Document:

exv10w9

 

Exhibit 10.9

LEASE AGREEMENT

BETWEEN

PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,

a Delaware limited partnership

(“Landlord”)

AND

HYPERION SOLUTIONS CORPORATION,

a Delaware corporation

(“Tenant”)

5450 and 5470 Great America Parkway

Santa Clara, California

Dated: June __, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE	 	PAGE	 
	ARTICLE 1 BASIC LEASE INFORMATION AND CERTAIN DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 PREMISES AND QUIET ENJOYMENT
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 3 TERM; COMMENCEMENT DATE; DELIVERY AND ACCEPTANCE OF
PREMISES
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 4 RENT
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 5 TAXES
	 	 	3	 
	 
	 	 	 	 
	ARTICLE 6 OPERATING COSTS
	 	 	5	 
	 
	 	 	 	 
	ARTICLE 7 SERVICES
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 8 ASSIGNMENT AND SUBLETTING
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 9 REPAIRS
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 10 ALTERATIONS
	 	 	13	 
	 
	 	 	 	 
	ARTICLE 11 LIENS
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 12 USE AND COMPLIANCE; HAZARDOUS SUBSTANCES
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 13 DEFAULT AND REMEDIES
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 14 INSURANCE
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 15 DAMAGE BY FIRE OR OTHER CAUSE
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 16 CONDEMNATION
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 17 INDEMNIFICATION
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 18 SUBORDINATION
	 	 	26	 
	 
	 	 	 	 
	ARTICLE 19 SURRENDER OF THE PREMISES AND HOLDOVER
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 20 [INTENTIONALLY OMITTED.]
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 21 MISCELLANEOUS
	 	 	28	 

 

 

	 	 	 	 	 
	 	 	PAGE	 
	ARTICLE 22 RENEWAL OPTIONS
	 	 	33	 
	 
	 	 	 	 
	ARTICLE 23 RIGHT OF FIRST OFFER TO LEASE BUILDING 10
	 	 	36	 
	 
	 	 	 	 
	ARTICLE 24 RIGHT OF FIRST OFFER TO PURCHASE
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 25 RIGHT OF FIRST OFFER FOR NEW IMPROVEMENTS
	 	 	39	 
	 
	 	 	 	 
	ARTICLE 26 CAFETERIA
	 	 	42	 
	 
	 	 	 	 
	ARTICLE 27 PERSONAL PROPERTY
	 	 	43	 
	 
	 	 	 	 
	ARTICLE 28 SIGNAGE
	 	 	44	 
	 
	 	 	 	 
	ARTICLE 29 COMPETITION
	 	 	45	 
	 
	 	 	 	 
	ARTICLE 30 SATELLITE DISH
	 	 	45	 

EXHIBITS AND RIDERS

The following Exhibits and Riders are attached hereto and by this reference made a part of this
Lease:

	 	 	 
	SCHEDULE 1.1

	 	DEFINITIONS
	EXHIBIT A

	 	FLOOR PLAN OF THE PREMISES
	EXHIBIT B

	 	THE LAND
	EXHIBIT C

	 	RENT SCHEDULE
	EXHIBIT D

	 	WORK LETTER
	EXHIBIT E

	 	FORM OF COMMENCEMENT NOTICE
	EXHIBIT F

	 	INVENTORY LIST
	EXHIBIT G

	 	LAND COSTS, DEVELOPMENT FEES, RETURN RATE AND TENANT CREDIT ADJUSTMENT
	EXHIBIT H

	 	BROKERAGE COMMISSION AGREEMENT
	RIDER NO. 1

	 	RULES AND REGULATIONS

 

 

BASIC LEASE INFORMATION

(“Basic Lease Information”)

	 	 	 	 	 
	A.

	 	Additional Rent:
	 	The Additional Rent shall be all sums, other than Base Rent, due and payable by Tenant under the Lease,
including, but not limited to, Tenant’s Share of Operating Costs.
	 
	 	 	 	 
	B.

	 	Base Rent:
	 	The Base Rent shall be the amounts set forth on the Base Rent Schedule attached hereto as Exhibit C.
	 
	 	 	 	 
	C.

	 	Brokers:
	 	Cornish & Carey Commercial and Cushman & Wakefield.
	 
	 	 	 	 
	D.

	 	Buildings:
	 	The buildings commonly known as 5450 and 5470 Great America Parkway, Santa Clara, California.
	 
	 	 	 	 
	E.

	 	Commencement Date:
	 	July 1, 2004, subject to the provisions of Article 3 hereof.
	 
	 	 	 	 
	F.

	 	Expiration Date:
	 	December 31, 2014, unless sooner terminated or extended pursuant to the terms hereof.
	 
	 	 	 	 
	G.

	 	Land:
	 	That certain parcel of real estate described in Exhibit B attached hereto.
	 
	 	 	 	 
	H.

	 	Landlord’S Address for Notice:
	 	Prentiss Properties Acquisition Partners, L.P.
	 

	 	 	 	3890 W. Northwest Highway, Suite 400
	 

	 	 	 	Dallas, Texas 75220
	 

	 	 	 	Attention: President
	 
	 	 	 	 
	 

	 	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Prentiss Properties Trust
	 

	 	 	 	1901 Harrison Street, Suite 100
	 

	 	 	 	Oakland, California 94612
	 

	 	 	 	Attention: Managing Director
	 
	 	 	 	 
	I.

	 	Landlord’s Address for Payment:
	 	Prentiss Properties Acquisition Partners, L.P.
	 

	 	 	 	P.O. Box 100435
	 

	 	 	 	Pasadena, CA 91189-0435

 

 

	 	 	 	 	 
	J.
	 	Landlord’s Contribution:	 	$2,197,210.00.
	 
	 	 	 	 
	K.
	 	Lease Year:	 	The first “Lease Year” shall be the period from the  Commencement  Date to the last day of the twelfth
(12th)  full  calendar  month  following  the  calendar  month in which the  Commencement  Date  occurs.
Thereafter,  each  consecutive  twelve (12) calendar  month period shall  constitute one (1) Lease Year.
Notwithstanding  anything contained herein to the contrary, if the Commencement Date occurs on the first
(1st) day of a calendar month, the first Lease Year shall be twelve (12) full calendar months.
	 
	 	 	 	 
	L.
	 	Premises:	 	The  Buildings  other than the  Underground  Parking Area marked on the floor plans  attached  hereto as
Exhibit A and the Cafeteria marked on the floor plans attached hereto as Exhibit A.
	 
	 	 	 	 
	M.
	 	Project:	 	The Land and all  improvements  now or in the future  thereon,  including  the  Buildings and all Common
Areas, commonly known as 5450, 5470 and 5480 Great America Parkway, Santa Clara, California.
	 
	 	 	 	 
	N.
	 	Rent:	 	The Base Rent and the Additional Rent.
	 
	 	 	 	 
	O.
	 	Rentable Area of the Project:	 	Landlord and Tenant agree that for all purposes of this Lease the Rentable  Area of the Project shall be
deemed to be 306,412 square feet.
	 
	 	 	 	 
	P.
	 	Rentable Area of the Premises:	 	Landlord and Tenant agree that for all  purposes of this Lease the Rentable  Area of the Premises  shall
be deemed to be 219,721 square feet.
	 
	 	 	 	 
	Q.
	 	Security Deposit:	 	None.

 

 

	 	 	 	 	 
	R.
	 	Tenant’s Address for Notice:	 	Hyperion Solutions Corporation
	 
	 	 	 	900 Long Ridge Road
	 
	 	 	 	Stamford, Connecticut 06902
	 
	 	 	 	Attn: Real Estate Director
	 
	 	 	 	 
	 
	 	 	 	With a copy to:
	 
	 	 	 	 
	 
	 	 	 	Hyperion Solutions Corporation
	 
	 	 	 	5450 Great American Parkway
	 
	 	 	 	Santa Clara, CA 95054
	 
	 	 	 	Attn: General Counsel
	 
	 	 	 	 
	 
	 	 	 	With a courtesy copy to:
	 
	 	 	 	 
	 
	 	 	 	Hopkins & Carley,
	 
	 	 	 	A Law Corporation
	 
	 	 	 	70 S. First Street
	 
	 	 	 	San Jose, CA  95113-2406
	 
	 	 	 	Attn:          Garth E. Pickett, Esq.
	 
	 	 	 	     Julie A. Frambach, Esq.
	 
	 	 	 	 
	S.
	 	Tenant’s Permitted Use:	 	All aspects of a computer software company, including, but not limited to development,  sales, marketing
and general administration  and all other legally  permitted uses, all of which uses must be consistent
with the operation of a first-class office building.
	 
	 	 	 	 
	T.
	 	Tenant’s Share:	 	71.71%
	 
	 	 	 	 
	U.
	 	Term:	 	Ten (10) Lease Years and six (6) full calendar months.

 

 

LEASE AGREEMENT

     THIS LEASE AGREEMENT (this “Lease”) is made as of June                     , 2004 (the “Effective Date”) by and
between Prentiss Properties Acquisition Partners, L.P., a Delaware limited partnership
(“Landlord”), and Hyperion Solutions Corporation, a Delaware corporation (“Tenant”), upon all the
terms set forth in this Lease as follows:

ARTICLE 1

BASIC LEASE INFORMATION AND CERTAIN DEFINITIONS

     1.1 The Basic Lease Information is made a part of this Lease, but the provisions of this Lease
addressing such matters in detail shall control over any inconsistent provisions in the Basic Lease
Information. All terms capitalized but not otherwise defined herein shall have the respective
meanings given to them in the Basic Lease Information or Schedule 1.1 attached hereto.

ARTICLE 2

PREMISES AND QUIET ENJOYMENT

     2.1 Tenant hereby leases the Premises from Landlord upon the terms and conditions set forth
herein. The parties hereto agree that the interior walls within the Buildings as shown on Exhibit
A may not accurately reflect the location or existence of the interior walls within the Buildings
as of the Effective Date. During the Term, Tenant shall have the non-exclusive right to use the
Common Areas in accordance with the rules and regulations set forth on Rider No. 1 attached hereto
(the “Rules and Regulations”).

     2.2 Provided Tenant fully and timely performs all the terms of this Lease on Tenant’s part to
be performed, including payment by Tenant of all Rent, Tenant shall have, hold and enjoy the
Premises during the Term without disturbance from or by Landlord or those claiming through
Landlord, subject to the terms of this Lease.

     2.3 As of the Effective Date, Landlord represents and warrants that Landlord has insurable
title to the Premises and the Project in fee simple, subject to only those matters set forth on
Schedule B of that certain Commitment prepared by First American Title Insurance Company as Order
No. NCS-67122-SC dated April 20, 2004, a copy of which Landlord has previously delivered to Tenant
and to the best of Landlord’s knowledge, no other tenancies, covenants, conditions, restrictions,
encumbrances or easements of record. Landlord shall obtain a leasehold title insurance policy from
First American Title Insurance Company to be issued to Tenant simultaneous with Landlord’s owner’s
title insurance policy in the amount of Thirty Four Million Six Hundred Twenty Five Thousand and
No/100s Dollars ($34,625,000.00), which shall be the same amount as in Landlord’s policy, provided
that Landlord shall pay any cost in connection with the issuance of such policy in excess of $500,
and Tenant shall reimburse Landlord for any cost up to $500.

1

 

ARTICLE 3

TERM; COMMENCEMENT DATE;

DELIVERY AND ACCEPTANCE OF PREMISES

     3.1 The Commencement Date shall be the later of (a) July 1, 2004 or (b) the date Landlord
delivers possession of the Premises to Tenant. The Commencement Date shall be confirmed, along
with other matters, by written notice sent by Landlord substantially in the form of Exhibit E
attached hereto (the “Commencement Notice”). From and after the Effective Date and prior to the
Commencement Date, Tenant may have access to the Premises for the purpose of performing the
Leasehold Improvements, subject to all of the terms and conditions of this Lease, including Exhibit
D attached hereto, except that Tenant shall have no obligation to pay Rent prior to the
Commencement Date of this Lease. In consideration of Tenant entering into this Lease and as an
inducement to lease the Premises for the Term, Landlord hereby represents, warrants and covenants
that to Landlord’s knowledge, there are no lawsuits or proceedings currently pending against (i)
Landlord or (ii) all or any portion of the Project, whether involving eminent domain or otherwise,
which would in either (i) or (ii) above affect all or any portion of the Project or Tenant’s use
and enjoyment of thereof. Notwithstanding anything contained herein to the contrary, in the event
Landlord fails to deliver possession of the Premises to Tenant, consisting of delivering keys and
providing full access to the Premises, on or before July 30, 2004, Tenant may thereafter at any
time terminate this Lease prior to the date Landlord does so deliver possession.

     3.2 Subject to the terms of Article 9 hereof, Tenant’s occupancy of any portion of the
Premises shall be conclusive evidence that Tenant (a) has accepted the Premises as suitable for
Tenant’s purposes, in its “as is, where is” condition without any representations or warranties
except as specifically set forth herein, and (b) without prejudicing any rights Tenant may have
with respect to any third parties, has waived any claims against Landlord with respect to any
defects in the Premises and the Project.

ARTICLE 4

RENT

     4.1 Tenant shall pay to Landlord, without notice, demand, offset or deduction, in lawful money
of the United States of America, at Landlord’s Address for Payment, or at such other place or in
such other manner as Landlord shall designate in writing from time to time: (a) the Base Rent in
equal monthly installments, in advance, on the first day of each calendar month during the Term
commencing on the Commencement Date, and (b) the Additional Rent, at the respective times required
hereunder. The first monthly installment of Base Rent shall be paid in advance on the date of
Tenant’s execution of this Lease and applied to the first installments of Base Rent coming due
under this Lease. If the Rent Commencement Date falls on a date other than the first day of a
calendar month or the Expiration Date occurs on a date other than the last day of a calendar month,
the Rent due for such fractional month shall be prorated on a per diem basis for the portion of
such fractional month falling within the Term.

2

 

Notwithstanding the foregoing, Tenant shall not be liable for the payment of Base Rent for the
first one hundred eighty (180) days of the Term.

     4.2 Commencing with the third such installment in any twelve month period that is not paid
within five (5) days after its due date, all installments of Rent not paid within five (5) days
after their due date shall be subject to a late charge of five percent (5%) of the amount of the
late payment. In addition, all installments of Rent not paid on their due date shall bear
interest from the 31st day after the date due until paid at a rate per annum (the
“Interest Rate”) equal to the greater of (i) ten percent (10%) or (ii) four percent (4%) above the
prime rate of interest (the “Prime Rate”) from time to time publicly announced by Citibank, N.A., a
national banking association, or any successor thereof; provided, in no event shall the Interest
Rate exceed the maximum rate of interest then permitted by applicable law. As long as no such
failure to timely pay any installment of Rent matures into an Event of Default, Landlord hereby
waives Landlord’s right to collect any such late charge or interest described herein if Landlord
fails to deliver notice to Tenant that such charge or interest has accrued within thirty (30) days
following the date such charge or interest is first due.

ARTICLE 5

TAXES

     5.1 Tenant shall pay before delinquency any and all taxes levied or assessed upon or against
trade fixtures, equipment, furniture, and other personal property installed or located on the
Premises (collectively the “personal property”). If any personal property shall be assessed with
the real property comprising the Premises, Tenant shall pay to Landlord, as Additional Rent, the
amounts attributable to the personal property within thirty (30) days after receipt of a written
statement from Landlord setting forth the amount of such taxes, assessments and public charges
attributable to the personal property.

     5.2 Within thirty (30) days after receipt of the a copy of the bill therefor issued by the
applicable taxing body, Tenant shall pay to Landlord as Additional Rent Tenant’s pro rata share of
all Taxes which are assessed, levied, confirmed, imposed or which become a lien upon the Project
with respect to any period of time within the Term, whether payable as a regular installment of
Taxes or as a result of a supplemental assessment or reassessment of Taxes. Tenant’s pro rata
share of Taxes shall be Tenant’s Share, subject to such adjustment as Landlord may reasonably
determine on an equitable basis taking into account any extraordinary improvements on the Project.
During the last year of the Term, in addition to the payment of tax bills issued during such year
for the prior years’ Taxes, Tenant shall pay to Landlord monthly with each of Tenant’s Operating
Cost Payments a payment to cover Tenant’s pro rata share of Taxes assessed against the Project that
have accrued but not been paid. Any such Taxes prorated on an estimated basis shall be reprorated
by the parties when the actual amount of such item becomes known. Any adjustment due to
reproration shall be effected not later than thirty (30) days following final determination of the
amount of such item and demand by the party to whom credit is due. The provisions of this Section
5.2 shall survive the expiration or termination of the Lease.

3

 

     5.3 Tenant shall pay before delinquency any and all taxes levied or assessed and which accrue
during the Term (excluding, however, state and federal personal or corporate income taxes measured
by the net income of Landlord from all sources, capital stock taxes, and estate and inheritance
taxes succession, transfer, gift or franchise taxes), whether or not now customary or within the
contemplation of the parties hereto, which are based upon, measured by or otherwise calculated with
respect to: (i) the gross or net rental income of Landlord under this Lease, including, without
limitation, any gross receipts tax levied by any taxing authority, or any other gross income tax or
excise tax levied by any taxing authority with respect to the receipt of the rental payable
hereunder; (ii) the possession, lease, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion thereof; (iii) the value of any leasehold
improvements, alterations or additions made in or to the Premises, regardless of whether title to
such improvements, alterations or additions shall be in Tenant or Landlord; or (iv) this
transaction or any document to which Tenant is a party creating or transferring an interest or an
estate in the Premises.

     5.4 Tenant acknowledges that Taxes “for” a given year are those Taxes that accrue and are
assessed for the Project in such year even if paid in a later year. If at any time during the
Lease Term the method of taxation prevailing at the Commencement Date shall be altered so that any
new or additional tax assessment, levy, imposition, or charge, or any part thereof, shall be
imposed in place or partly in place of any Taxes or contemplated increase therein, including
without limitation any tax, assessment, levy, imposition or charge on Rent, then all such taxes,
assessments, levies, impositions or charges shall be deemed to be Taxes for the purpose hereof, to
the extent that such Taxes would be payable if the Project was the only property of Landlord
subject to such tax. Taxes shall not include interest and penalties for late payment, except to
the extent that such penalty or interest is attributable to Tenant’s failure to remit on a timely
basis its payment of Taxes, in which case Tenant shall be solely responsible for payment of such
interest and/or penalty. If Taxes for the Premises are not assessed separately from the Project
and such interest or penalty is attributable to such failure by Tenant and to other tenants’
failure to pay their pro rata share of Taxes, Tenant shall pay its proportionate share of the
amount of such interest and/or penalty. Landlord may contest any assessment of Taxes and the cost
of such contest may be included as an Operating Cost, up to the amount of any tax savings (unless
Landlord conducted such contest at Tenant’s request, in which case no such limitation shall occur).
Any net recovery realized by Landlord in a contest concerning the imposition of Taxes shall be
refunded to Tenant in proportion to the share paid by Tenant for Taxes in the year in respect of
which the refund is made. Tenant may request that Landlord contest any assessment of Taxes. If
Landlord refuses to contest such Taxes, Tenant may do so on Landlord’s behalf. In such case,
Landlord agrees to reasonably cooperate with Tenant (at no expense to Landlord) in any appeal of
Taxes or assessments. Tenant will be entitled to its proportionate share of any refund or
reduction obtained through such appeal as provided herein after first reimbursing Tenant for its
costs reasonably incurred in connection with such contest from such refund or reduction, and shall
be responsible for the full amount of any increase in Taxes or assessments made as a result of such
appeal. Promptly upon receiving the initial assessed valuation of the Project from the County Tax
Assessor of Santa Clara, California, Landlord shall inform Tenant of such valuation. Landlord
agrees to consult with Tenant regarding any contest of such valuation. Any contest of such
valuation shall be made pursuant to the terms of this Section 5.4. Except as set forth herein,
Tenant shall have no right to appeal Taxes or assessments.

4

 

     5.5 Notwithstanding anything contained in this Article 5 to the contrary, Tenant shall not be
required to pay any Taxes that are (1) fairly allocable to any period of time prior to the
Commencement Date or following the expiration or sooner termination of this Lease (except for
Tenant’s personal property taxes as set forth in Section 5.1), (2) fairly allocable to any other
tenant’s personal property, (3) payable solely as a result of a default by Landlord under this
Lease or a default of any other tenant of the Project or (4) payable solely as a result of any sale
or transfer of the Land, Buildings or Premises, or any part thereof, to a party that controls
Landlord, is controlled by Landlord or is under common control with Landlord, where “control” is
defined as set forth in Section 8.4 below (each, an “Affiliate”), provided in the event that
Landlord subsequently sells or transfers the Land, Buildings or Premises, or any part thereof, to a
party that is not an Affiliate, from and after such sale or transfer on a going forward basis,
Tenant’s obligation to pay Taxes shall include any amount that previously had not been allocable to
Tenant as a result of the terms of this clause (4).

ARTICLE 6

OPERATING COSTS

6.1 A. Beginning on the Commencement Date, Tenant shall pay to Landlord at the same time as
it is required to make payment of Base Rent, an amount (the “Operating Costs Payment”) equal
to one twelfth (1/12th) of the estimated Tenant’s Share of Operating Costs attributable to
the Project for any full or partial year during the Term. Tenant acknowledges that in
connection with any particular Operating Cost, notwithstanding the fixed percentage interest
of Tenant’s Share set forth in the Basic Lease Information, Landlord may fairly allocate
such Operating Cost among the users of the Project if using such user’s share based on such
user’s rentable square footage compared to the rentable square footage of the Project
results in an inequitable allocation of such Operating Cost among the users of the Project.

     B. Prior to any year (or as soon thereafter as is reasonably practicable) and from time
to time during any year, Landlord shall notify Tenant as to monthly installments of the
Operating Costs Payment payable by Tenant based on Landlord’s reasonable estimate of
Operating Costs for such year. Until such time as Landlord notifies Tenant of such
estimate, Tenant shall continue to make its Operating Costs Payment in the same monthly
amount as the prior year. On the first day of the calendar month following thirty (30) days
after Tenant’s receipt of Landlord’s notice of any revised estimate in such installments,
Tenant shall pay to Landlord (in addition to the revised monthly estimate) a lump sum
payment in an amount so that Tenant’s total payments for the year will equal Landlord’s
revised estimate of Tenant’s aggregate Operating Costs Payment for such year. If such lump
sum payment amount exceeds the amount of Tenant’s monthly payment for the immediately
proceeding month, Tenant shall have an additional thirty (30) days to pay such amount. The
Operating Costs Payment for the first calendar year in which the Term falls (if the
Commencement Date is other than January 1) and the last calendar year in which the Term
falls (if the Term ends on a date other than December 31) shall be prorated based upon the
number of days in the Term falling within the year in question.

5

 

     C. After Landlord shall have ascertained the actual amount of Operating Costs for the
prior year but in any case within one hundred eighty (180) days of the end of such year (but
subject to adjustment upon receipt of additional information within twelve [12] months
following the end of any calendar year [an “Amended Notice”]), Landlord shall notify Tenant
as to the amount of such Operating Costs and the Operating Costs Payment resulting therefrom
(an “Annual Adjustment Notice”). If the Operating Costs Payment actually due exceeds total
estimated payments made by Tenant on account of Tenant’s Share of Operating Costs for such
year, then Tenant shall pay Landlord the full amount of any such deficiency within thirty
(30) days after receiving the Annual Adjustment Notice. If the Operating Costs Payment
actually due is less than the total estimated payments made by Tenant on account of Tenant’s
Share of Operating Costs for such year, then Landlord shall, at its option, credit any such
excess to Rent next owing by Tenant or refund such excess to Tenant, provided, at the end of
the Term, Landlord shall refund such excess to Tenant.

The provisions of this Section 6.1 shall survive the expiration or termination of this Lease.

     6.2 If the Project is not fully occupied (meaning one-hundred percent (100%) of the Rentable
Area of the Project) during any full or partial year of the Term, those Operating Costs which vary
with the level of occupancy shall be adjusted for such year to an amount which Landlord reasonably
estimates would have been incurred had the Project been the greater of ninety-five percent (95%)
occupied or the actual occupancy of the Project. In no event shall Landlord collect from the
tenants of the Project more than the actual Operating Costs for such year.

     6.3 The parties hereto agree that the measurements set forth in the Basic Lease Information
are, for the purposes of this Lease, correct and the parties will not remeasure the Project or the
Premises. If during the Term any change occurs in either the number of square feet of the Rentable
Area of the Premises (by virtue of the addition of space to the Premises or the reduction in the
size of the Premises) or by addition to or subtraction from the Rentable Area of the Project,
effective as of the date of any such change, the addition or subtraction of such Rentable Area of
the Project or Rentable Area of the Premises shall be measured using the same method of measurement
as the parties hereto used for the original measurement of the Premises as reasonably determined by
Landlord and reasonably approved by Tenant, and Tenant’s Share shall be adjusted in accordance with
such measurement. Landlord shall promptly notify Tenant in writing of such change and the reason
therefor. Any changes made pursuant to this Section 6.3 shall not alter the computation of
Operating Costs as provided in this Article 6 or Taxes as provided in Article 5, but, on and after
the date of any such change, Tenant’s Share of Operating Costs and Taxes shall be appropriately
adjusted. If such estimated payments of Tenant’s Share are so adjusted during a year, a
reconciliation payment for Tenant’s Share pursuant to this Article 6 for the calendar year in which
such change occurs shall be computed pursuant to the method set forth in Sections 6.1 and 6.2, such
computation to take into account the daily weighted average of Tenant’s Share of Operating Costs
during such year.

     6.4 Tenant shall have the right upon the delivery of written notice to Landlord (“Tenant’s
Review Notice”) and at reasonable times to review the books and records of Landlord

6

 

relating to Tenant’s Operating Costs Payment. Such review shall take place at the Project or
the office of Landlord’s managing agent in the greater San Francisco Bay Area and shall be at
Tenant’s sole cost and expense. Tenant must deliver Tenant’s Review Notice to Landlord within
ninety (90) days after Tenant has received its Annual Adjustment Notice for the prior year and must
complete its review with written notice to Landlord, specifying in detail the reasons for any
discrepancy as to a particular item within forty-five (45) days after Landlord makes its books and
records available to Tenant. Failure by Tenant to deliver Tenant’s Review Notice to Landlord
within such ninety (90) day period or to perform its review and provide Landlord with such notice
within such subsequent forty-five (45) day period shall constitute a waiver of Tenant’s rights to
contest such Annual Adjustment Notice. Tenant shall pay the full amount of Tenant’s Operating
Costs Payment shown to be due on the Annual Adjustment Notice without delay, but by doing so shall
not, so long as it timely complies with the time periods set forth above, waive its rights to
review Landlord’s books and records or to dispute the accuracy or appropriateness of any such
Annual Adjustment Notice or any items thereon as provided in this Section 6.4. In the event
Landlord provides an Amended Notice, Tenant shall have the same rights with respect to the Amended
Notice as with the Annual Adjustment Notice as set forth in this Section 6.4.

     Tenant hereby agrees that all information disclosed in the books and records shall be kept
confidential and shall not be disclosed to any other party, including, but not limited to, any
other tenant in the Building. Tenant further agrees to cause any third party engaged by Tenant to
review said books and records to execute and deliver a confidentiality agreement in a form
reasonably acceptable to Landlord prior to its performing any such review. In addition, any
accountants or other professional retained by Tenant to review Landlord’s statement pursuant to
this Section 6.4 shall be subject to Landlord’s approval, not to be unreasonably withheld,
conditioned or delayed. Any accountant or professional retained by Tenant to perform such audit
shall be paid by Tenant on a fixed hourly basis and not on a contingency fee based upon a
percentage of the recovery of any discrepancy discovered. Tenant shall pay all costs associated
with such review, unless it is finally determined that Landlord’s original determination of
Tenant’s Operating Cost Payment was overstated by more than three percent (3%), in which event the
Landlord shall pay the reasonable third party costs of such audit incurred by Tenant. If such
review discloses a discrepancy in Landlord’s calculation of Tenant’s Operating Cost Payment, and
Landlord agrees with such determination, Landlord shall promptly pay to Tenant the amount of any
overpayment by Tenant or Tenant shall promptly pay to Landlord the amount of any underpayment by
Tenant, as the case may be. If Landlord delivers notice to Tenant that Landlord does not agree
with such determination of Operating Costs, Tenant’s accountant or other professional retained by
Tenant to perform such audit and Landlord’s regular accountants shall select a third accounting
firm from the “Big 4” accounting firms. If the two (2) accountants cannot agree on the selection
of the third accountant within ten (10) days of their selection, then either party may request
appointment of the third accountant by application to the JAMS. Once the third accountant has been
selected as provided for above, then, as soon thereafter as practicable but in any case within
fourteen (14) days, the third accountant shall make his/her determination of the actual Operating
Costs in dispute and such determination shall be binding on both Landlord and Tenant. The parties
shall share equally in the costs of the third accountant. Subject to Landlord’s obligations to pay
Tenant’s third party costs as set forth herein, any fees of any accountant or professional engaged
directly by Landlord or Tenant, however, shall be borne by the party retaining such accountant or
professional.

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ARTICLE 7

SERVICES

     7.1 During the Term and subject to the other terms of this Lease, Landlord shall furnish
Tenant with the following services: (a) cafeteria service in the Cafeteria as set forth in Section
26.1 below; (b) exterior window washing at least four (4) times each Lease Year; (c) electricity
and gas for lighting, incidental use and the heating, ventilation and air conditioning system
currently serving the Premises; and (d) water and sewer for restrooms and breakrooms incidental to
Tenant’s use. Other than electricity separately metered to the Premises, all services referred to
in this Section 7.1 shall be provided by Landlord and paid for by Tenant on a prorata basis as part
of the Operating Costs Payment. With respect to electricity for the Premises, Landlord shall, at
Landlord’s expense, install submeters so as to separate the use of electricity serving the Premises
and electricity serving the remainder of the Project. Tenant shall pay as Additional Rent to
Landlord, within thirty (30) days after receiving an invoice therefor, Landlord’s cost of
electricity serving the Premises based upon Tenant’s actual usage of such electricity. Landlord’s
billing of electricity to Tenant shall be without mark-up.

     7.2 Except as expressly provided in this Lease, Landlord shall not be obligated to furnish
services to the Premises. Tenant shall cooperate with Landlord at all times and, as reasonably
necessary, allow Landlord reasonable access to the Premises to provide such services, subject to
the terms of Section 21.24 below.

     7.3 At all times during the Term, Tenant shall contract directly with utility providers, at
its sole expense, for all utilities other than electricity, gas and water attributable to its use
of the Premises. All such utility payments shall be paid directly by Tenant on or prior to the
date on which the same are due to the utility provider. Tenant shall also obtain at its expense
any and all janitorial and security for the Premises as Tenant desires. In addition, Tenant, at
its cost, shall secure regular roof and heating, ventilation and air conditioning system inspection
and maintenance services by professional maintenance services to the extent necessary to maintain
the Premises in a good condition comparable with the good condition which the Premises are in as of
the Effective Date, subject to ordinary wear and tear and the provisions of Articles 15 and 16.
Not more often than once each calendar year upon advance written notice, Landlord may inspect at
the Premises Tenant’s maintenance, service and inspection plan for the heating, ventilation and air
conditioning, electrical, plumbing and mechanical systems and the roof coverings. Tenant shall
reasonably cooperate with such inspection. Tenant shall cooperate fully with Landlord at all times
and abide by all reasonable regulations and requirements that Landlord may reasonably prescribe for
the proper functioning and protection of the heating, ventilation and air conditioning, electrical,
mechanical and plumbing systems and maintenance and inspection of the roof coverings for the
Premises. If Landlord reasonably determines that Tenant has not fulfilled its obligations under
this Section 7.3, upon thirty (30) days prior written notice to Tenant (except in the case of an
emergency, when no such notice shall be required), Landlord may, but need not, provide such
services, and Tenant shall pay Landlord the cost thereof within fifteen (15) days after Landlord’s
written demand.

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     7.4 Except as set forth in Section 7.5 below, Tenant agrees that Landlord shall not be liable
for damages, by abatement of Rent or otherwise, for failure to furnish or delay in furnishing any
service (including telephone and telecommunication services), or for any diminution in the quality
or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part,
by breakage, repairs, replacements, or improvements, by any strike, lockout or other labor trouble,
by inability to secure electricity, gas, water, or other fuel at the Premises or Project after
reasonable effort to do so, by any riot or other dangerous condition, emergency, accident or
casualty whatsoever, by act or default of Tenant or other parties, or by any other cause; and such
failures or delays or diminution shall never be deemed to relieve Tenant from paying Rent or
performing any of its obligations under this Lease. Furthermore, Landlord shall not be liable
under any circumstances for a loss of, or injury to, property or for injury to, or consequential
damages to Tenant’s business, through or in connection with or incidental to a failure to furnish
any of the services or utilities as set forth in this Article 7. Tenant hereby waives any benefits
of any applicable existing or future Applicable Laws, including the provisions of California Civil
Code Section 1932(1), permitting the termination of this Lease due to such interruption, failure or
inability to provide services for any limited duration.

     7.5 Notwithstanding the foregoing, if (i) Landlord ceases to furnish any service set forth in
Section 7.1 above to the Premises, (ii) such cessation is not caused by Force Majeure, (iii) such
cessation has not arisen as a result of an act or omission of Tenant or the Tenant Parties and (iv)
as a result of such cessation, the Premises (or a material portion thereof) is rendered unusable
for Tenant’s business purposes and Tenant in fact Ceases to Use such space, then, as Tenant’s sole
and exclusive remedy for such cessation (except as set forth in Articles 15 and 16 below, which in
the event of a casualty shall govern), commencing on the sixth (6th) consecutive Business Day after
Tenant has informed Landlord of such cessation or Landlord otherwise has actual knowledge of such
cessation and all of the foregoing conditions have been met, the Rent payable hereunder shall be
equitably abated based on the percentage of the Premises so rendered unusable for Tenant’s business
purposes and that in fact Tenant has Ceased to Use all or such portion of the Premises. Such
abatement shall continue until the earlier of (a) date the Premises become usable again by the
removal of such cessation of services or (b) date the Tenant resumes use of the Premises.

ARTICLE 8

ASSIGNMENT AND SUBLETTING

     8.1 Tenant shall not, by operation of law or otherwise, (i) assign, pledge, encumber or
otherwise transfer this Lease or any part hereof, or the interest of Tenant under this Lease, (ii)
sublease all or any portion of the Premises, or (iii) allow the Premises or any part thereof to be
occupied or used for any purpose by anyone other than Tenant, other than occupancy by service
providers and consultants to Tenant to the extent necessary to provide such services and
consultations (individually or collectively, a “Transfer”), without first obtaining in each
instance the prior written consent of Landlord. Subject to the terms of Section 8.3 below,
Landlord’s consent shall not be unreasonably withheld or delayed.

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     8.2 A Transfer shall also be deemed to have occurred if (a) in a single transaction or in a
series of transactions more than 50% of the economic, ownership or voting interests (whether stock,
partnership interest, membership interest or otherwise) in any of (i) Tenant, or any party directly
or indirectly owning or controlling Tenant, or (ii) any guarantor of this Lease, or (b) Tenant’s
obligations under this Lease are taken over or assumed in consideration of Tenant leasing space in
another office building. The transfer of the publicly traded outstanding capital stock of any such
parties through the “over-the-counter” market or any recognized national securities exchange shall
not constitute a Transfer.

     8.3 If Tenant desires to engage in a Transfer, Tenant shall give Landlord written notice no
later than fifteen (15) days in advance of the proposed effective date of the Transfer specifying
the name and business of the proposed transferee or subtenant (the “Transferee”), the amount and
location of the space proposed to be subleased, the proposed Transferee’s financial statements, the
proposed terms of the Transfer and other information as Landlord may reasonably request to evaluate
the proposed Transfer. For Transfers that are not Permitted Transfers (defined below), Landlord
shall have fifteen (15) days following receipt of such notice and other information requested by
Landlord to notify Tenant in writing that Landlord elects to: (i) permit Tenant to engage in such
Transfer which permission may be conditioned on Landlord’s receipt of fifty percent (50%) of Bonus
Rent (defined as rent received by Tenant from such assignee or sublessee in excess of the rent paid
by Tenant hereunder after deducting reasonable attorneys’ fees, brokerage commissions, any tenant
improvement costs and other reasonably related costs) received by Tenant for any Transfer of all or
any portion of the Premises; (ii) in the event such Transfer transfers more than 50,000 square feet
of the Premises for substantially all of then remaining Term, to recapture and terminate this Lease
with respect to any space that is the subject of the Transfer; or (iii) reasonably withhold consent
to such Transfer. If Landlord fails to timely respond, Tenant may deliver a second notice to
Landlord of Tenant’s desire to so transfer the Premises or a portion thereof, which notice shall be
captioned in all capital letters “FAILURE TO RESPOND SHALL CONSTITUTE DEEMED CONSENT”. If Landlord
fails to consent or refuse consent within five (5) business days following such second notice,
Landlord shall be deemed to have elected the option set forth in clause (i) of the immediately
preceding sentence.

     Landlord may reasonably refuse to consent to a Transfer if (a) the proposed Transferee is an
assignee and not financially creditworthy or the proposed Transferee is a governmental authority or
agency, an organization or person enjoying sovereign or diplomatic immunity, a medical or dental
practice, a so-called “telecommunication service provider” for housing equipment rather than
general office use, a current tenant or subtenant of the Project or a prospective tenant to whom
Landlord has made a written offer to lease space in the Project and with whom Landlord is in active
negotiations, unless Landlord shall not have premises available to offer to such current or
prospective tenant at the time, (b) an Event of Default by Tenant then exists under this Lease, (c)
such assignment or subletting would cause a default under another lease in the Project with respect
to a ordinary and customary provision of such lease, including, but not limited to, a restrictive
use, exclusive or non-competition provisions, or a violation of any Requirement, or (d) any portion
of the Project or Premises would likely become subject to additional or different Requirements as a
consequence of the proposed assignment or subletting; provided, however, that the foregoing are
merely examples of reasons for which Landlord may

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withhold its approval and shall not be deemed exclusive of any reasons for reasonably
withholding approval, whether similar or dissimilar to such examples. In the event Tenant intends
to offer the Premises or any portion there of for sublease or to assign the Lease, upon Tenant’s
written request therefore, Landlord shall provide Tenant with a list of any restrictive use
provisions and/or exclusive or non-competition provisions contained in any then existing leases for
any portion of the Project.

     Tenant shall deliver to Landlord copies of all assignment or sublet documents executed in
connection with any Permitted Transfer that relate to this Lease or other documents necessary to
show the occurrence of such Transfer.

     No Transfer shall relieve Tenant from any covenant, liability or obligation hereunder (whether
past, present or future) and Tenant shall remain liable under this Lease as a principal and not as
a surety. Landlord’s consent to a Transfer shall not be deemed a consent to any subsequent
Transfer. No acceptance by Landlord of any Rent or any other sum of money from any Transferee
shall be deemed to constitute Landlord’s consent to any Transfer. Any attempted Transfer by Tenant
in violation of this Article 8 shall be void. Tenant shall pay to Landlord, as Additional Rent,
reasonable and customary third party legal fees incurred by Landlord in connection with any
proposed Transfer (including a Permitted Transfer) requested or made.

     8.4 Notwithstanding anything to the contrary in this Article 8, Tenant may without the
requirement of Landlord’s consent, without Landlord’s recapture rights and without Landlord’s right
to participate in any Bonus Rent, sublet all or part of the Premises, or assign this Lease to: (a)
any entity which controls Tenant, is controlled by Tenant or is under common control with Tenant;
(b) a successor corporation or other entity into which or with which Tenant is merged or
consolidated; or (c) an entity which acquired substantially all of Tenant’s assets (the activities
described herein are referred to herein as “Permitted Transfers”); provided that (i) such
successor entity assumes all of the obligations and liabilities of Tenant and, except in the case
of a Transfer made pursuant to subsection (a) above, has a tangible net worth at least equal to the
lesser of (1) the tangible net worth of Tenant as of the date immediately prior to such Transfer or
(2) the tangible net worth of Tenant as of the Effective Date; and (ii) Tenant shall provide notice
to Landlord of the transfer within ten (10) days of the date of the Transfer. For purposes hereof,
“control” shall mean ownership of at least 51% of all the economic, ownership and voting interests
in such entity.

ARTICLE 9

REPAIRS

     9.1 Tenant shall keep the Premises (including the electrical, plumbing, heating, life safety,
ventilation and air conditioning systems, the roof membrane, the elevator cabs and equipment
(including shafts), the Leasehold Improvements, the Premises Improvements and any Alterations
whether or not installed by or for Tenant) that are not the obligation of Landlord to maintain
hereunder in good order and in a safe, neat and clean condition. Notwithstanding the foregoing,
Landlord agrees, if requested by Tenant, to assign to Tenant (without recourse or, if not
assignable, to make good faith diligent efforts to enforce on Tenant’s behalf, provided

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Landlord shall not be required to incur out of pocket costs) any warranties and other rights
Landlord may have against any third party related to elements of the Premises that Tenant is
required to maintain hereunder while reserving to itself the right to enforce such warranties and
rights following the termination of this Lease and with respect to those elements that Landlord is
required to maintain hereunder. Tenant hereby indemnifies and holds Landlord harmless from any
cost, damage or loss due to Tenant’s acts or omissions with respect to such warranties and rights.
Notwithstanding anything to the contrary contained herein, in the event that any of the roof
membrane, window seals and glass systems, core building heating, ventilation and air conditioning
system, supplemental heating, ventilation and air conditioning systems existing as of the Effective
Date, core building electrical service system, core building plumbing, back-up generators existing
as of the Effective Date (the “Generators”), UPS system and UPS batteries and the elevator systems
and the two approximately 5,000 gallon underground diesel storage tanks and any other storage tanks
(collectively, the “Storage Tanks”) servicing the Premises or the Project (collectively, the “Core
Building Systems”) require replacement, rather than repair and maintenance (other than as a result
of improper maintenance, misuse or abuse by Tenant), upon Tenant’s request therefor, Landlord shall
replace such Core Building System and the cost of such replacement shall be an Operating Cost,
subject to the terms set forth in the definition of Operating Costs with respect to such Core
Building Systems. All maintenance and repairs made by Tenant shall be performed in a good and
workmanlike manner and in accordance with the alteration provisions of Article 10. In addition,
except as provided in Sections 9.2, 9.3 and 9.4, Tenant shall, at, its expense and pursuant to the
terms and conditions of this Lease, promptly and adequately repair all damage to the Premises and
replace or repair all damaged, broken, or worn elements of the Premises that are not Landlord’s
obligation to maintain pursuant to Sections 9.2, 9.3 and 9.4 below, excepting ordinary wear and
tear and subject to the terms of Articles 15 and 16 below. Notwithstanding anything to the
contrary contained herein, at Landlord’s option, if Tenant fails to commence to maintain the
Premises or make repairs and replacements as required under this Section 9.1 within thirty (30)
days following written notice to Tenant from Landlord (except in the case of an emergency, when no
such notice shall be required) and thereafter diligently and continuously complete such
maintenance, repairs or replacements, Landlord may deliver a second notice to Tenant, which notice
shall be captioned in all capital letters “FAILURE TO RESPOND MAY RESULT IN LANDLORD COMMENCING
REPAIRS”. If Tenant fails to commence such repairs within five (5) business days following such a
second notice, Landlord may, but need not, perform such maintenance or make such repairs and
replacements, and Tenant shall pay Landlord the cost Landlord incurred in connection therewith,
within thirty (30) days after Landlord’s written demand.

     9.2 Subject to the provisions of Article 15 and Article 16, Landlord shall maintain, repair
and replace, at its sole cost and expense, and not as an Operating Cost, the structural elements of
the Project consisting of the foundations, roof structures, column beams, load bearing and exterior
walls and structural elements of the Buildings and the foundations, column beams, load bearing
walls and structural elements of the Underground Parking Areas and any future multi-floor parking
structure on the Project. Except as set forth in the immediately preceding sentence and subject to
the limitations set forth in the definitions concerning capital improvements and structural
elements, in addition to Landlord’s obligations with respect to Core Building Systems as set forth
in Section 9.1 above, Landlord shall maintain and repair the Common Areas of the Project, Storage
Tanks and Generators, the cost of which shall be

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reimbursed as an Operating Cost. Upon written notice to Landlord, Tenant may elect to
maintain, at its own cost and expense, those Generators serving solely the Premises.

     9.3 Landlord agrees to deliver the Premises to Tenant on the Commencement Date in a “broom
clean” condition with the Core Building Systems in good working order and repair and the Premises
watertight (the “Delivery Condition”). Tenant shall inform Landlord in writing of all failures of
the Delivery Conditions discovered by Tenant promptly following discovery thereof. Any claim based
on a failure of a Delivery Condition must be asserted in a written notice by Tenant to Landlord
given before the one hundred eightieth (180th) day following the Commencement Date
hereof (the “Warranty Date”), and, if not asserted in writing before the Warranty Date, from and
after the Warranty Date such claim shall be void and of no force or effect. Notwithstanding
anything to the contrary contained herein, Tenant acknowledges and agrees that Landlord’s sole
liability with respect to any failure of a Delivery Condition shall be (i) to cause the Premises to
be placed in the Delivery Condition, or (ii) for the cost thereof pursuant to the next proceeding
sentence. If Landlord fails to commence correcting any failure of a Delivery Condition within
thirty (30) days after receipt of notice from Tenant given on or before the Warranty Date, Tenant
shall have the right, but not the obligation, to perform such work and charge Landlord the
reasonable cost therefore, which Landlord shall pay within thirty (30) days of receipt of the
invoice. Except as expressly set forth herein, Tenant hereby waives any and all rights under and
benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil Code or
under any similar law, statute, or ordinance now or hereafter in effect.

     9.4 Landlord represents and warrants to Tenant that if based upon current interpretations of
Requirements as of the Commencement Date, the Premises (exclusive of furniture and equipment) fail
to comply with Requirements, including, without limitation, the Americans with Disabilities Act
(the “ADA”), Landlord will be solely responsible, at its cost, and not as an Operating Cost, to
correct such violation of the Requirements. Notwithstanding the foregoing, Tenant shall be
responsible for the cost of compliance with Requirements triggered by Tenant’s particular use of
the Premises, Tenant’s construction or alteration thereof, Tenant’s breach of this Lease or future
interpretations of or changes to Requirements to the extent that such compliance would not
otherwise be Landlord’s obligation under the terms of Sections 9.2 or 9.3 above; provided, in no
event shall Tenant be responsible for any alterations to the Premises that are Landlord’s
obligation to perform under the terms of Section 9.2 above. Tenant shall inform Landlord in
writing of all breaches of Requirements that are Landlord’s obligation to correct that are
discovered by Tenant promptly following discovery thereof. Notwithstanding anything to the
contrary contained herein, Tenant acknowledges and agrees that Landlord shall not be liable for any
damages incurred by Tenant due to a failure of the Premises to comply with Requirements as the
Requirements are interpreted as of the date of this Lease.

ARTICLE 10

ALTERATIONS

     10.1 The parties acknowledge that Tenant shall perform certain Leasehold Improvements (as
defined in Exhibit D hereto) as described in the Work Letter attached hereto as

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Exhibit D. Except for the Leasehold Improvements, which shall be governed by the terms and
conditions of the Work Letter and not this Article 10, Tenant shall not make any alterations,
improvements, additions or repairs (including without limitation, Major Alterations, collectively
“Alterations”) to the Premises without first obtaining Landlord’s written consent thereto, which
consent shall not be unreasonably withheld, conditioned or delayed; provided, however, (1) that
Landlord may withhold its consent in its sole discretion to any Alterations which (a) are visible
from the exterior of the Buildings or the Project, (b) may affect the Core Building Systems or any
structural components of the Buildings, or (c) are prohibited by any Requirements (individually and
collectively, a “Major Alteration”) and (2) Landlord’s consent is not required for Permitted
Alterations. As used herein, “Permitted Alterations” means Alterations (a) that are not Major
Alterations and (b) that cost less than one hundred thousand and 00/100 dollars ($100,000.00) for
each project. Tenant may perform Permitted Alterations so long as Tenant informs Landlord in
reasonable detail of the nature of the Permitted Alteration and otherwise complies with the
provisions of this Article 10. Landlord may require that any alterations that affect the Core
Building Systems or the structural components of the Buildings be performed by a contractor
approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed.

     10.2 Prior to commencing any Alteration other than a Permitted Alteration, Tenant shall submit
detailed plans and specifications for Landlord’s review and approval. Landlord shall notify Tenant
of its approval or disapproval of such plans and specification and the work described therein
within fifteen (15) Business Days of receipt thereof. Landlord shall state in writing and in
reasonable detail any objection to such Alteration. Tenant may revise its plans and specifications
to incorporate such comments and, if Tenant does so, it may again request Landlord’s consent
pursuant to the process described above. Neither approval of the plans and specifications nor
supervision of the Alteration by Landlord shall constitute a representation or warranty by Landlord
as to the accuracy, adequacy, sufficiency or propriety of such plans and specifications or the
quality of workmanship or the compliance of such Alteration with Requirements. If Tenant desires
to revise any plans and specifications to any material extent after obtaining Landlord’s approval
thereof, Tenant shall re-submit such plans and specifications to Landlord for its approval as
provided above.

     10.3 All Alterations shall (a) be performed in such a manner as to maintain harmonious labor
relations; (b) performed in compliance with good construction safety practices; (c) comply with all
applicable Requirements; (d) be completed promptly and in a good and workmanlike manner and in
accordance with the plans and specifications reasonably approved by Landlord, if required; (e) not
unreasonably disturb Landlord or other tenants in the Project; (f) be performed at Tenant’s sole
cost and expense; (g) be performed pursuant to validly issued building and construction permits;
and (h) be performed by contractors and subcontractors reasonably approved by Landlord prior to the
commencement of such work who possess the requisite experiences, personnel, financial strength and
other resources necessary to perform and complete the proposed Alteration in a good and workmanlike
lien free manner while preserving all existing warranties related to the Premises of which Landlord
has informed Tenant in writing. After completion of any Alterations, Tenant will deliver to
Landlord (1) a copy of “as built” plans and specifications depicting and describing such
Alterations and (2) final sworn owners and contractors’ statements and unconditional, full and
final lien waivers covering all labor and

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materials included in such Alteration. During the performance of any Alterations, Tenant shall
maintain, and shall cause its contractors to maintain, the insurance coverage described in Section
14.1A(v).

     10.4 Each Alteration made by Tenant in or upon the Premises (excepting only Tenant’s
furniture, equipment and trade fixtures), whether temporary or permanent in character, shall remain
upon the Premises and shall become Landlord’s property at the expiration or sooner termination of
this Lease without compensation to Tenant; provided, however, that Landlord shall have the right to
elect at the time Landlord gives its consent for such Alteration to require Tenant to remove that
Alteration immediately prior to the termination of this Lease. To the extent specifically
requested in writing by Tenant, Landlord shall inform Tenant at the time Landlord consents to any
Alteration whether Landlord shall require removal of such Alteration at the expiration or
termination of this Lease. In addition, upon Tenant’s request regarding specific existing or
contemplated Permitted Alterations, Landlord shall inform Tenant if Landlord will require Tenant to
remove such Permitted Alterations at the expiration or earlier termination of this Lease. Tenant
shall, at its cost and expense, effect such removal and restore the Premises to the condition
substantially similar to that existing immediately prior to the construction of the Alteration on
or before the expiration or termination of this Lease, subject to normal wear and tear and the
terms of Article 15 and 16 below. The provisions of this Section 10.4 shall survive the expiration
or any earlier termination of this Lease.

ARTICLE 11

LIENS

     Tenant shall keep the Project free from any liens arising from any work performed, materials
furnished, or obligations incurred by, or on behalf of Tenant. If any lien is filed, such lien
shall encumber only Tenant’s interest in the Leasehold Improvements and Alterations on the
Premises. Within twenty (20) days after the filing of any such lien, Tenant shall notify Landlord
of such lien. Tenant shall, within twenty (20) days of the filing of such lien, either (i)
discharge and cancel such lien of record, (ii) contest the same with diligence, in good faith and
in accordance with applicable Requirements and post a bond sufficient under the laws of the State
of California to cover the amount of the lien claim plus any penalties, interest, attorneys’ fees,
court costs, and other legal expenses in connection with such lien, or (iii) contest the same with
diligence, in good standing and in accordance with applicable Requirements and obtain a title
insurance endorsement for the Project insuring over the lien (together with the costs of defense)
in a form and from a title insurance company reasonably acceptable to Landlord or its Secured
Party. If Tenant fails to timely satisfy its obligations set forth in the previous sentence within
the time periods set forth herein, Landlord may, but is not required to, post a bond, and Tenant
shall reimburse Landlord within three (3) Business Days after notice to Tenant, as Additional Rent,
for all amounts so paid by Landlord, including expenses and attorneys’ fees, together with interest
thereon until paid at the Interest Rate.

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ARTICLE 12

USE AND COMPLIANCE; HAZARDOUS SUBSTANCES

     12.1 The Premises shall be used only for Tenant’s Permitted Use and for no other purposes
whatsoever.

     12.2 Subject to the terms of Article 9 hereof, including Landlord’s obligations set forth in
Sections 9.2, 9.3 and 9.4, Tenant shall, at Tenant’s sole expense, comply with all Requirements
concerning Tenant’s particular use of the Premises and indemnify and hold Landlord and the Landlord
Parties harmless from any losses, damages, costs, claims or expenses including all reasonable
attorneys’ fees and consultant fees (collectively, “Claims”) which the Landlord Parties incur or
suffer by reason of Tenant’s failure to comply with such obligations. If Tenant receives notice of
any violation of any Requirements, Tenant shall promptly notify Landlord in writing of such alleged
violation and furnish Landlord with a copy of such notice. Except as set forth in that certain ADA
Due Diligence Review for 3Com Pal Site Buildings 8, 9 & 10 dated May 11, 2004 prepared by Studios
Architecture, Property Condition Evaluation dated April 30, 2004 prepared by EMG, Seismic Risk
Assessment dated April 30, 2004 prepared by EMG, Phase I Environmental Site Assessment dated April
30, 2004 prepared by Arcadis G&M, Inc., Phase I Environmental Site Assessment dated October 10,
2001 prepared by LFR (Levine Fricke) and Environmental Impact Report PAL Site Expansion Project
dated December 1996 prepared by Environ Corporation, Wetlands Research Associates and H.T. Harvey &
Associates, Barton-Aschman Associates, Inc., and Donald Ballanti, to Landlord’s actual knowledge,
as of the Effective Date, there are no Hazardous Substances present in, on, under or about the
Premises or the Project in violation of Requirements, and no action, proceeding, or claim is
pending concerning any Hazardous Substances or pursuant to any Hazardous Substances Requirements.
Landlord shall defend, indemnify and hold Tenant harmless from and against all reasonable
investigation and remediation costs in connection with the presence of any Hazardous Substances
existing in, on, under or about the Premises or the Project prior to the Effective Date. Further
during the term of this Lease, Landlord shall maintain (a) pollution legal liability insurance
covering the Project as a part of a blanket policy with liability limits of no less than Ten
Million Dollars ($10,000,000.00) and (b) underground storage tank insurance with liability limits
of not less than the greater of $1,000,000 per occurrence/$2,000,000 aggregate or those limits
which satisfy all applicable Requirements, and each such policy shall name Tenant as an additional
insured thereunder, so long as such insurance policies are generally available and may be purchased
on commercially reasonable terms. Landlord’s obligations under this Section 12.2 shall survive the
termination or expiration of this Lease.

     12.3 Except for (i) amounts of Hazardous Substances (as hereinafter defined) which are a part
of or contained in customary office and janitorial and maintenance supplies and/or equipment and
(ii) diesel fuel stored in the Storage Tanks servicing the generators, and then with respect to
both items (i) and (ii) only if used, stored and disposed of in accordance with the manufacturer’s
instructions and all applicable Requirements, Tenant shall not, nor shall Tenant permit the Tenant
Parties to, use, store, generate, treat, release or dispose any Hazardous Substance at, on or under
the Project. Tenant shall indemnify, defend and hold the Landlord Parties harmless from all Claims
arising from or attributable to any breach by Tenant of the

16

 

covenants contained in this Section 12.3, as well as the use of any Hazardous Substances as
permitted by this Section 12.3. Tenant’s indemnification obligations hereunder shall survive the
termination or expiration of this Lease.

     12.4 The Tenant Parties shall comply with all reasonable Rules and Regulations. Landlord
shall at all times have the right to make reasonable changes and additions to such Rules and
Regulations. Any failure by Landlord to enforce any of the Rules and Regulations now or hereafter
in effect, either against Tenant or any other tenant in the Building, shall not constitute a waiver
of any such Rules and Regulations. Landlord shall not be liable to Tenant for the failure or
refusal by any other tenant, guest, invitee, visitor, or occupant of the Building to comply with
any of the Rules and Regulations provided Landlord shall use reasonable efforts to enforce the
Rules and Regulations. Landlord shall not enforce such Rules and Regulations against the tenants
of the Project on a discriminatory basis.

     12.5 Tenant and Tenant’s invitees, employees and agents shall be entitled to utilize, without
charge, commencing on the Commencement Date, six hundred seventy four (674) parking spaces in the
Project parking areas, included within such allotment, Tenant and the Tenant Parties and their
successors shall be entitled to use on an exclusive, reserved basis the parking spaces marked on
Exhibit A hereto as the “Reserved Spaces”. Landlord’s sole obligation with respect to such
Reserved Spaces shall be to mark such spaces as being for Tenant’s use. Tenant shall cause its
employees, invitees and agents to comply with the Rules and Regulations which are prescribed from
time to time by Landlord for the orderly operation and use of the parking areas where the parking
is located, including any sticker or other identification system established by Landlord, provided
they are non-discriminatory. If Tenant fails to observe the Rules and Regulations with respect to
parking and such failure continues for an additional five (5) days after written notice from
Landlord to Tenant, then Landlord, at its option, may remove particular vehicles of Tenant and/or
of its employees, licensees, contractors or invitees and all of Tenant’s personal property from the
parking areas to the extent that such vehicles or property are in violation of such Rules and
Regulations. Landlord shall not be liable for any damage or loss to any automobile (or property
therein) parking in, on or about such parking areas, or for any injury sustained by any person in
or about such areas. Tenant shall not tow cars or otherwise enforce its parking rights against
third parties other than Tenant Parties and Tenant’s assignees and sublessees. The parking
provided to Tenant pursuant to this Section 12.5 is provided to Tenant solely for use by Tenant’s
own personnel, visitors and Tenant’s occupants and such parking spaces may not be transferred,
assigned, subleased or otherwise alienated by Tenant, except on a pro-rata basis in connection with
a Permitted Transfer or an assignment or subletting or use by contractors of the Premises made in
accordance with the terms of this Lease. Notwithstanding anything to the contrary contained
herein, Landlord may reserve specific parking areas for other tenants of the Project covering a
number of parking spaces which is approximately proportionate (based on square footage of premises)
with the number of reserved parking spaces Landlord has granted Tenant hereunder.

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ARTICLE 13

DEFAULT AND REMEDIES

     13.1 The occurrence of any one or more of the following events shall constitute an “Event of
Default” under this Lease: (a) Tenant fails to pay any Rent hereunder as and when such Rent
becomes due and such failure shall continue for more than five (5) days after written notice from
Landlord that the same is due; (b) the Premises become abandoned for more than fourteen (14)
consecutive days as such abandonment may be determined pursuant to the terms of California Civil
Code Section 1951.3; (c) Tenant permits to be done anything which creates a lien upon the Premises
and fails to satisfy its obligations as required by Article 11; (d) Tenant violates the provisions
of Article 8 by making an unpermitted Transfer which is not cured within thirty (30) days of notice
thereof; (e) Tenant fails to maintain in force all policies of insurance required by this Lease and
such failure shall continue beyond the earlier to occur of (i) the lapse of such policy and (ii)
ten (10) days after Landlord gives Tenant notice of such failure; (f) any petition is filed by or
against Tenant or any guarantor of this Lease under any present or future section or chapter of the
Bankruptcy Code, or under any similar law or statute of the United States or any state thereof
(which, in the case of an involuntary proceeding, is not permanently discharged, dismissed, stayed,
or vacated, as the case may be, within sixty (60) days of commencement), or if any order for relief
shall be entered against Tenant or any guarantor of this Lease in any such proceedings; (g) Tenant
or any guarantor of this Lease becomes insolvent or makes a transfer in fraud of creditors or makes
an assignment for the benefit of creditors; (h) a receiver, custodian, or trustee is appointed for
the Premises or for all or substantially all of the assets of Tenant or of any guarantor of this
Lease, which appointment is not vacated within sixty (60) days following the date of such
appointment; or (i) Tenant fails to perform or observe any other terms of this Lease (other than
those specified above in this Section 13.1) and such failure continues for more than thirty (30)
days after Landlord gives Tenant written notice of such failure in the case of a non-emergency, or
immediately in the case of an emergency, or, if such non-emergency failure cannot be corrected
within such thirty (30) day period, if Tenant does not commence to correct such failure within said
thirty (30) day period and thereafter diligently prosecute the correction of same to completion
within an additional period of time reasonably necessary to correct such failure, but not to exceed
an additional ninety (90) days. Any notice given by Landlord pursuant to this Section 13.1 may be
the notice required or permitted pursuant to Section 1161 et seq. of the California Code of Civil
Procedure or successor statutes, provided the provisions of such statutes are followed, as may be
modified herein, and the provisions of this Lease shall not require the giving of a notice in
addition to such statutory notice to terminate this Lease and Tenant’s right to possession of the
Premises.

     13.2 During the continuance of any Event of Default, Landlord may pursue at its option any one
or more of the following without further notice or demand to Tenant, Tenant hereby expressly
waiving the requirement of service of any statutory notice or demand as a condition precedent to
Landlord’s exercising any of the following rights:

     A. Landlord may, at its option, terminate this Lease by written notice to Tenant and
recover possession of the Premises. Following such termination, Landlord

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may recover from Tenant damages arising from the Event of Default and the termination
of this Lease, including without limitation the following:

	 	(i)	 	The Worth at the Time of Award of the unpaid Rent which had
been earned at the time of termination; plus
	 
	 	(ii)	 	The Worth at the Time of Award of the amount by which the
unpaid 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; plus
	 
	 	(iii)	 	The Worth at the Time of Award of the amount by which the
unpaid 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; plus
	 
	 	(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; plus
	 
	 	(v)	 	At Landlord’s election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by the laws of the
State in which the Project is located.

As used in subsections (A)(i) and (ii) above, the “Worth at the Time of Award” shall be
computed by allowing interest at the Interest Rate. As used in subsection (A)(iii) above,
the “Worth at the Time of Award” shall be 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%); or

     B. Exercise the remedy, described in California Civil Code 1951.4 (Landlord may
continue the lease in effect after lessee’s breach and abandonment and recover rent as it
becomes due, if lessee has the right to sublet or assign, subject only to reasonable
limitations); or

     C. Apply against any amounts owed by Landlord to Tenant, any amounts then due and
payable by Tenant to Landlord; or

     D. At its option, but without any obligation, perform any obligation of Tenant under
this Lease and, if Landlord so elects, all costs and expenses incurred by Landlord in
performing such obligations, together with interest thereon at the Interest Rate from the
date incurred until paid in full, shall be reimbursed by Tenant to Landlord on demand and
shall be considered Rent for purposes of this Lease.

     13.3 No agreement to accept a surrender of the Premises and no act or omission by Landlord or
Landlord’s agents during the Term shall constitute an acceptance or surrender of the Premises
unless made in writing and signed by Landlord. No re-entry or taking possession of the

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Premises by Landlord shall constitute an election by Landlord to terminate this Lease unless a
written notice of such intention is given to Tenant. No provision of this Lease shall be construed
as an obligation upon Landlord to mitigate Landlord’s damages under the Lease, except to the extent
required by applicable Requirements, including, but not limited to, California Civil Code Section
1951.2.

     13.4 No provision of this Lease shall be deemed to have been waived by Landlord unless such
waiver is in writing and signed by Landlord. Landlord’s acceptance of Rent following an Event of
Default hereunder shall not be construed as a waiver of such Event of Default. No custom or
practice between the parties in connection with the terms of this Lease shall be construed to waive
or lessen Landlord’s right to insist upon strict performance of the terms of this Lease, without a
written notice thereof to Tenant from Landlord.

     13.5 The rights granted to Landlord in this Article 13 shall be cumulative of every other
right or remedy provided in this Lease or which Landlord may otherwise have at law or in equity or
by statute, and the exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies or constitute a forfeiture or waiver
of Rent or damages accruing to Landlord by reason of any Event of Default under this Lease. Tenant
agrees to pay to Landlord all costs and expenses incurred by Landlord in connection with an Event
of Default and the enforcement of this Lease, including all attorneys’ fees incurred in connection
with the collection of any sums due hereunder or the enforcement of any right or remedy of
Landlord.

     13.6 Tenant waives all rights of redemption or relief from forfeiture under California Code of
Civil Procedure Sections 1174 and 1179, and under any other present or future law, in the event
Tenant is evicted or Landlord otherwise lawfully takes possession of the Premises by reason of any
default by Tenant.

ARTICLE 14

INSURANCE 

14.1 A. Tenant shall obtain and keep in force during the Term the following insurance: (i)
”All Risk” insurance insuring the Leasehold Improvements and any other improvements existing
in the Premises (collectively, with the Leasehold Improvements the “Premises Improvements”),
Tenant’s interest in the Premises and all property located in the Premises, including
telephone and other equipment, supplies, computer systems, trade fixtures, furniture,
furnishings and other items of personal property (“Tenant’s Property”) and all Alterations,
in an amount equal to the full replacement value; (ii) Business Interruption insurance in an
amount that will reimburse Tenant for direct or indirect loss of earnings attributable to
all perils insured against under Section 14.1A(i); and sufficient to reimburse Tenant for
Rent in the event of a casualty to, or temporary taking of, the Project, Buildings or the
Premises; (iii) Commercial General Public Liability insurance including personal injury,
bodily injury, broad form property damage, products and completed operations liability,
contractual liability, coverage to include contractors and subcontractors, with a cross
liability clause and a severability of interests

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clause, in limits not less than $5,000,000.00, inclusive, per occurrence; (iv) Workers’
Compensation, in form and amount as required by applicable Requirements, including
Employer’s Liability insurance of not less than $1,000,000.00; (v) during the time Tenant,
or its contractor, performs any Alterations in the Premises (other than in connection with
the construction of Leasehold Improvements, in which case the provisions of Exhibit D hereto
shall apply), Builder’s Risk insurance on an “All Risk” basis (including collapse) on a
completed value (non-reporting) form for full replacement value covering all work
incorporated in the Project and all materials and equipment in or about the Premises; (vi)
Tenant’s “All Risk” Legal Liability insurance with limits not less than $1,000,000; (vii)
Automobile Liability covering all owned, leased, non-owned, hired, rented or borrowed
vehicles and related equipment with limits of $1,000,000.00 for bodily injury and property
damage combined; and (viii) any other form or forms of insurance or any changes or
endorsements to the insurance required herein as Landlord, or any mortgagee or lessor of
Landlord, may reasonably require, from time to time, in form or in amount that are
reasonable and customary in the Market Area for tenants in buildings of this type.

     B. All such policies of insurance shall name Tenant as the insured thereunder and
(except for the insurance described in Section 14.1A(iv)) shall name Landlord, the
Building’s property manager and other parties identified by Landlord such as mortgagees and
ground lessors (herein, such mortgagees, secured lenders and ground lessors are collectively
referred to as “Secured Parties”), as additional insureds with respect to the Commercial
General Public Liability insurance described in Section 14.1(A)(iii) above, all as their
respective interests may appear. The insurers will have a Best’s Rating of A-VI or better
and the deductibles shall be reasonable and customary for companies comparable to Tenant.
Tenant shall deliver to Landlord certificates and/or binders of such insurance by the
Commencement Date and, with respect to renewals of such policies, not later than five (5)
days prior to the end of the expiring term of coverage. All policies of insurance shall be
primary and Tenant shall not carry any separate or additional insurance concurrent in form
or requiring contribution in the event of any loss or damage with any insurance maintained
by Landlord. All such policies and certificates shall contain an agreement by the insurers
(i) that the policies will not be invalidated as they affect the interests of the additional
insureds by reason of any breach or violation of warranties, representations, declarations
or conditions contained in the policies by Tenant and (ii) that the insurers shall provide
Landlord with not less than thirty (30) days prior written notice of any material reduction
in coverage, termination or cancellation (ten (10) days for non-payment of premium) of such
policies and (iii) waiving any rights of subrogation, except with respect to the Commercial
General Public Liability insurance described in Section 14.1(A)(iii) above.

     14.2 Landlord shall obtain “All Risk” property insurance on the Project (other than Premises
Improvements and Tenant’s Property), including for risk of earthquake and flood if Landlord
desires, against damages or loss in an amount equal to the full replacement value, as well as
commercial general public liability insurance and such other insurance as is reasonably required by
Landlord or customarily maintained by prudent owners of Class A Buildings in the Market Area, all
in such amounts and with such insurers deductibles as Landlord reasonably

21

 

deems appropriate. Each year at least eleven (11) days prior to Landlord’s renewal of its
insurance policies that relate to the Project, Landlord will provide Tenant with information
regarding the insurance coverage for the Project, including the price, the Best’s ratings of the
insurer, the amount of the deductibles, the coverage and term. In the event that Tenant desires,
Tenant may, upon delivering notice to Landlord not more than ten (10) days after receiving
Landlord’s insurance notice, purchase “All-Risk” property insurance, including such coverages as
Landlord’s policy may contain, and Commercial General Public Liability insurance and/or such other
insurance that Landlord may carry with respect to the Premises, and provided that such insurance,
in all respects, is at least as favorable insurance as Landlord intends to provide, including, but
not limited to, at least the same coverage, term and insurer’s Best’s rating and the deductibles
are no higher (except for earthquake insurance which may be as high as ten percent [10%] of the
replacement cost of the Premises, but in the event that such deductible is higher than the
deductible offered by Landlord, Tenant shall be deemed to self-insure for the difference between
the deductible amount under the insurance policy obtained by Tenant and the deductible offered by
Landlord and in the event of a casualty covered by such policy, Tenant shall pay over the lesser of
the actual cost of repairs or such difference in the deductible amount to Landlord) as set forth in
the information delivered to Tenant from Landlord. In such case for the term of such insurance
policy or policies, (1) Tenant shall not be obligated to reimburse Landlord for such insurance
through Operating Costs, and (2) Landlord shall no longer be obligated to provide such insurance
under the terms of this Lease. Tenant may not modify or terminate such policy without Landlord’s
prior written consent, which may be granted or withheld in Landlord’s sole discretion. If Tenant
fails to deliver such notice, Landlord may carry such insurance and charge Tenant its pro rata
share as an Operating Cost. All such policies of insurance carried by Tenant shall comply with the
terms set forth above in Section 14.1(B) for insurance policies carried by Tenant.

     14.3 Tenant shall not conduct or knowingly permit to be conducted in the Premises any
activity, or place any equipment in or about the Premises or the Project, which will invalidate the
insurance coverage in effect or increase the rate of “All Risk” property insurance or other
insurance on the Premises or the Project, and Tenant shall comply with all requirements and
regulations of Landlord’s casualty and liability insurer. If any increase in the rate of property
insurance or other insurance carried by Landlord occurs due to any act or omission by any Tenant
Parties (as defined below), Tenant shall pay for such increase as Additional Rent payable with the
next monthly installment of Base Rent due under this Lease.

     14.4 Landlord and Tenant, in the exercise of their commercial business judgment, acknowledge
that the use of insurance is the best way to protect against the risk of loss to their respective
properties and economic interests in the Project and the Premises. Accordingly, each agree that in
the event of loss or damage to their respective properties or interests, such loss will be
satisfied first by the insurance proceeds paid to the party suffering the loss, next such loss will
be deemed satisfied by the insurance proceeds that would have been paid to the party suffering the
loss had the insurance required hereunder been carried by such party, and finally, such loss will
be satisfied by the party causing the loss or damage. Without limiting the waiver of subrogation
required in Section 14.1B, if and to the extent that applicable Requirements permit a full waiver
of claims between landlords and tenants in leases such as this Lease, then Landlord and Tenant
waive all claims against the other and the Tenant Parties and the Landlord Parties,

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respectively, for any loss, damage or injury, notwithstanding the negligence of either party
in causing a loss or the availability of insurance proceeds.

ARTICLE 15

DAMAGE BY FIRE OR OTHER CAUSE

     15.1 Except as otherwise expressly provided in this Article 15, if the Buildings (or any
portion thereof) or the Premises is damaged or destroyed during the Term, Landlord shall diligently
repair or restore the Buildings or the Premises (exclusive of the Premises Improvements, Tenant’s
Property and Alternations), as the case may be, as soon as reasonably possible to substantially the
condition in which the Buildings or the Premises, as the case may be, existed immediately prior to
such damage or destruction (exclusive of the Premises Improvements, Tenant’s Property and
Alterations). Except as otherwise expressly provided in this Article 15, if the Premises (or any
portion thereof) is damaged or destroyed during the Term, Tenant shall diligently repair or
restore, in accordance with the provisions governing Alterations as set forth in Section 10, the
Premises Improvements, the Tenant’s Property and the Alterations in the Premises as soon as
reasonably possible to substantially the condition in which such items existed immediately prior to
such damage or destruction.

     15.2 Except as provided in this Section 15.2, Landlord shall have no liability to Tenant for
inconvenience, loss of business or annoyance arising from any casualty or any restoration. If the
Premises (or any portion thereof) is not usable for Tenant’s business purposes pending and during
reconstruction as provided in Section 15.1, and in fact Tenant Ceases to Use the Premises (or the
affected portion thereof), Rent due and payable hereunder shall equitably abate for the portion of
the Premises which is unusable and which Tenant has Ceased to Use for the period commencing with
the date of such casualty until the earlier of the date (i) that reconstruction of the Premises is
substantially completed by Landlord to the extent required to be completed by Landlord as provided
in Section 15.1 plus a reasonable time to restore the Leasehold Improvements not to exceed one
hundred eighty (180) days or (ii) that Tenant resumes the conduct of its business from such portion
of the Premises.

     15.3 If there is damage or destruction to the Project (whether or not such damage affects the
Premises) or to the Premises, to the extent that Landlord reasonably determines that the Project or
the Premises (exclusive of the Premises Improvements, Tenant’s Property and Alterations), as the
case may be, cannot be fully repaired or restored within (i) three hundred sixty five (365) days
from the date of the casualty and occurs at any time during the Term or (ii) three (3) months from
the date of the casualty and occurs during the last Lease Year of the Term, as the same may have
been extended pursuant to Article 22 hereof, then, Landlord and (solely in the event that the
Premises is damaged or destroyed) Tenant shall have the option, upon written notice delivered to
the other party within fifteen (15) days of Tenant’s receipt of Landlord’s written notice of the
length of such restoration (such notice to be provided within sixty (60) days of such casualty), to
terminate this Lease. If the restoration to the Project is prohibited by any Requirements or the
insurance proceeds, including deductible amounts (subject to reimbursement pursuant to the terms of
Operating Costs), are insufficient or otherwise not available, then Landlord may elect to terminate
this Lease upon giving written notice of such

23

 

election to Tenant within sixty (60) days after such casualty. In the event that Landlord
declines to repair the Premises as a result of a shortage of insurance proceeds, Tenant may request
from Landlord an estimate of the shortage of insurance proceeds. Within thirty (30) days of
receipt of Landlord’s estimate, Tenant may deposit with Landlord the funds set forth in such
estimate, in which case, Landlord’s termination of the Lease shall be voided and Landlord shall
proceed with such restoration as if there were no such shortage. After completion if the actual
costs exceed such estimate, Tenant shall pay Landlord such excess costs. In the event the
restoration costs less than such estimate, Landlord shall refund any excess funds deposited by
Tenant.

     15.4 In the event of termination of this Lease pursuant to this Article 15, then (1) all Rent
shall be apportioned and paid to the later of the date on which possession is relinquished or the
date of such damage (subject to abatement as set forth in Section 15.2), (2) Tenant shall
immediately vacate the Premises as required herein and (3) Tenant shall pay to Landlord that amount
of Tenant’s insurance proceeds (or the amount which would have been received by Tenant if Tenant
was carrying the insurance required by this Lease) which insures damage to the Premises
Improvements and Alterations, provided that Tenant make keep the unamortized value (amortized on a
straight line basis over the Term) of Premises Improvement and Alterations constructed and paid for
by Tenant. Tenant’s obligations under this Section 15.4 shall survive the termination of this
Lease. If neither Landlord nor Tenant timely elects to terminate this Lease, this Lease shall
remain in full force and effect and the Project and Premises shall be diligently repaired and
restored in accordance with Section 15.1.

     15.5 Tenant hereby waives California Civil Code Sections 1932(2) and 1933(4), providing for
termination of hiring upon destruction of the thing hired and Sections 1941 and 1942, providing for
repairs to and of the Premises.

ARTICLE 16

CONDEMNATION

     16.1 If the whole or substantially the whole of the Buildings or the Premises are permanently
taken or condemned by eminent domain or by any conveyance in lieu thereof (such taking,
condemnation or conveyance in lieu thereof being hereinafter referred to as “condemnation”), the
Term shall cease and this Lease shall terminate on the date the condemning authority takes
possession.

     16.2 If as a result of any taking Landlord cannot within a reasonable time period provide
Tenant (i) at or in the vicinity of the Project (defined as being within one-quarter [1/4] mile
radius of the existing parking) with the number of parking spaces required by local code for office
space the size of the Premises or (ii) reasonable access to the Premises, then Landlord or Tenant
shall have the right to terminate this Lease by written notice to the other party given within
thirty (30) days after the date the condemning authority takes possession. If any portion of the
Project other than the Premises is permanently taken by condemnation, this Lease shall remain in
full force and effect unless terminated pursuant to the other provisions of this Article 16.

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     16.3 If a portion, but less than substantially the whole, of the Premises shall be permanently
taken by condemnation, then this Lease shall terminate as of the date the condemning authority
takes possession as to the portion of the Premises so taken, and unless Landlord or Tenant
exercises its option to terminate this Lease pursuant to this Section 16.3, this Lease shall remain
in full force and effect as to the remainder of the Premises. In the event that more than fifteen
percent (15%) of the floor area of the Premises is permanently taken by condemnation and Landlord
does not provide Tenant with comparable replacement space at the Project, Tenant may terminate this
Lease by written notice to Landlord given within thirty (30) days after the date the condemning
authority takes possession. If this Lease is not terminated pursuant to the provisions of this
Article 16, then the Rent due and payable hereunder shall equitably abate for the portion of the
Premises which is permanently condemned and not occupied for the period commencing with the date
possession of such portion of the Premises is given to the condemning authority. If all or any
portion of the Premises shall be temporarily taken by condemnation, then this Lease shall remain in
full force and effect and Tenant shall continue to pay in full the Rent payable hereunder. In the
event of such temporary condemnation, Tenant shall be entitled to appear in and claim any portion
of the condemnation award for such temporary taking that represents compensation for Tenant’s loss
of use and occupancy of the Premises during the lesser of the period of the temporary taking or the
Term of this Lease. Landlord shall be entitled to appear in and claim that portion of the
condemnation award that represents the cost of restoration of the Premises and the use or occupancy
of the Premises after the end of the Term.

     16.4 If this Lease terminates pursuant to the provisions of Article 16, the Rent shall be
apportioned as of such date of termination; provided, however, that those provisions of this Lease
which are designated to cover matters of termination and the period thereafter shall survive the
termination hereof.

     16.5 Except as specifically provided herein, all compensation awarded or paid upon a
condemnation of any portion of the Project shall belong to and be the property of Landlord without
participation by Tenant. Nothing herein shall be construed, however, to preclude Tenant from
prosecuting any claim directly against the condemning authority the unamortized value (amortized on
a straight line basis over the Term) of any Leasehold Improvements or Alterations paid for by
Tenant, for loss of business, loss of good will, moving expenses, damage to, and cost of removal
of, trade fixtures, furniture and other personal property belonging to Tenant.

ARTICLE 17

INDEMNIFICATION

     17.1 Tenant shall indemnify and save Landlord, the Secured Parties and the Landlord Parties
harmless from and against all Claims brought by third parties and that arise from Tenant’s or its
subtenant’s, assignee’s, agent’s, licensee’s, contractor’s, subcontractor’s, officer’s, director’s,
shareholder’s or employee’s (herein, Tenant and such other parties are collectively referred to as
the “Tenant Parties”) use and occupancy of the Premises and the Project or from any other activity,
omission, work or thing done, permitted or suffered by Tenant or the Tenant Parties in or about the
Premises and the Project. If any such proceeding is filed by

25

 

a third party against Landlord or any such indemnified party, Tenant agrees to defend Landlord
or such party in such proceeding at Tenant’s sole cost by legal counsel reasonably satisfactory to
Landlord and such indemnified party, if requested by Landlord. In no event shall Tenant be
obligated to indemnify Landlord or any of the other parties identified above for any willful or
negligent act or omission of Landlord or such other party.

     17.2 Landlord shall indemnify and save Tenant and the Tenant Parties harmless from and against
all Claims brought by third parties and that arise from Landlord’s or its agent’s, licensee’s,
contractor’s, subcontractor’s, officer’s, director’s, partner’s or employee’s (herein, Landlord and
such other parties are collectively referred to as the “Landlord Parties”) use and occupancy of the
Premises and the Project or from any other activity, omission, work, or thing done, permitted or
suffered by Landlord or Landlord Parties in or about the Premises and the Project. If any such
proceeding is filed by a third party against Tenant or any such indemnified party, Landlord agrees
to defend Tenant or such party in such proceeding at Landlord’s sole cost by legal counsel
reasonably satisfactory to Tenant and such indemnified party, if requested by Tenant. In no event
shall Landlord be obligated to indemnify Tenant or any of the other parties identified above for
any willful or negligent act or omission of Tenant or such other party.

     17.3 The provisions of this Article 17 shall survive the expiration or termination of this
Lease with respect to any Claims asserted against Landlord or Tenant within any applicable statute
of limitations.

ARTICLE 18

SUBORDINATION

     18.1 Unless elected otherwise by the ground lessee or Secured Party, as the case may be, this
Lease shall be subordinate to any present or future ground lease or mortgage respecting the
Project, and any amendments thereto; provided the ground lessee or Secured Party recognizes the
validity of this Lease and the Secured Party agrees that, notwithstanding any default by Landlord
with respect to said ground lease or mortgage or any termination or foreclosure thereof, Tenant’s
possession and right of use under this Lease and the rights of Tenant under this Lease in and to
the Premises shall not be disturbed by such Secured Party unless and until an Event of Default
shall have occurred hereunder.

     If any ground lease is terminated or mortgage foreclosed or deed in lieu of foreclosure given,
Tenant shall attorn to such Secured Party or purchaser at such foreclosure sale and this Lease
shall continue in effect as a direct lease between Tenant and such Secured Party or purchaser. The
ground lessee or Secured Party or purchaser shall (i) be liable as Landlord only for the
obligations of Landlord accruing after such ground lessee or Secured Party or purchaser has taken
fee title to the Building or Project and (ii) not be liable for (a) any Rent paid more than thirty
(30) days in advance or (b) any offsets, claims or defenses which Tenant may have against the
previous Landlord. Tenant shall within ten (10) business days of request by Landlord or ground
lessee, Secured Party or purchaser (in case of attornment), execute and deliver to the requesting
party a subordination, non-disturbance and attornment agreement in a form reasonably satisfactory
to the requesting party, Tenant and Landlord.

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     18.2 Any ground lessee, Secured Party or purchaser shall be responsible for the return of any
security deposit and Rent voluntarily paid in advance by Tenant only to the extent the security
deposit or Rent is received by or credited to such ground lessee, Secured Party or purchaser.

     18.3 No act or failure to act on the part of Landlord which would entitle Tenant under the
terms of this Lease, or by law, to be relieved of Tenant’s obligations hereunder or to terminate
this Lease, shall result in a release of such obligations or a termination of this Lease unless (a)
Tenant has given notice by registered or certified mail to any Secured Party whose address shall
have been furnished to Tenant, and (b) Tenant offers such Secured Party a reasonable opportunity to
cure the default.

     18.4 Landlord represents that on the Commencement Date, there shall be no indebtedness secured
by a mortgage or deed of trust on Landlord’s interest in the Project and that there is no other
Secured Party with respect to the Project.

     18.5 Tenant acknowledges that Landlord may in its sole discretion make the Project subject to
reasonable and non-discriminatory restrictive covenants, conditions, easements and other
encumbrances (“Restrictive Covenants”). Subject to the provisions of Section 21.15 below, such
Restrictive Covenants may not have a material adverse impact upon Tenant’s use and enjoyment of the
Premises or Common Areas or access to the Premises or reduce the number of parking spaces Tenant is
entitled to use hereunder. This Lease shall be subordinate to any such Restrictive Covenants.
Such subordination shall automatically be effective without any action or notice to Tenant.

ARTICLE 19

SURRENDER OF THE PREMISES AND HOLDOVER

     Upon the Expiration Date or earlier termination of this Lease, or upon any re-entry of the
Premises by Landlord without terminating this Lease pursuant to Section 13.2(B), Tenant, at
Tenant’s sole cost and expense, shall peacefully vacate and surrender the Premises to Landlord in
good order, broom clean and in the same condition as at the beginning of the Term or as the
Premises may thereafter have been improved by Landlord or Tenant (provided such Alterations were
made with Landlord’s consent and not required to be removed pursuant to Section 10.4 or Exhibit D
hereof), reasonable use and wear thereof and repairs which are Landlord’s obligations under
Articles 9, 15 and 16 only excepted, and Tenant shall comply with Section 10.4 relating to removal
and restoration as well as remove all Tenant’s Property and Alterations that Landlord requires
Tenant to remove (other than those Alterations that Landlord agreed could remain pursuant to the
terms of Section 10.4 above) and turn over all keys for the Premises to Landlord. Should Tenant
continue to hold the Premises after the Expiration Date or earlier termination of this Lease or
Tenant’s right to possession without Landlord’s prior written consent, such holding over shall
constitute and be construed as a tenancy at sufferance on the same terms hereof except monthly
installments of Base Rent shall be equal to (i) for the first thirty (30) days of any such
holdover, one hundred fifty percent (150%) of the Base Rent in effect as of the date of
termination, and (ii) after the first thirty (30) days of such holdover, one hundred fifty percent

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(150%) of the greater of the Base Rent in effect as of the date of termination and the fair
market rent as of the date of termination, and (B) Tenant shall have no right to renew this Lease
or to expand the Premises or any right to additional services. Tenant shall also be liable to
Landlord for any and all damages which Landlord suffers because of any holding over by Tenant.
Upon Tenant’s request therefor, Landlord shall give Tenant written notice of whether Landlord has
prospective tenants or purchasers for the Premises. Any of Tenant’s Property not removed that
Landlord’s requires to be removed or that is required to be removed pursuant to terms of this
Lease, may be removed by Landlord and stored, discarded, retained or sold by Landlord and the cost
of such storage, discarding, removal and disposition as well as the cost of repairing any damage
caused by such removal, shall be paid by Tenant within thirty (30) days of demand and such sum
shall accrue interest at the Interest Rate from the date incurred until paid in full. No
acceptance of Rent payable pursuant to this Section 19 by Landlord shall operate as waiver of
Landlord’s right to gain possession of the Premises or any other remedy set forth herein. The
provisions of this Article 19 shall survive the expiration or earlier termination of this Lease.

ARTICLE 20

[INTENTIONALLY OMITTED.]

ARTICLE 21

MISCELLANEOUS

     21.1 Professional Fees. In any action or proceeding brought by either party against
the other under this Lease, the prevailing party shall be entitled to recover from the other party
its professional fees for attorneys, appraisers and accountants, its investigation costs, and any
other legal expenses and court costs incurred by the prevailing party in such action or proceeding.

     21.2 Reimbursements. Wherever this Lease requires Tenant to reimburse or pay Landlord
for the cost of any item or service (including the overseeing of Alterations performed by Landlord
or Tenant other than Leasehold Improvements) except as a part of ordinary payments of Operating
Costs, Taxes or utility reimbursements, such costs will be the actual, reasonable costs of Landlord
for such item or service plus an administrative fee not to exceed five (5%) of the cost of such
item or service. All such charges shall be payable upon demand as Additional Rent.

     21.3 Severability. Every provision in this Lease is, and shall be construed as, a
separate and independent covenant. If any term of this Lease or the application thereof to any
person or circumstances shall be invalid or unenforceable, the remaining provisions shall not be
affected.

     21.4 Non-Merger. There shall be no merger of this Lease with any ground leasehold
interest or the fee estate in the Project or any part thereof by reason of the fact that the same
person may acquire or hold, directly or indirectly, this Lease or any interest in this Lease as
well as any ground leasehold interest or fee estate in the Project or any interest in such fee
estate.

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     21.5 Landlord’s Liability. Notwithstanding anything to the contrary contained in this
Lease, Landlord’s liability under this Lease is limited solely to Landlord’s equity in the Project,
and in no event shall recourse be had to any other property or assets of Landlord or against any
member, partner, shareholder, trustee, officer or director of Landlord or any assets of such
parties. If Landlord shall at any time transfer its interest in the Project or this Lease, and to
the extent the transferee assumes Landlord’s obligations and liabilities hereunder, Landlord shall
be released of any obligations occurring after such transfer, and Tenant shall look solely to
Landlord’s successors for performance of such obligations.

     21.6 Force Majeure. Whenever the period of time is herein prescribed for action to be
taken by Landlord or Tenant, Landlord or Tenant shall not be liable or responsible for, and there
shall be excluded from the computation for any such period of time, any delays due to Force
Majeure. Force majeure shall not excuse or delay Tenant’s obligation to pay Rent or any other
amount due under this Lease. As used herein, “Force Majeure” shall mean strikes, riots, acts of
God, shortages of labor or materials, weather, war, governmental approvals, laws, regulations, or
restrictions, or any other cause of any kind whatsoever which is beyond the reasonable control of,
as applicable, Landlord or Tenant.

     21.7 Headings. The article headings contained in this Lease are for convenience only
and shall not enlarge or limit the scope or meaning of the various and several articles hereof.
Words in the singular number shall be held to include the plural, unless the context otherwise
requires.

     21.8 Successors and Assigns. All agreements and covenants herein contained shall be
binding upon the respective heirs, personal representatives, successors and assigns of the parties
hereto. If there is more than one Tenant, the obligations hereunder imposed upon Tenant shall be
joint and several. If there is a guarantor of Tenant’s obligations hereunder, Tenant’s obligations
shall be joint and several obligations of Tenant and such guarantor, and Landlord need not first
proceed against Tenant hereunder before proceeding against such guarantor, and any such guarantor
shall not be released from its guarantee for any reason, including any amendment of this Lease, any
forbearance by Landlord or waiver of any of Landlord’s rights, the failure to give Tenant or such
guarantor any notices, or the release of any party liable for the payment or performance of
Tenant’s obligations hereunder. Notwithstanding the foregoing, nothing contained in this Section
21.8 shall be deemed to override Article 8.

     21.9 Landlord’s Representations. Neither Landlord nor Landlord’s agents or brokers
have made any representations or promises with respect to the Premises or the use thereof, the
Building, the Land, or any other portions of the Project except as herein expressly set forth and
all reliance with respect to any representations or promises is based solely on those contained
herein. No rights, easements, or licenses are acquired by Tenant under this Lease by implication
or otherwise except as, and unless, expressly set forth in this Lease.

     21.10 Entire Agreement; Amendments. This Lease and the Exhibits and Riders attached
hereto set forth the entire agreement between the parties and cancel all prior negotiations,
arrangements, brochures, agreements, and understandings, if any, between Landlord and Tenant
regarding the subject matter of this Lease. No amendment or modification

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of this Lease shall be binding or valid unless expressed in writing executed by both parties
hereto.

     21.11 Tenant’s Authority. Tenant hereby covenants, warrants and represents that: (1)
the individual executing this Lease on its behalf is duly authorized to execute and deliver this
Lease in accordance with the organizational documents of Tenant; (2) this Lease is binding upon
Tenant; (3) Tenant is duly organized and existing in the state of its formation and is qualified to
do business in the state where the Project is located and (4) the execution and delivery of this
Lease will not result in any breach of, or constitute a default under any mortgage, deed of trust,
lease, loan, credit agreement, partnership agreement or other contract or instrument to which it is
a party or by which it may be bound.

     21.12 Governing Law. This Lease shall be governed by and construed under the laws of
the State of California, without regard to conflicts of laws principals. Any action brought to
enforce or interpret this Lease shall be brought in the court of appropriate jurisdiction in Santa
Clara County, California. Should any provision of this Lease require judicial interpretation, the
court interpreting or considering same shall not apply the presumption that the terms hereof shall
be more strictly construed against the party who itself or through its agents prepared the same, it
being agreed that all parties hereto have participated in the preparation of this Lease and that
each party had full opportunity to consult legal counsel of its choice before the execution of this
Lease.

     21.13 Tenant’s Use of Name of the Project. Tenant shall not, without the prior
written consent of Landlord, use the name of the Project for any purpose other than as the address
of the business to be conducted by Tenant in the Premises, and Tenant shall not do or permit the
doing of anything which in the reasonable judgment of Landlord may reflect unfavorably on Landlord
or the Project or confuse or mislead the public as to any apparent connection or relationship
between Tenant and Landlord, the Project, or the Land.

     21.14 Ancient Lights. Any elimination or shutting off of light, air, or view by any
structure which may be erected on lands adjacent to the Premises shall not affect this Lease and
Landlord shall have no liability to Tenant with respect thereto.

     21.15 Changes to Project by Landlord. Landlord shall have the right to make changes
to all portions of the Project in Landlord’s reasonable discretion for the purpose of improving
access or security to the Project or the flow of pedestrian and vehicular traffic therein.
Landlord may at any time, without the same constituting an actual or constructive eviction and
without incurring any liability to Tenant therefor (a) rearrange, change, expand or contract
portions of the Project constituting Common Areas, (b) use Common Areas while engaged in making
improvements, repairs or alterations to the Project, or any portion thereof, and (c) do and perform
such other acts and make such other changes in to or with respect to the Project, or any portion
thereof, as Landlord may, in the exercise of sound business judgment, deem to be appropriate,
including without limitation the reasonable closure of any portion of the Project or the Common
Areas for such time in order to construct additional buildings or other improvements or prevent any
adverse possession or public dedication claim, provided Tenant continues to have access to the
Project and Premises, full use of the Cafeteria and subject to the provisions set forth below,

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parking as required under this Lease. In particular, without limiting the foregoing Tenant
hereby acknowledges that (a) Landlord reserves the right to further subdivide all or a portion of
the Project; (b) if portions of the Project or property adjacent to the Project (collectively, the
“Other Improvements”) are at any time owned by an entity other than Landlord, Landlord, at its
option, may enter into an agreement with the owner or owners of any or all of the Other
Improvements to provide (i) for reciprocal rights of access and/or use of the Project and the Other
Improvements, except for the Cafeteria, which may only be used as provided in Section 26.1 below,
(ii) for the common management, operation, maintenance, improvement and/or repair of all or any
portion of the Project and the Other Improvements, (iii) for the allocation of a portion of the
Operating Costs to the Other Improvements and the operating expenses and taxes for the Other
Improvements to the Project, and (iv) for the use or improvement of the Other Improvements and/or
the Project in connection with the improvement, construction, and/or excavation of the Other
Improvements and/or the Project and at Landlord’s request, Tenant shall subordinate this Lease to
any such agreement pursuant to the terms of Section 18.5; and (c) nothing contained herein shall be
deemed or construed to limit or otherwise affect Landlord’s right to convey all or any portion of
the Project or any other of Landlord’s rights described in this Lease. Tenant acknowledges that
Landlord may take various actions with respect to the Project, including, but not limited to,
performing construction on portions of the Project following Tenant’s occupancy of the Premises,
and that such actions may result in levels of noise, dust, obstruction of access, etc. which are in
excess of that present in a fully constructed project. Except as expressly set forth in this
Lease, Tenant hereby waives any and all rent offsets that may arise in connection with such
actions, including any offsets that may arise in connection with such actions. Notwithstanding
anything to the contrary contained herein, the parties hereto contemplate that during construction
at the Project Landlord will require alternative parking arrangements for the Project. The type
and terms of such alternative parking arrangement will be subject to Tenant’s consent not to be
unreasonably withheld, conditioned or delayed, but such arrangements may include valet parking on
the Project.

     21.16 Time of Essence. Time is of the essence of this Lease.

     21.17 Landlord’s Acceptance of Lease. The submission of this Lease to Tenant shall
not be construed as an offer and Tenant shall not have any rights with respect thereto unless this
Lease is consented to by any Secured Party, and any lessor of Landlord, to the extent such consent
is required, and Landlord executes a copy of this Lease and delivers the same to Tenant.

     21.18 Estoppel Certificates. Within ten (10) business days after request by either
party, the other party shall execute and deliver to the requesting party a written certificate as
to the status of this Lease, any existing defaults, the status of the payments and performance of
the parties required hereunder and such other information that may be reasonably requested. Any
such certificate may be relied upon by Landlord, any successor landlord, any Secured Party, any
lessor of Landlord, Tenant or any Tenant Parties.

     21.19 Financial Statements. At any time during the Term that Tenant’s stock is not
publicly traded, Tenant shall, but not more than once per year, except in the event of a transfer
or financing of the Project, upon ten (10) days prior written notice from Landlord, provide
Landlord with a current financial statement and financial statements of the two (2) years prior to
the

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current financial statement year. Such statement shall be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of Tenant, shall be
audited by an independent certified public accountant.

     21.20 WAIVER OF JURY TRIAL. EACH PARTY WAIVES TRIAL BY JURY IN THE EVENT OF ANY LEGAL
PROCEEDING BROUGHT BY THE OTHER IN CONNECTION WITH THIS LEASE. EACH PARTY SHALL BRING ANY ACTION
AGAINST THE OTHER IN CONNECTION WITH THIS LEASE IN A FEDERAL OR STATE COURTS LOCATED IN THE
DISTRICT WHERE THE PROJECT IS LOCATED, CONSENTS TO THE JURISDICTION OF SUCH COURTS, AND WAIVES ANY
RIGHT TO HAVE ANY PROCEEDING TRANSFERRED FROM SUCH COURTS ON THE GROUND OF IMPROPER VENUE OR
INCONVENIENT FORUM.

     21.21 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a
lesser amount than the Rent stipulated herein shall be deemed to be other than on account of the
earliest stipulated Rent, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment of Rent be deemed an accord and satisfaction. Landlord shall
accept such check or payment without prejudice to Landlord’s right to recover the balance of such
Rent or to pursue any other remedy in this Lease.

     21.22 Counterparts. This Lease may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which, when taken together, shall constitute one
and the same agreement.

     21.23 Waiver. No failure by either party to exercise, or delay in exercising, any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege. Any consent or approval given by
Landlord in any one instance shall not constitute consent or approval for any subsequent matter,
even if similar to the matter for which such consent or approval was originally given.

     21.24 Landlord’s Right to Inspect. Landlord shall retain duplicate keys, cards,
access codes or other access means to all doors of the Premises. Landlord shall have the right to
enter the Premises during normal business hours upon no less than twenty-four (24) hours prior oral
notice to Tenant’s designated representative (or, in the event of an emergency, at any hour without
notice) (a) to exhibit the same to present or prospective Secured Parties or purchasers during the
Term and to prospective tenants during the last twelve (12) months of the term, (b) to inspect the
Premises, (c) to confirm that Tenant is complying with all of Tenant’s covenants and obligations
under this Lease, (d) to make repairs required of Landlord under the terms of this Lease, (e) to
make repairs to areas adjoining the Premises, (f) to repair and service utility lines or other
components of the Project and (g) in connection with Landlord’s rights under Articles 7 and 9 of
this Lease; provided, however, Landlord shall use reasonable efforts to minimize interference with
Tenant’s business. Except to the extent of Landlord’s or any Landlord Parties’ negligence or
willful misconduct, Landlord shall not be liable to Tenant for the exercise of Landlord’s rights
under this Section 21.24. Landlord shall use reasonable and good faith efforts

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to inspect the Premises in a manner that will minimize to the extent practicable the
disruption of Tenant’s business in the Premises.

     21.25 Brokerage. Tenant and Landlord each represent and warrant to the other that it
has not entered into any agreement with, or otherwise had any dealings with, any broker or agent in
connection with the negotiation or execution of this Lease which could form the basis of any claim
by any such broker or agent for a brokerage fee or commission, finder’s fee, or any other
compensation of any kind or nature in connection herewith, other than with Brokers, and each party
shall indemnify and hold the other harmless from all Claims by any broker or agent with respect to
this Lease which arise out of any agreement or dealings, or alleged agreement or dealings, between
the indemnifying party and any such agent or broker, other than with Brokers. Landlord shall pay
the Brokers as required pursuant to the Commission Agreement between Landlord and the Brokers,
attached hereto and incorporated by this reference as Exhibit H relating to this Lease. This
provision shall survive the expiration or earlier termination of this Lease.

     21.26 Notices. All notices, consents, demands, requests, documents, or other
communications (other than payment of Rent) required or permitted hereunder (collectively,
“notices”) shall be in writing and be deemed given, whether actually received or not, when
dispatched for hand delivery (with signed receipts) to the other party, or on the first Business
Day after dispatched for delivery by nationally-recognized air express courier (with signed
receipts) to the other party, or on the third Business Day after deposit in the United States mail,
postage prepaid, certified, return receipt requested, except for notice of change of address which
shall be deemed given only upon actual receipt. The addresses of the parties for notices are set
forth in the Basic Lease Information, or any such other addresses subsequently specified by each
party in notices given pursuant to this Section 21.26.

ARTICLE 22

RENEWAL OPTIONS

     22.1 Subject to the provisions hereinafter set forth, Landlord hereby grants to Tenant an
option to extend the Term of this Lease, for a period of five (5) years, subject to variation
pursuant to the terms of Section 23.4 and 25.4 below (the “First Renewal Period”) after the
expiration of the initial Term, which First Renewal Period shall commence on the day after the
Expiration Date (the “First Renewal Period Commencement Date”) and end on the day before the fifth
(5th) anniversary of the First Renewal Period Commencement Date and an option to extend the Term of
this Lease, for a period of five (5) years, subject to variation pursuant to the terms of Section
23.4 and 25.4 below (the “Second Renewal Period”) after the expiration of the First Renewal Period,
which Second Renewal Period shall commence on the day after the expiration of the First Renewal
Period (the “Second Renewal Period Commencement Date”) and end on the day before the fifth (5th)
anniversary of the Second Renewal Period Commencement Date.

     22.2 Each such option shall be exercisable by written notice (each, a “Renewal Notice”) from
Tenant to Landlord of Tenant’s election to exercise said option given not later

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than twelve (12) months prior to the First Renewal Period Commencement Date or Second Renewal
Period Commencement Date, as applicable. If Tenant’s then applicable option is not so exercised,
said option and all future options shall thereupon expire.

     22.3 Tenant may only exercise either such option, and an exercise thereof shall only be
effective, if (i) at the time of Tenant’s exercise of said option and on the First Renewal Period
Commencement Date or Second Renewal Period Commencement Date, as applicable, this Lease is in full
force and effect and no Event of Default by Tenant exists, and (ii) inasmuch as said option is
intended only for the benefit of the original Tenant named in this Lease and said Tenant has not
assigned this Lease or sublet more than fifty percent (50%) of the Premises for substantially all
of the remaining term other than through a Permitted Transfer. Without limitation of the
foregoing, no sublessee or assignee other than an assignee through a Permitted Transfer shall be
entitled to exercise said option.

     22.4 Base Rent payable during each Renewal Period with respect to all space included in the
Premises as of the First Renewal Period Commencement Date or Second Renewal Period Commencement
Date, as applicable shall be equal to ninety-five percent (95%) of the Market Rent (as hereinafter
defined). Landlord shall give Tenant written notice of the Market Rent, including yearly
escalations, within thirty (30) days following written request by Tenant but not earlier than
fourteen (14) months prior to the First Renewal Period Commencement Date or Second Renewal Period
Commencement Date, as applicable.

     If Tenant disagrees with Landlord’s determination of the Market Rent, Tenant shall notify
Landlord of such disagreement within twenty (20) days after receipt of Landlord’s determination of
the Market Rent, which notice shall set forth Tenant’s determination of the Market Rent. If Tenant
fails to so notify Landlord of Tenant’s disagreement and Tenant’s determination of Market Rent
within the required time period, Landlord’s determination of the Market Rent shall be binding on
Tenant. If Tenant so notifies Landlord that Landlord’s determination of the Market Rent is not
acceptable to Tenant together with Tenant’s determination of Market Rent, Landlord and Tenant
shall, during the fifteen (15) day period after Tenant’s notice (the “Negotiation Period”), attempt
to agree on the Market Rent. If Landlord and Tenant are unable to agree, Tenant shall within ten
(10) days after the Negotiation Period, either (i) accept Landlord’s determination of the Market
Rent, (ii) if Tenant has not already exercised its then current option, reject Landlord’s
determination and decline to exercise such option, or (iii) reject such determination, exercise
such option, if Tenant has not already done so, and submit the determination to binding arbitration
as provided below. If Tenant fails to so notify Landlord of Tenant’s election under the preceding
sentence within said ten (10) day period after the Negotiation Period, Tenant shall be deemed to
have rejected Landlord’s determination and to have declined to exercise its current option, if
Tenant had not already exercised such option.

     In the event Tenant timely elects arbitration to determine the Market Rent, Landlord and
Tenant shall, within ten (10) days after such election to arbitrate, each select an independent
leasing broker who shall have at least ten (10) years’ experience in leasing office space in the
Market Area, with working knowledge of current rental rates and practices and shall not be an
employee of Landlord or Tenant or a broker retained by Landlord or Tenant in the previous

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twelve (12) month period. If either Landlord or Tenant fails to appoint a leasing broker
within the ten (10) day period referred to above, the leasing broker appointed by the other party
shall be the sole leasing broker for the purposes hereof. Upon selection, Landlord’s and Tenant’s
leasing broker shall select a third leasing broker meeting the aforementioned criteria. If the two
(2) leasing brokers cannot agree on the selection of the third leasing broker within ten (10) days
of their selection, then either party may request appointment of the third leasing broker by
application to the JAMS. Once the third leasing broker has been selected as provided for above
(or, if a party has failed to timely select any leasing broker, then once that party has failed to
make that selection), then, as soon thereafter as practicable but in any case within fourteen (14)
days, the third leasing broker (or the sole leasing broker, as applicable) shall make his/her
determination of which of Landlord’s estimate of the Market Rent or Tenant’s estimate of the Market
Rent (collectively, the “Estimates”) most closely reflects the Market Rent and such Estimate shall
be binding on both Landlord and Tenant as the Market Rent for the Premises for such Renewal Period.
Such leasing broker shall only be permitted to select either Landlord’s or Tenant’s Estimate and
shall not be permitted to determine a different rate. The parties shall share equally in the costs
of the third leasing broker (or the sole leasing broker, as applicable). Any fees of any leasing
broker, counsel or experts engaged directly by Landlord or Tenant, however, shall be borne by the
party retaining such leasing broker, counsel or expert.

     22.5 If Tenant has validly exercised one of such options, within thirty (30) days after the
parties hereto agree upon the Market Rent, Landlord and Tenant shall enter into a written amendment
to this Lease confirming the terms, conditions and provisions applicable to the First Renewal
Period or Second Renewal Period, as applicable, as determined in accordance herewith, with such
revisions to the rental provisions of this Lease as may be necessary to conform such provisions to
the Market Rent. Tenant’s failure to timely execute such amendment shall not negate the
irrevocable nature of Tenant’s election.

     22.6 The term “Market Rent” per square foot of Rentable Area of the Premises shall mean the
base rent for comparable space within the sub-markets of Sunnyvale, Santa Clara, North San Jose and
Milpitas, roughly outlined by the freeways 101, 237, and 280/680, in Santa Clara County, California
(“Market Area”). Comparable space shall consist of multi-story office buildings of similar age,
size, condition and quality of construction as the Buildings. Market Rent shall be determined
taking into consideration other relevant factors such as term, broker involvement, rental
abatement, tenant improvements, and other concessions then being offered to renewal tenants with
comparable creditworthiness as Tenant at such time and may include annual rental escalations.

     22.7 Tenant shall not have any option to extend the terms of this Lease beyond the expiration
of the Second Renewal Period. Both the First Renewal Period and the Second Renewal Period shall be
on the same terms and conditions set forth herein, except that (i) no concessions, abatements or
allowances granted with respect to the initial Term hereof shall be applicable to each of the First
Renewal Period and the Second Renewal Period, (ii) Base Rent shall be adjusted as set forth in this
Article 22 and (iii) First and Second Renewal Periods, once exercised, cannot be exercised again.

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ARTICLE 23

RIGHT OF FIRST OFFER TO LEASE BUILDING 10

     23.1 Landlord hereby grants to Tenant the right to lease, on the terms and conditions
hereinafter set forth (the “Building 10 Right of First Offer”), the building within the Project
known as Building 10 or 5480 Great America Parkway, Santa Clara, California (“Building 10”),
pursuant to the terms set forth in this Article 23 (the “Building 10 First Offer Space”). On or
before the first day of each calendar quarter in which Landlord intends to offer any part of
Building 10 for lease, Landlord shall give Tenant written notice (the “Building 10 Lease Offer
Notice”) of (i) the floor as well as the location within Building 10 of the Building 10 First Offer
Space; (ii) the rentable area of the Building 10 First Offer Space; (iii) Landlord’s estimate of
the commencement date for the Building 10 First Offer Space (the “Building 10 First Offer Space
Commencement Date”) and (iv) the initial rent, annual escalations of rent, any tenant inducements
and the term (“Basic Terms”) for such Building 10 First Offer Space. Tenant’s right to lease all,
but not less than all, of the Building 10 First Offer Space described in the Offer Notice from
Landlord shall be exercisable by written notice from Tenant to Landlord (“Building 10 Tenant’s
First Offer Notice”) given not later than five (5) business days after such Building 10 Lease Offer
Notice is given, time being of the essence. In addition, if Landlord has submitted a Building 10
Lease Offer Notice in response to a proposal from a third party for the lease of premises which
includes both Building 10 First Offer Space and other space in the Project, Landlord may condition
Tenant’s exercise of its Building 10 Right of First Offer with respect thereto on Tenant’s
agreement to take all the space which is the subject of such proposal, Building 10 First Offer
Space and otherwise. Once given, notice of exercise of such right shall be irrevocable, subject to
the terms of Section 24.3 below. If such right is not so exercised the first time it is available
to Tenant or if the conditions set forth in Section 23.4 are not satisfied, Tenant’s Building 10
Right of First Offer shall thereupon terminate as to the Building 10 First Offer Space, and
Landlord may thereafter lease the Building 10 First Offer Space without notice to Tenant and free
of any right of Tenant (conditioned on Landlord entering into a lease on no more favorable terms as
to the term, base rent or tenant inducements offered Tenant); provided that Tenant’s Building 10
Right of First Offer to Lease hereunder shall be reinstated, (a) as to any of such portion of the
Building 10 First Offer Space which Landlord does not lease or enter into a letter of intent to
lease within three (3) months after the Building 10 Offer Notice or at such time as such letter of
intent does not result in an executed lease, (b) as to any portion of the Building 10 First Offer
Space which is leased within three (3) months after the Building 10 Offer Notice (or pursuant to a
letter of intent signed within three (3) months of the Building 10 Offer Notice), at the expiration
of such lease, as the same may be renewed or extended by the existing tenant, whether or not
pursuant to any existing renewal or extension rights; and (c) if the rent at which Landlord will
actually lease the Building 10 First Offer Space to a prospective tenant is less than ninety-five
percent (95%) of the rent contained in Landlord’s Building 10 Lease Offer Notice, taking into
account the Tenant Credit Adjustment, or the Basic Terms other than rent in the lease to such
prospective tenant are materially more favorable than those offered to Tenant in Landlord’s
Building 10 Lease Offer Notice. Landlord’s Building 10 Lease Offer Notice may, at Landlord’s
option, be sent simultaneously with notices to other parties having rights in the applicable
Building 10 First Offer Space.

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     23.2 If Tenant has validly exercised its right to lease the Building 10 First Offer Space in
accordance with the terms hereof, Landlord and Tenant shall enter into a written lease confirming
the terms, conditions and provisions applicable to the Building 10 First Offer Space. If Landlord
is unable to deliver to Tenant possession of the Building 10 First Offer Space on or before the
estimated Building 10 First Offer Space Commencement Date for any reason whatsoever, Landlord shall
not be subject to any liability for such failure to deliver possession. Except as set forth
herein, such failure to deliver possession shall not affect either the validity of this Lease, or
the obligations of either Landlord or Tenant under this Lease, or be construed to extend the
expiration of the Term of this Lease either as to the Building 10 First Offer Space or the balance
of the Premises. Notwithstanding anything to the contrary contained herein, Landlord represents
that it shall use commercially reasonable efforts to recover possession of the Premises following
the natural expiration of the third party lease. If Landlord is unable to deliver possession of
the Building 10 Offer Space within one hundred twenty (120) days after the estimated Building 10
Offer Space Commencement Date, Tenant may revoke its notice of exercise with respect to the
Building 10 Offer Space by written notice to Landlord given at any time prior to Landlord
delivering possession of the Building 10 Offer Space. If simultaneously with or after Tenant gave
its Building 10 Tenant’s First Offer Notice, Tenant also exercised an option to extend the term of
the Lease and Tenant revokes its notice of exercise pursuant to the preceding sentence, Tenant may
also revoke its offer to extend at the time Tenant revokes with respect to Building 10.

     23.3 Notwithstanding anything contained herein to the contrary, Tenant acknowledges and agrees
that (i) if Tenant does not properly exercise its right to lease any portion of Building 10, its
rights under this Article 23 are expressly subordinate to the expansion rights, renewal rights and
rights of first offer or refusal of any tenant that actually leases premises within Building 10
prior to Tenant, as such rights are contained in such tenant’s lease; and (ii) its Building 10
Right of First Offer to Lease shall not apply to any space which is being renewed or extended by
the existing tenant of the applicable Building 10 First Offer Space, whether or not pursuant to any
existing renewal or extension rights.

     23.4 Tenant may only exercise its Building 10 Right of First Offer to Lease and an exercise
thereof shall only be effective if, (i) at the time of Tenant’s exercise of said right and on the
Building 10 First Offer Space Commencement Date this Lease is in full force and effect and no Event
of Default by Tenant exists, (ii) inasmuch as said option is intended only for the benefit of the
original Tenant named in this Lease or a Permitted Transferee, said Tenant has not assigned this
Lease or sublet more than 50,000 square feet of floor area of the Premises for substantially all of
the remaining term, other than through Permitted Transfers, (iii) at least five years remain in the
Term, as the same may have been extended pursuant to Article 22 hereof (If Tenant must exercise a
renewal option under Article 22 early in order to achieve the required remaining Term, Base Rent
during the First Renewal Period or Second Renewal Period, as applicable, shall be set six (6)
months prior to the First Renewal Period Commencement Date or Second Renewal Period Commencement
Date, as applicable. In addition, if upon exercising a renewal option the First Renewal Period or
Second Renewal Period, as applicable, would have a term that extends beyond the expiration of the
term of the Lease for the Building 10 First Offer Space, at the time Tenant exercises the renewal
option, Tenant may elect to shorten the First Renewal Period or Second Renewal Period, as
applicable, to be coterminous with the term of the

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Lease for the Building 10 First Offer Space; and (iv) at the time of Tenant’s exercise of said
right Tenant delivers to Landlord, simultaneously with the delivery of the Tenant’s First Offer
Notice, a certified copy of Tenant’s then current financial statements demonstrating a tangible net
worth of at least One Hundred Million Dollars ($100,000,000.00) and a net profit for at least three
(3) of the immediately preceding six (6) fiscal quarters of Tenant. Without limitation of the
foregoing, no sublessee or assignee other than an assignee through a Permitted Transfer shall be
entitled to exercise said right.

ARTICLE 24

RIGHT OF FIRST OFFER TO PURCHASE

     24.1 At least forty-five (45) days prior to offering the Project or any portion thereof (the
“Offered Property”) for sale, Landlord shall by written notice to Tenant advise Tenant that
Landlord desires to offer the Offered Property for sale along with a copy of a current title report
for the Project and a copy of all exceptions to title (the “Right of First Offer to Sell”). Tenant
shall have a period of thirty (30) days to inform Landlord that Tenant desires to negotiate with
Landlord to acquire the Offered Property and the price at which Tenant would be willing to purchase
the Offered Property (“Tenant’s Offer”). If Tenant fails to provide Landlord with a Tenant Notice
within the thirty (30) day time period described above or if the parties do not enter into a
Purchase Contract and Landlord sells the Offered Property, then except as expressly set forth
herein, Tenant shall be deemed to have permanently waived any rights Tenant may have under this
Section 24.1 to acquire the Offered Property. If Landlord informs Tenant that Landlord is
interested in negotiating a purchase agreement for the Offered Property based on the terms set
forth in Tenant’s Offer, Landlord shall refrain from actively marketing the Offered Property for
sale for a forty-five (45) day period, and Landlord and Tenant shall in good faith endeavor to
negotiate and execute a formal purchase and sale agreement within such time period pursuant to
which Tenant shall purchase and Landlord shall sell the Offered Property upon the price set forth
in Tenant’s Offer and such other terms acceptable to both parties each acting in good faith
(“Purchase Contract”). If Landlord rejects Tenant’s Offer or Landlord and Tenant are unable to
negotiate and execute a Purchase Contract on or before the expiration of the forty-fifth (45) day
after Tenant delivers Tenant’s Offer, Landlord may offer the Offered Property for sale and contract
for and consummate a sale of the Offered Property at any price greater than the price set forth in
Tenant’s Offer. In the event that Landlord subsequently desires to sell the Offered Property for
less than the price set forth in Tenant’s Offer, Landlord shall offer the Offered Property to
Tenant at the new price that Landlord is willing to take from a third party (the “Revised Offer”).
Tenant may accept the Revised Offer within three (3) business days by written notice. If Tenant so
accepts such Revised Offer, Landlord shall sell the Offered Property to Tenant upon the terms of
the Revised Offer as set forth in this Section 24.1. If Tenant does not accept the Revised Offer
within such three (3) business day period, Landlord shall be free to sell the Offered Property at a
price equal to or greater than the price set forth in the Revised Offer.

     24.2 Notwithstanding anything to the contrary contained herein, Tenant shall have no rights
under this Article 24 or otherwise to acquire any portion of the Project in connection with any (i)
Affiliate Transaction, (ii) a sale of a portion of the Project that does not include the

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Premises to a then current tenant of such portion of the Project, (iii) transfer upon or in
lieu of foreclosure or sale under the power of sale in connection with any lien on the Project or
any part thereof or (iv) the property Landlord intends to offer for sale includes the entire
Project and at least two (2) additional properties. For the purposes hereof, an “Affiliate
Transaction” shall be a transaction wherein the purchaser or transferee of the Premises is any
person(s) or entity(ies) directly or indirectly, through one or more intermediaries, controlled by,
or under common control with Landlord, by which control means the power to direct or approve
substantial transactions. Subject to the terms of Article 18 above, Tenant acknowledges that
Landlord shall have all rights necessary to finance the Project, including rights to encumber the
property with deeds of trust, mortgages or otherwise, and that no such financing arrangements shall
be deemed to be a sale of the Project or any part thereof pursuant to this Article 24.

     24.3 If at any time Landlord receives an unsolicited offer to purchase all or a portion of the
Project that does not include an offer to purchase property in addition to the Project from a third
party that Landlord is willing to accept, Landlord shall notify Tenant of the terms and conditions
of the offer and allow Tenant to match the offer within fifteen (15) business days of notification
by Landlord. If Tenant accepts such offer, Landlord and Tenant shall proceed in good faith to
enter into a purchase and sale agreement within the following thirty (30) days. If Tenant fails to
accept such offer or the parties cannot agree within such thirty (30) day period, then Landlord may
sell the Project or portion thereof at the price set forth in such offer.

     24.4 Notwithstanding anything to the contrary contained herein (a) Tenant shall have no right
to assign, transfer or otherwise dispose of any of its rights under this Article 24 except to a
Permitted Transferee, (b) no owner of the Project or any portion thereof, other than the original
Landlord under this Lease or any successor owner resulting from an Affiliate Transaction, shall
have any liability under this Article 24, (c) if Tenant shall purchase the Premises or a portion
thereof pursuant to this Article 24 or otherwise, all obligations of Tenant under this Lease shall
continue in full force and effect as to the entire Premises until such sale is closed and if such
sale is not closed, shall continue in full force and effect as to the entire Premises; and (d) if
the rights of Tenant to purchase the Project or any specific portion of this Project pursuant to
this Article 24 are terminated for any reason, Tenant hereby agrees to execute and deliver to
Landlord any reasonable documents or instruments confirming such termination within ten (10)
business days following Landlord’s request therefore. Without limitation of the foregoing, no
sublessee or assignee other than an assignee through a Permitted Transfer shall be entitled to
exercise said right.

     24.5 Tenant may only exercise its Right of First Offer to Sell and an exercise thereof shall
only be effective if at the time of Tenant’s Offer and on the closing date of such sale this Lease
is in full force and effect and no Event of Default by Tenant exists.

ARTICLE 25

RIGHT OF FIRST OFFER FOR NEW IMPROVEMENTS

     25.1 Landlord currently has the ability to construct additional office improvements (the “New
Improvements”) on the Northern portion of the Land. Landlord has not settled on design

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for the New Improvements, but contemplates that the New Improvements will contain at least
150,000 rentable square feet of office space. Landlord hereby grants to Tenant a right of first
offer to lease the New Improvements (the “New Improvements Right of First Offer”) pursuant to the
terms set forth in this Article 25. If Tenant elects to lease the New Improvements, Landlord will
work with Tenant to design the New Improvements to Tenant’s reasonable specifications, provided
that such design shall be subject to Landlord’s approval and must (i) comply with all Requirements,
(ii) include a minimum of 150,000 rentable square feet, and (iii) be for a first class office
building compatible with the rest of the Project and suitable for general office use by other
tenants upon vacancy by Tenant. If Tenant leases the New Improvements, the annual base rent for
the New Improvements (“New Improvements Base Rent”) for the first year of leasing the New
Improvements shall be the product of (i) the New Improvement Costs and (ii) the rate of return that
Landlord desires for such transaction (the “Return Rate”). The “New Improvement Costs” shall be
all costs of any nature incurred by Landlord with respect to construction of the New Improvements,
which are all hard costs, all soft costs, land costs (the “Land Costs”) and a development fee (the
“Development Fee”). On or before the first anniversary of the Commencement Date and on each
anniversary of the Commencement Date thereafter until the New Improvements have been leased,
Landlord shall give Tenant written notice (the “New Improvement Offer Notice”) of (i) the Land
Costs (which will vary based on density); (ii) the Development Fee (which will vary based on cost);
and (iii) the Return Rate that Landlord will use to determine the first year’s base rent for a
lease of the New Improvements to Tenant, as well as any escalations of such base rent in ensuing
years of the lease. Tenant shall have the option to lease all, but not less than all, of the New
Improvements from Landlord. Such option shall be exercisable by written notice from Tenant to
Landlord (“New Improvements Tenant’s First Offer Notice”) given not later than ten (10) business
days after such New Improvement Lease Offer Notice is given, time being of the essence. In order
to be effective the New Improvements Tenant’s First Offer Notice must be accompanied by a deposit
(the “Plan Deposit”) to reimburse Landlord for the costs of designing and planning the New
Improvements if Tenant does not ultimately lease the New Improvements from Landlord. In addition,
if Landlord has submitted a New Improvement Offer Notice in response to a proposal from a third
party for the lease of premises which includes both the New Improvements and other space in the
Project, Landlord may condition Tenant’s exercise of its New Improvements Right of First Offer with
respect thereto on Tenant’s agreement to take all the space which is the subject of such proposal,
New Improvements and otherwise. If such right is not so exercised the first time it is available
to Tenant or if the conditions set forth in Section 25.4 are not satisfied, Tenant’s New
Improvements Right of First Offer shall thereupon terminate as to the New Improvements, and
Landlord may thereafter lease the New Improvements without notice to Tenant and free of any right
in Tenant; provided that Tenant’s New Improvements Right of First Offer hereunder shall be
reinstated, (i) if Landlord does not lease or enter into a letter of intent to lease (unless such
letter of intent does not lead to a lease) the New Improvements within one year after the New
Improvements Offer Notice, (ii) if the Land Costs or Development Fee used to derive the rent at
which Landlord will actually lease the New Improvements to a prospective tenant are less than
ninety-five percent (95%) of the amounts contained in Landlord’s New Improvements Offer Notice, and

(iii) if the Return Rate used to derive the rent at which Landlord will actually lease the New
Improvements to a prospective tenant is less than ninety-five percent (95%) of the Return Rate
contained in Landlord’s New Improvements Offer Notice, taking into account the

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 Tenant Credit Adjustment. The Land Costs, Development Fee and Return Rate applicable through
the first anniversary of the Commencement Date are specified on Exhibit G hereto. As used herein,
the term “Tenant Credit Adjustment” means a percentage increase or decrease in rent to account for
the risks associated with leasing to tenants with different credit ratings. Included on Exhibit G
is a grid depicting the Tenant Credit Adjustment in the form of the basis point spreads between the
various credit ratings for prospective tenants and examples of how such spreads change Landlord’s
Return Rate for prospective tenants with different credit ratings. Landlord’s New Improvements
Offer Notice may, at Landlord’s option, be sent simultaneously with notices to other parties having
rights in the New Improvements.

     25.2 If Tenant has validly exercised its right to lease the New Improvements in accordance
with the terms hereof, Landlord and Tenant shall exercise good faith diligent efforts to agree upon
a preliminary design for the New Improvements and enter into a written amendment to this Lease
confirming the terms, conditions and provisions applicable to the New Improvements within
forty-five (45) days after Landlord’s receipt of the New Improvements Tenant’s First Offer Notice.
The amendment to this Lease for the New Improvements shall (i) include customary build to suit
construction provisions for the New Improvements, (ii) adjust the Rentable Area of the Project,
Rentable Area of the Premises and Tenant’s Share to reflect the addition of the New Improvements,
and (iii) provide for a minimum Term of this Lease with respect to the New Improvements of ten (10)
years. If Landlord and Tenant do enter into such amendment, Landlord shall return the Plan Deposit
to Tenant. If after exercising good faith diligent efforts Landlord and Tenant are unable to agree
upon a preliminary design for the New Improvements and enter into a written amendment to this Lease
confirming the terms, conditions and provisions applicable to the New Improvements within
forty-five (45) days after Landlord’s receipt of the New Improvements Tenant’s First Offer Notice,
such failure shall not affect either the validity of this Lease, or the obligations of either
Landlord or Tenant under this Lease, and Landlord shall be free to lease the New Improvements to a
third party free and clear of Tenant’s rights under this Lease. In such event Landlord shall apply
the Plan Deposit to the costs incurred by Landlord negotiating with Tenant and designing the New
Improvements and return any remaining portion of Plan Deposit to Tenant.

     25.3 Notwithstanding anything contained herein to the contrary, Tenant acknowledges and agrees
that if Tenant exercises its rights under this Article 25 but desires a building with less square
footage than is permitted by the Regulations, Tenant shall work with Landlord to design and build
the New Improvements to the full square footage permitted by the Regulations and Landlord shall be
permitted to lease the space not desired by Tenant to others. In such event the New Improvements
Costs shall be equitably allocated for the purpose of calculating rent. In addition, if Landlord
builds the New Improvements on a speculative basis rather than as a build to suit for a specific
tenant, Tenant’s rights under this Article 25 shall terminate, and Tenant shall have the same
rights with respect to such New Improvements that Tenant has under Article 23 with respect to
Building 10; provided, that (i) Landlord shall provide Tenant with annual (on each anniversary of
the Commencement Date) rather than quarterly notices in the nature of the Building 10 Lease Offer
Notice; (ii) all references to “three (3) months” in Section 23.1 shall be changed “one (1) year”
and (iii) and the provisions of Section 25.4 below shall apply with respect to such New
Improvements in lieu of Section 23.4. Finally, if Landlord builds the New Improvements in phases,
Tenant shall have the rights under this Article 25 with respect to each

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phase; provided that Tenant’s rights with respect to any subsequent phase shall be subordinate
to the rights of any other tenant of a prior phase.

     25.4 Tenant may only exercise its New Improvements Right of First Offer to Lease and, at
Landlord’s option, an exercise thereof shall only be effective if, (i) at the time of Tenant’s
exercise of said right and on the commencement date for the New Improvements this Lease is in full
force and effect and no Event of Default exists, (ii) inasmuch as said option is intended only for
the benefit of the original Tenant named in this Lease, the entire Premises are occupied by the
original Tenant named herein and said Tenant has not assigned this Lease or sublet more than 50,000
square feet of floor area of the Premises for substantially all of the remaining term, other than
to Permitted Transferees, (iii) at least ten (10) years remain in the Term, as the same may have
been extended pursuant to Article 22 hereof (if Tenant must exercise a renewal option under Article
22 early in order to achieve the required remaining Term, Base Rent during the First Renewal Period
or Second Renewal Period, as applicable, shall be set six (6) months prior to the First Renewal
Period Commencement Date or Second Renewal Period Commencement Date, as applicable. In addition,
if upon exercising a renewal option in order to achieve the minimum required remaining Term the
First Renewal Period or Second Renewal Period, as applicable, would have a term that extends beyond
the expiration of the term of the Lease for the New Improvements, at the time Tenant exercises the
renewal option, Tenant may elect to shorten the First Renewal Period or Second Renewal Period, as
applicable, to be coterminous with the term of the Lease for the New Improvements.), and (iv) at
the time of Tenant’s exercise of said right Tenant delivers to Landlord, simultaneously with the
delivery of the Tenant’s First Offer Notice, a certified copy of Tenant’s then current financial
statements demonstrating that Tenant has a Standard & Poors rating of BBB- or better.

ARTICLE 26

CAFETERIA

     26.1 Landlord, by itself, or through a contractor (the “Cafeteria Operator”) shall use good
faith, reasonable efforts to operate a restaurant in the Cafeteria for the use of Tenant, its
employees and invitees, and the users of Building 10 and their employees and invitees. Tenant
hereby approves Café Royale as the initial Cafeteria Operator. Landlord and Tenant agree to
consult and reasonably agree as to the type and scope of services to be provided by the Cafeteria
Operator, including the type and selection of menu items, hours of operation and whether catering
services will be provided. Landlord agrees that any service contract with a Cafeteria Operator
will include a right to terminate such contract upon thirty (30) days notice. If Tenant is not
satisfied with the services provided by the Cafeteria Operator, Landlord and Tenant will cooperate
to change the services provided by the Cafeteria Operator to such services reasonably approved by
Landlord and Tenant. If Tenant remains dissatisfied, on a reasonable, but subjective basis,
Landlord will find a replacement Cafeteria Operator. The replacement Cafeteria Operator and the
scope of services such operator provides shall be approved by Tenant in advance, which approval
shall not be unreasonably withheld. Once Tenant approves such replacement Cafeteria Operator and
scope of services, Landlord shall enter into a service contract with such Cafeteria Operator and
replace the then current Cafeteria Operator. If notwithstanding Landlord’s reasonable, good faith
efforts, Landlord cannot secure an operator for the Cafeteria

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satisfactory to Tenant, Landlord shall offer such operation to Tenant. In such event, Tenant
may, at Tenant’s sole cost and expense, but with no adjustment to Base Rent or Rentable Area of the
Project or Rentable Area of the Premises, operate the Cafeteria for the use of: (i) Tenant, its
employees and invitees; (ii) the occupants of Building 10 and their employees and invitees; and
(iii) at Tenant’s election, any other users of the Project and their employees and invitees.
Landlord shall perform all necessary maintenance and repairs to the Cafeteria. The cost to operate
the Cafeteria, after deducting sums collected in connection with the operation thereof, shall be
Operating Costs. Any user other than Tenant, its employees and invitees shall enter the Cafeteria
from the Common Areas. Tenant shall be solely responsible to secure any entrance to the Cafeteria
from the Premises.

ARTICLE 27

PERSONAL PROPERTY

     Landlord hereby grants to Tenant the right to use the existing furniture, telephone and other
personal property (collectively, the “Personal Property”) located in the Premises during the Term
and any extensions thereof at no additional cost on an as-is basis. The Personal Property is more
particularly listed on Exhibit F attached hereto (“Inventory List”). Within thirty (30) days after
the Commencement Date, Landlord and Tenant shall conduct a “walk-through” inspection of the
Premises to confirm the completeness and accuracy of the Personal Property shown on the Inventory
List. If as a result of the walk-through inspection, the parties determine that changes to the
Inventory List are warranted, such list shall be updated and the parties agree to execute an
amendment to this Lease reflecting such changes to the Inventory List. Tenant shall have a period
of ninety (90) days from the Commencement Date within which to inform Landlord of whether it
desires to utilize the telephone system currently within the Premises. In the event Tenant
notifies Landlord within such ninety (90) day period that it will not use the existing telephone
system, Landlord shall, within thirty (30) days thereafter remove the PBX cabinet of the telephone
system and restore any damage to the Premises caused thereby at its sole cost and expense.
Landlord makes no representation or warranty as to the condition of such Personal Property or its
usefulness to Tenant. Tenant shall be responsible for the maintenance and repair of the Personal
Property during the Lease Term at its sole cost and expense and shall insure the Personal Property
as part of Tenant’s property insurance required to be carried hereunder. Upon the expiration or
earlier termination of this Lease, but subject to the terms of Articles 15 and 16 hereof, Tenant
shall return the Personal Property to Landlord in its condition existing as of the Commencement
Date, reasonable wear and tear, obsolence and/or any item or items of Personal Property reaching
the end of its serviceable or useful life excepted. In the event that Tenant desires to dispose of
any of the Personal Property prior to the expiration or earlier termination of this Lease, Tenant
shall deliver written notice to Landlord specifying the Personal Property of which Tenant desires
to dispose. Landlord may deliver written notice to Tenant within fifteen (15) days of receipt of
Tenant’s notice of Landlord’s desire to retain such Personal Property, in which case Landlord shall
arrange with Tenant to remove such Personal Property from the Premises at Landlord’s sole cost and
expense. Unless Landlord notifies Tenant that Landlord desires to retain such Personal Property
within the time periods set forth herein, Tenant may dispose of such Personal Property at Tenant’s
sole cost and expense as Tenant sees fit.

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ARTICLE 28

SIGNAGE

     28.1 Subject to the provisions of this Article 28, Tenant shall be entitled to install the
directional signage and signs identifying Tenant’s name and logo in the Premises, on the Buildings,
and on monuments provided by Landlord (collectively, the “Tenant’s Signage”).

     28.2 The graphics, materials, color, design, lettering, lighting, size, illumination,
specifications and exact location of Tenant’s Signage (collectively, the “Sign Specifications”)
shall be subject to the prior written approval of Landlord, which approval shall not be
unreasonably withheld, condition or delayed, and shall be consistent and compatible with the
quality and nature of the Project. In addition, without limiting the foregoing, Landlord may
reasonably disapprove proposed Tenant’s Signage if such signage constitutes more than a reasonable
allocation of the total signage allocation available to the Project under Requirements. Tenant’s
Signage shall be subject to Tenant’s receipt of all required governmental permits and approvals and
shall be subject to all Requirements and to any covenants, conditions and restrictions affecting
the Project. Landlord shall use reasonable efforts to assist Tenant in obtaining all necessary
governmental permits and approvals for Tenant’s Signage. Tenant acknowledges that Landlord may
install such monument signs on the Project as Landlord deems desirable acting in Landlord’s
reasonable discretion. In the event that such monument signs identify tenants or occupants of the
Project, Tenant shall, at Tenant’s sole cost and expense, have the right to include Tenant’s name
and logo on such monument signs in a manner determined by Landlord so as to reasonably allocate the
use of such signage among the occupants of the Project (which may differ from sign to sign, but
which shall be reasonable taking all of the signs together), using such materials and colors as
Landlord shall determine in its reasonable discretion.

     28.3 The costs of the actual signs comprising Tenant’s Signage and the installation, design,
construction, and any and all other costs associated with Tenant’s Signage, including, without
limitation, utility charges and hook-up fees, permits, and maintenance and repairs shall be the
sole responsibility of Tenant; provided that Tenant shall be responsible for the cost of Tenant’s
sign panel on the Monument Sign, but Landlord shall maintain all monument signs set forth in this
Article 28 in good condition and repair, the cost of which shall be included in Operating Costs.
Should Tenant’s Signage require repairs, as determined in Landlord’s reasonable judgment, Landlord
shall have the right to provide notice thereof to Tenant and Tenant (except as set forth above)
shall cause such repairs to be performed within thirty (30) days after receipt of such notice from
Landlord at Tenant’s sole cost and expense; provided, however, if such repairs are reasonably
expected to require longer than thirty (30) days to perform, Tenant shall commence such repairs
and/or maintenance within such thirty (30) day period and shall diligently prosecute such repairs
and maintenance to completion. Should Tenant fail to perform such repairs within the periods
described in the immediately preceding sentence, Landlord shall have the right to cause such work
to be performed and to charge Tenant as Additional Rent for the actual cost of such work. Upon the
expiration or earlier termination of this Lease, Tenant shall, at Tenant’s sole cost and expense,
cause Tenant’s Signage to be removed and shall cause the areas in which such Tenant’s Signage was
located to be restored to

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the condition existing immediately prior to the placement of such Tenant’s Signage. If Tenant
fails to timely remove such Tenant’s Signage or to restore the areas in which such Tenant’s Signage
was located, as provided in the immediately preceding sentence, then Landlord may perform such
work, and all actual costs incurred by Landlord in so performing shall be reimbursed by Tenant to
Landlord within thirty (30) days after Tenant’s receipt of an invoice therefor. The terms and
conditions of this Section 28.3 shall survive the expiration or earlier termination of this Lease.

ARTICLE 29

COMPETITION

     29.1 Landlord hereby agrees that Landlord shall not lease, sublease, license or enter into any
other similar agreement for occupancy of any portion of the Project to any of the companies or any
entity that at the time of lease execution for such premises is a department, division, wholly
owned subsidiary, affiliate under common control (as defined in Section 8.4 above) or successor
entity of the companies listed below in this Section 29.1 (“Prohibited Companies”). Landlord
further covenants and agrees that all other leases for premises in the Project shall contain
provisions similar to those set forth in Sections 8.3(c) which provide that Landlord may refuse
consent to a Transfer if such transfer would cause a default under any other lease in the Project,
including a default under this Lease and Landlord shall refuse consent to a Transfer under any
lease for a portion of the Project that would cause a default under this Lease. Notwithstanding
the foregoing, if Landlord grants to any other tenant in the Project the right to assign its lease
or sublet all or any portion of its premises to a “permitted transferee” (the definition of which
in such lease for premises within the Project will be substantially similar to the definition of
Permitted Transferee set forth in Section 8.4 above), and such permitted transferee is a Prohibited
Company, then, and only then, will Landlord allow such Prohibited Company to occupy any space at
the Project. Such companies are (1) Cognos Corporation, a Delaware corporation, (2) SAP America,
Inc., a Delaware corporation, (3) Microsoft Corporation, a Washington corporation, (4) Oracle
Corporation, a Delaware corporation, (5) SAS Institute, Inc., a North Carolina corporation, (6)
Peoplesoft, Inc., a Delaware corporation, and (7) Business Objects Americas, a Delaware
corporation.

ARTICLE 30

SATELLITE DISH

     30.1 Tenant shall have the right to install, at Tenant’s sole cost and expense, on the roof of
the Buildings at a location reasonably acceptable to Landlord satellite dishes and antenna or
smaller and related accessories, including without limitation the conduit described below
(collectively, “Satellite Equipment”) as Tenant may reasonably request, provided that such
Satellite Equipment is properly screened, does not damage the structural integrity of the Premises,
shall not involve the making of any roof penetrations or any other actions which would result in a
breach of Landlord’s roof warranty, shall comply with applicable laws and further provided that
Tenant provides Landlord, at least twenty (20) days prior to any such installation: (i) plans and
specifications for the installation of the Satellite Equipment, which shall be subject

45

 

to Landlord’s prior written approval, which approval shall not be unreasonably withheld or
delayed; and (ii) copies of all required governmental and quasi-governmental permits, licenses and
authorizations which Tenant shall obtain at its own expense. Once installed, Landlord shall be
entitled, at Landlord’s cost, to require tenant to relocate its Satellite Equipment to a different
location on the roof of the Buildings as reasonably determined by Landlord. Tenant acknowledges
that, upon the expiration or termination of this Lease, Tenant shall be responsible, at its sole
cost and expense, to remove the Satellite Equipment and repair any and all damage as a result
thereof. In addition, Tenant acknowledges that Tenant shall be responsible for all additional roof
costs incurred by Landlord in the maintenance or replacement of the roof of applicable Building due
to the presence of the Satellite Equipment.

     30.2 Tenant shall not use the roof or the Satellite Equipment in any way that interferes with
the use of the Project by: (a) Landlord or (b) tenants or licensees of Landlord now or hereafter
leasing or licensing space in, on or at the Project (the “Project Tenants”). The operation of the
Satellite Equipment shall not interfere with the Project Tenants or with the maintenance or
operation of the Project, including but not limited to the roof, MATV, CATV or other video systems,
HVAC systems, electronically controlled elevator systems, computers, telephone systems, or any
other system serving the Project and/or its occupants, or the operation of any radio or
telecommunication equipment installed at the Project. Tenant agrees to immediately cease all
operations (except for testing as approved by Landlord) until the interference has been corrected
to the sole satisfaction of the Landlord. Tenant shall be responsible for all costs associated
with any tests deemed necessary to resolve any and all interference as set forth in this Lease. If
such interference has not been corrected within thirty (30) days, Landlord may require Tenant to
remove the Satellite Equipment. All operations by Tenant shall be lawful and in compliance with
all FCC rules and regulations. Tenant shall be responsible for all costs associated with any tests
deemed necessary to resolve any and all interference which Landlord determines or reasonably
believes is being caused by the Satellite Equipment or Tenant’s use of the Satellite Equipment.

     30.3 Tenant hereby agrees to indemnify and hold Landlord, its partners, agents, and employees
harmless from and against any and all costs, claims, damages, cause of action, and liability
(including reasonable attorneys’ fees and court costs) which may arise by reason of (a) any
interference as hereinabove described, and/or (b) any occurrence attributable to or arising out of
the installation, maintenance, repair, operation, or removal of any of the Satellite Equipment,
including, without limitation, any claim or cause of action for injury to or death of any person or
damage to any property, and Tenant agrees to defend any claim, cause of action, or demand against
Landlord, its partners, agents, and employees, arising out of any such interference and/or
occurrence.

46

 

     IN WITNESS WHEREOF, Landlord and Tenant have duly executed and delivered this Lease, as of the
day and year set forth on the cover page hereof.

	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 	 	 	 	 
	 	 	PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P., a Delaware limited partnership
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Prentiss Properties, Inc., a Delaware corporation, general partner
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	TENANT:
	 
	 	 	 	 	 	 
	 	 	HYPERION SOLUTIONS CORPORATION, a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

47

 

SCHEDULE 1.1

DEFINITIONS

     When used in this Lease, the terms set forth below shall have the following meanings:

     “Access Date” shall have the meaning given to it in Exhibit D hereof.

     “ADA” shall have the meaning given to it in Section 9.4 hereof.

     “Additional Rent” shall have the meaning given to it in the Basic Lease Information Section
hereof.

     “Affiliate” shall have the meaning given to it in Section 5.5 hereof.

     “Affiliate Transaction” shall have the meaning given to it in Section 24.2 hereof.

     “Alterations” shall have the meaning given to it in Section 10.1 hereof.

     “Amended Notice” shall have the meaning given to it in Section 6.1(C) hereof.

     “Annual Adjustment Notice” shall have the meaning given to it in Section 6.1(C) hereof.

     “Bankruptcy Code” shall mean the United State Bankruptcy Code relating to Bankruptcy, as
amended.

     “Base Rent” shall have the meaning given to it in the Basic Lease Information Section hereof.

     “Basic Lease Information” shall have the meaning given to it in the Basic Lease Information
Section hereof.

     “Bonus Rent” shall have the meaning given to it in Section 8.3 hereof.

     “Brokers” shall have the meaning given to it in the Basic Lease Information Section hereof.

     “Building 10” shall have the meaning given to it in Section 23.1 hereof.

     “Building 10 First Offer Space” shall have the meaning given to it in Section 23.1 hereof.

     “Building 10 First Offer Space Commencement Date” shall have the meaning given to it in
Section 23.1 hereof.

     “Building 10 Lease Offer Notice” shall have the meaning given to it in Section 23.1 hereof.

Schedule 1.1-1

 

     “Building 10 Right of First Offer” shall have the meaning given to it in Section 23.1 hereof.

     “Buildings” shall have the meaning given to it in the Basic Lease Information Section hereof.

     “Business days” shall mean Monday through Friday (except for Holidays).

     “Cafeteria” shall have the meaning given to it in the Basic Lease Information Section hereof.

     “Cafeteria Operator” shall have the meaning given to it in Section 26.1.

     “Cease to Use,” “Ceases to Use” or “Ceased to Use” shall mean ceasing use for business
purposes, but Tenant shall not be deemed to be using the Premises or portion thereof for business
purposes solely because of the presence of Tenant’s furniture, fixtures, equipment and personal
property within the Premises or the presence of personnel for the purpose of securing or protecting
Tenant’s property such as security guards or information technology personnel.

     “Claims” shall have the meaning given to it in Section 12.2 hereof.

     “Class A Buildings” shall mean Class A office buildings of similar age, quality of
construction and size in the Market Area.

     “Commencement Date” shall have the meaning given to it in Section 3.1 hereof.

     “Commencement Notice” shall have the meaning given to it in Section 3.1 hereof.

     “Common Areas” shall mean those certain areas and facilities of the Project and those certain
improvements to the Land which are from time to time provided by Landlord for the use of tenants of
the Project and their employees, clients, customers, licensees and invitees or for use by the
public, which facilities and improvements may include without limitation the Underground Parking
Area, the Cafeteria, all parking fields, any and all corridors, elevator foyers, vending areas,
cafeterias, bathrooms, electrical and telephone rooms, mechanical rooms, janitorial areas,
conference centers, fitness centers and other similar facilities of buildings other than the
Buildings of the Premises and any and all grounds, parks, landscaped areas, outside sitting areas,
sidewalks, walkways, tunnels, pedestrianways, skybridges, and generally all other improvements
located on the Land, or which connect the Land to other buildings.

     “Core Building Systems” shall have the meaning given to it in Section 9.1 hereof.

     The words “day” or “days” shall refer to calendar days, except where Business Days are
specified.

     “Delivery Condition” shall have the meaning given to it in Section 9.3 hereof.

     “Development Fee” shall have the meaning given to it in Section 25.1 hereof.

Schedule 1.1-2

 

     “Estimates” shall have the meaning given to in Section 22.4 hereof.

     “Event of Default” shall have the meaning given to it in Section 13.1 hereof.

     “Expiration Date” shall have the meaning given to it in the Basic Lease Information Section
hereof.

     “First Renewal Period” shall have the meaning given to it in Section 22.1 hereof.

     “First Renewal Period Commencement Date” shall have the meaning given to it in Section 22.1
hereof.

     “Force Majeure” shall have the meaning given to it in Section 21.6 hereof.

     “Generators” shall have the meaning given to it in Section 9.1 hereof.

     “Hazardous Substance” shall mean any substance, material, waste, gas or particulate matter
which is regulated by any local governmental authority, the State of California, or the United
States Government, including, but not limited to (i) any material or substance which is defined or
designated as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely
hazardous waste,” “infectious waste”, “medical waste”, “toxic substance”, “toxic pollutant” or
“restricted hazardous waste” under any provision of local, state or federal law; (ii) oil or
petroleum; (iii) asbestos and asbestos-containing materials; (iv) polychlorinated biphenyls, urea
formaldehyde, radon gas; (v) radioactive material; (vi) any Infectious Waste; and (vii) any product
that is flammable, combustible, corrosive, caustic poisonous, explosive or hazardous.

     Tenant shall not be deemed to be the “operator” of Tenant’s “facility” and the “owner” of all
Hazardous Substances or Infectious Wastes brought on the Premises by Tenant, or the Tenant Parties
and the wastes, byproducts or residues generated, resulting or produced therefrom.

     “Holidays” shall mean those holidays designated by Landlord, which holidays shall be
consistent with those holidays designated by landlords of other first-class office buildings in the
greater San Jose area.

     The words “herein,” “hereof,” “hereby,” “hereunder” and words of similar import shall be
construed to refer to this Lease as a whole and not to any particular Article or Section thereof
unless expressly so stated.

     The words “include” and “including” shall be construed as if followed by the phrase “without
being limited to.”

     “Infectious Wastes” shall mean: any solid waste capable of producing an infectious disease,
including all bulk blood, blood products; cultures of specimens from medical, pathological,
pharmaceutical, research, commercial and industrial laboratories; human tissues; organs, body
parts, secretions, blood and body fluids removed during surgery and autopsies; the carcasses and
body parts of all animals exposed to pathogens in research, used in the vivo testing

Schedule 1.1-3

 

of pharmaceuticals or that died of known or suspected infectious diseases; needles, syringes
and scalpel blades.

     “Interest Rate” shall have the meaning given to it in Section 4.2 hereof.

     “Land” shall have the meaning given to it in the Basic Lease Information Section hereof.

     “Land Costs” shall have the meaning given to it in Section 25.1 hereof.

     “Landlord” shall have the meaning given to it in the first paragraph of this Lease.

     “Landlord’s Address for Payment” shall have the meaning given to it in the Basic Lease
Information Section hereof.

     “Landlord’s Address for Notice” shall have the meaning given to it in the Basic Lease
Information Section hereof.

     “Landlord’s Contribution” shall have the meaning given to it in the Basic Lease Information
Section hereof.

     “Landlord Parties” shall have the meaning given to it in Section 17.2 hereof.

     “Lease” shall have the meaning given to it in the first paragraph of this Lease.

     “Leasehold Improvements” shall have the meaning given to it in Exhibit D hereof.

     “Lease Year” shall have the meaning given to it in the Basic Lease Information Section hereof.

     “Major Alteration” shall have the meaning given to it in Section 10.1 hereof.

     “Market Area” shall have the meaning given to it is Section 22.6 hereof.

     “Market Rent” shall have the meaning given to it is Section 22.6 hereof.

     “Negotiation Period” shall have the meaning given to it in Section 22.4 hereof.

     “New Improvements” shall have the meaning given to it in Section 25.1 hereof.

     “New Improvements Base Rent” shall have the meaning given to it in Section 25.1 hereof.

     “New Improvements Costs” shall have the meaning given to it in Section 25.1 hereof.

     “New Improvements Offer Notice” shall have the meaning given to it in Section 25.1 hereof.

Schedule 1.1-4

 

     “New Improvements Right of First Offer” shall have the meaning given to it in Section 25.1
hereof.

     “New Improvements Tenant’s First Offer Notice” shall have the meaning given to it in Section
25.1 hereof.

     “notices” shall have the meaning given to it in Section 21.26 hereof.

     “Offered Property” shall have the meaning given to it in Section 24.1 hereof.

     “Operating Costs” shall mean any and all expenses, costs and disbursements of every kind which
Landlord pays or incurs or becomes obligated to pay in connection with the operation, management,
repair and maintenance of the Project, including, without limitation, the cost to operate the
Cafeteria, less receipts therefrom, the costs of lighting the Common Areas; the cost of delivering
gas, water and sewer services to the Project, snow and ice and trash removal; painting; cleaning;
landscaping and grounds maintenance; window cleaning; elevator maintenance in the Common Areas;
repair and maintenance of the Project (including, but not limited to, Landlord’s repair,
maintenance and service obligations set forth in Article 7 and Article 9 hereof except as otherwise
expressly set forth herein); the rental value of the Project’s management office reasonable in size
for the Project; maintenance and repair of all personal property of Landlord used in connection
with the Project, the cost of renting personal property and equipment used in the repair and
maintenance of the Project; loading docks and truck docks; fuel, gas, water, sewer, steam,
electricity and other utility charges (other than utilities metered directly to and paid by
tenants); insurance and insurance deductibles (other than earthquake insurance deductibles which
shall be treated in the same manner as Core Building Systems); security or traffic control forces
or equipment (not to be construed to require Landlord to provide such services or equipment);
uniforms, supplies; holiday decorations; sales and use taxes on purchased goods; and other labor
costs, payroll taxes, insurance, training and wages, salaries and fringe benefits of persons
engaged in the accounting, operation, management, maintenance or repair of the Project; a
management fee of three percent (3%) of Base Rent and Additional Rent (whether or not Landlord
engages a property manager or uses its own personnel); Taxes (defined below); legal and accounting
costs incurred by Landlord or paid by Landlord to third parties, reasonable appraisal fees for
appraisals made in connection with obtaining insurance for the Project, reasonable consulting fees
and all other professional fees and disbursements to the extent of services performed for the
Project, all association dues incurred in connection with the operation, management, maintenance of
the Project, any and all amounts payable pursuant to any declaration of covenants, reciprocal
easement agreement or other encumbrance of record which may now or in the future affect the
Project, excluding legal fees with respect to disputes with individual tenants, negotiation of
tenant leases or with respect to the ownership rather than the operation, management or repair of
the Project and excluding appraisal consulting and other professional fees incurred in connection
with the financing or disposition of the Project; and any other expense or charge which, in
accordance with generally accepted accounting or management principles, would be considered an
expense of operating, maintaining upgrading, replacing, managing, or repairing the Project.

Schedule 1.1-5

 

     Operating Costs shall exclude (a) specific costs for any capital repairs, replacements,
equipment or improvements, except as provided below; (b) expenses for which Landlord is reimbursed
or indemnified (either by an insurer, condemner, tenant, warrantor or otherwise) to the extent of
funds received by Landlord; (c) expenses incurred in leasing or procuring tenants (including lease
commissions, advertising expenses and expenses of renovating space for tenants); (d) except as
provided below, payments for rented equipment if such payments would constitute a capital
expenditure not permitted pursuant to the foregoing if the equipment were purchased; (e) interest
or amortization payments on any mortgages; (f) net basic rents under ground leases; (g) costs
representing an amount paid to an affiliate of Landlord which is in excess of the amount which
would have been paid in the absence of such relationship; (h) costs specially billed to and paid by
specific tenants; (i) salaries and benefits of employees of Landlord and its affiliates above the
grade of group manager; (j) depreciation on the Premises, Buildings or equipment therein; (k)
amortization of cost of tenant improvements in the Project; (l) third party accountants’ fees,
other professional fees and costs incurred in connection with disputes or lease negotiations with
tenants or other occupants or prospective tenants or occupants of all or any portion of the
Project, the enforcement of any leases (including unlawful detainer proceedings and the collection
of rents), (m) overhead and profit paid to subsidiaries or affiliates of the Landlord for services
(other than management) on or to the Project for supplies or other materials, to the extent that
the overall cost of the services, supplies or materials provided by Landlord materially exceeds the
competitive cost of the services, supplies, or materials if obtained from an unrelated third party
on an arm’s length basis; (n) compensation paid to clerks, attendants, or other persons in
commercial concessions operated by the Landlord, other than in connection with the operation of the
Cafeteria; (o) rentals and other related expenses incurred in leasing air conditioning systems,
elevators, or other equipment ordinarily considered to be of a capital nature, except that if
Landlord incurs such rentals as an alternative to financing such capital expenditure, the annual
installments of such rentals may be passed through to the extent that such item would have been
passed through as a capital expense as set forth below; (p) items and services for which Tenant
reimburses the Landlord or pays third parties or that the Landlord provides selectively to one or
more tenants of all or any portion of the Project other than Tenant without reimbursement; (q)
maintenance costs incurred in connection with repairs or other work needed because of fire,
windstorm, or other casualty or cause insured against by Landlord or to the extent Landlord’s
insurance required under the terms of the Lease would have provided insurance, whichever is
greater; (r) all voluntary contributions to any political, charitable-organizations or other
industry related associations (e.g., BOMA); (s) capital costs for the acquisition of sculpture,
paintings or other art objects; (t) advertising, marketing and promotion costs; (u) costs
associated with the operation of the corporation or other entity which constitutes the Landlord, as
distinguished from costs of operation of the Project, including accounting and legal costs, costs
of defending lawsuits with any mortgagee, and the costs of selling, syndicating, financing,
mortgaging or hypothecating any ownership interest in Landlord, or any of the Landlord’s interests
in the Project; (v) reserves for bad debts or rental losses; (w) the costs incurred to investigate
the presence of any Hazardous Material (as defined above), costs to respond to any claim of
Hazardous Material contamination or damage, costs to remove any Hazardous Material from the
Premises, Buildings or Project or to remediate any Hazardous Material contamination, any judgments
or other costs incurred in connection with any Hazardous Material exposure or release, except to
the extent that the cost is caused by the storage, use,

Schedule 1.1-6

 

release or disposal of the subject Hazardous Material by Tenant; (x) fines and penalties
incurred due to Landlord’s operation of the Project in violation of any Requirements or due to
Landlord’s failure to timely pay real property taxes; and (y) any costs incurred by Landlord in
connection with the maintenance or repair of any new improvement on the Project that Tenant does
not use and from which Tenant does not benefit to the extent that such costs increase the cost to
operate the Project on a per square foot basis. Notwithstanding anything to the contrary contained
in this Lease, Operating Costs shall not include any charge that would duplicate or otherwise
result in double reimbursement to Landlord for a single expenditure made by Landlord.

     Operating Costs shall include the cost to replace any Core Building Systems, earthquake
insurance deductibles and with respect to the replacement or addition of capital improvements, the
following: (i) replacements of existing capital improvements; (ii) capital improvements made to
increase efficiencies at the Project; or (iii) capital improvements required by Requirements made
on or after the Commencement Date, in each case amortized over the useful life of such Core
Building System, earthquake insurance deductible or capital improvement (as determined in
accordance with generally accepted accounting principles), together with interest at two percent
(2%) above the Prime Rate per annum on the unamortized cost of such improvement or deductible. To
the extent that Operating Costs include the costs of capital improvements as provided in this
paragraph, Landlord shall be permitted to do the same with respect to the costs of leasing (rather
than purchasing) such capital item. In no event shall Landlord include in Operating Costs
Landlord’s cost to build or replace any structural elements of the Project. The useful life of an
earthquake insurance deductible shall be deemed to be ten (10) years for the purpose of this
paragraph.

     “Operating Costs Payment” shall have the meaning given to it in Section 6.1 hereof.

     “Other Improvements” shall have the meaning given to it in Section 21.15 hereof.

     “Permitted Alterations” shall have the meaning given to it in Section 10.1 hereof.

     “Permitted Transfers” shall have the meaning given to it in Section 8.4.

     “Plan Deposit” shall have the meaning given to it in Section 25.1 hereof.

     “Plans” shall have the meaning given to it in Exhibit D hereof.

     “Premises” shall have the meaning given to it in the Basic Lease Information Section hereof.

     “Premises Improvements” shall have the meaning given to it in Section 14.1(A) hereof.

     “Prime Rate” shall have the meaning given to it in Section 4.2 hereof.

     “Prohibited Companies” shall have the meaning given to it Section 29.1 hereof.

     “Project” shall have the meaning given to it in the Basic Lease Information Section hereof.

Schedule 1.1-7

 

     “Project Tenants” shall have the meaning given to it Section 30.2 hereof.

     “Purchase Contract” shall have the meaning given to it Section 24.1 hereof.

     “Renewal Notice” shall have the meaning given to it in Section 22.2 hereof.

     “Rent” shall have the meaning given to it in the Basic Lease Information Section hereof.

     “Rentable Area of the Project” shall have the meaning given to it in the Basic Lease
Information Section hereof.

     “Rentable Area of the Premises” shall have the meaning given to it in the Basic Lease
Information Section hereof.

     “Requirements” shall mean all requirements, rules, orders, codes and regulations of the
federal, state and municipal governments or other duly constituted public authority, and of any
board of insurance regulators or underwriters, health officer, fire marshall, and/or building
inspector and the terms and provisions of any ground lease, mortgage, deed to secure debt and any
other matter of record, in each case affecting or relating to the Project, the Premises, the
business conducted in the Premises or Tenant’s use of the Premises.

     “Revised Offer” shall have the meaning given to it in Section 24.1.

     “Rules and Regulations” shall have the meaning given to it in Section 2.1 hereof.

     “Return Rate” shall have the meaning given to it in Section 25.1 hereof.

     “Reserved Spaces” shall mean those parking spaces in the area marked on Exhibit A hereto as
“Reserved Spaces” as such parking spaces may be configured from time to time.

     “Right of First Offer to Sell” shall have the meaning given to it in Section 24.1 hereof.

     “Satellite Equipment” shall have the meaning given to it in Section 30.1 hereof.

     “Second Renewal Period” shall have the meaning given to it in Section 22.1 hereof.

     “Second Renewal Period Commencement Date” shall have the meaning given to it in Section 22.1
hereof.

     “Secured Parties” shall have the meaning given to it in Section 14.1(B) hereof.

     “Security Deposit” shall have the meaning given to it in the Basic Lease Information Section
hereof.

     “Sign Specifications” shall have the meaning given to it in Section 28.2 hereof.

     “Storage Tanks” shall have the meaning given to it in Section 9.1 hereof.

Schedule 1.1-8

 

     “Taxes” shall mean, all taxes, assessments, and other governmental charges, applicable to or
assessed against the Project or any portion thereof, or applicable to or assessed against
Landlord’s personal property used in connection therewith, whether federal, state, county, or
municipal and whether assessed by taxing districts or authorities presently taxing the Project or
the operation thereof or by other taxing authorities subsequently created, or otherwise, and any
other taxes and assessments attributable to or assessed against all or any part of the Project or
its operation; including any reasonable expenses, including fees and disbursements of attorneys,
tax consultants, arbitrators, appraisers, experts and other witnesses, incurred by Landlord in
contesting any taxes or the assessed valuation of all or any part of the Project.

     “Tenant” shall be deemed to include Tenant’s successors and assigns (to the extent permitted
by Landlord) and any and all occupants of the Premises permitted by Landlord and claiming by,
through or under Tenant.

     “Tenant’s Address for Notice” shall have the meaning given to it in the Basic Lease
Information Section hereof.

     “Tenant’s Architect” shall have the meaning given to it in Exhibit D hereof.

     “Tenant’s Contractors” shall have the meaning given to it in Exhibit D hereof.

     “Tenant Credit Adjustment” shall have the meaning given to it in Section 25.1 hereof.

     “Tenant’s Offer” shall have the meaning given to it in Section 24.1 hereof.

     “Tenant Parties” shall have the meaning given to it in Section 17.1 hereof.

     “Tenant’s Property” shall have the meaning given to it in Section 14.1(A) hereof.

     “Tenant’s Permitted Use” shall have the meaning given to it in the Basic Lease Information
Section hereof.

     “Tenant’s Review Notice” shall have the meaning given to it in Section 6.4 hereof.

     “Tenant’s Share” shall have the meaning given to it in the Basic Lease Information Section
hereof.

     “Tenant’s Signage” shall have the meaning given to it in Section 28.1 hereof.

     “Term” shall have the meaning given to it in the Basic Lease Information Section hereof.

     The “terms of this Lease” shall be deemed to include all terms, covenants, conditions,
provisions, obligations, limitations, restrictions, reservations and agreements contained in this
Lease.

     “Transfer” shall have the meaning given to it in Section 8.1 hereof.

     “Transferee” shall have the meaning given to it in Section 8.3 hereof.

Schedule 1.1-9

 

     “Underground Parking Area” shall have the meaning given to it in the Basic Lease Information
Section hereof.

     “Warranty Date” shall have the meaning given to it in Section 9.3 hereof.

     A “year” shall mean a calendar year.

Schedule 1.1-10

 

EXHIBIT A

FLOOR PLAN OF THE PREMISES

First Floor — Building 8

A-1

 

Second Floor — Building 8

A-2

 

Third Floor — Building 8

A-3

 

Fourth Floor — Building 8

A-4

 

First
Floor — Building 9

A-5

 

Second
Floor — Building 9

A-6

 

Lower Podium
Floor — Building 9

A-7

 

5500 Campus — Lower Podium Level Plan

A-8

 

Project Plan

A-9

 

EXHIBIT B

THE LAND

All that real property, situate in the City of Santa Clara, County of Santa Clara, State of
California, being a portion of the lands of the City of Santa Clara Land Fill Corporation and the
City of Santa Clara described as Parcel B in that Deed of Gift recorded August 30, 1967 in Book
7840 at Page 204, Official Records of Santa Clara County and being a portion of the lands of the
City of Santa Clara as described in the deed recorded in Book 9458 at page 115, Official Records of
Santa Clara County, said real property being more particularly described as follows:

Beginning at the brass pin monument located at the intersection of the monument line of Great
America Parkway (125 feet wide) and the centerline Old Mountain View — Alviso Road (60 feet wide)
as shown on that Parcel Map filed for record in Book 602 of Maps at Page 34, Santa Clara County
Records; thence along the centerline of Old Mountain View — Alviso Road, North 89° 47’ 24” West
259.00 feet to the Southerly prolongation of the Easterly line of the lands of Santa Clara Valley
Water District, described as Parcel 1 in the Grant Deed recorded in Book D928 at Page 706, Official
Records of Santa Clara County; thence along said prolongated line, North 10° 57’ 34” West 30.58
feet to the Southeasterly corner of said lands of Santa Clara Valley Water District and the True
Point of Beginning, said point being on the North line of said Old Mt. View — Alviso Road as shown
on that Parcel Map filed for record in Book 413 of Maps at Page 13, Santa Clara County Records;
thence along the Easterly line of San Tomas Aquino Creek, conveyed to the Santa Clara Valley Water
District as Parcel 1 in that Grant Deed recorded in Book D928 at Page 706, Official Records of
Santa Clara County, and in that Quitclaim recorded in Book D928 at Page 716, Official Records of
Santa Clara County, North 10° 57’ 34” West 1325.72 feet to the Southerly corner of that parcel
described in the Grant Deed from the City of Santa Clara to the Santa Clara Valley Water District,
recorded February 14, 1997, Document 13613165, Official Records of Santa Clara County; thence along
the Southeasterly line of said parcel, North 19° 14’ 15” East 105.25 feet to the Southeasterly line
of that parcel described as Parcel 1 in that Grant Deed from the City of Santa Clara to the State
of California, recorded February 10, 1997, Document 13607858, Official Records of Santa Clara
County; thence along the general Southerly boundary of the last said parcel the following six (6)
courses: North 63° 34’ 28” East 51.54 feet; North 62° 02’ 11” East 153.02 feet; North 61° 29’ 12”
East 230.90 feet; Easterly and Southeasterly along a tangent curve to the right, having a radius of
32.00 feet, through a central angle of 100° 07’ 12”, an arc length of 55.92 feet to a point of
compound curvature; Southerly along a tangent curve to the right, having a radius of 282.00 feet,
through a central angle of 18° 23’ 50”, an arc length of 90.55 feet; South 00° 00’ 14” West 55.36
feet to the Westerly line of said Great America Parkway, shown as “Proposed Great America Parkway”
on that Record of Survey filed for record in Book 34 of Maps at Pages 1 through 8, Santa Clara
County Records; thence along said Westerly line, South 01° 05’ 29” West 1395.20 feet; thence along
a tangent curve to the right, having a radius of 50.00 feet, through a central angle of 89° 07’
07”, for an arc length of 77.77 feet to a point of
tangency on said North line of Old Mt. View — Alviso Road; thence along said North line, North 89° 47’ 24” West 150.14 feet to said True Point of
Beginning.

APN: 104-52-020

 

 

EXHIBIT C

RENT SCHEDULE

	 	 	 	 	 
	Period	 	Base Rent Per Month
	July 1, 2004 — December 31, 2004
	 	None.
	January 1, 2005 — June 30, 2005
	 	$	208,734.95	 
	July 1, 2005 — June 30, 2006
	 	$	219,721.00	 
	July 1, 2006 — June 30, 2007
	 	$	230,707.05	 
	July 1, 2007 — June 30, 2008
	 	$	241,693.10	 
	July 1, 2008 — June 30, 2009
	 	$	252,679.15	 
	July 1, 2009 — June 30, 2010
	 	$	263,665.20	 
	July 1, 2010 — June 30, 2011
	 	$	274,651.25	 
	July 1, 2011 — June 30, 2012
	 	$	285,637.30	 
	July 1, 2012 — June 30, 2013
	 	$	296,623.35	 
	July 1, 2013 — June 30, 2014
	 	$	307,609.40	 
	July 1, 2014 — December 31, 2014
	 	$	318,595.45	 

 

 

EXHIBIT D

WORK LETTER

ARTICLE 1

LEASEHOLD IMPROVEMENTS

     Tenant, at its sole cost and expense, but subject to payment of the Landlord’s Contribution
(as hereinafter defined) shall perform, or cause to be performed, the work (the “Leasehold
Improvements”) in the Premises provided for in the Plans (as hereafter defined) submitted to and
approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed.
Landlord’s review and approval of the Plans or any other submission of Tenant shall create no
responsibility or liability on the part of Landlord for such compliance or for their completeness
or design sufficiency. The parties hereto agree that the basic scope of the Leasehold Improvements
is as set forth on Schedule A to this Work Letter and that both parties agree to such scope of
work. In addition, Landlord agrees that Tenant shall not have to remove any of the Leasehold
Improvements upon the expiration or earlier termination of this Lease.

ARTICLE 2

CONDITION OF THE PREMISES

     Tenant shall accept the Premises in its “As-Is” condition for the purpose of completing the
Leasehold Improvements, subject to the terms of Section 3.2 of the Lease.

ARTICLE 3

PRE-CONSTRUCTION ACTIVITIES

     (a) Prior to commencing Tenant’s construction of Leasehold Improvements, Tenant shall
submit the following information and items to Landlord for Landlord’s review and approval:

	 	(i)	 	An estimated construction schedule including
the scheduled commencement date of construction of the Leasehold
Improvements, milestone dates and the estimated date of completion of
construction.
	 
	 	(ii)	 	An itemized statement of estimated construction
costs, including permits and architectural and engineering fees.
	 
	 	(iii)	 	The names and addresses of Tenant’s
contractors (and the Tenant’s contractor’s subcontractors and vendors)
to be engaged by Tenant for the Leasehold Improvements (collectively,
“Tenant’s

D-1

 

	 	 	 	Contractors”). Landlord has the right to reasonably approve or
disapprove Tenant’s Contractors.
	 
	 	(iv)	 	The name and address of the architect to be
engaged by Tenant for the Leasehold Improvements (“Tenant’s
Architect”), and Tenant’s Architect’s written statement that Tenant’s
Architect has visited the site, inspected and verified existing
conditions as such conditions affect the Plans and construction of the
Leasehold Improvements. Landlord has the right to reasonably approve
or disapprove Tenant’s Architect. Landlord hereby approves Reel
Grobman & Associates as Tenant’s Architect.
	 
	 	(v)	 	Copies of insurance certificates or binders of
insurance as hereinafter described. Tenant shall not permit Tenant’s
Contractors to commence work until the required insurance has been
obtained and verification has been delivered to Landlord.
	 
	 	(vi)	 	The Plans for the Leasehold Improvements, which
Plans shall be subject to Landlord’s reasonable approval in accordance
with Paragraph 3(b) below.

Tenant will update such information and items by notice to Landlord of any material changes.

     (b) As used herein the term “Plans” shall mean full and detailed construction drawings,
architectural and engineering plans and specifications covering the Leasehold Improvements
(including, without limitation, architectural, mechanical, electrical, life safety, fire
protection and plumbing working drawings for the Leasehold Improvements). Subject to
Landlord’s Contribution, Tenant shall pay all costs and expenses of preparing the Plans,
including any reasonable out-of-pocket costs incurred by Landlord in connection with the
review and approval thereof, but in no case shall Tenant be obligated to supply greater
detail in its Plans than that required by governmental authorities and contractors. The
Plans shall be subject to Landlord’s reasonable approval and the approval of all local
governmental authorities requiring approval, if any. Landlord shall give its approval or
disapproval (giving reasons in case of disapproval) of the Plans within fifteen (15)
business days after their delivery to Landlord. If Landlord does not respond within such
fifteen (15) business day period, Landlord’s approval shall be deemed given. Landlord
agrees not to unreasonably withhold its approval of said Plans; provided, however, that
Landlord shall not be deemed to have acted unreasonably if it withholds its consent because,
in Landlord’s opinion: (i) the Leasehold Improvements are likely to adversely affect
Building systems, the structure of the Building or the safety of the Building; (ii) the
Leasehold Improvements would adversely affect Landlord’s ability to furnish services to
Tenant or other tenants; (iii) the Leasehold Improvements would violate any governmental
laws, rules or ordinances; (iv) the Leasehold Improvements contain or would require the use
of hazardous or toxic materials in violation of

D-2

 

Requirements; (v) the Leasehold Improvements would adversely affect the exterior
appearance of the Building; or (vi) the Leasehold Improvements would adversely affect
another tenant’s premises. The foregoing reasons, however, shall not be exclusive of the
reasons for which Landlord may withhold consent, whether or not such other reasons are
similar or dissimilar to the foregoing. Landlord shall cooperate with Tenant by discussing
or reviewing preliminary plans and specifications at Tenant’s request prior to completion of
the full, final detailed Plans in order to expedite the preparation of and the subsequent
approval process concerning the final Plans. If Landlord notifies Tenant that changes are
required to the final Plans submitted by Tenant, Tenant shall submit to Landlord, for its
approval, the Plans amended in accordance with the changes so required. Such submission of
revised Plans shall be accompanied by a written point by point response from Tenant
specifically responding to any disapprovals or other responses delivered by Landlord to
Tenant. The Plans shall also be revised, and the Leasehold Improvements shall be changed,
to incorporate any work required in the Premises by any local governmental field inspector.
Landlord’s approval of the Plans shall in no way be deemed to be acceptance or approval of
any element therein contained which is in violation of any applicable statutes, laws,
ordinances, orders, codes, rules, regulations, building or fire codes or other governmental
requirements.

     (c) No Leasehold Improvements shall be undertaken or commenced by Tenant in the
Premises until the date Tenant is entitled to access to the Premises for construction of the
Leasehold Improvements as set forth in Article 3 of the Lease (the “Access Date”), and then
only if:

	 	(i)	 	The Plans for the Premises have been submitted
to and approved by Landlord pursuant to the terms hereof.
	 
	 	(ii)	 	All necessary building permits have been
obtained by Tenant.
	 
	 	(iii)	 	All required insurance coverages have been
obtained by Tenant, it being understood that failure of Landlord to
receive evidence of such coverage upon commencement of the Leasehold
Improvements shall not waive Tenant’s obligations to obtain such
coverages.

ARTICLE 4

CHARGES AND FEES

     Subject to Article 8 below, Tenant shall be responsible for all costs and expenses
attributable to the Leasehold Improvements.

D-3

 

ARTICLE 5

CHANGE ORDERS

     All material changes to the final Plans requested by Tenant must be approved by Landlord in
advance of the implementation of such changes as part of the Leasehold Improvements, such approval
shall not be unreasonably withheld, conditioned or delayed.

ARTICLE 6

STANDARDS OF DESIGN AND CONSTRUCTION AND

CONDITIONS OF TENANT’S PERFORMANCE

     All work done in or upon the Premises by Tenant shall be done according to the standards set
forth in this Article 6, except as the same may be modified in the Plans approved by both Landlord
and Tenant.

     (a) Tenant’s Plans and all design and construction of the Leasehold Improvements shall
comply with all applicable statutes, ordinances, regulations, laws, codes and industry
standards, including, but not limited to, requirements of Landlord’s fire insurance
underwriters and the requirements of the Americans With Disabilities Act. Approval by
Landlord of the Plans shall not constitute a waiver of this requirement or assumption by
Landlord of responsibility for compliance.

     (b) Tenant shall, at its own cost and expense, but subject to payment by Landlord of
Landlord’s Contribution under Article 8 below, obtain all required building permits and,
when construction has been completed, shall, at its own cost and expense, obtain an
occupancy permit for the Premises, which shall be delivered to Landlord. Tenant’s failure
to obtain such permits shall not cause a delay in the Rent Commencement Date, or the payment
of Rent and performance of other obligations under the Lease.

     (c) Tenant’s Contractors shall be licensed contractors, possessing good labor
relations, capable of performing quality workmanship and working in harmony with Landlord’s
contractors and subcontractors and with other contractors and subcontractors in the Project.

     (d) Tenant shall use only new, first-class materials in the Leasehold Improvements
generally of a quality level of building standard, except where explicitly shown in the
Plans approved by Landlord and Tenant. Such approval of Landlord shall not be unreasonably
withheld, conditioned or delayed.

     (e) Tenant and Tenant’s Contractors, in performing work, shall cooperate with other
tenants and occupants of the Project so that the parties shall not interfere with each
other’s work. Construction equipment and materials are to be kept within the

D-4

 

Premises and delivery and loading of equipment and materials shall be done at such
locations and at such time as Landlord shall reasonably direct so as not to unreasonably
burden the operation of the Project.

     (f) Tenant shall permit access to the Premises, and the Leasehold Improvements shall be
subject to inspection, by Landlord and Landlord’s architects, engineers, contractors and
other representatives, at all times during the period in which the Leasehold Improvements
are being constructed and installed and following completion of the Leasehold Improvements.
With respect to such inspections, Landlord shall take reasonable steps to minimize any
unreasonable burden or delay to the progress of Tenant’s work.

     (g) Tenant shall notify Landlord upon completion of the Leasehold Improvements and
shall furnish Landlord with such further documentation as may be necessary under Article 8
below.

     (h) Tenant shall have no authority to materially deviate from the Plans in performance
of the Leasehold Improvements, except as authorized by Landlord and its designated
representative in writing. Tenant shall furnish to Landlord “as-built” drawings of the
Leasehold Improvements. Such record drawings shall be submitted in a final package by
Tenant’s general contractor to Landlord within one hundred eighty (180) days after
completion of the Leasehold Improvements. Final disbursement of any remaining amounts of
Landlord’s Contribution will not occur until such record drawings have been received by
Landlord.

     (i) Tenant shall impose on and enforce all applicable terms herein against Tenant’s
Architect and Tenant’s Contractors.

ARTICLE 7

INSURANCE AND INDEMNIFICATION

(a) In addition to any insurance which may be required under the Lease, Tenant shall secure, pay
for and maintain or cause Tenant’s Contractors to secure, pay for and maintain during the
continuance of construction and fixturing work within the Premises, insurance in the following
minimum coverages and limits of liability:

	 	(i)	 	Tenant Workmen’s Compensation and Employer’s
Liability Insurance with limits of not less than $500,000.00, or such
higher amounts as may be required from time to time by any employee
benefit acts or other statutes applicable where the work is to be
performed, and in any event sufficient to protect Tenant’s Contractors
from liability under the aforementioned acts.

D-5

 

	 	(ii)	 	Comprehensive General Liability Insurance
including Broad Form Contractual, Broad Form Property Damage, Personal
Injury, Completed Operations and Products coverages (such Completed
Operations and Products shall be provided for a period of three (3)
years after the date of final acceptance of the Leasehold
Improvements), and deletion of any exclusion pertaining to explosion,
collapse and underground property damage hazards, with limits of not
less than $5,000,000.00 combined single limit for bodily injury and
property damage for each general contractor and $2,000,000 combined
single limit for bodily injury and property damage for each
subcontractor.
	 
	 	(iii)	 	Comprehensive Automobile Liability Insurance
including Owned, Non-Owned and Hired Car coverages, with limits of not
less than $1,000,000.00 combined single limit for both bodily injury
and property damage.
	 
	 	(iv)	 	“All-risk” builder’s risk insurance upon the
entire Leasehold Improvements to the full insurable value thereof.
This insurance shall include the interests of Landlord and Tenant (and
their respective contractors and subcontractors of any tier to the
extent of any insurable interest therein) in the Leasehold Improvements
and shall insure against the perils of fire and extended coverage and
shall include “all-risk” builder’s risk insurance for physical loss or
damage including, without duplication of coverage, theft, vandalism and
malicious mischief. If portions of the Leasehold Improvements are
stored off the site of the Buildings or in transit to said site and are
not covered under said “all-risk” builder’s risk insurance, then Tenant
shall secure and maintain similar property insurance on such portions
of the Leasehold Improvements. Any loss insured under said “all-risk”
builder’s risk insurance is to be adjusted between Landlord and Tenant,
as their interests may appear.

All policies (except the workmen’s compensation policy) shall be endorsed to include as
additional insured parties Landlord and its partners, directors, officers, employees and
agents, Landlord’s contractors, Landlord’s architects, and such additional persons as
Landlord may designate. The waiver of subrogation provisions contained in the Lease shall
apply to all insurance policies (except the Tenant Workmen’s Compensation policy) to be
obtained by Tenant pursuant to this paragraph. The insurance policy endorsements shall also
provide that all additional insured parties shall be given thirty (30) days’ prior written
notice of any reduction, cancellation or non-renewal of coverage (except that ten (10) days’
notice shall be sufficient in the case of cancellation for non-payment of premium) and shall
provide that the insurance coverage afforded to the additional insured parties thereunder
shall be primary to any insurance carried independently by said

D-6

 

additional insured parties. Additionally, where applicable, each policy shall contain a
cross-liability and severability of interest clause.

     (b) Without limitation of the indemnification provisions contained in the Lease, to the
fullest extent permitted by law Tenant agrees to indemnify, protect, defend and hold
harmless Landlord, Landlord’s contractors and Landlord’s architects and their partners,
directors, officers, employees and agents, from and against all claims, liabilities, losses,
damages and expenses of whatever nature arising out of or in connection with the Leasehold
Improvements or the entry of Tenant or Tenant’s Contractors into the Project and the
Premises, including, without limitation, mechanic’s liens or the cost of any repairs to the
Premises or Project necessitated by activities of Tenant or Tenant’s Contractors and bodily
injury to persons or damage to the property of Tenant, its employees, agents, invitees,
licensees or others, except and to the extent that such claims, liabilities, losses, damages
and expenses arise out of the negligent act or omission of Landlord or any Landlord’s Party.
It is understood and agreed that the foregoing indemnity shall be in addition to the
insurance requirements set forth above and shall not be in discharge of or in substitution
for same or any other indemnity or insurance provision of the Lease.

ARTICLE 8

LANDLORD’S CONTRIBUTION

     (a) Provided that no Event of Default exists, Landlord shall contribute Landlord’s
Contribution (as set forth in the Basic Lease Information section of the Lease) as
Landlord’s share of the cost of the Leasehold Improvements and Tenant shall have sole
responsibility for the payment of any excess of the cost of the Leasehold Improvements over
the amount of the Landlord’s Contribution. Tenant shall not be entitled to a credit or other
payment for any portion of the Landlord’s Contribution not used prior to the first
anniversary of the Commencement Date. Landlord’s payments for the Leasehold Improvements
shall be made as costs of the Leasehold Improvements are incurred based on an application
for payment reasonably approved by Landlord, except that ten percent (10%) of the amount due
from Landlord will be withheld by Landlord until Tenant satisfies the terms of Article 6(h)
hereof, at which time such funds will be promptly released to Tenant.

     (b) Periodically, but not more frequently than once per month, Tenant may submit to
Landlord a payment request for costs of the Leasehold Improvements incurred naming the
parties to be paid and the respective amounts of such payments, which payment request shall
be accompanied by a statement in writing by Tenant stating the various contracts entered
into by Tenant for the Leasehold Improvements for which Tenant desires reimbursement through
Landlord’s Contribution and with respect to each: the total contract price of all labor,
work, services and materials; the amounts theretofore paid thereon; and the amount requested
for the current disbursement, and such other documentation as Landlord shall reasonably
request. Provided such documentation is

D-7

 

submitted by the 20th day of a month, Landlord will approve or disapprove such
documentation, or portions thereof, by the 1st day of the following month. If Landlord
disapproves of any such documentation, Landlord shall notify Tenant of the reason therefor.
Thereafter, to the extent such documentation is approved, payment shall be made no later
than the 20th day of the month following receipt by Landlord of the payment request and
accompanying documentation.

     (c) Within one hundred eighty (180) days after receipt of the final Certificate of
Occupancy, Tenant shall submit to Landlord a detailed breakdown of the total amount of the
costs of the Leasehold Improvements, together with final waivers of liens, contractors’
affidavits, and architects’ certificates in such form as may be reasonably required by
Landlord, Landlord’s title insurance company and Landlord’s lender, if any, from all parties
performing labor or supplying materials or services in connection with the Leasehold
Improvements, showing that all of said parties have been compensated in full and waiving all
liens in connection with the Premises and Project.

ARTICLE 9

MISCELLANEOUS

     (a) Except as herein expressly set forth or in the Lease, Landlord has no agreement
with Tenant and has no obligation to do any work with respect to the Premises.

     (b) Notices hereunder shall be given in the same manner as under the Lease.

     (c) The liability of Landlord hereunder or under any amendment hereto or any instrument
or document executed in connection herewith shall be limited as provided in the Lease.

     (d) The headings set forth herein are for convenience only.

     (e) This Exhibit sets forth the entire agreement of Tenant and Landlord regarding the
Leasehold Improvements, and may only be amended if in writing, duly executed by both
Landlord and Tenant.

     (f) This Agreement shall not be deemed applicable to any additional space added to the
original Premises at any time or from time to time, whether by any options under the Lease
or otherwise, or to any portion of the original Premises or any additions thereto in the
event of a renewal or extension of the original term of the Lease, whether by any options
under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or
supplement thereto.

D-8

 

SCHEDULE A TO EXHIBIT D

Description of Scope of Leasehold Improvements

	 	•	 	Construction of approximately 120 private offices, distributed throughout each floor of
the Buildings constituting the Premises. Offices will be located along the window line and
internal portions of the buildings. The majority of the offices will be approximately 110
to 150 square feet, with Executive offices of approximately 200 sq. ft. Each office will
include a sidelight window and HVAC controls designed for 1 thermostat per 2 offices.
	 
	 	•	 	Construction of 4 to 5 training rooms in a consolidated location. Each training room
will be approximately 500 sq. ft., with two of those rooms partitioned to allow a combined
space when open. Each training room will be equipped with drop down projection screens,
marker boards, and individual thermostats, as well as sound proofing in the walls and
ceiling.
	 
	 	•	 	Construction of a Corporate Briefing Center of approximately 3-4,000 sq. ft., to include
a large presentation room with state of the art AV equipment, an adjacent small conference
room, kitchen and lounge area. The center will be designed for presentations to clients
and will be finished with the very high quality materials.
	 
	 	•	 	Construction of a Fitness Center of approximately 2,000 sq. ft., to include restrooms,
showers, lockers and workout area.

 

 

EXHIBIT E

FORM OF COMMENCEMENT NOTICE

     This Commencement Notice is delivered this                      day of                                         , 2004, by Prentiss
Properties Acquisition Partners, L.P., a Delaware limited partnership (“Landlord”), to Hyperion
Solutions Corporation, a Delaware corporation (“Tenant”), pursuant to the provisions of Section 3.1
of that certain Lease Agreement (the “Lease”) dated                                         , 2004, by and between
Landlord and Tenant covering certain space in the Building known as 5450 and 5470 Great America
Parkway, Santa Clara, California. All terms used herein with their initial letter capitalized
shall have the meaning assigned to such terms in the Lease.

W
I T N E S S E T H:

     1. Tenant has accepted possession of the Premises, the Building and the Leasehold Improvements
and all such Leasehold Improvements have been satisfactorily completed by Landlord and accepted by
Tenant, subject only to the completion of “punch list” items.

     2. Landlord has fulfilled all of its duties of an inducement nature, and is not in default in
any manner in the performance of any of the terms, covenants, or provisions of the Lease.

     3. The Commencement Date of the Lease is the                      day of                                         , 20                    , and the
Expiration Date is the                      day of                                         , 20                    .

     4. The Base Rent shall be the amounts set forth on the Base Rent Schedule with payments of
Base Rent of $                    , beginning                                         , 20                    , subject, however, to such
increases as provided in the Lease.

	 	 	 	 	 
	Period	 	Base Rent Per Month
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

 

 

     5. Remittance of the foregoing payments shall be made on the first day of each month in
accordance with the terms and conditions of the Lease at the following address:

	 	 	 
	 

	 	Prentiss Properties Acquisition Partners, L.P.
	 

	 	P.O. Box 100435
	 

	 	Pasadena, CA 91189-0435

     6. Operating Costs are estimated each year and revised information shall be provided to
Tenant. Pursuant to Article 6 of the Lease, Tenant shall be responsible for Tenant’s Share of
Operating Costs. Pursuant to Article 5 of the Lease, Tenant shall be responsible for Tenant’s
Share of Taxes.

     IN WITNESS WHEREOF, this instrument has been duly executed by Landlord as of the date first
written above.

	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 	 	 	 	 
	 	 	PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P., a Delaware limited partnership
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Prentiss Properties, Inc., a Delaware corporation, general partner
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 

E-2

 

EXHIBIT F

INVENTORY LIST

TEKNION WORKSTATION SUMMARY — QUANTITIES ARE APPROXIMATE

	 	 	 	 	 
	Location	 	Quantity	 	Description
	 
	Bldg 8 1st Floor
	 	18	 	6x8 Teknion Contributor Cube
	 
	 	41	 	8x8 Teknion Contributor Cube
	 
	 	4	 	8x10 Teknion Contributor Cube
	 
	 	12	 	8x12 Teknion Mgr. Cube
	 
	 	13	 	Storage Cube
	 
	 	4	 	Printer Stations
	 
	 	 	 	 
	Bldg 8 2nd Floor
	 	54	 	8x8 Teknion Contributor Cube
	 
	 	6	 	8x10 Teknion Contributor Cube
	 
	 	7	 	8x12 Teknion Mgr. Cube
	 
	 	7	 	Printer Stations
	 
	 	 	 	 
	Bldg 8 3rd Floor
	 	118	 	8x8 Teknion Contributor Cube
	 
	 	42	 	8x12 Teknion Mgr. Cube
	 
	 	2	 	Storage Cube
	 
	 	23	 	Printer Stations
	 
	 	17	 	4x4 Cubes
	 
	 	 	 	 
	Bldg 8 4th Floor
	 	155	 	8x8 Teknion Contributor Cube
	 
	 	42	 	8x12 Teknion Mgr. Cube
	 
	 	2	 	Storage Cube
	 
	 	23	 	Printer Stations
	 
	 	17	 	4x4 Cubes
	 
	 	 	 	 
	Bldg 9 1st Floor
	 	1	 	Teknion Reception Cube
	 
	 	120	 	8x8 Teknion Contributor Cube
	 
	 	20	 	8x12 Teknion Mgr. Cube
	 
	 	1	 	9x20 Teknion Bullpen
	 
	 	24	 	Printer Station
	 
	 	 	 	 
	Bldg 9 2nd Floor
	 	122	 	8x8 Teknion Contributor Cube
	 
	 	29	 	8x12 Teknion Mgr. Cube
	 
	 	23	 	Printer Station

F-1

 

ANCILLARY FURNITURE SUMMARY — QUANTITIES ARE APPROXIMATE

	 	 	 	 	 
	Location	 	Quantity	 	Description
	 
	Bldg 8 1st Floor

Lobby Area
	 	2	 	Coffee Tables with Lounge Chairs
	Conference Rooms
	 	6	 	Conference Rooms with Tables and Chairs
	 
	 	 	 	 
	Bldg 8 2nd Floor

Conference Rooms
	 	2	 	Conference Rooms with Tables and Chairs
	Data Center
	 	 	 	 
	 
	 	 	 	 
	Bldg 8 3rd Floor

Conference Rooms
	 	14	 	Conference Rooms with Tables and Chairs
	 
	 	 	 	 
	Bldg 8 4th Floor

Conference Rooms
	 	12	 	Conference Rooms with Tables and Chairs
	 
	 	 	 	 
	Bldg 9 1st Floor

Lobby Area
	 	4	 	Lounge Chairs
	Conference Rooms
	 	6	 	Conference Rooms with Tables and Chairs
	 
	 	 	 	 
	Bldg 9 2nd Floor

Conference Rooms
	 	9	 	Conference Rooms with Tables and Chairs

F-2

 

MISCELLANEOUS EQUIPMENT — QUANTITIES ARE APPROXIMATE

Conference Facilities — Quantities are approximate

Whiteboards, easels and projection screens

Multi-Purpose Room: 135 chairs, 2 tables, Overhead Projector and Easel

Other
Furniture and Equipment — Quantities are approximate

Art Work (All Buildings): 47 pieces (approximate — includes art located in

Building 10 which is not a part)

3 large file cabinets — Building 8

7 lab tables — Buildings 8 and 10 (approximate — includes tables located in Building 10 which are not a part)

4 large chairs — Building 8

46 interior plants (All Buildings) (approximate — includes plants located in Building 10 which are not a part)

1 Plasma Flat Screen Monitor — Building 8

4 — 36” Mitsubishi TV Monitors — Building 8

Security System Components — Quantities are approximate

Building 8

1 PXN Network Security panel

3 PX Security Panels

44 CASI-RUSCO 940 series 40-bit proximity Card Readers

Building 9

1 PXN Network Security panel

1 PX Security Panel

31 CASI-RUSCO 940 series 40-bit proximity Card Readers

F-3

 

EXHIBIT G

LAND COSTS, DEVELOPMENT FEES, RETURN RATE

AND TENANT CREDIT ADJUSTMENT

LAND COSTS

$40 per FAR (where “FAR” means the maximum remaining square footage allowed for development on the
Project under the Requirements)

DEVELOPMENT FEE

4% of the New Improvements Cost

RETURN RATE

9.5%

TENANT CREDIT ADJUSTMENT

	 	 	 
	Credit Rating	 	Return Rate Reduction
	BBB-
	 	0
	 
	 	 
	BBB
	 	15 Basis Points
	 
	 	 
	BBB+
	 	35 Basis Points
	 
	 	 
	A-
	 	60 Basis Points
	 
	 	 
	A/A+
	 	85 Basis Points
	 
	 	 
	AA-
	 	110 Basis Points
	 
	 	 
	AA+
	 	135 Basis Points
	 
	 	 
	AAA
	 	150 Basis Points

G-1

 

EXAMPLE

The following is an example of the calculation of the New Improvements Base Rent for the first year
of leasing the New Improvements and is included herein solely for example purposes and without
implication that any cost, fee or rate contained herein bears any relation to the actual cost, fee
or rate that may be incurred in connection with the actual development of the New Improvements:

Land Costs = $40 per FAR

FAR =200,000

Development Fee = 4%

Development costs other than Land Costs = $200 per FAR

Return Rate = 9.5%

First Year New Improvements Base Rent psf = (Land Costs + Development costs + [{Land Costs +
Development costs} x Development Fee]) x Return Rate

First Year New Improvements Base Rent psf = ($200 + $40 + [{$200 + $40} x .04]) x .095) = $249.60 x .095 = $23.71 psf

G-2

 

EXHIBIT H

BROKERAGE COMMISSION AGREEMENT

May 13, 2004

Mr. Eric Anderson

Cornish & Carey Commercial

2804 Mission College Blvd, Suite 120

Santa Clara, CA 95054

			
	RE:	 	Lease (“Lease”) with Hyperion Solutions Corporation (“Tenant”) for space in the building
commonly known as 5450 (Building 8) & 5470 (Building 9) Great America Parkway, Santa
Clara, California (“Building”).

Dear Eric:

You have advised us that you represent Hyperion Solutions Corporation with respect to the
Lease. This Commission Agreement will be made an Exhibit to the
Lease Agreement between
Prentiss Properties and Hyperion Solutions Corporation.

As the total compensation with respect to the Lease, you shall be entitled to a Commission, which
shall be calculated, earned and payable as follows:

	(a)	 	The Commission for the space initially leased to Tenant under the Lease shall be an amount
equal to $0.75 per square foot per year for years 1 – 10, the
Initial Lease Term (excluding all
renewals). This Commission shall be deemed earned and shall be payable 50% within 30 days
after the date the Lease is fully executed and delivered to Tenant and the remaining 50%
within 30 days after the date the Initial Term has commenced provided that Tenant has
accepted the initial space and is not in default under the Lease.
	 
	(b)	 	You shall be entitled to an additional Commission with
respect to any expansion space leased
to Tenant, under the Lease, if, at the time of the leasing of such expansion space, you are
actively involved in the negotiations between us and Tenant for such expansion, and you are,
during such times, the Person authorized on behalf of Tenant for such
expansion (i.e. you
have either delivered a new authorization letter signed by Tenent or
you have otherwise evidenced to us your control of Tenant for
purposes of negotiating the expansion).

Prentiss Properties.

1901 Harrison Street, Suite
100 Oakland, CA 94612

5108399974 Fax:
5104522050

H-1

 

Mr. Eric
Anderson 

May 13, 2004

Page 2 of 3

	 	 	This additional Commission shall be in an amount equal to $0.75 per square foot per year
for any expansion space added within the first 24 months of the Initial Lease Term.
Commission for any expansion space added after month 24 of the Initial Lease Term will be
paid at the then full market commission rate. The Commission shall be deemed earned and
shall be payable, in full, within 30 days after the commencement date for such additional
space.
	 
	(c)	 	You shall also be entitled to an additional Commission with respect to any renewal of the
term, under the Lease, if, at the time of the exercise of such renewal term, you are
actively
involved in the negotiations between us and Tenant for such renewal, and you are, during
such time, the person authorized on behalf of Tenant for such renewal (i.e. you have either
delivered a new authorization letter signed by Tenant or you have otherwise evidenced to us
your control of Tenant for purposes of negotiating the renewal). This additional
Commission shall be in an amount equal to one-half of the then full market commission
rate. This Commission shall be deemed earned and shall be payable, in full, within 30 days
after the commencement date for such renewal.
	 
	(d)	 	In the event the Lease grants Tenant a right or option to
cancel the Lease for all or any
portion of the space prior to the commencement of the term, then no portion of the
Commission shall be earned or paid until Tenant’s right to cancel is waived or expires
without being exercised, at which time the Commission shall be paid. If the Lease provides
that Tenant may cancel the Lease for all or any portion of the space after the commencement
of the term, the Commission shall be earned and paid on only the years of the uncancellable
portion of the term, plus the amount of any termination penalty set
forth in the Lease,
until
Tenant’s right to cancel is waived or expires without being exercised, at which time, the
balance of the Commission shall be paid. No Commission shall be paid on any portion of
the Lease where Rental Abatement is being provided to the Tenant.

In the event of any default by us in performing our obligations under this letter, your rights and
remedies may be enforced only against our interest in the Building. In addition, in the event that
any legal action or proceeding is commenced as a result of a dispute between us with respect to
the matters set forth in this letter, the prevailing party shall be entitled to collect from the
other party its reasonable costs and attorney fees.

By your acceptance of this letter you represent and warrant to us that Cornish & Carey is licensed
as a real estate broker and you are acting as a licensed agent for Cornish & Carey in the state in
which this Building is located, that, to the best of your knowledge, you are the procuring cause
of the Lease with respect to the Initial Term of the Lease, and that in connection with the Lease
you have dealt with no person or entity who might be entitled to a commission or other
compensation with respect to the Lease, other than our leasing agent, Cushman & Wakefield.

H-2

 

Mr. Eric Anderson 
May
13, 2004

Page 3 of 3

You agree that there shall be no public statement or other publicity with respect to the Building or the
Lease without our prior written approval. You shall hold all information received by you with
respect to the Building and the Lease in confidence.

You
understand and agree that this letter is being given to you solely
for your benefit, that we shall
pay only one (1) commission in connection with the Lease, and that you shall not be entitled to
assign this agreement or any payment under this agreement.

We would
appreciate your signing this letter as confirmation of your agreement and acceptance of
the matters we have set forth in this letter.

	 	 	 	 	 	 	 	 	 	 	 
	Very truly yours,	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Accepted and agreed this
	By:	 	/s/ Daniel K. Cushing	 	 	 	21st day of May, 2004.
	 

	 	 	 	 	 	 	 	 	 	 
	Name:

	 	Daniel K. Cushing	 	 	 	 	 	 	 	 
	Title:

	 	Senior Vice President	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROKER:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	/s/ Eric Anderson
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name:	 	Eric Anderson
	 	 	 	 	 	 	Title:	 	Vice President
	 	 	 	 	 	 	Broker’s License No.	 	 
	 

	 	 	 	 	 	 	 	 	 	 

H-3

 

RIDER NO. 1

RULES AND REGULATIONS

     1. Sidewalks, doorways, vestibules, halls, stairways and similar areas shall not be obstructed
by tenants or their officers, agents, servants, and employees, or used for any purpose other than
ingress and egress to and from the Premises and for going from one part of the Project to another
part of the Project.

     2. Plumbing fixtures and appliances shall be used only for the purpose for which constructed,
and no sweepings, rubbish, rags, or other unsuitable material shall be thrown or placed therein.

     3. Subject to the terms and conditions of the Lease, no signs, posters, advertisements, or
notices shall be painted or affixed on any of the windows or doors, or other part of the Buildings,
visible from the exterior of the Premises.

     4. The Premises shall not be used for conducting any barter, trade, peddling, or exchange of
goods or sale through promotional give-away gimmicks or any business involving the sale of
second-hand goods, insurance salvage stock, or fire sale stock, and shall not be used for any
auction or pawnshop business, any fire sale, bankruptcy sale, going-out-of- business sale, moving
sale, bulk sale, or any other business which, because of merchandising methods or otherwise, would
tend to lower the first-class character of the Project.

     5. Tenants shall not do anything, or permit anything to be done, in or about the Project, or
bring or keep anything therein, that will in any way increase the possibility of fire or other
casualty or obstruct or interfere with the rights of, or otherwise injure or annoy, other tenants,
or do anything in conflict with the valid pertinent laws, rules, or regulations of any governmental
authority.

     6. Tenant shall not place a load upon any floor of the premises which exceeds the floor load
per square foot which such floor was designed to carry or which is allowed by applicable building
code. Landlord may reasonably prescribe the weight and position of all safes and heavy
installations which Tenant desires to place in the Premises so as properly to distribute the weight
thereof.

     7. A tenant shall notify the Project manager when safes or other heavy equipment are to be
taken into or out of any Building. Moving of such items shall be done under the supervision of the
Project manager, after receiving written permission from him/her. A tenant shall be required to
use protective coverings on walls, elevators and floors to prevent damage caused by the moving of
such items.

     8. Corridor doors, when not in use, shall be kept closed.

     9. All deliveries must be made in such a manner so as not to disturb any other occupants of
the Project.

1

 

     10. Each tenant shall cooperate with Project employees in keeping the Project neat and clean.

     11. Nothing shall be swept or thrown into the corridors, halls, elevator shafts, or stairways.
No birds, animals (except guide dogs), or reptiles, or any other creatures, shall be brought into
or kept in or about the Project.

     12. Tenants shall not make or permit any offensive noises or odors in the Project, or
otherwise interfere in any way with other tenants or persons having business with them.

     13. No equipment of any kind shall be operated in the Premises that could unreasonably annoy
any other tenant in the Project.

     14. Business machines and mechanical equipment belonging to Tenant which cause noise and/or
vibration that may be transmitted to the structure of the Building so as to be objectionable to
Landlord or any tenants in the Project shall be placed and maintained by Tenant, at Tenant’s
expense, in setting of cork, rubber, or spring type noise and/or vibration eliminators sufficient
to eliminate vibration and/or noise.

     15. Landlord has the right to evacuate the Project in event of emergency or catastrophe.

     16. If any governmental license or permit shall be required for the proper and lawful conduct
of Tenant’s business, Tenant, before occupying the Premises, shall procure and maintain such
license or permit and submit it for Landlord’s inspection. Tenant shall at all times comply with
the terms of any such license or permit.

     17. Tenants shall not be allowed to prepare or cook food within the Premises other than
employees of Tenants using a microwave or toaster oven installed in kitchens within the Premises to
heat meals for their own consumption.

     18. All locks and keys for entry doors and doors within the Premises shall be provided by
Landlord, at Tenant’s cost, except the initial entry doors locks and keys shall be at Landlord’s
cost.

     19. Landlord reserves the right to rescind any of these Rules and Regulations and make such
other and further reasonable and non-discriminatory rules and regulations not inconsistent with the
express terms of the Lease, which Rules and Regulations when made and notice thereof given to a
tenant shall be binding upon him in like manner as if originally herein prescribed.

     20. Tenant shall comply with any policies, programs and measures as may be reasonably
necessary for the conservation, recycling and/or preservation of energy and natural resources
imposed from time to time by any applicable Requirements.

     21. The sashes, skylights, windows, and doors that admit light and air into the halls or other
public places in the Project shall not be obstructed, nor shall any parcels or other articles be
placed on the window sills or on the peripheral air conditioning enclosures.

2

 

     22. Tenant assumes full responsibility for protecting the Premises from theft and robbery.
Upon the request of the Landlord, the Tenant shall furnish to Landlord, information including the
name and telephone number of an individual designated by Tenant who should be contacted in the case
of an emergency, the name of all individuals to whom Tenant has given entrance keys, and the names
of all individuals authorized by Tenant to enter the Premises at other than business hours.

     23. All entrance doors in the Premises shall be left locked by Tenant when the Premises are
not in use. Entrance doors shall not be left open at any time.

     24. The Premises shall not be used for lodging or sleeping.

     25. Service requests shall be directed to the Project office. Employees of Landlord shall not
perform any work for Tenant unless under instructions from Landlord.

     26. Smoking of tobacco products anywhere within the buildings of the Project is prohibited.

3exv10w1

 

Exhibit 10.1

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

 

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	1.	 	 	 	Employment Period	 	 	1	 
	 
	2.	 	 	 	Terms of Employment	 	 	2	 
	 	 	(a)	 	Position and Duties	 	 	2	 
	 	 	(b)	 	Compensation	 	 	2	 
	 
	 	 	 	(i)	 	Base Salary	 	 	2	 
	 
	 	 	 	(ii)	 	Annual Bonus	 	 	3	 
	 

	 	 	 	(iii)
	 	Qualified Plans
	 	 	3	 
	 

	 	 	 	(iv)
	 	Welfare Benefit Plans
	 	 	3	 
	 

	 	 	 	(v)
	 	Expenses
	 	 	4	 
	 

	 	 	 	(vi)
	 	Fringe Benefits and Perquisites
	 	 	4	 
	 

	 	 	 	(vii)
	 	Office and Support Staff
	 	 	4	 
	 

	 	 	 	(viii)
	 	Vacation
	 	 	4	 
	 

	 	 	 	(ix)
	 	Equity and Performance Based Awards
	 	 	4	 
	 
	3.	 	 	 	Termination of Employment	 	 	5	 
	 	 	(a)	 	Death or Disability	 	 	5	 
	 	 	(b)	 	Cause	 	 	5	 
	 	 	(c)	 	Good Reason; Window Period	 	 	5	 
	 	 	(d)	 	Notice of Termination	 	 	6	 
	 	 	(e)	 	Date of Termination	 	 	6	 
	 
	4.	 	 	 	Obligations of the Company Upon Termination	 	 	6	 
	 	 	(a)	 	Good Reason or During a Window Period; Other than for Cause, Death or Disability	 	 	6	 
	 	 	(b)	 	Death	 	 	9	 
	 	 	(c)	 	Disability	 	 	10	 
	 	 	(d)	 	Cause; Other than for Good Reason or During a Window Period	 	 	10	 
	 
	5.	 	 	 	Non-exclusivity of Rights	 	 	11	 
	 
	6.	 	 	 	Full Settlement; Resolution of Disputes	 	 	11	 
	 
	7.	 	 	 	Certain Additional Payments by the Company	 	 	12	 
	 
	8.	 	 	 	Confidential Information; Certain Prohibited Activities	 	 	14	 
	 
	9.	 	 	 	Change of Control; Potential Change of Control	 	 	15	 
	 
	10.	 	 	 	Successors	 	 	20	 
	 
	11.	 	 	 	Miscellaneous	 	 	20	 

  i

 

 

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

     This CHANGE OF CONTROL EMPLOYMENT AGREEMENT (the “Agreement”) by and between Lennox
International Inc., a Delaware corporation (the “Company”), and                      (the “Executive”),
dated as of the ___day of                     , ___, to be effective as of the Agreement Effective Date
(as defined in Section 11(h) hereof).

     The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to assure that, in the event of a Change of Control
or Potential Change of Control (in each case as defined in Section 9 hereof), the Company will have
the continued services of the Executive and the Executive will be provided with compensation and
benefits arrangements that meet his expectations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this Agreement and supercedes all other
previous change of control agreements between the Company and Executive. It is understood that the
Executive has an existing employment agreement (the “Existing Agreement”) with the Company. This
Agreement is intended to provide certain protections to Executive that are not afforded by the
Existing Agreement. This Agreement is not, however, intended to provide benefits that are
duplicative of the Executive’s current benefits. To the extent that this Agreement provides
benefits of the same types as those provided under the Existing Agreement, the Company shall
provide the better of the benefits in each case during the Employment Period. If Executive remains
employed by the Company at the conclusion of an Employment Period, the Existing Agreement shall
continue in effect in accordance with its terms thereafter, except that Executive’s Base Salary for
purposes of the Existing Agreement shall be equal to the Executive’s Annual Base Salary under this
Agreement at the conclusion of the Employment Period.

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Employment Period. Upon a Change of Control or Potential Change of Control, the
Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company, in accordance with, and subject to, the terms and provisions
of this Agreement, for the period (the “Employment Period”) commencing on the date upon which there
occurs a Change of Control or a Potential Change of Control and ending on (i) if a Change of
Control has occurred, the second anniversary of the Employment Effective Date or (ii) if a
Potential Change of Control has occurred but a Change of Control has not occurred, the earliest of
(x) the date upon which the Board determines in good faith that a Change of Control is unlikely to
occur, (y) any anniversary of the Potential Change of Control, if at least 30 days prior to such
anniversary the Executive notifies the Company in writing that he elects to terminate his
employment with the Company as of such anniversary and (z) the second anniversary of the Employment
Effective Date. If the Employment Period commences by reason of a Potential Change of Control and
the Employment Period is thereafter terminated pursuant to clause (ii) (x) of the preceding
sentence, this Agreement shall nevertheless remain in effect and a new Employment Period shall
commence upon a subsequent Change of Control or Potential Change of Control. The Company shall
promptly notify the Executive in writing of the

1

 

occurrence of a Change of Control or Potential Change of Control and of any determination made by the Board pursuant to clause (ii)(x) above that
a Change of Control is unlikely to occur. As used herein, the term “Employment Effective Date”
shall mean, with respect to any Employment Period, the date upon which such Employment Period
commences in accordance with this Section 1.

     2. Terms of Employment.

          (a) Position and Duties.

     (i) During the Employment Period, (A) the Executive’s position (including
status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with the
most significant of those held, exercised and assigned at any time during the 90-day
period immediately preceding the Employment Effective Date, and (B) the Executive’s
services shall be performed at the location where the Executive was employed
immediately preceding the Employment Effective Date or at another location within 35
miles thereof.

     (ii) During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive’s
reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational institutions
and (C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive’s responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Employment Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the Employment Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s responsibilities to the Company.

          (b) Compensation.

     (i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary equal to the base salary in effect immediately prior
to the Employment Effective Date or, if more favorable to the Executive, the base
salary in effect at any time after the Employment Effective Date (“Annual Base
Salary”), which shall be paid in accordance with the normal business practice of the
Company. During the Employment Period, the Annual Base Salary shall be

2

 

reviewed at least annually and shall be increased at any time and from time to time as shall be substantially
consistent with increases in base salary generally awarded in the ordinary course of
business to executives of the Company and its affiliated companies. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term “Annual Base Salary” as utilized in this Agreement shall
refer to Annual Base Salary as so increased. As used in this Agreement, the term
“affiliated companies” shall include, when used with reference to the Company, any
company controlled by, controlling or under common control with the Company.

     (ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year or portion thereof during the Employment
Period, an annual bonus (the “Annual Bonus”) in cash equal to the greater of (A) the
greatest dollar amount of annual bonus paid or awarded to or for the benefit of the
Executive in respect of any of the preceding three fiscal years or (B) an amount
comparable to the annual bonus awarded to other Company executives taking into
account Executive’s position and responsibilities with the Company, prorated in the
case of either (A) or (B) for any period consisting of less than twelve full months.
The Annual Bonus awarded for a particular fiscal year shall (unless the Executive
elects to defer receipt thereof) be paid no later than the last day of the third
month after the end of such year.

     (iii) Qualified Plans. During the Employment Period, the Executive
shall be entitled to participate in all profit-sharing, savings and retirement plans
that are tax-qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (“Code”), and all plans that are supplemental to any such tax-qualified
plans, in each case to the extent that such plans are applicable generally to other
executives of the Company and its affiliated companies, but in no event shall such
plans provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities that are, in each case, less favorable, in the aggregate, than the
most favorable plans of the Company and its affiliated companies. As used in this
Agreement, the term “most favorable” shall, when used with reference to any plans,
practices, policies or programs of the Company and its affiliated companies, be
deemed to refer to the most favorable plans, practices, policies or programs of the
Company and its affiliated companies as in effect at any time during the three
months preceding the Employment Effective Date or, if more favorable to the
Executive, provided generally at any time after the Employment Effective Date to
other executives of the Company and its affiliated companies.

     (iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated

3

 

companies (including, without limitation, medical, prescription, dental, vision,
disability, salary continuance, group life and supplemental group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive with
benefits that are less favorable, in the aggregate, than the most favorable such
plans, practices, policies and programs of the Company and its affiliated companies.

     (v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and procedures
of the Company and its affiliated companies.

     (vi) Fringe Benefits and Perquisites. During the Employment Period,
the Executive shall be entitled to fringe benefits and perquisites in accordance
with the most favorable plans, practices, programs and policies of the Company and
its affiliated companies applicable to similarly situated executives, which, in the
aggregate, shall not be less than Executive’s benefits and perquisites in effect
prior to the commencement of the Employment Period or, if more favorable to the
Executive, the benefits and perquisites in effect at any time after the Employment
Effective Date.

     (vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with furnishings
and other appointments, and to exclusive personal secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to the Executive by
the Company and its affiliated companies at any time during the three months
preceding the Employment Effective Date.

     (viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies, but not less
than the amount of vacation time to which Executive was entitled prior to the
commencement of the Employment Period.

     (ix) Equity and Performance Based Awards. During the Employment
Period, the Executive shall be granted on an annual basis a long-term incentive package
consisting of stock options, restricted stock or restricted stock units and other
equity-based awards and performance grants, as selected by the Company, with an
aggregate value (as determined by an independent consulting firm selected by
Executive and reasonably acceptable to the Company) that shall be not less than the
aggregate value of the long-term incentive package awarded the Executive in any of
the three years immediately preceding such Employment Period.

4

 

     3. Termination of Employment.

          (a) Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 11(d) of this Agreement of its
intention to terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of
the Executive from the Executive’s duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s legal representative (such
agreement as to acceptability not to be withheld unreasonably).

          (b) Cause. The Company may terminate the Executive’s employment during the
Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean (i)
dishonesty by Executive which results in substantial personal enrichment at the expense of
the Company or (ii) demonstratively willful repeated violations of Executive’s obligations
under this Agreement which are intended to result and do result in material injury to the
Company.

          (c) Good Reason; Window Period. The Executive’s employment may be terminated
during the Employment Period by the Executive for Good Reason or during a Window Period by
the Executive without any reason. For purposes of this Agreement, “Window Period” shall
mean the 90-day period commencing 366 days after any Change of Control as defined in Section
9 of this Agreement. For purposes of this Agreement, “Good Reason” shall mean:

     (i) any change in the Executive’s position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as contemplated
by Section 2 of this Agreement, excluding for this purpose any de minimus changes
and excluding an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive, or any other assignment to the
Executive of any duties inconsistent in any respect with such position, authority,
duties or responsibilities, other than de minimus inconsistencies or other than, in
each case, any such change in duties or such assignment that would clearly
constitute a promotion or other improvement in Executive’s position;

     (ii) any failure by the Company to comply with any of the provisions of this
Agreement, other than an isolated, insubstantial and inadvertent failure not

5

 

occurring in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;

     (iii) the Company’s requiring the Executive to be based at any office or
location other than that described in Section 2(a)(i)(B) hereof;

     (iv) any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement;

     (v) any failure by the Company to comply with and satisfy the requirements of
Section 10 of this Agreement, provided that (A) the successor described in Section
10(c) has received, at least ten days prior to the Date of Termination (as defined
in subparagraph (e) below), written notice from the Company or the Executive of the
requirements of such provision and (B) such failure to be in compliance and satisfy
the requirements of Section 10 shall continue as of the Date of Termination; or

     (vi) in the event that the Executive is serving as a member of the Board
immediately prior to the Employment Effective Date, any failure to reelect Executive
as a member of the Board, unless such reelection would be prohibited by the
Company’s By-laws as in effect at the beginning of the Employment Period.

          (d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason or without any reason during a Window Period, shall be
communicated by Notice of Termination to the other party hereto given in accordance with
Section 11(d) of this Agreement. The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights hereunder.

          (e) Date of Termination. For purposes of this Agreement, the term “Date of
Termination” means (i) if the Executive’s employment is terminated by the Company for Cause,
or by the Executive during a Window Period or for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive’s
employment is terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of such
termination and (iii) if the Executive’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.

     4. Obligations of the Company Upon Termination.

          (a) Good Reason or During a Window Period; Other than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the

6

 

Executive’s employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason or his employment shall be terminated for any reason during a
Window Period:

     (i) the Company shall pay or provide to or in respect of the Executive the
following amounts and benefits:

     A. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the sum of (1) the Executive’s Annual
Base Salary through the Date of Termination, (2) the product of (x) the
highest Annual Bonus paid or awarded to or for the benefit of Executive
during the three fiscal years preceding the Date of Termination and (y) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination and the denominator of which is 365,
(3) any deferred compensation previously awarded to or earned by the
Executive (together with any accrued interest or earnings thereon) and (4)
any compensation for unused vacation time for which the Executive is
eligible in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses
(1), (2), (3) and (4) shall be hereinafter referred to as the “Accrued
Obligation”);

     B. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the sum of (1) three times the Annual
Base Salary and (2) three times the highest Annual Bonus paid or awarded to
or for the benefit of the Executive during the three fiscal years preceding
the Date of Termination;

     C. an additional three Years of Vesting Service and Years of Credited
Service, as well as an incremental three years added to Executive’s age, for
purposes of the Company’s Supplemental Retirement Plan and Profit Sharing
Restoration Plan;

     D. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the sum of (1) three times the Annual
Base Salary and (2) three times the highest Annual Bonus paid or awarded to
or for the benefit of the Executive during the three fiscal years preceding
the Date of Termination (the amounts in this clause D. to reflect the equity
component of Executive’s overall compensation);

     E. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the sum of (1) 15% of the Annual Base
Salary (this amount being paid in lieu of the provision of out placement
services) and (2) three times 15% of the Annual Base Salary that would have
been paid or awarded to or for the benefit of the

7

 

Executive during the fiscal year that includes the Date of Termination (this amount to reflect
the perquisites component of Executive’s overall compensation);

     F. effective as of the Date of Termination, (x) immediate vesting and
exercisability of, termination of any restrictions on sale or transfer
(other than any such restriction arising by operation of law) with respect
to and treatment of any performance goals as having been satisfied at the
highest possible level with respect to each and every stock option,
restricted stock award, restricted stock unit award and other equity-based
award and performance award (each, a “Compensatory Award”) that is
outstanding as of a time immediately prior to the Date of Termination, (y)
the extension of the term during which each and every Compensatory Award may
be exercised by the Executive until the earlier of (1) the third anniversary
of the Date of Termination or (2) the date upon which the right to exercise
any Compensatory Award would have expired if the Executive had continued to
be employed by the Company under the terms of this Agreement until the
second anniversary of the Employment Effective Date and (z) at the sole
election of Executive, in exchange for any or all Compensatory Awards that
are either denominated in or payable in Common Stock, an amount in cash
equal to the number of shares of Common Stock that are subject to the
Compensatory Award multiplied by the excess of (i) the Highest Price Per
Share (as defined below) over (ii) the exercise or purchase price, if any,
of such Compensatory Awards. As used herein, the term “Highest Price Per
Share” shall mean the highest price per share that can be determined to have
been paid or agreed to be paid for any share of Common Stock by a Covered
Person (as defined below) at any time during the Employment Period or the
six-month period immediately preceding the Employment Effective Date. As
used herein, the term “Covered Person” shall mean any Person other than an
Exempt Person (in each case as defined in Section 9 hereof) who (i) is the
Beneficial Owner (as defined in Section 9 hereof) of 35% or more of the
outstanding shares of Common Stock or 35% or more of the combined
voting power of the outstanding Voting Stock (as defined in Section 9
hereof) of the Company at any time during the Employment Period or the
two-year period immediately prior to the Employment Effective Date, or (ii)
is a Person who has any material involvement in proposing or effecting the
Change of Control or Potential Change of Control (but excluding any Person
whose involvement in proposing or effecting the Change of Control or
Potential Change of Control resulted solely from such Person’s voting or
selling of Common Stock in connection with the Change of Control or
Potential Change of Control, from such Person’s status as a director or
officer of the Company in evaluating and/or approving a Change of Control or
Potential Change of Control or both). In determining the Highest Price Per
Share, the price paid or agreed to be paid by a Covered Person will be
appropriately adjusted to take into

8

 

account (W) distributions paid or
payable in stock, (X) subdivisions of outstanding stock, (Y) combinations of
 shares of stock into a smaller number of shares and (Z) similar events.

     (ii) for the three-year period commencing with the Date of Termination, and in
the case of medical and health benefits for the COBRA continuation period commencing
thereafter, the Company shall continue medical and health benefits and group life
and supplemental group life benefits to the Executive and/or the Executive’s family
at least equal to those that would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 2(b)(iv) of this
Agreement if the Executive’s employment had not been terminated (such continuation
of such benefits for the applicable period herein set forth shall be hereinafter
referred to as “Welfare Benefit Continuation”). For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have remained employed
until the second anniversary, if the Date of Termination occurs before the third
anniversary of Executive’s employment with the Company or, if thereafter, third
anniversary of Executive’s Date of Termination and to have retired on such date; and

     (iii) the Company shall timely pay or provide to the Executive and/or the
Executive’s family any other amounts or benefits required to be paid or provided or
which the Executive and/or the Executive’s family is eligible to receive pursuant to
this Agreement and under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies as in effect and applicable
generally to other executives and their families on the Employment Effective Date
(such other amounts and benefits shall be hereinafter referred to as the “Other
Benefits”).

     (b) Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, and other than during a Window Period in
which event the provisions of Section 4(a) shall govern and the Executive shall be entitled
to the amounts and benefits set forth therein, this
Agreement shall terminate and the Company shall be obligated to pay to the Executive’s
legal representatives under this Agreement the greater of (i) such benefits as would be
provided to Executive under the Existing Agreement or (ii)(A) the payment of the Accrued
Obligations (which shall be paid to the Executive’s estate or beneficiary, as applicable, in
a lump sum in cash within 30 days of the Date of Termination), (B) the payment of an amount
equal to the Annual Salary that would have been paid to the Executive pursuant to this
Agreement for the period beginning on the Date of Termination and ending on the first
anniversary thereof if the Executive’s employment had not terminated by reason of death
(which shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination), (C) the timely payment or provision of
the Welfare Benefit Continuation and Other Benefits and (D) effective as of the Date of
Termination, (x) immediate vesting and exercisability of, and termination of any
restrictions on sale or transfer (other than any such restriction arising by operation of
law) with respect to, each

9

 

and every Compensatory Award outstanding as of a time immediately
prior to the Date of Termination, (y) the extension of the term during which each and every
Compensatory Award may be exercised or purchased by the Executive until the earlier of (I)
the second anniversary, if the Date of Termination occurs before the third anniversary of
Executive’s employment with the Company or, if thereafter, third anniversary of the Date of
Termination or (II) the date upon which the right to exercise or purchase any Compensatory
Award would have expired if the Executive had continued to be employed by the Company under
the terms of this Agreement until the second anniversary of the Employment Effective Date
and (z) at the sole election of Executive’s legal representative, in exchange for any
Compensatory Award that is either denominated in or payable in Common Stock, an amount in
cash equal to the excess of (I) the Highest Price Per Share over (II) the exercise or
purchase price, if any, of such Compensatory Award.

     (c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, and other than during a Window Period
in which event the provisions of Section 4(a) shall govern and the Executive shall be
entitled to the amounts and benefits set forth therein, this Agreement shall terminate and
the Company shall be obligated to pay to the Executive, the greater of (i) such benefits as
would be provided to Executive under the Existing Agreement or (ii)(A) the payment of the
Accrued Obligations (which shall be paid to the Executive in a lump sum in cash within 30
days of the Date of Termination), (B) the payment of an amount equal to the Annual Salary
that would have been paid to the Executive pursuant to this Agreement for the period
beginning on the Date of Termination and ending on the first anniversary thereof if the
Executive’s employment had not terminated by reason of Disability (which shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination), (C) the
timely payment or provision of the Welfare Benefit Continuation and Other Benefits and (D)
effective as of the Date of Termination, (x) immediate vesting and exercisability of, and
termination of any restrictions on sale or transfer (other than any such restriction arising
by operation of law) with respect to, each and every Compensatory Award outstanding as of a
time immediately prior to the Date of Termination, (y) the extension of the term during
which each and every Compensatory Award may be exercised or purchased by the Executive
until the earlier of (I) the third anniversary of the Date of Termination or (II) the
date upon which the right to exercise or purchase any Compensatory Award would have expired
if the Executive had continued to be employed by the Company under the terms of this
Agreement until the second anniversary of the Employment Effective Date and (z) at the sole
election of Executive, in exchange for any Compensatory Award that is either denominated in
or payable in Common Stock, an amount in cash equal to the excess of (I) the Highest Price
Per Share over (II) the exercise or purchase price, if any, of such Compensatory Award.

     (d) Cause; Other than for Good Reason or During a Window Period. If the
Executive’s employment shall be terminated for Cause during the Employment Period, and other
than during a Window Period in which event the provisions of Section 4(a) shall govern and
the Executive shall be entitled to the amounts and benefits set forth therein, this
Agreement shall terminate without further obligations under this Agreement to the Executive
other than for Accrued Obligations. If the Executive terminates

10

 

employment during the
Employment Period other than for Good Reason and other than during a Window Period, this
Agreement shall terminate without further obligations to the Executive, other than for the
payment of Accrued Obligations. In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.

5. Non-exclusivity of Rights. Except as provided in Section 4 of this Agreement, nothing
in this Agreement shall prevent or limit the Executive’s continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program or contract or agreement
except as such plan, policy, practice or program is expressly superseded by this Agreement.

6. Full Settlement; Resolution of Disputes.

     (a) The Company’s obligation to make payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense, mitigation or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to pay promptly as
incurred, to the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest (unless the Executive’s claim is
found by a court of competent jurisdiction to have been frivolous) by the Company, the
Executive or others of the validity or enforceability of, or liability under, any provision
of this Agreement (other than Section 8 hereof) or any guarantee of
performance thereof (including as a result of any contest by the Executive about the
amount of any such payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the Applicable Federal Rate provided for in Section 7872(f)(2)(A) of the
Code.

     (b) If there shall be any dispute between the Company and the Executive concerning (i)
in the event of any termination of the Executive’s employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of employment by the
Executive, whether Good Reason existed or whether such termination occurred during a Window
Period, then, unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in good faith or
that the termination by the Executive did not occur during a Window Period, the Company
shall pay all amounts, and provide all benefits, to the Executive and/or the Executive’s
family or other beneficiaries, as the case may be, that the Company would be required to pay
or provide pursuant to Section 4(a) hereof as though such termination were by the Company
without Cause or by the

11

 

Executive with Good Reason or during a Window Period; provided,
however, that the Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of the Executive to repay
all such amounts to which the Executive is ultimately adjudged by such court not to be
entitled; provided further that such undertaking need not be secured, whether by bond or
otherwise.

7. Certain Additional Payments by the Company.

     (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment or distribution to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments required
under this Section 7) (a “Payment”) would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by
the Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

     (b) Subject to the provisions of Section 7(c), all determinations required to be made
under this Section 7, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen LLP (the “Accounting Firm”);
provided, however, that the Accounting Firm shall not determine that no Excise Tax is
payable by the Executive unless it delivers to the Executive a written opinion (the
“Accounting Opinion”) that failure to report the Excise Tax on the Executive’s applicable
Federal income tax return would not result in the imposition of a negligence or similar
penalty. In the event that Arthur Andersen LLP has served, at any time during the two years
immediately preceding a Change of Control Date, as accountant or auditor for the individual,
entity or group that is involved in effecting or has any material interest in the Change of
Control, the Executive, at his option, shall appoint another nationally recognized
accounting firm to make the determinations and perform the other functions specified in this
Section 7 (which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Within 15 business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company, the Accounting Firm
shall make all determinations required under this Section 7, shall provide to the Company
and the Executive a written report setting forth such determinations, together with detailed
supporting calculations, and, if the Accounting Firm determines that no Excise Tax is
payable, shall deliver the Accounting Opinion to the Executive. Any Gross-Up Payment, as
determined pursuant to this Section 7, shall be

12

 

paid by the Company to the Executive within
five days of the receipt of the Accounting Firm’s determination. Subject to the remainder
of this Section 7, any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that a Gross-Up Payment that will not have been made by the Company should
have been made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that it is ultimately determined in accordance with the procedures
set forth in Section 7(c) that the Executive is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

     (c) The Executive shall notify the Company in writing of any claims by the Internal
Revenue Service that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but not later
than 30 days after the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim is
requested to be paid; provided, however, that the failure of the Executive to notify the
Company of such claim (or to provide any required information with respect thereto) shall
not affect any rights granted to the Executive under this Section 7 except to the extent
that the Company is materially prejudiced in the defense of such claim as a direct result of
such failure. The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim is due). If
the Company notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:

     (i) give the Company any information reasonably requested by the Company
relating to such claim;

     (ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to the Executive;

     (iii) cooperate with the Company in good faith in order effectively to contest
such claim; and

     (iv) if the Company elects not to assume and control the defense of such claim,
permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise

13

 

Tax or income tax (including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 7(c), the Company shall have the right, at its sole option, to
assume the defense of and control all proceedings in connection with such contest, in which
case it may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company’s right to assume
the defense of and control the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.

     (d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 7(c), the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Company’s complying with the requirements
of Section 7(c)) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.

     8. Confidential Information; Certain Prohibited Activities.

     (a) The Executive shall hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been obtained by the
Executive during the Executive’s employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement). After the
Executive’s Date of Termination, the Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law

14

 

or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those
designated by it. Except as provided in subsection (c) below, in no event shall an asserted
violation of the provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to Executive under this Agreement. Also, within
14 days of the termination of Executive’s employment for any reason, Executive shall return
to the Company all documents and other tangible items of or containing Company information
which are in Executive’s possession, custody or control.

     (b) Executive agrees that for a period of 24 complete calendar months following his
Date of Termination, Executive will not, either directly or indirectly, call on, solicit,
induce or attempt to induce any of the employees or officers of the Company whom Executive
had knowledge of or association with during Executive’s employment with the Company to
terminate their association with the Company either personally or through the efforts of his
or her subordinates.

     (c) In the event of a breach by Executive of any provision of this Section 8, the
Company shall be entitled to (i) cease any Welfare Benefit Contribution entitlement provided
pursuant to Section 4(a)(ii) hereof, (ii) relief by temporary restraining order, temporary
injunction and/or permanent injunction, (iii) recovery of all attorneys’ fees and costs
incurred in obtaining such relief and (iv) any other legal and equitable relief to which it
may be entitled, including monetary damages.

     9. Change of Control; Potential Change of Control.

     (a) As used in this Agreement, the terms set forth below shall have the following
respective meanings:

     “Beneficial Owner” shall mean, with reference to any securities, any Person if:

          (i) such Person is the “beneficial owner” of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act, as in effect on the date of
this Agreement) such securities; provided, however, that a Person shall not be deemed
the “Beneficial Owner” of, or to “beneficially own,” any security under this subsection
(i) as a result of an agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (x) arises solely from a revocable proxy
or consent given in response to a public (i.e., not including a solicitation exempted by
Rule 14a-2(b)(2) of the General Rules and Regulations under the Exchange Act) proxy or
consent solicitation made pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act and (y) is not then
reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or

          (ii) such Person is a member of a group (as that term is used in Rule 13d-5(b) of
the General Rules and Regulations under the Exchange Act) that includes any other Person
(other than Exempt Persons) that beneficially owns such securities;

15

 

provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially
own” any security held by a Norris Family Trust with respect to which such Person acts in the
capacity of trustee, personal representative, custodian, administrator, executor, officer, partner,
member, or other fiduciary; provided, further, that nothing in this definition shall cause a
Person engaged in business as an underwriter of securities to be the Beneficial Owner of, or to
“beneficially own,” any securities acquired through such Person’s participation in good faith in a
firm commitment underwriting until the expiration of forty days after the date of such acquisition.
For purposes hereof, “voting” a security shall include voting, granting a proxy, consenting or
making a request or demand relating to corporate action (including, without limitation, a demand
for a stockholder list, to call a stockholder meeting or to inspect corporate books and records) or
otherwise giving an authorization (within the meaning of Section 14(a) of the Exchange Act) in
respect of such security.

               The terms “beneficially own” and “beneficially owning” shall have meanings that are
correlative to this definition of the term “Beneficial Owner.”

               “Change of Control” shall mean any of the following occurring on or after the Agreement
Effective Date:

          (i) Any Person (other than an Exempt Person) shall become the Beneficial Owner of
35% or more of the shares of Common Stock then outstanding or
35% or more of the combined voting power of the Voting Stock of the Company then
outstanding; provided, however, that no Change of Control shall be deemed to occur for
purposes of this subsection (i) if such Person shall become a Beneficial Owner of 35% or
more of the shares of Common Stock or 35% or more of the combined voting power of the
Voting Stock of the Company solely as a result of (x) an Exempt Transaction or (y) an
acquisition by a Person pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions described in
clauses (x), (y) and (z) of subsection (iii) of this definition are satisfied;

          (ii) Individuals who, as of the Agreement Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the Agreement
Effective Date whose election, or nomination for election by the Company’s shareholders,
was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the
Incumbent Board; provided, further, that there shall be excluded, for this purpose, any
such individual whose initial assumption of office occurs as a result of any actual or
threatened election contest that is subject to the provisions of Rule 14a-11 under the
Exchange Act;

          (iii) Approval by the shareholders of the Company of a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger or
consolidation, (x) more than 65% of the then outstanding shares of common stock

16

 

of the corporation resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding Voting Stock of such corporation is beneficially
owned, directly or indirectly, by all or substantially all of the Persons who were the
Beneficial Owners of the outstanding Common Stock immediately prior to such
reorganization, merger or consolidation (ignoring, for purposes of this clause (x), the
first proviso in the definition of “Beneficial Owner” set forth in Section 9(a)) in
substantially the same proportions as their ownership immediately prior to such
reorganization, merger or consolidation of the outstanding Common Stock, (y) no Person
(excluding any Exempt Person or any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or indirectly, 35% or more of the
Common Stock then outstanding or 35% or more of the combined voting power of the Voting
Stock of the Company then outstanding) beneficially owns, directly or indirectly, 35% or
more of the then outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting power of the then
outstanding Voting Stock of such corporation and (z) at least a majority of the members
of the board of directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the time of the execution of the
initial agreement or initial action by the Board providing for such reorganization,
merger or consolidation; or

          (iv) Approval by the shareholders of the Company of (x) a complete liquidation or
dissolution of the Company, unless such liquidation or dissolution is approved as part
of a plan of liquidation and dissolution involving a sale or disposition of all or
substantially all of the assets of the Company to a corporation with respect to which,
following such sale or other disposition, all of the requirements of clauses (y)(A), (B)
and (C) of this subsection (iv) are satisfied, or (y) the sale or other disposition of
all or substantially all of the assets of the Company, other than to a corporation, with
respect to which, following such sale or other disposition, (A) more than 65% of the
then outstanding shares of common stock of such corporation and the combined voting
power of the Voting Stock of such corporation is then beneficially owned, directly or
indirectly, by all or substantially all of the Persons who were the Beneficial Owners of
the outstanding Common Stock immediately prior to such sale or other disposition
(ignoring, for purposes of this clause (y)(A), the first proviso in the definition of
“Beneficial Owner” set forth in Section 9(a)) in substantially the same proportions as
their ownership, immediately prior to such sale or other disposition, of the outstanding
Common Stock, (B) no Person (excluding any Exempt Person and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or indirectly, 35%
or more of the Common Stock then outstanding or 35% or more of the combined voting power
of the Voting Stock of the Company then outstanding) beneficially owns, directly or
indirectly, 35% or more of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding Voting Stock of such
corporation and (C) at least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the execution of the
initial agreement

17

 

or initial action of the Board providing for such sale or other disposition of assets of the Company.

               “Common Stock” shall mean the common stock, par value $.01 per share, of the Company, and
shall include, for purposes of Section 4 hereof, stock of any successor, within the meaning of
Section 10(c).

               “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

               “Exempt Person” shall mean (i) the Company, any subsidiary of the Company, any employee
benefit plan of the Company or any subsidiary of the Company, and any Person organized, appointed
or established by the Company for or pursuant to the terms of any such plan, (ii) any Person who is
shown under the caption “Principal and Selling Stockholders” in the Company’s final prospectus
dated July 28, 1999 relating to its initial public offering of the Common Stock as beneficially
owning (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement) one percent or more of the Common Stock
and (iii) any lineal descendant and any spouse of any such lineal descendant of D.W. Norris, but
only if such lineal descendant and any spouse of any such lineal descendant shall not at any time
hold shares of Common Stock or Voting Stock of the Company with the primary purpose of effecting
with respect to the Company (A) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, (B) a sale or transfer of a material amount of assets, (C) any
material change in the capitalization, (D) any
other material change in the business or corporate structure or operations, (E) changes in the
corporate charter or bylaws or (F) a change in the composition of the Board or of the members of
senior management.

               “Exempt Transaction” shall mean an increase in the percentage of the outstanding shares of
Common Stock or the percentage of the combined voting power of the outstanding Voting Stock of the
Company beneficially owned by any Person solely as a result of a reduction in the number of shares
of Common Stock then outstanding due to the repurchase of Common Stock by the Company, unless and
until such time as such Person shall purchase or otherwise become the Beneficial Owner of
additional shares of Common Stock constituting 3% or more of the then outstanding shares of Common
Stock or additional Voting Stock representing 3% or more of the combined voting power of the then
outstanding Voting Stock.

               “Norris Family Trust” shall mean any trust, estate, custodianship, other fiduciary
arrangement, corporation, limited partnership, limited liability company or other business entity
(collectively, a “Family Entity”) formed, owned, held, or existing primarily for the benefit of the
lineal descendants of D.W. Norris and any spouses of such lineal descendants, but only if such
Family Entity shall not at any time hold Common Stock or Voting Stock of the Company with the
primary purpose of effecting with respect to the Company (i) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation (ii) a sale or transfer of a material
amount of assets, (iii) any material change in capitalization, (iv) any other material change in
business or corporate structure or operations, (v) changes in corporate charter or bylaws, or (vi)
a change in the composition of the Board or of the members of senior management.

18

 

               “Person” shall mean any individual, firm, corporation, partnership, association, trust,
unincorporated organization or other entity.

               “Potential Change of Control” shall mean any of the following:

          (i) a tender offer or exchange offer is commenced by any Person which, if
consummated, would constitute a Change of Control;

          (ii) an agreement is entered into by the Company providing for a transaction which,
if consummated, would constitute a Change of Control;

          (iii) any election contest is commenced that is subject to the provisions of Rule
14a-11 under the Exchange Act; or

          (iv) any proposal is made, or any other event or transaction occurs or is
continuing, which the Board determines, if consummated, would result in a Change of
Control.

               “Voting Stock” shall mean, with respect to a corporation, all securities of such corporation
of any class or series that are entitled to vote generally in the election of directors of such
corporation (excluding any class or series that would be entitled so to vote by reason of the
occurrence of any contingency, so long as such contingency has not occurred).

     (a) In the event that the Company is a party to a transaction that is otherwise
intended to qualify for “pooling of interests” accounting treatment, such transaction
constitutes a Change of Control within the meaning of this Agreement and individuals who
satisfy the requirements in clauses (i) and (ii) below constitute at least 51% of the number
of directors of the entity surviving such transaction or any parent thereof: individuals
who (i) immediately prior to such transaction constituted the Board and (ii) on the date
hereof constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election contest relating
to the election of directors of the Company) whose appointment or election by the Board or
nomination for election by the Company’s stockholders was approved or recommended by a vote
of at least 51% of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously so approved
or recommended, then this Section 9 and other Agreement provisions concerning a Change of
Control shall, to the extent practicable, be interpreted so as to permit such accounting
treatment, and to the extent that the application of this sentence does not preserve the
availability of such accounting treatment, then, to the extent that any provision or
combination of provisions of this Section 9 and other Agreement provisions concerning a
Change of Control disqualifies the transaction as a “pooling” transaction (including, if
applicable, all provisions of the Agreement relating to a Change of Control), the Board
shall amend such provision or provisions if and to the extent necessary (including declaring
such provision or provisions to be null and void as of the date hereof, which declaration
shall be binding on Executive) so that such transaction may be accounted for as a “pooling
of interests.” All

19

 

determinations with respect to this paragraph shall be made by the
Company, based upon the advice of the accounting firm whose opinion with respect to “pooling
of interests” is required as a condition to the consummation of such transaction.

     10. Successors.

     (a) This Agreement is personal to the Executive and without the prior written consent
of the Company shall not be assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s heirs, executors and other legal representatives.

     (b) This Agreement shall inure to the benefit of and be binding upon the Company and
may only be assigned to a successor described in Section 10(c).

     (c) The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.

     11. Miscellaneous.

     (a) This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, without reference to principles of conflict of laws that would
require the application of the laws of any other state or jurisdiction.

     (b) The captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.

     (c) This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and heirs, executors and other
legal representatives, and supercedes all other previous agreements between the Company and
the Executive regarding this subject.

     (d) All notices and other communications hereunder shall be in writing and shall be
given, if by the Executive to the Company, by telecopy or facsimile transmission at the
telecommunications number set forth below and, if by either the Company or the Executive,
either by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

20

 

	 	 	 
	 

	 	If to the Executive:
	 
	 	 
	 

	 	                                                            
	 

	 	                                                            
	 

	 	                                                            
	 
	 	 
	 

	 	If to the Company:
	 
	 	 
	 

	 	Lennox International Inc.
	 

	 	2140 Lake Park Blvd.
	 

	 	Richardson, Texas 75080-2254
	 

	 	Telecommunications Number: (972) 497-6660
	 

	 	Attention: Chief Administrative Officer

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

     (e) The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

     (f) The Company may withhold from any amounts payable under this Agreement such
Federal, state or local taxes as shall be required to be withheld pursuant to any applicable
law or regulation.

21

 

     (g) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision hereof or any other provision of this Agreement or the failure to assert any right
the Executive or the Company may have hereunder, including, without limitation, the right of
the Executive to terminate employment for Good Reason or during a Window Period pursuant to
Section 3(c) of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.

     (h) This Agreement shall become effective as of the date first written above (the
“Agreement Effective Date “).

               IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization
from its Board of Directors, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.

	 	 	 
	 

	 	LENNOX INTERNATIONAL INC.
	 
	 	 
	 

	 	By:                                                            
	 

	 	Name: Robert E. Schjerven
	 

	 	Title: Chief Executive Officer
	 
	 	 
	 

	 	EXECUTIVE
	 
	 	 
	 

	 	                                                            

22

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