Document:

Exhibit 10.32

 

FIRST
AMENDMENT TO PURCHASE AND SALE AGREEMENT

 

This FIRST AMENDMENT, signed
and entered into as of this 10th day of December, 2007 is by and between
CREDENCE SYSTEMS CORPORATION (“Seller”) and CARLYLE INVESTMENT CO. (“Buyer”)

 

RECITALS

 

A.             Seller and Buyer entered
into that certain Purchase and Sale Agreement and Receipt for Earnest Money
dated November 5, 2007 (the “Agreement”).

 

B.              Seller and
Buyer desire to amend the Agreement as provided for herein.

 

NOW
THEREFORE, for and in consideration of the mutual covenants contained herein and
in the Agreement, the parties hereby amend the Agreement as follows:

 

1.               Purchase
Price. The Purchase Price is Twenty Million Dollars ($20,000,000).

 

2.               Earnest
Money. Upon mutual execution of this First Amendment, Buyer shall (i) convert
the Note to cash and deposit the same with the Title Company as Earnest Money,
and (ii) also deposit with the Title Company an additional Two Hundred
Fifty Thousand Dollars ($250,000) Earnest Money in the form of cash, for a total
cash Earnest Money deposit of Five Hundred Thousand Dollars ($500,000).

 

3.               Easements. At Closing, the
parties shall grant the following easements:

 

(a)           Seller and Buyer shall each grant to the other
permanent, reciprocal easements for purposes of vehicular and pedestrian
ingress and egress over and upon the existing drive aisle that straddles the
property boundary between Lot 2 of the Property (“Lot 2”) and the abutting Lot
1 that will be retained by Seller (“Lot 1”).

 

(b)           Seller shall grant to Buyer a permanent casement for
the use, maintenance, repair, and replacement of an electrical transformer and
generator serving the Property, together with the existing lines to and from
such equipment and the Property, that are located on Lot 1.

 

(c)           Seller shall grant to Buyer a temporary easement for
the use, maintenance, repair, and replacement of the existing parking areas and
drive aisles that are located on Lot 1 that serve the building located on Lot 2
(the “Parking Area”). Following Closing, Seller shall complete, at its sole
cost and expense, a boundary line adjustment between Lot 1 and Lot 2 to include
the Parking Area as part of Lot 2. Buyer shall cooperate with the boundary line
adjustment effort, and will execute any and all applications or other documents
necessary to accomplish the same. Upon completion of the boundary line
adjustment, Seller shall convey the Parking Area to Buyer and the temporary
easement therefor shall be terminated. If, despite Seller’s reasonable efforts,
Seller is unable to receive all necessary approvals for the boundary line
adjustment and the same does not occur, the easement for the Parking Area shall
be made permanent.

 

1

 

The parties shall agree on the form of the above easements prior to
Closing, which shall be executed and delivered by the parties at Closing and
recorded following the recording of the Deed.

 

4.               Contingency
Waiver. Buyer hereby waives all conditions to its obligations under the
Agreement, except for Seller and Buyer agreeing on the form or (i) the
easements described in Section 3 of this First Amendment and (ii) the
lease back of the Property described in Sections 24 and 25 of the Agreement,
and the execution and delivery of such documents by the parties at Closing.
Seller’s obligations under the Agreement are also contingent upon the same.

 

5.               Right
of First Opportunity. At Closing, Seller will grant to Buyer the
Right of First Opportunity to purchase Lot 1. By such right, if Seller
determines to sell Lot I, Seller will first advise Buyer of the terms and
conditions upon which Seller intends to sell Lot 1 and Buyer shall thereafter
have fifteen (15) days in which to agree to purchase Lot I on such terms and
conditions. If Buyer does not exercise the right to purchase Lot 1, Buyer’s
Right of First Opportunity shall be extinguished and Seller shall be free to
sell Lot 1 to a third-party.

 

6.               Effect
on Agreement. In the event of any inconsistency between the terms
of this First Amendment and of the Agreement, the terms hereof shall control.
Except as otherwise set forth herein, the terms of the Agreement shall remain
as originally stated, and the same shall remain in full force and effect.

 

7.               Defined
Terms. To the extent not otherwise defined herein, all capitalized terms used
herein shall have the meanings set forth in the Agreement.

 

8.               Counterparts. This First
Amendment may be executed in counterparts and by facsimile transmission, each
of which shall be deemed to be an original hereof, and all of which together
shall constitute one and the same agreement.

 

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

 

	
  SELLER

  	
  BUYER

  
	
   

  	
   

  
	
  Credence
  Systems Corporation

  	
  Carlyle
  Investment Co.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Dennis
  Mettagle

  	
   

  	
  Name:

  	
  R.
  Barry Menashe

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Vice
  President, and CPO

  	
   

  	
  Its:

  	
  Owner

  
									

 

2Exhibit 10.33

 

ABSOLUTELY NET

BASIC LEASE
PROVISIONS

 

The following lease
provisions are hereby incorporated into and made a part of the Absolutely Net
Commercial Lease to which this is attached:

 

A.            DATE OF LEASE: January 7,
2008 (the “Effective Date”)

 

B.            NAMES AND ADDRESSES OF
PARTIES:

 

LANDLORD:                             FIVE OAKS FLEX, LLC

621 SW Alder, Suite 605

Portland, OR 97205

TENANT:                                                   CREDENCE
SYSTEMS CORPORATION

Attn: General Counsel

5975 NW Pinefarm Place

Hillsboro, OR 97124

 

C.            PREMISES: The land and
improvements located at 5975 NW Pinefarm Place, Hillsboro, Washington County,
Oregon, the legal description of which is Lot 3, FIVE OAKS WEST, City of
Hillsboro, Washington County, Oregon. For the purpose hereof, the term “Building”
and “Premises” shall have the same meaning.

 

D.            COMMENCEMENT
DATE: January 7, 2008

 

E.             TERM: Commencement
Date through January 6, 2010, with an option of Tenant to extend the same
to January 6, 2011, upon written notice given to Landlord on or before January 6,
2009, if Tenant is not then in default.

 

F.             MINIMUM MONTHLY RENTAL:  $95,242.50

 

Rent shall be payable to Landlord at 621 SW
Alder, Suite 605, Portland, OR 97205, or such other address as Landlord
may designate in writing. On the Commencement Date, Tenant shall pay Landlord
Minimum Monthly Rental for the period from the Commencement Date through January 31,
2008.

 

G.            USE: Offices,
laboratory, research and development, manufacturing

 

H.            SECURITY DEPOSIT: $95,242.50

 

I.              TENANT’S
REQUIRED INSURANCE: Commercial general liability insurance, with limits
of liability not less than $2,000,000.00 combined single limit.

 

BASIC LEASE PROVISIONS

 

 

J.             EXHIBITS: The following Exhibit is
attached hereto and by this reference made a part hereof:  None

 

K.            BROKERS:  None

 

BASIC
LEASE PROVISIONS

 

 

ABSOLUTELY
NET OFFICE LEASE

 

1.             Parties. This Lease is made between
Landlord and Tenant named in the Basic Lease Provisions as of the date set
forth therein.

 

2.             Definitions. In addition to other definitions set forth in the
Lease, unless the context otherwise specifies or requires, the terms listed
below shall have the following meanings:

 

(a)           “Building” shall mean the
office building on the Premises.

 

(b)           “CCRs” shall mean that
certain Pacific Realty Associates, L.P. Protective Covenants for Five Oaks West
Business Park dated February 22,1996, recorded March 1,1996, as Recorder’s
No. 96018469; amended September 8, 1997, Recorder’s No. 970835161;
October 4, 1999,  Recorder’s No. 99113460; August 18,
2000, Recorder’s No. 2000-066732 and September 21, 2000, Recorder’s No. 2000-076736,
as well as covenants, conditions and restrictions as shown on Partition Plat
1996-029, and Partition Plat 1997-083, official records of Washington County,
Oregon.

 

(c)           “Indemnified Parties” shall mean
Landlord, Landlord’s Lender, Landlord’s Landlord, Landlord’s Property Manager,
together with their respective affiliates, subsidiaries, successors, assigns,
heirs, officers, directors, shareholders, partners, managers, members,
employees, agents and contractors.

 

(d)           “Landlord’s Lender” shall mean the
holder of any loan that is secured by a lien against the Building.

 

(e)           “Landlord’s Landlord” shall mean the
holder of the Landlord’s interests in any lease that is superior to this Lease.

 

(f)            “Landlord’s Property Manager”
shall mean any real estate property manager engaged by Landlord from
time to time to manage the Building.

 

3.             Possession and Commencement.

 

(a)           Tenant is in possession as of the Commencement Date.

 

(b)          Tenant acknowledges and agrees that Tenant has been
in possession of the Premises and that the Premises shall be leased by Landlord
to Tenant in its present “AS IS” condition and that Landlord makes absolutely
no representations or warranties whatsoever with respect to the Premises or the
condition thereof. Tenant acknowledges that Landlord has not investigated and
does not warrant or represent to Tenant that the Premises are fit for the purposes
intended by Tenant or for any other purpose or purposes whatsoever. Tenant
acknowledges that Tenant shall be solely responsible for any and all actions,
repairs, permits, approvals and costs required for the rehabilitation,
renovation, use, occupancy and operation of the Premises in accordance with
applicable governmental requirements, including, without limitation, all
governmental charges and fees, if any, which may be due or payable to
applicable authorities. Tenant agrees that, by leasing the Premises,

 

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Tenant warrants and represents that Tenant has
examined and approved all things concerning the Premises which Tenant deems
material to Tenant’s leasing and use of the Premises. Tenant further
acknowledges and agrees that (i) neither Landlord nor any agent of
Landlord has made any representation or warranty, express or implied,
concerning the Premises or which have induced Tenant to execute this Lease, and
(ii) any other representations and warranties are expressly disclaimed by
Landlord.

 

4.             Rental.

 

(a)           Beginning upon the Commencement Date and continuing
during the entire Term, Tenant shall pay to Landlord the “Minimum Monthly Rental” as described in
the Basic Lease Provisions as well as all “Additional
Rental” described herein. All references to “Rent” or “Rental”
hereinafter set forth in this Lease shall mean the Minimum Monthly
Rental and Additional Rental. The Minimum Monthly Rental shall be paid in
advance, without offset, notice or demand, on or before the first day of each
calendar month during the Term, except for the first calendar month, which
shall be prorated based on the Commencement Date.

 

(b)           Tenant recognizes that late payment of Rental or
other sum due hereunder will result in additional administrative expense to
Landlord, the extent of which additional administrative expense is extremely
difficult and economically impractical to ascertain. Tenant therefore agrees
that if Rental or any sum is due and payable pursuant to this Lease, and when
such amount remains due and unpaid five (5) days after said amount is due,
such amount shall be increased by a “Late
Charge” in an amount equal to five percent (5%) of the amount due.
The amount of the Late Charge to be paid by Tenant shall be reassessed and
added to Tenant’s obligation for each successive monthly period until paid. The
provisions of this subparagraph in no way relieve Tenant of the obligation to
pay Rental or other payments on or before the date on which they are due, nor
do the terms of this subparagraph in any way affect Landlord’s remedies
pursuant to paragraph 25 of this Lease in the event said Rental or other
payment is unpaid after the date due.

 

5.             Security
Deposit.  If an amount is set forth in
the Basic Lease Provisions as the Security Deposit, upon execution of this
Lease, Landlord acknowledges receipt of Tenant’s Security Deposit for the full
and faithful performance by Tenant of all of the covenants and terms of this
Lease required to be performed by Tenant. Such Security Deposit shall be
returned to Tenant within thirty (30) days after the expiration of this Lease
provided Tenant has fully and faithfully carried out all of Tenant’s
obligations hereunder, including the payment of all amounts due to Landlord
hereunder and the surrender of the Premises to Landlord in the condition
required herein. However, Landlord, at Landlord’s option, may apply such sum on
account of the payment of the last month’s Minimum Monthly Rental hereunder.
Said sum may be commingled with other funds of Landlord and shall not bear
interest. Notwithstanding the above, if Tenant becomes obligated to pay a Late
Charge or upon the occurrence of any Event of Default described in paragraph 24
below, at Landlord’s option, the Security Deposit shall become immediately due
and payable in full to Landlord, to be applied against any Late Charge, damages
or losses suffered by Landlord as a result of Tenant’s failure to timely pay Rental
or an Event of Default. In the event of a sale of the Building subject to this
Lease, Landlord shall transfer the Security Deposit to the purchaser to be held
under the terms of this Lease, and Landlord shall thereupon be released from
all liability for the return of the Security Deposit; Tenant agrees to look
solely to the new Landlord for the return of the Security Deposit.

 

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6.             Taxes.

 

(a)           Tenant shall be responsible for and pay before
delinquent all taxes assessed commencing on the Commencement Date and
continuing during the Term against any leasehold or personal property of any
kind owned by or placed upon or about the Premises by Tenant.

 

(b)           During the Term, as Additional Rental during the
Term, Tenant shall pay before delinquent all real property taxes and
assessments levied, assessed or imposed against the land and improvements in
the Premises. All real property taxes and assessments payable for a period,
part of which shall be beyond the expiration of the Term, shall be prorated
between Landlord and Tenant. Tenant shall deliver evidence of payment of all
taxes and assessments to Landlord upon payment thereof by Tenant.

 

(c)           If during the Term, the voters or the Legislature of
the state in which the Premises are located enact any substitute taxes, in any
name or form, which may be adopted to replace or supplement real property
taxes, then such substitute taxes shall be considered the equivalent of real
property taxes for the purposes of this paragraph. Should there be in effect
during the Term any law, statute or ordinance which levies, assesses or imposes
any tax (other than any income tax) upon rents, Tenant shall pay such tax as
may be attributed to the rents under this Lease or shall reimburse Landlord for
any such taxes paid by Landlord within ten (10) days after Landlord bills
Tenant for the same.

 

7.             Insurance.

 

(a)           During the Term, Tenant shall maintain in full force
a policy or policies of property insurance written on a “special causes of loss”
form (otherwise known as “all other perils”) to the extent of at least one
hundred percent (100%) percent of the replacement cost of the Building
(excluding foundations) which insurance shall also include twelve (12) months
business interruption insurance, plate glass insurance, vandalism, malicious
mischief, demolition and windstorm coverage for any additional costs resulting
from debris removal and coverage for the enforcement of any ordinance or law
regulating the reconstruction or replacement of any portion of the Building
required to be demolished, removed or modified by reason of the enforcement of
any building, zoning, safety or land use laws as a result of a covered loss.
Tenant shall also carry earthquake insurance of not less than $25,000,000.00
covering all of Tenant’s property outside the State of California.

 

(b)          During the Term, Tenant shall maintain in full force
a commercial general liability insurance policy of not less than $2,000,000.00,
combined single limit, insuring Landlord against liability for bodily injury
and property damage occurring in, or about the Building.

 

(c)           Tenant shall at its own expense during the Term also
carry in full force and effect:

 

(i)            Fire and/or casualty insurance with standard extended
coverage endorsements to the extent of the full replacement value of Tenant’s
trade fixtures, inventory and all other personal property owned or used by
Tenant in the operation of Tenant’s business

 

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with the proceeds thereof being used by Tenant for
the replacement of Tenant’s such property in the event of loss. Said insurance
shall provide for a deductible no greater than $100,000.00.

 

(ii)          Workmen’s Compensation and
Employer’s Liability coverage of not less than statutory limits of the state in
which the Premises is located.

 

(d)           All such insurance policy shall be with an insurance
company or companies with general policyholders’ rating of not less than “A
VIII” as rated in the most current available Best’s Key Rating Guide or “A VIII”
as then currently rated by Standard &  Poor’s
or Moody’s Investors Service and which are qualified to do business in the
state in which the Premises are located. Such policies shall provide that the
insurance shall not be cancelable or reduced without at least thirty (30) days’
prior written notice to Landlord, and shall be deemed primary and noncontributing
with any insurance available to Landlord. Tenant shall furnish Landlord with a
certificate or other acceptable evidence that such insurance is in effect.
Tenant shall also furnish Landlord with evidence that all premiums have been
paid as and when paid by Tenant.

 

(e)           If Tenant shall fail to obtain
insurance as required under this paragraph 7, Landlord may, but shall not be
obligated to, obtain such insurance for Landlord’s own benefit and not for or
on behalf of Tenant, and in such event, Tenant shall pay, as Additional Rent,
the premium for such insurance upon demand by Landlord.

 

(f)            Landlord acknowledges that
Tenant may maintain the insurance required pursuant to this paragraph 7 under
what is commonly known as a “blanket policy”.

 

8.             Intentionally
Deleted.

 

9.             Intentionally
Deleted.

 

10.           Use of
Premises. The Premises shall be used
for the Use set forth in the Basic Lease Provisions and for no other purpose
without Landlord’s prior written consent. In connection with the Use of the
Premises, Tenant shall:

 

(a)           Conform to all applicable laws and regulations of
any public authority affecting the Premises and the Use thereof, and correct at
Tenant’s own expense any failure of compliance.

 

(b)          Refrain from any activity which would be reasonably
offensive to Landlord or to owners or users of adjoining property, or which
would tend to create a nuisance or damage the reputation of the Premises.
Without limiting the generality of the foregoing, Tenant shall not permit any
objectionable noise or odor to escape or be emitted from the Premises.

 

(c)           Refrain from loading the floors beyond their
designed capacity and the point considered safe by a competent engineer or
architect selected by Landlord.

 

(d)          Refrain from making any marks or attaching any sign,
insignia, antenna, aerial or other device (collectively “Signs”)  to the exterior or
interior walls, windows or roof of the

 

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Premises without the written consent of the Landlord. Landlord hereby
consents to the existing Signs. Notwithstanding Landlord’s consent to any
Signs, Tenant may remove all such Signs upon termination of this Lease and, if
removed, repair any and all damage to the Premises caused thereby at Tenant’s
own cost and expense, including but not limited to, restoring the area under
and/or around any such removed sign to the same condition as the remainder of
the exterior of the Premises. Landlord hereby approves Tenant’s existing signs.

 

11.          Hazardous Materials.

 

(a)           As used herein, the term “Hazardous Material” means any hazardous or toxic substance,
material, or waste which is or becomes regulated by any federal, state, or
local governmental authority including, but not limited to, those substances,
materials, and wastes listed in the United States Department Transportation
Hazardous Materials Table (49 CFR 172.101) or by the United States
Environmental Protection Agency as hazardous substances (40 CFR Part 302)
and any amendments thereto, any material or substance which is defined as a “hazardous waste” pursuant to Section 1004
of the Federal Resource Conservation and Recovery Act, 42 USC § 6903), or
defined as a hazardous substance pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 US §
9601 et seq. (42 USC § 9601) together with petroleum products.

 

(b)          Except for Allowable Amounts, Tenant represents and
warrants to Landlord that, to the best of Tenant’s knowledge, as of the
Commencement Date, there are no Hazardous Material upon the Premises except
small quantities for Tenant’s Use normally found in similar properties, which
Hazardous Material is maintained in connection with applicable law (“Allowable
Amounts”). Except for Allowable Amounts, Tenant shall not generate, store, use,
or permit the generation, storage, or usage of any Hazardous Material upon the
Premises by Tenant, its agents, employees, contractors, or invitees without the
prior written consent of Landlord, which consent may be withheld if Tenant does
not demonstrate to Landlord’s reasonable satisfaction that such Hazardous
Material is necessary or useful to Tenant’s business and will be used, kept,
and stored in a manner that complies with all laws regulating any such
Hazardous Material so brought upon or used or kept in or about the Premises.

 

(c)           Tenant shall not cause or permit to be discharged
into the plumbing or sewage of the Premises any Hazardous Material.

 

(d)          Without limiting or otherwise qualifying any
provision hereof, Tenant shall, at its sole cost and expense, comply with any
and all rules, regulations, codes, ordinances, statutes, and other requirements
of any lawful governmental authority respecting Hazardous Material, pollution,
harmful chemicals, and other materials in connection with Tenant’s activities
on or about the Premises and those of its agents, employees, contractors, or
invitees. Tenant specifically agrees to comply with such requirements relating
to the handling, use, storage, and disposal of Hazardous Material and other
materials which are considered by any governmental authority as harmful,
dangerous, toxic, flammable, or otherwise deserving special care. In the
furtherance of, and not in limitation of, Tenant’s obligations hereunder,
throughout the Term, Tenant shall do or cause to be done all things necessary
to preserve and keep in full force and effect permits required for the conduct
of its business and operations from the time of commencement of this Lease
until its expiration or termination.

 

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(e)           Tenant shall
pay the full cost of any cleanup, remedial, removal, or restoration work
performed on or about the Premises (including posting a performance bond for
the estimated cost of cleanup if required by Landlord) as required by any
governmental authority in order to remove, neutralize, or otherwise treat
Hazardous Material of any type whatsoever directly or indirectly placed by
Tenant or its agents, employees, contractors, or invitees on or about the
Premises.

 

(f)           Tenant shall be
solely responsible for and shall indemnify, defend, and hold Indemnified
Parties harmless from any and all claims, judgments, damages, fines,
liabilities, demands, causes of action, proceedings, hearings, losses,
including without limitation, diminution in value of the Premises, damages for
the loss or restriction on use of rentable or usable space or of any amenity of
the Premises, damages arising from any adverse impact on marketing of space,
and sums paid in settlement of claims, attorney’s fees, consultant fees, and
expert fees, which arise during or after the term hereof as a result of
contamination by Hazardous Material from Tenant’s Use or activities, or the use
or activities of Tenant’s agents or contractors relating to the storage,
placement or use of Hazardous Material (hereinafter collectively referred to as
“Claims”). This indemnification by Tenant includes, without limitation,
costs incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal, or restoration work required by any federal, state,
or local governmental agency or political subdivision because of Hazardous
Material present in the soil or ground water on or under the Premises if caused
by Tenant.  Without limiting the
foregoing, if the presence of any Hazardous Material on the Premises caused or
permitted by Tenant or its agents or contractors results in any contamination
of the Premises, Tenant shall promptly take all actions at its sole expense as
are necessary to return the Premises to the condition existing prior to the
release of any such Hazardous Material to the Premises, provided that Landlord’s
approval of such actions shall first be obtained. The foregoing indemnity shall
survive the expiration or earlier termination of this Lease. Tenant agrees to
defend all such Claims on behalf of Indemnified Parties with counsel reasonably
acceptable to Landlord.

 

(g)          In addition to
any other right of inspection contained herein, Landlord and its agents shall
have the right, following reasonable notice (except in case of emergency), but
not the duty, to inspect the Premises at any time to determine whether Tenant
is complying with the terms of this Lease. If Tenant is not in compliance with
this Lease following notice to Tenant as required pursuant to paragraph 24(b) below,
Landlord shall have the right to immediately enter upon the Premises to remedy
any contamination caused by Tenant’s failure to comply notwithstanding any
other provision of this Lease. Landlord shall use its best efforts to minimize
interference with Tenant’s business but shall not be liable for any
interference caused thereby.

 

(h)          Any default
under this paragraph shall be a material default of this Lease enabling
Landlord to exercise any of the remedies set forth in this Lease.

 

(i)            Notwithstanding
anything to the contrary provided herein, it shall not be unreasonable for
Landlord to withhold its consent to any assignment, encumbrance, sublease, or
other transfer of this Lease if a proposed transferee’s anticipated use of the
Premises involves the generation, storage, use, treatment, or disposal of any
Hazardous Material. No consent to any assignment or subletting shall constitute
a further waiver of this provision. Any such assignment or

 

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subletting without such consent shall be void and
shall at Landlord’s option constitute a default hereunder.

 

12.          Intentionally Deleted.

 

13.          Tenant Improvements and
Alterations.

 

(a)           Intentionally deleted.

 

(b)          Tenant shall not be required to obtain the consent
or approval of Landlord for any decorations, painting, plastering, or
carpeting, but Tenant shall be required to give Landlord at least ten (10) days
prior written notice thereof.

 

(c)           Tenant shall be required to obtain the prior written
approval of Landlord for any alterations or improvements to the Premises which:

 

(i)            are not located wholly
within the Premises, the demising walls of the Premises, the entrances to
and/or exits from the Premises, or the floor or ceiling of the Premises (unless
required to connect the utility systems within the Premises to the utility
systems of the Building);

 

(ii)           decrease the value of the Building;

 

(iii)          adversely affect the structural integrity of the
Building or the operation of the HVAC, plumbing, electricity, or water and
sewer systems of the Building;

 

(iv)          require any roof penetration; or

 

(v)           which are at a cost of $25,000.00 or more.

 

(d)          Any such alterations, additions or improvements
shall be made at Tenant’s sole cost and expense. In the event Tenant’s
alterations, additions or improvements require roof penetration, Tenant shall
use Landlord’s roofing contractor or such other contractor as Landlord
reasonably approves. Landlord shall have ten (10) days after receiving
Tenant’s written notice of proposed work to respond or provide such written
consent. Tenant shall provide Landlord copies of any plans and specifications.
Tenant shall deliver to Landlord as-built plans showing all alterations within
thirty (30) days following installation of the alteration. Tenant shall provide
such construction insurance as may be reasonably required by Landlord.

 

(e)           Landlord shall have the right to require Tenant to
furnish adequate security to insure timely payment to the contractors and
subcontractors for such work. All work performed by the Tenant shall be done in
strict compliance with all applicable building, fire, sanitary and safety
codes, and other applicable laws, statutes, regulations and ordinances, and
Tenant shall secure all necessary permits for the same. Tenant shall keep the
Premises free from all liens in connection with any such work. All work
performed by the Tenant shall be carried forward expeditiously, shall not
interfere with Landlord’s work or the work to be performed by or for other
tenants, and shall be

 

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completed within a reasonable time. Landlord or Landlord’s agents shall
have the right at all reasonable times to inspect the quality and progress of
such work.

 

(f)            Tenant shall provide its own trash container(s) for
construction debris; promptly remove all construction and related debris from
the Premises; and immediately following completion of construction, Tenant
shall repair and restore any portions of the Premises harmed as a result of the
construction activities to the condition existing immediately prior to
construction. Landlord’s review and/or approval of any request for alterations,
additions or improvements in or to the Premises, and/or the plans and specifications
with respect thereto, shall not create responsibility or liability on the part
of Landlord, nor shall such review or approval evidence or constitute a
representation or warranty by Landlord with respect to the action or
undertaking approved or the completeness, accuracy, design sufficiency, or
compliance of such plans or specifications with laws, ordinances, rules, and
/or regulations of any governmental agency or authority. Landlord and Tenant
acknowledge that such items shall be Tenant’s exclusive responsibility.

 

(g)           All improvements, alterations and other work
performed on the Premises by either Landlord or Tenant shall be the property of
Landlord when installed, except for Tenant’s trade fixtures, and may not be
removed at the expiration of this Lease unless the applicable Landlord’s
consent specifically provides otherwise.

 

14.          Repairs and Maintenance.

 

(a)           During the Term, Tenant shall continue all of Tenant’s
existing maintenance programs and service contracts (either those in existence
or replacements thereof). Tenant shall maintain, replace and repair the
Premises (including but not limited to landscaping and parking lots) as well as
all the structural and exterior components of the Building including the roof
during the Term. Tenant shall repair and replace the component parts of the
heating and air conditioning, water, sewer, gas and electrical systems as
necessary to maintain said systems in the same condition as existed on the
Effective Date, reasonable wear and tear excepted. Tenant shall provide all
ordinary maintenance and repairs to the Premises, including, without
limitation, replacement of broken glass, replacement of worn or damaged
flooring, repair of lighting fixtures, and repairs and maintenance of interior
walls and ceilings. On the expiration of the Term or other termination of this
Lease, Tenant shall deliver up the Premises with all required repairs and
replacements completed and with all improvements located thereon, in good
repair and condition, broom clean, reasonable wear and tear and the provisions
of paragraph 21 excepted.

 

(b)           Tenant agrees that Landlord shall have no obligation
under this Lease to make any repairs or replacements to the Premises or
improvements thereon, or any alteration, addition, change, or improvement thereof
or thereto, whether structural or otherwise. The intention of this Lease is
that the rent received by Landlord shall be “ABSOLUTELY NET”, free and clear of
any expenses to Landlord under this Lease for the taxes, insurance, and/or
construction, care, maintenance (including common area maintenance charges and
charges accruing under easements, assessments and/or charges pursuant to the
CCRs or other agreements relating to the Premises), operation, repair,
replacement, alteration, addition, change, and improvement of or to the
Premises. Upon the expiration or earlier termination of this Lease, Tenant
shall remain responsible for, and shall pay to Landlord, any cost, charge or
expense for which Tenant is otherwise responsible for hereunder

 

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attributable to any period (prorated on a daily
basis) prior to the expiration or earlier termination of this Lease.

 

(c)           Tenant shall not enter into any maintenance
agreements that will extend beyond the Term without Landlord’s prior written
consent.

 

(d)           Upon expiration of the Term, Tenant shall assign to
Landlord any warranties relating to the Premises and deliver to Landlord all
manuals, plans, specifications, records and other documents maintained by
Tenant in connection with the maintenance of the Building.

 

15.           Liens. Tenant shall
keep the Premises and Tenant’s leasehold interest free from all liens,
including construction, mechanic’s and materialmen’s liens, arising from any
act or omission of Tenant or those claiming under Tenant. Notwithstanding the
foregoing, in the event of a lien, Tenant shall remove said lien by applicable
statutory bond procedure or otherwise discharge such lien within ten (10) days
of written notice from Landlord. Landlord shall have the right to post and
maintain on the Premises such notices of nonresponsibility as are provided for
under the lien laws of the state in which the Premises are located.

 

16.           Utilities. Tenant shall
be solely responsible and promptly pay for all water and sewer facilities, gas
and electrical services, including heat and light, garbage collection, and all
other facilities and utility services used by Tenant in the Premises during the
Term. Tenant shall pay for all light bulbs, tubes and ballasts in the Premises.
Tenant agrees at all times to cooperate fully with Landlord and to abide by all
the regulations and requirements which Landlord may prescribe for the proper
functioning and protection of said systems. Except for Landlord’s willful misconduct,
Landlord shall not be liable for, and Tenant shall not be entitled to, any
abatement or reduction of Rental nor shall Tenant be excused from compliance
with all terms and provisions of this Lease by reason of Landlord’s failure to
furnish any of the foregoing.

 

17.           Light and Air. This Lease
does not grant any rights of access to light or air over any part of the
Premises.

 

18.           Indemnity.

 

(a)           The Indemnified Parties shall not be liable to
Tenant, or to Tenant’s employees, agents, invitees, licensees, contractors, or
visitors, or to any other person, for any injury to person or damage to
property or for consequential damages of any nature on or about the Premises
caused by any act or omission of Tenant, its agents, servants, or employees, or
of any other persons entering upon the Premises under express or implied
invitation by Tenant; provided, however, subject to the provisions of paragraph
19 below, which provisions shall control the terms of this paragraph 18, an
Indemnified Party shall be liable for actual damages resulting from its
negligence or willful misconduct.

 

(b)          Tenant agrees to indemnify, defend, and hold
harmless Indemnified Parties of and from any and all claims, demands, causes of
action, losses, liabilities, judgments, attorney’s fees, expenses, or damages (i) arising
from any accident, incident, injury, damage, howsoever and by whomsoever
caused, to any person or property occurring in or about the Premises, except to
the

 

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extent such accident, incident, injury or damage is caused by the
negligence or willful misconduct of an Indemnified Party, (ii) arising out
of any and all defaults by Tenant or its agents, employees, or contractors
under this Lease, or (iii) arising out of the negligence or willful misconduct
of Tenant or its agents, employees, or contractors. Tenant shall, at its own
cost and expense, defend any and all suits which may be brought against
Indemnified Parties either alone or in connection with others upon any such
above-mentioned cause or claim, and shall satisfy, pay and discharge any and
all judgments that may be recovered against Indemnified Parties in any such
action or actions in which Indemnified Parties may be a party defendant.

 

(c)           The provisions of this
paragraph shall survive expiration or earlier termination of this Lease with
respect to claims or liability occurring prior to such termination.

 

19.           Waiver of Subrogation. Notwithstanding
anything to the contrary contained in this Lease, but without limiting any
other waiver set forth herein, Landlord and Tenant hereby mutually agree that
in the event either Landlord or Tenant sustains a loss by reason of fire or any
other event or casualty and such party is then covered (or is required by the
terms of this Lease to be covered) in whole or in part by insurance with
respect to such loss, then the party sustaining the loss agrees that, to the
extent (but only to the extent) such party is compensated for such loss by its
insurance (or to the extent the insurance required to be carried under this
Lease by such party would have compensated the party for such loss), the party
sustaining the loss shall have no right to recovery against the other party,
its partners, officers, agents, contractors or employees, and waives any right
of subrogation which might otherwise exist in or accrue to any third party.
Landlord and Tenant agree that all policies of insurance obtained by them
pursuant to the terms of this Lease shall contain provisions or endorsements
thereto waiving the insurer’s rights of subrogation with respect to claims
against the other and, unless the policies permit waiver of subrogation without
notice to the insurer, each shall notify its insurance companies of the
existence of the waiver and indemnity provisions set forth in this Lease. In
all events, but subject to any other waiver set forth herein, the party
sustaining any loss which is required to be covered by insurance pursuant to
the other provisions of this Lease may recover from the other party (assuming
such other party otherwise has liability for the loss suffered) the amount of
any deductible or excess loss under any applicable policy of insurance, to the
extent of the deductible under such policy and/or such excess loss.

 

20.           Damage to
Tenant’s Property. Except for
Landlord’s willful misconduct, Landlord shall not be liable and Tenant hereby
waives all claims against Landlord for any damage to the goods, stock,
merchandise or other property of Tenant or to any person in or about the
Premises resulting from any cause whatsoever, including, but not limited to,
damage by rain, water, gas, steam, electricity or theft.

 

21.           Damage or Destruction.

 

(a)           If the Premises shall be partially damaged by fire
or other cause and subparagraph (b) below does not apply, the damage to
the Premises shall be repaired by Tenant, at Tenant’s sole cost and expense and
there shall be no abatement of Rent. The repairs shall be made at the expense
of Tenant, whether or not insurance proceeds are available and shall be
accomplished with all reasonable dispatch. Tenant, at Tenant’s expense shall
repair and/or replace all of Tenant’s property necessary for the operation of
Tenant’s business.

 

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(b)           If, during the last year of
the Term, the Premises are damaged by a fire or other cause to the extent of
fifty percent (50%) or more of the replacement cost thereof, either party may
elect to terminate this Lease as of the date of damage or destruction by notice
given to the other party in writing not more than sixty (60) days following the
date of damage provided, however, if Landlord has elected to terminate this
Lease, Tenant may cancel Landlord’s such election by agreeing to make all necessary
repairs. If such notice is given, all rights and obligations of the parties
shall cease as of the date of termination and Minimum Monthly Rental and
Additional Rent shall be prorated as of said date and Tenant shall pay to
Landlord one hundred percent (100%) of the replacement cost for damage to the
Building (excluding foundations and without deduction for depreciation) without
deductible. Tenant’s said obligation is not contingent on Tenant having
received insurance proceeds. Any insurance which may be carried by Landlord or
Tenant shall be for the sole benefit of the party carrying such insurance.

 

(c)           In the absence of an election to terminate as
described in subparagraph (b) above, Tenant shall proceed to restore the
Building pursuant to the provisions of subparagraph (a) above to
substantially the same form as prior to the damage or destruction and there
shall be no abatement of Rent.

 

22.          Condemnation.

 

(a)           If the entire Premises shall be acquired or
condemned by any governmental authority under its power of eminent domain for
any public or quasi-public use or purpose, this Lease shall terminate as of the
date of vesting or acquisition of title in the condemning authority and the
Rental shall be abated on that date. If less than the whole should be so
acquired or condemned, Tenant shall have the option to terminate this Lease by
notice given to Landlord within thirty (30) days of such taking. In the event
that such a notice of termination is given, this Lease shall terminate as of
the date of vesting or acquisition of title in the condemning authority and the
Minimum Monthly Rental and Additional Rent shall be prorated as of such date.

 

(b)           If this Lease has not been terminated as hereinabove
set forth, this Lease shall continue in force and effect, but from and after
the date of the vesting of title in the condemning authority, the Minimum
Monthly Rental payable hereunder during the unexpired portion of the Term shall
be reduced proportionately and any Additional Rent payable pursuant to the
terms to reflect the diminution of the Premises.

 

(c)           In connection with any taking of the Premises,
Landlord shall be entitled to receive the entire amount of any award which may
be made or given in such taking or condemnation, without deduction or
apportionment for any estate or interest of Tenant, it being expressly
understood and agreed by Tenant that no portion of any such award shall be
allowed or paid to Tenant for any so-called bonus or excess value of this
Lease, and such bonus or excess value shall be the sole property of Landlord.
Tenant shall not assert any claim against Landlord or the taking authority for
any compensation because of such taking (including any claim for bonus or
excess value of this Lease); provided, however, if any portion of the Premises
is taken, Tenant shall have the right, if permitted pursuant to applicable law,
to recover from the condemning authority (but not from Landlord) any
compensation as may be separately awarded or recoverable by Tenant for the
taking of Tenant’s furniture, fixtures, equipment and other personal property

 

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within the Premises, for Tenant’s relocation expenses, and for any loss
of goodwill or other damage to Tenant’s business by reason of such taking.

 

23.           Bankruptcy. Subject to paragraph 28, this Lease shall not be
assigned or transferred voluntarily or involuntarily by operation of law. It
may, at the option of Landlord, be terminated if Tenant be adjudged bankrupt or
insolvent, or makes an assignment for the benefit of creditors, or files or is
a party to the filing of a petition in bankruptcy, or commits an act of
bankruptcy, or in the case a receiver or a trustee is appointed to take charge
of any of the assets of Tenant or subtenants and assigns in or about the
Premises, and such receiver or trustee is not removed within thirty (30) days
after the date of his appointment, or in the event of judicial sale of the
personal property in or on the Premises upon judgment against Tenant or any
subtenant or assignee, unless such property or reasonable replacement thereof
be installed on the Premises. To the extent permitted by law, this Lease or any
sublease hereunder shall not be considered as an asset of a
debtor-in-possession, or an asset in bankruptcy, insolvency, receivership, or
other judicial proceedings.

 

24.           Tenant’s Default. The following shall be “Events of Default” by Tenant:

 

(a)           Failure of Tenant to pay any Rental when due or
failure of Tenant to pay any other charge required hereunder within five (5) days
of written notice from Landlord to Tenant. Notwithstanding anything to the
contrary provided herein, if Landlord has given one such notice to Tenant in a
calendar year, Tenant shall be in default if rental is not paid within five (5) days
of the date due without the need for any further notice from Landlord to
Tenant.

 

(b)           Failure of Tenant to comply with any term or
condition or fulfill any obligation of this Lease (other than the payment of
Rental or other charges), within twenty (20) days after written notice by
Landlord specifying the nature of the default with reasonable particularity. If
the default is of such a nature that it cannot be completely remedied within
the twenty (20) day period, this subparagraph shall be complied with if Tenant
begins correcting the default within the twenty (20) day period and thereafter
proceeds with reasonable diligence and in good faith to effect the remedy as
soon as practicable (but in no event longer than ninety (90) days).

 

(c)           Intentionally deleted.

 

(d)           The bankruptcy or insolvency of Tenant or the
occurrence of other acts specified in paragraph 23 of this Lease which give
Landlord the option to terminate.

 

(e)           A default pursuant to that certain Absolute Net
Office Lease of even date between Five Oaks Office, LLC as landlord and Tenant
shall be deemed an Event of Default hereunder.

 

25.           Remedies on Tenant’s Default. If an Event of Default occurs, Landlord may, at Landlord’s
option, exercise any one or more of the rights and remedies available to a
landlord in the state in which the Premises is located to redress such default,
consecutively or concurrently, including the following:

 

(a)           Landlord may elect to
terminate Tenant’s right to possession of the Premises or 

 

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any portion thereof by written notice to Tenant. Following such notice,
Landlord may re-enter, take possession of the Premises and remove any persons
or property by legal action or self-help with the use of reasonable force. To
the extent permitted by law, Landlord shall have the right to restrain the
personal property belonging to Tenant which is on the Premises at the time of
re-entry, or the right to such other security interest therein as the law may
permit, to secure all sums due or which become due to Landlord under this
Lease. Perfection of such security interest shall occur by taking possession of
such personal property or otherwise provided by law.

 

(b)           Following re-entry by Landlord, Landlord may relet
the Premises for a term longer or shorter than the Term and upon any reasonable
terms including the granting of rent concessions to the new tenant. Landlord
may alter, refurbish or otherwise change the character or use of the Premises
in connection with such reletting. Landlord shall not be required to relet for
any use or purpose which Landlord may reasonably consider injurious to its
property or to any tenant which Landlord may reasonably consider objectionable.
No such reletting by Landlord following a default by Tenant shall be construed
as an acceptance of the surrender of the Premises. If rent received upon such
reletting exceeds the rent received under this Lease, Tenant shall have no
claim to the excess.

 

(c)           Following re-entry, Landlord shall have the right to
recover from Tenant the following damages:

 

(i)            The Worth at the Time of the Award (as hereinafter
defined) of all unpaid Rental for the period prior to re-entry; plus

 

(ii)           The Worth at the Time of the Award (as hereinafter
defined) of the amount equal to the Rental lost during any period during which
the Premises are not relet prior to the date of the award, if Landlord uses
reasonable efforts to relet the Premises; plus

 

(iii)          The Worth at the Time of the
Award (as hereafter defined) of the amount by which the unpaid Rental for the
balance of the term after the time of the award exceeds the amount Tenant
proves could be avoided; plus

 

(iv)          Any other amount necessary
to compensate Landlord for all detriment proximately caused by Tenant’s failure
to perform Tenant’s obligation under this Lease or which in the ordinary course
of things would be likely to result therefrom, including, without limitation,
the cost of clean up and repair in preparation for a new tenant, renovations,
remodeling, the cost of correcting any defaults or restoring any unauthorized
alterations, the amount of any real estate commissions or advertising expenses
and attorney’s fees; plus

 

(v)           At Landlord’s election, any
other amount in addition to or in lieu of the foregoing, as may be permitted
from time to time by applicable law; plus

 

(vi)          Reasonable attorney’s fees
and expert witness fees incurred in connection with the default, whether or not
any litigation is commenced; plus

 

(d)           If Landlord lists the
Premises with a real estate broker experienced in leasing

 

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commercial property in the metropolitan area in which the Premises are
located, such listing shall be conclusively presumed to be the taking of
reasonable efforts to relet the Premises; plus

 

(e)           As used in subparagraphs (c)(i) and (c)(ii) above,
the “Worth at the Time of Award” is
computed by allowing interest at a rate equal to the published prime interest
rate of the Bank of America, N.A., San Francisco, California plus four (4%)
percent, unless such rate exceeds lawful limits permitted by the laws of the
state in which the Premises are located, in which case interest shall accrue at
the highest rate permitted in such state (hereinafter referred to as the “Default Interest Rate”). As used in subparagraph (c)(iii) above,
the “Worth at the Time of Award” is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award, plus one (1%) percent.

 

(f)            In the event that Tenant remains in possession
following default and Landlord does not elect to re-enter, Landlord may recover
all delinquent Rental and shall have the right to cure any nonmonetary default
and recover the cost of such cure from Tenant, plus interest from the date of
the expenditure at the Default Interest Rate. In addition, Landlord shall be
entitled to recover attorney’s fees reasonably incurred in connection with the
default, whether or not litigation is commenced. Landlord may sue to recover
such amounts as they accrue, and no one action for accrued damages shall bar a
later action for damages subsequently accruing.

 

(g)           The foregoing remedies shall not be exclusive but
shall be in addition to all other remedies and rights provided under applicable
law, and no election to pursue one right shall preclude resort to another
consistent remedy.

 

26.           Surrender at Expiration.

 

(a)           Upon expiration of the Term or earlier termination
on account of default, Tenant shall deliver all keys to Landlord and peaceably
surrender the Premises broom clean and in the same condition as exists on the
Effective Date, reasonable wear and tear excepted. Depreciation and wear from
ordinary use for the purpose for which the Premises were let need not be
restored, but all repairs and replacements for which Tenant is responsible
shall be completed pursuant to paragraph 14 above. Tenant’s obligations under
this paragraph shall be subject to the provisions of paragraph 21 relating to
damage or destruction.

 

(b)          All improvements and alterations placed on the
Premises during the Lease term, other than Tenant’s trade fixtures, shall, at
Landlord’s option exercised at the time of granting of its consent, become the
property of Landlord. Movable furniture, decorations, floor covering other than
hard surface bonded or adhesively fixed flooring, curtains, drapes, blinds,
furnishings and trade fixtures shall remain the property of Tenant if placed on
the Premises by Tenant. Anything to the contrary contained herein
notwithstanding, in no event shall Tenant be required to remove any
improvements, alterations, or fixtures (but not trade fixtures) that exist on
the Premises as of the Commencement Date.

 

(c)           If Landlord so elects at the time of granting its
consent, Tenant shall remove any or all fixtures installed on the Premises
during the Lease term which would otherwise remain the property of Landlord,
and shall repair any physical damage resulting from the removal. If Tenant
fails

 

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to remove such fixtures, Landlord may do so and charge the cost to
Tenant with interest from the date of expenditure at the Default Interest Rate.
Tenant shall remove all furnishings, furniture and trade fixtures which remain
the property of Tenant. If Tenant fails to do so, this shall be an abandonment
of the property, and Landlord may retain the property and all rights of Tenant
with respect to it shall cease or, by notice in writing given to Tenant within
twenty (20) days after removal was required, Landlord may elect to hold Tenant
to its obligation of removal. If Landlord elects to require Tenant to remove,
Landlord may effect a removal and place the property in public or private
storage for Tenant’s account. Tenant shall be liable to Landlord for the cost
of removal, transportation to storage, and storage, with interest on all such
expenses from the date of expenditure by Landlord at the Default Interest Rate.

 

(d)          The time for removal of any
property or fixtures which Tenant is required to remove from the Premises upon
termination shall be as follows:

 

(i)            On or before the date this Lease terminates because
of expiration of the term or because of a default under paragraphs 22 and 23.

 

(ii)           Within thirty (30) days after notice from Landlord
requiring such removal where the property to be removed is a fixture which
Tenant is not required to remove except after such notice by Landlord, and such
date would fall after the date on which Tenant would be required to remove
other property.

 

27.           Holdover.

 

(a)           If Tenant does not vacate the Premises at the time
required, Landlord shall treat Tenant as a tenant from month-to-month, subject
to all the provisions of this Lease except the Term, except that the Rental
shall be one hundred fifty (150%) percent of the Minimum Monthly Rental due for
the full calendar month immediately preceding the expiration of the Term
together with all damages (but specifically excluding consequential damages)
sustained by Landlord by said failure to vacate. Failure of Tenant to remove
fixtures, furniture, furnishings or trade fixtures which Tenant is required to
remove under this Lease shall constitute a failure to vacate to which this
paragraph shall apply if the property not removed will substantially interfere
with the occupancy of the Premises by another tenant or with occupancy by
Landlord for any purpose including preparation for a new tenant.

 

(b)           If a month-to-month tenancy results from a holdover
by Tenant under this paragraph, the tenancy shall be terminable at the end of
any monthly rental period on written notice by either party given not less than
ten (10) days prior to the termination date which shall be specified in
the notice. Tenant waives any notice which would otherwise be provided by law
with respect to a month-to-month tenancy.

 

28.           Assignment and Subletting.

 

(a)           Tenant shall not assign or
pledge this Lease, sublet all or any part of the 

 

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Premises whether voluntarily, involuntarily or by
operation of law, or permit the use or occupancy of the Premises by anyone
other than Tenant, or assign this Lease for security purposes, without the
written consent of Landlord. In the event that Landlord shall consent to an
assignment or sublease hereunder, Tenant shall pay Landlord’s reasonable
attorneys’ fees and costs, incurred in connection with the processing of
documents necessary to the giving of such consent.

 

(b)          In the event Tenant desires to sublet the Premises,
or any portion thereof, or assign this Lease, Tenant shall give written notice
thereof to Landlord at least fifteen (15) but not more than one hundred twenty
(120) days prior to the proposed commencement date of such subletting or
assignment, which notice shall set forth the name of the proposed subtenant or
assignee, the relevant terms of any such sublease and copies of relevant
financial information concerning the proposed subtenant or assignee. Landlord
shall respond to the request within fourteen (14) days of Tenant’s notice.
Tenant shall remain primarily liable, after any assignment or sublease, for the
payment of Rental and other charges hereunder and the performance of all of
Tenant’s obligations under this Lease, notwithstanding such assignment or
subletting by Tenant.

 

(c)           In addition to Landlord’s right to approve any
subtenant or assignee Landlord shall have the option, in Landlord’s sole
discretion, to terminate this Lease or in the case of a proposed sublease of
less than all of the Premises to recapture the portion of the Premises to be
sublet as of the date the subletting or assignment is to be effective. Landlord
shall exercise Landlord’s option within thirty (30) days from the date of
receipt of Tenant’s written notice. If Landlord exercises Landlord’s option to
terminate this Lease or recapture a portion of the Premises, Tenant shall be
released of all further liability hereunder from and after the effective date
of such termination or recapture as to the Premises as a whole in connection in
the case of termination or as to portion of the Premises recaptured. If
Landlord exercises Landlord’s option to recapture a portion of the Premises,
Tenant shall be released proportionately based on the Rental as of the date
immediately prior to such recapture.

 

(d)          Consent by Landlord to one (1) assignment or
sublease shall not constitute a consent to other transfers or a waiver of
Landlord’s rights pursuant to this paragraph.

 

(e)           Notwithstanding anything contained in this paragraph
28 to the contrary, Tenant shall have the right to assign this Lease or to
sublet the Premises to any corporation or entity into which Tenant may merge or
to any corporation or entity arising out of a consolidation of Tenant with
another corporation or to a corporation or other entity acquiring all or
substantially all of the assets or stock of Tenant. Such right to assign the
Lease or to sublet the Premises shall be expressly conditioned upon Tenant
delivering to Landlord an executed copy of the assignment wherein the corporation
or entity into which Tenant may merge or the corporation or entity arising out
of a consolidation of Tenant with another corporation or entity or such
acquiring corporation or entity, as the case may be, assumes for the benefit of
Landlord all of the terms, conditions and covenants set forth in this Lease to
be observed and performed by Tenant existing on and after the effective date of
the assignment and agrees to be bound by the terms, conditions and covenants of
this Lease. Any such assignment or subletting shall not relieve Tenant from
liability for the payment of Rental or other sums herein provided or from the
obligation to keep and be bound by the terms, conditions and covenants of this
Lease.

 

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(f)           No sublease shall extend beyond the Term.

 

29.           Authority. If a party is a corporation, each of the individuals
executing this Lease on behalf of such party does hereby covenant and warrant
that the party is a duly authorized and existing corporation, that such party
has and is qualified to do business in the state in which the Building is
located, that the corporation has full right and authority to enter into this
Lease and that each and all of the individuals signing on behalf of the
corporation are authorized to do so. Upon Landlord’s request, Tenant shall
provide Landlord with evidence reasonably satisfactory to Landlord confirming
the foregoing covenants and warranties.

 

30.           Subordination. Tenant agrees that this Lease shall be subject and
subordinate to any mortgage, trust deed or like encumbrance heretofore or
hereafter placed by Landlord or its successors in interest upon its interest in
the Premises to secure the payment of monies loaned, interest thereon and other
obligations. Landlord agrees to provide Tenant a Non-Disturbance Agreement from
the holder of any future mortgage, trust deed or like encumbrance. The terms of
any Non-Disturbance Agreement provided by Landlord shall also contain such
covenants, conditions, restrictions, limitations, exceptions and the like as
are reasonably necessary and customary for the protection and balancing of the
competing interests of the Tenant, the Landlord’s Lender and Landlord. Such
Non-Disturbance Agreement shall also provide that no assignment or transfer of
Landlord’s rights hereunder to a lending institution as collateral security in
connection with such encumbrance and no foreclosure sale or transfer in lieu of
foreclosure shall affect Tenant’s right to possession, use and occupancy of the
Premises so long as Tenant is not in default hereunder. The failure by Landlord
to obtain such Non-Disturbance Agreement shall not affect the subordination of
this Lease to any such encumbrance. Tenant agrees to execute and deliver, within
ten (10) days of such request by Landlord, any and all instruments desired
by Landlord subordinating in the manner requested by Landlord to such mortgage,
trust deed or like encumbrance. Tenant further appoints Landlord as its
attorney-in-fact for the Term to execute, on behalf of Tenant, any such
instruments subordinating this Lease to such mortgage, trust deed or like
encumbrance. In the event of the sale of the real property of which the
Premises are a part upon foreclosure or upon the exercise of a power of sale,
Tenant will, upon written request of the purchaser, attorn to the purchaser and
recognize the purchaser as Landlord under this Lease.

 

31.           Estoppel Certificate.

 

(a)           Tenant shall from time to time, upon not less than
ten (10) days’ prior notice, submit to Landlord, or to any person
designated by Landlord, in a form presented by Landlord, a statement in writing
certifying: (i) that this Lease is unmodified and in full force and effect
(or if there have been modifications, identifying the same by the date thereof
and specifying the nature thereof); (ii) that to the knowledge of Tenant
no uncured default exists hereunder (or if such uncured default does exist,
specifying the same); (iii) the dates to which Rental and other charges
payable hereunder have been paid; (iv) that Tenant has no claims against
Landlord and no defenses or offsets to Rental except for the continuing
obligations under this Lease (or if Tenant has any such claims, defenses or
offsets, specifying the same); and (v) such other matters as may be
requested by Landlord.

 

(b)          If Tenant shall fail to respond within ten (10) days
of receipt by Tenant of a written request by Landlord as herein provided,
Tenant shall be deemed to have given such certificate

 

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as above provided, without modification, and shall be deemed to have
admitted the accuracy of any information supplied by Landlord to a prospective
purchaser or mortgagee and that this Lease is in full force and effect, that
there are not uncured defaults in Landlord’s performance, that the Security
Deposit is as stated in the Basic Lease Provisions and that not more than one (1) month’s
Minimum Monthly Rental has been paid in advance.

 

(c)           Any such certificate may be
relied upon by any prospective purchaser or lender.

 

32.           Force
Majeure. Except for Tenant’s
obligation to pay Rental and other charges, neither party shall be deemed in
default for the nonperformance or for any interruption or delay in performance
of any of the terms, covenants and conditions of this Lease if the same shall
be due to any labor dispute, strike, lock-out, civil commotion or like
operation, invasion, rebellion, hostilities, war, terrorism, bio-terrorism,
military or usurped power, sabotage, governmental regulations or controls,
inability to obtain labor, services or materials, or through act of God or
causes beyond the reasonable control of such party, provided such cause is not
due to such party’s willful act or neglect.

 

33.           Landlord’s
Right of Entry. Landlord and/or
its authorized representatives may enter the Premises at all reasonable times
(but at any time in the event of emergency). Any such entry shall be in
compliance with Tenant’s reasonable access rules, including easements and
restrictions dealing with secured and/or restricted areas.

 

34.           Landlord’s Right to Cure
Default. If Tenant shall fail to
perform any of the covenants or obligations to be performed by Tenant,
Landlord, in addition to all other remedies provided herein, shall have the
option to cure such default after ten (10) days’ written notice to Tenant.
All of Landlord’s expenditures incurred to correct the default shall be
reimbursed by Tenant upon demand with interest from the date of expenditure by
Landlord at the Default Interest Rate. Landlord’s right to cure defaults is for
the full protection of Landlord and the existence of this right shall not
release Tenant from the obligation to perform all of the covenants herein
provided to be performed by Tenant, or deprive Landlord of any other right
which Landlord may have by reason of such default by Tenant.

 

35.           Intentionally deleted.

 

36.           Landlord’s
Signs and Showings. Landlord may
place on the Premises (but not on the Building) signs notifying the public that
the Premises are “for sale” or “for rent” or “for lease”.  During the Term, Landlord may also
show the Premises to potential tenants, buyers and/or lenders at all reasonable
times during normal business hours and subject to the terms of paragraph 33
hereof.

 

37.           Brokers. If Tenant has
dealt with any other person or real estate broker in respect to leasing the
Building, Tenant shall be solely responsible for the payment of any such fee
due said person or firm and Tenant shall hold Landlord free and harmless
against any liability in respect thereto.

 

38.           Intentionally deleted.

 

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9044.051 Five Oaks Flex Lease to Credence Lot 3 v2

 

 

39.          General
Provisions.

 

(a)           Complete Agreement. There are no oral
agreements between Landlord and Tenant affecting this Lease, and this Lease may
not be modified, except by written instrument by the parties or their
successors in interest. This Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and other statements, if any,
between Landlord and Tenant or displayed by Landlord to Tenant with respect to
the subject matter of this Lease or the Building. There are no representations
between Landlord and Tenant, other than those contained in this Lease, and all
reliance with respect to this Lease is fully upon such representation.
Submission of this instrument by Landlord for examination or signature by
Tenant does not constitute a reservation of or option for the Lease, and this
instrument is not effective as a Lease or otherwise until execution and
delivery by both Landlord and Tenant.

 

(b)          Exhibits and Addenda. Exhibits and Addenda
attached hereto shall be initialed by Landlord and Tenant and are incorporated
herein and made a part of this Lease.

 

(c)           Recordation. Neither Landlord nor
Tenant shall record this Lease or a memorandum hereof without the prior consent
of the other party.

 

(d)          Waiver. If either Landlord or
Tenant waives the performance of any term, covenant or condition contained in
this Lease, such waiver shall not be deemed a waiver of any subsequent breach
of the same or any other term, covenant or condition contained in this Lease.
Acceptance of Rental (in whole or part) by Landlord shall not constitute a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, regardless of Landlord’s knowledge of such preceding breach at the
time of Landlord’s acceptance of such Rental. Failure by Landlord or Tenant to
enforce any of the terms, covenants or conditions of this Lease for any length
of time shall not be deemed a waiver or to decrease the right of Landlord or
Tenant to insist thereafter upon the strict performance by the party violating
any of the terms, covenants or conditions of this Lease. Waiver by Landlord or
Tenant of any term, covenant or condition contained in this Lease may only be
made by an original written document signed by the waiving party.

 

(e)           Time. Time is of the essence of
this Lease.

 

(f)             Severability. If any
term or provision of this Lease, the deletion of which would not adversely
affect the receipt of any material benefit by either party hereunder, shall be
held to be invalid or unenforceable to any extent, the remainder of this Lease
shall not be affected thereby and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.

 

(g)          Notices. All notices,
demands, consents, approvals and other communications which are required or
desired to be given by either party to the other hereunder shall be in writing
and shall be: hand delivered; transmitted by facsimile (with a duplicate copy
sent by first class mail, postage prepaid); sent by certified or registered
mail, postage prepaid, return receipt requested; or sent by reputable overnight
courier service for delivery on the next business day, delivery charges
prepaid. Notices delivered by hand or by overnight courier shall be deemed
given when actually received or when refused by their intended recipient.  Facsimile notices shall be deemed delivered

 

Page 19. OFFICE LEASE

9044.051 Five Oaks Flex Lease to Credence Lot 3 v2

 

 

when a legible copy has been received (provided receipt has been
verified by telephone confirmation or one of the other permitted means of
giving notice pursuant to this paragraph. Mail notices shall be deemed received
two (2) days following mailing. Notices shall be sent to Landlord and
Tenant at the addresses set forth in the Basic Lease Provisions. A party may
change its address for notice by giving at least ten (10) days prior
notice of such change to the other party.

 

(h)          Joint and Several Liability. If there be
more than one Tenant, the obligations hereunder imposed upon Tenant shall be
joint and several.

 

(i)            Cumulative Remedies. No remedy or
election hereunder shall be deemed exclusive, but shall, whenever possible, be
cumulative with all other remedies at law or in equity.

 

(j)            Successors and Assigns. Subject to
the provisions of paragraph 28 above, the terms, covenants and conditions
contained herein shall be binding upon and inure to the benefit of the heirs,
successors, executors, administrators and assigns of the parties.

 

(k)           Costs of Suit. In the event
that any party to this Lease institutes a suit, action, arbitration, or other
legal proceeding of any nature whatsoever, relating to this Lease or to the
rights or obligations of the parties with respect thereto, including, without
limitation, any proceeding seeking a declaration of rights, for rescission or
under the U.S. Bankruptcy Code and involving issues peculiar to federal
bankruptcy law, the prevailing party shall be entitled to recover from the
losing party its reasonable attorney, paralegal, accountant, expert witness
(whether or not called to testify at trial or other proceeding) and other
professional fees and all other fees, costs, and expenses actually incurred and
reasonably necessary in connection therewith, including but not limited to
deposition transcript and court reporter costs, as determined by the judge or
arbitrator at trial or other proceeding, and including such fees, costs and
expenses incurred in any appellate or review proceeding, or in collecting any
judgment or award, or in enforcing any decree rendered with respect thereto, in
addition to all other amounts provided for by law.

 

(l)            Sale. In the event
that the original Landlord or any successor in interest of Landlord in the
Premises shall sell or convey the Premises, all liabilities and obligations on
the part of the original Landlord or such successor under this Lease occurring
thereafter shall terminate and thereupon all such liabilities and obligations
shall be binding upon the new owner.

 

(m)          Construction. The paragraph
headings of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any parts of this Lease. If the
context so requires, the singular pronoun shall be taken to mean and include
the plural and that generally all grammatical changes shall be made, assumed
and implied to make the provisions hereof apply equally to corporations,
partnerships and individuals.

 

(n)          Law Governing. This Lease
shall be governed by the laws of the state in which the Premises are located.

 

(o)          Consents. Any consent
or approval required under this Lease shall be valid only if granted in writing
and, unless otherwise specifically provided herein, shall not be unreasonably
withheld or conditioned by either party.  
The consenting party shall have the right to impose

 

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9044.051 Five Oaks Flex Lease to Credence Lot 3 v2

 

 

reasonable conditions as part of any consent including reimbursement of
reasonable attorney and other professional fees and costs incurred in
determining how to respond to the request for consent or approval. In no event
shall either party have the right to terminate this Lease, and in no event
shall either party be liable for monetary damages to the other, based upon a
claim arising from the withholding or conditioning of consent or approval; the
sole remedy of the party for any withholding or conditioning of consent or
approval which is proven to be contrary to this Lease or its Exhibits shall be
a court or arbitrator order requiring the party to grant the requested consent
or approval on terms ordered by the court or arbitrator.

 

(p)          Waiver of Jury Trial. LANDLORD AND
TENANT EACH WAIVE ALL RIGHTS TO TRIAL BY JURY OF ANY SUITS, CLAIMS,
COUNTERCLAIMS, ACTIONS OR OTHER PROCEEDINGS OF ANY KIND ARISING UNDER OR
RELATING TO THIS LEASE (INCLUDING, WITHOUT LIMITATION ANY PRESENT OR FUTURE
MODIFICATION HEREOF) OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
DEALINGS OF THE PARTIES HERETO OR THE PREMISES, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. LANDLORD AND TENANT EACH ACKNOWLEDGES THAT THIS IS A WAIVER OF A
LEGAL RIGHT AND REPRESENTS TO THE OTHER THAT THIS WAIVER IS MADE KNOWINGLY AND
VOLUNTARILY. LANDLORD AND TENANT EACH AGREES THAT ALL SUCH SUITS, CLAIMS,
COUNTERCLAIMS, ACTIONS OR OTHER PROCEEDINGS SHALL BE TRIED BEFORE A JUDGE OF A
COURT OF COMPETENT JURISDICTION, WITHOUT A JURY. LANDLORD AND TENANT EACH
AGREES THAT THIS PARAGRAPH CONSTITUTES WRITTEN CONSENT THAT TRIAL BY JURY SHALL
BE WAIVED IN ANY SUCH SUIT, CLAIM, COUNTERCLAIM, ACTION OR OTHER PROCEEDING AND
AGREE THAT LANDLORD AND TENANT SHALL EACH HAVE THE RIGHT AT ANY TIME TO FILE
THIS LEASE WITH A CLERK OR JUDGE OF ANY COURT IN WHICH ANY SUCH SUIT, CLAIM,
COUNTERCLAIM, ACTION OR OTHER PROCEEDING MAY BE PENDING AS STATUTORY
WAIVER OF TRIAL BY JURY.

 

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Page 21. OFFICE
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9044.051
Five Oaks Flex Lease to Credence Lot 3 v2

 

 

IN WITNESS WHEREOF, Landlord
and Tenant have executed this Lease in duplicate the day and year first herein
written, any corporate signature being by authority of the Board of Directors.

 

	
  Five
  Oaks Flex, LLC

  	
  Credence
  Systems Corporation

  
	
  an
  Oregon limited liability company

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  R.
  Barry Menashe, Manager

  	
   

  	
   

  	
  Byron
  Milstead,

  
	
   

  	
   

  	
  Sr.
  Vice President and General Counsel

  
	
   

  	
   

  
	
  LANDLORD

  	
   

  	
  TENANT

  	
   

  
								

 

Page 22. OFFICE
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9044.051
Five Oaks Flex Lease to Credence Lot 3 v2

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