Document:

Exhibit 10-31 Compensation

Exhibit
10.31

Description
of Employment Terms and Bonus Arrangements for Named Executive
Officers

A.
William Allen, III. As of the date of this filing, the Company has not finalized
a new employment agreement with Mr. Allen regarding the terms of his recent
promotion to Chief Executive Officer. It is anticipated that Mr. Allen’s
employment agreement will contain the following provisions. Mr. Allen’s
employment agreement will have a ten-year term, with a base salary of $750,000
per year, plus certain other incentives and benefits, including a one-time
signing bonus of $2,000,000 in consideration of his employment, which is to be
paid on May 1, 2005. Mr. Allen is also eligible to receive an annual bonus of up
to $1,000,000 each year if the Company meets certain established performance
goals based on revenues and earnings per share growth. Mr. Allen will
receive 450,000 shares of restricted stock subject to the following time and
performance vesting schedule: (i) 135,000 shares will vest as of
December 31, 2009, and an additional 45,000 shares will vest at that time
if the market capitalization of the Company exceeds an established target as of
that date; (ii) 135,000 shares will vest as of December 31, 2011, and an
additional 45,000 shares will vest if the market capitalization of the Company
exceeds an established target as of that date; and (iii) the balance of the
shares as of December 31, 2014. Vesting on each vesting date is contingent upon
Mr. Allen being employed as Chief Executive Officer of the Company on that
vesting date.

Paul E.
Avery. As of the date of this filing, the Company has not finalized a new
employment agreement with Mr. Avery regarding the terms of his recent promotion
to Chief Operating Officer. It is anticipated that Mr. Avery’s employment
agreement will contain terms substantially similar to his existing employment
agreement, included as Exhibit 10.18 in the Company’s 2004 Form 10-K and more
fully described in the Company’s 2005 Proxy Statement. Mr. Avery’s base salary
is $630,000 per year, and he is eligible to receive certain other incentives and
benefits. Mr. Avery is also eligible to receive quarterly and annual bonuses
based on the Company meeting certain objective performance goals including
comparable sales growth, average unit volume growth, net income increases,
development and initiatives and subjective criteria determined by the Committee
(“Performance Goals”). If the Performance Goals for a specific quarter are met,
Mr. Avery is entitled to earn a bonus of up to $400,000 for that calendar
quarter and a year-end bonus equal to the aggregate of 25% of each quarterly
bonus earned.

Benjamin
P. Novello. The Company and Mr. Novello entered into an employment agreement
dated January 1, 2004, as included as Exhibit 10.19 to the Company’s 2004 Form
10-K and more fully described in the Company’s 2005 Proxy Statement. Mr.
Novello’s base salary is $400,000, and he is eligible to receive certain other
incentives and benefits. Mr. Novello is also eligible to receive quarterly
bonuses based on the Outback Steakhouse brand meeting its Performance Goals. If
the Performance Goals for a specific quarter are met, Mr. Novello is
entitled to earn a bonus of up to $150,000 for that calendar
quarter.

Steven T.
Shlemon. The Company and Mr. Shlemon entered into an employment agreement dated
April 27, 2000, as included as Exhibit 10.13 to the Company’s 2004 Form 10-K and
more fully described in the Company’s 2005 Proxy Statement. Mr. Shlemon’s base
salary is $240,000, and he is eligible to receive certain other incentives and
benefits. Mr. Shlemon is also eligible to receive quarterly bonuses based on the
Carrabba’s Italian Grill brand meeting its Performance Goals. If the Performance
Goals for a specific quarter are met, Mr. Shlemon is
entitled
to earn a bonus
of up to $125,000 for that calendar quarter.exv10w28

 

Exhibit 10.28

LEASE

(Multi-Tenant; Net)

McCarthy Center

BETWEEN

THE IRVINE COMPANY

AND

ENGENIO INFORMATION TECHNOLOGIES, INC.

 

 

INDEX TO LEASE

	 	 	 	 	 
	ARTICLE I. BASIC LEASE PROVISIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II. PREMISES
	 	 	3	 
	SECTION 2.1. LEASED PREMISES
	 	 	3	 
	SECTION
2.2. ACCEPTANCE OF PREMISES
	 	 	3	 
	SECTION
2.3. BUILDING NAME AND ADDRESS
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III. TERM
	 	 	4	 
	SECTION
3.1. GENERAL
	 	 	4	 
	SECTION
3.2. DELAY IN POSSESSION
	 	 	4	 
	SECTION
3.3. RIGHT TO EXTEND THIS LEASE
	 	 	5	 
	 
	 	 	 	 
	ARTICLE IV. RENT AND OPERATING EXPENSES
	 	 	6	 
	SECTION
4.1. BASIC RENT
	 	 	6	 
	SECTION
4.2. OPERATING EXPENSES
	 	 	6	 
	SECTION
4.3. SECURITY DEPOSIT
	 	 	8	 
	 
	 	 	 	 
	ARTICLE V. USES
	 	 	8	 
	SECTION
5.1. USE
	 	 	8	 
	SECTION
5.2. SIGNS
	 	 	9	 
	SECTION
5.3. HAZARDOUS MATERIALS
	 	 	9	 
	 
	 	 	 	 
	ARTICLE VI. COMMON AREAS; SERVICES
	 	 	11	 
	SECTION
6.1. UTILITIES AND SERVICES
	 	 	11	 
	SECTION
6.2. OPERATION AND MAINTENANCE OF COMMON AREAS
	 	 	11	 
	SECTION
6.3. USE OF COMMON AREAS
	 	 	11	 
	SECTION
6.4. PARKING
	 	 	12	 
	SECTION
6.5. CHANGES AND ADDITIONS BY LANDLORD
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VII. MAINTAINING THE PREMISES
	 	 	12	 
	SECTION
7.1. TENANT’S MAINTENANCE AND REPAIR
	 	 	12	 
	SECTION
7.2. LANDLORD’S MAINTENANCE AND REPAIR
	 	 	13	 
	SECTION
7.3. ALTERATIONS
	 	 	13	 
	SECTION
7.4. MECHANIC’S LIENS
	 	 	14	 
	SECTION
7.5. ENTRY AND INSPECTION
	 	 	14	 
	SECTION
7.6. SPACE PLANNING AND
SUBSTITUTION
	 	 	 	 
	 
	 	 	 	 
	ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANTS PROPERTY
	 	 	14	 
	 
	 	 	 	 
	ARTICLE IX. ASSIGNMENT AND SUBLETTING
	 	 	14	 
	SECTION
9.1. RIGHTS OF PARTIES
	 	 	14	 
	SECTION
9.2. EFFECT OF TRANSFER
	 	 	16	 
	SECTION
9.3. SUBLEASE REQUIREMENTS
	 	 	16	 
	SECTION
9.4. CERTAIN TRANSFERS
	 	 	16	 
	 
	 	 	 	 
	ARTICLE X. INSURANCE AND INDEMNITY
	 	 	17	 
	SECTION
10.1. TENANT’S INSURANCE
	 	 	17	 
	SECTION
10.2. LANDLORD’S INSURANCE
	 	 	17	 
	SECTION 10.3. TENANT’S INDEMNITY
	 	 	17	 
	SECTION 10.4. LANDLORD’S NONLIABILITY
	 	 	17	 
	SECTION 10.5. WAIVER OF SUBROGATION
	 	 	18	 
	 
	 	 	 	 
	ARTICLE XI. DAMAGE OR DESTRUCTION
	 	 	18	 
	SECTION 11.1. RESTORATION
	 	 	18	 
	SECTION 11.2. LEASE GOVERNS
	 	 	19	 
	 
	 	 	 	 
	ARTICLE XII, EMINENT DOMAIN
	 	 	19	 
	SECTION 12.1. TOTAL OR PARTIAL TAKING
	 	 	19	 
	SECTION 12.2. TEMPORARY TAKING
	 	 	19	 
	SECTION 12.3. TAKING OF PARKING AREA
	 	 	19	 
	 
	 	 	 	 
	ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
	 	 	19	 
	SECTION 13.1. SUBORDINATION
	 	 	19	 
	SECTION 13.2. ESTOPPEL CERTIFICATE
	 	 	20	 
	SECTION 13.3. FINANCIALS
	 	 	20	 
	 
	 	 	 	 
	ARTICLE XIV, EVENTS OF DEFAULT AND REMEDIES
	 	 	20	 
	SECTION 14.1. TENANT’S DEFAULTS
	 	 	20	 

i

 

	 	 	 	 	 
	SECTION 14.2. LANDLORD’S REMEDIES
	 	 	21	 
	SECTION 14.3. LATE PAYMENTS
	 	 	22	 
	SECTION 14.4. RIGHT OF LANDLORD TO PERFORM
	 	 	22	 
	SECTION 14.5. DEFAULT BY LANDLORD
	 	 	22	 
	SECTION 14.6. EXPENSES AND LEGAL FEES
	 	 	23	 
	SECTION 14.7. WAIVER OF JURY TRIAL
	 	 	23	 
	SECTION 14.8. SATISFACTION OF JUDGMENT
	 	 	23	 
	SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD
	 	 	23	 
	 
	 	 	 	 
	ARTICLE XV. END OF TERM
	 	 	23	 
	SECTION 15.1. HOLDING OVER
	 	 	23	 
	SECTION 15.2. MERGER ON TERMINATION
	 	 	23	 
	SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY
	 	 	23	 
	 
	 	 	 	 
	ARTICLE XVI. PAYMENTS AND NOTICES
	 	 	24	 
	 
	 	 	 	 
	ARTICLE XVII. RULES AND REGULATIONS
	 	 	24	 
	 
	 	 	 	 
	ARTICLE XVIII. BROKER’S COMMISSION
	 	 	24	 
	 
	 	 	 	 
	ARTICLE XIX. TRANSFER OF LANDLORD’S INTEREST
	 	 	24	 
	 
	 	 	 	 
	ARTICLE XX. INTERPRETATION
	 	 	24	 
	SECTION 20.1. GENDER AND NUMBER
	 	 	24	 
	SECTION 20.2 HEADINGS
	 	 	25	 
	SECTION 20.3 JOINT AND SEVERAL LIABILITY
	 	 	25	 
	SECTION 20.4. SUCCESSORS
	 	 	25	 
	SECTION 20.5. TIME OF ESSENCE
	 	 	25	 
	SECTION 20.6. CONTROLLING LAW/VENUE
	 	 	25	 
	SECTION 20.7. SEVERABILITY
	 	 	25	 
	SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES
	 	 	25	 
	SECTION 20.9. INABILITY TO PERFORM
	 	 	25	 
	SECTION 20.10 ENTIRE AGREEMENT
	 	 	25	 
	SECTION 20.1l. QUIET ENJOYMENT
	 	 	25	 
	SECTION 20.12. SURVIVAL
	 	 	25	 
	SECTION 20.13 INTERPRETATION
	 	 	25	 
	 
	 	 	 	 
	ARTICLE XXI. EXECUTION AND RECORDING
	 	 	25	 
	SECTION 21.1. COUNTERPARTS
	 	 	25	 
	SECTION 21.2. CORPORATE, LIMITED LIABILITY
COMPANY AND PARTNERSHIP AUTHORITY
	 	 	25	 
	SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER
	 	 	26	 
	SECTION 21.4. RECORDING
	 	 	26	 
	SECTION 21.5. AMENDMENTS
	 	 	26	 
	SECTION 21.6. EXECUTED COPY
	 	 	26	 
	SECTION 21.7. ATTACHMENTS
	 	 	26	 
	 
	 	 	 	 
	ARTICLE XXII. MISCELLANEOUS
	 	 	26	 
	SECTION 22.1. NONDISCLOSURE OF LEASE TERMS
	 	 	26	 
	SECTION 22.2. GUARANTY
	 	 	26	 
	SECTION 22.3. CHANGES REQUESTED BY LENDER
	 	 	26	 
	SECTION 22.4. MORTGAGEE PROTECTION
	 	 	26	 
	SECTION 22.5. COVENANTS AND CONDITIONS
	 	 	26	 
	SECTION 22.6. SECURITY MEASURES
	 	 	27	 

	 	 	 
	EXHIBITS
	 	 
	Exhibit A

	 	Description of Premises
	Exhibit B

	 	Environmental Questionnaire
	Exhibit C

	 	Landlord’s Disclosures
	Exhibit D

	 	Insurance Requirements
	Exhibit E

	 	Rules and Regulations
	Exhibit F

	 	Standard Improvements
	Exhibit X

	 	Work Letter
	Exhibit Y

	 	Project Site Plan

ii

 

LEASE 

(Multi-Tenant; Net)

     THIS
LEASE is dated for reference purposes only as of the 30th day of June, 2004, by and
between THE IRVINE COMPANY, a Delaware corporation hereafter called “Landlord,” and ENGENIO
INFORMATION TECHNOLOGIES, INC., a Delaware corporation, hereinafter called “Tenant.”

ARTICLE I. BASIC LEASE PROVISIONS

     Each reference in this Lease to the “Basic Lease Provisions” shall mean and refer to the
following collective terms, the application of which shall be governed by the provisions in the
remaining Articles of this Lease. Any dates or times for performance calculated from the date of
this Lease shall be calculated from the date of the last party to sign this Lease and not from the
reference date noted above.

	1.  	Premises: Suite No. 100 (the Premises are more particularly described in
Section 2.1).
	 
	   	Address of Building: 670 N. McCarthy Boulevard, Milpitas, CA
	 
	2.  	Project Description (if applicable): McCarthy Center
	 
	3.  	Use of Premises: General office including data center and customer service “experience” center.
	 
	4.  	Estimated Delivery Date: two (2) weeks after the date of the last signatory hereto.
	 
	5.  	Term: Sixty (60) months, plus such additional days as may be required to cause this Lease to
terminate on the final day of the calendar month.
	 
	6.  	Basic Rent: During the initial six (6) months of the Term of this Lease (and subject to the
provisions of Section 14.2(d) of the Lease), Tenant shall not be obligated to pay Basic Rent.
	 
	   	Basic Rent is subject to adjustment as follows:
	 
	   	Commencing six (6) months following the Commencement Date, the Basic Rent shall be
$21,565.18 per month, based on $.82 per rentable square foot.
	 
	   	Commencing twelve (12) months following the Commencement Date, the Basic Rent shall be
$22,091.16 per month, based on $.84 per rentable square foot.
	 
	   	Commencing twenty-four (24) months following the Commencement Date, the Basic Rent shall be
$22,880.13 per month, based on $.87 per rentable square foot.
	 
	   	Commencing thirty-six (36) months following the Commencement Date, the Basic Rent shall be
$23,669.10 per month, based on $.90 per rentable square foot.
	 
	   	Commencing forty-eight (48) months following the Commencement Date, the Basic Rent shall
be $24,195.08 per month, based on $.92 per rentable square foot.
	 
	7.  	Guarantor(s): None

	8.  	Floor Area: Approximately 26,299 rentable square feet and approximately 23,720 useable square
feet.
	 
	9.  	Security Deposit: $24,195.08.
	 
	10.  	Broker(s): Julien J. Studley
	 
	11.  	Additional Insureds: McCarthy Center Partners LLC, a Delaware limited liability company
	 
	12.  	Address for Payments and Notices:

	 	 	 
	LANDLORD	 	TENANT
	 
	 	 
	THE IRVINE COMPANY

	 	ENGENIO INFORMATION
	dba Office Properties

	 	TECHNOLOGIES, INC.
	8105 Irvine Center Drive, Suite 300

	 	670 N. McCarthy Boulevard,Suite 100
	Irvine, CA 92618

	 	Milpitas, CA 95035
	Attn: Vice President, Operations,Technology Portfolio

	 	Attention: Vice President and General Counsel

1

 

	   	with a copy of notices to:
	 
	   	THE IRVINE COMPANY 
 dba Office Properties
8105 Irvine Center Drive, Suite 300
Irvine, CA 92618

Attn: Senior Vice President, Operations
Office Properties
	 	 
	13.  	Tenant’s Liability Insurance Requirement: $2,000,000.00
	 
	14.  	Vehicle Parking Spaces: One hundred five (105)

2

 

ARTICLE II. PREMISES

     SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases from Landlord the
premises shown in Exhibit A (the “Premises”), containing approximately the rentable square
footage set forth as the “Floor Area” in Item 8 of the Basic Lease Provisions and known by the
suite number identified in Item 1 of the Basic Lease Provisions. The Premises are located in the
building identified in Item 1 of the Basic Lease Provisions (the Premises together with such
building and the underlying real property, are called the “Building”), and is a portion of the
project identified in Item 2 of the Basic Lease Provisions and
shown in Exhibit Y, if any
(the “Project”). All references to “Floor Area” in this Lease shall mean the rentable square
footage set forth in Item 8 of the Basic Lease Provisions. The rentable square footage set forth
in Item 8 may include or have been adjusted by various factors, including, without limitation, a
load factor to allocate a proportionate share of any vertical penetrations, stairwells, common
lobby or common features or areas of the Building. Tenant agrees that the Floor Area set forth in
Item 8 shall be binding on Landlord and Tenant for purposes of this Lease regardless of whether
any future or differing measurements of the Premises or the Building are consistent or
inconsistent with the Floor Area set forth in Item 8. The Premises are a portion of certain real
property which is leased by Landlord pursuant to that certain Master Lease dated December 31, 2003
(the “Master Lease”) by and between McCarthy Center Partners LLC, a Delaware limited liability
company (“Master Lessor”), as “Landlord”, and Landlord as “Tenant”. That certain Master Lease
(Short Form — Memorandum) was recorded on December 31, 2003 as Document No. 17553727 in the
Official Records of Santa Clara County, California

     SECTION 2.2. ACCEPTANCE OF PREMISES. Except as expressly set forth in this Lease, Tenant
acknowledges that neither Landlord nor any representative of Landlord has made any representation
or warranty with respect to the Premises, the Building or the Project or their respective
suitability or fitness for any purpose other than general office use, including without limitation
any representations or warranties regarding the compliance of Tenant’s use of the Premises with
the applicable zoning or regarding any other land use matters, and Tenant shall be solely
responsible as to such matters. Further, neither Landlord nor any representative of Landlord has
made any representations or warranties regarding (i) what other tenants or uses may be permitted
or intended in the Building or the Project, (ii) any exclusivity of use by Tenant with respect to
its permitted use of the Premises as set forth in Item 3 of the Basic Lease Provisions, or (iii)
any construction of portions of the Project not yet completed. Tenant further acknowledges that
neither Landlord nor any representative of Landlord has agreed to undertake any alterations or
additions or construct any improvements to the Premises except as expressly provided in this
Lease. As of the Commencement Date, Tenant shall be conclusively deemed to have accepted the
Premises and those portions of the Building and Project in which Tenant has any rights under this
Lease, which acceptance shall mean that it is conclusively established that the Premises and those
portions of the Building and Project in which Tenant has any rights under this Lease were in
satisfactory condition and in conformity with the provisions of this Lease. If no items are
required of Landlord under the Work Letter attached hereto as Exhibit X (“Work Letter”), Tenant
shall be conclusively deemed to have accepted the Premises, and those portions of the Building and
Project in which Tenant has any rights under this Lease, in their existing condition as of the
Commencement Date, and to have waived any and all right or claim regardless of the nature thereof
against Landlord arising out of the condition of the Premises, the Building or the Project.
Nothing contained in this Section shall affect the commencement of the Term or the obligation of
Tenant to pay rent.

     Notwithstanding the foregoing, Landlord shall deliver the Premises to Tenant on the
Commencement Date (as defined in Section 3.1) clean and free of debris with all items of
Landlord’s work pursuant to the Work Letter, including without limitation, the installation of
the Tenant Improvements (as defined in Section 3.1) completed in accordance with the terms of the
Work Letter. Landlord warrants to Tenant that the roof, plumbing, fire sprinkler system, lighting,
heating, ventilation and air conditioning systems and electrical systems in the Premises, shall be
in good operating condition on the Commencement Date and during the initial twelve (12) months of
the Term. In the event of a non-compliance with such warranty, Landlord shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from Tenant setting forth the
nature and extent of such non-compliance, rectify same at Landlord’s cost and expense. Further, in
connection with the construction of the Tenant Improvements pursuant to the Work Letter, Tenant
shall use commercially reasonable efforts to obtain customary warranties and guaranties from the
contractor(s) performing such work and/or the manufacturers of equipment installed therein, but
shall be under no obligation to incur additional expense in order to obtain or extend such
warranties. If Tenant is required to make repairs to any component of the Premises or any of its
systems not covered by the Landlord’s warranty contained in this Section 2.2 but for which
Landlord has obtained a contractor’s or manufacturer’s warranty, then Landlord shall, upon request
by Tenant, use its commercially reasonable efforts to pursue its rights under any such warranties
for the benefit of Tenant. Under no circumstances will Tenant have the right to enforce any of the
warranties and guaranties obtained by Landlord.

     SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any name selected by
Landlord from time to time for the Building and/or the Project as any part of Tenant’s corporate
or trade name. Landlord shall have the right to change the name, address, number or designation of
the Building or Project without liability to Tenant.

     SECTION 2.4. RIGHT OF FIRST REFUSAL.

     (a) Provided Tenant is not then in default after the expiration of the applicable cure period,
Landlord hereby grants Tenant the one time right of first refusal in accordance with the terms of
this Section 2.4 (the “First Refusal Right”) to lease such space (“First Refusal Space”) that (i)
is located in the Building and contiguous to the Premises; and (ii) Landlord has received a bona
fide signed letter of intent to lease the space described in Section 2.4(i) from a potential tenant
that is acceptable to Landlord as Landlord shall determine in its sole and absolute discretion
(“Acceptable LOI”). The First Refusal Right shall apply only to the first Acceptable LOI that
Landlord receives during the eighteen (18) month period immediately following the date of execution
of this Lease.

3

 

If Tenant fails to exercise the First Refusal Right, Landlord fails to receive an Acceptable
LOI during the eighteen (18) month period immediately following the date of execution of this
Lease or Tenant exercises the First Refusal Right with respect to an Acceptable LOI, the First
Refusal Right shall be of no further force and effect and the Tenant shall not have any right of
first refusal to lease any additional space in the Building. Promptly after receipt of an
Acceptable LOI, Landlord shall prepare an amendment to this Lease setting forth the terms upon
which Tenant may lease the First Refusal Space and deliver same to Tenant for Tenant’s
consideration. Such lease amendment shall be on the same terms and conditions set forth in this
Lease as modified by each and every term and condition set forth in the Acceptable LOI. If Tenant
desires to exercise the First Refusal Right, Tenant shall execute and return to Landlord the
aforementioned lease amendment within three (3) business days after delivery by Landlord. Tenant’s
failure to timely return such lease amendment shall be deemed Tenant’s election not to exercise
the First Refusal Right and Landlord shall be free to lease the First Refusal Space free and clear
of the First Refusal Right. If requested by Landlord following Tenant’s failure to exercise the
First Refusal Right, Tenant shall execute a waiver and release of the First Refusal Right and
deliver same to Landlord within three (3) business days after demand. Tenant’s failure to deliver
such waiver and release shall constitute a material default hereunder. Tenant’s rights under this
Section 2.4(a) shall belong solely to Engenio Information Technologies, Inc., a Delaware
corporation, and may not be assigned or transferred by it. Any attempted assignment or transfer
shall be void and of no force or effect. Notwithstanding anything contained in this Section 2.4(a)
to the contrary, it is understood that Tenant’s First Refusal Right shall be subordinate to the
intervening rights of first offer, if any, of the Ground Lessor under the ground lease underlying
the First Refusal Space, and to any preexisting extension or expansion rights granted by Landlord
to any third party tenant leasing, or with the right to lease the First Refusal Space or any
portion thereof, and in no event shall the First Refusal Space be subject to the provisions of
this First Refusal Right unless and until such prior rights are waived and/or not exercised by the
holder thereof.

     (b) In addition to the rights set forth in Section 2.4(a) above, provided Tenant is not then
in default after the expiration of the applicable cure period, Landlord hereby grants Tenant the
right (“Suite 120 Leasing Right”) to lease that certain space located in the Building and
identified as Suite 120 and consisting of approximately eleven thousand nine hundred fifty two
rentable square feet as set forth on the attached Exhibit A (“Suite 120”). The Suite 120
Leasing Right shall commence on the date of execution of this Lease and shall expire on the date
that is six (6) months after such execution date if the Tenant has not provided written notice of
its election to exercise the Suite 120 Leasing Right. Tenant’s failure to exercise the Suite 120
Leasing Right shall not limit Tenant’s rights set forth in Section 2.4(a) above. The Suite 120
Leasing Right shall be on the same terms and conditions of this Lease, including, but not limited
to, the per rentable square foot (i) Basic Rent; (ii) Security Deposit; (iii) tenant improvement
allowance provided pursuant to the Work Letter and (iv) vehicle parking spaces; but excepting
therefrom, (a) the Lease term for Suite 120 will expire concurrently with the expiration of the
Premises; (b) Basic Rent payments shall commence concurrently with the Basic Rent for the
Premises; and (c) the estimated delivery date for Suite 120 will be forty five (45) days after
Tenant’s exercise of the Suite 120 Leasing Right. In addition, the Floor Area and Tenant’s Share
will be appropriately adjusted. Promptly after receipt Tenant’s notice exercising the Suite 120
Leasing Right, Landlord shall prepare an amendment to this Lease (the “Amendment”) setting forth
the terms upon which Tenant may lease Suite 120 and deliver same to Tenant for Tenant’s
consideration. If the Amendment is acceptable to Tenant, Tenant shall execute and return the
Amendment to Landlord within ten (10) business days after delivery by Landlord. Tenant’s failure
to timely return such lease amendment shall act to void Tenant’s exercise of the Suite 120 Leasing
Right and Landlord shall be free to lease Suite 120, subject to Tenant’s rights set forth in
Section 2.4(a) above. Tenant’s rights under this Section 2.4(b) shall belong solely to Engenio
Information Technologies, Inc., a Delaware corporation, and may not be assigned or transferred by
it. Any attempted assignment or transfer shall be void and of no force or effect.

ARTICLE III. TERM

     SECTION 3.1. GENERAL. The term of this Lease (“Term”) shall be for the period shown in Item 5
of the Basic Lease Provisions. Subject to the provisions of Section 3.2 below, the Term shall
commence (“Commencement Date”) on the earlier of (a) the date Tenant commences business operations
in the Premises, and (b) the date the tenant improvements constructed pursuant to the Work Letter
(“Tenant Improvements”) have been substantially completed in accordance with the Work Letter (as
evidenced by written approval thereof in accordance with the building permits issued for the Tenant
Improvements or issuance of a temporary or final certificate of occupancy for the Premises); and
(c) December 10, 2004. Tenant shall commence construction of the Tenant Improvements promptly after
the execution of this Lease and shall diligently prosecute the construction thereof to completion.
Should Tenant fail to promptly commence such construction or fail to diligently prosecute such
construction to completion, the date for completion of the Tenant Improvements pursuant to
subsection (b) above shall be accelerated on a day for day basis resulting from such failure. The
date on which this Lease is scheduled to terminate is referred to as the “Expiration Date.”
Promptly after the Commencement Date is established, the parties shall memorialize on a customary
form provided by Landlord the actual Commencement Date and the Expiration Date of this Lease.
Tenant’s failure to execute that form shall not affect the validity of Landlord’s determination of
those dates or Tenant’s obligation to pay rent hereunder. From and after the execution of this
Lease, Tenant shall have access to the Premises for the purpose of completing construction of the
Tenant Improvements and to enable Tenant to install fixtures, furniture, computers, telephone and
cabling equipment in the Premises. Such access shall be subject to all of the terms and conditions
of this Lease, except that Tenant’s rental obligation shall not commence to accrue until the
Commencement Date hereof.

     SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason whatsoever, cannot deliver
possession of the Premises to Tenant on or before the date that is two weeks after the date of the
last signatory hereto (“Estimated Delivery Date”), this Lease shall not be void or voidable nor
shall Landlord be liable to Tenant for any resulting loss or damage. However, Tenant shall not be
liable for any rent until the Commencement Date occurs as provided in Section 3.1 above, except
that if Landlord cannot tender possession of the Premises in accordance with the provisions of
Section 3.1 above due to any action or inaction of Tenant, then the Commencement Date shall be
deemed to have occurred and Landlord shall be entitled to full performance by Tenant

4

 

(including the payment of rent) from the date Landlord would have been able to so tender
possession of the Premises to Tenant but for Tenant’s action or inaction. For purposes of
determining the Commencement Date pursuant to Section 3.1, the date set forth in Section 3.1(c)
above shall be extended on a day for day basis for each day Landlord is delayed in delivering
possession of the Premises to Tenant beyond the Estimated Delivery Date; provided, however, if
such delay is caused or contributed to by Tenant, the date set forth in Section 3.1(c) above
shall not be extended as a result of such delay.

     Notwithstanding anything to the contrary contained in this Section 3.2, if for any reason
other than Tenant Delays, or other matters beyond Landlord’s reasonable control, the actual
Commencement Date has not occurred by the date that is one hundred twenty (120) days following the
Estimated Delivery Date, then Tenant may, by written notice to Landlord given within ten (10) days
thereafter, but prior to the actual occurrence of the Commencement Date, elect to terminate this
Lease. Notwithstanding the foregoing, if at any time during the construction period for the Tenant
Improvements, Landlord reasonably believes that the Commencement Date will not occur on or before
one hundred twenty (120) days following the Estimated Delivery Date, Landlord may notify Tenant in
writing of such fact and of a new outside date on or before which the Commencement Date will
occur, and Tenant must elect within ten (10) days of receipt of such notice to either terminate
this Lease or waive its right to terminate this Lease provided the Commencement Date occurs on or
prior to the new outside date established by Landlord in such notice to Tenant. Tenant’s failure
to elect to terminate this Lease within such ten (10) day period shall be deemed Tenant’s waiver
of its right to terminate this Lease as provided in this paragraph as to the previous outside
date, but not as to the new outside date established by said notice,

     SECTION 3.3. RIGHT TO EXTEND THIS LEASE. Provided that no Event of Default has occurred under
any provision of this Lease, either at the time of exercise of the extension right granted herein
or at the time of the commencement of such extension, then Tenant may extend the Term of this
Lease for one (1) period of thirty-six (36) months. Tenant shall exercise its right to extend the
Term by and only by delivering to Landlord, not less than nine (9) months or more than twelve (12)
months prior to the expiration date of the Term, Tenant’s irrevocable written notice of its
commitment to extend (the “Commitment Notice”). The Basic Rent payable under the Lease during any
extension of the Term shall be ninety five percent (95%) of the fair market rental rate as
determined in the following provisions.

     If Landlord and Tenant have not by then been able to agree upon the Basic Rent for the
extension of the Term, then within ten (10) business days after the receipt of the Commitment
Notice, Landlord shall notify Tenant in writing of the Basic Rent that would reflect ninety five
percent (95%) of the fair market rental rate for a 36-month renewal of comparable space in the
Project (together with any increases thereof during the extension period) as of the commencement
of the extension period (“Landlord’s Determination”). Should Tenant disagree with the Landlord’s
Determination, then Tenant shall, not later than twenty (20) days thereafter, notify Landlord in
writing of Tenant’s determination of those rental terms (“Tenant’s Determination”). Within ten
(10) days following delivery of the Tenant’s Determination, the parties shall attempt to agree on
a licensed real estate broker with at least ten (10) years experience in the Milpitas/San
Jose/Highway 237 market to determine the fair market rental. If the parties are unable to agree in
that time, then each party shall designate a broker within ten (10) days thereafter. Should either
party fail to so designate a broker within that time, then the broker designated by the other
party shall determine the fair market rental. Should each of the parties timely designate a
broker, then the two brokers so designated shall appoint a third broker who shall, acting alone,
determine the fair market rental for the Premises.

     Within ten (10) business days following the selection of the broker and such broker’s receipt
of the Landlord’s Determination and the Tenant’s Determination, the broker shall determine whether
the rental rate determined by Landlord or by Tenant more accurately reflects ninety five percent
(95%) of the fair market rental rate for the 36-month renewal of the Lease for the Premises, as
reasonably extrapolated to the commencement of the extension period. Accordingly, either the
Landlord’s Determination or the Tenant’s Determination shall be selected by the broker as the fair
market rental rate for the extension period. In making such determination, the broker shall
consider rental comparables for the Project and rental comparables for similarly improved space
within the Milpitas/San Jose/Highway 237 market with appropriate adjustment for location and
quality of project, but the broker shall not attribute any factor for market tenant improvement
allowances for renewal leases or brokerage commissions in making its determination of the fair
market rental rate. At any time before the decision of the broker is rendered, either party may,
by written notice to the other party, accept the rental terms submitted by the other party, in
which event such terms shall be deemed adopted as the agreed fair market rental. The fees of the
broker(s) shall be borne entirely by the party whose determination of the fair market rental rate
was not accepted by the broker.

     Within twenty (20) days after the determination of the rental rate, Landlord shall prepare an
appropriate amendment to this Lease for the extension period, and Tenant shall execute and return
same to Landlord within ten (10) days after Tenant’s receipt of same. Should the rental rate not
be established by the commencement of the extension period, then Tenant shall continue paying rent
at the rate in effect during the last month of the initial Term, and a lump sum adjustment shall
be made promptly upon the determination of such new rental.

     If Tenant fails to timely comply with any of the provisions of this paragraph, Tenant’s right
to extend the Term shall be extinguished and the Lease shall automatically terminate as of the
expiration date of the Term, without any extension and without any liability to Landlord. Tenant
shall have no other right to extend the Term beyond the single thirty-six (36) month extension
period created by this paragraph. Unless agreed to in a writing signed by Landlord and Tenant, any
extension of the Term, whether created by an amendment to this Lease or by a holdover of the
Premises by Tenant, or otherwise, shall be deemed a part of, and not in addition to, any duly
exercised extension period permitted by this paragraph. Tenant’s rights under this Section 3.3
shall be personal to Engenio Information Technologies, Inc., and shall not be transferable without
the prior written consent of the Landlord, which consent may be withheld in Landlord’s sole and
absolute discretion; provided, however, Engenio Information Technologies, Inc., may assign its
rights under this Section 3.3 to a Permitted Transferee without

5

 

obtaining Landlord’s consent. In addition, if Tenant enters into permitted subleases of the
Premises totaling more than fifty percent (50%) of the rentable square footage of the Premises,
Tenant’s rights under this Section 3.3 shall terminate at the option of Landlord.

ARTICLE IV. RENT AND OPERATING EXPENSES

     SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant shall pay to
Landlord without deduction or offset, the rental amount for the Premises shown in Item 6 of the
Basic Lease Provisions (the “Basic Rent”), as such may be increased pursuant to Section II(D) of
the Work Letter and including subsequent adjustments, if any. Any rental adjustment to Basic Rent
shown in Item 6 shall be deemed to occur on the specified month, whether or not the Commencement
Date occurs at the end of a calendar month. The rent shall be due and payable in advance
commencing on the Commencement Date (as prorated for any partial month) and continuing thereafter
on the first day of each successive calendar month of the Term. No demand, notice or invoice shall
be required for the payment of Basic Rent. An installment of rent in the amount of one (1) full
month’s Basic Rent at the initial rate specified in Item 6 of the Basic Lease Provisions and one
(1) month’s estimated Tenant’s Share of Operating Expenses (as defined in Section 4.2) shall be
delivered to Landlord concurrently with Tenant’s execution of this Lease and shall be applied
against the Basic Rent and Operating Expenses first due hereunder.

     SECTION 4.2. OPERATING EXPENSES.

     (a) From and after Commencement Date, Tenant shall pay to Landlord, as additional rent,
Tenant’s
Share of all Operating Expenses, as defined in Section 4.2(f), incurred by Landlord in the
operation of the Building
and the Project. The term “Tenant’s Share” means that portion of any Operating Expenses
determined by
multiplying the cost of such item by a fraction, the numerator of which is the Floor Area (set
forth in item 8 of the
Basic Lease Provisions) and the denominator of which is the total rentable square footage, as
determined from time
to time by Landlord, of (i) the Building, for expenses determined by Landlord to benefit or
relate substantially to the
Building rather than the entire Project, (ii) all of the buildings in the Project, as
determined by Landlord, for
expenses determined by Landlord to benefit or relate substantially to the entire Project
rather than any specific
building or (iii) all or some of the buildings within the Project as well as all or a portion
of other property owned by
Landlord and/or its affiliates, for expenses which benefit or relate to such buildings within
the Project and such other
real property. In the event that Landlord determines in its reasonable discretion that any
premises within the
Building or any building within the Project or any portion of a building or project within a
larger area incurs a non-proportional benefit from any expense, or is the non-proportional cause of any such expense,
Landlord may, allocate
a greater percentage of such Operating Expense to such premises, building or project, as
applicable. The full
amount of any management fee payable by Landlord for the management of Tenant’s Premises that
is calculated as a
percentage of the rent payable by Tenant shall be paid in full by Tenant as additional rent.

     (b) Prior
to the start of each full Expense Recovery Period (as defined in this Section 4.2),
Landlord
shall give Tenant a written estimate of the amount of Tenant’s Share of Operating Expenses for
the applicable
Expense Recovery Period. Failure to provide such estimate shall not relieve Tenant from its
obligation to pay
Tenant’s Share of Operating Expenses or estimated amounts thereof, if and when Landlord
provides such estimate or
final payment amount. Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in
advance concurrently with payments of Basic Rent. If Landlord has not furnished its written
estimate for any
Expense Recovery Period by the time set forth above, Tenant shall continue to pay monthly the
estimated Tenant’s
Share of Operating Expenses in effect during the prior Expense Recovery Period; provided that
when the new
estimate is delivered to Tenant, Tenant shall, at the next monthly payment date, pay any
accrued estimated Tenant’s
Share of Operating Expenses based upon the new estimate. For purposes hereof, “Expense
Recovery Period” shall
mean every twelve month period during the Term (or portion thereof for the first and last
lease years) commencing
July 1 and ending June 30, provided that Landlord shall have the right to change the date on
which an Expense
Recovery Period commences in which event appropriate reasonable adjustments shall be made to
Tenant’s Share of
Operating Expenses so that the amount payable by Tenant shall not materially vary as a result
of such change.

     (c) Within one hundred twenty (120) days after the end of each Expense Recovery Period,
Landlord
shall furnish to Tenant a statement showing in reasonable detail the actual or prorated
Tenant’s Share of Operating
Expenses incurred by Landlord during the period, and the parties shall within thirty (30) days
thereafter make any
payment or allowance necessary to adjust Tenant’s estimated payments of Tenant’s Share of
Operating Expenses, if
any, to the actual Tenant’s Share of Operating Expenses as shown by the annual statement. Any
delay or failure by
Landlord in delivering any statement hereunder shall not constitute a waiver of Landlord’s
right to require Tenant to
pay Tenant’s Share of Operating Expenses pursuant hereto. Any amount due Tenant shall be
credited against
installments next coming due under this Section 4.2, and any deficiency shall be paid by
Tenant together with the
next installment. Should Tenant fail to object in writing to Landlord’s determination of
Tenant’s Share of Operating
Expenses within ninety (90) days following delivery of Landlord’s expense statement,
Landlord’s determination of
Tenant’s Share of Operating Expenses for the applicable Expense Recovery Period shall be
conclusive and binding
on the parties for all purposes and any future claims to the contrary shall be barred.

     Provided no Event of Default has occurred which has not either been cured by Tenant or waived
by Landlord, Tenant shall have the right to cause a certified public accountant, engaged on a
non-contingency fee basis, to audit Operating Expenses by inspecting Landlord’s general ledger of
expenses not more than once during any Expense Recovery Period. However, to the extent that
insurance premiums or any other component of Operating Expenses is determined by Landlord on the
basis of an internal allocation of costs utilizing information Landlord in good faith deems
proprietary, such expense component shall not be subject to audit. Tenant shall give notice to
Landlord of Tenant’s intent to audit within ninety (90) days after Tenant’s receipt of Landlord’s
expense statement which sets forth Tenant’s Share of Landlord’s actual Operating Expenses. Such
audit shall be conducted at a mutually agreeable time during normal business hours at the office of
Landlord or its management agent where such accounts are maintained. If Tenant’s audit determines
that actual Operating Expenses have been overstated by

6

 

more than five percent (5%), then subject to Landlord’s right to review and/or contest the
audit results, Landlord shall reimburse Tenant for the reasonable out-of-pocket costs of such
audit. Tenant’s rent shall be appropriately adjusted to reflect any overstatement in Operating
Expenses. In the event of a dispute between Landlord and Tenant regarding such audit, such dispute
shall be submitted and resolved by binding arbitration pursuant to Section 22.7 below. All of the
information obtained by Tenant and/or its auditor in connection with such audit, as well as any
compromise, settlement, or adjustment reached between Landlord and Tenant as a result thereof,
shall be held in strict confidence and, except as may be required pursuant to litigation, shall
not be disclosed to any third party, directly or indirectly, by Tenant or its auditor or any of
their officers, agents or employees. Landlord may require Tenant’s auditor to execute a separate
confidentiality agreement affirming the foregoing as a condition precedent to any audit. In the
event of a violation of this confidentiality covenant in connection with any audit, then in
addition to any other legal or equitable remedy available to Landlord, Tenant shall forfeit its
right to any reconciliation or cost reimbursement payment from Landlord due to said audit (and any
such payment theretofore made by Landlord shall be promptly returned by Tenant), and Tenant shall
have no further audit rights under this Lease.

     (d) Even though this Lease has terminated and the Tenant has vacated the Premises, when the
final
determination is made of Tenant’s Share of Operating Expenses for the Expense Recovery Period
in which this
Lease terminates, Tenant shall within thirty (30) days of written notice pay the entire
increase over the estimated
Tenant’s Share of Operating Expenses already paid. Conversely, any overpayment by Tenant
shall be rebated by
Landlord to Tenant not later than thirty (30) days after such final determination..

     (e) If, at any time during any Expense Recovery Period, any one or more of the Operating
Expenses
are increased to a rate(s) or amount(s) in excess of the rate(s) or amount(s) used in
calculating the estimated Tenant’s
Share of Operating Expenses for the year, then the estimate of Tenant’s Share of Operating
Expenses may be
increased by written notice from Landlord for the month in which such
rate(s) or amount(s)
becomes effective and
for all succeeding months by an amount equal to Tenant’s Share of the increase. If Landlord
gives Tenant written
notice of the amount or estimated amount of the increase, the month in which the increase will
or has become
effective, then Tenant shall pay the increase to Landlord as a part of Tenant’s monthly
payments of the estimated
Tenant’s Share of Operating Expenses as provided in
Section 4.2(b), commencing with the month
following Tenant’s
receipt of Landlord’s notice. In addition, Tenant shall pay upon written request any such
increases which were
incurred prior to the Tenant commencing to pay such monthly increase.

     (f) The term “Operating Expenses” shall mean and include all Project Costs, as defined in
subsection (g), and Property Taxes, as defined in subsection (h).

     (g) The term “Project Costs” shall include all expenses of operation, repair and maintenance
of the
Building and the Project, including without limitation all appurtenant Common Areas (as
defined in Section 6.2),
and shall include the following charges by way of illustration but not limitation: water and
sewer charges; insurance
premiums and deductibles and/or reasonable premium and deductible equivalents should Landlord
elect to
self-insure all or any portion of any risk that Landlord is authorized to insure hereunder;
license, permit, and
inspection fees; light; power; window washing; trash pickup; janitorial services to any
interior Common Areas;
heating, ventilating and air conditioning; supplies; materials; equipment; tools; the cost of
any insurance or tax
consultant utilized by Landlord in connection with the Building and/or Project; establishment
of reasonable reserves
for roof replacement and/or repairs; costs incurred in connection with compliance with any
laws or changes in laws
applicable to the Building or the Project; the cost of any capital investments or replacements
(other than tenant
improvements for specific tenants) to the extent of the amortized amount thereof over the
useful life of such capital
investments or replacements calculated at a market cost of funds, all as determined by
Landlord, for each such year
of useful life during the Term; costs associated with the maintenance of an air conditioning,
heating and ventilation
service agreement, and maintenance of an intrabuilding network cable service agreement for any
intrabuilding
network cable telecommunications lines within the Project, and any other installation,
maintenance, repair and
replacement costs associated with such lines; capital costs associated with a requirement
related to demands on
utilities by Project tenants, including without limitation the cost to obtain additional phone
connections; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes for administrative
and other personnel
directly applicable to the Building and/or Project, including both Landlord’s personnel and
outside personnel; any
expense incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and a reasonable
overhead/management fee for the
professional operation of the Project not to exceed the then current market fee charged by
owners of similarly
improved space within the Milpitas/San Jose/Highway 237 market. Tenant acknowledges that (i)
Landlord is
currently charging a management fee of 3% of Basic Rent and Operating Expenses; and (ii) such
fee is considered
market competitive for purposes of this Lease. It is understood and agreed that Project
Costs may include
competitive charges for direct services (including, without limitation, management and/or
operations services)
provided by any subsidiary, division or affiliate of Landlord.

     Notwithstanding the provisions of Section 4.2(g) above, Project Costs shall not include: (a)
the cost of capital improvements (except as set forth above); (b) all fees, costs, principal and
interest related to any mortgage(s) or deed(s) of trust, all payments made under any ground or
underlying lease and all other non-operating debts of Landlord; (c) the cost of repairs or other
work to the extent Landlord is reimbursed by insurance or condemnation proceeds; (d) costs in
connection with leasing space in the Building (including, without limitation, brokerage
commissions, marketing costs, attorneys’ fees, lease concessions, rental abatements and
construction allowances granted to specific tenants); (e) costs incurred in connection with the
sale, financing or refinancing of the Building or Project; (f) fines, interest and penalties
incurred due to the late payment of Property Taxes or Project Costs not caused to by Tenant’s
failure to timely pay Basic Rent, Operating Expenses or Property Taxes; (g) any penalties or
damages that Landlord pays to Tenant under this Lease or to other tenants in the Building or
Project under their respective leases; (h) any costs, fines, or penalties incurred due to
violations by Landlord of any governmental rule or authority; (i) the cost of any service provided
to Tenant or other occupants of the Building or Project for which Landlord is actually reimbursed
by another tenant in the Building; (j) costs associated with damage or repairs to the Project or
Common Areas necessitated by the willful misconduct of Landlord or Landlord’s

7

 

employees or authorized agents; (k) salaries and benefits or employees over the level of property
manager; (1) legal
fees, accountant fees and other expenses incurred in disputes with other tenants or occupants
of the Building or
Project or associated with the enforcement of any other leases or defense of Landlord’s title
to or interest in the Building, Project or any part thereof; (m) services or installations
furnished to any tenant in the Building that are not also furnished to Tenant; (n) the cost of any
service provided to Tenant or other occupants of the Building or Project for which Landlord is
actually reimbursed; and (o) costs or fees payable to public authorities in connection with any
future construction, renovation and/or improvements to the Project (other than the Tenant
Improvements or any improvements made to the Premises by or for Tenant) including fees for
transit, housing, schools, open space, child care, arts programs, traffic mitigation measures,
environmental impact reports, traffic studies, and transportation system management plans;
provided, however, any of the foregoing that would be considered part of Property Taxes and/or
billed as such may be included in Property Taxes.

     (h) The term “Property Taxes” as used herein shall include any form of federal, state, county
or local government or municipal taxes, fees, charges or other impositions of every kind (whether
general, special, ordinary or extraordinary) related to the ownership, leasing or operation of the
Premises, Building or Project, including without limitation, the following: (i) all real estate
taxes or personal property taxes, as such property taxes may be reassessed from time to time; and
(ii) other taxes, charges and assessments which are levied with respect to this Lease or to the
Building and/or the Project, and any improvements, fixtures and equipment and other property of
Landlord located in the Building and/or the Project, (iii) all assessments and fees for public
improvements, services, and facilities and impacts thereon, including without limitation arising
out of any Community Facilities Districts, “Mello Roos” districts, similar assessment districts,
and any traffic impact mitigation assessments or fees; (iv) any tax, surcharge or assessment which
shall be levied in addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (v) taxes based on the receipt of rent (including gross
receipts or sales taxes applicable to the receipt of rent), and (vi) costs and expenses incurred
in contesting the amount or validity of any Property Tax by appropriate proceedings.
Notwithstanding the foregoing, Property Taxes shall not include any (i) net income, capital,
stock, succession, transfer, franchise, gift, estate or inheritance tax; (ii) any item to the
extent otherwise included in Project Costs; (iii) any environmental assessments, charges or liens
arising in connection with the remediation of Hazardous Materials from the Project, the causation
of which arose prior to the Commencement Date or to the extent caused by Landlord, its agents,
employees or contractors or any tenant of the Project (other than Tenant or its sublessees or
assignees); or (iv) reserves for future Property Taxes. If any Property Taxes are payable in
installments over a period of time, Tenant shall be liable only for the payment of those
installments falling due and payable during the Term, with appropriate proration for fractional
years.

     SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant’s delivery of this Lease, Tenant shall
deposit with Landlord the sum, if any, stated in Item 9 of the Basic Lease Provisions, to be held
by Landlord as security for the full and faithful performance of all of Tenant’s obligations under
this Lease (the “Security Deposit”). Landlord shall not be required to keep this Security Deposit
separate from its general funds, and Tenant shall not be entitled to interest on the Security
Deposit. Subject to the last sentence of this Section, the Security Deposit shall be understood and
agreed to be the property of Landlord upon Landlord’s receipt thereof, and may be utilized by
Landlord in its sole and absolute discretion towards the payment of all expenses by Landlord for
which Tenant would be required to reimburse Landlord under this Lease, including without limitation
brokerage commissions and Tenant Improvement costs. Upon any Event of Default by Tenant (as defined
in Section 14.1), Landlord may, in its sole and absolute discretion, retain, use or apply the whole
or any part of the Security Deposit to pay any sum which Tenant is obligated to pay under this
Lease, sums that Landlord may expend or be required to expend by reason of the Event of Default by
Tenant or any loss or damage that Landlord may suffer by reason of the Event of Default or costs
incurred by Landlord in connection with the repair or restoration of the Premises pursuant to
Section 15.3 of this Lease upon expiration or earlier termination of this Lease. In no event shall
Landlord be obligated to apply the Security Deposit upon an Event of Default and Landlord’s rights
and remedies resulting from an Event of Default, including without limitation, Tenant’s failure to
pay Basic Rent, Tenant’s Share of Operating Expenses or any other amount due to Landlord pursuant
to this Lease, shall not be diminished or altered in any respect due to the fact that Landlord is
holding the Security Deposit. If any portion of the Security Deposit is applied by Landlord as
permitted by this Section, Tenant shall within five (5) business days after written demand by
Landlord deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its
original amount. If Tenant fully performs its obligations under this Lease, the Security Deposit
shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest in
this Lease) within thirty (30) days after the expiration of the Term, provided that Tenant agrees
that Landlord may retain the Security Deposit to the extent and until such time as all amounts due
from Tenant in accordance with this Lease have been determined and paid in full and Tenant agrees
that Tenant shall have no claim against Landlord for Landlord’s retaining such Security Deposit to
the extent provided in this Section.

ARTICLE V. USES

     SECTION 5.1. USE. Tenant shall use the Premises only for the purposes stated in Item 3 of the
Basic Lease Provisions, all in accordance with applicable laws and restrictions and pursuant to
approvals to be obtained by Tenant from all relevant and required governmental agencies and
authorities. The parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in addition to any
other available remedy. Tenant, at its expense, shall procure, maintain and make available for
Landlord’s inspection throughout the Term, all governmental approvals, licenses and permits
required for the proper and lawful conduct of Tenant’s permitted use of the Premises. Tenant shall
not do or permit anything to be done in or about the Premises which will in any way unreasonably
interfere with the rights of other occupants of the Building or the Project, or use or allow the
Premises to be used for any unlawful purpose, nor shall Tenant permit any nuisance or commit any
waste in the Premises or the Project. Tenant shall not perform any work or conduct any business
whatsoever in the Project other than inside the Premises. Tenant shall not do or permit to be done
anything which will invalidate or increase the cost of any insurance policy(ies) covering the
Building, the Project and/or their contents, and shall comply with all applicable insurance
underwriters rules. Subject to the provisions of Article IV,

8

 

Tenant shall comply at its expense with all present and future laws,
ordinances, restrictions, regulations, orders, rules and requirements of all
governmental authorities that pertain to Tenant or its use of the Premises,
including without limitation all federal and state occupational health and safety
requirements, whether or not Tenant’s compliance will necessitate expenditures or
interfere with its use and enjoyment of the Premises. Tenant shall comply at its
expense with all present and future covenants, conditions, easements or
restrictions now or hereafter affecting or encumbering the Building and/or
Project, and any amendments or modifications thereto, including without
limitation the payment by Tenant of any periodic or special dues or assessments
charged against the Premises or Tenant which may be allocated to the Premises or
Tenant in accordance with the provisions thereof; provided, however, such future
restrictions or requirements do not materially derogate the rights of Tenant or
materially increase the obligations of Tenant under this Lease. Tenant shall
promptly upon demand reimburse Landlord for any additional insurance premium
charged by reason of Tenant’s failure to comply with the provisions of this
Section, and shall indemnify Landlord from any liability and/or expense resulting
from Tenant’s noncompliance.

     SECTION 5.2. SIGNS. Tenant, and its successors and assigns, shall have the
right to install and maintain during the Term one (1) exterior “eye-brow” sign on
the Building (the “Eye-Brow Sign”). Landlord, acting reasonably and in good faith,
shall designate the location of the Eye-Brow Sign. Except as approved in writing
by Landlord, in its sole and absolute discretion, Tenant shall have no right to
maintain signs in any other location in, on or about the Premises, the Building or
the Project and shall not place or erect any other signs that are visible from the
exterior of the Building. The size, design, graphics, material, style, color and
other physical aspects of any permitted sign shall be subject to Landlord’s
written determination, as determined solely by Landlord, prior to installation,
that signage is in compliance with any covenants, conditions or restrictions
encumbering the Premises and Landlord’s signage program for the Project, as in
effect from time to time and approved by the City in which the Premises are
located (“Signage Criteria”). Prior to placing or erecting any such signs, Tenant
shall obtain and deliver to Landlord a copy of any applicable municipal or other
governmental permits and approvals and comply with any applicable insurance
requirements for such signage. Tenant shall be responsible for the cost of any
permitted sign, including the fabrication, installation, maintenance and removal
thereof and the cost of any permits therefor. If Tenant fails to
maintain its sign
in good condition, or if Tenant fails to remove same upon termination of this
Lease and repair and restore any damage caused by the sign or its removal,
Landlord may do so at Tenant’s expense. Landlord shall have the right to
temporarily remove any signs in connection with any repairs or maintenance in or
upon the Building. The term “sign” as used in this Section shall include all
signs, designs, monuments, displays, advertising materials, logos, banners,
projected images, pennants, decals, pictures, notices, lettering, numerals or
graphics.

     SECTION 5.3. HAZARDOUS MATERIALS.

     (a) For purposes of this Lease, the term “Hazardous Materials” includes (i)
any “hazardous material”
as defined in Section 25501(o) of the California Health and Safety Code, (ii)
hydrocarbons, polychlorinated
biphenyls or asbestos, (iii) any toxic or hazardous materials, substances,
wastes or materials as defined pursuant to
any other applicable state, federal or local law or regulation, and (iv) any
other substance or matter which may result
in liability to any person or entity as result of such person’s possession,
use, release or distribution of such substance
or matter under any statutory or common law theory.

     (b) Except for ordinary quantities of office and cleaning supplies customarily
used in projects similar
to the Project, which shall be used in full compliance with all Hazardous
Materials laws, Tenant shall not cause or
permit any Hazardous Materials to be brought upon, stored, used, generated,
released or disposed of on, under, from
or about the Premises (including without limitation the soil and groundwater
thereunder) without the prior written
consent of Landlord, which consent may be given or withheld in Landlord’s sole
and absolute discretion.
Notwithstanding the foregoing, Tenant shall have the right, without obtaining
prior written consent of Landlord: (A)
to utilize within the Premises a reasonable quantity of standard office
products that may contain Hazardous
Materials (such as photocopy toner, “White Out”, and the like), provided
however, that (i) Tenant shall maintain
such products in their original retail packaging, shall follow all
instructions on such packaging with respect to the
storage, use and disposal of such products, and shall otherwise comply with
all applicable laws with respect to such
products, and (ii) all of the other terms and provisions of this Section 5.3
shall apply with respect to Tenant’s
storage, use and disposal of all such products, and (B) to utilize within the
Premises those Hazardous Materials in
kind and content listed on the Environmental Questionnaire delivered to
Landlord prior to the execution of this
Lease to the extent the use of such Hazardous Materials are permitted by
Landlord’s insurance and do not increase
the amount of the premiums of such insurance, provided that Tenant shall
comply with all applicable laws with
respect to such Hazardous Materials and all of the other terms and provisions
of this Section 5.3 shall apply with
respect to Tenant’s storage, use and disposal of such Hazardous Materials.
Landlord may, in its sole and absolute
discretion, place such conditions as Landlord deems appropriate with respect
to Tenant’s use of any such Hazardous
Materials, and may further require that Tenant demonstrate that any such
Hazardous Materials are necessary or
useful to Tenant’s business and will be generated, stored, used and disposed
of in a manner that complies with all
applicable laws and regulations pertaining thereto and with good business
practices. Tenant understands that
Landlord may utilize an environmental consultant to assist in determining
conditions of approval in connection with
the storage, generation, release, disposal or use of Hazardous Materials by
Tenant on or about the Premises, and/or
to conduct periodic inspections of the storage, generation, use, release and/or disposal of such
Hazardous Materials
by Tenant on and from the Premises, and Tenant agrees that any costs incurred by Landlord in
connection therewith
shall be reimbursed by Tenant to Landlord as additional rent hereunder upon demand; however, Tenant
shall have
no obligation to reimburse Landlord for any costs incurred in connection with any environmental
consultant retained
by Landlord pursuant to this Section unless Tenant shall be in default under this Section 5.3 and
such costs are
covered by Tenant’s indemnity obligations contained in this Section 5.3.

     (c) Prior to the execution of this Lease, Tenant shall complete, execute and deliver to
Landlord an
Environmental Questionnaire and Disclosure Statement (the “Environmental Questionnaire”) in
the form of
Exhibit B attached hereto. The completed Environmental Questionnaire shall be deemed
incorporated into this

9

 

Lease for all purposes, and Landlord shall be entitled to rely fully on the
information contained therein. On each anniversary of the Commencement Date until
the expiration or sooner termination of this Lease, Tenant shall disclose to
Landlord in writing the names and amounts of all Hazardous Materials which were
stored, generated, used, released and/or disposed of on, under or about the
Premises for the twelve-month period prior thereto, and which Tenant desires to
store, generate, use, release and/or dispose of on, under or about the Premises
for the succeeding twelve-month period. In addition, to the extent Tenant is
permitted to utilize Hazardous Materials upon the Premises, Tenant shall promptly
provide Landlord with complete and legible copies of all the following
environmental documents relating thereto: reports filed pursuant to any
self-reporting requirements; permit applications, permits, monitoring reports,
emergency response or action plans, workplace exposure and community exposure
warnings or notices and all other reports, disclosures, plans or documents (even
those which may be characterized as confidential) relating to water discharges,
air pollution, waste generation or disposal, and underground storage tanks for
Hazardous Materials; orders, reports, notices, listings and correspondence (even
those which may be considered confidential) of or concerning the release,
investigation of, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant’s use, handling, storage,
release and/or disposal of Hazardous Materials.

     (d) Landlord and its agents shall have the right, but not the obligation, to
inspect, sample and/or
monitor the Premises and/or the soil or groundwater thereunder at any time to
determine whether Tenant is
complying with the terms of this Section 5.3, and in connection therewith
Tenant shall provide Landlord with full
access to all facilities, records and personnel related thereto. If Tenant
is not in compliance with any of the
provisions of this Section 5.3, or in the event of a release of any Hazardous
Material on, under or about the Premises
caused or permitted by Tenant, its agents, employees, contractors, licensees
or invitees, Landlord and its agents shall
have the right, but not the obligation, without limitation upon any of
Landlord’s other rights and remedies under this
Lease, to immediately enter upon the Premises without notice and to discharge
Tenant’s obligations under this
Section 5.3 at Tenant’s expense, including without limitation the taking of
emergency or long-term remedial action.
Landlord and its agents shall endeavor to minimize interference with Tenant’s
business in connection therewith, but
shall not be liable for any such interference. In addition, Landlord, at
Tenant’s expense, shall have the right, but not
the obligation, to join and participate in any legal proceedings or actions
initiated in connection with any claims
arising out of the storage, generation, use, release and/or disposal by Tenant
or its agents, employees, contractors,
licensees or invitees of Hazardous Materials on, under, from or about the
Premises.

     (e) If the presence of any Hazardous Materials on, under, from or about the
Premises or the Project
caused or permitted by Tenant or its agents, employees, contractors, licensees
or invitees results in (i) injury to any
person, (ii) injury to or any contamination of the Premises or the Project, or
(iii) injury to or contamination of any
real or personal property wherever situated, Tenant, at its expense, shall
promptly take all actions necessary to return
the Premises and the Project and any other affected real or personal property
owned by Landlord to the condition
existing prior to the introduction of such Hazardous Materials and to remedy
or repair any such injury or
contamination, including without limitation, any cleanup, remediation,
removal, disposal, neutralization or other
treatment of any such Hazardous Materials. Notwithstanding the foregoing,
Tenant shall not, without Landlord’s
prior written consent, which consent may be given or withheld in Landlord’s
sole and absolute discretion, take any
remedial action in response to the presence of any Hazardous Materials on,
from, under or about the Premises or the
Project or any other affected real or personal property owned by Landlord or
enter into any similar agreement,
consent, decree or other compromise with any governmental agency with respect
to any Hazardous Materials
claims; provided however, Landlord’s prior written consent shall not be
necessary in the event that the presence of
Hazardous Materials on, under or about the Premises or the Project or any
other affected real or personal property
owned by Landlord (i) imposes an immediate threat to the health, safety or
welfare of any individual and (ii) is of
such a nature that an immediate remedial response is necessary and it is not
possible to obtain Landlord’s consent
before taking such action. To the fullest extent permitted by law, Tenant
shall indemnify, hold harmless, protect and
defend (with attorneys reasonably acceptable to Landlord) Landlord and Master
Lessor, and any successors to all or
any portion of Landlord’s and/or Master Lessor’s interest in the Premises and
in the Project and in any other real or
personal property owned by Landlord or Master Lessor, from and against any and
all liabilities, losses, damages,
diminution in value, judgments, fines, demands, claims, recoveries,
deficiencies, costs and expenses (including
without limitation reasonable attorneys’ fees, court costs and other
professional expenses), whether foreseeable or
unforeseeable, arising directly or indirectly out of the use, generation,
storage, treatment, release, on- or off-site
disposal or transportation of Hazardous Materials by Tenant or Tenant’s
agents, employees, contractors, licensees or
invitees on, into, from, under or about the Premises, the Building or the
Project and any other real or personal
property owned by Landlord or Master Lessor. Such indemnity obligation shall
specifically include, without
limitation, the cost of any required or necessary repair, restoration, cleanup
or detoxification of the Premises, the
Building and the Project and any other real or personal property owned by
Landlord or Master Lessor, the
preparation of any closure or other required plans, whether or not such action
is required or necessary during the
Term or after the expiration of this Lease and any loss of rental due to the
inability to lease the Premises or any
portion of the Building or Project as a result of such Hazardous Material or
remediation thereof. If it is at any time
discovered that Hazardous Materials have been released on, into, from, under or about the Premises
during the
Term, or that Tenant or its agents, employees, contractors, licensees or invitees may have caused
or permitted the
release of a Hazardous Material on, under, from or about the Premises, the Building or the Project
or any other real
or personal property owned by Landlord or Master Lessor, Tenant shall, at Landlord’s request,
immediately prepare
and submit to Landlord a comprehensive plan, subject to Landlord’s approval, specifying the actions
to be taken by
Tenant to return the Premises, the Building or the Project or any other real or personal property
owned by Landlord or Master Lessor, to the condition existing prior to the introduction of such Hazardous Materials.
Upon Landlord’s
approval of such cleanup plan, Tenant shall, at its expense, and without limitation of any rights
and remedies of
Landlord under this Lease or at law or in equity, immediately implement such plan and proceed to
cleanup such
Hazardous Materials in accordance with all applicable laws and as required by such plan and this
Lease. The
provisions of this Section 5.3(e) shall expressly survive the expiration or sooner termination of
this Lease.

10

 

     (f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, certain
facts relating to
Hazardous Materials at the Project known by Landlord to exist as of the date of this Lease,
as more particularly
described in Exhibit C attached hereto. Tenant shall have no liability
or responsibility with respect to the Hazardous Materials facts described in
Exhibit C, nor with respect to any Hazardous Materials which were not
used, generated, stored, treated, released, disposed or transported on- or
off-site, by Tenant or Tenant’s agents, employees, contractors, licensees or
invitees. Notwithstanding the preceding two sentences, Tenant
agrees to notify its
agents, employees, contractors, licensees, and invitees of any exposure or
potential exposure to Hazardous Materials at the Premises that Landlord brings to
Tenant’s attention. Provided such information is accurate, Tenant hereby
acknowledges that this disclosure satisfies any obligation of Landlord to Tenant
pursuant to California Health & Safety Code Section 25359.7, or any amendment or
substitute thereto or any other disclosure obligations of Landlord. Landlord shall
take responsibility, at its sole cost and expense, for any govenrmentally-required
clean-up, remediation, removal, disposal, neutralization or other treatment of
Hazardous Materials conditions described in this Section 5.3(f). The foregoing
obligation on the part of Landlord shall include the reasonable costs (including,
without limitation, reasonable attorney’s fees) of defending Tenant from and
against any legal action or proceeding instituted by any governmental agency in
connection with such clean-up, remediation, removal, disposal, neutralization or
other treatment of such conditions, provided that Tenant promptly tenders such
defense to Landlord. Tenant agrees to notify its agents, employees, contractors,
licensees, and invitees of any exposure or potential exposure to Hazardous
Materials at the Premises that Landlord brings to Tenant’s attention.

ARTICLE VI. COMMON AREAS; SERVICES

     SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, telecommunications
service, refuse pickup, janitorial service, interior landscape maintenance and all
other utilities, materials and services furnished directly to Tenant or the
Premises or used by Tenant in, on or about the Premises during the Term, together
with any taxes thereon. If any utilities or services are not separately metered or
assessed to Tenant, Landlord shall make a reasonable determination of Tenant’s
proportionate share of the cost of such utilities and services, and Tenant shall
pay such amount to Landlord, as an item of additional rent, within twenty (20)
days after receipt of Landlord’s statement or invoice therefor. Alternatively,
Landlord may elect to include such cost in the definition of Project Costs in
which event Tenant shall pay Tenant’s proportionate share of such costs in the
manner set forth in Section 4.2. Landlord shall not be liable for damages or
otherwise for any failure or interruption of any utility or other service
furnished to the Premises, and no such failure or interruption shall be deemed an
eviction or entitle Tenant to terminate this Lease or withhold or abate any rent
due hereunder. Notwithstanding the foregoing, if as a result of the direct actions
of Landlord, its employees, contractors or authorized agents, for more than three
(3) consecutive business days following written notice to Landlord there is no
HVAC or electricity services to all or a portion of the Premises, or such an
interruption of other essential utilities and building services, such as fire
protection or water, so that all or a portion of the Premises cannot be used by
Tenant, then Tenant’s Basic Rent (or an equitable portion of such Basic Rent to
the extent that less than all of the Premises are affected) shall thereafter be
abated until the Premises are again usable by Tenant; provided, however, that if
Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant’s purposes,
as for example, bringing in portable air-conditioning equipment, then there shall
not be an abatement of Basic Rent. The foregoing provisions shall be Tenant’s sole
recourse and remedy in the event of such an interruption of services, and shall
not apply in case of the actions of parties other than Landlord, its employees,
contractors or authorized agents, or in the case of damage to, or destruction of,
the Premises (which shall be governed by the provisions of Article XI of the
Lease). Any disputes concerning the foregoing provisions shall be submitted to and
resolved by JAMS arbitration pursuant to Section 22.7 of this Lease. Landlord
shall at all reasonable times have free access to the Building and Premises to
install, maintain, repair, replace or remove all electrical and mechanical
installations of Landlord. Tenant acknowledges that the costs incurred by Landlord
related to providing above-standard utilities to Tenant, including, without
limitation, telephone lines, may be charged to Tenant.

     SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate, repair and maintain all Common Areas within the Building
and the Project. The term “Common Areas” shall mean all areas within the exterior
boundaries of the Building and other buildings in the Project which are not held
for exclusive use by persons entitled to occupy space, and all other appurtenant
areas and improvements within the Project provided by Landlord for the common use
of Landlord and tenants and their respective employees and invitees, including
without limitation parking areas and structures, driveways, sidewalks, landscaped
and planted areas, hallways and interior stairwells not located within the
premises of any tenant, common electrical rooms and roof access entries, common
entrances and lobbies, elevators, and restrooms not located within the premises of
any tenant.

     SECTION 63. USE OF COMMON AREAS. The occupancy by Tenant of the Premises shall include
the use of the Common Areas in common with Landlord and with all others for whose convenience and
use the
Common Areas may be provided by Landlord, subject, however, to compliance with all reasonable rules
and
regulations as are prescribed from time to time by Landlord. Landlord shall operate and maintain
the Common
Areas in the manner Landlord may determine to be appropriate. All costs incurred by Landlord for
the maintenance
and operation of the Common Areas shall be included in Project Costs except as expressly prohibited
by Section 4.2
or to the extent any particular cost incurred is related to or associated with a specific tenant
and can be charged to
such tenant of the Project. Landlord shall at all times during the Term have exclusive control of
the Common Areas,
and may restrain or permit any use or occupancy, except as authorized by Landlord’s reasonable
rules and
regulations. Tenant shall keep the Common Areas clear of any obstruction or unauthorized use
related to Tenant’s
operations or use of Premises, including without limitation, planters and furniture. Landlord may
temporarily close
any portion of the Common Areas for repairs, remodeling and/or alterations, to prevent a public
dedication or the
accrual of prescriptive rights, or for any other reason deemed sufficient by Landlord, without
liability to Landlord.

11

 

Tenant shall have access to the Premises and Common Areas twenty-four (24)
hours per day, three hundred sixty five (365) days per year.

     SECTION 6.4. PARKING. Tenant shall be entitled, at no additional cost, to
the number of vehicle parking spaces set forth in Item 14 of the Basic Lease
Provisions, which spaces shall be unreserved and unassigned, on those portions
of the Common Areas designated by Landlord for parking. Landlord shall designate
and mark fifteen (15) of such spaces in the front of the Premises as “reserved”
for Tenant. Tenant shall not use more parking spaces than such number. All
parking spaces shall be used only for parking of vehicles no larger than full
size passenger automobiles, sports utility vehicles or pickup trucks. Tenant
shall not permit or allow any vehicles that belong to or are controlled by
Tenant or Tenant’s employees, suppliers, shippers, customers or invitees to be
loaded, unloaded or parked in areas other than those designated by Landlord for
such activities. If Tenant permits or allows any of the prohibited activities
described above, then Landlord shall have the right, without notice, in addition
to such other rights and remedies that Landlord may have, to remove or tow away
the vehicle involved and charge the costs to Tenant. Parking within the Common
Areas shall be limited to striped parking stalls, and no parking
shall be
permitted in any driveways, access ways or in any area which would prohibit or
impede the free flow of traffic within the Common Areas. There shall be no
parking of any vehicles for longer than a forty-eight (48) hour period unless
otherwise authorized by Landlord, and vehicles which have been abandoned or
parked in violation of the terms hereof may be towed away at the owner’s
expense. Nothing contained in this Lease shall be deemed to create liability
upon Landlord for any damage to motor vehicles of visitors or employees, for any
loss of property from within those motor vehicles, or for any injury to Tenant,
its visitors or employees, unless ultimately determined (i) to be caused by the
willful misconduct of Landlord, Landlord’s employees or authorized agents; or
(ii) that Landlord had knowledge of the likelihood of such condition, a
reasonable opportunity to take reasonable protective measures and failed to do
so. Landlord shall have the right to establish, and from time to time amend, and
to enforce against all users all reasonable rules and regulations (including the
designation of areas for employee parking) that Landlord may deem necessary and
advisable for the proper and efficient operation and maintenance of parking
within the Common Areas. Landlord shall have the right to construct, maintain
and operate lighting facilities within the parking areas; to change the area,
level, location and arrangement of the parking areas and improvements therein;
to restrict parking by tenants, their officers, agents and employees to employee
parking areas; to enforce parking charges (by operation of meters or otherwise);
and to do and perform such other acts in and to the parking areas and
improvements therein as, in the use of good business judgment, Landlord shall
determine to be advisable. Any person using the parking area shall observe all
directional signs and arrows and any posted speed limits. In no event shall
Tenant interfere with the use and enjoyment of the parking area by other tenants
of the Project or their employees or invitees. Parking areas shall be used only
for parking vehicles. Washing, waxing, cleaning or servicing of vehicles, or the
storage of vehicles for longer than 48-hours, is prohibited unless otherwise
authorized by Landlord. Tenant shall be liable for any damage to the parking
areas caused by Tenant or Tenant’s employees, suppliers, shippers, customers or
invitees, including without limitation damage from excess oil leakage. Tenant
shall have no right to install any fixtures, equipment or personal property in
the parking areas.

     SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the right
to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. Landlord may at any time
relocate or remove any of the various buildings, parking areas, and other Common
Areas, and may add buildings and areas to the Project from time to time. No
change shall entitle Tenant to any abatement of rent or other claim against
Landlord, provided that the change does not deprive Tenant of reasonable access
to or use of the Premises. Notwithstanding the foregoing, no change by Landlord
to the Common Areas shall: (i) materially impair access to and from the Premises
from the parking areas, (ii) reduce the number of Tenant’s parking spaces
granted under this Lease, or (iii) otherwise unreasonably interfere with
Tenant’s access to and use of the Premises, the parking areas and the Common
Areas adjacent to the Building in any material manner without Tenant’s prior
written consent, which shall not be unreasonably withheld.

ARTICLE VII. MAINTAINING THE PREMISES

     SECTION 7.1. TENANT’S MAINTENANCE AND REPAIR. Tenant at its sole expense shall
maintain and make all repairs and replacements necessary to keep the Premises in the
condition as existed on the
Commencement Date (or on any later date that the improvements may have been installed),
excepting ordinary wear
and tear, including without limitation all interior glass, doors, door closures, hardware,
fixtures, electrical, plumbing,
fire extinguisher equipment and other equipment installed in the Premises and all
Alterations constructed by Tenant
pursuant to Section 7.3 below. Notwithstanding the foregoing, Tenant shall have no
obligation to repair, maintain or
repair the roof, foundations, footings, structural systems, exterior glass, sky lights
(including seals), electrical and
mechanical systems, plumbing, sewer and other utility lines outside the Premises or within
the Building’s slab,
landscaping, walkways, fencing, parking areas, exterior lighting, exterior walls all of
which shall be the
responsibility of Landlord. Any damage or deterioration of the Premises shall not be deemed
ordinary wear and tear
if the same could have been prevented by good maintenance practices by Tenant. As part of
its maintenance
obligations hereunder, Tenant shall, at Landlord’s request, provide Landlord with copies of
all maintenance
schedules, reports and notices prepared by, for or on behalf of
Tenant. All repairs and
replacements shall be at least
equal in quality to the original work, shall be made only by a licensed contractor approved
in writing in advance by
Landlord and shall be made only at the time or times approved by Landlord. Any contractor utilized by Tenant shall
be subject to Landlord’s standard requirements for contractors, as modified from time to time. Landlord may impose
reasonable restrictions and requirements with respect to repairs, as provided in Section 7.3, and
the provisions of
Section 7.4 shall apply to all repairs. Alternatively, Landlord may elect to perform any repair
and maintenance of
the electrical and mechanical systems and any air conditioning, ventilating or heating equipment
serving the
Premises and include the cost thereof as part of Tenant’s Share of Operating Expenses. If Tenant
fails to properly
maintain and/or repair the Premises as herein provided following Landlord’s notice and the
expiration of the
applicable cure period (or earlier if Landlord determines that such work must be performed
prior to such time in order to avoid damage to the Premises or Building or other detriment), then Landlord may elect,
but shall have no

12

 

obligation, to perform any repair or maintenance required hereunder on
behalf of Tenant and at Tenant’s expense, and Tenant shall reimburse Landlord upon
demand for all reasonable costs incurred upon submission of an invoice.

     SECTION 7.2. LANDLORD’S MAINTENANCE AND REPAIR. Subject to Section 7.1
and Article XI, Landlord shall provide service, maintenance and repair with
respect to any air conditioning, ventilating or heating equipment which serves the
Premises (exclusive, however, of supplemental HVAC equipment serving only the
Premises), and shall maintain in good repair all elements and portions of the
roof, foundations, footings, the exterior surfaces of the exterior walls of the
Building (including exterior glass), skylights (including seals), and the
structural, electrical and mechanical systems, except that Tenant at its expense
shall make all repairs which Landlord deems reasonably necessary as a result of
the act or negligence of Tenant, its agents, employees, invitees, subtenants or
contractors. Landlord shall have the right to employ or designate any reputable
person or firm, including any employee or agent of Landlord or any of Landlord’s
affiliates or divisions, to perform any service, repair or maintenance function;
provided that any employee or affiliate of Landlord shall not charge in excess of
the fair market value for such service. Landlord need not make any other
improvements or repairs except as specifically required under this Lease, and
nothing contained in this Section shall limit Landlord’s right to reimbursement
from Tenant for maintenance, repair costs and replacement costs as provided
elsewhere in this Lease. Tenant understands that it shall not make repairs at
Landlord’s expense or by rental offset. Tenant further understands that Landlord
shall not be required to make any repairs to the roof, foundations, footings, the
exterior surfaces of the exterior walls of the Building (excluding exterior
glass), or structural, electrical or mechanical systems unless and until Tenant
has notified Landlord in writing of the need for such repair and Landlord shall
have a reasonable period of time thereafter to commence and complete said repair,
if warranted. Except as set forth in Section 4.2, all costs of any maintenance,
repairs and replacement on the part of Landlord provided hereunder shall be
considered part of Project Costs.

     SECTION
7.3. ALTERATIONS. Except as otherwise provided in this Section, Tenant shall make no
alterations, additions, fixtures or improvements (“Alterations”) to the Premises or the
Building without the prior
written consent of Landlord, which consent shall not be unreasonably withheld, conditioned
or delayed.
Notwithstanding the foregoing, in the event that any requested Alteration would result in a
change from Landlord’s
building standard materials and specifications for the Project (“Standard Improvements”),
Landlord may withhold
consent to such Alteration in its sole and absolute discretion. In the event Landlord so
consents to a change from the
Standard Improvements (such change being referred to as a “Non-Standard Improvement”),
Tenant shall be
responsible for the cost of replacing such Non-Standard Improvement with the applicable
Standard Improvement
(“Replacements”) which Replacements shall be completed prior to the Expiration Date or
earlier termination of this
Lease. A copy of the Standard Improvements are attached hereto as Exhibit F.
Landlord shall not unreasonably
withhold its consent to any Alterations which cost less than Two Dollar ($2.00) per square
foot of the Premises and
do not (i) affect the exterior of the Building or outside areas (or be visible from
adjoining sites), or (ii) affect or
penetrate any of the structural portions of the Building, including but not limited to the
roof, or (iii) require any
change to the basic floor plan of the Premises (including, without limitation, the adding of
any additional “office”
square footage) or any change to any structural or mechanical systems of the Premises, or
(iv) fail to comply with
any applicable governmental requirements or require any governmental permit as a
prerequisite to the construction
thereof, or (v) result in the Premises requiring building services beyond the level normally
provided to other tenants,
or (vi) interfere in any manner with the proper functioning of, or Landlord’s access to, any
mechanical, electrical,
plumbing or HVAC systems, facilities or equipment located in or serving the Building, or
(vii) diminish the value of
the Premises (as determined by Landlord in its reasonable discretion) including, without
limitation, using lesser
quality materials than those existing in the Premises, or (viii) alter or replace Standard
Improvements. Landlord
may impose any condition to its consent, including but not limited to a requirement that the
installation and/or
removal of all Alterations and Replacements be covered by a lien and completion bond
satisfactory to Landlord in
its sole and absolute discretion and requirements as to the manner and time of performance
of such work. Landlord
shall in all events, whether or not Landlord’s consent is required, have the right to
approve the contractor performing
the installation and removal of Alterations and Replacements and Tenant shall not permit any
contractor not
approved by Landlord to perform any work on the Premises or on the Building. Tenant shall
obtain all required
permits for the installation and removal of Alterations and Replacements and shall perform
the installation and
removal of Alterations and Replacements in compliance with all applicable laws, regulations
and ordinances,
including without limitation the Americans with Disabilities Act, all covenants, conditions
and restrictions affecting
the Project, and the Rules and Regulations as described in Article XVII. Tenant understands
and agrees that
Landlord shall be entitled to a supervision fee in the amount of five percent (5%) of the
cost of such Alterations
either requiring a permit from the City of Milpitas or affecting any mechanical, electrical,
plumbing or HVAC
systems, facilities or equipment located in or serving the Building. Under no circumstances
shall Tenant make any
Alterations or Replacements which incorporate any Hazardous Materials, including without
limitation asbestos-containing construction materials into the Premises, the Building or the Common Area. If any
governmental entity
requires, as a condition to any proposed Alterations by Tenant, that improvements be made to
the Common Areas,
and if Landlord consents to such improvements to the Common Areas (which consent may be
withheld in the sole
and absolute discretion of Landlord), then Tenant shall, at Tenant’s sole expense, make such
required improvements
to the Common Areas in such manner, utilizing such materials, and with such contractors,
architects and engineers
as Landlord may require in its sole and absolute discretion. Any request for Landlord’s consent to
any proposed
Alterations shall be made in writing and shall contain architectural plans describing the work in
detail reasonably
satisfactory to Landlord. Landlord may elect to cause its architect to review Tenant’s
architectural plans, and the
reasonable cost of that review shall be reimbursed by Tenant. Should the work proposed by
Tenant and consented
to by Landlord modify the basic floor plan of the Premises, then Tenant shall, at its
expense, furnish Landlord with
as-built drawings and CAD disks compatible with Landlord’s systems and standards. Unless Landlord otherwise
agrees in writing, all Alterations made or affixed to the Premises, the Building or to the Common Area (excluding
moveable trade fixtures and furniture), including without limitation all Tenant Improvements constructed pursuant
to the Work Letter (except as otherwise provided in the Work Letter), shall become the property of Landlord and
shall be surrendered with the Premises at the end of the Term; except that Landlord may, by notice to Tenant given
either prior to or following the expiration or termination of this Lease, require Tenant to remove by the Expiration

13

 

Date, or sooner termination date of this Lease, or within ten (10) days
following notice to Tenant that such removal is required if notice is given
following the Expiration Date or sooner termination, all or any of the Alterations
installed either by Tenant or by Landlord at Tenant’s request, including without
limitation all Tenant Improvements constructed pursuant to the Work Letter (except
as otherwise provided in the Work Letter), and to repair any damage to the
Premises, the Building or the Common Area arising from that removal and restore the
Premises to their condition prior to making such Alterations.

     SECTION 7.4. MECHANIC’S LIENS. Tenant shall keep the Premises free from any
liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly (but in
no event later than ten (10) business days following such request) cause any such
lien to be released by posting a bond in accordance with California Civil Code
Section 3143 or any successor statute. In the event that Tenant shall not, within
thirty (30) days following the imposition of any lien, cause the lien to be released
of record by payment or posting of a proper bond, Landlord shall have, in addition
to all other available remedies, the right to cause the lien to be released by any
means it deems proper, including payment of or defense against the claim giving rise
to the lien. All reasonable and actual expenses so incurred by Landlord, including
Landlord’s reasonable attorneys’ fees, and any foreseeable consequential or other
damages proximately caused by such lien, shall be reimbursed by Tenant upon demand,
together with interest from the date of payment by Landlord at the maximum rate
permitted by law until paid. Tenant shall give Landlord no less than twenty (20)
days’ prior notice in writing before commencing construction of any kind on the
Premises or Common Area and shall again notify Landlord that construction has
commenced, such notice to be given on the actual date on which construction
commences, so that Landlord may post and maintain notices of non-responsibility on
the Premises or Common Area, as applicable, which notices Landlord shall have the
right to post and which Tenant agrees it shall not disturb. Tenant shall also
provide Landlord notice in writing within ten (10) days following the date on which
such work is substantially completed. The provisions of this Section shall expressly
survive the expiration or sooner termination of this Lease.

     SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times, upon
at least twenty-four (24) hours written or oral notice (except in emergencies, when
no notice shall be required) have the right to enter the Premises to inspect them,
to supply services in accordance with this Lease, to have access to install, repair,
maintain, replace or remove all electrical and mechanical installations of Landlord
and to protect the interests of Landlord in the Premises, and to submit the Premises
to prospective or actual purchasers or encumbrance holders (or, during the last one
hundred and eighty (180) days of the Term or when an uncured Tenant Event of Default
exists, to prospective tenants), all without being deemed to have caused an eviction
of Tenant and without abatement of rent except as provided elsewhere in this Lease.
Landlord shall have the right to use any and all means which Landlord may deem
proper to open the doors in an emergency in order to obtain entry to the Premises,
and any entry to the Premises obtained by Landlord shall not under any circumstances
be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or any eviction of Tenant from the Premises.

ARTICLE VII. TAXES AND ASSESSMENTS ON TENANT’S PROPERTY

     Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, and, if required by Landlord, against all Non
Standard Improvements to the Premises (as defined in Section 7.3) made by Tenant,
and against any Alterations (as defined in Section 7.3) made to the Premises or the
Building by or on behalf of Tenant. If requested by Landlord, Tenant shall cause its
personal property, Non-Standard Improvements and Alterations to be assessed and
billed separately from the real property of which the Premises form a part. If any
taxes required to be paid by Tenant on Tenant’s personal property, Non-Standard
Improvements and/or Alterations are levied against Landlord or Landlord’s property
and if Landlord pays the same, or if the assessed value of Landlord’s property is
increased by the inclusion of a value placed upon the personal property,
Non-Standard Improvements and/or Alterations and if Landlord pays the taxes based
upon the increased assessment, Landlord shall have the right to require that Tenant
pay to Landlord the taxes so levied against Landlord or the proportion of the taxes
resulting from the increase in the assessment. In calculating what portion of any
tax bill which is assessed against Landlord separately, or Landlord and Tenant
jointly, is attributable to Tenant’s Non-Standard Improvements, Alterations and
personal property, Landlord’s reasonable determination shall be
conclusive.

ARTICLE IX. ASSIGNMENT AND SUBLETTING

     SECTION 9.1. RIGHTS OF PARTIES.

     (a) Notwithstanding any provision of this Lease to the contrary, and except as to transfers
expressly
permitted without Landlord’s consent pursuant to Section 9.4, Tenant will not, either
voluntarily or by operation of
law, assign, sublet, encumber, or otherwise transfer all or any part of Tenant’s interest in
this Lease or the Premises,
or permit the Premises to be occupied by anyone other than Tenant, without Landlord’s prior
written consent, which
consent shall not unreasonably be withheld in accordance with the provisions of Section
9.1(b). No assignment
(whether voluntary, involuntary or by operation of law) and no subletting shall be valid or
effective without
Landlord’s prior written consent and, at Landlord’s election, any such assignment or subletting
shall be void and of
no force and effect and any such attempted assignment or subletting shall constitute an Event of
Default of this
Lease. Landlord shall not be deemed to have given its consent to any assignment or subletting by
any course of
action, including its acceptance of any name for listing in the Building directory, other than
written consent. To the
extent not prohibited by provisions of the Bankruptcy Code, 11 U.S.C.
Section 101 et seq., (the"Bankruptcy Code”), including Section 365(f)(l), Tenant on behalf of itself and its creditors,
administrators and assigns waives
the applicability of Section 365(e) of the Bankruptcy Code unless the proposed assignee of the
Trustee for the estate
of the bankrupt meets Landlord’s standard for consent as set forth in Section 9.1(b) of this Lease. If this Lease is
assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations to be delivered in connection with the assignment of this Lease (but not in
connection with the

14

 

transfer of ownership of Tenant’s personal property) shall be delivered to Landlord, shall be and
remain the exclusive property of Landlord and shall not constitute property of Tenant or of the
estate of Tenant within the meaning of the Bankruptcy Code. Any person or entity to which this
Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to have
assumed all of the obligations arising under this Lease on and after the date of the assignment,
and shall upon demand execute and deliver to Landlord an instrument confirming that assumption.

     (b) If Tenant desires to transfer an interest in this Lease or the Premises, it shall first
notify Landlord
of its desire and shall submit in writing to Landlord: (i) the name and address of the
proposed transferee; (ii) the
nature of any proposed transferee’s business to be carried on in the Premises; (iii) the terms
and provisions of any
proposed sublease, assignment or other transfer, including a copy of the proposed assignment,
sublease or transfer
form; (iv) evidence that the proposed assignee, subtenant or transferee will comply with the
requirements of
Exhibit D hereto; (v) a completed Environmental Questionnaire from the proposed
assignee, subtenant or transferee;
(vi) any other information requested by Landlord and reasonably related to the transfer and
(vii) the fee described in
Section 9.1(e). Except as provided in Section 9.1 (c), Landlord shall not unreasonably
withhold its consent,
provided that the parties agree that it shall be reasonable for Landlord to withhold its
consent if: (1) the use of the
Premises will not be consistent with the provisions of this Lease; (2) the proposed assignee
or subtenant has been
required by any prior landlord, lender or governmental authority to take remedial action in
connection with
Hazardous Materials contaminating a property arising out of the proposed assignee’s or
subtenant’s actions or use of
the property in question or is subject to any enforcement order issued by any governmental
authority in connection
with the use, disposal or storage of a Hazardous Material; (3) insurance requirements of the
proposed assignee or
subtenant may not be brought into conformity with Landlord’s then current leasing practice;
(4) a proposed
subtenant or assignee has not demonstrated to the reasonable satisfaction of Landlord that it
is financially
responsible and reasonably able to fulfill the obligations set forth in this Lease as
reasonably determined by
Landlord after reviewing all available financial statement of such proposed subtenant or
assignee for the two-year
period preceding the request for Landlord’s consent, and/or a certification signed by the
proposed subtenant or
assignee that it has not been evicted or been in arrears in rent at any other leased premises
for the 3-year period
preceding the request for Landlord’s consent; (5) the proposed assignee or subtenant is an
existing tenant of the
Building or Project or a prospect with whom Landlord is actively negotiating to become a
tenant at the Building or
Project; or (6) the proposed transfer will impose additional burdens or adverse tax effects on
Landlord. Tenant’s
exterior signage rights are personal to Tenant and may not be assigned or transferred to any
assignee of this Lease or
subtenant of the Premises. Notwithstanding the foregoing, Tenant may assign its exterior
signage rights in
connection with an assignment of this Lease or sublease of the entire Premises that is either
consented to by
Landlord or a Permitted Transfer (as defined below); provided, however, that Landlord shall
have the right of prior
approval that such signage continues to comply with the Sign Criteria and the other
requirements of Section 5.2 of
this Lease, and provided further that any name and/or graphics on such signage do not
materially devalue the Project
as determined by Landlord in its sole and absolute discretion.

     If Landlord consents to the proposed transfer, Tenant may within ninety (90) days after the
date of the consent effect the transfer upon the terms described in the information furnished to
Landlord; provided that any material change in the terms shall be subject to Landlord’s consent as
set forth in this Section 9.1. Landlord shall approve or disapprove any requested transfer within
fifteen (15) business days following receipt of Tenant’s written request, the information set
forth above, and the fee set forth below.

     (c) Notwithstanding the provisions of Section 9.1(b) above, in lieu of consenting to a
proposed
assignment or subletting, Landlord may elect, within the fifteen (15) business day period
permitted for Landlord to
approve or disapprove a requested transfer (provided such transfer involves at least
substantially all of either the first
or second floor of the Premises), to (i) sublease the Premises (or the portion proposed to be
subleased), or take an
assignment of Tenant’s interest in this Lease, upon substantially the same terms as offered to
the proposed subtenant
or assignee (excluding terms relating to the purchase of personal
property, the use of Tenant’s
name or the
continuation of Tenant’s business), or (ii) terminate this Lease as to the portion of the
Premises proposed to be
subleased or assigned with a proportionate abatement in the rent payable under this Lease,
effective thirty (30) days’
following written notice by Landlord of its election to so sublease or terminate. Landlord
may thereafter, at its
option, assign, sublet or re-let any space so sublet, obtained by assignment or obtained by
termination to any third
party, including without limitation the proposed transferee of Tenant.

     (d) In the event that Landlord approves the requested assignment or subletting, Tenant agrees
that
fifty percent (50%) of any amounts paid by the assignee or subtenant, however described, in
excess of (i) the Basic
Rent payable by Tenant hereunder, or in the case of a sublease of a portion of the Premises,
in excess of the Basic
Rent reasonably allocable to such portion as determined by Landlord, plus (ii) Tenant’s direct
out-of-pocket costs
which Tenant certifies to Landlord have been paid to provide occupancy related services to
such assignee or
subtenant of a nature commonly provided by landlords of similar space, shall be the property
of Landlord and such
amounts shall be payable directly to Landlord by the assignee or subtenant or, at Landlord’s
option, by Tenant within
ten (10) days of Tenant’s receipt thereof. Landlord shall have the right to review or audit
the books and records of
Tenant, or have such books and records reviewed or audited by an outside accountant, to
confirm any such direct
out-of-pocket costs. In the event that such direct out-of-pocket costs claimed by Tenant are
overstated by more than
five percent (5%), Tenant shall reimburse Landlord for any of Landlord’s costs related to such
review or audit. At
Landlord’s request, a written agreement shall be entered into by and among Tenant, Landlord
and the proposed
assignee or subtenant confirming the requirements of this Section 9. l(d).

     (e) Tenant shall pay to Landlord a fee equal to the greater of (i) Landlord’s actual costs
related to such
assignment, subletting or other transfer or (ii) Five Hundred Dollars ($500.00), to process
any request by Tenant for
an assignment, subletting or other transfer under this Lease. Tenant shall pay Landlord the
sum of Five Hundred
Dollars ($500.00) concurrently with Tenant’s request for consent to any assignment, subletting
or other transfer, and
Landlord shall have no obligation to consider such request unless accompanied by such payment.
Tenant shall pay

15

 

Landlord upon demand any costs in excess of such payment to the extent
Landlord’s actual costs related to such request exceeds $500.00. Such fee is hereby
acknowledged as a reasonable amount to reimburse Landlord for its costs of review
and evaluation of a proposed transfer.

     SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its obligation to pay rent and to
perform all its other obligations under this Lease. Moreover, Tenant shall
indemnify and hold Landlord harmless, as provided in Section 10.3, for any act or
omission by an assignee or subtenant. Each assignee, other than Landlord, shall
assume all obligations of Tenant under this Lease and shall be liable jointly and
severally with Tenant for the payment of all rent, and for the due performance of
all of Tenant’s obligations, under this Lease. No assignment or subletting shall be
effective or binding on Landlord unless documentation in form and substance
satisfactory to Landlord in its reasonable discretion evidencing the transfer, and
in the case of an assignment, the assignee’s assumption of the obligations of
Tenant under this Lease, is delivered to Landlord and both the assignee/subtenant
and Tenant deliver to Landlord an executed consent to transfer instrument prepared
by Landlord and consistent with the requirements of this Article. The acceptance by
Landlord of any payment due under this Lease from any other person shall not be
deemed to be a waiver by Landlord of any provision of this Lease or to be a consent
to any transfer. Consent by Landlord to one or more transfers shall not operate as
a waiver or estoppel to the future enforcement by Landlord of its rights under this
Lease or as a consent to any subsequent transfer.

     SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions shall
apply to any subletting by Tenant of all or any part of the Premises and shall be
deemed included in each sublease:

     (a) Each and every provision contained in this Lease (other than with respect
to the payment of rent
hereunder) is incorporated by reference into and made a part of such sublease,
with “Landlord” hereunder meaning
the sublandlord therein and “Tenant” hereunder meaning the subtenant therein.

     (b) Tenant hereby irrevocably assigns to Landlord all of Tenant’s interest in
all rentals and income
arising from any sublease of the Premises, and Landlord may collect such rent
and income and apply same toward
Tenant’s obligations under this Lease; provided, however, that until there is
an Event of Default by Tenant, Tenant
shall have the right to receive and collect the sublease rentals. Landlord
shall not, by reason of this assignment or
the collection of sublease rentals, be deemed liable to the subtenant for the
performance of any of Tenant’s
obligations under the sublease. Tenant hereby irrevocably authorizes and
directs any subtenant, upon receipt of a
written notice from Landlord stating that an uncured Event of Default exists in
the performance of Tenant’s
obligations under this Lease, to pay to Landlord all sums then and thereafter
due under the sublease. Tenant agrees
that the subtenant may rely on that notice without any duty of further inquiry
and notwithstanding any notice or
claim by Tenant to the contrary. Tenant shall have no right or claim against
the subtenant or Landlord for any
rentals so paid to Landlord.

     (c) In the event of the termination of this Lease for any reason, including
without limitation as the
result of an Event of Default by Tenant or by the mutual agreement of Landlord
and Tenant, Landlord may, at its
sole option, take over Tenant’s entire interest in any sublease and, upon
notice from Landlord, the subtenant shall
attorn to Landlord. In no event, however, shall Landlord be liable for any
previous act or omission by Tenant under
the sublease or for the return of any advance rental payments or deposits under
the sublease that have not been
actually delivered to Landlord, nor shall Landlord be bound by any sublease
modification executed without
Landlord’s consent or for any advance rental payment by the subtenant in excess
of one month’s rent. The general
provisions of this Lease, including without limitation those pertaining to
insurance and indemnification, shall be
deemed incorporated by reference into the sublease despite the termination of
this Lease. In the event Landlord does
not elect to take over Tenant’s interest in a sublease in the event of any such
termination of this Lease, such sublease
shall terminate concurrently with the termination of this Lease and such
subtenant shall have no further rights under
such sublease and Landlord shall have no obligations to such subtenant.

     SECTION 9.4. CERTAIN TRANSFERS. The following shall be deemed to constitute an assignment
of this Lease; (a) other than to a Permitted Transferee, the sale of all or substantially all
of Tenant’s assets (other than
bulk sales in the ordinary course of business), (b) if Tenant is a privately held
corporation, an unincorporated
association, a limited liability company or a partnership (i), other than to a Permitted
Transferee, the transfer,
assignment or hypothecation of any stock or interest in such corporation, association,
limited liability company or
partnership in the aggregate of fifty percent (50%) (except for public offerings of shares of
stock), or (ii) other than a
merger with a Permitted Transferee, the merger by Tenant in which the stockholders of Tenant
immediately prior to
the merger hold less than fifty percent (50%) of the stock of the surviving entity
immediately following the merger,
or (c) if Tenant’s parent company is a privately held corporation (i) other than to a
Permitted Transferee, the
transfer, assignment or hypothecation of Tenant’s parent company’s stock in the aggregate in
excess of fifty percent
(50%) in a single transaction or series of related transactions or (ii) other than a merger
with a Permitted Transferee,
a merger by Tenant’s parent company in a single transaction or series of related transactions
in which the
stockholders of Tenant’s parent company hold less than fifty percent (50%) of the stock of
the surviving entity
immediately following such transaction or series of related transactions. For purposes hereof, a
“Permitted
Transferee” shall mean: (a) any person(s) or entity who controls, is controlled by or is under
common control with
Tenant, (b) to any entity resulting from the merger, consolidation or other reorganization with
Tenant, whether or
not Tenant is the surviving entity or (c) to any person or legal entity which acquires all or
substantially all of the
assets or stock of Tenant (each of the foregoing is hereinafter referred to as a “Tenant
Affiliate”); so long as (i) the
net worth of the successor or reorganized entity after such merger is at least equal to the greater
of the net worth of
Tenant as of the execution of this Lease by Landlord or the net worth of Tenant immediately prior
to the date of
such merger or reorganization, evidence of which, reasonably satisfactory to Landlord, shall be
presented to
Landlord prior to such merger or reorganization, (ii) Tenant has provided Landlord, prior to such
merger or
reorganization, written notice of such merger or reorganization and such assignment documentation,
evidence and
other information as Landlord may reasonably require to confirm the foregoing and in connection
therewith, and

16

 

(iii) all of the other terms and requirements Sections 9.2 and 9.3 shall apply
with respect to such assignment, (iv) said Permitted Transferee shall assume, in full,
the obligations of Tenant under this Lease, and (v) the use of the Premises by the
Permitted Transferee shall be as set forth in Section 3 of the Basic Lease Provisions.
For purposes of this paragraph, a public or private offering of Tenant debt or equity
shall not be deemed an assignment of this Lease and the term “control” means
possession, directly or indirectly, of the power to direct or cause the direction of
the management, affairs and policies of anyone, whether through the ownership of
voting securities, by contract or otherwise. The bonus rental provisions of Section
9.1 (d) and the recapture provision of Section 9.1 (c) of this Lease shall not apply
to an assignment or sublease by Tenant to a Tenant Affiliate.

ARTICLE X. INSURANCE AND INDEMNITY

     SECTION 10.1. TENANT’S INSURANCE. Tenant, at its sole cost and expense, shall
provide and maintain in effect the insurance described in
Exhibit D. Evidence
of that insurance must be delivered to Landlord prior to the Commencement Date.

     SECTION 10.2. LANDLORD’S INSURANCE. Landlord may, at its election, provide any or
all of the following types of insurance, with or without deductible and in amounts and
coverages as may be determined by Landlord in its sole and absolute discretion:
property insurance, subject to standard exclusions, covering the Building and/or
Project, and such other risks as Landlord or its mortgagees may from time to time deem
appropriate, including coverage for the Tenant Improvements constructed by Landlord
pursuant to the Work Letter, and commercial general liability coverage. Landlord shall
not be required to carry insurance of any kind on Tenant’s Alterations or on Tenant’s
other property, including, without limitation, Tenant’s trade fixtures, furnishings,
equipment, signs and all other items of personal property, and Landlord shall not be
obligated to repair or replace that property should damage occur. All proceeds of
insurance maintained by Landlord upon the Building and/or Project shall be the property
of Landlord, whether or not Landlord is obligated to or elects to make any repairs. At
Landlord’s option, Landlord may self-insure all or any portion of the risks for which
Landlord elects to provide insurance hereunder.

     SECTION 10.3. JOINT INDEMNITY.

     (a) Tenant Indemnity. To the fullest extent permitted by law, Tenant shall defend,
indemnify,
protect, save and hold harmless Landlord and Master Lessor, and their respective
agents, and affiliates of Landlord,
including, without limitation, any corporations or other entities controlling,
controlled by or under common control
with Landlord or Master Lessor, from and against any and all claims, liabilities,
costs or expenses arising either
before or after the Commencement Date from Tenant’s use or occupancy of the Premises,
the Building or the
Common Areas, including, without limitation, the use by Tenant, its agents,
employees, invitees or licensees of any
recreational facilities within the Common Areas, or from the conduct of its business,
or from any activity, work, or
thing done, permitted or suffered by Tenant or its agents, employees, invitees or
licensees in or about the Premises,
the Building or the Common Areas, or from any Event of Default in the performance of
any obligation on Tenant’s
part to be performed under this Lease, or from any act or negligence of Tenant or its
agents, employees, visitors,
patrons, guests, invitees or licensees. Landlord may, at its option, require Tenant
to assume Landlord’s defense in
any action covered by this Section through counsel reasonably satisfactory to
Landlord. The provisions of this
Section shall expressly survive the expiration or sooner termination of this Lease.
Tenant’s obligations under this
Section shall not apply in the event that the claim, liability, cost or expense (i)
is caused by the willful misconduct of
Landlord, Landlord’s employees or authorized agents; or (ii) (1) relates to an
obligation of Landlord hereunder;
(2) is of the nature that Landlord had knowledge of the condition; (3) a reasonable
opportunity to take reasonable
curative measures; and (4) failed to do so; or (iii) that is Landlord’s
responsibility to indemnify Tenant pursuant to
Section 10.4 below.

     (b) Landlord Indemnity. To the fullest extent permitted by law, but subject to the
express
limitations on liability contained in this Lease (including, without limitation, the
provisions of Sections 10.4, 10.5
and 14.8 of this Lease, Landlord shall defend, indemnify, protect, save and hold
harmless Tenant, its agents and any
and all affiliates of Tenant, including without limitation, any corporations, or
other entities controlling, controlled by
or under common control with Tenant, from and against any and all claims,
liabilities, costs or expenses arising
either before or after the Commencement Date that occurs in connection with the
operation, maintenance and repair
of the Common Areas of the Project and (i) is caused by the willful misconduct of
Landlord, Landlord’s employees
or authorized agents; or (ii) (1) relates to an obligation of Landlord hereunder; (2)
is of the nature that Landlord had
knowledge of the condition; (3) a reasonable opportunity to take reasonable curative
measures; and (4) failed to do
so. The provisions of this Subsection 10.3(b) shall expressly survive the expiration
or sooner termination of this
Lease.

     SECTION 10.4. LANDLORD’S NONLIABILITY. Subject to the express indemnity obligations
contained in Section 10.3(b) of this Lease and such other applicable provisions of this Lease,
Landlord shall not be
liable to Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord for
personal injury or any other loss, cost, damage, injury or liability whatsoever resulting from
fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak or flow from or into any part of the
Premises or from
the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances,
plumbing, air
conditioning, electrical works or other fixtures in the Building. Notwithstanding any provision
of this Lease to the
contrary, including, without limitation, the provisions of Section 10.3(b) of this Lease,
Landlord shall in no event be
liable to Tenant, its employees, agents, and invitees, and Tenant hereby waives all claims against
Landlord, for (i)
loss or interruption of Tenant’s business or income (including, without limitation, any
consequential damages and
lost profit or opportunity costs), or (ii) any other loss, cost, damage, injury or liability
resulting from, but not limited
to, Acts of God (except with respect to restoration obligations pursuant to Article XI below),
acts of civil
disobedience or insurrection, acts or omissions (criminal or otherwise) of any third parties (other
than Landlord’s
employees or authorized agents), including without limitation, any other tenants within the Project
or their agents,

17

 

employees, contractors, guests or invitees. Landlord shall have no liability
and, except as provided in Sections 11.1 and 12.1 below, there shall be no abatement
of rent, by reason of any injury to or interference with Tenant’s business arising
from the making of any repairs, alterations or improvements to any portion of the
Building, including repairs to the Premises, nor shall any related activity by
Landlord constitute an actual or constructive eviction; provided, however, that in
making repairs, alterations or improvements, Landlord shall interfere as little as
reasonably practicable with the conduct of Tenant’s business in the Premises. Tenant
shall immediately notify Landlord in case of fire or accident in the Premises, the
Building or the Project and of defects in any improvements or equipment.

     SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives all
rights of recovery against the other and the other’s agents on account of loss and
damage occasioned to the property of such waiving party to the extent that the
waiving party is entitled to proceeds for such loss or damage under any property
insurance policies carried of required to be carried by the provisions of this Lease;
provided however, that the foregoing waiver shall not apply to the extent of Tenant’s
obligations to pay deductibles under any such policies and this Lease. By this waiver
it is the intent of the parties that neither Landlord nor Tenant shall be liable to
any insurance company (by way of subrogation or otherwise) insuring the other party
for any loss or damage insured against under any property insurance policies
contemplated by this Lease, even though such loss or damage might be occasioned by
the negligence of such party, its agents, employees, contractors, guests or invitees.

ARTICLE XI. DAMAGE OR DESTRUCTION

     SECTION 11.1. RESTORATION.

     (a) If the Premises or the Building or a part thereof are materially damaged by
any fire, flood,
earthquake or other casualty, Landlord shall have the right to terminate this
Lease upon written notice to Tenant if:
(i) Landlord reasonably determines that proceeds necessary to pay the full cost of
repair is not available from
Landlord’s insurance, including without limitation earthquake insurance, plus such
additional amounts Tenant elects,
at its option, to contribute, excluding however the deductible (for which Tenant
shall be responsible for Tenant’s
Share); (ii) Landlord reasonably determines that the Premises cannot, with
reasonable diligence, be fully repaired by
Landlord (or cannot be safely repaired because of the presence of hazardous
factors, including without limitation
Hazardous Materials, earthquake faults, and other similar dangers) within two
hundred seventy (270) days after the
date of the damage; (iii) an uncured Event of Default by Tenant has occurred; or
(iv) the material damage occurs
during the final twelve (12) months of the Term. Landlord shall notify Tenant in
writing (“Landlord’s Notice”)
within sixty (60) days after the damage occurs as to (A) whether Landlord is
terminating this Lease as a result of
such material damage and (B) if Landlord is not terminating this Lease, the number
of days within which Landlord
has estimated that the Premises, with reasonable diligence, are likely to be fully
repaired. In the event Landlord
elects to terminate this Lease, this Lease shall terminate as of the date
specified for termination by Landlord’s Notice
(which termination date shall in no event be later than sixty (60) days following
the date of the damage, or, if no
such date is specified, such termination shall be the date of Landlord’s Notice).

     (b) If Landlord has the right to terminate this Lease pursuant to Section 11.1 (a)
and does not elect to
so terminate this Lease, and provided that at the time of Landlord’s Notice
neither an Event of Default exists nor has
Landlord delivered Tenant a notice of any failure by Tenant to fulfill an
obligation under this Lease which, unless
cured by Tenant within the applicable grace period, would constitute an Event of
Default, then within ten (10) days
following delivery of Landlord’s Notice pursuant to Section 11.l(a), Tenant may
elect to terminate this Lease by
written notice to Landlord, but only if (i) Landlord’s Notice specifies that
Landlord has determined that the Premises
cannot be repaired, with reasonable diligence, within two hundred seventy (270)
days after the date of damage or (ii)
the casualty has occurred within the final twelve (12) months of the Term and such
material damage has a materially
adverse impact on Tenant’s continued use of the Premises. If Tenant fails to
provide such termination notice within
such ten (10) day period, Tenant shall be deemed to have waived any termination
right under this Section 11.l(b) or
any other applicable law.

     (c) In the event that neither Landlord nor Tenant terminates this Lease pursuant
to this Section 11.1 as
a result of material damage to the Building or Premises resulting from a casualty,
Landlord shall repair all material
damage to the Premises or the Building as soon as reasonably possible and this
Lease shall continue in effect for the
remainder of the Term. Subject to any provision to the contrary in the Work
Letter, such repair by Landlord shall
include repair of material damage to the Tenant Improvements constructed or paid
for by Landlord pursuant to the
Work Letter, if any, so long as insurance proceeds from insurance required to be
carried by Tenant are made
available to Landlord. Landlord shall have the right, but not the obligation, to
repair or replace any other leasehold
improvements made by Tenant or any Alterations (as defined in Section 7.3)
constructed by Tenant. If Landlord
elects to repair or replace such leasehold improvements and/or Alterations, all
insurance proceeds available for such
repair or replacement shall be made available to Landlord. Landlord shall have no
liability to Tenant in the event
that the Premises or the Building has not been fully repaired within the time
period specified by Landlord in
Landlord’s Notice to Tenant as described in Section 11.l(a). Notwithstanding the foregoing, the
repair of damage to
the Premises to the extent such damage is not material shall be governed by Sections 7.1 and 7.2.

     (d) Commencing on the date of such material damage to the Building, and ending on
the sooner of the
date the damage is repaired or the date this Lease is terminated, the rental to be
paid under this Lease shall be abated
in the same proportion that the Floor Area of the Premises that is rendered unusable by the damage
from time to
time bears to the total Floor Area of the Premises, as reasonably and in good faith determined by
Landlord, but only
to the extent business interruption insurance is required of Tenant
pursuant to Exhibit D.

     (e) Landlord shall not be required to repair or replace any improvements or fixtures that
Tenant is
obligated to repair or replace pursuant to Section 7.1 or any other provision of this Lease
and Tenant shall continue
to be obligated to so repair or replace any such improvements or fixtures, notwithstanding any
provisions to the
contrary in this Article XI. In addition, but subject to the provisions of Section 10.5, in the
event the damage or

18

 

destruction to the Premises or Building are due in substantial part to
the fault or neglect of Tenant or its employees, subtenants, invitees or
representatives, the costs of such repairs or replacement to the Premises or
Building shall be borne by Tenant in proportion to its responsibility for such
damage or destruction, and in addition, Tenant shall not be entitled to
terminate this Lease as a result, notwithstanding the provisions of Section 1
l.l(b).

     (f) Tenant shall fully cooperate with Landlord in removing Tenant’s
personal property and any debris from the Premises to facilitate all
inspections of the Premises and the making of any repairs. Notwithstanding
anything to the contrary contained in this Lease, if Landlord in good faith
believes there is a risk of injury to persons or damage to property from entry
into the Building or Premises following any damage or destruction thereto,
Landlord may restrict entry into the Building or the Premises by Tenant, its
employees, agents and contractors in a non-discriminatory manner, without being
deemed to have violated Tenant’s rights of quiet enjoyment to, or made an
unlawful detainer of, or evicted Tenant from, the Premises. Upon request,
Landlord shall consult with Tenant to determine if there are safe methods of
entry into the Building or the Premises solely in order to allow Tenant to
retrieve files, data in computers, and necessary inventory, subject however to
all indemnities and waivers of liability from Tenant to Landlord contained in
this Lease and any additional indemnities and waivers of liability which
Landlord may require.

     SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of
law.

ARTICLE XII. EMINENT DOMAIN

     SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises which materially impairs Tenant’s ability to conduct its business in
the Premises is taken by any lawful authority by exercise of the right of
eminent domain, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority. In the event title to a portion of the Building or
Project, whether or not including a portion of the Premises, is taken or sold in
lieu of taking, and if Landlord elects to restore the Building in such a way as
to alter the Premises materially, either party may terminate this Lease, by
written notice to the other party, effective on the date of vesting of title. In
the event neither party has elected to terminate this Lease as provided above,
then Landlord shall promptly, after receipt of a sufficient condemnation award,
proceed to restore the Premises to substantially their condition prior to the
taking, and a proportionate allowance shall be made to Tenant for the rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of the taking and restoration. In the event
of a taking, Landlord shall be entitled to the entire amount of the condemnation
award without deduction for any estate or interest of Tenant; provided that
nothing in this Section shall be deemed to give Landlord any interest in, or
prevent Tenant from seeking any award against the taking authority for, the
taking of personal property and fixtures belonging to Tenant or for relocation
or business interruption expenses recoverable from the taking authority.

     SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises,
Building or Common Area shall terminate this Lease or give Tenant any right to
abatement of rent, and any award specifically attributable to a temporary taking
of the Premises shall belong entirely to Tenant. A temporary taking shall be
deemed to be a taking of the use or occupancy of the Premises for a period of
not to exceed thirty (30) days.

     SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking
of the parking area such that Landlord can no longer provide sufficient parking
to comply with this Lease, Landlord may substitute reasonably equivalent parking
in a location within 100 meters of the Building; provided that if Landlord fails
to make that substitution within thirty (30) days following the taking and if
the taking materially impairs Tenant’s use and enjoyment of the Premises, Tenant
may, at its option, terminate this Lease by written notice to Landlord. If this
Lease is not so terminated by Tenant, there shall be no abatement of rent and
this Lease shall continue in effect.

ARTICLE XII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

     SECTION 13.1. SUBORDINATION. This Lease shall be subordinate to the Master Lease and to all
renewals, modifications and extensions thereof. Further, at the option of Landlord or any
lender of Landlord’s that
obtains a security interest in the Building, this Lease shall be either superior or
subordinate to all ground or
underlying leases, mortgages and deeds of trust, if any, which may hereafter affect the
Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Notwithstanding the
foregoing, so long as no
Event of Default exists under this Lease, Tenant’s possession and quiet enjoyment of the
Premises shall not be
disturbed and this Lease shall not terminate in the event of termination of the Master
Lessor or of any such ground
or underlying lease, or the foreclosure of any such mortgage or deed of trust, to which
this Lease has been
subordinated pursuant to this Section. Tenant shall execute and deliver any commercially
reasonable documents or
agreements requested by Landlord, Master Lessor or such lessor or lender which provide
Tenant with the non-disturbance protections set forth in this Section. In the event of a termination or foreclosure,
Tenant shall become a
tenant of and attorn to the successor-in-interest to Landlord upon the same terms and conditions as
are contained in
this Lease, and shall execute any instrument reasonably required by Landlord’s successor for
that purpose. Tenant
Shall also, upon written request of Landlord, execute and deliver all commercially reasonable
instruments as may be
required from time to time to subordinate the rights of Tenant under this Lease to any ground or underlying lease or
to the lien of any mortgage or deed of trust (provided that such instruments include the nondisturbance and
attornment provisions set forth above), or, if requested by Landlord, to subordinate, in whole or in part, any ground CO
or underlying lease or the lien of any mortgage or deed of trust to this Lease. Tenant agrees that any purchaser at a
foreclosure sale or lender taking title under a deed-in-lieu of foreclosure shall not be responsible for any act or
omission of a prior landlord, shall not be subject to any offsets or defenses Tenant may have against a prior landlord,
and shall not be liable for the return of the security deposit to the
extent it
is not actually received by such purchaser or bound by any rent paid for more
than the current month in which the foreclosure occurred. Within thirty (30)

19

 

days of the execution hereof, as a condition precedent to Tenant’s
obligations under this Lease, Landlord shall deliver to Tenant executed and
notarized nondisturbance agreements in writing from all lessors under all
ground leases or underlying leases and lenders whose debt is secured by all or
a portion of the Project, in form and content provided for in the applicable
underlying ground lease or financing documents, as applicable, stating that so
long as Tenant is not in default under any of the terms, covenants, conditions,
or agreements of this Lease, this Lease and all of the terms, provisions, and
conditions of this Lease, shall remain in full force and effect, and neither
this Lease, nor Tenant’s rights nor Tenant’s possession of the Premises will be
disturbed during the Term of this Lease or any extension thereof.

     SECTION 13.2. ESTOPPEL CERTIFICATE.

     (a) Each party shall, at any time upon not less than fifteen (15) business
days prior written notice from
the other, execute, acknowledge and deliver to the other, in any
commercially reasonable form that the other may
require, a statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified,
stating the nature of the modification and certifying that this Lease, as
modified, is in full force and effect) and the
dates to which the rental, additional rent and other charges have been paid
in advance, if any, and (ii) acknowledging
that, to such party’s knowledge, there are no uncured defaults on the part
of the other party, or specifying each
default if any are claimed, and (iii) setting forth all further information
that such party or any purchaser or
encumbrancer may reasonably require. Tenant’s statement may be relied
upon by any prospective purchaser or
encumbrancer of all or any portion of the Building or Project.

     (b) Notwithstanding any other rights and remedies of Landlord or Tenant,
Landlord’s or Tenant’s
failure to deliver any estoppel statement within the provided time shall be
conclusive upon Landlord or Tenant, as
the case may be, that (i) this Lease is in full force and effect, without
modification except as may be represented by
Landlord, (ii) there are no uncured Events of Default in Landlord’s or
Tenant’s performance, and (iii) not more than
one month’s rental has been paid in advance.

     SECTION 13.3. FINANCIALS.

     Tenant has made available to Landlord prior to the execution of this
Lease, the consolidated balance sheet and related consolidated statements of
operations, of stockholder’s equity and of cash flows of Tenant and its
subsidiaries (“Statements”) for the most recent prior year. In addition to the
foregoing Statements, Tenant shall deliver to Landlord within fifteen (15)
business days after request, Tenant’s current Statements for the most recent
prior year, or, in the event Tenant is a publicly traded corporation on a
nationally recognized stock exchange, Tenant’s current financial reports filed
with the Securities and Exchange Commission, which Statements shall accurately
and completely reflect the financial condition of Tenant. Landlord agrees that
it will keep the Statements confidential, except that Landlord shall have the
right to deliver the same to any proposed purchaser of the Building or Project,
and to any encumbrancer of all or any portion of the Building or Project.

ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES

     SECTION 14.1. TENANT’S DEFAULTS. In addition to any other breaches of this
Lease which are defined as Events of Default in this Lease, the occurrence of
any one or more of the following events shall constitute an Event of Default by
Tenant:

     (a) The failure by Tenant to make any payment of Basic Rent or additional
rent required to be made
by Tenant, as and when due, where the failure continues for a period of
five (5) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in
lieu of, and not in addition to, any notice
required under California Code of Civil Procedure Section 1161 and 1161(a)
as amended. For purposes of these
Events of Default and remedies provisions, the term
“additional rent” shall
be deemed to include all amounts of
any type whatsoever other than Basic Rent to be paid by Tenant pursuant to
the terms of this Lease.

     (b) The assignment, sublease, encumbrance or other transfer of this Lease
by Tenant, either
voluntarily or by operation of law, whether by judgment, execution,
transfer by intestacy or testacy, or other means,
without the prior written consent of Landlord when consent is required by
this Lease.

     (c) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate,
successor or guarantor of Tenant, was materially false.

     (d) The failure of Tenant to timely and fully provide any subordination
agreement, estoppel certificate
or financial statements in accordance with the requirements of Article
XIII.

     (e) The abandonment of the Premises by Tenant (provided that Tenant shall not be deemed to
have
abandoned the Premises if it vacates but continues to timely perform each and every of its
obligations under this
Lease).

     (f) The failure or inability by Tenant to observe or perform any of the express or implied
covenants or
provisions of this Lease to be observed or performed by Tenant, other than as specified in
this Section 14.1, where
the failure continues for a period of thirty (30) days after written notice from Landlord to
Tenant or such shorter
period as is specified in any other provision of this Lease; provided, however, that any such
notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil Procedure Section
1161 and 1161(a) as
amended. However, if the nature of the failure is such that more than thirty (30) days are
reasonably required for its
cure, then Tenant shall not be deemed to have committed an Event of Default if Tenant
commences the cure within
thirty (30) days, and thereafter diligently pursues the cure to completion.

20

 

     (g) (i) The making by Tenant of any general assignment for the benefit
of creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts discharged
or a petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed within thirty (30) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Tenant’s assets located at
the Premises or of Tenant’s interest in this Lease, if possession is not
restored to Tenant within thirty (30) days; (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease, where the seizure is not
discharged within thirty (30) days; or (v) Tenant’s convening of a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event
described in this Section 14.1(g) unless notification in writing is received by
Landlord, nor shall there be any presumption attributable to Landlord of
Tenant’s insolvency. In the event that any provision of this Section 14.l(g) is
contrary to applicable law, the provision shall be of no force or effect.

     SECTION 14.2. LANDLORD’S REMEDIES.

     (a) If an Event of Default by Tenant occurs, then in addition to any other
remedies available to
Landlord, Landlord may exercise the following remedies:

          (i) Landlord may terminate Tenant’s right to possession of the Premises by
any lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. Such termination
shall not affect any accrued obligations of Tenant under this Lease. Upon
termination, Landlord shall have the right to reenter the Premises and remove
all persons and property. Landlord shall also be entitled to recover from
Tenant:

               (1) The worth at the time of award of the unpaid Basic Rent and additional rent
which had been earned at the time of termination;

               (2) The worth at the time of award of the amount by which the unpaid Basic Rent
and additional rent which would have been earned after termination until the
time of award exceeds the amount of such loss that Tenant proves could have been
reasonably avoided;

               (3) The worth at the time of award of the amount by which the unpaid Basic
Rent
and additional rent for the balance of the Term after the time of award
exceeds the amount of such loss that Tenant
proves could be reasonably avoided;

               (4) 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 from Tenant’s
Event of Default, including, but not limited to, the cost of recovering possession
of the Premises, refurbishment of the Premises, marketing costs, commissions and
other expenses of reletting, including necessary repair, the unamortized portion of
any tenant improvements and brokerage commissions funded by Landlord in connection
with this Lease, reasonable attorneys’ fees, and any other reasonable costs; and

               (5) At Landlord’s election, all other amounts in addition to or in lieu of the
foregoing as may be permitted by law. The term “rent” as used in the Lease
shall be deemed to mean the Basic Rent, Tenant’s Share of Operating Expenses and
any other sums required to be paid by Tenant to Landlord pursuant to the terms
of this Lease, including, without limitation, any sums that may be owing from
Tenant pursuant to Section 4.3 of this Lease. Any sum, other than Basic Rent,
shall be computed on the basis of the average monthly amount accruing during the
twenty-four (24) month period immediately prior to the Event of Default, except
that if it becomes necessary to compute such rental before the twenty-four (24)
month period has occurred, then the computation shall be on the basis of the
average monthly amount during the shorter period. As used in Sections 14.2(a)(i)
(1) and (2) above, the “worth at the time of award” shall be computed by
allowing interest at the rate of ten percent (10%) per annum. As used in
Section 14.2(a)(i)(3) above, the “worth at the time of award” shall be computed
by discounting the amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).

          (ii) Landlord may elect not to terminate Tenant’s right to possession of the Premises, in
which event Landlord may continue to enforce all of its rights and remedies under this
Lease, including the right to
collect all rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the
appointment of a receiver to protect the Landlord’s interests under this Lease, shall not
constitute a termination of
the Tenant’s right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy
provided by this Section 14.2(a)(ii), Landlord shall not unreasonably withhold its consent
to an assignment or
subletting of the Premises subject to the reasonable standards for Landlord’s consent as are
contained in this Lease.

     (b) Landlord shall be under no obligation to observe or perform any covenant of this Lease on
its part
to be observed or performed which accrues after the date of any Event of Default by Tenant
unless and until the
Event of Default is cured by Tenant, it being understood and agreed that the performance by
Landlord of its
obligations under this Lease are expressly conditioned upon Tenant’s full and timely performance of
its obligations
under this Lease. The various rights and remedies reserved to Landlord in this Lease or otherwise shall be
cumulative and, except as otherwise provided by California law, Landlord may pursue any or all of its rights and
remedies at the same time.

     (c) No delay or omission of Landlord to exercise any right or remedy shall be construed as a waiver of
the right or remedy or of any breach or Event of Default by Tenant. The acceptance by Landlord
of rent shall not be

21

 

a (i) waiver of any preceding breach or Event of Default by Tenant of any
provision of this Lease, other than the failure of Tenant to pay the particular
rent accepted, regardless of Landlord’s knowledge of the preceding breach or Event
of Default at the time of acceptance of rent, or (ii) a waiver of Landlord’s right
to exercise any remedy available to Landlord by virtue of the breach or Event of
Default. The acceptance of any payment from a debtor in possession, a trustee, a
receiver or any other person acting on behalf of Tenant or Tenant’s estate shall
not waive or cure a breach or Event of Default under Section 14.1. No payment by
Tenant or receipt by Landlord of a lesser amount than the rent required by this
Lease shall be deemed to be other than a partial payment on account of the earliest
due stipulated rent, nor shall any endorsement or statement on any check or letter
be deemed an accord and satisfaction and Landlord shall accept the check or payment
without prejudice to Landlord’s right to recover the balance of the rent or pursue
any other remedy available to it. No act or thing done by Landlord or Landlord’s
agents during the Term shall be deemed an acceptance of a surrender of the
Premises, and no agreement to accept a surrender shall be valid unless in writing
and signed by Landlord. No employee of Landlord or of Landlord’s agents shall have
any power to accept the keys to the Premises prior to the termination of this
Lease, and the delivery of the keys to any employee shall not operate as a
termination of this Lease or a surrender of the Premises.

     (d) Any agreement for free or abated rent or other charges, or for the giving
or paying by Landlord to or for Tenant of any cash or other bonus, inducement or
consideration for Tenant’s entering into this Lease
(“Inducement Provisions”) shall
be deemed conditioned upon Tenant’s full and faithful performance of the terms,
covenants and conditions of this Lease. Upon an Event of Default under this Lease by
Tenant, any such Inducement Provisions shall automatically be deemed deleted from
this Lease and of no further force or effect and the amount of any rent reduction or
abatement or other bonus or consideration already given by Landlord or received by
Tenant as an Inducement shall be immediately due and payable by Tenant to Landlord,
notwithstanding any subsequent cure of said Event of Default by Tenant. The
acceptance by Landlord of rent or the cure of the Event of Default which initiated
the operation of this Section 14.1 shall not be deemed a waiver by Landlord of the
provisions of this Section 14.2(d).

     SECTION 14.3. LATE PAYMENTS.

     (a) Any payment due to Landlord under this Lease, including without limitation
Basic Rent, Tenant’s Share of Operating Expenses or any other payment due to Landlord
under this Lease, that is not received by Landlord within five (5) days following the
date due shall bear interest at the maximum rate permitted by law from the date due
until fully paid. The payment of interest shall not cure any breach or Event of Default
by Tenant under this Lease. In addition, Tenant acknowledges that the late payment by
Tenant to Landlord of Basic Rent and Tenant’s Share of Operating Expenses will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of which will
be extremely difficult and impracticable to ascertain. Those costs may include, but
are not limited to, administrative, processing and accounting charges, and late charges
which may be imposed on Landlord by the terms of any ground lease, mortgage or trust
deed covering the Premises. Accordingly, if any Basic Rent or Tenant’s Share of
Operating Expenses due from Tenant shall not be received by Landlord or Landlord’s
designee within five (5) days following the date due, then Tenant shall pay to
Landlord, in addition to the interest provided above, a late charge, which the Tenant
agrees is reasonable, in a sum equal to the greater of five percent (5%) of the amount
overdue or Two Hundred Fifty Dollars ($250.00) for each delinquent payment. Acceptance
of a late charge by Landlord shall not constitute a waiver of Tenant’s breach or Event
of Default with respect to the overdue amount, nor shall it prevent Landlord from
exercising any of its other rights and remedies.

     (b) Should Tenant deliver to Landlord, at any time during the Term, two (2) or
more insufficient checks, the Landlord may require that all monies then and thereafter
due from Tenant be paid to Landlord by cashier’s check. If any check for any payment to
Landlord hereunder is returned by the bank for any reason, such payment shall not be
deemed to have been received by Landlord and Tenant shall be responsible for any
applicable late charge, interest payment and the charge to Landlord by its bank for
such returned check. Nothing in this Section shall be construed to compel Landlord to
accept Basic Rent, Tenant’s Share of Operating Expenses or any other payment from
Tenant if there exists an Event of Default unless such payment fully cures any and all
such Event of Default. Any acceptance of any such payment shall not be deemed to waive
any other right of Landlord under this Lease. Any payment by Tenant to Landlord may
be applied by Landlord, in its sole and absolute discretion, in any order determined by
Landlord to any amounts then due to Landlord.

     SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed by
Tenant under this Lease shall be performed at Tenant’s sole cost and expense and without any
abatement of rent or right of set-off. If Tenant fails to pay any sum of money, other than rent
payable to Landlord, or fails to perform any other act on its part to be performed under this
Lease, and the failure continues beyond any applicable grace period set forth in Section 14.1,
then in addition to any other available remedies, Landlord may, at its election make the payment
or perform the other act on Tenant’s part and Tenant hereby grants Landlord the right to enter
onto the Premises in order to carry out such performance. Landlord’s election to make the payment
or perform the act on Tenant’s part shall not give rise to any responsibility of Landlord to
continue making the same or similar payments or performing the same or similar acts nor shall
Landlord be responsible to Tenant for any damage caused to Tenant as the result of such
performance by Landlord. Tenant shall, promptly upon demand by Landlord, reimburse Landlord for
all sums paid by Landlord and all necessary incidental costs, together with interest at the
maximum rate permitted by law from the date of the payment by Landlord.

     SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease, and Tenant shall have
no rights to take any action against Landlord, unless and until Landlord has failed
to perform the obligation within thirty (30) days after written notice by Tenant to
Landlord specifying in reasonable detail the nature and extent of the failure;
provided, however, that if the nature of Landlord’s obligation is such that more
than thirty (30) days are required for its performance, then Landlord shall not be
deemed to be in default if it commences performance within the thirty (30) day
period and thereafter diligently pursues the cure to completion. In the event of
Landlord’s default under this Lease, Tenant’s sole remedies

22

 

shall be to seek constructive eviction from the Premises, seek damages or
specific performance from Landlord, provided that any damages shall be limited
to Tenant’s actual out-of-pocket expenses and shall in no event include any
consequential damages, lost profits or opportunity costs.

     SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any Event of Default by Tenant under this Lease or
holding over of possession by Tenant after the expiration or earlier
termination of this Lease, or any action related to a filing for bankruptcy or
reorganization by Tenant, including without limitation all costs, expenses and
actual accountants, appraisers, attorneys and other professional fees, and any
collection agency or other collection charges, shall be due and payable to
Landlord on demand, and shall bear interest at the rate of ten percent (10%)
per annum. Should either Landlord or Tenant bring any action in connection with
this Lease, the prevailing party shall be entitled to recover as a part of the
action its reasonable attorneys’ fees, and all other costs. The prevailing
party for the purpose of this Section shall be determined by the trier of the
facts.

     SECTION 14.7. WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH ACKNOWLEDGES
THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT
TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND
KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER
(AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY
CLAIM OF INJURY OR DAMAGE. FURTHERMORE, THIS WAIVER AND RELEASE OF ALL RIGHTS TO
A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER PROVISION,
COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.

     SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do not
constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
Should Tenant recover a money judgment against Landlord, such judgment shall be
satisfied only from the interest of Landlord in the Project and out of the rent
or other income from such property receivable by Landlord or out of
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord’s right, title or interest in the Project and no action for
any deficiency may be sought or obtained by Tenant.

     SECTION
14.9. INTENTIONALLY DELETED.

ARTICLE XV. END OF TERM

     SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. Any period of time following the Expiration Date or earlier termination
of this Lease required for Tenant to remove its property or to place the
Premises in the condition required pursuant to Section 15.3 (or for Landlord to
do so if Tenant fails to do so) shall be deemed a holding over by Tenant. If
Tenant holds over for any period after the Expiration Date (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default
under this Lease; such holding over with the prior written consent of Landlord
shall constitute a month-to-month tenancy commencing on the first (1st) day
following the termination of this Lease and terminating thirty (30) days
following delivery of written notice of termination by either Landlord or Tenant
to the other. In either of such events, possession shall be subject to all of
the terms of this Lease, except that (i) for the first two (2) months of such
holdover tenancy, the monthly Basic Rent shall be one hundred fifty percent
(150%) of the Basic Rent for the month immediately preceding the date of
termination; and (ii) for each month following the period referred to in
subsection (i) of this Section, the monthly Basic Rent shall be the greater of
(a) one hundred fifty percent (150%) of the Basic Rent for the month immediately
preceding the date of termination; and (b) the then current scheduled Basic Rent
for the most recently leased comparable space in the Project. The acceptance by
Landlord of monthly holdover rental in a lesser amount shall not constitute a
waiver of Landlord’s right to recover the full amount due for any holdover by
Tenant, unless otherwise agreed in writing by Landlord. If Tenant fails to
surrender the Premises upon the expiration of this Lease despite demand to do so
by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability, including without limitation, any claims made by any succeeding
tenant relating to such failure to surrender. The foregoing provisions of this
Section are in addition to and do not affect Landlord’s right of re-entry or any
other rights of Landlord under this Lease or at law.

     SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of this Lease by
Tenant, or a mutual termination of this Lease, shall terminate any or all existing subleases
unless Landlord, at its option, elects in writing to treat the surrender or termination as an
assignment to it of any or all subleases affecting the Premises.

     SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the provisions of 7.3 of
this Lease, upon the Expiration Date or upon any earlier termination of this Lease, Tenant shall
quit and surrender possession of the Premises to Landlord in as good order, condition and repair as
when received or as hereafter may be improved by Landlord or Tenant, reasonable wear and tear and
repairs which are Landlord’s obligation excepted, and shall, without expense to Landlord, remove
or cause to be removed from the Premises all personal property and debris, except for any items
that Landlord may by written authorization allow to remain. Tenant shall repair all damage to the
Premises resulting from the removal, which repair shall include the patching and filling of holes
and repair of structural damage, provided that Landlord may instead elect to repair any structural

23

 

damage at Tenant’s expense. If Tenant shall fail to comply with the provisions of this Section,
Landlord may effect the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand. If Tenant fails to remove Tenant’s personal
property from the Premises upon the expiration of the Term, Landlord may remove, store, dispose of
and/or retain such personal property, at Landlord’s option, in accordance with then applicable
laws, all at the expense of Tenant. If requested by Landlord, Tenant shall execute, acknowledge and
deliver to Landlord an instrument in writing releasing and quitclaiming to Landlord all right,
title and interest of Tenant in the Premises.

ARTICLE XVI. PAYMENTS
AND NOTICES

     All sums payable by Tenant to Landlord shall be deemed to be rent under this
Lease and shall be paid, without deduction or offset, in lawful money of the United
States to Landlord at its address set forth in Item 12 of the Basic Lease
Provisions, or at any other place as Landlord may designate in writing. Unless this
Lease expressly provides otherwise, as for example in the payment of Basic Rent and
the Tenant’s Share of Operating Costs pursuant to Sections 4.1 and 4.2, all
payments shall be due and payable within five (5) days after demand. All payments
requiring proration shall be prorated on the basis of a thirty (30) day month and a
three hundred sixty (360) day year. Any notice, election, demand, consent, approval
or other communication to be given or other document to be delivered by either
party to the other may be delivered in person or by courier or overnight delivery
service to the other party, or may be deposited in the United States mail, duly
registered or certified, postage prepaid, return receipt requested, and addressed
to the other party at the address set forth in Item 12 of the Basic Lease
Provisions, or if to Tenant, at that address or, from and after the Commencement
Date, at the Premises (whether or not Tenant has departed from, abandoned or
vacated the Premises). Either party may, by written notice to the other, served in
the manner provided in this Article, designate a different address. If any notice
or other document is sent by mail, it shall be deemed served or delivered
seventy-two (72) hours after mailing. If more than one person or entity is named as
Tenant under this Lease, service of any notice upon any one of them shall be deemed
as service upon all of them.

ARTICLE XVII. RULES AND REGULATIONS

     Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E. and any reasonable and
nondiscriminatory amendments, modifications and/or additions as may be adopted and
published by written notice to tenants by Landlord for the safety, care, security,
good order, or cleanliness of the Premises, Building, Project and Common Areas
provided that such additional rules and regulations do not materially decrease
Tenant’s rights under this lease or materially increase Tenant’s obligations under
this Lease. Landlord shall not be liable to Tenant for any violation of the Rules
and Regulations or the breach of any covenant or condition in any lease by any
other tenant or such tenant’s agents, employees, contractors, guests or invitees.
One or more waivers by Landlord of any breach of the Rules and Regulations by
Tenant or by any other tenant(s) shall not be a waiver of any subsequent breach of
that rule or any other. Tenant’s failure to keep and observe the Rules and
Regulations shall constitute a breach of this Lease. In the case of any conflict
between the Rules and Regulations and this Lease, this Lease shall be controlling.

ARTICLE XVII. BROKER’S COMMISSION

     The parties recognize as the broker(s) who negotiated this Lease the firm(s),
if any, whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions, and
agree that Landlord shall be responsible for the payment of brokerage commissions
to those broker(s) unless otherwise provided in this Lease. Tenant warrants that it
has had no dealings with any other real estate broker or agent in connection with
the negotiation of this Lease, and Tenant agrees to indemnify and hold Landlord
harmless from any cost, expense or liability (including reasonable attorneys’ fees)
for any compensation, commissions or charges claimed by any other real estate
broker or agent employed or claiming to represent or to have been employed by
Tenant in connection with the negotiation of this Lease. The foregoing agreement
shall survive the termination of this Lease. If Tenant fails to take possession of
the Premises or if this Lease otherwise terminates prior to the Expiration Date as
the result of failure of performance by Tenant, Landlord shall be entitled to
recover from Tenant the unamortized portion of any brokerage commission funded by
Landlord in addition to any other damages to which Landlord may be entitled.

ARTICLE XIX. TRANSFER OF LANDLORD’S INTEREST

     In the event of any transfer of Landlord’s interest in the Premises, the transferor shall be
automatically relieved of all further obligations on the part of Landlord (but shall not be
relieved of any obligations or liabilities arising during its ownership of such interest in the
Premises), and the transferor shall be relieved of any obligation to pay any funds in which Tenant
has an interest to the extent that such funds have been turned over, subject to that interest, to
the transferee and Tenant is notified of the transfer as required by law. No beneficiary of a deed
of trust to which this Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit, unless the mortgagee
or beneficiary under the deed of trust or the landlord actually receives the Security Deposit. It
is intended that the covenants and obligations contained in this Lease on the part of Landlord
shall, subject to the foregoing, be binding on Landlord, its successors and assigns, only during
and in respect to their respective successive periods of ownership.

ARTICLE XX. INTERPRETATION

     SECTION 20.1. GENDER AND NUMBER, Whenever the context of this Lease requires, the
words “Landlord” and “Tenant” shall include the plural as well as the singular, and words
used in neuter, masculine or feminine genders shall include the others.

24

 

     SECTION
20.2. HEADINGS. The captions and headings of the articles
and sections of this Lease are for convenience only, are not a part of this
Lease and shall have no effect upon its construction or interpretation.

     SECTION
20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.

     SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.

     SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease.

     SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Any
litigation commenced concerning any matters whatsoever arising out of or in any
way connected to this Lease shall be initiated in the Superior Court of the
county in which the Project is located.

     SECTION
20.7. 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 or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.

     SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party’s consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.

     SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be
delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, other than financial inability, then the
performance of the work or the doing of the act shall be excused for the period
of the delay and the time for performance shall be extended for a period
equivalent to the period of the delay. The provisions of this Section shall not
operate to excuse Tenant from the prompt payment of rent or from the timely
performance of any other obligation under this Lease within Tenant’s reasonable
control.

     SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waives its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement or
implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.

     SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant’s part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall have
the right of quiet enjoyment and use of the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or through
Landlord.

     SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

     SECTION 20.13. INTERPRETATION. This Lease shall not be construed in favor
of or against either party, but shall be construed as if both parties prepared
this Lease.

ARTICLE XXI. EXECUTION AND RECORDING

     SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement

     SECTION
21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP AUTHORITY. The
parties hereto represent and warrant that they are duly authorized to execute and deliver
this Lease, and that this Lease is binding in accordance with its terms. If this Lease is
not signed by two officers as provided in California Corporations Code Section 313, Tenant
shall, at Landlord’s request, deliver a certified copy

25

 

of its board of directors’ resolution, operating agreement or
partnership agreement or certificate authorizing or evidencing the execution
of this Lease.

     SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER.  The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution
of this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact
executed and delivered this Lease to Tenant, it being intended that this
Lease shall only become effective upon execution by Landlord and delivery of
a fully executed counterpart to Tenant.

     SECTION 21.4. RECORDING.  Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord,
shall execute and acknowledge a “short form” memorandum of this Lease for
recording purposes.

     SECTION 21.5. AMENDMENTS.  No amendment or termination of this Lease
shall be effective unless in writing signed by authorized signatories of
Tenant and Landlord, or by their respective successors in interest. No
actions, policies, oral or informal arrangements, business dealings or other
course of conduct by or between the parties shall be deemed to modify this
Lease in any respect.

     SECTION 21.6. EXECUTED COPY.  Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.

     SECTION 21.7. ATTACHMENTS.  All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.

ARTICLE XXII.
MISCELLANEOUS 

     SECTION 22.1. NONDISCLOSURE OF LEASE TERMS.  Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute
proprietary information of Landlord. Disclosure of the terms could adversely
affect the ability of Landlord to negotiate other leases and impair
Landlord’s relationship with other tenants. Accordingly, Tenant agrees that
it, and its partners, officers, directors, employees and attorneys, shall not
intentionally and voluntarily disclose, by public filings or otherwise, the
terms and conditions of this Lease (“Confidential Information”) to any third
party, either directly or indirectly, without the prior written consent of
Landlord, which consent may be given or withheld in Landlord’s sole and
absolute discretion. The foregoing restriction shall not apply if either: (i)
Tenant is required to disclose the Confidential Information in response to a
subpoena or other regulatory, administrative or court order, (ii) independent
legal counsel to Tenant advises Tenant is required to disclose the
Confidential Information to, or file a copy of this Lease with, any
governmental agency or any stock exchange; provided however, that in such
event, Tenant shall, before making any such disclosure (A) provide Landlord
with prompt written notice of such required disclosure, (B) at Tenant’s sole
cost, take all reasonable legally available steps to resist or narrow such
requirement, including without limitation preparing and filing a request for
confidential treatment of the Confidential Information and (C) if disclosure
of the Confidential Information is required by subpoena or other regulatory,
administrative or court order, Tenant shall provide Landlord with as much
advance notice of the possibility of such disclosure as practical so that
Landlord may attempt to stop such disclosure or obtain an order concerning
such disclosure. The form and content of a request by Tenant for confidential
treatment of the Confidential Information shall be provided to Landlord at
least five (5) business days before its submission to the applicable
governmental agency or stock exchange and is subject to the reasonable prior
written approval of Landlord. In addition, Tenant may disclose the terms of
this Lease to prospective assignees of this Lease and prospective subtenants
under this Lease with whom Tenant is actively negotiating such an assignment
or sublease.

     SECTION 22.2. INTENTIONALLY DELETED. 

     SECTION
22.3. CHANGES REQUESTED BY LENDER.  If, in connection with
obtaining financing for the Project, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications
do not materially increase the obligations or decrease the rights of Tenant
or materially and adversely affect the leasehold interest created by this
Lease.

     SECTION 22.4. MORTGAGEE PROTECTION.  No act or failure to act on the part of Landlord which
would otherwise entitle Tenant to be relieved of its obligations hereunder shall result in such
a release or termination unless (a) Tenant has given notice by registered or certified mail to
any beneficiary of a deed of trust or mortgage covering the Building whose address has been
furnished to Tenant by written notice and (b) such beneficiary is afforded a reasonable
opportunity to cure the default by Landlord (which in no event shall be less than sixty (60)
days), including, if necessary to effect the cure, time to obtain possession of the Building by
power of sale or judicial foreclosure provided that such foreclosure remedy is diligently
pursued. Tenant agrees that each beneficiary of a deed of trust or mortgage covering the
Building is an express third party beneficiary hereof, Tenant shall have no right or claim for
the collection of any deposit from such beneficiary or from any purchaser at a foreclosure sale
unless such beneficiary or purchaser shall have actually received and not refunded the deposit,
and Tenant shall comply with any written directions by any beneficiary to pay rent due hereunder
directly to such beneficiary without determining whether a default exists under such
beneficiary’s deed of trust.

     SECTION 22.5. COVENANTS AND CONDITIONS.  All of the provisions of this Lease shall
be construed to be conditions as well as covenants as though the words specifically
expressing or imparting covenants and conditions were used in each separate provision.

26

 

     SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that Landlord shall have no
obligation whatsoever to provide guard service or other security measures for the benefit of the
Premises or the Project. Tenant assumes all responsibility for the protection of Tenant, its
employees, agents, invitees and property from acts of third parties. Nothing herein contained shall
prevent Landlord, at its sole option, from providing security protection for the Project or any
part thereof, in which event the cost thereof shall be included within the definition of Project
Costs.

	 	 	 	 	 	 	 
	LANDLORD:	 	TENANT:
	 
	 	 	 	 	 	 
	THE IRVINE COMPANY	 	ENGENIO INFORMATION TECHNOLOGIES, INC.
	a Delaware corporation	 	a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/ Steven Case
	 	By:	 	/s/ Thomas Georgens
	

	 	

	 	 	 	

	 	 	Steven Case	 	 	 	Name (Print): Thomas Georgens
	 	 	Senior Vice President, Office Properties	 	 	 	Title (Print): President And Chief Executive Officer
	 
	 	 	 	 	 	 
	By:

	 	/s/ Steven E. Claton
	 	By:
	 	/s/ David E. Sanders
	

	 	

	 	 	 	

	

	 	Steven E. Claton, Vice President
	 	 	 	Name: David E. Sanders
	

	 	Operations, Office Properties
	 	 	 	Title: Vice President General Councel

27

 

EXHIBIT A

DESCRIPTION OF PREMISES

1

 

EXHIBIT A

DESCRIPTION OF PREMISES

1

 

EXHIBIT B

THE IRVINE COMPANY — INVESTMENT PROPERTIES GROUP

HAZARDOUS MATERIAL SURVEY FORM

     The purpose of this form is to obtain information regarding the use of hazardous substances on
Investment Properties Group (“IPG”) property. Prospective tenants and contractors should answer the
questions in light of their proposed activities on the premises. Existing tenants and contractors
should answer the questions as they relate to ongoing activities on the premises and should update
any information previously submitted.

     If additional space is needed to answer the questions, you may attach separate sheets of paper
to this form. When completed, the form should be sent to the following address:

THE IRVINE COMPANY MANAGEMENT OFFICE

8105 Irvine Center Drive, Suite 350

Irvine, CA 92618

     Your cooperation in this matter is appreciated. If you have any questions, please call your
property manager at (949) 720-4400 for assistance.

	1.  	GENERAL INFORMATION.
	 
	   	Name of Responding Company:          
               
               
              
               
               
    
	   	Check all that apply:                      
          Tenant           (    )    
                
              Contractor 
         (    )

              
              
               
               
    Prospective   (    )
               
               
   Existing          
    (    )
	 
	   	Mailing Address:         
           
               
               
                
                   
               
          

Contact person & Title:           
               
               
               
              
            
           
        

Telephone Number: (  )      
             
             
             
            
              
              
               
  
	 
	   	Current TIC Tenant(s):
	 
	   	Address of Lease Premises:          
               
               
              
             
              
              
	 
	   	Length of Lease or Contract Term:         
             
               
              
              
               
      
	 
	   	Prospective TIC Tenant(s):

	 
	   	Address of Leased Premises:          
               
               
              
              
               
        
  
	 
	   	Address of Current Operations:          
               
               
             
            
             
               
	 
	   	Describe the proposed operations to take place on the property, including principal
products manufactured or services to be conducted. Existing tenants and contractors should
describe any proposed changes to ongoing operations.
	 
	   	

	   	

	   	

	 
	2.  	HAZARDOUS MATERIALS. For the purposes of this Survey Form, the term “hazardous
material” means any raw material, product or agent considered hazardous under any state or
federal law. The term does not include wastes which are intended to be discarded.

	 	2.1  	Will any hazardous materials be used or stored on site?

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Chemical Products
	 	Yes
	 	(    )
	 	No
	 	(    )
	 	 
	

	 	Biological Hazards/	 	 	 	 	 	 	 	 	 	 
	

	 	Infectious Wastes
	 	Yes
	 	(    )
	 	No
	 	(    )	 	 
	

	 	Radioactive Materials
	 	Yes
	 	(    )
	 	No
	 	(    )	 	 
	

	 	Petroleum Products
	 	Yes
	 	(    )
	 	No
	 	(    )	 	 

1

 

	 	2.2  	List any hazardous materials to be used or stored, the quantities that will be
on-site at any given time, and the location and method of storage (e.g., bottles in
storage closet on the premises).

	 	 	 	 	 	 	 
	

	 	 	 	     Location and Method	 	 
	

	 	Hazardous Materials
	 	          of Storage
	 	               Quantity
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  

	 	2.3  	Is any underground storage of hazardous materials proposed or currently conducted
on the premises? Yes ( ) No ( )
	 
	 	   	If yes, describe the materials to be stored, and the size and construction of the tank.
Attach copies of any permits obtained for the underground storage of such substances.
	 
	 	   	

	 	   	

	 	   	

	3.  	HAZARDOUS WASTE. For the purposes of this Survey Form, the term “hazardous waste” means
any waste (including biological, infectious or radioactive waste) considered hazardous under any
state or federal law, and which is intended to be discarded.

	 	3.1  	List any hazardous waste generated or to be generated on the premises, and indicate
the quantity generated on a monthly basis.

	 	 	 	 	 	 	 
	

	 	 	 	     Location and Method	 	 
	

	 	Hazardous Materials
	 	          of Storage
	 	               Quantity
	 
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  

	 	3.2  	Describe the method(s) of disposal (including recycling) for each waste. Indicate
where and how often disposal will take place.

	 	 	 	 	 	 	 
	

	 	 	 	     Location and Method	 	 
	

	 	Hazardous Materials
	 	          of Storage
	 	               Quantity
	 
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  
	

	 	                                      
;  
	 	                                      
;  
	 	                                      
;  

	 	3.3  	Is any treatment or processing of hazardous, infectious or radioactive wastes
currently conducted or proposed to be conducted on the premise? Yes( ) No ( )
	 
	 	   	If yes, please describe any existing or proposed treatment methods.
	 
	 	   	

	 	   	

	 	   	

	 	3.4  	Attach copies of any hazardous waste permits or licenses issued to your company
with respect to its operations on the premises.

2

 

	4.  	SPILLS

4.1 During the past year, have any spills or releases of hazardous materials occurred
on the premises?       Yes      (   )      No      (   )

     If so, please describe the spill and attach the results of any testing conducted to
determine the extent of such spills.

	 	   	

	 	   	

	 	   	

	 	4.2  	Were any agencies notified in connection with such spills?
     Yes (   )     No (   )

     If so, attach copies of any spill reports or other correspondence with regulatory
agencies.

	 	4.3  	Were any clean-up actions undertaken in connection with the spills?
     Yes      (   )      No      (   )

     If so, briefly describe the actions taken. Attach copies of any clearance letters
obtained from any regulatory agencies involved and the results of any final soil or
groundwater sampling done upon completion of the clean-up work.

	 	   	

	 	   	

	 	   	

	5.  	WASTEWATER TREATMENT/DISCHARGE 

	 	5.1  	Do you discharge industrial wastewater to:

	 	 	 	 	 
	

	 	                                      
;  storm drain?
	 	                                      
;  sewer?
	

	 	                                      
;  surface water?
	 	                                      
;  no industrial discharge

	 	5.2  	Is your industrial wastewater treated before discharge?     Yes      (   )     No      (   )
	 
	 	   	If yes, describe the type of treatment conducted.

	 	   	

	 	   	

	 	   	

5.3 Attach copies of any wastewater discharge permits issued to your company with
respect to its operations on the premises.

	6.  	AIR DISCHARGES.

	 	6.1  	Do you have any air filtration systems or stacks that discharge into the air?     Yes      (   )       No (   )
	 
	 	6.2  	Do you operate any equipment that require air emissions permits?       Yes      (   )     No      (   )
	 
	 	6.3  	Attach copies of any air discharge permits pertaining to these operations.

	7.  	HAZARDOUS MATERIALS DISCLOSURES.

7.1 Does your company handle an aggregate of at least 500 pounds, 55 gallons or
200 cubic feet of hazardous material at any given time?      Yes       (   )      No      (   )

7.2 Has your company prepared a Hazardous Materials Disclosure — Chemical
Inventory and Business Emergency Plan or similar disclosure document pursuant to state
or county requirements?      Yes       (   )     No      (   )

           If so, attach a copy.

3

 

	 	7.3  	Are any of the chemicals used in your operations regulated under Proposition 65?
	 
	 	   	If so, describe the procedures followed to comply with these requirements.

7.4 Is your company subject to OSHA Hazard Communication Standard
Requirements? Yes (   ) No (   )

               If so, describe the procedures followed to comply with these requirements.

	8.  	ANIMAL TESTING.

8.1 Does your company bring or intend to bring live animals onto the premises for
research or development purposes  Yes (   ) No (   )

               If so, describe the activity.

8.2 Does your company bring or intend to bring animal body parts or bodily fluids onto
the premises for research or development purposes? Yes (   ) No (   )

               If so, describe the activity.

	9.  	ENFORCEMENT ACTIONS, COMPLAINTS.

9.1 Has your company ever been subject to any agency enforcement actions,
administrative orders, lawsuits, or consent orders/decrees regarding environmental
compliance or health and safety? Yes (   ) No (   )

               If so, describe the actions and any continuing obligations imposed as a result of these
actions.

9.2 Has your company ever received any request for information, notice of violation or demand
letter, complaint, or inquiry regarding environmental compliance or
health and safety? Yes (   ) No (  )

9.3 Has an environmental audit ever been conducted which concerned operations or activities
on premises occupied by you? Yes (   ) No (   )

4

 

9.4 If you answered “yes” to any questions in this section, describe the environmental
action or complaint and any continuing compliance obligation imposed as a result of the same.

	 	   	

	 	   	

	 	   	

	 	   	

	 	 	 	 	 
	 	 	

	 	 	

	 
	

	 	By:
	 	                                      
;  
	

	 	 	 	Name:
                                        

	

	 	 	 	Title:
                                        

	

	 	 	 	Date:                                     
   

5

 

EXHIBIT C

LANDLORD’S
DISCLOSURES

 McCarthy Center

Tenant acknowledges the following disclosures by Landlord with respect to Hazardous Materials at
the Premises. Tenant agrees to comply with the precautionary requirements and other provisions, set
forth below, that are associated with these Hazardous Materials.

None.

 

 

EXHIBIT D

TENANT’S INSURANCE

     The following requirements for Tenant’s insurance shall be in effect at the Building, and
Tenant shall also cause any subtenant to comply with these requirements. Landlord reserves the
right to adopt reasonable nondiscriminatory modifications and additions to these insurance
requirements. Tenant agrees to obtain and present evidence to Landlord that it has fully complied
with the insurance requirements.

     1. Tenant shall, at its sole cost and expense, commencing on the date Tenant is given access
to the Premises for any purpose and during the entire Term, procure, pay for and keep in full force
and effect: (i)
commercial general liability insurance with respect to the Premises and the operations of or
on behalf of Tenant in,
on or about the Premises, including but not limited to coverage for personal injury,
independent contractors, broad
form property damage, fire and water legal liability, products liability (if a product is sold
from the Premises), and
liquor law liability (if alcoholic beverages are sold, served or consumed within the
Premises), which policy(ies) shall
be written on an “occurrence” basis and for not less than the amount set forth in Item 13 of
the Basic Lease
Provisions, with a combined single limit (with a $50,000 minimum limit on fire legal
liability) per occurrence for
bodily injury, death, and property damage liability, or the current limit of liability carried
by Tenant, whichever is
greater, and subject to such increases in amounts as Landlord may determine from time to time;
(ii) workers’
compensation insurance coverage as required by law, together with employers’ liability
insurance of at least One
Million Dollars ($1,000,000.00); (iii) with respect to Alterations and the like required or
permitted to be made by
Tenant under this Lease, builder’s risk insurance, in an amount equal to the replacement cost
of the work; (iv)
insurance against fire, vandalism, malicious mischief and such other additional perils as may
be included in a
standard “special form” policy, insuring Tenant’s Alterations, trade fixtures, furnishings,
equipment and items of
personal property of Tenant located in the Premises, in an amount equal to not less than
ninety percent (90%) of
their actual replacement cost (with replacement cost endorsement); and (v) business
interruption insurance in
amounts satisfactory to cover one (1) year of loss. In no event shall the limits of any
policy be considered as
limiting the liability of Tenant under this Lease.

     2. In the event Landlord consents to Tenant’s use, generation or storage of Hazardous
Materials on,
under or about the Premises pursuant to Section 5.3 of this Lease, Landlord shall have the
continuing right to require
Tenant, at Tenant’s sole cost and expense (provided the same is available for purchase upon
commercially
reasonable terms), to purchase insurance specified and approved by Landlord, with coverage not
less than Five
Million Dollars ($5,000,000.00), insuring (i) any Hazardous Materials shall be removed from
the Premises, (ii) the
Premises shall be restored to a clean, healthy, safe and sanitary condition, and (iii) any
liability of Tenant, Landlord
and Landlord’s officers, directors, shareholders, agents, employees and representatives,
arising from such Hazardous
Materials.

     3. All policies of insurance required to be carried by Tenant pursuant to this Exhibit
D containing a
deductible exceeding One Million Dollars ($1,000,000.00) per occurrence must be approved in
writing by Landlord
prior to the issuance of such policy. Tenant shall be solely responsible for the payment of
all deductibles.

     4. All policies of insurance required to be carried by Tenant pursuant to this Exhibit
D shall be
written by responsible insurance companies authorized to do business in the State of
California and with a general
policyholder rating of not less than “A-” and financial
rating of not less than “VIII” in the
most current Best’s
Insurance Report. Any insurance required of Tenant may be furnished by Tenant under any
blanket policy carried
by it or under a separate policy. A certificate of insurance, certifying that the policy has
been issued, provides the
coverage required by this Exhibit D and contains the required provisions, together
with endorsements acceptable to
Landlord evidencing the waiver of subrogation and additional insured provisions required
below, shall be delivered
to Landlord prior to the date Tenant is given the right of possession of the Premises. Proper
evidence of the renewal
of any insurance coverage shall also be delivered to Landlord not less than ten (10) days
prior to the expiration of
the coverage. Landlord may at any time, and from time to time, inspect any and all insurance
policies required by
this Lease.

     5. Each policy evidencing insurance required to be carried by Tenant pursuant to this
Exhibit D shall
contain the following provisions and/or clauses satisfactory to Landlord: (i) with respect to
Tenant’s commercial
general liability insurance, a provision that the policy and the coverage provided shall be
primary and that any
coverage carried by Landlord shall be noncontributory with respect to any policies carried by
Tenant, together with
a provision including Landlord, the Additional Insureds identified in Item 11 of the Basic
Lease Provisions, and any
other parties in interest designated by Landlord, as additional insureds; (ii) except with
respect to Tenant’s
commercial general liability insurance, a waiver by the insurer of any right to subrogation
against Landlord, its
agents, employees, contractors and representatives which arises or might arise by reason of
any payment under the
policy or by reason of any act or omission of Landlord, its agents, employees, contractors or
representatives; and
(iii) a provision that the insurer will not cancel or change the coverage provided by the
policy without first giving
Landlord thirty (30) days prior written notice.

     6. In the event that Tenant fails to procure, maintain and/or pay for, at the times and for
the durations
specified to this Exhibit D, any insurance required by
this Exhibit D, or
fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and pay the
premiums, in which event
Tenant shall repay Landlord all sums paid by Landlord, together with interest at the maximum
rate permitted by law
and any related costs or expenses incurred by Landlord, within ten (10) days following
Landlord’s written demand to
Tenant.

1

 

     NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST PROVIDE EVIDENCE
OF THE REQUIRED INSURANCE TO LANDLORD’S MANAGEMENT AGENT PRIOR TO BEING AFFORDED ACCESS TO THE
PREMISES.

2

 

EXHIBIT E

RULES AND REGULATIONS

     This Exhibit sets forth the rules and regulations governing Tenant’s use of the Premises
leased to Tenant pursuant to the terms, covenants and conditions of the Lease to which this
Exhibit is attached and therein made part thereof. In the event of any conflict or inconsistency
between this Exhibit and the Lease, the Lease shall control.

     1. Tenant shall not place anything or allow anything to be placed near the glass of any
window, door,
partition or wall, which may appear unsightly from outside the Premises.

     2. The walls, walkways, sidewalks, entrance passages, elevators, stairwells, courts and
vestibules
shall not be obstructed or used for any purpose other than ingress and egress of pedestrian
travel to and from the
Premises, and shall not be used for smoking, loitering or gathering, or to display, store or
place any merchandise,
equipment or devices, or for any other purpose. The walkways, sidewalks, entrance passageways,
courts, vestibules
and roof are not for the use of the general public and Landlord shall in all cases retain the
right to control and
prevent access thereto by all persons whose presence in the judgment of the Landlord shall be
prejudicial to the
safety, character, reputation and interests of the Building and its tenants, provided that
nothing herein contained shall
be construed to prevent such access to persons with whom Tenant normally deals in the ordinary
course of Tenant’s
business unless such persons are engaged in illegal activities. Smoking is permitted outside
the building and within
the project only in areas designated by Landlord. No tenant or employee or invitee or agent of
any tenant shall be
permitted upon the roof of the Building without prior written approval from Landlord.

     3. No awnings or other projection shall be attached to the outside walls of the Building. No
security
bars or gates, curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any
window or door of the Premises without the prior written consent of Landlord. Neither the
interior nor exterior of
any windows shall be coated or otherwise sunscreened without the express written consent of
Landlord.

     4. Tenant shall not mark, nail, paint, drill into, or in any way deface any part of the
Premises or the
Building except to affix standard pictures or other wall hangings on the interior walls of the
premises so long as they
are not visible from the exterior of the building. Tenant shall not lay linoleum, tile,
carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any manner except
as approved by Landlord
in writing which approval shall not be unreasonably withheld, conditioned or delayed. The
expense of repairing any
damage resulting from a violation of this rule or removal of any floor covering shall be borne
by Tenant.

     5. The toilet rooms, urinals, wash bowls and other plumbing apparatus shall not be used for
any
purpose other than that for which they were constructed and no foreign substance of any kind
whatsoever shall be
thrown therein. Any pipes or tubing used by Tenant to transmit water to an appliance or device
in the Premises must
be made of copper or stainless steel, and in no event shall plastic tubing be used for that
purpose. The expense of
any breakage, stoppage or damage resulting from the violation of this rule shall be borne by
the tenant who, or
whose employees or invitees, caused it.

     6. Landlord shall direct electricians as to the manner and location of any future telephone
wiring. No
boring or cutting for wires will be allowed without the prior consent of Landlord which
approval shall not be
unreasonably withheld, conditioned or delayed. The locations of the telephones, call boxes
and other office
equipment affixed to the Premises shall be subject to the prior written approval of Landlord
which approval shall not
be unreasonably withheld, conditioned or delayed.

     7. The Premises shall not be used for manufacturing or for the storage of merchandise except
as such
storage may be incidental to the permitted use of the Premises. No exterior storage shall be
allowed at any time
without the prior written approval of Landlord. The Premises shall not be used for cooking
(except for the type of
cooking normally conducted in similar office projects) or washing clothes without the prior
written consent of
Landlord, or for lodging or sleeping or for any immoral or illegal purposes.

     8. Tenant shall not make, or permit to be made, any unseemly or disturbing noises or disturb
or
interfere with occupants of this or neighboring buildings or premises or those having business
with them, whether by
the use of any musical instrument, radio, phonograph, noise, or otherwise. Tenant shall not
use, keep or permit to be
used, or kept, any foul or obnoxious gas or substance in the Premises or permit or suffer the
Premises to be used or
occupied in any manner offensive or objectionable to Landlord or other occupants of this or
neighboring buildings
or premises by reason of any odors, fumes or gases.

     9. No animals, except for seeing eye dogs, shall be permitted at any time within the
Premises.

     10. Tenant shall not use the name of the Building or the Project in connection with or in
promoting or
advertising the business of Tenant, except as Tenant’s address, without the written consent of
Landlord. Landlord
shall have the right to prohibit any advertising by any Tenant which, in Landlord’s reasonable
opinion, tends to
impair the reputation of the Project or its desirability for its intended uses, and upon
written notice from Landlord
any Tenant shall refrain from or discontinue such advertising.

     11. Canvassing, soliciting, peddling, parading, picketing, demonstrating or otherwise engaging
in any
conduct that unreasonably impairs the value or use of the Premises or the Project are
prohibited and each Tenant
shall cooperate to prevent the same. Landlord shall have full and absolute authority to
regulate or prohibit the

1

 

entrance to the Premises of any vendor, supplier, purveyor, petitioner, proselytizer or other
similar person if, in the good faith judgment of Landlord, such person will be involved in general
solicitation activities, or the proselytizing, petitioning, or disturbance of other tenants or
their customers or invitees, or engaged or likely to engage in conduct which may in Landlord’s
opinion distract from the use of the Premises for its intended purpose. Notwithstanding the
foregoing, Landlord reserves the absolute right and discretion to limit or prevent access to the
Buildings by any food or beverage vendor, whether or not invited by Tenant, and Landlord may
condition such access upon (he vendor’s execution of an entry permit agreement which may contain
provisions for insurance coverage and/or the payment of a fee to Landlord.

     12. No equipment of any type shall be placed on the Premises which in Landlord’s reasonable
opinion
exceeds the load limits of the floor or otherwise threatens the soundness of the structure or
improvements of the
Building.

     13. Regular building hours of operation are from 6:00 AM to 6:00 PM Monday through Friday and
9:00 AM to 1:00 PM on Saturday. No air conditioning unit or other similar apparatus shall be
installed or used by
any Tenant without the prior written consent of Landlord which approval shall not be
unreasonably withheld,
conditioned or delayed.

     14. The entire Premises, including vestibules, entrances, doors, fixtures, interior windows
and plate
glass, shall at all times be maintained in a safe, neat and clean condition by Tenant. All
trash, refuse and waste
materials shall be regularly removed from the Premises by Tenant and placed in the containers
at the locations
designated by Landlord for refuse collection. All cardboard boxes must be “broken down” prior
to being placed in
the trash container. All styrofoam chips must be bagged or otherwise contained prior to
placement in the trash
container, so as not to constitute a nuisance. Pallets must be immediately disposed of by
tenant and may not be
disposed of in the Landlord provided trash container or enclosures. Pallets may be neatly
stacked in an exterior
location on a temporary basis (no longer than 5 days) so long as Landlord has provided prior
written approval. The
burning of trash, refuse or waste materials is prohibited.

     15. Tenant shall use at Tenant’s cost such pest extermination contractor as Landlord may
direct and at
such intervals as Landlord may reasonably require.

     16. All
keys for the Premises shall be provided to Tenant by Landlord and Tenant shall return
to
Landlord any of such keys so provided upon the termination of the Lease. Tenant shall not
change locks or install
other locks on doors of the Premises, without the prior written consent of Landlord. In the
event of loss of any keys
furnished by Landlord for Tenant, Tenant shall pay to Landlord the costs thereof. Upon the
termination of its
tenancy, Tenant shall deliver to Landlord all the keys to lobby(s), suite(s) and telephone &
electrical room(s) which
have been furnished to Tenant or which Tenant shall have had made.

     17. No person shall enter or remain within the Project while intoxicated or under the
influence of
liquor or drugs. Landlord shall have the right to exclude or expel from the Project any person
who, in the absolute
discretion of Landlord, is under the influence of liquor or drugs.

     18. The moving of large or heavy objects shall occur only between the persons employed to move
those objects in or out of the Building must be reasonably acceptable to Landlord. Without
limiting the generality of
the foregoing, no freight, furniture or bulky matter of any description shall be received into
or moved out of the
lobby of the Building or carried in the elevator.

     19. Tenant shall not install equipment, such as but not limited to electronic tabulating or
computer
equipment, requiring electrical or air conditioning service in excess of that to be provided
by Landlord under the
Lease without prior written consent of Landlord which approval shall not be unreasonably
withheld, conditioned or
delayed.

     20. Landlord may from time to time grant other tenants of the project individual and temporary
variances from these Rules, provided that any variance does not have a material adverse effect
on the use and
enjoyment of the Premises by Tenant.

     21. Landlord reserves the right to amend or supplement the foregoing Rules and Regulations and
to
adopt and promulgate additional rules and regulations applicable to the Premises provided such
amendment or
supplements do not materially increase Tenant’s obligations or decrease Tenant’s rights under
this Lease. Notice of
such rules and regulations and amendments and supplements thereto, if any, shall be given to
the Tenant.

2

 

EXHIBIT X

WORK LETTER 

(Tenant Buildout with Landlord’s Contribution)

	 	1.  	TENANT IMPROVEMENTS. The tenant improvement work (“Tenant Improvements”) shall consist of the work
required to complete certain improvements to the Premises pursuant to
approved ” Working Drawings
and Specifications” (as defined below). Tenant shall employ Gensler & Associates (the
“Architect”) for preparation of the Preliminary Plan and Working Drawings and Specifications (as
hereinafter defined), and shall cause the Architect to inspect the Premises to become acquainted
with all existing conditions. Tenant shall contract with San Jose Construction Co., Inc. (the ‘TI
Contractor”) , to construct the Tenant Improvements at Tenant’s sole cost and expense, subject to
Article II below. The Tenant Improvements work shall be undertaken and prosecuted in accordance
with the following requirements:

	 	a.  	Tenant and Landlord have approved both (i) a detailed space plan for the Premises, prepared
by the Architect, a copy of which is attached hereto as Exhibit X-1 (“Preliminary
Plan”), and (ii) an estimate, itemized by discipline, materials and labor, of the
cost to complete the Tenant Improvements in accordance with the Preliminary Plan
(“Preliminary Cost Estimate”), which Preliminary Cost Estimate is attached hereto
as Exhibit X-2. Within three (3)days after the date of this Work Letter, Tenant
shall cause the Architect to prepare working drawings and specifications based on
the approved Preliminary Plan (the “Working Drawings and
Specifications”), and any change proposed by Tenant to the approved Working
Drawings and Specifications (“Change”). Within three (3) business days
following its submission to Landlord, Landlord shall approve (by signing a copy
thereof) or shall disapprove the Working Drawings and Specifications and/or the
Change. If Landlord disapproves the Working Drawings and Specifications or Change
as a result of a failure of the foregoing to comply with the Preliminary Plan,
Landlord shall specify in detail the reasons for disapproval and Tenant shall cause
the Architect to modify Ihe Working Drawings and Specifications or Change to
incorporate Landlord’s suggested revisions in a mutually satisfactory manner.
Tenant agrees and acknowledges that Landlord will not check the Preliminary Plan,
the Working Drawings and Specifications and/or any Change for building code
compliance (or other federal, state or local law, ordinance or regulations compliance),
and that Tenant and its Architect shall be solely responsible for such matters.
	 
	 	b.  	It is understood that except as provided below, the Tenant Improvements shall only include
actual improvements to the Premises set forth in the Preliminary Plan or the
approved Working Drawings and Specifications, and shall exclude (but not by way
of limitation) Tenant’s furniture, trade fixtures, partitions, equipment and
signage improvements, if any. Further, the Tenant Improvements shall incorporate
Landlord’s building standard materials and specifications (“Standards”). All aspects of
the Preliminary Plan are considered Standards for purposes of this Work Letter.
No deviations from the Standards may be required by Tenant with respect to doors
and frames, finish hardware, entry graphics, the ceiling system, light fixtures
and switches, mechanical systems, life and safety systems, and/or window
coverings; provided that Landlord may, in its sole discretion, authorize in writing one
or more of such deviations, in which event Tenant shall be solely responsible for
the cost of replacing same with the applicable Standard item(s) upon the
expiration or termination of this Lease. All non- standard items (“Non-Standard
Improvements”) and Changes to the Preliminary Plan or Working Drawings and
Specifications that are not customarily included in Landlord’s tenant improvements
of other premises located in the Project shall be considered Non-Standard
Improvements and shall be subject to the prior approval of Landlord, which may be
withheld in Landlord’s sole discretion. Landlord shall in no event be required to
approve any Non-Standard Improvement if Landlord determines that such
improvements (i) is of a lesser quality than the corresponding Standard, (ii)
fails to conform to applicable governmental requirements, (iii) requires building
services beyond the level

Exhibit X

Page 1 of 5

 

	 	   	Landlord has agreed to provide Tenant under this Lease, or (iv) would have an adverse
aesthetic impact from the exterior of the Premises.
	 
	 	c.  	Tenant shall submit the approved Working Drawings and Specifications to the TI Contractor,
who shall be the general contractor hired to construct the Tenant Improvements.
TI Contractor shall solicit bids from at least three (3) subcontractors for each
major trade, provided that, a bidding process shall not be required with respect
to mechanical, electrical and plumbing. All subcontractors shall be subject to
Landlord’s reasonable approval. Tenant shall provide copies of the bid responses to
Landlord. Tenant shall enter into a “lump sum” construction contract (the “TI
Contract”) with the TI Contractor for construction of the Tenant Improvements. If
requested by Landlord, Tenant shall deliver a copy of the TI Contract to
Landlord. Tenant shall cause the Tenant Improvements work to be constructed in
a good and workmanlike manner in accordance with the approved Working Drawings
and Specifications.
	 
	 	d.  	Prior to the commencement of the Tenant Improvements work, Tenant shall deliver to Landlord a
copy of the final application for permit and issued permit for the work.
	 
	 	e.  	The TI Contractor and each of its subcontractors shall comply with landlord’s requirements
as generally imposed on third party contractors, including without limitation all
insurance coverage requirements and the obligation to furnish appropriate
certificates of insurance to Landlord, prior to commencement of construction or
the Tenant Improvements work.
	 
	 	f.  	A construction schedule shall be provided to Landlord prior to commencement of the
construction of the Tenant Improvements work, and weekly updates shall be
supplied during the progress of the work; provided however, that the completion
of the Tenant Improvements shall not be a condition of, or affect, the
Commencement Date of this Lease.
	 
	 	g.  	Tenant shall give Landlord ten (10) days prior written notice of the commencement of
construction of the Tenant Improvements work so that Landlord may cause an
appropriate notice of non-responsibility to be posted.
	 
	 	h.  	The Tenant Improvements work shall be subject to inspection at all times by Landlord and its
construction manager, and Landlord and/or its construction manager shall be permitted to
attend weekly job meetings with the TI Contractor.
	 
	 	i.  	Tenant shall apply and pay for all utility services required for the Tenant Improvements
work.
	 
	 	j.  	Upon completion of the work, Tenant shall cause to be provided to Landlord (i) as-built
drawings of the Tenant Improvements work signed by the Architect, (ii) CADD tapes of the
improved space compatible with Landlord’s CADD system, (iii) a final punch list signed by
Tenant, (iv) final and unconditional lien waivers from the TI Contractor and all
subcontractors, (v) a duly recorded notice of completion of the improvement work, and (vi) a
certificate of occupancy for the Premises (collectively, the “Close-Out Package”).
	 
	 	k.  	The Tenant Improvements work shall be prosecuted at all times in accordance with all state,
federal and local laws, regulations and ordinances, including without limitation all OSHA and
other safety laws, the Americans with Disabilities Act (“ADA”) and all applicable
governmental permit and code requirements,
	 
	 	l.  	All of the provisions of this Lease (including, without limitation, the provisions of
Sections 7.4, 10.1 and 10.3) shall apply to, and shall be binding on Tenant with respect to,
the construction of the Tenant Improvements.

Exhibit X

Page 2 of 5

 

	 	m.  	Landlord shall permit Tenant and its contractors to enter the Premises prior to the
Commencement Date of the Lease in order that Tenant may construct the Tenant
Improvements in the Premises through Tenant’s own contractors prior to the Commencement
Date. The foregoing license to enter the Premises prior to the Commencement Date is,
however, conditioned upon the compliance by Tenant’s contractors with all requirements
imposed by Landlord on third party contractors, including without limitation the
maintenance by Tenant and its contractors and subcontractors of workers’ compensation
and public liability and property damage insurance in amounts and with companies and on
forms satisfactory to Landlord, with certificates of such insurance being furnished to
landlord prior to proceeding with any such entry. The entry shall be deemed to be under
all of the provisions of the Lease. Landlord shall not be liable in any way for any
injury, loss or damage which may occur to any such work being performed by Tenant, the
same being solely at Tenant’s risk.
	 
	 	n.  	Tenant hereby designates Don Higbee and Mark Avila (“Tenant’s Construction
Representatives”), Telephone Nos. (408) 433-8140 and (408) 433-8284, each as its
representative and agent for all matters related to the Tenant Improvements, including
but not by way of limitation, for purposes of receiving notices, approving submittals
and issuing requests for Changes, and Landlord shall be entitled to rely upon
authorizations and directives of such person(s) as if given directly by Tenant. The
foregoing authorization is intended to provide assurance to Landlord that it may rely
upon the directives and decision making of the Tenant’s Construction Representatives
with respect to the Tenant Improvement and is not intended to limit or reduce
Landlord’s right to reasonably rely upon any decisions or directives given by other
officers or representatives of Tenant. Tenant may amend the designation of its
Tenant’s Construction Representative(s) at any time upon delivery of written notice to
Landlord.
	 
	 	o.  	 Landlord hereby designates Steve Aldapa (“Landlord’s Construction
Representative”), Telephone No. (310) 996-0202 as its representative and agent for
all matters related to the Tenant Improvements, including but not by way of
limitation, for purposes of receiving notices, approving submittals and Changes, and
Tenant shall be entitled to rely upon authorizations and directives of such person(s)
as if given directly by Landlord. The foregoing authorization is intended to provide
assurance to Tenant that it may rely upon the directives and decision making of the
Landlord’s Construction Representative with respect to the Tenant Improvements and is
not intended to limit or reduce Tenant’s right to reasonably rely upon any
decisions or directives given by other officers or representatives of Landlord.
Landlord may amend the designation of its Landlord’s Construction Representative(s)
at any time upon delivery of written notice to Tenant.

	 	II.  	COST OF THE TENANT IMPROVEMENTS WORK

	 	a.  	Subject to Section II(d) below, Landlord shall provide to Tenant a tenant
improvement allowance in the amount of Six Hundred Forty Thousand Four
Hundred Forty Dollars ($640,440.00) (the
“Landlord’s Contribution”) based on Twenty Seven Dollars ($27.00)
per usable square foot of the Premises, with any excess cost of the Tenant
Improvements in accordance with the approved Working Drawings
and Specifications, to be borne solely by Tenant. It is further understood
and agreed that Landlord’s construction manager shall be entitled to a
supervision/administrative fee equal to five percent (5%) of the cost of
the Tenant Improvements work (not to exceed thirty thousand dollars ($30,000), which
fee shall be paid from the Landlord’s Contribution. If the actual cost
of completion of the Tenant Improvements is less than the maximum amount
provided for the Landlord’s Contribution and the Additional Landlord
Funding, such savings shall inure to the benefit of Landlord and Tenant shall
not be entitled to any credit or payment.
	 
	 	b.  	Landlord shall pay the Landlord’s Contribution and the Additional Landlord
Funding (defined in Section II(d) below), provided Tenant has elected to
exercise its right to the Additional Landlord Funding, in whole or in part
to Tenant or Tenant’s designee within twenty (20) days in accordance
with the following:

Exhibit X

Page 3 of 5

 

	 	i.  	Tenant must deliver to Landlord an invoice(s) with appropriate backup
documents for the work performed that Tenant desires to be paid by the
Landlord’s Contribution and/or Additional Landlord Funding.
	 
	 	ii.  	Within twenty (20) days of Landlord’s receipt of such
invoice(s) and backup documents, Landlord shall pay Tenant or Tenant’s
designee a portion of the Landlord’s Contribution and/or Additional Landlord
Funding sufficient to pay the invoice in full (unless the amount claimed under
the invoice(s) exceeds the Landlord’s Contribution and/or the Additional
Landlord Funding). Notwithstanding the foregoing, Landlord may retain ten
percent (10%) of all invoiced amounts until Tenant submits the Close-Out
Package to Landlord at which point Landlord shall pay Tenant any retained
portions of the Landlord’s Contribution and Additional Landlord Funding within
twenty (20) days.
	 
	 	iii.  	Tenant may only request payments by Landlord from the
Landlord’s Contribution and the Additional Landlord Funding once construction
of the Tenant Improvements has been at least fifty percent (50%) completed
and once construction of the Tenant Improvements has been substantially
completed.

	 	c.  	It is understood that the foregoing Tenant Improvements may be done during
Tenant’s occupancy of the Premises and, in this regard, Tenant agrees to
assume any risk of injury, loss or damage which may result (unless caused
by the willful misconduct of Landlord or Landlord’s authorized
employees, agents or contractors). Tenant further agrees that it shall be
solely responsible for relocating its office equipment and furniture in
the Premises in order for the foregoing Tenant Improvements to
be completed in the Premises, that the Commencement Date of the Lease is
not conditioned upon nor shall such Commencement Date be extended by the
completion of the foregoing Tenant Improvements, and that no rental
abatement shall result while the foregoing Tenant Improvements are completed in
the Premises. It is further understood and agreed that the Tenant
Improvements shall be scheduled and shall be substantially completed not
later than February 10, 2005, to be eligible for funding by Landlord, and
that Landlord shall not be obligated to fund any Tenant Improvements commenced after
such date.
Notwithstanding the foregoing, each day after the deadline set forth in Section l(a)
above that Landlord fails to deliver its approval or disapproval shall delay the date
set forth in Section 3.1 (c) of the Lease by one (1) day.
	 
	 	d.  	If requested by Tenant, Landlord shall fund the additional costs related to
the Tenant Improvements in excess of Landlord’s Contribution by up to an
additional Three Dollars ($3.00) per useable square foot (for a total
additional funding of up to Seventy One Thousand One Hundred Sixty Dollars
($71,160.00) (“Additional Landlord Funding”). To the extent of the
Additional Landlord Funding, Basic Rent shall increase, retroactive to
the Commencement Date of this Lease, by an amount equal to the
Additional Landlord Funding plus interest at the annual rate of eight
percent (8%) amortized equally over the first sixty (60) months of the
Lease. Upon request by Landlord, the amount of such rental adjustment
shall be memorialized in a form provided by Landlord. In the event that
the amount of the rental adjustment is finally determined subsequent to
the Commencement Date, Tenant shall promptly pay to Landlord a lump sum
amount equal to the total accrued sums owing due to the retroactive adjustment.

	 	III.  	DISPUTE RESOLUTION

	 	a.  	All claims or disputes between Landlord and Tenant arising out of, or relating
to, this Work Letter shall be decided by the JAMS/ENDISPUTE (“JAMS”), or its
successor, with such arbitration to be held in Santa Clara County, California, unless
the parties mutually agree otherwise. Within ten (10) business days following
submission to JAMS, JAMS shall designate three arbitrators and each party may, within
five (5) business days thereafter, veto one of the three persons so designated. If two
different designated arbitrators have been vetoed, the third arbitrator shall hear and
decide the matter. If less than two (2) arbitrators are timely vetoed, JAMS shall
select a single arbitrator from the non-vetoed

Exhibit X

Page 4 of 5

 

	 	   	arbitrators originally designated by JAMS, who shall hear and decide the matter.
Any arbitration pursuant to this section shall be decided within thirty (30) days of submission
to JAMS. The decision of the arbitrator shall be final and binding on the parties. All costs
associated with the arbitration shall be awarded to the prevailing party as determined by the
arbitrator.
	 
	 	b.  	Notice of the demand for arbitration by either party to the Work Letter shall be filed in
writing with the other party to the Work Letter and with JAMS and shall be made
within a reasonable time after the dispute has arisen. The award rendered by the
arbitrator shall be final, and judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof. Except by
written consent of the person or entity sought to be joined, no arbitration
arising out of or relating to this Work Letter shall include, by consolidation,
joinder or in any other manner, any person or entity not a party to the Work
Letter unless (1) such person or entity is substantially involved in a
common question of fact or law, (2) the presence of such person or entity is
required if complete relief is to be accorded in the arbitration, or (3) the
interest or responsibility of such person or entity in the matter is not
insubstantial.
	 
	 	c.  	The agreement herein among the parties to arbitrate shall be specifically enforceable under
prevailing law. The agreement to arbitrate hereunder shall apply only to disputes
arising out of, or relating to, this Work Letter, and shall not apply to other
matters of dispute under the Lease except as may be expressly provided in the
Lease.

Exhibit X

Page 5 of 5

 

 

 

 

 

EXHIBIT X-2

APPROVED PRELIMINARY COST ESTIMATE

[SEE ATTACHED]

Exhibit X-2

Page 1 of 1

 

San Jose Construction
Co., Inc.

General Contractors

September 8, 2004

LSI LOGIC

1551 Mc Carthy Blvd., D-129

Milpitas, CA 95035

(408) 433-8140 Fax (408) 433-7484

	 	 	 
	Attn:

	 	Mr. Don Higbee
	Ref:

	 	ENGENIO – 670 N. MC CARTHY BLVD., MILPITAS, CA

	Subj.

	 	Preliminary Budget Proposal

Dear Don:

San Jose Construction Co., Inc. is pleased to submit for your review our preliminary budget
construction proposal for the above referenced property. Our ability to successfully coordinate and
construct these improvements is based upon the extensive experience of our project management team
and our ability to work with and coordinate a blend of the most proficient subcontractors in the
Silicon Valley. The following is the lists the drawings for which our proposal is based upon:

	 	 	 	 	 
	Drawings provided by Gensler:	 	 	 
	M670.100.FP

	 	Construction Plan – First Floor
	 	Dated 08/20/04
	M670.100.PC

	 	Power & Communication Plan – First Floor
	 	Dated 08/20/04
	M670.100.RC

	 	Reflective Ceiling Plan – First Floor
	 	Dated 08/20/04
	M670.200.FP

	 	Construction Plan – Second Floor
	 	Dated 08/12/04
	M670.200.PC

	 	Power & Communication Plan
– Second Floor
	 	Dated 08/12/04
	M670.200.RC

	 	Reflective Ceiling Plan – Second Floor
	 	Dated 08/12/04

TOTAL SUM.........$1,189,313.00

The following items have been EXCLUDED from our proposal:

	•  	Leveling and scraping of existing concrete floors by others
	 
	•  	Any work not specifically listed in our cost
breakdown
	 
	•  	Drywall patch to existing
walls not under construction
	 
	•  	Any
work to existing lobby, stairs or restroom cores
	 
	•  	Paging system, telephone system & data cabling
	 
	•  	Structural engineering or calculations
	 
	•  	City and fire department corrections
	 
	•  	Any work to existing HVAC units
	 
	•  	Relocation of rain water leaders
	 
	•  	P.G. & E. feeds & patching
	 
	•  	Testing and inspection

 

 

LSI LOGICS

Page 2 of 2

The following items have been EXCLUDED from our proposal:

	w  	Corian or granite counter tops
	 
	w  	Overtime/standby time
	 
	w  	Any work to the site
	 
	w  	Security system
	 
	w  	Spiral ductwork
	 
	w  	Card readers
	 
	w  	Appliances
	 
	w  	Signage
	 
	w  	Permits

The following items are ALTERNATES to our proposal:

	w  	Upgrade hard surfaces for millwork, i.e. corian or granite, scope TBD (Allowance) ADD:
17,500.00

We are confident that we can provide you with the most effective, cost conscious and motivated
contracting team for this project.

We look forward to teaming with you, and will make every effort to ensure that the facility is
completed in a timely manner and to your total satisfaction.

Sincerely,

SAN JOSE CONSTRUCTION CO., INC.

[ILLEGIBLE]

Fran Conte
jt:
lsimccarthyprop

 

 

SAN JOSE CONSTRUCTION CO., INC.

9/8/04

LSI LOGIC

670 NORTH MCCARTHY BLVD BLDG 8

MILPITAS , CA

PRELIMINARY BUDGET

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	23,020	 	 	 	 
	COST CODE	 	DESCRIPTION	 	TOTAL	 	SQ.FT	 	SUBCONTRACTOR	 	 
	11200

	 	GENERAL CONDITIONS
	 	 	67,600	 	 	 	2.94	 	 	SJC	 	 
	17100

	 	PROGRESSIVE CLEAN UP (SJC)
	 	 	2,650	 	 	 	0.12	 	 	SJC	 	 
	17150

	 	FINAL CLEAN UP 	 	 	4,000	 	 	 	0.17	 	 	NOR CAL	 	 
	17600

	 	BLUEPRINTS (ALLOWANCE)
	 	 	850	 	 	 	0.04	 	 	SJC	 	 
	20700

	 	FLOOR CORING (ALLOWANCE)
	 	 	650	 	 	 	0.03	 	 	SJC	 	 
	20770

	 	INTERIOR DEMO @ LOBBY
	 	 	1,200	 	 	 	0.05	 	 	SJC	 	 
	61100

	 	MISC. CARPENTRY (40HRS)
	 	 	2,280	 	 	 	0.10	 	 	SJC	 	 
	62000

	 	MILLWORK
	 	 	74,500	 	 	 	3.24	 	 	SCL	 	 
	62002

	 	MILLWORK (RECEPTION DESK ALLOWANCE)
	 	 	20,000	 	 	 	0.87	 	 	SCL	 	 
	72000

	 	WALL INSULATION
	 	 	7,627	 	 	 	0.33	 	 	SCL	 	 
	75100

	 	ROOF PATCH (ALLOWANCE)
	 	 	1,500	 	 	 	0.07	 	 	KINGS ROOFING	 	 
	82000

	 	DOORS, FRAME & HARDWARE & SIDELITES
	 	 	56,676	 	 	 	2.46	 	 	TRIM TECH	 	 
	88000

	 	GLASS & GLAZING
	 	 	35,800	 	 	 	1.56	 	 	GRAND PRIX	 	 
	88000

	 	GLASS & GLAZING (STACKING DOOR)
	 	 	16,000	 	 	 	0.70	 	 	GRAND PRIX	 	 
	88000

	 	REMOVE & REPLACE EXT GLAZING (STOCKING)
	 	 	2,880	 	 	 	0.13	 	 	GRAND PRIX	 	 
	88001

	 	ALUMINUM SILL CAP @ EXTERIOR FURRED WAL	 	 	 	 	 	 	 	 	 	 	 	 
	92500

	 	DRYWALL & FRAME
	 	 	118,535	 	 	 	5.15	 	 	ERIC STARK	 	 
	95000

	 	ACOUSTICAL CEILING
	 	 	45,890	 	 	 	1.99	 	 	CAM ACOUSTICS	 	 
	96800

	 	FLOOR COVER
	 	 	52,232	 	 	 	2.27	 	 	PRESTON HOLMES	 	 
	96800

	 	ACCENT CARPET @ 6 LOCATIONS (ALLOW)
	 	 	7,000	 	 	 	0.30	 	 	PRESTON HOLMES	 	 
	99000

	 	PAINTING
	 	 	15,325	 	 	 	0.67	 	 	BURDICK PAINTING	 	 
	101100

	 	WALLTALKERS @ CONF RMS
	 	 	0	 	 	 	0.00	 	 	PSI	 	 
	105200

	 	FIRE EXTINGUISHERS
	 	 	1,500	 	 	 	0.00	 	 	SJC	 	 
	111300

	 	PROJECTIONS SCREENS
	 	 	18,738	 	 	 	0.00	 	 	PSI	 	 
	125100

	 	WINDOW COVER (ALLOWANCE)
	 	 	16,000	 	 	 	0.00	 	 	PENINSULATORS
	 	
	153000

	 	FIRE SPRINKLERS
	 	 	32,250	 	 	 	1.40	 	 	BROUGHTON	 	 
	154000

	 	PLUMBING & CONDENSATE
	 	 	14,560	 	 	 	0.63	 	 	METRO	 	 
	155000

	 	HVAC
	 	 	218,650	 	 	 	9.50	 	 	CAL-AIR	 	 
	155001

	 	HVAC CONTROLS (ASI)
	 	 	76,111	 	 	 	3.31	 	 	AIR SYSTEMS	 	 
	160000

	 	ELECTRICAL
	 	 	209,920	 	 	 	9.12	 	 	MID-STATE	 	 
	160001

	 	FIRE ALARM (ALLOWANCE)
	 	 	7,125	 	 	 	0.31	 	 	MID-STATE	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	SUBTOTAL
	 	 	1,138,099	 	 	 	49.44	 	 	 	 	 
	

	 	GENERAL CONTRACTOR OH&P
	 	 	45,524	 	 	 	198	 	 	 	 	 
	

	 	INSURANCE
	 	 	5,690	 	 	 	0.25	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	PROJECT TOTAL
	 	 	1,189,313	 	 	 	51.66	 	 	 	 	 

 

 

EXHIBIT Y

Project Site
Plan

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}]]