Document:

Exhibit 10.1

 

EXECUTION VERSION

 

Wachovia
Bank, National Association

One Wachovia Center, 5th Floor

301 S. College Street, NC 0537

Charlotte, North Carolina 28288-0537

 

as of June 30,
2005

 

MedQuest, Inc.

4300 North Point Parkway

Alpharetta, Georgia 30022

Attn:       John Haggerty

 Chief Financial
Officer

 

RESTATED AMENDMENT
TO THIRD LIMITED WAIVER

 

Dear Mr. Haggerty:

 

This Restated Amendment
to Third Limited Waiver (this “Restated Letter Agreement”) makes reference
to that certain Amended and Restated Credit Agreement,
dated as of September 3, 2003 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among MQ
ASSOCIATES, INC., a Delaware corporation (“Holdings”), MEDQUEST, INC., a
Delaware corporation (the “Borrower”), the lenders from time to time
party thereto (the “Lenders”), and WACHOVIA BANK, NATIONAL ASSOCIATION (“Wachovia”),
as administrative agent for the Lenders (in such capacity, the “Administrative
Agent”).

 

Reference is also made to
that certain Third Limited Waiver dated as of May 13, 2005 (the “Third
Waiver”) among Holdings, the Borrower, the Lenders party thereto and the
Administrative Agent.  Capitalized terms
used herein without definition shall have the meanings given to them in the
Third Waiver.

 

The parties hereby agree
that, upon the occurrence of the Effective Date (as defined below) hereof:

 

(a)           Section 1(i)(II) of the Third
Waiver is hereby deleted in its entirety and the following new Section 1(i)(II)
shall be inserted in lieu thereof:

 

“(II) one or more
Defaults and/or Events of Default that have occurred and may be continuing, or
that may occur, with respect to (x) the covenants contained in Section 7.1
of the Credit Agreement as of and for the period ended June 30, 2005, (y) the
covenants to deliver a copy of the unaudited consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of the fiscal

 

1

 

quarter ended on March 31,
2005 and June 30, 2005, and the related unaudited consolidated statements
of income and cash flows for such fiscal quarters and the portions of the
fiscal year through the end of such fiscal quarters, within 45 days after the
end of such fiscal quarters, as required by Section 6.1(b) of the
Credit Agreement, and/or (z) the failure to give notice of any such Default
and/or Event of Default listed in clauses (x) and (y) or any representation or
warranty made or deemed made by Holdings and the Borrower that no such Default
and/or Event of Default has occurred ((I) and (II), collectively, the “Third
Waiver Specified Defaults”) and” ;

 

(b)           the proviso to Section 1 of the
Third Waiver shall be amended by deleting the date “June 30, 2005” and inserting
the date “August 13, 2005” in lieu thereof; and

 

(c)           Section 2 of the Third Waiver
shall be amended by deleting the reference to “Section 2(a)” appearing
therein and inserting a reference to “Section 1” in lieu thereof.

 

This Restated Letter Agreement shall become effective
upon the occurrence of each of the following (the “Effective Date”):  (a) the Administrative Agent shall have
received a duly executed counterpart of this letter agreement from Holdings, the
Borrower and the Required Lenders; and (b) the Administrative Agent shall
have been paid or reimbursed for all fees and expenses due and owing to the Administrative
Agent to the extent invoiced prior to July 29, 2005, including, without
limitation, reimbursement for all legal fees and expenses of Morgan, Lewis &
Bockius LLP incurred by the Administrative Agent.

 

Nothing in this Restated Letter Agreement shall be
construed as a waiver or modification of, any other term or condition of the
Credit Agreement or any of the instruments or agreements referred to therein or
to prejudice the right or rights which the Administrative Agent or the Lenders
may now have or may have in the future under or in connection with the Credit
Agreement or any of the instruments or agreements referred to therein.  The Credit Agreement and all of the other
related documents, agreements and instruments shall remain in full force and
effect and are hereby ratified and confirmed in all respects.

 

This Restated Letter
Agreement supersedes in its entirety the Amendment to Third Limited Waiver
dated as of June 30, 2005 among the Borrower, Holdings, the Administrative
Agent and the Required Lenders.

 

2

 

This Restated Letter Agreement shall be construed in
accordance with the laws (without regard to the conflict of laws provisions) of
the State of New York, but giving effect to federal laws applicable to national
banks.

 

This Restated Letter Agreement may be executed by one
or more of the parties on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this letter
agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.

 

[Remainder
of page left blank intentionally]

 

3

 

Please acknowledge receipt of this Restated Letter
Agreement and confirm your consent to the foregoing by signing below, and
returning a copy of this Restated Letter Agreement to Lauren A. Scher, Esq.
at Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York
10178 by 5:00 p.m., New York City time, on July 29,
2005.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as Administrative Agent

  and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew Berk

  	
   

  
	
   

  	
  Name:  Matthew
  Berk

  
	
   

  	
  Title:    Authorized
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED AND

  AGREED TO BY:

  	
   

  
	
   

  	
   

  
	
  MEDQUEST, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ John Haggerty

  	
   

  	
   

  
	
  Name: John Haggerty

  	
   

  
	
  Title:   Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
  MQ ASSOCIATES, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ John Haggerty

  	
   

  	
   

  
	
  Name: John Haggerty

  	
   

  
	
  Title:   Chief
  Financial Officer

  	
   

  
							

 

(signatures
continued on following pages)

 

Signature Page to Restated Amendment
to Third Waiver

 

 

WACHOVIA BANK, N.A., as a Lender

 

	
  By:

  	
  /s/ Matthew Berk

  	
   

  
	
  Name:  Matthew
  Berk

  
	
  Title:   
  Authorized Officer

  

 

 

	
  CHASE LINCOLN FIRST

  COMMERCIAL CORPORATION,
 as a Lender

  
	
   

  
	
  By:

  	
  /s/ Dawn Lee Lum

  	
   

  
	
  Name:  Dawn Lee Lum

  
	
  Title:   Director

  

 

 

	
  GENERAL ELECTRIC

  CAPITAL CORPORATION,
 as a Lender

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Brent A. Shepherd

  	
   

  	
   

  
	
  Name: Brent A. Shepherd

  	
   

  
	
  Title:  Duly Authorized Signatory

  	
   

  
				

 

 

	
  UBS AG, STAMFORD
  BRANCH,
 as a Lender

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Wilfred V. Saint

  	
   

  	
   

  
	
  Name:  Wilfred V. Saint

  	
   

  
	
  Title:   Director,
  Banking

  	
   

  
	
   

  	
  Products Services, US

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Barbara Ezell -
  McMichael

  	
   

  	
   

  
	
  Name: Barbara Ezell -
  McMichael

  	
   

  
	
  Title:   Associate Director, Banking Products

  	
   

  
	
   

  	
  Services, USExhibit 10.1

 

SUBLEASE

(331 East Evelyn, Mountain View, California)

 

This Sublease (“Sublease”),
dated June 28, 2005 (the “Execution Date”), is entered into by and between
VERISITY DESIGN, INC., a California corporation (“Sublandlord”), and CONCEPTUS,
INC., a Delaware corporation (“Subtenant”).

 

1.                                    BASIC SUBLEASE PROVISIONS

 

1.1                               Premises: The Premises under this Sublease consist of
approximately 58,242 rentable square feet of space located on the First (1st)
and Second (2nd) floors of the building (the “Building”), which
Building is located at 331 East Evelyn, in the City of Mountain View, in the
State of California 94039.  The Premises
demised hereunder are a portion of those certain premises (“Master Premises”) containing
approximately 58,242 rentable square feet of office space located on the 1st
and 2nd floors of the Building which forms a part of the project (“Project”)
with approximately 266,088 square feet of space and are demised pursuant to the
Master Lease. The Premises are depicted on Exhibit A to this
Sublease,

 

1.2                               Master Landlord: SFERS Real Estate Corp. U, a Delaware
corporation.

 

1.3                               Master Lease: Lease Agreement dated April 15, 2004 as
amended by that certain First Amendment to Lease dated June
    , 2005 entered into by Sublandlord, as “Tenant”, and
Master Landlord, as “Landlord”, a copy of which is attached hereto as Exhibit B.

 

1.4                               Term: Approximately forty-six (46) months, beginning on the
Commencement Date and ending on the Expiration Date unless terminated earlier
in accordance with the terms and conditions of this Sublease.

 

1.5                               Estimated Commencement Date: September 1,
2005.

 

1.6                               Expiration Date: June 15, 2009.

 

1.7                               Base Rent: See Section 4.2
below.

 

1.8                               Base Year: None.

 

1.9                               Subtenant’s Share of Master
Premises:  100%.

 

1.10                        Subtenant’s Use:  The
uses stated in Master Lease Section 1.1, 1,2 and 1.3 together with the
right to use the Premises for (i) research, (ii) development, (iii) marketing,
(iv) assembly and other associated uses for a medical device operation and
for no other purpose.

 

1.11                        Subtenant’s Address:

 

	
  Prior to the
  Commencement Date:

  	
   

  	
  Conceptus, Inc.

  
	
   

  	
   

  	
  1021 Howard Avenue

  
	
   

  	
   

  	
  San Carlos, CA 94070

  

 

 

Verisity Design, lnc. 

331 East Evelyn, Mountain View, California

 

 

	
  After
  the Commencement Date:

  	
   

  	
  Premises

  

 

	
  Sublandlord’s Address:

  	
   

  	
  Verisity Design, Inc. c/o

  
	
   

  	
   

  	
  Cadence
  Design Systems, Inc.

  
	
   

  	
   

  	
  2655
  Seely Avenue

  
	
   

  	
   

  	
  San
  Jose, CA 95134

  
	
   

  	
   

  	
  Attention:
  Legal Counsel

  

 

	
  With
  a copy to:

  	
   

  	
  Verisity
  Design, Inc. c/o

  
	
   

  	
   

  	
  Cadence
  Design Systems, Inc.

  
	
   

  	
   

  	
  2655
  Seely Avenue

  
	
   

  	
   

  	
  San
  Jose, CA 95134

  
	
   

  	
   

  	
  Attention:
  Vice President of Facilities

  
	
   

  	
   

  	
  and
  Real Estate

  
	
   

  	
   

  	
   

  
	
  With
  a copy of defaults to:

  	
   

  	
  Reed
  Smith LLP

  
	
   

  	
   

  	
  Two
  Embarcadero Center

  
	
   

  	
   

  	
  Suite 2000

  
	
   

  	
   

  	
  San
  Francisco, CA 94111

  
	
   

  	
   

  	
  Attention:
  Charles H. Seaman, Esq.

  
	
   

  	
   

  	
   

  
	
  With
  payment to be made to:

  	
   

  	
  The
  Staubach Company

  
	
   

  	
   

  	
  15601
  Dallas Parkway Suite 400

  
	
   

  	
   

  	
  Addison,
  Texas 75001

  
	
   

  	
   

  	
  Attn:
  Verisity Design, Inc. c/o

  
	
   

  	
   

  	
  Cadence
  Lease Administration

  

 

1.12                        Security Deposit.  $101,826.42

 

	
  1.13

  	
   

  	
  Brokers:

  	
   

  	
  For Sublandlord:

  	
   

  	
  The Staubach Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  For Subtenant:

  	
   

  	
  The Staubach Company

  

 

1.14                        Definitions: Each of the terms in the Basic Sublease
Provisions are used in this Sublease as defined terms and have the meanings
given in such sections. Other capitalized words and phrases for which no
definition is given in this Sublease shall have the meanings given them in the
Master Lease. Unless otherwise indicated, all section references are to
the sections of this Sublease.

 

2.                                      DEMISE OF PREMISES

 

2.1                               Sublandlord hereby subleases the Premises to
Subtenant, and Subtenant hereby subleases the Premises from Sublandlord, on and
subject to the terms and conditions of this Sublease. Within thirty (30) days
of the mutual execution of this Sublease, Subtenant shall have the right at its
sole cost and expense to carry out an independent measurement of the Premises
using a third party licensed architect. If the Subtenant architect identifies a
discrepancy of more than five percent (5%) between the architect’s calculation
of the rentable square footage of the Premises compared to the rentable square
footage stated in Section 1.1 above the Sublandlord and Subtenant agree to
work “in good faith” to establish a mutually acceptable rentable square footage
for the Premises. Notwithstanding any

 

2

 

establishment
of a rentable square footage adjustment as set forth above, Subtenant agrees
that it shall take possession of all of the Sublandlord’s premises space as
defined under the terms of the Master Lease. Where the Sublandlord and Subtenant
cannot agree upon an adjustment to the rentable square footage of the Premises
following a calculation by Subtenant’s independent architect the parties agree
to be bound by the decision of three arbiters under an arbitration conducted in
accordance with the rules of the American Arbitration Association.
Sublandlord and Subtenant shall each elect an arbiter and those two arbiters
shall select the third. The costs of each arbiter shall be the responsibility
of each appointing party with the cost of the third arbiter to be divided
between Sublandlord and Subtenant.

 

2.2                               Sublandlord hereby grants to Subtenant the
right to use on a nonexclusive basis the “Common Area” (as defined in the
Master Lease) in the Building and the “Project” (as such term is defined in the
Master Lease Section 1.3) in compliance with such Rules and
Regulations set forth in Master Lease Exhibit D as Master Landlord may promulgate
from time to time.

 

2.3                               Sublandlord reserves the right, on reasonable
prior notice and subject to Subtenant’s reasonable security requirements, to
inspect the Premises; provided, however, Sublandlord shall not be required to give
notice or comply with Subtenant’s reasonable security requirements in the case of
an entry due to an emergency.

 

2.4                               Sublandlord agrees to allow Subtenant, its
employees, agents, consultants and contractors to have access and early entry
to the Premises, from the date Master Landlord consents in writing to a fully
executed original of this Sublease prior to the Commencement Date (“Early Entry
Period”) on reasonable prior written notice, to allow Subtenant to carry out
installation of Subtenant’s improvements, furniture, fixtures, and
telecommunications equipment thereof as in the reasonable opinion of Subtenant
is required to ready the Premises for occupancy; provided, however, such Early
Entry Period shall immediately cease on twenty four hours notice from Sublandlord
and to the extent that Subtenant fails to abide by such notice Sublandlord
shall have the right to apply any and all of the Security Deposit to remedy the
same including Sublandlord’s actual legal fees. Subtenant, its employees, agents,
consultants and contractors shall take all reasonable and necessary safety and
security precautions in connection with the carrying out of the installation of
improvements, furniture, fixtures, telecommunications equipment and shall
obtain all required governmental permits and pay all governmental fees and
charges associated with such work. Subtenant shall indemnify, defend and hold
Sublandlord and Master Landlord and all Sublandlord’s employees, successors and/or
assigns (collectively, the “Indemnitees”) harmless from and against any and all
costs, demands, claims, liabilities, violations, losses or damages which any of
the Indemnitees, individually or collectively, may at any time hereafter suffer
or sustain arising or in any way related to Subtenant’s accessing and entering
the Premises and carrying out installation of furniture, fixtures,
telecommunications equipment or improvements in, on or to the Premises prior to
the Commencement Date of this Sublease.

 

3.                                      TERM

 

3.1                               Subject to the Master Landlord’s consent to
this Sublease, the Term shall commence on the Commencement Date which shall be
the later of (i) the Estimated Commencement Date, or (ii) forty five
(45) days following the date Sublandlord

 

3

 

delivers possession of
the Premises to Subtenant; provided, however, Subtenant agrees that Subtenant
shall be subject to all of the terms and conditions of this Sublease, other
than the obligation to pay Base Rent to Sublandlord, (including, without
limitation all of Subtenant’s insurance obligations contained herein)
immediately upon delivery of the Premises by Sublandlord.

 

3.2                               If for any reason Sublandlord cannot deliver possession
of the Premises to Subtenant by the Estimated Commencement Date, Sublandlord
shall not be liable therefor, nor shall such failure affect the validity of
this Sublease or the obligations of Subtenant hereunder (except as provided
below), or extend the Expiration Date, but in such case the Commencement Date
will not occur and Subtenant shall not be obligated to pay Rent until
possession of the Premises is tendered to Subtenant, provided that either party
may cancel this Sublease if Sublandlord using “good faith” does not deliver
possession of the Premises (in the required condition) to Subtenant on or
before November 1, 2005.

 

3.3                               The Term shall end on the Expiration Date. However,
the Sublease may be terminated prior to the Expiration Date if the Master Lease
is terminated for any cause whatsoever (and Master Landlord does not require
Subtenant to attorn) and the Term shall end on such earlier termination,
provided Sublandlord indemnifies Subtenant for early termination of this
Sublease due to Sublandlord’s negligent acts or omissions with respect to the
Master Lease. Provided Subtenant shall intend to remain in the Premises under a
direct lease with the Master Landlord to commence after the Sublease expiration
date, then Sublandlord shall waive its right to extend the Master Lease
provided Subtenant shall have executed a new lease with Master Landlord
contingent upon written notice as described below and Subtenant shall have the
right on not less than forty five (45) days written notice prior to the Expiration
Date set forth on the face of this Sublease in Section 1.6 to adjust the date
of surrender of the Premises to Sublandlord to June 30, 2009 upon all of
the terms and conditions of this Sublease including the requirement to pay
rent.

 

3.4                               In the event that Master Landlord’s consent to
Sublease is not forthcoming by the date that is forty five (45) days after the
delivery of and receipt by Master Landlord of the executed Sublease to Master
Landlord together with all further information reasonably requested by Master
Landlord then, Subtenant or Sublandlord shall have the right to terminate this
Sublease upon written notice to the other party and Sublandlord and Subtenant
shall have no further rights or obligations under this Sublease, unless
specifically reserved in the Sublease.

 

4.                                      RENT

 

4.1                               The
consideration payable by Subtenant for the Premises shall consist of the Base Rent under Section 4.2, the
Additional Rent under Section 4.4 and the Other Charges under Section 4.5.
Base Rent, Additional Rent and Other Charges are collectively referred to as “Rent.”
Subtenant’s covenant to pay Rent shall be independent of every other covenant
in this Sublease.

 

4.2                               The
Base Rent shall be paid throughout the term as follows: 

 

Months 1-6                                 $0.00

 

4

 

Months 7-12                          $46,593.60 per month ($9.60 per sq. ft per annum)

 

Months 13-24                   $47,991.41 per month ($9.88 per sq. ft per annum)

 

Months 25-36                   $49,431.15 per month ($10.18 per sq. ft per annum)

 

Months 37-46                   $50,913.21 per month ($10.49 per sq. ft per annum)

 

4.3                               Beginning on the Commencement Date and
continuing thereafter on the first day of each month during the Term, Subtenant
shall pay to Sublandlord in advance, and without notice, demand, deduction or
offset, the monthly Base Rent specified in Section 4.2 above. Base Rent
for any partial month will be prorated, based on a thirty (30) day month. Subtenant
shall pay the first full month’s Rent for month seven (7) upon execution
and delivery to Sublandlord, and if the Commencement Date is not the first day
of the month, then Subtenant shall pay the prorated Rent for the first partial
month on the Commencement Date. During the first 6 months of the Sublease Term,
and thereafter, Subtenant shall pay to the Sublandlord the Additional Rent
(defined in Section 4.4 below) and the Other Charges (defined in Section 4.5
below).

 

4.4                               (a) Throughout the Term, Subtenant shall
pay to Sublandlord, as additional rent (“Additional Rent”) an amount equal to
Subtenant’s Share of the Pass Through Costs (defined below) in accordance with
this Section 4.3 and Section 4.4. “Pass Through Costs” means, without
limitation, the amounts paid by Sublandlord to reimburse Master Landlord for
taxes, insurance, operating expenses, common area maintenance charges,
management fees, amortized capital expenditures for required repairs or
improvements (as described in Master Lease Section 4.1.2), and/or other expenses
incurred by Master Landlord in connection with the Building or the Master Landlord’s
Project. For purposes of calculating Additional Rent, Sublandlord shall be entitled
to rely conclusively on Master Landlord’s determination of estimated and actual
Pass Through Costs, except that Subtenant shall have the same right at its sole
cost and expense to require Sublandlord upon reasonable prior written notice to
audit and challenge the determination of Master Landlord’s determination of Expenses
(as defined in Master Lease Section 4.1.2) as Sublandlord has under Section 4.3
of the Master Lease; provided, however, it shall be deemed reasonable for
Sublandlord to require Subtenant to advance to Sublandlord prior to Sublandlord
commencing upon such audit and challenge of Expense determination Sublandlord’s
reasonable estimate of the costs and expenses associated therewith. The Sublandlord
and Subtenant agree that within thirty (30) days of the expiration of such
audit and challenge of the Expense determination to reconcile any costs and expenses
associated therewith and to either reimburse Sublandlord accordingly. A Default
under the terms of this section 4.4(a) shall be deemed to be a breach
of the terms and conditions of this Sublease. Any unreimbursed sums due
Sublandlord shall be deemed “Rent” under this Sublease and all of Sublandlord’s
rights and remedies to recover such delinquent amount shall be in accordance
with the terms and conditions of this Sublease, including, without limitation,
the right to apply the Security Deposit (as described in Sections 1.12 and
16.2) against the same.

 

(b) On
the first day of each calendar month during each Sublease Year, Subtenant shall
pay to Sublandlord one-twelfth (1/12th) of Subtenant’s Share of the Pass
Through Costs, as estimated in Sublandlord’s Estimate, which Sublandlord’s

 

5

 

Estimate shall be the
amount stated in Master Landlord’s estimate of such costs and expenses as
demanded of Sublandlord by Master Landlord. On or about the first day of March of
the following Sublease Year after the first Sublease Year during the Term, or
as soon thereafter as is reasonably practicable, Sublandlord shall furnish
Subtenant with a statement of the actual Pass Through Costs for the preceding
Sublease Year, reconciling the actual amounts paid pursuant to Sublandlord’s
Estimate and the actual amounts payable hereunder (“Actual Pass Through Cost
Statement”). Within thirty (30) days after Sublandlord’s giving of such Actual
Pass Through Cost Statement, Subtenant shall make a lump sum payment to
Sublandlord in the amount, if any, by which the actual Subtenant’s Share of
Pass Through Costs for such preceding Sublease Year as shown on the Actual Pass
Through Cost Statement, exceeds the aggregate of the monthly installments of
the estimated Subtenant’s Share of Pass Through Costs paid during such
preceding Sublease Year. If Subtenant’s Share of Pass Through Costs, as shown
on Sublandlord’s Actual Pass Through Cost Statement, is less than the aggregate
of the monthly installments of Subtenant’s Share of Pass Through Costs actually
paid by Subtenant during such preceding Sublease Year, then Sublandlord shall
apply such amount to the next accruing monthly installment(s) of Subtenant’s
Share of Pass Through Costs due from Subtenant until fully credited to
Subtenant; provided, however, that if no Rent is due, then Sublandlord shall
refund such amounts to Subtenant within a reasonable period of time. If the
Term ends on a date other than the last day of December, the actual Pass
Through Costs for the year in which the Expiration Date occurs, Subtenant’s
Share of Pass Through Costs for such year shall be represented by a fraction,
the numerator of which shall be the number of days during such fractional year
falling within the Term, and the denominator of which is 365. The provisions of
this Section 4.3 shall survive the Expiration Date or any sooner
termination provided for in this Sublease.

 

4.5                               Throughout
the Term, Subtenant also shall pay within five (5) business days after written
notice from Sublandlord any other fees, charges or other sums due under the Master
Lease (collectively, “Other Charges”). To the extent that utility consumption
costs, including without limitation, electric and other charges incurred in
connection with lighting, and providing electrical power and heating,
ventilating and air conditioning service to the Premises are separately metered
and billed directly to Subtenant, Subtenant shall be responsible for paying all
such costs before delinquency as Other Charges. To the extent such utilities
are not separately metered to the Premises and billed directly to Subtenant
separately from Additional Rent, Subtenant shall pay its share of such costs in
an amount equal to Subtenant’s share of Master Premises as Other Charges. Other
Charges also include, without limitation: (a) excess or after hours
electrical service or heating, ventilating or air conditioning service supplied
to the Premises; (c) services or benefits supplied to the Premises at
Subtenant’s request (or with Subtenant’s acquiescence) for which Master Landlord
reserves any right to impose a fee or charge separate from the Master Lease
Pass Through Costs; (d) to reimburse Master Landlord for taxes on personal
property, equipment and fixtures located in or about the Premises during the
Term; (e) to pay for any damage to the Building resulting from the act or omission
of Subtenant or Subtenant’s agents, employees or invitees; and (f) damages
recoverable due to a default under the Master Lease which is the result of any
Default or failure of performance by Subtenant under this Sublease.

 

4.6                               All
Rent shall be paid to Sublandlord, or to such other person or such other place
as Sublandlord may from time to time designate in writing. If any Rent is not
paid

 

6

 

when due, Subtenant shall
pay, at Sublandlord’s discretion, a late charge to Sublandlord equal to the
greater of (a) $50 or (b) three percent (3%) of the delinquent amount
and all interest and late charges as Sublandlord would sustain under the Master
Lease to the extent caused by the Default of Subtenant in the case of
delinquent payment of any rent due under the Master Lease. Neither demand for,
nor receipt of, any late charge called for under this Sublease shall (i) operate
to waive any default by Subtenant or provide a substitute for Subtenant’s full
and timely performance of the obligation to pay Rent, or (ii) limit the
exercise of any other right or remedy Sublandlord may have under this Sublease
in case of Subtenant’s Default.

 

4.7                             In the
event of any casualty or condemnation affecting the Premises, Rent payable by
Subtenant shall be proportionately abated, but only as to the portion of the
Premises damaged or taken; and only to the extent that any amounts payable by
Sublandlord under the Master Lease (the “Master Lease Rent”) is abated or
reduced with respect to the Premises. Subtenant shall have no right to
terminate the Sublease in connection with any casualty or condemnation except
to the extent that the Master Lease also is terminated as to the Premises or
any material portion thereof.

 

5.                                      POSSESSION AND USE

 

5.1                               Sublandlord
shall deliver the Premises to Subtenant with all Premises, HVAC, electrical and
plumbing systems serving the Premises in operational and good condition and repair
as of the Sublease Commencement Date. In addition, Sublandlord shall deliver
the Premises to Subtenant in a broom clean condition, and Sublandlord shall
patch any holes, replace any damage ceiling tiles and repaint where necessary
prior to Sublease Commencement Date. Except as otherwise expressly provided
herein, Sublandlord subleases the Premises to Subtenant strictly in their
present “as-is” and “with all faults” condition; provided, however, nothing contained
in this Section 5.1 shall limit Subtenant’s rights under this Sublease to require
Sublandlord to enforce the terms of the Master Lease (in accordance with the
terms and conditions stated herein) in the respect of any failure by Master Landlord
to maintain and repair the Building as required pursuant to the terms of the Master
Lease. Subtenant shall have thirty (30) days after delivery of the Premises to provide
Sublandlord notice of any Premises condition not conforming to Sublandlords
required delivery condition and provided in the reasonable opinion of Sublandlord
the same shall be a Sublandlord obligation. The Sublandlord shall repair the
non-conforming Premises condition within a commercially reasonable time. In all
other respects the Subtenant, by acceptance of possession of the Premises, conclusively
acknowledges the Premises to be in good working order and repair and in a
tenantable condition.

 

5.2                               The
Premises shall be used and occupied solely for Subtenant’s Use as specified in the
Basic Sublease Provisions. Sublandlord agrees to use commercially reasonable efforts
to seek from the Master Landlord a permitted change of use from the Master Lease
use, as specified therein, to give effect to the use specified in Section 1.10
above, and Subtenant shall have the right to terminate this Sublease in
accordance with Section 3.4 if such approval is not obtained in writing
within forty five (45) days after an executed copy of this Sublease is received
by Master Landlord. Subtenant shall not use or suffer or permit the Premises to
be used for any other purpose except with Master Landlord’s and Sublandlord’s
discretionary consent.

 

7

 

6.                                      SUBTENANT’S UTILITY,
MAINTENANCE AND REPAIR OBLIGATIONS

 

6.1                               Subtenant
shall be responsible for and shall pay before delinquency for all maintenance,
repairs and replacements to the Premises and its equipment, to the extent
Sublandlord is obligated to perform the same with respect to the Master Premises
under the Master Lease.

 

6.2                               Subtenant
shall comply with all laws and ordinances, and all orders, rules and regulations
of all governmental authorities and of all insurance bodies and their fire prevention
engineers at any time in force, applicable to the Premises or to Subtenant’s
particular use or manner of use thereof, to the extent Sublandlord is obligated
to perform the same with respect to the Master Premises under the Master Lease.

 

6.3                               Subtenant
shall protect, indemnify, defend and hold Sublandlord harmless from all liability,
loss, cost, damage, liens, costs or expenses imposed on Sublandlord or which
Sublandlord may sustain or incur from Subtenant’s failure to perform its obligations
under this Article 6.

 

7.                                      SUBTENANT’S INSURANCE AND
INDEMNITY

 

7.1                               Throughout
the Term, Subtenant shall procure and maintain, at its own cost and expense,
such commercial general liability insurance as is required to be carried by Sublandlord
under the Master Lease, naming Sublandlord and Master Landlord, as additional
insured in the manner required therein, and such property insurance as is required
to be carried by Sublandlord under the Master Lease to the extent such property
insurance pertains to the Premises. If the Master Lease requires Sublandlord to
insure leasehold improvements or alterations, then Subtenant shall insure such
leasehold improvements which are located in the Premises, as well as alterations
in the Premises made by Subtenant. Subtenant shall furnish to Sublandlord a
certificate of Subtenant’s insurance required under this Section 7.1 prior
to the Commencement Date.

 

7.2                               Subtenant
waives claims against Sublandlord for damage to property owned by Subtenant
where such damage is covered under any policy of property damage insurance
maintained (or required by this Sublease to be maintained) by Subtenant. Sublandlord
waives claims against Subtenant for damage to property owned by Sublandlord
where such damage is covered under any policy of property damage insurance
maintained (or required by the Master Lease or this Sublease to be maintained)
by Sublandlord; provided, however, all of Sublandlord’s FF&E (defined in Section 19
below) shall be the responsibility of Subtenant during the Term of this Sublease
and as such Sublandlord’s waiver provided herein shall not apply to the same,
it being acknowledged that Subtenant shall be bound to the terms of Section 19
and shall replace any damaged or destroyed FF&E at Subtenant’s sole cost
and expense. Subtenant hereby waives claims against Master Landlord and
Sublandlord for death, injury, loss or damage of every kind and nature, if and
to the extent that Sublandlord waives or releases such claims against Master
Landlord under the Master Lease. Subtenant agrees to obtain, for the benefit of
Master Landlord and Sublandlord, such waivers of subrogation rights from its
insurer as are required of Sublandlord under the Master Lease.

 

8

 

7.3                               Subtenant
agrees to protect, indemnify, defend and hold Sublandlord harmless from all
losses, damages, liabilities and expenses which Sublandlord may incur, or for
which Sublandlord may be liable to Master Landlord, arising from the acts or
omissions of Subtenant, or any events occurring in or about the Premises during
the Term, which are the subject matter of any indemnity or hold harmless of
Sublandlord to Master Landlord under the Master Lease. Subtenant’s obligations
to protect, indemnify, defend and hold harmless Sublandlord under this Section 7.3
are in no way conditioned upon either (a) Subtenant’s acts or omissions
being a cause of any underlying claim, demand, action, loss or damage, or (b) Sublandlord
being free of negligence or wrongful conduct in connection therewith.

 

8.                                      ASSIGNMENT OR SUBLETTING

 

8.1                               Except
with the prior written consent of Master Landlord (subject to provisions of 9.1
and 9.5 of the Master Lease) and Sublandlord, which consent shall not be withheld
or delayed if Master Landlord consents, Subtenant shall not (a) assign, convey
or mortgage this Sublease or any interest under it; (b) allow any transfer
thereof or any lien upon Subtenant’s interest by operation of law; (c) further
sublet the Premises or any part thereof or (d) permit the occupancy of the
Premises or any part thereof by anyone other than Subtenant. Master Landlord’s
consent to any assignment or Sublease of this Sublease shall be in accordance
with the Master Lease Sublandlord shall use reasonable efforts to obtain the
consent of Master Landlord. All costs of obtaining Master Landlord’s and
Sublandlord’s consent (including legal fees) shall be borne by Subtenant.
Sublandlord shall not be required to consent to any assignment or Sublease by
Subtenant where Master Landlord withholds its consent.

 

8.2                               No permitted
assignment shall be effective and no permitted sublease shall commence unless
and until any Default by Subtenant hereunder has been cured. No permitted assignment
or subletting shall relieve Subtenant from Subtenant’s obligations and
agreements under this Sublease and Subtenant shall continue to be liable as a
principal and not as a guarantor or surety, to the same extent as though no
assignment or subletting had been made. Consent to any assignment or sublease
shall not be deemed to release Subtenant from its requirement to obtain consent
for any future assignment or sublease.

 

8.3                               “Bonus
Rent” shall mean the excess of (i) all consideration received by Subtenant
from an assignment of this Sublease or a sublease of all or any portion of the Premises
over (ii) the Base Rent and Additional Rent payable by Subtenant to Sublandlord
under this Sublease (prorated, in the case of a sublease of less than all of
the Premises, to reflect obligations allocable to only the portion of the
Premises so sublet). In determining the total consideration under the foregoing
clause (i), Subtenant shall be
entitled to exclude therefrom reasonable leasing commissions paid by Subtenant
to any unaffiliated third party, payments attributable to the amortization of
the cost of improvements Subtenant must make to the Premises at its cost to
ready same for the assignee or sublessee, and other reasonable, out-of- pocket
costs paid by Subtenant which are directly related to Subtenant’s obtaining the
assignment or sublease.

 

8.4                               Any
Bonus Rent realized by Subtenant under any sublease or assignment shall be divided
and paid as follows; fifty percent (50%) to Subtenant and fifty percent (50%)
to Sublandlord.

 

9

 

9.                                      ALTERATIONS

 

9.1                               Sublandlord
hereby approves the plans for alterations attached hereto as Exhibit F and
agrees to use commercially reasonable efforts to obtain Master Landlord’s consent
thereto. Otherwise, during the Term Subtenant shall not make any other alterations
or improvements in or additions or improvements to the Premises (“Alterations”)
if to do so would constitute a default under the Master Lease (without regard to
any requirement of notice or cure period). Sublandlord’s consent to such
Alterations shall not be withheld if Master Landlord consents to such Alterations.
Sublandlord shall use reasonable efforts to obtain the consent of Master
Landlord. If Alterations by Subtenant are consented to, Subtenant shall comply
with all of the covenants of Sublandlord contained in the Master Lease pertaining
to the performance of such Alterations. In addition, Subtenant shall indemnify,
defend and hold harmless Sublandlord against liability, loss, cost, damage,
liens and expense imposed on Sublandlord arising out of the performance of
Alterations by Subtenant and/or failure to remove the same at the end of the Term
if Sublandlord is required to surrender the Premises to Master Landlord with
all such alterations removed and the Premises restored to the condition as of
the date of mutual execution of this Sublease.

 

9.2                               Any
consented to or actual Alterations shall be made at Subtenant’s sole cost and expense,
including any cost to comply with applicable laws and regulations and any management
or supervision fee charged by Master Landlord and shall if Master Landlord at the
time of consent does not indicate otherwise in writing to Sublandlord and
Subtenant be removed by Subtenant prior to the end of the Term at Subtenant’s
sole cost and expense. The cost of such removal shall be paid by Subtenant,
including restoration of the Premises to the condition as of the date of mutual
execution of this Sublease and damage due to any part thereof occasioned by
such removal.

 

10.                               CASUALTY OR EMINENT DOMAIN

 

10.1                        In the
event of a fire or other casualty affecting the Master Landlord’s Project, the Building
or the Premises, or of a taking of all or a part of the Master Landlord’s Project,
the Building or the Premises under the power of eminent domain, Sublandlord
shall be entitled to exercise any right it may have to terminate the Master
Lease without first obtaining the consent or approval of Subtenant.

 

10.2                        If the
Master Lease imposes on Sublandlord the obligation to repair or restore leasehold
improvements or alterations within the Master Premises, Subtenant shall be
responsible for repair or restoration of leasehold improvements or alterations within
the Premises,

 

11.                               SURRENDER

 

11.1                        On the Expiration
Date, or upon the earlier termination of the Sublease or of Subtenant’s right
to possession of the Premises, Subtenant will at once surrender and deliver up
the Premises, together with all improvements thereon (not required to be
removed by Sublandlord upon notice), to Sublandlord in good condition and
repair, reasonable wear and tear excepted; conditions existing because of
Subtenant’s failure to perform maintenance, repairs or replacements as required
of Subtenant under this Sublease shall not be deemed “reasonable wear and tear.”

 

10

 

Said improvements shall
include all plumbing, lighting, electrical, heating, cooling and ventilating
fixtures and equipment. Subtenant shall surrender to Sublandlord all keys to
the Premises and make known to Sublandlord the combination of all combination
locks which Subtenant is permitted to leave on the Premises.

 

11.2                        If
Subtenant performs any Alterations, Subtenant shall be obligated to remove such
Alterations and restore the Premises to the condition existing on the Execution
Date if the Master Lease requires such removal and restoration by Sublandlord. If
the Master Lease requires Sublandlord to remove the same upon surrender of the Premises
space to Master Landlord then Subtenant shall remove all alterations and improvements
as described more fully in section 9.1 above and Exhibit F
attached hereto. All other Alterations in or upon the Premises made by
Subtenant shall become a part of and shall remain upon the Premises upon such
termination without compensation, allowance or credit to Subtenant. Said right
shall be exercisable by Sublandlord’s giving written notice thereof to
Subtenant not less than five (5) days prior to such Expiration Date or
more than a reasonable period of time after any earlier termination. Subtenant
shall repair any damage occasioned by such removal or restoration. If
Sublandlord or Master Landlord requires removal of any Alteration made by
Subtenant, or a portion thereof, and Subtenant does not make such removal in
accordance with this Section, Sublandlord may remove the same (and repair any
damage occasioned thereby), and dispose thereof, or at its election, warehouse
the same. Subtenant shall pay the costs of such removal, repair and warehousing
on demand.

 

11.3                        Subtenant
shall not be required to remove any alterations performed by Sublandlord prior
to the Execution Date or to restore the Premises to their condition prior to Sublandlord’s
making of such alterations. If Sublandlord is required under the Master Lease
to remove any alterations performed by Sublandlord prior to the Execution Date,
Subtenant shall permit Sublandlord to enter the Premises for a reasonable
period of time, subject to such conditions as Subtenant may reasonably impose,
for the purpose of removing such alterations and restoring the Premises as required
by the Master Lease. However, if either Sublandlord or Subtenant reasonably
determines that Sublandlord’s entry prior to the Expiration Date is not compatible
with Subtenant’s continued use of the Premises, then either party may terminate
this Lease upon not less than ten (10) days written notice to the other, with
such termination to be effective on the date of Sublandlord’s re-entry into the
Premises for the purpose of removing such alterations and restoring the
Premises.

 

11.4                        On the
Expiration Date, or upon the earlier termination of the Sublease or of Subtenant’s
right to possession of the Premises, Subtenant shall remove Subtenant’s articles
of personal property, fixtures and equipment incident to Subtenant’s business (“Subtenant’s
Property”), including the FF&E referenced in Section 19 hereof only if purchased
by Subtenant; provided, however that Subtenant shall at Subtenant’s sole cost
and expense repair any injury or damage to the Premises which may result from
such removal, and shall restore the Premises to the same condition as prior to
the installation thereof. If Subtenant does not remove Subtenant’s Property
from the Premises on or before the Expiration Date or the earlier termination
of this Sublease, Sublandlord may, at its option, remove the same (and repair
any damage occasioned thereby and restore the Premises as aforesaid) and
dispose thereof or warehouse the same, and Subtenant shall pay the cost of such
removal, repair, restoration or warehousing to Sublandlord on demand, or Sublandlord
may treat said Subtenant’s Property as having been conveyed to

 

11

 

Sublandlord with this
Sublease acting as a bill of sale therefor, without further payment or credit
by Sublandlord to Subtenant.

 

12.                               HOLDING OVER.

 

12.1                        Subtenant
has no right to occupy the Premises or any portion thereof after the Expiration
Date or after the termination of this Sublease or of Subtenant’s right to possession
hereunder. In the event Subtenant or any party claiming by, through or under
Subtenant holds over, Sublandlord may exercise any and all remedies available to
it at law or in equity to recover possession of the Premises, and to recover damages,
including without limitation, damages payable by Sublandlord to Master Landlord
by reason of such holdover.

 

12.2                        Without limiting
Sublandlord’s rights under Section 12.1, for each and every month or
partial month that Subtenant or any party claiming by, through or under Subtenant
remains in occupancy of all or any portion of the Premises after the Expiration
Date or after the earlier termination of this Sublease or of Subtenant’s right
to possession, Subtenant shall pay, as minimum damages and not as a penalty, monthly
rental at a rate equal to the rate of monthly holdover rent payable by Sublandlord
for the Premises pursuant to the Master Lease (and all Sublandlord’s legal fees
associated with any holding over discussions, negotiations, disputes, settlements
or agreements, if any). The acceptance by Sublandlord of any lesser sum shall
be construed as payment on account and not in satisfaction of damages for such
holding over.

 

13.                               ENCUMBERING TITLE

 

13.1                        Subtenant
shall not do any act which in any way encumbers the title of Master Landlord in
and to the Building or Master Landlord’s Project nor shall the interest or estate
of Master Landlord or Sublandlord be in any way subject to any claim by way of
lien or encumbrance, whether by operation of law or by virtue of any express or
implied contract by Subtenant, or by reason of any other act or omission of Subtenant.
Any claim to, or lien upon, the Premises, or the Building, or Master Landlord’s
Project arising from any act or omission of Subtenant shall accrue only against
the subleasehold estate of Subtenant and shall be subject and subordinate to the
paramount title and rights of Master Landlord in and to the Building and the Master
Landlord’s Project and the interest of Sublandlord in the Master Lease Premises.

 

13.2                        Without
limiting the generality of Section 13.1, Subtenant shall not permit the Premises,
or the Building, or the Master Landlord’s Project to become subject to any mechanics’,
laborers’ or materialmen’s lien on account of labor or material furnished to
Subtenant or claimed to have been furnished to Subtenant in connection with work
of any character performed or claimed to have been performed on the Premises
by, or at the direction or sufferance of, Subtenant.

 

14.                               SUBTENANT’S DEFAULT

 

14.1                        Any one or
more of following events shall be considered a “Default” by Subtenant, as such
term is used in this Sublease:

 

12

 

(a)                                 Subtenant
shall be adjudged an involuntary bankrupt, or a decree or order approving, as
properly filed, a petition or answer filed against Subtenant asking
reorganization of Subtenant under the Federal bankruptcy laws as now or
hereafter amended, or under the laws of any State, shall be entered; or

 

(b)                                 Subtenant
shall file, or admit the jurisdiction of the court and the material allegations
contained in, any petition in bankruptcy, or any petition pursuant or purporting
to be pursuant to the Federal Bankruptcy laws now or hereafter amended, or
Subtenant shall institute any proceedings for relief of Subtenant under any
bankruptcy or insolvency laws or any laws relating to the relief of debtors, readjustment
of indebtedness, re-organization, arrangements, composition or extension; or

 

(c)                                  Subtenant
shall make any assignment for the benefit of creditors or shall apply for or
consent to the appointment of a receiver for Subtenant or any of the property
of Subtenant; or

 

(d)                                 Subtenant
shall admit in writing its inability to pay its debts as they become due; or

 

(e)                                  The
Premises are levied on by any revenue officer or similar officer; or

 

(f)                                   A
decree or order appointing a receiver of the property of Subtenant shall be made;
or

 

(g)                                  Subtenant
shall assign this Sublease or further sublet the Premises other than in strict
accordance with Article 8; or

 

(h)                                 Subtenant
fails to make any payment of Rent required to be made by Subtenant after three (3) days
of receipt by Subtenant of written notice that Sublandlord has not received
such payment due; or

 

(i)                                     Subtenant
fails to secure insurance or to provide proper evidence of insurance as set
forth in Article 7 of this Sublease or fails to keep the Premises, or the
Building, or the Master Landlord’s Project free of lien claims as set forth in Article 13
of this Sublease; or

 

(j)                                    Subtenant,
by its act or omission, causes an event or condition under the Master Lease
which either is a default thereunder or, subject only to the delivery of any
required notice or passage of any cure or grace period, would constitute a
default thereunder; or

 

(k)                                 Subtenant
fails to fulfill, keep, observe or perform any of the other covenants and
obligations herein contained to be fulfilled, kept, observed and performed by
Subtenant, and such failure continues for more than fifteen (15) days after
notice thereof to Subtenant.

 

14.2                      Upon the
occurrence of any one or more Default(s), Sublandlord may exercise any remedy
against Subtenant which Master Landlord may exercise for default by Sublandlord
under the Master Lease. Without limiting the generality of the foregoing,
Sublandlord may exercise the damage remedies available under any

 

13

 

statute and the
California Civil Code Sections 1951.2 and 1951.4 which provides that a lessor
may continue a lease in effect and recover damages as they become due.

 

15.                               PROVISIONS REGARDING MASTER
LEASE

 

15.1                        This
Sublease and all rights of the parties hereunder, are subject and subordinate
to all of the terms, covenants and conditions of the Master Lease. In the event
of any conflict between the terms of this Sublease and the Master Lease, the
terms of the Master Lease shall control. Each party agrees that it will not, by
its act or omission to act, cause a default under the Master Lease. In
furtherance of the foregoing, the parties hereby acknowledge, each to the
other, that it is not practical in this Sublease to enumerate all of the rights
and obligations of the various parties under the Master Lease and specifically
to allocate those rights and obligations in this Sublease. Accordingly, in
order to afford to Subtenant the benefits of this Sublease and of those
provisions of the Master Lease which by their nature are intended to benefit
the party in possession of the Premises, and in order to protect Sublandlord against
a Default by Subtenant which might cause a default by Sublandlord under the
Master Lease, Sublandlord and Subtenant covenant and agree as set forth in Sections
15.2 through 15.9 below.

 

15.2                        Provided
Subtenant shall timely pay all Rent as and when due under this Sublease, Sublandlord
shall pay, as and when due, all Master Lease Rent.

 

15.3                        Except as
otherwise expressly provided in this Sublease, Sublandlord shall perform its
covenants and obligations under the Master Lease which do not require for their
performance possession of the Premises and which are not otherwise to be performed
hereunder by Subtenant on behalf of Sublandlord. For example, Sublandlord shall
perform its covenants and obligations as tenant under the Master Lease which
pertain to the remainder of the Master Premises.

 

15.4                        Except as
otherwise expressly provided in this Sublease, Subtenant shall perform all affirmative
covenants and shall refrain from performing any act which is prohibited by the
negative covenants of the Master Lease, where the obligation to perform or refrain
from performing is by its nature imposed upon the party in possession of the Premises.
If practicable, Subtenant shall perform affirmative covenants which are also
covenants of Sublandlord under the Master Lease at least five (5) days
prior to the date when Sublandlord’s performance is required under the Master
Lease. Sublandlord shall have the right to enter the Premises to cure any
Default by Subtenant for its failure to act in accordance with this Section 15.4.

 

15.5                        Except as
otherwise expressly provided in this Sublease, Sublandlord shall not agree to an
amendment to the Master Lease which materially adversely affects Subtenant’s occupancy
of the Premises, unless Sublandlord shall first obtain Subtenant’s prior
written approval to such amendment. However, it is expressly agreed that: (a) the
foregoing shall not prevent Sublandlord from entering into any agreement or
amendment with Master Landlord which terminates the Master Lease with respect
to the Premises in lieu of Master Landlord granting its consent to this Sublease;
(b) if without the fault of Sublandlord the Master Lease should terminate prior
to the Expiration Date, Sublandlord shall have no liability to Subtenant; and
(c) to the extent the Master Lease grants Sublandlord any discretionary right
to terminate the Master Lease, whether due to casualty, condemnation, or
otherwise,

 

14

 

Sublandlord shall be
entitled to exercise or not exercise such right in its sole and absolute
discretion, provided it shall give Subtenant reasonable prior notice and a
right to elect to keep the Master Lease and the Sublease in effect; provided
Subtenant shall meet all costs associated with such election including all of
Sublandlord’s costs and expenses. Subject to the limitations expressed above or
elsewhere in this Sublease, so long as Subtenant is not in Default, Subtenant’s
quiet and peaceable enjoyment of the Premises shall not be disturbed or
interfered with by Sublandlord, or by any person claiming by, through, or under
Sublandlord.

 

15.6                        Sublandlord
grants to Subtenant the right, so long as Subtenant is not in Default, to receive
all of the services and benefits with respect to the Premises which are to be provided
by Master Landlord under the Master Lease. Sublandlord shall have no duty to
perform any obligations of Master Landlord which are, by their nature, the obligation
of an owner or manager of real property. By way of illustration and not limitation,
Sublandlord shall not be required to provide any services (including janitorial,
utilities, HVAC service, security, or use of common areas or parking facilities)
or to perform any maintenance or repairs which Master Landlord is or may be
required to provide or perform under the Master Lease. Sublandlord shall have no
responsibility for or be liable to Subtenant for any default, failure or delay
on the part of Master Landlord in the performance or observance by Master
Landlord of any of its obligations under the Master Lease, nor shall such
default by Master Landlord affect this Sublease or waive or defer the
performance of any of Subtenant’s obligations under this Sublease, including
without limitation the obligation to pay Rent; and Subtenant hereby expressly
waives the provisions of any statute, ordinance or judicial decision, now or
hereafter in effect, which would give Subtenant the right to make repairs at
the expense of Sublandlord, or to claim any actual or constructive eviction by
virtue of any interruption in access, services or utilities to, or any failure
to make repairs in or to, the Premises, or the Building, or the Master Landlord’s
Project. Notwithstanding the foregoing, the parties do contemplate that Master
Landlord will, in fact, perform its obligations under the Master Lease and in
the event of any default or failure of such performance by Master Landlord,
Sublandlord agrees that it will, upon notice from Subtenant, make demand upon
Master Landlord to perform its obligations under the Master Lease and, provided
that Subtenant specifically agrees to pay all costs and expenses of Sublandlord
and provides Sublandlord with security reasonably satisfactory to Sublandlord
to pay such costs and expenses, Sublandlord will take appropriate legal action
to enforce the Master Lease.

 

15.7                        Any
non-liability, release, indemnity or hold harmless provision in the Master
Lease for the benefit of Master Landlord shall be deemed to apply under this
Sublease and inure to the benefit of both Sublandlord and Master Landlord.

 

15.8                        If
Subtenant desires to take any action which requires the consent of Master Landlord
under the terms of the Master Lease, then, notwithstanding anything to the
contrary herein: (a) Sublandlord, independently, shall have the same
rights of approval or disapproval as Master Landlord has under the Master
Lease; (b) Subtenant shall not take any such action until it obtains the
consent of both Sublandlord (whose consent shall not be unreasonably withheld) and
Master Landlord; and (c) Subtenant shall request that Sublandlord obtain
Master Landlord’s consent on Subtenant’s behalf and Sublandlord shall use
commercially reasonable efforts to obtain such consent. Subtenant shall pay all
costs reasonably incurred by Sublandlord in seeking or procuring Master
Landlord’s consent, except Sublandlord

 

15

 

shall pay all such costs
of Master Landlord related to the creation and approval of this Sublease. Any
approval or consent required of Sublandlord conclusively shall be deemed
reasonably withheld if approval or consent also is required of the Master
Landlord, and Master Landlord fails to give Master Landlord’s approval or
consent.

 

15.9                        Subtenant
shall protect, defend, indemnify and hold harmless Sublandlord from any and all
liability, damages, liabilities, claims proceedings, actions, demands and costs
(including reasonable attorneys’ fees) resulting, directly or indirectly, from Subtenant’s
Default under the Sublease.

 

15.10                 Sublandlord shall
protect, defend, indemnify and hold harmless Subtenant from any and all
liability, damages, liabilities, claims proceedings, actions, demands and costs
(including reasonable attorneys’ fees) resulting, directly or indirectly, from Sublandlord’s
breach of this Sublease or the Master Lease.

 

16.                               EXCLUDED PROVISIONS; INCORPORATION
BY REFERENCE

 

16.1                        Notwithstanding
any other provision of this Sublease, Subtenant shall not have any rights
hereunder that are available only to Sublandlord as expressly provided in the Master
Lease. In addition, the rights and duties of Sublandlord as Tenant under the Master
Lease contained in the following provisions of the Master Lease shall not be applicable
to Subtenant under this Sublease:

 

Sections
4.2, 4.3, 26.1, 26.2, 27;

 

Articles
2, 3, 5, 6, 9, 14, 15, 18, 29, 33, 39, 42, 43, 44;

 

Exhibit B

Exhibit C 

Exhibit E 

Exhibit F

 

16.2                        The
following Paragraphs of the Master Lease are incorporated herein by reference, with
“Sublandlord” substituted for “Landlord,” “Subtenant” substituted for “Tenant,”
and “Sublease” substituted for “Lease”:

 

Sections
4.1.2, 4,1.3, 7.2, 7.3, 17.2

 

Articles
1, 8, 10, 11, 12, 19, 20, 25, 28, 31, 32, 34, 35, 45

 

17.                               MASTER LANDLORD’S CONSENT

 

17.1                        This
Sublease and the obligations of the parties hereunder are expressly conditioned
upon Sublandlord’s obtaining prior written consent hereto by Master Landlord in
substantially the form provided in Exhibit D attached hereto.
Subtenant shall promptly deliver to Sublandlord any information reasonably
requested by Master Landlord (in connection with Master Landlord’s approval of
this Sublease) with respect to the nature and operation of Subtenant’s business
and/or the financial condition of Subtenant.

 

16

 

17.2
                     Sublandlord
and Subtenant hereby agree, for the benefit of Master Landlord, that this
Sublease and Master Landlord’s consent hereto shall not (a) create privity
of contract between Master Landlord and Subtenant; (b) be deemed to have
amended the Master Lease in any regard (unless Master Landlord shall have
expressly agreed writing to such amendment); or (c) be construed as a
waiver of Master Landlord’s right to consent to any assignment of the Master
Lease by Sublandlord or any further subletting of the Master Premises, or as a
waiver of Master Landlord’s right to consent to any assignment by Subtenant of
this Sublease or any sub-subletting of the Premises or any part thereof. Master
Landlord’s consent shall, however, be deemed to evidence Master Landlord’s
agreement that Subtenant shall be entitled to waiver of claims and of the right
of subrogation for damage to Master Landlord’s property if and to the extent
that the Master Lease provides such waivers for the benefit of Sublandlord.

 

18.                               NOTICES

 

18.1                        All
notices which may or are required to be given by either party to the other
shall be in writing and shall be deemed given when received or refused if
personally delivered, or if sent by United States registered or certified mail,
postage prepaid, return receipt requested, or if sent by a nationally
recognized overnight commercial courier service providing receipted delivery,
in any such case (a) if to Subtenant, addressed to Subtenant at the
address specified in the Basic Sublease Provisions or at such other place as
Subtenant may from time to time designate by notice in writing to Sublandlord (provided,
however, if Subtenant has abandoned the Premises, any such notice may be
properly sent to Subtenant’s agent for service of process), or (b) if for
Sublandlord, addressed to Sublandlord at the address specified in the Basic
Sublease Provisions or at such other place as Sublandlord may from time to time
designate by notice in writing to Subtenant. 
Each party agrees promptly to deliver a copy of any notice, demand,
request, consent or approval received from Master Landlord.

 

18.2                        Any notice
delivered by Sublandlord in connection with, or as a precondition to, a Default
by Subtenant shall be in lieu of and not in addition to any notice to pay rent or
notice to perform any covenant required under law.

 

19.                               FURNITURE, FIXTURES AND EQUIPMENT

 

During the Term,
Subtenant shall be allowed to use any or all of Sublandlord’s furniture, trade
fixtures and equipment (the “FF&E”) located in the Premises and described
more fully in Exhibit C to this Sublease. Sublandlord shall remove
any of Sublandlord’s personal property within the Premises not forming part of
the FF&E which Subtenant does not want to remain on the Premises provided
Subtenant shall have identified the same in writing to Sublandlord prior to the
actual Commencement Date, in which event the Sublandlord and Subtenant agree to
substitute a revised initialed Exhibit C schedule of FF&E in
place of the Exhibit C attached hereto as of the date of this Sublease.
Subtenant’s right to identify FF&E to be removed by Sublandlord shall be a
one (1) time right. To the extent that Subtenant identifies any other
FF&E to be removed after Subtenant has provided Sublandlord its written
notice to remove such FF&E as described above, Subtenant shall be, at
Subtenant’s sole cost and expense, reimburse Sublandlord the actual costs and
expenses of such FF&E removal. Sublandlord shall remove the FF&E
requested in writing by Subtenant within a reasonable period of time.
Sublandlord shall incur no liability to Subtenant for any delay in such removal.
Sublandlord shall have no obligation to remove

 

17

 

any FF&E from the
Premises where any Subtenant written notice requesting removal of FF&E is
delivered and received by Subtenant after the Commencement Date. The FF&E
is made available for Subtenant’s use on an “as is” and “with all faults”
basis, and Sublandlord shall have no obligation to alter or repair the FF&E
in anticipation of Subtenant’s use, except that the data cabling shall be
operational and labeled as of the Commencement Date. No separate charge shall
be payable for Subtenant’s use of the FF&E, but such right of use shall end
upon early termination of this Sublease or Subtenant’s right to possession of
the Premises. During the Term, Subtenant shall (a) maintain the FF&E
in good condition and repair, (b) not remove the FF&E from the
Premises except with Sublandlord’s prior within consent, and (c) bear all
risk of loss to the FF&E. Six (6) months prior to the end of the term
Subtenant shall have the option to purchase the FF&E identified on Exhibit C
as the same may have been substituted by the parties upon the Expiration Date
of this Sublease for $10.00 by giving written notice to Sublandlord that
Subtenant desires to purchase such FF&E. In the absence of such written
notice, Sublandlord shall have no obligation to sell the FF&E to Subtenant.
Upon valid exercise of Subtenant’s option to purchase the FF&E, Sublandlord
shall upon the Expiration Date execute a Bill of Sale in the form attached
hereto at Exhibit E to this Sublease. This option to purchase shall
be binding on both parties upon receipt of the written notice of exercise by
Sublandlord. Immediately following the Expiration Date and provided no earlier
termination of this Sublease has taken place, or Subtenant has validly
exercised Subtenant’s option to purchase the FF&E, Subtenant shall upon
Sublandlord’s request repair any damage to or replace any FF&E. Sublandlord
shall have no obligation to sell Subtenant any FF&E removed by Sublandlord,
or with Sublandlord’s consent by any other party.

 

20.                               MISCELLANEOUS

 

20.1                        Sublandlord,
as the tenant under the Master Lease identified in Section 1.3 above, represents
and warrants to Subtenant that: (a) Exhibit B to this Sublease
is a full and complete copy of the Master Lease; (b) the Master Lease, as
of the Execution Date, is in full force and effect and constitutes the entire
agreement of Master Landlord and Sublandlord relating to the lease of the
Premises, and (c) to the current actual knowledge of Sublandlord (without
duty of inquiry), there exists no event of default under the Master Lease and
there exists no event which would constitute an event of default under the
Master Lease but for the giving of any required notice and passage of any
applicable grace or cure period; (d) the person or persons executing this
Sublease for Sublandlord are fully authorized to so act and no other action is required
to bind Sublandlord to this Sublease; and (e) Sublandlord has the right
and power to execute and deliver this Sublease and to perform its obligations
hereunder, subject only to Master Landlord’s consent.

 

20.2                        Subtenant
represents and warrants to Sublandlord that: (a) Subtenant is familiar with
the provisions of the Master Lease insofar as they pertain to the Premises and Subtenant’s
use and occupation thereof under this Sublease; (b) Subtenant has the right
and power to execute and deliver this Sublease and to perform its obligations hereunder;
(c) the person or persons executing this Sublease for Subtenant are fully authorized
to so act and no other action is required to bind Subtenant to this Sublease;
and (d) Subtenant is duly organized and in good standing in its state of formation
and is authorized to conduct business in the state where the Premises are located.

 

20.3                        Upon
execution and delivery of this Sublease to Sublandlord, Subtenant shall deposit
with Sublandlord the Security Deposit in the amount specified in the Basic

 

18

 

Sublease Provisions, as
security for the full and faithful performance of every provision of this
Sublease to be performed by Subtenant, it being expressly understood and agreed
that the Security Deposit is not an advance deposit for Rent or a measure of
Sublandlord’s damages in case of Subtenant’s default. If Subtenant Defaults
with respect to any provision of this Sublease, including but not limited to
the provisions relating to the payment of Rent, Sublandlord may use, apply or
retain all or any part of the Security Deposit for the payment of any Rent or
any other amount which Sublandlord may spend or become obligated to spend by
reason of Subtenant’s Default, to repair damages to any part of the Premises or
the Building, to clean the Premises or to compensate Sublandlord for any other
loss or damage which Sublandlord may suffer by reason of Subtenant’s Default.
Sublandlord shall not be required to keep the Security Deposit separate from
its general funds, and Subtenant shall not be entitled to interest on the
Security Deposit. If any portion of the Security Deposit is so used or applied,
Subtenant shall, within ten (10) days after written demand therefor,
deposit cash with Sublandlord in an amount sufficient to restore the Security
Deposit to the full amount required hereunder, and Subtenant’s failure to do so
shall be a material breach of this Lease. If Subtenant shall fully and
faithfully perform every provision of this Sublease to be performed by it, the
Security Deposit or any balance thereof shall be returned to Subtenant within
three weeks of the Expiration Date or such earlier termination of this
Sublease.

 

20.4                        Subtenant
agrees to comply with all rules and regulations that Master Landlord has made
or may hereafter from time to time make for the Building and the “Project”. Sublandlord
shall not be liable in any way for damage caused by the non-observance by any
of the other tenants of such similar covenants in their leases or of such rules
and regulations.

 

20.5                        Each party
warrants to the other that it has had no dealings with any broker or agent in
connection with this Sublease, except those Brokers specified in the Basic Sublease
Provisions. Each party covenants to protect, defend, indemnify and hold harmless
the other party from and against any and all costs (including reasonable attorneys’
fees), expense or liability for any compensation, commission and charges claimed
by any broker or other agent, other than the Brokers, with respect to this Sublease
or the negotiation thereof on behalf of such party.

 

20.6                        Sublandlord
shall not be deemed in default with respect to any of the terms, covenants and
conditions of this Sublease on Sublandlord’s part to be performed, if Sublandlord’s
failure to timely perform the same is due in whole or in part to any strike,
lockout, labor trouble (whether legal or illegal), civil disorder, failure of
power, restrictive governmental laws and regulations, riots, insurrections,
war, shortages accidents, casualties, acts of God, acts caused directly by
Subtenant or Subtenant’s agents, employees and invitees or any other cause
beyond that reasonable control of Sublandlord, except that this force majeure provision
shall not apply to Subtenant’s right to terminate under Section 3 for late
delivery of the Premises.

 

20.7                        Subtenant
shall have the right at no additional charge to use four (4) non-reserved parking
spaces per 1000 rentable square feet available to Sublandlord under the terms
of the Master Lease,

 

20.8                        This
Sublease shall be subject to the laws of the State of California.

 

19

 

20.9                        Sublandlord shall use commercially reasonable
efforts to seek the Master Landlord’s consent to building signage, building
entrance signage and signage on one ground mounted monument sign for Subtenant
in accordance with Article 41 of the Master Lease; provided, however, the
cost of the same, instillation, removal at the end of the Term and repair to
any damage occasioned by such removal and refinishing of surfaces to match
surrounding surfaces shall be at Subtenant’s sole cost and expense.

 

20.10                 Without any obligation on Sublandlord or
Master Landlord to provide the same, Sublandlord shall use commercially
reasonable efforts to seek a non-disturbance right for Subtenant from Master
Landlord.

 

[*** SIGNATURES ON NEXT PAGE ***]

 

20

 

IN
WITNESS WHEREOF, Sublandlord and Subtenant have executed this
Sublease on the dates set forth below, intending to be bound hereby.

 

	
  SUBLANDLORD:

  	
   

  	
   

  	
  SUBTENANT:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VERISITY DESIGN, INC.,

  	
   

  	
   

  	
  CONCEPTUS, INC.,

  	
   

  
	
  a California
  corporation

  	
   

  	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James J. Cowie

  	
   

  	
   

  	
  By:

  	
  /s/ Mark M Sieczkarek

  	
   

  
	
   

  	
  Name:

  	
  James J. Cowie

  	
   

  	
   

  	
   

  	
  Name:

  	
  MARK M SIECZKAREK

  	
   

  
	
   

  	
  Its:

  	
  Assistant Secretary

  	
   

  	
   

  	
   

  	
  Its:

  	
      CEO/PRESIDENT

  	
   

  
	
  [must be CEO, chairman
  of the board, president

  	
   

  	
   

  	
   

  	
   

  	
  [must be CEO, chairman
  of the board,

  	
   

  
	
  or vice president]

  	
   

  	
   

  	
   

  	
   

  	
  president or vice
  president]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: 

  	
  June 29, 2005

  	
   

  	
   

  	
   

  	
   

  	
  Date:

  	
  6/27/05

  	
   

  
												

 

21

 

EXHIBIT A

 

DESIGNATION OF PREMISES

 

 

Exhibit A

 

 

 

Exhibit A

 

 

 

Exhibit A

 

 

EXHIBIT B

 

MASTER LEASE

 

[*** Attach Master Lease Here ***]

 

 

Exhibit B

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  USE AND RESTRICTIONS ON
  USE

  	
   

  
	
  2.

  	
  TERM

  	
   

  
	
  3.

  	
  RENT

  	
   

  
	
  4.

  	
  RENT ADJUSTMENTS

  	
   

  
	
  5.

  	
  SECURITY DEPOSIT

  	
   

  
	
  6.

  	
  ALTERATIONS

  	
   

  
	
  7.

  	
  REPAIR

  	
   

  
	
  8.

  	
  LIENS

  	
   

  
	
  9.

  	
  ASSIGNMENT AND
  SUBLETTING

  	
   

  
	
  10.

  	
  INDEMNIFICATION

  	
   

  
	
  11.

  	
  INSURANCE

  	
   

  
	
  12.

  	
  WAIVER OF SUBROGATION

  	
   

  
	
  13.

  	
  SERVICES AND UTILITIES

  	
   

  
	
  14.

  	
  HOLDING OVER

  	
   

  
	
  15.

  	
  SUBORDINATION

  	
   

  
	
  16.

  	
  RULES AND REGULATIONS

  	
   

  
	
  17.

  	
  REENTRY BY LANDLORD

  	
   

  
	
  18.

  	
  DEFAULT

  	
   

  
	
  19.

  	
  REMEDIES

  	
   

  
	
  20.

  	
  TENANT’S BANKRUPTCY OR
  INSOLVENCY

  	
   

  
	
  21.

  	
  QUIET ENJOYMENT

  	
   

  
	
  22.

  	
  CASUALTY

  	
   

  
	
  23.

  	
  EMINENT DOMAIN

  	
   

  
	
  24.

  	
  SALE BY LANDLORD

  	
   

  
	
  25.

  	
  ESTOPPEL CERTIFICATES

  	
   

  
	
  26.

  	
  SURRENDER OF PREMISES

  	
   

  
	
  27.

  	
  NOTICES

  	
   

  
	
  28.

  	
  TAXES PAYABLE BY TENANT

  	
   

  
	
  29.

  	
  RELOCATION OF TENANT

  	
   

  
	
  30.

  	
  DEFINED TERMS AND
  HEADINGS

  	
   

  
	
  31.

  	
  TENANT’S AUTHORITY

  	
   

  
	
  32.

  	
  FINANCIAL STATEMENTS
  AND CREDIT REPORTS

  	
   

  
	
  33.

  	
  COMMISSIONS

  	
   

  
	
  34.

  	
  TIME AND APPLICABLE LAW

  	
   

  
	
  35.

  	
  SUCCESSORS AND ASSIGNS

  	
   

  
	
  36.

  	
  ENTIRE AGREEMENT

  	
   

  
	
  37.

  	
  EXAMINATION NOT OPTION

  	
   

  
	
  38.

  	
  RECORDATION

  	
   

  

 

i

 

	
  39.

  	
  OPTION
  TO RENEW

  	
   

  
	
  40.

  	
  SIGNAGE

  	
   

  
	
  41.

  	
  CAFETERIA

  	
   

  
	
  42.

  	
  ADDITIONAL
  SPACE IN PROJECT

  	
   

  
	
  43.

  	
  IMPROVEMENT
  OF EXTERIOR OF PROJECT

  	
   

  
	
  44.

  	
  LIMITATION
  OF LANDLORD’S LIABILITY

  	
   

  

 

EXHIBIT A
- FLOOR PLAN DEPICTING THE PREMISES

EXHIBIT A-l
- SITE PLAN

EXHIBIT A-2
- DEPICTION OF VISITOR PARKING SPACES

EXHIBIT B
- INITIAL ALTERATIONS

EXHIBIT C
- COMMENCEMENT DATE MEMORANDUM

EXHIBIT D
- RULES AND REGULATIONS

EXHIBIT E
- FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

EXHIBIT F-FORM OF
GUARANTY

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

ii

 

MULTI-TENANT
INDUSTRIAL NET LEASE

REFERENCE
PAGES

 

	
  BUILDING:

  	
   

  	
  Mountain
  View Corporate Center

  
	
   

  	
   

  	
   

  
	
  LANDLORD:

  	
   

  	
  SFERS
  REAL ESTATE CORP. U, a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  LANDLORD’S
  ADDRESS:

  	
   

  	
  1310
  Tully Road, Suite 110

  
	
   

  	
   

  	
  San
  Jose, California 95122

  
	
   

  	
   

  	
   

  
	
  WIRE
  INSTRUCTIONS AND/OR ADDRESS FOR

  	
   

  	
  SFERS
  Real Estate Corp. U

  
	
  RENT
  PAYMENT:

  	
   

  	
  Dept.
  #44631

  
	
   

  	
   

  	
  P.O. Box
  44000

  San Francisco, California 94144

  
	
   

  	
   

  	
   

  
	
  LEASE
  REFERENCE DATE:

  	
   

  	
  April 14,
  2004

  
	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
  VERISITY
  DESIGN, INC., a California corporation

  
	
   

  	
   

  	
   

  
	
  TENANT’S
  NOTICE ADDRESS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (a) As of beginning of Term:

  	
   

  	
  331
  East Evelyn, Mountain View, California 94039

  
	
   

  	
   

  	
   

  
	
  (b) Prior to beginning of Term (if
  different):

  	
   

  	
  2041
  Landings Drive, Building N

  
	
   

  	
   

  	
  Mountain
  View, California 94043

  
	
   

  	
   

  	
   

  
	
  PREMISES
  ADDRESS:

  	
   

  	
  331
  East Evelyn, Mountain View, California 94039

  
	
   

  	
   

  	
   

  
	
  PREMISES
  RENTABLE AREA:

  	
   

  	
  Approximately
  58,242 sq. ft. (for outline of Premises see Exhibit A)

  
	
   

  	
   

  	
   

  
	
  BUILDING
  PROJECT RENTABLE AREA:

  	
   

  	
  Approximately
  266,088 sq. ft.

  
	
   

  	
   

  	
   

  
	
  USE:

  	
   

  	
  Research,
  development, marketing, assembly and distribution of software and computer
  components and general office use

  
	
   

  	
   

  	
   

  
	
  SCHEDULED
  COMMENCEMENT DATE:

  	
   

  	
  July 1,
  2004

  
	
   

  	
   

  	
   

  
	
  TERM
  OF LEASE:

  	
   

  	
  Approximately
  five (5) years beginning on the Commencement Date and ending on the
  Termination Date. The period from the Commencement Date to the last day of
  the same month is the “Commencement Month.”

  
	
   

  	
   

  	
   

  
	
  TERMINATION
  DATE:

  	
   

  	
  June 30,
  2009

  

 

	
  /s/ [ILLEGIBLE]

  
	
  Initials

  

iii

 

ANNUAL
RENT and MONTHLY INSTALLMENT OF RENT (Article 3):

 

	
  7/1/2004

  	
   

  	
  6/30/2005

  	
   

  	
  58,242

  	
   

  	
  $

  	
   

  	
  $

  	
  $

  	
   

  
	
  7/1/2005

  	
   

  	
  6/30/2006

  	
   

  	
  58,242

  	
   

  	
  $

  	
   

  	
  $

  	
  $

  	
   

  
	
  7/1/2006

  	
   

  	
  6/30/2007

  	
   

  	
  58,242

  	
   

  	
  $

  	
   

  	
  $

  	
  $

  	
   

  
	
  7/1/2007

  	
   

  	
  6/30/2008

  	
   

  	
  58,242

  	
   

  	
  $

  	
   

  	
  $

  	
  $

  	
   

  
	
  7/1/2008

  	
   

  	
  6/30/2009

  	
   

  	
  58,242

  	
   

  	
  $

  	
   

  	
  $

  	
  $

  	
   

  

*                 Subject to abatement pursuant to Section 3.1.1
of the Lease.

 

	
  INITIAL
  ESTIMATED MONTHLY INSTALLMENT

  	
   

  	
  $                commencing
  7/1/2004

  
	
  OF
  RENT ADJUSTMENTS (Article 4)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TENANT’S
  PROPORTIONATE SHARE:

  	
   

  	
  21.89%

  
	
   

  	
   

  	
   

  
	
  TENANT’S
  PROPORTIONATE SHARE FOR

  	
   

  	
  4
  parking spaces per 1,000 rentable square feet of the

  
	
  PARKING:

  	
   

  	
  Premises

  
	
   

  	
   

  	
   

  
	
  SECURITY
  DEPOSIT:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  ASSIGNMENT/SUBLETTING
  FEE

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  REAL
  ESTATE BROKER DUE COMMISSION:

  	
   

  	
  Cornish &
  Carey Commercial

  
	
   

  	
   

  	
   

  
	
  GUARANTOR:

  	
   

  	
  Verisity
  Ltd, a corporation organized under the laws of the State of Israel.
  Concurrent with Tenant’s execution and delivery of this Lease, Tenant shall
  cause the Guarantor to execute and deliver to Landlord a Guaranty in the form
  attached hereto as Exhibit F.

  

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

	
  /s/ [ILLEGIBLE]

  
	
  Initials

  

 

iv

 

	
  TENANT’S SIC CODE:

  	
   

  	
  5045

  
	
   

  	
   

  	
   

  
	
  AMORTIZATION RATE:

  	
   

  	
  N/A

  

 

The Reference Pages information
is incorporated into and made a part of the Lease. In the event of any conflict
between any Reference Pages information and the Lease, the Lease shall
control. This Lease includes Exhibits A through F, all of which are made a part
of this Lease.

 

	
  LANDLORD:

  	
   

  	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SFERS REAL ESTATE CORP. U,

  	
   

  	
   

  	
  VERISITY
  DESIGN, INC.,

  	
   

  
	
  a
  Delaware corporation

  	
   

  	
   

  	
  a
  California corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  RREEF Management
  Company, a

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Delaware corporation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  James H. Ida

  	
   

  	
   

  	
  By:

  	
  /s/
  Charles Alvarez

  	
   

  
	
  Name: James H. Ida

  	
   

  	
   

  	
  Name: 

  	
  Charles Alvarez

  	
   

  
	
  Title: District Manager

  	
   

  	
   

  	
  Title:

  	
  Vice President of
  Finance and

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  4/15/04

  	
   

  	
   

  	
  Dated:

  	
  4/15/04

  	
   

  
										

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK)

 

v

LEASE

 

By
this Lease Landlord leases to Tenant and Tenant leases from Landlord the
Premises in the Building as set forth and described on the Reference Pages. The
Premises are depicted on the floor plan attached hereto as Exhibit A,
and the Building is depicted on the site plan attached hereto as Exhibit A-l.
The Reference Pages, including all terms defined thereon, are incorporated as
part of this Lease.

 

1.             USE AND RESTRICTIONS ON USE.

 

1.1           The Premises are to
be used solely for the purposes set forth on the Reference Pages. Tenant shall
not do or permit anything to be done in or about the Premises which will in any
way obstruct or interfere with the rights of other tenants or occupants of the
Building or injure, annoy, or disturb them, or allow the Premises to be used
for any improper, immoral, unlawful, or objectionable purpose, or commit any
waste. Tenant shall not do, permit or suffer in, on, or about the Premises the
sale of any alcoholic liquor without the written consent of Landlord first
obtained. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises and its occupancy and shall
promptly comply with all governmental orders and directions for the correction,
prevention and abatement of any violations in the Building or appurtenant land,
caused or permitted by, or resulting from the specific use by, Tenant, or in or
upon, or in connection with, the Premises, all at Tenant’s sole expense. Tenant
shall not do or permit anything to be done on or about the Premises or bring or
keep anything into the Premises which will in any way increase the rate of,
invalidate or prevent the procuring of any insurance protecting against loss or
damage to the Building or any of its contents by fire or other casualty or
against liability for damage to property or injury to persons in or about the
Building or any part thereof.

 

1.2           Tenant shall not, and
shall not direct, suffer or permit any of its agents, contractors, employees,
licensees or invitees (collectively, the “Tenant Entities”) to at any time
handle, use, manufacture, store or dispose of in or about the Premises or the
Building any (collectively “Hazardous Materials”) flammables, explosives,
radioactive materials, hazardous wastes or materials, toxic wastes or
materials, or other similar substances, petroleum products or derivatives or
any substance subject to regulation by or under any federal, state and local
laws and ordinances, relating to the protection of the environment or the
keeping, use or disposition of environmentally hazardous materials, substances,
or wastes, presently in effect or hereafter adopted, all amendments to any of
them, and all rules and regulations issued pursuant to any of such laws or
ordinances (collectively “Environmental Laws”), nor shall Tenant suffer or
permit any Hazardous Materials to be used in any manner not fully in compliance
with all Environmental Laws, in the Premises or the Building and appurtenant
land or allow the environment to become contaminated with any Hazardous Materials.
Notwithstanding the foregoing, Tenant may handle, store, use or dispose of
products containing small quantities of Hazardous Materials (such as aerosol
cans containing insecticides, toner for copiers, paints, paint remover and the
like) to the extent customary and necessary for the use of the Premises for
general office purposes; provided that tenant shall always handle, store, use,
and dispose of any such Hazardous Materials in a safe and lawful manner and
never allow such Hazardous Materials to contaminate the Premises, Building and
appurtenant land or the environment. Tenant shall protect, defend, indemnify
and hold each and all of the Landlord Entities (as defined in Article 30)
harmless from and against any and all loss, claims, liability or costs
(including court costs and attorney’s fees) incurred by reason of any actual or
asserted failure of Tenant to fully comply with all applicable Environmental
Laws, or the presence, handling, use or disposition in or from the Premises of
any Hazardous Materials by Tenant or any Tenant Entity (even though permissible
under all applicable Environmental Laws or the provisions of this Lease), or by
reason of any actual or asserted failure of Tenant to keep, observe, or perform
any provision of this Section 1.2. As of the date hereof, Landlord has not
received written notice from any governmental agencies that the Building is in
violation of any Environmental Laws. Further, to Landlord’s actual knowledge,
there are no Hazardous Materials at the Building other than small quantities of
Hazardous Materials (such as aerosol cans containing insecticides, toner for
copiers, paints, paint remover and the like) to the extent customary and
necessary for the use of the Premises for general office purposes. For purposes
of this Section, “Landlord’s actual knowledge” shall be deemed to mean and
limited to the current actual knowledge of James Ida, District Manager of Rreef
Management Company, a Delaware corporation, at the time of execution of this
Lease and not any implied, imputed, or constructive knowledge of said
individual or of Landlord or any parties related to or comprising Landlord and
without any independent investigation or inquiry having been made or any
implied duty to investigate or make any inquiries; it being understood and
agreed that such individual shall have no personal liability in any manner
whatsoever hereunder or otherwise related to the transactions contemplated
hereby.

 

1.3             Tenant and the Tenant Entities will
be entitled to the non-exclusive use of the common areas of the Building as
they exist from time to time during the Term, including the parking facilities,
subject to Landlord’s rules and regulations regarding such use. However,
in no event will Tenant or the Tenant Entities park more vehicles in the
parking facilities than Tenant’s Proportionate Share of the total parking
spaces available for common use. The foregoing shall not be deemed to provide
Tenant with an exclusive right to any parking spaces or any guaranty of the
availability of any particular parking spaces or any specific number of parking
spaces. Lessee shall be allotted five (5) designated visitor parking
spaces,

 

1

 

as
depicted on the site plan attached hereto as Exhibit A-2, provided
that such designated spaces shall be inclusive of and not in addition to Tenant’s
Proportionate Share of the total parking spaces available for common use.
Landlord shall not allot to any other tenant of the Building or of the project
in which the Building is located (the “Project”) the right to use parking
spaces in excess of such tenant’s proportionate share of the total parking
spaces available for common use.

 

2.             TERM.

 

2.1            The Term of this Lease shall begin
on the date (“Commencement Date”) which shall be the later of the Scheduled
Commencement Date as shown on the Reference Pages and the date that
Landlord shall lender possession of the Premises to Tenant, and shall terminate
on the date as shown on the Reference Pages (“Termination Date”), unless
sooner terminated by the provisions of this Lease. Anything to the contrary
notwithstanding, in the event that Tenant’s completion of the Initial
Alterations (as defined in Exhibit B attached hereto) is delayed
due to strikes, acts of God, shortages of labor or materials, war, terrorist
acts, civil disturbances and other causes beyond the reasonable control of the
performing party (each a “Force Majeure”) beyond July 1, 2004, the
Scheduled Commencement Date and Termination Date shall be delayed by an equal
period of time, provided that in no event shall such delay exceed thirty (30)
days. Tenant shall, at Landlord’s request, execute and deliver a memorandum
agreement provided by Landlord in the form of Exhibit C attached
hereto, setting forth the actual Commencement Date, Termination Date and, if
necessary, a revised rent schedule. Should Tenant fail to do so within thirty
(30) days after Landlord’s request, the information set forth in such
memorandum provided by Landlord shall be conclusively presumed to be agreed and
correct.

 

2.2           Tenant agrees that in the event of
the inability of Landlord to deliver possession of the Premises on the date immediately
following the date this Lease is fully executed by Landlord and Tenant and
Tenant has delivered to Landlord the fully executed Guaranty, all prepaid
rental for the seventh (7th) month of the Term, the Security
Deposit, and insurance certificates required hereunder (the “Effective Date”)
for any reason, Landlord shall not be liable for any damage resulting from such
inability, but Tenant shall not be liable for any rent until the time when
Landlord can, after notice to Tenant, deliver possession of the Premises to
Tenant. No such failure to give possession on the date immediately following
the Effective Date shall affect the other obligations of Tenant under this
Lease, except that if the Effective Date occurs on or before April 15,
2004, and Landlord is unable to deliver possession of the Premises on or before
April 19, 2004, Tenant shall have the option to terminate this Lease with
the written notice of such termination delivered to Landlord no later than
April 23, 2004.

 

2.3           Tenant shall be permitted to occupy
the Premises for purposes of performing the Initial Alterations, installing
furniture, data cabling, equipment or other personal property and for the
purposes set forth on the Reference Pages as of the date that Landlord delivers
possession of the Premises to Tenant, which delivery Tenant acknowledges will
not occur prior to the Effective Dale. Such possession prior to the
Commencement Date shall be subject to all of the terms and conditions of this
Lease, including, without limitation, Tenant’s compliance with the insurance
requirements of Article 11, except that Tenant shall not be required to
pay Monthly Installments of Rent or Tenant’s Proportionate Share of Expenses and
Taxes with respect to the period of time prior to the Commencement Date during
which Tenant occupies the Premises for such purposes. However, Tenant shall be
liable for any parking or special or after hour services provided to Tenant
during such period. Said early possession shall not advance the Termination
Date.

 

2.4           Notwithstanding anything to the
contrary set forth herein, except to the extent caused by Tenant or any Tenant
Entity, the base Building electrical, heating, ventilation and air conditioning
systems, mechanical systems, plumbing systems, and fire sprinkler, fire alarm
monitoring and smoke detector systems (collectively, the “Life Safety Systems”)
and the Building roof shall be in good and working order as of the date
Landlord delivers possession of the Premises to Tenant, subject to completion
of the Landlord Work (as defined in Exhibit B attached hereto). If
the foregoing are not in good and working order as provided above, Landlord
shall be responsible for repairing or restoring same at its cost and expense promptly,
provided that Tenant has delivered written notice thereof to Landlord not later
than sixty (60) days following the date Tenant substantially completes
construction of the Initial Alterations, but in no event later than August 1, 2004. Notwithstanding the foregoing,
Tenant, and not Landlord, shall be responsible, at its cost, for any repairs
and for the correction of any defects that arise out of or in connection with the
specific nature of Tenant’s business, the acts or omissions of Tenant or any
Tenant Entity, Tenant’s arrangement of any furniture, equipment or other
property in the Premises, any repairs, alterations, additions or improvements
performed by or on behalf of Tenant, including the Initial Alterations (as defined
in Exhibit B hereto), and any design or configuration of the
Premises created by or for Tenant which specifically results in such defect in
the mechanical or electrical systems in the Premises. Tenant further
acknowledges that no representations as to the condition or repair of the
Premises nor promises to alter, remodel or improve the Premises have been made
by Landlord or any agents of Landlord unless such are expressly set forth in
this Lease. By taking possession of the Premises, Tenant accepts them as being
in good order, condition and repair and in the condition in which Landlord is
obligated to deliver them, subject to completion of the Landlord Work, and
except as set forth in any notice from Tenant to

 

2

 

Landlord
delivered within sixty (60) days following the date Tenant substantially
completes construction of the Initial Alterations, but in no event later than August 1,
2004. It is hereby understood and agreed that no representations respecting the
condition of the Premises or the Building have been made by Landlord to Tenant,
except as specifically set forth in this Lease.

 

2.5           Except to the extent properly
included in Expenses, Landlord shall be responsible for the cost of correcting
any violations of governmental laws, ordinances and regulations, including
without limitation, Title III of the Americans with Disabilities Act (the “ADA”)
(collectively, “Laws”) with respect to the exterior common areas of the
Building and the second floor balconies of the Building, at its sole cost and
expense. Notwithstanding the foregoing, Landlord shall have the right to
contest any alleged violation in good faith, including, without limitation, the
right to apply for and obtain a waiver or deferment of compliance, the right to
assert any and all defenses allowed by applicable law and the right to appeal
any decisions, judgments or rulings to the fullest extent permitted by
applicable law. Landlord, after the exhaustion of any and all rights to appeal
or contest, will make all repairs, additions, alterations or improvements
necessary to comply with the terms of any final order or judgment.
Notwithstanding the foregoing, Tenant, not Landlord, shall be responsible for
the correction of any violations that arise out of or in connection with any
claims brought under any Laws, including any provision of the ADA other than
Title III, the specific nature of Tenant’s business in the Premises (other than
general office use), the acts or omissions of Tenant or any Tenant Entity,
Tenant’s arrangement of any furniture, equipment or other property in the
Premises, any repairs, alterations, additions or improvements performed by or
on behalf of Tenant, including the Initial Alterations, and any design or
configuration of the Premises specifically requested by Tenant after being
informed that such design or configuration may not be in strict compliance with
the ADA.

 

3.             RENT.

 

3.1           Tenant agrees to pay to Landlord the
Annual Rent in effect from time to time by paying the Monthly Installment of
Rent then in effect on or before the first day of each full calendar month
during the Term, except that the first full month’s rent shall be paid upon the
execution of this Lease. The Monthly Installment of Rent in effect at any time
shall be one-twelfth (1/12) of the Annual Rent in effect at such time. Rent for
any period during the Term which is less than a full month shall be a prorated
portion of the Monthly Installment of Rent based upon the number of days in
such month. Said rent shall be paid to Landlord, without deduction or offset
and without notice or demand, at the Rent Payment Address, as set forth on the Reference Pages, or to such
other person or at such other place as Landlord may from time to time designate
in writing. If an Event of Default occurs, Landlord may require by notice to
Tenant that all subsequent rent payments be made by an automatic payment from
Tenant’s bank account to Landlord’s account, without cost to Landlord, Tenant
must implement such automatic payment system prior to the next scheduled rent
payment or within ten (10) days after Landlord’s notice, whichever is
later. Unless specified in this Lease to the contrary, all amounts and sums
payable by Tenant to Landlord pursuant to this Lease shall be deemed additional
rent.

 

3.1.1        Notwithstanding anything in this Lease
to the contrary, so long as Tenant is not in default under this Lease, Tenant
shall be entitled to an abatement of Monthly Installment of Rent with respect
to the Premises, as originally described in this Lease, in the amount of (a) $
          per month for the
period commencing on July 1, 2004 and continuing through December 31,
2004, and (b) $         per month
for the period commencing on January 1, 2005 and continuing through June 30,
2005 (collectively, the “Abated Monthly Installment of Rent”). The maximum
total amount of Abated Monthly Installment of Rent abated with respect to the
Premises in accordance with the foregoing shall equal $              .  Only Monthly Installment of Rent shall be
abated pursuant to this Section, as more particularly described herein, and all
other rent and other costs and charges specified in this Lease, including
without limitation. Tenant’s Proportionate Share of Expenses and Taxes, shall
remain as due and payable pursuant to the provisions of this Lease. In the
event of a delay in the Scheduled Commencement Date as set forth in the second
sentence of Section 2.1 above, each of the rent abatement periods set
forth in clauses (a) and (b) above shall be delayed by an equal
period of time.

 

3.2           Tenant recognizes that late payment
of any rent or other sum due under this Lease will result in administrative
expense to Landlord, the extent of which additional expense is extremely
difficult and economically impractical to ascertain. Tenant therefore agrees
that if rent or any other sum is not paid within three (3) days of the
date due and payable pursuant to this Lease, a late charge shall be imposed in
an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) three
percent (3%) of the unpaid rent or other payment. The amount of the late charge
to be paid by Tenant shall be reassessed and added to Tenant’s obligation for
each successive month until paid. The provisions of this Section 3.2 in no
way relieve Tenant of the obligation to pay rent or other payments on or before
the date on which they are due, nor do the terms of this Section 3.2 in
any way affect Landlord’s remedies pursuant to Article 19 of this Lease in
the event said rent or other payment is unpaid after date due.

 

3

 

4.             RENT ADJUSTMENTS.

 

4.1           For the purpose of this Article 4,
the following terns are defined as follows:

 

4.1.1        Lease Year:
Each fiscal year (as determined by Landlord from time to time in Landlord’s reasonable
discretion) falling partly or wholly within the Term.

 

4.1.2        Expenses: All
costs of operation, maintenance, repair, replacement and management of the Building
(including the amount of any credits which Landlord may grant to particular
tenants of the Building in lieu of providing any standard services or paying
any standard costs described in this Section 4.1.2 for similar tenants),
as determined in accordance with generally accepted accounting principles,
including the following costs by way of illustration, but not limitation: water
and sewer charges; insurance charges of or relating to all insurance policies
and endorsements deemed by Landlord to be reasonably necessary or desirable and
relating in any manner to the protection, preservation, or operation of the
Building or any part thereof; utility costs, including, but not limited to, the
cost of heat, light, power, steam, gas; waste disposal; the cost of janitorial
services; the cost of security and alarm services (including any central
station signaling system); costs of cleaning, repairing, replacing and
maintaining the common areas, including parking and landscaping, window
cleaning costs; labor costs; costs and expenses of managing the Building
including management and/or administrative fees; air conditioning maintenance
costs; elevator maintenance fees and supplies; material costs; equipment costs
including the cost of maintenance, repair and service agreements and rental and
leasing costs; purchase costs of equipment; current rental and leasing costs of
items which would be capital items if purchased; tool costs; licenses, permits and
inspection fees; wages and salaries; employee benefits and payroll taxes;
accounting and legal fees; any sales, use or service taxes incurred in
connection therewith. In addition, Landlord shall be entitled to recover, as
additional rent (which, along with any other capital expenditures constituting
Expenses, Landlord may either include in Expenses or cause to be billed to
Tenant along with Expenses and Taxes but as a separate item), Tenant’s
Proportionate Share of: (i) an allocable portion of the cost of capital
improvement items which are reasonably calculated to reduce operating expenses;
(ii) the cost of fire sprinklers and suppression systems and other life
safety systems; and (iii) other capital expenses which are required under any
governmental laws, regulations or ordinances which were not applicable to the
Building at the time it was constructed; but the costs described in this
sentence shall be amortized over the reasonable life of such expenditures in
accordance with such reasonable life and amortization schedules as shall be
determined by Landlord in accordance with generally accepted accounting
principles, with interest on the unamortized amount at one percent (1%) in
excess of the Wall Street Journal prime lending rate announced from time to
time. Expenses shall not include depreciation or amortization of the Building
or equipment in the Building except as provided herein, loan principal
payments, costs of alterations of tenants’ premises, leasing commissions,
interest expenses on long-term borrowings or advertising costs. The following
items are also excluded from Expenses and in no event shall Tenant have any
obligation to perform, pay directly or reimburse Landlord for any of the
following except to the extent expressly provided herein:

 

(a)                                  Marketing costs, including leasing
commissions, attorneys’ fees in connection with the negotiation and preparation
or enforcement of letters, deal memos, letters of intent, leases, subleases
and/or assignments, space planning costs, and other costs and expenses incurred
in connection with lease, sublease and/or assignment negotiations and
transactions with present or prospective tenants or other occupants of the
Building.

 

(b)                                 Attorney’s fees and other expenses incurred
in connection with negotiations or disputes with prospective tenants or tenants
or other occupants of the Building.

 

(c)                                  Any expenses for which Landlord has received
actual reimbursement (other than through Expenses).

 

(d)                                 Sums paid to subsidiaries or other affiliates
of Landlord for services on or to the Building and/or Premises, but only to the
extent that the costs of such services exceed the competitive cost for such
services rendered by persons or entities of similar skill, competence and
experience.

 

(e)                                  Ground lease rental. 

 

(f)                                    Interest (except as provided in this Lease
for the amortization of capital improvements and except to the extent incurred
as a result of any act or omission of Tenant).

 

(g)                                 Costs incurred by Landlord in connection with
the correction of latent defects in the construction of the Building.

 

4

 

(h)                                 Any fines, penalties or interest resulting
from the gross negligence or willful misconduct of the Landlord or its agents
or employees.

 

(i)                                     Landlord’s charitable and political
contributions.

 

(j)                                     Fines, costs or penalties incurred as a
result and to the extent of a violation by Landlord or other tenants of the
project of which Building is a part of any applicable laws.

 

(k)                                  The cost or expense of any services or
benefits provided generally to other tenants in the Building and not provided
or available to Tenant.

 

(1)                                  All costs of purchasing or leasing major
sculptures, paintings or other major works or objects of art (as opposed to
decorations purchased or leased by Landlord for display in the common areas of
the Building).

 

(m)                               Principal payments of mortgage and other non-operating
debts of Landlord.

 

(n)                                 The cost of operating any commercial
concession which is operated by Landlord in the Building, including, without
limitation, any compensation paid to clerks, attendants or other persons
operating such commercial concessions on behalf of Landlord, but only to the
extent revenues from any such commercial concessions exceed such costs and
compensation.

 

(o)                                 Landlord’s costs of electricity and other
services sold or provided to tenants in the Building and for which Landlord is reimbursed
by such tenants as a separate additional charge or rental over and above the
base rental or additional base rental payable under the lease with such tenant.

 

(p)                                 All items (including repairs) and services
for which Tenant or other tenants pay directly to third parties or for which
Tenant or other tenants reimburse Landlord (other than through Expenses).

 

(q)                                 Except to the extent caused by the acts or
omissions of Tenant or any Tenant Entity, any costs associated with the full
replacement of the roof of the Building.

 

(r)                                    Except to the extent caused by the acts or
omissions of Tenant or any Tenant Entity, Landlord’s costs to repair and
maintain the roof of the Building in excess of Four Thousand Dollars
($4,000.00) per Lease Year.

 

4.1.3        Taxes: Real
estate taxes and any other taxes, charges and assessments which are levied with
respect to the Building or the land appurtenant to the Building, or with
respect to any improvements, fixtures and equipment or other property of
Landlord, real or personal, located in the Building and used in connection with
the operation of the Building and said land, any payments to any ground lessor
in reimbursement of tax payments made by such lessor; and all fees, expenses
and costs incurred by Landlord in investigating, protesting, contesting or in
any way seeking to reduce or avoid increase in any assessments, levies or the
tax rate pertaining to any Taxes to be paid by Landlord in any Lease Year.
Taxes shall not include any corporate franchise, or estate, inheritance or net
income tax, or tax imposed upon
any transfer by Landlord of its interest in this Lease or the Building or any
taxes to be paid by Tenant pursuant to Article 28.

 

4.2           Tenant shall pay as additional rent for each
Lease Year Tenant’s Proportionate Share of Expenses and Taxes incurred for such
Lease Year.

 

4.3           The annual determination of Expenses
shall be made by Landlord and shall be binding upon Landlord and Tenant,
subject to the provisions of this Section 4.3. During the Term, Tenant may
review, at Tenant’s sole cost and expense, the books and records supporting
such determination in an office of Landlord, or Landlord’s agent, during normal
business hours, upon giving Landlord five (5) days advance written notice within sixty (60) days
after receipt of such determination, but in no event more often than once in
any one (1) year period, subject to execution of a confidentiality agreement acceptable
to Landlord, and provided that if Tenant utilizes an independent accountant to
perform such review it shall be one of national standing which is reasonably
acceptable to Landlord, is not compensated on a contingency basis and is also subject
to such confidentiality agreement. If Tenant fails to object to Landlord’s
determination of Expenses within ninety (90) days after receipt, or if any such
objection fails to state with specificity the reason for the objection, Tenant
shall be deemed to have approved such determination and shall have no further
right to object to or contest such determination. In the event that during all
or any portion of any Lease Year or Base Year, the Building is not fully rented
and occupied Landlord

 

5

 

shall
make an appropriate adjustment in occupancy-related Expenses for such year for
the purpose of avoiding distortion of the amount of such Expenses to be
attributed to Tenant by reason of variation in total occupancy of the Building,
by employing consistent and sound accounting and management principles to
determine Expenses that would have been paid or incurred by Landlord had the
Building been at least ninety-five percent (95%) rented and occupied, and the
amount so determined shall be deemed to have been Expenses for such Lease Year.

 

4.4           Prior to the actual determination
thereof for a Lease Year, Landlord may from time to time estimate Tenant’s
liability for Expenses and/or Taxes under Section 4.2, Article 6 and Article 28
for the Lease Year or portion thereof. Landlord will give Tenant written
notification of the amount of such estimate and Tenant agrees that it will pay,
by increase of its Monthly Installments of Rent due in such Lease Year,
additional rent in the amount of such estimate. Any such increased rate of
Monthly Installments of Rent pursuant to this Section 4.4 shall remain in
effect until further written notification to Tenant pursuant hereto. Landlord
shall use commercially reasonable efforts to (i) provide such estimate to Tenant
within ninety (90) days after the beginning of each calendar year and (ii) to
provide earlier notice to Tenant in the event that Landlord becomes aware,
prior to delivery of such estimate, of any event or condition which is likely
to cause a material increase in Landlord’s estimate of Tenant’s Proportionate
Share of Expenses and Taxes over those due in the previous calendar year.

 

4.5           When the above mentioned actual
determination of Tenant’s liability for Expenses and/or Taxes is made for any
Lease Year and when Tenant is so notified in writing, then:

 

4.5.1        If the total additional rent Tenant
actually paid pursuant to Section 4.3 on account of Expenses and/or Taxes
for the Lease Year is less than Tenant’s liability for Expenses and/or Taxes,
then Tenant shall pay such deficiency to Landlord as additional rent in one
lump sum within thirty (30) days of receipt of Landlord’s bill therefor; and

 

4.5.2        If the total additional rent Tenant
actually paid pursuant to Section 4.3 on account of Expenses and/or Taxes
for the Lease Year is more than Tenant’s liability for Expenses and/or Taxes,
then Landlord shall credit the difference against the then next due payments to
be made by Tenant under this Article 4, or, if the Lease has terminated, refund
the difference in cash.

 

4.6           If the Commencement Date is other
than January 1 or if the Termination Date is other than December 31, Tenant’s
liability for Expenses and Taxes for the Lease Year in which said Date occurs
shall be prorated based upon a three hundred sixty-five (365) day year.

 

5.             SECURITY DEPOSIT. Tenant shall deposit the Security Deposit
with Landlord upon the execution of this Lease. Said sum shall be held by
Landlord as security for the faithful performance by Tenant of all the terms,
covenants and conditions of this Lease to be kept and performed by Tenant and
not as an advance rentel deposit or as a measure of Landlord’s damage in case
of Tenant’s default. If Tenant defaults with respect to any provision of this
Lease, Landlord may use any part of the Security Deposit for the payment of any
rent or any other sum in default, or for the payment of any amount which
Landlord may spend or become obligated to spend by reason of Tenant’s default,
or to compensate Landlord for any other loss or damage which Landlord may
suffer by reason of Tenant’s default. If any portion is so used, Tenant shall within
five (5) days after written demand therefor, deposit with Landlord an
amount sufficient to restore the Security Deposit to its original amount and
Tenant’s failure to do so shall be a material breach of this Lease. Except to
such extent, if any, as shall be required by law, Landlord shall not be
required to keep the Security Deposit separate from its general funds, and Tenant
shall not be entitled to interest on such deposit. If Tenant shall fully and
faithfully perform every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned to Tenant at such
time after termination of this Lease when Landlord shall have determined that
all of Tenant’s obligations under this Lease have been fulfilled.
Notwithstanding anything to the contrary contained herein or in Article 23
hereof, Tenant hereby waives the provisions of Section 1950.7 of the
California Civil Code, or any similar or successor Regulations or other laws
now or hereinafter in effect.

 

6.             ALTERATIONS.

 

6.1           Except for the Initial Alterations
(as defined and subject to the limitations set forth in Exhibit B
to this Lease), Tenant shall not make or suffer to be made any alterations,
additions, or improvements, including, but not limited to, the attachment of
any fixtures or equipment in, on, or to the Premises or any part thereof or the
making of any improvements as required by Article 7, without the prior
written consent of Landlord. When applying for such consent, Tenant shall, if
requested by Landlord, furnish complete plans and specifications for such
alterations, additions and improvements. Landlord’s consent shall not be
unreasonably withheld with respect to alterations which (i) are not
structural in nature, (ii) are not visible from the exterior of the
Building, (iii) do not affect or require modification of the Building’s
electrical,

 

6

 

mechanical,
plumbing, HVAC or other systems, and (iv) in aggregate do not cost more
than $5.00 per rentable square foot of that portion of the Premises affected by
the alterations in question.

 

6.2           In the event Landlord consents to the
making of any such alteration, addition or improvement by Tenant, the same
shall be, at Tenant’s option, made by using either Landlord’s contractor or a
contractor reasonably approved by Landlord, in either event at Tenant’s sole
cost and expense. If Tenant shall employ any contractor other than Landlord’s
contractor and such other contractor or any subcontractor of such other
contractor shall employ any non-union labor or supplier, Tenant shall be
responsible for and hold Landlord harmless from any and all delays, damages and
extra costs suffered by Landlord as a result of any dispute with any labor
unions concerning the wage, hours, terms or conditions of the employment of any
such labor. In any event Landlord may charge Tenant a construction management
fee not to exceed five percent (5%) of the cost of such work to cover
its overhead as it relates to such proposed work, plus third-party costs actually
incurred by Landlord in connection with the proposed work and the design
thereof, with all such amounts being due five (5) days after Landlord’s
demand. Notwithstanding the foregoing, no construction management fee shall be
due in connection with the construction of the Initial Alterations.

 

6.3           All alterations, additions or
improvements proposed by Tenant shall be constructed in accordance with all government
laws, ordinances, rules and regulations, using Building standard materials
where applicable, and Tenant shall, prior to construction, provide the
additional insurance required under Article 11 in such case, and also all
such assurances to Landlord as Landlord shall reasonably require to assure
payment of the costs thereof, including but not limited to, notices of non-responsibility,
waivers of lien, surety company performance bonds and funded construction
escrows and to protect Landlord and the Building and appurtenant land against
any loss from any mechanic’s, materialmen’s or other liens. Tenant shall pay in
addition to any sums due pursuant to Article 4, any increase in real
estate taxes attributable to any such alteration, addition or improvement for
so long, during the Term, as such increase is ascertainable; at Landlord’s
election said sums shall be paid in the same way as sums due under Article 4.
Landlord may, as a condition to its consent to any particular alterations or
improvements, require Tenant to deposit with Landlord the amount reasonably
estimated by Landlord as sufficient to cover the cost of removing such
alterations or improvements and restoring the Premises, to the extent required under
Section 26.2

 

6.4           Notwithstanding anything to the
contrary contained herein, so long as Tenant’s written request for consent for
a proposed alteration or improvements contains the following statement in
large, bold and capped font “PURSUANT TO SECTION 6
OF THE LEASE, IF LANDLORD CONSENTS TO THE SUBJECT ALTERATION, LANDLORD SHALL
NOTIFY TENANT IN WRITING WHETHER OR NOT LANDLORD WILL REQUIRE SUCH ALTERATION
TO BE REMOVED AT THE EXPIRATION OR EARLIER TERMINATION OF THE LEASE.”,
at the time Landlord gives its consent for any alterations or improvements, if
it so does, Tenant shall also be notified whether or not Landlord will require
that such alterations or improvements be removed upon the expiration or earlier
termination of this Lease. Notwithstanding anything to the contrary contained
in this Lease, at the expiration or earlier termination of this Lease and
otherwise in accordance with Article 26 hereof, Tenant shall be required
to remove all alterations or improvements made to the Premises except for the
Initial Alterations and any such alterations or improvements which Landlord
expressly indicates or is deemed to have indicated shall not be required to be
removed from the Premises by Tenant. If Tenant’s written notice strictly
complies with the foregoing and if Landlord fails to notify Tenant within ten (10) business
days of Landlord’s receipt of such notice whether Tenant shall be required to
remove the subject alterations or improvements at the expiration or earlier
termination of this Lease, it shall be assumed that Landlord shall require the
removal of the subject alterations or improvements.

 

7.             REPAIR.

 

7.1           Landlord shall have no obligation to
alter, remodel, improve, repair, decorate or paint the Premises, except as
specified in Exhibit B if attached to this Lease and except that
Landlord shall repair and maintain all structural portions of the Building and
the Building envelope, including the roof, foundation walls, water heaters,
skylights, windows, glass, plate glass, and Life Safety Systems, as well as all
outdoor areas and specifically any terrace and deck areas. In addition,
Landlord shall also maintain the common areas of the Building and the Building
systems generally servicing the common areas of the Building (including,
without limitation, any heating, ventilating and air conditioning units);
provided, however, that the costs and expenses associated with the foregoing
shall be a part of Expenses and subject to the terms and conditions of Article 4
of this Lease. Landlord shall not be liable for any failure to make any repairs
or to perform any maintenance unless such failure shall persist for an
unreasonable time after written notice of the need of such repairs or
maintenance is given to Landlord by Tenant.

 

7.2           Tenant shall periodically inspect the
Premises to identify any conditions that are in need of maintenance or repair.
Tenant shall provide Landlord with notice of any such conditions and Landlord
shall make any such repairs within a

 

7

 

reasonable
period of time following the receipt of such notice. All sums paid by Landlord
and ail expenses incurred by it in connection with such repairs, which are not
expressly obligations of Landlord, as provided herein, shall be payable to
Landlord by Tenant within ten (10) business days of Landlord’s demand.
Tenant as part of its obligations hereunder shall keep the Premises in a clean
and sanitary condition. Tenant will, use commercially reasonable efforts to
keep all such parts of the Premises in such a manner to minimize deterioration
due to ordinary wear and from falling temporarily out of repair,
and upon termination of this Lease in any way Tenant will yield up the Premises
to Landlord in good condition and repair, ordinary wear and tear and loss by
fire or other casualty excepted (but not excepting any damage to glass).
Notwithstanding anything to the contrary contained herein and except to the extent
caused by Tenant or any of the Tenant Entities’ acts and/or omissions or as a
result of casualty, to the extent Landlord is made aware and Landlord
determines in its reasonable discretion that expenditures for the full
replacement of any of the heating, ventilating and air conditioning units
solely servicing the Premises (as opposed to the replacement of components or
repair thereof) must be made, Landlord shall cause such work to be completed at
its sole cost and expense, which cost shall not be included in Expenses.
However, except to the extent caused by Tenant or any of the Tenant Entities'
acts and/or omissions, to the extent Landlord is made aware and Landlord
determines in its reasonable discretion that expenditures to repair or replace
components of any of the heating, ventilating and air conditioning units solely
servicing the Premises (as opposed to the full replacement thereof) must be
made, Landlord shall cause such work to be completed and all such costs and
expenses incurred by Landlord in connection with such repairs or replacement of
components shall be payable to Landlord by Tenant within ten (10) business
days of Landlord’s demand, provided that except to the extent caused by the
acts or omissions of Tenant or any Tenant Entity, Tenant shall not be required
to pay more than Three Thousand Dollars ($3000.00) per Lease Year for such
repair or replacement of components (excluding the costs associated with the
maintenance/service contract described in Section 7.4 below). Tenant
shall, at its own cost and expense, repair any damage to the Premises or the
Building resulting from and/or caused in whole or in part by the negligence or
misconduct of Tenant, its agents, employees, contractors, invitees, or any
other person entering upon the Premises as a result of Tenant’s business
activities or caused by Tenant’s default hereunder.

 

7.3           Except as provided in Article 22,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant’s business arising from the making of
any repairs, alterations or improvements in or to any portion of the Building
or the Premises or to fixtures, appurtenances and equipment in the Building.
Tenant hereby waives any and all rights under and benefits of subsection 1
of Section1932 and Sections 1941 and 1942 of the California
Civil Code, or any similar or successor Regulations or other laws now or
hereinafter in effect.

 

7.4           Landlord shall, on behalf of Tenant,
enter into a regularly scheduled preventive maintenance/service contract with a
maintenance contractor for servicing all heating and air conditioning systems
and equipment serving the Premises. All costs and expenses paid by Landlord in
connection therewith shall be payable to Landlord by Tenant within ten (10) days
of Landlord’s demand.

 

8.             LIENS. Tenant shall keep the Premises, the Building
and appurtenant land and Tenant’s leasehold interest in the Premises free from
any liens arising out of any services, work or materials performed, furnished,
or contracted for by Tenant, or obligations incurred by Tenant. In the event
that Tenant fails, within ten (10) days following the imposition of any
such lien, to either cause the same to be released of record or provide
Landlord with insurance against the same issued by a major title insurance
company or such other protection against the same as Landlord shall accept
(such failure to constitute an Event of Default), Landlord shall have the right
to cause the same to be released by such means as it shall deem proper, including
payment of the claim giving rise to such lien. All such sums paid by Landlord
and all expenses incurred by it in connection therewith shall be payable to it
by Tenant within five (5) business days of Landlord’s demand.

 

9.             ASSIGNMENT AND
SUBLETTING.

 

9.1           Tenant shall not have the right to
assign or pledge this Lease or to sublet the whole or any part of the Premises
whether voluntarily or by operation of law, or permit the use or occupancy of
the Premises by anyone other than Tenant, and shall not make, suffer or permit
such assignment, subleasing or occupancy without the prior written consent of Landlord,
such consent not to be unreasonably withheld, and said restrictions shall be
binding upon any and all assignees of the Lease and subtenants of the Premises.
In the event Tenant desires to sublet, or permit such occupancy of, the
Premises, or any portion thereof, or assign this Lease, Tenant shall give
written notice thereof to Landlord at least thirty (30) days but no more than
one hundred twenty (120) days prior to the proposed commencement date of such
subletting or assignment, which notice shall set forth the name of the proposed
subtenant or assignee, the relevant terms of any sublease or assignment and copies
of financial reports and other relevant financial information of the proposed
subtenant or assignee.

 

9.2           Notwithstanding any assignment or
subletting, permitted or otherwise, Tenant shall at all times remain directly,
primarily and fully responsible and liable for the payment of the rent specified
in this Lease and for compliance with all of its other obligations under the
terms, provisions and covenants of this Lease. Notwithstanding any assignment
or

 

8

 

subletting,
permitted or otherwise, so long as the Guaranty (as defined in the Reference
Pages) shall be in full force and effect, Guarantor (as defined in the
Reference Pages) shall remain directly, primarily and fully responsible and
liable for its obligations under the Guaranty. Upon the occurrence of an Event
of Default, if the Premises or any part of them are then assigned or sublet,
Landlord, in addition to any other remedies provided in this Lease or provided
by law, may, at its option, collect directly from such assignee or subtenant
all rents due and becoming due to Tenant under such assignment or sublease and
apply such rent against any sums due to Landlord from Tenant under this Lease,
and no such collection shall be construed to constitute a novation or release
of Tenant from the further performance of Tenant’s obligations under this
Lease. Without limiting the foregoing, no assignment or subletting by Tenant,
permitted or otherwise, shall relieve Guarantor of any liability under the
Guaranty.

 

9.3           Intentionally Omitted.

 

9.4           In the event that Tenant sells,
sublets, assigns or transfers this Lease, Tenant shall pay to Landlord as additional
rent an amount equal to fifty percent (50%) of any
Increased Rent (as defined below), less the Costs Component (as defined below),
when and as such Increased Rent is received by Tenant. As used in this Section,
“Increased Rent” shall mean the excess of (i) all rent and other
consideration which Tenant is entitled to receive by reason of any sale,
sublease, assignment or other transfer of this Lease, over (ii) the rent
otherwise payable by Tenant under this Lease at such time. For purposes of the
foregoing, any consideration received by Tenant in form other than cash shall
be valued at its fair market value as determined by Landlord in good faith. The
“Costs Component” is that amount which, if paid monthly, would fully amortize
on a straight-line basis, over the entire period for which Tenant is to receive
Increased Rent, the reasonable costs incurred by Tenant for leasing
commissions, legal fees and tenant improvements in connection with such
sublease, assignment or other transfer.

 

9.5           Notwithstanding any other provision
hereof, it shall be considered reasonable for Landlord to withhold its consent
to any assignment of this Lease or sublease of any portion of
the Premises if at the time of either Tenant’s notice of the proposed
assignment or sublease or the proposed commencement date thereof, there shall
exist any uncured default of Tenant or matter which will become a default of
Tenant with passage of time unless cured, or if the proposed assignee or sublessee
is an entity: (a) with which Landlord is already in negotiation; (b) is
already an occupant of the Building unless Landlord is unable to provide the
amount of space required by such occupant; (c) is a governmental agency; (d) is
incompatible with the character of occupancy of the Building; (e) with
which the payment for the sublease or assignment is determined in whole or in
part based upon its net income or profits; or (f) would subject the
Premises to a use which would: (i) involve increased personnel or wear
upon the Building; (ii) violate any exclusive right granted to another
tenant of the Building; (iii) require any addition to or modification of
the Premises or the Building in order to comply with building code or other
governmental requirements; or, (iv) involve a violation of Section 1.2.
Tenant expressly agrees that for the purposes of any statutory or other
requirement of reasonableness on the part of Landlord, Landlord’s refusal to
consent to any assignment or sublease for any of the reasons described in this Section 9.5,
shall be conclusively deemed to be reasonable.

 

9.6           Upon any request to assign or sublet,
Tenant will pay to Landlord the Assignment/Subletting Fee plus, on demand, a
sum equal to all of Landlord’s costs, including
reasonable attorney’s fees, incurred in investigating and considering any
proposed or purported assignment or pledge of this Lease or sublease of any of
the Premises, regardless of whether Landlord shall consent to, refuse consent,
or determine that Landlord’s consent is not required for, such assignment, pledge
or sublease. Notwithstanding the foregoing, provided that neither the Tenant
nor the proposed transferee requests any changes to this Lease or Landlord’s standard
form of consent (other than minor and immaterial changes) in connection with the
proposed transfer, the attorney’s fees payable by Tenant pursuant to this Section 9.6
shall not exceed $1500.00 for such proposed transfer. Any purported sale,
assignment, mortgage, transfer of this Lease or subletting which does not
comply with the provisions of this Article 9 shall be void.

 

9.7           If Tenant is a corporation, limited
liability company, partnership or trust, any transfer or transfers of or change
or changes within any twelve (12) month period in the number of the outstanding
voting shares of the corporation or limited liability company, the general
partnership interests in the partnership or the identity of the persons or
entities controlling the activities of such partnership or trust resulting in
the persons or entities owning or controlling a majority of such shares,
partnership interests or activities of such partnership or trust at the
beginning of such period no longer having such ownership or control shall be
regarded as equivalent to an assignment of this Lease to the persons or
entities acquiring such ownership or control and shall be subject to all the
provisions of this Article 9 to the same extent and for all intents and purposes
as though such an assignment.

 

9.8           So long as Tenant is not entering
into the Permitted Transfer (as defined below) for the purpose of avoiding or
otherwise circumventing the remaining terms of this Article 9, Tenant may
assign its entire interest under this Lease, without the consent of Landlord,
to (a) an affiliate, subsidiary, or parent of Tenant, or a corporation,
partnership or other legal

 

9

 

entity
wholly owned by Tenant (collectively, an “Affiliated Party”), or (b) a successor
to Tenant by purchase, merger, consolidation or reorganization, provided that
all of the following conditions are satisfied (each such Transfer a “Permitted
Transfer” and any such assignee or sublessee of a Permitted Transfer, a “Permitted
Transferee”): (i) Tenant is not in default under this Lease; (ii) the
Permitted Use does not allow the Premises to be used for retail purposes; (iii) Tenant
shall give Landlord written notice at least thirty (30) days prior to the
effective date of the proposed Permitted Transfer; (iv) with respect to a
proposed Permitted Transfer to an Affiliated Party, Tenant and Guarantor have a
consolidated net worth which is at least equal to or greater than three (3) times
the then outstanding obligations of Tenant for Annual Rent and Tenant’s
Proportionate Share of Expenses and Taxes from the date of such Permitted
Transfer through the Termination Date of this Lease; and (v) with respect
to a purchase, merger, consolidation or reorganization or any Permitted
Transfer which results in Tenant ceasing to exist as a separate legal entity, (A) Tenant’s
successor shall own all or substantially all of the assets of Tenant, and (B) Tenant’s
successor and Guarantor shall have a consolidated net worth which is at least
equal to three (3) times the then outstanding obligations of Tenant for
Annual Rent and Tenant’s Proportionate Share of Expenses and Taxes from the
date of such permitted Transfer through he Termination Date of this Lease.
Tenant’s notice to Landlord shall include information and documentation showing
that each of the above conditions has been satisfied. If requested by Landlord,
Tenant’s successor shall sign a commercially reasonable form of assumption
agreement. As used herein, (1) “parent” shall mean a company which owns a
majority of Tenant’s voting equity; (2) “subsidiary” shall mean an entity
wholly owned by Tenant or at least fifty-one percent (51%) of whose voting
equity is owned by Tenant; and (3) “affiliate” shall mean an entity
controlled, controlling or under common control with Tenant.

 

10.          INDEMNIFICATION. None of the Landlord Entities shall be
liable and Tenant hereby waives all claims against them for any damage to any
property or any injury to any person in or about the Premises or the Building
by or from any cause whatsoever (including without limiting the foregoing, rain
or water leakage of any character from the roof, windows, walls, basement,
pipes, plumbing works or appliances, the Building not being in good condition
or repair, gas, fire, oil, electricity or theft), except to the extent caused
by or arising from the gross negligence or willful misconduct of Landlord or its
agents, employees or contractors. Tenant shall protect, indemnify and hold the
Landlord Entities harmless from and against any and all loss, claims, liability
or costs (including court costs and attorney’s fees) incurred by reason of (a) any
damage to any property (including but not limited to property of any Landlord
Entity) or any injury (including but not limited to death) to any person
occurring in, on or about the Premises or the Building to the extent that such
injury or damage shall be caused by or arise from any actual or alleged act,
neglect, fault, or omission by or of Tenant or any Tenant Entity to meet any
standards imposed by any duty with respect to the injury or damage; (b) the
conduct or management of any work or thing whatsoever done by the Tenant in or
about the Premises or from transactions of the Tenant concerning the Premises;
(c) Tenant’s failure to comply with any and all governmental laws, ordinances
and regulations applicable to the condition or use of the Premises or its
occupancy; or (d) any breach or default on the part of Tenant in the
performance of any covenant or agreement on the part of the Tenant to be performed
pursuant to this Lease. The provisions of this Article shall survive the termination
of this Lease with respect to any claims or liability accruing prior to such
termination.

 

11.          INSURANCE.

 

11.1         Tenant shall keep in force throughout
the Term: (a) a Commercial General Liability insurance policy or policies
to protect the Landlord Entities against any liability to the public or to any
invitee of Tenant or a Landlord Entity incidental to the use of or resulting
from any accident occurring in or upon the Premises with a limit of not less
than $1,000,000 per occurrence and not less than $2,000,000 in the annual
aggregate, or such larger amount as Landlord may prudently require from time to
time, covering bodily injury and property damage liability and $1,000,000
products/completed operations aggregate; (b) Business Auto Liability
covering owned, non-owned and hired vehicles with a limit of not less than
$1,000,000 per accident; (c) insurance protecting against liability under
Worker’s Compensation Laws with limits at least as required by statute with
Employers Liability with limits of $500,000 each accident, $500,000 disease
policy limit, $500,000 disease-each employee; (d) All Risk or Special Form coverage
protecting Tenant against loss of or damage to Tenant’s alterations, additions,
improvements, carpeting, floor coverings, panelings, decorations, fixtures,
inventory and other business personal property situated in or about the
Premises to the full replacement value of the property so insured; and, (e) Business
Interruption Insurance with limit of liability representing loss of at least
approximately six (6) months of income.

 

11.2         The aforesaid policies shall (a) be
provided at Tenant’s expense; (b) name the Landlord Entities as additional
insureds (General Liability) and loss payee (Property—Special Form); (c) be
issued by an insurance company with a minimum Best’s rating of “A:VII” during
the Term; and (d) provide that said insurance shall not be canceled unless
thirty (30) days prior written notice (ten days for non-payment of premium)
shall have been given to Landlord; a certificate of Liability insurance on
ACORD Form 25 and a certificate of Property insurance on ACORD Form 27
shall be delivered to Landlord by Tenant upon the Commencement Date and at least thirty (30) days prior to each renewal of said insurance.

 

10

 

11.3         Whenever Tenant shall undertake any
alterations, additions or improvements in, to or about the Premises (“Work”)
the aforesaid insurance protection must extend to and include injuries to
persons and damage to property arising in connection with such Work, without
limitation including liability under any applicable structural work act, and
such other insurance as Landlord shall require; and the policies
of or certificates evidencing such insurance must be delivered to Landlord
prior to the commencement of any such Work.

 

12.          WAIVER OF SUBROGATION. So long as their respective insurers so
permit, Tenant and Landlord hereby mutually waive their respective rights of
recovery against each other for any loss insured by fire, extended coverage,
All Risks or other insurance now or hereafter existing for the benefit of the
respective party but only to the extent of the net insurance proceeds payable
under such policies. Each party shall obtain any special endorsements required
by their insurer to evidence compliance with the aforementioned waiver.

 

13.          SERVICES AND UTILITIES. Tenant shall pay for all water, gas, heat,
light, power, telephone, sewer, and other utilities and services used on or
from the Premises, together with any taxes, penalties, and surcharges or the
like pertaining thereto and any maintenance charges for utilities. In the event
that any electric light bulbs, tubes and ballasts servicing the Premises
require replacement, Landlord shall provide such replacement within a
reasonable period of time and notice from Tenant and Tenant shall pay all costs
and expenses incurred by Landlord in connection therewith within ten (10) business
days of Landlord’s demand. Landlord shall furnish all battery packs for
emergency lighting and fire extinguishers and Tenant shall pay all costs and
expenses incurred by Landlord in connection therewith within ten (10) business
days of Landlord’s demand. If any such services are not separately metered to
Tenant, Tenant shall pay such proportion of all charges jointly metered with
other premises as determined by Landlord, in its sole discretion, to be
reasonable. Any such charges paid by Landlord and assessed against Tenant shall
be immediately payable to Landlord on demand and shall be additional rent
hereunder. Tenant will not, without the written consent of Landlord, contract
with a utility provider to service the Premises with any utility, including,
but not limited to, telecommunications, electricity, water, sewer or gas, which
is not previously providing such service to other tenants in the Building. In
the event that Landlord establishes a cafeteria in the Building, upon Tenant’s
request, Landlord shall, at its sole cost and expense, arrange for such
cafeteria to be separately metered. Landlord shall in no event be liable for
any interruption or failure of utility services on or to the Premises.

 

14.          HOLDING OVER. Tenant shall pay Landlord for each day
Tenant retains possession of the Premises or part of them after termination of
this Lease by lapse of time or otherwise at the rate (“Holdover Rate”) which
shall be One Hundred Fifty Percent (150%) of the greater of (a) the amount
of the Annual Rent for the last period prior to the date of such termination
plus all Rent Adjustments under Article 4; and (b) the then market
rental value of the Premises as determined by Landlord assuming a new lease of
the Premises of the then usual duration and other terms, in either case,
prorated on a daily basis, and also pay all damages sustained by Landlord by
reason of such retention. If Landlord gives notice to Tenant of Landlord’s
election to such effect, such holding over shall constitute renewal of this
Lease for a period from month to month or one (1) year, whichever shall be
specified in such notice, in either case at the Holdover Rate, but if the
Landlord does not so elect, no such renewal shall result notwithstanding
acceptance by Landlord of any sums due hereunder after such termination; and
instead, a tenancy at sufferance at the Holdover Rate shall be deemed to have
been created. In any event, no provision of this Article 14 shall be
deemed to waive Landlord’s right of reentry or any other right under this Lease
or at law.

 

15.          SUBORDINATION. Without the necessity of any additional
document being executed by Tenant for the purpose of effecting a subordination,
this Lease shall be subject and subordinate at all times to ground or
underlying leases and to the lien of any mortgages or deeds of trust now or
hereafter placed on, against or affecting the Building, Landlord’s interest or estate
in the Building, or any ground or underlying lease; provided, however, that if
the lessor, mortgagee, trustee, or holder of any such mortgage or deed of trust
elects to have Tenant’s interest in this Lease be superior to any such
instrument, then, by notice to Tenant, this Lease shall be deemed superior,
whether this Lease was executed before or after said instrument. Notwithstanding
the foregoing, Tenant covenants and agrees to execute and deliver within ten (10) days
of Landlord’s request such further instruments evidencing such subordination or
superiority of this Lease as may be required by Landlord. As of the date
hereof, a lien encumbers Landlord’s interest in the Building in favor of
Sumitomo Mitsui Banking Corporation. At Tenant’s cost, Landlord shall provide
Tenant with a non-disturbance, subordination, and attornment agreement in favor
of Tenant in the form attached hereto as Exhibit E (the “SNDA”) within
sixty (60) days following Tenant’s execution and delivery thereof to Landlord.

 

16.          RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with all the rules and regulations as set forth in Exhibit D
to this Lease and all reasonable and non-discriminatory modifications of and
additions to them from time to time put into effect by Landlord. Landlord shall
not be responsible to Tenant for the non-performance by any other tenant or
occupant of the Building of any such rules and regulations.

 

11

 

17.          REENTRY BY LANDLORD.

 

17.1         Landlord reserves and shall at all
times have the right to re-enter the Premises to inspect the same, to show said
Premises to prospective purchasers, mortgagees or tenants, and to alter,
improve or repair the Premises and any portion of the Building, without
abatement of rent, and may for that purpose erect, use and maintain
scaffolding, pipes, conduits and other necessary structures and open any wall,
ceiling or floor in and through the Building and Premises where reasonably
required by the character of the work to be performed, provided entrance to the
Premises shall not be blocked thereby, and further provided that the business
of Tenant shall not be interfered with unreasonably. Notwithstanding the
foregoing, except (a) to the extent requested by Tenant, (b) in
connection with regular scheduled maintenance programs, and/or (c).in the event
of an emergency, Landlord shall provide to Tenant reasonable prior notice
(either written or oral) before Landlord enters the Premises to perform any
repairs therein. Landlord shall have the right at any time to change the
arrangement and/or locations of entrances, or passageways, doors and doorways,
and corridors, windows, elevators, stairs, toilets or other public parts of the
Building and to change the name, number or designation by which the Building is
commonly known. In the event that Landlord damages any portion of any wall or
wall covering, ceiling, or floor or floor covering within the Premises,
Landlord shall repair or replace the damaged portion to match the original as
nearly as commercially reasonable but shall not be required to repair or
replace more than the portion actually damaged. Tenant hereby waives any claim
for damages for any injury or inconvenience to or interference with Tenant’s
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned by any action of Landlord authorized by this Article 17.

 

17.2         For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors in the Premises, excluding Tenant’s vaults and safes or special
security areas (designated in advance), and Landlord shall have the right to
use any and all means which Landlord may deem proper to open said doors in an
emergency to obtain entry to any portion of the Premises. As to any portion to
which access cannot be had by means of a key or keys in Landlord’s possession,
Landlord is authorized to gain access by such means as Landlord shall elect and
the cost of repairing any damage occurring in doing so shall be borne by Tenant
and paid to Landlord within five (5) days of Landlord’s demand.

 

18.          DEFAULT.

 

18.1         Except as otherwise provided in Article 20,
the following events shall be deemed to be Events of Default under this Lease:

 

18.1.1      Tenant shall fail to pay when due any sum
of money becoming due to be paid to Landlord under this Lease, whether such sum
be any installment of the rent reserved by this Lease, any other amount treated
as additional rent under this Lease, or any other payment or reimbursement to
Landlord required by this Lease, whether or not treated as additional rent
under this Lease, and such failure shall continue for a period of five (5) days
after written notice that such payment was not made when due, but if any such
notice shall be given, for the twelve (12) month period commencing with the
date of such notice, the failure to pay within five (5) days after due any
additional sum of money becoming due to be paid to Landlord under this Lease
during such period shall be an Event of Default, without notice. The notice
required pursuant to this Section 18.1.1 shall replace rather than
supplement any statutory notice required under California Code of Civil
Procedure Section 1161 or any similar or successor statute. The fact that
under certain circumstances no notice is required to be delivered by Landlord
to Tenant pursuant to this Section 18.1.1, shall not be deemed to constitute
a waiver by Tenant of any right Tenant may have to receive statutory notice
required under California Code of Civil Procedure Section 1161 or any
similar or successor statute.

 

18.1.2      Tenant shall fail to comply with any term,
provision or covenant of this Lease which is not provided for in another Section of
this Article and shall not cure such failure within thirty (30) days
(forthwith, if the failure involves a hazardous condition) after written notice
of such failure to Tenant provided, however, that such failure shall not be an
event of default if such failure could not reasonably be cured during such
thirty (30) day period, Tenant has commenced the cure within such thirty (30)
day period and thereafter is diligently pursuing such cure to completion, but
the total aggregate cure period shall not exceed ninety (90) days.

 

18.1.3      Tenant shall fail to vacate the Premises
immediately upon termination of this Lease, by lapse of time or otherwise, or
upon termination of Tenant’s right to possession only.

 

18.1.4      Tenant or Guarantor shall become
insolvent, admit in writing its inability to pay its debts generally as they
become due, file a petition in bankruptcy or a petition to take advantage of
any insolvency statute, make an assignment for the benefit of creditors, make a
transfer in fraud of creditors, apply for or consent to the appointment of a receiver
of itself or of the whole or any substantial part of its property, or file a
petition or answer seeking reorganization or

 

12

 

arrangement
under the federal bankruptcy laws, as now in effect or hereafter amended, or
any other applicable law or statute of the United States or any state thereof.

 

18.1.5      A court of competent jurisdiction shall
enter an order, judgment or decree adjudicating Tenant bankrupt, or appointing a receiver of Tenant, or of the whole or any substantial part of its
property, without the consent of Tenant, or approving a petition filed against
Tenant seeking reorganization or arrangement of Tenant under the bankruptcy
laws of the United States, as now in effect or hereafter amended, or any state
thereof and such order, judgment or decree shall not be vacated or set aside or
stayed within sixty (60) days from the date of entry thereof.

 

19.          REMEDIES.

 

19.1         Upon the occurrence of any Event or
Events of Default under this Lease, whether enumerated in Article 18 or
not, Landlord shall have the option to pursue any one or more of the following
remedies without any notice (except as expressly prescribed herein) or demand
whatsoever (and without limiting the generality of the foregoing, Tenant hereby
specifically waives notice and demand for payment of rent or other obligations
and waives any and all other notices or demand requirements imposed by applicable
law):

 

19.1.1      Terminate this Lease and Tenant’s right to
possession of the Premises and recover from Tenant an award of damages equal to
the sum of the following:

 

19.1.1.1   The Worth at the Time of Award of the unpaid
rent which had been earned at the time of termination;

 

19.1.1.2   The Worth at the Time of Award of the amount
by which the unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rent loss that Tenant affirmatively
proves could have been reasonably avoided;

 

19.1.1.3   The Worth at the Time of Award of the amount
by which the unpaid rent for the balance of the Term after the time of award
exceeds the amount of such rent loss that Tenant affirmatively proves could be reasonably
avoided;

 

19.1.1.4   Any other amount necessary to compensate
Landlord for all the detriment either proximately caused by Tenant’s failure to
perform Tenant’s obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom; and

 

19.1.1.5   All such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time under applicable
law.

 

The
“Worth at the Time of Award” of the amounts referred to in parts 19.1.1.1 and
19.1.1.2 above, shall be computed by allowing interest at the lesser of a per
annum rate equal to: (i) the greatest per annum rate of interest permitted
from time to time under applicable law, or (ii) the Prime Rate plus 5%.
For purposes hereof, the “Prime Rate” shall be the per annum interest rate
publicly announced as its prime or base rate by a federally insured bank
selected by Landlord in the State of California. The “Worth at the Time of
Award” of the amount referred to in part 19.1.1.3, above, shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus 1%;

 

19.1.2      Employ the remedy described in California
Civil Code § 1951.4 (Landlord may continue this Lease in effect after
Tenant’s breach and abandonment and recover rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations); or

 

19.1.3      Notwithstanding Landlord’s exercise of the
remedy described in California Civil Code § 1951.4 in respect of an Event
or Events of Default, at such time thereafter as Landlord may elect in writing,
to terminate this Lease and Tenant’s right to possession of the Premises and
recover an award of damages as provided above in Section 19.1.1.

 

19.2         The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such
rent. No waiver by Landlord of any breach hereof shall be effective unless such
waiver is in writing and signed by Landlord.

 

13

 

19.3        TENANT HEREBY WAIVES
ANY AND ALL RIGHTS CONFERRED BY SECTION 3275 OF THE CIVIL CODE OF
CALIFORNIA AND BY SECTIONS 1174 (c) AND 1179 OF THE CODE OF CIVIL PROCEDURE
OF CALIFORNIA AND ANY AND ALL OTHER REGULATIONS AND RULES OF LAW FROM TIME TO
TIME IN EFFECT DURING THE TERM PROVIDING THAT TENANT SHALL HAVE ANY RIGHT TO
REDEEM, REINSTATE OR RESTORE THIS LEASE FOLLOWING ITS TERMINATION BY REASON OF TENANT’S
BREACH. TENANT ALSO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS LEASE.

 

19.4         No right or remedy herein conferred
upon or reserved to Landlord is intended to be exclusive of any other right or
remedy, and each and every right and remedy shall be cumulative and in addition
to any other right or remedy given hereunder or now or hereafter existing by
agreement, applicable law or in equity. In addition to other remedies provided
in this Lease, Landlord shall be entitled, to the extent permitted by
applicable law, to injunctive relief, or to a decree compelling performance of
any of the covenants, agreements, conditions or provisions of this Lease, or to
any other remedy allowed to Landlord at law or in equity. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon an Event of
Default shall not be deemed or construed to constitute a waiver of such
Default.

 

19.5         This Article 19 shall be
enforceable to the maximum extent such enforcement is not prohibited by applicable
law, and the unenforceability of any portion thereof shall not thereby render
unenforceable any other portion..

 

19.6         If more than one (1) Event of
Default occurs during the term or any renewal thereof, Tenant’s renewal options,
expansion options, purchase options and rights of first offer and/or refusal, if
any are provided for in this Lease, shall be null and void.

 

19.7         If, on account of any breach or default
by Tenant in Tenant’s obligations under the terms and conditions of this Lease,
it shall become necessary or appropriate for Landlord to employ or consult with
an attorney or collection agency concerning or to enforce or defend any of
Landlord’s rights or remedies arising under this Lease or to collect any sums
due from Tenant, Tenant agrees to pay all costs and fees so incurred by
Landlord, including, without limitation, reasonable attorneys’ fees and costs.
TENANT EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY. Tenant hereby specifically
also waives notice and demand for payment of rent or other obligations, except
for those notices specifically required pursuant to the terms of this Lease and
notices which may be required under California Code of Civil Procedure Section 1161,
as described in Section 18.1.1 above.

 

19.8         Upon the occurrence of an Event of
Default, Landlord may (but shall not be obligated to) cure such default at
Tenant’s sole expense. Without limiting the generality of the foregoing,
Landlord may, at Landlord’s
option, enter into and upon the Premises if Landlord determines in its sole
discretion that Tenant is not acting within a commercially reasonable time to
maintain, repair or replace anything for which Tenant is responsible under this
Lease or to otherwise effect compliance with its obligations under this Lease
and correct the same, without being deemed in any manner guilty of trespass,
eviction or forcible entry and detainer and without incurring any liability for
any damage or interruption of Tenant’s business resulting therefrom and Tenant
agrees to reimburse Landlord within five (5) days of Landlord’s demand as additional
rent, for any expenses which Landlord may incur in thus effecting compliance
with Tenant’s obligations under this Lease, plus interest from the date of
expenditure by Landlord at the Wall Street Journal prime rate.

 

20.          TENANT’S BANKRUPTCY
OR INSOLVENCY.

 

20.1         If at any time and for so long as
tenant shall be subjected to the provisions of the United States Bankruptcy
Code or other law of the United States or any state thereof for the protection
of debtors as in effect at such time (each a “Debtor’s Law”):

 

20.1.1      Tenant, Tenant as debtor-in-possession,
and any trustee or receiver of Tenant’s assets (each a “Tenant’s Representative”)
shall have no greater right to assume or assign this Lease or any interest in
this Lease, or to sublease any of the Premises than accorded to Tenant in Article 9,
except to the extent Landlord shall be required to permit such assumption,
assignment or sublease by the provisions of such Debtor’s Law. Without
limitation of the generality of the foregoing, any right of any Tenant’s
Representative to assume or assign this Lease or to sublease any of the
Premises shall be subject to the conditions that:

 

20.1.1.1   Such Debtor’s Law shall provide to Tenant’s
Representative a right of assumption of this Lease which Tenant’s
Representative shall have timely exercised and Tenant’s Representative shall
have fully cured any default of Tenant under this Lease.

 

14

 

20.1.1.2   Tenant’s Representative or the proposed
assignee, as the case shall be, shall have deposited with Landlord as security
for the timely payment of rent an amount equal to the larger of: (a) three
(3) months’ rent and other monetary charges accruing under this Lease; and
(b) any sum specified in Article 5; and shall have provided Landlord
with adequate other assurance of the future performance of the obligations of
the Tenant under this Lease. Without limitation, such assurances shall include,
at least, in the case of assumption of this Lease, demonstration to the
satisfaction of the Landlord that Tenant’s Representative has and will continue
to have sufficient unencumbered assets after the payment of all secured
obligations and administrative expenses to assure Landlord that Tenant’s
Representative will have sufficient funds to fulfill the obligations of Tenant
under this Lease; and, in the case of assignment, submission of current
financial statements of the proposed assignee, audited by an independent
certified public accountant reasonably acceptable to Landlord and showing a net
worth and working capital in amounts determined by Landlord to be sufficient to
assure the future performance by such assignee of all of the Tenant’s
obligations under this Lease.

 

20.1.1.3   The assumption or any contemplated assignment
of this Lease or subleasing any part of the Premises, as shall be the case,
will not breach any provision in any other lease, mortgage, financing agreement
or other agreement by which Landlord is bound.

 

20.1.1.4   Landlord shall have, or would have had absent
the Debtor’s Law, no right under Article 9 to refuse consent to the
proposed assignment or sublease by reason of the identity or nature of the
proposed assignee or sublessee or the proposed use of the Premises concerned.

 

21.          QUIET ENJOYMENT. Landlord represents and warrants that it
has full right and authority to enter into this Lease and that Tenant, while
paying the rental and performing its other covenants and agreements contained
in this Lease, shall peaceably and quietly have, hold and enjoy the Premises
for the Term without hindrance or molestation from Landlord subject to the
terms and provisions of this Lease. Landlord shall not be liable for any
interference or disturbance by other tenants or third persons, nor shall Tenant
be released from any of the obligations of this Lease because of such
interference or disturbance.

 

22.          CASUALTY.

 

22.1         In the event the Premises or the
Building are damaged by fire or other cause and in Landlord’s reasonable estimation
such damage can be materially restored within two hundred ten (210) days after
the date of such damage, Landlord shall forthwith repair the same and this
Lease shall remain in full force and effect, except that Tenant shall be entitled
to a proportionate abatement in rent from the date of such damage. Such
abatement of rent shall be made pro rata in accordance with the extent to which
the damage and the making of such repairs shall interfere with the use and
occupancy by Tenant of the Premises from time to time, Within forty-five (45)
days from the date of such damage, Landlord shall notify Tenant, in writing, of
Landlord’s reasonable estimation of the length of time within which material
restoration can be made, and Landlord’s determination shall be binding on
Tenant. For purposes of this Lease, the Building or Premises shall be deemed “materially
restored” if they are in such condition as would not prevent or materially
interfere with Tenant’s use of the Premises for the purpose for which it was
being used immediately before such damage.

 

22.2         If such repairs cannot, in Landlord’s
reasonable estimation, be made within two hundred ten (210) days after the date
of such damage, Landlord and Tenant shall each have the option of giving the
other, at any time within ninety (90) days after such damage, notice
terminating this Lease as of the date of such damage. In the event of the
giving of such notice, this Lease shall expire and all interest of the Tenant
in the Premises shall terminate as of the date of such damage as if such date
had been originally fixed in this Lease for the expiration of the Term. In the
event that neither Landlord nor Tenant exercises its option to terminate this
Lease, then Landlord shall repair or restore such damage, this Lease continuing
in full force and effect, and the rent hereunder shall be proportionately
abated as provided in Section 22.1.

 

22.3         Landlord shall not be required to
repair or replace any damage or loss by or from fire or other cause to any panelings,
decorations, partitions, additions, railings, ceilings, floor coverings, office
fixtures or any other property or improvements installed on the Premises by, or
belonging to, Tenant. Any insurance which may be carried by Landlord or Tenant
against loss or damage to the Building or Premises shall be for the sole
benefit of the party carrying such insurance and under its sole control.

 

22.4         In the event that Landlord should fail
to complete such repairs and material restoration within sixty (60) days after
the date estimated by Landlord therefor as extended by this Section 22.4,
Tenant may at its option and as its sole remedy terminate this Lease by
delivering written notice to Landlord, within fifteen (15) days after the
expiration of said period of time, whereupon the Lease shall end on the date of
such notice or such later date fixed in such notice as if the date of such
notice was the date originally fixed in this Lease for the expiration of the
Term; provided, however, that if

 

15

 

construction is delayed because of changes, deletions or additions in
construction requested by Tenant, strikes, lockouts, casualties, Acts of God,
war, material or labor shortages, government regulation or control or other
causes beyond the reasonable control of Landlord, the period for restoration,
repair or rebuilding shall be extended for the amount of time Landlord is so
delayed.

 

22.5         Notwithstanding anything to the
contrary contained in this Article: (a) Landlord shall not have any
obligation whatsoever to repair, reconstruct, or restore the Premises when the
damages resulting from any casualty covered by the provisions of this Article 22
occur during the last twelve (12) months of the Term or any extension thereof,
but if Landlord determines not to repair such damages Landlord shall notify
Tenant and if such damages shall render any material portion of the Premises
untenantable Tenant shall have the right to terminate this Lease by notice to
Landlord within fifteen (15) days after receipt of Landlord’s notice; and (b) in
the event the holder of any indebtedness secured by a mortgage or deed of trust
covering the Premises or Building requires that any insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen
(15) days after such requirement is made by any such holder, whereupon this
Lease shall end on the date of such damage as if the date of such damage were
the date originally fixed in this Lease for the expiration of the Term.

 

22.6         In the event of any damage or
destruction to the Building or Premises by any peril covered by the provisions
of this Article 22, it shall be Tenant’s responsibility to properly secure
the Premises and upon notice from Landlord to remove forthwith, at its sole
cost and expense, such portion of all of the property belonging to Tenant or
its licensees from such portion or all of the Building or Premises as Landlord
shall request.

 

22.7         Tenant hereby waives any and all rights
under and benefits of Sections 1932(2) and 1933(4) of the California
Civil Code, or any similar or successor Regulations or other laws now or
hereinafter in effect.

 

23.          EMINENT DOMAIN. If all or any substantial part of the
Premises shall be taken or appropriated by any public or quasi-public authority
under the power of eminent domain, or conveyance in lieu of such appropriation,
either party to this Lease shall have the right, at its option, of giving the
other, at any time within thirty (30) days after such taking, notice terminating
this Lease, except that Tenant may only terminate this Lease by reason of
taking or appropriation, if such taking or appropriation shall be so
substantial as to materially interfere with Tenant’s use and occupancy of the
Premises. If neither party to this Lease shall so elect to terminate this
Lease, the rental thereafter to be paid shall be adjusted on a fair and
equitable basis under the circumstances. In addition to the rights of Landlord
above, if any substantial part of the Building shall be taken or appropriated
by any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, and regardless of whether the Premises or any part
thereof are so taken or appropriated, Landlord shall have the right, at its
sole option, to terminate this Lease. Landlord shall be entitled to any and all
income, rent, award, or any interest whatsoever in or upon any such sum, which
may be paid or made in connection with any such public or quasi-public use or
purpose, and Tenant hereby assigns to Landlord any interest it may have in or
claim to all or any part of such sums, other than any separate award which may
be made with respect to Tenant’s trade fixtures and moving expenses; Tenant
shall make no claim for the value of any unexpired Term. Tenant hereby waives
any and all rights under and benefits of Section 1265.130 of the California
Code of Civil Procedure, or any similar or successor Regulations or other laws
now or hereinafter in effect.

 

24.          SALE BY LANDLORD. In event of a sale or conveyance by Landlord
of the Building, the same shall operate to release Landlord from any future
liability upon any of the covenants or conditions, expressed or implied,
contained in this Lease in favor of Tenant, and in such event Tenant agrees to
look solely to the responsibility of the successor in interest of Landlord in
and to this Lease. Except as set forth in this Article 24, this Lease
shall not be affected by any such sale and Tenant agrees to attorn to the
purchaser or assignee. If any security has been given by Tenant to secure the
faithful performance of any of the covenants of this Lease, Landlord may
transfer or deliver said security, as such, to Landlord’s successor in interest
and thereupon Landlord shall be discharged from any further liability with
regard to said security.

 

25.          ESTOPPEL CERTIFICATES. Within ten (10) days following any
written request which Landlord may make from time to time, Tenant shall execute
and deliver to Landlord or mortgagee or prospective mortgagee a sworn statement
certifying: (a) the date of commencement of this Lease; (b) the fact
that this Lease is unmodified and in full force and effect (or, if there have
been modifications to this Lease, that this lease is in full force and effect,
as modified, and stating the date and nature of such modifications); (c) the
date to which the rent and other sums payable under this Lease have been paid;
(d) the fact that there arc no current defaults under this Lease by either
Landlord or Tenant except as specified in Tenant’s statement; and (e) such
other matters as may be requested by Landlord. Landlord and Tenant intend that
any statement delivered pursuant to this Article 25 may be relied upon by
any mortgagee, beneficiary or purchaser, and Tenant shall be liable for all
loss, cost or expense resulting from the failure of any sale or funding of any
loan caused by any material misstatement contained in such estoppel
certificate. Tenant irrevocably agrees that if Tenant fails to execute and
deliver such

 

16

 

certificate
within such ten (10) day period Landlord or Landlord’s
beneficiary or agent may execute and deliver such certificate on Tenant’s
behalf, and that such certificate shall be fully binding on Tenant.

 

26.          SURRENDER OF PREMISES.

 

26.1         Tenant shall arrange to meet Landlord
for two (2) joint inspections of the Premises, the first to occur at least
thirty (30) days (but no more than sixty (60) days) before the last day of the
Term, and the second to occur not later than forty-eight (48) hours after
Tenant has vacated the Premises. In the event of Tenant’s failure to arrange
such joint inspections and/or participate in either such inspection, Landlord’s
inspection at or after Tenant’s vacating the Premises shall be conclusively
deemed correct for purposes of determining Tenant’s responsibility for repairs
and restoration.

 

26.2         All alterations, additions, and
improvements in, on, or to the Premises made or installed by or for Tenant, including
carpeting (collectively, “Alterations”), shall be and remain the property of
Tenant during the Term. Upon the expiration or sooner termination of the Term,
all Alterations, except Tenant’s furniture and cubicles that are de-mountable and
non-hardwalled (collectively, “Tenant’s Removable Furniture”) which shall
remain Tenant’s property, shall become a part of the realty and shall belong to
Landlord without compensation, and title shall pass to Landlord under this
Lease as by a bill of sale. At the end of the Term or any renewal of the Term
or other sooner termination of this Lease, Tenant will peaceably deliver up to
Landlord possession of the Premises, together with all Alterations, except
Tenant’s Removable Furniture which shall remain Tenant’s property, by
whomsoever made, in the same conditions received or first installed, broom
clean and free of all debris, excepting only ordinary wear and tear and damage
by fire or other casualty. Notwithstanding the foregoing, subject to Section 6.4,
if Landlord elects by notice given to Tenant at least ten (10) days prior to
expiration of the Term, Tenant shall, at Tenant’s sole cost, remove any
Alterations, including carpeting, so designated by Landlord’s notice, and
repair any damage caused by such-removal. If Landlord elects by notice given to
Tenant at least ten (10) days prior to the expiration of the Term, Tenant
shall, at Tenant’s sole cost, remove any door hardware or access devices installed
by Tenant and restore the locks and/or access devices to a standard type
similar to those existing in the Premises as of the date Landlord delivers
possession of the Premises to Tenant. Tenant must, at Tenant’s sole cost,
remove upon termination of this Lease, any and all of Tenant’s furniture,
furnishings, movable partitions of less than full height from floor to ceiling
and other trade fixtures and personal property (collectively, “Personalty”).
Personalty not so removed shall be deemed abandoned by the Tenant and title to
the same shall thereupon pass to Landlord under this Lease as by a bill of
sale, but Tenant shall remain responsible for the cost of removal and disposal
of such Personalty, as well as any damage caused by such removal. In lieu of
requiring Tenant to remove Alterations and Personalty and repair the Premises
as aforesaid, Landlord may, by written notice to Tenant delivered at least
thirty (30) days before the Termination Date, require Tenant to pay to
Landlord, as additional rent hereunder, the cost of such removal and repair in
an amount reasonably estimated by Landlord.

 

26.3         All obligations of Tenant under this
Lease not fully performed as of the expiration or earlier termination of the
Term shall survive the expiration or earlier termination of the Term Upon the
expiration or earlier termination of the Term, Tenant shall pay to Landlord the
amount, as estimated by Landlord, necessary to repair and restore the Premises
as provided in this Lease and/or to discharge Tenant’s obligation for unpaid
amounts due or to become due to Landlord. All such amounts shall be used and
held by Landlord for payment of such obligations of Tenant, with Tenant being
liable for any additional costs upon demand by Landlord, or with any excess to
be returned to Tenant after all such obligations have been determined and
satisfied. Any otherwise unused Security Deposit shall be credited against the
amount payable by Tenant under this Lease.

 

27.          NOTICES. Any notice or document required or
permitted to be delivered under this Lease shall be addressed to the intended
recipient, by fully prepaid registered or certified United States Mail return
receipt requested, or by reputable independent contract delivery service
furnishing a written record of attempted or actual delivery, and shall be
deemed to be delivered when tendered for delivery to the addressee at its
address set forth on the Reference Pages, or at such other address as it has
then last specified by written notice delivered in accordance with this Article 27,
or if to Tenant at either its aforesaid address or its last known registered
office or home of a general partner or individual owner, whether or not
actually accepted or received by the addressee. Any such notice or document may
also be personally delivered if a receipt is signed by and received from, the
individual, if any, named in Tenant’s Notice Address.

 

28,          TAXES PAYABLE BY TENANT.  In
addition to rent and other charges to be paid by Tenant under this Lease, Tenant
shall reimburse to Landlord, upon demand, any and all taxes payable by Landlord
(other than net income taxes) whether or not now customary or within the
contemplation of the parties to this Lease: (a) upon, allocable to, or
measured by or on the gross or net rent payable under this Lease, including
without limitation any gross income tax or excise tax levied by the State, any
political subdivision thereof, or the Federal Government with respect to the
receipt of such rent; (b) upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy of the

 

17

 

Premises
or any portion thereof including any sales, use or service tax imposed as a
result thereof; (c) upon or measured by the tenant’s gross receipts or
payroll or the value of Tenant’s equipment, furniture, fixtures and other
personal property of Tenant or leasehold improvements, alterations or additions
located in the Premises; or (d) upon this transaction or any document to
which Tenant is a party creating or transferring any interest of Tenant in this
Lease or the Premises. In addition to the foregoing, Tenant agrees to pay,
before delinquency, any and all taxes levied or assessed against Tenant and
which become payable during the term hereof upon Tenant’s equipment, furniture,
fixtures and other personal property of Tenant located in the Premises.

 

29.          [INTENTIONALLY
OMITTED)

 

30.          DEFINED TERMS AND HEADINGS. The Article headings shown in this
Lease are for convenience of reference and shall in no way define, increase,
limit or describe the scope or intent of any provision of this Lease. Any
indemnification or insurance of Landlord shall apply to and inure to the
benefit of all the following “Landlord Entities”, being Landlord, Landlord’s
investment manager, and the trustees, boards of directors, officers, general
partners, beneficiaries, stockholders, employees and agents of each of them.
Any option granted to Landlord shall also include or be exercisable by Landlord’s
trustee, beneficiary, agents and employees, as the case may be. In any case
where this Lease is signed by more than one person, the obligations under this
Lease shall be joint and several. The terms “Tenant” and “Landlord” or any
pronoun used in place thereof shall indicate and include the masculine or
feminine, the singular or plural number, individuals, firms or corporations,
and their and each of their respective successors, executors, administrators
and permitted assigns, according to the context hereof. The term “rentable area”
shall mean the rentable area of the Premises or the Building as calculated by
the Landlord on the basis of the plans and specifications of the Building
including a proportionate share of any common areas. Tenant hereby accepts and
agrees to be bound by the figures for the rentable square footage of the
Premises and Tenant’s Proportionate Share shown on the Reference Pages;
however, Landlord may adjust either or both figures if there is manifest error,
addition or subtraction to the Building or any business park or complex of
which the Building is a part, remeasurement or other circumstance reasonably
justifying adjustment. The term “Building” refers to the structure in which the
Premises are located and the common areas (parking lots, sidewalks,
landscaping, etc.) appurtenant thereto. If the Building is part of a larger
complex of structures, the term “Building” may include the entire complex,
where appropriate (such as shared Expenses or Taxes) and subject to Landlord’s
reasonable discretion.

 

31.          TENANT’S AUTHORITY. If Tenant signs as a corporation,
partnership, trust or other legal entity each of the persons executing this
Lease on behalf of Tenant represents and warrants that Tenant has been and is
qualified to do business in the state in which the Building is located, that
the entity has full right and authority to enter into this Lease, and that all
persons signing on behalf of the entity were authorized to do so by appropriate
actions. Tenant agrees to deliver to Landlord, simultaneously with the delivery
of this Lease, a corporate resolution, proof of due authorization by partners,
opinion of counsel or other appropriate documentation reasonably acceptable to
Landlord evidencing the due authorization of Tenant to enter into this Lease.

 

32.          FINANCIAL STATEMENTS AND CREDIT
REPORTS. At Landlord’s
request, Tenant shall deliver to Landlord a copy, certified by an officer of
Tenant as being a true and correct copy, of Tenant’s most recent audited
financial statement, or, if unaudited, certified by Tenant’s chief financial
officer as being true, complete and correct in all material respects. So long
as Tenant and Guarantor file consolidated public annual reports, the foregoing
may be satisfied by delivery by Tenant to Landlord of each such current public
annual report for such applicable year. The immediately preceding sentence is
personal to Tenant and shall not be applicable to any successor or assign of
Tenant. Tenant hereby authorizes Landlord to obtain one or more credit reports
on Tenant at any time, and shall execute such further authorizations as
Landlord may reasonably require in order to obtain a credit report.  At the request of Landlord from time to time,
Tenant shall provide to Landlord Guarantor’s current financial statements or
other information discussing financial worth of Guarantor as reasonably
requested by Landlord.

 

33.          COMMISSIONS. Each of the parties represents and warrants
to the other that it has not dealt with any broker or finder in connection with
this Lease, except as described on the Reference Pages.

 

34.          TIME AND APPLICABLE LAW. Time is of the essence of this Lease and
all of its provisions. This Lease shall in all respects be governed by the laws
of the state in which the Building is located.

 

35.          SUCCESSORS AND ASSIGNS. Subject to the provisions of Article 9,
the terms, covenants and conditions contained in this Lease shall be binding
upon and inure to the benefit of the heirs, successors, executors,
administrators and assigns of the parties to this Lease.

 

18

 

36.          ENTIRE AGREEMENT. This Lease, together with its exhibits,
contains all agreements of the parties to this Lease and supersedes any
previous negotiations. There have been no representations made by the Landlord
or any of its representatives or understandings made between the parties other
than those set forth in this Lease and its exhibits. This Lease may not be
modified except by a written instrument duly executed by the parties to this
Lease.

 

37.          EXAMINATION NOT OPTION. Submission of this Lease shall not be
deemed to be a reservation of the Premises. Landlord shall not be bound by this
Lease until it has received a copy of this Lease duly executed by Tenant and has
delivered to Tenant a copy of this Lease duly executed by Landlord, and until
such delivery Landlord reserves the right to exhibit and lease the Premises to
other prospective tenants. Notwithstanding anything contained in this Lease to
the contrary, Landlord may withhold delivery of possession of the Premises from
Tenant until such time as Tenant has paid to Landlord any security deposit
required by Article 5, the first month’s rent as set forth in Article 3
and any sum owed pursuant to this Lease.

 

38.          RECORDATION. Tenant shall not record or register this
Lease or a short form memorandum hereof without the prior written consent of
Landlord, and then shall pay all charges and taxes incident such recording or
registration.

 

39.          OPTION TO RENEW.

 

39.1         Tenant shall, provided the Lease is in
full force and effect and Tenant is not in default under any of the other terms
and conditions of the Lease at the time of notification or commencement, have
one (1) option to renew (the “Renewal Option”) this Lease for a term of
five (5) years (the “Renewal Term”), for the portion of the Premises being
leased by Tenant as of the date the Renewal Term is to commence, on the same
terms and conditions set forth in this Lease, except as modified by the terms,
covenants and conditions as set forth below:

 

39.1.1      If Tenant elects to exercise the Renewal
Option, then Tenant shall provide Landlord with written notice no later than
the date which is one hundred eighty (180) days prior to the expiration of the Term
of this Lease but no earlier than the date which is two hundred seventy (270)
days prior to the expiration of the Term of this Lease. If Tenant fails to
provide such notice, Tenant shall have no further right to extend or renew the
Term of this Lease.

 

39.1.2      The Annual Rent and Monthly Installment of
Rent in effect at the expiration of the initial Term of this Lease shall be
increased to reflect the current fair market rental for comparable Space in the
Building and in other similar buildings in the same rental market as of the
date the Renewal Term is to commence, taking into account the specific provisions
of this Lease which will remain constant. Landlord shall advise Tenant of the
new Annual Rent and Monthly Installment of Rent for the Premises no later than
thirty (30) days after receipt of Tenant’s written request therefor. Said request
shall be made no earlier than thirty (30) days prior to the first date on which
Tenant may exercise its Renewal Option under this Article 39. Said
notification of the new Annual Rent may include a provision for its escalation
to provide for a change in fair market rental between the time of notification
and the commencement of the Renewal Term. In no event shall the Annual Rent and
Monthly Installment of Rent for the Renewal Term be less than the Annual Rent
and Monthly Installment of Rent in the preceding period.

 

39.1.3      This Renewal Option is not transferable
and the parties hereto acknowledge and agree that they intend that the Renewal
Option shall be “personal” to Tenant as set forth above and that in no event
will any assignee or sublessee have any rights to exercise the Renewal Option.

 

39.1.4      As the Renewal Option is exercised, Tenant
shall have no further right to extend the term of this Lease.

 

39.1.5      Notwithstanding anything herein to the
contrary, Tenant’s Renewal Option is subject and subordinate to the expansion
rights (whether such rights are designated as a right of first offer, right of
first refusal, expansion option or otherwise) of any tenant of the Building
existing on the date hereof.

 

40.           Intentionally Omitted.

 

41.          SIGNAGE.

 

41.1.1      During the Term and provided that Tenant
leases and occupies the Premises, Tenant, at Tenant’s sole cost, but subject to
governmental approval, shall have the right to place its name on the Building’s
monument sign located on East Evelyn (the “Monument Sign”). The design, size
and color of the signage with Tenant’s name to be included on the Monument
Sign, and the manner in which it is attached to the Monument Sign, shall be
subject to the reasonable approval of Landlord and all applicable governmental
authorities, and Landlord shall have the right to require that all names

 

19

 

on
the Monument Sign be of the same size and style. Tenant, at its cost, shall be
responsible for the maintenance, repair or replacement of Tenant’s signage on
the Monument Sign, which shall be maintained in a manner reasonably
satisfactory to Landlord. Tenant’s right to place its name on the Monument
Sign, and the location of Tenant’s name on the Monument Sign, shall be subject
to the existing rights of existing tenants in the Building and Project, and the
location of Tenant’s name on the Monument Sign shall be further subject to
Landlord’s reasonable approval. Although the Monument Sign will be maintained
by Landlord, Tenant shall pay its proportionate share of the cost of any
maintenance and repair associated with the Monument Sign. Upon expiration or earlier
termination of the Lease or Tenant’s right to possession of the Premises, or if
Tenant ceases to lease or occupy the Premises, Landlord, at Tenant’s cost,
payable as additional rent within five (5) business days after demand
therefor, shall have the right to remove Tenant’s signage from the Monument
Sign and restore the Monument Sign to the condition it was in prior to
installation of Tenant’s signage thereon, ordinary wear and tear excepted. The
rights provided in this Article 41 shall be non-transferable unless
otherwise agreed by Landlord in writing.

 

41.1.2  During the term and provided that Tenant
leases and occupies the Premises, Tenant, at Tenant’s sole cost, but subject to
governmental approvals, shall be entitled to one exclusive sign to be located
near the top of the exterior wall of the Building on the East side of the
Building (i.e., the side of the Building which faces Highway 237) (“Building
Signage”). The design, size, color and exact location of the Building Signage
shall be subject to the approval of all applicable governmental authorities and
Landlord’s prior written approval, which approval shall not be unreasonably
withheld, provided that the location does not detract from the first-class
quality of the Building or the Project. 
Such right to Building Signage is personal to Tenant and is subject to
the following terms and conditions:

 

41.1.2.1   Tenant shall submit plans and drawings for
the Building Signage to the City of Mountain View and to any other public authorities having jurisdiction and shall obtain written
approval from each such jurisdiction prior to installation, and shall fully
comply with all applicable laws.

 

41.1.2.2   Tenant shall, at Tenant’s sole cost and
expense, design, construct and install the Building Signage.

 

41.1.2.3   The Building Signage shall be subject to
Landlord’s prior written approval, which Landlord shall have the right to
withhold in its reasonable discretion.

 

41.1.2.4   Tenant shall periodically inspect the
Building Signage to identify any conditions that are in need of maintenance or
repair. Tenant shall provide Landlord with notice of any such conditions and
Landlord shall make any such repairs within a reasonable period of time
following the receipt of such notice. All sums paid by Landlord and all expenses
incurred by it in connection with such repairs shall be payable to Landlord by
Tenant within ten (10) business days of Landlord’s demand. Tenant shall be
responsible for any electrical energy used in connection with the Building
Signage. Notwithstanding the foregoing, Tenant shall not be liable for any fee in connection with Tenant’s right to
display the Building Signage in accordance with the Lease. At Landlord’s
option, Tenant’s right to the Building Signage may be revoked and terminated
upon occurrence of any of the following events:

 

41.1.2.4.1                Tenant shall be in default under
this Lease beyond any applicable cure period.

 

41.1.2.4.2                Tenant does not occupy the
Premises.

 

41.1.2.4.3                This Lease shall terminate or
otherwise no longer be in effect.

 

Upon
the expiration or earlier termination of this Lease or at such other time that
Tenant’s signage rights are terminated pursuant to the terms hereof, if Tenant
fails to remove its signage and repair the Building in accordance with the
terms of this Lease, Landlord shall cause Tenant’s signage to be removed from
the Building and the Building to be repaired and restored to the condition
which existed prior to the installation of Tenant’s signage (including, if
necessary, the replacement of any precast concrete panels), all at the sole
cost and expense of Tenant and otherwise in accordance with this Lease, without
further notice from Landlord notwithstanding anything to the contrary contained
in this Lease. Tenant shall pay all costs and expenses for such removal and
restoration within five (5) business days following delivery of an invoice
therefor. The rights provided in this Section 41.1.2 shall be
non-transferable, except in connection with an assignment of this Lease
approved by Landlord, a Permitted Transfer, or as otherwise agreed by Landlord
in writing in its sole discretion.

 

42.          CAFETERIA. Subject to tenant demand and market
conditions, Landlord shall use commercially reasonable efforts to establish a
cafeteria in the Building. In the event that Landlord is unwilling or unable to
establish a cafeteria in the Building or to maintain the existence of a cafeteria
which it may establish, Landlord shall not be liable for any damages

 

20

 

resulting
therefrom and the absence of the same shall have no effect on or diminish the
rights, obligations and liabilities of Landlord and Tenant under this Lease or
be considered to be a default by Landlord hereunder, nor shall Tenant be
entitled to any abatement of Rent due to the absence of a cafeteria in the
Building.

 

43.          ADDITIONAL SPACE IN PROJECT. In the event that Tenant requires
additional space within the Project (each, an “Additional Space”), Tenant may
inform Landlord of the size, type and location of the space that Tenant desires
to lease and so long as no Event of Default has occurred and is continuing,
Landlord agrees to use good faith efforts to offer available space within the
Project to Tenant to the extent such space substantially meets Tenant’s needs,
is not subject to any renewal or expansion rights of any existing tenant of the
Project, and Landlord, is not otherwise in negotiations to lease such space to
a third party. Notwithstanding the foregoing, nothing set forth in this Article 43
shall diminish or otherwise affect Tenant’s obligations under this Lease and in
no event shall Landlord be liable to Tenant if Landlord is unable to offer any
additional space within the Project to Tenant pursuant to the terms of Article 43.

 

44.          IMPROVEMENT OF EXTERIOR OF PROJECT. Landlord shall use commercially reasonable
efforts to improve the landscaping, signage, and building exteriors at the
Project, as determined to be necessary or desirable by Landlord, in its sole
and absolute discretion.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

21

 

45.          LIMITATION OF LANDLORD’S LIABILITY. Redress for any claim against Landlord
under this Lease shall be limited to and enforceable only against and to the
extent of Landlord’s interest in the Building. The obligations of Landlord
under this Lease are not intended to be and shall not be personally binding on,
nor shall any resort be had to the private properties of, any of its or its investment manager’s
trustees, directors, officers, partners, beneficiaries, members, stockholders,
employees, or agents, and in no case shall Landlord be liable to Tenant
hereunder for any lost profits, damage to business, or any form of special,
indirect or consequential damages.

 

	
  LANDLORD:

  	
   

  	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SFERS
  REAL ESTATE CORP. U,

  	
   

  	
   

  	
  VERISITY
  DESIGN, INC.,

  	
   

  
	
  a Delaware corporation

  	
   

  	
   

  	
  a
  California corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  RREEF
  Management Company, a

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Delaware
  corporation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James H. Ida

  	
   

  	
   

  	
  By:

  	
  /s/
  Charles Alvarez

  	
   

  
	
  Name:
  James H. Ida

  	
   

  	
   

  	
  Name:

  	
  Charles
  Alvarez

  	
   

  
	
  Title:
  District Manager

  	
   

  	
   

  	
  Title:

  	
  Vice
  President of Finance and

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Chief
  Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4/15/04

  	
   

  	
   

  	
  Dated:

  	
  4/15/04

  	
   

  
										

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

22

 

EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

 

SFERS REAL ESTATE CORP. U, a Delaware
corporation, as Landlord and 

VERISITY DESIGN, INC., a California
corporation, as Tenant

 

Exhibit A
is intended only to show the general layout of the Premises as of the beginning
of the Term of this Lease. It does not in any way supersede any of Landlord’s
rights set forth in Article 17 with respect to arrangements and/or
locations of public parts of the Building and changes in such arrangements
and/or locations. It is not to be scaled; any measurements or distances shown
should be taken as approximate.

 

 

/s/ ILLEGIBLE

Initials

 

A-1

 

 

 

EXHIBIT A-2 - DEPICTION OF VISITOR PARKING SPACES

 

attached to and made a part of Lease bearing the 

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and 

VERISITY DESIGN, INC., a California corporation, as Tenant

 

Exhibit A-2
is intended only to show the general layout of the Visitor Parking Spaces as of
the beginning of the Term of this Lease. It does not in any way supersede any
of Landlord’s rights set forth in Article 17 with respect to arrangements
and/or locations of public parts of the Building and changes in such
arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.

 

 

/s/ ILLEGIBLE

Initials

 

A-3

 

 

 

EXHIBIT B
– INITIAL ALTERATIONS

 

attached to and made a part of Lease bearing the

Lease
Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and 

VERISITY DESIGN, INC., a California corporation, as Tenant

 

1.                                       Tenant, following the delivery of the
Premises, as originally described in the Lease, by Landlord to Tenant and the full
and final execution and delivery of the Lease and the Guaranty to Landlord,
shall have the right to perform alterations and improvements in the Premises
(the “Initial Alterations”), subject to the terms of this Exhibit Notwithstanding
the foregoing, Tenant and its contractors shall not have the right to perform
Initial Alterations in the Premises unless and until Tenant has complied with
all of the terms and conditions of Article 6 of the Lease, including,
without limitation, approval by Landlord of the final plans for the Initial
Alterations, as applicable, and the contractors to be retained by Tenant to
perform such Initial Alterations. Tenant shall be responsible for all elements
of the design of Tenant’s plans (including, without limitation, compliance with
law, functionality of design, the structural integrity of the design, the
configuration of the premises and the placement of Tenant’s furniture,
appliances and equipment), and Landlord’s approval of Tenant’s plans shall in
no event relieve Tenant of the responsibility for such design. The general
contractor and any Major Trade Subcontractor (defined below) with whom Tenant
or Tenant’s general contractor shall contract to construct the Initial
Alterations are subject to approval by Landlord, which approval shall not be
unreasonably withheld or delayed. For purposes of this Exhibit B a “Major
Trade Subcontractor” shall mean any subcontractor responsible for heating,
ventilation and air conditioning, plumbing, or electrical systems in the
Premises. Tenant’s general contractor (a) shall maintain insurance as
required pursuant to the terms of the Lease and (b) be licensed as a
contractor in the state/municipality in which the Premises are located.
Landlord hereby approves Integrity Office Solutions, Inc. as the
construction manager for the construction of the Initial Alterations (the “Construction
Manager”) and the general contractors and Major Trade Subcontractors listed on
Scheduled B-4 attached hereto. Upon request by Landlord, Tenant shall deliver
to Landlord financial statements for any general contractor or Major Trade
Subcontractor for which Tenant has obtained or desires to obtain Landlord’s
approval

 

2.                                       Tenant agrees that the Initial Alterations
shall be constructed in accordance with the construction budget attached hereto
as Schedule B-3 (the “Approved Budget”). Tenant shall not modify the amount
allocated to each line item of the Approved Budget by more than three percent
(3%) without Landlord’s prior written approval, which approval shall not be
unreasonably withheld.

 

3.                                       Provided Tenant is not in default under the
Lease, Landlord agrees to contribute the sum of $        (the “Allowance”) toward the cost of
performing the Initial Alterations in preparation of Tenant’s occupancy of the Premises,
as originally described in the Lease. The Allowance may only be used for (a) hard
costs in connection with the Initial Alterations, (b) costs associated
with moving Tenant from its existing location into the Premises, including, without
limitation, the cost of telephone, data and computer cabling, consulting fees,
reprinting stationery on hand, moving Tenant’s furniture, equipment and other
personal property into the Premises, and the cost of space improvements
performed in the Premises not otherwise included in the Initial Alterations,
and (c) the cost of purchasing furniture and fixtures for use solely in
the Premises; but excluding office supplies (including without limitation,
letterhead and business cards) and computer equipment. The Allowance, less a
ten percent (10%) retainage (which retainage shall be payable as part of the
final draw), shall be paid to Tenant or the Construction Manager or, in the
event that Landlord reasonably believes that Tenant or the Construction Manager
is not timely paying the contractors, at Landlord’s option, to the order of the
general contractor that performs the Initial Alterations, in periodic disbursements
within thirty (30) days after receipt of the following documentation: (a) an
application for payment and sworn statement of contractor substantially in the
form of AIA Document G-702 covering all work for which disbursement is to be
made to a date specified therein; (b) Contractor’s, subcontractor’s and
material supplier’s full or partial waivers of liens, as applicable, which
shall cover all Initial Alterations for which disbursement is being requested
and all other statements and forms required for compliance with the mechanics’
lien laws of the state in which the Premises is located, (c) copies of all
construction contracts for the Initial Alterations, together with copies of all
change orders, if any; and (d) a request to disburse from Tenant
containing an approval by Tenant of the work done and a good faith estimate of
the cost to complete the Initial Alterations. Upon completion of the Initial
Alterations, and prior to final disbursement of the Allowance, Tenant shall
furnish Landlord with: (i) general contractor and architect’s

 

 

/s/ ILLEGIBLE

Initials

 

B-1

 

completion affidavits, (ii) full and final
waivers of lien, (iii) receipted bills covering all labor and materials
expended and used, (iv) as-built plans of the Initial Alterations, and (v) the
certification of Tenant and its architect that the Initial Alterations have
been installed in a good and workmanlike manner in accordance with the approved
plans, and in accordance with applicable laws, codes and ordinances. In no
event shall Landlord be required to disburse the Allowance more than one time
per month. If the Initial Alterations exceed the Allowance, Tenant shall be
entitled to the Allowance in accordance with the terms hereof, but each
individual disbursement of the Allowance shall be disbursed in the proportion
that the Allowance bears to the total cost for the Initial Alterations, less
the ten percent (10%) retainage referenced above. Notwithstanding anything
herein to the contrary, Landlord shall not be obligated to disburse any portion
of the Allowance during the continuance of an uncured default under the Lease,
and Landlord’s obligation to disburse shall only resume when and if such
default is cured.

 

4.                                       Except as expressly provided in Paragraph 3
above, in no event shall the Allowance be used for the purchase of equipment,
furniture or other items of personal property of Tenant. If Tenant does not
submit a request for payment of the entire Allowance to Landlord in accordance
with the provisions contained in this Exhibit by October 31, 2004 (which
date shall be subject to extension equal to the number of days of delay in
construction actually experienced by Tenant due to Force Majeure (as defined in
the Lease), provided that such extension shall in no event exceed thirty (30) days)
any unused amount shall accrue to the sole benefit of Landlord, it being
understood that Tenant shall not be entitled to any credit, abatement or other
concession in connection therewith. Tenant shall be responsible for all applicable
state sales or use taxes, if any, payable in connection with the Initial
Alterations and/or the Allowance.

 

5.                                       Tenant agrees to accept the Premises in its “as-is”
condition and configuration, it being agreed that Landlord shall not be
required to perform any work, other than the Landlord Work (as defined below)
or, except as provided herein with respect to the Allowance, the Landlord HVAC
Allowance (as defined below) or the Tenant HVAC Allowance (as defined below)
incur any costs in connection with the construction or demolition of any
improvements in the Premises.

 

6.                                       Any unused portion of the Allowance that is
in excess of the costs incurred by Tenant for construction of the Initial Alterations
and any unused portions of the Landlord HVAC Upgrade Allowance and the Tenant
HVAC Upgrade Allowance that are in excess of the costs of the HVAC Upgrade
shall accrue to the sole benefit of Landlord, it being understood and agreed
that Tenant shall not be entitled to receive any credit or abatement in
connection therewith. In no event shall Landlord have any obligation to
disburse any portion of the Allowance, Landlord HVAC Upgrade Allowance or
Tenant HVAC Upgrade Allowance after October 31, 2004 (which date shall be
subject to extension equal to the number of days of delay in construction
actually experienced by Tenant due to Force Majeure, provided that such
extension shall in no event exceed thirty (30) days).

 

7.                                       Provided Tenant is not in default under the Lease,
Landlord agrees to contribute an amount not to exceed $           
(the “Landlord HVAC Upgrade Allowance”) toward the cost of performing certain
upgrades to the heating, ventilation and air conditioning systems exclusively
serving the Premises, in accordance with Schedule B-l attached hereto and made
a part hereof (the “HVAC Upgrade”), which Landlord HVAC Upgrade Allowance shall
be in addition to, not in lieu of the Allowance. The Landlord HVAC Upgrade
Allowance shall be paid to Tenant, the Construction Manager, or in the event
that Landlord reasonably believes that the Tenant or Construction Manager is
not timely paying the contractors, at Landlord’s option, to the order of the
contractor that performs such HVAC Upgrades in monthly disbursements according
to the procedure set forth in Paragraph 3 above, with Tenant and Landlord
contributing to the costs of HVAC Upgrades on a pari passu basis (i.e., for every dollar that Tenant applies
of the Tenant HVAC Upgrade Allowance (defined in Paragraph 8 below) on the HVAC
Upgrade, Landlord shall pay a dollar of the Landlord HVAC Allowance). The
Landlord HVAC Upgrade Allowance will be a part of the regular monthly
disbursement and requisition for the Allowance, and not a separate requisition;
however the Landlord HVAC Upgrade Allowance will be a separate line item on
such requisition.

 

8.                                       Provided Tenant is not in default under the
Lease, Landlord agrees to contribute an amount not to exceed $            
(the “Tenant HVAC Upgrade Allowance”) in order to finance the Tenant’s
contribution toward the performance of the HVAC Upgrades, which Tenant HVAC
Upgrade Allowance shall be in addition to, not in lieu of the Allowance and the
Landlord HVAC Upgrade Allowance. The Tenant HVAC Upgrade Allowance shall be
paid to Tenant, the Construction Manager, or in the event that Landlord
reasonably believes that the Tenant or Construction Manager is not timely
paying the contractors, at Landlord’s option, to the order of the contractor
that performs the HVAC Upgrades, in monthly disbursements according to the
procedure set forth in Paragraph 3 above, with the Tenant HVAC Upgrade
Allowance and the Landlord HVAC Upgrade Allowance being paid on a pari passu basis, as described in

 

 

/s/ ILLEGIBLE

Initials

 

B-2

 

Paragraph 7 above. Any Tenant HVAC Upgrade Allowance
paid to or on behalf of Tenant hereunder shall be repaid to Landlord as
additional rent in equal monthly installments throughout the initial Term of
the Lease at an interest rate equal to eight and one-half percent (8.5%) per
annum. If Tenant is in default under the Lease after the expiration of
applicable cure periods, the entire unpaid balance of the Tenant HVAC Upgrade
Allowance paid to or on behalf of Tenant shall be come immediately due and
payable and, except to the extent required by applicable law, shall not be
subject to mitigation or reduction in connection with a reletting of the
Premises by Landlord. Upon request of Landlord, Tenant shall execute an
amendment to the Lease or other appropriate agreement, prepared by Landlord,
evidencing the amount of the Tenant HVAC Upgrade Allowance required by Tenant
and the repayment schedule relating to Tenant’s repayment of the Tenant
HVAC Upgrade Allowance, as described herein. By way of example only, if at the
end of the second (2nd) month of the Term of the Lease, Landlord disburses to
Tenant (or its contractors) the sum of Dollars ($              )
constituting the Tenant HVAC Upgrade Allowance, then beginning on the first
(1st) day of the fourth (4th) month of the Term and continuing each succeeding
month of the initial Term, Tenant shall pay to Landlord the sum of             
100ths Dollars ($        as additional
rent, in accordance with the terms of Article 3 of the Lease. Anything to
the contrary notwithstanding, Tenant shall have the right at any time to prepay
the Tenant HVAC Upgrade Allowance plus any accrued and unpaid interest in full
or in part without penalty or premium.

 

9.                                       Landlord, at its sole cost and expense
(subject to the terms hereof) shall perform improvements to the Premises and
the Building in accordance with the following work list (the “Work List”) using
Building standard methods, materials and finishes. The improvements to be
performed in accordance with the Work List are hereinafter referred to as the “Landlord
Work”. Landlord shall enter into a direct contract for the Landlord Work with a
general contractor selected by Landlord. In addition, Landlord shall have the
right to select and/or approve any subcontractors used in connection with the
Landlord Work.

 

WORK LIST

 

A.           Perform the repair and maintenance work to
the currently existing heating, ventilation and air conditioning units exclusively
serving the Premises which is recommended in the report prepared by Barker
Mechanical Services, Inc., dated as of March 30, 2004 and attached
hereto as Schedule B-2 (the “Barker Report”).

 

B.             Perform repairs to the Building roof, fire
sprinkler systems, and/or other causes of leaks reasonably necessary to remedy
the cause of ceiling tile discoloration in the Premises.

 

10.                                 Landlord and Tenant agree to cooperate with
each other in order to enable the Landlord Work and the Initial Alterations to
be performed in a timely manner and with as little inconvenience to the operation
of each party’s business as is reasonable possible (and Landlord and Tenant
hereby agree to coordinate with each other’s construction schedules so as to
avoid delays therein). Notwithstanding anything herein to the contrary, no
delay in the completion of the Landlord Work or inconvenience suffered by
Tenant during the performance of Landlord Work shall subject Landlord to any
liability for any loss of damage resulting therefrom Or entitle Tenant to any credit,
abatement or adjustment of rent or other sums payable under the Lease; provided
that Landlord uses commercially reasonable efforts to complete the Landlord
Work within thirty (30) days of the date upon which Landlord delivers
possession of the Premises to Tenant, subject to extension equal to the number
of days of delay actually experienced by Landlord due to Tenant Delay (as
defined below) or Force Majeure, and further provided if the Landlord Work
cannot reasonably be completed within such thirty (30) period, that Landlord
commences the Landlord Work within such thirty (30) day period and diligently
prosecutes the Landlord Work to completion. For the purposes of this Exhibit B,
“Tenant Delay” shall mean a delay in the performance of the Landlord Work as a result
of the acts or omissions of Tenant, any Tenant Entity or their respective
contractors or vendors, including, without limitation, Tenant’s failure to
comply with any of its obligations under the Lease.

 

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

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

 

 

/s/ ILLEGIBLE

Initials

 

B-3

 

SCHEDULE B-l - HVAC UPGRADE SPECIFICATIONS

 

attached to and made a part of Lease bearing the 

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and 

VERISITY DESIGN, INC., a California corporation, as Tenant

 

 

/s/ ILLEGIBLE

Initials

 

 

Schedule B-1

 

BUDGET ESTIMATE

 

BUILDING HVAC SYSTEM (does not include server room HVAC requirements)

 

	
   

  	
   

  	
   

  	
  ITEM

  	
   

  	
  Model

  	
   

  	
  Cost

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  ADDITIONAL HVAC UNITS

  	
   

  	
   

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1

  	
  Four
  10 ton split systems to supplement Building HVAC****

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.2

  	
  Structural
  supports for condensing units on the roof

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.3

  	
  Lifting
  and installation of condensing units

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.4

  	
  Installation
  of the fan-coll units in the ceiling

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.5

  	
  Refrigerant
  Piping

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.6

  	
  Refrigerant
  Piping Insulation

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.7

  	
  Refrigeration
  piping: air evacuation, presure testing, refrigerant charging

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.8

  	
  Supply
  and return air ductwork, diffusers, balancing dampers and duct insulation
  (associated with split systems zones only)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.9

  	
  Testing
  and balancing

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  RE-ZONING OF EXISTING
  SYSTEM SO

  	
   

  	
   

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1

  	
  Demolition,
  removal of discarted ductwork and existing duct patching

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2

  	
  62
  Total Building VAV zones including all new low pressure distribution ductwork
  installation and difussers

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.3

  	
  62
  New VAV boxes

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.3

  	
  Hot
  water piping and insulation for 30 New VAV reheat boxes

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.4

  	
  Air
  and water balancing

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Controls 

  	
   

  	
   

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1

  	
  Upgrade
  of the control boards at four existing roof-top package units

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.2

  	
  DDC
  controls for additional 4 split systems

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.3

  	
  DDC
  controls for existing boiler and hot water pump

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.4

  	
  New
  DDC controls for 62 new VAV boxes, Including controller, thermostat, damper
  actuator, control valve and all associated wiring

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
   

  	
  3.5

  	
  “TRANE”
  Tracer Sumit controller with all associated programming

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.6

  	
  Replacement
  of existing control valves at 15 existing VAV boxes

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.7

  	
  Start-up
  and commissioning

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  MISC

  	
   

  	
   

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.1

  	
  Servicing
  and Overhaul of existing four roof-top AC-units

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.2

  	
  Testing
  of existing building medium pressure ductwork that is to be reused including
  all repairs, replacement. and all related work as required.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.3

  	
  Servicing
  and cleaning of existing heating water system

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.4

  	
  Ceiling
  grid, tile, and lights be removed and replaced as required (Approx 50%)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.5

  	
  Installation
  of new combination fire/smoke dampers (16 total)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.6

  	
  Removal
  of the existing air compressor

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  all
  and all related electrical and other work related to the above HVAC upgrade
  must be included

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Estimated Cost

  	
   

  	
   

  	
   

  	
  $

  	
  0

  	
   

  

 

 

SCHEDULE B-2
-BARKER REPORT

 

attached to and made a part of Lease bearing the 

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and 

VERISITY DESIGN, INC., a California corporation, as Tenant

 

	
   

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
  Initials

  

 

Schedule B-2

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6800 SIERRA CT, SUITE
  L, DUBLIN CA 94568

  	
   

  	
  925-560-0280

  	
   

  	
  fax 925-560-0288

  
	
   

  	
   

  	
   

  	
  www.barkermech.com

  

 

March 30, 2004

 

Rreef

1310 Tully Road, Suite 110

San Jose, Ca

Attn:       Sylvia Salamant

 

Re:          HP Building #331

331 E Evelyn

Mt. View, CA 95134

 

Barker Mechanical
Services, Inc., has performed an inspection of all units at the above
referenced address.  Below are our
findings:

 

AC#1 –  Unit is in good condition considering age and
has 5-10 years life expectancy before normal replacement.  We recommend the following:

 

1.             Install 2 belts (BX87)

2.             Replace worn compressor contactor’s
(40 amp 220 volt)

3.             Chemically clean both evaporator
and condenser coils

4.             Replace 1 belt (BX81) on the
economizer

5.             Install 5 pneumatic thermostats and
grease fittings..

 

AC#2 – Unit
is in good condition considering age and has 5-10 years life expectancy before
normal replacement.  We recommend the
following:

 

1.             Install 2 belts (AX72)

2.             Install 2 belts (5VX900)

3.             Chemically clean both evaporator
and condenser coils

4.             Replace the suction king valve.

5.             Grease fittings.

 

AC#3 – Unit
is in good condition considering age and has 5-10 years life expectancy before
normal replacement.  We recommend the
following:

 

1.             Install 2 belts (BX66)

2.             Install 2 belts (A72)

3.             Chemically clean both evaporator
and condenser coils

4.             Grease fittings.

 

AC#4 – Unit
is in good condition considering age and has 5-10 years life expectancy before
normal replacement.  We recommend the
following:

 

1.             Install 2 belts (BX66)

2.             Install 2 belts (A72)

3.             Chemically clean both evaporator
and condenser coils

4.             Replace the suction king valve

5.             Grease fittings.

6.             Install new blower motor breaker

 

	
  LIC. #747039

  	
   

  	
  NO FINE PRINT

  	
   

  	
  24 HR EMERGENCY SERVICE

  
	
   

  	
   

  	
  SATISFACTION
  GUARANTEED

  	
   

  	
   

  

 

 

 

PRELIMINARY BUDGET ESTIMATE

 

	
  Project:

  	
  Verisity

  
	
   

  	
  331 East Evelyn Avenue

  
	
   

  	
  Mountain View, CA

  
	
   

  	
   

  
	
  Date:

  	
  4/9/2004

  
	
   

  	
   

  	
   

  
	
   

  	
  Rentable Square Footage:

  	
  58,000

  
	
   

  	
  Number of people:

  	
  234

  

 

	
   

  	
   

  	
  Description

  	
   

  	
  Quantity

  	
   

  	
  Unit

  	
   

  	
  Unit Cost

  	
   

  	
  Cost

  	
   

  
	
  Soft Costs

  	
   

  	
  Architect

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Engineer

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Expeditor

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  DOB/Permit Fees

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Building
  Costs/Elevator Charges

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  Audio/Visual
  Consultant

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  Security
  Consultant

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  Technology Move
  and Design Consultant

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Art Consultant

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  Project
  Reimbursables

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hard Costs

  	
   

  	
  Construction

  	
   

  	
  48,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  HVAC Upgrade
  & Related Work

  	
   

  	
  58,000

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Construction
  Sublease Space

  	
   

  	
  10,000

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Audio/Visual
  (Relocate Only)

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Security

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Signage

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Art/Furnishings

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Workstations

  	
   

  	
  182

  	
   

  	
  PP

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Training

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  1st Floor Pantry

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Conference rooms

  	
   

  	
  8

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Customer
  Reception and Lounge Area

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  2nd Floor
  Breakout room

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Private Offices

  	
   

  	
  49

  	
   

  	
  PP

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Team Room

  	
   

  	
  5

  	
   

  	
  PP

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Lunch room

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Reception Area

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Information
  Technology

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cabling (Dual
  Run)

  	
   

  	
  350

  	
   

  	
  DR

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  PBX/Phones/Voice
  Mail

  	
   

  	
  234

  	
   

  	
  PP

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  Cabling and
  Fiber for Server Room

  	
   

  	
  1

  	
   

  	
  PP

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Desktop PC’s

  	
   

  	
  234

  	
   

  	
  PP

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  4

  	
   

  	
  234

  	
   

  	
  PP

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  New Cabinets

  	
   

  	
  1

  	
   

  	
  EA

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  UPS

  	
   

  	
  1

  	
   

  	
  LS

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Server Room 24/7
  Supp. AC

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Misc IT and
  Server Room

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Move - Physical
  Relocation of.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Office Contents

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  PBX
  Relocation/Reprogram

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Server Room/PC’s

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Copiers

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Lab Equipment

  	
   

  	
  58,000

  	
   

  	
  SF

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Subtotal:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Contingency

  	
   

  	
  5

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  

 

Integrity Office Solutions

4/13/2004

 

SCHEDULE B-3
-APPROVED BUDGET

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and 

VERISITY DESIGN, INC., a California corporation, as Tenant

 

	
   

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
  Initials

  

 

Schedule B-3

 

 

 

AIR COMPRESSOR
– Unit is in good condition considering age and has 5-10 years life expectancy
before normal replacement. We recommend the following:

Ingersol Rand

Model #2-242E5

Serial # 30T6243098

1.   Install
4 belts (AX68)

2.   Auto
water bleed

3.   No
oil found at randomly selected pneumatic controls

4.   Need
to change oil in compressors and pressure wash.

 

BOILER
– Unit is in good condition considering age and has 5-10 years life expectancy
before normal replacement. We recommend the following:

Ajax

Model #WGFD1275

Serial #87-64532-2-1

1. Clean fire eye and
adjust gas valve linkage.

 

AIR DRYER
– Unit is operating in poor condition. We recommend the following:

Perma

Medal #35HSBA100

Serial #21318-4

1. Replacement of air
dryer before failure

 

EXHAUST FANS
are all in good condition considering age and have 5-10 years life expectancy
before normal replacement.

 

We hope this meets with
your approval. Please do not hesitate to contact us for any further information.
You may contact Charles Hazzell at (925) 766-1985.

 

Thank you,

 

 

	
  /s/ Janay Santos

  	
   

  

Janay Santos

Service Manager

 

 

 

SCHEDULE B-4
-APPROVED GENERAL CONTRACTORS AND MAJOR TRADE SUBCONTRACTORS

 

attached to and
made a part of Lease bearing the 

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE
CORP. U, a Delaware corporation, as Landlord and 

VERISITY DESIGN, INC, a California corporation, as Tenant

 

	
  General Contractors

  	
   

  	
  Electrical

  	
   

  	
  HVAC

  	
   

  	
  Plumbers

  
	
  Baycor

  	
   

  	
  Cupertino

  	
   

  	
  ACCO

  	
   

  	
  Cobra
  Mechanical

  
	
  NOVO

  	
   

  	
  Elcor

  	
   

  	
  Air
  Systems

  	
   

  	
  D &
  M Plumbing

  
	
  Skyline

  	
   

  	
  Foley

  	
   

  	
  All
  Air

  	
   

  	
  KDS
  Plumbing

  
	
  Syl-Mar

  	
   

  	
  Frank

  	
   

  	
  Cal-Air

  	
   

  	
  Lyons
  Brothers

  
	
  Team
  Construction

  	
   

  	
  Howell

  	
   

  	
  DelCon

  	
   

  	
  Madlem
  Mechanical

  
	
   

  	
   

  	
  Marke

  	
   

  	
  Foothill

  	
   

  	
  Metro

  
	
   

  	
   

  	
  Mission

  	
   

  	
  Helwig

  	
   

  	
  Novotec

  
	
   

  	
   

  	
  Palmer

  	
   

  	
  Michael
  D Burns Company

  	
   

  	
  Ramcon
  Plumbing

  
	
   

  	
   

  	
  Redwood
  City Electric

  	
   

  	
  SVM

  	
   

  	
  Terry Mechanical

  
	
   

  	
   

  	
  RK

  	
   

  	
  Terry

  	
   

  	
   

  
	
   

  	
   

  	
  WBE

  	
   

  	
  Therma

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Western
  Allied

  	
   

  	
   

  

 

	
   

  	
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  Initials

  

 

Schedule B-4

 

 

EXHIBIT C - COMMENCEMENT DATE MEMORANDUM

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and

VERISITY DESIGN, INC., a California corporation, as Tenant

 

COMMENCEMENT DATE MEMORANDUM

 

THIS MEMORANDUM, made as of            ,
2004, by and between SFERS REAL ESTATE CORP. U, a Delaware corporation (“Landlord”)
and VERISITY DESIGN, INC., a California corporation (“Tenant”).

 

Recitals:

 

A.            Landlord and Tenant are parties to that
certain Lease, dated for reference February _, 2004 (the “Lease”)

for certain premises (the “Premises”) consisting of approximately 58,242 square
feet at the building

commonly known as Mountain View Corporate Center.

 

B.            Tenant is in possession of the Premises and
the Term of the Lease has commenced.

 

C.            Landlord and Tenant desire to enter into this
Memorandum confirming the Commencement Date, the

Termination Date and other matters under the Lease.

 

NOW, THEREFORE, Landlord and Tenant agree as follows:

 

1.             The actual Commencement Date is

 

2.             The actual Termination Date is

 

3.             The schedule of the Annual Rent and the
Monthly Installment of Rent set forth on the Reference Pages is deleted in its entirety, and the following is
substituted therefor:

 

(insert rent schedule]

 

4.             Capitalized
terms not defined herein shall have the same meaning as set forth in the Lease.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.

 

	
  LANDLORD:

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  
	
  SFERS
  REAL ESTATE CORP. U,

  a Delaware corporation

  	
  VERISITY
  DESIGN, INC.,

  a California corporation

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  RREEF
  Management Company, a Delaware 

  corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
                       DO  
  NOT   SIGN                  

  	
   

  	
  By:

  	
                       DO  
  NOT   SIGN                  

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
  Charles
  Alvarez

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  Vice
  President of Finance and

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Chief
  Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  Dated:

  	
   

  	
   

  
											

 

	
   

  	
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  Initials

  

 

C-1

 

EXHIBIT D - RULES AND REGULATIONS

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and 

VERISITY DESIGN, INC., a California corporation, as Tenant

 

1.             No sign, placard, picture, advertisement, name
or notice (collectively referred to as “Signs”) shall be installed or displayed
on any part of the outside of the Building without the prior written consent of
the Landlord which consent shall be in Landlord’s sole discretion. All approved
Signs shall be printed, painted, affixed or inscribed at Tenant’s expense by a person
or vendor approved by Landlord and shall be removed by Tenant at Tenant’s
expense upon vacating the Premises. Landlord shall have the right to remove any
Sign installed or displayed in violation of this rule at Tenant’s expense
and without notice.

 

2.             If Landlord objects in writing to any
curtains, blinds, shades or screens attached to or hung in or used in
connection with any window or door of the Premises or Building, Tenant shall
immediately discontinue such use. No awning shall be permitted on any part of
the Premises. Except as approved by Landlord with respect to the Initial
Alterations (as defined in the Lease) Tenant shall not place anything or allow
anything to be placed against or near any glass partitions or doors or windows
which may appear unsightly, in the opinion of Landlord, from outside the
Premises.

 

3.             Tenant shall not alter any lock or other
access device or install a new or additional lock or access device or bolt on any
door of its Premises without the prior written consent of Landlord, which
consent shall not be unreasonably withheld; provided, however, Tenant shall be
permitted to install door hardware that meets standard industry practice for
security services as required by Tenant. Tenant, upon the termination of its
tenancy, shall deliver to Landlord the keys or other means of access to all
doors.

 

4.             If Tenant requires telephone, data, burglar
alarm or similar service, the cost of purchasing, installing and maintaining
such service shall be borne solely by Tenant. No boring or cutting for wires
will be allowed without the prior written consent of Landlord. Landlord shall
direct electricians as to where and how telephone, data, and electrical wires
are to be introduced or installed. The location of burglar alarms, telephones,
call boxes or other office equipment affixed to the Premises shall be subject
to the prior written approval of Landlord, which consent shall not be
unreasonably withheld.

 

5.             Tenant shall not place a load upon any floor
of its Premises, including mezzanine area, if any, which exceeds the load per
square foot that such floor was designed to carry and that is allowed by law.
Heavy objects shall stand on such platforms as determined by Landlord to be
necessary to properly distribute the weight. Landlord will not be responsible
for loss of or damage to any such equipment or other property from any cause,
and all damage done to the Building by maintaining or moving such equipment or
other property shall be repaired at the expense of Tenant.

 

6.             Tenant shall not install any radio or
television antenna, satellite dish, loudspeaker or other device on the roof or
exterior walls of the Building without Landlord’s prior written consent which
consent shall be in Landlord’s sole discretion.

 

7.             Tenant shall not mark, drive nails, screw or
drill into the partitions, woodwork, plaster or drywall (except for pictures
and general office uses) or in any way deface the Premises or any part
thereof.  Tenant shall not affix any
floor covering to the floor of the Premises or paint or seal any floors in any
manner except as approved by Landlord. Tenant shall repair any damage resulting
from noncompliance with this rule.

 

8.             No cooking shall be done or permitted on the
Premises, except that Underwriters’ Laboratory approved microwave ovens or
equipment for brewing coffee, tea, hot chocolate and similar beverages shall be
permitted, provided that such equipment and use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and
regulations.

 

9.             Tenant shall not use any hand trucks except
those equipped with the rubber tires and side guards, and may use such other
material-handling equipment as Landlord may approve. Tenant shall not bring any
other vehicles of any kind into the Building. Forklifts which operate on
asphalt areas shall only use tires that do not damage the asphalt.

 

10.           Tenant shall not use the name of the Building
or any photograph or other likeness of the Building in connection with or in
promoting or advertising Tenant’s business except that Tenant may include the
Building name in Tenant’s address.

 

	
   

  	
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  Initials

  

 

D-1

 

Landlord
shall have the right, exercisable without notice and without liability to any
tenant, to change the name and address of the Building.

 

11.           All trash and refuse shall be contained in
suitable receptacles at locations approved by Landlord. Tenant shall not place
in the trash receptacles any personal trash or material that cannot be disposed
of in the ordinary and customary manner of removing such trash without
violation of any law or ordinance governing such disposal.

 

12.           Tenant shall comply with all safety, fire
protection and evacuation procedures and regulations established by Landlord or
any governing authority.

 

13.           Tenant assumes all responsibility for securing
and protecting its Premises and its contents including keeping doors locked and
other means of entry to the Premises closed.

 

14.           Tenant shall not use any method of heating or
air conditioning other than that supplied by Landlord without Landlord’s prior
written consent.

 

15.           No person shall go on the roof without
Landlord’s permission.

 

16.           Tenant shall not permit any animals, other
than seeing-eye dogs, to be brought or kept in or about the Premises or any
common area of the property.

 

17.           Tenant shall not permit any motor vehicles to
be washed or mechanical work or maintenance of motor vehicles to be performed
on any portion of the Premises or parking lot without Landlord’s prior consent.

 

18.           These Rules and Regulations are in
addition to, and shall not be construed to in any way modify or amend, in whole
or in part, the terms, covenants, agreements and conditions of any lease of any
premises in the Building. Landlord may waive any one or more of these Rules and
Regulations for the benefit of any tenant or tenants, and any such waiver by Landlord
shall not be construed as a waiver of such Rules and Regulations for any
or all tenants.

 

19.           Landlord reserves the right to make such other
and reasonable rules and regulations as in its judgment may from time to
time be needed for safety and security, for care and cleanliness of the
Building and for the preservation of good order in and about the Building.
Tenant agrees to abide by all such rules and regulations herein stated and
any additional rules and regulations which are adopted. Tenant shall be
responsible for the observance of all of the foregoing rules by Tenant’s employees,
agents, clients, customers, invitees and guests.

 

20.           Any toilet rooms, toilets, urinals, wash bowls
and other 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
into them. 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, shall have caused it.

 

21.           Tenant shall not permit smoking or carrying of
lighted cigarettes or cigars in areas reasonably designated by Landlord or any
applicable governmental agencies as non-smoking areas.

 

22.           Any directory of the Building or project of
which the Building is a part (“Project Area”), if provided, will be exclusively
for the display of the name and location of tenants only and Landlord reserves
the right to charge for the use thereof and to exclude any other names.

 

23.           Canvassing, soliciting, distribution of
handbills or any other written material in the Building or Project Area is prohibited
and each tenant shall cooperate to prevent the same. No tenant shall solicit
business from other tenants or permit the sale of any goods or merchandise in
the Building or Project Area without the written consent of Landlord.

 

24.           Any equipment belonging to Tenant which causes
noise or vibration that may be transmitted to the structure of the Building or
to any space therein to such a degree as to be objectionable to Landlord or to
any tenants in the Building shall be placed and maintained by Tenant, at Tenant’s
expense, on vibration eliminators or other devices sufficient to eliminate the noise
or vibration.

 

	
   

  	
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  Initials

  

 

D-2

 

25.           Driveways, sidewalks, halls, passages, exits,
entrances and stairways (“Access Areas”) shall not be obstructed by tenants or
used by tenants for any purpose other than for ingress to and egress from their
respective premises. Access areas 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 judgement of Landlord, shall be
prejudicial to the safety, character, reputation and interests of the Building
or its tenants.

 

26.           Landlord
reserves the right to designate the use of parking areas and spaces. Tenant
shall not park in visitor, reserved, or unauthorized parking areas. Tenant and
Tenant’s guests shall park between designated parking lines only and shall not
park motor vehicles in those areas designated by Landlord for loading and
unloading. Vehicles in violation of the above shall be subject to being towed
at the vehicle owner’s expense. Vehicles parked more than seven (7) nights
without prior written consent of the Landlord shall be deemed abandoned and
shall be subject to being towed at vehicle owner’s expense. Tenant will from
time to time, upon the request of Landlord, supply Landlord with a list of
license plate numbers of vehicles owned or operated by its employees or agents.

 

27.           No trucks, tractors or similar vehicles can be
parked anywhere other than in Tenant’s own truck dock area. Tractor-trailers
which must be unhooked or parked with dolly wheels beyond the concrete loading
areas must use steel plates or wood blocks under the dolly wheels to prevent
damage to the asphalt paving surfaces. No parking or storing of such trailers
will be permitted in the parking areas or on streets adjacent thereto.

 

28.           During periods of loading and unloading,
Tenant shall not unreasonably interfere with traffic flow and loading and unloading
areas of other tenants. All products, materials or goods must be stored within
the Tenant’s Premises and not in any exterior areas, including, but not limited
to, exterior dock platforms, against the exterior of the Building, parking
areas and driveway areas. Tenant agrees to keep the exterior of the Premises
clean and free of nails, wood, pallets, packing materials, barrels and any
other debris produced from their operation.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

	
   

  	
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  Initials

  

 

D-3

 

EXHIBIT E- FORM OF SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and 

VERISITY DESIGN, INC., a California corporation, as Tenant

 

This
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is
entered into as of this
             day
of             ,
2004, by and among
                         
(“Tenant”), SUMITOMO MITSUI BANKING CORPORATION (“Agent”) and SFERS REAL ESTATE
CORP. U (“Landlord”).

 

A.            Pursuant to a lease dated
          (the “Lease”) between
Landlord and Tenant, Tenant is a tenant of a certain building (the “Building”)
on that certain real property described on Exhibit A annexed hereto
located in                              ,
State of California (the “Land”). Borrower’s interest in the Building and the
Land shall be referred to herein as “Property”).

 

B.            Agent is Administrative Agent on behalf of
Lenders party to a Credit Agreement dated as of          
(the “Credit Agreement”) with respect to, among other things, making a Loan to
Landlord in the amount of
$             with interest
thereon, evidenced by a certain Promissory Note secured by, among other things,
a Mortgage, Assignment of Leases and Security Agreement (the “Mortgage”)
constituting a valid lien upon the Property, and secured by an Assignment of
Landlord’s interest in the Lease as more particularly set forth in a certain
Assignment of Leases and Rents.

 

C.            As a condition precedent to obtaining the
Loan, Agent has required that Landlord and Tenant make certain agreements with
Agent with respect to the Lease for the benefit of the Lenders party to the
Credit Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing facts and mutual covenants
contained herein, the parties hereto do hereby agree as follows:

 

1.             Assignment: Tenant hereby acknowledges and
agrees that it has notice that the Lease and the rent and all other sums due
thereunder have been assigned or are to be assigned to Agent as security for
the obligations secured by the Mortgage and agrees to such assignment. In the
event Agent forwards written notice to Tenants of the occurrence of an Event of
Default Under the Mortgage and demands that Tenant pay its sums due under the
Lease directly to Agent, Tenant shall honor such demand and pay such sums due
under the Lease directly to Agent or as otherwise directed pursuant to such
notice. In complying with these provisions, Tenant shall be entitled to rely
solely upon the notices given by Agent and Landlord hereby permits said direct
payments to be made and further agrees to indemnify and hold Tenant harmless
from and against any and all
loss, claim, damage or liability arising out of Tenants compliance with such
notice. Tenant shall be entitled to full credit under the Lease for any rents
paid to Agent in accordance with the provisions of this Paragraph to the same
extent as if such rents were paid directly to Landlord.

 

2.             Subordination. Subject to the terms hereof and
by its execution hereof Tenant acknowledges that the Mortgage in favor of
Agent, and any renewals, modifications, consolidations, replacements and
extensions thereof shall remain a lien on the Property until such time when
fully paid or otherwise disposed of pursuant to the terms thereof prior and
superior to the Lease (including specifically, without limitation, any option
to purchase or rights of first refusal affecting the Property, or any portion
thereof contained therein), the leasehold estate created thereby and Tenant’s
right, title and interest in the Property as if the Mortgage had been executed,
delivered and duly recorded in the appropriate land records prior to the
execution and delivery of the Lease.

 

3.             ATTORNMENT. If the interest of Landlord in the
Property and under the Lease shall be acquired by Agent by reason of
foreclosure of the Mortgage or any other act or proceeding(s) made or brought
to enforce the rights of the Agent, including, but not limited to, by deed in
lieu of foreclosure or as a result of any other means, then the Lease and all
terms therein, and the rights of Tenant thereunder, shall continue in full
force and effect and shall not be altered, terminated, or disturbed, except in
accordance with the terms of the lease, and Tenant shall be bound to Agent and
Agent shall be bound to Tenant, subject to the terms hereof under all of the
terms, covenants and conditions of the Lease for the balance of the terms, and
any renewals thereof with the same force and effect as if the Agent were the
Landlord under the Lease. In the event Agent acquires the interest of Landlord,
Tenant hereby agrees to attorn to Agent as his landlord, said attornment to be effective
and self-operative without the execution of any other instruments on the part
of either party hereto, immediately upon Agent succeeding to the interest of
Landlord under the Lease with written notice of same being delivered to Tenant.
Upon receipt by Tenant of said written notice from Agent that Agent has
succeeded to the interest of Landlord under the Lease, Tenant will make all
payments of monetary obligations due by Tenant under the Lease at the address
provided by

 

	
   

  	
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  Initials

  

 

E-1

 

Agent
in the notice. Tenant agrees, however, upon the election of and written demand
by Agent within sixty (60) days after Agent receives title to Property, to
execute an instrument in confirmation of the foregoing provisions, satisfactory
to Agent and Tenant, in which Tenant shall acknowledge this agreement to attorn
which shall set forth the terms and conditions hereof and shall not be deemed
or construed, in any way, as expanding or modifying Tenant’s obligations as
tenant under the Lease, except where specifically set forth herein.

 

4.             Nondisturbance.
If it becomes necessary to foreclose the Mortgage, Mortgagee will not terminate
the Lease nor join Tenant in summary or foreclosure proceedings so long as
Tenant is not in default under any of the terms, covenants or conditions of
said Lease without corresponding default of Landlord beyond applicable grace
periods after notice thereof or if in default, same shall be cured. If Agent
shall succeed to the interests of Landlord under the Lease, Agent shall be
bound to the Tenant under all of the terms, covenant and conditions of the
Lease, and Agent agrees to recognize Tenant and further agrees that Tenant
shall not be disturbed in its possession or use, of the Property, said
nondisturbance to be effective and self-operative without the execution of any
other instrument(s) on the part of either party hereto, immediately upon Agent
succeeding to the interest of Landlord under the Lease, of the Property for any
reason our than one which would entitle Landlord to terminate the lease under
its terms or would cause, without any further action by Landlord, the
termination of the Lease or would entitle Landlord to dispossess Tenant from the
Property. Tenant shall, from and after Agent’s succession to the interests of
Landlord under the Lease, have the same remedies against Agent for the breach
of any provision contained in the Lease that Tenant might have had under the
Lease against Landlord if Agent had not succeeded to the interests of Landlord
under the Lease; provided further, however, that Agent except as expressly set
forth in the Lease shall not be:

 

(a)           personally liable for any acts or omissions of any prior landlord
(including, but not limited to, Landlord); or

 

(b)           subject to any offsets or defenses which Tenant may have against any
prior landlord (including, but not limited to, Landlord); or

 

(c)           liable for any consequential damages attributable to any acts or
omissions of any prior landlord (including, but not limited to, Landlord); or

 

(d)           obligated to give Tenant a credit for or acknowledge any rent or any
other sums not delivered to Agent which Tenant has paid to Landlord in excess
of the rent due under the Lease at the time Agent gave Tenant notice of its succession
to the Landlord’s interest; or

 

(e)           liable for the repayment of any monies paid by Tenant under the Lease
except that Agent as a successor to Landlord shall be liable for the repayment
of a security deposit if payable to Tenant and Landlord fails to pay even if
Agent as successor to Landlord has not received the security deposit; or

 

(f)            obligated to commence or complete any
construction or contribute toward construction or installation of any
improvements required under the Lease, or expand or rehabilitate existing
improvements thereon, or restore improvements following any casualty not
required to be insured under the Lease or pay the costs of any restoration in
excess of the proceeds recovered
under any insurance required to be carried under the Lease, provided however
that Agent shall cause to be applied to restoration required under the Lease
all proceeds of casualty insurance received by or under the control of Agent;
or

 

(g)           liable for any damages or other relief attributable to any latent or
patent defects in construction; or

 

(h)           liable for any costs or expenses related to any indemnification provided
by any prior landlord (including, but not limited to, Landlord) with respect to
the presence or clean-up of any hazardous substances or materials in, on, under
or about the leased premises; or

 

(i)            obligated to enforce any restriction on
competition beyond the Building or Property; or

 

(j)            bound by any amendment or modification of the
Lease made without its consent and knowledge.

 

Additionally,
in such event, Tenant shall be bound to Agent, and Agent shall be bound to
Tenant, subject to the terms hereof under all of the terms, covenants and
conditions of the Lease, and Agent and Tenant shall, from and after Agent’s
succession to the interest of Landlord under the Lease, have the same remedies
against each other for the breach of any provision contained in the Lease that
they might have had under the Lease against each other if Agent were the
original Landlord under the Lease.

 

	
   

  	
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  Initials

  

 

E-2

 

 

5.             Limitations on Liability.  Neither this Agreement, the Assignment, nor
anything to the contrary in the Lease shall, prior to Agent’s acquisition of
Landlord’s interest in and possession of the Property, operate to give rise to
or create any responsibility or liability for the control, care, management or
repair of the Property upon Agent, or impose responsibility for the carrying
out by Agent of any of the covenants, terms and conditions of the Lease, or
constitute Agent a “mortgagee in possession,” nor shall said instrument operate
to make Agent responsible or liable for any waste committed on the Property by
any person whatsoever, or for any dangerous or defective condition of the
Property, or for any negligence in the management, upkeep, repair or control of
the Property resulting in loss, injury or death to any tenant, licensee,
invoice, guest, employee, agent or stranger unless Agent becomes Landlord. In the
event Agent becomes substitute landlord, Leader may assign its interest as
substitute landlord without notice to, the consent of or the assumption of any
liability to any other party hereto, so long as Landlord’s obligations under
the Lease and this Agreement, are fully assumed by said Assignee, who shall be
deemed by Agent to be a commercially reasonable Assignee, provided however that
Agent as successor Landlord shall be responsible for the performance of
continuing obligations of Landlord existing after such acquisition.

 

Anything
herein or in the Lease to the contrary notwithstanding, in the event that Agent
shall acquire title to the leased premises, Agent shall have no obligation, nor
incur any liability beyond the then-existing interest, if any, of Agent the
leased premises and Tenant shall look exclusively to such interest of Agent in
the leased premises for the payment and discharge of any obligations imposed
upon Agent hereunder or under the Lease, and Agent is hereby released and
relieved of any other liability hereunder and under the Lease. As regards
Agent, Tenant shall look solely to the estate or interest owned by Agent in the
leased premises and Tenant will not collect or attempt to collect any judgment
out of any other assets of Agent. By executing this Agreement, Landlord
specifically acknowledges and agrees that nothing contained in this Section shall
impair, limit, affect, lessen, abrogate or otherwise modify the obligations of
Landlord to Tenant under the Lease. Agent’s interest (as such term is used
herein) in the leased premises shall include Agent’s equity in the leased
premises, rents, protests and issues from the leased premises and proceeds from
casualty or condemnation affecting the leased premises.

 

6.             Warranties and Representations.  Tenant hereby warrants, represents, covenants
and agrees to and with Agent:

 

(a)           not to alter, modify, cancel, terminate or surrender Lease, except as
provided therein or herein;

 

(b)           after the date hereof (except as otherwise expressly provided in the
Lease), not to enter into any agreement with Landlord, its successors or
assigns, which grants any concession with respect to the Lease or which reduces
the rent called for thereunder without the express written consent of Agent;

 

(c)           after the date hereof (except as otherwise expressly provided in the
Lease), not to create any offset or claims against rents, or prepay rent more
than thirty (30) days in advance

 

(d)           that Tenant is now lessee of the leasehold estate created by the Lease
and shall not hereafter assign the Lease except as permitted by the terms
thereof

 

(e)           to promptly certify in writing to Agent, in connection with any proposed
assignment of the Mortgage, whether or not any default on the part of Landlord
is claimed to exist under the Lease, and what any such claimed default
factually involves; and

 

(f)            not to voluntarily subordinate the Lease to
any other lien or encumbrance without Agent’s prior written consent (except as
otherwise expressly provided in the Lease).

 

7.             No Waiver. Notwithstanding any other provision
of this Agreement, where Agent acquires Landlord’s interest in and possession
of the Premises and a Landlord default has occurred and is continuing, Tenant
shall not be considered as having waived its rights to require that Agent remedy
such default it the Landlord default Continues after the dale Agent acquires Landlord’s
interest in and possession of the Premises. In that case, Agent shall have no
liability for Landlord’s default as it applies to the period before Agent’s
acquisition of Landlord’s interest in and possession of the Property, but shall
be liable for any failure to cure such continuing default thereafter, provided
only that Agent receives the benefit of any notice and cure period required by the Lease or hereunder.

 

8.             Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New Jersey.

 

9.             Notice and Cure.  In the event that Landlord shall default in
the performance or observance of any of the terms, conditions or agreement in
the Lease, Tenant shall give written notice thereof to Agent and Agent shall
have the right but not

 

	
   

  	
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E-3

 

the
obligation) to cure such default. Tenant further agrees that if Landlord shall
have failed to cure such default within the time provided for in the Lease,
then the Agent provided such is not a failure to provide Essential Services or
access to the Premises for which Tenant may exercise self-help shall have an
additional thirty (30) days within which to cure such default or if such
default cannot be cured within that time, then such additional time as may be
necessary to cure such default shall be granted if within such thirty (30) days
Agent has commenced and is diligently pursuing the remedies necessary to cure
such default (including, but not limited to, commencement of foreclosure
proceedings, if necessary to effect such cure), in which event the Lease shall
not be terminated while such remedies are being so diligently pursued.
Specifically preserved hereby are any rights Tenant may have to cure in the
event of an emergency, or otherwise, and to set-off and deduct the cost of same
from rent, as may be provided in the Lease; provided prior written notice of
the exercise of such rights is delivered to Agent, and it is expressly
understood by Leader that Agent’s permission is not, in any way, required.

 

10.           Binding Effect; Definitions. The provisions of
this Agreement shall be covenants running with the Property, and shall be
binding upon and inure to the benefit of the respective parties hereto and
their respective heirs, legatees, executors, administrators, beneficiaries,
successors and assigns, including without limitation (a) any person who
shall obtain, directly or by assignment or conveyance, any interest in the
Mortgage, (b) any transferee; or (c) any person who shall obtain any
interest in the Property, whether through foreclosure or otherwise.
Furthermore, the provisions of this Agreement shall be binding upon any
guarantor of Tenants obligations under the Lease. As used herein the term “Tenant”
shall include Tenant, its successors and assigns; the words “foreclosures and “foreclosure
sale” as used herein shall be deemed to include the acquisition of Landlord’s
estate in the Property by voluntary deed (or assignment) in lieu of
foreclosure; and the word “Agent” shall include Agent herein specifically named
in its capacity as Administrative Agent under the Credit Agreement and any
successor Administrative Agent thereunder, and anyone who shall have succeeded
to Landlord’s interest in the Property by, through or under-foreclosure of the
Mortgage.

 

11.           Entire Agreement.  This Agreement shall be the whole and only
agreement between the parties hereto with regard to the subordination of the
Lease and leasehold interest of Tenant to the Mortgage in favor of Agent, and,
with respect to Agent and Tenant only, shall supersede and cancel any prior
agreements as to such, or any, subordination, including, but not limited to,
those provisions, if any, contained in the Lease, which provide for the
subordination of the lease and leasehold interest of Tenant to a deed or deeds
of trust or to a mortgage or mortgages to be thereafter executed, and shall not
be modified or amended except writing signed by all parties hereto.

 

12.           Consideration. Tenant declares, agrees and
acknowledges that it intentionally and unconditionally waives, relinquishes and
subordinates the Lease and leasehold interest in favor of the Mortgage above
mentioned to the extent set forth in this Agreement, and, in consideration of
this waiver, relinquishment and subordination, specific loans and advances are
being and will be made and, as part and parcel thereof specific monetary and
other obligations are being and will be entered into which would not be made or
entered into but for said reliance upon this waiver, relinquishment and
subordination.

 

13.           Invalidity or Unenforceability. If any term,
covenants or condition of this Agreement other than the effectiveness of the
non-disturbance intention is held to be invalid, illegal or unenforceable in
any respect, this Agreement shall be construed without such provision.

 

14.           Number and Gender. The use of the neuter
gender in this Agreement shall be deemed to include any other gender, and,
words in the singular number shall be held to include the plural, when the
sense requires.

 

15.           Notice. Any notice required or allowed by this
Agreement shall be in writing and shall be (i) hand-delivered, effective
upon receipt, or (ii) sent by United States Express Mail or by private
overnight courier, effective upon receipt, or (iii) served by certified
mail, postage prepaid, return receipt requested, deemed effective on the day of
actual delivery as shown by the addressee’s return receipt or the expiration of
three (3) business days after the date of mailing, whichever is the
earlier in time; addressed to the parry intended to receive the same at the
address set forth below:

 

If
to Tenant:

 

If to Landlord:

 

	
   

  	
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E-4

 

If
to Agent:

 

The
parties may, by written notice to the others, designate a different mailing
address for notices.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.

 

	
   

  	
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E-5

 

EXHIBIT C

 

FURNITURE, TRADE FIXTURES AND EQUIPMENT

 

	
  17

  	
   

  	
  SIDE
  CHAIRS

  	
   

  
	
  296

  	
   

  	
  ROLLING
  DESK CHAIRS

  	
   

  
	
  32

  	
   

  	
  KITCHEN
  CHAIRS

  	
   

  
	
  9

  	
   

  	
  36”
  RD. KITCHEN TABLES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAPLE FURNITURE

  	
   

  
	
  2

  	
   

  	
  MAPLE
  RT RETURN DESK

  	
   

  
	
  4

  	
   

  	
  MAPLE
  LFT RETURN DESK

  	
   

  
	
  2

  	
   

  	
  MAPLE
  8’ BOAT CONFERENCE TABLES

  	
   

  
	
  3

  	
   

  	
  MAPLE
  42-48” RD. TABLES 

  	
   

  
	
  2

  	
   

  	
  MAPLE
  2’ SQ. TABLES

  	
   

  
	
  1

  	
   

  	
  MAPLE
  3’ ROUND

  	
   

  
	
  2

  	
   

  	
  MAPLE
  CREDENZAS

  	
   

  
	
  1

  	
   

  	
  MAPLE
  12’ CONFERENCE ROOM TABLE

  	
   

  
	
  5

  	
   

  	
  MAPLE
  LATERAL FILES

  	
   

  
	
  4

  	
   

  	
  MAPLE
  SHORT BOOKCASES 

  	
   

  
	
  1

  	
   

  	
  MAPLE
  RECEPTION DESK

  	
   

  
	
  3

  	
   

  	
  MAPLE
  BLK LEATHER STUFFED CHAIRS

  	
   

  
	
  8

  	
   

  	
  MAPLE
  BLUE STUFFED CHAIRS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OAK FURNITURE

  	
   

  
	
  7

  	
   

  	
  OAK
  51/2’ DESKS

  	
   

  
	
  1

  	
   

  	
  OAK
  6’ RT RETURN DESK

  	
   

  
	
  6

  	
   

  	
  OAK
  TALL BOOKCASES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAHOGANY FURNITURE

  	
   

  
	
  9

  	
   

  	
  MAHOGANY
  51/2 LEFTHAND RETURN DESKS

  	
   

  
	
  3

  	
   

  	
  MAHOGANY
  51/2 RIGHTHAND RETURN DESKS

  	
   

  
	
  1

  	
   

  	
  MAHOGANY
  8’ BOAT CONFERENCE TABLE

  	
   

  
	
  1

  	
   

  	
  MAHOGANY
  12’ BOAT CONFERENCE TABLE

  	
   

  
	
  1

  	
   

  	
  MAHOGANY
  5’ CREDENZA

  	
   

  
	
  10

  	
   

  	
  MAHOGANY
  TALL BOOKCASES

  	
   

  
	
  5

  	
   

  	
  MAHOGANY
  SHORT BOOKCASES

  	
   

  
	
   9

  	
   

  	
  MAHOGANY
  LATERAL FILES

  	
   

  

 

Exhibit C

 

Verisity Design, Inc.

331 East Evelyn, Mountain
View, California

 

 

 

	
  5

  	
   

  	
  MAHOGANY
  42” ROUND TABLES

  	
   

  
	
  32

  	
   

  	
  MAHOGANY
  SIDE CHAIRS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LAMINATED GREY FURNITURE

  	
   

  
	
  2

  	
   

  	
  GREY
  8’ BOAT CONFERENCE TABLES

  	
   

  
	
   7

  	
   

  	
  GREY
  OFFICE DESK WORKSTATIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BLACK FURNITURE

  	
   

  
	
  1

  	
   

  	
  BLACK
  8’ CONFERENCE ROOM TABLE 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CHERRY FURNITURE

  	
   

  
	
  7

  	
   

  	
  CHERRY
  6’ RIGHT RETURN DESKS

  	
   

  
	
  8

  	
   

  	
  CHERRY
  6’ LEFT RETURN DESKS

  	
   

  
	
   1

  	
   

  	
  CHERRY
  RECEPTION DESK

  	
   

  
	
  10

  	
   

  	
  CHERRY
  42” ROUND TABLES

  	
   

  
	
  8

  	
   

  	
  CHERRY
  SHORT BOOKCASES 

  	
   

  
	
  15

  	
   

  	
  CHERRY
  LATERAL FILES 

  	
   

  
	
  57

  	
   

  	
  CHERRY
  SIDE CHAIRS

  	
   

  
	
  1

  	
   

  	
  CHERRY
  22” SQUARE SIDE TABLE

  	
   

  
	
  1

  	
   

  	
  CHERRY
  4’ COFFEE TABLE

  	
   

  
	
  3

  	
   

  	
  CHERRY
  BLUE STUFFED CHAIRS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CUBICLES

  	
   

  
	
  64

  	
   

  	
  1ST
  FLOOR ALL WITH LATERAL FILES 

  	
   

  
	
  105

  	
   

  	
  2ND
  FLOOR ALL WITH LATERAL FILES 

  	
   

  
	
  12

  	
   

  	
  IN
  STORAGE

  	
   

  

 

 

EXHIBIT C

 

FURNITURE, TRADE FIXTURES AND EQUIPMENT

 

SECURITY
SYSTEM

 

 

EXHIBIT D

 

MASTER LANDLORD CONSENT TO SUBLEASE

 

[*** Attach
Master Landlord Consent Form Here ***]

 

Exhibit D

 

Verisity Design, Inc.

331 East Evelyn, Mountain
View, California

 

 

LANDLORD CONSENT TO SUBLEASE

 

THIS LANDLORD CONSENT TO SUBLEASE (“Consent
Agreement”) is entered into as of              ,     ,
by and among
                       (“Landlord”),                           
(“Sublandlord”), and                       (“Subtenant”).

 

RECITALS:

 

A.            Landlord, as landlord, and Sublandlord, as
tenant, are parties to that certain lease agreement dated
                   ,
(as the same may have been amended, the “Lease”) pursuant to which Landlord has
leased to Sublandlord certain premises containing approximately
                       
rentable square feet (the “Premises”) of the building commonly known as located
at                    (the
“Building”).

 

B.            Sublandlord and Subtenant have entered into
(or are about to enter into) that certain sublease agreement dated as of attached hereto as Exhibit A (the “Sublease”)
pursuant to which Sublandlord has agreed to sublease to Subtenant certain premises
described as follows:
                                          ,
California comprising rentable square feet (the Sublet Premises”) constituting
all or a part of the Premises.

 

C.            Sublandlord and Subtenant have requested
Landlord’s consent to the Sublease.

 

D.            Landlord has agreed to give such consent upon
the terms and conditions contained in this Consent Agreement.

 

NOW THEREFORE, in consideration of the foregoing preambles
which by this reference are incorporated herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord hereby consents to the Sublease subject to the following terms and
conditions, all of which are hereby acknowledged and agreed to by Sublandlord
and Subtenant:

 

1.             Sublease Agreement. 
Sublandlord and Subtenant hereby represent that a true and complete copy
of the Sublease is attached hereto and made a part hereof as Exhibit A,
and Sublandlord and Subtenant agree that the Sublease with respect to Landlord
and/or the Sublet Premises shall not be modified without Landlord’s prior
written consent, which consent shall not be unreasonably withheld.  Landlord consents to the following: (i) the
Subtenant’s Use, as described in Section 1.10 of the Sublease, and (ii) the
tenant improvements and alterations described in Exhibit F of the Sublease, and agrees that Subtenant and
Tenant do no have to remove or modify said improvements prior to or at the end
of the Term.

 

2.             Representations.  Sublandlord
hereby represents and warrants that Sublandlord (i) has full power and
authority to sublease the Sublet Premises to Subtenant, (ii) has not
transferred or conveyed its interest in the Lease to any person or entity
collaterally or otherwise, and (iii) has full power and authority to enter
into the Sublease and this Consent Agreement.

 

	
   

  	
   

  
	
   

  	
  Initials

  

 

1

 

Subtenant
hereby represents and warrants that Subtenant has full power and authority to
enter into the Sublease and this Consent Agreement.

 

3.             Indemnity and Insurance.  Subtenant
hereby assumes, with respect to Landlord, all of the indemnity and insurance
obligations of the Sublandlord under the Lease with respect to the Sublet
Premises, provided that the foregoing shall not be construed as relieving or releasing
Sublandlord from any such obligations. Notwithstanding the foregoing, to the extent
the same is legally permissable, Sublandlord may satisfy such insurance
obligation for itself and on behalf of Subtenant.

 

4.             No Release.  Nothing contained in the
Sublease or this Consent Agreement shall be construed as relieving or releasing
Sublandlord from any of its obligations under the Lease, it being expressly
understood and agreed that Sublandlord shall remain liable for such obligations
notwithstanding anything contained in the Sublease or this Consent Agreement or
any subsequent assignment(s), sublease(s) or transfer(s) of the interest of the
tenant under the Lease. Sublandlord shall be responsible for the collection of
all rent due it from Subtenant, and for the performance of all the other terms
and conditions of the Sublease, it being understood that Landlord is not a
party to the Sublease and, notwithstanding anything to the contrary contained
in the Sublease, is not bound by any terms, provisions, representations or
warranties contained in the Sublease and is not obligated to Sublandlord or
Subtenant for any of the duties and obligations contained therein.

 

5.             Administrative Fee.  Upon
Sublandlord’s execution and delivery of this Consent Agreement, Sublandlord
shall pay to Landlord the sum of $             
in consideration for Landlord’s review of the Sublease and the preparation and
delivery of this Consent Agreement and shall deliver such amount to Landlord
concurrent with Sublandlord’s delivery of the executed.

 

6.             No Transfer.  Subtenant shall not further
sublease the Sublet Premises, assign its interest as the Subtenant under the
Sublease or otherwise transfer its interest in the Sublet Premises or the
Sublease to any person or entity without the written consent of Landlord, which
Landlord may withhold in its sole discretion.

 

7.             Lease. The parties agree that the Sublease is subject and subordinate to the
terms of the Lease, and all terms of the Lease, other than Sublandlord’s
obligation to pay Monthly Installments of Rent [CHECK DEFINED TERM], are incorporated into the Sublease. In
no event shall the Sublease or this Consent Agreement be construed as granting
or conferring upon the Sublandlord or the Subtenant any greater rights than
those contained in the Lease nor shall there be any diminution of the rights
and privileges of the Landlord under the Lease, nor shall the Lease be deemed
modified in any respect.    Without limiting
the scope of the preceding sentence, any construction or alterations performed
in or to the Sublet Premises shall be performed with Landlord’s prior written
approval and in accordance with the terms and conditions of the Lease. It is
hereby acknowledged and agreed that any provisions in the Sublease which limit
the manner in which Sublandlord may amend the Lease are binding only upon
Sublandlord and Subtenant as between such

 

	
   

  	
   

  
	
   

  	
  Initials

  

 

2

 

parties.
Landlord shall not be bound in any manner by such provisions and may rely upon
Sublandlord’s execution of any agreements amending or terminating the Lease
subsequent to the date hereof notwithstanding any contrary provisions in the
Sublease.

 

8.             Parking and Services. Any parking rights granted to Subtenant
pursuant to the Sublease shall be satisfied out of the parking rights, if any,
granted to Sublandlord under the Lease. Sublandlord hereby authorizes
Subtenant, as agent for Sublandlord, to obtain services and materials for or
related to the Sublet Premises, and Sublandlord agrees to pay for such services
and materials as additional Rent under the Lease upon written demand from Landlord.   However, as a convenience to Sublandlord,
Landlord may bill Subtenant directly for such services and materials, or any
portion thereof, in which event Subtenant shall pay for the services and
materials so billed upon written demand, provided that such billing shall not
relieve Sublandlord from its primary obligation to pay for such services and
materials.

 

9.             Attornment.  If the Lease or Sublandlord’s
right to possession thereunder terminates for any reason prior to expiration of
the Sublease, Subtenant agrees, at the written election of Landlord, to attorn
to Landlord upon the then executory terms and conditions of the Sublease for
the remainder of the term of the Sublease. In the event of any such election by
Landlord, Landlord will not be (a) liable for any rent paid by Subtenant
to Sublandlord more than one month in advance, or any security deposit paid by
Subtenant to Sublandlord, unless same has been transferred to Landlord by
Sublandlord; (b) liable for any act or omission of Sublandlord under the
Lease, Sublease or any other agreement between Sublandlord and Subtenant or for
any default of Sublandlord under any such documents which occurred prior to the
effective date of the attornment; (c) subject to any defenses or offsets
that Subtenant may have against Sublandlord which arose prior to the effective
date of the attornment; (d) bound by any changes or modifications made to
the Sublease without the written consent of Landlord, (e) obligated in any
manner with respect to the transfer, delivery, use or condition of any
furniture, equipment or other personal property in the Sublet Premises which
Sublandord agreed would be transferred to Subtenant or which Sublandlord agreed
could be used by the Subtenant during the term of the Sublease, or (f) liable
for the payment of any improvement allowance, or any other payment, credit,
offset or amount due from Sublandlord to Subtenant under the Sublease. If
Landlord does not elect to have Subtenant attorn to Landlord as described
above, the Sublease and all rights of Subtenant in the Sublet Premises shall
terminate upon the date of termination of the Lease or Sublandlord’s right to
possession thereunder. The terms of this Section 9 supercede any contrary
provisions in the Sublease.

 

10.           Payments Under the Sublease. If at any time Sublandlord is in default
under the terms of the Lease, Landlord shall have the right to contact
Subtenant and require Subtenant to pay all rent due under the Sublease directly
to Landlord until such time as Sublandlord has cured such default.    Subtenant agrees to pay such sums directly
to Landlord if requested by Landlord, and Sublandlord agrees that any such sums
paid by Subtenant shall be deemed applied against any sums owed by Subtenant
under the Sublease.  Any such sums
received by Landlord from Subtenant shall be received by Landlord on behalf of
Sublandlord and shall be applied by Landlord to any sums past due under the
Lease, in

 

	
   

  	
   

  
	
   

  	
  Initials

  

 

 

such
order of priority as required under the Lease or, if the Lease is silent in
such regard, then in such order of priority as Landlord deems appropriate. The
receipt of such funds by Landlord shall in no manner be deemed to create a
direct lease or sublease between Landlord and Subtenant. If Subtenant fails to
deliver its Sublease payments directly to Landlord as required herein following
receipt of written notice from Landlord as described above, then Landlord shall
have the right to remove any signage of Subtenant, at Subtenant’s cost, located
outside the Premises or in the Building lobby or elsewhere in the Building and
to pursue any other rights or remedies available to Landlord at law or in
equity.

 

11.           Excess Rent. If Landlord is entitled to any excess rent from Sublandlord pursuant
to the terms of the Lease, then, in addition to all rent otherwise payable by
Sublandlord to Landlord under the Lease, Sublandlord shall also pay to Landlord
the portion of the excess rent to which Landlord is entitled under the Lease,
in the manner described in the Lease. Landlord’s failure to bill Sublandlord
for, or to otherwise collect, such sums shall in no manner be deemed a waiver
by Landlord of its right to collect such sums in accordance with the Lease.

 

12.           Sublandlord Notice Address.    If
Sublandlord is subleasing the entire Premises or otherwise vacating the
Premises, Sublandlord’s new address for notices to Sublandlord under the Lease
shall be as follows:
                                           
: and if no address is filled in at the preceding blank (or if a post office
box address is used for the preceding blank), then Landlord may continue to
send notices to Sublandlord at the address(es) provided in, and in accordance
with the terms of, the Lease.

 

13.           Authority.   Each signatory of this
Consent Agreement represents hereby that he or she has the authority to execute
and deliver the same on behalf of the party hereto for which such signatory is
acting.

 

14.           Limitation Of Landlord’s Liability.  
Redress for any claim against Landlord under this Consent Agreement
shall be limited to and enforceable only against and to the extent of Landlord
s interest in the building of which the Sublet Premises is a part. The
obligations of Landlord under this Consent Agreement, if any, are not intended
to be and shall not be personally binding on, nor shall any resort be had to
the private properties of, any of its or its investment manager’s trustees,
directors, officers, partners, beneficiaries, members, stockholders,  employees, 
or agents,  and in no case shall
Landlord be liable to Sublandlord and/or Subtenant hereunder for any lost
profits, damage to business, or any form of special, indirect or consequential
damages.

 

	
   

  	
   

  
	
   

  	
  Initials

  

 

 

IN WITNESS WHEREOF, Landlord,
Sublandlord and Subtenant have executed this Consent Agreement as of the date
set forth above.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  By:
  RREEF Management Company, a Delaware 

  corporation, its Property Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:
  District Manager

  
	
   

  	
   

  
	
   

  	
  SUBLANDLORD:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  SUBTENANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
									

 

	
   

  	
   

  
	
   

  	
  Initials

  

 

 

EXHIBIT A 

 

SUBLEASE AGREEMENT

 

	
   

  	
   

  
	
   

  	
  Initials

  

 

 

EXHIBIT E 

 

BILL OF SALE

 

For valuable consideration, receipt and sufficiency of which is
acknowledged, VERISITY DESIGN, INC., a California corporation (“Seller”) grants, sells, transfers and
assigns convey and deliver to CONCEPTUS, INC., a Delware corporation (“Purchaser”) all right, title and interest
of Seller in and to the furniture, trade fixtures and equipment (the “FF&E”)
owned by Seller and located in the Premises, the address of which is at 331 E.
Evelyn, City of Mountain View, State of California, which FF&E is described
in Exhibit 1 attached hereto and incorporated herein by reference.

 

The FF&E is conveyed by Seller “as is,” “where is,” “with all faults”
and without any warranty or representation, express or implied, of any nature
or sort, including, without limitation, any implied or express warranty of
merchantability, fitness of use for a particular purpose, or otherwise;
provided, however Seller represents to Purchaser that Seller has good title to
the FF&E and conveyed all of Seller’s right, title and interest in the
FF&E free and clear of any encumbrance or lien.

 

Seller acknowledges the delivery by Purchaser of the sum of Ten Dollar
($10.00), in immediately available U.S. funds, representing the current cost
and sales tax charged thereon for the FF&E,

 

Each individual executing this Bill of Sale represents and warrants that
they are duly authorized to execute and deliver this Bill of Sale on behalf of
Seller and in accordance with any duly adopted resolution of the Board of
Directors of Seller, as required, and in accordance with the bylaws of Seller,
as required. This Bill of Sale shall be binding upon the Seller and Purchaser and
their successors and assigns.

 

Dated:
                                 ,
2009.

 

- DO NOT EXECUTE -

 

	
  SELLER:

  
	
   

  
	
  VERISITY
  DESIGN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  ACKNOWLEDGE
  AND AGREED BY:

  
	
   

  
	
   

  
	
  PURCHASER:

  
	
   

  
	
  CONCEPTUS,
  INC.,

  
	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Exhibit E

 

Verisity Design, Inc.

331 East Evelyn, Mountain View, California

 

 

 

EXHIBIT 1 TO EXHIBIT E

 

DESCRIPTION OF

FURNITURE, TRADE FIXTURES AND EQUIPMENT

TO BE ATTACHED HERE ON OR BEFORE THE

SALE DATE

 

 

EXHIBIT F 

 

PLANS AND ALTERATIONS

 

[*** Attach Subtenant’s Plans and Alterations to Be
Approved by Sublandlord and

Master Landlord Here ***]

 

 

 

Exhibit A

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