Document:

EXHIBIT 10.5.1

 

FIRST AMENDMENT TO LEASE

 

                This
FIRST AMENDMENT TO
LEASE (this “Amendment”) is dated as of this __ day of November,
1999 by and between MONTAGUE LLC, a
California limited liability company (“Landlord”), and ULTRATECH
STEPPER, INC., a Delaware corporation (“Tenant”).

 

RECITALS

 

                A.            The Equitable Life Assurance Society of the United States (“Equitable”)
and Tenant entered into a Lease dated September 10, 1993, as amended by that
certain Agreement Defining Landlord’s Property dated January 1, 1994, those
certain letter Agreements dated November 24, 1995, and January 5, 1996, and
that certain Commencement of Term Agreement dated January 11, 1996
(collectively, the “Lease”), for premises (the “Premises”) with a street
address of 3050 Zanker Road, San Jose, California, and more particularly
described in the Lease.

 

                B.            Landlord acquired the property on
which the Premises are located on or about January 29, 1997, and succeeded to
the interest of Equitable as landlord under the Lease.

 

                C.            Landlord and Tenant now desire to
amend the Lease on the terms and conditions set forth herein. Capitalized terms
used in this Amendment and not otherwise defined shall have the meanings
assigned to them in the Lease.

 

AGREEMENT

 

                NOW,
THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant hereby agree as follows:

 

                1.             Condition
Precedent To Lease Amendment.
This Amendment and the parties’ obligations hereunder are subject to the
receipt by Landlord, no later than fifteen (15) business days after the date
hereof, of the Lender’s Consent, as hereinafter defined. Landlord hereby agrees
to use diligent efforts to obtain the Lender’s Consent by such date; however,
if Landlord does not receive the Lender’s Consent by such date, this Amendment
shall thereupon be deemed terminated and of no further force or effect, and
neither party shall have any further rights, obligations, or liabilities
hereunder. As used herein, the term “Lender’s Consent” means a written consent
to this Amendment in form reasonably satisfactory to Landlord, executed by the
holder of the promissory note secured by that certain Deed of Trust
(encumbering the fee interest in the real property of which the Premises are a
part) recorded on January 29, 1997, in the Official Records of Santa Clara
County, California, at Series No. 13593424.

 

                2.             Term.
Notwithstanding anything to the contrary
contained in the Lease, the initial term of the Lease is hereby extended such
that the Expiration Date (as defined in Section 2 of the Lease) shall be
changed to January 31, 2011 (or such later date to make the term of the Lease
co-terminus with the lease dated of eve date herewith between Landlord and
Tenant for the building known as 2880 Junction Avenue, San Jose, California).
The period of time from the original Expiration Date of April 3, 2005, through
the new Expiration date of January 31, 2011, is referred to herein as the
“Extension Period,” provided that the Extension Period shall be deemed part of
the Lease Term (as defined in Section 3.L. of the Lease) for all purposes under
the Lease.

 

                3.             Rent
for Extension Period. Basic Rent for the
Extension Period shall be the greater of (a) $1.68 per square foot per month
for the first twelve (12) months of the Extension Period, increased by three
percent (3%) per annum compounded at the end of each twelve (12) month period
during the Extension Period, or (b) the Fair Market Rent (with annual
increases) as determined pursuant to the terms of Section 4 below.

 

                4.             Fair
Market Rent

 

                                (a)           For purposes hereof, “Fair Market
Rent” shall mean, collectively, the Basic Rent and annual increases determined
pursuant to the process described below. No earlier than nine (9) months and no
later than six (6) months prior to the commencement of the Extension Period,
Landlord shall notify Tenant in writing of Landlord’s estimate of Fair Market
Rent for the Extension Period. Within thirty (30) days after receipt of such
notice from Landlord, Tenant shall have the right either to (i) accept
Landlord’s statement as the Fair Market

 

 

1

 

Rent for the Extension Period, or (ii) elect
to arbitrate Landlord’s estimate of Fair Market Rent, such arbitration to be
conducted pursuant to the provisions hereof. Failure on the part of Tenant to
require arbitration of Fair Market Rent within such thirty (30) day period
shall constitute acceptance of the Fair Market Rent for the Extension Period as
calculated by Landlord. If Tenant elects arbitration, the arbitration shall be
concluded within sixty (60) days after the date of Tenant’s election, subject
to extension for an additional fifteen (15) day period if a third arbitrator is
required and does not act in a timely manner. To the extent that arbitration
has not been completed prior to the expiration of any preceding period for
which Basic Rent has been determined, Tenant shall pay Basic Rent at the rate
calculated by Landlord, with the potential for an adjustment to be made once
Fair Market Rent is ultimately determined by arbitration.

 

                                (b)           In
the event of arbitration, the judgment or the award rendered in any such
arbitration may be entered in any court having jurisdiction and shall be final
and binding between the parties. The arbitration shall be conducted and
determined in the City of San Jose in accordance with the then prevailing rules
of the American Arbitration Association or its successor for arbitration of
commercial disputes except to the extent that the procedures mandated by such
rules shall be modified as follows:

 

                                                (i)            Tenant
shall make demand for arbitration in writing within thirty (30) days after
service of Landlord’s determination of Fair Market Rent given under Section
4(a) above, specifying therein the name and address of the person to act as the
arbitrator on its behalf. The arbitrator shall be qualified as a real estate
appraiser familiar with the Fair Market Rent of similar industrial, research
and development, or office space in the Silicon Valley area who would qualify
as an expert witness over objection to give opinion testimony addressed to the
issue in a court of competent jurisdiction. Failure on the part of Tenant to
make a proper demand in a timely manner for such arbitration shall constitute a
waiver of the right thereto. Within fifteen (15) days after the service of the
demand for arbitration, Landlord shall give notice to Tenant, specifying the
name and address of the person designated by Landlord to act as arbitrator on
its behalf who shall be similarly qualified. If Landlord fails to notify Tenant
of the appointment of its arbitrator, within or by the time above specified,
then the arbitrator appointed by Tenant shall be the arbitrator to determine
the issue.

 

                                                (ii)           In
the event that two arbitrators are chosen pursuant to section 4(b)(i) above,
the arbitrators so chosen shall, within fifteen (15) days after the second
arbitrator is appointed determine the Fair Market Rent. If the two arbitrators
shall be unable to agree upon a determination of Fair Market Rent within such
fifteen (15) day period, they, themselves, shall appoint a third arbitrator,
who shall be a competent and impartial person with qualifications similar to
those required of the first two arbitrators pursuant to Section 4(b)(i). In the
event they are unable to agree upon such appointment within seven (7) days
after expiration of such fifteen (15) day period, the third arbitrator shall be
selected by the parties themselves, if they can agree thereon, within a further
period of fifteen (15) days. If the parties do not so agree, then either party,
on behalf of both, may request appointment of such a qualified person by the
then Chief Judge of the United States District Court having jurisdiction over
the County of Santa Clara, acting in his private and not in his official
capacity, and the other party shall not raise any question as to such Judge’s
full power and jurisdiction to entertain the application for and make the
appointment. The three arbitrators shall decide the dispute if it has not
previously been resolved by following the procedure set forth below.

 

                                                (iii)         Where
an issue cannot be resolved by agreement between the two arbitrators selected
by Landlord and Tenant or settlement between the parties during the course of
arbitration, the issue shall be resolved by the three arbitrators within
fifteen (15) days of the appointment of the third arbitrator in accordance with
the following procedure. The arbitrator selected by each of the parties shall
state in writing his determination of the Fair Market Rent supported by the
reasons therefor with counterpart copies to each party. The arbitrators shall
arrange for a simultaneous exchange of such proposed resolutions. The role of
the third arbitrator shall be to select which of the two proposed resolutions
most closely approximates his determination of Fair Market Rent. The third
arbitrator shall have no right to propose a middle ground or any modification
of either of the two proposed resolutions. The resolution he chooses as most
closely approximating his determination shall constitute the decision of the
arbitrators and be final and binding upon the parties.

 

                                                (iv)          In
the event of a failure, refusal or inability of any arbitrator to act, his
successor shall be appointed by him, but in the case of the third arbitrator,
his successor shall

 

 

2

 

be appointed in the same manner as provided
for appointment of the third arbitrator. The arbitrators shall decide the issue
within fifteen (15) days after the appointment of the third arbitrator. Any
decision in which the arbitrator appointed by Landlord and the arbitrator
appointed by Tenant concur shall be binding and conclusive upon the parties.
Each party shall pay the fee and expenses of its respective arbitrator and both
shall share the fee and expenses of the third arbitrator, if any, and the attorneys’
fees and expenses of counsel for the respective parties and of witnesses shall
be paid by the respective party engaging such counsel or calling such
witnesses.

 

                                                (v)            The
arbitrators shall have the right to consult experts and competent authorities to
obtain factual information or evidence pertaining to a determination of Fair
Market Rent, but any such consultation shall be made in the presence of both
parties with full right on their part to cross-examine. The arbitrators shall
render their decision and award in writing with counterpart copies to each
party. The arbitrators shall have no power to modify the provisions of the
Lease or this Amendment.

 

                5.             Ratification.
The Lease, as amended by this Amendment, is hereby ratified by Landlord and
Tenant and Landlord and Tenant hereby agree that the Lease, as so amended,
shall continue in full force and effect.

 

                6.             Miscellaneous.

 

                                (a)           Voluntary
Agreement. The parties have read this Amendment and on the advice of
counsel they have freely and voluntarily entered into this Amendment.

 

                                (b)           Attorney’s
Fees. If either party commences an action against the other party
arising out of or in connection with this Amendment, the prevailing party shall
be entitled to recover from the losing party reasonable attorney’s fees and
costs of suit.

 

                                (c)           Successors.
This Amendment shall be binding on and inure to the benefit of the
parties and their successors.

 

                                (d)           Counterparts.
This Amendment may be signed in two or more counterparts. When at least one
such counterpart has been signed by each party, this Amendment shall be deemed
to have been fully executed, each counterpart shall be deemed to be an
original, and all counterparts shall be deemed to be one and the same
agreement.

 

                IN WITNESS WHEREOF, Landlord and Tenant have
executed this Amendment as of the date first written above.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
  MONTAGUE LLC, a California
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Montague Park Corporation,
  a California corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Henry D. Bullock

  
	
   

  	
   

  	
   

  	
  Henry D. Bullock, President

  
					

 

 

3

 

	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
  ULTRATECH STEPPER, INC., a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Bruce R. Wright

  
	
   

  	
  Name:

  	
  Bruce R. Wright

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 

 

4Exhibit 10.44

 

LEASE

 

BY AND
BETWEEN

 

iSTAR
SUNNYVALE PARTNERS, L.P.,

a Delaware limited partnership

 

as
Landlord

 

and

 

SILICON
IMAGE, INC.,

a Delaware corporation

 

as
Tenant

 

December
12, 2002

 

1060 East Arques Avenue and 1070/1080 East Arques
Avenue (portion)

Sunnyvale, California

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 REFERENCE

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  References

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 LEASED PREMISES, TERM AND
  POSSESSION

  	
  3

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Demise Of Leased
  Premises

  	
  3

  
	
  2.2

  	
  Right To Use Outside
  Areas

  	
  3

  
	
  2.3

  	
  Lease
  Commencement Date And Lease Term

  	
  3

  
	
  2.4

  	
  Delivery
  Of Possession

  	
  3

  
	
  2.5

  	
  Acceptance Of Possession

  	
  3

  
	
  2.6

  	
  Surrender Of Possession

  	
  4

  
	
  2.7

  	
  Tenant
  Improvement Work; Allowance

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 RENT, LATE CHARGES AND SECURITY
  DEPOSITS

  	
  5

  
	
   

  	
   

  
	
  3.1

  	
  Base
  Monthly Rent

  	
  5

  
	
  3.2

  	
  Additional
  Rent

  	
  5

  
	
  3.3

  	
  Year-End Adjustments;
  Audits

  	
  6

  
	
  3.4

  	
  Late
  Charge, And Interest On Rent In Default

  	
  6

  
	
  3.5

  	
  Payment Of
  Rent

  	
  7

  
	
  3.6

  	
  Prepaid Rent

  	
  7

  
	
  3.7

  	
  Security
  Deposit

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 USE OF LEASED PREMISES AND OUTSIDE
  AREA

  	
  8

  
	
   

  	
   

  
	
  4.1

  	
  Permitted Use

  	
  8

  
	
  4.2

  	
  General Limitations On
  Use

  	
  8

  
	
  4.3

  	
  Noise
  And Emissions

  	
  8

  
	
  4.4

  	
  Trash
  Disposal

  	
  8

  
	
  4.5

  	
  Parking

  	
  8

  
	
  4.6

  	
  Signs

  	
  9

  
	
  4.7

  	
  Compliance
  With Laws And Private Restrictions

  	
  9

  
	
  4.8

  	
  Compliance
  With Insurance Requirements

  	
  9

  
	
  4.9

  	
  Landlord’s Right To
  Enter

  	
  9

  
	
  4.10

  	
  Use
  Of Outside Areas

  	
  10

  
	
  4.11

  	
  Environmental Protection

  	
  10

  
	
  4.12

  	
  Rules
  And Regulations

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5
  REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

  	
  12

  
	
   

  	
   

  
	
  5.1

  	
  Repair
  And Maintenance

  	
  12

  
	
  5.2

  	
  Utilities

  	
  12

  
	
  5.3

  	
  Security

  	
  13

  
	
  5.4

  	
  Energy And
  Resource Consumption

  	
  13

  
	
  5.5

  	
  Limitation Of
  Landlord’s Liability

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6
  ALTERATIONS AND IMPROVEMENTS

  	
  13

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  By Tenant

  	
  13

  
	
  6.2

  	
  Ownership Of
  Improvements

  	
  14

  
	
  6.3

  	
  Alterations Required
  By Law

  	
  14

  
	
  6.4

  	
  Liens

  	
  14

  
	
  6.5

  	
  Existing
  Alterations and Installations

  	
  14

  

 

-i-

 

	
  ARTICLE 7 ASSIGNMENT AND SUBLETTING BY TENANT

  	
  15

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  By Tenant

  	
  15

  
	
  7.2

  	
  Affiliates

  	
  16

  
	
  7.3

  	
  Landlord’s
  Election

  	
  16

  
	
  7.4

  	
  Conditions To
  Landlord’s Consent

  	
  16

  
	
  7.5

  	
  Assignment
  Consideration And Excess Rentals Defined

  	
  17

  
	
  7.6

  	
  Payments

  	
  17

  
	
  7.7

  	
  Good Faith

  	
  17

  
	
  7.8

  	
  Effect Of Landlord’s
  Consent

  	
  17

  
	
  7.9

  	
  Options
  Personal

  	
  18

  
	
  7.10

  	
  Tenant’s
  Remedies

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 LIMITATION ON LANDLORD’S LIABILITY
  AND INDEMNITY

  	
  18

  
	
   

  	
   

  
	
  8.1

  	
  Limitation
  On Landlord’s Liability And Release

  	
  18

  
	
  8.2

  	
  Tenant’s
  Indemnification Of Landlord

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 INSURANCE

  	
  19

  
	
   

  	
   

  
	
  9.1

  	
  Tenant’s
  Insurance

  	
  19

  
	
  9.2

  	
  Landlord’s
  Insurance

  	
  20

  
	
  9.3

  	
  Mutual Waiver Of
  Subrogation

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 DAMAGE TO LEASED PREMISES

  	
  21

  
	
   

  	
   

  
	
  10.1

  	
  Landlord’s Duty To
  Restore

  	
  21

  
	
  10.2

  	
  Insurance
  Proceeds

  	
  21

  
	
  10.3

  	
  Landlord’s Right To
  Terminate

  	
  21

  
	
  10.4

  	
  Tenant’s Right To
  Terminate

  	
  21

  
	
  10.5

  	
  Tenant’s
  Waiver

  	
  22

  
	
  10.6

  	
  Abatement
  Of Rent

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 CONDEMNATION

  	
  22

  
	
   

  	
   

  
	
  11.1

  	
  Tenant’s Right To
  Terminate

  	
  22

  
	
  11.2

  	
  Landlord’s Right To
  Terminate

  	
  22

  
	
  11.3

  	
  Restoration

  	
  22

  
	
  11.4

  	
  Temporary
  Taking

  	
  22

  
	
  11.5

  	
  Division Of
  Condemnation Award

  	
  22

  
	
  11.6

  	
  Abatement
  Of Rent

  	
  23

  
	
  11.7

  	
  Taking
  Defined

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 DEFAULT AND REMEDIES

  	
  23

  
	
   

  	
   

  
	
  12.1

  	
  Events Of Tenant’s
  Default

  	
  23

  
	
  12.2

  	
  Landlord’s
  Remedies

  	
  24

  
	
  12.3

  	
  Landlord’s
  Default And Tenant’s Remedies

  	
  25

  
	
  12.4

  	
  Limitation Of
  Tenant’s Recourse

  	
  25

  
	
  12.5

  	
  Tenant’s
  Waiver

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 GENERAL PROVISIONS

  	
  26

  
	
   

  	
   

  
	
  13.1

  	
  Taxes On Tenant’s
  Property

  	
  26

  
	
  13.2

  	
  Holding Over

  	
  26

  
	
  13.3

  	
  Subordination To
  Mortgages

  	
  26

  
	
  13.4

  	
  Tenant’s
  Attornment Upon Foreclosure

  	
  27

  
	
  13.5

  	
  Mortgagee
  Protection

  	
  27

  
	
  13.6

  	
  Estoppel
  Certificate

  	
  27

  

 

-ii-

 

	
  13.7

  	
  Financial
  Statements and Information

  	
  27

  
	
  13.8

  	
  Transfer
  By Landlord

  	
  28

  
	
  13.9

  	
  Force Majeure

  	
  28

  
	
  13.10

  	
  Notices

  	
  28

  
	
  13.11

  	
  Attorneys’
  Fees

  	
  29

  
	
  13.12

  	
  Definitions

  	
  29

  
	
  13.13

  	
  General Waivers

  	
  30

  
	
  13.14

  	
  Confidentiality

  	
  31

  
	
  13.15

  	
  Miscellaneous

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 AUTHORITY BROKERS AND ENTIRE
  AGREEMENT

  	
  31

  
	
   

  	
   

  
	
  14.1

  	
  Authority

  	
  31

  
	
  14.2

  	
  Brokerage
  Commissions

  	
  31

  
	
  14.3

  	
  Entire
  Agreement

  	
  32

  
	
  14.4

  	
  Landlord’s Representations

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15 RIGHTS OF FIRST REFUSAL

  	
  32

  
	
   

  	
   

  
	
  15.1

  	
  Additional
  Space

  	
  32

  
	
  15.2

  	
  Lease
  Modifications

  	
  32

  
	
  15.3

  	
  Rights
  of Mitsubishi

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16 TELEPHONE SERVICE

  	
  33

  

 

-iii-

 

LEASE

THIS LEASE, dated as of December 12, 2002 (the
“Effective Date of this Lease”), is made by and between iSTAR SUNNYVALE
PARTNERS, L.P., a Delaware limited partnership (“Landlord”),
and SILICON IMAGE,
INC., a Delaware corporation (“Tenant”).

ARTICLE 1

REFERENCE

1.1          References. 
All references in this Lease (subject to any further clarifications
contained in this Lease) to the following terms shall have the following
meaning or refer to the respective address, person, date, time period, amount,
percentage, calendar year or fiscal year as below set forth:

	
   

  	
  Tenant’s Address for
  Notice:

  	
   

  	
  Silicon Image, Inc.

  
	
   

  	
   

  	
   

  	
  1060 East Arques Avenue

  
	
   

  	
   

  	
   

  	
  Sunnyvale,
  California  94085

  
	
   

  	
   

  	
   

  	
  Attention: Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tenant’s
  Representative:

  	
   

  	
  Richard Zyhylij

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Landlord’s Address for
  Notices:

  	
   

  	
  c/o iStar Financial,
  Inc.

  
	
   

  	
   

  	
   

  	
  One Embarcadero Center

  
	
   

  	
   

  	
   

  	
  Suite 3300

  
	
   

  	
   

  	
   

  	
  San Francisco, CA 94111

  
	
   

  	
   

  	
   

  	
  Attn:  Asset Management

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Landlord’s
  Representative:

  	
   

  	
  Erich Stiger

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Phone Number:

  	
   

  	
  (415) 391-4300

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lease Commencement
  Date:

  	
   

  	
  August 1, 2003

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lease Term:

  	
   

  	
  Seven (7) years

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lease Expiration Date:

  	
   

  	
  Seven (7) Years from
  the Lease Commencement Date (as hereinabove defined), or such earlier date on
  which termination occurs in accordance with the terms of this Lease.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Options to Renew:

  	
   

  	
  None.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Rights of First
  Refusal:

  	
   

  	
  As provided in Article
  15.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  First Month’s Prepaid
  Rent:

  	
   

  	
  $76,022.80

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tenant’s Security
  Deposit:

  	
   

  	
  $152,045.00

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Late Charge Amount:

  	
   

  	
  Five Percent (5%) of
  the delinquent amount.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tenant’s Required
  Liability Coverage:

  	
   

  	
  $3,000,000 combined
  single limit

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tenant’s Broker(s):

  	
   

  	
  Ted Eyre of BT
  Commercial.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Property:

  	
   

  	
  That certain real
  property situated in the City of Sunnyvale, County of Santa Clara, State of
  California, together with all buildings, easements and improvements thereon,
  which real property is shown on the Site Plan attached hereto as Exhibit “A”
  and is commonly known as or otherwise described as follows: 1060-1090 East
  Arques Avenue, Sunnyvale, California.

  

 

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  Building:

  	
   

  	
  Those certain buildings
  within the Property in which the Leased Premises are located, which buildings
  are designated on Exhibit “A” hereto (collectively, the “Building”) and are
  commonly known as or otherwise described as follows: 1060 East Arques Avenue
  and 1070/1080 East Arques Avenue, Sunnyvale, California.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Outside Areas:

  	
   

  	
  The “Outside Areas”
  shall mean all areas within the Property which are located outside the
  buildings, such as pedestrian walkways, parking areas, landscaped area, open
  areas and enclosed trash disposal areas.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Leased Premises:

  	
   

  	
  (1) All the interior
  space within the 1060 East Arques building, including stairwells, connecting
  walkways, and atriums, consisting of approximately 50,819 square feet and,
  for purposes of this Lease, agreed to contain said number of square feet and
  (2) approximately one-half of the interior space within the 1070/1080 East
  Arques building, including stairwells, connecting walkways, and atriums
  within such one-half portion, consisting of approximately 29,205 square feet
  and, for purposes of this Lease, agreed to contain said number of square
  feet.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Base Monthly Rent:

  	
   

  	
  The term “Base Monthly
  Rent” shall mean the following:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  $76,022.80 per month
  from the Lease Commencement Date for a period of 12 months. On the first day
  following the end of such 12 month period, and on the same date during each
  subsequent year of the Lease Term (each an “Adjustment Date”), Base Monthly
  Rent shall be increased to an amount equal to one hundred three percent
  (103%) of the Base Monthly Rent in effect immediately prior to such Adjustment
  Date.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Use:

  	
   

  	
  General office,
  research & development, marketing, light storage and all other legal
  uses, subject to Paragraph 4.2.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tenant’s Project
  Proportionate Share:

  	
   

  	
  37.13%

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tenant’s Building
  Proportionate Share:

  	
   

  	
  100% of the 1060 East
  Arques building; 50% of the 1070/1080 East Arques building

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Exhibits:

  	
   

  	
  The term “Exhibits”
  shall mean the Exhibits of this Lease which are described as follows:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Exhibit “A” — Site Plan
  showing the Property and approximately delineating the portions of the
  Building in which the Leased Premises are located.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Exhibit “B” — Form of
  Tenant Estoppel

  

 

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ARTICLE 2

LEASED PREMISES, TERM AND POSSESSION

2.1          Demise
Of Leased Premises. 
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
for Tenant’s own use in the conduct of Tenant’s business and not for purposes
of speculating in real estate, for the Lease Term and upon the terms and
subject to the conditions of this Lease, that certain interior space described
in Article 1 as the Leased Premises, reserving and excepting to Landlord the
right to fifty percent (50%) of all assignment consideration and excess rentals
as provided in Article 7 below. Tenant’s lease of the Leased Premises,
together with the appurtenant right to use the Outside Areas as described in
Paragraph 2.2 below, shall be conditioned upon and be subject to the continuing
compliance by Tenant with (i) all the terms and conditions of this Lease,
(ii) all Laws (as hereinafter defined) governing the use of the Leased
Premises and the Property, (iii) all Private Restrictions (as hereinafter
defined), easements and other matters now of public record respecting the use
of the Leased Premises and Property, and (iv) all reasonable rules and
regulations from time to time established by Landlord.

2.2          Right
To Use Outside Areas.  As an
appurtenant right to Tenant’s right to the use and occupancy of the Leased
Premises, Tenant shall have the non-exclusive right, in common with other
occupants and users of the Property, to use the Outside Areas in conjunction
with its use of the Leased Premises solely for the purposes for which they were
designated and intended and for no other purposes whatsoever. Tenant’s right to
so use the Outside Areas shall be subject to the limitations on such use as set
forth in this Lease and shall terminate concurrently with any termination of
this Lease.

2.3          Lease
Commencement Date And Lease Term.  The term of this Lease shall
begin on the Lease Commencement Date as set forth in Article 1 (the “Lease
Commencement Date”). The term of this Lease shall in all events end on the
Lease Expiration Date (as set forth in Article 1). The Lease Term shall be that
period of time commencing on the Lease Commencement Date and ending on the
Lease Expiration Date (the “Lease Term”).

2.4          Delivery
Of Possession. 
Landlord shall deliver to Tenant possession of the Leased Premises on
the Lease Commencement Date. 
Notwithstanding the foregoing, (a) Mistubishi currently leases all
of the interior space in the 1070/1080 East Arques building through July 31,
2003, (b) Landlord will work with Mistubishi to try to deliver to Tenant
possession of that portion of the Leased Premises located in the 1070/1080 East
Arques building by March 1, 2003, either in the form of a direct lease with
Landlord or in the form of a sublease with Mitsubishi.  If Landlord is able to deliver such early
possession in the form of a direct lease with Landlord, this Lease will be
amended to provide for such early possession, including, without limitation,
rent for such portion of the Leased Premises and the early occupancy period.

2.5          Acceptance
Of Possession. 
OTHER THAN ANY EXPRESS REPRESENTATIONS AND WARRANTIES OF LANDLORD SET
FORTH IN THIS LEASE (THE “EXPRESS REPRESENTATIONS”), LANDLORD DOES NOT, BY THE
EXECUTION AND DELIVERY OF THIS LEASE, AND LANDLORD SHALL NOT, BY THE EXECUTION
AND DELIVERY OF ANY DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN CONNECTION
WITH THIS LEASE, MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF
ANY KIND OR NATURE WHATSOEVER, WITH RESPECT TO THE LEASED PREMISES (THE
“NON-EXPRESS REPRESENTATIONS”), AND ALL SUCH NON-EXPRESS REPRESENTATIONS ARE
HEREBY DISCLAIMED.  WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING PROVISION, LANDLORD MAKES, AND SHALL MAKE, NO
NON-EXPRESS REPRESENTATION AS TO MATTERS OF TITLE, ZONING, TAX CONSEQUENCES,
PHYSICAL OR ENVIRONMENTAL CONDITION (INCLUDING, WITHOUT LIMITATION, LAWS,
RULES, REGULATIONS, ORDERS AND REQUIREMENTS PERTAINING TO THE USE, HANDLING,
GENERATION, TREATMENT, STORAGE OR DISPOSAL OF ANY TOXIC OR HAZARDOUS WASTE OR
TOXIC, HAZARDOUS OR REGULATED SUBSTANCE), VALUATION, GOVERNMENTAL APPROVALS,
GOVERNMENTAL REGULATIONS OR ANY OTHER MATTER OR THING RELATING TO OR AFFECTING
THE LEASED PREMISES (THE “DISCLAIMED MATTERS”).  TENANT AGREES THAT, WITH RESPECT TO THE LEASED PREMISES, TENANT
HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY
NON-EXPRESS REPRESENTATION OF LANDLORD. 
TENANT ACKNOWLEDGES THAT PURSUANT TO THE TERMS AND CONDITIONS OF THE
SUBLEASE (AS DEFINED IN SECTION 14.3 HEREOF), TENANT HAS BEEN 

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IN POSSESSION OF THE
LEASED PREMISES PRIOR TO THE DATE OF THIS LEASE AND WILL CONTINUE TO HAVE
POSSESSION OF THE LEASED PREMISES UNTIL THE LEASE COMMENCEMENT DATE.  LANDLORD SHALL LEASE TO TENANT, AND TENANT
SHALL ACCEPT, THE LEASED PREMISES “AS IS”, “WHERE IS”, AND WITH ALL FAULTS, AND
EXCEPT FOR THE EXPRESS REPRESENTATIONS THERE ARE NO ORAL AGREEMENTS, WARRANTIES
OR REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE LEASED PREMISES BY LANDLORD
OR ANY THIRD PARTY.  WITHOUT IN ANY WAY
LIMITING ANY PROVISION OF THIS DISCLAIMER, TENANT SPECIFICALLY ACKNOWLEDGES AND
AGREES THAT, EXCEPT TO THE EXTENT OF THE EXPRESS REPRESENTATIONS, TENANT HEREBY
WAIVES, RELEASES AND DISCHARGES ANY CLAIM IT HAS, MIGHT HAVE HAD OR MAY HAVE
AGAINST LANDLORD WITH RESPECT TO (i) THE DISCLAIMED MATTERS, (ii) THE
CONDITION OF THE LEASED PREMISES, EITHER PATENT OR LATENT, (iii) THE PAST,
PRESENT OR FUTURE CONDITION OR COMPLIANCE OF THE LEASED PREMISES WITH REGARD TO
ANY ENVIRONMENTAL PROTECTION, POLLUTION CONTROL OR LAND USE LAWS, RULES,
REGULATIONS, ORDERS OR REQUIREMENTS, INCLUDING, WITHOUT LIMITATION, THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980,
AND (iv) ANY OTHER STATE OF FACTS THAT EXISTS WITH RESPECT TO THE LEASED
PREMISES.  BY SUCH RELEASE, TENANT
EXPRESSLY WAIVES ITS RIGHTS, IF ANY, UNDER CALIFORNIA CIVIL CODE SECTION 1542
WHICH PROVIDES:

“A General Release does
not extend to claims which the creditor does not know or suspect to exist in
his favor at the time of executing the release which if known by him must have
materially affected his settlement with the debtor.”

2.6          Surrender
Of Possession. 
Immediately prior to the expiration or upon the sooner termination of
this Lease, Tenant shall remove all of Tenant’s signs from the exterior of the
Building and shall remove all of Tenant’s equipment, trade fixtures, furniture,
supplies, wall decorations and other personal property from within the Leased
Premises, the Building and the Outside Areas, and shall vacate and surrender
the Leased Premises, the Building, the Outside Areas and the Property to
Landlord in the same condition, broom clean, as existed at the earlier of the
(a) the date on which Tenant first occupied the Leased Premises pursuant
to the Sublease (as defined in Section 14.3 hereof) or (b) the Lease
Commencement Date, reasonable wear and tear excepted. Tenant shall repair all damage
to the Leased Premises, the exterior of the Building and the Outside Areas
caused by Tenant’s removal of Tenant’s property. Tenant shall patch and
refinish, to Landlord’s reasonable satisfaction, all penetrations made by
Tenant or its employees to the floor, walls or ceiling of the Leased Premises,
whether such penetrations were made with Landlord’s approval or not. Tenant
shall repair or replace all stained or damaged ceiling tiles, wall coverings
and floor coverings to the reasonable satisfaction of Landlord. Tenant shall
repair all damage caused by Tenant to the exterior surface of the Building and
the paved surfaces of the Outside Areas, reasonable wear and tear excepted,
and, where necessary, replace or resurface same. Additionally, to the extent
that Landlord shall have notified Tenant in writing at the time the
improvements were completed that it desired to have certain improvements
removed at the expiration or sooner termination of the Lease, Tenant shall,
upon the expiration or sooner termination of the Lease, remove any such
improvements constructed or installed by Landlord or Tenant and repair all
damage caused by such removal. If the Leased Premises, the Building, the
Outside Areas and the Property are not surrendered to Landlord in the condition
required by this paragraph at the expiration or sooner termination of this
Lease, Landlord may, at Tenant’s expense, so remove Tenant’s signs, property
and/or improvements not so removed and make such repairs and replacements not
so made or hire, at Tenant’s expense, independent contractors to perform such
work. Tenant shall be liable to Landlord for all costs incurred by Landlord in
returning the Leased Premises, the Building and the Outside Areas to the
required condition, together with interest on all costs so incurred from the
date paid by Landlord at the then maximum rate of interest not prohibited or
made usurious by law until paid. In addition to Tenant’s obligations set forth
in Paragraph 13.2, Tenant shall pay to Landlord the amount of all costs so
incurred plus such interest thereon, within ten (10) days of Landlord’s
billing Tenant for same. Tenant shall indemnify Landlord against loss or
liability resulting from delay by Tenant in surrendering the Leased Premises,
including, without limitation, any claims made by any succeeding Tenant or any
losses to Landlord with respect to lost opportunities to lease to succeeding
tenants.

2.7          Tenant
Improvement Work; Allowance. 
Landlord shall provide Tenant with an improvement allowance of up to
five hundred thousand dollars ($500,000.00) (the “Allowance”).  The Allowance shall be used to reimburse
Tenant only for direct, reasonable costs incurred by Tenant in designing,
constructing and installing improvements in the Leased Premises (excluding the
costs of separating Tenant’s portion of 
the interior space of the 1070/1080 

 

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East Arques building to
accommodate Tenant’s desired layout, which costs shall be Landlord costs) (the
“Tenant Improvements”); provided, however, that the Allowance shall not be used
to reimburse Tenant for any costs incurred by Tenant in connection with
signage, furniture or moving.  The
Tenant Improvements shall be designed, constructed and installed in accordance
with plans and specifications to be reasonably approved in advance by Landlord
and in accordance with all applicable laws, ordinances and regulations, and
shall be constructed by a general contractor that is licensed in the State of
California and reasonably approved in advance by Landlord.  Tenant Improvement work may commence upon
the completion and execution of all required documentation and receipt of all
required approvals and permits.  Landlord
shall pay to Tenant the Allowance when Tenant provides to Landlord receipts for
all Tenant Improvement work and evidence that all such work has been completed
free and clear of all mechanics’ and materialman’s liens; provided that
Landlord shall have no obligation to pay any portion of the Allowance for any
Tenant Improvement work that has not been so completed within eighteen
(18) months following the Lease Commencement Date.

ARTICLE 3

RENT, LATE CHARGES AND SECURITY DEPOSITS

3.1          Base
Monthly Rent. 
Commencing on the Lease Commencement Date (as determined pursuant to
Article 2 above) and continuing throughout the Lease Term, Tenant shall pay to
Landlord, without prior demand therefor, in advance on the first day of each
calendar month, the amount set forth as “Base Monthly Rent” in Article 1 (the
“Base Monthly Rent”).

3.2          Additional
Rent. 
Commencing on the Lease Commencement Date (as determined pursuant
Article 2 above) and continuing throughout the Lease Term, in addition to the
Base Monthly Rent and to the extent not required by Landlord to be contracted
for and paid directly by Tenant, Tenant shall pay to Landlord as additional
rent (the “Additional Rent”) the following amounts:

(a)   An amount equal to all Property Operating Expenses (as
defined in Paragraph 13.12) incurred by Landlord. Payment shall be made by
whichever of the following methods (or combination of methods) is (are) from
time to time designated by Landlord:

(i)            Landlord may forward invoices or bills for such
expenses to Tenant, and Tenant shall, no later than ten (10) days prior to
the due date, pay such invoices or bills and deliver satisfactory evidence of
such payment to Landlord, and/or

(ii)           Landlord may bill to Tenant, on a periodic basis not
more frequently than monthly, the amount of such expenses (or group of
expenses) as paid or incurred by Landlord, and Tenant shall pay to Landlord the
amount of such expenses within ten days after receipt of a written bill
therefor from Landlord, and/or

(iii)         Landlord may deliver to Tenant Landlord’s reasonable
estimate of any given expense (such as Landlord’s Insurance Costs or Real
Property Taxes), or group of expenses, which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine,
and Tenant shall pay to Landlord an amount equal to the estimated amount of
such expenses for such year in equal monthly installments during such year with
the installments of Base Monthly Rent.

(b)   Landlord’s share of the consideration received by
Tenant upon certain assignments and sublettings as required by Article 7.

(c)   Any legal fees and costs that Tenant is obligated to
pay or reimburse to Landlord pursuant to Article 13; and

(d)   Any other charges or reimbursements due Landlord from
Tenant pursuant to the terms of this Lease.

 

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Notwithstanding the foregoing, Landlord may elect by written notice to
Tenant to have Tenant pay Real Property Taxes or any portion thereof directly
to the applicable taxing authority, in which case Tenant shall make such
payments and deliver satisfactory evidence of payment to Landlord no later than
ten (10) days before such Real Property Taxes become delinquent.

3.3          Year-End
Adjustments; Audits. 
If Landlord shall have elected to bill Tenant for the Property Operating
Expenses (or any group of such expenses) on an estimated basis in accordance
with the provisions of Paragraph 3.2(a)(iii) above, Landlord shall furnish
to Tenant within three months following the end of the applicable calendar or
fiscal year, as the case may be, a written statement setting forth (i) a
reasonably detailed description of the Property Operating Expenses in question,
(ii) the amount of such expenses paid or incurred during the just ended
calendar or fiscal year, as appropriate, and (iii) the amount that Tenant
has paid to Landlord for credit against such expenses for such period. If
Tenant shall have paid more than its obligation for such expenses for the
stated period, Landlord shall, at its election, either (i) credit the
amount of such overpayment toward the next ensuing payment or payments of
Additional Rent that would otherwise be due or (ii) refund in cash to
Tenant the amount of such overpayment; provided, however, that if the Lease has
ended then Landlord shall promptly pay the amount of such overpayment. If such
year-end statement shall show that Tenant did not pay its obligation for such
expenses in full, then Tenant shall pay to Landlord the amount of such
underpayment within ten (10) days from Landlord’s billing of same to Tenant.
The provisions of this Paragraph shall survive the expiration or sooner
termination of this Lease. In the event Tenant objects in writing to any such
year-end statement or other billing for Additional Rent within sixty
(60) days after receipt of such statement or billing, then Tenant shall
have the right, during the six (6) month period following delivery of such
statement or billing, at Tenant’s sole cost, to review in Landlord’s offices
Landlord’s records relevant to such statement or billing.  Such review shall be carried out only by a
“Big Five” accounting firm (i.e., PricewaterhouseCoopers, KMPG Peat Marwick,
Ernst & Young, Deloitte & Touche and Arthur Andersen or their
successors), and not by any other person, and shall be subject to Landlord’s
reasonable audit procedures.  No person
conducting such an audit shall be compensated on a “contingency” or other
incentive basis.  If, as of the date
sixty (60) days after Tenant’s receipt of such year-end statement or
billing, Tenant shall not have objected thereto in writing, or if, during the
six (6) month period following delivery of such statement or billing,
Tenant shall not have carried out a review of Landlord’s records, then such
year-end statement or billing, as the case may be, shall be final and binding
upon Landlord and Tenant, and Tenant shall have no further right to object to
such statement or billing.  If Tenant
timely delivers a written objection to a year-end statement or billing and,
within such six (6) month period, Tenant conducts an audit and delivers to
Landlord a written statement specifying objections to such annual statement,
then Tenant and Landlord shall meet to attempt to resolve such objection within
ten (10) days after delivery of the objection statement.  If such objection is not resolved within
such ten (10) day period, then either party shall have the right, at any
time within sixty (60) days after the expiration of such ten (10) day
period, to require that the dispute be submitted to binding arbitration under
the rules of the American Arbitration Association.  If neither Landlord nor Tenant commences an arbitration
proceeding within such sixty (60) day period, then the year-end statement
or other billing in question shall be final and binding on Landlord and
Tenant.  Notwithstanding that any such
dispute remains unresolved, Tenant shall be obligated to pay Landlord all
amounts payable in accordance with this Paragraph 3 (including any disputed
amount).  The audit and arbitration
procedures set forth in this Paragraph 3.3 shall be Tenant’s exclusive remedy
with respect to the calculation of the amount of Tenant’s obligations under
Paragraph 3.2.  In the event that it is
finally determined that Landlord over billed Tenant by more than five percent
(5%), then, provided that Tenant delivers to Landlord a written statement
setting forth in reasonable detail the expenses actually incurred by Tenant in
conducting such audit, Landlord shall reimburse Tenant for reasonable expenses
actually incurred by Tenant in conducting such audit.  Landlord shall include such reimbursement amount with the
overpayment amount being credited against Additional Rent or refunded to
Tenant, as the case may be.

3.4          Late
Charge, And Interest On Rent In Default.  Tenant
acknowledges that the late payment by Tenant of any monthly installment of Base
Monthly Rent or any Additional Rent will cause Landlord to incur certain costs
and expenses not contemplated under this Lease, the exact amounts of which are
extremely difficult or impractical to fix. Such costs and expenses will include
without limitation, administration and collection costs and processing and
accounting expenses. Therefore, if any installment of Base Monthly Rent is not
received by Landlord from Tenant within ten (10) calendar days after the
same becomes due, Tenant shall immediately pay to Landlord a late charge in an
amount equal to the amount set forth in Article 1 as the “Late Charge Amount,”
and if any Additional Rent is not received by Landlord within ten
(10) calendar days after same becomes due, Tenant shall immediately pay to
Landlord a late charge in an amount equal to 5% of the Additional Rent not so
paid. Landlord and Tenant agree that 

 

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this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the anticipated loss Landlord would suffer by
reason of Tenant’s failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within which to pay any rental installment or prevent
Landlord from exercising any right or remedy available to Landlord upon
Tenant’s failure to pay each rental installment due under this Lease when due,
including the right to terminate this Lease. If any rent remains delinquent for
a period in excess of ten (10) calendar days, then, in addition to such
late charge, Tenant shall pay to Landlord interest on any rent that is not so
paid from the date due until paid at the then maximum rate of interest not
prohibited or made usurious by Law.

3.5          Payment
Of Rent. 
Except as specifically provided otherwise in this Lease, all rent shall
be paid in lawful money of the United States, without any abatement, reduction
or offset for any reason whatsoever, to Landlord at such address as Landlord may
designate from time to time. Tenant’s obligation to pay Base Monthly Rent and
all Additional Rent shall be appropriately prorated at the commencement and
expiration of the Lease Term. The failure by Tenant to pay any Additional Rent
as required pursuant to this Lease when due shall be treated the same as a
failure by Tenant to pay Base Monthly, and Landlord shall have the same rights
and remedies against Tenant as Landlord would have had Tenant failed to pay the
Base Monthly Rent when due.

3.6          Prepaid
Rent. 
Tenant shall, no later than thirty (30) days prior to the Lease
Commencement Date, pay to Landlord the amount set forth in Article 1 as “First
Month’s Prepaid Rent” as prepayment of rent for credit against the first
payment of Base Monthly Rent due hereunder.

3.7          Security Deposit.  No later than
thirty (30) days prior to the Lease Commencement Date, Tenant shall
deposit with Landlord the amount set forth in Article 1 as the “Security
Deposit” as security for the performance by Tenant of the terms of this Lease
to be performed by Tenant, and not as prepayment of rent. Landlord may apply
such portion or portions of the Security Deposit as are reasonably necessary
for the following purposes: (i) to remedy any default by Tenant in the
payment of Base Monthly Rent or Additional Rent or a late charge or interest on
defaulted rent, or any other monetary payment obligation of Tenant under this
Lease; (ii) to repair damage to the Leased Premises, the Building or the
Outside Areas caused or permitted to occur by Tenant; (iii) to clean and
restore and repair the Leased Premises, the Building or the Outside Areas
following their surrender to Landlord if not surrendered in the condition
required pursuant to the provisions of Article 2, and (iv) to remedy any
other default of Tenant to the extent permitted by Law including, without
limitation, paying in full on Tenant’s behalf any sums claimed by materialmen
or contractors of Tenant to be owing to them by Tenant for work done or
improvements made at Tenant’s request to the Leased Premises. In this regard,
Tenant hereby waives any restriction on the uses to which the Security Deposit
may be applied as contained in Section 1950.7(c) of the California Civil Code
and/or any successor statute. In the event the Security Deposit or any portion
thereof is so used, Tenant shall pay to Landlord, promptly upon demand, an
amount in cash sufficient to restore the Security Deposit to the full original
sum. If Tenant fails to promptly restore the Security Deposit and if Tenant
shall have paid to Landlord any sums as “Last Month’s Prepaid Rent,” Landlord
may, in addition to any other remedy Landlord may have under this Lease, reduce
the amount of Tenant’s Last Month’s Prepaid Rent by transferring all or
portions of such Last Month’s Prepaid Rent to Tenant’s Security Deposit until
such Security Deposit is restored to the amount set forth in Article 1.
Landlord shall not be deemed a trustee of the Security Deposit. Landlord may
use the Security Deposit in Landlord’s ordinary business and shall not be
required to segregate it from Landlord’s general accounts. Tenant shall not be
entitled to any interest on the Security Deposit. If Landlord transfers the
Building or the Property during the Lease Term, Landlord may pay the Security
Deposit to any subsequent owner in conformity with the provisions of Section
1950.7 of the California Civil Code and/or any successor statute, in which
event the transferring landlord shall be released from all liability for the
return of the Security Deposit. Tenant specifically grants to Landlord (and
Tenant hereby waives the provisions of California Civil Code Section 1950.7 to
the contrary) a period of thirty (30) days following a surrender of the Leased
Premises by Tenant to Landlord within which to inspect the Leased Premises,
make required restorations and repairs, receive and verify workmen’s billings
therefor, and prepare a final accounting with respect to the Security Deposit;
provided, however, that if Landlord cannot reasonably complete all of the
foregoing tasks within such period of thirty (30) days, then, as long as
Landlord commences and diligently prosecutes such tasks, Landlord shall have
such additional time as may be reasonably required (but not to exceed an
additional thirty (30) days) to complete such tasks.  In no event shall the Security Deposit or any portion thereof, be
considered prepaid rent.

 

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ARTICLE 4

USE OF LEASED PREMISES AND OUTSIDE AREA

4.1          Permitted
Use. 
Tenant shall be entitled to use the Leased Premises solely for the
“Permitted Use” as set forth in Article 1 and for no other purpose whatsoever.
Tenant shall continuously and without interruption use the Leased Premises for
such purpose for the entire Lease Term. Tenant shall have the right to use the
Outside Areas in conjunction with its Permitted Use of the Leased Premises
solely for the purposes for which they were designed and intended and for no
other purposes whatsoever.

4.2          General
Limitations On Use. 
Tenant shall not do or permit anything to be done in or about the Leased
Premises, the Building, the Outside Areas or the Property which does or could
(i) jeopardize the structural integrity of the Building or (ii) cause
damage to any part of the Leased Premises, the Building, the Outside Areas or
the Property. Tenant shall not operate any equipment within the Leased Premises
which does or could (i) injure, vibrate or shake the Leased Premises or
the Building, (ii) damage, overload or impair the efficient operation of any
electrical, plumbing, heating, ventilating or air conditioning systems within
or servicing the Leased Premises or the Building, or (iii) damage or
impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building.  Tenant shall not affix
any equipment to or make any penetrations or cuts in the floor, ceiling, walls
or roof of the Leased Premises. Tenant shall not place any loads upon the
floors, walls, ceiling or roof systems which could endanger the structural
integrity of the Building or damage its floors, foundations or supporting
structural components. Tenant shall not place any explosive, flammable or
harmful fluids or other waste materials in the drainage systems of the Leased
Premises, the Building, the Outside Areas or the Property. Tenant shall not
drain or discharge any fluids in the landscaped areas or across the paved areas
of the Property. Tenant shall not use any of the Outside Areas for the storage
of its materials, supplies, inventory or equipment and all such materials,
supplies, inventory or equipment shall at all times be stored within the Leased
Premises. Tenant shall not commit nor permit to be committed any waste in or
about the Leased Premises, the Building, the Outside Areas or the Property.
Tenant shall not use, or permit the use of, the Leased Premises for any
pornographic or obscene purposes, any commercial sex establishment, any
pornographic, obscene, nude or semi-nude performances, modeling, materials,
activities or sexual conduct.

4.3          Noise
And Emissions. All noise generated by Tenant in its use
of the Leased Premises shall be confined or muffled so that it does not
interfere with the businesses of or annoy the occupants and/or users of
adjacent properties. All dust, fumes, odors and other emissions generated by
Tenant’s use of the Leased Premises shall be sufficiently dissipated in
accordance with sound environmental practice and exhausted from the Leased
Premises in such a manner so as not to interfere with the businesses of or
annoy the occupants and/or users of adjacent properties, or cause any damage to
the Leased Premises, the Building, the Outside Areas or the Property or any
component part thereof or the property of adjacent property owners.

4.4          Trash
Disposal. 
Tenant shall provide trash bins or other adequate garbage disposal
facilities within the trash enclosure areas provided or permitted by Landlord
outside the Leased Premises sufficient for the interim disposal of all of its
trash, garbage and waste. All such trash, garbage and waste temporarily stored
in such areas shall be stored in such a manner so that it is not visible from
outside of such areas, and Tenant shall cause such trash, garbage and waste to
be regularly removed from the Property in a clean, safe and neat condition free
and clear of all trash, garbage, waste and/or boxes, pallets and containers
containing same at all times.

4.5          Parking.  Tenant shall have the nonexclusive right to
park on the legal parcel on which the Building is located as shown on the site
plan attached as Exhibit A hereto and in no other location on the Property.
Tenant shall not, at any time, park or permit to be parked any recreational
vehicles, inoperative vehicles or equipment in the Outside Areas or on any
portion of the Property. Tenant agrees to assume responsibility for compliance
by its employees and invitees with the parking provisions contained herein. If
Tenant or its employees park any vehicle within the Property in violation of
these provisions, then Landlord may, upon prior written notice to Tenant giving
Tenant one (1) day (or any applicable statutory notice period, if longer
than one (1) day) to remove such vehicle(s), in addition to any other
remedies Landlord may have under this Lease, charge Tenant, as Additional Rent,
and Tenant agrees to 

 

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pay, as Additional Rent,
One Hundred Dollars ($100) per day for each day or partial day that each such
vehicle is so parked within the Property.

4.6          Signs.  Tenant shall not place or install on or
within any portion of the Leased Premises, the exterior of the Building, the
Outside Areas or the Property any sign, advertisement, banner, placard, or
picture which is visible from the exterior of the Leased Premises. Tenant shall
not place or install on or within any portion of the Leased Premises, the
exterior of the Building, the Outside Areas or the Property any business
identification sign which is visible from the exterior of the Leased Premises
until Landlord shall have approved in writing and in its sole discretion the
location, size, content, design, method of attachment and material to be used
in the making of such sign; provided,
however, that so long as such signs are normal and customary
business directional or identification signs within the Building, Tenant shall
not be required to obtain Landlord’s approval. Any sign, once approved by
Landlord, shall be installed at Tenant’s sole cost and expense and only in
strict compliance with Landlord’s approval, using a person approved by Landlord
to install same. Landlord may remove any signs (which have not been approved in
writing by Landlord), advertisements, banners, placards or pictures so placed
by Tenant on or within the Leased Premises, the exterior of the Building, the
Outside Areas or the Property and charge to Tenant the cost of such removal,
together with any costs incurred by Landlord to repair any damage caused
thereby, including any cost incurred to restore the surface (upon which such
sign was so affixed) to its original condition. Tenant shall remove all of
Tenant’s signs, repair any damage caused thereby, and restore the surface upon
which the sign was affixed to its original condition, all to Landlord’s
reasonable satisfaction, upon the termination of this Lease.

4.7          Compliance
With Laws And Private Restrictions.  Tenant shall
abide by and shall promptly observe and comply with, at its sole cost and expense,
all Laws and Private Restrictions respecting the use and occupancy of the
Leased Premises, the Building, the Outside Areas or the Property and shall
defend with competent counsel, indemnify and hold Landlord harmless from any
claims, damages or liability resulting from Tenant’s failure to so abide,
observe, or comply. For the avoidance of doubt, the extent of Tenant’s
obligations hereunder with respect to hazardous materials are set forth in
Section 4.11 hereof, and the provisions of this Section 4.7 shall not be
construed to impose on Tenant any greater or additional obligations respecting
hazardous materials than the obligations set forth in Section 4.11.  Tenant’s obligations hereunder shall survive
the expiration or sooner termination of this Lease.

4.8          Compliance
With Insurance Requirements.  With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with the
provision of this Lease, copies of which have been or will, upon Tenant’s
written request therefor, be provided to Tenant, Tenant shall not conduct nor
permit any other person to conduct any activities nor keep, store or use (or
allow any other person to keep, store or use) any item or thing within the
Leased Premises, the Building, the Outside Areas or the Property which
(i) is prohibited under the terms of any such policies, (ii) could
result in the termination of the coverage afforded under any of such policies,
(iii) could give to the insurance carrier the right to cancel any of such policies,
or (iv) could cause an increase in the rates (over standard rates) charged
for the coverage afforded under any of such policies. Tenant shall comply with
all requirements of any insurance company, insurance underwriter, or Board of
Fire Underwriters which are necessary to maintain, at standard rates, the
insurance coverages carried by either Landlord or Tenant pursuant to this
Lease.

4.9          Landlord’s Right To Enter.  Landlord and
its agents shall have the right to enter the Leased Premises during normal
business hours after giving Tenant reasonable notice and subject to Tenant’s
reasonable security measures for the purpose of (i) inspecting the same;
(ii) showing the Leased Premises to prospective purchasers, mortgagees or
tenants; (iii) making necessary alterations, additions or repairs; and
(iv) performing any of Tenant’s obligations when Tenant has failed to do
so. Landlord shall have the right to enter the Leased Premises during normal
business hours (or as otherwise agreed), subject to Tenant’s reasonable security
measures, for purposes of supplying any maintenance or services agreed to be
supplied by Landlord. Landlord shall have the right to enter the Outside Areas
during normal business hours for purposes of (i) inspecting the exterior
of the Building and the Outside Areas; (ii) posting notices of
nonresponsibility (and for such purposes Tenant shall provide Landlord at least
thirty days’ prior written notice of any work to be performed on the Leased
Premises); and (iii) supplying any services to be provided by Landlord.
Any entry into the Leased Premises or the Outside Areas obtained by Landlord in
accordance with this paragraph shall not under any circumstances be construed
or deemed to be a forcible or unlawful entry into, or a detainer of, the Leased
Premises, or an eviction, actual or constructive of Tenant from the Leased
Premises or any portion thereof.

 

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4.10        Use
Of Outside Areas. 
Tenant, in its use of the Outside Areas, shall at all times keep the
Outside Areas in a safe condition free and clear of all materials, equipment,
debris, trash (except within existing enclosed trash areas), inoperable
vehicles, and other items which are not specifically permitted by Landlord to
be stored or located thereon by Tenant. If, in the opinion of Landlord,
unauthorized persons are using any of the Outside Areas by reason of, or under
claim of, the express or implied authority or consent of Tenant, then Tenant,
upon demand of Landlord, shall restrain, to the fullest extent then allowed by
Law, such unauthorized use, and shall initiate such appropriate proceedings as
may be required to so restrain such use.

4.11        Environmental
Protection. 
Tenant’s obligations under this Paragraph 4.11 shall survive the
expiration or termination of this Lease.

(a)   As used herein, the term “Hazardous Materials” shall
mean any toxic or hazardous substance, material or waste or any pollutant or
infectious or radioactive material, including but not limited to those
substances, materials or wastes regulated now or in the future under any of the
following statutes or regulations and any and all of those substances included
within the definitions of “hazardous substances,” “hazardous materials,”
“hazardous waste,” “hazardous chemical substance or mixture,” “imminently
hazardous chemical substance or mixture,” “toxic substances,” “hazardous air
pollutant,” “toxic pollutant,” or “solid waste” in the (a) Comprehensive
Environmental Response, Compensation and Liability Act of 1990 (“CERCLA” or “Superfund”),
as amended by the Superfund Amendments and Reauthorization Act of 1986
(“SARA”), 42 U.S.C. § 9601 et seq.,
(b) Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C.
§ 6901 et seq.,
(c) Federal Water Pollution Control Act (“FSPCA”), 33 U.S.C. § 1251 et seq., (d) Clean Air Act
(“CAA”), 42 U.S.C. § 7401 et seq.,
(e) Toxic Substances Control Act (“TSCA”), 14 U.S.C. § 2601 et seq., (f) Hazardous Materials
Transportation Act, 49 U.S.C. § 1801, et seq.,
(g) Carpenter-Presley-Tanner Hazardous Substance Account Act (“California
Superfund”), Cal. Health & Safety Code § 25300 et seq., (h) California
Hazardous Waste Control Act, Cal. Health & Safety code § 25100 et seq., (i) Porter-Cologne
Water Quality Control Act (“Porter-Cologne Act”), Cal. Water Code § 13000 et seq., (j) Hazardous Waste
Disposal Land Use Law, Cal. Health & Safety codes § 25220 et seq., (k) Safe Drinking Water
and Toxic Enforcement Act of 1986 (“Proposition 65”), Cal. Health & Safety
code § 25249.5 et seq.,
(l) Hazardous Substances Underground Storage Tank Law, Cal. Health &
Safety code § 25280 et seq.,
(m) Air Resources Law, Cal. Health & Safety Code § 39000 et seq., and (n) regulations
promulgated pursuant to said laws or any replacement thereof, or as similar
terms are defined in the federal, state and local laws, statutes, regulations,
orders or rules. Hazardous Materials shall also mean any and all other
biohazardous wastes and substances, materials and wastes which are, or in the
future become, regulated under applicable Laws for the protection of health or
the environment, or which are classified as hazardous or toxic substances,
materials or wastes, pollutants or contaminants, as defined, listed or
regulated by any federal, state or local law, regulation or order or by common law
decision, including, without limitation, (i) trichloroethylene,
tetrachloroethylene, perchloroethylene and other chlorinated solvents,
(ii) any petroleum products or fractions thereof, (iii) asbestos,
(iv) polychlorinted biphenyls, (v) flammable explosives,
(vi) urea formaldehyde, (vii) radioactive materials and waste, and
(viii) materials and wastes that are harmful to or may threaten human
health, ecology or the environment.

(b)   Notwithstanding anything to the contrary in this
Lease, Tenant, at its sole cost, shall comply with all Laws relating to the
storage, use and disposal of Hazardous Materials; provided, however, that Tenant shall not be responsible for
contamination of the Leased Premises by Hazardous Materials existing as of the
Lease Commencement Date unless caused by Tenant. Tenant shall not store, use or
dispose of any Hazardous Materials except for those Hazardous Materials listed
in a Hazardous Materials management plan (“HMMP”) which Tenant shall deliver to
Landlord upon execution of this Lease and update at least annually with
Landlord (“Permitted Materials”) which may be used, stored and disposed of
provided (i) such Permitted Materials are used, stored, transported, and
disposed of in strict compliance with applicable laws, (ii) such Permitted
Materials shall be limited to the materials listed on and may be used only in
the quantities specified in the HMMP, and (iii) Tenant shall provide
Landlord with copies of all material safety data sheets and other documentation
required under applicable Laws in connection with Tenant’s use of Permitted
Materials as and when such documentation is provided to any regulatory
authority having jurisdiction, in no event shall Tenant cause or permit to be
discharged into the plumbing or sewage system of the Building or onto the land
underlying or adjacent to the Building any Hazardous Materials. Tenant shall be
solely responsible for and shall defend, indemnify, and hold Landlord and its
agents harmless from and against all claims, costs and liabilities, including
attorneys’ fees and costs, arising out of or in connection with Tenant’s
storage, use and/or disposal of Hazardous Materials. If the presence of
Hazardous Materials on the Leased Premises caused or permitted by Tenant
results in contamination or deterioration of water or soil, then Tenant shall 

 

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promptly take any and all
action necessary to clean up such contamination, but the foregoing shall in no
event be deemed to constitute permission by Landlord to allow the presence of
such Hazardous Materials. At any time prior to the expiration of the Lease Term
if Tenant has a reasonable basis to suspect that there has been any release or
the presence of Hazardous Materials in the ground or ground water on the Leased
Premises which did not exist upon commencement of the Lease Term, Tenant shall
have the right, but not the obligation, to conduct appropriate tests of water
and soil and to deliver to Landlord the results of such tests to demonstrate
that no contamination in excess of permitted levels has occurred as a result of
Tenant’s use of the Leased Premises. With respect only and solely to Hazardous
Materials whose presence on, in or under the Leased Premises was caused by
Tenant or arose during the term of this Lease (except to the extent such
presence (i) was caused by Landlord or (ii) resulted from the migration of
Hazardous Materials from a source outside of the Leased Premises and Tenant
could not have reasonably prevented such migration), Tenant shall further be
solely responsible for, and shall defend, indemnify, and hold Landlord and its
agents harmless from and against all claims, costs and liabilities, including
attorneys’ fees and costs, arising out of or in connection with any removal,
cleanup and restoration work and materials required hereunder to return the
Leased Premises and any other property of whatever nature to the condition that
would have existed if such Hazardous Materials had not been present.

(c)   Upon termination or expiration of the Lease, Tenant at
its sole expense shall cause all Hazardous Materials placed in or about the
Leased Premises, the Building and/or the Property by Tenant, its agents,
contractors, or invitees, and all installations (whether interior or exterior)
made by or on behalf of Tenant relating to the storage, use, disposal or
transportation of Hazardous Materials to be removed from the property and
transported for use, storage or disposal in accordance and compliance with all
Laws and other requirements respecting Hazardous Materials used or permitted to
be used by Tenant. Regarding such Hazardous Materials and installations, Tenant
shall apply for and shall obtain from all appropriate regulatory authorities
(including any applicable fire department or regional water quality control
board) all permits, approvals and clearances necessary for the closure of the
Property and shall take all other actions as may be required to complete the
closure of the Building and the Property. In addition, prior to vacating the Leased
Premises, Tenant shall undertake and submit to Landlord an environmental site
assessment from an environmental consulting company reasonably acceptable to
Landlord which site assessment shall evidence Tenant’s compliance with this
Paragraph 4.11.

(d)   At any time prior to expiration of the Lease term,
subject to reasonable prior notice (not less than forty-eight (48) hours) and
Tenant’s reasonable security requirements and provided such activities do not
unreasonably interfere with the conduct of Tenant’s business at the Leased
Premises, Landlord shall have the right to enter in and upon the Property,
Building and Leased Premises in order to conduct appropriate tests of water and
soil to determine whether levels of any Hazardous Materials in excess of legally
permissible levels has occurred as a result of Tenant’s use thereof. Landlord
shall furnish copies of all such test results and reports to Tenant and, at
Tenant’s option and cost, shall permit split sampling for testing and analysis
by Tenant. Such testing shall be at Tenant’s expense if Landlord has a
reasonable basis for suspecting and confirms the presence of Hazardous
Materials in the soil or surface or ground water in, on, under, or about the
Property, the Building or the Leased Premises, which has been caused by or
resulted from the activities of Tenant, its agents, contractors, or invitees.

(e)   Landlord may voluntarily cooperate in a reasonable
manner with the efforts of all governmental agencies in reducing actual or
potential environmental damage. Tenant agrees at all times to cooperate fully
with the requirements and recommendations of governmental agencies regulating,
or otherwise involved in, the protection of the environment.

4.12        Rules
And Regulations. 
In the event Silicon Image, Inc. is no longer the sole tenant of the
Leased Premises, Landlord shall have the right from time to time to establish
reasonable rules and regulations and/or amendments or additions thereto
respecting the use of the Leased Premises and the Outside Areas for the care
and orderly management of the Property. Upon delivery to Tenant of a copy of
such rules and regulations or any amendments or additions thereto, Tenant shall
comply with such rules and regulations. A violation by Tenant of any of such
rules and regulations shall constitute a default by Tenant under this Lease. If
there is a conflict between the rules and regulations and any of the provisions
of this Lease, the provisions of this Lease shall prevail. Landlord shall not
be responsible or liable to Tenant for the violation of such rules and
regulations by any other tenant of the Property.

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ARTICLE 5

REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

5.1          Repair
And Maintenance. 
Except in the case of damage to or destruction of the Leased Premises,
the Building, the Outside Areas or the Property caused by an act of God or
other peril, in which case the provisions of Article 10 shall control, the
parties shall have the following obligations and responsibilities with respect
to the repair and maintenance of the Leased Premises, the Building, the Outside
Areas, and the Property.

(a)           Tenant’s Obligations. 
Except as expressly provided in Paragraph 5.1(b) below, Tenant shall, at
all times during the Lease Term and at its sole cost and expense, regularly
clean and continuously keep and maintain in good order, and repair the Leased
Premises and every part thereof including, without limiting the generality of
the foregoing, (i) all interior walls, floors and ceilings, (ii) all
windows, doors and skylights, (iii) all electrical wiring, conduits,
connectors and fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets
and drains, (v) all lighting fixtures, bulbs and lamps and all heating,
ventilating and air conditioning equipment, and (vi) all entranceways to
the Leased Premises. Tenant, if requested to do so by Landlord, shall hire, at
Tenant’s sole cost and expense, a licensed heating, ventilating and air
conditioning contractor to regularly and periodically (not less frequently than
every three months) inspect and perform required maintenance on the heating,
ventilating and air conditioning equipment and systems serving the Leased
Premises, or alternatively, Landlord may, at its election, contract in its own
name for such regular and periodic inspections of and maintenance on such
heating, ventilating and air conditioning equipment and systems and charge to
Tenant, as Additional Rent, the cost thereof. Tenant, if requested to do so by
Landlord, shall hire, at Tenant’s sole cost and expense, a licensed roofing
contractor to regularly and periodically (not less frequently than every three
months) inspect and perform required maintenance on the roof of the Leased
Premises, or alternatively, Landlord may, at its election, contract in its own
name for such regular and periodic inspections of and maintenance on the roof
and charge to Tenant, as Additional Rent, the cost thereof. Tenant shall, at
all times during the Lease Term, keep in a clean and safe condition the Outside
Areas. Tenant shall regularly and periodically sweep and clean the driveways
and parking areas. Tenant shall, at its sole cost and expense, repair all
damage to the Leased Premises, the Building, the Outside Areas or the Property
caused by the activities of Tenant, its employees, invitees or contractors
promptly following written notice from Landlord to so repair such damages. If
Tenant shall fail to perform the required maintenance or fail to make repairs
required of it pursuant to this paragraph within a reasonable period of time
following notice from Landlord to do so, then Landlord may, at its election and
without waiving any other remedy it may otherwise have under this Lease or at
law, perform such maintenance or make such repairs and charge to Tenant, as Additional
Rent, the costs so incurred by Landlord for same. All glass within or a part of
the Leased Premises, both interior and exterior, is at the sole risk of Tenant
and any broken glass shall promptly be replaced by Tenant at Tenant’s expense
with glass of the same kind, size and quality.

(b)           Landlord’s Obligation. 
By the end of the 2003 calendar year, Landlord shall, at Landlord’s sole
expense and as a one-time obligation, (i) repair any leaking window seals
on the Building and (ii) replace the roof surface on the Building
(excluding any structural roof elements). 
In addition, Landlord shall, at all times during the Lease Term,
maintain in good condition and repair the foundation, structural exterior walls
and structural roof elements of the Building, and Landlord may charge Tenant,
as Additional Rent pursuant to Article 3 (to the extent permitted pursuant
to Article 3), the costs incurred by Landlord in performing such
maintenance and/or making such repairs.

5.2          Utilities.  Tenant shall arrange at its sole cost and
expense and in its own name, for the supply of gas and electricity to the
Leased Premises.  Landlord shall, at its
sole expense, cause separate water and sewer meter(s) to be installed for each
of the entire 1060 East Arques building and the entire 1070/1080 East
Arques building, and Landlord shall maintain the water and sewer service in its
own name; provided, however, that if at any time during the Lease Term Landlord
shall require Tenant to put the water and sewer service in Tenant’s name, Tenant
shall do so, provided that Tenant shall not bear any costs associated with
causing separate metering. Tenant shall be responsible for determining if the
local supplier of water, gas and electricity can supply the needs of Tenant and
whether or not the existing water, gas and electrical distribution systems
within the Building and the Leased Premises are adequate for Tenant’s needs.
Tenant shall be responsible for determining if the existing sanitary and storm
sewer systems now servicing the Leased Premises and the Property are adequate
for Tenant’s needs. Tenant 

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shall pay all charges for
water, gas, electricity and storm and sanitary sewer services as so supplied to
the Leased Premises, irrespective of whether or not the services are maintained
in Landlord’s or Tenant’s name.

5.3          Security.  Tenant acknowledges that Landlord has not
undertaken any duty whatsoever to provide security for the Leased Premises, the
Building, the Outside Areas or the Property and, accordingly, Landlord is not
responsible for the security of same or the protection of Tenant’s property or
Tenant’s employees, invitees or contractors. To the extent Tenant determines
that such security or protection services are advisable or necessary, Tenant
shall arrange for and pay the costs of providing same.

5.4          Energy
And Resource Consumption. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation
of the electrical, heating, ventilating and air conditioning systems and all
other energy or other resource consumption systems with the Property and/or
(ii) in order to comply with the requirements and recommendations of
utility suppliers and governmental agencies regulating the consumption of
energy and/or other resources.

5.5          Limitation
Of Landlord’s Liability. 
Landlord shall not be liable to Tenant for injury to Tenant, its
employees, agents, invitees or contractors, damage to Tenant’s property or loss
of Tenant’s business or profits, nor shall Tenant be entitled to terminate this
Lease or to any reduction in or abatement of rent by reason of (i) Landlord’s
failure to provide security services or systems within the Property for the
protection of the Leased Premises, the Building or the Outside Areas, or the
protection of Tenant’s property or Tenant’s employees, invitees, agents or
contractors, or (ii) Landlord’s failure to perform any maintenance or
repairs to the Leased Premises, the Building, the Outside Areas or the Property
until Tenant shall have first notified Landlord, in writing, of the need for
such maintenance or repairs, and then only after Landlord shall have had a
reasonable period of time following its receipt of such notice within which to
perform such maintenance or repairs, or (iii) any failure, interruption,
rationing or other curtailment in the supply of water, electric current, gas or
other utility service to the Leased Premises, the Building, the Outside Areas
or the Property from whatever cause (other than Landlord’s sole active
negligence or willful misconduct), or (iv) the unauthorized intrusion or
entry into the Leased Premises by third parties (other than Landlord).

ARTICLE 6

ALTERATIONS AND IMPROVEMENTS

6.1          By
Tenant. 
Tenant shall not make any alterations to or modifications of the Leased
Premises or construct any improvements within the Leased Premises until
Landlord shall have first approved, in writing, the plans and specifications
therefor, which approval shall not be unreasonably withheld.  Without limiting the generality of the
foregoing, Tenant acknowledges that it shall be reasonable for Landlord to
withhold its consent to any modification, alteration or improvement if, in
Landlord’s reasonable judgment, such modification, alteration or improvement
would adversely affect the structure of the Building, any of the Building’s
systems, the appearance of the Building or the value or utility of the Building
or the Property.  All such
modifications, alterations or improvements, once so approved, shall be made,
constructed or installed by Tenant at Tenant’s expense (including all permit fees
and governmental charges related thereto), using a licensed contractor first
approved by Landlord, in substantial compliance with the Landlord-approved
plans and specifications therefor. All work undertaken by Tenant shall be done
in accordance with all Laws and in a good and workmanlike manner using new
materials of good quality. Tenant shall not commence the making of any such
modifications or alterations or the construction of any such improvements until
(i) all required governmental approvals and permits shall have been
obtained, (ii) all requirements regarding insurance imposed by this Lease
have been satisfied, (iii) Tenant shall have given Landlord at least five
(5) business days prior written notice of its intention to commence such work
so that Landlord may post and file notices of non-responsibility, and
(iv) if requested by Landlord, Tenant shall have obtained contingent
liability and broad form builder’s risk insurance in an amount satisfactory to
Landlord in its reasonable discretion to cover any perils relating to the
proposed work not covered by insurance carried by Tenant pursuant to Article 9.
In no event shall Tenant make any modification, alterations or improvements
whatsoever to the Outside Areas or the exterior or structural components of the
Building including, without limitation, any cuts or penetrations in the floor, 

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roof or exterior walls of
the Leased Premises. As used in this Article, the term “modifications,
alterations and/or improvements” shall include, without limitation, the
installation of additional electrical outlets, overhead lighting fixtures,
drains, sinks, partitions, doorways, or the like. Notwithstanding the
foregoing, Tenant, without Landlord’s prior written consent (but subject to the
other terms and conditions of this Article 6), shall be permitted to make
alterations to the Leased Premises which do not affect the structure of the
Building or the Leased Premises, do not affect the plumbing, electrical,
mechanical or other systems of the Building and do not affect the appearance of
the Leased Premises viewed from the exterior, provided that: (a) such
alterations do not exceed $25,000 individually or $100,000 in the aggregate,
(b) Tenant shall timely provide Landlord the notice required pursuant to
Paragraph 4.9 above, (c) Tenant shall notify Landlord in writing within
thirty (30) days of completion of the alteration and deliver to Landlord a set
of the plans and specifications therefor, either “as built” or marked to show
construction changes made, and (d) Tenant shall, upon Landlord’s request,
remove the alteration at the termination of the Lease and restore the Leased
Premises to their condition prior to such alteration.

6.2          Ownership
Of Improvements. 
All modifications, alterations and improvements made or added to the
Leased Premises by Tenant (other than Tenant’s inventory, equipment, movable
furniture, wall decorations and trade fixtures) shall be deemed real property
and a part of the Leased Premises, but shall remain the property of Tenant
during the Lease. Any such modifications, alterations or improvements, once
completed, shall not be altered or removed from the Leased Premises during the
Lease Term without Landlord’s written approval first obtained in accordance
with the provisions of Paragraph 6.1 above. At the expiration or sooner
termination of this Lease, all such modifications, alterations and improvements
other than Tenant’s inventory, equipment, movable furniture, wall decorations
and trade fixtures, shall automatically become the property of Landlord and
shall be surrendered to Landlord as part of the Leased Premises as required
pursuant to Article 2, unless Landlord shall require Tenant to remove any
of such modifications, alterations or improvements in accordance with the
provisions of Article 2, in which case Tenant shall so remove same.
Landlord shall have no obligations to reimburse Tenant for all or any portion
of the cost or value of any such modifications, alterations or improvements so
surrendered to Landlord. All modifications, alterations or improvements which
are installed or constructed on or attached to the Leased Premises by Landlord
and/or at Landlord’s expense shall be deemed real property and a part of the
Leased Premises and shall be property of Landlord. All lighting, plumbing,
electrical, heating, ventilating and air conditioning fixtures, partitioning,
window coverings, wall coverings and floor coverings installed by Tenant shall
be deemed improvements to the Leased Premises and not trade fixtures of Tenant.

6.3          Alterations
Required By Law. 
Tenant shall make all modifications, alterations and improvements to the
Leased Premises, at its sole cost, that are required by any Law because of
(i) Tenant’s use or occupancy of the Leased Premises, the Building, the
Outside Areas or the Property, (ii) Tenant’s application for any permit or
governmental approval, or (iii) Tenant’s making of any modifications,
alterations or improvements to or within the Leased Premises.  Subject to the immediately foregoing
sentence, if Landlord shall, at any time during the Lease Term, be required by
any governmental authority to make any modifications, alterations or
improvements to the Building or the Property, the cost incurred by Landlord in
making such modifications, alterations or improvements, including interest at a
rate equal to the greater of (a) 10%, or (b) the sum of that rate
quoted by Wells Fargo Bank, N.T. & S.A. from time to time as its prime
rate, plus two percent (2%) (“Wells Prime Plus Two”), shall be amortized by Landlord
over the useful life of such modifications, alterations or improvements, as
determined in accordance with generally accepted accounting principles, and the
monthly amortized cost of such modifications, alterations and improvements as
so amortized shall be considered a Property Maintenance Cost.

6.4          Liens.  Tenant shall keep the Property and every
part thereof free from any lien (except to the extent imposed as the result of
Landlord’s actions or omissions), and shall pay when due all bills arising out
of any work performed, materials furnished, or obligations incurred by Tenant,
its agents, employees or contractors relating to the Property. If any such
claim of lien is recorded against Tenant’s interest in this Lease, the Property
or any part thereof, Tenant shall bond against, discharge or otherwise cause
such lien to be entirely released within ten days after the same has been
recorded. Tenant’s failure to do so shall be conclusively deemed a material
default under the terms of this Lease.

6.5          Existing
Alterations and Installations. 
Landlord agrees that, upon expiration of the Master Lease and the
Sublease (as such terms are defined in Section 14.3 hereof), Landlord will
not require removal of or restoration with respect to the following alterations
or installations made by Tenant prior to the Effective Date of this Lease,
provided that such alterations or installations were permitted or properly
authorized under the terms of the Master 

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Lease and the
Sublease:  (a) penetration of the
exterior walls and roof of the Building, (b) other physical alterations to
any part of the Leased Premises or the Building, and (c) installation
activities with respect to antennas or other equipment (including, without
limitation, the chiller, the air compressor and the three (3) 40’ storage
containers).  The provisions of this
Section 6.5 shall not in any way limit Tenant’s removal and restoration
obligations set forth in Section 2.6 hereof.

ARTICLE 7

ASSIGNMENT AND SUBLETTING BY TENANT

7.1          By
Tenant. 
Tenant shall not sublet the Leased Premises or any portion thereof or
assign its interest in this Lease, whether voluntarily or by operation of law,
without Landlord’s prior written consent which shall not be unreasonably
withheld. Any attempted subletting or assignment without Landlord’s prior
written consent, at Landlord’s election, shall constitute a default by Tenant
under the terms of this Lease. The acceptance of rent by Landlord from any
person or entity other than Tenant, or the acceptance of rent by Landlord from
Tenant with knowledge of a violation of the provisions of this paragraph, shall
not be deemed to be a waiver by Landlord of any provision of this Article or
this Lease or to be a consent to any subletting by Tenant or any assignment of
Tenant’s interest in this Lease. Without limiting the circumstances in which it
may be reasonable for Landlord to withhold its consent to an assignment or
subletting, Landlord and Tenant acknowledge that it shall be reasonable for
Landlord to withhold its consent in the following instances:

(a)   the proposed assignee or sublessee is a governmental
agency;

(b)   in Landlord’s reasonable judgment, the use of the
Leased Premises by the proposed assignee or sublessee would involve occupancy
by other than primarily general office or software engineering personnel, would
entail any alterations which would lessen the value of the leasehold
improvements in the Leased Premises, or would require increased services by
Landlord;

(c)   in Landlord’s reasonable judgment, the financial worth
of the proposed assignee is less than that of Tenant or does not meet the
credit standards applied by Landlord;

(d)   the proposed assignee or sublessee (or any of its
affiliates) has been in material default under a lease, has been in litigation
with a previous landlord, or in the ten years prior to the assignment or
sublease has filed for bankruptcy protection, has been the subject of an
involuntary bankruptcy, or has been adjudged insolvent;

(e)   Landlord has experienced a previous default by or is
in litigation with the proposed assignee or sublessee;

(f)    in Landlord’s reasonable judgment, the Leased
Premises, or the relevant part thereof, will be used in a manner that will
violate any negative covenant as to use contained in this Lease;

(g)   the use of the Leased Premises by the proposed
assignee or sublessee will violate any applicable law, ordinance or regulation;

(h)   the proposed assignee or sublessee is, as of the date
of this Lease, a tenant in any property owned by Landlord or its affiliates
located in the City of Sunnyvale, California;

(i)    the proposed assignment or sublease fails to include
all of the terms and provisions required to be included therein pursuant to
this Article 7;

(j)    Tenant is in default beyond all applicable notice and
cure periods of any obligation of Tenant under this Lease, or Tenant has
defaulted under this Lease on three or more occasions during the 12 months
preceding the date that Tenant shall request consent; or

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(k)   in the case of a subletting of less than the entire
Leased Premises, if the subletting would result in the division of the Leased
Premises into more than two subparcels or would require improvements to be made
outside of the Leased Premises.

7.2          Affiliates.  Notwithstanding anything
contained herein to the contrary regarding Landlord consent requirements, but
otherwise subject to the provisions of this Article 7, Tenant may sublet
or assign to any Affiliate (as hereinafter defined) without obtaining
Landlord’s consent, provided that in the event of a merger, if required by
Landlord, the surviving entity provides an express assumption of all
obligations of Tenant under this Lease. 
“Affiliate” means an entity controlling, controlled by or under common
control with Tenant, as well as any entity into or with which Tenant is merged
or otherwise consolidated (but excluding any entity which purchases all or
substantially all of Tenant’s assets).

7.3          Landlord’s
Election. 
If Tenant shall desire to assign its interest under the Lease or to
sublet the Leased Premises, Tenant must first notify Landlord, in writing, of
its intent to so assign or sublet, at least thirty (30) days in advance of the
date it intends to so assign its interest in this Lease or sublet the Leased
Premises but not sooner than one hundred eighty days in advance of such date,
specifying in detail the terms of such proposed assignment or subletting,
including the name of the proposed assignee or sublessee, the proposed assignee’s
or sublessee’s intended use of the Leased Premises, current financial
statements (including a balance sheet, income statement and statement of cash
flow, all prepared in accordance with generally accepted accounting principles)
of such proposed assignee or sublessee, the form of documents to be used in
effectuating such assignment or subletting and such other information as
Landlord may reasonably request. Landlord shall have a period of ten (10)
business days following receipt of such notice and the required information
within which to do one of the following: (i) consent to such requested
assignment or subletting subject to Tenant’s compliance with the conditions set
forth in Paragraph 7.4 below, or (ii) refuse to so consent to such
requested assignment or subletting, provided that such consent shall not be
unreasonably refused. During such ten (10) business day period, Tenant
covenants and agrees to supply to Landlord, promptly upon request, all
necessary or relevant information which Landlord may reasonably request
respecting such proposed assignment or subletting and/or the proposed assignee
or sublessee.

7.4          Conditions
To Landlord’s Consent. 
If Landlord elects to consent, or shall have been ordered to so consent
by a court of competent jurisdiction, to such requested assignment or
subletting, such consent shall be expressly conditioned upon the occurrence of
each of the conditions below set forth, and any purported assignment or
subletting made or ordered prior to the full and complete satisfaction of each
of the following conditions shall be void and, at the election of Landlord,
which election may be exercised at any time following such a purported
assignment or subletting but prior to the satisfaction of each of the stated
conditions, shall constitute a material default by Tenant under this Lease
until cured by satisfying in full each such condition by the assignee or
sublessee. The conditions are as follows:

(a)   Landlord having approved in form and substance the
assignment or sublease agreement and any ancillary documents, which approval
shall not be unreasonably withheld by Landlord if the requirements of this
Article 7 are otherwise complied with.

(b)   Each such sublessee or assignee having agreed, in
writing satisfactory to Landlord and its counsel and for the benefit of
Landlord, to assume, to be bound by, and to perform the obligations of this
Lease to be performed by Tenant which relate to space being subleased or
assigned.

(c)   Tenant having fully and completely performed all of
its obligations under the terms of this Lease through and including the date of
such assignment or subletting.

(d)   Tenant having reimbursed to Landlord all reasonable
costs and reasonable attorneys’ fees incurred by Landlord in conjunction with
the processing and documentation of any such requested subletting or
assignment.

(e)   Tenant having delivered to Landlord a complete and
fully-executed duplicate original of such sublease agreement or assignment
agreement (as applicable) and all related agreements.

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(f)    Tenant having paid, or having agreed in writing to pay
as to future payments, to Landlord fifty percent (50%) of all assignment
consideration or excess rentals to be paid to Tenant or to any other on
Tenant’s behalf or for Tenant’s benefit for such assignment or subletting as
follows:

(i)            If Tenant assigns its interest under this Lease and if
all or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to fifty percent (50%) of the
assignment consideration so paid or to be paid (whichever is the greater) at
the time of the assignment by the assignee; or

(ii)           If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant’s assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant’s assignee jointly agree to
pay to Landlord an amount equal to fifty percent (50%) of all such future
assignment consideration installments to be paid by such assignee as and when such
assignment consideration is so paid.

(iii)         If Tenant subleases the Leased Premises, that Tenant
and Tenant’s sublessee shall have entered into a written agreement with and for
the benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant
and Tenant’s sublessee jointly agree to pay to Landlord fifty percent (50%) of
all excess rentals to be paid by such sublessee as and when such excess rentals
are so paid.

7.5          Assignment
Consideration And Excess Rentals Defined.  For purposes
of this Article, including any amendment to this Article by way of addendum or
other writing, the term “assignment consideration” shall mean all consideration
to be paid by the assignee to Tenant or to any other party on Tenant’s behalf
or for Tenant’s benefit as consideration for such assignment, after deduction
for any commissions paid by Tenant, the unamortized balance of any tenant
improvements paid for by Tenant in connection with such assignment, and
attorneys’s fees and other consultants’ fees reasonably and actually incurred
by Tenant in connection with such assignment (provided that such attorneys’
fees and other consultants’ fees shall not exceed $5,000 in the aggregate), and
the term “excess rentals” shall mean all consideration to be paid by the
sublessee to Tenant or to any other party on Tenant’s behalf or for Tenant’s
benefit for the sublease of the Leased Premises in excess of the rent due to
Landlord under the terms of this Lease for the same period, after deduction for
any commissions paid by Tenant, the unamortized balance of any tenant
improvements paid for by Tenant in connection with such sublease, and
attorneys’s fees and other consultants’ fees reasonably and actually incurred
by Tenant in connection with such sublease (provided that such attorneys’ fees
and other consultants’ fees shall not exceed $5,000 in the aggregate). Tenant
agrees that the portion of any assignment consideration and/or excess rentals
arising from any assignment or subletting by Tenant which is to be paid to
Landlord pursuant to this Article now is and shall then be the property of
Landlord and not the property of Tenant. 
If the assignment or sublease is made on a full-service, gross basis,
then for purposes of calculating the assignment consideration or excess rent
the full-service, gross rent amount shall be converted to a net rent amount.

7.6          Payments.  All payments required by this Article to be
made to Landlord shall be made in cash in full as and when they become due. At
the time Tenant, Tenant’s assignee or sublessee makes each such payment to
Landlord, Tenant or Tenant’s assignee or sublessee, as the case may be, shall
deliver to Landlord an itemized statement in reasonable detail showing the
method by which the amount due Landlord was calculated and certified by the party
making such payment as true and correct.

7.7          Good
Faith. 
The rights granted to Tenant by this Article are granted in
consideration of Tenant’s express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the
value of any of Tenant’s personal property which may be conveyed or leased
generally concurrently with and which may reasonably be considered a part of
the same transaction as the permitted assignment or subletting shall be made
fairly, honestly and in good faith. If Tenant shall breach this covenant,
Landlord may immediately declare Tenant to be in default under the terms of
this Lease and terminate this Lease and/or exercise any other rights and
remedies Landlord would have under the terms of this Lease in the case of a
material default by Tenant under this Lease.

7.8          Effect
Of Landlord’s Consent. 
No subletting or assignment, even with the consent of Landlord, shall
relieve Tenant of its personal and primary obligation to pay rent and to
perform all of the other obligations to be performed 

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by Tenant hereunder.
Consent by Landlord to one or more assignments of Tenant’s interest in this
Lease or to one or more sublettings of the Leased Premises shall not be deemed
to be a consent to any subsequent assignment or subletting. If Landlord shall
have been ordered by a court of competent jurisdiction to consent to a
requested assignment or subletting, or such an assignment or subletting shall
have been ordered by a court of competent jurisdiction over the objection of
Landlord, such assignment or subletting shall not be binding between the
assignee (or sublessee) and Landlord until such time as all conditions set
forth in Paragraph 7.4 above have been fully satisfied (to the extent not then
satisfied) by the assignee or sublessee, including, without limitation, the
payment to Landlord of all agreed assignment considerations and/or excess
rentals then due Landlord.

7.9          Options
Personal.  If Landlord consents to an assignment or
subletting hereunder and this Lease contains any renewal options, expansion
options, rights of first refusal, rights of first negotiation or any other
rights or options pertaining to additional space in the Building or the
Property, such rights and/or options shall not run to the assignee or
subtenant, it being agreed by the parties hereto that any such rights and
options are personal to the original Tenant named herein and may not be
transferred.

7.10        Tenant’s
Remedies. 
Notwithstanding any contrary provision of law, including California
Civil Code section 1995.310, Tenant shall have no right, and Tenant hereby
waives and relinquishes any right, to cancel or terminate this Lease in the
event Landlord is determined to have unreasonably withheld or delayed its
consent to a proposed Transfer.

ARTICLE 8

LIMITATION ON LANDLORD’S LIABILITY AND
INDEMNITY

8.1          Limitation
On Landlord’s Liability And Release.  Landlord
shall not be liable to Tenant for, and Tenant hereby releases Landlord and its
partners, principals, members, officers, agents, employees, lenders, attorneys,
and consultants from, any and all liability, whether in contract, tort or on
any other basis, for any injury to or any damage sustained by Tenant, Tenant’s
agents, employees, contractors or invitees, any damage to Tenant’s property, or
any loss to Tenant’s business, loss of Tenant’s profits or other financial loss
of Tenant resulting from or attributable to the condition of, the management
of, the repair or maintenance of, the protection of, the supply of services or
utilities to, the damage in or destruction of the Leased Premises, the
Building, the Property or the Outside Areas, including without limitation
(i) the failure, interruption, rationing or other curtailment or cessation
in the supply of electricity, water, gas or other utility service to the
Property, the Building or the Leased Premises; (ii) the vandalism or
forcible entry into the Building or the Leased Premises; (iii) the
penetration of water into or onto any portion of the Leased Premises;
(iv) the failure to provide security and/or adequate lighting in or about
the Property, the Building or the Leased Premises, (v) the existence of
any design or construction defects within the Property, the Building or the
Leased Premises; (vi) the failure of any mechanical systems to function
properly (such as the HVAC systems); (vii) the blockage of access to any
portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was proximately caused by Landlord’s negligence, willful misconduct, or
Landlord’s failure to perform an obligation expressly undertaken pursuant to
this Lease after a reasonable period of time shall have lapsed following
receipt of written notice from Tenant to so perform such obligation. In this
regard, Tenant acknowledges that it is fully apprised of the provisions of Law
relating to releases, and particularly to those provisions contained in Section
1542 of the California Civil Code which reads as follows:

“A general release does
not extend to claims which the creditor does not know or suspect to exist in
his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor.”

Notwithstanding
such statutory provision, and for the purpose of implementing a full and
complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the
exceptions specifically set forth herein, the release and discharge set forth
in this paragraph is a full and complete settlement and release and discharge
of all claims and is intended to include in its effect, without limitation, all
claims which Tenant, as of the date hereof, does not know of or suspect to
exist in its favor.

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8.2          Tenant’s
Indemnification Of Landlord.  Tenant shall defend with
competent counsel satisfactory to Landlord any claims made or legal actions
filed or threatened against Landlord with respect to the violation of any Law,
or the death, bodily injury, personal injury, property damage, or interference
with contractual or property rights suffered by any third party occurring
within the Leased Premises or resulting from Tenant’s use or occupancy of the
Leased Premises, the Building or the Outside Areas, or resulting from Tenant’s
activities in or about the Leased Premises, the Building, the Outside Areas or
the Property, and Tenant shall indemnify and hold Landlord, Landlord’s
partners, principals, members, employees, agents and contractors harmless from
any loss liability, penalties, or expense whatsoever (including any loss
attributable to vacant space which otherwise would have been leased, but for
such activities) resulting therefrom, except to the extent proximately caused
by the negligence or willful misconduct of Landlord. This indemnity agreement
shall survive the expiration of this Lease.

ARTICLE 9

INSURANCE

9.1          Tenant’s
Insurance. 
Tenant shall maintain insurance complying with all of the following:

(a)   Tenant shall procure, pay for and keep in full force
and effect, at all times during the Lease Term, the following:

(i)            Commercial general liability insurance insuring Tenant
against liability for personal injury, bodily injury, death and damage to
property occurring within the Leased Premises, or resulting from Tenant’s use
or occupancy of the Leased Premises, the Building, the Outside Areas or the
Property, or resulting from Tenant’s activities in or about the Leased Premises
or the Property, with coverage in an amount equal to Tenant’s Required
Liability Coverage (as set forth in Article 1), which insurance shall
contain a “broad form liability” endorsement insuring Tenant’s performance of
Tenant’s obligations to indemnify Landlord as contained in this Lease.

(ii)           Fire and property damage insurance in so-called “fire
and extended coverage” form insuring Tenant against loss from physical damage
to Tenant’s personal property, inventory, trade fixtures and improvements
within the Leased Premises with coverage for the full actual replacement cost
thereof;

(iii)         Product liability insurance (including, without
limitation, if food and/or beverages are distributed, sold and/or consumed
within the Leased Premises, to the extent obtainable, coverage for liability
arising out of the distribution, sale, use or consumption of food and/or
beverages (including alcoholic beverages, if applicable) at the Leased Premises
for not less than Tenant’s Required Liability Coverage (as set forth in
Article 1);

(iv)          Workers’ compensation insurance and any other employee
benefit insurance sufficient to comply with all laws; and

(v)            With respect to making of alterations or the
construction of improvements or the like undertaken by Tenant, contingent
liability and builder’s risk insurance, in an amount and with coverage
reasonably satisfactory to Landlord.

(b)   Each policy of liability insurance required to be
carried by Tenant pursuant to this paragraph or actually carried by Tenant with
respect to the Leased Premises or the Property: (i) shall, except with
respect to insurance required by subparagraph (a)(iv) above, name Landlord, and
such others as are designated by Landlord, as additional insureds;
(ii) shall be primary insurance providing that the insurer shall be liable
for the full amount of the loss, up to and including the total amount of
liability set forth in the declaration of coverage, without the right of
contribution from or prior payment by any other insurance coverage of Landlord;
(iii) shall be in a form satisfactory to Landlord; (iv) shall be
carried with companies reasonably acceptable to Landlord with Best’s ratings of
at least A and XI; (v) shall provide that such policy shall not be subject
to cancellation, lapse or change except after at least ten days prior written
notice to Landlord in the event of non-payment of premiums and in all other
cases at least thirty days prior written notice to Landlord, and
(vi) shall contain a so-called “severability” or “cross liability” 

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endorsement. Each policy
of property insurance maintained by Tenant with respect to the Leased Premises
or the Property or any property therein (i) shall provide that such policy
shall not be subject to cancellation, lapse or change except after at least
thirty days prior written notice to Landlord and (ii) shall contain a
waiver and/or a permission to waive by the insurer of any right of subrogation
against Landlord, its partners, principals, members, officers, employees,
agents and contractors, which might arise by reason of any payment under such
policy or by reason of any act or omission of Landlord, its partners,
principals, members, officers, employees, agents and contractors.

(c)   Prior to the time Tenant or any of its contractors
enters the Leased Premises, Tenant shall deliver to Landlord, with respect to
each policy of insurance required to be carried by Tenant pursuant to this
Article, a copy of such policy (appropriately authenticated by the insurer as
having been issued, premium paid) or a certificate of the insurer certifying in
form satisfactory to Landlord that a policy has been issued, premium paid,
providing the coverage required by this Paragraph and containing the provisions
specified herein. With respect to each renewal or replacement of any such
insurance, the requirements of this Paragraph must be complied with not less
than thirty days prior to the expiration or cancellation of the policies being
renewed or replaced. Landlord may, at any time and from time to time, inspect
and/or copy any and all insurance policies required to be carried by Tenant
pursuant to this Article. If Landlord’s Lender, insurance broker, advisor or
counsel reasonably determines at any time that the amount of coverage set forth
in Paragraph 9.1(a) for any policy of insurance Tenant is required to carry
pursuant to this Article is not adequate, then Tenant shall increase the amount
of coverage for such insurance to such greater amount as Landlord’s Lender,
insurance broker, advisor or counsel reasonably deems adequate.

9.2          Landlord’s
Insurance. 
With respect to insurance maintained by Landlord:

(a)   Landlord shall maintain, as the minimum coverage
required of it by this Lease, fire and property damage insurance in so-called
“fire and extended coverage” form insuring Landlord (and such others as
Landlord may designate) against loss from physical damage to the Building with
coverage of not less than one hundred percent (100%) of the full actual
replacement cost thereof and against loss of rents for a period of not less
than six months. Such fire and property damage insurance, at Landlord’s
election but without any requirements on Landlord’s behalf to do so,
(i) may be written in so-called “all risk” form, excluding only those
perils commonly excluded from such coverage by Landlord’s then property damage
insurer; (ii) may provide coverage for physical damage to the improvements
so insured for up to the entire full actual replacement cost thereof;
(iii) may be endorsed to cover loss or damage caused by any additional
perils against which Landlord may elect to insure, including earthquake and/or
flood; and/or (iv) may provide coverage for loss of rents for a period of
up to twelve months. Landlord shall not be required to cause such insurance to
cover any of Tenant’s personal property, inventory, and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises. Landlord shall use commercially reasonable efforts
to obtain such insurance at competitive rates.

(b)   Landlord shall maintain commercial general liability
insurance insuring Landlord (and such others as are designated by Landlord)
against liability for personal injury, bodily injury, death, and damage to
property occurring in, on or about, or resulting from the use or occupancy of
the Property, or any portion thereof, with combined single limit coverage of at
least Three Million Dollars ($3,000,000). Landlord may carry such greater
coverage as Landlord or Landlord’s Lender, insurance broker, advisor or counsel
may from time to time determine is reasonably necessary for the adequate
protection of Landlord and the Property.

(c)   Landlord may maintain any other insurance which in the
opinion of its insurance broker, advisor or legal counsel is prudent in carry
under the given circumstances, provided such insurance is commonly carried by
owners of property similarly situated and operating under similar
circumstances.

9.3          Mutual
Waiver Of Subrogation. 
Landlord hereby releases Tenant, and Tenant hereby releases Landlord and
its respective partners, principals, members, officers, agents, employees and
servants, from any and all liability for loss, damage or injury to the property
of the other in or about the Leased Premises or the Property which is caused by
or results from a peril or event or happening which is covered by insurance
actually carried and in force at the time of the loss by the party sustaining
such loss; provided, however,
that such waiver shall be effective only to the extent permitted by the
insurance covering such loss and to the extent such insurance is not prejudiced
thereby.

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ARTICLE 10

DAMAGE TO LEASED PREMISES

10.1        Landlord’s
Duty To Restore. 
If the Leased Premises, the Building or the Outside Area are damaged by
any peril after the Lease Commencement Date, Landlord shall restore the same,
as and when required by this paragraph, unless this Lease is terminated by
Landlord pursuant to Paragraph 10.3 or by Tenant pursuant to
Paragraph 10.4. If this Lease is not so terminated, then upon the issuance
of all necessary governmental permits, Landlord shall commence and diligently
prosecute to completion the restoration of the Leased Premises, the Building or
the Outside Area, as the case may be, to the extent then allowed by law, to
substantially the same condition in which it existed as of the Lease
Commencement Date. Landlord’s obligation to restore shall be limited to actual
receipt of insurance proceeds and to the improvements constructed by Landlord.
Landlord shall have no obligation to restore any Improvements made by Tenant to
the Leased Premises or any of Tenant’s personal property, inventory or trade
fixtures. Upon completion of the restoration by Landlord, Tenant shall
forthwith replace or fully repair all of Tenant’s personal property, inventory,
trade fixtures and other improvements constructed by Tenant to like or similar
conditions as existed at the time immediately prior to such damage or
destruction.

10.2        Insurance
Proceeds. 
All insurance proceeds available from the fire and property damage
insurance carried by Landlord shall be paid to and become the property of
Landlord. If this Lease is terminated pursuant to either Paragraph 10.3 or
10.4, all insurance proceeds available from insurance carried by Tenant which
cover loss of property that is Landlord’s property or would become Landlord’s
property on termination of this Lease shall be paid to and become the property
of Landlord, and the remainder of such proceeds shall be paid to and become the
property of Tenant. If this Lease is not terminated pursuant to either
Paragraph 10.3 or 10.4, all insurance proceeds available from insurance carried
by Tenant which cover loss to property that is Landlord’s property shall be
paid to and become the property of Landlord, and all proceeds available from
such insurance which cover loss to property which would only become the
property of Landlord upon the termination of this Lease shall be paid to and
remain the property of Tenant. The determination of Landlord’s property and
Tenant’s property shall be made pursuant to Paragraph 6.2.

10.3        Landlord’s
Right To Terminate. 
Landlord shall have the option to terminate this Lease in the event any
of the following occurs, which option may be exercised only by delivery to
Tenant of a written notice of election to terminate within thirty days after
the date of such damage or destruction:

(a)   The Building is damaged by any peril covered by valid
and collectible insurance actually carried by Landlord and in force at the time
of such damage or destruction (an “insured peril”) to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, plus the
deductible amount specified in such insurance policy, or (ii) fifty percent of
the then actual replacement cost thereof;

(b)   The Building is damaged by an uninsured peril, which
peril Landlord was not required to insure against pursuant to the provisions of
Article 9 of this Lease.

(c)   The Building is damaged by any peril and, because of
the laws then in force, the Building (i) cannot be restored at reasonable cost
or (ii) if restored, cannot be used for the same use being made thereof before
such damage.

10.4        Tenant’s
Right To Terminate. 
If the Leased Premises, the Building or the Outside Area are damaged by
any peril and Landlord does not elect to terminate this Lease or is not
entitled to terminate this Lease pursuant to this Article, then as soon as
reasonably practicable, Landlord shall furnish Tenant with the written opinion
of Landlord’s architect or construction consultant as to when the restoration
work required of Landlord may be complete. Tenant shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Landlord of a written notice of election to
terminate within seven days after Tenant receives from Landlord the estimate of
the time needed to complete such restoration:

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(a)   If the time estimated to substantially complete the
restoration exceeds one hundred twenty (120) days from and after the date the
architect’s or construction consultant’s written opinion is delivered; or

(b)   If the damage occurred within twelve months of the
last day of the Lease Term and the time estimated to substantially complete the
restoration exceeds one hundred twenty (120) days from and after the date such
restoration is commenced.

10.5        Tenant’s
Waiver. 
Landlord and Tenant agree that the provisions of Paragraph 10.4
above, captioned “Tenant’s Right To Terminate”, are intended to supersede and
replace the provisions contained in California Civil Code, Section 1932,
Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of such Civil Code Sections and the
provisions of any successor Civil Code Sections or similar laws hereinafter
enacted.

10.6        Abatement
Of Rent. 
In the event of damage to the Leased Premises which does not result in
the termination of this Lease, the Base Monthly Rent (and any Additional Rent)
shall be temporarily abated starting on the date of such event of damage in
proportion to the degree to which Tenant’s use of the Leased Premises is
impaired by such damage.

ARTICLE 11

CONDEMNATION

11.1        Tenant’s
Right To Terminate. 
Except as otherwise provided in Paragraph 11.4 below regarding temporary
takings, Tenant shall have the option to terminate this Lease if, as a result
of any taking, (i) all of the Leased Premises is taken, or
(ii) twenty-five percent (25%) or more of the rentable area Leased
Premises is taken and the part of the Leased Premises that remains cannot,
within a reasonable period of time, be made reasonably suitable for the
continued operation of Tenant’s business. Tenant must exercise such option
within a reasonable period of time, to be effective on the later to occur of
(i) the date that possession of that portion of the Leased Premises that
is condemned is taken by the condemnor or (ii) the date Tenant vacated the
Leased Premises.

11.2        Landlord’s
Right To Terminate. 
Except as otherwise provided in Paragraph 11.4 below regarding temporary
takings, Landlord shall have the option to terminate this Lease if, as a result
of any taking, (i) all of the Leased Premises is taken,
(ii) twenty-five percent (25%) or more of the Leased Premises is taken and
the part of the Leased Premises that remains cannot, within a reasonable period
of time, be made reasonably suitable for the continued operation of Tenant’s
business, or (iii) because of the laws then in force, the Leased Premises
may not be used for the same use being made before such taking, whether or not
restored as required by Paragraph 11.3 below. Any such option to terminate
by Landlord must be exercised within a reasonable period of time, to be
effective as of the date possession is taken by the condemnor.

11.3        Restoration.  If any part of the Leased
Premises or the Building is taken and this Lease is not terminated, then
Landlord shall, to the extent not prohibited by laws then in force, make
reasonable commercial efforts to repair any damage occasioned thereby to the
remainder thereof to a condition reasonably suitable for Tenant’s continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Paragraph 10.1.

11.4        Temporary
Taking. 
If a portion of the Leased Premises is temporarily taken for a period of
one year or less and such period does not extend beyond the Lease Expiration
Date, this Lease shall remain in effect. If any portion of the Leased Premises
is temporarily taken for a period which exceeds one year or which extends
beyond the Lease Expiration Date, then the rights of Landlord and Tenant shall
be determined in accordance with Paragraphs 11.1 and 11.2 above.

11.5        Division
Of Condemnation Award. 
Any award made for any taking of the Property, the Building, or the
Leased Premises, or any portion thereof, shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award; provided,
however, that Tenant shall be entitled to receive any portion of the
award that is made specifically (i) for the taking of personal property,
inventory or trade 

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fixtures belonging to
Tenant, (ii) for the interruption of Tenant’s business or its moving
costs, or (iii) for the value of any leasehold improvements installed and
paid for by Tenant. The rights of Landlord and Tenant regarding any
condemnation shall be determined as provided in this Article, and each party
hereby waives the provisions of Section 1265.130 of the California Code of
Civil Procedure, and the provisions of any similar law hereinafter enacted,
allowing either party to petition the Supreme Court to terminate this Lease
and/or otherwise allocate condemnation awards between Landlord and Tenant in
the event of a taking of the Leased Premises.

11.6        Abatement
Of Rent. 
In the event of a taking of the Leased Premises which does not result in
a termination of this Lease (other than a temporary taking), then, as of the
date possession is taken by the condemning authority, the Base Monthly Rent
shall be reduced in the same proportion that the area of that part of the
Leased Premises so taken (less any addition to the area of the Leased Premises
by reason of any reconstruction) bears to the area of the Leased Premises
immediately prior to such taking.

11.7        Taking
Defined. 
The term “taking” or “taken” as used in this Article 11 shall mean any
transfer or conveyance of all or any portion of the Property to a public or
quasi-public agency or other entity having the power of eminent domain pursuant
to or as a result of the exercise of such power by such an agency, including
any inverse condemnation and/or any sale or transfer by Landlord of all or any
portion of the Property to such an agency under threat of condemnation or the
exercise of such power.

ARTICLE 12

DEFAULT AND REMEDIES

12.1        Events
Of Tenant’s Default. 
Tenant shall be in default of its obligations under this Lease if any of
the following events (“Events of Default”) occur:

(a)   Tenant shall have failed to pay Base Monthly Rent or
any regularly scheduled Additional Rent when due and such failure continues for
more than three (3) days after Landlord gives written notice thereof to Tenant;
provided, however, that after the second such failure in a calendar year, only
the passage of time, but no further notice, shall be required to establish an
Event of Default in the same calendar year; or

(b)   Tenant shall have failed to pay any other Additional
Rent or other amount of money or charge payable by Tenant hereunder as and when
such additional rent or amount or charge becomes due and payable and such
failure continues for more than ten (10) days after Landlord gives written
notice thereof to Tenant; provided, however, that after the second such failure
in a calendar year, only the passage of time, but no further notice, shall be
required to establish an Event of Default in the same calendar year; or

(c)   Tenant shall have failed to perform any term, covenant
or condition of this Lease (except those requiring the payment of Base Monthly Rent
or Additional Rent, which failures shall be governed by subparagraphs (a) and
(b) above) within fifteen (15) days after written notice from Landlord to
Tenant specifying the nature of such failure and requesting Tenant to perform
same; provided, however, that if, by the nature of such term, covenant or
condition, such failure cannot reasonably be cured within such period of
fifteen (15) days, an Event of Default shall not exist as long as Tenant
commences with due diligence and dispatch the curing of such failure within
such period of fifteen (15) days and, having so commenced, thereafter
prosecutes with diligence and dispatch and completes the curing of such failure
within a reasonable time; or

(d)   Tenant shall have sublet the Leased Premises or assigned
or encumbered its interest in this Lease in violation of the provisions
contained in Article 7, whether voluntarily or by operation of law; or

(e)   Tenant or any guarantor of this Lease shall have
permitted or suffered the sequestration or attachment of, or execution on, or
the appointment of a custodian or receiver with respect to, all or any
substantial part of the property or assets of Tenant (or such guarantor) or any
property or asset essential to the conduct of Tenant’s (or such guarantor’s)
business, and Tenant (or such guarantor) shall have failed to obtain a return
or release of the same 

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within thirty days
thereafter, or prior to sale pursuant to such sequestration, attachment or
levy, whichever is earlier; or

(f)    Tenant or any guarantor of this Lease shall have made
a general assignment of all or a substantial part of its assets for the benefit
of its creditors; or

(g)   Tenant or any guarantor of this Lease shall have
allowed (or sought) to have entered against it a decree or order which:
(i) grants or constitutes an order for relief, appointment of a trustee,
or condemnation or a reorganization plan under the bankruptcy laws of the
United States; (ii) approves as properly filed a petition seeking
liquidation or reorganization under said bankruptcy laws or any other debtor’s
relief law or similar statute of the United States or any state thereof; or
(iii) otherwise directs the winding up or liquidation of Tenant; provided,
however, if any decree or order was entered without Tenant’s consent or over
Tenant’s objection, Landlord may not terminate this Lease pursuant to this
Subparagraph if such decree or order is rescinded or reversed within thirty
days after its original entry; or

(h)   Tenant or any guarantor of this Lease shall have
availed itself of the protection of any debtor’s relief law, moratorium law or
other similar law which does not require the prior entry of a decree or order.

12.2        Landlord’s
Remedies. 
In the event of any default by Tenant, and without limiting Landlord’s
right to indemnification as provided in Article 8.2, Landlord shall have the
following remedies, in addition to all other rights and remedies provided by
law or otherwise provided in this Lease, to which Landlord may resort
cumulatively, or in the alternative:

(a)   Landlord may, at Landlord’s election, keep this Lease
in effect and enforce, by an action at law or in equity, all of its rights and
remedies under this Lease including, without limitation, (i) the right to
recover the rent and other sums as they become due by appropriate legal action,
(ii) the right to make payments required by Tenant, or perform Tenant’s
obligations and be reimbursed by Tenant for the cost thereof with interest at
the then maximum rate of interest not prohibited by law from the date the sum
is paid by Landlord until Landlord is reimbursed by Tenant, and (iii) the
remedies of injunctive relief and specific performance to prevent Tenant from
violating the terms of this Lease and/or to compel Tenant to perform its
obligations under this Lease, as the case may be.

(b)   Landlord may, at Landlord’s election, terminate this
Lease by giving Tenant written notice of termination, in which event this Lease
shall terminate on the date set forth for termination in such notice. Any
termination under this subparagraph shall not relieve Tenant from its
obligation to pay to Landlord all Base Monthly Rent and Additional Rent then or
thereafter due, or any other sums due or thereafter accruing to Landlord, or
from any claim against Tenant for damages previously accrued or then or
thereafter accruing. In no event shall any one or more of the following actions
by Landlord, in the absence of a written election by Landlord to terminate this
Lease constitute a termination of this Lease:

(i)            Appointment of a receiver or keeper in order to
protect Landlord’s interest hereunder;

(ii)           Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof
or otherwise; or

(iii)         Any action taken by Landlord or its partners,
principals, members, officers, agents, employees, or servants, which is
intended to mitigate the adverse effects of any breach of this Lease by Tenant,
including, without limitation, any action taken to maintain and preserve the
Leased Premises on any action taken to relet the Leased Premises or any portion
thereof for the account at Tenant and in the name of Tenant.

(c)   In the event Tenant breaches this Lease and abandons
the Leased Premises, Landlord may terminate this Lease, but this Lease shall
not terminate unless Landlord gives Tenant written notice of termination. If
Landlord does not terminate this Lease by giving written notice of termination,
Landlord may enforce all its rights and remedies under this Lease, including
the right and remedies provided by California Civil Code Section 1951.4
(“lessor may continue lease in effect after lessee’s breach and abandonment and
recover rent as it becomes due, if 

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lessee has right to
sublet or assign, subject only to reasonable limitations”), as in effect on the
Effective Date of this Lease.

(d)   In the event Landlord terminates this Lease, Landlord
shall be entitled, at Landlord’s election, to the rights and remedies provided
in California Civil Code Section 1951.2, as in effect on the Effective Date of
this Lease. For purposes of computing damages pursuant to Section 1951.2, an
interest rate equal to the maximum rate of interest then not prohibited by law
shall be used where permitted. Such damages shall include, without limitation:

(i)            The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco, at the time of award plus one percent; and

(ii)           Any other amount necessary to compensate Landlord for
all detriment 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, including without limitation, the following: (i)
expenses for cleaning, repairing or restoring the Leased Premises, (ii)
expenses for altering, remodeling or otherwise improving the Leased Premises
for the purpose of reletting, including removal of existing leasehold
improvements and/or installation of additional leasehold improvements (regardless
of how the same is funded, including reduction of rent, a direct payment or
allowance to a new tenant, or otherwise), (iii) broker’s fees allocable to the
remainder of the term of this Lease, advertising costs and other expenses of
reletting the Leased Premises; (iv) costs of carrying and maintaining the
Leased Premises, such as taxes, insurance premiums, utility charges and
security precautions, (v) expenses incurred in removing, disposing of and/or
storing any of Tenant’s personal property, inventory or trade fixtures
remaining therein; (vi) reasonable attorney’s fees, expert witness fees, court
costs and other reasonable expenses incurred by Landlord (but not limited to
taxable costs) in retaking possession of the Leased Premises, establishing damages
hereunder, and releasing the Leased Premises; and (vii) any other expenses,
costs or damages otherwise incurred or suffered as a result of Tenant’s
default.

12.3        Landlord’s
Default And Tenant’s Remedies.  In the event Landlord fails to perform its
obligations under this Lease, Landlord shall nevertheless not be in default
under the terms of this Lease until such time as Tenant shall have first given
Landlord written notice specifying the nature of such failure to perform its
obligations, and then only after Landlord shall have had thirty (30) days
following its receipt of such notice within which to perform such obligations; provided that, if longer than thirty (30)
days is reasonably required in order to perform such obligations, Landlord
shall have such longer period. In the event of Landlord’s default as above set
forth, then, and only then, Tenant may then proceed in equity or at law to
compel Landlord to perform its obligations and/or to recover damages
proximately caused by such failure to perform (except as and to the extent
Tenant has waived its right to damages as provided in this Lease).

12.4        Limitation
Of Tenant’s Recourse. 
Tenant’s recourse shall be limited to Landlord’s interest in the
Property, which shall include undistributed proceeds from a sale or other
transfer of the Property as well as from a refinancing of the Property. In
addition, if Landlord is a corporation, trust, partnership, joint venture,
limited liability company, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, or other
principals of such business entity, and (ii) Tenant shall have no recourse to
the assets of such officers, directors, trustees, partners, joint venturers,
members, owners, stockholders or principals. Additionally, if Landlord is a
partnership or limited liability company, then Tenant covenants and agrees:

(a)   No partner or member of Landlord shall be sued or
named as a party in any suit or action brought by Tenant with respect to any
alleged breach of this Lease (except to the extent necessary to secure
jurisdiction over the partnership and then only for that sole purpose);

(b)   No service of process shall be made against any
partner or member of Landlord except for the sole purpose of securing
jurisdiction over the partnership; and

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(c)   No writ of execution will ever be levied against the
assets of any partner or member of Landlord other than to the extent of his or
her interest in the assets of the partnership or limited liability company
constituting Landlord.

Tenant further
agrees that each of the foregoing covenants and agreements shall be enforceable
by Landlord and by any partner or member of Landlord and shall be applicable to
any actual or alleged misrepresentation or nondisclosure made regarding this
Lease or the Leased Premises or any actual or alleged failure, default or
breach of any covenant or agreement either expressly or implicitly contained in
this Lease or imposed by statute or at common law.

12.5        Tenant’s
Waiver. 
Landlord and Tenant agree that the provisions of Paragraph 12.3 above
are intended to supersede and replace the provisions of California Civil Code
Sections 1932(1), 1941 and 1942, and accordingly, Tenant hereby waives the
provisions of California Civil Code Sections 1932(1), 1941 and 1942 and/or any
similar or successor law regarding Tenant’s right to terminate this Lease or to
make repairs and deduct the expenses of such repairs from the rent due under
this Lease.

ARTICLE 13

GENERAL PROVISIONS

13.1        Taxes
On Tenant’s Property. 
Tenant shall pay before delinquency any and all taxes, assessments,
license fees, use fees, permit fees and public charges of whatever nature or
description levied, assessed or imposed against Tenant or Landlord by a
governmental agency arising out of, caused by reason of or based upon Tenant’s estate
in this Lease, Tenant’s ownership of property, improvements made by Tenant to
the Leased Premises or the Outside Areas, improvements made by Landlord for
Tenant’s use within the Leased Premises or the Outside Areas, Tenant’s use (or
estimated use) of public facilities or services or Tenant’s consumption (or
estimated consumption) of public utilities, energy, water or other resources
(collectively, “Tenant’s Interest”). Upon demand by Landlord, Tenant shall
furnish Landlord with satisfactory evidence of these payments. If any such
taxes, assessments, fees or public charges are levied against Landlord,
Landlord’s property, the Building or the Property, or if the assessed value of
the Building or the Property is increased by the inclusion therein of a value
placed upon Tenant’s Interest, regardless of the validity thereof, Landlord
shall have the right to require Tenant to pay such taxes, and if not paid and
satisfactory evidence of payment delivered to Landlord at least ten days prior
to delinquency, then Landlord shall have the right to pay such taxes on
Tenant’s behalf and to invoice Tenant for the same. Tenant shall, within the
earlier to occur of (a) thirty (30) days of the date it receives an invoice
from Landlord setting forth the amount of such taxes, assessments, fees, or
public charge so levied, or (b) the due date of such invoice, pay to Landlord,
as Additional Rent, the amount set forth in such invoice. Failure by Tenant to
pay the amount so invoiced within such time period shall be conclusively deemed
a default by Tenant under this Lease. Tenant shall have the right to bring suit
in any court of competent jurisdiction to recover from the taxing authority the
amount of any such taxes, assessments, fees or public charges so paid.

13.2        Holding
Over.  This Lease shall terminate without further notice on the Lease
Expiration Date (as set forth in Article 1). Any holding over by Tenant after
expiration of the Lease Term shall neither constitute a renewal nor extension
of this Lease nor give Tenant any rights in or to the Leased Premises except as
expressly provided in this Paragraph. Any such holding over to which Landlord
has consented shall be construed to be a tenancy from month to month, on the
same terms and conditions herein specified insofar as applicable, except that
the Base Monthly Rent shall be increased to an amount equal to one hundred
fifty percent (150%) of the Base Monthly Rent payable during the last full
month immediately preceding such holding over.

13.3        Subordination
To Mortgages. 
This Lease is subject to and subordinate to all ground leases, mortgages
and deeds of trust which affect the Building or the Property and which are of
public record as of the Effective Date of this Lease, and to all renewals,
modifications, consolidations, replacements and extensions thereof. However, if
the lessor under any such ground lease or any lender holding any such mortgage
or deed of trust shall advise Landlord that it desires or requires this Lease
to be made prior and superior thereto, then, upon written request of Landlord
to Tenant, Tenant shall promptly execute, acknowledge and deliver any and all
customary or reasonable documents or instruments which Landlord and such lessor
or lender deems necessary or desirable to make this Lease 

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prior thereto. Tenant
hereby consents to Landlord’s ground leasing the land underlying the Building
or the Property and/or encumbering the Building or the Property as security for
future loans on such terms as Landlord shall desire, all of which future ground
leases, mortgages or deeds of trust shall be subject to and subordinate to this
Lease. However, if any lessor under any such future ground lease or any lender
holding such future mortgage or deed of trust shall desire or require that this
Lease be made subject to and subordinate to such future ground lease, mortgage
or deed of trust, then Tenant agrees, within ten days after Landlord’s written
request therefor, to execute, acknowledge and deliver to Landlord any and all
documents or instruments requested by Landlord or by such lessor or lender as
may be necessary or proper to assure the subordination of this Lease to such
future ground lease, mortgage or deed of trust, but only if such lessor or
lender agrees to recognize Tenant’s rights under this Lease and agrees not to
disturb Tenant’s quiet possession of the Leased Premises so long as Tenant is
not in default under this Lease. If Landlord assigns the Lease as security for
a loan, Tenant agrees to execute such documents as are reasonably requested by
the lender and to provide reasonable provisions in the Lease protecting such
lender’s security interest which are customarily required by institutional
lenders making loans secured by a deed of trust.

13.4        Tenant’s
Attornment Upon Foreclosure.  Tenant shall, upon request,
attorn (i) to any purchaser of the Building or the Property at any
foreclosure sale or private sale conducted pursuant to any security instruments
encumbering the Building or the Property, (ii) to any grantee or
transferee designated in any deed given in lieu of foreclosure of any security
interest encumbering the Building or the Property, or (iii) to the lessor
under an underlying ground lease of the land underlying the Building or the
Property, should such ground lease be terminated; provided that such purchaser,
grantee or lessor recognizes Tenant’s rights under this Lease, except that such
purchaser, grantee or lessor shall not: 
(a) be liable for any act or omission of iStar Sunnyvale
Partners, L.P. under this Lease; (b) be subject to any offsets or
defenses which Tenant might have against iStar Sunnyvale Partners, L.P.
(prior to such purchaser, grantee or lessor becoming landlord under this
Lease); (c) be bound by any Rent or Additional Rent which Tenant might
have paid to iStar Sunnyvale Partners, L.P. for more than the current month or
more than one (1) month prior to the due date for the then current
installment; (d) be liable for any deposits made or prepaid Rent paid by
Tenant hereunder unless such deposits or payments have been transferred to such
purchaser, grantee or lessor; or (e) be bound by any amendment or
modification of this Lease made without any required lessor’s or lender’s
consent.

13.5        Mortgagee
Protection. 
In the event of any default on the part of Landlord, Tenant will give
notice by registered mail to any Lender or lessor under any underlying ground
lease who shall have requested, in writing, to Tenant that it be provided with
such notice, and Tenant shall offer such Lender or lessor a reasonable
opportunity to cure the default, including time to obtain possession of the
Leased Premises by power of sale or judicial foreclosure or other appropriate
legal proceedings if reasonably necessary to effect a cure.

13.6        Estoppel
Certificate. 
Tenant will, within ten (10) business days following any request by
Landlord, execute and deliver to Landlord an estoppel certificate in the form
attached as Exhibit D (i) certifying that this Lease is unmodified and in
full force and effect, or, if modified, stating the nature of such modification
and certifying that this Lease, as so modified, is in full force and effect,
(ii) stating the date to which the rent and other charges are paid in
advance, if any, (iii) acknowledging that there are not, to Tenant’s knowledge,
any uncured defaults on the part of Landlord hereunder, or specifying such
defaults if any are claimed, and (iv) certifying such other information
about this Lease as may be reasonably requested by Landlord, its Lender or
prospective lenders, investors or purchasers of the Building or the Property.
Tenant’s failure to execute and deliver such estoppel certificate within ten
(10) days after Landlord’s request therefor shall be a material default by
Tenant under this Lease, and Landlord shall have all of the rights and remedies
available to Landlord as Landlord would otherwise have in the case of any other
material default by Tenant, including the right to terminate this Lease and sue
for damages proximately caused thereby, it being agreed and understood by
Tenant that Tenant’s failure to so deliver such estoppel certificate in a
timely manner could result in Landlord being unable to perform committed
obligations to other third parties which were made by Landlord in reliance upon
this covenant of Tenant. Landlord and Tenant intend that any statement
delivered pursuant to this paragraph may be relied upon by any Lender or
purchaser or prospective Lender or purchaser of the Building, the Property, or
any interest in them.

13.7        Financial
Statements and Information.

(a)   Tenant shall deliver to Landlord and to any lender or
purchaser designated by Landlord the following information certified to be
true, complete and correct by an officer of Tenant: within 90 days after
the end of each 

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fiscal year of Tenant, a
balance sheet of Tenant and its consolidated subsidiaries as of the end of such
year, a statements of profits and losses of Tenant and its subsidiaries for
such year, and an audited statement of cash flows of Tenant and its
consolidated subsidiaries for such year, setting forth in each case, in
comparative form, the corresponding figures for the preceding fiscal year in
reasonable detail and scope and certified by independent certified public
accountants of recognized national standing selected by Tenant; and within 60
days after the end of each fiscal quarter of Tenant a balance sheet of Tenant
and its consolidated subsidiaries as at the end of such quarter, statements of
profits and losses of Tenant and its consolidated subsidiaries for such quarter
and a statement of cash flows of Tenant and its consolidated subsidiaries for
such quarter, setting forth in each case, in comparative form, the
corresponding figures for the similar quarter of the preceding year, in
reasonable detail and scope, and certified to be true and complete by a
financial officer of Tenant having knowledge thereof; the foregoing financial
statements all being prepared in accordance with generally accepted accounting
principles, consistently applied.  If
Tenant is a reporting company under the Securities and Exchange Act of 1934, as
amended, the foregoing annual reports of this Paragraph 13.14 will be satisfied
by the delivery of Tenant’s forms 10-K, 10-Q and annual reports promptly upon
their filing with the Securities and Exchange Commission.  Together with the annual financial
statements described above, Tenant shall deliver to Landlord an annual
operating statement of the Leased Premises in detail reasonably satisfactory to
Landlord and certified to be true, complete and correct by an officer of
Tenant.

(b)   Upon ten (10) days’ prior written notice, Tenant
will permit Landlord and its professional representatives to visit Tenant’s
offices, and discuss Tenant’s affairs and finances with appropriate officers,
and will make available such information as Landlord may reasonably request
bearing on Tenant, the Leased Premises or this Lease, and Landlord shall
maintain the confidentiality of any information designated by Tenant as
“nonpublic”, and Landlord will execute and use its reasonable efforts to cause
Landlord’s professional representatives to execute confidentiality agreements.

13.8        Transfer
By Landlord. 
Landlord and its successors in interest shall have the right to transfer
their interest in the Building, the Property, or any portion thereof at any
time and to any person or entity. In the event of any such transfer, the
Landlord originally named herein (and in the case of any subsequent transfer,
the transferor), from the date of such transfer, (i) shall be
automatically relieved, without any further act by any person or entity, of all
liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be
relieved of all liability for the performance of the obligations of the
Landlord hereunder which have accrued before the date of transfer if its
transferee agrees to assume and perform all such prior obligations of the
Landlord hereunder. Tenant shall attorn to any such transferee. After the date
of any such transfer, the term “Landlord” as used herein shall mean the
transferee of such interest in the Building or the Property.

13.9        Force
Majeure. 
The obligations of each of the parties under this Lease (other than the
obligations to pay money) shall be temporarily excused if such party is
prevented or delayed in performing such obligations by reason of any strikes,
lockouts or labor disputes; government restrictions, regulations, controls,
action or inaction; civil commotion; or extraordinary weather, fire or other
acts of God.

13.10      Notices.  Any notice required or desired to be given
by a party regarding this Lease shall be in writing and shall be personally
served, or in lieu of personal service may be given by reputable overnight
courier service, postage prepaid, addressed to the other party as follows:

	
   

  	
  If to
  Landlord:

  	
   

  	
  c/o iStar Financial,
  Inc.

  
	
   

  	
   

  	
   

  	
  One Embarcadero Center

  
	
   

  	
   

  	
   

  	
  Suite 3300

  
	
   

  	
   

  	
   

  	
  San Francisco, CA 94111

  
	
   

  	
   

  	
   

  	
  Attention:  Asset Management

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  	
  Pillsbury Winthrop LLP

  
	
   

  	
   

  	
   

  	
  50 Fremont Street

  
	
   

  	
   

  	
   

  	
  San Francisco, CA 94105

  
	
   

  	
   

  	
   

  	
  Attention: Glenn Q.
  Snyder, Esq.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to
  Tenant:

  	
   

  	
  Silicon Image, Inc.

  
	
   

  	
   

  	
   

  	
  1060 East Arques Avenue

  
	
   

  	
   

  	
   

  	
  Sunnyvale,
  California  94085

  
	
   

  	
   

  	
   

  	
  Attention:  Chief Financial Officer

  

 

-28-

 

Any notice given
in accordance with the foregoing shall be deemed received upon actual receipt
or refusal to accept delivery.

13.11      Attorneys’
Fees. 
In the event any party shall bring any action, arbitration proceeding or
legal proceeding alleging a breach of any provision of this Lease, to recover
rent, to terminate this Lease, or to enforce, protect, determine or establish
any term or covenant of this Lease or rights or duties hereunder of either
party, the prevailing party shall be entitled to recover from the
non-prevailing party as a part of such action or proceeding, or in a separate
action for that purpose brought within one year from the determination of such
proceeding, reasonable attorneys’ fees, expert witness fees, court costs and
other reasonable expenses incurred by the prevailing party.

13.12      Definitions.  Any term that is given a
special meaning by any provision in this Lease shall, unless otherwise
specifically stated, have such meaning wherever used in this Lease or in any
Addenda or amendment hereto. In addition to the terms defined in Article 1, the
following terms shall have the following meanings:

(a)   Real Property Taxes. The term “Real Property Tax” or “Real
Property Taxes” shall each mean Tenant’s Project Percentage Share of
(i) all taxes, assessments, levies and other charges of any kind or nature
whatsoever, general and special, foreseen and unforeseen (including all
instruments of principal and interest required to pay any general or special
assessments for public improvements and any increases resulting from
reassessments caused by any change in ownership or new construction), now or
hereafter imposed by any governmental or quasi-governmental authority or special
district having the direct or indirect power to tax or levy assessments, which
are levied or assessed for whatever reason against the Property or any portion
thereof, or Landlord’s interest herein, or the fixtures, equipment and other
property of Landlord that is an integral part of the Property and located
thereon, or Landlord’s business of owning, leasing or managing the Property or
the gross receipts, income or rentals from the Property, (ii) all charges,
levies or fees imposed by any governmental authority against Landlord by reason
of or based upon the use of or number of parking spaces within the Property,
the amount of public services or public utilities used or consumed (e.g. water, gas, electricity, sewage or
waste water disposal) at the Property, the number of person employed by tenants
of the Property, the size (whether measured in area, volume, number of tenants
or whatever) or the value of the Property, or the type of use or uses conducted
within the Property, and all costs and fees (including attorneys’ fees)
reasonably incurred by Landlord in contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax, and
(iii) all tax increases due to improvements made to the Leased Premises by
Tenant or by Landlord on behalf of Tenant. If, at any time during the Lease
Term, the taxation or assessment of the Property prevailing as of the Effective
Date of this Lease shall be altered so that in lieu of or in addition to any
the Real Property Tax described above there shall be levied, awarded or imposed
(whether by reason of a change in the method of taxation or assessment,
creation of a new tax or charge, or any other cause) an alternate, substitute,
or additional use or charge (i) on the value, size, use or occupancy of
the Property or Landlord’s interest therein or (ii) on or measured by the
gross receipts, income or rentals from the Property, or on Landlord’s business
of owning, leasing or managing the Property or (iii) computed in any
manner with respect to the operation of the Property, then any such tax or
charge, however designated, shall be included within the meaning of the terms
“Real Property Tax” or “Real Property Taxes” for purposes of this Lease. If any
Real Property Tax is partly based upon property or rents unrelated to the
Property, then only that part of such Real Property Tax that is fairly
allocable to the Property shall be included within the meaning of the terms
“Real Property Tax” or “Real Property Taxes.” Notwithstanding the foregoing,
the terms “Real Property Tax” or “Real Property Taxes” shall not include
estate, inheritance, transfer, gift or franchise taxes of Landlord or the
federal or state income tax imposed on Landlord’s income from all sources.

(b)   Landlord’s Insurance Costs. The term “Landlord’s Insurance Costs”
shall mean Tenant’s Project Proportionate Share of the costs to Landlord to
carry and maintain the policies of fire and property damage insurance for the
Building and the Property and general liability and any other insurance required
or permitted to be carried by Landlord pursuant to Article 9, together with any
deductible amounts paid by Landlord upon the occurrence of any insured casualty
or loss.

(c)   Property Maintenance Costs. The term “Property Maintenance Costs”
shall mean Tenant’s Project Proportionate Share of all costs and expenses
(except Landlord’s Insurance Costs, Real Property Taxes and Building 

-29-

 

Maintenance Costs) paid
or incurred by Landlord in protecting, operating, maintaining, repairing and
preserving the Property and all parts thereof, including without limitation,
(i) market rate professional management fees, (ii) the amortizing
portion of any costs incurred by Landlord in the making of any modifications,
alterations or improvements required by any governmental authority as set forth
in Article 6, which are so amortized during the Lease Term, and
(iii) such other costs, and the amortizing portion of all capital
expenditures, as may be paid or incurred with respect to operating,
maintaining, and preserving the Property, such as repairing and resurfacing
paved areas, repairing and replacing structural parts of the Property, and
repairing and replacing, when necessary, electrical, plumbing, heating,
ventilating and air conditioning systems serving the Property.

(d)   Building Maintenance Costs. The term “Building Maintenance Costs”
shall mean Tenant’s Building Proportionate Share of the amortizing portion of
all capital expenditures allocable to the Building and all other costs as may
be incurred with respect to operating, maintaining and preserving the Building,
including, without limitation, repair and resurfacing the exterior surfaces of
the Building (including costs), and repairing and replacing, when necessary, electrical,
plumbing, heating, ventilating and air conditioning systems serving the
Building.

(e)   Property Operating Expenses. The term “Property Operating Expenses”
shall mean and include all Real Property Taxes, plus all Landlord’s Insurance
Costs, plus all Property Maintenance Costs and Building Maintenance Costs.  The term “Property Operating Expense” shall
not include:  (i) interest and
principal payments on mortgages or any other debt costs, or rental payments on
any ground lease of the Property; (ii) real estate brokers’ leasing
commissions; (iii) legal fees, space planner fees and advertising expenses
incurred with regard to leasing the Building or Property or portions thereof;
(iv) any cost or expenditure for which Landlord may be reimbursed by others
(e.g., insurance proceeds, warranties or tort claims); (v) the cost of any
service furnished to any tenant of the Property which Landlord does not make
available to Tenant; (vi) expense reserves; (vii) franchise or income
taxes imposed upon Landlord; (viii) legal and auditing fees which are for
the benefit of Landlord, such as collecting delinquent rents, preparing tax
returns and other financial statements; and (ix) fines, penalties and
interest; provided, however, that excluding any such items from the term
“Property Operating Expense” shall not in any way limit Tenant’s obligations
for such items to the extent such obligations are expressly set forth elsewhere
in this Lease.

(f)    Law. The term “Law” shall mean any judicial decisions and
any statute, constitution, ordinance, resolution, regulation, rule,
administrative order, or other requirements of any municipal, county, state,
federal, or other governmental agency or authority having jurisdiction over the
parties to this Lease, the Leased Premises, the Building or the Property, or
any of them, in effect either at the Effective Date of this Lease or at any
time during the Lease Term, including, without limitation, any regulation,
order, or policy of any quasi-official entity or body (e.g. a board of fire
examiners or a public utility or special district).

(g)   Lender. The term “Lender” shall mean the holder of any
promissory note or other evidence of indebtedness secured by the Property or
any portion thereof.

(h)   Private Restrictions. The term “Private Restrictions” shall
mean (as they may exist from time to time) any and all covenants, conditions
and restrictions, private agreements, easements, and any other recorded
documents or instruments affecting the use of the Property, the Building, the
Leased Premises, or the Outside Areas.

(i)    Rent. The term “Rent” shall mean collectively Base Monthly
Rent and all Additional Rent.

13.13      General
Waivers. 
One party’s consent to or approval of any act by the other party
requiring the first party’s consent or approval shall not be deemed to waive or
render unnecessary the first party’s consent to or approval of any subsequent
similar act by the other party. No waiver of any provision hereof, or any
waiver of any breach of any provision hereof, shall be effective unless in
writing and signed by the waiving party. The receipt by Landlord of any rent or
payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach. No waiver of any provision of
this Lease shall be deemed a continuing waiver unless such waiver specifically
states so in writing and is signed by both Landlord and Tenant. No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Lease shall impair such right or
remedy or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by either party of any breach of any provision of this
Lease shall not be deemed to be a waiver of any subsequent breach of the same
or any other provisions herein contained.

-30-

 

13.14      Confidentiality. 
Landlord and Tenant each hereby agrees to maintain the confidentiality
of the terms and conditions of this Lease and not to disclose such terms and
conditions to anyone other than to its (or its affiliates’) officers,
employees, advisors, agents, attorneys and lenders or as required by law, rule
or regulation.

13.15      Miscellaneous.  Should any provisions of this
Lease prove to be invalid or illegal, such invalidity or illegality shall in no
way affect, impair or invalidate any other provisions hereof, and such
remaining provisions shall remain in full force and effect. Time is of the
essence with respect to the performance of every provision of this Lease in
which time of performance is a factor. Any copy of this Lease which is executed
by the parties shall be deemed an original for all purposes. This Lease shall,
subject to the provisions regarding assignment, apply to and bind the
respective heirs, successors, executors, administrators and assigns of Landlord
and Tenant. The term “party” shall mean Landlord or Tenant as the context
implies. If Tenant consists of more than one person or entity, then all members
of Tenant shall be jointly and severally liable hereunder. This Lease shall be
construed and enforced in accordance with the Laws of the State in which the
Leased Premises are located. The captions in this Lease are for convenience
only and shall not be construed in the construction or interpretation of any
provision hereof. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership, corporation, limited
liability company, joint venture, or other form of business entity, and the
singular includes the plural. The terms “must,” “shall,” “will,” and “agree”
are mandatory. The term “may” is permissive. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefor. Where Landlord’s consent is required hereunder, the consent of any
Lender shall also be required. Landlord and Tenant shall both be deemed to have
drafted this Lease, and the rule of construction that a document is to be
construed against the drafting party shall not be employed in the construction
or interpretation of this Lease. Where Tenant is obligated not to perform any
act or is not permitted to perform any act, Tenant is also obligated to
restrain any others reasonably within its control, including agents, invitees,
contractors, subcontractors and employees, from performing such act. Landlord
shall not become or be deemed a partner or a joint venturer with Tenant by
reason of any of the provisions of this Lease.

ARTICLE 14

AUTHORITY

BROKERS AND ENTIRE AGREEMENT

14.1        Authority.

(a)   If Tenant is a corporation, each individual executing
this Lease on behalf of such corporation represents and warrants that Tenant is
validly formed and duly authorized and existing, that Tenant is qualified to do
business in the State in which the Leased Premises are located, that Tenant has
the full right and legal authority to enter into this Lease, and that he or she
is duly authorized to execute and deliver this Lease on behalf of Tenant in
accordance with its terms. Tenant shall, within thirty days after execution of
this Lease, deliver to Landlord a certified copy of the resolution of its board
of directors authorizing or ratifying the execution of this Lease and if Tenant
fails to do so, Landlord at its sole election may elect to terminate this
Lease.

(b)   Landlord is a limited partnership, and each individual
executing this Lease on behalf of Landlord represents and warrants that
Landlord is validly formed and duly authorized and existing, that Landlord is
qualified to do business in the State in which the Leased Premises are located,
that Landlord has the full right and legal authority to enter into this Lease,
and that he or she is duly authorized to execute and deliver this Lease on
behalf of Landlord in accordance with its terms.

14.2        Brokerage
Commissions. Tenant represents, warrants and agrees
that, except for Tenant’s Broker,  it
has not had any dealings with any real estate broker(s), leasing agent(s),
finder(s) or salesmen with respect to the lease by it of the Leased Premises
pursuant to this Lease, and that, subject to the immediately following
sentence, it will indemnify, defend with competent counsel, and hold Landlord
harmless from any liability for the payment of any real estate brokerage
commissions, leasing commissions or finder’s fees claimed by any real estate
broker(s), leasing agent(s), finder(s), or salesmen to be earned or due and
payable by reason of Tenant’s agreement or promise (implied or otherwise) to
pay (or to have Landlord pay) such a commission or finder’s fee by reason of
its leasing 

-31-

 

the Leased Premises
pursuant to this Lease.  Landlord shall
pay to Tenant’s Broker a lease commission equal to three percent (3%) of the
total Base Monthly Rent payable over the Lease Term.

14.3        Entire
Agreement. 
This Lease and the Exhibits (as described in Article 1), which Exhibits
are by this reference incorporated herein, constitute the entire agreement
between the parties, and there are no other agreements, understandings or
representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein. No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.  Tenant and Landlord acknowledge and agree
that (i) as of the date of this Lease, tenant is in possession of the
Leased Premises pursuant to the terms of that certain Sublease (the
“Sublease”), dated as of October 15, 1999, by and between Mitsubishi
Electronics America, Inc., as sublandlord, and Tenant, as subtenant, and that
certain Lease (the “Master Lease”), dated as of July 15, 1984, by and between
Landlord, as landlord, and Mitsubishi Electronics America, Inc., as tenant, and
(ii) nothing in this Lease constitutes a waiver by Landlord or Tenant of
any of the rights, obligations, terms or conditions of the Sublease or the
Master Lease.

14.4        Landlord’s
Representations. 
Tenant acknowledges that neither Landlord nor any of its agents made any
representations or warranties respecting the Property, the Building or the
Leased Premises, upon which Tenant relied in entering into the Lease, which are
not expressly set forth in this Lease. Tenant further acknowledges that neither
Landlord nor any of its agents made any representations as to (i) whether
the Leased Premises may be used for Tenant’s intended use under existing Law,
or (ii) the suitability of the Leased Premises for the conduct of Tenant’s
business, or (iii) the exact square footage of the Leased Premises, and
that Tenant relies solely upon its own investigations with respect to such
matters. Tenant expressly waives any and all claims for damage by reason of any
statement, representation, warranty, promise or other agreement of Landlord or
Landlord’s agent(s), if any, not contained in this Lease or in any Exhibit
attached hereto.

ARTICLE 15

RIGHTS OF FIRST REFUSAL

15.1        Additional
Space.  In the event
that (a) Tenant requires space in addition to the Leased Premises and
(c) the 1050 East Arques building and/or the remaining portion of the
1070/1080 East Arques building are vacant or will become vacant within one
(1) year of the Lease Commencement Date, Tenant shall have the right to
lease such vacant space in its entirety as additional space at market value not
to exceed $1.25 per square foot per month and otherwise on the same terms of
this Lease, modified only as provided in this Paragraph 15.1 and in Paragraph
15.2 below.  Landlord will notify Tenant
promptly upon receiving notification of any vacancy or pending vacancy of such
other space.  Tenant may exercise the
right of first refusal to lease additional space pursuant to this Paragraph
15.1 by notifying Landlord at anytime during the first twelve (12) months
following the Lease Commencement Date; provided, however, that if, prior to
Tenant’s exercise of such right, Landlord enters into negotiations for the
lease of such other space with a party not currently a tenant within the
Sunnyvale Research Center, Landlord will notify Tenant of such negotiations and
Tenant will have ten (10) days following receipt of such notice to notify
Landlord of its intent to exercise its right of first refusal for that
particular other space.  In any event,
unless the parties otherwise agree, the Lease Commencement Date for any
additional space Leased by Tenant would be the date on which Landlord delivers
such additional space to Tenant, and the Lease Term for any additional space
leased by Tenant would be set to expire on the Lease Expiration Date.  If Tenant does not timely exercise the right
of first refusal under this Paragraph 15.1, then such right shall automatically
be void and of no further force or effect.

15.2        Lease
Modifications.  If Tenant
exercises its right of first refusal to lease additional space pursuant to
Paragraph 15.1, the following terms of this Lease shall be modified as
necessary to reflect the lease of such alternative or additional space:  Tenant’s Address for Notice; Building;
Leased Premises; Lease Commencement Date; Security Deposit (increased in
accordance with any rental increase); Base Monthly Rent and Tenant’s Project
Proportionate Share.

15.3        Rights
of Mitsubishi.  Notwithstanding
anything to the contrary in this Article 15, Tenant’s rights of first refusal
set forth in this Article 15 shall not apply with respect to any leasing
discussions or negotiations between Landlord and Mistubishi, which is the
current tenant in the other space, and shall be and remain subordinate to any 

-32-

 

such discussions and
negotiations, any lease agreement now or hereafter entered into between
Landlord and Mitsubishi and/or any existing rights or options that have been
granted to Mitsubishi.

ARTICLE 16

TELEPHONE SERVICE

Notwithstanding
any other provision of this Lease to the contrary:

(a)   So long as the entirety of the Leased Premises is
leased to Tenant:

(i)            Landlord shall have no responsibility for providing to
Tenant any telephone equipment, including wiring, within the Leased Premises or
for providing telephone service or connections from the utility to the Leased
Premises; and

(ii)           Landlord makes no warranty as to the quality, continuity
or availability of the telecommunications services in the Building, and Tenant
hereby waives any claim against Landlord for any actual or consequential
damages (including damages for loss of business) in the event Tenant’s
telecommunications services in any way are interrupted, damaged or rendered
less effective, except to the extent caused by the grossly negligent or willful
act or omission by Landlord, its agents or employees. Tenant accepts the
telephone equipment (including, without limitation, the INC, as defined below)
in its “AS-IS” condition, and Tenant shall be solely responsible for
contracting with a reliable third party vendor to assume responsibility for the
maintenance and repair thereof (which contract shall contain provisions
requiring such vendor to inspect the INC periodically (the frequency of such
inspections to be determined by such vendor based on its experience and
professional judgment), and requiring such vendor to meet local and federal
requirements for telecommunications material and workmanship). Landlord shall
not be liable to Tenant and Tenant waives all claims against Landlord
whatsoever, whether for personal injury, property damage, loss of use of the
Leased Premises, or otherwise, due to the interruption or failure of telephone
services to the Leased Premises. Tenant hereby holds Landlord harmless and
agrees to indemnify, protect and defend Landlord from and against any liability
for any damage, loss or expense due to any failure or interruption of telephone
service to the Leased Premises for any reason. Tenant agrees to obtain loss of
rental insurance adequate to cover any damage, loss or expense occasioned by
the interruption of telephone service.

(b)   At such time as the entirety of the Leased Premises is
no longer leased to Tenant, Landlord shall in its sole discretion have the
right, by written notice to Tenant, to elect to assume limited responsibility
for INC, as provided below, and upon such assumption of responsibility by
Landlord, this subparagraph (b) shall apply prospectively.

(i)            Landlord shall provide Tenant access to such quantity
of pairs in the Building intra-building network cable (“INC”) as is determined
to be available by Landlord in its reasonable discretion. Tenant’s access to
the INC shall be solely by arrangements made by Tenant, as Tenant may elect,
directly with Pacific Bell or Landlord (or such vendor as Landlord may
designate), and Tenant shall pay all reasonable charges as may be imposed in
connection therewith. Pacific Bell’s charges shall be deemed to be reasonable.
Subject to the foregoing, Landlord shall have no responsibility for providing
to Tenant any telephone equipment, including wiring, within the Leased Premises
or for providing telephone service or connections from the utility to the Leased
Premises, except as required by law.

(ii)           Tenant shall not alter, modify, add to or disturb any
telephone wiring in the Leased Premises or elsewhere in the Building without
the Landlord’s prior written consent. Tenant shall be liable to Landlord for
any damage to the telephone wiring in the Building due to the act, negligent or
otherwise, of Tenant or any employee, contractor or other agent of Tenant.
Tenant shall have no access to the telephone closets within the Building,
except in the manner and under procedures established by Landlord. Tenant shall
promptly notify Landlord of any actual or suspected failure of telephone
service to the Leased Premises.

(iii)         All costs incurred by Landlord for the installation,
maintenance, repair and replacement of telephone wiring in the Building shall
be a Property Maintenance Cost.

-33-

 

(iv)          Landlord makes no warranty as to the quality,
continuity or availability of the telecommunications services in the Building,
and Tenant hereby waives any claim against Landlord for any actual or
consequential damages (including damages for loss of business) in the event
Tenant’s telecommunications services in any way are interrupted, damaged or
rendered less effective, except to the extent caused by the grossly negligent
or willful act or omission by Landlord, its agents or employees. Tenant
acknowledges that Landlord meets its duty of care to Tenant with respect to the
Building INC by contracting with a reliable third party vendor to assume
responsibility for the maintenance and repair thereof (which contract shall
contain provisions requiring such vendor to inspect the INC periodically (the
frequency of such inspections to be determined by such vendor based on its
experience and professional judgment), and requiring such vendor to meet local
and federal requirements for telecommunications material and workmanship).
Subject to the foregoing, Landlord shall not be liable to Tenant and Tenant
waives all claims against Landlord whatsoever, whether for personal injury,
property damage, loss of use of the Leased Premises, or otherwise, due to the
interruption or failure of telephone services to the Leased Premises. Tenant
hereby holds Landlord harmless and agrees to indemnify, protect and defend
Landlord from and against any liability for any damage, loss or expense due to
any failure or interruption of telephone service to the Leased Premises for any
reason. Tenant agrees to obtain loss of rental insurance adequate to cover any
damage, loss or expense occasioned by the interruption of telephone service.

-34-

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
Effective Date of this Lease.

	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
  iSTAR SUNNYVALE
  PARTNERS, L.P., a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Erich Steiger

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICON IMAGE,
  INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert G. Gargus

  
	
   

  	
  Title:

  	
  CFO

  
				

 

-35-

 

EXHIBIT A

SITE
PLAN

 

 

 

 

-1-

 

EXHIBIT B

FORM OF
TENANT ESTOPPEL CERTIFICATE

 

TENANT ESTOPPEL
CERTIFICATE

 

	
  To:

  	
  iStar Sunnyvale Partners, L.P.

  	
   

  
	
   

  	
  c/o iStar Financial, Inc.

  	
   

  
	
   

  	
  One Embarcadero Center, Suite 3300

  	
   

  
	
   

  	
  San Francisco, CA 94111

  	
   

  
	
   

  	
  ATTN: Asset Management

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ATTN:

  	
   

  	
   

  

 

 

Re:          Lease, dated as of
_____________, 200_ between __________________, a ________________, as tenant
(the original named tenant under the Lease, together with such tenant’s
successors and assigns, being hereinafter referred to collectively as the
“Tenant”), and iStar Sunnyvale Partners, L.P., a Delaware limited partnership
(“Landlord”), covering certain premises known by the street address _____________________
in the City of Sunnyvale, County of Santa Clara, State of California (the
“Leased Premises”), as amended as noted on attached Schedule A (collectively,
the “Lease”)

 

Gentlemen:

 

                The undersigned
Tenant hereby represents, warrants and certifies to _______________________
(“________”) and Landlord, that:

 

                1.             The Lease has not been modified,
changed, altered or amended in any respect, either orally or in writing, except
as may be indicated on Schedule A attached hereto, and constitutes the entire agreement
between Tenant and Landlord affecting Tenant’s leasing of the Leased
Premises.  A true and correct copy of
the Lease is attached as Schedule B. 
The Lease is in full force and effect and is not subject to any
contingencies or conditions not set forth in the Lease.

 

                2.             The term of the Lease commenced on
______________ ___, ____ and will expire on ______________ ___, _____; the
Tenant has no option to renew the Lease Term.

 

                3.             The monthly base rent payable under
the Lease as of the current month is $_________.  Tenant has paid all fixed and additional rent and other sums
which are due and payable under the Lease through the date hereof, and Tenant
has not made and will not make any prepayments of fixed rent (except first
month’s rent) for more than one month in advance.  To Tenant’s best knowledge, there are no presently unexpired
rental concessions or abatements due under the Lease except as set forth on
Schedule A attached hereto.  To Tenant’s
best knowledge, Tenant has no credits, offsets, abatements, defenses,
counterclaims or deductions against any rental or other payments due under the
Lease or with respect to its performance of the other terms and conditions of
the Lease, and has asserted no claims against Landlord.

 

                4.             Tenant has paid to Landlord a
security deposit in the amount of $__________. 
Landlord is the beneficiary under a letter of Credit in the amount of
$__________ required by the Lease as additional security.  Tenant has not made any other payments to
Landlord as a security deposit, advance or prepaid rent (except first month’s
rent).

 

                5.             Landlord has completed, and, if
required under the Lease, paid for, any and all tenant work 

 

 

-1-

 

 

required under the Lease and Tenant has accepted the Leased
Premises.  Tenant is not entitled to any
further payment or credit for tenant work.

 

                6.             To Tenant’s current actual
knowledge, Landlord is not in default in the performance of any of the terms of
the Lease, nor is there now any fact or condition which, with notice or lapse
of time or both, will become such a default. 
Tenant has not delivered to Landlord any notice of default with respect
to the Landlord’s obligations under the Lease.

 

                7.             Tenant is in actual possession of
the entire Leased Premises and, to Tenant’s current actual knowledge, is not in
any respect in default under any of the terms and conditions of the Lease, nor
is there now any fact or condition which, with notice or lapse of time or both,
will become such a default.  Tenant has
not received from Landlord any notice of default with respect to the Tenant’s
obligations under the Lease.

 

                8.             Tenant has not assigned,
transferred, mortgaged or otherwise encumbered its interest under the Lease,
nor subleased any of the Leased Premises, nor permitted any person or entity to
use the Leased Premises, except as otherwise indicated on Schedule A annexed
hereto.

 

                9.             Except as expressly provided in the
Lease, Tenant:

 

(i)                                     does not have any right to renew or
extend the term of the lease,

 

(ii)                                  does not have any right to cancel or
surrender the Lease prior to the expiration of the term of the Lease,

 

(iii)                               does not have any option or rights of
first refusal or first offer to purchase or lease all or any part of the Leased
Premises or the real property of which the Leased Premises are a part,

 

(iv)                              does not have any right, title or
interest with respect to the Leased Premises other than as lessee under the
lease, and

 

(v)                                 does not have any right to relocate into
other property owned by Landlord or any of landlord’s affiliates.

 

                10.           There has not been filed by or, to
Tenant’s current actual knowledge, against Tenant a petition in bankruptcy,
voluntary or otherwise, any assignment for the benefit of creditors, any
petition seeking reorganization or arrangement under the bankruptcy laws of the
United States, or any state thereof, or any other action brought under said
bankruptcy laws with respect to Tenant.

 

                11.           If Tenant is required to provide
insurance coverage under the Lease, Tenant has not given or received written
notice that Tenant’s insurance coverage will be canceled or will not be
renewed.

 

                12.           Tenant is not aware of any material
defects or deficiencies in the systems, elements or components of the Leased
Premises.  Tenant has not received any
written notice, citation or other claim alleging any material violation of any
applicable building, zoning, land use, environmental, anti-pollution, health,
fire, safety, access accommodations for the physically handicapped,
subdivision, energy and resource conservation or similar laws, statutes, rules,
regulations or ordinances, or any covenants, conditions and restrictions
applicable to the Leased Premises.

 

                13.           To the current actual knowledge of
Tenant, any and all brokerage and leasing commissions relating to and/or
resulting from Tenant’s execution and delivery of the Lease and occupancy of
the Leased Premises have been paid in full.

 

                14.           The individual executing this Tenant
Estoppel Certificate on behalf of Tenant represents and warrants that he has
the power and the authority to execute this Tenant Estoppel Certificate on
behalf of Tenant.

 

 

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                15.           This Tenant Estoppel Certificate shall inure to the
benefit of ___________ and Landlord and their respective nominees, successors,
assigns, participants and designees and shall be binding upon Tenant and its
successors and assigns.

 

Dated this ____
day of  ______________, _______.

 

Tenant:  _______________________, a __________________

 

 

	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  

 

 

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