Document:

Exhibit 10.1

TERMINATION OF
PURCHASE AND SALE AGREEMENT

Effective November 3, 2006
the purchase and sale agreement dated August 7, 2006 between MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii
corporation, whose address is 120 Kane St., Kahului, Hawaii 96732 (“Seller”)
and DUNCAN MACNAUGHTON, whose address is
1001 Bishop Street, Suite 1050, Honolulu, HI  96813 (hereinafter referred to as “Buyer”)
relating to a sale of the a portion of Tax Map Key No. (2) 2-3-7:1,
consisting of approximately 89.203 acres, located in Kula, Maui, Hawaii, is
hereby terminated.

Buyer’s deposits shall be refunded to Buyer, and the
parties are hereby released from all obligations and liabilities arising out of
said purchase and sale agreement.

IN
WITNESS WHEREOF, the parties hereto have executed this Termination of Purchase
and Sale Agreement as of the date first set forth above.

	
  MAUI LAND & PINEAPPLE COMPANY, INC.

  
	
  By

  	
             /s/
  RANDALL H. ENDO

  	
   

  
	
   

  	
  Randall H. Endo

  
	
   

  	
  Its Vice President /
  Community Development

  
	
  By

  	
             /s/
  RYAN C. CHURCHILL

  	
   

  
	
   

  	
  Ryan C. Churchill

  
	
   

  	
  Its Vice President /
  Community Development

  
	
   

  	
  “Seller”

  	
   

  
	
  DUNCAN MACNAUTHTON

  	
   

  
	
  DUNCAN MACNAUGHTON

  	
   

  
	
   

  	
  “Buyer”Exhibit 10.2

Mr. Tom
Juliano

300 Inu Road

Kula, Hawaii 96790

Re:       Separation from Employment

Dear Tom:

We recognize and
appreciate the contributions you have made during your employment with Kapalua
Land Company (“KLC”) and we wish you well in your future endeavors. We have set
forth below the details of your separation from employment with KLC and from
your relationships with other entities affiliated with Maui Land and Pineapple
Company, collectively referred to as “MLP”.

1.     Resignation.   Your last day of active service with KLC
shall be October 23, 2006 (“separation date”). You agree that you will not
represent to the general public or to any individual that you are associated or
affiliated with KLC or any MLP entity after your separation date.

2.     Vacation and Leave Time.   You will be paid a lump sum
amount of thirty-one thousand seven hundred thirty dollars and sixteen cents ($31,730.16)
for your accrued vacation and four thousand eight hundred seven dollars and
sixty-nine cents ($4,807.69) compensation time through your separation date. This
amount will be paid to you within 30 days of your separation date. This payment
represents payment in full for all vacation and leave that you are entitled to.

3.     Performance of Duties.   Your duties, responsibilities
and authority with KLC will cease as October 13, 2006. You will use your
best efforts to coordinate any steps necessary to effect a smooth transition. You
agree that you will fully cooperate with KLC and MLP and their attorneys in the
defense of all claims that you have knowledge about even though your
cooperation may be necessary after your separation from KLC.

4.     Consideration for Termination.   You will be paid two
hundred fifty thousand dollars ($250,000.00) in four equal payments on the
following four dates, beginning November 30, 2006, February 28, 2007,
May 31, 2007, and August 31, 2007. This payment, in accord with
paragraph 8 of this Agreement, is in full satisfaction of all implied or
express contract claims, tort claims or statutory claims that you have against KLC
or any MLP affiliated entities arising out of your employment or resignation
from employment with KLC. The payments of the amounts in this paragraph are
expressly conditioned on your completion of all your duties, including the
completion of all records and reports.

5.     Return of Property.   On or before your separation date,
you will turn over to Holly Ka`akimaka, our keys and other KLC or MLP
materials, records, supplies or equipment you may have in your possession. You
agree that you will not retain any documents, materials, supplies or equipment
that you received from KLC or MLP without KLC’s written authorization.

6.     Continuation of Health Care Benefits.   KLC will
continue your present health care insurance coverage through your separation
date and for four month thereafter. KLC will pay for this insurance coverage
either through direct payment to the insurance company or by reimbursing you
for COBRA payments. Thereafter, you may be eligible to continue medical and/or
dental coverage under KLC’s medical and dental plans, at your own expense, in
accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985.

7.     Residence.   You agree to vacate your company owned
residence at 300 Inu Road on or before June 30, 2007. Your further agree
that you have no right to remain in this residence after that date. You agree
that you will pay KLC $200.00 per day for each day that you remain in the
residence after June 30, 2007.

8.     Release of Claims.   In consideration of the above
paragraphs, you hereby release KLC, MLP, and their directors, officers,
employees, and agents from any and all claims (including, but not limited to,
claims for personal injury, infliction of emotional distress, breach of express
or implied contract, tort or for 

violation of any federal,
state or local statute, regulation or ordinance, including Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the
Hawaii Civil Rights Act, and the Hawaii Employment Practices Law, H.R.S.
Chapter 378) you now have, known or unknown, arising out of your employment
with or separation from employment with KLC or your affiliation with any MLP
entities.

9.     Confidentiality.   You agree to refrain from disclosing
any confidential, commercial or financial information about KLC or any MLP
entities which you acquired while an employee of KLC. You further agree that
you will not disparage or make negative statements about KLC or MLP or any of
their directors, officers or employees. KLC agrees that if asked for a
reference by a prospective employer, that it will not make negative or
disparaging comments about your performance.

10.   Compliance.   KLC and MLP strive to comply with all
state and federal requirements. You agree that if you are aware of any state or
federal requirement that has not been complied with, that you have reported the
failure of compliance to Holly Ka`akimaka or that you will do so prior to your
separation date.

11.   Stock Options.   As of your separation date, you have
10,000 vested options in MLP stock. In accordance with the terms of your Stock
Option Agreement, you will be able to exercise the vested options through April 13,
2007.

12.   Waiver of Rights and Claims under the ADEA.   You are
advised that this Agreement specifically refers or may refer to rights and
claims arising under the Age Discrimination in Employment Act (“ADEA”), 29
U.S.C. § 621, et seq. Pursuant to 29 U.S.C. § 626(f)(1)(F)(i), you
have twenty-one (21) days in which to consider the terms of this Agreement and
to consult with your attorney. Pursuant to 29 C.F.R. § 1625.22(e)(6), and
as indicated by your special signature below, you hereby knowingly and voluntarily
waive the twenty-one (21) day pre-execution consideration period set forth in
29 U.S.C. § 626(f)(1)(F)(i). Therefore, pursuant to 29 U.S.C. § 626(f)(1)(G),
you will have seven (7) days after your execution of this Agreement to
revoke the ADEA portion of this Agreement. If you elect to so revoke the ADEA
portion of this Agreement, you shall contact KLC immediately. In the event you
revoke your agreement, you will not receive the payment specified in paragraph
4. Copies of the ADEA law and regulations may be accessed through the Internet
including but not limited to http://www4.law.cornell.edu/uscode/ and
http://www.access.gpo.gov/nara/cfr/cfr-retrieve.html#page1.

 2
 

Please indicate your
agreement to the foregoing by signing and dating this page where indicated
below.

	
  

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
  /s/ HOLLY KA`AKIMAKA

  
	
   

  	
   

  	
  Holly Ka`akimaka,

  
	
   

  	
   

  	
  Director, Industrial Relations

  
	
  /s/ THOMAS JULIANO

  	
   

  	
   

  
	
  Tom Juliano

  	
   

  	
   

  
	
  10-24-06

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

	
  Approved:

  	
  /s/ ROBERT
  I. WEBBER

  	
   

  
	
   

  	
  CFO

  
	
  Date:

  	
  November 3, 2006

  	
   

  
	
  PURSUANT TO 29 C.F.R. §
  1625.22(e)(6),

  I HEREBY KNOWINGLY AND VOLUNTARILY WAIVE THE TWENTY-ONE (21) DAY PRE-EXECUTION
  CONSIDERATION PERIOD SET FORTH IN 29 U.S.C. § 626(f)(1)(F)(i)

  	
   

  	
   

  
	
  /s/ THOMAS
  JULIANO 

  	
   

  	
  10-24-06

  	
   

  
	
  Tom Juliano

  	
   

  	
  Date

  	
   

  
							

 

 3Exhibit 10.1

Lease Agreement

(NNN)

Basic Lease Information

	
  Lease Date:

  	
   

  	
  November 6, 2006

  
	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  FSP Montague Business Center Corp.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address:

  	
   

  	
  c/o Franklin Street Properties

  
	
   

  	
   

  	
  401 Edgewater Place, Suite 200

  
	
   

  	
   

  	
  Wakefield, MA 01880

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  Techwell, Inc.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Tenant’s Address:

  	
   

  	
  408 East Plumeria Drive

  
	
   

  	
   

  	
  San Jose, California 95134-1912

  
	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
  Approximately 27,908 rentable square feet as shown
  on Exhibit A

  
	
   

  	
   

  	
   

  
	
  Premises Address:

  	
   

  	
  408 East Plumeria Drive, San Jose, California

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Building A:

  	
  Approximately 54,484 rentable square feet

  
	
   

  	
   

  	
  Lot:

  	
  APN

  	
   

  	
   

  
	
   

  	
   

  	
  Montague Business Center (“Park”):

  	
  Approximately 145,951 rentable square feet

  
	
   

  	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  January 1, 2007 (“Commencement Date”) through

  
	
   

  	
   

  	
  December 31, 2011 (“Expiration Date”)

  
	
   

  	
   

  	
   

  
	
  Base Rent (¶3):

  	
   

  	
  Twenty-Two Thousand Seven Hundred Forty-Five and
  02/100 Dollars ($22,745.02) per month

  
	
   

  	
   

  	
   

  
	
  Adjustments to Base Rent:

  	
   

  	
  On each anniversary of the Commencement Date, Base
  Rent shall increase by four percent (4%) over the Base Rent in
  effect for the immediately preceding year.

  
	
   

  	
   

  	
   

  
	
  Advance Rent (¶3):

  	
   

  	
  Twenty-Two Thousand Seven Hundred Forty-Five and
  02/100 Dollars ($22,745.02)

  
	
   

  	
   

  	
   

  
	
  Security Deposit (¶4):

  	
   

  	
  Twenty-Two Thousand Seven Hundred Forty-Five and
  02/100 Dollars ($22,745.02)

  
	
   

  	
   

  	
   

  

 

	
  Tenant’s Share of Operating Expenses (¶6.1):

  	
   

  	
  19.12% of the Park, 51.22% of the Building

  
	
  Tenant’s Share of Tax Expenses (¶6.2):

  	
   

  	
  19.12% of the Park, 51.22% of the Building

  
	
  Tenant’s Share of Common Area Utility Costs
  (¶7.2):

  	
   

  	
  19.12% of the Park, 51.22% of the Building

  
	
  Tenant’s Share of Utility Expenses (¶7.1):

  	
   

  	
  19.12% of the Park, 51.22% of the Building

  

 

	
  Permitted Uses (¶9):

  	
   

  	
  Engineering, warehousing, research and development,
  repair of electronic equipment and administrative offices ancillary thereto,
  but only to the extent permitted by the City of San Jose and all agencies and
  governmental authorities having jurisdiction thereof.

  	 

	
   

  	
   

  	
   

  	 

	
  Parking Spaces:

  	
   

  	
  19.12% of the non-exclusive and non-designated
  spaces located at the Project

  	 

	
   

  	
   

  	
   

  	 

	
  Broker (¶33):

  	
   

  	
  Wayne Mascia Associates for Tenant

  	 

	
   

  	
   

  	
  Freestone Properties for Landlord

  	 

	
   

  	
   

  	
   

  	 

	
  Exhibits:

  	
   

  	
  Exhibit A -

  	
   

  	
  Premises, Building, Lot and/or Park

  
	
   

  	
   

  	
  Exhibit B -

  	
   

  	
  Tenant Improvements

  
	
   

  	
   

  	
  Exhibit C -

  	
   

  	
  Rules and Regulations

  
	
   

  	
   

  	
  Exhibit D -

  	
   

  	
  Tenant Improvement Work by Landlord

  
	
   

  	
   

  	
  Exhibit E -

  	
   

  	
  Tenant’s Initial Hazardous Materials Disclosure
  Certificate

  
	
   

  	
   

  	
  Exhibit F -

  	
   

  	
  Intentionally Omitted

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Addenda:

  	
   

  	
  Addendum 1 -

  	
   

  	
  Right of First Offer

  
	
   

  	
   

  	
  Addendum 2 -

  	
   

  	
  Option to Extend

  
						

 

 i
 

 

Table of Contents

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Premises

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Occupancy

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Rent

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Security Deposit

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Condition of Premises; Tenant Improvements

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Additional Rent

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Utilities and Services

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Late Charges

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Use of Premises

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Alterations; and Surrender of Premises

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Repairs and Maintenance

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Insurance

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Limitation of Liability and Indemnity

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Assignment and Subleasing

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Subordination

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Right of Entry

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Estoppel Certificate

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Tenant’s Default

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Remedies for Tenant’s Default

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Holding Over

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Landlord’s Default

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Parking

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Transfer of Landlord’s Interest

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Waiver

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  Casualty Damage

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  Condemnation

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Environmental Matters/Hazardous Materials

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  Financial Statements

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  General Provisions

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
   

  	
  Signs

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
   

  	
  Mortgagee Protection

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
   

  	
  Warranties of Tenant

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
   

  	
  Brokerage Commission

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
   

  	
  Quiet Enjoyment

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.

  	
   

  	
  Satellite Dish

  	
   

  	
  16

  

 

 ii

 

NNN Tenant Improvements

Lease Agreement

The
Basic Lease Information and this Lease are, and shall be construed as, a single
instrument.

1.             Premises

Landlord
leases the Premises to Tenant upon the terms and conditions contained
herein.  Tenant shall have the right to
use, on a non-exclusive basis, parking areas and ancillary facilities located
within the Common Areas of the Project, subject to the terms of this
Lease.  For purposes of this Lease, (i)
as of the Lease Date, the rentable square footage area of each of the Premises,
the Building and the Park shall be deemed to be the number of rentable square
feet as set forth in the Basic Lease Information, (ii) the rentable square
footage of the Premises may include a proportionate share of certain areas used
in common by all occupants of the Building and/or the Park (for example
corridors, common restrooms, an electrical room or telephone room) and (iii)
the number of rentable square feet of any of the Building and the Park may
subsequently change after the Lease Date commensurate with any physical
modifications to any of the foregoing by Landlord, and Tenant’s Share shall
accordingly change.  The term “Project”
means and collectively refers to the Building, Common Areas, Lot and Park.

2.             Occupancy

Landlord
and Tenant hereby acknowledge that, pursuant to the terms of that certain
Agreement of Sublease dated as of August 1, 2004 (the “Sublease”), by and
between Tenant, as sublessee, and Novellus Systems, Inc., as sublessor, Tenant
currently occupies the Premises.  On the
Commencement Date, Landlord shall deliver the Premises to Tenant in accordance
with the terms of this Lease.  Tenant
covenants that, on the Commencement Date, the Sublease shall have terminated
and be of no further force or effect.

3.             Rent

On
the date that Tenant executes this Lease, Tenant shall deliver to Landlord the
original executed Lease, the Advance Rent (which shall be applied against Rent
payable for the first month(s) Tenant is required to pay Rent), the Security
Deposit, and all insurance certificates required to be delivered under Section
12 and Exhibit B of this Lease. 
Tenant agrees to pay Landlord without prior notice or demand, abatement,
offset, deduction or claim, in advance at Landlord’s Address, on the
Commencement Date and thereafter on the first (1st) day of each month
throughout the Term (i) Base Rent and (ii) as Additional Rent, Tenant’s Share
of Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility
Expenses.  The term “Rent” means the
aggregate of all these amounts.  If
Landlord permits Tenant to occupy the Premises without requiring Tenant to pay
rental payments for a period of time, the waiver of the requirement to pay
rental payments shall only apply to the waiver of Base Rent.  If any rental payment date (including the
Commencement Date) falls on a day of the month other than the first day of such
month or if any rental payment is for a period which is shorter than one (1)
month, then the rental for any such fractional month shall be a proportionate
amount of a full calendar month’s rental based on the proportion that the
number of days in such fractional month bears to the number of days in the
calendar month during which the fractional month occurs.  All other payments or adjustments required to
be made under the terms of this Lease that require proration on a time basis
shall be prorated in the same manner.  To
the extent not already paid as part of the Advance Rent any prorated Rent shall
be paid on the Commencement Date, and any prorated Rent for the final calendar
month shall be paid on the first day of the calendar month in which the date of
expiration or termination occurs.

4.             Security Deposit

Simultaneously
with Tenant’s execution and delivery of this Lease, Tenant shall deliver to
Landlord, as a Security Deposit for the faithful performance by Tenant of its
obligations under this Lease, the amount specified in the Basic Lease
Information.  If Tenant is in Default
hereunder beyond any applicable notice and cure periods, Landlord may, but
without obligation to do so, use all or any portion of the Security Deposit to
cure the Default or to compensate Landlord for all damages sustained by
Landlord in connection therewith.  Tenant
shall, immediately on demand, pay to Landlord a sum equal to the portion of the
Security Deposit so applied or used to replenish the amount of the Security
Deposit held to increase such deposit to the amount initially deposited with
Landlord.  At the expiration or earlier
termination of this Lease, within the time period(s) prescribed by California
Civil Code Section 1950.7 (or any successor law), Landlord shall return the
Security Deposit to Tenant, less such amounts as are reasonably necessary, as
determined by Landlord, to remedy Tenant’s Default(s) hereunder or to otherwise
restore the Premises to a clean and safe condition, reasonable wear and tear
excepted.  If the cost to restore the
Premises exceeds the amount of the Security Deposit, Tenant shall promptly
deliver to Landlord any and all of such excess sums.  Landlord shall not be required to segregate
the Security Deposit from other funds, and, unless required by law, interest
shall not be paid on the Security Deposit. 
Tenant shall not have any use of, or right of offset against, the Security
Deposit.

5.             Condition of Premises; Tenant Improvements

Tenant
agrees (i) to accept the Premises on the Commencement Date (and by taking
possession of the Premises, Tenant shall conclusively be deemed to have
accepted and inspected the Premises) as then being suitable for Tenant’s intended
use and in good operating order, condition and repair in its then existing “AS
IS” condition, except as otherwise set forth in Exhibit B hereto, (ii)
that neither Landlord nor any of Landlord’s agents, representatives or
employees has made any representations, express or implied, as to the
suitability, habitability, merchantability, fitness, quality or condition of
the Premises for the conduct of Tenant’s business or for any other purpose,
including without limitation, any storage incidental thereto, except as
expressly set forth herein, and (iii) the Premises, Building and Park fully
comply with any of Landlord’s covenants and obligations hereunder.  Landlord hereby represents and warrants to
Tenant that for the period commencing on the Commencement Date through and
including the date that is six (6) months after the Commencement Date, the
Building roof and the heating, ventilation and air conditioning systems shall
be in good working order.  The Tenant
Improvements (defined in Exhibit B) shall be installed in accordance
with the terms and provisions of Exhibit B.  Tenant hereby waives, to the extent permitted
by law, any claim or cause of action based upon any warranties, either express
or implied, as to habitability, merchantability, suitability, quality,
condition or fitness for any particular purpose with regard to the Premises,
the Building or the Park.  Tenant
represents and warrants to Landlord that Tenant has had an opportunity to
measure the actual dimensions of the Premises and agrees to the square footage
calculations set forth in this Lease for all purposes.

6.             Additional Rent

Landlord
and Tenant intend that this Lease be a “triple net lease.”  The costs and expenses described in this
Section 6 and all other sums, charges, costs and expenses specified in this
Lease other than Base Rent are to be paid by Tenant to Landlord as additional
rent (collectively, “Additional Rent”).

6.1          Operating Expenses:

6.1.1       Definition of Operating Expenses:  Tenant shall pay to Landlord Tenant’s Share of all Operating Expenses as
Additional Rent.  The term “Operating
Expenses” means the total amounts paid or payable by Landlord in connection
with the ownership, management, maintenance, repair and operation of the
Premises and Project. The term “Common Areas” means all areas and facilities
within the Project exclusive of the Premises and other portions of the Project
leasable exclusively to other tenants. 
The Common Areas include, but are not limited to, interior lobbies,
mezzanines, parking areas, access and perimeter roads, sidewalks, 

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rail
spurs (if any), and landscaped areas. 
Operating Expenses may include, but are not limited to, Landlord’s cost
of: (i) repairs to, and maintenance of, the roof (excluding structural portions
thereof) and roof membrane, and the non-structural elements of the perimeter
exterior walls of the Building; (ii) maintaining the Common Areas of the
Project; (iii) annual insurance premium(s) for any and all insurance Landlord
elects to obtain, including without limitation, “all risk” or “special purpose”
coverage, earthquake and flood for the Project, rental value insurance, and
subject to Section 25 below, any deductible; (iv) (a) modifications,
alterations and/or  improvements to any
portion of the Project occasioned by any rules, laws or regulations effective
subsequent to the Lease Date; (b) reasonably necessary replacements to any
portion of the Project after the Commencement Date; and (c) alterations or
improvements to the Project that are intended to reduce operating costs or
improve life/safety conditions, all of the foregoing as reasonably determined
by Landlord; provided, if such costs are of a capital nature, then such
costs or allocable portions thereof shall be amortized on a straight-line basis
over the estimated useful life of the capital item or fifteen (15) years
whichever is shorter, as reasonably determined by Landlord, together with
reasonable interest on the unamortized balance; (v) the management and
administration of the Project, including, without limitation, a property management
fee no greater than three percent (3%) of the Rent due hereunder, accounting,
auditing, billing, postage, and legal and accounting costs and all fees,
licenses and permits related to the ownership, operation and management of the
Project; (vi) preventative maintenance and repair contracts including, but not
limited to, contracts for elevator systems (if any), heating, ventilation and
air conditioning systems and lifts for disabled persons; (vii) security and
fire protection services for any portion of the Project, if and to the extent,
in Landlord’s sole discretion, such services are provided; (viii) the creation
and modification of any licenses, easements or other similar undertakings with
respect to the Project; (ix) supplies, materials, equipment, rental equipment
and other similar items used in the operation and/or maintenance of the Project
and any reasonable reserves established for replacement or repair of any Common
Area improvements or equipment; (x) any and all levies, charges, fees and/or assessments
payable to any applicable owner’s association or similar body; (xi) any barrier
removal work or other required improvements, alterations or work to any portion
of the Project generally required under the ADA (defined below) (the “ADA Work”);
provided, if such ADA Work is required under the ADA due to Tenant’s use
of the Premises or any Alteration (defined below) made to the Premises by or on
behalf of Tenant, then the cost of such ADA Work shall be borne solely by
Tenant and shall not be included as part of the Operating Expenses; and (xii)
the repairs and maintenance items set forth in Section 11.2 below.  Landlord shall have the right, from time to
time, to equitably allocate and prorate some or all of the Operating Expenses
among different tenants and/or different buildings of the Project and/or on a
building by building basis (the “Cost Pools”). 
In such event, Tenant’s Share shall be commensurately revised to reflect
any such increases or decreases.

6.1.2       Operating Expense
Exclusions:  The term “Operating Expenses” shall not
include:  (i) costs (including permit,
license, and inspection fees) incurred in renovating, improving or decorating
vacant space or space for other tenants within the Project; (ii) costs incurred
because Landlord or another tenant actually violated the terms and conditions
of any lease within the Project; (iii) legal and auditing fees (other than
those fees reasonably incurred in connection with the maintenance and operation
of any portion the Project), leasing commissions, advertising expenses, and
other costs incurred in connection with the original leasing of the Project or
future re-leasing of any portion of the Project; (iv) depreciation of the
Building or any other improvements situated within the Project; (v) any items
for which Landlord is actually reimbursed; (vi) costs of repairs or other work
necessitated by casualty (excluding any deductibles) and/or costs of repair or
other work necessitated by the exercise of the right of eminent domain to the
extent insurance proceeds or a condemnation award, as applicable, is actually
received by Landlord for such purposes; provided, such costs of repairs
or other work shall be paid by the parties in accordance with the provisions of
Sections 25 and 26, below; (vii) other than any interest charges for capital
improvements or alterations referred to in Section 6.1.1(iv) hereinabove, any
interest or payments on any financing for the Building or the Project, interest
and penalties incurred as a result of Landlord’s late payment of any invoice
(provided that Tenant pays Tenant’s Share of Operating Expenses and Tax
Expenses to Landlord when due as set forth herein), and any bad debt loss, rent
loss or reserves for same; (viii) costs associated with the investigation
and/or remediation of Hazardous Materials (hereafter defined) present in, on or
about any portion of the Project, unless such costs and expenses are the
responsibility of Tenant as provided in Section 27 hereof, in which event such
costs and expenses shall be paid solely by Tenant in accordance with Section 27
hereof; (ix) Landlord’s cost for the repairs and maintenance items set forth in
Section 11.3; (x) overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for goods and/or services in the Project
to the extent the same exceeds the costs of such by unaffiliated third parties
on a competitive basis; or any costs included in Operating Expenses
representing an amount paid to any entity related to Landlord which is in
excess of the amount which would have been paid in the absence of such
relationship; (xi) any payments under a ground lease or master lease; (xii) any
ADA Work required under the ADA due to another tenant’s specific use of their
premises or any alterations made by Landlord or other tenants in other leasable
space at the Project (but not to any Common Area); (xiii) salaries of any
executive employees of Landlord; and (xiv) costs related to the initial Tenant
Improvement work to be performed by Landlord and set forth on Exhibit D
(but not the repair or replacement of any such improvements).

6.2          Tax Expenses:  Tenant shall pay to Landlord Tenant’s Share of all Tax Expenses
applicable to the Project.  Prior to
delinquency, Tenant shall pay any and all taxes and assessments levied upon
Tenant’s Property (defined below in Section 10) located or installed in or
about the Premises by, or on behalf of Tenant. 
To the extent any such taxes or assessments are not separately assessed
or billed to Tenant, then Tenant shall pay the amount thereof as invoiced by
Landlord.  Tenant shall also reimburse
and pay Landlord, as Additional Rent, within ten (10) days after demand
therefor, one hundred percent (100%) of (i) any increase in real property taxes
attributable to any and all Alterations (defined below in Section 10), Tenant
Improvements, fixtures, equipment or other improvements of any kind whatsoever
placed in, on or about the Premises for the benefit of, at the request of, or
by Tenant, and (ii) taxes and assessments levied or assessed upon or with
respect to the possession, operation, use or occupancy by Tenant of the
Premises or any other portion of the Project. 
“Tax Expenses” means, without limitation, any form of tax and assessment
(general, special, supplemental, ordinary or extraordinary), commercial rental
tax, payments under any improvement bond or bonds, license fees, license tax,
business license fee, rental tax, transaction tax or levy imposed by any
authority having the direct or indirect power of tax (including any
governmental, school, agricultural, lighting or other improvement district) as
against any legal or equitable interest of Landlord in the Premises or Project
or any other tax, fee, or excise, however described, including, but not limited
to, any tax imposed in substitution (partially or totally) of any tax
previously included within the definition of Tax Expenses.  “Tax Expenses” shall not include (a) any
franchise, estate, inheritance, net income, or excess profits tax imposed upon
Landlord, (b) any penalty or fee imposed solely as a result of Landlord’s
failure to pay Tax Expenses when due, and (c) any items included as Operating
Expenses.

6.3          Payment of Expenses: 
Landlord shall estimate Tenant’s Share of the Operating Expenses and Tax
Expenses for the calendar year in which the Lease commences.  Commencing on the Commencement Date,
one-twelfth (1/12th) of this estimated amount shall be paid by Tenant to
Landlord, as Additional Rent, and thereafter on the first (1st) day of each month
throughout the remaining months of such calendar year.  Thereafter, Landlord may estimate such
expenses for each calendar year during the Term of this Lease and Tenant shall
pay one-twelfth (1/12th) of such estimated amount as Additional Rent on the first
(1st) day of each month throughout the Term. 
Tenant’s obligation to pay Tenant’s Share of Operating Expenses and Tax
Expenses shall survive the expiration or earlier termination of this Lease.

6.4          Annual
Reconciliation:  By June 30th of each calendar year, Landlord
shall furnish Tenant with an accounting of actual and accrued Operating
Expenses and Tax Expenses for the immediately preceding calendar year (“Statement”);
provided, failure by Landlord to give such Statement by such date shall not
constitute a waiver by Landlord of its right to collect any underpayment by
Tenant at any time.  Within thirty (30)
days of Landlord’s delivery of such Statement, Tenant shall pay to Landlord the
amount of any underpayment.  Landlord
shall credit the amount of any overpayment by Tenant toward the next estimated
monthly installment(s) of Additional Rent falling due, or if the Term of the
Lease has expired, refund the amount of overpayment to Tenant as soon as
possible thereafter.  If the Term of the
Lease expires prior to the annual reconciliation of expenses Landlord shall
have the right to reasonably estimate Tenant’s Share of such expenses, and
deduct any underpayment from Tenant’s Security Deposit.  Failure by Landlord to accurately estimate
Tenant’s Share of such expenses or to otherwise perform such reconciliation
shall not constitute a waiver of 

 2
 

 

Landlord’s
right to collect any underpayment at any time during the Term or after the
expiration or earlier termination of this Lease.

6.5          Dispute; Audit:

6.5.1       Dispute:  If
there exists any dispute as to the calculation of Tenant’s Share of Operating
Expenses (a “Dispute”), neither
the events, errors, acts or omissions giving rise to the Dispute shall
constitute a breach or default by Landlord nor shall Landlord be liable to
Tenant, except as specifically provided below. 
If there is a Dispute, Tenant shall so notify Landlord in writing within
forty-five (45) days after receipt of the Statement.  Such notice shall specify the items in
Dispute.  Notwithstanding the existence
of a Dispute, Tenant shall timely pay the amount in dispute as and when
required under this Lease, provided such payment shall be without prejudice to
Tenant’s position.  Upon receipt of such
payment, Landlord shall thereafter provide Tenant with such supplementary
information regarding the items in Dispute as may be reasonably requested by
Tenant in an effort to resolve such Dispute; provided, however, that Landlord
shall not be required to provide any supplementary information to Tenant unless
all sums shown to be due by Tenant on the Statement are paid in full.  If Landlord and Tenant are unable to resolve
such Dispute within thirty (30) days after Landlord has provided such
supplementary information, such Dispute shall be referred to a mutually satisfactory
third party certified public accountant for final resolution, subject to the
audit rights of Tenant contained in Section 6.5.2.  The cost of such certified public accountant
shall be paid by the party found to be least accurate (in terms of dollars in
dispute).  If a Dispute is resolved in
favor of Tenant, Landlord shall, within thirty (30) days thereafter, refund any
overpayment to Tenant, together with interest from the time of such overpayment
at ten percent (10%) per annum.  The
determination of such certified public accountant shall be final and binding,
subject to the audit rights of Tenant contained in Section 6.5.2,
and final settlement shall be made within thirty (30) days after receipt of
such accountant’s decision.  If Tenant
fails to dispute the calculation of Tenant’s Share of Operating Expenses in
accordance with the procedures and within the time periods specified in this Section 6.5.1,
or request an audit of the Operating Expenses in accordance with the procedures
and within the time periods specified in Section 6.5.2, the
Statement shall be considered final and binding for the calendar year in
question.

6.5.2       Audit: 
Tenant, at Tenant’s expense, shall have the right, no more frequently
than once per calendar year, following thirty (30) days’ prior written notice
(such written notice to be given within thirty (30) days following Tenant’s
receipt of Landlord’s Statement delivered in accordance with Section 6.4)
to Landlord, to audit Landlord’s books and records relating to Operating
Expenses for the immediately preceding calendar year only; provided that such
audit must be concluded within sixty (60) days after Tenant’s receipt of
Landlord’s Statement for the year to which such audit relates; and provided
further that the conduct of such audit must not unreasonably interfere with the
conduct of Landlord’s business.  Without
limitation upon the foregoing, Tenant’s right to audit Landlord’s books and
records shall be subject to the following conditions:  (i) such audit shall be conducted during
normal business hours and at the location where Landlord maintains its books
and records; (ii)  Tenant shall deliver
to Landlord a copy of the results of such audit within five (5) days after its
receipt by Tenant; (iii)  no audit shall
be permitted if Tenant in is Default under this Lease, including any failure by
Tenant to pay an amount in Dispute; (iv) 
provided such audit does not result in a credit or refund for overpaid
Operating Expenses Tenant shall reimburse Landlord within ten (10) days following
written demand for the cost of all copies requested by Tenant’s auditor;
(v)  such audit must be conducted by an
independent, nationally-recognized accounting firm or a local accounting firm
reasonably acceptable to Landlord that is not being compensated by Tenant on a
contingency fee basis and which has agreed with Landlord in writing to keep the
results of such audit confidential on terms and conditions acceptable to
Landlord; (vi)  no subtenant shall have
the right to audit; (vii)  if, for any
calendar year, an assignee of Tenant (as permitted by this Lease) has audited
or given notice of an audit, Tenant will be prohibited from auditing such
calendar year, unless in the case of an audit having been noticed but not yet
performed by such assignee, the assignee withdraws its audit notice, and,
similarly, if Tenant has audited such calendar year or given such notice, the
foregoing restrictions of this Section 6.5.2 (vii) will apply to the
assignee’s right to audit; and (viii) 
any assignee’s audit right will be limited to the period after the effective
date of the assignment.

6.5.3       Adjustment:  Unless
Landlord in good faith disputes the results of such audit, an appropriate
adjustment shall be made between Landlord and Tenant to reflect any overpayment
or underpayment of Tenant’s Share of Operating Expenses within thirty (30) days
after delivery of such audit to Landlord. 
In the event of an overpayment by Tenant, within thirty (30) days
following the delivery of such audit, Landlord shall, if a Default exists
hereunder, make a cash payment to Tenant in the amount of such overpayment, or,
if a Default exists hereunder, credit such overpayment against delinquent Rent
and make a cash payment to Tenant for the balance.  In the event Landlord in good faith disputes
the results of any such audit, the parties shall in good faith attempt to
resolve any disputed items.  If Landlord
and Tenant are able to resolve such dispute, final settlement shall be made
within thirty (30) days after resolution of the dispute.  If the parties are unable to resolve any such
dispute, any sum on which there is no longer dispute shall be paid and any
remaining disputed items shall be referred to a mutually satisfactory third
party certified public accountant for final resolution.  The cost of such certified public accountant
shall be paid by the party found to be least accurate (in terms of dollars in
dispute).  The determination of such
certified public accountant shall be final and binding and final settlement
shall be made within thirty (30) days after receipt of such accountant’s
decision.

7.             Utilities and Services

Tenant
shall pay the cost of all (i) water, sewer use, sewer discharge fees and sewer
connection fees, gas, electricity, telephone, telecommunications, cabling and
other utilities billed or metered separately to the Premises and (ii) refuse
pickup and janitorial service to the Premises.

7.1          Utility
Expenses:  Tenant shall pay to
Landlord Tenant’s Share of any utility fees, use charges, or similar services
provided to any portion of the Project that are not billed or metered
separately to Tenant or another
tenant (collectively, “Utility Expenses”). 
If Landlord reasonably determines that Tenant’s Share of Utility
Expenses is not commensurate with Tenant’s use of such services, Tenant shall
pay to Landlord the amount which is attributable to Tenant’s use of the
utilities or similar services, as reasonably estimated and determined by
Landlord, based upon factors such as size of the Premises and intensity of use
of such utilities by Tenant such that Tenant shall pay the portion of such
charges reasonably consistent with Tenant’s use of such utilities and similar
services.  Tenant shall also pay Tenant’s
Share of any assessments, charges and fees included within any tax bill for the
Lot on which the Premises are situated, including without limitation,
entitlement fees, allocation unit fees and sewer use fees.

7.2          Common Area Utility
Costs:  Tenant shall pay to Landlord Tenant’s Share of
any Common Area utility fees, charges and expenses (collectively, “Common Area
Utility Costs”).  Tenant shall pay to
Landlord, as Additional Rent, one-twelfth (1/12th)
of the estimated annual amount of Tenant’s Share of the Common Area Utility
Costs on the Commencement Date and thereafter on the first (1st) day of each month throughout the Term. 
Any reconciliation thereof shall be substantially in the same manner as
set forth in Section 6.4 above.

7.3          Miscellaneous:  Tenant
acknowledges that the Premises may become subject to the rationing of utility
services or restrictions on utility use as required by a public utility
company, governmental agency or other similar entity having jurisdiction
thereof.  Tenant agrees that its tenancy
and occupancy hereunder shall be subject to such rationing restrictions as may
be imposed upon Landlord, Tenant, the Premises, or other portions of the
Project, and Tenant shall in no event be excused or relieved from any covenant
or obligation to be kept or performed by Tenant by reason of any such rationing
or restrictions.

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8.             Late Charges

The
sums and charges set forth in this Section 8 shall be “Additional Rent”.  Tenant acknowledges that late payment (the
second (2nd) day of each month or any time thereafter) of Rent and all other
sums due hereunder, will cause Landlord to incur costs not contemplated by this
Lease.  Such costs may include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any note secured by any encumbrance against
the Premises, and late charges and penalties due to the late payment of real
property taxes on the Premises. 
Therefore, if any installment of Rent or any other sum payable by Tenant
is not received by Landlord when due, Tenant shall promptly pay to Landlord a
late charge, as liquidated damages, in an amount equal to ten percent (10%) of
such delinquent amount plus interest thereon at ten percent (10%) per
annum for every month or portion thereof that such sums remain unpaid.  Notwithstanding the foregoing, Landlord
waives the late charge for the first two (2) instances during the Term in which
Tenant fails to timely pay Rent.  If
Tenant delivers to Landlord two (2) checks for which there are not sufficient
funds, Landlord may require Tenant to replace such check with a cashier’s check
for the amount of such check and all other charges payable hereunder.  The parties agree that this late charge and
the other charges referenced above represent a fair and reasonable estimate of
the costs that Landlord will incur by reason of such late payment by Tenant,
excluding attorneys’ fees and costs. 
Acceptance of any late charge or other charges shall not constitute a
waiver by Landlord of Tenant’s Default with respect to the delinquent amount,
nor prevent Landlord from exercising any of the other rights and remedies
available to Landlord for any other Default of Tenant under this Lease.

9.             Use of Premises

9.1          Compliance with Laws, Recorded Matters, and Rules and
Regulations:  The Premises shall be used solely for the
permitted uses specified in the Basic Lease Information and for no other uses
without Landlord’s prior written consent. 
Landlord’s consent shall not be unreasonably withheld or delayed so long
as the proposed change in use (i) does not involve the use of Hazardous
Materials other than as expressly permitted under the provisions of Section 27
below, (ii) does not require any additional parking spaces, and (iii) is
compatible and consistent with the other uses then being made in the Project,
as reasonably determined by Landlord. 
The use of the Premises by Tenant and its employees, representatives,
agents, invitees, licensees, subtenants, customers or contractors
(collectively, “Tenant’s Representatives”) shall be subject to, and at all
times in compliance with, (a) any and all applicable laws, rules, codes,
ordinances, statutes, orders and regulations as same exist from time to time
throughout the Term (collectively, the “Laws”), including without limitation,
the requirements of the Americans with Disabilities Act, a federal law codified
at 42 U.S.C. 12101 et seq., including, but not limited to Title III thereof,
all regulations and guidelines related thereto and all requirements of Title 24
of the State of California (collectively, the “ADA”), (b) any and all
instruments, licenses, restrictions, easements or similar instruments,
conveyances or encumbrances which are at any time required to be made by or
given by Landlord relating to the initial development of the Project and/or the
construction, from time to time, of any additional improvements in the Project,
including without limitation, any Tenant Improvements (collectively, “Development
Documents”), (c) any and all documents, easements, covenants, conditions and
restrictions, and similar instruments, together with any and all amendments and
supplements thereto made, from time to time, each of which has been or
hereafter is recorded in any official or public records with respect to the
Premises or any other portion of the Project (collectively, “Recorded Matters”),
and (d) any and all rules and regulations set forth in Exhibit C hereto,
any other reasonable rules and regulations now or hereafter promulgated by
Landlord, and any rules, restrictions and/or regulations imposed by any
applicable owners association or similar entity (collectively, “Rules and
Regulations”).  Landlord reserves to
itself the right, from time to time, to grant, without the consent of Tenant,
such easements, rights and dedications that Landlord deems reasonably
necessary, and to cause the recordation of parcel or subdivision maps and/or
restrictions, so long as such easements, rights, dedications, maps and
restrictions, as applicable, do not materially and adversely interfere with
Tenant’s operations in the Premises. 
Tenant agrees to sign promptly any documents reasonably requested by
Landlord to effectuate any such easements, rights, dedications, maps or
restrictions.  Tenant agrees to, and does
hereby, assume full and complete responsibility (x) to ensure that the
Premises, including without limitation, the Tenant Improvements, are in
compliance with all applicable Laws throughout the Term and (y) subject to Exhibit
B, for the payment of all costs, fees and expenses associated with any
modifications, improvements or other Alterations to the Premises and/or any
other portion of the Project occasioned by the enactment of, or changes to, any
Laws arising from Tenant’s particular use of the Premises or Alterations or
other improvements made to the Premises regardless of when such Laws became
effective.  Tenant shall have no right to
initiate, submit an application for, or otherwise request, any land use
approvals or entitlements with respect to the Premises or any other portion of
the Project.

9.2          Prohibition on Use: 
Tenant shall not use the Premises or permit anything to be done in or
about the Premises nor keep or bring anything therein which will increase the
existing rate of or affect any policy of insurance upon the Building or any of
its contents, or cause a cancellation of any insurance policy.  No auctions may be conducted in, on or about
any portion of the Premises or the Project without Landlord’s prior written
consent thereto.  Tenant shall not do or
permit anything to be done in or about the Premises which will obstruct or
interfere with the rights of Landlord or other tenants or occupants of any
portion of the Project.  The Premises
shall not be used for any unlawful purpose. 
Tenant shall not cause, maintain or permit any private or public
nuisance in, on or about any portion of the Premises or the Project, including,
but not limited to, any offensive odors, noises, fumes or vibrations.  Tenant shall not damage or deface or
otherwise commit or suffer to be committed any waste in, upon or about the
Premises or any other portion of the Project. 
Tenant shall not place or store, nor permit any other person or entity
to place or store, any property, equipment, materials, supplies or personal
property outside of the Premises.  With
the exception of any service animals assisting the disabled, Tenant shall not permit
any animals, including, but not limited to, any household pets, to be brought
or kept in or about the Premises. 
Subject to Section 35 below, Tenant shall neither install any radio or
television antenna, satellite dish, microwave or other device on the roof or
exterior walls of the Building or any other portion of the Project nor make any
penetrations of or to the roof of the Building without Landlord’s prior written
consent, which consent may be withheld in Landlord’s sole discretion.  Tenant shall not interfere with radio,
telecommunication, or television broadcasting or reception from or in the
Building or elsewhere.  Tenant shall
place no loads upon the floors, walls, or ceilings in excess of the maximum
designed load permitted by the applicable Uniform Building Code or which may
damage the Building or outside areas within the Project.

10.          Alterations; and Surrender of Premises

10.1        Alterations: Tenant shall be permitted to make, at its
sole cost and expense, non-structural alterations and additions to the interior
of the Premises without obtaining Landlord’s prior written consent, provided
said alterations are not part of Tenant’s Wi-Fi Network (defined hereinbelow),
do not affect the Building systems and the cost of such alterations does not
exceed Two Thousand Dollars ($2,000.00) each job and Ten Thousand Dollars
($10,000.00) cumulatively each calendar year (the “Permitted Improvements”).  Tenant, however, shall first notify Landlord
of such Permitted Improvements so that Landlord may post a Notice of
Non-Responsibility on the Premises.  Except for the Permitted Improvements, Tenant
shall neither install any signs, fixtures or improvements, nor make or permit
any other alterations or additions (individually, an “Alteration”, and
collectively, “Alterations”) to the Premises without the prior written consent
of Landlord, which consent shall not be unreasonably withheld so long as any
such Alteration does not affect the Building systems, structural integrity or
structural components of the Premises or Building.  If any such Alteration is expressly permitted
by Landlord, Tenant shall deliver at least ten (10) days prior written notice
to Landlord, from the date Tenant commences construction, sufficient to enable
Landlord to post and record a Notice of Non-Responsibility.  Tenant shall obtain all necessary permits or
other governmental approvals prior to commencing any work and deliver a copy of
same to Landlord.  All Alterations shall
be (i) at Tenant’s sole cost and expense in accordance with plans and
specifications which have been previously submitted to and approved in writing
by Landlord, and shall be installed by a licensed, insured (and bonded, at
Landlord’s option) contractor (reasonably approved by Landlord) in compliance
with all applicable Laws, Development Documents, Recorded Matters, and Rules
and Regulations and (ii) performed in a good and workmanlike manner and so as
not to obstruct access to any portion of the 

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Project
or any business of Landlord or any other tenant.  Landlord’s approval of any plans,
specifications or working drawings for Tenant’s Alterations shall neither
create nor impose any responsibility or liability on the part of Landlord for
their completeness, design sufficiency, or compliance with any Laws.  As Additional Rent, Tenant shall reimburse
Landlord, within ten (10) days after demand, for actual legal, engineering,
architectural, planning and other expenses incurred by Landlord in connection
with Tenant’s Alterations, plus Tenant shall pay to Landlord a fee equal to
five percent (5%) of the total cost of the Alterations.  If Tenant makes any Alterations, Tenant shall
carry “Builder’s All Risk” insurance, in an amount approved by Landlord and
such other insurance as Landlord may require. 
All such Alterations shall be insured by Tenant in accordance with
Section 12 of this Lease immediately upon completion.  Tenant shall keep the Premises and the Lot on
which the Premises are situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by or on behalf of
Tenant.  Tenant shall, prior to
commencing any Alterations, (a) cause its contractor(s) and/or major
subcontractor(s) to provide insurance as reasonably required by Landlord, and
(b) provide such assurances to Landlord, including without limitation, waivers
of lien, surety company performance bonds as Landlord shall require to assure
payment of the costs thereof to protect Landlord and the Project from and
against any mechanic’s, materialmen’s or other liens.

10.1.1     Wi-Fi Network:  Without
limiting the generality of the foregoing, in the event Tenant desires to
install wireless intranet, Internet and communications network (“Wi-Fi Network”)
in the Premises for the use by Tenant and its employees, then the same shall be
subject to the provisions of this Section 10.1.1 (in addition to the other
provisions of this Section 10).  In the
event Landlord consents to Tenant’s installation of such Wi-Fi Network, Tenant
shall, in accordance with Section 10.2 below, remove the Wi-Fi Network from the
Premises prior to the termination of the Lease. 
Tenant shall use the Wi-Fi Network so as not to cause any interference
to other tenants in the Building or to other tenants at the Park or with any
other tenant’s communication equipment, and not to damage the Building or Park
or interfere with the normal operation of the Building or Park and Tenant
hereby agrees to indemnify, defend and hold Landlord harmless from and against
any and all claims, costs, damages, expenses and liabilities (including
reasonable attorneys’ fees) arising out of Tenant’s failure to comply with the
provisions of this Section 10.1.1, except to the extent same is caused by
the gross negligence or willful misconduct of Landlord and which is not covered
by the insurance carried by Tenant under this Lease (or which would not be
covered by the insurance required to be carried by Tenant under this
Lease).  Should any interference occur,
Tenant shall take all necessary steps as soon as reasonably possible and no
later than three (3) calendar days following such occurrence to correct such
interference.  If such interference
continues after such three (3) day period, Tenant shall immediately cease
operating such Wi-Fi Network until such interference is corrected or remedied
to Landlord’s satisfaction.  Tenant
acknowledges that Landlord has granted and/or may grant telecommunication
rights to other tenants and occupants of the Building and to telecommunication
service providers and in no event shall Landlord be liable to Tenant for any
interference of the same with such Wi-Fi Network.  Landlord makes no representation that the
Wi-Fi Network will be able to receive or transmit communication signals without
interference or disturbance.  Tenant
shall (i) be solely responsible for any damage caused as a result of the Wi-Fi
Network, (ii) promptly pay any tax, license or permit fees charged pursuant to
any laws or regulations in connection with the installation, maintenance or use
of the Wi-Fi Network and comply with all precautions and safeguards recommended
by all governmental authorities, and (iii) pay for all necessary repairs,
replacements to or maintenance of the Wi-Fi Network.  Should Landlord be required to retain
professionals to research any interference issues that may arise and to confirm
Tenant’s compliance with the terms of this Section 10.1.1, Landlord shall
retain such professionals at commercially reasonable rates, and Tenant shall
reimburse Landlord within twenty (20) days following submission to Tenant of an
invoice from Landlord, which costs shall not exceed $1,000 per year.  This reimbursement obligation is independent
of any rights or remedies Landlord may have in the event of a Default by Tenant
under this Lease.

10.2        Surrender
of Premises:  At the expiration of the Term or earlier
termination of this Lease, Tenant shall surrender the Premises to Landlord (a)
in good condition and repair (damage by acts of God, casualty, and ordinary
wear and tear excepted), but with all interior walls cleaned, any carpets
cleaned, all floors cleaned and waxed, all non-working light bulbs and ballasts
replaced and all roll-up doors and plumbing fixtures in good condition and
working order, and (b) in accordance with Section 27 hereof.  The term “ordinary wear and tear” shall not
include any damage or deterioration that could have been prevented by Tenant’s
employment of ordinary prudence, care and diligence in the occupancy and use of
the Premises and the performance of all of its obligations under this
Lease.  Items not considered ordinary
wear and tear hereunder include the following for which Tenant shall bear the
obligation for repair and restoration: (i) excessively soiled, stained, worn or
marked surfaces or finishes; (ii) damage, including holes in building surfaces
(e.g., cabinets, doors, walls, ceilings and floors) caused by the installation
or removal of Tenant’s trade fixtures, furnishings, decorations, equipment,
alterations, utility installations, security systems, communication systems
(including cabling, wiring and conduits), displays and signs; (iii) damage to
any component, fixture, hardware, system or component part thereof within the
Premises, and any such damage to the Building caused by Tenant or its agents,
contractors or employees, to the extent not recovered by Landlord from
insurance proceeds.  On or before the
expiration or earlier termination of this Lease, Tenant shall remove at its
sole cost and expense (A) all of Tenant’s Property (defined below), (B) Tenant’s
signage from the Premises and other portions of the Project, and (C) any
Alterations; provided, except with respect to Cabling (the removal of which is
described below) Landlord may, by notice to Tenant given at the time that
Tenant requests Landlord’s consent to an Alteration, permit Tenant to leave
such Alteration in the Premises upon the expiration or earlier termination of
the Lease.  Tenant shall repair any
damage caused by all of such removal activities.  “Tenant’s Property” means all equipment,
trade fixtures, furnishings, all telephone, data, and other cabling and wiring
(including any cabling and wiring associated with the Wi-Fi Network, if any)
installed or caused to be installed by Tenant (including any cabling and
wiring, installed above the ceiling of the Premises or below the floor of the
Premises), inventories, goods and personal property of Tenant.  Any of Tenant’s Property not so removed by
Tenant as required herein shall be deemed abandoned and may be stored, removed,
and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims
against Landlord for any damages resulting from Landlord’s retention and
disposition of such property; provided, however, Tenant shall remain liable to
Landlord for all costs incurred in storing and disposing of such abandoned
property of Tenant. Landlord may elect to take responsibility to remove any such
wiring or cabling installed above the ceiling or beneath the floors of the
Premises, in which case Tenant shall pay Landlord for the actual cost incurred
by Landlord therefor, (together with a five percent (5%)
supervision/administration fee) within thirty (30) days after being billed for
the same.  Notwithstanding anything to
the contrary contained herein, Tenant shall prior to the expiration of this
Lease, at Tenant’s expense and in compliance with the National Electric Code
and other applicable Laws, remove all electronic, fiber, phone and data cabling
and related equipment that has been installed by or for the benefit of Tenant
in or around the Premises (collectively, the “Cabling”); provided, however,
Tenant shall not remove such Cabling if Tenant receives a written notice from
Landlord at least fifteen (15) days prior to the expiration of the Lease
authorizing such Cabling to remain in place, in which event the Cabling shall
be surrendered with the Premises upon the expiration or earlier termination of
this Lease.  All Alterations except those
which Landlord requires Tenant to remove shall remain in the Premises as the
property of Landlord.  If the Premises
are not surrendered at the expiration of the Term or earlier termination of
this Lease, and in accordance with this Section 10 and Section 27 below, Tenant
shall continue to be responsible for the payment of Rent (as the same may be
increased pursuant to Section 20 below) until the Premises are so surrendered
in accordance with said provisions.  Tenant
shall indemnify, defend and hold the Indemnitees (hereafter defined) harmless
from and against any and all Claims (defined below) (x) arising from any delay
by Tenant in so surrendering the Premises including, without limitation, any
Claims made against Landlord by any succeeding tenant or prospective tenant
founded on or resulting from such delay and (y) suffered by Landlord due to
lost opportunities to lease any portion of the Premises to any such succeeding
tenant or prospective tenant.

11.          Repairs and Maintenance

11.1        Tenant’s Repairs and
Maintenance Obligations:
Except for those portions of the Building to be maintained by Landlord, as
provided in Sections 11.2 and 11.3 below, Tenant shall, at its sole cost and
expense, keep and maintain all parts of the Premises and such portions of the
Building as are within the exclusive control of Tenant in good, clean and safe
condition and repair,

 5

 

promptly
making all necessary repairs and replacements, whether ordinary or
extraordinary, with materials and workmanship of the same character, kind and
quality as the original thereof, all of the foregoing in accordance with the
applicable provisions of Section 10 hereof, and to the reasonable satisfaction
of Landlord including, but not limited to, repairing any damage (and replacing
any property so damaged) caused by Tenant or any of Tenant’s Representatives,
or due to or associated with prolonged hours, non-office use, unusually heavy
people loads (defined as more than one person per two hundred (200) rentable
square feet), unusually heavy utility use, unusually heavy floor loads, or
other unusual occupancy factors, and restoring the Premises and other portions
of the Project to the condition existing prior to the occurrence of such
damage.  Without limiting any of the
foregoing, Tenant shall be solely responsible for promptly maintaining,
repairing and replacing the following, provided that such are located within
the Premises or serve the Premises (a) all mechanical systems and, commencing
on the date that is six (6) months after the Commencement Date, the heating,
ventilation and air conditioning systems (“HVAC”), (b) all plumbing work and
fixtures, (c) electrical wiring systems, fixtures and equipment exclusively
serving the Premises, (d) all interior lighting (including, without limitation,
light bulbs and/or ballasts) and exterior lighting exclusively serving the
Premises or adjacent to the Premises (which shall not include any parking lot
lighting), (e) all glass, windows, window frames, window casements, skylights,
interior and exterior doors, door frames and door closers, (f) all roll-up
doors, ramps and dock equipment, including without limitation, dock bumpers,
dock plates, dock seals, dock levelers and dock lights, (g) all tenant signage,
(h) lifts for disabled persons, (i) sprinkler systems, fire protection systems
and security systems, except to the extent maintained by Landlord, and (j) all
partitions, fixtures, equipment, interior painting, interior walls and floors,
and floor coverings of the Premises and every part thereof (including, without
limitation, any demising walls contiguous to any portion of the Premises).  Any such work shall be performed by licensed,
insured and bonded contractors and subcontractors reasonably approved by
Landlord.  Additionally, Tenant shall be
solely responsible for the performance of the regular removal of trash and
debris.  Tenant’s maintenance and repair
obligations pursuant to Section 11.1(a) above shall include the procurement and
maintenance of a heating, ventilation and air conditioning systems preventative
maintenance and repair contract(s); such contract(s) to provide for maintenance
on a quarterly basis; provided, such contracts shall not be required to be
maintained by Tenant for the first six (6) months of the Term.  Landlord reserves the right, but without the
obligation to do so, to procure and maintain the heating, ventilation and air
conditioning systems preventative maintenance and repair contract(s) and, if
Landlord so elects to procure and maintain any such contract(s), Tenant will
reimburse Landlord for the cost thereof in accordance with the provisions of
Section 6 above.  If Tenant procures and
maintains any of such contract(s), Tenant will promptly deliver to Landlord a
true and complete copy of each such contract and any and all renewals or
extensions thereof, and each service report or other summary received by Tenant
pursuant to or in connection with such contract(s).  Upon prior written notice to Landlord, Tenant
shall be permitted to access the roof of the Premises to the extent necessary
to service the HVAC pursuant to Tenant’s HVAC maintenance and repair contract.

11.2        Maintenance by Landlord: 
Subject to the provisions of Section 11.1, and further subject to Tenant’s
obligation under Section 6 to reimburse Landlord, in the form of Additional
Rent, for Tenant’s Share of the cost and expense of the following described
items, Landlord shall repair and maintain the following items:  fire protection services; the roof and roof
coverings (provided that Tenant installs no additional air conditioning or
other equipment on the roof that damages the roof coverings, in which event
Tenant shall pay all costs relating to the presence of such additional
equipment); the plumbing and mechanical systems serving the Building, excluding
the plumbing, mechanical and electrical systems exclusively serving the
Premises; any rail spur and rail crossing; exterior painting of the Building;
and the parking areas, pavement, landscaping, sprinkler systems, sidewalks,
driveways, curbs, and lighting systems in the Common Areas.  If Landlord elects to perform any repair or
restoration work required to be performed by Tenant, Tenant shall reimburse
Landlord upon demand for all costs and expenses incurred by Landlord in
connection therewith.  Tenant shall
promptly report, in writing, to Landlord any defective condition known to it
which Landlord is required to repair.

11.3        Landlord’s Repairs and
Maintenance Obligations:  Subject to the provisions of Sections 11.1,
25 and 26, and except for repairs rendered necessary by the intentional or
negligent acts or omissions of Tenant or any of Tenant’s Representatives,
Landlord shall, at Landlord’s sole cost and expense, keep in good repair the
structural portions of the roof, floors, foundations and exterior perimeter
walls of the Building (exclusive of glass and exterior doors).  Notwithstanding anything in Sections 6.1 or
11.1 to the contrary, for the period commencing on the Commencement Date and
ending on the date that is six (6) months after the Commencement Date, Landlord
shall, at its sole cost and expense, perform all maintenance and repairs to the
HVAC and the roof serving the Premises.

11.4        Tenant’s Failure to
Perform Repairs and Maintenance Obligations:  If
Tenant refuses or neglects to repair and maintain the Premises and the other
areas properly as required herein and to the reasonable satisfaction of
Landlord, (i) Landlord may, but without obligation to do so, at any time after
the expiration of any applicable notice and cure periods (except in the event
of an emergency for which no notice or cure period is required), make such
repairs or maintenance without Landlord having any liability to Tenant for any
loss or damage that may accrue to Tenant’s Property or to Tenant’s business by
reason thereof, except to the extent any damage is caused by the willful
misconduct or negligence of Landlord or its authorized agents and representatives
and (ii) Tenant shall pay to Landlord, as Additional Rent, Landlord’s costs and
expenses incurred therefor.  Tenant’s
obligations under this Section 11 shall survive the expiration of the Term or
earlier termination thereof.  Tenant
hereby waives any right to repair at the expense of Landlord under any
applicable Laws now or hereafter in effect.

12.          Insurance

12.1        Types of Insurance: 
Tenant shall maintain in full force and effect at all times during the
Term, at Tenant’s sole cost and expense, for the protection of Tenant and
Landlord, as their interests may appear, policies of insurance issued by
carriers reasonably acceptable to Landlord and its lender which afford the
following coverages: (i) worker’s compensation and employer’s liability, as required
by law; (ii) commercial general liability insurance (occurrence form) providing
coverage for bodily injury and property damage occurring in, on or about the
Premises arising out of Tenant’s and Tenant’s Representatives’ use or occupancy
of the Premises and such insurance shall (a) include coverage for contractual
liability, fire damage, premises, personal injury, completed operations and
products liability and with respect to completed operations and products, a
$1,000,000 aggregate, and (b) have a combined single limit of not less than
Five Million Dollars ($5,000,000) per occurrence and a Five Million Dollar
($5,000,000) aggregate limit (if Tenant has other locations which it owns or
leases, the policy shall include an endorsement); (iii) comprehensive
automobile liability insurance with a combined single limit of at least
$1,000,000 per occurrence for claims arising out of any company owned
automobiles, if any; (iv) “all risk” or “special purpose” property insurance,
including without limitation, sprinkler leakage, covering damage to or loss of
any of Tenant’s Property and the Tenant Improvements located in, on or about
the Premises, and in addition, coverage for business interruption of Tenant,
together with, if the property of any of Tenant’s invitees, vendors or
customers  is to be kept in the
Premises.  Such insurance shall be
written on a replacement cost basis (without deduction for depreciation) in an
amount equal to one hundred percent (100%) of the full replacement value of the
aggregate of the items referred to in this clause (iv); (v) employers liability
with limits of $1,000,000 each accident, $1,000,000 disease policy limit,
$1,000,000 disease-each employee; (vi) business interruption insurance
with limit of liability representing loss of at lease approximately two (2)
months of income; and (vii) such other insurance or higher limits of
liability as is then customarily required for similar types of buildings within
the general vicinity of the Project or as may be reasonably required by any of
Landlord’s lenders.

12.2        Insurance Policies: 
Insurance required to be maintained by Tenant shall be written by
companies (i) licensed to do business in the State of California, (ii)
domiciled in the United States of America, and (iii) having a “General
Policyholders Rating” of at least A-:VII (or such higher rating as may be
required by a lender having a lien on the Premises) as set forth in the most
current issue of “A.M. Best’s Rating Guides.” 
Any deductible amounts under any of the insurance policies required
hereunder shall not exceed One Hundred Thousand Dollars ($100,000).  Tenant shall deliver to Landlord certificates
of insurance and true and complete copies of any and all endorsements required
herein for all insurance required to be maintained by Tenant hereunder at the
time of execution of this Lease by Tenant. 
Tenant shall, at least fifteen (15) days prior to expiration of each
policy, furnish Landlord with certificates of 

 6
 

 

renewal
or “binders” thereof.  Each certificate
shall expressly provide that such policies shall not be cancelable or otherwise
subject to material modification except after thirty (30) days prior written
notice to the parties named as additional insureds as required in this Lease
(except for cancellation for nonpayment of premium, in which event cancellation
shall not take effect until at least ten (10) days’ notice has been given to
Landlord).  Tenant shall have the right
to provide insurance coverage which it is obligated to carry pursuant to the
terms of this Lease under a blanket insurance policy, provided such blanket
policy expressly affords coverage for the Premises and Landlord as required by
this Lease.

12.3        Additional Insureds and
Coverage:  Each of Landlord,
Landlord’s property management company or agent, and Landlord’s lender(s)
having a lien against the Premises or any other portion of the Project shall be
named as additional insureds or loss payees (as applicable) under all of the
policies required in Section 12.1(ii) and, with respect to the Tenant Improvements,
in Section 12.1(iv) hereof.  All such
policies shall provide for severability of interest.  All insurance to be maintained by Tenant
shall, except for workers’ compensation and employer’s liability insurance, be
primary, without right of contribution from insurance maintained by
Landlord.  Any umbrella/excess liability
policy (which shall be in “following form”) shall provide that if the
underlying aggregate is exhausted, the excess coverage will drop down as
primary insurance.  The limits of
insurance maintained by Tenant shall not limit Tenant’s liability under this
Lease.  It is the parties’ intention that
the insurance to be procured and maintained by Tenant as required herein shall
provide coverage for damage or injury arising from or related to Tenant’s
operations of its business and/or Tenant’s or Tenant’s Representatives’ use of
the Premises and any of the areas within the Project.  Notwithstanding anything to the contrary
contained herein, to the extent Landlord’s cost of maintaining insurance with
respect to the Building and/or any other buildings within the Project is
increased as a result of Tenant’s acts, omissions, Alterations, improvements,
use or occupancy of the Premises, Tenant shall pay one hundred percent (100%)
of, and for, each such increase as Additional Rent.

12.4        Failure of Tenant to
Purchase and Maintain Insurance: 
If Tenant fails to obtain and maintain the insurance required herein
throughout the Term, Landlord may, but without obligation to do so, purchase
the necessary insurance and pay the premiums therefor.  If Landlord so elects to purchase such
insurance, Tenant shall promptly pay to Landlord as Additional Rent, the amount
so paid by Landlord, upon Landlord’s demand therefor.  In addition, Landlord may recover from Tenant
and Tenant agrees to pay, as Additional Rent, any and all Claims which Landlord
may incur due to Tenant’s failure to obtain and maintain such insurance.

12.5        Landlord’s Insurance: 
During the Term hereof, Landlord shall, in a commercially reasonable
manner comparable to other comparable industrial buildings in the market where
the Building is located, keep in effect (i) commercial property insurance on
the Park, the Project and the Building, its fixtures and equipment, and rent
loss insurance for a period and amount of not less than one (1) year of rent
(such commercial property insurance policy shall, at a minimum, cover the
perils insured under the ISO special causes of loss form which provides “all
risk” coverage, and include replacement cost coverage equal to eighty percent
(80%) of the replacement cost of the Building), and (ii) a policy or policies
of commercial general liability insurance insuring against liability arising
out of the risks of death, bodily injury, property damage and personal injury liability
with respect to the Park, the Project and the Building.   All costs of Landlord’s insurance maintained
hereunder shall be included in Operating Expenses.

12.6        Waiver of Subrogation:  Landlord and Tenant mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties’ property to the extent that such loss or damage is insured by
an insurance policy required to be in effect at the time of such loss or
damage.  Each party shall obtain any
special endorsements, if required by its insurer, whereby the insurer waives
its rights of subrogation against the other party.  This provision is intended to waive fully,
and for the benefit of the parties hereto, any rights and/or claims which might
give rise to a right of subrogation in favor of any insurance carrier.  The
foregoing waiver shall not apply to losses or damages in excess of actual or
required policy limits (whichever is greater) nor to any deductible applicable
under any policy obtained by the waiving party. 
The failure of either party (the “Defaulting Party”) to take out or maintain any insurance policy
required under this Lease shall be a defense to any claim asserted by the
Defaulting Party against the other party hereto by reason of any loss sustained
by the Defaulting Party that would have been covered by any such required
policy.  The waivers set forth in the
immediately preceding sentence shall be in addition to, and not in substitution
for, any other waivers, indemnities, or exclusions of liabilities set forth in
this lease.  This Section 12.6 shall not
apply to Tenant’s worker’s compensation and employer’s liability
insurance.

13.          Limitation of Liability and Indemnity

Except
to the extent of Claims (defined below) resulting from the gross negligence or
willful misconduct of Landlord or its authorized representatives, Tenant
expressly waives and releases Landlord and Landlord’s lenders, partners,
members, property management company (if other than Landlord), agents,
directors, officers, employees, representatives, contractors, successors and
assigns and each of their respective partners, members, directors, officers,
employees, representatives, agents, contractors, heirs, successors and assigns
(collectively, the “Indemnitees”) from and against all liabilities, damages,
demands, penalties, costs, claims, losses, judgments, charges and expenses
(including reasonable attorneys’ fees, costs of court and expenses necessary in
the prosecution or defense of any litigation including the enforcement of this
provision) (collectively, “Claims”) arising from or in any way related to,
directly or indirectly, (i) Tenant’s or Tenant’s Representatives’ use of the
Premises and other portions of the Project, (ii) the conduct of Tenant’s
business, (iii) from any activity, work or thing done, permitted or suffered by
Tenant in or about the Premises, (iv) Tenant’s failure to perform any covenant
or obligation of Tenant under this Lease, and/or (v) the active and/or passive
negligence of any of the Indemnitees. 
Furthermore, Tenant agrees to protect, defend (with counsel reasonably
acceptable to Landlord) and hold the Indemnitees harmless and indemnify the
Indemnitees from and against all Claims arising from or in any way related to,
directly or indirectly, (i) Tenant’s or Tenant’s Representatives’ use of the
Premises and other portions of the Project, (ii) the conduct of Tenant’s
business, (iii) from any activity, work or thing done, permitted or suffered by
Tenant in or about the Premises, and/or (iv) Tenant’s failure to perform any
covenant or obligation of Tenant under this Lease.  Tenant agrees that the obligations of Tenant
herein shall survive the expiration or earlier termination of this Lease.

Except
to the extent of Claims resulting from the gross negligence or willful
misconduct of any Indemnitee, to the fullest extent permitted by law, neither Landlord nor any other Indemnitee
shall be liable for damages to Tenant or any party claiming through Tenant for
any injury to or death of any person or damage to property or for interruption
or damage to business resulting from any of the following reasons: (a) any
act, omission or negligence of Tenant or Tenant’s Representatives; (b) any
act, omission or negligence of any other tenant within the Building, or any of
their respective employees, agents, contractors, tenants, assignees, licensees,
invitees or customers; (c) the repair, alteration, maintenance, damage or
destruction of the Premises or any other portion of the Building (including the
construction of leasehold improvements for other tenants of the Building),
except to the extent caused by the gross negligence or willful misconduct of
Landlord or any other Indemnitee; (d) vandalism, theft, burglary and other
criminal acts (other than those committed by Landlord’s employees);
(e) any defect in or failure of equipment, pipes, wiring, heating or air
conditioning equipment, stairs, elevators, or sidewalks, the bursting of any
pipes or the leaking, escaping or flowing of gas, water, steam, electricity, or
oil, broken glass, or the backing up of any drains, except to the extent caused
by the gross negligence or willful misconduct of Landlord or any other
Indemnitee; (f) injury done or occasioned by wind, snow, rain or
ice, fire, act of God, public enemy, injunction, riot, strike,
insurrection, war, court order, requisition, or order of any governmental body
or authority, (g) any other cause beyond the reasonable control of
Landlord or (h) the passive or active negligence of any Indemnitee.  Under no circumstances shall Landlord or any
other Indemnitee be liable for damages related to business interruption or loss
of profits.  The provisions of this
Section 13 shall not limit the obligations of Landlord or the rights of
Tenant under this Lease not involving a claim for damages.

 7
 

 

14.          Assignment and Subleasing

14.1        Prohibition:  Tenant
shall not, without the prior written consent of Landlord (which consent shall
not be unreasonably withheld), assign, mortgage, hypothecate, encumber, grant
any license or concession, pledge or otherwise transfer this Lease or any
interest herein, permit any assignment or other transfer of this Lease by
operation of law, sublet the Premises or any part thereof, or permit the use of
the Premises by any persons other than Tenant and Tenant’s Representatives
(collectively, “Transfers” and any entity to whom any Transfer is made or
sought to be made is sometimes referred to as a “Transferee”).  No consent to any Transfer shall constitute a
waiver of the provisions of this Section 14, and all subsequent Transfers may
be made only with the prior written consent of Landlord, which consent shall
not be unreasonably withheld, but which consent shall be subject to the
provisions of this Section 14.

14.2        Request for Consent:  If Tenant seeks to make a Transfer, Tenant
shall notify Landlord, in writing (“Tenant’s Notice”), and deliver to Landlord
at least thirty (30) days prior to the proposed commencement date of the
Transfer (“Proposed Effective Date”) the following: (i) a description of the
portion of the Premises to be transferred (the “Subject Space”); (ii) all of
the terms of the proposed Transfer, including without limitation, the Proposed
Effective Date, the name and address of the proposed Transferee, and a copy of
the existing or proposed assignment, sublease or other agreement governing the
proposed Transfer; (iii) current financial statements of the proposed
Transferee certified by an officer, member, partner or owner thereof, and
certified by the proposed Transferee’s chief financial officer financial statements
for the previous three (3) most recent consecutive fiscal years; and (iv) such
other information as Landlord may then reasonably require.  Within thirty (30) days after Landlord’s
receipt of the Tenant’s Notice (the “Landlord Response Period”) Landlord shall
notify Tenant, in writing, of its determination with respect to such requested
proposed Transfer and Landlord’s election as set forth in Section 14.5.  If Landlord does not elect to recapture
pursuant to Section 14.5 and Landlord does consent to the requested proposed
Transfer, Tenant may thereafter assign its interests in and to this Lease or
sublease all or a portion of the Premises to the same party and on the same
terms as set forth in the Tenant’s Notice.

14.3        Criteria for Consent:  Tenant
agrees that, among other circumstances for which Landlord could reasonably
withhold consent to a proposed Transfer, it shall be reasonable for Landlord to
withhold its consent where (a) Tenant is in Default of its obligations under
this Lease or at any time during the Term of this Lease Tenant has been in
Chronic Default, (b) the use to be made of the Premises by the proposed
Transferee is prohibited, or differs from the uses permitted, under this Lease,
(c) the proposed Transferee or its business is subject to compliance with
additional requirements of the ADA beyond those requirements which are
applicable to Tenant, (d) the proposed Transferee does not intend to occupy the
Premises, (e) Landlord reasonably disapproves of the proposed Transferee’s
business operating ability or history, reputation or creditworthiness or the
character of the business to be conducted at the Premises, (f) the proposed
Transferee is a governmental agency or unit or an existing tenant in the
Project, (g) the proposed Transfer would cause Landlord to violate another
agreement or obligation to which Landlord is a party or otherwise subject, (h)
either the proposed Transferee, or any person or entity which directly or
indirectly, controls, is controlled by, or is under common control with, the
proposed Transferee:  (1) is negotiating
with Landlord to lease space in the Building at such time or (2) has negotiated
with Landlord during the four (4) month period immediately preceding the Tenant’s
Notice, (i) the rent proposed to be charged by Tenant to the proposed
Transferee during the term of such Transfer, calculated using a present value
analysis, is less than seventy-five percent (75%) of the rent then being quoted
by Landlord, at the proposed time of such Transfer, for comparable space in the
Building or any other Building in the Project for a comparable term, calculated
using a present value system, or (j) the proposed Transferee will use, store or
handle Hazardous Materials (defined below) of a type, nature or quantity not
then being used by Tenant.

14.4        Effectiveness of
Transfer and Continuing Obligations:  Prior to the date on which any
permitted Transfer becomes effective, Tenant shall deliver to Landlord (i) a
counterpart of the fully executed Transfer document, (ii) an executed Hazardous
Materials Disclosure Certificate substantially in the form of Exhibit E
hereto (the “Transferee HazMat Certificate”), and (iii) Landlord’s standard
form of Consent to Assignment or Consent to Sublease, as applicable, executed
by Tenant and the Transferee in which each of Tenant and the Transferee
confirms its obligations under this Lease. 
Failure or refusal of a Transferee to execute any such consent
instrument shall not release or discharge the Transferee from its obligation to
do so or from any liability as provided herein. 
The voluntary, involuntary or other surrender of this Lease by Tenant,
or a mutual cancellation by Landlord and Tenant, shall not work a merger, and
any such surrender or cancellation shall, at the option of Landlord, either terminate
all or any existing subleases or operate as an assignment to Landlord of any or
all of such subleases.  Each permitted
Transferee shall assume and be deemed to assume this Lease and shall be and
remain liable jointly and severally with Tenant for payment of Rent and for the
due performance of, and compliance with all the terms, covenants, conditions
and agreements herein contained on Tenant’s part to be performed or complied
with, for the Term of this Lease.  No
Transfer shall affect the continuing primary liability of Tenant (which,
following assignment, shall be joint and several with the assignee) under this
Lease whether occurring before or after such Transfer, and Tenant shall not be
released from performing any of the terms, covenants and conditions of this
Lease.  An assignee of Tenant shall
become directly liable to Landlord for all obligations of Tenant
hereunder.  The acceptance of any Rent by
Landlord from any other person (whether or not such person is an occupant of
the Premises) shall not be deemed to be a waiver by Landlord of any provision
of this Lease or to be a consent to any Transfer.  For purposes hereof, if Tenant is a business
entity other than a publicly traded corporation, the direct or indirect
transfer of fifty percent (50%) or more of the ownership interest of the entity
(whether in a single transaction or in the aggregate through more than one
transaction) shall be deemed a Transfer and shall be subject to this Section
14.  Any and all options, rights of
refusal, improvement allowances and other similar rights granted to Tenant in
this Lease, if any, shall not be assignable by Tenant unless expressly
authorized in writing by Landlord.  Any
transfer made without Landlord’s prior written consent, shall, at Landlord’s
option, be null, void and of no effect, and shall, at Landlord’s option,
constitute a Default by Tenant of this Lease. 
As Additional Rent, Tenant shall promptly (a) pay to Landlord each time
it requests a Transfer, a fee in the amount of one thousand five hundred
dollars ($1,500) and (b) reimburse Landlord for actual legal and other expenses
incurred by Landlord in connection with any actual or proposed Transfer.

14.5        Recapture:  If the Transfer (i) by itself or taken together with then existing or
pending Transfers covers or totals, as the case may be, more than thirty-five
percent (35%) of the rentable square feet of the Premises, or (ii) is for a
term which by itself or taken together with then existing or pending Transfers
is greater than fifty percent (50%) of the period then remaining in the Term of
this Lease as of the time of the Proposed Effective Date, then Landlord shall
have the right, to be exercised by giving written notice to Tenant within
forty-five (45) days after receipt of Tenant’s request, to recapture the
Subject Space described in the Tenant’s Notice. 
If such recapture notice is given, it shall serve to terminate this
Lease with respect to the proposed Subject Space, or, if the proposed Subject
Space covers all the Premises, it shall serve to terminate the entire Term of
this Lease, in either case, as of the Proposed Effective Date.  If this Lease is terminated with respect to
less than the entire Premises, Rent shall be adjusted on the basis of the
proportion of rentable square feet retained by Tenant to the rentable square
feet originally demised and this Lease as so amended shall continue thereafter
in full force and effect.  In the event
that Landlord elects to recapture the Subject Space, Tenant may elect, within
five (5) days after receipt of Landlord’s recapture notice, to rescind Tenant’s
request for a Transfer provided Tenant shall remain liable for payment to
Landlord of all fees and expenses set forth in Section 14.4.

14.6        Transfer Premium:  If
Landlord consents to a Transfer, as a condition thereto, Tenant shall pay to
Landlord monthly, as Additional Rent, at the same time as the monthly
installments of Rent are payable hereunder, fifty percent (50%) of any Transfer
Premium.  The term “Transfer Premium”
shall mean all rent, additional rent and other consideration payable by such
Transferee which either initially or over the term of the Transfer exceeds the
Rent or pro rata portion of the Rent, as the case may be, for the Subject
Space, after deducting therefrom (i) reasonable legal and brokerage fees and
(ii) tenant improvement allowances (not to exceed $8.00 per square foot)
incurred in connection with such Transfer. 
The costs set forth in clauses (i) and (ii) of the immediately preceding
sentence shall be deducted from the Transfer Premium in equal monthly
installments such that the total cost thereof is recouped by Tenant over the
remaining term of the Lease.

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14.7        Affiliated
Companies/Restructuring of Business Organization:  The
assignment or subletting by Tenant of all or any portion of this Lease or the
Premises to (i) a parent or subsidiary of Tenant, or (ii) any person or entity
which controls, is controlled by or under the common control with Tenant, or
(iii) any entity which purchases all or substantially all of the assets of Tenant,
or (iv) any entity into which Tenant is merged or consolidated (all such
persons or entities described in clauses (i), (ii), (iii) and (iv) being
sometimes herein referred to as “Affiliates”) shall not be deemed a Transfer
under this Section 14 (hence, the aforesaid events shall not be subject to
obtaining Landlord’s prior consent; and Landlord shall not have any right to
receive any Transfer Premium in connection therewith except for a transfer
pursuant to Section 14.7(iii) (“Permitted Transfer”); provided in all instances
that:

14.7.1     any such Affiliate was not formed as a
subterfuge to avoid the obligations of this Section 14;

14.7.2     Tenant give Landlord at least thirty (30)
days prior written notice of any such assignment or sublease to an Affiliate;

14.7.3     As to a transfer as referenced in Section
14.7(iii) above, the successor of Tenant has as of the effective date of any
such assignment or sublease a tangible net worth and net assets, in the
aggregate, computed in accordance with generally accepted accounting principles
(but excluding goodwill as an asset), which is sufficient to meet the
obligations of Tenant under this Lease, as reasonably determined by Landlord;

14.7.4     any such assignment or sublease shall be
subject to all of the terms and provisions of this Lease, and such assignee or
sublessee (i.e. any such Affiliate), other than in the case of an Affiliate
resulting from a merger or consolidation as described in Section 14.7(iv)
above, shall assume, in a written document reasonably satisfactory to Landlord
and delivered to Landlord upon or prior to the effective date of such
assignment or sublease, all the obligations of Tenant under this Lease; and

14.7.5     Tenant and any guarantor shall remain fully
liable for all obligations to be performed by Tenant under this Lease.

14.8        Waiver: 
Notwithstanding any Transfer, or any indulgences, waivers or extensions
of time granted by Landlord to any Transferee, or failure by Landlord to take
action against any Transferee, Tenant agrees that Landlord may, at its option,
proceed against Tenant without having taken action against or joined such
Transferee, except that Tenant shall have the benefit of any indulgences,
waivers and extensions of time granted to any such Transferee.

15.          Subordination

To
the fullest extent permitted by law, this Lease, the rights of Tenant under
this Lease and Tenant’s leasehold interest shall be subject and subordinate at
all times to: (i) all ground leases or underlying leases which may now exist or
hereafter be executed affecting the Building, the Lot, or any other portion of
the Project, and (ii) the lien of any mortgage or deed of trust which may now
or hereafter exist for which the Building, the Lot, ground leases or underlying
leases, any other portion of the Project or Landlord’s interest or estate
therein is specified as security. 
Notwithstanding the foregoing, Landlord or any such ground lessor,
mortgagee, or any beneficiary shall have the right to require this Lease be
superior to any such ground leases or underlying leases or any such liens,
mortgage or deed of trust.  If any ground
lease or underlying lease terminates for any reason or any mortgage or deed of
trust is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall attorn to and become the Tenant of the successor in
interest to Landlord, provided such successor in interest will not disturb
Tenant’s use, occupancy or quiet enjoyment of the Premises if Tenant is not in
Default of this Lease.  The successor in
interest to Landlord following foreclosure, sale or deed in lieu thereof shall
not be:  (a) liable for any act or
omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) subject to any offsets or defenses which Tenant
might have against any prior lessor; (c) bound by prepayment of more than one
(1) month’s Rent; or (d) liable to Tenant for any Security Deposit not actually
received by such successor in interest to the extent any portion of such
Security Deposit has not already been forfeited by, or refunded to,
Tenant.  Landlord shall be liable to
Tenant for all or any portion of the Security Deposit not forfeited by, or
refunded to Tenant, until and unless Landlord transfers such Security Deposit
to the successor in interest.  Tenant covenants
and agrees to execute (and acknowledge if required by Landlord, any lender or
ground lessor) and deliver, within ten (10) days of a written demand or request
by Landlord and in the form reasonably requested by Landlord, ground lessor,
mortgagee or beneficiary, any additional documents evidencing the priority or
subordination of this Lease with respect to any such ground leases or
underlying leases or the lien of any such mortgage or deed of trust, provided
that such documents include a provision whereby such ground lessor, mortgagee
or beneficiary agrees that is shall not disturb Tenant’s use, occupancy or
quiet enjoyment of the Premises if Tenant is not in Default of this Lease.

16.          Right of Entry

Landlord
and its agents shall have the right to enter the Premises at all reasonable
times, upon 24 hour prior notice (except in the event of an emergency, for
which no prior notice shall be required), for purposes of inspection,
exhibition, posting of notices, investigation, replacements, repair, maintenance
and alteration.  It is further agreed
that Landlord shall have the right to use any and all means Landlord deems
necessary to enter the Premises in an emergency.  Landlord shall have the right to place (i) “for
rent” or “for lease” signs on the outside of the Premises, the Building and in
the Common Areas during the last six (6) months of the Term, and (ii) “for sale”
signs on the outside of the Building and in the Common Areas.  Tenant hereby waives any Claim from damages
or for any injury or inconvenience to or interference with Tenant’s business,
or any other loss occasioned thereby except for any Claim for any of the
foregoing arising out of the gross negligence or willful misconduct of Landlord
or its authorized representatives. 
Landlord shall use commercially reasonable efforts to minimize any
disruption to Tenant’s business during any entry into the Premises.

17.          Estoppel Certificate

Tenant
shall execute (and acknowledge if required by any lender or ground lessor) and
deliver to Landlord, within ten (10) days after Landlord provides such to
Tenant, a statement in writing certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification), the date to which the Rent and other charges are paid in
advance, if any, acknowledging that there are not, to Tenant’s know­ledge, any
uncured defaults on the part of Landlord hereunder or specifying such defaults
as are claimed, and such other matters as Landlord may reasonably require.  Any such statement may be conclusively relied
upon by Landlord and any prospective purchaser or encumbrancer of the Building
or other portions of the Project.  Tenant’s
failure to deliver such statement within such time shall be conclusive upon the
Tenant that (a) this Lease is in full force and effect, without modification
except as may be represented by Landlord; (b) there are no uncured defaults in
Landlord’s performance; and (c) not more than one month’s Rent has been paid in
advance.

18.          Tenant’s Default

The
occurrence of any one or more of the following events shall, at Landlord’s
option, constitute a “Default” by Tenant of the provisions of this Lease:

18.1        The abandonment of the Premises by
Tenant, as abandonment is statutorily defined in California Civil Code Section
1951.3 or all similar or successor laws;

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18.2        The failure by Tenant to make any
payment of Rent, Additional Rent or any other payment or charge required
hereunder within three (3) days after receipt of Landlord’s written notice of
such failure; provided, any such written notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Sections 1161 et seq. and all similar or successor laws;

18.3        Except as otherwise provided in Section 19.4
hereof, the failure by Tenant to observe, perform or comply with any of the
conditions, covenants or provisions of this Lease (except failure to make any
payment of Rent and/or Additional Rent and any other payment or charge required
hereunder) and such failure is not cured within (i) thirty (30) days of the
date on which Landlord delivers written notice of such failure to Tenant for
all failures other than with respect to (a) Hazardous Materials (defined in
Section 27 hereof), (b) Tenant making the repairs, maintenance and replacements
required under the provisions of Section 11.1 hereof, or (c) the timely
delivery by Tenant of a subordination, non-disturbance and attornment agreement
(an “SNDA”), a counterpart of a fully executed Transfer document and a consent
thereto (collectively, the “Transfer Documents”), an estoppel certificate and
insurance certificates, (ii) ten (10) days of the date on which Landlord
delivers written notice of such failure to Tenant for all failures in any way
related to Hazardous Materials or Tenant failing to timely make the repairs,
maintenance or replacements required by Section 11.1, and (iii) the time
period, if any, specified in the applicable sections of this Lease with respect
to subordination, assignment and sublease, estoppel certificates and
insurance.  However, provided a Chronic
Default has not occurred, Tenant shall not be in default of its obligations
hereunder if such failure (other than any failure of Tenant to timely and
properly make the repairs, maintenance, or replacements required by Section
11.1, or timely deliver an SNDA, the Transfer Documents, an estoppel
certificate or insurance certificates, for which no additional cure period
shall be given to Tenant) cannot reasonably be cured within such thirty (30) or
ten (10) day period, as applicable, and Tenant promptly commences, and
thereafter diligently proceeds with same to completion, all actions necessary
to cure such failure as soon as is reasonably possible, but in no event shall
the completion of such cure be later than sixty (60) days after the date on
which Landlord delivers to Tenant written notice of such failure, unless
Landlord, acting reasonably and in good faith, otherwise expressly agrees in
writing to a longer period of time based upon the circumstances relating to
such failure as well as the nature of the failure and the nature of the actions
necessary to cure such failure.  Any such
written notice shall be in lieu of, and not in addition to, any notice required
under California Code of Civil Procedure Sections 1161, et seq. and all similar
or successor laws; or

18.4        The making of a general assignment by
Tenant for the benefit of creditors, the filing of a voluntary petition by
Tenant or the filing of an involuntary petition by any of Tenant’s creditors
seeking the rehabilitation, liquidation, or reorganization of Tenant under any
law relating to bankruptcy, insolvency or other relief of debtors and, in the
case of an involuntary action, the failure to remove or discharge the same
within sixty (60) days of such filing, the appointment of a receiver or other
custodian to take possession of substantially all of Tenant’s assets or this
leasehold, Tenant’s insolvency or inability to pay Tenant’s debts or failure
generally to pay Tenant’s debts when due, any court entering a decree or order
directing the winding up or liquidation of Tenant or of substantially all of
Tenant’s assets, Tenant taking any action toward the dissolution or winding up
of Tenant’s affairs, the cessation or suspension of Tenant’s use of the
Premises, or the attachment, execution or other judicial seizure of
substantially all of Tenant’s assets or this leasehold.

19.          Remedies for Tenant’s Default

19.1        Landlord’s Rights:  In the event of Tenant’s Default under this
Lease, Landlord may terminate Tenant’s right to possess the Premises by any
lawful means.  Following delivery of
written notice by Landlord, this Lease shall terminate on the date specified in
such notice and Tenant shall immediately surrender possession of the Premises
to Landlord.  In addition, whether or not
this Lease is terminated, Landlord shall have the right to immediately re-enter
the Premises, and if Landlord’s right of re-entry is exercised following
Tenant’s abandonment of the Premises, all of Tenant’s Property left on the
Premises or in the Project shall be deemed abandoned.  If Landlord relets the Premises or any
portion thereof, Tenant shall immediately be liable to Landlord for all costs
Landlord incurs in reletting the Premises or any part thereof, including,
without limitation, broker’s commissions, expenses of cleaning, redecorating,
and further improving the Premises and other similar costs (collectively, the “Reletting
Costs”).  All Reletting Costs shall be
fully chargeable to Tenant and shall not be prorated or otherwise amortized in
relation to any new lease for the Premises or any portion thereof.  Reletting may be for a period shorter or
longer than the remaining term of this Lease. 
In no event shall Tenant be entitled to any excess rent received by
Landlord.  No act by Landlord other than
giving written notice to Tenant shall terminate this Lease or Tenant’s right to
possess the Premises, including without limitation, acts of maintenance,
efforts to relet the Premises or the appointment of a receiver on Landlord’s
initiative to protect Landlord’s interest under this Lease.  At all times Landlord shall have the right to
remedy any Default of Tenant, to maintain or improve the Premises, to cause a
receiver to be appointed to administer the Premises and any new or existing subleases
and to add to the Rent payable hereunder all of Landlord’s reasonable costs in
so doing, with interest at the maximum rate permitted by law from the date of
such expenditure.

19.2        Damages Recoverable:  If Tenant breaches this Lease and abandons the
Premises before the end of the Term, or if Landlord terminates Tenant’s right
to possession following Tenant’s Default under this Lease, then in either such
case, Landlord may recover from Tenant all damages suffered by Landlord as a
result of Tenant’s failure to perform its obligations hereunder, including
without limitation, the unamortized cost of any Tenant Improvements constructed
by or on behalf of Tenant pursuant to Exhibit B hereto to the extent
Landlord has paid for such improvements, the unamortized portion of any broker’s
or leasing agent’s commission incurred with respect to the leasing of the
Premises to Tenant for the balance of the Term remaining after the date on
which Tenant is in Default of its obligations hereunder, and all Reletting Costs,
and the worth at the time of the award (computed in accordance with paragraph
(3) of Subdivision (a) of Section 1951.2 of the California Civil Code) of the
amount by which the Rent then unpaid hereunder for the balance of the Lease
Term exceeds the amount of such loss of Rent for the same period which Tenant
proves could be reasonably avoided by Landlord and in such case, Landlord prior
to the award, may relet the Premises for the purpose of mitigating damages
suffered by Landlord because of Tenant’s failure to perform its obligations
hereunder; provided, however, that even if Tenant abandons the
Premises, as abandonment is statutorily defined
in California Civil Code Section 1951.3 or all similar or successor laws, this
Lease shall nevertheless continue in full force and effect for as long as
Landlord does not terminate Tenant’s right of possession, and until such
termination, Landlord shall have the remedy described in Section 1951.4 of the
California Civil Code (Landlord may continue this Lease in effect after Tenant’s
breach and abandonment and recover Rent as it becomes due, if Tenant has the
right to sublet or assign, subject only to reasonable limitations) and may
enforce all its rights and remedies under this Lease, including the right to
recover the Rent from Tenant as it becomes due hereunder.  The “worth at the time of the award” within
the meaning of Subparagraphs (a)(1) and (a)(2) of Section 1951.2 of the
California Civil Code shall be computed by allowing interest at the rate of ten
percent (10%) per annum.  Tenant hereby
waives for itself and for all those claiming under Tenant its right to obtain
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179 (or any successor or substitute statute), or under any
other present or future law, in the event judgment for possession enters
against Tenant or Landlord takes possession of the Premises following any Default
of Tenant hereunder.

19.3        Chronic
Default:  The term “Chronic Default” as used in this
Lease shall mean that Tenant has Defaulted in the performance of any of its
obligations under this Lease more than three (3) times during the Term of the
Lease, regardless of whether or not Tenant thereafter cures any such Default.  A Chronic Default is not curable by
Tenant.  Upon the occurrence of a Chronic
Default and at all times thereafter during the balance of the Term of this
Lease, Landlord shall no longer be obligated to provide Tenant written notice
of default as set forth in Sections 18.2 or 18.3 hereof and Tenant shall no
longer be entitled to any cure period set forth in this Lease, including
without limitation, those cure periods set forth in Sections 18.2 or 18.3.  Following a Chronic Default, Landlord, in its
sole discretion, may elect to provide written notice of default to Tenant or
grant Tenant a period during which it may cure any such default, however, no
such delivery of written notice or grant of a cure period by Landlord shall in
any way obligate Landlord to provide Tenant any subsequent written notices of
default or cure periods.

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19.4        Rights
and Remedies Cumulative:  The foregoing rights and remedies of Landlord
are not exclusive; they are cumulative in addition to any rights and remedies
now or hereafter existing at law, in equity, by statute or otherwise, and to any remedies Landlord may have
under bankruptcy laws or laws affecting creditors’ rights generally.  In addition to all of the remedies set forth
above, if Tenant Defaults under this Lease, all options granted to Tenant
hereunder shall automatically terminate, unless otherwise expressly agreed to
in writing by Landlord.

20.          Holding Over

If
Tenant holds over after the expiration of the Term, with or without the express
or implied consent of Landlord, such tenancy shall be from month-to-month only,
and shall not constitute a renewal hereof or an extension for any further term,
and in such case Base Rent shall be payable at a monthly rate equal to one
hundred seventy-five percent (175%) of the greater of (i) the Base Rent
applicable during the last rental period of the Term under this Lease or (ii)
the fair market rental rate for the Premises as of the commencement of such
holdover period.  Such month-to-month
tenancy shall be subject to every other term and provision contained herein.  Landlord hereby expressly reserves the right
to require Tenant to surrender possession of the Premises to Landlord in the
condition required herein upon the expiration or earlier termination of this
Lease.  The provisions of this Section 20
shall not be deemed to limit or constitute a waiver of any other rights or
remedies of Landlord provided herein or at law. 
If Tenant fails to surrender the Premises upon the expiration or earlier
termination of this Lease, in addition to any other liabilities to Landlord accruing
therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless
from all Claims resulting from such failure, including but not limited to, any
Claims made by any succeeding tenant founded upon such failure to surrender,
and any lost profits to Landlord resulting therefrom.

21.          Landlord’s Default

Landlord
shall not be considered in default of this Lease unless Landlord fails within a
reasonable time to perform an obligation required to be performed by Landlord
hereunder.  For purposes hereof, a
reasonable time shall in no event be less than thirty (30) days after receipt
by Landlord of written notice specifying the nature of the obligation Landlord
has not performed; provided, however, that if the nature of
Landlord’s obligation is such that more than thirty (30) days, after receipt of
written notice, is reasonably necessary for its performance, then Landlord
shall not be in default of this Lease if performance of such obligation is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.

22.          Parking

Tenant
may use the number of non-designated and non-exclusive parking spaces specified
in the Basic Lease Information.  Landlord
shall exercise reasonable efforts to ensure that such spaces are available to
Tenant for its use, but Landlord shall not be required to enforce Tenant’s
right to use the same.  Tenant and Tenant’s
Representatives shall not park or permit any parking of vehicles overnight.

23.          Transfer of Landlord’s Interest

Tenant
acknowledges that Landlord has the right to transfer all or any portion of its
interest in the Premises, Building, Project and this Lease.  Tenant expressly agrees that in the event of
any such transfer, Landlord shall automatically be entirely released from all
liability under this Lease and Tenant agrees to look solely to such transferee
for the performance of Landlord’s obligations hereunder after the date of such
transfer. Landlord shall cause each such transferee to sign an agreement
whereby such transferee agrees to perform Landlord’s obligations hereunder
arising or accruing after the date of such transfer.  A ground lease or similar long term lease by
Landlord of the entire Building or Lot, of which the Premises are a part, shall
be deemed a sale within the meaning of this Section 23.  Tenant agrees to attorn to such new owner
provided such new owner agrees not to disturb Tenant’s use, occupancy or quiet
enjoyment of the Premises so long as Tenant is not in Default of this Lease.

24.          Waiver

No
delay or omission in the exercise of any right or remedy of either party on any
default by the other party shall impair such a right or remedy or be construed
as a waiver.  The subsequent acceptance
of Rent by Landlord after a Default by Tenant of this Lease shall not be deemed
a waiver of such Default, other than a waiver of timely payment for the
particular Rent payment involved, and shall not prevent Landlord from
maintaining an unlawful detainer or other action based on such Default.  No payment by Tenant or receipt by Landlord
of a lesser amount than the monthly Rent and other sums due hereunder shall be
deemed to be other than on account of the earliest Rent or other sums due, nor
shall any endorsement or statement on any check or accompanying any check or
payment be deemed an accord and satisfaction; and Landlord may accept such
payment without prejudice to Landlord’s right to recover the balance of such
Rent or other sum or pursue any other remedy provided in this Lease.  No failure, partial exercise or delay on the
part of the Landlord in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.

25.          Casualty Damage

25.1        Casualty:  If the
Premises or any part (excluding any of Tenant’s Property, any Wi-Fi Network,
any Tenant Improvements and any Alterations installed by or for the benefit of
Tenant (collectively, “Tenant’s FF&E”)) shall be damaged or destroyed by
fire or other casualty, Tenant shall give immediate written notice thereof to
Landlord.  Within sixty (60) days after
receipt by Landlord of such notice, Landlord shall notify Tenant, in writing,
of the following time period within which the necessary repairs can reasonably
be made, as estimated by Landlord: (a) within one hundred eighty (180) days, or
(b) in more than one hundred eighty (180) days, from the date of such notice.

25.1.1     Minor Insured Damage:  If the
Premises (other than Tenant’s FF&E) are damaged only to such extent that
repairs, rebuilding and/or restoration can be reasonably completed within one
hundred eighty (180) days, this Lease shall not terminate and, provided that
insurance proceeds are available and paid to Landlord to fully repair the
damage and/or Tenant otherwise voluntarily contributes any shortfall thereof,
Landlord shall repair the Premises to substantially the same condition that
existed prior to the occurrence of such casualty, except Landlord shall not be
required to rebuild, repair, or replace any of Tenant’s FF&E.  The Rent payable hereunder shall be abated
proportionately from the date and to the extent Tenant vacates the affected
portions of the Premises until any and all repairs required herein to be made
by Landlord are substantially completed, but such abatement shall (i) only be
to the extent of the portion of the Premises which is actually rendered
unusable and unfit for occupancy, (ii) only during the time Tenant is not
actually using same, and (iii) Landlord receives rental abatement insurance
proceeds therefor.

25.1.2     Major Insured Damage:  If the
Premises (other than Tenant’s FF&E) are damaged to such extent that
repairs, rebuilding and/or restoration cannot be reasonably completed, as
reasonably determined by Landlord, within one hundred eighty (180) days, then
either Landlord or Tenant may terminate this Lease by giving written notice
within twenty (20) days after notice from Landlord regarding the time period of
repair.  If either party notifies the
other of its intention to so terminate this Lease, then this Lease shall
terminate and the Rent shall be abated from the date of the occurrence of such
damage, provided Tenant diligently proceeds to and expeditiously vacates the
Premises (but, in all events Tenant must vacate and surrender the Premises to
Landlord by no later than twenty (20) days thereafter or there shall not be any
abatement of Rent until Tenant so vacates the Premises).  If neither party elects to terminate this
Lease, Landlord shall promptly commence and diligently prosecute to completion
the repairs to the Premises, provided insurance proceeds are available and paid
to Landlord to fully repair the damage or Tenant voluntarily contributes 

 11
 

 

any
shortfall thereof (except that Landlord shall not be required to rebuild,
repair, or replace any of Tenant’s FF&E). 
During the time when Landlord is prosecuting such repairs to substantial
completion, the Rent payable hereunder shall be abated proportionately from the
date and to the extent Tenant actually vacates the affected portions of the
Premises until any and all repairs required herein to be made by Landlord are
substantially completed, but such abatement shall (i) only be to the extent of
the portion of the Premises which is actually rendered unusable and unfit for
occupancy, (ii) only during the time Tenant is not actually using same, and
(iii) Landlord receives rental abatement insurance proceeds therefor.

25.1.3     Damage Near End of
Term:  Notwithstanding anything to the contrary
contained in this Lease except for the provisions of Section 25.3 below, if the
Premises are substantially damaged during the last year of the Term of this
Lease, either Landlord or Tenant may, at their option, cancel and terminate
this Lease by giving written notice to the other party of its election to do so
within forty-five (45) days after receipt by Landlord of notice from Tenant of
the occurrence of such casualty.  If
either party so elects to terminate this Lease, all rights of Tenant hereunder
shall cease and terminate twenty (20) days after Tenant’s receipt or delivery
of such notice, as applicable, and Tenant shall immediately vacate the Premises
and surrender possession thereof to Landlord.

25.2        Deductible and
Uninsured Casualty:  Tenant shall pay to Landlord, as Additional
Rent, the deductible amounts under the insurance policies obtained by Landlord
and Tenant under this Lease if the proceeds are used to repair the Premises.  However, if other portions of the Building
are also damaged by said casualty and insurance proceeds are payable therefor,
then Tenant shall only pay its proportionate share of the deductible as
reasonably determined by Landlord.  If
any portion of the Premises is damaged and is not fully covered by the
aggregate of insurance proceeds received by Landlord and any applicable
deductible, and Tenant does not voluntarily contribute any shortfall thereof,
then Landlord or Tenant shall have the right to terminate this Lease by delivering
written notice of termination to the other party within thirty (30) days after
the date of notice to Tenant of such event, whereupon all rights of Tenant
shall cease and terminate twenty (20) days after Tenant’s receipt of such
notice, and Tenant shall immediately vacate the Premises and surrender
possession thereof to Landlord.

25.3        Tenant’s Fault and
Lender’s Rights:  Notwithstanding anything to the contrary
contained herein, if the Premises (other than Tenant’s FF&E) or any other
portion of the Building is damaged by fire or other casualty due to the acts or
omissions of Tenant or any of Tenant’s Representatives, (i) the Rent shall only
be abated during the repair of such damage to the extent Landlord receives
rental loss insurance proceeds therefor, (ii) Tenant will not have any right to
terminate this Lease due to the occurrence of such casualty, and (iii) Tenant
will be responsible for the excess cost and expense of the repair and
restoration of the Premises and/or Building (including any deductible) to the
extent not covered by insurance proceeds. 
Notwithstanding anything to the contrary contained herein, if the holder
of any indebtedness secured by the Premises or any other portion of the Project
requires that the insurance proceeds be applied to such indebtedness, then
Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant within thirty (30) days after the date of
notice to Tenant of such event, whereupon all rights of Tenant shall cease and
terminate twenty (20) days after Tenant’s receipt of such notice, and Tenant
shall immediately vacate the Premises and surrender possession thereof to
Landlord.

25.4        Tenant’s Waiver: 
Landlord shall not be liable for any inconvenience or annoyance to Tenant,
injury to the business of Tenant, loss of use of any part of the Premises by
Tenant or loss of Tenant’s Property, resulting in any way from such damage or
the repair thereof.  During any entry
into the Premises to repair damage pursuant to this Section 25, Landlord shall
use commercially reasonable efforts to minimize interference with Tenant’s
business.  With respect to any damage
which Landlord is obligated to repair or may elect to repair, Tenant waives all
rights to terminate this Lease or offset any amounts against Rent pursuant to
rights accorded Tenant by any law currently existing or hereafter enacted,
including without limitation, all rights pursuant to California Civil Code
Sections 1932(2.), 1933(4.), 1941 and 1942 and any similar or successor laws.

26.          Condemnation

If
twenty-five percent (25%) or more of the Premises is condemned by eminent
domain, inversely condemned or sold in lieu of condemnation for any public or
quasi-public use or purpose (“Condemned”), then Tenant or Landlord may
terminate this Lease as of the date when physical possession of the Premises is
taken and title vests in such condemning authority, and Rent shall be adjusted
to the date of termination.  Tenant shall
not because of such condemnation assert any claim against Landlord or the
condemning authority for any compensation because of such condemnation, and
Landlord shall be entitled to receive the entire amount of any award without
deduction for any estate of interest or other interest of Tenant; provided,
however, the foregoing shall not preclude Tenant, at Tenant’s sole cost
and expense, from obtaining any separate award to Tenant for loss of, or damage
to, Tenant’s Property or for damages for cessation or interruption of Tenant’s
business provided such award is separate from Landlord’s award and does not
diminish nor otherwise impair the award otherwise payable to Landlord.  In addition to the foregoing, Tenant shall be
entitled to seek compensation for the relocation costs recoverable by Tenant pursuant
to the provisions of California Government Code Section 7262.  If neither party elects to terminate this
Lease, Landlord shall, if necessary, promptly proceed to restore the Premises
or the Building, as applicable, to substantially the same condition prior to
such partial condemnation, allowing for the reasonable effects of such partial
condemnation, and a proportionate allowance shall be made to Tenant, as
determined by Landlord, for the Rent corresponding to the time during which,
and to the part of the Premises of which, Tenant is deprived on account of such
partial condemnation and restoration. 
Landlord shall not be required to spend funds for restoration in excess
of the condemnation proceeds received by Landlord.

27.          Environmental Matters/Hazardous Materials

27.1        Hazardous Materials
Disclosure Certificate:  Simultaneously herewith, Tenant has delivered
to Landlord Tenant’s executed initial Hazardous Materials Disclosure
Certificate (the “Initial HazMat Certificate”), a copy of which is attached
hereto as Exhibit E.  Tenant
covenants, represents and warrants to Landlord that the information in the
Initial HazMat Certificate is true and correct and accurately describes the
use(s) of Hazardous Materials which will be made and/or used on the Premises by
Tenant.  Tenant shall, commencing with
the date which is one year from the Commencement Date and continuing every year
thereafter, deliver to Landlord, an executed Hazardous Materials Disclosure
Certificate (“the “HazMat Certificate”), in substantially the form attached hereto
as Exhibit E, describing Tenant’s then present use of Hazardous
Materials on the Premises, and any other reasonably necessary documents as
requested by Landlord.

27.2        Definition of Hazardous Materials:  “Hazardous
Materials” means (a) any hazardous or toxic wastes, materials or substances,
and other pollutants or contaminants, which are or become regulated by any
Environmental Laws; (b) petroleum, petroleum by products, gasoline, diesel
fuel, crude oil or any fraction thereof; (c) asbestos and asbestos containing
material, in any form, whether friable or nonfriable; (d) polychlorinated
biphenyls; (e) radioactive materials; (f) lead and lead-containing materials;
(g) any other material, waste or substance displaying toxic, reactive,
ignitable or corrosive characteristics, as all such terms are used in their
broadest sense, and are defined or become defined by any Environmental Law
(defined below); (h) any materials which cause or threatens to cause a nuisance
upon or waste to any portion of the Project or any surrounding property; or (i)
any materials which pose or threaten to pose a hazard to the health and safety
of persons on the Premises, any other portion of the Project or any surrounding
property.  For purposes of this Lease, “Hazardous
Materials” shall not include nominal amounts of ordinary household cleaners,
office supplies and janitorial supplies which are not actionable under any
Environmental Laws.

27.3        Prohibition; Environmental Laws:  Tenant
shall not be entitled to use or store any Hazardous Materials on, in, or about
any portion of the Premises or Project without, in each instance, obtaining
Landlord’s prior written consent thereto. 
If Landlord, in its sole discretion, consents to any such usage or
storage, then Tenant shall be permitted to use and/or store only those 

 12
 

 

Hazardous
Materials and in such quantities (A) that are necessary for Tenant’s business,
(B) to the extent disclosed in the most recent HazMat Certificate, and (C)
expressly approved by Landlord in writing. 
In all events such usage and storage must at all times be in full
compliance with any and all applicable local, state and federal environmental,
health and/or safety-related laws, statutes, orders, standards, courts’
decisions, ordinances, rules and regulations (as interpreted by judicial and
administrative decisions), decrees, directives, guidelines, permits or permit
conditions, currently existing and as amended, enacted, issued or adopted in
the future (collectively, the “Environmental Laws”).  Tenant agrees that any changes to the type
and/or quantities of Hazardous Materials specified in the most recent HazMat
Certificate may be implemented only with the prior written consent of Landlord,
which consent may be given or withheld in Landlord’s sole discretion.  Tenant shall not be entitled nor permitted to
install any tanks under, on or about the Premises for the storage of Hazardous
Materials without the express written consent of Landlord, which may be given
or withheld in Landlord’s sole discretion. 
Landlord shall have the right at all times during the Term to (i)
inspect the Premises, (ii) conduct tests and investigations to determine
whether Tenant is in compliance with this Section 27 or to determine if
Hazardous Materials are present in, on or about the Project, and (iii) request
lists of all Hazardous Materials used, stored or otherwise located on, under or
about any portion of the Premises and/or the Common Areas.  The cost of all such inspections, tests and
investigations (collectively, “Inspections”) shall be borne by Tenant, if
Tenant or any of Tenant’s Representatives are directly or indirectly
responsible for any contamination revealed by such Inspections.  The aforementioned rights granted herein to
Landlord and its representatives shall not create (a) a duty on Landlord’s part
to perform Inspections, monitor or otherwise observe the Premises or Tenant’s
and Tenant’s Representatives’ activities with respect to Hazardous Materials,
including without limitation, Tenant’s operation, use and any remediation
related thereto, or (b) liability on the part of Landlord and its
representatives for Tenant’s use, storage, disposal or remediation of Hazardous
Materials, it being understood that Tenant shall be solely responsible for all
liability in connection therewith.

27.4        Tenant’s Environmental Obligations:  Tenant
shall give to Landlord immediate verbal and follow-up written notice of
any spills, releases, discharges, disposals, emissions, migrations, removals or
transportation of Hazardous Materials on, under or about any portion of the
Premises or in any Common Areas (collectively, a “Release”); provided that
Tenant has knowledge of such event(s). 
Tenant, at its sole cost and expense, covenants and warrants to promptly
investigate, clean up, remove, restore and otherwise remediate (including,
without limitation, preparation of any feasibility studies or reports and the
performance of any and all closures) any Release of Hazardous Materials arising
from or related to the acts or omissions of Tenant or Tenant’s Representatives
such that the affected portions of the Project and any adjacent property are
returned to the condition existing prior to the appearance of such Hazardous
Materials.  Any such investigation, clean
up, removal, restoration and other remediation shall only be performed after
Tenant has obtained Landlord’s prior written consent, which consent shall not
be unreasonably withheld so long as such actions would not potentially have a
material adverse long-term or short-term effect on any portion of the Project.  Notwithstanding the foregoing, Tenant shall
be entitled to respond immediately to an emergency without first obtaining
Landlord’s prior written consent.  In the
event of a Release caused by the acts or omissions of Tenant or Tenant’s
Representatives, Tenant, at its sole cost and expense, shall conduct and
perform, or cause to be conducted and performed, all closures as required by
any Environmental Laws or any agencies or other governmental authorities having
jurisdiction thereof.  If Tenant fails to
so promptly investigate, clean up, remove, restore, provide closure or
otherwise so remediate, Landlord may, but without obligation to do so, take any
and all steps necessary to rectify the same and Tenant shall promptly reimburse
Landlord, upon written demand, for all costs and expenses to Landlord of
performing investigation, clean up, removal, restoration, closure and
remediation work.  All such work
undertaken by Tenant, as required herein, shall be performed in such a manner
so as to enable Landlord to make full economic use of the Premises and the
other portions of the Project after the satisfactory completion of such work.

27.5        Environmental Indemnity:  Tenant
shall, protect, indemnify, defend (with counsel acceptable to Landlord) and
hold Landlord and the other Indemnitees harmless from and against any and all
Claims (including, without limitation, diminution in value of any portion of
the Premises or the Project, damages for the loss of or restriction on the use
of rentable or usable space, and from any adverse impact of Landlord’s
marketing of any space within the Project) arising at any time during or after
the Term in connection with or related to, directly or indirectly, the use,
presence or Release of Hazardous Materials on, in or about any portion of the
Project as a result (directly or indirectly) of the acts or omissions of Tenant
or any of Tenant’s Representatives. 
Neither the written consent of Landlord to the presence, use or storage
of Hazardous Materials in, on, under or about any portion of the Project nor
the strict compliance by Tenant with all Environmental Laws shall excuse Tenant
from its obligations of indemnification pursuant hereto.  Tenant shall not be relieved of its
indemnification obligations under the provisions of this Section 27.5 due to
Landlord’s status as either an “owner” or “operator” under any Environmental
Laws.

27.6        Mold:  Tenant, at its sole cost and expense, will
regularly monitor the Premises for the presence of mold or any conditions that
reasonably can be expected to give rise to mold, such as by way of example but
not limitation, water damage, mold growth, repeated complaints of respiratory
ailments or eye irritation by persons occupying the Premises or any notice from
a governmental authority of complaints of indoor air quality at the
Premises.  If Tenant discovers the
existence of any mold or conditions referred to above, Tenant will notify
Landlord and, if requested by Landlord, retain an industrial hygienist or other
professional mold consultant to conduct an inspection and prepare a report for
Tenant and Landlord.  If the inspection
report concludes that mold is present in the Premises, Tenant, at its sole cost
and expense, will hire a contractor that satisfies the requirements of Section
10 that specializes in mold remediation to prepare a remediation plan for the
Premises. If the inspection report concludes that mold is present in the
Premises due in whole or in part to actions, omissions or negligence of Tenant,
Tenant will be responsible for the cost of such inspection and the cost of
remediation to the extent of Tenant’s responsibility for the presence of mold
at or within the Premises.  If the
inspection report concludes that mold is present in the Premises due in whole
or in part to actions, omissions or negligence of Landlord, Landlord will be
responsible for the cost of such inspection and the cost of remediation to the
extent of Landlord’s responsibility for the presence of mold at or within the
Premises. Any remediation plan will be subject to the approval of Landlord,
which approval will not be unreasonably withheld or delayed.  Upon Landlord’s approval of the plan, the
contractor will promptly carry out the work contemplated in the plan in
accordance with Laws.  To the extent
required by applicable state or local health or safety requirements, occupants
and visitors to the Premises will be notified of the conditions and the
schedule for the remediation. Landlord will have a reasonable opportunity to
inspect the remediated portion of the Premises after completion of the
remediation. The contractor performing the remediation will provide a written
certification to Landlord and Tenant that the remediation has been completed in
accordance with Laws.  Tenant covenants
and agrees to indemnify, protect, defend (by counsel reasonably acceptable to
Landlord) and save Landlord and any Indemnitee harmless against and from any
and all Claims, known or unknown, foreseen or unforeseen, contingent or
otherwise, which may at any time be imposed upon, incurred by or asserted or
awarded against Landlord, any Indemnitee or the Premises (which for purposes of
this Section shall be deemed to include any parking and/or storage space) or
any portion thereof and arising from or out of any mold on, in, under or affecting all or any portion of the
Premises, introduced by Tenant or any Tenant Representative including, without
limitation, (i) the costs of removal of any and all mold from all or any portion of the Premises, (ii) additional
costs required to take necessary precautions to protect against the release of mold on, in, under or affecting the
Premises, into the air, any body of water, any other public domain or any
surrounding areas, and (iii) any costs incurred to comply with all
Environmental Laws.  The foregoing
indemnity shall not apply to mold
which (i) was not introduced by Tenant or any Tenant Representative and/or (ii)
may be located in the Premises at or prior to the occupancy of the Premises or
any other part of the Building by Tenant or any Tenant Representative or, if
sooner, the initial commencement (heretofore or hereafter) of any work,
construction, repairs or alterations therein by Tenant or any Tenant
Representative.

27.7        Survival:  Tenant’s obligations and
liabilities under this Section 27 shall survive the expiration or earlier
termination of this Lease.  If Landlord
determines that the condition of any portion of the Project violates the
provisions of this Lease with respect to Hazardous Materials, then Landlord may
require Tenant to hold over possession of the Premises until Tenant can
surrender the Premises to Landlord in the condition in which the Premises
existed prior to the appearance of such Hazardous Materials (except for
reasonable wear and tear, casualty and condemnation), including without
limitation, performing closures as required by any Environmental Laws.  For purposes hereof, the term “reasonable
wear and tear” shall not include any deterioration in the condition or 

 13
 

 

diminution
of the value of any portion of the Project in any manner whatsoever related to
directly, or indirectly, Hazardous Materials. 
Any such holdover by Tenant will be with Landlord’s consent and will not
be terminable by Tenant in any event or circumstance until Landlord and Tenant
mutually agree that closure is complete.

28.          Financial Statements

Tenant represents and
warrants that any financial statements provided by it to Landlord were true,
correct and complete when provided, and that no material adverse change has
occurred since that date that would render them inaccurate or misleading.  Subject to restrictions on disclosure under
applicable Law, Tenant, within fifteen (15) days after request, shall provide
Landlord with current audited or certified financial statements and such other
information with respect to Tenant and any guarantor hereunder as Landlord may
reasonably request in order to create a “business profile” of Tenant and
determine Tenant’s ability to fulfill its obligations under this Lease, but in
no event more frequently than twice per calendar year.  In addition, Tenant agrees upon prior written
request to meet with Landlord, any lender or prospective purchaser during
normal business hours at mutually convenient times, from time to time, to
discuss such information about Tenant’s business and financial condition requested
by Landlord.

29.          General Provisions

29.1        Time:  Time
is of the essence in this Lease and with respect to each and all of its
provisions in which performance is a factor.

29.2        Successors and
Assigns:  The covenants and conditions herein contained,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of the parties hereto.

29.3        Recordation:  Tenant shall not record this Lease or a short form memorandum hereof.

29.4        Landlord Exculpation:  The liability of Landlord to Tenant for any default by Landlord under
the terms of this Lease shall be limited to the actual interest of Landlord and
its present or future partners or members in the Building, and Tenant agrees to
look solely to Landlord’s interest in the Building (including the proceeds from
any sale thereof) for satisfaction of any liability and shall not look to other
assets of Landlord nor seek any recourse against the assets of the individual
partners, members, directors, officers, shareholders, agents or employees of
Landlord, including without limitation, any property management company of
Landlord (collectively, the “Landlord Parties”).  It is the parties’ intention that Landlord
and the Landlord Parties shall not in any event or circumstance be personally
liable, in any manner whatsoever, for any judgment or deficiency hereunder or
with respect to this Lease.  The
liability of Landlord under this Lease is limited to its actual period of ownership
of title to the Building.

29.5        Severability and
Governing Law:  Any provisions of this Lease which shall
prove to be invalid, void or illegal shall in no way affect, impair or
invalidate any other provisions hereof and such other provisions shall remain
in full force and effect.  This Lease
shall be enforced, governed by and construed in accordance with the laws of the
State of California.

29.6        Attorneys’ Fees:  Tenant
shall pay to Landlord on demand all reasonable attorney’s fees, costs and
expenses incurred by Landlord in recovery of any Rent or enforcement of
Landlord’s rights under this Lease. 
Furthermore, if Landlord or Tenant employs an attorney to assert or
defend any action arising out of the breach of any term, covenant or provision
of this Lease, or to bring legal action for the unlawful detainer of the
Premises, the prevailing party shall be entitled to recover from the
non-prevailing party reasonable attorney’s fees and costs of suit incurred in
connection therewith.  For purposes of
this Section 29.6 a party shall be considered to be the “prevailing
party” to the extent that (i) such party initiated the litigation and
substantially obtained the relief which it sought (whether by judgment,
voluntary agreement or action of the other party, trial, or alternative dispute
resolution process), (ii) such party did not initiate the litigation and
either (1) received a judgment in its favor, or (2) did not receive
judgment in its favor, but the party receiving the judgment did not
substantially obtain the relief which it sought, or (iii) the other party
to the litigation withdrew its claim or action without having substantially
received the relief which it was seeking. 
With respect to any matter as to which Tenant requests Landlord’s
consent or approval hereunder, or if Tenant requests any waiver, modification,
or amendment of any provisions hereof, Tenant shall, whether or not any such
consent, approval, waiver, modification or amendment, is agreed to, pay to
Landlord as Rent hereunder all of Landlord’s reasonable out of pocket costs (including,
without limitation, reasonable attorneys’ fees and engineers’ fees) incurred by
Landlord in connection with the review of such matter and preparation and
negotiation of documentation in connection therewith.

29.7        Entire Agreement:  It is
understood and agreed that there are no oral agreements between the parties
hereto affecting this Lease and this Lease (including all exhibits and addenda)
supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease.  This Lease, all exhibits attached hereto, and
any separate agreement executed by Landlord and Tenant in connection with this
Lease and dated of even date herewith (a) contain all of the terms, covenants,
conditions, warranties and agreements of the parties relating in any manner to
the rental, use and occupancy of the Premises, and (b) shall be considered to
be the only agreement between the parties hereto and their representatives and
agents.  This Lease may not be modified,
deleted or added to except by a writing signed by the parties hereto.  All negotiations and oral agreements have
been merged into and are included herein. 
There are no other representations or warranties between the parties,
and all reliance with respect to representations is based totally upon the
representations and agreements contained in this Lease.  The parties acknowledge that (i) each party
and/or its counsel have reviewed and revised this Lease, and (ii) no rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall be employed in the interpretation or enforcement of this
Lease or any amendments or exhibits to this Lease or any document executed and
delivered by either party in connection with this Lease.

29.8        Warranty of Authority:  Each
person executing this Lease on behalf of a party represents and warrants that
(i) such person is duly and validly authorized to do so on behalf of the entity
it purports to so bind, and (ii) if such party is a limited liability company,
partnership, corporation or trustee, that such limited liability company, partnership,
corporation or trustee has full right and authority to enter into this Lease
and perform all of its obligations hereunder. 
Tenant hereby warrants that this Lease is legal, valid and binding upon
Tenant and enforceable against Tenant in accordance with its terms.

29.9        Notices:  All
notices, demands, statements or communications (collectively, “Notices”) given
or required to be given by either party to the other hereunder shall be in
writing, shall be sent by United States certified or registered mail, postage
prepaid, return receipt requested, delivered by a nationally recognized
same-day or overnight courier (e.g. FedEx or UPS) or delivered personally (i)
to Tenant at the Tenant’s Address set forth in the Basic Lease Information, or
to such other place as Tenant may from time to time designate in a Notice to
Landlord; or (ii) to Landlord at Landlord’s Address set forth in the Basic
Lease Information, or to such other firm or to such other place as Landlord may
from time to time designate in a Notice to Tenant.  Any Notice will be deemed given on the date
it is mailed as provided in this Section 29.9, upon the first (1st) business day after delivery to a nationally recognized overnight
courier, on the date of delivery by a nationally recognized same-day courier ,
or upon the date personal delivery is made.

29.10      Joint and Several;
Covenants and Conditions:  If Tenant consists of more than
one person or entity, the obligations of all such persons or entities shall be
joint and several.  Each provision to be
performed by Tenant hereunder shall be deemed to be both a covenant and a
condition.

 14

 

29.11      Confidentiality:  Tenant
acknowledges that the contents of this Lease and any related documents are
confidential information.  Tenant shall keep and maintain such information strictly
confidential and shall not disclose such confidential information to any person
or entity other than Tenant’s financial, legal and space planning consultants.

29.12      Landlord Renovations:  Tenant
acknowledges that Landlord may from time to time, at Landlord’s sole option,
renovate, improve, develop, alter, or modify (collectively, “Renovations”)
portions of the Building, Premises, Common Areas and the Project, including
without limitation, systems and equipment, roof, and structural portions of the
same; provided Landlord shall utilize commercially reasonable efforts to minimize
the disruption and interference with Tenant’s business and operations at the
Premises.  In connection with such
Renovations, Landlord may, among other things, erect scaffolding or other
necessary structures in the Building, limit or eliminate access to portions of
the Project, including portions of the Common Areas, or perform work in the
Building, which work may create noise, dust or leave debris in the
Building.  Tenant hereby agrees that such
Renovations and Landlord’s actions in connection with such Renovations shall in
no way constitute a constructive eviction of Tenant nor entitle Tenant to any
abatement of Rent.  Landlord shall have
no responsibility, or for any reason be liable to Tenant, for any direct or
indirect injury to or interference with Tenant’s business arising from the
Renovations, nor shall Tenant be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Premises or of
Tenant’s Property, Alterations or improvements resulting from the Renovations
or Landlord’s actions in connection with such Renovations, or for any
inconvenience or annoyance occasioned by such Renovations or Landlord’s actions
in connection with such Renovations; provided Landlord shall utilize
commercially reasonable efforts to minimize the disruption and interference
with Tenant’s business and operations at the Premises.

29.13      Waiver
of Jury Trial:  To the extent permitted by Law, the parties
hereto shall and they hereby do waive trial by jury in any action, proceeding
or counterclaim brought by either of the parties hereto against the other on
any matters whatsoever arising out of or in any way related to this Lease, the
relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises,
Building, Park or Project and/or any claim of injury, loss or damage.

29.14      Submission of Lease: 
Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or an option for lease, and it is not
effective as a lease or otherwise until execution and delivery by both Landlord
and Tenant.

29.15      Anti-Terrorism
Provisions:

(i)  Tenant represents and
warrants as of the date of this Lease and throughout the Term of this Lease
that: (a) Tenant is and will continue to be in compliance with the
Anti-Terrorism Laws (as defined below); (b) Tenant is not, and will not be, a
Prohibited Person (as defined below); (c) Tenant does not and will not
knowingly: (A) conduct any business or engage in any transaction or dealing
with any Prohibited Person, or (B) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to Executive Order 13224 (as defined below); and (d) Tenant has not entered
into this Lease directly or indirectly on behalf of, and Tenant is not
otherwise acting, directly or indirectly, for or on behalf of any Prohibited
Person.  Tenant shall promptly notify
Landlord if it has reason to believe that any of the foregoing representations
and warranties are no longer correct.

(ii)  For the purposes hereof: (a)
“Anti-Terrorism Laws” means any laws related to terrorism or money laundering,
including Executive Order 13224 and the USA Patriot Act (as defined below), and
any regulations promulgated under either of them; (b) “Executive Order 13224”
means Executive Order Number 13224 on Terrorism Financing, effective September
24, 2001; (c) “Person” means any individual, corporation, partnership, joint
venture, limited liability company, association, bank, joint-stock company,
trust, unincorporated organization or government, or an agency or political
subdivision thereof; (d) “Prohibited Person” means (A) a Person subject to the
provisions of Executive Order 13224; (B) a Person owned or controlled by, or
acting for or on behalf of, an entity that is subject to the provisions of
Executive Order 13224; (C) a Person with whom Tenant is prohibited from dealing
by any of the Anti-Terrorism Laws; (D) a Person that commits, threatens or
conspires to commit or supports “terrorism” as defined in Executive Order
13224; (E) a Person or entity that is named as a “specially designated national
and blocked person” on the most current list published by the U.S. Treasury
Department’s Office of  Foreign Assets
Control; or (F) a Person who is affiliated with a Person described in clauses
(A) through (E) above; and (e) “USA Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, H.R. 3162, Public Law 107-56, as may be amended
from time to time.

(iii)  Tenant shall defend,
indemnify, and hold harmless Landlord, its members, trustees and agents and its
and their respective employees, officers, directors and members from and
against any and all Claims, arising from or related to any breach of the
foregoing representations and warranties.

(iv)  Tenant acknowledges and
agrees that, notwithstanding anything to the contrary in this Lease, Landlord
may withhold its consent to any Transfer if the prospective assignee or
subtenant is a Prohibited Person.

29.16      Independent
Obligations:  The obligation of Tenant to pay Rent
hereunder and the obligation of Tenant to perform Tenant’s other covenants and
duties hereunder constitute independent, unconditional obligations to be
performed at all times provided for hereunder and are independent of the
Landlord’s performance of Landlord’s duties and obligations hereunder.  Except as expressly provided in this Lease,
Tenant waives and relinquishes all rights which Tenant might have to claim any
nature of lien against or withhold, abate or deduct from, or offset against
Rent.

30.          Signs

All
signs and graphics of every kind visible in or from public view shall be
subject to (i) Landlord’s prior written approval and (ii), and in compliance
with, all applicable Laws, Development Documents, Recorded Matters, Rules and
Regulations, and Landlord’s sign criteria (“Sign Criteria”) as same may exist
from time to time.  Landlord shall
cooperate with Tenant in obtaining required governmental approvals for all approved
signage.  Tenant shall remove all such
signs and graphics prior to the expiration or earlier termination of this
Lease.  Such installations and removals
shall be made in a manner as to avoid damage or defacement of the Premises and
all other affected portions of the Project. 
Tenant shall repair any such damage, including without limitation,
discoloration caused by such installation or removal.  Landlord shall have the right, at its option,
to deduct from the Security Deposit such sums as are reasonably necessary to
remove such signs and make any repairs necessitated by such removal.  Notwithstanding the foregoing, in no event
shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which are likely
to interfere with the visibility of any sign, canopy, advertising matter, or
decoration of any kind of any other business or occupant of the Building or
other portions of the Project be permitted hereunder.  Tenant further agrees to maintain each such
sign and graphics, as may be approved, in good condition and repair at all
times.  Subject to the terms and
conditions of this Lease, including, without limitation, Landlord’s approval
rights pursuant to this Section 30 and Exhibit B, Tenant shall be permitted to
install its signage: (A) on the sign located at the main entrance to the
Building, (B) on the existing Building monument sign located in the landscaped
area at the corner of Plumeria Drive and Montague Expressway, and (C) on the
exterior wall on the Montague Expressway side of the Building, and the costs of
all such signage and the installation thereof shall be paid for with the Tenant
Improvement Allowance.  Landlord
acknowledges that Tenant’s signage existing as of the Lease Date is hereby
approved.

 15
 

 

31.          Mortgagee Protection

Upon
any default on the part of Landlord, Tenant will give written Notice by
registered or certified mail to any beneficiary of a deed of trust or mortgagee
of a mortgage covering the Premises who has provided Tenant with Notice of
their interest together with an address for receiving Notice, and shall offer
such beneficiary or mortgagee a reasonable opportunity to cure the default,
including time to obtain possession of the Premises by power of sale or a
judicial foreclosure, if such should prove necessary to effect a cure.  If such default cannot be cured within such
time period, then such additional time as may be necessary will be given to
such beneficiary or mortgagee to effect such cure so long as such beneficiary
or mortgagee has commenced the cure within the original time period and
thereafter diligently pursues such cure to completion, in which event this
Lease shall not be terminated while such cure is being diligently pursued.  Tenant agrees that each lender to whom this
Lease has been assigned by Landlord is an express third party beneficiary
hereof.  Tenant shall not make any
prepayment of Rent more than one (1) month in advance without the prior written
consent of each such lender.  Tenant waives
the collection of any deposit from each such lender or purchaser at a foreclosure
sale unless said lender or purchaser shall have actually received and not
refunded the deposit.  Tenant agrees to
make all payments under this Lease to the lender with the most senior
encumbrance upon receiving a direction, in writing, to pay said amounts to such
lender.  Tenant shall comply with such
written direction to pay without determining whether an event of default exists
under such lender’s loan to Landlord. 
If, in connection with obtaining financing for the Premises or any other
portion of the Project, Landlord’s lender shall request reasonable
modification(s) to this Lease as a condition to such financing, Tenant shall
not unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not materially and adversely affect Tenant’s rights hereunder,
including Tenant’s use, occupancy or quiet enjoyment of the Premises.

32.          Warranties of Tenant

Tenant
warrants and represents to Landlord, for the express benefit of Landlord, that
Tenant has undertaken a complete and independent evaluation of the risks
inherent in the execution of this Lease and the operation of the Premises for
the use permitted hereby, and that, based upon said independent evaluation,
Tenant has elected to enter into this Lease and hereby assumes all risks with
respect thereto.  Tenant further warrants
and represents to Landlord, for the express benefit of Landlord, that in
entering into this Lease, Tenant has not relied upon any statement, fact,
promise or representation (whether express or implied, written or oral) not
specifically set forth herein and that any statement, fact, promise or
representation (whether express or implied, written or oral) made at any time
to Tenant, which is not expressly incorporated herein, is hereby waived by
Tenant.

33.          Brokerage Commission

Landlord
and Tenant each represents and warrants for the benefit of the other that it
has had no dealings with any real estate broker, agent or finder in connection
with the Premises and/or the negotiation of this Lease, except for the
Broker(s) specified in the Basic Lease Information, and that it knows of no
other real estate broker, agent or finder who is or might be entitled to a real
estate brokerage commission or finder’s fee in connection with this Lease or
otherwise based upon contacts between the claimant and Tenant.  Each party shall indemnify and hold harmless
the other from and against any and all Claims with respect to a fee or
commission by any real estate broker, agent or finder in connection with the
Premises and this Lease other than the Broker(s) (if any) resulting from the
actions of the indemnifying party. 
Unless expressly agreed to in writing by Landlord and the Broker(s), no
real estate brokerage commission or finder’s fee shall be owed to, or otherwise
payable to, the Broker(s) for any renewals or other extensions of the initial
term of this Lease or for any additional space leased by Tenant other than the
Premises as same exists as of the Lease Date. 
Tenant further represents and warrants to Landlord that Tenant will not
receive (i) any portion of any brokerage commission or finder’s fee payable to
the Broker(s) in connection with this Lease, or (ii) any other form of
compensation or incentive from the Broker(s) with respect to this Lease.

34.          Quiet Enjoyment

Landlord
covenants with Tenant, upon the paying of Rent and observing and keeping the
covenants, agreements and conditions of this Lease on its part to be kept,
during the periods that Tenant is not otherwise in Default of this Lease, and
subject to the rights of any of Landlord’s lenders, (i) that Tenant shall and
may peaceably and quietly have, hold, occupy and enjoy the Premises and Common
Areas during the Term, and (ii) neither Landlord, nor any successor or assign
of Landlord, shall disturb Tenant’s occupancy or enjoyment of the Premises and
Common Areas.  The foregoing covenant is
in lieu of any other covenant express or implied.

35.          Satellite Dish

Tenant
shall have the non-exclusive right (but only to the extent permitted by the
City of San Jose and all agencies and governmental authorities having
jurisdiction thereof), at Tenant’s sole cost and expense, to install and
operate up to two (2) antennae or satellite dishes (“Satellite Dishes”) along
with any necessary cables (“Cables”) on a portion of the roof of the Building
to be designated by Landlord (“Roof Space”) for the Term of the Lease (the
Satellite Dishes and Cables are hereinafter collectively referred to as the “Equipment”).  The location, size and design of the
Equipment shall be subject to Landlord’s approval, not to unreasonably withheld
and which best promotes the safety, aesthetics and efficiency of the Equipment;
provided, all of the Equipment and any modifications thereto or placement
thereof shall be (i) at Tenant’s sole cost and expense, (ii) contained visually
within the roof screen, (iii) installed and operated to Landlord’s reasonable
specifications (including the requirement that any installation of Equipment be
performed by Landlord’s contractor), and (iv) installed, maintained, operated
and removed in accordance with all Recorded Matters and applicable Laws.  All modifications to the Building, including
the Roof Space, if any, shall be reasonably approved by Landlord prior to
commencement of any work with respect to the Equipment.  No additional rent shall be paid by Tenant
for use of the Roof Space and operation of the Equipment.  The Equipment shall remain the property of
Tenant and Tenant shall remove the Equipment upon the expiration or earlier termination
of the Lease.  Tenant shall restore the
Roof Space and any other portion of the Buildings affected by the Equipment to
its original condition, excepting ordinary wear and tear and/or damage or
destruction due to fire or other casualty not caused directly or indirectly by
Tenant, its agents, employees, contractors or the Equipment or any part
thereof.  Tenant may not assign, lease,
rent, sublet or otherwise transfer any of its interest in the Roof Space or the
Equipment except together with the remainder of all of the Premises as more particularly
set forth in Section 14.  Each of the
other provisions of this Lease shall be applicable to the Equipment and the use
of the Roof Space by Tenant, including without limitation, Sections 11 and 13
of this Lease.  The Equipment shall
comply with all-non-interference rules of the Federal Communications
Commission.  If applicable, Tenant shall
provide to Landlord a copy of (i) the Federal Communications Commission (or
other agency) grant which has awarded frequencies to Tenant and (ii) a list of
Tenant’s frequencies.  Anything to the
contrary contained herein notwithstanding, if, during the Lease Term, as such
Term may be extended, Landlord, in its reasonable judgment, believes that the
Equipment poses a human health or environmental hazard that cannot be
remediated or has not been remediated within ten (10) days after Tenant has
been notified thereof, then Tenant shall immediately cease all operations of
the Equipment and Tenant shall remove all of the Equipment within thirty (30)
days thereafter.  To the best of Tenant’s
knowledge, Tenant represents to Landlord that the Equipment shall not emit or
project any electro-magnetic fields which pose a human health or environmental
hazard.  In addition, Tenant shall be
responsible for insuring the Equipment and Landlord shall have no
responsibility therefor.  Tenant shall
indemnify, defend (by counsel reasonably acceptable to Landlord) and hold
harmless Landlord from any and all claims, demands, losses, liabilities, damages,
judgments, costs and expenses (including reasonable attorneys’ fees) Landlord
may suffer or incur arising out of or related to the installation, use,
operation, maintenance, replacement and/or removal of the Equipment or any
portion thereof.

/// signature page follows ///

 16
 

 

 

/// continued from previous page ///

 

IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease Date specified
in the Basic Lease Information.

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  TECHWELL, INC.,

  	
   

  	
  FSP MONTAGUE
  BUSINESS CENTER CORP.,

  
	
  a Delaware
  corporation

  	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Hiro Kozato

  	
   

  	
   

  	
  By:

  	
  /s/ George J. Carter

  	
   

  
	
  Name:

  	
  Hiro Kozato

  	
   

  	
  Name:

  	
  George J. Carter

  	
   

  
	
  Title:

  	
  Chief Executive Officer/President

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark Voll

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Mark Voll

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  	
   

  
								

 

 17

 

Exhibit A

Premises

This
exhibit, entitled “Premises”, is and shall constitute Exhibit A to that
certain Lease Agreement dated November 6, 2006 (the “Lease”), by and
between FSP Montague Business Center Corp., a Delaware corporation (“Landlord”)
and Techwell, Inc., a Delaware corporation (“Tenant”) for the leasing of
certain premises located in the Montague
Business Center at 408 East Plumeria Drive, San Jose, California (the “Premises”).

The
Premises consist of the rentable square footage of space specified in the Basic
Lease Information and has the address specified in the Basic Lease
Information.  The Premises are a part of
and are contained in the Building specified in the Basic Lease Information.  The cross-hatched area depicts the Premises
within the Building:

 Exhibit A, Page 1

 

Exhibit
B

Tenant Improvements

This
exhibit, entitled “Tenant Improvements”, is and shall constitute Exhibit B
to that certain Lease Agreement dated November 6, 2006 (the “Lease”), by
and between FSP Montague Business Center Corp., a Delaware corporation (“Landlord”),
and Techwell, Inc., a Delaware
corporation (“Tenant”), for the leasing of certain premises located at Montague
Business Center at 408 East Plumeria Drive, San Jose, California (the “Premises”).  The terms, conditions and provisions of this Exhibit
B are hereby incorporated into and are made a part of the Lease.  Any capitalized terms used herein and not
otherwise defined herein shall have the meaning ascribed to such terms as set
forth in the Lease:

1.             Tenant
To Construct Tenant Improvements.  Subject to the provisions below,
Tenant shall be solely responsible for the planning, construction and
completion of the interior tenant improvements to the Premises and Tenant’s
exterior signage (“Tenant Improvements”) to the Premises in accordance with the
terms and conditions of this Exhibit B. 
The Tenant Improvements shall not include any of Tenant’s personal
property, trade fixtures, furnishings (except as
herein provided), equipment or similar items.

2.             Tenant
Improvement Plans.

A.            Preliminary
Plans and Specifications.  Promptly after execution of the
Lease, Tenant shall retain a licensed and insured architect (“Architect”) to
prepare preliminary working architectural and engineering plans and
specifications (“Preliminary Plans and Specifications”) for the Tenant
Improvements.  Tenant shall deliver the
Preliminary Plans and Specifications to Landlord. The Preliminary Plans and
Specifications shall be in sufficient detail to show locations, types and
requirements for all heat loads, people loads, floor loads, power and plumbing,
regular and special HVAC needs, telephone communications, telephone and
electrical outlets, lighting, lighting fixtures and related power, and
electrical and telephone switches. 
Landlord shall reasonably approve or disapprove the Preliminary Plans
and Specifications within five (5) days after Landlord receives the Preliminary
Plans and Specifications and, if disapproved, Landlord shall return the
Preliminary Plans and Specifications to Tenant, who shall make all necessary
revisions within ten (10) days after Tenant’s receipt thereof.  This procedure shall be repeated until
Landlord approves the Preliminary Plans and Specifications.  The approved Preliminary Plans and
Specifications, as modified, shall be deemed the “Final Preliminary Plans and
Specifications”.  Notwithstanding the
foregoing provisions of this Paragraph 2.A., Landlord and Tenant hereby approve
the Preliminary Plans and Specifications attached hereto as Schedule 1

B.            Final
Plans and Specifications.  After the Final Preliminary
Plans and Specifications are approved by Landlord and are deemed to be the
Final Preliminary Plans and Specifications, Tenant shall cause the Architect to
prepare in twenty (20) days following Landlord’s approval of the Final Preliminary
Plans and Specifications the final working architectural and engineering plans,
specifications and drawings, (“Final Plans and Specifications”) for the Tenant
Improvements. Tenant shall then deliver the Final Plans and Specifications to
Landlord.  Landlord shall reasonably
approve or disapprove the Final Plans and Specifications within five (5) days
after Landlord receives the Final Plans and Specifications and, if disapproved,
Landlord shall return the Final Plans and Specifications to Tenant who shall
make all necessary revisions within ten (10) days after Tenant’s receipt
thereof. This procedure shall be repeated until Landlord approves, in writing,
the Final Plans and Specifications.  The
approved Final Plans and Specifications, as modified, shall be deemed the “Construction
Documents”.

C.            Miscellaneous.  All deliveries of the Preliminary Plans
and Specifications, the Final Preliminary Plans and Specifications, the Final
Plans and Specifications, and the Construction Documents shall be delivered by
messenger service, by personal hand delivery or by overnight parcel
service.  While Landlord has the right to
approve the Preliminary Plans and Specifications, the Final Preliminary Plans
and Specifications, the Final Plans and Specifications, and the Construction
Documents, Landlord’s interest in doing so is to protect the Premises, the
Building and Landlord’s interest. 
Accordingly, Tenant shall not rely upon Landlord’s approvals and
Landlord shall not be the guarantor of, nor responsible for, the adequacy and
correctness or accuracy of the Preliminary Plans and Specifications, the Final
Preliminary Plans and Specifications, the Final Plans and Specifications, and
the Construction Documents, or the compliance thereof with applicable laws, and
Landlord shall incur no liability of any kind by reason of granting such
approvals.

D.            Building
Standard Work. The
Construction Documents shall provide that the Tenant Improvements to be
constructed in accordance therewith must be at least equal, in quality, to Landlord’s
building standard materials, quantities and procedures then in use by Landlord
(“Building Standards”) attached hereto as Exhibit B-2, and shall consist
of improvements which are generic in nature. 
Notwithstanding the foregoing Building Standards, all finishes to be
constructed and finish materials to be used as part of the Tenant Improvements
(including but not limited to, doors, door frames, hardware, drywall texture,
ceiling grid, ceiling tiles, light fixtures and ceiling height) shall match existing
specifications, finishes and finish materials in the Premises to the extent
possible.

E.             Construction
Agreements. Tenant
hereby covenants and agrees that a provision shall be included in each and
every agreement made with the Architect and the Contractor with respect to the
Tenant Improvements specifying that Landlord shall be a third party beneficiary
thereof, including without limitation, a third party beneficiary of all
covenants, representations, indemnities and warranties made by the Architect and/or
Contractor.

3.             Permits.
Tenant at its sole
cost and expense (subject to the provisions of Paragraph 5 below) shall obtain
all governmental approvals of the Construction Documents to the full extent
necessary for the issuance of a building permit for the Tenant Improvements
based upon such Construction Documents. 
Tenant at its sole cost and expense shall also cause to be obtained all
other necessary approvals and permits from all governmental agencies having jurisdiction
or authority for the construction and installation of the Tenant Improvements
in accordance with the approved Construction Documents.  Tenant at its sole cost and expense (subject
to the provisions of Paragraph 5 below) shall undertake all steps necessary to
insure that the construction of the Tenant Improvements is accomplished in
strict compliance with all statutes, laws, ordinances, codes, rules, and
regulations applicable to the construction of the Tenant Improvements and the
requirements and standards of any insurance underwriting board, inspection
bureau or insurance carrier insuring the Premises and/or the Building.

4.             Construction.

A.            Tenant shall be solely
responsible for the construction, installation and completion of the Tenant
Improvements in accordance with the Construction Documents approved by Landlord
and is solely responsible for the payment of all amounts when payable in
connection therewith without any cost or expense to Landlord, except for
Landlord’s obligation to contribute the Tenant Improvement Allowance in accordance
with the provisions of Paragraph 5 below. 
Tenant shall diligently proceed with the construction, installation and
completion of the Tenant Improvements in accordance with the Construction
Documents and the completion schedule reasonably approved by Landlord.  No material changes shall be made to the
Construction Documents and the completion schedule approved by Landlord without
Landlord’s prior written consent, which consent shall not be unreasonably
withheld or delayed.

B.            Tenant at its sole cost
and expense (subject to the provisions of Paragraph 5 below) shall employ a
licensed, insured and bonded general contractor (“Contractor”) to construct the
Tenant Improvements in accordance with the Construction Documents. The
construction contracts between Tenant and the Contractor and between the
Contractor and subcontractors shall be subject to Landlord’s prior written
approval, which approval shall not be unreasonably withheld or delayed.  Proof that the Contractor is licensed in
California, is bonded as required under California law, and has the insurance
specified in Exhibit B-1, attached hereto and incorporated herein by
this reference, shall be provided to Landlord at the time that Tenant requests
approval of the Contractor from Landlord. Tenant shall comply with or cause the
Contractor to comply with all other terms and provisions of Exhibit B-1. 

 Exhibit B, Page 1
 

 

C.            Prior to the
commencement of the construction and installation of the Tenant Improvements,
Tenant shall provide the following to Landlord, all of which shall be to
Landlord’s reasonable satisfaction:

(i)            An estimated budget
and cost breakdown for the Tenant Improvements.

(ii)           Estimated completion
schedule for the Tenant Improvements.

(iii)          Copies of all
required approvals and permits from governmental agencies having jurisdiction
or authority for the construction and installation of the Tenant Improvements;
provided, however, if prior to commencement of the construction and
installation of Tenant Improvements Tenant has not received the electrical,
plumbing or mechanical permits, Tenant shall only be required to provide
Landlord with evidence that Tenant has made application therefor, and, upon
receipt by Tenant of such permits, Tenant shall promptly provide Landlord with
copies thereof.

(iv)          Evidence of Tenant’s
procurement of insurance required to be obtained pursuant to the provisions of
Paragraphs 4.B and 4.G.

D.            Landlord shall at all
reasonable times have a right to inspect the Tenant Improvements (provided
Landlord does not materially interfere with the work being performed by the
Contractor or its subcontractors) and Tenant shall immediately cease work upon
written notice from Landlord if the Tenant Improvements are not in compliance
with the Construction Documents approved by Landlord.  If Landlord shall give notice of faulty
construction or any other deviation from the Construction Documents, Tenant
shall cause the Contractor to make corrections promptly. However, neither the
privilege herein granted to Landlord to make such inspections, nor the making of
such inspections by Landlord, shall operate as a waiver of any rights of
Landlord to require good and workmanlike construction and improvements
constructed in accordance with the Construction Documents.

E.             Subject to Landlord
complying with its obligations in Paragraph 5 below, Tenant shall pay and
discharge promptly and fully all claims for labor done and materials and
services furnished in connection with the Tenant Improvements. The Tenant
Improvements shall not be commenced until five (5) business days after Landlord
has received notice from Tenant stating the date the construction of the Tenant
Improvements is to commence so that Landlord can post and record any
appropriate Notice of Non-responsibility.

F.             Tenant acknowledges
and agrees that the agreements and covenants of Tenant in Sections 10 and 9 of
the Lease shall be fully applicable to Tenant’s construction of the Tenant
Improvements.

G.            Tenant shall maintain,
and cause to be maintained, during the construction of the Tenant Improvements,
at its sole cost and expense, insurance of the types and in the amounts
specified in Exhibit B-1 and in Section 12 of the Lease, together with
builders’ risk insurance for the amount of the completed value of the Tenant
Improvements on an all-risk non-reporting form covering all improvements under
construction, including building materials, and other insurance in amounts and
against such risks as the Landlord shall reasonably require in connection with
the Tenant Improvements.

H.            No materials, equipment
or fixtures shall be delivered to or installed upon the Premises pursuant to
any agreement by which another party has a security interest or rights to
remove or repossess such items, without the prior written consent of Landlord,
which consent shall not be unreasonably withheld.

I.              Landlord reserves the
right to establish reasonable rules and regulations for the use of the Building
during the course of construction of the Tenant Improvements, including, but
not limited to, construction parking, storage of materials, hours of work, use
of elevators, and clean-up of construction related debris.

J.             Upon completion of the
Tenant Improvements, Tenant shall deliver to Landlord the following, all of
which shall be to Landlord’s reasonable satisfaction:

(i)            Any certificates required
for occupancy, including a permanent and complete Certificate of Occupancy
issued by the City of San Jose.

(ii)           A Certificate of
Completion signed by the Architect who prepared the Construction Documents,
reasonably approved by Landlord.

(iii)          A cost breakdown
itemizing all expenses for the Tenant Improvements, together with invoices and
receipts for the same or other evidence of payment.

(iv)          Final and
unconditional mechanic’s lien waivers for all the Tenant Improvements.

(v)           A Notice of Completion
for execution by Landlord, which certificate once executed by Landlord shall be
recorded by Tenant in the official records of the County of Santa Clara, and
Tenant shall then deliver to Landlord a true and correct copy of the recorded
Notice of Completion.

(vi)          A true and complete
copy of all as-built plans and drawings for the Tenant Improvements.

5.             Tenant
Improvement Allowance.

A.            Subject to Tenant’s
compliance with the provisions of this Exhibit B, Landlord shall provide
to Tenant an allowance in the amount of Two Hundred Twenty-Three Thousand Two
Hundred Sixty Four and 00/100 dollars ($223,264) (the “Tenant Improvement
Allowance”) to construct and install only the Tenant Improvements.  The Tenant Improvement Allowance shall be
used to design, prepare, plan, obtain the approval of, construct and install
the Tenant Improvements, and if applicable, the Furnishings Credit (as defined
below), and for no other purpose.  Except
as otherwise expressly provided herein, Landlord shall have no obligation to
contribute the Tenant Improvement Allowance unless and until the Construction
Documents have been approved by Landlord and Tenant has complied with all
requirements set forth in Paragraph 4.C. of this Exhibit B.  In addition to the foregoing, Landlord shall
have no obligation to disburse all or any portion of the Tenant Improvement
Allowance to Tenant unless Tenant makes a progress payment request pursuant to
the terms and conditions of Paragraph 5.B. below prior to March 31, 2007.  The costs to be paid out of the Tenant
Improvement Allowance shall include all reasonable costs and expenses
associated with the design, preparation, approval, planning, construction and
installation of the Tenant Improvements (the “Tenant Improvement Costs”),
including all of the following:

(i)            All costs of the
Preliminary Plans and Specifications, the Final Plans and Specifications, and
the Construction Documents, including costs incurred by Landlord in connection
with the review and approval thereof, and engineering costs associated with
completion of the State of California energy utilization calculations under
Title 24 legislation:

(ii)           All costs of
obtaining building permits and other necessary authorizations from local
governmental authorities;

(iii)          All costs of
interior design and finish schedule plans and specifications including as-built
drawings, if applicable;

 Exhibit B, Page 2
 

 

(iv)          All direct and
indirect costs of procuring, constructing and installing the Tenant
Improvements in the Premises, including, but not limited to, the construction fee
for overhead and profit and the cost of all on-site supervisory and
administrative staff, office, equipment and temporary services rendered by the
Contractor in connection with the construction of the Tenant Improvements;
provided, however, that the construction fee for overhead and profit, the cost
of all on-site supervisory and administrative staff, office, equipment and
temporary services shall not exceed amounts which are reasonable and customary
for such items in the local construction industry;

(v)           All fees payable to
the Architect and any engineer if they are required to redesign any portion of
the Tenant Improvements following Tenant’s and Landlord’s approval of the
Construction Documents;

(vi)          Utility connection
fees;

(vii)         Inspection fees and filing
fees payable to local governmental authorities, if any;

(viii)        All costs of all
permanently affixed equipment and non-trade fixtures provided for in the
Construction Documents, including the cost of installation;

(ix)           A construction management fee payable
to Landlord in the amount of two and one-half percent (2 1/2%) of the aggregate
of the principal amount of the Amortized Excess TI Costs (defined below) and
the Tenant Improvement Allowance (the “CM Fee”); and

(x)            Provided the Tenant
Improvement Allowance is not used in its entirety pursuant to the foregoing
Tenant Improvement Costs, then Tenant shall have the right to reimbursement of
up to Fifty-Five Thousand Eight Hundred Sixteen Dollars ($55,816) (the “Furnishings
Credit”) for new furniture in the Premises.

The
Tenant Improvement Allowance shall be the maximum contribution by Landlord for
the Tenant Improvement Costs, and the disbursement of the Tenant Improvement
Allowance is subject to the terms contained hereinbelow.

B.            Except for payment
of the CM Fee, and subject to Paragraph 5.A. above, Landlord will make payments to Tenant from the
Tenant Improvement Allowance to reimburse Tenant for Tenant Improvement Costs
paid or incurred by Tenant.  Payment of
the CM Fee shall be the first payment from the Tenant Improvement Allowance and
shall be made by means of a deduction or credit against the Tenant Improvement
Allowance.  Tenant shall be entitled to
submit up to two (2) requests for reimbursement of the Tenant Improvement
Allowance with each such payment conditioned on satisfaction of the following
conditions precedent: (a) receipt by Landlord of conditional mechanics’ lien
releases for the work completed and to be paid by said progress payment,
conditioned only on the payment of the sums set forth in the mechanics’ lien
release, executed by the Contractor and all subcontractors, labor suppliers and
materialmen; (b) receipt by Landlord of unconditional mechanics’ lien releases
from the Contractor and all subcontractors, labor suppliers and materialmen for
all work other than that being paid by the current progress payment previously
completed by the Contractor, subcontractors, labor suppliers and materialmen
and for which Tenant has received funds from the Tenant Improvement Allowance
to pay for such work; (c) receipt by Landlord of any and all documentation
reasonably required by Landlord detailing the work that has been completed and
the materials and supplies used as of the date of Tenant’s request for the
progress payment, including, without limitation, invoices, bills, or statements
for the work completed and the materials and supplies used; and (d) completion
by Landlord or Landlord’s agents of any inspections of the work completed and
materials and supplies used as deemed reasonably necessary by Landlord.  Except for the CM Fee payment (credit), Tenant
Improvement Allowance payments shall be paid to Tenant within fourteen (14)
days from the satisfaction of the conditions set forth in the immediately
preceding sentence. The preceding notwithstanding, all Tenant Improvement Costs
paid or incurred by Tenant prior to Landlord’s approval of the Construction
Documents in connection with the design and planning of the Tenant Improvements
by Architect shall be paid from the Tenant Improvement Allowance, without any
retention, within fourteen (14) days following Landlord’s receipt of invoices,
bills or statements from Architect evidencing such costs. Notwithstanding the
foregoing to the contrary, Landlord shall be entitled to withhold and retain
twenty percent (20%) of the Tenant Improvement Allowance or of any Tenant
Improvement Allowance payment until the Landlord has received all of the
documents set forth in Paragraph 4.J. above or, at Landlord’s election,
lien-free expiration of the time for filing of any mechanics’ liens claimed or
which might be filed on account of any work ordered by Tenant or the Contractor
or any subcontractor in connection with the construction and installation of
the Tenant Improvements.

C.            Landlord shall not be
obligated to pay any Tenant Improvement Allowance reimbursement or the Tenant
Improvement Allowance retention if on the date Tenant is entitled to receive
the Tenant Improvement Allowance reimbursement or the Tenant Improvement
Allowance retention, there is an event of default under this Lease.  Such payments shall resume upon Tenant curing
any such event of default within the time periods which may be provided for in
the Lease.

D.            Should the total cost
of constructing the Tenant Improvements be less than the Tenant Improvement
Allowance, the Tenant Improvement Allowance shall be automatically reduced to
the amount equal to said actual cost.

6.             Termination.  If the
Lease is terminated prior to the date on which the Tenant Improvements are
completed, for any reason due to the Default of Tenant hereunder, in addition
to any other remedies available to Landlord under the Lease, Tenant shall pay
to Landlord as Additional Rent under the Lease, within five (5) days of receipt
of a statement therefor, any and all costs incurred by Landlord and not
reimbursed or otherwise paid by Tenant through the date of termination in
connection with the Tenant Improvements to the extent planned, installed and/or
constructed as of such date of termination, including, but not limited to, any
costs related to the removal of all or any portion of the Tenant Improvements
and restoration costs related thereto. 
Subject to the provisions of Section 10.2 of the Lease, upon the
expiration or earlier termination of the Lease, Tenant shall not be required to
remove the Tenant Improvements (with the exception of Tenant’s furniture) it
being the intention of the parties that the Tenant Improvements (with the
exception of Tenant’s furniture) are to be considered incorporated into the
Building.

7.             Lease Provisions; Conflict.  The terms and provisions of the Lease,
insofar as they are applicable, in whole or in part, to this Exhibit B,
are hereby incorporated herein by reference, and specifically including all of
the provisions of Section 29 of the Lease. 
In the event of any conflict between the terms of the Lease and this Exhibit
B, the terms of this Exhibit B shall prevail.  Any amounts payable by Tenant to Landlord
hereunder shall be deemed to be Additional Rent under the Lease and, upon any
default in the payment of same, Landlord shall have all rights and remedies
available to it as provided for in the Lease.

 Exhibit B, Page 3

 

Exhibit B-1

Construction Insurance Requirements

Before
commencing work, the contractor shall procure and maintain at its sole cost and
expense until completion and final acceptance of the work, at least the
following minimum levels of insurance.

A.            Workers’ Compensation in statutory
amounts and Employers Liability Insurance in the minimum amounts of $100,000
each accident for bodily injury by accident and $100,000 each employee for
bodily injury by disease with a $500,000 policy limit, covering each and every
worker used in connection with the contract work.

B.            Comprehensive General Liability
Insurance on an occurrence basis including, but not limited to, protection for
Premises/Operations Liability, Broad Form Contractual Liability, Owner’s and
Contractor’s Protective, and Products/Completed Operations Liability*, in the
following minimum limits of liability.

	
  Bodily Injury, Property Damage, and

  	
   

  
	
  Personal Injury Liability

  	
  $2,000,000/each occurrence

  
	
   

  	
  $3,000,000/aggregate

  

 

*              Products/Completed
Operations Liability Insurance is to be provided for a period of at least one
(1) year after completion of work.

Coverage should include protection for Explosion,
Collapse and Underground Damage.

C.            Comprehensive Automobile Liability
Insurance with the following minimum limits of liability.

	
  Bodily Injury and Property

  	
  $1,000,000/each occurrence

  
	
  Damage Liability

  	
  $2,000,000/aggregate

  

 

This insurance will apply to all owned, non-owned or hired automobiles
to be used by the Contractor in the completion of the work.

D.            Umbrella Liability Insurance in a
minimum amount of five million dollars ($5,000,000), providing excess coverage
on a following-form basis over the Employer’s Liability limit in Paragraph A
and the liability coverages outlined in Paragraphs B and C.

E.             Equipment and Installation
coverages in the broadest form available covering Contractor’s tools and
equipment and material not accepted by Tenant. 
Tenant will provide Builders Risk Insurance on all accepted and
installed materials.

All
policies of insurance, duplicates thereof or certificates evidencing coverage
shall be delivered to Landlord prior to commencement of any work and shall name
Landlord, and its partners and lenders as additional insureds as their
interests may appear.  All insurance
policies shall (1) be issued by a company or companies licensed to be business
in the state of California, (2) provide that no cancellation, non-renewal or
material modification shall be effective without thirty (30) days prior written
notice provided to Landlord, (3) provide no deductible greater than $15,000 per
occurrence, (4) contain a waiver to subrogation clause in favor of Landlord,
and its partners and lenders, and (5) comply with the requirements of Sections
12.2, 12.3 and 12.4 of the Lease to the extent such requirements are
applicable.

 Exhibit B, Page 4
 

 

Exhibit
B-2

Building Standards

Outline Specification for

New Office Build-Out in R&D Buildings

Notwithstanding
any of the below specifications and standards, all finishes to be constructed
and finish materials to be used as part of the Tenant Improvements shall match
existing finishes and finish materials in the Premises to the extent possible.

OFFICE AREA

Demising
Partition and Corridor Walls:

Note:      One
hr. rated walls where required based on occupancy group.

A.                                   6” 20-gage metal studs at 24” O.C. (or as
required by code based on roof height) framed full height from finish floor to
surface above.

B.            One (1) layer 5/8” drywall Type “X”
both sides of wall, fire taped only.

Interior Partitions:

A.            3-5/8” 25-gage metal studs at 24”
O.C. to bottom of T-Bar ceiling grid approximately 9’ 0” high.

B.            One (1) layer 5/8” drywall both
sides of wall, smooth ready for paint.

C.            3-5/8” metal studs including all
lateral bracing as required by code.

Perimeter Drywall (At Office
Areas):

A.                                   3-5/8” metal studs @ 24” O.C. to 12’ 0” above
finished floor. (or as required by Title-24 for full height envelope then use
demising wall spec.)

B.            One (1) layer 5/8” Type “X” drywall
taped smooth and ready for paint.

Column Furring:

A.            Furring channel all sides of 2-1/2”
metal studs per details.

B.            One (1) layer 5/8” drywall taped
smooth and ready for paint.

C.            Columns within walls shall be
furred-out.

Acoustical Ceilings:

Note:      Gyp.
Bd. ceiling at all restrooms Typ.

A.            2’ x 4’ standard white T-Bar grid
system as manufactured by Chicago Metallic of equal.

B.                                     2’ x 4’ x 5/8” white, no-directional
acoustical tile to be regular second look as manufactured by Armstrong or equal.

Painting:

A.                                   Sheetrock walls within office to receive two
(2) coats of interior latex paint as manufactured by Kelly Moore or equal.  Some portions of second coat to be single
accent color.

B.            Semi-gloss paint all restrooms and
lunch rooms.

Window Covering:

A.                                   1” aluminum mini-blinds as manufactured by
Levelor, Bali or equal, color to be selected by Legacy Partners Commercial,
Inc. (brushed aluminum or white).

B.            Blinds to be sized to fit window
module.

VCT:

A.            VCT to be 1/8” x 12” x 12” as
manufactured by Armstrong -Excelon Series or equal.

B.            Slabs shall be water proofed per
manufacturer recommendations, at sheet vinyl or VCT areas.

Light
Fixtures:

A.                                   2” x 4” T-bar lay in 3-tube energy efficient
fixture with cool white fluorescent tubes with parabolic lens as manufactured
by Lithonia or equal. (Approximately 50 F.C.)

Light Switches:

A.            Switching as required by Title 24.

B.            Switch assembly to be Levinton or
equal, color - White

Electrical Outlet:

A.                                   110V duplex outlet in demising or interior
partitions only, as manufactured by Leviton or equal, color to be White.

 Exhibit B, Page 5
 

 

B.                                     Maximum eight (8) outlets per circuit, spacing
to meet code or minimum 2 per office, conference room, reception and 2
dedicated over cabinet at lunch room junction boxes above ceiling for large
open area with furniture partitions.

C.            Transformers to be a minimum of 20%
or over required capacity.

D.            Contractors to inspect electric room
and to include all necessary metering cost.

E.             No aluminum wiring is acceptable.

Telephone/Data Outlet:

A.            One (1) single outlet box in wall
with pullwire from outlet box to area above T-bar ceiling per office.

B.            Cover plate for phone outlets by
telephone/data vendors.

Fire Sprinklers:

As required by fire codes.

Topset Base:

A.            4” rubber base as manufactured by
Burke or equal, standard colors only.

B.            4” rubber base at VCT areas.

Toilet Areas:

Wet
walls to receive Duraboard or Wonder Board and ceramic tile up to 48”.  Floors to receive ceramic tile with self
coved base as required by code.

Carpet:

Note any of the following carpets are acceptable

Designweave:  Alumni 28 oz.,
Windswept Classic 30 oz. or Stratton Design Series III 30 oz, Structure II 28
oz. (not including border).

Wood Doors:

Shall be 3’ 0” x 9’ 0” x 1-3/4” (unless otherwise specified) solid core,
prefinished harmony (rotary N. birch).

Door Frames:

Shall be ACI or equal, 3-3/4” or 4-7/8” throat, brushed, standard
aluminum, snap-on trim.

Hardware:

1-1/2
pr. butts F179 Stanley, Latchset  D10S
Rhodes Schlage, Lockset D53PD Rhodes Schlage, Dome Type floor stop Gylnn
Johnson FB13, Closer 4110LCN (where required) brushed chrome.

Insulation:

By
Title 24 insulation.

Plumbing:

A.                                   Shall comply with all local codes and
handicapped code requirements. Fixtures shall be either “American Standard”, “Kohler”
or “Norris”.  All toilet accessories and
grab bars shall be “Bobrick” or equal and approved by owner.

B.                                     Plumbing bid shall include 5 gallon minimum
hot water heater, or insta hot with mixer valve including all connections.

Toilet Partitions:

Shall be as manufactured by Fiat, global or equal if approved by
owner.  Color to be white or gray.

HVAC:

HVAC units per specifications.

Five
(5) year warranty provided on all HVAC compressor units.  All penetrations including curbs and sleepers
to be hot moped to Legacy Partners Commercial, Inc. standard.

Warehouse Areas:

Floor - seal concrete with water base clear
acrylic sealer.

Fire
Extinguishers - 2A 10 BC surface mount by code x by S.F.

400 W metal halide lighting at warehouse minimum 5-7 foot candles.

Note:      All
high pile storage requirements are excluded for standard building T.I.

 Exhibit B, Page 6
 

 

Schedule 1 to Exhibit B

Preliminary Plans and Specification

 Exhibit B, Page 7

 

Exhibit C

Rules & Regulations

This
exhibit, entitled “Rules & Regulations”, is and shall constitute Exhibit
C to that certain Lease Agreement dated for reference purposes as of November 6,
2006 (the “Lease”), by and between FSP Montague Business Center Corp., a
Delaware corporation (“Landlord”) and Techwell, Inc., a Delaware corporation (“Tenant”)
for the leasing of certain premises located in the Montague Business Center at 408 East Plumeria Drive, San Jose,
California (the “Premises”).  The terms,
conditions and provisions of this Exhibit C are hereby incorporated into
and are made a part of the Lease.  Any
capitalized terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms as set forth in the Lease:

1.             Subject to Section 30 of the Lease, no
advertisement, picture or sign of any sort shall be displayed on or outside the
Premises or the Building without the prior written consent of Landlord.  Landlord shall have the right to remove any
such unapproved item without Notice and at Tenant’s expense.

2.             Tenant shall park motor vehicles in those
general parking areas, as designated by Landlord, except for loading and
unloading.  During those periods of
loading and unloading, Tenant shall not unreasonably interfere with (i) traffic
flow within the Project and (ii) loading and unloading activities of other
tenants.  Tenant shall not regularly park
motor vehicles in designated parking areas after the conclusion of normal daily
business activity.

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

4.             All window coverings installed by Tenant and
visible from the outside of the Building require the prior written approval of
Landlord.

5.             Subject to Section 27 of the Lease, Tenant
shall not use, keep or permit to be used or kept any foul or noxious gas or
substance or any flammable or combustible materials in or around the Premises,
the Building or any portion of the Project.

6.             Tenant shall not alter any lock or install any
new locks or bolts on any door at the Premises without the prior consent of
Landlord.

7.             Tenant shall not disturb, solicit or canvas
any occupant of the Project and shall cooperate to prevent same.

8.             No person shall go on the roof without
Landlord’s permission except as otherwise expressly provided in Section 11.1 of
the Lease.

9.             Business machines and mechanical equipment
belonging to Tenant which cause noise or vibration that may be transmitted to
the structure of the Building, to such a degree as to be objectionable to
Landlord or other tenants, shall be placed and maintained by Tenant, at Tenant’s
expense, on vibration eliminators or other devices sufficient to eliminate
noise or vibration.

10.          All goods, including material used to store
goods, delivered to the Premises shall be immediately moved into the Premises
and shall not be left in parking or receiving areas overnight.  Tenant shall not store or permit the storage
or placement of goods, merchandise, pallet ors equipment of any sort outside of
the Premises, Building or in any of the Common Areas.  No displays or sales of merchandise are
allowed in the parking lots or other portions of the Common Areas.

11.          Tractor trailers which must be unhooked or
parked with dolly wheels beyond the concrete loading areas must use steel
plates or wood blocks under the dolly wheels to prevent damage to the asphalt
paving surfaces.  No parking or storing
of such trailers will be permitted in the auto parking areas of the Project or
on streets adjacent thereto.

12.          Forklifts which operate on asphalt paving
areas shall not have solid rubber tires and shall only use tires that do not
damage the asphalt.

13.          Tenant is responsible for the storage and
removal of all trash and refuse.  All
such trash and refuse shall be contained in suitable receptacles and stored
behind screened enclosures at locations approved by Landlord.

14.          With the exception of any service animals
assisting the disabled, Tenant shall not permit any animals, including, but not
limited to, any household pets, to be brought or kept in the Premises,
Building, Common Areas or Project.

15.          Tenant shall not permit (i) any motor vehicles
to be washed in any portion of the Premises or Common Areas, and (ii) any
mechanical work or maintenance of motor vehicles to be performed in any portion
of the Premises or Common Areas.

 Exhibit C, Page 1

 

Exhibit D

Tenant Improvement Work by Landlord

 Exhibit D, Page 1

 

Exhibit E

Hazardous Materials Disclosure Certificate

Your
cooperation in this matter is appreciated. 
Initially, the information provided by you in this Hazardous Materials
Disclosure Certificate is necessary for the Landlord (identified below) to
evaluate and finalize a lease agreement with you as Tenant.  After a lease agreement is signed by you and
the Landlord (the “Lease Agreement”), on an annual basis in accordance with the
provisions of Section 27 of the signed Lease Agreement, you are to provide an update
to the information initially provided by you in this certificate.  The information contained in the initial
Hazardous Materials Disclosure Certificate and each annual certificate provided
by you thereafter will be maintained in confidentiality by Landlord subject to
release and disclosure as required by (i) any lenders and owners and their
respective environmental consultants, (ii) any prospective purchaser(s) of all
or any portion of the property on which the Premises are located, (iii)
Landlord to defend itself or its lenders, partners or representatives against
any claim or demand, and (iv) any laws, rules, regulations, orders, decrees, or
ordinances, including, without limitation, court orders or subpoenas.  Any and all capitalized terms used herein,
which are not otherwise defined herein, shall have the same meaning ascribed to
such term in the signed Lease Agreement. 
Any questions regarding this certificate should be directed to, and when
completed, the certificate should be delivered to:

Landlord:  FSP Montague Business Center Corp., a
Delaware corporation

Name
of (Prospective) Tenant:  Techwell Inc.,
a California corporation

Mailing
Address:  408 East Plumeria Drive, San
Jose, California           

Contact
Person, Title and Telephone Number(s):

Contact Person for Hazardous Waste Materials
Management and Manifests and Telephone Number(s):

 

 

Address
of (Prospective) Premises:  408 East
Plumeria Drive, San Jose, California

Length of (Prospective) Initial Term:  

 

1.             General Information:

Describe
the initial proposed operations to take place in, on, or about the Premises,
including, without limitation, principal products processed, manufactured or
assembled services and activities to be provided or otherwise conducted.  Existing Tenants should describe any proposed
changes to on-going operations.

 

 

2.             Use, Storage and Disposal of Hazardous Materials

2.1                               Will any Hazardous Materials be used,
generated, stored or disposed of in, on or about the Premises?  Existing Tenants should describe any
Hazardous Materials which continue to be used, generated, stored or disposed of
in, on or about the Premises.

	
  Wastes

  	
  Yes o

  	
  No o

  
	
  Chemical
  Products

  	
  Yes o

  	
  No o

  
	
  Other

  	
  Yes o

  	
  No o

  

 

If
Yes is marked, please explain:

 

 

2.2                               If “Yes” is marked in Section 2.1, attach a
list of any Hazardous Materials to be used, generated, stored or disposed of
in, on or about the Premises, including the applicable hazard class and an
estimate of the quantities of such Hazardous Materials at any given time;
estimated annual throughput; the proposed location(s) and method of storage
(excluding nominal amounts of ordinary household cleaners and janitorial
supplies which are not regulated by any Environmental Laws); and the proposed
location(s) and method of disposal for each Hazardous Material, including, the
estimated frequency, and the proposed contractors or subcontractors.  Existing Tenants should attach a list setting
forth the information requested above and such list should include actual data
from on-going operations and the identification of any variations in such
information from the prior year’s certificate.

3.             Storage Tanks and Sumps

3.1                               Is any above or below ground storage of
gasoline, diesel, petroleum, or other Hazardous Materials in tanks or sumps
proposed in, on or about the Premises? 
Existing Tenants should describe any such actual or proposed activities.

	
  Yes o

  	
  No o

  	
   

  

 

If
yes, please explain:

 

 

4.             Waste Management

4.1                               Has your company been issued an EPA Hazardous
Waste Generator I.D. Number?  Existing
Tenants should describe any additional identification numbers issued since the
previous certificate.

	
  Yes o

  	
  No o

  	
   

  

 

4.2                               Has your company filed a biennial or quarterly
reports as a hazardous waste generator? 
Existing Tenants should describe any new reports filed.

	
  Yes o

  	
  No o

  	
   

  

 

If yes, attach a copy of the most recent report filed.

5.             Wastewater Treatment and Discharge

5.1          Will your company
discharge wastewater or other wastes to:

	
            storm
  drain?

  	
            sewer?

  
	
            surface
  water?

  	
            no
  wastewater or other wastes discharged.

  

 

 Exhibit E, Page 1
 

 

Existing
Tenants should indicate any actual discharges. 
If so, describe the nature of any proposed or actual discharge(s).

 

 

5.2          Will any such wastewater
or waste be treated before discharge?

	
  Yes o

  	
  No o

  	
   

  

 

If
yes, describe the type of treatment proposed to be conducted.  Existing Tenants should describe the actual
treatment conducted.

 

 

6.             Air Discharges

6.1                               Do you plan for any air filtration systems or
stacks to be used in your company’s operations in, on or about the Premises
that will discharge into the air; and will such air emissions be
monitored?  Existing Tenants should
indicate whether or not there are any such air filtration systems or stacks in
use in, on or about the Premises which discharge into the air and whether such
air emissions are being monitored.

	
  Yes o

  	
  No o

  	
   

  

 

If
yes, please describe:

 

 

6.2                               Do you propose to operate any of the following
types of equipment, or any other equipment requiring an air emissions
permit?  Existing Tenants should specify
any such equipment being operated in, on or about the Premises.

	
            Spray
  booth(s)

  	
            Incinerator(s)

  
	
            Dip
  tank(s)

  	
            Other
  (Please describe)

  
	
            Drying
  oven(s)

  	
  No Equipment Requiring Air
  Permits

  

 

If
yes, please describe:

 

 

7.             Hazardous Materials Disclosures

7.1                               Has your company prepared or will it be
required to prepare a Hazardous Materials management plan (“Management Plan”)
pursuant to Fire Department or other governmental or regulatory agencies’
requirements?  Existing Tenants should
indicate whether or not a Management Plan is required and has been prepared.

	
  Yes o

  	
  No o

  	
   

  

 

If yes, attach a copy of the
Management Plan.  Existing Tenants should
attach a copy of any required updates to the Management Plan.

7.2                               Are any of the Hazardous Materials, and in
particular chemicals, proposed to be used in your operations in, on or about
the Premises regulated under Proposition 65? 
Existing Tenants should indicate whether or not there are any new
Hazardous Materials being so used which are regulated under Proposition 65.

	
  Yes o

  	
  No o

  	
   

  

 

If
yes, please explain:

 

 

8.             Enforcement Actions and Complaints

8.1                               With respect to Hazardous Materials or
Environmental Laws, has your company ever been subject to any agency
enforcement actions, administrative orders, or consent decrees or has your
company received requests for information, notice or demand letters, or any
other inquiries regarding its operations? 
Existing Tenants should indicate whether or not any such actions, orders
or decrees have been, or are in the process of being, undertaken or if any such
requests have been received.

	
  Yes o

  	
  No o

  	
   

  

 

If
yes, describe the actions, orders or decrees and any continuing compliance
obligations imposed as a result of these actions, orders or decrees and also
describe any requests, notices or demands, and attach a copy of all such
documents.  Existing Tenants should
describe and attach a copy of any new actions, orders, decrees, requests,
notices or demands not already delivered to Landlord pursuant to the provisions
of Section 27 of the signed Lease Agreement.

 

 

8.2                               Have there ever been, or are there now
pending, any lawsuits against your company regarding any environmental or
health and safety concerns?

	
  Yes o

  	
  No o

  	
   

  

 

If
yes, describe any such lawsuits and attach copies of the complaint(s),
cross-complaint(s), pleadings and all other documents related thereto as
requested by Landlord.  Existing Tenants
should describe and attach a copy of any new complaint(s), cross-complaint(s),
pleadings and other related documents not already delivered to Landlord
pursuant to the provisions of Section 27 of the signed Lease Agreement.

 

 

8.3                               Have there been any problems or complaints
from adjacent Tenants, owners or other neighbors at your company’s current
facility with regard to environmental or health and safety concerns?  Existing Tenants should indicate whether or
not there have been any such problems or complaints from adjacent Tenants,
owners or other neighbors at, about or near the Premises.

	
  Yes o

  	
  No o

  	
   

  

 

 Exhibit E, Page 2
 

 

If
yes, please describe.  Existing Tenants
should describe any such problems or complaints not already disclosed to
Landlord under the provisions of the signed Lease Agreement.

 

 

9.                                      Permits and Licenses

9.1                               Attach copies of all Hazardous Materials
permits and licenses including a Transporter Permit number issued to your
company with respect to its proposed operations in, on or about the Premises,
including, without limitation, any wastewater discharge permits, air emissions
permits, and use permits or approvals. 
Existing Tenants should attach copies of any new permits and licenses as
well as any renewals of permits or licenses previously issued.

The
undersigned hereby acknowledges and agrees that (A) this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Landlord in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit; (B) that this Hazardous
Materials Disclosure Certificate is being delivered in accordance with, and as
required by, the provisions of Section 27 of the Lease Agreement; and (C) that
Tenant shall have and retain full and complete responsibility and liability
with respect to any of the Hazardous Materials disclosed in the HazMat
Certificate notwithstanding Landlord’s/Tenant’s receipt and/or approval of such
certificate.  Tenant further agrees that
none of the following described acts or events shall be construed or otherwise
interpreted as either (a) excusing, diminishing or otherwise limiting Tenant
from the requirement to fully and faithfully perform its obligations under the
Lease with respect to Hazardous Materials, including, without limitation,
Tenant’s indemnification of the Indemnitees and compliance with all
Environmental Laws, or (b) imposing upon Landlord, directly or indirectly, any
duty or liability with respect to any such Hazardous Materials, including,
without limitation, any duty on Landlord to investigate or otherwise verify the
accuracy of the representations and statements made therein or to ensure that
Tenant is in compliance with all Environmental Laws;  (i) the delivery of such certificate to
Landlord and/or Landlord’s acceptance of such certificate, (ii) Landlord’s
review and approval of such certificate, (iii) Landlord’s failure to obtain
such certificate from Tenant at any time, or (iv) Landlord’s actual or
constructive knowledge of the types and quantities of Hazardous Materials being
used, stored, generated, disposed of or transported on or about the Premises by
Tenant or Tenant’s Representatives. 
Notwithstanding the foregoing or anything to the contrary contained
herein, the undersigned acknowledges and agrees that Landlord and its partners,
lenders and representatives may, and will, rely upon the statements,
representations, warranties, and certifications made herein and the
truthfulness thereof in entering into the Lease Agreement and the continuance
thereof throughout the term, and any renewals thereof, of the Lease Agreement.

I
(print name)                                      ,
acting with full authority to bind the (proposed) Tenant and on behalf of the
(proposed) Tenant, certify, represent and warrant that the information
contained in this certificate is true and correct.

(Prospective) Tenant:

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

 Exhibit E, Page 3

 

Addendum 1

Right of First Offer

This
Addendum 1 (the “Addendum”) is incorporated as a part of that certain Lease
Agreement dated October __, 2006, by and between FSP Montague Business Center
Corp., a Delaware corporation (“Landlord”) and Techwell, Inc., a California
corporation (“Tenant”) for the leasing of certain premises located in the Montague Business Center at 408 East
Plumeria Drive, San Jose, California (the “Premises”).

1.             Right of First
Offer.  During the term of the Lease,
subject to the terms and conditions of Section 5 of this Addendum, Tenant shall
have a right of first offer (“First Offer Right”) to lease any portion of the
rentable area of the Building (the “First Offer Space”), which may become
available for lease as provided hereinbelow as determined by Landlord.  For purposes hereof, the First Offer Space
shall become available for lease to Tenant (a) if such space is vacant as of
the execution of this Lease, then immediately prior to the first time Landlord
intends to submit to, or Landlord intends to accept from, a third party a bona
fide proposal (or letter of intent) to lease all or any portion of the First
Offer Space, and (b) if any portion of the First Offer Space is leased to a
third party as of the execution of this Lease, then immediately prior to
placing such portion of the First Offer Space on the market for lease to any
new tenant. Notwithstanding anything herein to the contrary, Tenant’s First
Offer Right set forth herein shall be subject and subordinate to all expansion,
first offer and similar rights currently set forth in any lease which has been
executed as of the date of execution of this Lease, as such leases may be
modified, amended or extended (collectively, the “Superior Rights”).

2.             Terms
and Conditions.  Landlord shall give
Tenant written notice (the “First Offer Notice”) that either the First Offer
Space will or has become available for lease by Tenant as provided above (as
such availability is determined by Landlord), or Landlord is negotiating with
third parties for the lease of First Offer Space, pursuant to the terms of
Tenant’s First Offer Right, as set forth in this Addendum, provided that no
holder of Superior Rights desires to lease all or any portion of the First
Offer Space.  Any such Landlord’s First
Offer Notice delivered by Landlord in accordance with the provisions of Section
1 above shall set forth the terms upon which Landlord would lease the First
Offer Space to Tenant, including, without limitation (i) the anticipated date
upon which the First Offer Space will be available for lease by Tenant and the
commencement date therefor, (ii) the Base Rent payable for the First Offer
Space, and (iii) the term of the lease for the First Offer Space.  As of the commencement of the First Offer
Space term, Landlord shall deliver to Tenant possession of the First Offer
Space in its then existing condition and state of repair, “AS IS”, without any
obligation of Landlord to remodel, improve or alter the First Offer Space, to
perform any other construction or work of improvement upon the First Offer
Space, or to provide Tenant with any construction or refurbishment
allowance.  Tenant acknowledges that no
representations or warranties of any kind, express or implied, respecting the
condition of the First Offer Space, Building, or Park have been made by
Landlord or any agent of Landlord to Tenant, except as expressly set forth
herein.  Tenant further acknowledges that
neither Landlord nor any of Landlord’s agents, representatives or employees
have made any representations as to the suitability or fitness of the First
Offer Space for the conduct of Tenant’s business, or for any other
purpose.  Any exception to the foregoing
provisions must be made by express written agreement signed by both parties.

3.             Procedure
for Acceptance.  On or before the
date which is forty-eight (48) hours after Tenant’s receipt of Landlord’s First
Offer Notice (the “Election Date”), Tenant shall deliver written notice to
Landlord (“Tenant’s Election Notice”) pursuant to which Tenant shall have the
right to elect either to:  (i) lease the
entire First Offer Space described in the First Offer Notice upon the terms set
forth in the First Offer Notice; or (ii) refuse to lease such First Offer Space
identified in the First Offer Notice. If Tenant does not respond in writing to
Landlord’s First Offer Notice by the Election Date, Tenant shall be deemed to
have elected not to lease the First Offer Space.  If Tenant elects or is deemed to have elected
not to lease the First Offer Space, then Tenant’s First Offer Right set forth
in this Addendum shall terminate for a period of sixty (60) days and Landlord
shall thereafter have the right to lease all or any portion of such First Offer
Space to anyone to whom Landlord desires on any terms Landlord desires.

4.             Lease of First
Offer Space.  If Tenant timely
exercises this First Offer Right as set forth herein, Tenant shall provide
Landlord a non-refundable deposit, equivalent to the last month’s Base Rent for
the First Offer Space and the parties shall promptly thereafter execute an
amendment to the Lease adding such First Offer Space to the Premises on all of
the terms and conditions as applicable to the initial Premises, as modified to
reflect the terms and conditions as determined pursuant to the foregoing
provisions of this Addendum.  Upon full
execution of an amendment for the First Offer Space, the non-refundable deposit
shall be credited toward Base Rent or the security deposit for the First Offer
Space, as agreed between the parties. 
Notwithstanding anything to the contrary contained herein, Tenant must
elect to exercise its First Offer Right provided herein, if at all, with
respect to all of the space offered by Landlord to Tenant in Landlord’s First
Offer Notice at any particular time, and Tenant may not elect to lease only a
portion thereof.

5.             Limitations on,
and Conditions to, First Offer Right. 
Notwithstanding anything in the foregoing to the contrary, at Landlord’s
option, and in addition to all of Landlord’s remedies under this Lease, at law
or in equity, the First Offer Right hereinabove granted to Tenant shall not be
deemed to be properly exercised if any of the following individual events occur
or any combination thereof occur:(i) at any time Tenant is, or has been, in
Default of the performance of any of the covenants, conditions or agreements to
be performed under this Lease; and/or 
(ii) on the scheduled commencement date for Tenant’s lease of the First
Offer Space, Tenant is in Default under this Lease; and/or (iii) Tenant has
assigned its rights and obligations under all or part of the Lease or Tenant
has subleased all or part of the Premises except to an Affiliate pursuant to
Section 14.7 of the Lease; and/or (iv) Tenant’s tangible net worth and net
assets, in the aggregate, computed in accordance with generally accepted
accounting principles (but excluding goodwill as an asset), is insufficient at
the time Tenant’s Election Notice is delivered to Landlord to meet the
obligations of Tenant under this Lease, as reasonably determined by Landlord;
and/or (v) Tenant has failed to exercise properly this First Offer Right in a
timely manner in strict accordance with the provisions of this Addendum; and/or
(vi) Tenant or an Affiliate permitted pursuant to Section 14.7 of the Lease, is
no longer has possession of all or any part of the Premises under the Lease, or
if the Lease has been terminated earlier, pursuant to the terms and provisions
of the Lease.  Tenant’s First Offer Right
to lease the First Offer Space is personal to the original Tenant executing
this Lease or an Affiliate permitted pursuant to Section 14.7 of the Lease, and
may not be assigned or exercised, voluntarily or involuntarily, by or to, any
person or entity other than the original Tenant or an Affiliate permitted
pursuant to Section 14.7 of the Lease, and shall only be available to and
exercisable by the Tenant or an Affiliate permitted pursuant to Section 14.7 of
the Lease when the original Tenant or an Affiliate permitted pursuant to
Section 14.7 of the Lease is in actual and physical possession of the entire
Premises.

6.             Brokers.  Neither Landlord nor Tenant will be
responsible for any brokerage commissions or finder’s fees payable to any
broker retained by the other party in connection with any of the First Offer
Space described herein, and Landlord and Tenant hereby agree to defend,
indemnify and hold each other harmless against any loss, claim, expense or
liability (including attorneys’ fees and costs) with respect to any such
commissions or brokerage fees claimed with respect thereto.

 Addendum 1, Page 1

 

Addendum 2

Option to Extend

This Option to Extend Addendum (the “Addendum”) is incorporated as part
of that certain Lease dated for reference purposes as of October    ,
2006, by and between FSP Montague Business Center Corp., a Delaware corporation
(“Landlord”) and Techwell, Inc., a California corporation (“Tenant”) for the
leasing of certain premises located in the Montague Business Center at 408 East Plumeria Drive, San Jose,
California (the “Premises”).  Any
capitalized terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms as set forth in the Lease.

1.             Grant of
Extension Option.  Subject to the provisions, limitations and
conditions set forth in Paragraph 5 below, Tenant shall have an option (“Option”)
to extend the initial term of the Lease for two (2) additional, consecutive
periods of three (3) years each (as to each, an “Extended Term”).

2.             Tenant’s Option
Notice.  Tenant shall have the right to deliver
written notice to Landlord of its intent to exercise an Option (the “Option
Notice”).  If Landlord does not receive
an Option Notice from Tenant on a date which is neither more than nine (9)
months nor less than six (6) months prior to the end of the initial term of the
Lease or the then current Extended Term, all rights under this Addendum shall
automatically terminate and shall be of no further force or effect.  Upon the proper exercise of an Option,
subject to the provisions, limitations and conditions set forth in Paragraph 5
below, the term of the Lease shall be extended for the applicable Extended
Term.

3.             Establishing the
Initial Monthly Base Rent for the Extended Term.  The
initial monthly Base Rent for the Extended Term shall be equal to the then Fair
Market Rental Rate, as hereinafter defined. 
As used herein, the “Fair Market Rental Rate” payable by Tenant for an
Extended Term shall mean the Base Rent for the highest and best use for
comparable space at which non-equity tenants, as of the commencement of the
lease term for such Extended Term, will be leasing non-sublease, non-equity,
unencumbered space comparable in size, location and quality to the Premises for
a comparable term, which comparable space is located in the Building and in
other comparable buildings in the vicinity of the Building, taking into
consideration all out-of-pocket concessions generally being granted at such
time for such comparable space, including the condition and value of existing
tenant improvements in the Premises.  The
Fair Market Rental Rate shall include the periodic rental increases that would
be included for space leased for the period of the Extended Term.

If Landlord and Tenant are unable to agree on the Fair Market Rental
Rate for an Extended Term within ten (10) days of receipt by Landlord of an
Option Notice, Landlord and Tenant each, at its cost and by giving notice to
the other party, shall appoint a competent and impartial commercial real estate
broker (hereinafter “broker”) with at least five (5) years’ full-time
commercial real estate brokerage experience in the geographical area of the
Premises to set the Fair Market Rental Rate for such Extended Term.  If either Landlord or Tenant does not appoint
a broker within ten (10) days after the other party has given notice of the name
of its broker, the single broker appointed shall be the sole broker and shall
set the Fair Market Rental Rate for such Extended Term.  If two (2) brokers are appointed by Landlord
and Tenant as stated in this paragraph, they shall meet promptly and attempt to
set the Fair Market Rental Rate.  In
addition, if either of the first two (2) brokers fails to submit their opinion
of the Fair Market Rental Rate within the time frames set forth below, then the
single Fair Market Rental Rate submitted shall automatically be the initial
monthly Base Rent for the applicable Extended Term and shall be binding upon
Landlord and Tenant.  If the two (2)
brokers are unable to agree within ten (10) days after the second broker has
been appointed, they shall attempt to select a third broker, meeting the
qualifications stated in this paragraph within ten (10) days after the last day
the two (2) brokers are given to set the Fair Market Rental Rate.  If the two (2) brokers are unable to agree on
the third broker, either Landlord or Tenant by giving ten (10) days’ written
notice to the other party, can apply to the Presiding Judge of the Superior
Court of the county in which the Premises is located for the selection of a
third broker who meets the qualifications stated in this paragraph.  Landlord and Tenant each shall bear one-half
(1⁄2) of the cost of appointing the third broker and of paying the third broker’s
fee.  The third broker, however selected,
shall be a person who has not previously acted in any capacity for either
Landlord or Tenant.  Within fifteen (15)
days after the selection of the third broker, the third broker shall select one
of the two Fair Market Rental Rates submitted by the first two brokers as the
Fair Market Rental Rate for the applicable Extended Term.  The determination of the Fair Market Rental
Rate by the third broker shall be binding upon Landlord and Tenant.

In no event shall the monthly Base Rent at the commencement of any
Extended Term, as determined pursuant to this Addendum, be less than the
monthly Base Rent in effect immediately prior to the expiration of the term if
such Extended Term did not commence. 
Upon determination of the initial monthly Base Rent for an Extended Term
pursuant to the terms outlined above, Landlord and Tenant shall immediately
execute, at Landlord’s sole option, either the standard lease agreement then in
use by Landlord, or an amendment to the Lease. 
Such new lease agreement or amendment, as the case may be, shall set
forth among other things, the initial monthly Base Rent for such Extended Term
and the actual commencement date and expiration date of the Extended Term.  Tenant shall have no other right to further
extend the term of the Lease under this Addendum unless Landlord and Tenant
otherwise expressly agree in writing.

4.             Condition
of Premises and Brokerage Commissions for the Extended Term.  If Tenant timely and properly exercises an
Option, in strict accordance with the terms contained herein: (1) Tenant shall
accept the Premises in its then “As-Is” condition and, accordingly, Landlord
shall not be required to perform any additional improvements to the Premises;
and (2) neither Landlord nor
Tenant will be responsible for any brokerage commissions or finder’s fees
payable to any broker retained by the other party in connection with an Option,
and Landlord and Tenant hereby agree to defend, indemnify and hold each other
harmless against any loss, claim, expense or liability (including attorneys’
fees and costs) with respect to any such commissions or brokerage fees claimed
with respect thereto.

5.             Limitations On,
and Conditions To, Extension Option.  This
Option is personal to Tenant or an Affiliate permitted pursuant to Section 14.7
of the Lease, and may not be assigned, voluntarily or involuntarily, separate
from or as part of the Lease.  At
Landlord’s option, all rights of Tenant under this Option shall terminate and
be of no force or effect if any of the following individual events occur or any
combination thereof occur: (1) Tenant has been in Default at any time during
the initial term of the Lease, or is in Default of any provision of the Lease
on the date Landlord receives an Option Notice; and/or (2) Tenant has assigned
its rights and obligations under all or part of the Lease or Tenant has
subleased all or part of the Premises except to an Affiliate permitted pursuant
to Section 14.7 of the Lease; and/or (3) Tenant’s tangible net worth and net
assets, in the aggregate, computed in accordance with generally accepted
accounting principles (but excluding goodwill as an asset), is insufficient at
the time an Option Notice is delivered to Landlord to meet the obligations of
Tenant under this Lease, as reasonably determined by Landlord; and/or (4)
Tenant has failed to exercise properly an Option in a timely manner in strict
accordance with the provisions of this Addendum; and/or (5) Tenant or an
Affiliate permitted pursuant to Section 14.7 of the Lease no longer has
possession of all or any part of the Premises under the Lease, or if the Lease
has been terminated earlier, pursuant to the terms and provisions of the Lease.

6.             Time is of the
Essence.  Time is of the essence with respect to each
and every time period set forth in this Addendum.

 Addendum 2, Page 1

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