Document:

EXHIBIT
10.14

SECOND AMENDED AND
RESTATED

MASTER LEASE OF LAND AND IMPROVEMENTS

By and Between

SMBC LEASING AND FINANCE,
INC.,

a Delaware corporation,

as Landlord,

and

ADOBE SYSTEMS INCORPORATED,

a Delaware corporation,

as Tenant

THIS LEASE IS NOT
INTENDED TO CONSTITUTE A TRUE LEASE

FOR INCOME TAX PURPOSES.  SEE SECTION
21.2

 

 

 

 

SECOND
AMENDED AND RESTATED

MASTER LEASE OF LAND AND IMPROVEMENTS

THIS
SECOND AMENDED AND RESTATED MASTER LEASE OF LAND AND IMPROVEMENTS (this “Lease”) is by and between SMBC LEASING
AND FINANCE, INC. (formerly known as Sumitomo Bank Leasing and Finance, Inc.),
a Delaware corporation (“Landlord”), and ADOBE SYSTEMS INCORPORATED, a Delaware
corporation (“Tenant”), and is entered into as of the date set forth
in Article I and shall be effective and binding upon the parties
hereto as of such date. Capitalized terms used in this Lease shall have the
definitions set forth in Appendix A or in the text of this Lease.

RECITALS:

WHEREAS, Landlord and Tenant are parties to that
certain Amended, Restated and Consolidated Master Lease of Land and
Improvements, dated as of August 11, 1999, as amended by that certain Amendment
No. 1, dated as of October 8, 1999, and by that certain Amendment
No. 2, dated as of August 9, 2000 (as amended, the “Restated Lease”),
which Restated Lease amended, restated and consolidated and replaced in their
entirety (a) that certain Sublease of the Land and Lease of the Improvements,
dated October 12, 1994, between Landlord and Tenant, as amended by that certain
First Amendment to Sublease of the Land and Lease of the Improvements, dated
August 15, 1996; and (b) that certain Sublease of the Land and Lease of the
Improvements, dated August 15, 1996, between Landlord and Tenant (collectively,
the “Original Leases”), pursuant to which Original Leases Landlord funded
advances for the construction of improvements on the land described therein;

WHEREAS, in connection with execution of the Original
Leases, Tenant, as trustor, executed in favor of Landlord, as beneficiary (a)
that certain Deed of Trust, Financing Statement, Security Agreement and Fixture
Filing (with Assignment of Rents and Leases), dated and recorded October 12,
1994, in the Official Records as Document No. 12684590, as amended by a
First Amendment to Deed of Trust, Financing Statement, Security Agreement and
Fixture Filing (with Assignment of Rents and Leases), dated and recorded August
15, 1996, in the Official Records as Document No. 13410225, and by a
Second Amendment to Deed of Trust, Financing Statement, Security Agreement and
Fixture Filing (with Assignment of Rents and Leases), dated and recorded August
11, 1999, in the Official Records as Document No. 14936872; and (b) that
certain Deed of Trust, Financing Statement, Security Agreement and Fixture Filing
(with Assignment of Rents and Leases), dated and recorded August 15, 1996, in
the Official Records as Document No. 13410223, as amended by a First Amendment
to Deed of Trust, Financing Statement, Security Agreement and Fixture Filing
(with Assignment of Rents and Leases), dated and recorded August 11, 1999,
in the Official Records as Document No. 14935443 (collectively, the
“Original Deeds of Trust”);

WHEREAS, in connection with the execution of the
Restated Lease, Landlord and Tenant entered into (a) that certain Lease
Supplement No. 1, dated as of August 11, 1999, and that certain Memorandum
of Amended, Restated and Consolidated Master Lease — Lease Supplement
No. 1, dated and recorded August 11, 1999, in the Official Records as
Document No. 14936871 (collectively, “Original Lease Supplement No. 1”),
and (b) that certain Lease 

 

Supplement No. 2,
dated as of August 11, 1999, and that certain Memorandum of Amended, Restated
and Consolidated Master Lease — Lease Supplement No. 2, dated and recorded August 11,
1999, in the Official Records as Document No. 14935442 (collectively, “Original
Lease Supplement No. 2”) (Original Lease Supplement No. 1 and
Original Lease Supplement No. 2 are referred to collectively as the
“Original Lease Supplements”); and

WHEREAS, Landlord and Tenant wish to further amend the
transactions described in the above Recitals by amending and restating in its
entirety the Restated Lease (including the Original Lease Supplements) by the
execution and delivery of this Lease and the Lease Supplements referred to
herein and by amending the Original Deeds of Trust by the execution, delivery
and recordation in the Official Records of certain amendments thereto dated of
even date herewith (as so amended, the “Amended Deeds of Trust”)..

AGREEMENT:

NOW, THEREFORE, in consideration of the Base Rent
reserved herein, and the terms, covenants and conditions set forth below,
Landlord and Tenant hereby agree as follows, which agreement shall amend and
restate the Restated Lease in full:

ARTICLE
I

BASIC
LEASE PROVISIONS

	
  1.1

  	
  Date of
  Lease

  	
  August 11, 2004

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Landlord:

  	
  SMBC Leasing and Finance, Inc., a Delaware corporation.

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Tenant:

  	
  Adobe Systems Incorporated, a Delaware corporation.

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Administrative
  Agent:

  	
  SMBC Leasing and Finance, Inc., a Delaware corporation.

  
	
   

  	
   

  	
   

  
	
  1.5

  	
  Land:

  	
  Each tract of land more particularly described on Schedule 1 to a
  particular Lease Supplement, executed and delivered pursuant to this Lease,
  together with all easements, rights of way, appurtenances and other rights
  and benefits belonging or pertaining to such tract of land.  Landlord makes no representations as to
  the accuracy of the description of any Land. 
  Land may be subject to a Ground Lease, as further described in the
  Lease Supplement applicable thereto.

  

 

 

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  1.6

  	
  Parcels:

  	
  The Land and the Improvements located thereon.

  
	
   

  	
   

  	
   

  
	
  1.7

  	
  Term:

  	
  The term of this Lease (“Master Lease Term”) shall commence on the
  Date of Lease set forth in Section 1.1 above and shall expire five (5)
  years from the Date of Lease (the “Expiration Date”).  The term of each Lease Supplement (“Lease
  Supplement Term”) shall commence on the date set forth in the applicable
  Lease Supplement and expire on the Expiration Date.  The Expiration Date of the Master Lease Term may be extended by
  Tenant for an additional period of five (5) years, subject to and in
  accordance with the terms of Section 4.3(a) below (the “First
  Extension Term”); and the Expiration Date of the First Extension Term may thereafter
  be extended based upon terms that are mutually agreeable to Landlord, Tenant,
  Administrative Agent and each Rent Purchaser (the “Subsequent Extension
  Term”) and in accordance with Section 4.3(b) below.  The Master Lease Term, the First Extension
  Term, the Subsequent Extension Term and Lease Supplement Term are sometimes
  collectively referred to herein as the “Term.”  The Term shall cease upon, and shall not refer to any period of
  time after, termination of this Lease or, with respect to any Lease Supplement,
  the termination of such Lease Supplement (whether pursuant to the terms of
  this Lease or such Lease Supplement, by operation of law, or otherwise).

  
	
   

  	
   

  	
   

  
	
  1.8

  	
  Base Rent:

  	
  As described in Appendix A.

  
	
   

  	
   

  	
   

  
	
  1.9

  	
  Appraisal:

  	
  The appraisal of Landlord’s interest in the Parcels described in
  Lease Supplement No. 1 (in the form of Exhibit A attached hereto) and
  Lease Supplement No. 2 (in the form of Exhibit B attached hereto)
  executed as of the Date of Lease and made by Cushman & Wakefield of
  California prior to the Date of Lease to determine the fair market value of
  Landlord’s interest in such Parcels as of the Date of Lease (the “Present
  Value”) and the fair market value of such interest of Landlord 

  

 

 

3

 

	
   

  	
   

  	
  estimated as of the Expiration Date (the “Estimated Future Value”),
  and which appraisal shall comply with all of the provisions of the Financial
  Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the
  rules and regulations adopted pursuant thereto, and all other applicable
  Legal Requirements.

  
	
   

  	
   

  	
   

  
	
  1.10

  	
  Addresses
  for Notices:

  	
   

  
	
   

  	
   

  	
   

  
	
  LANDLORD
  AND

  ADMINISTRATIVE AGENT:

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  SMBC Leasing and Finance, Inc

  277 Park Avenue

  New York, NY  10172

  Attention:  Chief Credit Officer

  	
  Adobe Systems Incorporated

  151 Almaden Boulevard

  San Jose, CA  95110

  Attention:  Treasurer

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
  Clifford Chance US LLP

  31 West 52nd Street

  New York, NY  10019

  Attention:  Jay Gavigan, Esq.

  	
  Adobe Systems Incorporated

  151 Almaden Boulevard

  San Jose, CA  95110

  Attention:  General Counsel

  
	
   

  	
   

  	
   

  

This Article I is
intended to supplement and/or summarize the provisions set forth in the balance
of this Lease.  If there is any conflict
between any provisions contained in this Article I and the balance of
this Lease, the balance of this Lease shall control.

ARTICLE
II

DEFINITIONS

All defined terms for the Operative Documents are
contained in Appendix A.

ARTICLE III

DEMISE

3.1          Parcels. 
Subject to the terms, covenants and conditions contained herein and in
each Lease Supplement, Landlord shall, upon delivery of a Lease Supplement
executed by Tenant, agree to lease to Tenant the Parcel covered by such Lease
Supplement and Tenant agrees to lease from Landlord the Parcel covered by such
Lease Supplement, together with all rights, privileges, easements and
appurtenances relating to the Parcels. 
Without limitation of Section 23.6, Tenant agrees that it shall use the
Parcels in accordance with all of the terms and conditions 

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of the Ground Lease, if
applicable, and shall comply with all terms and conditions of the Ground Lease.

ARTICLE
IV

TERM

4.1          Term.  
The Term of this Lease is specified in Article I.

4.2          Holding
Over.  If Tenant remains in possession of a Parcel
after the expiration of the Term without executing a new lease, such holding
over shall be construed as a tenancy from month-to-month, subject to all terms,
covenants and conditions herein contained and in the applicable Lease
Supplement.  The Base Rent shall be
calculated based upon the Default Rate and shall be required to be paid by
Tenant during such holding over in the same manner as during the Term.  The foregoing notwithstanding, Tenant shall
not be permitted to remain in possession of any Parcel after the expiration of
the Term without Landlord’s consent; and in the event Tenant shall remain in
possession of any Parcel after the expiration of the Term without Landlord’s
consent, Landlord shall be entitled to exercise any and all remedies available
to Landlord as a consequence thereof.

4.3          Extension of Term.

(a)           First Extension Term.

(i)            Conditions.  Landlord agrees to extend the Term of this Lease for the First
Extension Term subject to the fulfillment of the following conditions:

(A)          Tenant shall have delivered written
notice to Landlord requesting such extension not less than sixty (60) days
prior to the Expiration Date;

(B)           No Default shall have occurred and be
continuing at the time of such request or on the Expiration Date;

(C)           The Administrative Agent and each
Rent Purchaser shall have consented to such extension; provided that if the
same Entity is then Landlord and Administrative Agent, the consent of the
Administrative Agent shall not be required; and

(D)          On or prior to the Expiration Date,
Tenant shall have delivered or caused to be delivered to Landlord a Letter of
Credit in an amount not less than the sum of (A) the Lease Investment Balance
Equity and (B) the amount of Base Rent that would accrue on the Lease
Investment Balance Equity during a period of 100 days at the Assumed Rate in
effect on the date of issuance of the Letter of Credit, computed on the basis
of a year of 360 days.

(ii)           Adjustments in Terms.  If the Term is extended for the First
Extension Term, then as of the first day of the First Extension Term:

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(A)          the Pricing Grid shall be eliminated,
the Landlord Contribution Rate - Libor Rate Margin shall be 1.0%, the Landlord
Contribution Rate - Base Rate Margin shall be 0%, the Rent Purchasers’
Contribution Rate - Libor Rate Margin shall be 0%, and the Rent Purchasers’
Contribution Rate - Base Rate Margin shall be 0%.

(B)           Sections 21.21 (other than Section
21.21(d)(v)(B)(2)) and 21.22 of this Lease shall no longer be in effect:

(iii)          Additional Event of Default.  If the Term is extended for the First
Extension Term, the following additional Events of Default shall be in effect
and shall be deemed to be added to Section 19.1:

                                                (o)           Invalidity, Repudiation. 
The L/C Issuer shall directly or indirectly contest the validity of the
Letter of Credit in any manner in any court of competent jurisdiction, or shall
repudiate, or purport to discontinue or terminate, the Letter of Credit or the
Letter of Credit shall cease to be a legal, valid and binding obligation of the
L/C Issuer or shall cease to be in full force and effect against the L/C Issuer
for any reason; or

                                                (p)           Rating of L/C Issuer. 
The L/C Issuer shall be rated below A+ by S&P or below A1 by Moody’s
and the L/C Issuer shall not have been replaced by an Entity that qualifies as
an “L/C Issuer” within fifteen (15) Business Days of the first day upon which
the L/C Issuer is so rated; or

                                                (q)           Assumed Rate. 
Base Rent with respect to the Landlord Contribution shall accrue at a
rate per annum that is greater than the Assumed Rate in effect on the date of
issuance of the Letter of Credit (or any later date upon which the amount of
the Letter of Credit shall have been increased) and the stated amount of the
Letter of Credit shall not have been increased, within ten (10) Business Days
of the first day upon which Base Rent shall so accrue, to an amount equal to
the sum of (i) the Lease Investment Balance Equity and (ii) the amount of Base
Rent that would accrue on the Lease Investment Balance Equity during a period
of 100 days at the Assumed Rate in effect on the date of such increase,
computed on the basis of a year of 360 days;

                                                (r)           Non-Extension.  If the Letter of Credit has a stated
expiration date that is prior to the date that is 100 days after the last day
of the Term (after giving effect to the First Extension Term), Tenant shall
have failed to deliver or cause to be delivered to Landlord, on or prior to the
date that is 100 days prior to the stated expiration date of the Letter of
Credit, (i) evidence of the extension thereof or (ii) an instrument
constituting a “Letter of Credit” (as defined in Section 4.3(a)(v))
as of the date of issuance of such instrument.

(iv)          Letter of Credit.  If a Letter of Credit has been issued, the
following provisions shall be in effect with respect thereto:

(A)          If Tenant pays an amount (a “Lease
Payment Amount”) under this Lease to Landlord and Landlord, within ninety (90)
days of the date of such payment and following the commencement of a proceeding
under any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect by or against Tenant, makes demand for
payment under a Letter of Credit of such amount, Landlord will hold 

6

 

the amount paid under
such Letter of Credit (a “Letter of Credit Payment Amount”) in escrow pursuant
to the terms of this section.  Each
Letter of Credit Payment Amount held pursuant to this section shall bear interest
at a rate equal to the rate determined from time to time as the rate applicable
to overnight deposits with Landlord. 
Each Letter of Credit Payment Amount shall be deemed to include such
earnings thereon.

(B)           If Landlord is required by a court of
competent jurisdiction to return as a preference or otherwise a Lease Payment
Amount (or any portion thereof), Landlord shall immediately apply the
corresponding Letter of Credit Payment Amount (or a corresponding portion
thereof), in place of such returned Lease Payment Amount (or portion thereof)
(and, to the extent that such court requires the return of amounts constituting
a deemed rate of interest on a Lease Payment Amount or any similar charge, cost
or expense, Landlord shall apply a corresponding portion of the Letter of
Credit Payment Amount in place of such deemed interest, charge, cost or
expense), and Tenant shall remain liable for any deficiency.  If all of a Lease Payment Amount has been
returned, Landlord has applied the corresponding Letter of Credit Payment Amount
in place of such Lease Payment Amount and, following such application, Landlord
continues to hold any portion of such Letter of Credit Payment Amount, Landlord
shall promptly pay such portion to Tenant or as shall be directed by a court of
competent jurisdiction.

(C)           If (I) it is determined by a final,
non-appealable order by a court of competent jurisdiction that a Lease Payment
Amount (or any portion thereof not theretofore returned) need not be returned
as a preference or otherwise or (II) the period during which a claim, action or
other proceeding asserting that a Lease Payment Amount (or any portion thereof
not theretofore returned) should be returned as a preference or otherwise
avoided may be commenced under applicable law has expired (after giving effect
to all applicable tolling agreements, stipulations, court orders and similar
agreements, instruments and orders), Landlord shall promptly pay the Letter of
Credit Payment Amount (or portion thereof) corresponding to such Lease Payment
Amount (or portion thereof) to Tenant or as shall be directed by a court of
competent jurisdiction.

(v)           Defined Terms.  As used in this Section 4.3(a):

(A)          “Assumed Rate” shall mean, as of any
date of determination, a per annum rate equal to the sum of (i) the LIBOR Rate
for a Rental Period of 12 months commencing on such date, (ii) the applicable
margin on such date for the Landlord Contribution as set forth in the Pricing
Grid adjusted as provided for in Section 4.3(a)(ii), and
(iii) 2.0%.

(B)           “L/C Issuer” shall mean a commercial bank
acceptable to Landlord and rated AA- or higher by S&P or Aa3 or higher by
Moody’s.

(C)           “Letter of
Credit” shall mean a clean, irrevocable standby letter of credit
in favor of Landlord that:

(1)           is issued by an L/C Issuer with
respect to the obligations of Tenant under the Lease;

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(2)           is drawable by Landlord (i) upon the
occurrence of an Event of Default; and (ii) if, following a payment by Tenant
under the Lease, within ninety (90) days of the date of such payment, a
proceeding under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect is commenced by or
against Tenant;

(3)           either (i) has a stated expiration
date that is on or after the date that is 100 days after the last day of the
Term (after giving effect to the First Extension Term) or (ii) has a stated
expiration date that is prior to the date that is 100 days after the last day
of the Term (after giving effect to the First Extension Term) and is drawable
by Landlord if not renewed on or prior to the date that is 100 days prior to
its stated expiration date; and

(4)           is otherwise in form and substance
reasonably acceptable to Landlord.

(D)          “Moody’s” shall mean Moody’s Investors Service,
Inc.

(E)           “S&P” shall mean Standard &
Poor’s Ratings Services, a division of the McGraw Hill Companies, Inc.

(b)           Subsequent Extension of Term.  Provided that (i) no Default or Event of
Default has occurred and is continuing hereunder, and (ii) Landlord, in its
sole and absolute discretion, consents, Tenant may request, upon not less than
twelve (12) months prior written notice to Landlord and Administrative Agent,
the extension of the Term of this Lease beyond the First Extension Term for an
additional period under terms which must be mutually agreeable to Landlord and
Tenant.  Landlord’s consent to the terms
of such extension shall be conditioned upon the approval of Administrative
Agent and each Rent Purchaser, which may be granted or withheld by such entity
in its sole discretion.

ARTICLE
V

IMPROVEMENTS

5.1          Improvements. 
Tenant has continuously been in possession and occupancy of all
Improvements existing on Land covered by Lease Supplement No. 1 and Lease
Supplement No. 2 since the construction thereof under the terms of the
Original Leases and the Restated Lease. 
Tenant represents and warrants that all such Improvements were
constructed in accordance with the Original Leases and the Original
Construction Management Agreements.

5.2          Title
to and Nature of Improvements.  Subject to
the provisions of this Lease, including, without limitation, Section 21.2,
Tenant agrees that any and all Improvements of whatever nature at any time
constructed, placed or maintained on the Land shall be and remain the property
of Landlord, subject to Tenant’s rights under this Lease and the rights of
Administrative Agent and Rent Purchasers under the Operative Documents.

8

 

ARTICLE
VI

FUNDING

6.1          Funding.

On the Funding Date, the entire Commitment Amount
shall have been funded.  Landlord,
Administrative Agent and all Rent Purchasers shall have no obligation to fund
any further Advances to Tenant after the Date of Lease.

ARTICLE
VII

RENT

7.1          Base Rent.

(a)           The Base Rent to be paid by Tenant
under each Lease Supplement shall begin to accrue on the Rent Commencement Date
as specified in such Lease Supplement and shall be determined based upon the
Pricing Grid attached hereto as Exhibit C.  Tenant shall pay Base Rent by wire transfer in accordance with
the terms of the Participation Agreement. 
Tenant shall be supplied with such bank account information as Tenant
shall require to enable payment by wire transfer of federal funds.  Tenant shall wire transfer to such account
in accordance with the terms of the Participation Agreement until notified of
any account change.  Base Rent payments
shall be due and payable in arrears (i) on the last day of each Rental Period
selected by Tenant for a Portion (except that, with respect to any Rental
Period of six (6), nine (9) or twelve (12) months, Base Rent with respect
thereto shall be due and payable at the end of each three (3) month period
during such Rental Period or, if such day is not a Business Day, the following
Business Day), (ii) on any date on which this Lease shall terminate as to any
Parcel, and (iii) on any other date on which all or any portion of the
Lease Investment Balance is paid, except that the last installment of Base Rent
shall be payable on the last day of the Term (each such date shall be a “Rent
Payment Date”), and Base Rent payments shall be made to Landlord and
Administrative Agent in accordance with the terms of the Participation
Agreement.  No sooner than thirty (30)
days or later than ten (10) days prior to the due date for any installment of
Base Rent hereunder with respect to any Portion, Landlord and Administrative
Agent each shall deliver to Tenant notices indicating the exact dollar amount
of the Base Rent that is due on such due date to Landlord or Administrative
Agent, as applicable, with respect to such Portion (an “Invoice”).  If either Landlord or Administrative Agent
fails to send an Invoice, Tenant shall pay the amount shown on the previous
Invoice applicable to such portion from such Entity in accordance with the
terms of the Participation Agreement. 
If Tenant’s payment of the amount shown on the previous Invoice is less
than the Base Rent then due such Entity, Tenant shall pay the difference within
ten (10) days after receipt of notice from such Entity of such shortfall.  If Tenant’s payment of the amount shown on
the previous Invoice exceeds the Base Rent then due such Entity, then (provided
that no Event of Default has occurred and is continuing), such excess amount
shall be credited to the next installment of Base Rent due to such Entity with
respect to such Portion.

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(b)           Tenant may select the number and
amounts of the Portions into which the Lease Investment Balance is to be
divided and the Rental Period for each such Portion by delivering to
Administrative Agent and Landlord, not less than three (3) Business Days prior
to the Date of Lease and thereafter the last day of each Rental Period for a
Portion and in accordance with Section 21.3, an irrevocable written
notice in the form of Exhibit D, appropriately completed (a “Notice of
Rental Period Selection”), subject to the following:

(i)            No Portion shall combine the
Landlord Contribution with any part of the Rent Purchasers’ Contribution.

(ii)           Each Portion shall be in a minimum
amount of $2,500,000 or an integral multiple of $500,000 in excess thereof
(except as otherwise provided below); provided, however, that the
total number of Portions outstanding at any time shall not exceed eight (8)
with respect to the Rent Purchasers’ Contribution and three (3) with respect to
the Landlord Contribution (and, in the case of both the Rent Purchasers’
Contribution and the Landlord Contribution, one such Portion may be in the
amount of the remaining balance of the Rent Purchasers’ Contribution or the
Landlord Contribution, as the case may be, if such balance is less than
$2,500,000 or is not an integral multiple of $500,000).

(iii)          The initial and each subsequent Rental
Period selected by Tenant for each Portion shall be one (1), two (2), three
(3), six (6), nine (9) or twelve (12) months; provided, however,
that (A) each Rental Period shall begin and end on the eleventh (11th) day of
the month or, if such day is not a Business Day, on the next following Business
Day; (B) no Rental Period shall end after the Expiration Date; (C) no
Rental Period shall be longer than one (1) month if a Default has occurred and
is continuing at the time the Notice of Rental Period Selection is required to
be delivered in accordance with this Section 7.1(b); and (D) each Rental
Period for which Tenant fails to make a selection by delivering a Notice of
Rental Period Selection in accordance with this Section 7.1(b) shall be
deemed to be one (1) month.

7.2          Proration. 
If the Term for any Lease Supplement or this Lease expires or is
otherwise terminated on other than a regularly scheduled Rent Payment Date,
then Base Rent shall be prorated for the period from the immediately preceding
Rent Payment Date until the end of the Term on an Actual/360 Basis.

7.3          No
Abatement of Rent.  Except as a consequence of a
reduction in the Lease Investment Balance, Tenant shall not be entitled to any
abatement, diminution, reduction, setoff or postponement of Base Rent as a
consequence of any inconvenience to, interruption or cessation of or loss of
Tenant’s use or enjoyment of the Parcels or as a result of any reason
whatsoever, including without limitation, the breach by Landlord of this Lease
or the breach by Landlord or any other Entity of any Operative Document.

7.4          Delinquent
Rent.  Any Base Rent or Additional Rent not paid
when due shall accrue interest at the Default Rate from the date such Base Rent
or Additional Rent was originally due until the date such Base Rent or
Additional Rent is paid.  All interest
accrued on past due Base Rent or Additional Rent shall be due and payable by
Tenant at the time the Base Rent or Additional Rent is paid, or upon demand by
Landlord or Administrative Agent, if earlier.

 

10

7.5          Additional Rent.

(a)           Break Funding Costs.  In the event that Landlord, Administrative
Agent or any Rent Purchaser incurs Break Funding Costs, Tenant agrees to pay to
Landlord, Administrative Agent or such Rent Purchaser any Break Funding Costs
claimed by such Entity.  The Entity
claiming such Break Funding Costs shall deliver to Tenant a statement setting
forth in reasonable detail the calculation used to determine the Break Funding
Costs claimed by such Entity.  The
agreements in this Section 7.5(a) shall survive the termination of this
Lease with respect to any Break Funding Costs on payments that become due
during the Term.

(b)           Other Additional Rent.  Tenant agrees to pay all other Additional
Rent when it becomes due and payable under this Lease, any Lease Supplement or
any other Operative Document.

7.6          Rent
Upon Default.  Tenant agrees to pay, and Landlord agrees to
accept, the entire Lease Investment Balance as Additional Rent upon an Event of
Default pursuant to Section 19.1 below. 
If Tenant pays the entire Lease Investment Balance, and any other sums
owing Landlord, Administrative Agent and each Rent Purchaser, pursuant to Section
7.5 above and Section 19.1 below, Landlord shall reconvey the
applicable Security Instruments to Tenant and Landlord shall deliver to Tenant
a duly executed and acknowledged grant deed conveying title to each of the
Parcels to Tenant or Tenant’s designee.

ARTICLE
VIII

 

TAXES;
ADDITIONAL CHARGES; GROSS UP

8.1          Real Estate Taxes.

(a)           From and after the date of each Lease
Supplement, Tenant shall pay during the Term directly to the appropriate taxing
authority all Real Estate Taxes (as defined below) and provide Landlord and
Administrative Agent a certified copy of an original official receipt received
by Tenant showing payment thereof.  If
the date of each Lease Supplement occurs on, or the Lease Supplement Term
expires or otherwise terminates on, any date other than the beginning or end of
a taxable year, Tenant’s obligation to pay Real Estate Taxes shall be prorated
on the basis of a 365-day year, so as to include only that portion of the
taxable year which is a part of the Lease Supplement Term.  Unless a termination of the Lease results
from the purchase of the Parcels pursuant to Article XX below, any
Real Estate Taxes levied against the Parcels which accrue during the Term of
this Lease but which would not be due and payable to the appropriate taxing
authority until after the expiration of the Term of this Lease (as the same may
be extended) shall be paid by Tenant to Landlord upon such termination.  Landlord shall pay such amounts to the
appropriate taxing authority on a timely basis.

(b)           Except to the extent that Real Estate
Tax bills and statements are sent directly to Tenant by the taxing authority,
upon receipt by Landlord of the tax bills or statements, Landlord will use
reasonable efforts to promptly advise Tenant in writing of all Real Estate
Taxes and shall deliver copies of all applicable tax bills or statements to
Tenant.  Tenant shall pay directly to
the taxing authority all Real Estate Taxes prior to the later of
(i) thirty (30) days 

11

 

after receipt by Tenant
from Landlord of a copy of such bills and statements referred to above, or
(ii) five (5) Business Days prior to delinquency.  As used herein, the term “Real Estate Taxes”
shall mean any and all taxes, governmental fees and similar charges or
assessments levied or assessed against the Improvements and/or the Land including,
without limitation, ad valorem taxes and special assessments applicable to real
property specifically set forth in a Ground Lease; provided, however,
that Real Estate Taxes shall not include any Landlord Taxes (as defined
below).  Real Estate Taxes shall also
include any and all documentary, transfer, sales, mortgage, recording or
similar taxes imposed on Landlord or Tenant in connection with the transactions
contemplated by the Operative Documents or any sale of the Parcels to a third
party in accordance with this Lease following an Event of Default by Tenant or
in a transaction to which Tenant is a party. 
As used herein, the term “Landlord Taxes” shall mean any and all
franchise, gains, gift, succession, excess profits, gross receipts, revenue, income
or similar taxes or taxes in lieu thereof imposed upon Landlord or any party
other than Tenant (or an affiliate thereof) and any withholding tax imposed as
a collection device for, in lieu of, or otherwise related to any of the
foregoing without regard to whether such tax is required to be collected by
Tenant and without regard to whether Tenant would be liable for such
withholding tax in the event it failed to so withhold, but excluding any such
tax or withholding imposed on Landlord by a state (or any local taxing
authority thereof or therein) where a Parcel is located unless Landlord was
subject to such tax in such jurisdiction without regard to the transactions
contemplated by the Operative Documents. 
For purposes of the foregoing, an income tax shall include, without
limitation, any tax imposed under the United States Internal Revenue Code, as
well as any tax which could qualify as an “income tax” under United States
Treasury Regulation Section 1.901-2 (except to the extent any such statute or
regulation is subsequently modified to include a tax or other governmental
charge of a materially different type and nature from the taxes currently
described therein) and any income tax which may be payable under the laws of
any jurisdiction either now or in the future, provided Landlord was subject to
tax in such jurisdiction without regard to the transactions contemplated by the
Operative Documents.  Real Estate Taxes
for any given tax year shall exclude assessment installments that are not due
and payable during such tax year.

8.2          Personal
Property Taxes.  Tenant shall pay directly to the appropriate
taxing authorities prior to delinquency any and all taxes and assessments
levied or assessed during the Term upon or against Tenant’s furniture,
equipment, trade fixtures and any other personal property in the Parcels.

8.3          Right
to Contest.  Tenant shall not be required to pay any Real
Estate Taxes or any other taxes for which Tenant is liable hereunder
(including, without limitation, any taxes for which Tenant is required to
indemnify Landlord under Section 22.1) (including penalties and
interest), so long as (i) Tenant shall contest the same or the validity thereof
by appropriate legal proceedings in such a manner to prevent the sale,
forfeiture or loss of any portion of the Parcels or any Rent and (ii) the
position to be taken by Tenant pursuant to such contest would have a realistic
possibility of success if litigated. 
For purposes of this Lease, Tenant may conclusively establish that a
position to be taken in a contest would have a realistic possibility of success
if litigated by providing to Landlord a letter from counsel stating an opinion
to such effect.  In the event of any
such contest, Tenant shall, within thirty (30) days after the final
determination thereof, pay and discharge the amounts determined to be due in
accordance therewith and with the provisions of this Lease, together with any
penalties, fines, interest, costs and expenses that 

12

 

may have accrued thereon
or that may have resulted from Tenant’s contest.  Tenant also shall have a right to contest any taxes for which it
is liable hereunder, but with regard to which the position to be taken pursuant
to such contest would not have a realistic possibility of success if litigated,
provided that Tenant pays such taxes on or prior to the date upon which such
taxes are asserted to be due by the relevant governmental authority.  Notwithstanding the foregoing provisions of
this Section 8.3, Tenant shall have an unconditional right to contest (without
prior payment) any taxes imposed by law upon Tenant rather than upon
Landlord.  Tenant’s decision to pay any
taxes prior to contesting its or another party’s underlying liability therefor
shall not be deemed to imply or suggest that the position to be taken in such
contest would not have a realistic possibility of success if litigated.  Landlord shall, at Tenant’s sole cost and
expense, cooperate fully with Tenant in connection with the exercise of
Tenant’s right of contest contained herein, and in the event that applicable
law shall require that Landlord, rather than Tenant, pursue legal proceedings
for such contest, Landlord will initiate and pursue such contest upon Tenant’s
request and in accordance with Tenant’s instructions (including, without limitation,
Tenant’s instructions as to the selection of legal counsel and matters of
strategy or settlement); provided, however, that Landlord shall
not be subject to any liability for the payment of any costs or expenses in
connection with any such contest or proceedings, and Tenant will indemnify and
save harmless Landlord from any such costs and expenses (including, without
limitation, attorneys’ fees, costs of court and appraisal costs), reimbursing
Landlord therefor upon demand (or paying such costs and expenses directly when
due, all as directed by Landlord). 
Tenant shall be entitled to any refund of any taxes and penalties or
interest from any governmental authority to the extent the refund represents
moneys paid to the governmental authority by Tenant or paid by Landlord and
reimbursed by Tenant.

8.4          Additional
Charges.  All payments made by Tenant under this Lease
and each other Operative Document shall be made free and clear of, and without
reduction or withholding for or on account of, any present, or future taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed pursuant to any
Legal Requirement, excluding, however, any Landlord Taxes (all such nonexcluded
taxes, levies, imposts, deductions, charges or withholdings being hereinafter
called “Additional Charges”).  Tenant
shall be responsible for the payment of any such Additional Charges; and if any
such Additional Charges are required to be withheld from any amounts payable to
Landlord, Administrative Agent or any Rent Purchaser hereunder or under any
other Operative Document, then the amounts so payable to Landlord,
Administrative Agent or such Rent Purchaser shall be increased by an amount
(“Additional Amount”) necessary to yield to Landlord, Administrative Agent or
such Rent Purchaser (after payment of all Additional Charges) the Base Rent,
Additional Rent and other amounts payable hereunder or under any other
Operative Document at the rates or in the amounts specified in this Lease or
such other Operative Document.  Whenever
any Additional Charges are required to be withheld by Tenant, such Additional
Charges shall be deducted or withheld by Tenant, and shall be paid by Tenant to
the appropriate governmental authority in accordance with applicable Legal
Requirements.  As promptly as possible
thereafter, Tenant shall send to Landlord and Administrative Agent for their
own accounts a copy of an original official receipt (or other evidence of
payment) received by Tenant showing payment thereof.  If Tenant is required to pay Landlord, Administrative Agent or
any Rent Purchaser any Additional Amount, Landlord shall, and shall request
that Administrative Agent and the applicable Rent Purchaser, use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction in which it 

13

 

books this transaction if
the making of such a change would avoid the need for, or reduce the amount of,
any such Additional Amount which may thereafter accrue and would not, in the
reasonable judgment of Landlord, Administrative Agent or such Rent Purchaser,
be otherwise disadvantageous to it.  The
agreements in this Section 8.4 shall survive the termination of this
Lease with respect to any Additional Charges or payments that become due during
the Term.

ARTICLE IX

INSURANCE

9.1          Liability
Insurance.  At all times during the Term, Tenant shall
obtain at Tenant’s sole cost and expense a policy or policies of commercial
general liability insurance on an “occurrence” basis against claims for
“personal injury” liability, including bodily injury, death or property damage
liability.  The liability insurance policy
shall contain coverage of at least $10,000,000 combined single limit per
occurrence.

9.2          Builders’
Risk Insurance.  With respect to any Improvements which may
be under construction and not yet covered by insurance under the terms of Section
9.3, Tenant shall maintain or cause to be maintained at Tenant’s sole cost
and expense a policy or policies of builders’ risk insurance in an amount equal
to the value upon completion of the work (exclusive of land, foundation,
excavation, grading, landscaping, architectural and development fees and other items
customarily excluded from such coverage), insuring against the risks
customarily insured against under such insurance, including fire, vandalism,
malicious mischief, sprinkler leakage, lightning, and windstorm.

9.3          All-Risk
Insurance.  With respect to any Improvements now or
hereafter situated on the Land, at all times, Tenant shall, at Tenant’s sole
cost and expense, obtain and maintain, or cause to be obtained and maintained,
(a) a policy or policies of all-risk insurance covering the Improvements, providing
coverage against loss or damage by fire, vandalism, malicious mischief,
sprinkler leakage, lightning, windstorm, and other insurable perils, as, under
good insurance practice, from time to time are insured against under all-risk
coverage for properties of similar character, age and location in an amount or
amounts not less than one hundred percent (100%) of the then actual replacement
cost (exclusive of land, foundation, excavations, grading, landscaping,
architectural and development fees and other items customarily excluded from
such coverage and without any deduction for depreciation); and (b) if any
Parcel is determined to be in a flood zone, standard flood coverage.  Tenant will self-insure against loss or
damage to any Improvements caused by an earthquake; and Tenant shall not be
required to maintain other earthquake insurance, but may elect to do so in its
sole discretion.

9.4          General
Requirements.  The insurance required under this Article
IX may be furnished under a “primary” policy and an “umbrella” policy or
policies.  Landlord, Administrative
Agent and each Rent Purchaser shall be named as an additional insured under
Tenant’s policy of insurance required under Section 9.1; and such
policies shall contain cross-liability coverage.  Landlord shall be named as loss payee with respect to all
insurance required under Sections 9.2 and 9.3.  Tenant shall furnish Landlord and Administrative Agent with
certificates from Tenant’s insurers with respect to the insurance required to
be carried hereunder on or before the date such insurance is required to be
carried.  The certificates shall state
that 

14

 

such insurance is in full
force and effect and that coverage will not be reduced below the amounts required
under this Article IX or otherwise limited or canceled without
thirty (30) days’ prior written notice to Landlord and Administrative
Agent.  Renewal certificates shall be
furnished to Landlord and Administrative Agent within five (5) days following
the expiration of each such policy.  Any
blanket insurance policy or policies that insure Tenant against the risks and
for the amounts herein specified shall be deemed to satisfy the obligation of
Tenant hereunder, provided that Landlord, Administrative Agent and each Rent
Purchaser shall be named as additional insured parties thereunder as their
interest may appear and that the coverage afforded Landlord, Administrative
Agent and each Rent Purchaser will not be reduced or diminished by reason of
the use of such blanket policy of insurance, and provided further that the
requirements set forth herein are otherwise satisfied, and provided that any
such policy of blanket insurance shall specify the amount of the total
insurance allocated to the risks required to be insured hereunder and such
allocated amount meets the requirements of this Article IX.  All insurance required by this Article IX
shall be with an insurance company licensed to do business in the state in
which the Parcel is located with a general policyholder’s rating, as rated by
the most current available “Best” Insurance Reports, of no less than A- and a
financial size rating of at least VII; provided, however, that
such rating shall not be required with respect to any insurance required by
this Article IX if on any date such insurance is underwritten by a Captive
Insurance Subsidiary of Tenant, so long as Tenant’s Debt/EBITDA Ratio for the
consecutive four-quarter period ending most recently prior to such date is 2.00
to 1.00 or less.

9.5          Waiver
of Subrogation.  Notwithstanding anything to the contrary
contained herein, to the extent permitted by law and so long as any insurance
coverage maintained by Tenant is not diminished by reason thereof, Tenant
hereby (a) releases and waives any rights it may have against Landlord,
Administrative Agent, any Rent Purchaser and their respective officers, agents
and employees on account of any loss or damages occasioned to Tenant, its
property or the Parcels, and arising from any risk covered by any fire and extended
coverage insurance maintained by Tenant, whether or not due to the negligence
of Landlord, Administrative Agent, any Rent Purchaser, or their respective
agents, employees, contractors, licensees, invitees or other persons, and (b)
waives on behalf of any insurer providing such insurance to Tenant any right of
subrogation that any such insurer may have or acquire against Landlord,
Administrative Agent, any Rent Purchaser or such persons by virtue of payment
of any loss under such insurance. 
Tenant shall cause its insurance policies to contain a waiver of
subrogation clause in accordance with the foregoing.

9.6          Indemnity. 
Tenant shall protect, defend, indemnify, hold and save Landlord,
Administrative Agent and each Rent Purchaser harmless from and against any and
all losses, costs, liabilities or damages (including reasonable attorneys’ fees
and disbursements and court costs) arising by reason of:  (i) any failure of Tenant to maintain
insurance for the benefit of Landlord, Administrative Agent and each Rent
Purchaser as required pursuant to this Article IX, (ii) the failure to
obtain the waiver of subrogation clause required by Section 9.5 hereof,
or (iii) the invalidation of such insurance policy required to be obtained
by Tenant hereunder by Tenant’s insurer. 
Tenant’s duty to indemnify Landlord, Administrative Agent and each Rent
Purchaser under this Section 9.6 shall survive the expiration or earlier
termination of this Lease with respect to events occurring during the Term.

15

 

ARTICLE X

USE

10.1        Use.

(a)           Permitted.  Tenant may use the Parcels for any lawful purpose, which shall at
all times be subject to the Ground Lease.

(b)           Environmental
Compliance.

(i)            Defined Terms.  The term “Applicable Environmental Laws”
shall mean any applicable laws, regulations or ordinances pertaining to health
or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 or otherwise (as
amended, hereinafter called “CERCLA”), the Resource Conservation and Recovery
Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, the Hazardous and Solid Waste Amendments of
1984 or otherwise (as amended, hereinafter called “RCRA”), and the California
Health & Safety Code Section 25501(j). 
The terms “hazardous substance” and “release” as used in this Lease
shall have the meanings specified in CERCLA, and the terms “solid waste” and
“disposal” (or “disposed”) shall have the meanings specified in RCRA; provided,
in the event either CERCLA or RCRA is amended or superseded by other laws so as
to broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment or other laws; and,
provided further, to the extent that the laws of any state in which a Parcel is
located establish a meaning for “hazardous substance,” “release,” “solid waste,”
or “disposal” which is broader than that specified in either CERCLA or RCRA,
such broader meaning shall apply.

(ii)           Tenant’s Covenants.  Tenant will not cause or permit the Parcels
to be in violation of, or do anything or permit anything to be done which
subjects Landlord, Administrative Agent, any Rent Purchaser, Tenant or the
Parcels to any remedial obligations under or which creates a claim or cause of
action against Landlord, Administrative Agent, any Rent Purchaser, Tenant (in
each case relating to the Parcels) or the Parcels under any Applicable
Environmental Laws, including, without limitation, CERCLA, RCRA, and the
environmental laws of the state in which the Parcels are located assuming
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the Parcels, and Tenant
will promptly notify Landlord and Administrative Agent in writing of any
existing, pending or threatened investigation, claim or inquiry of which Tenant
has knowledge by any governmental authority in connection with any Applicable
Environmental Laws.  Tenant shall obtain
any permits, licenses or similar authorizations to construct, occupy, operate
or use any improvements, fixtures and equipment at any time located on the
Parcels by reason of any Applicable Environmental Laws.  Tenant will not use the Parcels in a manner
which will result in the unlawful disposal or other unlawful release of any
hazardous substance or solid waste on or to the Parcels and covenants and
agrees to keep or cause the Parcels to be free of any unlawful hazardous
substance, solid waste or environmental contaminants (including, without
limitation, arsenic in soil and friable asbestos and any substance containing
asbestos 

16

 

deemed hazardous and
unlawful by any Applicable Environmental Law), and to remove the amounts of the
same (or if removal is prohibited by law, to take whatever action is required
by law) promptly upon discovery at Tenant’s sole expense to the extent required
by Applicable Environmental Law.  Tenant
shall promptly notify Landlord and Administrative Agent in writing of any
unlawful disposal or other unlawful release of any hazardous substance,
environmental contaminants or solid wastes on or to the Parcels in violation of
Applicable Environmental Law.  In the
event Tenant fails to comply with or perform any of the foregoing covenants and
obligations, after thirty (30) days’ prior written Notice to Tenant, Landlord
or Administrative Agent may, but shall be under no obligation to, cause the
Parcels to be freed from such unlawful hazardous substance, unlawful solid
waste or unlawful environmental contaminants (or if removal is prohibited by
law, to take whatever action is required by law) and the cost of the removal or
such other action shall be a demand obligation owing by Tenant to the
remediating party pursuant to this Lease. 
Notwithstanding the foregoing, Landlord and Administrative Agent shall
have no right to cause the removal of such materials so long as Tenant both:
(1) is diligently and in good faith proceeding to comply with Tenant’s
obligation to remove such unlawful amounts of such materials; and (2) has the
financial ability to so comply.  Subject
to the foregoing, Tenant grants to Landlord, and to the extent permitted by the
Operative Documents, Administrative Agent and their respective agents and
employees access to the Parcels, and the license to remove the unlawful
hazardous substance, unlawful solid waste or environmental contaminants (or if
removal is prohibited by law, to take whatever action is required by law); and
agrees to indemnify and save Landlord, Administrative Agent and all Rent
Purchasers harmless from all costs and expenses involved and from all claims (including
consequential damages) asserted or proven against Landlord, Administrative
Agent or any Rent Purchaser by any party in connection therewith.  Upon reasonable request by Landlord or, to
the extent permitted by the Operative Documents, Administrative Agent for “good
cause” (defined below), at any time and from time to time during the Term,
Tenant will provide at Tenant’s sole expense an inspection or audit of the
Parcels from an engineering or consulting firm approved by the Entity making
such request, indicating the presence or absence of any hazardous substance,
solid waste or environmental contaminants located on the Parcels.  If Tenant fails to provide same after sixty
(60) days’ notice, the Entity making such request may order same, and Tenant grants
to such Entity and its respective employees and agents access to the Parcels
and a license to undertake any testing reasonably required to obtain such
inspection or audit.  The cost of
obtaining such inspection or audit and any expenses incurred by such Entity in
connection therewith shall be a demand obligation owing by Tenant to such
Entity pursuant to this Lease.  For
purposes of this Section 10.1(b)(2), “good cause” shall mean that the
Entity requesting such inspection or audit shall have reasonable grounds to
believe that an unlawful release or an unlawful disposal of hazardous
substances or solid wastes has occurred on the Parcels.

(c)           Compliance With Legal Requirements.  Tenant shall at all times comply with all
material Legal Requirements applicable to the Land or any improvements now or
hereafter situated on the Land and/or the use thereof.

10.2        Contest
of Legal Requirements.  Tenant shall have the right
at its sole cost and expense to contest the validity of any Legal Requirements
applicable to the Parcels by appropriate proceedings diligently conducted in
good faith; and upon the request of Tenant and at Tenant’s sole cost and
expense, Landlord will join and cooperate with Tenant in such proceedings.  Subject to Section 8.3, and any other
provision of this Lease to the contrary 

17

 

notwithstanding, Tenant’s
right to contest Legal Requirements must be exercised in such a manner as to
avoid any exposure of the Parcels or any part thereof to foreclosure or
execution sale or exposure of Landlord, Administrative Agent or any Rent
Purchaser to civil or criminal penalties arising from Tenant’s non-compliance
with such Legal Requirements.  Tenant
shall defend and indemnify Landlord, Administrative Agent and each Rent
Purchaser against, and hold Landlord, Administrative Agent and each Rent
Purchaser harmless from, any and all liability, loss, cost, damage, injury or
expense (including, without limitation, attorneys’ fees and costs) which
Landlord, Administrative Agent or any Rent Purchaser may sustain or suffer by
reason of Tenant’s failure or delay in complying with, or Tenant’s contest of,
any such Legal Requirements (or Landlord’s contest, if requested in writing by
Tenant), and Tenant’s duty to indemnify Landlord, Administrative Agent and each
Rent Purchaser under this Section 10.2 shall survive the expiration or
earlier termination of this Lease.

ARTICLE
XI

UTILITIES
AND SERVICES

11.1        Services
to the Parcels.  At Tenant’s sole cost and expense, Tenant shall
make its own arrangements for the provision of all utilities and services to be
provided to or consumed on the Parcels, including, without limitation, air
conditioning and ventilation service contracts, heating, electric power,
telephone, water (both domestic and fire protection), sanitary sewer, storm
drain, natural gas and janitorial services, including for the installation,
maintenance and repair of service lines and meters to measure Tenant’s
consumption of such utilities.

ARTICLE XII

MAINTENANCE AND REPAIRS SURRENDER OF THE PARCELS

12.1        Tenant
Obligations.  Landlord shall have no obligation to
maintain the Parcels.  Tenant shall at
all times and at Tenant’s sole cost and expense maintain the Parcels in good
repair, normal wear and tear excepted.

12.2        Surrender
of the Parcels.  Except as provided in Section 20.1
below, upon the expiration or earlier termination of the Term, Tenant shall
surrender each Parcel to Landlord in its then condition, subject to compliance
by Tenant on or prior to such date with its obligations under this Lease and
the other Operative Documents, but including any condition resulting from: (i)
normal wear and tear; (ii) obsolescence; (iii) damage that is caused by
Landlord or its agents, employees or contractors; and (iv) any improvements,
alterations, additions, repairs, replacements or decorations in, to or of the
Parcels or on the Land which are not Tenant’s Property which Tenant may elect
to remain on the Land or the Parcels. 
Title to all Tenant’s Property shall be and remain in Tenant throughout
the Term, and at any time during the Term of this Lease, the same may be
removed by Tenant, or, at Tenant’s abandonment or written election, surrendered
with the Parcels, in which event title to such surrendered property shall, if Landlord
so elects in Landlord’s sole discretion, be deemed transferred to
Landlord.  Any of such property that is
not removed from the Parcels on or prior to the expiration or early termination
of this Lease or any Lease Supplement shall be considered abandoned and
Landlord may deal with it as Landlord elects.

18

 

ARTICLE XIII

LIENS

13.1        Pay and Discharge Liens.

(a)           Tenant shall not directly or
indirectly create or allow to remain, and shall promptly discharge at its sole
cost and expense, any Lien, attachment or levy upon any Parcel or any Lien,
attachment or levy with respect to Base Rent or Additional Rent, other than any
Lien specified as a permitted title exception in Schedule 2 attached to a Lease
Supplement or any Landlord Lien. 
Notwithstanding the foregoing, Tenant shall not be required to discharge
or remove any Lien on any Parcel, so long as no Event of Default has occurred
and is continuing and, in the opinion of Tenant’s counsel, Tenant shall have a
realistic possibility of success in contesting the existence, amount,
applicability or validity thereof by appropriate proceedings, which proceedings
(i) shall not involve any material danger that any Parcel or any Base Rent or
Additional Rent would be subject to sale, forfeiture or loss, (ii) shall not
affect the payment of any Base Rent or Additional Rent or result in any such
amounts being payable to any Person other than Landlord or the Administrative
Agent, (iii) will not place Landlord, the Administrative Agent or any Rent
Purchaser in any danger of civil or criminal liability and (iv) shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which Tenant or such Parcel is subject and shall not constitute a
default thereunder.

(b)           Nothing contained in this Lease shall
be construed as constituting the consent or request of Landlord, expressed or
implied, to or for the performance by any contractor, mechanic, laborer,
materialman, supplier or vendor of any labor or services or for the furnishing
of any materials for any construction, modification, addition, repair or
demolition of or to any Parcel or any part thereof.  NOTICE IS HEREBY GIVEN THAT LANDLORD IS NOT AND SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
TENANT, OR TO ANYONE HOLDING ANY PARCEL OR ANY PART THEREOF THROUGH OR UNDER
TENANT, AND THAT NO MECHANIC’S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR
MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY
PARCEL.

ARTICLE XIV

ASSIGNMENT BY LANDLORD

14.1        Further
Mortgages or Encumbrances by Landlord.  Except for
the Security Instruments and the Rent Purchasers’ Deed of Trust, and any
amendments thereto, Landlord shall not cause or create any mortgages, deeds of
trust, encumbrances or exception to exist with respect to the Parcels at any
time.  Landlord agrees that it will not
materially modify any Security Instrument nor will it cause any new bonds or
assessments to encumber the Parcels without Tenant approval.

14.2        Landlord’s
Right to Sell.  Subject to Tenant’s Purchase Option set
forth in Article XX hereof and without limitation of Landlord’s
rights and remedies under Article XIX 

19

 

hereof, Landlord may
transfer all or any portion of its right, title and interest in any Parcel to
Administrative Agent, any Rent Purchaser or any other financial institution
having a minimum capitalization and surplus of at least $50,000,000, so long as
such transfer (i) does not cause Tenant to be identified as the ‘primary
beneficiary’ of the transactions contemplated by this Lease and the Operative
Documents under the relevant provisions of FASB Interpretation No. 46
(rev. December 2003), as hereafter amended or replaced, or otherwise require
the transferee Entity and Tenant to be consolidated for financial accounting
purposes under then applicable accounting standards or otherwise prevent Tenant
from utilizing operating lease accounting with respect to this Lease, and (ii)
would not result in an increase in the amount of Real Estate Taxes payable with
respect to such Parcel as a consequence of a reassessment thereof.  Any sale or transfer by Landlord pursuant to
this section shall by its express terms recognize and confirm the right of
possession of Tenant to the Parcels and Tenant’s other rights arising out of
this Lease shall not be affected or disturbed in any way by any such sale,
transfer, assignment or conveyance (except for any disturbance resulting from a
foreclosure sale conducted pursuant to the laws of the state where each Parcel
is located at which independent third party bids were permitted pursuant to the
applicable Security Instruments all subject to the terms of Section 19.2),
and any transferee shall expressly assume in writing all obligations of
Landlord to be performed following the date of transfer.  Nothing in this Section 14.2 shall
prohibit Landlord from selling rents to any financial institution pursuant to
the Participation Agreement and/or the Rent Purchase Agreement executed by and
between Landlord, Administrative Agent and the Rent Purchasers (without
transferring Landlord’s interest in the Parcels) or from granting a security
interest to the Rent Purchasers as additional inducement to participate in this
transaction.

14.3        Transfer
of Funds and Property.  At each time Landlord sells,
assigns, transfers or conveys the entire right, title and estate of Landlord in
any Parcel and in this Lease, Landlord shall turn over to the transferee any funds
or other property then held by Landlord under this Lease and thereupon all the
liabilities and obligations on the part of the Landlord under this Lease
arising after the effective date of such sale, assignment, transfer or
conveyance shall terminate as to the transferor and be binding upon the
transferee.

ARTICLE
XV

ASSIGNMENT
AND SUBLEASING

15.1        Right to Assign.

(a)           Tenant’s Right.  Provided that there is not an Event of
Default under this Lease which is continuing and uncured or if there is such an
Event of Default, provided that Tenant cures the Event of Default in connection
with the assignment, Tenant shall have the right, at any time and from time to
time during the Term, to assign all of its right, title and estate in a Parcel
and in this Lease with the prior written approval of Landlord and
Administrative Agent, which consent shall not be unreasonably withheld.  Any such assignee, immediate or remote,
shall have the same right of assignment. 
Any such assignment shall be evidenced by a written instrument, properly
executed and acknowledged by all parties thereto and, at Tenant’s election,
duly recorded in the Official Records, wherein and whereby the assignee assumes
all of the obligations of Tenant under this Lease.  Notwithstanding any such assignment and assumption, 

20

 

Tenant shall remain
primarily liable for all obligations and liabilities on the part of Tenant
theretofore or thereafter arising under this Lease and all Lease Supplements.

(b)           Notice.  Tenant shall, promptly after execution of each assignment, notify
Landlord and Administrative Agent of the name and mailing address of the
assignee and shall, on demand, permit Landlord and Administrative Agent to
examine and copy the assignment agreement.

15.2        Right to Sublet.

(a)           Tenant’s Right.  Provided that there is not an Event of
Default under this Lease which is continuing and uncured or if there is such an
Event of Default, provided that Tenant cures the Event of Default in connection
with the sublease, Tenant shall have the right, at any time and from time to
time during the Term, to sublet all or any portion of the Parcels and to
extend, modify or renew any sublease without the approval of Landlord; provided
that, except as specified hereinbelow with respect to any Retail Leases, no
sublease shall have a term that extends beyond the Expiration Date.  Notwithstanding any such sublease, Tenant
shall remain primarily liable for all obligations and liabilities on the part
of Tenant theretofore or thereafter arising under this Lease and all Lease
Supplements.  It is expressly understood
that Tenant may lease to third parties, in arms-length transactions and on then
current fair market terms, certain ground floor space constructed for retail
use and currently existing in the Improvements (“Qualifying Retail Leases”)
without the consent of Landlord or Administrative Agent, and any such
Qualifying Retail Lease may have a maturity date which extends beyond the
Expiration Date.

(b)           Notice.  Tenant shall, promptly after execution of each sublease, notify
Landlord and Administrative Agent of the name and mailing address of the
subtenant and shall, on demand, permit Landlord and Administrative Agent to
examine and copy the sublease.

(c)           Nondisturbance Agreement.  Upon Tenant’s request, Landlord shall enter
into a non-disturbance and attornment agreement with any subtenant of Tenant
under any Qualifying Retail Lease.  Such
agreement shall provide that Landlord shall recognize such Qualifying Retail
Lease and not disturb the subtenant’s possession thereunder so long as such
subtenant shall not be in default under such Qualifying Retail Lease.  Tenant shall immediately reimburse Landlord
on demand for all reasonable out-of-pocket costs and expenses incurred by Landlord
in complying with Landlord’s obligations under this Section 15.2.

15.3        Mortgage
by Tenant.  Tenant shall not have the right to mortgage,
pledge or otherwise encumber all or any portion of the right, title and estate
of Tenant in any Parcel or in this Lease, without the prior written consent of
Landlord and Administrative Agent.

ARTICLE
XVI

EMINENT
DOMAIN

16.1        Total
or Substantial Taking.  If title or access is taken
for any public or quasi-public use, or under any statute or by right of
condemnation or eminent domain, or by sale in lieu thereof (a “Taking”) with
respect to any or all of a Parcel, or if title to so much of the Parcel or 

21

 

access thereto is Taken,
or if the Parcel or access thereto is damaged, blocked or impaired by the
Taking, so that, in Tenant’s sole discretion, such Parcel or access thereto,
even after a reasonable amount of reconstruction thereof, will no longer be
suitable for the conduct of Tenant’s (and/or Tenant’s subtenants’) business,
then in any such event, the Lease Supplement relating to such Parcel shall
terminate on the date of such Taking, and, to the extent the compensation for
such Taking payable to Landlord pursuant to Section 16.4 is less than
the Purchase Price for such Parcel, Tenant shall pay the balance of the
Purchase Price for such Parcel into escrow as provided in the Participation
Agreement for distribution as provided in the Rent Purchase Agreement.  Landlord shall not exercise any right to
terminate a Ground Lease without Tenant’s prior approval, in Tenant’s sole
discretion.  Tenant shall restore the
Parcels to the extent provided in a Ground Lease in the event the applicable
Lease Supplement and Ground Lease are terminated.  The provisions of Section 16.4 shall be applicable only as
to the compensation allocated to the ground lessee under a Ground Lease in the
event of a Taking.

16.2        Partial
Taking.  If any part of a Parcel, or access thereto,
shall be subject to a Taking, and the Parcel or the remaining part thereof and
access thereto will be, in Tenant’s reasonable discretion, suitable for the
conduct of Tenant’s (and/or Tenant’s subtenants’) business in a manner
consistent with the conduct of such business prior to such Taking, all of the
terms, covenants and conditions of this Lease and the Lease Supplement covering
such Parcel shall continue, except that Base Rent shall be adjusted to reflect
the decreased Lease Investment Balance remaining after application thereto of
the award made to Landlord for such Taking.

16.3        Temporary
Taking.  If the whole or any part of any Parcel is
subject to a Taking for temporary use or occupancy, this Lease shall not
terminate by reason thereof and Tenant shall continue to pay, in the manner and
at the times herein specified, the full amount of the Base Rent payable by
Tenant hereunder, and, except only to the extent that Tenant may be prevented
from so doing by reason of such Taking, Tenant shall continue to perform and
observe all of the other terms, covenants and conditions hereof on the part of
Tenant to be performed and observed, as though the Taking had not
occurred.  In the event of any such
temporary Taking, Tenant shall be entitled to receive the entire amount of the
award made for the Taking, whether paid by way of damages, rent or
otherwise.  If the temporary Taking is
for a term in excess of thirty (30) days, then the Taking shall be treated as a
permanent Taking and be governed by Section 16.1 or 16.2, as applicable.

16.4        Damages. 
The compensation attributable to the Parcels (in each case the
compensation or value shall be determined as of the date of the Taking) awarded
or paid upon any Taking (other than a temporary Taking, which shall be governed
by Section 16.3), whether awarded to Landlord, Tenant, or any of them,
shall be held by the Escrow Agent described in Section 17.3(b), and
distributed in the same manner as insurance proceeds pursuant to Section 17.3.  For purposes of this Section 16.4,
references to the term “casualty” or similar terms in Section 17.3 shall
be deemed to refer to “Taking.” Any portion of such compensation which Tenant
does not want to use for any construction, restoration or reconstruction shall
be paid as follows (the order of payment as set forth below shall be the
“Distribution Formula”): (i) to Landlord (but only to the extent of the
then-existing Lease Investment Balance and all accrued and unpaid Base Rent and
Additional Rent); and (ii) with any remaining excess to be paid to Tenant.  Any compensation in excess of the Lease
Investment Balance, plus all accrued and unpaid Base Rent and Additional Rent,
shall be paid to Tenant.  Any
compensation payable 

22

 

to Landlord shall be
deposited in escrow as provided in the Participation Agreement and distributed
as provided in the Rent Purchase Agreement.

16.5        Notice
and Execution.  Immediately upon service of process upon
Landlord or Tenant in connection with any Taking relating to any Parcel or any
portion thereof or access thereto, each party shall give the other Notice
thereof.  Each party agrees to execute
and deliver to the other all instruments that may be required to effectuate the
provisions of this Article XVI. 
Tenant reserves the right to appear in and to contest any proceedings in
connection with any such Taking.  Tenant
shall immediately reimburse Landlord on demand for all reasonable out-of-pocket
costs and expenses incurred by Landlord in complying with Landlord’s
obligations under this Section 16.5.

16.6        Terms
of SJRDA Ground Leases. 
Notwithstanding any of the foregoing provisions of this Article XVI,
Landlord and Tenant acknowledge that in the event of any inconsistency between
the foregoing terms of this Article XVI and Article XI of the
SJRDA Ground Leases, the terms of Article XI of the SJRDA Ground
Leases shall control; and Tenant shall have no right to terminate this Lease
(or a Lease Supplement) as a consequence of a Taking unless Landlord shall also
have the right to terminate the SJRDA Ground Leases (or the corresponding SJRDA
Ground Lease in the case of termination of a Lease Supplement) as a consequence
thereof (provided that Tenant may exercise the Purchase Option under Section
20.1 at any time); Landlord shall not exercise any right to terminate
either of the SJRDA Ground Leases without Tenant’s prior approval, in Tenant’s
sole discretion; Tenant shall restore the Parcels to the extent provided in the
SJRDA Ground Leases in the event this Lease (or applicable Lease Supplement)
and the SJRDA Ground Leases (or corresponding SJRDA Ground Lease) are not
terminated; and the provisions of Section 16.4 above shall be applicable
only to the compensation allocated to the ground lessee under the terms of an
SJRDA Ground Lease in the event of a Taking.

ARTICLE XVII

DAMAGE OR DESTRUCTION

17.1        Casualty. 
If any of the improvements now or hereafter situated on a Parcel
(including the Improvements) are damaged or destroyed by fire or other
casualty, except as provided to the contrary in Section 17.2, this Lease
and corresponding Lease Supplement shall continue in full force and effect
without any abatement or reduction in Base Rent, and Tenant, at Tenant’s
election, shall either (a) restore such improvements substantially to their
condition prior to the damage or destruction, subject to Landlord’s approval in
accordance with the terms of an applicable construction management agreement,
if any, which shall not be unreasonably withheld, of the plans and general
contractor’s construction contract; or (b) not restore such improvements and terminate
the Lease Supplement for such Parcel as provided in Section 17.2.  Notwithstanding the foregoing, Tenant shall
be required to perform, or cause to be performed, at Tenant’s sole cost and
expense, any work or service required by any Legal Requirement for the
protection of persons or property from any risk, or for the abatement of any
nuisance, created by or arising from the casualty or the damage or destruction
caused thereby.

23

 

17.2        Termination
of Lease Supplement.  In the case of: (a) any
damage or casualty of any Improvements located on a particular Parcel, which in
the good faith judgment of Tenant’s Board of Directors would render the
Improvements either unsuitable or uneconomic for restoration or continued use
by Tenant; (b) the damage or destruction of all or substantially all (as
determined in good faith by Tenant’s Board of Directors) of the Improvements;
or (c) the damage or destruction of the Improvements where restoration cannot
(as determined in good faith by Tenant’s Board of Directors) reasonably be
completed either within 365 days or prior to the Expiration Date, then Tenant
shall be deemed to have elected to terminate the Lease Supplement and exercise
the Purchase Option for such Parcel.  In
the event Tenant terminates the Lease Supplement pursuant to the preceding
sentence, Tenant shall purchase Landlord’s interest in such Parcel for a
purchase price equal to the Purchase Price for the Parcel as such Purchase
Price shall have the meaning set forth in Section 20.1. The purchase of
Landlord’s interest in the Parcel shall be pursuant to the terms of Section
20.1, as applicable to the Parcel. 
Upon the completion of such purchase, the Lease Supplement and all
obligations with respect to the purchased Parcel shall terminate.

17.3        Insurance
Proceeds.  In the event of any fire or other casualty,
the proceeds of any insurance policies maintained by Tenant pursuant to Section
9.2 or 9.3 shall be held, applied and dealt with as follows:

(a)           If no Event of Default has occurred
and is continuing, and provided that Tenant has not terminated the applicable
Lease Supplement pursuant to Section 17.2, any proceeds (per occurrence)
of such policies attributable to the Improvements below the amount of Two Million
Dollars ($2,000,000.00) or any proceeds directly attributable to improvements
constructed on the Property by Tenant solely with its own funds shall be paid
directly to Tenant and applied and used as Tenant may direct in its sole
discretion for any construction, restoration or reconstruction purposes in
connection with any improvements located on the Land which were destroyed,
damaged or affected by such casualty; provided, however, that at
such time no Event of Default has occurred and is continuing.  Any portion of such proceeds which Tenant
does not want to use (subject to the terms of Section 17.3(c)) for any
construction, restoration or reconstruction shall be paid in accordance with
the Distribution Formula set forth in Section 16.4 above.

(b)           If no Event of Default has occurred
and is continuing, any proceeds (per occurrence) of such policies attributable
to the Improvements greater than Two Million Dollars ($2,000,000.00) shall be
paid to an escrow agent (“Escrow Agent”) mutually agreeable to the parties (but
such escrow agent shall not be a party which is related to or affiliated with
either of the parties to this Lease, but shall be bound by the terms of this Article
XVII).  Such proceeds shall be
invested by the Escrow Agent as Tenant may direct (provided, however,
that such proceeds may not be invested in any securities or any debt
obligations issued by Tenant).  Such
proceeds shall be paid by the Escrow Agent to Tenant (or to third parties as
Tenant may direct), as Tenant may direct from time to time as restoration,
construction or rebuilding progresses to pay the cost of any restoration,
construction or rebuilding on the Land required by Section 17.1 or any
Improvements located upon the Land, so long as Landlord reasonably determines
that the following conditions are satisfied at the time of such request for
payment by Tenant: (i) the sum requested has been paid or is then due and
payable or will become due and payable within thirty (30) days; (ii) Tenant has
the financial ability (taking into account the insurance proceeds held by 

24

 

the Escrow Agent) to
complete the restoration, construction or rebuilding required by Section 17.1;
(iii) Landlord has approved the plans, if any, relating to the restoration of
Improvements (which approval shall not be unreasonably withheld or delayed);
and (iv) in Landlord’s reasonable judgment, such restoration work required by Section
17.1 in connection with the Improvements can be completed at least nine (9)
months prior to the expiration of the Term. 
Landlord shall promptly upon request instruct the Escrow Agent to make
the payments requested by Tenant unless an Event of Default has occurred and is
continuing or any of the four (4) conditions described above is not satisfied
at the time of such request.  Any excess
insurance proceeds existing after Tenant’s completion of the restoration,
construction or rebuilding which Tenant elects to perform, and all insurance
proceeds if an Event of Default has occurred and is continuing or any of the
four (4) conditions described above is not satisfied, shall be paid pursuant to
the Distribution Formula.

(c)           If Tenant elects to terminate the
applicable Lease Supplement, Tenant may use any insurance proceeds to pay the
Purchase Price described in Section 17.2, and all rights of Landlord in
insurance proceeds not used to pay the Purchase Price shall be assigned to
Tenant by Landlord at the time Tenant purchases Landlord’s interest in the
Parcel covered by such Lease Supplement. 
If either: (1) Tenant has not delivered written notice to Landlord
within ninety (90) days after reaching final written settlement with all
insurance companies regarding the amount of proceeds to be paid for the casualty
in question, pursuant to which notice Tenant elects to either exercise its
termination rights under Section 17.2 and/or to fully repair or restore
pursuant to Section 17.1; or (2) Landlord reasonably believes that
Tenant has abandoned reconstruction or restoration work required by Section
17.1 (and Tenant shall have failed to diligently recommence reconstruction
or restoration work which Tenant is then able to perform within thirty (30)
days after Tenant’s receipt from Landlord of a Notice of Landlord’s belief of
Tenant’s abandonment of the reconstruction or restoration work); then, in
either case, the proceeds attributable to the Improvements shall be paid
pursuant to the Distribution Formula.

(d)           Any insurance proceeds payable to
Landlord under this Article XVII shall be deposited into escrow as
provided in the Participation Agreement and applied pursuant to the Rent
Purchase Agreement to reduce the Lease Investment Balance for such Parcel by a
like amount.

(e)           Notwithstanding any of the foregoing
provisions of this Article XVII, Landlord and Tenant acknowledge that in
the event of any inconsistency between the foregoing terms of this Article
XVII and the terms of the SJRDA Ground Leases, the terms of the SJRDA
Ground Leases shall control, and Tenant shall have no right to terminate this
Lease (or a Lease Supplement) as a consequence of any damage or destruction
unless Landlord shall also have the right to terminate the SJRDA Ground Leases
(or the corresponding SJRDA Ground Lease in the case of termination of a Lease
Supplement) as a consequence thereof (provided that Tenant may exercise the
Purchase Option under Section 20.1 at any time); Landlord shall not
exercise any right to terminate either of the SJRDA Ground Leases without
Tenant’s prior approval, in Tenant’s sole discretion; Tenant shall restore or
rebuild the Parcels in the manner and subject to the terms of the SJRDA Ground
Leases in the event this Lease (or applicable Lease Supplement) and the SJRDA
Ground Leases (or corresponding SJRDA Ground Lease) are not terminated; and the
provisions regarding the application of insurance proceeds provided in Section
17.3 above 

25

 

shall be subject to the
terms of any SJRDA Ground Lease and the allocation of insurance proceeds
between the ground lessor and ground lessee if provided for therein.

ARTICLE XVIII

QUIET ENJOYMENT

18.1        Quiet
Enjoyment.  Landlord covenants to secure to Tenant the
quiet possession of the Parcels for the full Term against all persons claiming
the same, by, through or in the right of Landlord, subject to Landlord’s rights
and remedies under Article XIX upon an Event of Default by Tenant.  The existence of any Permitted Title
Exceptions shall not be deemed to constitute a breach of Landlord’s obligations
hereunder.  Tenant shall, immediately
upon demand, reimburse Landlord for all reasonable costs, expenses and damages
incurred or paid by Landlord in the performance of Landlord’s obligations under
this Article XVIII (except for any costs, expenses or damages arising
from any Landlord Liens or Landlord’s willful breach of this Lease).  Landlord agrees that, so long as no Event of
Default has occurred and is continuing, Landlord shall not exercise the right
to terminate any Ground Lease.

ARTICLE XIX

DEFAULT

19.1        Default. 
Each of the following events shall constitute an event of default
(“Event of Default”) by Tenant:

(a)           Non-Payment.  Tenant shall (i) fail to pay on the Expiration Date any amounts
payable by Tenant under this Lease or any of the other Operative Documents, or
(ii) fail to pay within five (5) days after the same becomes due, any Base
Rent, Additional Rent or other amounts required under the terms of this Lease
or any of the other Operative Documents; or

(b)           Specific Defaults.  (i) Tenant shall fail to carry any policy of
insurance required by Article IX, or (ii) Tenant or any of its
Subsidiaries shall fail to perform any covenant, obligation, condition or
agreement set forth in Sections 21.21 or 21.22; or

(c)           Other Defaults.  Tenant or any of its Subsidiaries shall fail
to observe or perform any other covenant, obligation, condition or agreement
contained in this Lease or the other Operative Documents and such failure shall
continue for fifteen (15) Business Days after the earlier of (i) Tenant’s
written acknowledgment of such failure and (ii) written notice to Tenant by
Landlord, Administrative Agent or any Rent Purchaser of such failure; or

(d)           Representations and Warranties.  Any written representation, warranty,
certificate, information or other statement (financial or otherwise) made or
furnished by Tenant or any of its Subsidiaries to Landlord, Administrative
Agent or any Rent Purchaser in or in connection with this Lease or any of the
other Operative Documents shall be false, incorrect, incomplete or misleading in
any material respect when made or furnished and either:

(i)            Tenant has acknowledged that such
representation, warranty, certificate, information or other statement was
false, incorrect, incomplete or misleading in any 

26

 

material respect when
made or furnished, or Landlord, Administrative Agent or any Rent Purchaser has
delivered to Tenant written notice to such effect and such representation,
warranty, certificate, information or other statement cannot be remedied; or

(ii)           Such representation, warranty,
certificate, information or other statement continues to be false, incorrect,
incomplete or misleading in any material respect thirty (30) days after the
earlier of (A) Tenant’s written acknowledgment that such representation,
warranty, certificate, information or other statement was false, incorrect,
incomplete or misleading in any material respect when made or furnished, and
(B) written notice to Tenant by Landlord, Administrative Agent or any Rent Purchaser
to such effect; or

(e)           Cross-Default.  (i) Tenant or any of its Subsidiaries shall
fail to make any payment on account of any Indebtedness of such Entity (other
than the Obligations) when due (whether at scheduled maturity, by required
prepayment, upon acceleration or otherwise) and such failure shall continue
beyond any period of grace provided with respect thereto, if the amount of such
Indebtedness exceeds $25,000,000 or the effect of such failure is to cause, or
permit the holder or holders thereof to cause, Indebtedness of Tenant and its
Subsidiaries (other than the Obligations) in an aggregate amount exceeding
$25,000,000 to become redeemable, due or otherwise payable (whether at
scheduled maturity, by required prepayment, upon acceleration or otherwise)
and/or to be secured by cash collateral or (ii) Tenant or any of its
Subsidiaries shall otherwise fail to observe or perform any agreement, term or
condition contained in any agreement or instrument relating to any Indebtedness
of such Entity (other than the Obligations), or any other event shall occur or
condition shall exist, if the effect of such failure, event or condition is to
cause, or permit the holder or holders thereof to cause, Indebtedness of Tenant
and its Subsidiaries (other than the Obligations) in an aggregate amount
exceeding $25,000,000 to become redeemable, due or otherwise payable (whether
at scheduled maturity, by required prepayment, upon acceleration or otherwise)
and/or to be secured by cash collateral; or

(f)            Insolvency, Voluntary Proceedings.  Tenant or any of its Material Subsidiaries
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of it
or any of its creditors, (iv) except as otherwise provided in Section 21.21
(d) below, be dissolved or liquidated in full or in part, (v) become insolvent
(as such term may be defined or interpreted under any applicable statute), (vi)
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding commenced
against it, or (vi) take any action for the purpose of effecting any of the
foregoing; or

(g)           Involuntary Proceedings.  Proceedings for the appointment of a
receiver, trustee, liquidator or custodian of Tenant or any of its Material
Subsidiaries or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to Tenant or any of its Material Subsidiaries or the
debts thereof under any bankruptcy, insolvency or other similar law now or 

27

 

hereafter in effect shall
be commenced and an order for relief entered or such proceeding shall not be
dismissed or discharged within sixty (60) days of commencement; or

(h)           Judgments.  (i) One or more judgments, orders, decrees or arbitration awards
requiring Tenant and/or its Subsidiaries to pay an aggregate amount of
$25,000,000 or more (exclusive of amounts covered by insurance issued by
(y) an insurer not an Affiliate of Tenant or (z) a Captive Insurance Subsidiary)
shall be rendered against Tenant and/or any of its Subsidiaries in connection
with any single or related series of transactions, incidents or circumstances
and the same shall not be satisfied, vacated or stayed for a period of ten (10)
consecutive days; or (ii) any judgment, writ, assessment, warrant of
attachment, tax lien or execution or similar process shall be issued or levied
against a substantial part of the property of Tenant and its Subsidiaries taken
as a whole and the same shall not be released, stayed, vacated or otherwise
dismissed within ten (10) days after issue or levy; or

(i)            Operative Documents.  The Operative Documents, taken as a whole,
shall cease to provide Landlord, Administrative Agent or any Rent Purchaser the
practical realization of the material rights and remedies intended to be
provided thereunder; or any Operative Document shall be asserted by Tenant or
any of its Subsidiaries not to be a legal, valid and binding obligation of
Tenant or any of its Subsidiaries enforceable in accordance with its terms; or

(j)            Employee Benefit Plans.  Any Reportable Event which constitutes
grounds for the termination of any Employee Benefit Plan by the PBGC or for the
appointment of a trustee by the PBGC to administer any Employee Benefit Plan
shall occur, or any Employee Benefit Plan shall be terminated within the
meaning of Title IV of ERISA or a trustee shall be appointed by the PBGC to
administer any Employee Benefit Plan; or

(k)           Reserved.

(l)            Reserved.

(m)          Ground Lease Default.  Tenant shall fail to observe or perform any
covenant, obligation, condition or agreement in any Ground Lease or any Ground
Lease shall expire, terminate or otherwise be extinguished; or

(n)           Default in Payment of Purchase Price or Guaranteed
Residual Value.  Failure
of Tenant to (a) complete the Purchase Option after election (or deemed
election pursuant to Section 17.2 or otherwise) to do so and pay amounts
due in connection therewith when due, (b) perform all of its obligations
pursuant to the Termination Option if Tenant has elected to exercise the
Termination Option (defined in Section 20.2) (and has not rescinded
its election to exercise such option) set forth in Section 20.2,
including, without limitation, the obligations to make the payments required
pursuant to Sections 20.2(b), (d) and (e) when due, or (c) pay the
Purchase Price when due upon a Taking pursuant to Section 16.1.

19.2        Landlord’s
Remedies.  Upon the occurrence and during the
continuation of an Event of Default, Landlord shall have the remedies specified
below:

28

 

(a)           Continue Lease.  After the occurrence of an Event of Default,
Landlord shall have the right to enforce, by suit or otherwise, all other
covenants and conditions hereof to be performed or complied with by Tenant and
to exercise all other remedies permitted by the laws of the state in which the
Parcel is located.  Upon application by
Landlord, a receiver may be appointed to take possession of such Parcel and
exercise all rights granted to Landlord as set forth in this Section 19.2.

(b)           Terminate Lease.  In connection with an Event of Default,
Landlord may terminate this Lease or any Lease Supplement by giving Tenant
Notice thereof at any time after the occurrence of such Event of Default.  In such event Tenant shall be obligated to
purchase the Parcel (if Landlord has terminated only the Lease Supplement for
such Parcel) or all of the Parcels (if Landlord has terminated this Lease) for
an amount equal to the Purchase Price for such Parcel or all of the Parcels, as
applicable, described in the Purchase Option contained in Section 20.1
below (that is, all accrued Base Rent, Additional Rent and the Lease Investment
Balance under each Lease Supplement); provided that if this Lease is being
terminated with respect to a Parcel on the basis of an Event of Default under
Section 19.1(e) of this Lease relating to a failure, event or condition arising
solely as a consequence of the breach or alleged breach of a “material adverse
effect” or “material adverse change” clause or other similar clause with
respect to the relevant Indebtedness, then Tenant shall pay, in lieu of the
Lease Investment Balance component of the Purchase Price for such Parcel, the
Guaranteed Residual Value for such Parcel. 
In such event, the leasehold interest in such Parcel and title to the
Improvements thereon shall remain with Landlord and, at the request of Landlord
or the Administrative Agent, Tenant will remarket the Parcel on behalf of
Landlord, the Administrative Agent and the Rent Purchasers as provided in
Section 20.2(c) and (d) of this Lease (except that Tenant shall be deemed to
have paid the Guaranteed Residual Value for such Parcel to the extent it has
paid such amount hereunder).  Landlord
shall also have its other remedies at law (including its rights under the
Security Instruments).

(c)           Landlord’s Continuing Obligation to Sell.  Except in the case of a foreclosure under
the applicable Security Instruments, in the event Landlord obtains possession
of a Parcel pursuant to the terms of this Lease (because of Tenant’s default,
Lease expiration, or otherwise), Landlord shall be under a continuing
obligation to use its commercially reasonable efforts to sell such Parcel to
one or more unrelated third parties; provided, however, that Landlord
shall not be required to sell or attempt to sell any portion of such Parcel (i)
in a manner, or under circumstances, that could materially impair Landlord’s
ability to enforce any of its rights or remedies under the Operative Documents
(as determined in Landlord’s sole discretion), or (ii) at a time when market
conditions render it inadvisable to sell or attempt to sell such Parcel (as
determined in Landlord’s sole discretion). 
Upon the occurrence of any such sale, Landlord shall be obligated to pay
to Tenant any excess of the amount realized by Landlord in connection with such
sale over the Purchase Price.  For
purposes of the preceding sentence, the amount realized by Landlord upon a sale
of a Parcel shall be net of Landlord’s sale expenses and other expenses
incurred by Landlord to consummate such sale. 
Landlord’s obligation to pay such excess to Tenant shall survive any
termination of this Lease and shall remain subject to the terms of the Rent
Purchase Agreement or Participation Agreement. 
Tenant agrees that the Landlord will be deemed to be acting in good
faith if it refuses to sell its interest for less than the excess of the Lease
Investment Balance over the Guaranteed Residual Value.

29

19.3        No
Waiver.  No failure by Landlord or Tenant to insist
upon the strict performance of any term, covenant or condition of this Lease or
to exercise any right or remedy consequent upon a breach thereof and no
acceptance of full or partial Base Rent or Additional Rent during the
continuance of any breach shall constitute a waiver of any such breach or of
the term, covenant, or condition.  No
term, covenant or condition of this Lease to be performed or complied with by
Tenant or Landlord, and no breach thereof, shall be waived, terminated, altered
or modified except by a written instrument executed by Landlord and
Tenant.  No waiver of any breach shall
affect or alter this Lease, but each and every term, covenant, and condition of
this Lease shall continue in full force and effect with respect to any other
then existing subsequent breach thereof.

19.4        Effect
of Assignment.  Notwithstanding an Entity’s prior assignment
or transfer of its interest as Tenant under this Lease, so long as Landlord and
Administrative Agent have been given Notice of such assignment pursuant to Section
15.1 and Section 21.3, Landlord shall give such Entity copies of all
Notices required by this Article XIX in connection with any Event of
Default, and such Entity shall have the period granted hereunder to Tenant to
cure such Event of Default, unless such Entity shall have been released from
all obligations arising under this Lease and all Operative Documents.  Landlord may not assert any rights against
such Entity in the absence of such Notice and opportunity to cure, so long as
Landlord and Administrative Agent have been given Notice of such assignment
pursuant to Sections 15.1 and 21.3.

19.5        Landlord
Right to Perform.  If Tenant fails to perform any covenant or
agreement to be performed by Tenant under this Lease, and if the failure or
default continues for thirty (30) days after Notice to Tenant (except for
emergencies and except for payment of any lien or encumbrance threatening the
imminent sale of any Parcel or any portion thereof, in which case payment or
performance may be made as soon as necessary to minimize the damage to person
or property caused by such emergency or to prevent any such sale), Landlord
may, but shall have no obligation to, pay the same and perform such covenant or
agreement on behalf of and at the expense of Tenant and do all reasonably
necessary work and make all reasonably necessary payments in connection
therewith including, but not limited to, the payment of reasonable attorneys’
fees and disbursements incurred by Landlord. 
Notwithstanding the foregoing, Landlord shall have no right to perform
on behalf of Tenant so long as Tenant: (1) is diligently and in good faith
attempting to cure such matter and prosecuting such cure to completion; (2) has
the financial ability to so comply; and (3) commenced cure of such matter
within thirty (30) days after Tenant’s receipt of Notice thereof from
Landlord.  Failure by Tenant to comply
with the above shall allow Landlord to commence in a reasonable and customary
manner and in good faith to attempt to cure such matter.  Upon demand, Tenant shall reimburse Landlord
for the reasonable amount so paid, together with interest at the Default Rate
from the date incurred until the date repaid. 
Neither the performance by Landlord pursuant to this Section 19.5
nor the exercise by Landlord of any of its other rights and remedies shall
constitute a cure or waiver of any Event of Default or nullify any Notice of
Default or sale, unless and until all obligations under the Operative Documents
are paid in full.

19.6        Landlord’s
Default.  If Landlord fails to perform any covenant or
agreement to be performed by Landlord under Section 14.1, Section
16.4, Article XX, Article XXI, or Section 21.8 of
this Lease, and if the failure or default continues for thirty (30) days after
Notice to Landlord (except for emergencies and except for payment of any lien
or encumbrance 

 

30

 

threatening the imminent
sale of the Parcels or any portion thereof, in which case payment or cure may
be made as soon as necessary to minimize the damage to person or property
caused by such emergency or to prevent any such sale), Tenant may, but shall
have no obligation to, pay the same and cure such default on behalf of and, so
long as such failure to perform arises due to Landlord’s gross negligence,
willful misconduct, or willful breach of this Lease, at the expense of Landlord
and do all reasonably necessary work and make all reasonably necessary payments
in connection therewith including, but not limited to, the payment of
reasonable attorneys’ fees and disbursements incurred by Tenant.  Notwithstanding the foregoing, Tenant shall
have no right to cure any such failure to perform by Landlord so long as
Landlord is diligently and in good faith attempting to cure such matter.  Notwithstanding anything to the contrary,
Landlord’s liability under this Lease shall in all events be limited as
provided in Section 21.13 below, or as otherwise indicated in this
Lease.

ARTICLE
XX

TENANT’S
OPTION TO PURCHASE OR TERMINATE

20.1        Option To Purchase Parcels.

(a)           Purchase Option.  Provided no Event of Default has occurred
and is continuing, on any Rent Payment Date during the Term, Tenant shall have
the option (“Purchase Option”) to purchase all, but not less than all of the
Parcels covered by all Lease Supplements. 
The purchase price (“Purchase Price”) for the Parcels shall be the sum
of accrued and unpaid Base Rent, any accrued and unpaid Additional Rent, plus
the Lease Investment Balance under all Lease Supplements and expenses incurred
by Landlord in consummating the transfer of the Parcels pursuant to this Article
XX.  The Purchase Price shall be
deposited by Tenant in escrow as provided in the Participation Agreement and
distributed as provided in the Rent Purchase Agreement.

(b)           Purchase Option Exercise Notice.  If Tenant desires to exercise the Purchase
Option, Tenant shall deliver to Landlord and Administrative Agent thirty (30)
days’ prior written notice (“Purchase Option Exercise Notice”) of Tenant’s
election.  If Tenant does not exercise
the Termination Option with respect to the Parcels as provided in Section 20.2
below it shall be deemed to have exercised the Purchase Option with respect to
the Parcels.

(c)           Transfer.  If Tenant exercises the Purchase Option with respect to a Parcel,
the purchase and sale of the Parcels shall be consummated as follows:

(i)            Landlord shall grant and convey the
Parcels to Tenant, its authorized agent or assignee, pursuant to a duly
executed and acknowledged assignment and assumption of leasehold interest (as
to the Land) and a grant deed as to the Parcels (collectively herein the
“Deed”), free and clear of all liens, encumbrances, deeds of trust, mortgages,
rights-of-way and restrictive covenants or conditions, of record, placed
against the Parcels by Landlord except for (A) the Permitted Title Exceptions
(but not the Security Instruments), and (B) any UCC-1 filed or recorded which
evidences security interests encumbering the Parcels or any part thereof in
favor of Landlord, which security interests Landlord shall cause to be released
so that they no longer affect the Parcels (“Landlord Liens”).

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(ii)           The Purchase Price shall be paid to
Landlord upon delivery of the Deed and any other documents reasonably requested
by Tenant (the “Additional Documents”) to evidence the transfer of the Parcels
subject to the Permitted Title Exceptions (excluding the Security Instruments,
and any UCC-1 filed or recorded which evidences security interests encumbering
the Parcels or any part thereof in favor of Landlord, which security interests
Landlord shall cause to be released so that they no longer affect the
Parcels).  In the event that Tenant
elects to assign the Purchase Option pursuant to Section 20.1(d) below,
and Tenant’s assignee pays an amount less than the Purchase Price for the
Parcels, Tenant shall pay to Landlord any excess of the Purchase Price over the
amount paid by such assignee.  Landlord
shall deliver the Deed and the Additional Documents to Tenant or Tenant’s
assignee on the date for closing specified by Tenant in the Purchase Option
Exercise Notice.  The closing shall take
place at the location and in the manner reasonably set forth by Tenant or Tenant’s
Assignee in the Purchase Option Exercise Notice; provided that the date of
closing shall occur no later than the last day of the Term of the Lease.

(iii)          If Landlord shall fail to remove all
Landlord Liens within the time herein prescribed for the delivery of the Deed,
then Tenant shall have the right (in addition to all other rights provided by
law or in equity) by a written notice to Landlord: (1) to extend the time
(notwithstanding the Expiration Date of this Lease) in which Landlord shall
remove all Landlord Liens and deliver the Deed and Additional Documents, during
which extension this Lease shall remain in full force and effect, except Tenant
shall be released from its obligation to pay Base Rent and Additional Rent
during the extension; (2) to accept delivery of the Deed and Additional
Documents subject to such Landlord Liens not cleared by Landlord; or
(3) to accept delivery of the Deed and the Additional Documents and if any
Landlord Lien is curable by the payment of money, Tenant may make such payment
and such payment shall be a credit against the Purchase Price in favor of
Tenant.

(iv)          Base Rent shall be prorated and paid
and all Additional Rent which is then due and payable shall be paid as of the
date title to the Parcel is vested of record in Tenant.  Tenant shall pay the escrow fees; the
recorder’s fee for recording the Deed; the premium for the title insurance
policy; all documentary transfer taxes; Tenant’s attorneys’ fees; Landlord’s
reasonable attorneys’ fees; all other costs and expenses incurred by Tenant in
consummating the transfer of the Parcel; and all reasonable expenses (except as
specified in the next sentence) incurred by Landlord in consummating the
transfer of the Parcel pursuant to this Section 20.1.  Landlord shall pay the costs and expenses of
removing Landlord Liens.

(d)           Assignment.  Tenant shall have the right, after giving notice to Landlord, but
without Landlord’s consent, to assign this Purchase Option, in whole, to any
Entity at any time, whether or not Tenant also assigns its interest in the
Lease.  Notwithstanding any such
assignment, Tenant shall remain primarily liable for all obligations and
liabilities on the part of Tenant theretofore or thereafter arising under this
Lease and all Lease Supplements.

20.2        Termination Option.

(a)           Notice.  Provided that no Default or Event of Default has occurred and is
then continuing and subject to the conditions in Section 20.2(e), unless
Tenant has notified Landlord and Administrative Agent prior to such date that
it elects the Purchase Option, Tenant 

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may, on or before the
date which is nine (9) months prior to the expiration of the Term, exercise an
option (“Termination Option”) to sell all but not less than all the Parcels; provided,
however, that at any time Tenant can rescind its election to exercise
its Termination Option if it then exercises its Purchase Option pursuant to Section
20.1 above, and in the event of any such rescission by Tenant, Tenant shall
be responsible for payment of any fees and expenses incurred in connection
therewith or resulting therefrom, including any such fees and expenses incurred
by or on behalf of Landlord.

(b)           Termination Option.  After giving the notice set forth in Section
20.2(a) above Tenant shall then use its best efforts to sell the Parcels
for cash to a third party purchaser (who is not an affiliate of Tenant within
the meaning of Rule 405 under the Securities Act of 1933) and, if the Parcels
are not conveyed to such purchaser prior to the expiration of the Term,
Landlord may, at its option, either allow the Tenant to holdover pursuant to Section
4.2 above, or terminate the Lease, in which case Tenant shall immediately
vacate the Parcels and quitclaim all interest of Tenant, if any, therein to
Landlord.  Tenant shall pay to Landlord,
on the last day of the Term, any Base Rent or Additional Rent due and owing
under the applicable Lease Supplement, this Lease or any other Operative
Document.

(c)           Termination Option Procedures.  In the event that Tenant elects the
Termination Option with respect to the Parcels, Tenant shall use its best
efforts to obtain a purchaser for the Parcels. 
Tenant shall notify Landlord promptly upon receipt of any bid for the Parcels.  Except as otherwise provided below, any sale
by Tenant shall be for the highest cash bid submitted to Tenant, including any
cash bid submitted by or through Landlord. 
The determination of the highest bid shall be made by Landlord.  Notwithstanding the above provisions, Tenant
may accept any cash bid which exceeds the Lease Investment Balance.  If Landlord undertakes any sales efforts,
Tenant shall promptly reimburse Landlord for any reasonable charges, costs and
expenses incurred in such effort, including any commissions, allocated time charges,
costs and expenses of internal counsel, external counsel or other attorneys’
fees.  If the Parcels have not been sold
by the end of the Term, then Tenant shall pay to Landlord on the last day of
the Term the amount of the Guaranteed Residual Value with respect thereto and
shall continue Tenant’s sales efforts for the Parcels.

(d)           Payments under the Termination Option.  If Tenant elects the Termination Option with
respect to the Parcels, any sale pursuant to the Termination Option that
results from acceptance of a bid prior to the end of the Term shall be
consummated on the last day of the Term. 
On the last day of the Term, the proceeds (“Proceeds”) of the sale of
the Parcels pursuant to the Termination Option shall be paid in accordance with
the Distribution Formula.  If the
Proceeds are less than the Lease Investment Balance applicable thereto (a
“Shortfall”), then Landlord shall receive such Proceeds and the Tenant shall
make an additional payment to the Landlord equal to such Shortfall, but not more
than the Guaranteed Residual Value applicable to all Parcels minus the
reasonable and documented out-of-pocket expenses incurred by the Tenant in
connection with the sale of the Parcels, and Tenant shall also pay to Landlord
any other amount owing by Tenant under any Operative Document.  If a sale is consummated after the end of
the Term and Tenant has already paid the Guaranteed Residual Value as required
by Section 20.2(c) above, then the Proceeds shall be paid to Landlord to
the extent of the difference between the Guaranteed Residual Value amount
already paid by Tenant and the applicable Lease Investment Balance, and any
excess Proceeds shall be paid to Tenant 

33

 

after Tenant has paid to
Landlord any other amount owing by Tenant under any Operative Document.

(e)           Termination Conditions. Each of the
following conditions must be met by Tenant in connection with the exercise of
the Termination Option with respect to each Parcel:

(i)            Not more than one hundred eighty
(180) and not less than ninety (90) days prior to the Expiration Date, Tenant
shall deliver to Landlord a Phase One environmental site assessment for such
Parcel prepared by an environmental consultant selected by Tenant and approved
in advance by Landlord, which shall contain conclusions reasonably satisfactory
to Landlord as to the environmental status of such Parcel. If such
environmental site assessment indicates any exceptions, Tenant shall have also
delivered a Phase Two environmental assessment by such environmental consultant
prior to the Expiration Date showing the completion of the remediation of such
exceptions in compliance with all requirements of law.

(ii)           On the Expiration Date, no Default or
Event of Default shall have occurred and be continuing and Tenant shall not be
conducting any contest pursuant to this Lease in connection with such Parcel.

(iii)          On the Expiration Date, Tenant shall
be in compliance in all material respects with its obligations under Articles
X through XIII, XVI and XVII with respect to such
Parcel.

(iv)          In connection with any such sale of
Landlord’s interest in any Parcel, Tenant will provide to the purchaser all
customary “seller’s” indemnities, representations and warranties regarding
absence of Liens (except Landlord Liens) and the condition of such Parcel,
including an environmental indemnity for such Parcel, to the extent the same
are required by the purchaser. Tenant shall have obtained, at its cost and
expense, all required governmental and regulatory consents and approvals and
shall have made all filings as required by applicable law in order to carry out
and complete the transfer of such Parcel. As to Landlord, any such sale of
Landlord’s interest in a Parcel shall be made on an “as is, with all faults” basis
without representation or warranty by Landlord other than the absence of
Landlord Liens. Any agreement as to such sale shall be made subject to
Landlord’s rights hereunder.

(v)           Tenant shall pay all prorations,
credits, costs and expenses of the sale of Landlord’s interest in such Parcel,
whether incurred by Landlord or Tenant, including the cost of all title
insurance, surveys, environmental reports, appraisals, transfer taxes,
Landlord’s reasonable attorneys’ fees, Tenant’s attorneys’ fees, commissions,
escrow fees, recording fees, and all applicable documentary and other transfer
taxes.

(vi)          Tenant shall pay to Landlord on or
prior to such Expiration Date, the amount, if any, by which the fair market
sales value of such Parcel has been reduced by excess wear and tear. If the
Guaranteed Residual Value plus the sales proceeds to be retained by Landlord is
less than the Lease Investment Balance of such Parcel, then Landlord may cause
an appraisal to be made, at the expense of Tenant, to determine the amount of
such reduction due to excess wear and tear.

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If Tenant does not comply with any of the conditions
or any of its obligations under this Article XX with respect to a
Parcel, then Landlord may declare by written notice to Tenant the Termination
Option with respect to all Parcels to be null and void, in which event all of
Tenant’s rights under this Article XX shall immediately terminate and
Tenant shall be obligated to purchase Landlord’s interest in all Parcels as if
it had exercised the Purchase Option under Section 20.1 on the Expiration Date.

ARTICLE
XXI

MISCELLANEOUS

21.1        Relationship. 
Neither this Lease nor any other Operative Documents or transactions
contemplated hereby or thereby shall in any respect be interpreted, deemed or
construed as constituting Landlord, Rent Purchasers, Administrative Agent and
Tenant as partners or joint venturers, one with the other, or as creating any
partnership, joint venture, association or, except as set forth in Section
21.2 below, any other relationship other than that of landlord and tenant;
and, except as set forth in Section 21.2 below, both Landlord and Tenant
agree not to make any contrary assertion, contention, claim or counterclaim in
any action, suit or other legal proceeding involving either Landlord or Tenant
or the subject matter of this Lease.

21.2        Form of Transaction; Certain Tax
Matters.

(a)           Landlord and Tenant hereby agree and
declare that the transactions contemplated by this Lease are intended to constitute,
both as to matters of form and substance:

(i)            an operating lease for financial
accounting purposes, and

(ii)           a financing arrangement secured by
the Parcels (and not a “true lease”) for purposes of Federal, state and local
income tax, commercial law and other legal purposes, including bankruptcy.

Accordingly, and notwithstanding any other provision
of this Lease to the contrary, Landlord and Tenant agree and declare that (A)
the transactions contemplated hereby are intended to have a dual, rather than
single, form and (B) all references in this Lease to the “Lease” of the Parcels
which fail to reference such dual form do so as a matter of convenience only
and do not reflect the intent of Landlord and Tenant as to the true form of
such arrangements.

(b)           Landlord and Tenant agree that, in
accordance with their intentions and the substance of the transactions
contemplated hereby, Tenant (and not Landlord) shall be treated as the owner of
the Parcels for Federal, state, local income tax purposes and this Lease shall
be treated as a financing arrangement secured by the Parcels. Tenant shall be
entitled to take any deduction, credit allowance or other reporting, filing or
other tax position consistent with such characterizations. Landlord shall not
file any Federal, state or local income tax returns, reports or other
statements in a manner which is inconsistent with the foregoing provisions of
this Section 21.2.

35

 

(c)           Tenant acknowledges that it has
retained accounting, tax and legal advisors to assist it in structuring this
Lease and Tenant is not relying on any advice from or representations of
Landlord regarding the proper treatment of this transaction for accounting,
income tax or any other purpose.

21.3        Notices. 
Each Notice shall be in writing and shall be sent by personal delivery,
overnight courier (charges prepaid or billed to the sender) or by the deposit
of such with the United States Postal Service, or any official successor
thereto, designated as registered or certified mail, return receipt requested,
bearing adequate postage and in each case addressed as provided in Section
1.10.  Each Notice shall be
effective upon being personally delivered or actually received.  The time period in which a response to any
such Notice must be given or any action taken with respect thereto shall
commence to run from the date of personal delivery or receipt of the Notice by
the addressee thereof, as reflected on the return receipt of the Notice.  Rejection or other refusal to accept shall
be deemed to be receipt of the Notice sent. 
By giving to the other party at least thirty (30) days’ prior Notice
thereof, either party to this Lease shall have the right from time to time during
the Term of this Lease to change the address(es) thereof and to specify as the
address(es) thereof any other address(es) within the continental United States
of America.

21.4        Severability
of Provisions.  If any term, covenant or condition of this
Lease shall be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to Entities or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby.

21.5        Entire
Agreement; Amendment.  This Lease and each other
Operative Document constitutes the entire agreement of Landlord, Administrative
Agent, each Rent Purchaser and Tenant with respect to the subject matter hereof
and thereof.  Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed as set forth in the Rent Purchase
Agreement.

21.6        Memorandum
of Amended and Restated Lease.  Neither
party shall record this Lease.  However,
concurrently with the execution of any Lease Supplement, Landlord and Tenant
shall execute a Memorandum of Lease (“Memorandum of Lease”) in the form
attached to each Lease Supplement and by this reference made a part hereof,
which Memorandum of Lease shall be promptly recorded in the Official Records.

21.7        Successors
and Assigns.  Subject to Articles XIV and XV,
this Lease shall inure to the benefit of and be binding upon Landlord and
Tenant and their respective heirs, executors, legal representatives, successors
and assigns.  Whenever in this Lease a
reference to any Entity is made, such reference shall be deemed to include a
reference to the heirs, executors, legal representatives, successors and
permitted assigns of such Entity.

21.8        Commissions. 
Landlord and Tenant each represent and warrant that neither has dealt
with any broker in connection with this transaction and that no real estate
broker, salesperson or finder has the right to claim a real estate brokerage,
salesperson’s commission or finder’s fee by reason of contact between the
parties brought about by such broker, salesperson or finder.  Each party shall hold and save the other
harmless of and from any and all loss, cost, 

36

 

damage, injury or expense
arising out of or in any way related to claims for real estate broker’s or
salesperson’s commissions or fees based upon allegations made by the claimant
that it is entitled to such a fee from the indemnified party arising out of
contact with the indemnifying party or alleged introductions of the
indemnifying party to the indemnified party.

21.9        Attorneys’
Fees.  In the event any action is brought by
Landlord or Tenant against the other to enforce or for the breach of any of the
terms, covenants or conditions contained in this Lease, the prevailing party
shall be entitled to recover reasonable attorneys’ fees to be fixed by the
court, together with costs of suit therein incurred.  Tenant shall pay the reasonable attorneys’ fees incurred by
Landlord for the review and negotiation of this Lease.

21.10      Governing
Law.  This Lease and the obligations of the
parties hereunder shall be governed by and interpreted, construed and enforced
in accordance with the laws of the State of California.

21.11      Counterparts. 
This Lease may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall comprise but
a single instrument.

21.12      Time
Is of the Essence.  Time is of the essence of
this Lease, and of each provision hereof.

21.13      Limitations
on Recourse.  The obligations of Tenant and Landlord under
this Lease shall be without recourse to any partner, officer, trustee,
beneficiary, shareholder, director or employee of Tenant or Landlord.  Except for the gross negligence or willful
misconduct of Landlord or for breach of Landlord’s obligations to fund pursuant
to Article VI above, Landlord’s liability to Tenant for any default by
Landlord under this Lease: (1) shall be limited to Landlord’s interest in the
Parcels; and (2) shall extend to any actual damages of Tenant, but shall not
extend to any foreseeable or unforeseeable consequential damages.

21.14      Estoppel
Certificates.  Within thirty (30) days after request
therefor by either party, the non-requesting party shall deliver, in recordable
form, a certificate to any proposed mortgagee, purchaser, sublessee or assignee
and to the requesting party, certifying (if such be the case) that this Lease
is in full force and effect, the date of Tenant’s most recent payment of Base
Rent, that, to the best of its knowledge, the non-requesting party has no
defenses or offsets outstanding, or stating those claimed, and any other
information reasonably requested. 
Failure to deliver said statement in time shall be conclusive upon the
non-requesting party that: (a) this Lease is in full force and effect, without
modification except as may be represented by the requesting party; (b) there
are no uncured defaults in the requesting party’s performance and the
non-requesting party has no right of offset, counterclaim or deduction against
the non-requesting party’s obligations hereunder; (c) no more than one month’s
Base Rent has been paid in advance; and (d) any other matters reasonably
requested in such certificate.

21.15      As-Is
Lease.  Landlord makes no representations or warranties
concerning the condition, suitability or any other matters relating to the
Parcels, and Tenant hereby acknowledges that Tenant leases the Parcels from
Landlord on an “as is” basis.

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21.16      Net
Lease.  Except as otherwise provided in this Lease,
Tenant agrees that this Lease is an absolute net Lease, and the Base Rent
called for hereunder shall be paid as required inclusive of all expenses
associated with the Parcels, including without limitation, Real Estate Taxes
and insurance premiums for the insurance required to be carried hereunder, and
all other reasonable and customary costs and expenses incurred by Landlord, in
connection with the Parcels or this Lease, all of which shall be paid or reimbursed
by Tenant unless otherwise specifically provided herein.  Tenant agrees to reimburse Landlord, within
five (5) Business Days following receipt of any written demand therefor, for
all reasonable and customary fees, late charges, title endorsements, and other
costs and expenses charged to Landlord which accrue during any period.

21.17      Landlord’s Representations and
Warranties.  Landlord hereby represents and warrants
that:

(a)           Landlord has the full right and
authority to enter into this Lease, consummate the sale, transfers and
assignments contemplated herein and otherwise perform its obligations under
this Lease;

(b)           the person or persons signatory to
this Lease and any document executed pursuant hereto on behalf of Landlord have
full power and authority to bind Landlord;

(c)           the execution and delivery of this
Lease and the performance of Landlord’s obligations hereunder do not and shall
not result in the violation of Landlord’s organizational documents or any
material contract or agreement to which Landlord may be a party;

(d)           Landlord is duly organized and
existing under the laws of the jurisdiction in which it is formed, and is
qualified to do business in the State of California; and

(e)           as of the Date of Lease and at all
times thereafter during the Term, the fair value of the Parcels is and shall be
less than half of the fair value of the total assets of Landlord and no more
than 95% of the Lease Investment Balance is or shall be financed or encumbered
by (i) non-recourse debt and/or (ii) equity that does not participate in all of
the profits and losses of Landlord.

21.18      Tenant’s
Representations and Warranties.  In order to
induce Landlord, Administrative Agent and each Rent Purchaser to enter into the
Operative Documents, Tenant represents and warrants to Landlord, Administrative
Agent and each Rent Purchaser as follows:

(a)           Due Incorporation, Qualification, etc.  Each of Tenant and Tenant’s Material
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization; (ii) has the power
and authority to own, lease and operate its properties and carry on its
business as now conducted; and (iii) is duly qualified, licensed to do business
and in good standing as a foreign corporation in each jurisdiction where the
failure to be so qualified or licensed is reasonably likely to have a Material
Adverse Effect.  Tenant is organized
under the laws of the State of Delaware and is a “registered entity” under the
laws of the State of Delaware.  Tenant’s
exact name is as set forth in the preamble to this Lease.  

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The chief executive
office and principal place of business of Tenant is located at 345 Park Avenue,
San Jose, California.

(b)           Authority.  The execution, delivery and performance by Tenant of each
Operative Document executed, or to be executed, by Tenant and the consummation
of the transactions contemplated thereby (i) are within the power of Tenant and
(ii) have been duly authorized by all necessary actions on the part of Tenant.

(c)           Enforceability.  Each Operative Document executed, or to be
executed, by Tenant has been, or will be, duly executed and delivered by Tenant
and constitutes, or will constitute, a legal, valid and binding obligation of
Tenant, enforceable against Tenant in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors’ rights generally and general
principles of equity.

(d)           Non-Contravention.  The execution and delivery by Tenant of the
Operative Documents executed by Tenant and the performance and consummation of
the transactions contemplated thereby do not (i) violate any Legal Requirement
applicable to Tenant; (ii) violate any provision of, or result in the breach or
the acceleration of, or entitle any other Entity to accelerate (whether after
the giving of notice or lapse of time or both), any Contractual Obligation of
Tenant or the SJRDA Ground Leases; or (iii) result in the creation or
imposition of any Lien (or the obligation to create or impose any Lien) upon
any property, asset or revenue of Tenant (except such Liens as may be created
in favor of Landlord, Administrative Agent or any Rent Purchaser pursuant to this
Lease or the other Operative Documents).

(e)           Approvals.  No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required in
connection with the execution and delivery of the Operative Documents executed
by Tenant or the performance or consummation of the transactions contemplated
thereby, except for those which have been made or obtained and are in full
force and effect and except for the filing of the Operative Documents with the
SEC as material agreements of Tenant, which SEC filing will be made by Tenant
in the ordinary course of its SEC filings.

(f)            No Violation or Default.  Neither Tenant nor any of its Subsidiaries
is in violation of or in default with respect to (i) any Legal Requirement
applicable to such Entity or (ii) any Contractual Obligation of such Entity
(nor is there any waiver in effect which, if not in effect, would result in
such a violation or default), where, in each case, such violation or default is
reasonably likely to have a Material Adverse Effect.  Without limiting the generality of the foregoing, neither Tenant
nor any of its Subsidiaries (A) has violated any Applicable Environmental Laws,
(B) has any liability under any Applicable Environmental Laws or (C) has
received notice or other communication of an investigation or is under
investigation by any Governmental Authority having authority to enforce
Applicable Environmental Laws, where such violation, liability or investigation
is reasonably likely to have a Material Adverse Effect.  No Default has occurred and is continuing.

(g)           Litigation.  No action (including derivative actions), suit, proceeding or
investigation is pending or, to the knowledge of Tenant, threatened against
Tenant or any of its 

39

 

Subsidiaries at law or in
equity in any court or before any other Governmental Authority which (i) seeks
to enjoin, either directly or indirectly, the execution, delivery or
performance by Tenant of the Operative Documents or the transactions
contemplated thereby, or (ii) except as disclosed in the 10-K report filed by
Tenant with the Securities and Exchange Commission for the fiscal year ended
November 28, 2003, is reasonably likely (alone or in the aggregate) to have a
Material Adverse Effect.

(h)           Title; Possession Under Leases.  Tenant and its Material Subsidiaries own and
have good and marketable title, or a valid leasehold interest in, or licenses
with respect to, all their respective properties and assets as reflected in the
most recent Financial Statements delivered to Landlord and Administrative Agent
(except those assets and properties disposed of in the ordinary course of
business or otherwise in compliance with this Lease since the date of such
Financial Statements) and all respective assets and properties acquired by
Tenant and its Material Subsidiaries since such date (except those disposed of
in the ordinary course of business or otherwise in compliance with this Lease).  Such assets and properties are subject to no
Lien, except for Permitted Liens.  Each
of Tenant and its Material Subsidiaries has complied with all material
obligations under all material leases to which it is a party and enjoys
peaceful and undisturbed possession under such leases subject only to rights of
sublessees of Tenant or its Material Subsidiaries.

(i)            Financial Statements.  The audited Financial Statements dated
November 28, 2003, and the unaudited Financial Statements for the fiscal
quarter ended June 4, 2004, furnished by Tenant to Landlord and Administrative
Agent prior to the date hereof, (i) are in accordance with the books and
records of Tenant and its Subsidiaries, which have been maintained in
accordance with good business practice; (ii) have been prepared in conformity with
GAAP; and (iii) fairly present in all material respects the financial
conditions and results of operations of Tenant and its Subsidiaries as of the
date thereof and for the period covered thereby.  Neither Tenant nor any of its Subsidiaries has any Contingent
Obligations, liability for taxes or other outstanding obligations which are
material in the aggregate, except as disclosed in such Financial Statements;
and, since June 4, 2004, there has been no development or event that is
reasonably likely to have a Material Adverse Effect.

(j)            Equity Securities.  All Equity Securities of Tenant have been
offered and sold in compliance with all federal and state securities laws and
all other Legal Requirements, except where any failure to comply is not
reasonably likely to have a Material Adverse Effect.

(k)           No Agreements Regarding Mergers; Etc.  Neither Tenant nor any of its Subsidiaries
has any legal obligation, absolute or contingent, to any Entity to effect any
merger, consolidation or other reorganization of Tenant or any of its
Subsidiaries (except as permitted by Section 21.21(d)) or to enter into
any agreement with respect thereto.

(l)            Employee
Benefit Plans.

(i)            Based upon the latest valuation of
each Employee Benefit Plan that either Tenant or any ERISA Affiliate maintains
or contributes to, or has any obligation under (which occurred within twelve
months of the date of this representation), the aggregate benefit liabilities
of such plan within the meaning of § 4001 of ERISA did not exceed the aggregate

40

 

value of the assets of
such plan.  Neither Tenant nor any ERISA
Affiliate has any liability with respect to any post-retirement benefit under
any Employee Benefit Plan which is a welfare plan (as defined in section 3(1)
of ERISA), other than liability for health plan continuation coverage described
in Part 6 of Title I(B) of ERISA, which liability for health plan contribution
coverage is not reasonably likely to have a Material Adverse Effect.

(ii)           Each Employee Benefit Plan complies,
in both form and operation, in all material respects, with its terms, ERISA and
the IRC, and no condition exists or event has occurred with respect to any such
plan which would result in the incurrence by either Tenant or any ERISA
Affiliate of any material liability, fine or penalty.  Each Employee Benefit Plan, related trust agreement, arrangement
and commitment of Tenant or any ERISA Affiliate is legally valid and binding
and in full force and effect.  No
Employee Benefit Plan is being audited or investigated by any government agency
or is subject to any pending or threatened claim or suit.  Neither Tenant nor any ERISA Affiliate nor
any fiduciary of any Employee Benefit Plan has engaged in a prohibited
transaction under section 406 of ERISA or section 4975 of the IRC.

(iii)          Neither Tenant nor any ERISA Affiliate
contributes to or has any material contingent obligations to any Multiemployer
Plan.  Neither Tenant nor any ERISA
Affiliate has incurred any material liability (including secondary liability)
to any Multiemployer Plan as a result of a complete or partial withdrawal from
such Multiemployer Plan under Section 4201 of ERISA or as a result of a
sale of assets described in Section 4204 of ERISA.  Neither Tenant nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or insolvent under and within the
meaning of Section 4241 or Section 4245 of ERISA or that any Multiemployer Plan
intends to terminate or has been terminated under Section 4041A of ERISA.

(m)          Other Regulations.  Tenant is not subject to regulation under
the Investment Company Act of 1940, the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or to any other Governmental Rule limiting its ability to incur
indebtedness.

(n)           Patent and Other Rights.  Except as disclosed in the 10-Q report filed
by Tenant with the Securities and Exchange Commission for the fiscal quarter
ended June 4, 2004, Tenant and its Material Subsidiaries own, license
or otherwise have the full right to use, under validly existing agreements, all
patents, licenses, trademarks, trade names, trade secrets, service marks,
copyrights and all rights with respect thereto, which are material to the
conduct of their businesses taken as a whole.

(o)           Governmental Charges.  Tenant and its Subsidiaries have filed or
caused to be filed all tax returns or requests for extension which are required
to be filed by them.  Tenant and its
Subsidiaries have paid, or made provision for the payment of, all taxes and
other Governmental Charges which have or may have become due pursuant to said
returns or otherwise and all other indebtedness, except such Governmental
Charges or indebtedness, if any, which are being contested in good faith and as
to which adequate reserves (determined in accordance with GAAP) have been
provided or which are not reasonably likely to have a Material Adverse Effect
if unpaid.

41

 

(p)           Margin Securities.  No part of the Commitment Amount will be
used directly or indirectly for the purpose of purchasing or carrying, or for
payment in full or in part of debt that was incurred for the purposes of
purchasing or carrying, any margin security as such term is defined in Section
207.2 of Regulation G of the Board of Governors of the Federal Reserve System
(12 C.F.R., Chapter 11, Part 207).

(q)           SJRDA Ground Leases.  Each SJRDA Ground Lease is in full force and
effect and no default has occurred and is continuing under either SJRDA Ground
Lease.

(r)            Solvency, Etc.  On the Date of Lease and after the execution
and delivery of the Operative Documents and the consummation of the
transactions contemplated thereby, (i) the fair value of the property of
Tenant is greater than the fair value of the liabilities (including contingent,
subordinated, matured and unliquidated liabilities) of Tenant, (ii) the present
fair saleable value of the assets of Tenant is greater than the amount that
will be required to pay the probable liability of Tenant on its debts as they
become absolute and matured, (iii) Tenant does not intend to, and does not
believe that it will, incur debts or liabilities beyond Tenant’s ability to pay
as such debts and liabilities mature and (iv) Tenant is not engaged in or about
to engage in business or transactions for which Tenant’s property would
constitute an unreasonably small capital.

(s)           Catastrophic Events.  Neither Tenant nor any of its Subsidiaries
and none of their properties is or has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or other casualty that is reasonably likely to
have a Material Adverse Effect.  There
are no disputes presently subject to grievance procedure, arbitration or
litigation under any of the collective bargaining agreements, employment
contracts or employee welfare or incentive plans to which Tenant or any of its
Subsidiaries is a party, and there are no strikes, lockouts, work stoppages or
slowdowns, or, to the best knowledge of Tenant, jurisdictional disputes or
organizing activities occurring or threatened which alone or in the aggregate
are reasonably likely to have a Material Adverse Effect.

(t)            Obligations.  The obligations of Tenant hereunder and under the other Operative
Documents to which it is a party (i) rank at least pari passu in right of
payment with all other unsecured and unsubordinated Indebtedness of Tenant and
(ii) constitute “senior debt” for purposes of any subordinated
Indebtedness of Tenant.

(u)           Reserved.

(v)           Accuracy of Information Furnished.  The Operative Documents and the other
certificates and written statements and information (excluding projections and
analyst reports) prepared by and furnished by Tenant and its Subsidiaries to
Landlord, Administrative Agent and the Rent Purchasers in connection with the
Operative Documents and the transactions contemplated thereby, taken as a
whole, do not contain any untrue statement of a material fact and do not omit
to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.  All projections furnished by Tenant and its
Subsidiaries to Landlord, Administrative Agent and the Rent Purchasers in
connection with the Operative Documents and the transactions contemplated
thereby have been based upon 

42

 

reasonable assumptions
and represent, as of their respective dates of presentations, Tenant’s and its
Subsidiaries’ reasonable estimates of the future performance of Tenant and its
Subsidiaries.

(w)          Offer of Securities, etc.  Neither the Tenant nor any person authorized
to act on the Tenant’s behalf has, directly or indirectly, offered any interest
in any Parcels or any other interest similar thereto (the sale or offer of
which would be integrated with the sale or offer of such interest in a Parcel),
for sale to, or solicited any offer to acquire any of the same from, any person
other than the Landlord and other “accredited investors” (as defined in
Regulation D of the Securities and Exchange Commission).

(x)            Parcels.  To the best of Tenant’s knowledge, the Parcels will comply in all
material respects with all material requirements of law (including, without
limitation, all zoning and land use laws and environmental laws) and insurance
requirements.

(y)           Flood Hazard Areas.  To the best of Tenant’s knowledge, except as
otherwise identified on the survey delivered to Landlord in connection with the
Original Leases, no portion of any Parcel is located in an area identified as a
special flood hazard area by the Federal Emergency Management Agency or other
applicable agency.  If any Parcel is
located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, then flood insurance
has been obtained for such Parcel in accordance with Article IX and in
accordance with the National Flood Insurance Act of 1968, as amended.

(z)            Lease. 
Upon the execution and delivery of each Lease Supplement, (i) the Tenant
will have unconditionally accepted the Parcel covered by such Lease Supplement
(provided that nothing contained herein shall be deemed a waiver by the Tenant
of any right of action against persons with respect to title to and condition
of the Parcel on the Rent Commencement Date other than the Landlord), (ii) no
right of offset will exist with respect to any Base Rent or other sums payable
under this Lease, and (iii) no Base Rent under this Lease will have been
prepaid.

21.19      Capital
Adequacy.  If, after the date hereof, Landlord,
Administrative Agent or any Rent Purchaser shall have reasonably determined
that the adoption after the date hereof of any Legal Requirement regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy, whether or not having the force of law, of any such
Governmental Authority, has or would have the effect of reducing the rate of
return on the capital of Landlord or any Rent Purchaser as a consequence of its
obligations hereunder to a level below that which Landlord or any Rent
Purchaser could have achieved but for such adoption, change or compliance
(taking into consideration Landlord’s and Rent Purchasers’ policies with
respect to capital adequacy), then from time to time, within fifteen (15) days
after written demand (which demand shall be accompanied by a statement setting
forth the basis for such demand) delivered to Tenant by Landlord,
Administrative Agent or any Rent Purchaser, Tenant shall pay to Landlord,
Administrative Agent and/or such Rent Purchaser such additional amount or
amounts as will compensate Landlord, Administrative Agent and/or any Rent
Purchaser for such reduction.

43

 

21.20      Affirmative
Covenants of Tenant.  Until the termination of this
Lease and the satisfaction in full by Tenant of all Obligations, Tenant will
comply, and will cause compliance, with the following affirmative covenants,
unless Landlord and Majority Rent Purchasers shall otherwise consent in
writing:

(a)           Financial Statements, Reports, etc.  Tenant shall furnish to Landlord and
Administrative Agent, with sufficient copies for each Rent Purchaser, the
following, each in such form and such detail as Landlord, Administrative Agent
or Majority Rent Purchasers shall reasonably request:

(i)            As soon as available and in no event
later than forty-five (45) days after the last day of each of the first three
(3) fiscal quarters of Tenant, a copy of the Financial Statements of Tenant and
its Subsidiaries (prepared on a consolidated basis) for such quarter and for
the fiscal year to date, certified by the chief executive officer or chief
financial officer of Tenant to present fairly in all material respects the
financial condition, results of operations and other information reflected
therein and to have been prepared in accordance with GAAP (subject to normal
year-end audit adjustments);

(ii)           As soon as available and in no event
later than ninety (90) days after the close of each fiscal year of Tenant, (A)
copies of the audited Financial Statements of Tenant and its Subsidiaries
(prepared on a consolidated basis) for such year, audited by KPMG LLP or other
independent certified public accountants of recognized national standing
acceptable to Landlord and Administrative Agent, and (B) copies of the
unqualified opinions (or qualified opinions reasonably acceptable to Landlord
and Administrative Agent) and, to the extent delivered and within ten (10) days
after delivery, final management letters delivered by such accountants to the
Audit Committee of the Board of Directors in connection with all such Financial
Statements;

(iii)          Contemporaneously with the quarterly
and year-end Financial Statements required by the foregoing clauses (i)
and (ii), a compliance certificate of the chief executive officer, chief
financial officer or treasurer of Tenant (a “Compliance Certificate”)
which (A) states that no Default has occurred and is continuing, or, if any
such Default has occurred and is continuing, a statement as to the nature
thereof and what action Tenant proposes to take with respect thereto; and (B)
sets forth, for the quarter, year or other applicable period covered by such
Financial Statements or as of the last day of such quarter or year (as the case
may be), the calculation of the financial ratios and tests provided in Section
21.22;

(iv)          [Reserved];

(v)           As soon as possible and in no event
later than thirty (30) Business Days after any officer of Tenant knows of the
occurrence or existence of (A) any Reportable Event under any Employee Benefit
Plan or Multiemployer Plan; (B) any actual litigation, suits or claims against
Tenant or any of its Subsidiaries which individually asserts a claim for
monetary damages payable by Tenant or its Subsidiaries of $25,000,000 or more;
or (C) any other event or condition which is reasonably likely to have a
Material Adverse Effect; or (D) any Default; the statement of the chief
executive officer, chief financial officer or treasurer of Tenant setting forth

44

 

details of such event,
condition or Default and the action which Tenant proposes to take with respect
thereto;

(vi)          As soon as available and in no event
later than five (5) Business Days after they are sent, made available or filed,
copies of (A) all registration statements and reports filed by Tenant or any of
its Subsidiaries with any securities exchange or the United States Securities
and Exchange Commission (including, without limitation, all 10-Q, 10-K and 8-K
reports); (B) all reports, proxy statements and financial statements sent or
made available by Tenant to its security holders; and (C) all press releases
concerning any material developments in the business of Tenant made available
by Tenant to the public generally; and

(vii)         Such other instruments, agreements,
certificates, statements, documents and information relating to the operations
or condition (financial or otherwise) of Tenant or its Subsidiaries, and
compliance by Tenant with the terms of this Lease and the other Operative
Documents as Landlord and Administrative Agent may from time to time reasonably
request.

The requirements of clauses (i), (ii) and (vi) above
may be satisfied by (i) the posting of such documents on Tenant’s internet
homepage located at www.adobe.com or the SEC’s EDGAR database (located at www.sec.gov)
no later than the next Business Day after such documents have been filed with
the SEC; provided that such documents shall be in a format that is downloadable
and printable; or (ii) the delivery of such documents via electronic format by
e-mail or otherwise.

(b)           Books and Records.  Tenant and its Subsidiaries shall at all
times keep proper books of record and account in which full, true and correct
entries will be made of their transactions in accordance with GAAP.

(c)           Inspections.  Tenant and its Subsidiaries shall permit Landlord, Administrative
Agent and each Rent Purchaser, or any agent or representative thereof, upon
reasonable notice and during normal business hours and to the extent reasonably
necessary for the administration of the Obligations, to visit and inspect any
of the properties and offices of Tenant and its Material Subsidiaries, to
examine the books and records of Tenant and its Subsidiaries and make copies
thereof, and to discuss the affairs, finances and business of Tenant and its
Subsidiaries with, and to be advised as to the same by, their officers and,
after prior written notice to Tenant, their auditors and accountants, all at
such times and intervals as Landlord, Administrative Agent and each Rent
Purchaser may reasonably request; provided, however, (i) unless
an Event of Default shall have occurred and be continuing, any such visit and
inspection shall be made at the sole expense of Landlord or Administrative
Agent whose agent or representative is making such visit and inspection and
(ii) when an Event of Default exists, any such visit and inspection shall be
made at the sole expense of Tenant.

(d)           Insurance.  Without limiting Article IX, Tenant and its Material
Subsidiaries shall:

(i)            Carry and maintain insurance of the
types and in the amounts customarily carried from time to time during the term
of this Lease by others engaged in 

45

 

substantially the same
business as such Entity and operating in the same geographic area as such
Entity, including, but not limited to, fire, commercial general liability,
property damage and worker’s compensation;

(ii)           Carry and maintain each policy for
such insurance with (A) a company which is rated A- or better by A.M. Best
and Company at the time such policy is placed and at the time of each annual
renewal thereof, or (B) a Captive Insurance Subsidiary, so long as
Tenant’s Debt/EBITDA Ratio for the consecutive four-quarter period ending most
recently prior to the date any such insurance is placed with such captive
insurance Subsidiary is 2:00 to 1:00 or less, or (C)  an other insurer
which is reasonably satisfactory to Landlord and Administrative Agent; and

(iii)          Deliver to Landlord and Administrative
Agent upon request not more than once each year schedules setting forth all
insurance then in effect.

(e)           Governmental Charges and Other Indebtedness.  Tenant and its Subsidiaries shall promptly
pay and discharge when due (i) all taxes and other Governmental Charges prior
to the date upon which penalties accrue thereon, (ii) all Indebtedness which,
if unpaid, could become a Lien upon the property of Tenant or its Material
Subsidiaries and (iii) subject to any subordination provisions applicable
thereto, all other Indebtedness which in each case, if unpaid, is reasonably
likely to have a Material Adverse Effect, except such Indebtedness as may in
good faith be contested or disputed, or for which arrangements for deferred
payment have been made, provided that in each such case appropriate reserves are
maintained to the reasonable satisfaction of Landlord and Administrative Agent.

(f)            General Business Operations.  Other than as permitted by Section 21.21(d),
each of Tenant and its Subsidiaries shall (i) preserve and maintain its
corporate existence and all of its rights, privileges and franchises reasonably
necessary to the conduct of its business, (ii) conduct its business activities
in compliance with all Legal Requirements and Contractual Obligations
applicable to such Entity and (iii) keep all property useful and necessary in
its business in good working order and condition, ordinary wear and tear
excepted, except, in each case, where any failure is not reasonably likely to
have a Material Adverse Effect.  Other
than as permitted by Section 2.21(d), Tenant shall maintain its chief
executive office and principal place of business in the United States.

(g)           Obligations.  Tenant will ensure that its obligations hereunder and under the
other Operative Documents to which it is a party (i) rank at least pari passu
in right of payment with all other unsecured and unsubordinated Indebtedness of
Tenant and (ii) constitute “senior debt” for purposes of any subordinated
Indebtedness of Tenant.

21.21      Negative
Covenants of Tenant.  Until the termination of this
Lease and the satisfaction in full by Tenant of all Obligations, Tenant will
comply, and will cause compliance, with the following negative covenants,
unless Landlord and Majority Rent Purchasers shall otherwise consent in
writing:

(a)           Reserved.

46

 

(b)           Liens. 
Neither Tenant nor any of its Subsidiaries shall create, incur, assume
or permit to exist any Lien on or with respect to any of its assets or property
of any character, whether now owned or hereafter acquired, except for the
following (“Permitted Liens”):

(i)            Liens in favor of Landlord,
Administrative Agent or any Rent Purchaser securing the Obligations;

(ii)           Liens listed on Schedule 2 to
any Lease Supplement as approved by Landlord and Administrative Agent or listed
on Exhibit E and existing on the Date of Lease;

(iii)          Liens for taxes or other Governmental
Charges not at the time delinquent or thereafter payable without penalty or
being contested in good faith, provided that adequate reserves for the payment thereof
have been established in accordance with GAAP;

(iv)          Liens of carriers, warehousemen,
mechanics, materialmen, vendors, and landlords and other similar Liens imposed
by law incurred in the ordinary course of business for sums not overdue more
than 45 days or being contested in good faith, provided that adequate reserves
for the payment thereof have been established in accordance with GAAP;

(v)           Deposits under workers’ compensation,
unemployment insurance and social security laws or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, or to secure statutory obligations of surety or appeal bonds or to
secure indemnity, performance or other similar bonds in the ordinary course of
business;

(vi)          Zoning restrictions, easements,
rights-of-way, title irregularities and other similar encumbrances, which alone
or in the aggregate are not substantial in amount and do not materially detract
from the value of the property subject thereto or interfere with the ordinary
conduct of the business of Tenant or any of its Subsidiaries;

(vii)         Banker’s Liens and similar Liens
(including set-off rights) in respect of bank deposits;

(viii)        Liens on any property or assets
acquired, or on the property or assets of any Entities acquired by Tenant or
any of its Subsidiaries after the Date of Lease pursuant to Section 21.21(d),
provided that (A) such Liens exist at the time such property or assets or such
Entities are so acquired and (B) such Liens were not created in contemplation
of such acquisitions;

(ix)           Judgment Liens, provided that such
Liens do not constitute an Event of Default under Section 19.1(h);

(x)            Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties and in connection with the importation of goods in the ordinary course
of Tenant’s and its Subsidiaries’ businesses;

47

 

(xi)           Liens securing purchase money loans
and Capital Leases incurred by Tenant and its Subsidiaries to finance their
acquisition of real property, fixtures or equipment provided that (A) in each
case, the Indebtedness secured by such Liens (1) is incurred by such Entity at
the time of, or not later than ninety (90) days after, the acquisition by such
Entity of the property so financed, and (2) does not exceed the purchase price
of the property so financed; and (B) in each case, such Lien (1) covers
only those assets, the acquisition of which was financed by such Indebtedness,
and (2) secures only such Indebtedness;

(xii)          Liens on the property or assets of any
Subsidiary of Tenant in favor of Tenant or any other Subsidiary of Tenant;

(xiii)         Liens incurred in connection with the
extension, renewal or refinancing of the Indebtedness secured by the Liens
described in clause (ii) or (xi) above, provided that any
extension, renewal or replacement Lien (A) is limited to the property covered
by the existing Lien and (B) secures Indebtedness which is no greater in amount
and has material terms no less favorable to Landlord or the Rent Purchasers
than the Indebtedness secured by the existing Lien; 

(xiv)        Liens securing Indebtedness of (A) up to
$50,000,000 on Tenant’s facility in India, and (B) up to $75,000,000 on
Tenant’s facility in Seattle, Washington; and

(xv)         Other Liens, provided that the
aggregate principal amount of the Indebtedness secured by such other Liens that
is outstanding at any time does not exceed twenty percent (20%) of Tenant’s Net
Worth determined as of the last day of the immediately preceding fiscal
quarter.

Notwithstanding the foregoing, with respect to the
Parcels only, the Liens described in clauses (i) through (iv) (other than
those listed on Exhibit E) shall be considered “Permitted Liens.”

(c)           Reserved.

(d)           Mergers, Acquisitions, Etc.  Neither Tenant nor any of its Subsidiaries
shall consolidate with or merge into any other Entity or permit any other
Entity to merge into it, acquire any Entity as a new Subsidiary, or acquire all
or substantially all of the assets of any other Entity, and Tenant shall not
sell all or substantially all of its assets to any other Entity, except as
follows:

(i)            Any Subsidiary of Tenant may merge
or consolidate with any other Subsidiary of Tenant, and the Tenant or any
Subsidiary of Tenant may establish new Subsidiaries;

(ii)           Any Subsidiary of Tenant and its
Subsidiaries may merge or consolidate with Tenant, provided that no Event of
Default has occurred and is continuing and Tenant is the surviving corporation;

(iii)          Any Subsidiary of Tenant may dissolve
after transferring or distributing its assets to Tenant or any of its
Subsidiaries, provided that no Event of Default has 

48

 

occurred and is
continuing on the date of, or will result after giving effect to, any such
dissolution;

(iv)          Any Subsidiary of Tenant may merge or
consolidate with any other Entity (other than Tenant or a Subsidiary), whether
or not such other Entity becomes a Subsidiary of Tenant, or acquire any Entity
as a Subsidiary or acquire all or substantially all of the assets of any other
Entity, provided, that no Event of Default has occurred and is continuing  and
Tenant shall continue to be in compliance with each of the financial covenants
set forth in Section 21.22 hereof immediately following any such
merger, consolidation or acquisition (notwithstanding the determination dates
otherwise in effect under Section 21.22) and after giving effect
thereto on a pro forma basis; and, with respect to any such transaction in
which the consideration being paid by Tenant or any of its Subsidiaries exceeds
$50,000,000, the chief executive officer, chief financial officer or treasurer
of Tenant shall have delivered a compliance certificate as of the date of such
merger, consolidation or acquisition certifying that no Event of Default has
occurred and is continuing and as to such compliance and showing the
calculation of the financial ratios and tests specified in such financial
covenants; and

(v)           Tenant may merge or consolidate with
any other Entity or acquire any Entity as a new Subsidiary or acquire all or
substantially all of the assets of any other Entity or sell all or
substantially all of its assets to any Entity, provided that:

(A)          in the case of any merger or
consolidation, either (1) Tenant is the surviving corporation or (2) the
surviving Entity (x) is a solvent Entity organized under the laws of a country
member to the Organization for Economic Cooperation and Development, or
Bermuda, Barbados or the Cayman Islands, and (y) assumes all of the obligations
of Tenant in a manner acceptable to the Landlord and, if requested by Landlord,
delivers one or more opinions of counsel from counsel acceptable to Landlord as
to the enforceability of the Obligations against the surviving Entity and such
other matters as Landlord may reasonably request;

(B)           in the case of any merger or
consolidation, if Tenant is not the surviving Entity, or in the case of a
disposition of all or substantially all of Tenant’s assets, the surviving or
acquiring Entity, after giving effect to such merger or consolidation or such
acquisition of Tenant’s assets:

(1)           shall have a rating of its unsecured
and non-credit enhanced senior obligations of at least BBB+ from S&P or
Baa1 from Moody’s; provided that if such obligations are not rated by S&P
or Moody’s, Tenant or the surviving or acquiring Entity shall have presented
evidence reasonably satisfactory to Landlord that such obligations are rated,
pursuant to the internal scoring or rating procedures of an internationally
recognized financial institution not an Affiliate of Tenant or Landlord, at a
level not less than the equivalent of BBB+ by S&P or Baa1 by Moody’s; and

(2)           shall present an acceptable exposure
to Landlord, in accordance with Landlord’s then current guidelines regarding
Landlord’s existing outstanding credits to such surviving or acquiring Entity,
the industry that constitutes such Entity’s primary business activities, and
the country(ies) in which such Entity conducts its primary business 

49

 

activities, based on
Landlord’s exposures at the time of such merger, consolidation or disposition
of assets;

(C)           in each case, no Event of Default
shall have occurred and be continuing at the date of such merger,
consolidation, acquisition or disposition or shall occur as a result of giving
effect thereto;

(D)          in each case, Tenant or the surviving
Entity, as the case my be, shall be in compliance with Section 21.22
determined as of the date of such merger, consolidation or acquisition
(notwithstanding the determination dates otherwise in effect under Section
21.22) and after giving effect thereto on a pro forma basis; and

(E)           in each case in which the
consideration being paid by Tenant or any of its Subsidiaries exceeds
$50,000,000 or in which Tenant is not the surviving Entity, the chief executive
officer, chief financial officer or treasurer of Tenant (or of the surviving
Entity, if Tenant is not the surviving Entity) shall have delivered a
compliance certificate as of the date of such merger, consolidation or
acquisition certifying as to the matters in clause (C) above and showing
the calculation of the financial ratios and tests referred to in clause (D)
above.

(e)           Reserved.

(f)            Reserved.

(g)           Change in Business.  Neither Tenant nor any of its Subsidiaries
shall engage in any business substantially different from its present business,
as described in the 10-K report filed by Tenant with the Securities and
Exchange Commission for the fiscal year ended November 28, 2003, and other internet-related
services for its customers; provided, however, that Tenant may at
any time form a Captive Insurance Subsidiary.

(h)           Employee Benefit Plans.

(i)            Neither Tenant nor any ERISA
Affiliate shall (A) adopt or institute any Employee Benefit Plan that is an
employee pension benefit plan within the meaning of Section 3(2) of ERISA, (B)
take any action which will result in the partial or complete withdrawal, within
the meanings of sections 4203 and 4205 of ERISA, from a Multiemployer Plan, (C)
engage or permit any Entity to engage in any transaction prohibited by section
406 of ERISA or section 4975 of the IRC involving any Employee Benefit Plan or
Multiemployer Plan which would subject Tenant or any ERISA Affiliate to any
tax, penalty or other liability including a liability to indemnify, (D) incur
or allow to exist any accumulated funding deficiency (within the meaning of
section 412 of the IRC or section 302 of ERISA), (E) fail to make full payment
when due of all amounts due as contributions to any Employee Benefit Plan or
Multiemployer Plan, (F) fail to comply with the requirements of section 4980B
of the IRC or Part 6 of Title I(B) of ERISA, or (G) adopt any amendment to any
Employee Benefit Plan which would require the posting of security pursuant to
section 401(a)(29) of the IRC, where singly or cumulatively, the above would be
reasonably likely to have a Material Adverse Effect.

50

 

(ii)           Neither Tenant nor any of its
Subsidiaries shall (A) engage in any transaction prohibited by any Governmental
Rule applicable to any Foreign Plan, (B) fail to make full payment when due of
all amounts due as contributions to any Foreign Plan or (C) otherwise fail
to comply with the requirements of any Governmental Rule applicable to any
Foreign Plan, where singly or cumulatively, the above would be reasonably
likely to have a Material Adverse Effect.

(i)            Transactions With Affiliates.  Neither Tenant nor any of its Subsidiaries
shall enter into any Contractual Obligation with any Affiliate (other than
Tenant or one of its Subsidiaries) or engage in any other transaction with any
Affiliate except (i) for agreements with officers and directors of Tenant or
its Subsidiaries for indemnification or participation under Tenant’s equity
plans and loans to or retention or severance agreements with officers and
directors of Tenant or its Subsidiaries, each as approved by the Board of
Directors of Tenant; (ii) upon terms at least as favorable to Tenant or
such Subsidiary as an arms-length transaction with unaffiliated Entities; or
(iii) for transactions with a Captive Insurance Subsidiary or with Affiliates
in which Tenant or its Subsidiaries have venture capital investments.

(j)            Accounting Changes.  Neither Tenant nor any of its Subsidiaries
shall change its accounting practices except as required by GAAP.

21.22      Financial
Covenants.  Until the termination of this Lease and the
satisfaction in full by Tenant of all Obligations, Tenant will comply, and will
cause compliance, with the following financial covenants, unless Landlord and
Majority Rent Purchasers shall otherwise consent in writing:

(a)           Quick Ratio.  Tenant shall not permit its Quick Ratio to be less than 1.00 on
the last day of any fiscal quarter.

(b)           Debt/EBITDA Ratio.  Tenant shall not permit its Debt/EBITDA
Ratio for any consecutive four-quarter period to be greater than 3.00.

(c)           Fixed Charge Coverage Ratio.  Tenant shall not permit its Fixed Charge
Coverage Ratio for any consecutive four-quarter period to be less than 2.25.

(d)           Leverage Ratio.  Tenant shall not permit its Leverage Ratio
to be greater than 0.60 to 1.00 on the last day of any fiscal quarter.

21.23      Nonmerger
of Estates.  If both Landlord’s and Tenant’s estates in
the Parcels become vested in the same owner, this Lease shall nevertheless not
be destroyed by application of the doctrine of merger except at the express
election of Landlord and the consent of Administrative Agent.

21.24      Title
to and Nature of Improvements.  Subject to
the provisions of Sections 12.2 and as otherwise appropriate in
this Lease, Tenant agrees that any and all Improvements of whatever nature at
any time constructed, placed or maintained upon any part of the Land shall be
and remain the property of the Landlord, subject to Tenant’s rights under this
Lease, including, without limitation, Section 21.2, and the rights of
Administrative Agent and the Rent Purchasers under the Operative Documents.

51

 

21.25      Nondiscrimination. 
Tenant hereby covenants by and for itself, its heirs, executors,
administrators and assigns, and all persons claiming under or through it, and
this Lease is made and accepted upon and subject to the following conditions:
that there shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex, age,
handicap, marital status, ancestry or national origin in the leasing,
subleasing, transferring, use, occupancy, tenure or enjoyment of the Parcels
herein leased, nor shall Tenant itself, or any person claiming under or through
it establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees in the Parcels herein
leased.

ARTICLE
XXII

INDEMNIFICATION

22.1        Tax
Indemnity.  Notwithstanding anything in Article VIII
to the contrary, Tenant shall protect and defend Landlord, Administrative Agent
and Rent Purchasers from and against all criminal prosecution regarding and
shall indemnify and hold Landlord, Administrative Agent and Rent Purchasers
harmless from and against any and all losses, costs, liabilities or damages
(including reasonable attorneys’ fees and disbursements and court costs)
arising by reason of:

(a)           Any and all U.S. Federal, state or
local income taxes imposed upon Landlord, Administrative Agent or Rent
Purchasers in consequence of Landlord, Administrative Agent or Rent Purchasers
being treated as the owner or lessor of the Parcels (or any part thereof) for
such tax purposes to the extent such taxes exceed such entity’s tax liability
under this transaction if such entity were not treated as the owner or lessor
of the Parcels (but as lender) for tax purposes; provided Landlord has fully
complied with Section 21.2;

(b)           Any and all taxes imposed upon Tenant
(except to the extent of Landlord Taxes or to the extent that such taxes are
imposed upon Tenant as a result of Landlord’s failure to comply with its
obligations under this Lease);

(c)           Any and all taxes required to be
withheld from payments made by Tenant to a third party not related to or
affiliated with Landlord;

(d)           Any and all Real Estate Taxes;

(e)           Any and all taxes owed by Landlord,
Administrative Agent or any Rent Purchaser (other than Landlord Taxes) as a
result of payment made by Tenant to such entity pursuant to Tenant’s indemnity
obligations under this Section 22.1; and

(f)            Any and all costs, liabilities or
damages (including reasonable attorneys’ fees) incurred by Landlord,
Administrative Agent or any Rent Purchaser in obtaining indemnification
payments from Tenant under the provisions of this Section 22.1.

Tenant’s duty to indemnify Landlord, Administrative
Agent and each Rent Purchaser under this Section 22.1 shall apply
only to taxes arising during the Term or after the Term while Landlord has
record title to and Tenant is occupying the Parcels (whether or not due and
payable 

52

 

at the conclusion
of the Term), but shall otherwise survive the expiration or earlier termination
of this Lease.

22.2        Indemnification
Concerning the Parcels.  Tenant will
defend, protect, indemnify and save harmless Landlord, Administrative Agent and
each Rent Purchaser from and against all liabilities, obligations, claims,
damages, causes of action, costs and expenses, imposed upon or incurred by
Landlord, Administrative Agent and each Rent Purchaser by reason of the
occurrence or existence of any of the following during the Term, except to the
extent caused by the willful misconduct, gross negligence, or willful breach of
contract of such Entity or its respective agents: (a) any accident, injury to
or death of persons or loss of or damage to property occurring on or about the
Parcels or Improvements; (b) performance of any labor or services or the
furnishing of any materials or other property in respect of the Parcels or the
Improvements; (c) the negligence or willful misconduct on the part of Tenant or
any of its agents, invitees, employees or contractors or any other persons
entering onto the Parcels or the Improvements at the request, behest or with
the permission of Tenant; (d) the use or occupancy of the Improvements; or (e)
the use of the Land.  Tenant’s duty to
indemnify Landlord, Administrative Agent and each Rent Purchaser under this Section
22.2 shall survive the expiration or earlier termination of this Lease with
respect to events occurring during the Term or after the Term while Landlord
has record title to and Tenant is occupying the Parcels.

22.3        Environmental
Indemnity.  Tenant agrees to indemnify and hold
Landlord, Administrative Agent and each Rent Purchaser harmless from and
against, and to reimburse Landlord, Administrative Agent and each Rent
Purchaser with respect to, any and all claims, demands, causes of action,
losses, damages, liabilities, costs and expenses (including attorneys’ fees and
court costs), fines and/or penalties of any and every kind or character, known
or unknown, fixed or contingent, asserted or potentially asserted against or
incurred by Landlord, Administrative Agent or such Rent Purchaser at any time
and from time to time by reason of, in connection with or arising out of (a)
the failure of Tenant to perform any obligation herein required to be performed
by Tenant regarding Applicable Environmental Laws, (b) any violation of any
Applicable Environmental Law by Tenant with respect to the Parcels or any
disposal or other release by Tenant or with respect to the Parcels of any
hazardous substance, environmental contaminants or solid waste on or to the
Parcels, whether or not resulting in a violation of any Applicable
Environmental Law, (c) any act, omission, event or circumstance by Tenant or
with any respect to the Parcels which constitutes or has constituted violation
of any Applicable Environmental Law with respect to the Parcels, regardless of
whether the act, omission, event or circumstance constituted a violation of any
Applicable Environmental Law at the time of its existence or occurrence, and
(d) any and all claims or proceedings (whether brought by private party or
governmental agencies) for bodily injury, property damage, abatement or
remediation, environmental damage or impairment or any other injury or damage
resulting from or relating to any hazardous or toxic substance or contaminated
material located upon or migrating into, from or through the Parcels (whether
or not the release of such materials was caused by Tenant, a subtenant, a prior
owner of the Parcels or any other Entity) which Landlord, Administrative Agent
or such Rent Purchaser may incur. 
Tenant’s duty to indemnify Landlord, Administrative Agent or such Rent
Purchaser under this Section 22.3 shall survive the expiration or
earlier termination of the Lease or applicable Lease Supplement with respect to
events occurring during or prior to the Term or after the Term while Landlord
has record title to and Tenant is occupying the Parcels.

53

 

22.4        General
Indemnity.  Except to the extent of the gross negligence
or willful misconduct of the Entity seeking such indemnification, Tenant shall
defend, indemnify, and hold Landlord, Administrative Agent and each Rent
Purchaser harmless from and against any and all losses, costs, expenses, liabilities,
claims, causes of action and damages of all kinds that may result to Landlord,
Administrative Agent or any Rent Purchaser, including reasonable attorneys’
fees and disbursements incurred by Landlord, Administrative Agent or any Rent
Purchaser, in any way relating to or arising out of this Lease or the other
Operative Documents executed by Tenant in connection with this Lease or the
transactions contemplated hereby or thereby or the enforcement against Tenant
of any of the terms hereof or thereof. 
Tenant’s duty to indemnify Landlord, Administrative Agent and each Rent
Purchaser under this Lease shall survive the expiration or earlier termination
of this Lease.

ARTICLE
XXIII

COVENANTS
OF LANDLORD

23.1        Title. 
In the event Tenant so requests in writing (and so long as either Tenant
agrees to indemnify Landlord to Landlord’s satisfaction from any liabilities or
obligations in connection therewith, or Landlord does not incur any liabilities
or obligations in connection therewith), Landlord shall execute all documents,
instruments and agreements reasonably requested by Tenant in order to
accomplish any of the following in the manner reasonably requested by Tenant
and within the time parameters reasonably requested by Tenant: (1) remove
exceptions to title to or affecting the Parcels; (2) create exceptions to title
(including, without limitation, easements and rights of way) to or affecting
the Parcels; or (3) modify any then-existing exception to title.  Tenant shall promptly reimburse Landlord
for, or at Landlord’s request, pay directly in advance, all reasonable costs,
expenses and other amounts incurred or required to be expended by Landlord in
order to comply with Tenant’s requests made in accordance with the preceding
sentence, and the failure of Tenant to reimburse or pay any such amounts shall
result in the suspension of Landlord’s obligations under such sentence with
respect to that particular request until the amounts required to be paid by
Tenant under this sentence have been paid.

23.2        Land
Use.  Except where requested by Tenant pursuant to
this Section 23.2, Landlord shall not cause or give its written consent
to any land use or zoning change affecting the Parcels or any changes of street
grade.  In the event Tenant so requests
in writing (and so long as either Tenant agrees to indemnify Landlord to
Landlord’s satisfaction, from any liabilities or obligations in connection
therewith, or Landlord does not incur any liabilities or obligations in
connection therewith), Landlord shall execute all documents, instruments and
agreements reasonably requested by Tenant in order to accomplish any of the
following in the manner reasonably requested by Tenant and within the time
parameters reasonably requested by Tenant: (1) cause a change in any land use
restriction or law affecting the Parcels; (2) cause a change in the zoning
affecting a Parcels; or (3) cause a change in the street grade with respect to
any street in the vicinity of a Parcels. 
Tenant shall promptly reimburse Landlord for, or at Landlord’s request,
pay directly in advance, all reasonable costs, expenses and other amounts
incurred or required to be expended by Landlord in order to comply with
Tenant’s requests made in accordance with the preceding sentence, and the
failure of Tenant to reimburse or pay any such amounts shall result in the
suspension of Landlord’s obligations under such sentence with 

54

 

respect to that
particular request until the amounts required to be paid by Tenant under this
sentence have been paid.  In any event,
all land usage shall remain subject to the terms of the Ground Lease, if
applicable to a particular Lease Supplement.

23.3        Transfer
of Property Interests.  Except as requested by Tenant
pursuant to this Lease, Landlord shall not transfer to any third party any
rights inuring to or benefits associated with the Parcels (including, without
limitation, zoning rights, development rights, air space rights, mineral, oil,
gas or water rights).  Nothing in this Section
23.3 shall limit Landlord’s right to transfer Landlord’s interest in this
Lease to a third party or its rights to transfer the Parcels pursuant to Section
14.2; provided that as to a transfer under Section 14.2 any
purchaser of Landlord’s interest in the Parcels shall be bound by the terms of
this Lease, including without limitation the terms of this Section 23.3).

23.4        No
Impairment of Value.  No action shall be taken
under Section 23.1, 23.2 or 23.3 which would impair the value,
utility or useful life of the Improvements without the prior written consent of
Administrative Agent and the Rent Purchasers as provided in the Rent Purchase
Agreement.

23.5        Purchase
Option Under SJRDA Ground Leases.  Landlord
shall not exercise any of the purchase option rights under any SJRDA Ground
Lease affecting any Lease Supplement without Tenant’s prior written consent, in
Tenant’s sole discretion.  Upon the
request of Tenant, Landlord shall, at no cost or expense to Landlord, cooperate
with Tenant so as to permit Tenant acquire the ground lessors’ interest in the
Land that is subject to a SJRDA Ground Lease pursuant to any purchase option
rights under any such SJRDA Ground Lease, including either by assigning such
purchase option rights to Tenant or by exercising such purchase option rights
on behalf of and for the benefit of Tenant; provided, however,
that Landlord shall have no obligation or liability with respect to the
purchase of any such Land, and Tenant shall indemnify and hold Landlord
harmless from and against any and all loss, cost, liability, claim, damage or
expense suffered or incurred by Landlord (including attorneys’ fees and costs)
as a consequence of or in any way related to the assignment to Tenant or
exercise of any such purchase option rights or any actions taken by Landlord
with respect thereto.

23.6        Leasehold Interests Under Ground
Leases. The
following provisions relate to each Ground Lease:

(a)           Tenant covenants and agrees to
perform and to observe all of the terms, covenants, provisions, conditions and
agreements of each Ground Lease on Landlord’s part as tenant thereunder to be
performed and observed (including, without limitation, payment of all rent,
additional rent and other amounts payable by Landlord as tenant under such
Ground Lease) to the end that all things shall be done which are necessary to
keep unimpaired the rights of Landlord as tenant under any Ground Lease. Tenant
further covenants that it shall cause to be exercised any renewal option
contained in a Ground Lease which relates to renewal occurring in whole or in
part during the term of this Lease.

(b)           Without limitation of Article XXII,
Tenant covenants and agrees to indemnify and hold harmless Landlord,
Administrative Agent and each Rent Purchaser from and against any and all
liability, loss, damage, suits, penalties, claims and demands of every kind and

55

 

nature (including,
without limitation, reasonable attorneys’ fees and expenses) by reason of
Tenant’s failure to comply with any Ground Lease or the provisions of this
Section 23.6.

(c)           Landlord and Tenant agree that
Landlord shall have no obligation or responsibility to provide services or
equipment required to be provided or repairs or restorations required to be
made in accordance with the provisions of any Ground Lease by Landlord
thereunder. Landlord shall in no event be liable to Tenant nor shall the
obligations of Tenant hereunder be impaired or the performance thereof excused
because of any failure or delay on the part of Landlord under any Ground Lease
in providing such services or equipment or making such restorations or repairs
and such failure or delay shall not constitute a basis for any claim against
Landlord or any offset against any amount payable to Landlord under this Lease.

IN WITNESS
WHEREOF, the
parties hereto have duly executed this Lease as of the day and year first above
written.

	
   

  	
  TENANT:

  	
  ADOBE SYSTEMS INCORPORATED,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Bruce R. Chizen

  
	
   

  	
   

  	
   

  	
  Bruce R. Chizen

  
	
   

  	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Murray J. Demo

  
	
   

  	
   

  	
   

  	
  Murray J. Demo

  
	
   

  	
   

  	
   

  	
  Senior Vice President and Chief 

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LANDLORD:

  	
  SMBC LEASING AND FINANCE, INC.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William M. Ginn

  
	
   

  	
   

  	
  Name:

  	
  William M. Ginn

  
	
   

  	
   

  	
  Its:

  	
  Chairman

  
	
   

  	
   

  	
   

  	
   

  

 

56

 

APPENDIX A

I.              DEFINITIONS

Acquisition
Price.  “Acquisition Price” shall mean, as to any
Rent Purchaser an amount equal to such Rent Purchaser’s Percentage of the
Commitment Amount.

Actual/360
Basis.  “Actual/360 Basis” shall mean interest
calculated on the basis of a 360-day year and charged on the basis of actual
days elapsed for any whole or partial period in which interest is being
calculated.

Additional
Amount.  “Additional Amount” shall have the meaning
set forth in Section 8.4 of the Lease.

Additional
Charges.  “Additional Charges” shall have the meaning
set forth in Section 8.4 of the Lease.

Additional
Documents. 
“Additional Documents” shall have the meaning set forth in Section
20.1(c)(ii) of the Lease.

Additional
Rent.  “Additional Rent” shall mean any amounts,
other than Base Rent, which are payable by Tenant to Landlord, Administrative
Agent or any other Entity as required under the Lease, any Lease Supplement or
any other Operative Document, specifically including, but without limitation,
any rent or other amounts payable by the ground lessee under any Ground Lease,
payment of interest on any overdue payments of Tenant to either Landlord or
Administrative Agent on behalf of the Rent Purchasers, payment of the
Guaranteed Residual Value, the Purchase Price, all indemnification payments
payable by Tenant, and all Break Funding Costs.

Administrative
Agent.  “Administrative Agent” shall mean SMBC
Leasing and Finance, Inc., as agent for the Rent Purchasers, collectively, and
its successors and permitted assigns in interest.

Administrative
Agent’s Wire Transfer Instructions. 
“Administrative Agent’s Wire Transfer Instructions” shall mean the
following with respect to payments to be made to Administrative Agent:

Citibank, N.A., New York

ABA No.: 021000089

A/C Name: Sumitomo Mitsui
Banking Corporation

A/C No.: 36023837

Further Credit to:  SMBC Leasing and Finance, Inc.

Account No.:283572

 

Advance. 
“Advance” shall mean, with respect to Lease Supplement No. 1 and Lease
Supplement No. 2 executed as of the Date of Lease, the Commitment Amount, which
shall 

 

APPENDIX A-1

 

include (a) costs
incurred in connection with the making of the Lease and paid by Landlord or
Administrative Agent (including reasonable attorneys’ fees and costs in
connection with preparation of the Operative Documents), transaction costs
(including title charges and professional fees and expenses) and other
reasonable professional fees, arrangement fees, appraisal fees, inspection,
testing and permitting fees, reasonable travel expense for inspections and
insurance; and (b) all amounts previously advanced pursuant to the Restated
Lease.

Affiliate. 
“Affiliate” shall mean, with respect to any Entity, (a) each Entity
that, directly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, ten percent (10%) or more of any class of
Equity Securities of such Entity, (b) each Entity that controls, is controlled
by or is under common control with such Entity or any Affiliate of such Entity
or (c) each of such Entity’s officers, directors, general partners and, if such
Entity is a joint venture organized as a separate legal entity, joint venturers
having powers comparable to a general partner; provided, however, that in no
case shall any of the following Entities be deemed to be an Affiliate of Tenant
or any of its Subsidiaries for purposes of the Operative Documents: (i)
Landlord or Administrative Agent, or (ii) the general partner of any venture
capital partnership which would otherwise be deemed an Affiliate solely because
it acts as general partner and controls such venture capital partnership.  For the purposes of this definition,
“control” of an Entity shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies.

Amended
Deeds of Trust. 
“Amended Deeds of Trust” shall have the meaning set forth in the
Recitals to the Lease.

Applicable
Environmental Laws.  “Applicable Environmental
Laws” shall have the meaning set forth in Section 10.1 (b) of the Lease.

Appraisal. 
“Appraisal” shall have the meaning set forth in Section 1.9 of
the Lease.

Assignee
Rent Purchaser.  “Assignee Rent Purchaser” shall have the
meaning set forth in Section 7.4(b) of the Rent Purchase Agreement.

Assignor
Rent Purchaser.  “Assignor Rent Purchaser” shall have the
meaning set forth in Section 7.4(b) of the Rent Purchase Agreement.

Assignment. 
“Assignment” shall have the meaning set forth in Section 7.4(b)
of the Rent Purchase Agreement.

Assignment
Agreement.  “Assignment Agreement” shall have the
meaning set forth in Section 7.4(b) of the Rent Purchase Agreement.

Assignment
Effective Date.  “Assignment Effective Date” shall have the
meaning set forth in Section 2 of the Rent Purchase Agreement.

Assumed
Rate.  “Assumed Rate” shall have the meaning set
forth in Section 4.3(a)(v) of the Lease.

APPENDIX A-2

 

Base
Rate.  “Base Rate” shall mean, on any day, the
greater of (a) the “Reference Rate,” which is the per annum rate publicly
announced by Bank of America at its San Francisco office as in effect on such
date and is determined by Bank of America from time to time as a means of
pricing credit extensions to some customers and is neither directly tied to any
external rate of interest or index nor necessarily the lowest rate of interest
charged by Bank of America at any given time for any particular class of
customers or credit extensions, and (b) one-half percent (0.50%) plus
the “Federal Funds Rate” for such day, which Federal Funds Rate for such day is
the per annum rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Board of Governors of
the Federal Reserve System (including any such successor publication, “H.15
(519)”) for such day opposite the caption “Federal Funds (Effective)” for such
day.  If on any relevant day, a rate is
not yet published in H.15 (519), the Federal Funds Rate for such day shall be
the rate set forth in the daily statistical release designated as the Composite
3:30 p.m. Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor publication, the “Composite 3:30 p.m. Quotations”) for such day
under the caption “Federal Funds Effective Rate”.  If on any relevant day, a rate is not yet published in either
H.15 (519) or the Composite 3:30 p.m. Quotations, the Federal Funds Rate for
such day shall be the arithmetic mean, as determined by Administrative Agent,
of the rates quoted to Administrative Agent for such day by three (3) Federal
funds brokers of recognized standing selected by Administrative Agent, and
Administrative Agent shall promptly provide written evidence of such
calculation to Tenant.  Any change in
the Base Rate resulting from a change in the Prime Rate shall become effective
on the Business Day on which each change in the Prime Rate occurs.

Base
Rent.  “Base Rent” shall mean, as of a Rent Payment
Date, that amount equal to the following:

(a)           for
each Portion of the then outstanding Rent Purchasers’ Contribution, the product
obtained by multiplying the Rent Purchasers’ Contribution Rate for such Portion
by the amount of such Portion, which amount is then prorated for the rental
period in question on an Actual/360 Basis; plus

(b)           for
each Portion of the then outstanding Landlord Contribution, the product
obtained by multiplying the Landlord Contribution Rate for such Portion by the
amount of such Portion, which amount is then prorated for the rental period in
question on an Actual/360 Basis.

Basic
Lease Provisions.  “Base Lease Provisions” shall have the
meaning set forth in Article I of the Lease.

Break
Funding Costs.  “Break Funding Costs” shall mean all costs,
losses and expenses of Landlord, Administrative Agent or any Rent Purchaser
(including all such costs, losses and expenses in respect of any interest paid
or premium or penalty incurred by such Entity to lenders or otherwise), as a
result of any payment made by Tenant or the exercise of the Purchase Option
pursuant to Section 20.1 of the Lease, other than on a Rent Payment Date
(including as a result of the exercise by Landlord of rights and remedies under
the Operative Documents), and which may include losses incurred by Landlord,
Administrative Agent or such Rent Purchaser as a result of funding and other
contracts entered into by Landlord, Administrative Agent or such 

APPENDIX A-3

 

Rent Purchaser in
connection with the transactions contemplated under the Operative Documents, or
such costs, losses and expenses of Landlord resulting from any payment as such
payments relate to any Rate Contracts in effect upon the Date of Lease for the
Landlord Contribution.

Building. 
“Building” shall mean any building or buildings, structures and
facilities now or hereafter located on the Land covered by a Lease Supplement.

Business
Days.  “Business Days” shall mean every day of the
week excepting Saturday and Sunday, and excluding holidays when banks in
California and New York are generally closed for business, unless otherwise
expressly stated and, if such Business Day is relating to the LIBOR Rate or the
calculation of the LIBOR Rate, a day that dealings in U.S. Dollar Deposits are
carried out in the London Interbank market.

Capital
Leases.  “Capital Leases” shall mean any and all
lease obligations that, in accordance with GAAP, are required to be capitalized
on the books of a lessee.

Captive
Insurance Subsidiary.  “Captive Insurance
Subsidiary” shall mean a Subsidiary of Tenant that is (i) primarily
engaged in the business of providing insurance to Tenant and/or its other
Subsidiaries; (ii) subject to regulation as a provider of insurance in the
jurisdiction where it is organized and in each jurisdiction where it provides
insurance; and (iii) in good standing and in compliance with all Legal
Requirements (including without limitation Legal Requirements relating to
capital adequacy) in each jurisdiction where it is subject to regulation as a
provider of insurance.

CERCLA.  “CERCLA”
shall have the meaning set forth in Section 10.1(b)(i) of the Lease.

Change
of Law.  “Change of Law” shall have the meaning set
forth in the definition of “Landlord Contribution Rate.”

Commitment
Amount.  “Commitment Amount,” as of the Date of
Lease, shall mean One Hundred Forty-Three Million Two Hundred Thousand and
no/100 Dollars ($143,200,000.00).

Contingent
Obligation.  “Contingent Obligation” shall mean, with
respect to any Entity, (a) any Guaranty Obligation of that Entity; and (b) any
direct or indirect obligation or liability, contingent or otherwise, of that
Entity (i) in respect of any Surety Instrument (as defined in the definition of
“Indebtedness”) issued for the account of that Entity or as to which that
Entity is otherwise liable for reimbursement of drawings or payments, (ii) as a
partner or joint venturer in any partnership or joint venture, (iii) to
purchase any materials, supplies or other property from, or to obtain the
services of, another Entity if the relevant contract or other related document
or obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered, (iv) in respect to any Rate Contract
that is not entered into in connection with a bona fide hedging operation that
provides offsetting benefits to such Entity, or (v) to purchase or sell Equity
Securities or other securities of any Entity. 
The amount of any Contingent Obligation shall 

APPENDIX A-4

 

(subject, in the
case of Guaranty Obligations, to the last sentence of the definition of
“Guaranty Obligation”) be deemed equal to the maximum reasonably anticipated
liability in respect thereof; provided, that (A) in the case of item
(b)(v) of this definition, the amount of the Contingent Obligation with
respect to the purchase or sale of such Equity Securities or other securities
shall be the net settlement amount to be paid in cash or securities, and
(B) in the case of item (b)(iv) of this definition, the Contingent
Obligation with respect to such Rate Contracts shall be marked to market on a
current basis.

Contractual
Obligation.  “Contractual Obligation” of any Entity shall
mean, any indenture, note, lease, loan agreement, security, deed of trust,
mortgage, security agreement, guaranty, instrument, contract, agreement or
other form of contractual obligation or undertaking to which such Entity is a
party or by which such Entity or any of its property is bound.

Date
of Lease. 
“Date of Lease” shall have the meaning set forth in Section 1.1
of the Lease.

Debt/EBITDA
Ratio.  “Debt/EBITDA Ratio” shall mean, with respect
to Tenant for any consecutive four-quarter period, the ratio, determined on a
consolidated basis in accordance with GAAP, of:

(a)           The
total Indebtedness of Tenant and its Subsidiaries on the last day of such
period, excluding any Indebtedness under or with respect to currency exchange
Rate Contracts;

to

(b)           The
EBITDA of Tenant and its Subsidiaries for such period.

Deed. 
“Deed” shall have the meaning set forth in Section 20.1(c)(i) of
the Lease.

Default. 
“Default” shall mean an Event of Default or any event or circumstance
not yet constituting an Event of Default which, with the giving of any notice
or the lapse of any period of time or both, would become an Event of Default.

Default
Amounts.  “Default Amounts” shall mean all amounts
paid by Tenant or otherwise realized by Landlord as a result of the exercise of
Landlord’s remedies during the continuance of an Event of Default under the
Lease.

Default
Rate.  “Default Rate” shall mean the per annum rate
equal to the sum of two hundred basis points plus (a) in the case of any
payment of Base Rent on any Portion of the Lease Investment Balance after an
Event of Default, the Landlord Contribution Rate or the Rent Purchasers’
Contribution Rate applicable to such Portion immediately prior to such Event of
Default, or (b) in the case of any other payment, the Base Rate.

Distribution
Formula.  “Distribution Formula” shall have the
meaning set forth in Section 16.4 of the Lease.

EBITDA. 
“EBITDA” shall mean, with respect to Tenant for any period, the sum,
determined on a consolidated basis in accordance with GAAP, of the following:

APPENDIX A-5

 

(a)           The
net income or net loss of Tenant and its Subsidiaries for such period before
provision for income taxes;

plus

(b)           The
sum (to the extent deducted in calculating net income or loss in clause (a)
above) of (i) all Interest Expenses of Tenant and its Subsidiaries for such
period, (ii) all depreciation and amortization expenses of Tenant and its
Subsidiaries for such period, and (iii) all non-cash charges taken by
Tenant and its Subsidiaries during such period for in-process research and
development.

Eligible
Assignee.  “Eligible Assignee” shall mean an Entity
that is a commercial bank or another financial institution which (i) the lessor
under the Ground Leases has confirmed is a responsible bona fide institutional
lender, as defined in Section 907 of the Ground Leases, (ii) is a qualified
institutional buyer as defined in Rule 144A under the Securities Act of 1933,
as amended, (iii) has a combined capital and surplus of at least $50,000,000,
and (iv) is acting through a branch, agency or office located in the United
States.

Employee
Benefit Plan.  “Employee Benefit Plan” shall mean any
employee benefit plan within the meaning of section 3(3) of ERISA maintained or
contributed to by Tenant or any ERISA Affiliate, other than a Multiemployer
Plan.

Entity. 
“Entity” shall mean any person, corporation, partnership (general or
limited), joint venture, association, limited liability company, joint stock
company, trust or other business entity or organization.

Equity
Securities.  “Equity Securities” of any Entity shall mean
(a) all common stock, preferred stock, participations, shares, partnership
interests or other equity interests in and of such Entity (regardless of how
designated and whether or not voting or non­voting) and (b) all warrants,
options and other rights to acquire or sell any of the foregoing.

ERISA. 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974.

ERISA
Affiliate.  “ERISA Affiliate” shall mean any Entity
which is treated as a single employer with Tenant under Section 414 of the IRC.

Escrow
Agent.  “Escrow Agent” shall have the meaning set
forth in Section 17.3(b) of the Lease.

Estimated
Future Value.  “Estimated Future Value” shall have the
meaning set forth in Section 1.9 of the Lease.

Event
of Default.  “Event of Default” shall have the meaning
set forth in Section 19.1 of the Lease.

Expiration
Date.  “Expiration Date” shall have the meaning set
forth in Section 1.7 of the Lease.

APPENDIX A-6

 

Extension
Term.  “Extension Term” shall have the meaning set
forth in Section 1.7 of the Lease.

Federal
Funds Rate.  “Federal Funds Rate” shall have the meaning
set forth in the definition of “Base Rate.”

Financial
Statements.  “Financial Statements” shall mean, with
respect to any accounting period for any Entity, statements of income,
shareholders’ equity and cash flows of such Entity for such period, and a
balance sheet of such Entity as of the end of such period, setting forth in
each case in comparative form figures for the corresponding period in the
preceding fiscal year if such period is less than a full fiscal year or, if
such period is a full fiscal year, corresponding figures from the preceding
annual audit, all prepared in reasonable detail and in accordance with GAAP.

First
Extension Term. 
“First Extension Term” shall have the meaning set forth in Section
1.7 of the Lease.

Fixed
Charge Coverage Ratio.  “Fixed Charge Coverage Ratio”
shall mean, with respect to Tenant for any consecutive four-quarter period, the
ratio, determined on a consolidated basis in accordance with GAAP, of:

(a)           The
sum of (i) the net income of Tenant and its Subsidiaries for such period, plus
(ii) to the extent deducted in calculating such net income, (A) all
Interest Expenses of Tenant and its Subsidiaries for such period, (B) all
income tax expenses of Tenant and its Subsidiaries for such period, (C) all
rental expenses of Tenant and its Subsidiaries for such period, (D) all
non-cash charges taken by Tenant and its Subsidiaries during such period for
in-process research and development, and (E) all amortization charges for goodwill
taken by Tenant and its Subsidiaries during such period;

to

(b)           The
sum of (i) all Interest Expenses of Tenant and its Subsidiaries for such
period, plus (ii) all rental expenses of Tenant and its Subsidiaries for
such period, plus (iii) the current portion of all long-term
Indebtedness of Tenant and its Subsidiaries appearing on the consolidated
balance sheet of Tenant on the last day of such period, plus without
duplication, (iv) twenty percent (20%) of all synthetic lease Indebtedness
of Tenant and its Subsidiaries under clause (b) of the definition of
Indebtedness on the last day of such period; provided, however, that any
Indebtedness under or with respect to currency exchange Rate Contracts shall be
excluded for purposes of the calculation under this paragraph (b).

Foreign
Plan.  “Foreign Plan” shall mean any employee
benefit plan maintained by Tenant or any of its Subsidiaries which is mandated
or governed by any Governmental Rule of any Governmental Authority other than
the United States.

Funding. 
“Funding” shall mean the payment of the applicable Acquisition Price by
any Rent Purchaser on the Funding Date.

APPENDIX A-7

 

Funding
Date.  “Funding Date” shall mean the date upon
which the entire Commitment Amount is funded to Tenant by Landlord and each
Rent Purchaser pursuant to the terms of the Lease, the Participation Agreement
and the Rent Purchase Agreement.

GAAP. 
“GAAP” shall mean generally accepted accounting principles and practices
as in effect in the United States of America from time to time, consistently
applied.

Governmental
Authority.  “Governmental Authority” shall mean any
nation or government, any state, county, city or other political subdivision
thereof and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.

Governmental
Charges.  “Governmental Charges” shall mean, with
respect to any Entity, all levies, assessments, fees, claims or other charges
imposed by any Governmental Authority upon such Entity or any of its property
or otherwise payable by such Entity.

Governmental
Rule.  “Governmental Rule” shall mean any law,
rule, regulation, ordinance, order, code interpretation, judgment, decree,
directive, guidelines, policy or similar form of decision of any Governmental
Authority which is made publicly available.

Ground
Lease and SJRDA Ground Leases.  “Ground
Lease” shall mean any ground lease or other agreement pursuant to which Land
described in a Lease Supplement is leased to Landlord, as ground lessee, by a
ground lessor, including, without limitation (i) that certain Ground Lease
dated as of October 12, 1994, between Redevelopment Agency of the City of San
Jose (“SJRDA”), as landlord, and Landlord, as tenant, and (ii) that certain
Ground Lease dated as of August 15, 1996, between SJRDA, as landlord, and
Landlord, as tenant (collectively, the “SJRDA Ground Leases”).

Guaranteed
Residual Value.  “Guaranteed Residual Value” shall mean an
amount which is indicated on each Lease Supplement as of the Date of Lease.

Guaranty
Obligation.  “Guaranty Obligation” shall mean, with
respect to any Entity, any direct or indirect liability of that Entity with
respect to any indebtedness, lease, dividend, letter of credit or other
obligation (the “primary obligations”) of another Entity (the “primary
obligor”), including any obligation of that Entity, whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary obligations or
any property constituting direct or indirect security therefor, or (b) to
advance or provide funds (i) for the payment or discharge of any such primary
obligation, or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, or (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof.  The
amount of any Guaranty Obligation shall be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty Obligation
is made or, if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof.

APPENDIX A-8

 

Improvements. 
“Improvements” shall mean any Building located on any Land described in
a Lease Supplement and all related improvements, fixtures and equipment now or
hereafter installed in such Building or on the Land on which such Building is
located.

Indebtedness. 
“Indebtedness” of any Entity shall mean, without duplication:

(a)           All
obligations of such Entity evidenced by notes, bonds, debentures or other
similar instruments and all other obligations of such Entity for borrowed money
(including obligations to repurchase receivables and other assets sold with
recourse);

(b)           All
obligations of such Entity for the deferred purchase price of property or
services (including obligations under letters of credit and other credit
facilities which secure or finance such purchase price and obligations under
“synthetic” leases);

(c)           All
obligations of such Entity under conditional sale or other title retention
agreements with respect to property acquired by such Entity (to the extent of
the value of such property if the rights and remedies of the seller or lender
under such agreement in the event of default are limited solely to repossession
or sale of such property);

(d)           All
obligations of such Entity as lessee under or with respect Capital Leases;

(e)           All
non-contingent payment or reimbursement obligations of such Entity under or
with respect to all letters of credit (including standby and commercial),
banker’s acceptances, bank guaranties, shipside bonds, surety bonds and similar
instruments (hereinafter “Surety Instruments”);

(f)            All
net obligations of such Entity, contingent or otherwise, under or with respect
to Rate Contracts;

(g)           All
Guaranty Obligations of such Entity with respect to the obligations of other
Entities of the types described in clauses (a) - (f) above and all other
Contingent Obligations of such Entity; and

(h)           All
obligations of other Entities of the types described in clauses (a) - (f)
above to the extent secured by (or for which any holder of such obligations has
an existing right, contingent or otherwise, to be secured by) any Lien in any
property (including accounts and contract rights) of such Entity, even though
such Entity has not assumed or become liable for the payment of such
obligations.

Insurance
and Condemnation Payments.  “Insurance
and Condemnation Payments” shall mean the portion of all compensation
attributable to the Parcels and awarded or paid upon any Taking, as described
in Section 16.4 of the Lease, and paid to Landlord pursuant to the
Distribution Formula set forth in Section 16.4 of the Lease, plus
the portion of all proceeds of insurance paid to Landlord pursuant to the
Distribution Formula set forth in Section 16.4 of the Lease, as
described in Section 17.3 of the Lease.

Interest
Expenses.  “Interest Expenses” shall mean, with respect
to any Entity for any period, the sum, determined on a consolidated basis in
accordance with GAAP, of (a) all interest 

APPENDIX A-9

 

on the
Indebtedness of such Entity paid or accrued during such period (including
interest attributable to Capital Leases) plus (b) all fees in respect of
outstanding letters of credit paid or accrued by such Entity during such
period.

Invoice. 
“Invoice” shall have the meaning set forth in Section 7.1 of the
Lease.

IRC. 
“IRC” shall mean the Internal Revenue Code of 1986.

L/C
Issuer.  “L/C Issuer” shall have the meaning set
forth in Section 4.3(a)(v) of the Lease.

Land. 
“Land” shall have the meaning set forth in Section 1.5 of the
Lease.

Landlord. 
“Landlord” shall mean SMBC Leasing and Finance, Inc. (formerly known as
Sumitomo Bank Leasing and Finance, Inc.) and its successors and permitted
assigns.

Landlord
Contribution.  “Landlord Contribution,” for any Lease
Supplement at the time of the relevant calculation, shall mean the amount
specified as the Landlord Contribution in such Lease Supplement, less all
amounts applied to reduce the Lease Investment Balance with respect to such
Lease Supplement which are distributed to Landlord in accordance with the Rent Purchase
Agreement.

Landlord
Contribution Rate.  “Landlord Contribution Rate”
for any Rental Period and Portion applicable to the Landlord Contribution,
shall be equal to the per annum rate equal to the sum of the LIBOR Rate for
such Rental Period or Portion plus the applicable margin set forth in the
Pricing Grid under the heading “Landlord Contribution Rate - Libor Rate
Margin,” such rate to change from time to time during such period as the
applicable margin shall change. 
Notwithstanding the foregoing:

(a)           If,
on or before the first day of any Rental Period for any Portion, (1) Landlord
shall determine that the LIBOR Rate for such Rental Period cannot be adequately
and reasonably determined due to the unavailability of funds in or other
circumstances affecting the London interbank market or (ii) Landlord determines
that the rate of interest for such Portion does not adequately and fairly
reflect the cost to Landlord of funding its share of such Portion, Landlord
shall immediately give notice of such condition to Tenant.  After the giving of any such notice by
Landlord and until Landlord shall otherwise notify Tenant that the
circumstances giving rise to such condition no longer exist, the Landlord
Contribution Rate for each new Rental Period shall be the Base Rate, plus
the applicable margin set forth in the Pricing Grid under the heading “Landlord
Contribution Rate - Base Rate Margin.”

(b)           If,
after the date of the Lease, the adoption of any Governmental Rule, or any
change in any Governmental Rule or the application or requirements thereof
(whether such change occurs in accordance with the terms of such Governmental
Rule as enacted, as a result of amendment or otherwise) or any change in the
interpretation or administration of any Governmental Rule by any Governmental
Authority, or compliance by Landlord with any request or directive (whether or
not having the force of law) of any Governmental Authority (a “Change of Law”),
shall make it unlawful or impossible for Landlord to make or maintain any part
of the Lease Investment Balance at the LIBOR Rate, Landlord shall immediately
notify 

APPENDIX A-10

 

Tenant of such
Governmental Rule or Change of Law. 
After the giving of any such notice by Landlord and until Landlord shall
otherwise notify Tenant that such Change of Law or Governmental Rule is no
longer in effect with respect to Landlord, the Landlord Contribution Rate for
each new Rental Period shall be the Base Rate, plus the applicable margin
set forth in the Pricing Grid under the heading “Landlord Contribution Rate -
Base Rate Margin.”

(c)           Subject
to other provisions relating to payment of the Default Rate, if a Default has
occurred and is continuing at the time the Notice of Rental Period Selection is
required to be delivered in accordance with Section 7.1(b) of the Lease,
the Landlord Contribution Rate for each new Rental Period shall be the Base
Rate plus the applicable margin set forth in the  Pricing Grid under the
heading “Landlord Contribution Rate - Base Rate Margin” until such Default has
been cured or waived.

Landlord
Liens.  “Landlord
Liens” shall have the meaning set forth in Section 20.1(c)(i) of the
Lease.

Landlord
Taxes.  “Landlord Taxes” shall have the meaning set
forth in Section 8.1(b) of the Lease.

Landlord’s
Additional Rent Interest.  “Landlord’s
Additional Rent Interest” shall mean the respective amount owed to Landlord for
Additional Rent, excluding the Purchase Price, the Guaranteed Residual Value,
the Termination Amount, Insurance and Condemnation Payments and Default
Amounts, but including, without limitation, any Break Funding Costs, Additional
Charges and Additional Amounts payable pursuant to Section 8.4 of the
Lease, claims for indemnification amounts payable by Tenant under the Operative
Documents, and all other fees, costs and expenses payable or reimbursable by
Tenant under the Operative Documents.

Landlord’s
Base Rent Interest.  “Landlord’s Base Rent
Interest” shall mean the sum of (a) the portion of each payment of Base Rent
attributable to the Landlord Contribution calculated in accordance with clause
(b) of the definition of “Base Rent;” plus (b) the same portion of each
payment of interest paid by Tenant at the Default Rate on Base Rent.

Landlord’s
Default Interest.  “Landlord’s Default Interest” shall mean
Landlord’s right to receive and retain, in the order of priority set forth in Section
3.2 of the Rent Purchase Agreement, so much of the Default Amounts that
does not exceed the then outstanding balance of Landlord Contribution plus all
other amounts then due and owing to Landlord under the Lease and the other
Operative Documents.

Landlord’s
Insurance and Condemnation Interest.  “Landlord’s
Insurance and Condemnation Interest” shall mean Landlord’s right to receive and
retain, in the order of priority set forth in Section 3.2 of the Rent
Purchase Agreement, so much of the Insurance and Condemnation Payments that
does not exceed the Landlord’s Percentage of the Insurance and Condemnation
Payments.

Landlord’s
Interests.  “Landlord’s Interests” shall mean, with
respect to a Parcel, the Landlord’s Base Rent Interest, the Landlord’s Default
Interest, the Landlord’s Insurance and Condemnation Interest, the Landlord’s
Purchase Price Interest, Landlord’s Additional Rent 

APPENDIX A-11

 

Interest, the
Landlord’s Guaranteed Residual Value Interest and the Landlord’s Termination
Option Interest.

Landlord’s
Percentage.  “Landlord’s Percentage” shall mean the
percentage that the Landlord Contribution represents of the Lease Investment
Balance, as such amounts are reduced by any payments applied to the Lease
Investment Balance.

Landlord’s
Purchase Price Interest.  “Landlord’s
Purchase Price Interest” shall mean Landlord’s right to receive and retain, in
the order of priority set forth in Section 3.2 of the Rent Purchase
Agreement, so much of the Purchase Price payable by Tenant under Section
20.1 of the Lease that exceeds the Rent Purchasers’ Purchase Price
Interest.

Landlord’s
Termination Option Interest.  “Landlord’s
Termination Option Interest” shall mean Landlord’s right to receive and retain,
in the order of priority set forth in Section 3.2 of the Rent Purchase
Agreement, so much of the Termination Amount that does not exceed the then
outstanding balance of Landlord Contribution (after taking into account any
prior reductions in the outstanding amount of Landlord Contribution) plus all
other amounts then due and owing to Landlord under the Lease and the other
Operative Documents.

Landlord’s
Wire Transfer Instructions.  “Landlord’s
Wire Transfer Instructions” shall mean the following with respect to payments
to be made to the Landlord:

Citibank, N.A., New York

ABA No.:  021000089

A/C Name:  Sumitomo Mitsui Banking Corporation

A/C No.:  36023837

Further Credit to:  SMBC Leasing and Finance, Inc.

A/C No.: 
283572

Lease. 
“Lease” shall mean that certain Second Amended and Restated Master Lease
of Land and Improvements dated as of August 11, 2004, by and between Landlord
and Tenant.

Lease
Extension Request.  “Lease Extension Request”
shall have the meaning set forth in Section 6.2 of the Rent Purchase
Agreement.

Lease
Investment Balance.  “Lease Investment Balance”
shall mean, for any Lease Supplement, at the time in question, (a) the amount
specified in such Lease Supplement as the original Lease Investment Balance; reduced
by (b) the following, to the extent that the following relate to the Land
and Improvements described in such Lease Supplement: (i) the aggregate of all
amounts received by Landlord pursuant to the following provisions of the Lease:
Article XVI (Eminent Domain), and Article XVII (Damage or
Destruction), Section 19.2 (Landlord’s Remedies), Section 20.1
(Option to Purchase Parcels), and/or Section 20.2 (Termination Option);
and (ii) the aggregate of all amounts received by Landlord or Administrative
Agent in respect of the Lease or any other Operative Document that are not
otherwise applied to reduce the Lease Investment Balance relating to such Lease
Supplement and which constitute a repayment or reduction of the amounts placed
at risk by or through the Landlord, excluding for purposes of this clause
amounts paid as Base Rent under the Lease and reimbursement or payment for
expenses, fees, indemnification payments and similar items payable by Tenant to
Landlord, 

APPENDIX A-12

 

Administrative
Agent, any Rent Purchaser or any other Entity under the Lease, any Lease
Supplement, or any other Operative Document.

Lease
Investment Balance Debt.  “Lease
Investment Balance Debt” shall mean the portion of the Lease Investment Balance
not invested by Landlord.  As of the
Date of Lease, the Lease Investment Balance Debt shall not exceed
$126,800,000.00.

Lease
Investment Balance Equity.  “Lease
Investment Balance Equity” shall mean the portion of the Lease Investment
Balance invested by Landlord.  On the
Date of Lease, the Lease Investment Balance Equity shall be $16,400,000.00.

Lease
Payment Amount.  “Lease Payment Amount” shall have the
meaning set forth in Section 4.3(a)(iv) of the Lease.

Lease
Supplement.  “Lease Supplement” shall mean either or both
of Lease Supplement No. 1 (attached to the Lease as Exhibit A) or Lease
Supplement No. 2 (attached to the Lease as Exhibit B).

Lease
Supplement Term.  “Lease Supplement Term” shall have the
meaning set forth in each Lease Supplement.

Legal
Requirements.  “Legal Requirements” shall mean all
statutes, codes, laws, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements of all federal, state, county, municipal and other
governments, departments, commissions, boards, courts, authorities, officials
and officers, which now or at any time hereafter are applicable to the Lease or
applicable to and enforceable against any Parcel or any part thereof, as
applicable.

Letter
of Credit.  “Letter of Credit” shall have the meaning
set forth in Section 4.3(a)(v) of the Lease.

Letter
of Credit Payment Amount.  “Letter of
Credit Payment Amount” shall have the meaning set forth in Section
4.3(a)(iv) of the Lease.

Leverage
Ratio.  “Leverage Ratio” shall mean, with respect to
Tenant and its Subsidiaries, as of the last day of a fiscal quarter, the ratio
of (a) the total Indebtedness of Tenant and its Subsidiaries, to (b) the total
capitalization of Tenant and its Subsidiaries (i.e., total Indebtedness plus
the book value of Tenant’s equity).

LIBOR
Rate.  “LIBOR Rate” shall mean, with respect to
each Rental Period for a Portion, a rate per annum equal to the quotient
(rounded upward if necessary to the nearest 1/100 of one percent) of:

(a)           The
British Banker’s Association LIBOR Rate (rounded upward if necessary to the
nearest 1/100 of one percent) as quoted on the BBAM 1 screen on Bloomberg (or,
if at any time such quotes are unavailable from Bloomberg, on Bridge Telerate
(Page 3750)) on the second Business Day prior to the first day of such
Rental Period at or about 11:00 a.m. (London 

APPENDIX A-13

 

time) (for
delivery on the first day of such Rental Period) for a term comparable to such
Rental Period;

divided by

(b)           One
minus the Reserve Requirement for such Portion in effect from time to time.

If, for any reason, the LIBOR Rate is not available
from the aforementioned sources for any Rental Period, Landlord shall determine
the LIBOR Rate for such Rental Period based upon the rates per annum at which
Dollar deposits are offered to Landlord in the London interbank market on the
second Business Day prior to the first day of such Rental Period at or about
11:00 a.m. (London time) (for delivery on the first day of such Rental Period)
in an amount equal to such Portion and for a term comparable to such Rental
Period.

The LIBOR Rate shall be adjusted automatically as to
all outstanding Portions then calculated on the basis of the LIBOR Rate as of
the effective date of any change in the Reserve Requirement.

Lien. 
“Lien” shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, charge or other encumbrance in, of, or on such property
or the income therefrom, including, without limitation, the interest of a
vendor or lessor under a conditional sale agreement, Capital Lease or other
title retention agreement, or any agreement to provide any of the foregoing,
and the filing of any financing statement or similar instrument under the
Uniform Commercial Code or comparable law of any jurisdiction other than
filings made for notice purposes only in connection with true leases (which
would not include “synthetic” leases).

Majority
Rent Purchasers.  “Majority Rent Purchasers” shall mean those
Rent Purchasers representing an aggregate interest in the Lease Investment
Balance Debt in excess of sixty-six and two-thirds percent (66 2/3%), excluding
from the “Lease Investment Balance Debt” that portion thereof attributed to any
Rent Purchaser that is in default under the terms of the Rent Purchase
Agreement or the Participation Agreement.

Master
Lease Term.  “Master Lease Term” is defined in Section
1.7 of the Lease.

Material
Adverse Effect.  “Material Adverse Effect” shall mean a
material adverse effect on (a) the business, assets, operations, or financial
condition of Tenant and its Subsidiaries, taken as a whole; (b) the ability of
Tenant to pay or perform the Obligations in accordance with the terms of the
Lease and the other Operative Documents; or (c) practical realization of the
material rights and remedies of Landlord, Administrative Agent or any Rent
Purchaser intended to be provided under the Operative Documents.

Material
Subsidiary.  “Material Subsidiary” shall mean any
Subsidiary that had revenues during the immediately preceding fiscal year equal
to or greater than five percent (5%) of the consolidated gross revenues of
Tenant and its Subsidiaries during such year.

Memorandum
of Lease.  “Memorandum of Lease” shall have the meaning
set forth in Section 21.6 of the Lease.

APPENDIX A-14

 

Moody’s. 
“Moody’s” shall have the meaning set forth in Section 4.3(a)(v)
of the Lease.

Multiemployer
Plan.  “Multiemployer Plan” shall mean any
multiemployer plan within the meaning of section 3(37) of ERISA maintained or
contributed to by Tenant or any ERISA Affiliate.

Net
Worth.  “Net Worth” shall mean, with respect to
Tenant at any time, the remainder at such time, determined on a consolidated
basis in accordance with GAAP, of (a) the total assets of Tenant and its
Subsidiaries at such time, minus (b) the sum (without limitation and without
duplication of deductions) of the total liabilities of Tenant and its
Subsidiaries at such time and all reserves of Tenant and its Subsidiaries at
such time for anticipated losses and expenses (to the extent not deducted in
calculating total assets in clause (a) above).

Notice. 
“Notice” shall mean a written advice, request, demand or notification
required or permitted by the Lease, as more particularly provided in Section
21.3 of the Lease.

Notice
of Rental Period Selection.  “Notice of
Rental Period Selection” shall have the meaning set forth in Section 7.1(b)
of the Lease.

Obligations. 
“Obligations” shall mean and include, with respect to Tenant, all loans,
advances, debts, liabilities, and obligations, howsoever arising, owed by
Tenant to Landlord, Administrative Agent or any Rent Purchaser of every kind
and description (whether or not evidenced by any note or instrument and whether
or not for the payment of money), direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising pursuant to the terms
of the Lease and the other Operative Documents, including, without limitation,
all Base Rent and Additional Rent, interest, fees, charges, expenses,
attorneys’ fees and accountants’ fees chargeable to Tenant or payable by Tenant
under the Lease or the other Operative Documents.

Official
Records.  “Official Records” shall mean the official
records of Santa Clara County.

Operative
Documents.  “Operative Documents” shall mean the Lease,
the Lease Supplements, the Security Instruments, the Participation Agreement,
the Rent Purchase Agreement, the Rent Purchasers’ Deed of Trust and all other
documents, instruments and agreements delivered to Landlord, Administrative
Agent or any Rent Purchaser pursuant to the terms of any of the foregoing
documents.

Original
Construction Management Agreements.  “Original
Construction Management Agreements” shall mean each of the Construction
Management Agreements entered into by Landlord and Tenant at the time of and in
connection with the execution of each of the Original Leases.

Original
Deeds of Trust.  “Original Deeds of Trust” shall have the
meaning set forth in the Recitals to the Lease.

APPENDIX A-15

 

Original
Lease Supplements, Original Lease Supplement No. 1 and Original Lease
Supplement No. 2.  “Original Lease Supplements,” “Original Lease
Supplement No. 1” and “Original Lease Supplement No. 2” shall have the meanings
set forth in the Recitals to the Lease.

Original
Leases.  “Original Leases” shall have the meaning set forth in
the Recitals to the Lease.

Original
Participation Agreement.  “Original
Participation Agreement” shall have the meaning set forth in the Recitals of
the Participation Agreement.

Original
Rent Purchase Agreement.  “Original
Rent Purchase Agreement” shall have the meaning set forth in the recitals of
the Rent Purchase Agreement.

Parcel. 
“Parcel” shall have the meaning set forth in Section 1.6 of the
Lease.

Participation
Agreement.  “Participation Agreement” shall mean that
certain Amended and Restated Participation Agreement dated as of August 11,
2004, executed by and among Tenant, Landlord, Administrative Agent and Rent
Purchasers in the form attached to the Lease as Exhibit C.

PBGC. 
“PBGC” shall mean the Pension Benefit Guaranty Corporation.

Permitted
Liens.  “Permitted Liens” shall have the meaning set
forth in Section 21.21(b) of the Lease.

Permitted
Title Exceptions.  “Permitted Title Exceptions” shall mean the
following: (a) the exceptions set forth in each Lease Supplement or in any
title insurance delivered in connection with the Operative Documents;
(b) taxes and assessments (excluding Landlord Taxes as defined in Section
8.1 of the Lease) not yet due and payable; (c) the Security Instruments;
(d) all title defects, liens, encumbrances, deeds of trust, mortgages,
rights-of-way, and restrictive covenants and conditions affecting the Land
except to the extent any of the foregoing arise as a result of Landlord’s
actions or with Landlord’s written consent (unless such actions taken or consent
given by Landlord are requested in writing by Tenant); and (e) the Lease
and all Lease Supplements.

Present
Value.  “Present Value” shall have the meaning set
forth in Section 1.9 of the Lease.

Portion. 
“Portion” shall mean a portion of the Lease Investment Balance for which
a Landlord Contribution Rate or a Rent Purchasers’ Contribution Rate is
determined.

Pricing
Grid.  “Pricing Grid” shall mean that certain
pricing grid attached to the Lease as Exhibit C.

Proceeds. 
“Proceeds” shall have the meaning set forth in Section 20.2(d) of
the Lease.

Purchase
Option.  “Purchase Option” shall have the meaning set
forth in Section 20.1(a) of the Lease.

APPENDIX A-16

 

Purchase
Option Exercise Notice.  “Purchase Option
Exercise Notice” shall have the meaning set forth in Section 20.1(b) of
the Lease.

Purchase
Price.  “Purchase Price” shall have the meaning set
forth in Section 20.1(a) of the Lease.

Qualifying
Retail Leases.  “Qualifying Retail Leases” shall have the
meaning set forth in Section 15.2(a) of the Lease.

Quick
Ratio.  “Quick Ratio” shall mean, with respect to
Tenant and its Subsidiaries at any time, the ratio, determined on a
consolidated basis in accordance with GAAP, of:

(a)           The
sum at such time, to the extent unencumbered and unrestricted, of all (i) cash
of Tenant and its Subsidiaries; (ii) cash equivalents of Tenant and its
Subsidiaries; (iii) short-term investments of Tenant and its Subsidiaries which
comply with the investment policy of Tenant; and (iv) accounts receivable of
Tenant and its Subsidiaries, net of appropriate loss and other reserves
therefor;

to

(b)           The
sum at such time of all (i) current liabilities of Tenant and its Subsidiaries;
and (ii) to the extent not included in such current liabilities under the
preceding clause (i), the current portion of all Indebtedness of the
types described in clauses (a) - (d) of the definition of
“Indebtedness.”

Rate
Contracts.  “Rate Contracts” shall mean swap agreements
(as that term is defined in Section 101 of the Federal Bankruptcy Reform Act of
1978, as amended) and any other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.

RCRA. 
“RCRA” shall have the meaning set forth in Section 10.1(b)(i) of
the Lease.

Real
Estate Taxes.  “Real Estate Taxes” shall have the meaning
set forth in Section 8.1(b) of the Lease.

Register. 
“Register” shall have the meaning set forth in Section 7.4(b)(ii)
of the Rent Purchase Agreement.

Rent
Commencement Date.  “Rent Commencement Date”
shall have the meaning set forth in the Lease Supplements.

Rent
Payment Date.  “Rent Payment Date” shall have the meaning
set forth in Section 7.1 of the Lease.

Rent
Purchase Agreement.  “Rent Purchase Agreement”
shall mean that certain Amended and Restated Rent Purchase Agreement, dated as
of August 11, 2004, executed by and among Landlord, Administrative Agent and
Rent Purchasers and acknowledged by Tenant.

APPENDIX A-17

 

Rent
Purchasers.  “Rent Purchasers” shall have the meaning set
forth in the Participation Agreement.

Rent
Purchasers’ Additional Rent Interest.  “Rent
Purchasers’ Additional Rent
Interest” shall mean the respective amount owed to each of the Rent Purchasers for
Additional Rent, excluding the Purchase Price, the Guaranteed Residual Value,
Insurance and Condemnation Payments and Default Amounts, but including, without
limitation, any Break Funding Costs, Additional Charges and Additional Amounts
payable pursuant to Section 8.4 of the Lease, claims for indemnification
amounts payable by Tenant under the Operative Documents, and all other fees,
costs and expenses payable or reimbursable by Tenant under the Operative
Documents.

Rent
Purchasers’ Base Rent Interest.  “Rent
Purchasers’ Base Rent Interest” shall mean the sum of (a) the portion of each
payment of Base Rent attributable to the Rent Purchasers’ Contribution
calculated in accordance with clause (a) of the definition of “Base
Rent;” plus (b) the same portion of each payment of interest paid
by Tenant at the Default Rate on Base Rent.

Rent
Purchaser’s Commitment.  “Rent
Purchaser’s Commitment” shall mean the commitment of any Rent Purchaser as
specified in Section 2.2 of the Participation Agreement and on such Rent
Purchaser’s counterpart signature page of the Participation Agreement.

Rent
Purchasers’ Contribution.  “Rent
Purchasers’ Contribution,” for any Lease Supplement at the time of the relevant
calculation, shall mean the Lease Investment Balance for such Lease Supplement
as of the date of such calculation, less the Landlord Contribution for such
Lease Supplement as of such date.

Rent
Purchasers’ Contribution Rate.  “Rent
Purchasers’ Contribution Rate” shall mean, for any Rental Period and Portion
applicable to the Rent Purchasers’ Contribution, the per annum rate equal to
the sum of the LIBOR Rate for such Rental Period and Portion plus the
applicable margin set forth in the Pricing Grid under the heading “Rent
Purchasers’ Contribution Rate - Libor Rate Margin,” such rate to change from
time to time  during  such  period as the applicable margin shall
change.  Notwithstanding the foregoing:

(a)           If,
on or before the first day of any Rental Period for any Portion, (i) any Rent
Purchaser shall advise Administrative Agent that the LIBOR Rate for such Rental
Period cannot be adequately and reasonably determined due to the unavailability
of funds in or other circumstances affecting the London interbank market or
(ii) Majority Rent Purchasers shall advise Administrative Agent that the rate
of interest for such Portion does not adequately and fairly reflect the cost to
such Rent Purchasers of funding their respective share of such Portion,
Administrative Agent shall immediately give notice of such condition to Tenant and
the other Rent Purchasers.  After the
giving of any such notice by Administrative Agent and until Administrative
Agent shall otherwise notify Tenant that the circumstances giving rise to such
condition no longer exist, the Rent Purchasers’ Contribution Rate for each new
Rental Period shall be the Base Rate, plus the applicable margin set forth in
the Pricing Grid under the heading “Rent Purchasers’ Contribution Rate - Base
Rate Margin.”

APPENDIX A-18

 

(b)           If,
after the date of the Lease, the adoption of any Governmental Rule or any
Change of Law shall make it unlawful or impossible for any Rent Purchaser to
make or maintain any part of the Lease Investment Balance at the LIBOR Rate,
such Rent Purchaser shall immediately notify Administrative Agent and Tenant of
such Governmental Rule or Change of Law. 
After the giving of any such notice by any Rent Purchaser and until
Administrative Agent shall otherwise notify Tenant that such Governmental Rule
or Change of Law is no longer in effect with respect to any Rent Purchaser, the
Rent Purchasers’ Contribution Rate for each new Rental Period shall be the Base
Rate, plus the applicable margin set forth in the Pricing Grid under the
heading “Rent Purchasers’ Contribution Rate - Base Rate Margin.”

(c)           If
a Default has occurred and is continuing at the time the Notice of Rental
Period Selection is required to be delivered in accordance with Section
7.1(b) of the Lease, the Rent Purchasers’ Contribution Rate for each new Rental
Period shall be the Base Rate, plus the applicable margin set forth in the
Pricing Grid under the heading “Rent Purchasers’ Contribution Rate - Base Rate
Margin” until such Default has been cured or waived.

Rent
Purchasers’ Deed of Trust.  “Rent Purchasers’
Deed of Trust” shall mean those certain Deeds of Trust granted by Landlord in
favor of Administrative Agent to secure Landlord’s obligations to
Administrative Agent and the Rent Purchasers pursuant to the Operative
Documents.

Rent
Purchasers’ Default Interest.  “Rent
Purchasers’ Default Interest” shall mean the right of the Rent Purchasers to
receive, in the order of priority set forth in Section 3.2 of the Rent
Purchase Agreement, so much of the Default Amounts that does not exceed the
then outstanding balance of Rent Purchasers’ Contribution plus all other
amounts then due and owing to the Rent Purchasers under the Lease and the other
Operative Documents.

Rent
Purchasers’ Insurance and Condemnation Interest. 
“Rent Purchasers’ Insurance and Condemnation Interest” shall mean the
right of the Rent Purchasers to receive, in the order of priority set forth in Section
3.2 of the Rent Purchase Agreement, so much of the Insurance and
Condemnation Payments that does not exceed the Rent Purchasers’ Percentage of
the Insurance and Condemnation Payments.

Rent
Purchasers’ Interests.  “Rent Purchasers’ Interests”
shall mean, with respect to a Parcel, the Rent Purchasers’ Base Rent Interest,
the Rent Purchasers’ Additional Rent Interest, the Rent Purchasers’ Default
Interest, the Rent Purchasers’ Insurance and Condemnation Interest, the Rent
Purchasers’ Purchase Price Interest and the Rent Purchasers’ Guaranteed
Residual Value Interest with respect to such Parcel.

Rent
Purchasers’ Percentage.  “Rent
Purchasers’ Percentage” shall mean the percentage that the Rent Purchasers’
Contribution represents of the Lease Investment Balance as such amounts are
reduced by any payments applied to the Lease Investment Balance.  As to any individual Rent Purchaser, “Rent
Purchaser’s Percentage” shall mean the percentage that such Rent Purchaser’s
Commitment represents of the Lease Investment Balance as such amounts are
reduced by any payments applied to the Lease Investment Balance.

APPENDIX A-19

 

Rent
Purchasers’ Purchase Price Interest.  “Rent
Purchasers’ Purchase Price Interest” shall mean the right of the Rent
Purchasers to receive, in the order of priority set forth in Section 3.2
of the Rent Purchase Agreement, so much of the Purchase Price payable by Tenant
to Landlord pursuant to an election under Section 20.1 of the Lease that
does not exceed (a) the Rent Purchasers’ Percentage of the Purchase Price, plus
(b) the same portion of each payment of interest paid by Tenant at the Default
Rate on the Purchase Price.

Rental
Period.  “Rental Period” shall mean, with respect to
any Portion, initially, the period commencing on the Rent Commencement Date and
ending on the Rent Payment Date selected by Tenant for such Portion pursuant to
Section 7.1 of the Lease and, thereafter, each period commencing on a Rent
Payment Date and ending on the Rent Payment Date selected by Tenant for such
Portion pursuant to Section 7.1 of the Lease.

Reportable
Event.  “Reportable Event” shall have the meaning
given to that term in ERISA and applicable regulations thereunder.

Reserve
Requirement.  “Reserve Requirement” shall mean, with
respect to any day in any Rental Period, the aggregate of the reserve
requirement rates (expressed as a decimal) in effect on such day for
eurocurrency funding (currently referred to as “Eurocurrency liabilities” in
Regulation D of the Board of Governors of the Federal Reserve System)
maintained by a member bank of the Federal Reserve System.  As used herein, the term “reserve requirement”
shall include, without limitation, any basic, supplemental or emergency reserve
requirements imposed on any Rent Purchaser or Landlord by any Governmental
Authority.

Restated
Lease.  “Restated Lease” shall have the meaning set
forth in the Recitals to the Lease.

Returned
Amount.  “Returned Amount” shall have the meaning set
forth in Section 4.4(c) of the Rent Purchase Agreement.

S&P. 
“S&P” shall have the meaning set forth in Section 4.3(a)(v)
of the Lease.

Security
Instruments.  “Security Instruments” shall mean the deed
of trust, mortgage, financing statement and/or any other security document or
instrument in favor of, and in form and substance satisfactory to, Landlord and
Administrative Agent, executed by Tenant in favor of Landlord and encumbering
the Parcel described in a Lease Supplement or encumbering any other property of
Tenant to secure Tenant’s obligations to Landlord under the Lease and any other
Operative Document, including, without limitation, the Amended Deeds of Trust.

Shortfall. 
“Shortfall” shall have the meaning set forth in Section 20.2(d)(i)
of the Lease.

Subparticipant. 
“Subparticipant” shall have the meaning set forth in Section 7.4(d)
of the Rent Purchase Agreement.

Subsequent
Extension Term.  “Subsequent Extension Term” shall have the meaning set
forth in Section 1.7 of the Lease.

APPENDIX A-20

 

Subsidiary. 
“Subsidiary” of any Entity shall mean (a) any corporation of which more
than 50% of the issued and outstanding Equity Securities having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned or controlled
by such Entity, by such Entity and one or more of its other Subsidiaries or by
one or more of such Entity’s other Subsidiaries, (b) any partnership, joint
venture, limited liability company or other association of which more than 50%
of the equity interest having the power to vote, direct or control the
management of such partnership, joint venture or other association is at the
time owned and controlled by such Entity, by such Entity and one or more of the
other Subsidiaries or by one or more of such Entity’s other Subsidiaries or (c)
any other Entity whose results of operations are included in the Financial
Statements of such Entity on a consolidated basis.

Surety
Instruments.  “Surety Instruments” shall have the meaning
set forth in the definition of “Indebtedness.”

Taking. 
“Taking” shall have the meaning set forth in Section 16.1 of the
Lease.

Tenant. 
“Tenant” shall mean Adobe Systems Incorporated, a Delaware corporation,
and its successors and permitted assigns in interest.

Tenant’s
Property.  “Tenant’s Property” shall mean any process
equipment, fixtures, furniture, furnishings, personal property or trade
fixtures located in any Improvements and readily removable therefrom without
causing injury to such Improvements.

Term. 
“Term” shall have the meaning set forth in Section 1.7 of the
Lease.

Termination
Amount.  “Termination Amount” shall mean Proceeds and
the Shortfall amount received in connection with the sale of any Parcel under Section
20.2 of the Lease upon exercise of the Termination Option.

Termination
Option.  “Termination Option” shall have the meaning
set forth in Section 20.2(a) of the Lease.

II.            RULES OF CONSTRUCTION

All personal pronouns used in the Operative Documents
shall include all other genders.  The
singular shall include the plural and the plural shall include the
singular.  Titles of Articles, Sections
and Subsections in the Operative Documents are for convenience only and neither
limit nor amplify the provisions of the Operative Documents, and all references
in any Operative Document to Articles, Sections or Subsections shall refer to
the corresponding Article, Section or Subsection of such Operative Documents
unless specific reference is made to the articles, sections or other
subdivisions of another document or instrument.  Unless otherwise specified in any Operative Document, all
accounting terms used in the Operative Documents shall be interpreted, all
accounting determinations under the Operative Documents shall be made, and all
Financial Statements required to be delivered under the Operative Documents
shall be prepared in accordance with GAAP, applied on a basis consistent with
the most recent audited consolidated Financial Statements of the Tenant and its
Subsidiaries delivered to Landlord or 

APPENDIX A-21

 

Administrative
Agent.  All references to any agreement,
including, without limitation, the Operative Documents, shall include such
agreement as amended, modified or supplemented from time to time; and all
references to any law, statute, ordinance or governmental rule or regulation
shall include any amendments thereto.

APPENDIX A-22

 

EXHIBIT A

Lease Supplement No. 1

SECOND
AMENDED AND RESTATED MASTER LEASE

 

AMENDED
AND RESTATED LEASE SUPPLEMENT NO. 1

 

 

THIS AMENDED AND RESTATED LEASE SUPPLEMENT NO. 1
(“Lease Supplement No. 1”), dated as of August 11, 2004, is executed by
and between SMBC LEASING AND FINANCE, INC. (formerly known as Sumitomo Bank
Leasing and Finance, Inc.), a Delaware corporation (“Landlord”), and ADOBE
SYSTEMS INCORPORATED, a Delaware corporation (“Tenant”).

Pursuant to (i) that certain Amended, Restated and
Consolidated Master Lease of Land and Improvements, dated as of August 11,
1999, between Landlord and Tenant, as amended by that certain Amendment
No. 1, dated as of October 8, 1999, and by that certain Amendment
No. 2, dated as of August 9, 2000 (as amended, the “Restated Lease”)
(which Restated Lease amended and restated, and replaced in its entirety, among
other things, that certain Sublease of the Land and Lease of the Improvements,
dated October 12, 1994, between Landlord and Tenant, as amended by that certain
First Amendment to Sublease of the Land and Lease of the Improvements, dated
August 15, 1996), and (ii) that certain Lease Supplement No. 1, dated
as of August 11, 1999, between Landlord and Tenant (the “Original Lease
Supplement”), Landlord leased to Tenant certain land and improvements in the
City of San Jose, County of Santa Clara, State of California (as specified
below, the “Parcel”).

Landlord and Tenant have now entered into that certain
Second Amended and Restated Master Lease of Land and Improvements dated as of
August 11, 2004 (herein called the “Lease” and the defined terms therein being
hereinafter used with the same meanings), which Lease amends and restates, and
replaces in its entirety, the Restated Lease. 
In connection therewith, Landlord and Tenant are entering into this
Lease Supplement No. 1, which Lease Supplement No. 1 amends and
restates, and replaces in its entirety, the Original Lease Supplement, for the
purpose of leasing the Parcel to Tenant pursuant to the Lease.

NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, Landlord and Tenant hereby agree as
follows:

(a)           Landlord
hereby delivers and leases to Tenant under the Lease, and Tenant accepts and
leases from Landlord under the Lease, the Parcel described in Schedule 1
attached hereto.

(b)           The
Permitted Title Exceptions are described in Schedule 2 attached hereto.

(c)           The
Lease Investment Balance for this Lease Supplement No. 1 is $67,029,787.00, the
Landlord Contribution for this Lease Supplement No. 1 is $7,676,596.00,
and the Guaranteed Residual Value for this Lease Supplement No. 1 is (i)
$59,353,191.00 for the 

 

EXHIBIT A-1

 

stated five (5)
year Term hereof, and (ii) $59,581,343.00 for the First Extension Term, if
exercised by the Tenant.

(d)           The
Lease Supplement Term commenced as of the date hereof and will expire on August
11, 2009; provided, however, that the Lease Supplement Term may be extended in
accordance with Section 4.3 of the Lease.

(e)           The
Rent Commencement Date for this Lease Supplement No. 1 is August 11,
2004.  Tenant hereby confirms its
agreement to pay Base Rent and Additional Rent for the Parcel during the Lease
Supplement Term in accordance with Article VII of the Lease.

(f)            Tenant
hereby confirms to Landlord that Tenant has accepted the Parcel and agrees that
it shall be incorporated into the Lease.

(g)           The
Land upon which the Improvements have been constructed and which is a part of
this Lease Supplement No. 1 is subject to that certain Ground Lease between
Landlord, as ground lessee, and the Redevelopment Agency of the City of San
Jose, as ground lessor, dated October 12, 1994, a memorandum of which has been
recorded with the Santa Clara County Recorder as Document No. 12684585.

(h)           This
Lease Supplement No. 1 may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

(i)            This
Lease Supplement No. 1 is being delivered in the State of California and in all
respects shall be governed by, and construed in accordance with, the laws of
the State of California, including all matters of construction, validity and
performance.

IN WITNESS WHEREOF, Landlord and Tenant have caused
this Lease Supplement No. 1 to be duly executed on the day and year first
above written.

 

	
   

  	
  LANDLORD:

  	
  SMBC LEASING AND FINANCE, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William M. Ginn

  
	
   

  	
   

  	
  Name:

  	
  William M. Ginn

  
	
   

  	
   

  	
  Its:

  	
  Chairman

  
	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT A-2

 

	
   

  	
  TENANT:

  	
  ADOBE SYSTEMS INCORPORATED, a Delaware
  corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Bruce R. Chizen

  
	
   

  	
   

  	
   

  	
  Bruce R. Chizen

  
	
   

  	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Murray J. Demo

  
	
   

  	
   

  	
   

  	
  Murray J. Demo

  
	
   

  	
   

  	
   

  	
  Senior Vice President and Chief Financial Officer

  

 

 

 

EXHIBIT A-3

 

EXHIBIT B

Lease Supplement No. 2

SECOND
AMENDED AND RESTATED MASTER LEASE

 

AMENDED
AND RESTATED LEASE SUPPLEMENT NO. 2

 

 

THIS AMENDED AND RESTATED LEASE SUPPLEMENT NO. 2
(“Lease Supplement No. 2”), dated as of August 11, 2004, is executed by and
between SMBC LEASING AND FINANCE, INC. (formerly known as Sumitomo Bank Leasing
and Finance, Inc.), a Delaware corporation (“Landlord”), and ADOBE SYSTEMS
INCORPORATED, a Delaware corporation (“Tenant”).

Pursuant to (i) that certain Amended, Restated and
Consolidated Master Lease of Land and Improvements, dated as of August 11,
1999, between Landlord and Tenant, as amended by that certain Amendment
No. 1, dated as of October 8, 1999, and by that certain Amendment
No. 2, dated as of August 9, 2000 (as amended, the “Restated Lease”)
(which Restated Lease amended and restated, and replaced in its entirety, among
other things, that certain Sublease of the Land and Lease of the Improvements,
dated August 15, 1996, between Landlord and Tenant), and (ii) that certain
Lease Supplement No. 2, dated as of August 11, 1999, between Landlord and
Tenant (the “Original Lease Supplement”), Landlord leased to Tenant certain
land and improvements in the City of San Jose, County of Santa Clara, State of
California (as specified below, the “Parcel”).

Landlord and Tenant have now entered into that certain
Second Amended and Restated Master Lease of Land and Improvements dated as of
August 11, 2004 (herein called the “Lease” and the defined terms therein being
hereinafter used with the same meanings), which Lease amends and restates, and
replaces in its entirety, the Restated Lease. 
In connection therewith, Landlord and Tenant are entering into this
Lease Supplement No. 2, which Lease Supplement No. 2 amends and
restates, and replaces in its entirety, the Original Lease Supplement, for the
purpose of leasing the Parcel to Tenant pursuant to the Lease.

NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, Landlord and Tenant hereby agree as
follows:

(a)           Landlord
hereby delivers and leases to Tenant under the Lease, and Tenant accepts and
leases from Landlord under the Lease, the Parcel described in Schedule 1
attached hereto.

(b)           The
Permitted Title Exceptions are described in Schedule 2 attached hereto.

(c)           The
Lease Investment Balance for this Lease Supplement No. 2 is $76,170,213.00, the
Landlord Contribution for this Lease Supplement No. 2 is $8,723,404.00,
and the Guaranteed Residual Value for this Lease Supplement No. 2 is (i) 

 

EX. B-1

 

$67,446,809.00 for
the stated five (5) year Term hereof, and (ii) $67,706,072.00 for the First
Extension Term, if exercised by the Tenant.

(d)           The
Lease Supplement Term commenced as of the date hereof and will expire on August
11, 2009; provided, however, that the Lease Supplement Term may be extended in
accordance with Section 4.3 of the Lease.

(e)           The
Rent Commencement Date for this Lease Supplement is August 11, 2004.  Tenant hereby confirms its agreement to pay
Base Rent and Additional Rent for the Parcel during the Lease Supplement Term
in accordance with Article VII of the Lease.

(f)            Tenant
hereby confirms to Landlord that Tenant has accepted the Parcel and agrees that
it shall be incorporated into the Lease.

(g)           The
Land upon which the Improvements have been constructed and which is a part of
this Lease Supplement No. 2 is subject to that certain Ground Lease between
Landlord, as ground lessee, and the Redevelopment Agency of the City of San
Jose, as ground lessor, dated August 15, 1996, a memorandum of which has been
recorded with the Santa Clara County Recorder as Document No. 13410218.

(h)           This
Lease Supplement No. 2 may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

(i)            This
Lease Supplement No. 2 is being delivered in the State of California and in all
respects shall be governed by, and construed in accordance with, the laws of
the State of California, including all matters of construction, validity and
performance.

IN WITNESS WHEREOF, Landlord and Tenant have caused
this Lease Supplement No. 2 to be duly executed on the day and year first
above written.

 

	
   

  	
  LANDLORD:

  	
  SMBC LEASING AND FINANCE, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William M. Ginn

  
	
   

  	
   

  	
  Name:

  	
  William M. Ginn

  
	
   

  	
   

  	
  Its:

  	
  Chairman

  
	
   

  	
   

  	
   

  	
   

  

 

 

 

 

	
   

  	
  TENANT:

  	
  ADOBE SYSTEMS INCORPORATED, a Delaware
  corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Bruce R. Chizen

  
	
   

  	
   

  	
   

  	
  Bruce R. Chizen

  
	
   

  	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Murray J. Demo

  
	
   

  	
   

  	
   

  	
  Murray J. Demo

  
	
   

  	
   

  	
   

  	
  Senior Vice President and Chief Financial OfficerEXHIBIT 4.1
                                                                     -----------

THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT
BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
ANY STATE SECURITIES LAWS OR THE PROVISIONS OF THIS NOTE.

                                CDKNET.COM, INC.

                        6% SUBORDINATED CONVERTIBLE NOTE
                              DUE OCTOBER 15, 2005

Number:
        ---------------------------------------------

Principal: $
           ------------------------------------------

Original Issue Date:                            ,2004
                     --------------------------------

Registered Holder:
                   ----------------------------------
                                 (name)

         CDKnet.com, Inc., a Delaware corporation (the "Company") with principal
offices at 948 US Highway 22, North Plainfield, NJ 07060, for value received,
hereby promises to pay the registered holder hereof (the "Holder") the principal
sum set forth above on October 15, 2005 (the "Maturity Date"), in such coin or
currency of the United States of America as at the time of payment shall be the
legal tender for the payment of public and private debts, and to pay interest,
less any amounts required by law to be deducted or withheld, computed on the
basis of a 365-day year, on the unpaid principal balance hereof from the date
hereof (the "Original Issue Date"), at the rate of 6% per year, until such
principal sum shall have become due and payable, or has been converted by the
Holder pursuant to Section 5, below. Interest shall be paid, on Maturity, or if
the principal of the Note is earlier converted pursuant to Section 3 below or
redeemed in accordance with Section 4 below, upon such conversion or redemption.
All references herein to dollar amounts refers to U.S. dollars.

         By acceptance and purchase of this Note, the registered holder hereof
agrees with the Company that the Note shall be subject to the following terms
and conditions:

         1. Authorization of Notes. The Company has authorized the issue and
sale of a 6% Subordinated Convertible Note due October 15, 2005 (the "Note,"
such term includes any notes which may be issued in exchange or in replacement
thereof) in the aggregate principal amount of not more than U.S. $500,000.

         2. Transfer or Exchange. Prior to due presentation to the Company for
transfer of this Note, the Company and any agent of the Company may treat the
person in whose name this Note is duly registered on the Company's Note Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes.

                                        1
<PAGE>
         3. Option to Convert Principal and Interest into Equity Securities. The
Company has disclosed to Holder, and Holder acknowledges, that the Company
intends to offer securities of the Company (which may consist of voting stock or
other securities convertible into Common Stock or warrants to obtain the Common
Stock; hereafter, collectively, "Equity Securities") for sale to one or more
investors pursuant to a private offering. The Company hereby agrees not to
complete such an offering of Equity Securities for a period of one year without
first offering to Holder the opportunity to convert all or a portion of the
total indebtedness under this Note (principal and all accrued interest hereafter
"Total Indebtedness") to the purchase of such Equity Securities upon the same
terms offered to other investors, provided the Investor will not have the right
to convert in the manner without the Company's consent if: (i) the purchase
price of the Equity Securities is less than $1.25 per share; and (ii) the
principal and interest due on the Note is paid at the Closing of the Equity
Offering in full. The Company shall give notice to Holder prior to any such
sale, which notice shall fully disclose the material terms thereof, and Holder
shall have a prior right and option for 5 days following receipt of such notice
to convert all or any portion of the Total Indebtedness to the purchase of a
portion of the Equity Securities.

         4. Redemption.

                  4.1 Optional Redemption. Subject to the Holder's right of
conversion set forth in Section 3, the Company shall have the right, at its sole
option and election made in accordance with Section 4.3(d) and subject to
Section 4.3(d), to redeem the Note, in whole but not in part, at the Redemption
Price of 105% of the principal (plus accrued and unpaid interest):

                  4.2. Mandatory Redemption. In the event the Company raises at
least $2 million of net proceeds in a private or public offering of equity
securities (a "Financing Event") the Company shall make an offer to acquire the
Notes, in accordance with the procedures set forth in Section 4.3(b), for the
face principal amount (plus accrued and unpaid interest).

                  4.3. Redemption Procedures. (a) Notice of any prepayment of
Notes pursuant to Section 4.1 shall be mailed at least 5 but not more than 20
days prior to the date fixed for redemption to, each Holder of Notes to be
redeemed, at such Holder's address as it appears in the Note Register. In order
to facilitate the redemption of Notes, the Board of Directors may fix a record
date for the determination of Notes to be redeemed which shall be a date at
least 2 days following the date of the notice.

                           (b) Promptly following a Financing Event (but in no
event more than 5 Business Days thereafter), the Company shall mail to each
Holder of Notes, at such Holder's address as it appears in the Note Register,
notice of such a Financing Event, which notice shall set forth each Holder's
right to require the Company to redeem any or all Notes held by it. The Company
shall thereafter, during a period of 10 days from the date of such notice redeem
any Notes, in whole or in part, at the option of the Holder, upon at least 5
days' written notice to the Company by such Holder specifying (i) the principal
amount of Notes to be redeemed and (ii) the redemption date.

                           (c) On the date of any redemption being made pursuant
to Section 4.1 or 4.2 which is specified in a notice given pursuant to this
Section 4.3 the Company shall wire transfer to such Holder in immediately
available funds the Redemption Price for the principal amount of Notes so
redeemed, together with an amount equal to all accrued and unpaid interest
thereon to the date of redemption.

                                        2
<PAGE>

         5. Restrictions on Transferability. The Note shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 5, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Note.
Holder, by acceptance of this Note, agrees to be bound by the provisions of this
Section 5.

                  5.1 Restrictive Legend. The Holder by accepting this Note
agrees that this Note may not be assigned or otherwise transferred unless and
until (i) the Company has received an opinion of counsel for the Holder that
such securities may be sold pursuant to an exemption from registration under the
Securities Act or (ii) a registration statement relating to such securities has
been filed by the Company and declared effective by the Commission.

         Except as otherwise provided in this Section 5, the Note shall be
stamped or otherwise imprinted with a legend in substantially the following
form:

                  "This Note and the securities represented hereby have not been
                  registered under the Securities Act of 1933, as amended, or
                  any state securities laws and may not be transferred in
                  violation of such Act, the rules and regulations thereunder or
                  any state securities laws or the provisions of this Note."

                  5.2 Notice of Proposed Transfers. Prior to any Transfer or
attempted Transfer of any Note, the Holder shall give five (5) days' prior
written notice (a "Transfer Notice") to the Company of Holder's intention to
effect such Transfer, describing the manner and circumstances of the proposed
Transfer, and obtain from counsel to Holder an opinion that the proposed
Transfer of such Note may be effected without registration under the Securities
Act or state securities laws. After the Company's receipt of the Transfer Notice
and opinion, such Holder shall thereupon be entitled to Transfer such Note, in
accordance with the terms of the Transfer Notice. Each Note issued upon such
Transfer shall bear the restrictive legends set forth in Section 5.1, unless in
the opinion of such counsel such legend is not required in order to ensure
compliance with the Securities Act.

                  5.3 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 5, the restrictions imposed by this Section upon the
transferability of the Notes, and the legend requirements of Section 5.1 shall
terminate as to any particular Note (i) when and so long as such security shall
have been effectively registered under the Securities Act and applicable state
securities laws and disposed of pursuant thereto or (ii) when the Company shall
have received an opinion of counsel that such shares may be transferred without
registration thereof under the Securities Act and applicable state securities
laws. Whenever the restrictions imposed by Section 5 shall terminate as to this
Note, as hereinabove provided, the Holder hereof shall be entitled to receive
from the Company upon written request of the Holder, at the expense of the
Company, a new Note bearing the following legend in place of the restrictive
legend set forth hereon:

                                        3
<PAGE>

                  "THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN NOTE
                  CONTAINED IN SECTION 5 HEREOF TERMINATED ON ___________, 20__,
                  AND ARE OF NO FURTHER FORCE AND EFFECT."

         All Notes issued upon registration of transfer, division or combination
of, or in substitution for, any Note or entitled to bear such legend shall have
a similar legend endorsed thereon. Whenever the restrictions imposed by this
Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate representing such Common
Stock not bearing the restrictive legends set forth in Section 5.1.

         6. Subordination. Any right of the Holder to payment of principal or
interest from the Company shall be subordinated to the claims and rights of the
holders of the Senior Debt ("Senior Debt Holders"). "Senior Debt" means all
Indebtedness of the Company to financial institutions or secured debt other than
the Notes, whether outstanding on the date of execution of this Note or
thereafter created, incurred or assumed, except (x) any such Indebtedness that
by the terms of the instrument or instruments by which such Indebtedness was
created, assumed or incurred expressly provides that it (i) is junior in right
of payment to the Notes or (ii) ranks pari passu in right of payment with the
Notes and (y) any amendments, modifications or supplements to, or any renewals,
extensions, deferrals, refinancing and refunding of, any of the foregoing. Any
cash payment of principal or interest to the Holder shall be collected, enforced
or received by the Holder as trustee for the Senior Debt Holders and paid over
to the Senior Debt Holders. The Holder agrees that in the event of any payment
of principal or interest by the Company to the Holder by reason of any
receivership, insolvency or bankruptcy proceeding, or proceeding for
reorganization or readjustment of the Company or its properties, or otherwise,
then, in any such event, the Senior Debt Holders shall be preferred in the
payment of their claims over the claim of the Holder to payment of principal or
interest against the Company or its properties, and the claims of the Senior
Debt Holders shall be first paid and satisfied in full before any payment or
distribution of any kind or character, whether in cash or property, shall be
made to the Holder. Provided, however, that this Section 8 shall not apply to
any payment of principal or interest made to the Holder while the Company is
solvent and not in default with respect to its Senior Debt.

         7. Replacement of Note Certificate. Upon receipt of evidence
satisfactory to the Company of the certificate loss, theft, destruction or
mutilation of the Note certificate and, in the case of any such loss, theft or
destruction, upon delivery of a bond of indemnity satisfactory to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of the
Note certificate, the Company will issue a new Note certificate, of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Note certificate.

         8. Covenants of the Company. So long as any of the Notes remain
outstanding, the Company shall:

                  (a)      Not pay any dividends in cash and/or property or
                           other assets of the Company in respect of its Common
                           Stock or otherwise; and

                                        4
<PAGE>

                  (b)      Not enter into a loan secured by the property and/or
                           assets of the Company or any of its subsidiaries with
                           (i) any director, officer or 5% stockholder of the
                           Company, (ii) any entity in which a director, officer
                           or 5% stockholder has an interest as an officer,
                           director, partner, beneficiary of a trust or is a 5%
                           or more equity holder of such entity, or (iii) any
                           parent, spouse, child or grandchild of an officer,
                           director or 5% stockholder of the Company upon terms
                           no less favorable to the Company than those which
                           could be obtained from an "arms-length" lender.

         9. Default. If any of the following events (herein called "Events of
Default") shall occur:

                  (a)      if the Company shall default in the payment or
                           prepayment of any part of the principal of any of the
                           Notes after the same shall become due and payable,
                           whether at maturity or at a date fixed for prepayment
                           or by acceleration or otherwise, and such default
                           shall continue for more than 30 days; or

                  (b)      if the Company shall default in the payment of any
                           installment of interest on any of the Notes for more
                           than 30 days after the same shall become due and
                           payable; or

                  (c)      if the Company shall make an assignment for the
                           benefit of creditors; or

                  (d)      if the Company shall dissolve; terminate its
                           existence; become insolvent on a balance sheet basis;
                           commence a voluntary case under the federal
                           bankruptcy laws or under any other federal or state
                           law relating to insolvency or debtor's relief; permit
                           the entry of a decree or order for relief against the
                           Company in an involuntary case under the federal
                           bankruptcy laws or under any other applicable federal
                           or state law relating to insolvency or debtor's
                           relief; permit the appointment or consent to the
                           appointment of a receiver, trustee, or custodian of
                           the Company or of any of the Company's property; make
                           an assignment for the benefit of creditors; or

                  (e)      if the Company shall default in the performance of or
                           compliance with any agreement, condition or term
                           contained in this Note or any of the other Notes and
                           such default shall not have been cured within 30 days
                           after such default; or

                  (f)      Any of the representations or warranties made by the
                           Company herein, in the Subscription Agreement, or in
                           any certificate or financial or other statements
                           heretofore or hereafter furnished by or on behalf of
                           the Company in connection with the execution and
                           delivery of this Note or the Subscription Agreement
                           shall be false or misleading in any material respect
                           at the time made;

then and in any such event the Holder of this Note shall have the option (unless
the default shall have theretofore been cured) by written notice to the Company
to declare the Note to be due and payable, whereupon the Note shall forthwith

                                        5
<PAGE>

mature and become due and payable, at the applicable prepayment price on the
date of such notice, without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived, anything contained in this
Note to the contrary notwithstanding. Upon the occurrence of an Event of
Default, the Company shall promptly notify the Holder of this Note in writing
setting out the nature of the default in reasonable detail.

         10. Remedies on Default.

                  10.1 Acceleration of Maturity. If any Event of Default shall
have occurred and be continuing, the Holder or Holders of at least 50.1% in
aggregate principal amount of outstanding Notes may, by notice to the Company,
declare the entire outstanding principal balance of the Notes, premium, if any,
and all accrued and unpaid interest thereon, to be due and payable immediately,
and upon any such declaration the entire outstanding principal balance of the
Notes, premium, if any, and said accrued and unpaid interest shall become and be
immediately due and payable, without presentment, demand, protest or other
notice whatsoever, all of which are hereby expressly waived, anything in the
Notes (except as set forth in Section 11 hereof) to the contrary
notwithstanding.

                  10.2 Conduct no Waiver, Collection Expenses. No course of
dealing on the part of any Holder, nor any delay or failure on the part of any
Holder to exercise any of its rights, shall operate as a waiver of such right or
otherwise prejudice such Holder's rights, powers and remedies. If the Company
fails to pay, when due, the principal or the premium, if any, or the interest on
any Note, the Company will pay to each Holder, to the extent permitted by law,
on demand, all costs and expenses incurred by such Holder in the collection of
any amount due in respect of any Note hereunder, including reasonable legal fees
incurred by such Holder in enforcing its rights hereunder.

                  10.3 Annulment of Acceleration. If a declaration is made in
accordance with Section 10.1, then and in-every such case, the Holder or Holders
of at least 50.1% in aggregate principal amount of outstanding Notes may, by an
instrument delivered to the Company, annul such declaration and the consequences
thereof, provided that at the time such declaration is annulled:

                           (i) no judgment or decree has been entered for the
         payment of any monies due on the Notes or pursuant to this Agreement;

                           (ii) all arrears of interest on the Notes and all
         other sums payable on the Notes and pursuant to this Agreement (except
         any principal of or interest or premium on the Notes which has become
         due and payable by reason of such declaration) shall have been duly
         paid; and

                           (iii) every other Event of Default shall have been
         duly waived or otherwise made good or cured.

                                        6
<PAGE>

         11. Amendments. With the consent of the Holders of more than 50.1% in
aggregate principal amount of the Notes at the time outstanding, the Company,
when authorized by a resolution of its Board of Directors, may enter into a
supplementary agreement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Note or of any
supplemental agreement or modifying in any manner the rights and obligations of
the holders of Notes or Common Stock issued upon conversion of the Notes, and of
the Company, provided, however, that no such supplemental agreement shall (a)
extend the fixed maturity of any Note, or reduce the principal amount thereof,
or reduce the rate or extend the time of payment of interest thereon, or alter
or impair the right to convert the same into Common Stock at the rates and upon
the terms provided in this Note, without the consent of the Holder of each of
the Notes so affected, or (b) reduce the aforesaid percentage of Notes, the
Holders of which are required to consent to any supplemental agreement, without
the consent of the Holders of all Notes then outstanding.

         12. Changes, Waivers. etc. Neither this Note nor any provisions hereof
may be changed, waived, discharged or terminated orally, but only by a statement
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, except to the extent provided in Section 11
of this Note.

         13. Entire Agreement. This Note embodies the entire agreement and
understanding between the Holder and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof.

         14. Governing Law, Jurisdiction, etc.

                  (a)      GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
                           CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
                           RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
                           OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW
                           PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
                           REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
                           OTHER THAN SUCH STATE.

                  (b)      Submission to Jurisdiction. Each of the parties
                           hereto hereby irrevocably and unconditionally
                           consents to submit to the exclusive jurisdiction of
                           the courts of the State of New York and of the United
                           States of America, in each case located in the County
                           of New York, for any action, proceeding or
                           investigation in any court or before any governmental
                           authority ("Litigation") arising out of or relating
                           to the Note and the transactions contemplated thereby
                           (and agrees not to commence any Litigation relating
                           thereto except in such courts), and further agrees
                           that service of any process, summons, notice or
                           document by U.S. registered mail to its respective
                           address set forth in the Letter Subscription
                           Agreement shall be effective service of process for

                                        7
<PAGE>

                           any Litigation brought against it in any such court.
                           Each of the parties hereto hereby irrevocably and
                           unconditionally waives any objection to the laying of
                           venue of any Litigation arising out of the Note or
                           the transactions contemplated hereby in the courts of
                           the State of New York or the United State of America,
                           in each case located in the County of New York, and
                           hereby further irrevocably and unconditionally waives
                           and agrees not to plead or claim in any such court
                           that any such Litigation brought in any such court
                           has been brought in an inconvenient forum.

                  (c)      Service of Process. Nothing herein shall affect the
                           right of any holder of a Note to serve process in any
                           other manner permitted by law or to commence legal
                           proceedings or otherwise proceed against the Company
                           in any other jurisdiction.

                  (d)      WAIVER OF JURY TRIAL. THE COMPANY HEREBY WAIVES ANY
                           RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
                           ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
                           INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
                           WITH ANY OF THE NOTES.

                  (e)      In the event of any dispute, question, controversy or
                           claim arising among the parties hereto which shall
                           arise out of or in connection with this Note, the
                           parties shall keep the proceeding related to such
                           controversy in strict confidence and shall not
                           disclose the nature of said dispute, the status of
                           the proceeding or any testimony, documents or
                           information obtained or exchanged in the course of
                           said proceeding without the express written consent
                           of all parties to such dispute.

                                                        CDKNET.COM, INC.

[Corporate Seal]

                                                        By __________________
                                                           Oleg Logvinov, CEO

Number:
         -------------------------------

Name of Holder:
                ------------------------

Principal:  $
            ----------------------------

Original Issue Date:
                     -------------------

                                        8

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