Document:

exv10w31

 

Exhibit 10.31

765 SYCAMORE DRIVE

MILPITAS, CALIFORNIA

STANDARD SINGLE TENANT NNN LEASE

W I T N E S S E T H

This lease (“Lease”) is entered into by and between Limar Realty Corp. #4, a California
corporation (“LANDLORD”) and LSI Logic Corporation, a Delaware corporation (“Tenant”). For and in
consideration of the payment of rents and the performance of the covenants herein set forth by
Tenant, Landlord does lease to Tenant and Tenant accepts the Premises described below subject to
the agreements herein contained.

	 	 	 	 	 	 	 
	1.	 	BASIC LEASE TERMS
	 
	 	 	 	 	 	 
	

	 	a.
	 	DATE OF LEASE:
	 	December 31,2003
	 
	 	 	 	 	 	 
	

	 	b.
	 	TENANT:
	 	LSI Logic Corporation
	 
	 	 	 	 	 	 
	

	 	 	 	Address (of the Premises):
	 	765 Sycamore Drive

Milpitas, California 95035
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Address (for Notices): 
LSI
Logic Corporation 
1621
Barber Lane, M/S D-106

Milpitas, CA 95035-7458

Attn: General Counsel
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	With a required copy to:
	

	 	 	 	 	 	LSI Logic Corporation 
1621
Barber Lane, M/S D-129

Milpitas, CA 95035-7458

Attn: Corporate Real Estate
	 
	 	 	 	 	 	 
	

	 	c.
	 	LANDLORD:

Address (for Notices):
	 	Limar Realty Corp. #4

1730 S. El Camino Real
	

	 	 	 	 	 	Suite 400
	

	 	 	 	 	 	San Mateo, California 94402

Attn: Thomas A. Numainville
	 
	 	 	d.	 	TENANT’S USE OF PREMISES: 	 	General Office and Engineering (dry) Labs
	 
	 	 	 	 	 	 
	

	 	e.
	 	PREMISES AREA:
	 	67,760 Rentable Square Feet
	 
	 	 	 	 	 	 
	

	 	f.
	 	INSURING PARTY:
	 	Landlord is the “Insuring Party” unless otherwise stated herein.
	 
	 	 	 	 	 	 
	

	 	g.
	 	TERM (inclusive):
	 	Commencement Date: January 1, 2004 (“Commencement Date”)
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Expiration Date: December 31, 2010 (“Expiration
Date”)
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Number of Months: 84
	 
	 	 	 	 	 	 
	

	 	h.
	 	INITIAL BASE RENT:
	 	Twenty-Nine Thousand One Hundred Thirty-Six and 80/100
Dollars ($29,136.80) per month.
	 
	 	 	 	 	 	 
	

	 	i.
	 	BASE RENT ADJUSTMENT	 	 
	 
	 	 	 	 	 	 
	

	 	 
	 	Step Increase.
The step adjustment provisions  of ¶4.b. apply for the periods shown below:

	 	 	 	 	 
	Periods (inclusive)	 	Monthly Base Rent	 
	1/1/06 - 12/31/06
	 	$	45,399.20	 
	 
	 	 	 	 
	1/1/07 - 12/31/07
	 	 	46,761.18	 
	 
	 	 	 	 
	1/1/08 - 12/31/08
	 	 	48,164.02	 
	 
	 	 	 	 
	1/1/09 - 12/31/09
	 	 	49,608.94	 
	 
	 	 	 	 
	1/1/10 - 12/31/10
	 	 	51,097.21	 

	 	 	 	 	 	 	 
	 	 	j.	 	TOTAL TERM BASE RENT: 	$3,591,649.80
	 
	 	 	 	 	 	 
	

	 	k.
	 	PREPAID BASE RENT:
	None

	 
	 	 	 	 	 	 
	

	 	I.
	 	SECURITY DEPOSIT:
	$44,958.97

-1-

 

	 	 	 	 	 	 	 
	 	 	m.	 	BROKER(S): Julien J. Studley, Inc. (Tenant)

	 
	 	 	 	 	 	 
	 	 	n.	 	EXHIBITS: Exhibits lettered “A” through “C” are attached hereto and made a part
hereof.

	2.  	PREMISES

	 	a.  	Premises. Landlord leases to Tenant the premises
described in ¶1. and in
Exhibit A (the
“Premises”). The term “Premises” includes all the land and improvements (including
the buildings,
landscaping, parking lot, etc.) as described on Exhibit A. Subject to any
additional work Landlord
has agreed herein to do, Tenant hereby accepts the Premises in their condition
existing as of the
date of the execution hereof, subject to all applicable zoning, municipal, county and
state laws,
ordinances and regulations governing and regulating the use of the Premises, and
accepts this
Lease subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto.
Tenant acknowledges that neither Landlord nor Landlord’s Broker has made any
representation or
warranty as to the suitability of the Premises for the conduct of Tenant’s business.
Tenant agrees
with the square footage specified for the Premises in ¶1. and will not hereafter
challenge such
determination and agreement. The rental payable by Tenant pursuant to this Lease is
not subject
to revision in the event of any discrepancy in the rentable square footage for the
Premises.
	 
	 	b.  	Acceptance; Quiet Enjoyment. Landlord represents that it is the fee simple
owner of the
Premises and has full right and authority to make this Lease. Landlord hereby
leases the
Premises to Tenant and Tenant hereby accepts the same from Landlord, in accordance
with the
provisions of this Lease. Landlord covenants that Tenant shall have peaceful and
quiet enjoyment
of the Premises during the Term (as defined below) of this Lease.

	3.  	Term. The term (“Term”) of this Lease is for the period that commences at 12:01 a.m. on
the
Commencement Date and expires at 11:59 p.m. on the Expiration Date. If Landlord, for any
reason,
cannot deliver possession of the Premises to Tenant on or before the Commencement Date, this
Lease
shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting from
such delay. In that event, however, there shall be an abatement of Rent (as defined below)
covering the
period between the Commencement Date and the date when Landlord delivers possession to
Tenant, and
all other terms and conditions of this Lease shall remain in full force and effect. If a
delay in possession is
caused by Tenant’s failure to perform any obligation in accordance with this Lease, the Term
shall
commence as of the Commencement Date, and there shall be no reduction of Rent between the
Commencement Date and the time Tenant takes possession.

	4.  	RENT

	 	a.  	Base Rent. Tenant shall pay Landlord in lawful money of the United States,
without notice,
demand, offset or deduction, rent in the amount(s) set forth in ¶1. which shall be
payable in
advance on the first day of each and every calendar month (“Base Rent”). Unless
otherwise
specified in writing by Landlord, all installments of Base Rent shall be payable at
Limar Realty
Corp. #4, Department #44294, P.O. Box 44000, San Francisco, CA 94144-4294. Base
Rent for
any partial month at the beginning or end of this Lease will be prorated in
accordance with the
number of days in the subject month. Tenant shall be entitled, at its option, to a
refund or credit of
the difference between the Initial Base Rent specified in ¶1h., paid monthly, and
$61,627.72, paid
monthly, from the date this Lease is signed by both Landlord and Tenant retroactive
to January 1,
2004.
	 
	 	   	For purposes of Section 467 of the Internal Revenue Code, the parties to this Lease
hereby agree to allocate the stated Base Rent provided herein to the periods which
correspond to the actual Base Rent payments as provided under the terms and
conditions of this Agreement.
	 
	 	b.  	Step Increase. The Base Rent shall be increased periodically to the amounts and
at the times set
forth in ¶1.i.
	 
	 	c.  	Rent Without Offset and Late Charge. All Rent shall be paid without prior
demand or notice and
without any deduction or offset whatsoever. All Rent shall be paid in lawful currency
of the United
States of America. Tenant acknowledges that late payment by Tenant to Landlord of any
Rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount of
such cost being
extremely difficult and impracticable to ascertain. Such costs include, without
limitation, processing
and accounting charges and late charges that may be imposed on Landlord by the terms
of any
encumbrance or note secured by the Premises. Therefore, if any Rent is not received
by Landlord
within five (5) days of its due date, Tenant shall pay to Landlord a late charge
equal to six percent
(6%) of such overdue payment. Landlord and Tenant hereby agree that such late
charge
represents a fair and reasonable estimate of the costs that Landlord will incur by
reason of any
such late payment and that the late charge is in addition to any and all remedies
available to the
Landlord and that the assessment and/or collection of the late charge shall not be
deemed a
waiver of any other default. Additionally, all such delinquent Rent or other sums,
plus this late
charge, shall bear interest from the due date thereof at the lesser
of ten percent
(10%) per annum
or the maximum legal interest rate permitted by law. Any payments of any kind
returned for
insufficient funds will be subject to an additional handling charge of $25.00, and if
a check is
returned for non-sufficient funds more than twice during the Term of the Lease,
Landlord may
require Tenant to pay all future payments of Rent or other sums due by cashier’s
check or by wire
transfer.

-2-

 

	 	d.  	Rent. The term “Rent” as used in this Lease shall refer to Base Rent, Real
Property Taxes, Operating Expenses, Security Deposit(s), Insurance Costs, repairs and
maintenance costs, utilities, late charges and other similar charges payable by Tenant
pursuant to this Lease either directly to Landlord or otherwise.

	5  	OPERATING EXPENSES

	 	a.  	Payment by Tenant. During the Term of this Lease Tenant shall pay to Landlord, as additional
Rent, on a monthly basis one hundred percent (100%) of the Operating Expenses.
	 
	 	b.  	Operating Expenses. The term “Operating Expenses” shall mean all expenses, costs and
disbursements (not specifically excluded from the definition of Operating Expenses below) of
every
kind and nature which Landlord shall pay or become obligated to pay because of or in
connection
with the ownership, maintenance, repair and operation of the Premises. Operating Expenses
shall
include, but not be limited to, the following:

	 	1)  	Wages and salaries of all employees engaged in the operation, maintenance and
security
of the Premises, including taxes, insurance and benefits relating thereto; and the
rental
cost and overhead of any office and storage space used to provide such services.
	 
	 	2)  	All supplies, materials and labor used in the operation, repair or maintenance
of the Premises.
	 
	 	3)  	Cost of all utilities, including surcharges, for the Premises, including the
cost of water,
power and lighting which are not separately billed to and paid for by Tenant.
	 
	 	4)  	Cost of all maintenance and service agreements for the Premises and the
equipment
thereon, including but not limited to, security services, exterior window cleaning,
janitorial
service, engineers, gardeners and trash removal services.
	 
	 	5)  	All Insurance Costs, as such term is defined in ¶16.
	 
	 	6)  	Cost of all repairs and general maintenance (excluding repairs and general
maintenance
paid by proceeds of insurance or by Tenant or other third parties).
	 
	 	7)  	A reasonable management fee for the property management of the Premises.
	 
	 	8)  	The costs of any additional services not provided to the Premises at the
Commencement
Date but thereafter provided by Landlord in its management of the Premises.
	 
	 	9)  	The cost of any capital improvements made to the Premises after the date of
this Lease,
with such cost thereof to be amortized over the useful life of the improvements as
reasonably determined by Landlord. Other than costs associated with
repairs,
replacements or refurbishments in the normal course and necessary for the normal
operation of the Premises, Landlord shall not, without Tenant’s consent, which
consent
shall not be unreasonably withheld, conditioned or delayed, materially alter the
physical
features of the Premises in a manner which materially affects Tenant’s use, or
construct
additional square footage, the cost for either of which would be amortized over its
useful
life and passed through to Tenant as part of Operating Expenses. A roof re-coating
shall
be treated as an Operating Expense, while a roof replacement would be an amortizable
capital expenditure.
	 
	 	10)  	Real Property Taxes as that term is defined in ¶11 .c.

	 
	 	11)  	Assessments, dues and other amounts payable pursuant to the CC&R’s described in ¶7.C.

	 	c.  	Operating Expenses shall not include:

	 	1)  	Costs paid for directly by Tenant or other tenants;
	 
	 	2)  	Costs incurred in connection with the financing, sale or acquisition of the
Premises or any
portion thereof;
	 
	 	3)  	Costs incurred in leasing or procuring tenants (including without
limitation, lease
commissions, advertising expenses, attorneys’ fees and expenses of renovating space
for tenants);
	 
	 	4)  	Executive salaries of off-site personnel employed by Landlord except for the
charge (or pro
rata share) of the property manager of the Premises;
	 
	 	5)  	Subject to the provisions of ¶5.b.9) above, depreciation on the Building or
other
improvements on the Premises;
	 
	 	6)  	Legal expenses for disputes with Tenant and any other professional fees of
attorneys,
auditors or consultants not incurred in connection with the normal maintenance and
operation of the Premises;

-3-

 

	 	7)  	Costs incurred that are reimbursed by Tenant, or third parties, including insurers;
	 
	 	8)  	Expenses for repair or replacement covered by warranties, and any costs due to
casualty
that are covered by insurance carried by Landlord;
	 
	 	9)  	Rentals and other payments by Landlord under any ground lease or other lease
underlying
the Lease, and interest, principal, points and other fees on debt or amortization of
any debt
secured in whole or part by all or any portion of the Premises;
	 
	 	10)  	Repairs or replacements caused by Landlord’s gross negligence or the gross
negligence
of Landlord’s employees or agents;
	 
	 	11)  	Net income, franchise, capital stock, estate or inheritance taxes or taxes which
are the
personal obligation of Landlord;
	 
	 	12)  	Landlord’s charitable or political contributions;
	 
	 	13)  	Payments to subsidiaries and affiliates of Landlord for services to the Premises
for
supplies or other materials to the extent that the cost of such services, supplies or
materials exceed the cost which would have been paid had the services, supplies or
materials been provided by unaffiliated parties on a competitive basis (provided,
however,
any fee for management services paid to an affiliate of Landlord shall be in the
amount set
forth in ¶5.b.7);
	 
	 	14)  	Payments to subsidiaries and affiliates of Landlord for services to the Project
for supplies
or other materials to the extent that the cost of such services, supplies or
materials exceed
the cost which would have been paid had the services, supplies or materials been
provided by unaffiliated parties on a competitive basis (provided, however, any fee
for
management services paid to an affiliate of Landlord shall be in the amount set forth
in
¶4.d.1)b);
	 
	 	15)  	Any compensation paid to clerks, attendants or other persons in commercial
concessions
operated by Landlord;
	 
	 	16)  	Advertising and promotional expenditures;
	 
	 	17)  	Costs of repairs and other work occasioned by fire, windstorm or other casualty
of an
insurable nature to the extent covered by insurance; or
	 
	 	18)  	Costs for sculpture, paintings or other objects of art other than for normal and
customary
lobby furnishings (nor insurance thereon or extraordinary security in connection
therewith).

	 	d.  	Extraordinary Services. Tenant shall pay within thirty (30) days of receipt of an invoice
from Landlord the cost of additional or extraordinary services provided to Tenant at
Tenant’s request and not paid or payable by Tenant pursuant to other provisions of this
Lease.

	 
	 	e.  	Impound. Landlord reserves the right, at Landlord’s option from time to time during the
calendar
year, to estimate the annual cost of Operating Expenses incurred by
Landlord (“Projected
Operating Expenses”) and to require Tenant to pay Tenant’s Share thereof in advance. Except
as provided below in this ¶5.e., Tenant shall pay to Landlord, monthly in advance as
additional Rent, one-twelfth (1/12) of Tenant’s Share of the Projected Operating Expenses.
The failure of Landlord to timely furnish to Tenant a schedule of the Projected Operating
Expenses for any Calendar Year shall not preclude Landlord from enforcing its rights to
collect any Projected Operating Expenses under this ¶5. Tenant’s share is 100% of Operating
Expenses.
	 
	 	   	When Landlord provides Tenant with a revised Projected Operating Expense Budget during any
calendar year, the following payment adjustments will be due Landlord: (1) Effective the
first of the month following notification of the new Projected Operating Expense Budget,
Tenant shall pay monthly in advance, one-twelfth (1/12) of Tenant’s Share of the new
Projected Operating Expenses, and 2) if the revised Projected Operating Expense Budget
exceeds the prior Budget, Landlord shall invoice to Tenant a retroactive billing and Tenant
shall pay said billing within thirty (30) days of receipt of same. The retroactive billing
will reflect the additional amount payable by the Tenant for Tenant’s Share of the new
Operating Expense Budget for the calendar year to date. For example, assume an annual
existing Operating Expense Budget of $144,000 for a tenant with a share of 50% and where such
tenant was initially making $6,000 a month of estimated payments. If the revised Operating
Expense Budget increases by $12,000 to $156,000 and the tenant is notified in June, then the
amounts due per 1) & 2) above are computed as follows:

	 	 	 	 	 
	1) New Monthly Payment (Effective July 1):	 	 	 	 
	Revised Annual Operating Expense Budget
	 	$	156,000	 
	 
	 	 	 
	Tenant’s Share @ 50%
	 	$	78,000	 
	 
	 	 	 
	New Payment @ 1/12 Monthly
	 	$	6,500	 
	 
	 	 	 

	 	 	 	 	 
	2) Retroactive Billing:	 	 	 	 
	Revised Annual Operating Expense Budget
	 	$	156,000	 
	 
	 	 	 
	Tenant’s Share @ 50% for 6 (of 12) months
	 	$	39,000	 
	Less payments, to date (6 @ $6,000)
	 	 	(36,000	)
	 
	 	 	 
	Retroactive Balance Due
	 	$	3.000	 
	 
	 	 	 

-4-

 

	 	   	As an alternative to a retroactive billing, Landlord may, at Landlord’s option,
spread the increase over the remaining months in the current calendar year in equal
monthly payments.

	 	f.  	Adjustment.

	 	1)  	Accounting. Within one hundred eighty (180) days (or as soon
thereafter as possible)
after the close of each calendar year or portion thereof of occupancy,
Landlord shall
provide Tenant a statement of such year’s actual Operating Expenses snowing
the actual
Operating Expenses compared to the Projected Operating Expenses. If the
actual
Operating Expenses are more than the Projected Operating Expenses then Tenant
shall
pay Landlord, within thirty (30) days of receipt of a bill therefor, the
difference. If the actual
Operating Expenses are less than the Projected Operating Expenses, then Tenant
shall
receive a credit against future Operating Expenses payments equal to the
difference;
provided, that in the case of an overpayment for the final lease year of the
Term, Landlord
shall credit the difference against any sums due from Tenant to Landlord in
accordance
with the terms of this Lease; and if no sums are due and unpaid, shall
promptly refund the
amount to Tenant.
	 
	 	2)  	Tenant’s Right to Audit. Within ninety (90) days after receipt
of Landlord’s statement
setting forth actual Operating Expenses (the
“Statement”), Tenant shall have
the right to
audit at Landlord’s local offices, at Tenant’s expense, Landlord’s accounts
and records
relating to Operating Expenses. Such audit shall be conducted by a certified
public
accountant approved by Landlord, which approval shall not be unreasonably
withheld, or
by Tenant’s independent lease administration consultants who shall not be
compensated
on a contingency or percentage basis. If such audit reveals that Landlord has
overcharged
Tenant, the amount overcharged shall be paid to Tenant within thirty (30) days
after the
audit is concluded. If such audit reveals that Landlord has undercharged
Tenant, the
amount of undercharge shall be paid by Tenant to Landlord within 30 days after
the audit is
conducted. In addition, if the Operating Expenses included in the Statement
exceed the
actual Operating Expenses which should have been charged to Tenant by more
than five
percent (5%), the cost of the audit shall be paid by Landlord. Tenant may not
withhold any
payment due as set forth in this Lease pending completion of the audit.
	 
	 	3)  	Proration. Tenant’s liability to pay Operating Expenses shall be
prorated on the basis of a
365 (or 366, as the case may be) day year to account for any fractional
portion of a year
included at the commencement or expiration of the Term of this Lease.
	 
	 	4)  	Survival. Landlord and Tenant’s obligations to pay for or credit
any increase or decrease
in payments pursuant to this ¶5. shall survive this Lease.

	 	g.  	Failure to Pay. Except as otherwise provided herein, failure of Tenant to pay
any of the charges
required to be paid under this ¶5. shall constitute a material default and breach of
this Lease and
Landlord’s remedies shall be as specified in ¶21.

	6.  	SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall deposit a security deposit
(“Security
Deposit”) in the amount set forth in ¶1. with Landlord. If Tenant is in default beyond
applicable cure
periods, Landlord can (but without any requirement to do so) use the Security Deposit or any
portion of it to
cure the default or to compensate Landlord for any damages sustained by Landlord resulting
from Tenant’s
default. Upon demand, Tenant shall immediately pay to Landlord a sum equal to the portion of
the Security
Deposit expended or applied by Landlord to restore the Security Deposit to its full amount.
In no event will
Tenant have the right to apply any part of the Security Deposit to any Rent due under this
Lease.
Landlord’s obligations with respect to the Security Deposit are those of a debtor and not a
trustee, and
Landlord can commingle the Security Deposit with Landlord’s general funds. Landlord shall
not be
required to pay Tenant interest on the Security Deposit. Tenant hereby waives the provisions
of California
Civil Code Section 1950.7, and all other provisions of law now in force or which may become
in force after
the date of execution of this Lease that provide that Landlord may claim from its security
deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair damages caused
by the
tenant, or to clean the premises or otherwise limit the application of a security deposit.
With respect to the
Security Deposit, Landlord and Tenant agree that Landlord may claim and employ the Security
Deposit in
connection with any and all sums reasonably necessary to compensate Landlord for any
foreseeable or
unforeseeable loss or damage caused by or resulting from any default by Tenant pursuant to
this Lease as
well as any foreseeable or unforeseeable loss or damage resulting from any act or omission by
Tenant or
Tenant’s officers, agents, employees, independent contractors, or invitees. If Tenant is not
in default at the
expiration or termination of this Lease and has fully complied with the provisions of ¶13.d.6)
and ¶26.,
Landlord shall return the Security Deposit to Tenant.

7. USE OF PREMISES

	 	a.  	Tenant’s Use. Tenant shall use the Premises solely for the purposes stated in
¶1. and for no other purposes without obtaining the prior written consent of Landlord.
Tenant acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises or with respect to the
suitability of the Premises to the conduct of Tenant’s business, nor has Landlord
agreed to undertake any modification, alteration or improvement to the Premises,
except as provided in writing in this Lease. With reasonable notice to Tenant,
Landlord may from time to time, at its sole discretion, make such modifications,
alterations, deletions or

-5-

 

	 	   	improvements to the Premises as Landlord may reasonably deem necessary or desirable,
without compensation to Tenant. Tenant shall promptly comply with all laws, statutes,
ordinances, orders and governmental regulations now or hereafter existing affecting the
Premises. Tenant shall not do or permit anything to be done in or about the Premises or
bring or keep anything in the Premises that will in any way increase the premiums paid by
Landlord on its insurance related to the Premises. Tenant will not perform any act or carry
on any practices that may injure the Premises. Tenant shall not use the Premises for
sleeping, washing clothes or the preparation, manufacture or mixing of anything that emits
any objectionable odor, noises, vibrations or lights onto such other tenants. If sound
insulation is required to muffle noise produced by Tenant on the Premises, Tenant at its
own cost shall provide all necessary insulation. Tenant shall not do anything on the
Premises which will overload any existing parking or service to the Premises. Pets and/or
animals of any type (other than seeing eye dogs) shall not be kept on the Premises. Tenant
covenants that it will not interfere with other tenants’ quiet enjoyment of their premises.

	 	b.  	Rules and Regulations. Tenant shall comply with and use the Premises in accordance with the
Rules and Regulations attached hereto as Exhibit B and to any reasonable
modifications to such
Rules and Regulations as Landlord may adopt from time to time, provided however that if any
rule
or regulation is in conflict with any term, covenant or condition of this Lease, this Lease
shall
prevail. In addition, no such rule or regulation, or any subsequent amendment thereto
adopted by
Landlord, shall in any material way alter, reduce or adversely affect any of Tenant’s rights
or
materially enlarge Tenant’s obligations under this Lease.
	 
	 	c.  	CC&R’s. Tenant agrees that this Lease is subject and subordinate to the Covenants, Conditions
and Restrictions, a copy of which is attached hereto as Exhibit C. as they may be
amended from
time to time (“CC&R’s”), and further agrees that the CC&R’s are an integral part of this
Lease.
Throughout the Term or any extension thereof, notwithstanding any other provision hereof,
Tenant
shall faithfully and timely assume and perform all obligations of Landlord and/or Tenant
under the
CC&R’s and any modifications or amendments thereto, including the payment of any periodic or
special dues or assessments against the Premises. Such dues and assessments shall be
included within the definition of Operating Expenses pursuant to ¶5.b.11), and Tenant shall
pay
such amounts as further set forth in ¶5. Tenant shall hold Landlord, its subsidiaries,
shareholders,
directors, officers, agents and employees harmless and indemnify Landlord, its subsidiaries,
shareholders, directors, officers, agents and employees against any loss, expense and
damage,
including attorneys’ fees and costs, arising out of the failure of Tenant to perform or
comply with
the CC&R’s.

8.    EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE

	 	a.  	Emissions. Tenant shall not:

	 	1)  	Knowingly permit any vehicle on the Premises to emit exhaust which is in
violation of any
governmental law, rule, regulation or requirement;
	 
	 	2)  	Discharge, emit or permit to be discharged or emitted, any liquid, solid or
gaseous matter,
or any combination thereof, into the atmosphere or on, into or under the Premises,
any
building or other improvements of which the Premises are a part, or the ground or
any
body of water which matter, as reasonably determined by Landlord or any governmental
entity to be in violation of law or regulation, and does or may pollute or
contaminate the
same, or is, or may become, radioactive or does, or may, adversely affect the (a)
health or
safety of persons, wherever located, whether on the Premises or anywhere else, (b)
condition, use or enjoyment of the Premises or any other real or personal property,
whether on the Premises or anywhere else, or (c) Premises or any of the improvements
thereto including buildings, foundations, pipes, utility lines, landscaping or
parking areas;
	 
	 	3)  	Produce, or permit to be produced, any intense glare, light or heat in
violation of law or
regulation;
	 
	 	4)  	Create, or permit to be created, any sound pressure level which will interfere
with the quiet
enjoyment of any real property outside the Premises, or which will create a nuisance
or
violate any governmental law, rule, regulation or requirement;
	 
	 	5)  	Create, or permit to be created, any vibration that is discernible outside the Premises;
or
	 
	 	6)  	Transmit, receive or permit to be transmitted or received from or to the
Premises, any
electromagnetic, microwave or other radiation which is or may be harmful or
hazardous to
any person or property in, or about the Premises, or anywhere else.

	 	b.  	Storage and Use.

	 	1)  	Storage. Subject to the uses permitted and prohibited to Tenant under this
Lease, Tenant shall store in appropriate leak proof containers all solid, liquid or
gaseous matter, or any combination thereof, which matter, if discharged or emitted
into the atmosphere, the ground or any body of water would be in violation of law or
regulation, and does or may (a) pollute or contaminate the same, or (b) adversely
affect the (i) health or safety of persons, whether on the Premises or anywhere else,
(ii) condition, use or enjoyment of the Premises or any real or personal property,
whether on the Premises or anywhere else, or (iii) Premises.

-6-

 

	 	2)  	Use. In addition, without Landlord’s prior written consent, Tenant shall not
use, store or
permit to remain on the Premises any solid, liquid or gaseous matter which is, or
may
become dangerously radioactive. If Landlord does give its consent, Tenant shall
store the
materials in such a manner that no radioactivity will be detectable outside a
designated
storage area and Tenant shall use the materials in such a manner that (a) no real or
personal property outside the designated storage area shall become contaminated
thereby
and (b) there are and shall be no adverse effects on the (i) health or safety of
persons,
whether on the Premises or anywhere else, (ii) condition, use or enjoyment of the
Premises or any real or personal property thereon or therein, or (iii) Premises or
any of the
improvements thereto or thereon.
	 
	 	3)  	Hazardous Materials. Subject to the uses permitted and prohibited to Tenant
under this
Lease, Tenant shall store, use, employ, transport and otherwise deal with all
Hazardous
Materials (as defined below) employed on or about the Premises in accordance with
all
federal, state, or local law, ordinances, rules or regulations applicable to
Hazardous
Materials in connection with or respect to the Premises.

	 	c.  	Disposal of Waste.

	 	1)  	Refuse Disposal. Tenant shall not keep any trash, garbage, waste or other
refuse on the
Premises except in sanitary containers and shall regularly and frequently remove
same
from the Premises. Tenant shall keep all incinerators, containers or other equipment
used
for storage or disposal of such materials in a clean and sanitary condition.
	 
	 	2)  	Sewage Disposal. Tenant shall properly dispose of all sanitary sewage and shall
not use
the sewage disposal system (a) for the disposal of anything except sanitary sewage
or (b)
amounts in excess of the lesser of: (i) that reasonably contemplated by the uses
permitted
under this Lease or (ii) that permitted by any governmental entity. Tenant shall
keep the
sewage disposal system free of all obstructions and in good operating condition.
	 
	 	3)  	Disposal of Other Waste. Tenant shall properly dispose of all other waste or
other matter
delivered to, stored upon, located upon or within, used on, or removed from, the
Premises
in such a manner that it does not, and will not, violate any law or regulation and
adversely
affect the (a) health or safety of persons, wherever located, whether on the
Premises or
elsewhere, (b) condition, use or enjoyment of the Premises or any other real or
personal
property, wherever located, whether on the Premises or anywhere else, or (c)
Premises or
any of the improvements thereto or thereon, foundations, pipes, utility lines,
landscaping or
parking areas.

	 	d.  	Information. Tenant or Landlord, as the case may be, shall each provide the other with any
and
all information regarding Hazardous Materials in the Premises, including copies of all
filings and
reports to governmental entities at the time they are originated, and any other information
reasonably requested by the other party. In the event of any accident, spill or other
incident
involving Hazardous Materials, Tenant or Landlord, as the case may be, shall immediately
report
the same to the other and supply the other with all information and reports with respect to
the
same. All information described herein shall be provided regardless of any claim by either
party
that it is confidential or privileged, provided that the provision of these documents will
not, in any
way, alter any aspect of the document’s confidentiality or privileged nature.
	 
	 	e.  	Compliance with Law. Notwithstanding any other provision in this Lease to the contrary,
Tenant
shall comply with all laws, statutes, ordinances, regulations, rules and other governmental
requirements now or hereafter existing in complying with its obligations under this Lease,
and in
particular, relating to the storage, use and disposal of Hazardous Materials.
	 
	 	f.  	Indemnity. Tenant hereby agrees to indemnify, defend and hold Landlord, its agents,
employees,
lenders, shareholders, directors, representatives, successors and assigns harmless from and
against any and all actions, causes of action, losses, damages, costs, claims, expenses,
penalties,
obligations or liabilities of any kind whatsoever (including but not limited to reasonable
attorneys’
fees) arising out of or relating to any Hazardous Materials employed, used, transported
across, or
otherwise dealt with by Tenant (or invitees, or persons or entities under the control of
Tenant) in
connection with or with respect to the Premises. Notwithstanding any of the provisions of
this
Lease, the indemnity obligation of Tenant pursuant to this ¶8.f. shall survive the
termination of this
Lease and shall relate to any occurrence as described in this ¶8.f. occurring in connection
with this
Lease. Landlord hereby agrees to indemnify, defend and hold Tenant harmless from and
against
any and all actions, causes of action, losses, damages, costs, claims, expenses, penalties,
obligations or liabilities of any kind whatsoever (including reasonable attorneys’ fees)
arising out of
or relating to (i) Hazardous Materials employed, used, transported to the Premises, for
which the
Premises are a part thereof, by Landlord, its agents or employees or (ii) Hazardous
Materials
existing on, in or under the Premises as of the date of this Lease. For purposes of this
Lease the
term “Hazardous Materials” shall mean any hazardous, toxic or dangerous waste, substance or
material, pollutant or contaminant, as defined for purposes of the Comprehensive
Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as
amended, or the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), as
amended, or any other federal, state, or local law, ordinance, rule or regulation applicable
to the
Premises, or any substance which is toxic, explosive, corrosive, flammable, infectious,
radioactive,
carcinogenic, mutagenic, or otherwise hazardous, or any substance which contains gasoline,

-7-

 

	 	   	diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls (PCB’s),
or radon gas, urea formaldehyde, asbestos or lead.

	9.  	SIGNS AND COMMUNICATIONS ANTENNAE. Tenant shall not place any sign or communications
antennae upon or adjacent to the Premises, except that Tenant may, with Landlord’s prior
written consent,
install such signs (but not on the roof) as are reasonably required to indicate Tenant’s
company name or
logo provided such signs are in compliance with Landlord’s standard sign criteria or install
communications
antennae used exclusively by Tenant provided such signs and/or communications antennae are in
compliance with all applicable governmental requirements and the CC&R’s. The installation of
any sign or
communications antennae on or adjacent to the Premises by or for Tenant shall be subject to
the
provisions of ¶13. (Repairs and Maintenance). Tenant shall remove any sign or communications
antennae
placed on or adjacent to the Premises by Tenant upon the expiration of the Term or sooner
termination of
this Lease, and Tenant shall repair any damage or injury to the Premises caused thereby, all
at Tenant’s
expense. If any signs or communications antennae are not removed, or necessary repairs not
made,
Landlord shall have the right to remove the signs or communications antennae and repair any
damage or
injury to the Premises at Tenant’s sole cost and expense. Notwithstanding any other
provision of this
Lease to the contrary, Landlord reserves all rights to the use of the roof and the right to
install and receive
all revenues from the installation of such communications antennae on the Premises as do not
unreasonably interfere with the conduct of Tenant’s business on the Premises. Landlord
will, however,
consult with Tenant regarding the location of any antennae placed on the Premises and attempt
to comply
with Tenant’s reasonable request as to location.
	 
	10.  	PERSONAL PROPERTY TAXES. Tenant shall pay at least ten (10) days prior to delinquency all
taxes
assessed against and levied upon Tenant owned leasehold improvements, trade fixtures,
furnishings,
equipment and all personal property of Tenant contained in the Premises or elsewhere. When
possible,
Tenant shall cause its leasehold improvements, trade fixtures, furnishings, equipment and all
other
personal property to be assessed and billed separately from the real property of Landlord.
If any of
Tenant’s said personal property shall be assessed with Landlord’s real property, Tenant shall
pay Landlord
the taxes attributable to Tenant within thirty (30) days after receipt of a written statement
setting forth the
taxes applicable to Tenant’s property.
	 
	11.  	 REAL PROPERTY TAXES

	 	a.  	Payment of Taxes. Landlord shall pay the Real Property Taxes, as defined in
¶11.c., during the
Term of this Lease. Subject to ¶11.b., Tenant shall promptly reimburse Landlord for
such Real
Property Taxes paid by Landlord.
	 
	 	b.  	Advance Payment. In order to ensure payment when due and before delinquency
of any or all
Real Property Taxes, Landlord shall provide to Tenant a copy of the tax bill for the
current Real
Property Taxes applicable to the Premises upon receipt by Landlord, and Tenant shall
pay that
amount to Landlord at least ten (10) business days before the delinquency date of the
tax bill. If
the amounts paid to Landlord by Tenant under the provisions of this ¶11. are
insufficient to
discharge the obligations of Tenant to pay such Real Property Taxes as the same
become due,
Tenant shall pay to Landlord, upon Landlord’s demand, such additional sums as are
necessary to
pay such obligations. All moneys paid to Landlord under this ¶11. may be intermingled
with other
moneys of Landlord and shall not bear interest.
	 
	 	c.  	Definition of “Real Property Taxes”. As used
herein, the term  “Real Property
Taxes” shall
include any form of real estate tax or assessment, general, special, ordinary or
extraordinary, and
any license fee, commercial rental tax, improvement bond or bonds, levy or tax or
other fee,
charge, or excise which may be imposed as a substitute for any of the foregoing
(other than
inheritance, personal income or estate taxes) imposed upon the Premises by any
authority having
the direct or indirect power to tax, including any city, county, state or federal
government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement district
thereof, levied
against any legal or equitable interest of Landlord in the Premises, Landlord’s right
to rent or other
income therefrom, and/or Landlord’s business of leasing the Premises. The term “Real
Property
Taxes” shall also include any tax, fee, levy, assessment or charge, or any increase
therein,
imposed by reason of events occurring, or changes in applicable law taking effect,
during the Term
of this Lease, including but not limited to a change in the ownership of the Premises
or in the
improvements thereon, the execution of this Lease, or any modification, amendment or
transfer
thereof, and whether or not contemplated by the parties hereto.
	 
	 	d.  	Appeals. In the event that either Landlord or Tenant desires to appeal or
contest any aspect of
any assessment or payment of any Real Property Tax, that party shall consult with the
other and
the parties shall mutually agree on which party is better suited to pursue the
appeal. Whether
Landlord or Tenant is the appealing party, Tenant shall be responsible for payment of
the cost of
the appeal.

	12.  	UTILITIES. Tenant shall pay for all water, gas, heat, light, power, telephone, trash
disposal and other
utilities and services supplied to the Premises, together with any taxes thereon. If any
such services are
not separately metered to Tenant, Tenant shall pay a reasonable proportion, to be determined
by Landlord,
of all charges jointly metered with other premises.
	 
	13.  	 REPAIRS AND MAINTENANCE

	 	a.  	Tenant’s Obligations.

-8-

 

	 	1)  	General. Tenant shall, at Tenant’s sole cost and expense and at all times,
contract for
janitorial services and supplies and keep the Premises and every part thereof in good
order, condition and repair, structural and non-structural (whether or not such
portion of the
Premises requiring repairs, or the means of repairing same, are reasonably or readily
accessible to Tenant, and whether or not the need for such repairs occurs as a result
of
Tenant’s use, any prior use, the elements or the age of such portion of the
Premises),
including, without limiting the generality of the foregoing, all equipment or
facilities serving
the Premises, such as plumbing, heating, air conditioning, ventilating, electrical,
lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose
or other automatic fire extinguishing system, including fire alarm and/or smoke
detection
systems and equipment, fire hydrants, fixtures, walls (interior and exterior),
foundations,
ceilings, roofs, floors, windows, doors, plate glass, skylights, landscaping,
driveways,
parking lots, fences, retaining walls, signs, sidewalks and parkways located in, on,
about or
adjacent to the Premises. Tenant shall not cause or permit any Hazardous Material to
be
spilled or released in, on, under or about the Premises (including through the
plumbing or
sanitary sewer system) and shall promptly, at Tenant’s expense, take all
investigatory
and/or remedial action reasonably recommended, whether or not formally ordered or
required, for the cleanup of any contamination of, and for the maintenance, security
and/or
monitoring of the Premises, the elements surrounding same, or neighboring properties,
that was caused or materially contributed to by Tenant, or pertaining to or involving
any
Hazardous Materials and/or storage tank brought onto the Premises by or for Tenant or
under its control. Tenant, in keeping the Premises in good order, condition and
repair,
shall exercise and perform good maintenance practices. Tenant’s obligations to
reimburse
Landlord as part of Operating Expenses shall include restorations, replacements
(i.e.,
parking lot, landscaping) or renewals when necessary in Landlord’s reasonable
discretion
to keep the Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.
	 
	 	2)  	Contracts. Tenant shall, at Tenant’s sole cost and expense, procure and
maintain
contracts, with copies to Landlord, in customary form and substance for, and with
contractors specializing and experienced in, the inspection, maintenance and service
of
the following equipment and improvements, if any, located on the Premises: (i)
heating, air
conditioning and ventilation equipment, (ii) boiler, fired or unfired pressure
vessels, (iii) fire
sprinkler and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems,
(v)
roof covering and drain maintenance and (vi) asphalt and parking lot maintenance.
Tenant
shall keep a detailed preventative maintenance schedule and log showing the frequency
of
maintenance on all HVAC, mechanical, electrical and other systems of the Premises and
provide Landlord with a copy of same quarterly.
	 
	 	3)  	As-Is Condition. The parties affirm that Landlord, its subsidiaries, officers,
shareholders,
members, managers, directors, agents and/or employees have made no representations
to Tenant respecting the condition of the Premises except as specifically stated
herein.
	 
	 	4)  	ADA. Tenant acknowledges that as of the Commencement Date, the Premises may
not
comply with the accessibility provisions of Title 24 of the California Code of
Regulations as
interpreted by the Office of the State Architect (“ADA”), and that Landlord shall
have no
obligation with respect to any such failure of the Premises to so comply. Tenant
shall, at
its cost, at any time during the Term as required by any applicable governmental
agency
having jurisdiction over the Premises, make such modifications and alterations to the
Premises as may be required in order to fully comply with the provisions of the ADA,
as
from time to time amended, and any and all regulations issued pursuant to or in
connection
with the ADA in such a manner as to satisfy the applicable governmental agency or
agencies requiring remediation. Tenant shall at least thirty (30) days prior to
the
commencement of any construction in connection with satisfaction of the ADA, give
written
notice to Landlord of its intended commencement of construction together with
sufficient
details so as to reasonably disclose to Landlord the nature of the proposed
construction,
copies of any notices received by Tenant from applicable governmental agencies in
connection with the ADA and such other documents or information as Landlord may
reasonably request. In any event, notwithstanding anything to the contrary
contained in
this Lease, prior to the termination of the Term, Tenant shall, at its cost, make
such
modifications and alterations to the Premises as may be required to comply fully with
the
ADA as from time to time amended and any and all regulations issued thereunder.
Tenant
shall give the Landlord thirty (30) days prior written notice as described above in
connection with any such construction. Any and all construction required to so comply
with
the ADA shall be completed by Tenant prior to the expiration of the Term.

	b.  	Landlord’s Obligations. Landlord shall have no obligation, in any manner whatsoever, to
repair
and maintain the Premises, or the equipment therein, whether structural or non structural,
all of
which obligations are intended to be that of the Tenant under ¶13.a. hereof.
	 
	c.  	Compliance with Governmental Regulations. Tenant shall, at its own cost and expense,
promptly and properly observe and comply with all present and future orders, regulations,
directions, rules, laws, ordinances, and requirements of all governmental authorities
(including but
not limited to state, municipal, county and federal governments and their departments,
bureaus,
boards and officials) arising from the use or occupancy of, or applicable to, the Premises
or
privileges appurtenant to or in connection with the enjoyment of the Premises. Tenant shall
also

-9-

 

	   	comply with all such rules, laws, ordinances and requirements at the time Tenant makes
any alteration, addition or change to the Premises.

	 	d.  	Miscellaneous.

	 	1)  	Landlord and Tenant shall each do all acts required to comply with
all applicable laws,
ordinances and rules of any public authority relating to their respective
maintenance
obligations as set forth herein.
	 
	 	2)  	Tenant expressly waives the benefits of any statute now or
hereafter in effect which would
otherwise afford the Tenant the right to make repairs at Landlord’s expense or
to terminate
this Lease because of Landlord’s failure to keep the Premises in good order,
condition and
repair and Tenant hereby specifically waives the provisions of California
Civil Code
Sections 1941 and 1942.
	 
	 	3)  	Tenant shall not place a load upon any floor of the Premises which
exceeds the load per
square foot which such floor was designed to carry, as determined by Landlord
or
Landlord’s structural engineer. The cost of any such determination made by
Landlord’s
structural engineer shall be paid for by Tenant upon demand.
	 
	 	4)  	Except as otherwise expressly provided in this Lease, and except in
instances of
Landlord’s gross negligence or willful misconduct, Landlord shall have no
liability to Tenant
nor shall Tenant’s obligations under this Lease be reduced or abated in any
manner
whatsoever by reason of any inconvenience, annoyance, interruption or injury
to business
arising from Landlord making any repairs or changes which Landlord is required
to make
or is permitted to make by this Lease or by any tenant’s lease or is required
by law to make
in or to any portion of the Premises. Landlord shall nevertheless use
reasonable efforts to
minimize any interference with Tenant’s business in the Premises.
	 
	 	5)  	Tenant shall give Landlord prompt notice of any damage to or
defective condition in any
part or appurtenance of the Premises’ mechanical, electrical, plumbing, HVAC
or other
systems serving, located in or passing through the Premises. Upon request by
Landlord,
Tenant shall provide Landlord with evidence reasonably acceptable to Landlord
of service
contracts on such systems.
	 
	 	6)  	Landlord may, at Landlord’s option, choose to perform any of the
Tenant’s obligations in
this ¶13. (“Tenant’s Obligations”) as to the exterior of the Premises (e.g.,
landscaping,
building exterior and parking lot). As to any Tenant’s Obligations as to the
interior of the
Premises, Landlord may perform only those Tenant’s Obligations which Tenant
fails to
perform itself. The cost of any such Tenant’s Obligations so performed by
Landlord shall
be at Tenant’s sole cost and expense. Tenant shall reimburse Landlord for any
such costs
incurred by Landlord in the performance of Tenant’s Obligations within thirty
(30) days of
receipt of a billing from Landlord.

	14.  	ALTERATIONS. Tenant shall not make any alterations to the Premises (“Alterations") without
Landlord’s prior written consent, which consent shall not be unreasonably withheld, provided
however that Tenant may make non-structural alterations costing less than $10,000 per event
without Landlord’s consent. Regardless of whether Landlord’s consent for an Alteration is
required, Tenant must provide Landlord at least fifteen (15) business days prior to the
commencement of any Alteration with a complete description of each such Alteration including
any building permit drawing(s) and specifications. Landlord may post notices regarding
non-responsibility in accordance with the laws of the state in which the Premises are
located. All Alterations made by Tenant, whether or not subject to Landlord’s consent, shall
be performed by Tenant and its contractors in a first class workmanlike manner and permits
and inspections shall be obtained from all required governmental entities. Landlord shall
respond to Tenant within fifteen (15) business days of actual receipt of Tenant’s written
request for consent to any Alterations. If Landlord fails to respond within thirty (30) days
of actual receipt, the Alterations shall be deemed approved and not subject to removal at the
end of the Term. At the time Landlord gives its consent to any Alterations, it shall
designate whether Tenant will be required to remove some or all of such Alterations upon the
expiration or termination of this Lease or whether Tenant will be able to leave the
Alterations and surrender them with the Premises. Everything else notwithstanding, in no
event will Tenant be required to remove or restore Alterations that are generic office tenant
improvements or engineering (dry) labs. Landlord may, upon 60 days prior written notice
before the expiration of the Term, require Tenant to remove some or all of the Alterations
for which Landlord’s consent was not previously requested. Before the last day of the Term,
Tenant shall at its own cost also remove those Alterations for which Landlord previously
notified Tenant removal would be required. If Landlord so elects, Tenant shall at its own
cost restore those Alterations for which consent was not previously requested to the
condition designated by Landlord in its election, before the last day of the Term. Should
Landlord consent in writing to Tenant’s Alteration of the Premises, Tenant shall contract
with a contractor approved by Landlord for the construction of such Alterations, shall secure
all appropriate governmental approvals and permits, and shall complete such Alterations with
due diligence in compliance with plans and specifications approved by Landlord. Tenant shall
pay all costs for such construction and shall keep the Premises free and clear of all
mechanics’ liens which may result from construction by Tenant.
	 
	   	Notwithstanding anything in this Lease to the contrary, Landlord will inspect the existing
alterations and improvements in the Premises within ninety (90) days of the date the Lease
is executed in full by both parties, and Tenant shall not be obligated to remove any
elements of the existing alterations and improvements that Landlord approves, but subject
to the paragraph immediately above, shall be obligated

-10-

 

	   	to remove as of the Expiration Date of this Lease any alterations and improvements to
the Premises made subsequent to the Commencement Date of the Prior Lease (as defined below)
which Landlord has not approved in writing. If Landlord fails to inspect or provide written
notice regarding its approval to Tenant within the ninety (90) day period described above,
all existing alterations and improvements shall be deemed approved and need not be removed
as of the Expiration Date of this Lease.

	15.  	RELEASE AND INDEMNITY. As material consideration to Landlord, Tenant agrees that Landlord
shall not
be liable to Tenant for any damage to Tenant or Tenant’s property from any cause, except for
damages
resulting from Landlord’s gross negligence or willful misconduct, and Tenant waives all
claims against
Landlord for damage to persons or property arising for any reason, except for damage
resulting directly
from Landlord’s gross negligence or willful misconduct. Tenant shall indemnify and hold
Landlord, its
subsidiaries, officers, shareholders, directors, agents and employees harmless from all
damages including
attorneys’ fees and costs arising out of any damage to any person or property occurring in,
on or about the
Premises or Tenant’s use of the Premises or Tenant’s breach of any term of this Lease.
	 
	16.  	 INSURANCE

	 	a.  	Payment For Insurance. Regardless of whether the Landlord or Tenant is the
Insuring Party,
Tenant shall pay for all insurance for the Premises required under this ¶16.
(“Insurance Costs”)
either directly or by reimbursement to Landlord as set forth in this ¶16. Premiums
for policy
periods commencing prior to or extending beyond the Lease Term shall be prorated to
correspond
to the Lease Term. Payment shall be made by Tenant to Landlord within thirty (30) days
following
receipt of an invoice for any amount due.
	 
	 	b.  	Liability Insurance.

	 	1)  	Carried by Tenant. Whether or not Tenant is the Insuring Party,
Tenant shall obtain and
keep in force during the Term of this Lease a commercial general liability
policy of
insurance protecting Tenant and Landlord (as an additional insured) against
claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of
the ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant
thereto. Such insurance shall be on an occurrence basis providing single limit
coverage in
an amount not less than $5,000,000 per occurrence with an “Additional
Insured-Managers
or Landlords of Premises” endorsement and contain an “Amendment of the
Pollution
Exclusion” for damage caused by heat, smoke or fumes from a hostile fire.
The policy
shall not contain any intra-insured exclusions as between
insured persons or
organizations, but shall include coverage for liability assumed under this
Lease as an
“insured contract” for the performance of Tenant’s indemnity obligations under
this Lease.
The limits of said insurance required by this Lease or as carried by Tenant
shall not,
however, limit the liability of Tenant nor relieve Tenant of any obligation
hereunder. All
insurance to be carried by Tenant shall be primary to and not contributory
with any similar
insurance carried by Landlord, whose insurance shall be considered excess
insurance
only. All insurance coverage required pursuant to this ¶16. which is to name
Landlord as
an additional named insured shall also name Landlord’s subsidiaries,
directors, agents,
members, managers, officers and employees as named insureds.

	 	2)  	Carried by Landlord. In the event Landlord is the Insuring
Party, Landlord shall also
maintain liability insurance as described in ¶16.b.1), in addition to, and not
in lieu of the
insurance required to be maintained by Tenant. In the event Tenant is the
Insuring Party,
Landlord shall in addition carry Lessor’s Risk Coverage and insure the
Premises on
Landlord’s umbrella policy. Tenant shall not be named as an additional
insured therein
under any insurance obtained by Landlord in accordance with this ¶16.b.2).

	 	c.  	Property Insurance - Building, Improvements and Rental Value.

	 	1)  	Building and Improvements. The Insuring Party shall obtain and
keep in force during the
Term of this Lease a policy or policies with Landlord named as an additional
insured (if
Tenant is the Insuring Party), with loss payable to Landlord and to the
holders of any
mortgages, deeds of trust or ground leases on the Premises
(“Lender(s)”),
insuring loss or
damage to the Premises. The amount of such insurance shall be equal to the
full
replacement cost of the Premises, as the same shall exist from time to time,
or the amount
required by Lender(s), but in no event more than the commercially reasonable
and
available insurable value thereof if, by reason of the unique nature or age of
the
improvements involved, such latter amount is less than full replacement cost.
If the
coverage is available at a commercially reasonable cost, such policy or
policies shall
insure against all risks of direct physical loss or damage (including Boiler
and Machinery
coverage and the perils of flood and earthquake), including coverage for any
additional
costs resulting from debris removal and reasonable amounts of coverage for
the
enforcement of any ordinance or law regulating the reconstruction or
replacement of any
undamaged sections of the Premises required to be demolished shall also
contain an
agreed valuation provision in lieu of any coinsurance clause and waiver of
subrogation. If
such insurance coverage has a deductible clause, then Tenant shall be liable
for such
deductible amount. Even if Landlord is the Insuring Party, Tenant’s personal
property shall
be insured by Tenant under ¶16.d. rather than by Landlord.
	 
	 	2)  	Rental Value. The Insuring Party shall, in addition, obtain and
keep in force during the
term of this Lease a policy or policies with Landlord named as an additional
insured (if

-11-

 

	 	   	Tenant is the Insuring Party), with loss payable to Landlord and Lender(s),
insuring the loss of the full rental and other charges payable by Tenant to
Landlord under this Lease for one (1) year (including all Real Property Taxes,
Insurance Costs and any scheduled Rent increases). Said insurance shall provide
that in the event the Lease is terminated by reason of an insured loss, the period
of indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the Premises, to provide for one full year’s loss of
Rent from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of coverage
shall be adjusted annually to reflect the projected Rent, Real Property Taxes,
Insurance Costs and other expenses, if any, otherwise payable by Tenant, for the
next twelve (12) month period. Tenant shall be liable for any deductible amount in
the event of such loss.

	 	3)  	Adjacent Premises. If the Premises are part of a larger building, or if the
Premises are
part of a group of buildings owned by Landlord which are adjacent to the Premises,
the
Tenant shall pay for any increase in the premiums for the property insurance of such
building or buildings if said increase is caused by Tenant’s acts, omissions, use or
occupancy of the Premises.
	 
	 	4)  	Tenant’s Improvements. If the Landlord is the Insuring Party, the Landlord
shall not be
required to insure Tenant’s personal property and leasehold improvements unless the
item
in question has become the property of Landlord under the terms of this Lease. If
Tenant
is the Insuring Party, the policy carried by Tenant under this ¶16.c. shall insure
Tenant’s
personal property and leasehold improvements.

	 	d.  	Tenant’s Property Insurance. Subject to the requirements of ¶16.e., Tenant at its cost shall
either by separate policy or by endorsement to a policy already carried, maintain insurance
coverage on all of Tenant’s personal property and Tenant’s leasehold improvements in, on or
about the Premises similar in coverage to that carried by the Insuring Party under ¶16.c.
Such
insurance shall be full replacement cost coverage with a deductible of not to exceed
$100,000 per
occurrence. The proceeds from any such insurance shall be used by Tenant for the replacement
of personal property or the restoration of Tenant owned leasehold improvements. Tenant shall
be
the Insuring Party with respect to the insurance required by this ¶16.d. and shall provide
Landlord
with written evidence that such insurance is in force.
	 
	 	e.  	Insurance Policies. If Tenant is the Insuring Party, Insurance required per this ¶16. shall
be with
companies duly licensed to transact business in the state where the Premises are located,
and
maintaining during the policy term a “General Policyholders Rating” of at least A- X, or
such other
minimal rating as may be required by Lender(s) as set forth in the most current issue of
“Best’s
Insurance Guide”. Tenant shall not do or permit to be done anything which shall invalidate
the
insurance policies referred to in this ¶16. If Tenant is the Insuring Party, Tenant shall
cause to be
delivered to Landlord certificates evidencing the existence and amounts of such insurance
with the
insureds and loss payable clauses as required by this Lease. No such policy shall be
cancelable
or subject to modification or lapse except after thirty (30) days prior written notice to
Landlord.
Tenant shall at least thirty (30) days prior to the expiration of such policies, furnish
Landlord with
evidence of renewals or certificates of insurance evidencing renewal thereof, or Landlord
may
order such insurance and charge the cost thereof to Tenant, which amount shall be payable by
Tenant to Landlord upon demand. If the Insuring Party shall fail to procure and maintain
the
insurance required to be carried by the Insuring Party under this ¶16., the other Party may,
but
shall not be required to, procure and maintain the same, but at Tenant’s expense.
	 
	 	f.  	Mutual Waiver. Notwithstanding anything to the contrary contained in this Lease, to the
extent
that this release and waiver does not invalidate or impair their respective insurance
policies, the
parties hereto release each other and their respective agents, employees, officers,
directors,
shareholders, successors, assignees and subtenants from all liability for injury to any
person or
damage to any property that is caused by or results from a risk which is actually insured
against
pursuant to the provisions of this Lease without regard to the negligence or willful
misconduct of
the parties so released. Each party shall use its commercially reasonable efforts to cause
each
insurance policy it obtains to provide that the insurer thereunder waives all right of
recovery by way
of subrogation as required herein in connection with any injury or damage covered by the
policy. If
such insurance policy cannot be obtained with such waiver of subrogation, or if such waiver
of
subrogation is only available at additional cost and the party for whose benefit the waiver
is not
obtained does not pay such additional costs after reasonable notice, then the party
obtaining such
insurance shall promptly notify the other party of the inability to obtain insurance
coverage with the waiver of subrogation.
	 
	 	g.  	Tenant’s Option. Notwithstanding anything to the contrary contained in this Lease, if for any
given
policy period, Tenant is able to obtain insurance coverage which meets the requirements of
this
¶16. at a cost lower than Landlord’s cost, then Tenant may be the Insuring Party. At least
thirty
(30) days prior to the beginning of any policy period for which Tenant desires to be the
Insuring
Party, Tenant shall submit to Landlord its insurance quote and proposed policy provisions.
Within
five (5) business days of receipt, Landlord shall review Tenant’s insurance quote and
proposed
policy provisions, and Landlord may request that the lender as to any loan(s) encumbering
the
property described in Exhibit A hereto (“Lender”) also review Tenant’s insurance
quote and
proposed policy provisions. Promptly following said reviews by Lender and Landlord,
Landlord
may, in its reasonable discretion, approve or reject Tenant’s proposed insurance. If
approved,
Tenant shall cause the approved policies to be issued, with copies of the insurance
certificate(s) to
be immediately provided to Landlord. If rejected, Landlord shall specify the reasons for
such

-12-

 

	 	   	rejection in writing. Tenant shall have three (3) business days from the
receipt of Landlord’s written notice of rejection to submit a revised insurance quote
and proposed policy provisions. Within three (3) business days after Landlord’s
receipt of Tenant’s revised insurance quote and policy provisions, Landlord shall
accept Tenant’s revised insurance if it adequately addresses the reasons initially
specified by Landlord for rejection. If in Landlord’s reasonable determination, such
revised insurance quote and policy provisions do not adequately address the reasons
initially specified by Landlord for rejection, Landlord may reject Tenant’s revised
insurance quote and policy provisions by stating the reasons therefor in writing;
however, such rejection shall be final in regard to that policy period, and Landlord
shall be the Insuring Party for that policy period. If Landlord approves Tenant’s
insurance, Tenant’s failure to provide the insurance certificate(s) to Landlord at
least ten (10) business days prior to the commencement of the applicable policy
period shall result in Landlord being the Insuring Party.

17. DAMAGE AND DESTRUCTION

	 	a.  	Damage Restoration Required. In the event that the Premises is damaged by
fire or other
casualty which is covered under insurance pursuant to the provisions of ¶16. above,
Landlord shall
restore such damage provided that: (i) the cost to repair the destruction of the
Premises does not
exceed sixty percent (60%) of the then replacement value of the Premises; (ii) the
insurance
proceeds are available (inclusive of any deductible amounts) to pay one hundred
percent (100%)
of the cost of restoration; and (iii) there exists at least eighteen (18) months
before the end of the
Term and, in the reasonable judgment of Landlord, the restoration can be completed
within two
hundred and seventy (270) days after the date of the damage or casualty under the laws
and
regulations of the state, federal, county and municipal authorities having
jurisdiction. Regardless of
whether Tenant or Landlord is the Insuring Party, the deductible amount of any
insurance coverage
shall be paid by Tenant except in the case of flood or earthquake and in such case the
deductible
amount in excess of $10,000 per occurrence shall be paid by Landlord. If such
conditions apply so
as to require Landlord to restore such damage pursuant to this ¶17.a., this Lease shall
continue in
full force and effect, unless otherwise agreed to in writing by Landlord and Tenant.
Tenant shall be
entitled to a proportionate reduction of Rent while such restoration takes place, such
proportionate
reduction to be based on the extent to which the damage and restoration efforts
interfere with
Tenant’s business in the Premises. Tenant’s right to a reduction of Rent hereunder
shall be
Tenant’s sole and exclusive remedy in connection with any such damage.
	 
	 	b.  	Damage - Restoration Not Required. In the event that the Premises is damaged by
a fire or
other casualty and Landlord is not required to restore such damage in accordance with
the
provisions of ¶17.a. immediately above, Landlord shall have the option to either (i)
repair or restore
such damage, with the Lease continuing in full force and effect, but Rent to be
proportionately
abated as provided in ¶17.a. above; or (ii) give notice to Tenant at any time within
thirty (30) days
after the occurrence of such damage terminating this Lease as of a date to be
specified in such
notice which date shall not be less than thirty (30) nor more than sixty (60) days
after the date on
which such notice of termination is given. In the event of the giving of such notice
of termination,
this Lease shall expire and all interest of Tenant in the Premises shall terminate on
the date so
specified in such notice and the Rent, reduced by any proportionate reduction in Rent
as provided
for in ¶17.a. above, shall be paid to the date of such termination. Notwithstanding the
foregoing, if
Tenant delivers to Landlord the funds necessary to make up the shortage (or absence)
in
insurance proceeds and the restoration can be completed in a two hundred seventy (270)
day
period, as reasonably determined by Landlord, and the destruction of the Premises does
not
exceed sixty percent (60%) of the then replacement value, Landlord shall restore the
Premises as
provided in ¶17.a. above.
	 
	 	c.  	End of Term Casualty. Notwithstanding the provisions of ¶17.a. and ¶17.b. above,
Landlord may
terminate this Lease if the Premises is damaged by fire or other casualty (and
Landlord’s
reasonably estimated cost of restoration of the Premises exceeds twenty-five percent
(25%) of the
then replacement value of the Premises) and such damage or casualty occurs during the
last
twelve (12) months of the Term of this Lease (or the Term of any renewal option, if
applicable) by
giving the other notice thereof at any time within thirty (30) days following the
occurrence of such
damage or casualty. Such notice shall specify the date of such termination which date
shall not be
less than thirty (30) nor more than sixty (60) days following the date on which such
notice of
termination is given. In the event of the giving of such notice of termination, this
Lease shall expire
and all interest of Tenant in the Premises shall terminate on the date so specified in
such notice
and the Rent shall be paid to the date of such termination.
	 
	 	d.  	Termination by Tenant. In the event that the destruction to the Premises cannot
be restored as
required herein under applicable laws and regulations within two hundred seventy (270) days of
the damage or casualty, notwithstanding the availability of insurance proceeds, Tenant shall have
the right to terminate this Lease by giving the Landlord notice thereof within thirty (30) days of date
of the occurrence of such casualty specifying the date of termination which shall not be less than
thirty (30) days nor more than sixty (60) days following the date on which such notice of termination
is given. In the event of the giving of such notice of termination, this Lease shall expire and all
interest of Tenant in the Premises shall terminate on the date so specified in such notice and the
Rent, reduced by any proportionate reduction in Rent as provided for in ¶17.a. above, shall be paid
to the date of such termination.
	 
	 	e.  	Restoration. Landlord agrees that, in any case in which Landlord is required to, or otherwise
agrees to restore the Premises, that Landlord shall proceed with due diligence to make
all
appropriate claims and applications for the proceeds of insurance and to apply for and
obtain all

-13-

 

	 	   	permits necessary for the restoration of the Premises. Landlord shall use
reasonable efforts to enforce any and all provisions in any mortgage, deed of trust
or other encumbrance on the Premises requiring Landlord and Lender to permit
insurance proceeds to be used for restoration. Landlord shall restore the Premises to
the condition existing prior to the date of the damage if permitted by applicable
law. Landlord shall not be required to restore alterations made by Tenant, Tenant’s
improvements, Tenant’s trade fixtures and Tenant’s personal property, such excluded
items being the sole responsibility of Tenant to restore provided, however, that
Landlord shall, to the extent of available insurance proceeds, restore Tenant
Improvements to the Premises made by Tenant such as interior offices, lab and
production improvements and other like improvements.

	 	f.  	Waiver. Tenant waives the provisions of Civil Code §1932(2) and Civil Code §1933(4) with
respect to any destruction of the Premises.

	18.  	CONDEMNATION

	 	a.  	Definitions. The following definitions shall apply: (1) “Condemnation” means (a)
the exercise of
any governmental power of eminent domain, whether by legal proceedings or otherwise by
condemnor, or (b) the voluntary sale or transfer by Landlord to any condemnor either
under threat
of condemnation or while legal proceedings for condemnation are proceeding; (2) “Date
of Taking”
means the date the condemnor has right to possession of the property being condemned;
(3)
“Award” means all compensation, sums or anything of value awarded, paid or received on
a total
or partial condemnation; and (4) “Condemnor” means any public or quasi-public
authority, or
private corporation or individual, having power of condemnation.
	 
	 	b.  	Obligations to be Governed by Lease. If during the Term of the Lease there is
any taking of all
or any part of the Premises, the rights and obligations of the parties shall be
determined strictly
pursuant to this Lease. Each party waives the provisions of Code of Civil Procedure
§1265.130
allowing either party to petition the Superior Court to terminate this Lease in the
event of a partial
condemnation of the Premises.
	 
	 	c.  	Total or Partial Taking. If the Premises are totally taken by Condemnation,
this Lease shall
terminate on the Date of Taking. If any portion of the Premises is taken by
Condemnation, this
Lease shall remain in effect, except that Tenant can elect to terminate this Lease if
the remaining
portion of the Premises is rendered unsuitable for Tenant’s continued use of the
Premises. If
Tenant elects to terminate this Lease, Tenant must exercise its right to terminate by
giving notice to
Landlord within thirty (30) days after the nature and extent of the Condemnation have
been finally
determined. If Tenant elects to terminate this Lease, Tenant shall also notify
Landlord of the date
of termination, which date shall not be earlier than thirty (30) days nor later than
ninety (90) days
after Tenant has notified Landlord of its election to terminate; except that this
Lease shall terminate
on the Date of Taking if the Date of Taking falls on a date before the date of
termination as
designated by Tenant. If any portion of the Premises is taken by Condemnation and
this Lease
remains in full force and effect, on the Date of Taking the Base Rent shall be reduced
by an
amount in the same ratio as the total number of square feet in the building(s) which
are a part of
the Premises taken bears to the total number of square feet in the building(s) which
are a part of
the Premises immediately before the Date of Taking. Any Award for the taking of all or
any part of
the Premises under the power of eminent domain or any payment made under threat of the
exercise of such power shall be the property of Landlord, whether such Award shall be
made as
compensation for diminution in value of the leasehold or for the taking of the fee, or
as severance
damages; provided, however, that Tenant shall be entitled to any compensation
separately
awarded to Tenant for Tenant’s relocation expenses and/or loss of Tenant’s trade
fixtures.

	19.  	ASSIGNMENT OR SUBLEASE

	 	a.  	Tenant shall not assign or encumber its interest in this Lease or the Premises
or sublease all or any part of the Premises or allow any other person or entity (except
Tenant’s authorized representatives, employees, invitees, guests or a Permitted
Transferee) to occupy or use all or any part of the Premises without first obtaining
Landlord’s consent, which consent shall not be unreasonably withheld. Any assignment,
encumbrance or sublease without Landlord’s prior written consent shall be voidable and
at Landlord’s election, shall constitute a default. If Tenant is a partnership, a
withdrawal or change, voluntary, involuntary or by operation of law of any partner, or
the dissolution of the partnership, shall be deemed a voluntary assignment. If Tenant
consists of more than one person, a purported assignment, voluntary or involuntary or
by operation of law from one person to the other shall be deemed a voluntary
assignment. If Tenant is a corporation, any dissolution, merger, consolidation or other
reorganization of Tenant, or sale or other transfer of a controlling percentage of the
capital stock of Tenant, or the sale of at least fifty percent (50%) of the value of
the assets of Tenant shall be deemed a voluntary assignment. Notwithstanding the
sentence immediately above, if the Tenant is a corporation, the Tenant shall be
entitled to assign this Lease without Landlord’s prior written consent in the event of
a reorganization of Tenant through the sale of all or a portion of Tenant’s Capital
Stock by Initial Public Offering (such event shall be referred to as a transfer to a
“Permitted Transferee”). In connection with any assignment, Landlord shall be entitled
to require an increase in the Security Deposit to the extent that such increase should
be commercially reasonable in Landlord’s discretion given the financial condition of
Tenant and the assignee following such event. In connection with any Sublease, Landlord
shall be entitled to hold any Security Deposit paid by Sublessee to Sublessor, which
Security Deposit shall be held by Landlord in accordance with the provisions of the
Sublease. Tenant shall give Landlord at least sixty (60) days prior written notice of
any intended transfer to a Permitted Transferee and in connection with such transfer
shall provide to Landlord copies of any documents

-14-

 

	 	  	or other information as Landlord may reasonably request. Unless otherwise expressly
agreed in writing by Landlord, no assignment shall relieve Tenant of any of its obligations
pursuant to this Lease.

	 	   	In the event of a sublease all Sublease Rent received by Tenant in excess of the Rent
payable by Tenant to Landlord under this Lease applicable to the portion of the Premises
subleased shall be deemed the “Bonus Amount”, after
deducting therefrom the “Subleasing
Costs” which shall include (i) commercially reasonable brokerage commissions, (ii) tenant
improvements made at the request of a subtenant and (iii) attorneys’ fees incurred by
Tenant in negotiating and documenting the sublease, which Subleasing Costs shall be
amortized over the Term of the Sublease for the purpose of determining the Bonus Amount.
Fifty percent (50%) of the Bonus Amount shall be promptly paid to Landlord following
receipt by Tenant. If the Subleasing Costs are not known at the commencement of the
sublease, the fifty percent (50%) of Bonus Amount due Landlord will be computed without
deduction of Subleasing Costs and promptly paid to Landlord. Once the Subleasing Costs are
presented to and verified by Landlord, the Bonus Amount paid by Tenant to date will be
adjusted and Landlord shall give Tenant a credit against the next payment(s) due to
Landlord from Tenant. The term “Sublease Rent” as used herein shall include any
consideration of any kind received by Tenant from or on behalf of any subtenant, if the
sums are related in any manner to the Premises, including, without limitation Rent,
operating expense payments, bonus money and payments for the purchase of or usage of
Tenant’s furniture, fixtures, inventory, equipment, accounts, goodwill, general intangibles
and other assets. Each sublease approved by Landlord shall stand alone as to the
computation of the Bonus Amount.
	 
	 	   	In the event of an assignment all Transfer Payments received by Tenant shall be deemed the
“Bonus Amount”, after deducting therefrom the
“Assignment Costs” which shall include (i)
commercially reasonable brokerage commissions and (ii) attorneys’ fees incurred by Tenant
in negotiating and documenting the assignment. Fifty percent (50%) of the Bonus Amount
shall be promptly paid to Landlord following receipt by Tenant. If the Assignment Costs are
not known at the commencement of the Assignment, the fifty percent (50%) of Bonus Amount
due Landlord will be computed without deduction of Assignment Costs and promptly paid to
Landlord. Once the Assignment Costs are presented to and verified by Landlord, the Bonus
Amount paid by Tenant to date will be adjusted and Landlord shall give Tenant a credit
against the next payment(s) due to Landlord from Tenant. The term
“Transfer Payments” as
used herein shall include any consideration of any kind received by Tenant from or on
behalf of any assignee, if the sums are related in any manner to the Premises, including,
without limitation assignment consideration, Rent, operating expense payments, bonus money
and payments for the purchase of or usage of Tenant’s furniture, fixtures, inventory,
equipment, accounts, goodwill, general intangibles and other assets.
	 
	 	   	If Tenant requests Landlord to consent to a proposed assignment or subletting, Tenant shall
pay to Landlord, whether or not consent is ultimately given, an amount equal to Landlord’s
reasonable attorneys’ fees and costs incurred in connection with such request, (not to
exceed $5,000). Each request for consent to an assignment or subletting shall be in
writing, and shall be accompanied by information as may be relevant to Landlord’s
determination as to the financial and operational responsibility and stability of the
proposed assignee or sublessee and the appropriateness of the proposed use by such assignee
or sublessee. Such information shall include a summary of the proposed use of, and any
proposed modifications to, the Premises. Tenant shall provide Landlord with such other or
additional information and/or documentation as may reasonably be requested by Landlord.
Tenant shall, upon completion of any assignment or subletting of all or any portion of the
Premises, immediately and irrevocably assign to Landlord as security for Tenant’s
obligations under the Lease, all Sublease Rent and/or Transfer Payments from any such
subletting or assignment. Landlord, as assignee and attorney in fact for Tenant, shall have
the right to collect all rent and other revenues collectable pursuant to any such sublet or
assignment and apply such rent and other revenues towards Tenant’s obligations under the
Lease.
	 
	 	b.  	No interest of Tenant in this Lease shall be assignable by involuntary assignment through
operation of law (including without limitation the transfer of this Lease by testacy or
intestacy).
Each of the following acts shall be considered an involuntary assignment: (a) if Tenant is
or
becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or
institutes
proceedings under the Bankruptcy Act in which Tenant is the bankrupt; or if Tenant is a
partnership
or consists of more than one person or entity, if any partner of the partnership or other
person or
entity is or becomes bankrupt or insolvent, or makes an assignment for the benefit of
creditors; or
(b) if a writ of attachment or execution is levied on this Lease; or (c) if in any
proceeding or action
to which Tenant is a party, a receiver is appointed with authority to take possession of the
Premises. An involuntary assignment shall constitute a default by Tenant and Landlord shall
have
the right to elect to terminate this Lease, in which case this Lease shall not be treated as
an asset
of Tenant.
	 
	 	c.  	Notwithstanding any provision to this Lease to the contrary, in any event where Landlord’s
consent
is required for assignment or sublease, Landlord may at its option, elect to terminate the
Lease
instead of approving the requested assignment or sublease, except if the requested
assignment or
sublease is for a period of less than one year (including any renewal periods). Should
Landlord so
elect to terminate this Lease, all of the obligations of the parties thereunder, to the
extent not
accrued, shall terminate on the later of sixty (60) days following Landlord’s notice to
Tenant of its
election hereunder, or the effective date of the proposed assignment or subletting sought by
the
Tenant, but in no event later than one hundred twenty (120) days following the date of
Landlord’s
election under this ¶ 19.c. At the time of termination, all obligations of both parties
hereunder shall

-15-

 

	 	   	terminate as to obligations thereafter accruing except as otherwise expressly
provided in this Lease.

	20.  	DEFAULT. The occurrence of any of the following shall constitute a default by Tenant: (a) a
failure of
Tenant to pay Rent within ten (10) days of its due date; (b) abandonment of the Premises; or
(c) failure to
timely perform any other provision of this Lease where such failure continues for a period in
excess of thirty
days following notice of such failure, provided however, that if the nature of such failure
is such that it
cannot reasonably be cured within thirty days, then Tenant shall not be in default if Tenant
commences to
cure such failure within thirty days and thereafter diligently prosecutes the cure to
completion. Tenant shall
give written notice to Landlord of any default by Landlord of its obligations pursuant to
this Lease asserted
by Tenant (with a copy of such notice to any lender
(“Lender”) against the Premises).
Landlord and
Landlord’s Lender shall be afforded a reasonable opportunity to cure any claimed default by
Landlord and
Landlord shall not be considered in default so long as Landlord (or Landlord’s Lender)
commences such
cure within a reasonable period of time and thereafter, continues to attempt to complete such
cure. Prior to
any obligation recited in this Lease to provide a Lender with any notice, Landlord shall
provide Tenant with
the name and address of its Lender in writing.

	21.  	LANDLORD’S REMEDIES. Landlord shall have the following remedies if Tenant is in default
(these
remedies are not exclusive; they are cumulative and in addition to any remedies now or later
allowed by
law):

	 	a.  	Landlord may continue this Lease in full force and effect, and this Lease will
continue in effect so
long as Landlord does not terminate Tenant’s right to possession, and Landlord shall
have the right
to collect Rent when due. During the period Tenant is in default, Landlord can enter
the Premises
and relet the Premises, or any part of the Premises, to third parties for Tenant’s
account. Tenant
shall be liable immediately to Landlord for all costs Landlord incurs in reletting
the Premises,
including without limitation, brokers’ commissions, expenses of remodeling the
Premises required
by the reletting, and like costs. Reletting can be for a period shorter or longer
than the remaining
Term of this Lease. Tenant shall pay to Landlord the Rent due under this Lease on the
dates the
Rent is due, less the Rent Landlord receives from any reletting. No act by Landlord
allowed by this ¶ 21.a. shall terminate this Lease unless Landlord notifies Tenant in writing that
Landlord elects to
terminate this Lease. After Tenant’s default and for so long as Landlord does not
terminate
Tenant’s right to possession of the Premises, if Tenant obtains Landlord’s consent,
Tenant shall
have the right to assign or sublet its interest in this Lease, but Tenant shall not
be released from
liability. Landlord’s consent to such a proposed assignment or subletting shall not
be unreasonably
withheld. If Landlord elects to relet the Premises as provided in
this ¶ 21.a., Rent
that Landlord
receives from reletting shall be applied to the payment of: first, any indebtedness
from Tenant to
Landlord other than Rent due from Tenant; second, all costs, including for
maintenance incurred by
Landlord in reletting; and third, Rent due and unpaid under this Lease. After
deducting the
payments referred to in this ¶ 21.a., any sum remaining from the Rent Landlord receives
from
reletting shall be held by Landlord and applied in payment of future Rent as Rent
becomes due
under this Lease. In no event shall Tenant be entitled to any excess Rent received by
Landlord. If,
on the date Rent is due under this Lease, the Rent received from the reletting is
less than the Rent
due on that date, Tenant shall pay to Landlord, in addition to the remaining Rent
due, all costs
including for maintenance Landlord incurred in reletting that remain after applying
the Rent
received from the reletting as provided in this ¶ 21.a.; and
	 
	 	b.  	Landlord may terminate Tenant’s right to possession of the Premises at any such
time. No act by
Landlord other than giving express written notice thereof to Tenant shall terminate
this Lease. Acts
of maintenance, efforts to relet the Premises, or the appointment of a receiver on
Landlord’s
initiative to protect Landlord’s interest under this Lease shall not constitute a
termination of
Tenant’s right to possession. Upon termination of Tenant’s right to possession,
Landlord has the
right to recover from Tenant: (1) the Worth of the unpaid Rent that had been earned
at the time of
termination of Tenant’s right to possession; (2) the Worth of the amount by which the
unpaid Rent
that would have been earned after the date of termination until the time of award
exceeds the
amount of the loss of Rent that Tenant proves could have been reasonably avoided; (3)
the Worth
of the amount of the unpaid Rent that would have been earned after the award
throughout the
remaining Term of the Lease to the extent such unpaid Rent exceeds the amount of the
loss of
Rent that Tenant proves could have been reasonably avoided; and (4) any other amount,
including
but not limited to, reasonable expenses incurred to relet the Premises, court costs,
attorneys’ fees
and collection costs necessary to compensate Landlord for all detriment caused by
Tenant’s
default. The “Worth”, as used above in (1) and
(2) in this ¶ 21.b. is to be computed
by allowing
interest at the lesser of eighteen percent (18%) per annum or the maximum legal
interest rate
permitted by law. The “Worth”, as used above in (3) in
this ¶ 21.b. is to be computed
by discounting
the amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the
award, plus one percent (1%).

	22.  	ENTRY OF PREMISES. Landlord and/or its authorized representatives shall have the right
after
reasonable notice except for emergencies to enter the Premises at all reasonable times for
any of the
following purposes: (a) to determine whether the Premises are in good condition and whether
Tenant is
complying with its obligations under this Lease; (b) to do any necessary maintenance and to
make any
restoration to the Premises that Landlord has the right or obligation to perform; (c) to post
“for sale” signs at
any time during the Term, or to post “for rent” or “for lease” signs during the last one
hundred eighty (180)
days of the Term or during any period while Tenant is in default; (d) to show the Premises to
prospective
brokers, lenders, agents, buyers, tenants or persons interested in leasing or purchasing the
Premises, at
any time during the Term; or (e) to repair, maintain or improve the Premises and to erect
scaffolding and
protective barricades around and about the Premises but not so as to prevent entry to the
Premises or to

-16-

 

	   	unreasonably interfere with Tenant’s use of the Premises and to do any other act or
thing necessary for the safety or preservation of the Premises. Landlord shall not be
liable in any manner for any inconvenience, disturbance, loss of business, nuisance or
other damage arising out of Landlord’s entry onto the Premises
as provided in this ¶ 22.
Tenant shall not be entitled to an abatement or reduction of Rent if Landlord exercises any
rights reserved in this ¶ 22. Landlord shall conduct its activities on the Premises as
provided herein in a commercially reasonable manner that will lessen the inconvenience,
annoyance or disturbance to Tenant.

	23.  	SUBORDINATION.

	 	a.  	Automatic Subordination. Without the necessity of any additional document being
executed by
Tenant for the purpose of effecting a subordination, and at the election of Landlord
or Landlord’s
Lender, this Lease shall be subject and subordinate at all times to (i) all ground
leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises, (ii) the lien
of any mortgage or deed of trust which may now exist or hereafter be executed
affecting the
Premises, and (iii) the lien of any mortgage or deed of trust which may hereafter be
executed in
any amount for which the Premises, ground leases or underlying leases, or Landlord’s
interest or
estate in any of said items is specified as security. In the event that any ground
lease or underlying
lease terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in
lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn
to and become the Tenant of the successor in interest (including without limitation
to Lender) to
Landlord (“Successor”). In connection with any such termination of a ground lease or
underlying
lease or any foreclosure or conveyance in lieu of foreclosure made in connection with
any
mortgage or deed of trust, then so long as Tenant is not in default after all
applicable notice and
cure periods pursuant to this Lease, Tenant shall not be disturbed in its possession
of the
Premises or in the enjoyment of its rights pursuant to this Lease during the Term of
this Lease or
any extension or renewal thereof. Notwithstanding any subordination of this Lease to
the lien of
any mortgage or deed of trust, the Lender, at any time, shall be entitled to
subordinate the lien of
its mortgage or deed of trust to this Lease by filing a notice of subordination in
the County in which
the Premises are located, and Lender shall agree in connection with any such filing,
that Tenant
shall not be disturbed in its possession of the Premises so long as Tenant is not in
default pursuant
to this Lease. In connection with any such filing, Tenant shall be obligated to
attorn to and to
become a Tenant of any Successor.
	 
	 	b.  	Additional Subordination. From time to time at the request of Landlord, Tenant
covenants and
agrees to execute and deliver within ten (10) business days following the date of
written request
from Landlord, documents evidencing the priority or subordination of this Lease with
respect to any
ground lease or underlying lease or the lien of any mortgage or deed of trust in
connection with the
Premises. Any and all such documents shall be in such form as is reasonably
acceptable to the
Lender(s). Any subordination agreement so requested by Landlord shall provide for
Tenant to
attorn to the Successor and shall further provide that Tenant shall not be disturbed
in its
possession of the Premises or in the enjoyment of its rights pursuant to this Lease
so long as
Tenant is not in default after all applicable notice and cure periods with respect to
its obligations
pursuant to the Lease. Any such Subordination, Non-disturbance and Attornment
Agreement shall
be recorded in the official records of the office of the County Recorder in the
County in which the
Premises is located.
	 
	 	c.  	Notice from Lender. Tenant shall be entitled to rely upon any notice given by
a Lender in
connection with the Premises requesting that Tenant make all future Rent payments to
such
Lender, and Tenant shall not be liable to Landlord for any payment made to such
Lender in
accordance with such notice. Notwithstanding any provision to the contrary of this
Lease, a
Successor shall not be (i) obligated to recognize the payment of Rent for a period of
more than one
month in advance; (ii) responsible for liabilities accrued pursuant to this Lease
prior to the date
(“Succession Date”) upon which the Successor becomes the “Landlord”
hereunder; (iii)
responsible to cure defaults of the Landlord pursuant to this Lease existing as of
the Succession
Date, except for defaults of a continuing nature of which Successor received notice
(as provided in
Paragraph 20) and in respect of which Tenant afforded Successor a reasonable cure
period
following such notice; (iv) responsible for any Security Deposit delivered by Tenant
pursuant to this
Lease not actually received by the Successor; or (v) bound by any execution,
modification,
termination or extension of this Lease or any grant of a purchase option or right of
first refusal or
any other action taken by the Landlord pursuant to this Lease, except in accordance
with the
provisions of an assignment of Leases executed by Landlord in favor of a Lender.

	24.  	ESTOPPEL CERTIFICATE; TENANT FINANCIAL STATEMENTS. Tenant, at any time and from time to
time, upon not less than ten (10) business days written notice from Landlord, will execute,
acknowledge
and deliver to Landlord and, at Landlord’s request, to any existing or prospective
purchaser, ground lessor
or mortgagee of any part of the Premises, a certificate of Tenant stating: (a) that Tenant
has accepted the
Premises (or, if Tenant has not done so, Tenant has not accepted the Premises and specifying
the reasons
therefor); (b) the Commencement and Expiration Dates of this Lease; (c) that this Lease is
unmodified and
in full force and effect (or, if there have been modifications, that same is in full force
and effect as modified
and stating the modifications); (d) whether or not to the best of Tenant’s knowledge there
are then existing
any defenses against the enforcement of any of the obligations of Tenant under this Lease
(and, if so,
specifying same); (e) whether or not to the best of Tenant’s knowledge there are then
existing any defaults
by Landlord in the performance of its obligations under this Lease (and, if so, specifying
same); (f) the
dates, if any, to which the Rent and other charges under this Lease have been paid; (g)
whether or not
there are Rent increases during the Lease Term and if so the amount of same; (h) whether or
not the
Lease contains any options or rights of first offer or first refusal; (i) the amount of any
Security Deposit or

-17-

 

	  	other sums due Tenant; (j) the current notice address for Tenant; and (k) any other
information that may reasonably be required by any of such persons. It is intended that any
such certificate of Tenant delivered pursuant to this ¶ 24. may be relied upon by Landlord and
any existing or prospective purchaser, ground lessor or mortgagee of the Premises. Provided
Tenant is not a publicly traded company which files with the SEC, Tenant will, at any time
upon request by Landlord, to deliver to Landlord the most recent financial statements of
Tenant with an opinion of a certified public accountant, if available, including a balance
sheet and profit and loss statement for the most recent prior three years all prepared in
accordance with generally accepted accounting principles consistently applied. Landlord
agrees to hold such financial statements confidential and to share them only with
prospective lenders and purchasers of the Premises. Other than for prospective lenders and
purchasers, Landlord shall not request financial statements more often than twice in any
calendar year.

	25.  	WAIVER. No delay or omission in the exercise of any right or remedy by Landlord shall impair
such right
or remedy or be construed as a waiver. No act or conduct of Landlord, including without
limitation,
acceptance of the keys to the Premises, shall constitute an acceptance of the surrender of
the Premises by
Tenant before the expiration of the Term. Only written notice from Landlord to Tenant shall
constitute
acceptance of the surrender of the Premises and accomplish termination of the Lease.
Landlord’s consent
to or approval of any act by Tenant requiring Landlord’s consent or approval shall not be
deemed to waive
or render unnecessary Landlord’s consent to or approval of any subsequent act by Tenant. Any
waiver by
Landlord of any Default must be in writing and shall not be a waiver of any other Default
concerning the
same or any other provision of the Lease.
	 
	26.  	SURRENDER OF PREMISES. Upon expiration of the Term, Tenant shall surrender to Landlord the
Premises and all tenant improvements and alterations clean and in the same condition as
existed at the
Commencement Date, except for ordinary wear and tear and Alterations which Tenant has the
right or is
obligated to remove under the provisions of ¶ 14. herein. Tenant shall remove all personal
property
including, without limitation, all wallpaper, paneling and other decorative improvements or
fixtures and shall
perform all restoration made necessary by the removal of any alterations or Tenant’s
fixtures, furnishings,
equipment and other personal property before the expiration of the Term, including, for
example, restoring
all wall surfaces to their condition as of the Commencement Date. In any event, Tenant shall
cause the
following to be done prior to the expiration or the sooner termination of this Lease: (i) all
interior walls shall
be cleaned so that they appear freshly painted; (ii) all tiled floors shall be cleaned and
waxed; (iii) all
carpets shall be cleaned and shampooed; (iv) all broken, marred, stained or nonconforming
acoustical
ceiling tile shall be replaced; (v) all exterior and interior windows shall be washed; (vi)
the HVAC system
shall be serviced by a reputable and licensed service firm and left in good operating
condition and repair as
so certified by such firm; and (vii) the plumbing and electrical systems and lighting shall
be placed in good
order and repair (including replacement of any burned out, discolored or broken light bulbs,
ballasts, or
lenses). Landlord can elect to retain or dispose of in any manner Tenant’s personal property
not removed
from the Premises by Tenant prior to the expiration of the Term. Tenant waives all claims
against Landlord
for any damage to Tenant resulting from Landlord’s retention or disposition of Tenant’s
personal property.
Tenant shall be liable to Landlord for Landlord’s cost for storage, removal and disposal of
Tenant’s
personal property.
	 
	27.  	HOLDOVER. If Tenant with Landlord’s consent remains in possession of the Premises after
expiration of
the Term or after the date in any notice given by Landlord to Tenant terminating this Lease,
such
possession by Tenant shall be deemed to be a month to month tenancy cancelable by either
party on thirty
(30) days written notice given at any time by either party and all provisions of this Lease,
except those
pertaining to Term, renewal options and Base Rent, shall apply and Tenant shall thereafter
pay monthly
Base Rent computed on a per month basis, for each month or part thereof (without reduction
for any partial
month) that Tenant remains in possession, in an amount equal to one hundred thirty-five
percent (135%) of
the Base Rent that was in effect for the last full calendar month immediately preceding
expiration of the
Term.
	 
	   	If Tenant holds over after the expiration or earlier termination of the Term hereof,
without the consent of Landlord, Tenant shall become a Tenant at sufferance only with a
continuing obligation to pay Rent provided that the Base Rent shall be one hundred fifty
percent (150%) of the Base Rent that was in effect for the last full calendar month
immediately preceding expiration of the Term for the first thirty (30) days of such
holdover, and two hundred percent (200%) of such Base Rent thereafter during the pendency
of such holdover. In any such case of Holdover without the consent of Landlord, the monthly
Base Rent shall be computed on a per-month basis, for each month or part thereof (without
reduction for any partial month) that Tenant remains in possession. Acceptance by Landlord
of Rent after expiration or earlier termination of the Term shall not constitute a consent
to a holdover hereunder or result in a renewal. The foregoing
provisions of this ¶ 27 are in
addition to and do not affect Landlord’s right of re-entry or any rights of Landlord
hereunder or as otherwise provided by law. If Tenant fails to surrender the Premises upon
the expiration of this Lease despite demand to do so by Landlord, Tenant shall indemnify
and hold Landlord harmless from all loss or liability arising out of such failure,
including without limitation, any claim made by any succeeding tenant founded on or
resulting from such failure to surrender. No provision of this ¶ 27 shall be construed as
implied consent by Landlord to any holding over by Tenant. Landlord expressly reserves the
right to require Tenant to surrender possession of the Premises to Landlord as provided in
this Lease upon expiration or other termination of this Lease. The
provisions of this ¶ 27
shall not be considered to limit or constitute a waiver of any other rights or remedies of
Landlord provided in this Lease or at law.
	 
	28.  	NOTICES. All notices, demands, or other communications required or contemplated under this
Lease,
including any notice delivered to Tenant by the Lender, shall be in writing and shall be
deemed to have
been duly given 48 hours from the time of mailing if mailed by registered or certified mail,
return receipt
requested, postage prepaid, or 24 hours from the time of shipping by overnight carrier, or
the actual time of

-18-

 

	   	delivery if delivered by personal service to the parties at the addresses specified in
¶ 1. Either Tenant or Landlord may change the address to which notices are to be given to such
party hereunder by giving written notice of such change of address to the other in
accordance with the notice provisions hereof.

	29.  	OPTIONS TO EXTEND.

	 	a.  	Grant of Options. Tenant shall have the right, at its option, to extend the
Lease for two (2)
additional periods of thirty (30) months each (the
“Extended Terms”) on an “as is”
basis, each
such Extended Term commencing at the expiration of the then current Term, provided
that at the
time of exercise and at the time of commencement of each Extended Term, Tenant is not
in default
under this Lease beyond the expiration of applicable notice and cure periods.
	 
	 	b.  	Exercise of Option. If Tenant decides to extend the Lease for an Extended
Term, Tenant shall
give written notice to Landlord of its election to extend not less than nine (9)
months prior to the
expiration of the then current Term. Tenant’s failure to give timely notice to
Landlord of Tenant’s
election to extend shall be deemed a waiver of Tenant’s right to extend. The terms
and conditions
applicable to each Extended Term shall be the same terms and conditions contained in
this Lease
except that Tenant shall not be entitled to any further option to extend beyond these
two extension
options. The Base Rent for each Extended Term shall be determined in accordance with
¶ 29.c.
below:
	 
	 	c.  	Determination of Base Rent During Each Extended Term

	 	1)  	Agreement of Base Rent. Landlord shall provide Tenant with
written notice of the
proposed Fair Market Rental Value (as defined below) no later than three (3)
months prior
to the expiration of the then current Term. Landlord and Tenant shall have
thirty (30) days
after Landlord provides the proposed Fair Market Rental Value in which to
agree on the
Base Rent for that Extended Term. The “Fair Market Rental
Value” of the
Premises for
that Extended Term shall be the Base Rent per rentable square foot as of the
commencement of that Extended Term, including three percent (3%) annual
increases,
taking into consideration all relevant market factors, including the use of
the Premises
permitted under this Lease, the quality, size, design and location of the
Premises, and the
rental value paid by tenants for lease renewals or extensions in premises of
comparable
size, quality and location. Base Rent for the first twelve (12) months of
that Extended
Term shall be 95% of the Fair Market Rental Value, with 3% annual increases to
be
effective at the beginning of each subsequent lease year. If Landlord and
Tenant agree on
the Base Rent for that Extended Term during the thirty (30) day period, they
shall
immediately execute an amendment to this Lease stating the new Base
Rent.
Notwithstanding any other provision of this Lease, the Base Rent for the first
twelve (12)
months of each Extended Term shall be no less than the scheduled Base Rent for
the last
month of the previous Lease Term plus three percent (3%), with three percent
(3%) annual
increases to be effective at the beginning of each subsequent lease year.
	 
	 	2)  	Selection of Appraisers. If Landlord and Tenant are unable to
agree on the Base Rent
for that Extended Term within the thirty (30) day period, then within ten (10)
business days
after the expiration of the thirty (30) day period and provided that Tenant
has timely
exercised the subject renewal option in accordance with ¶ 29.b., Landlord and
Tenant each
at its own cost and by giving notice to the other party, shall appoint a
competent and
disinterested real estate appraiser with at least five (5) years full-time
commercial appraisal
experience in the Milpitas, California, market area to appraise the Fair
Market Rental Value
of the Premises and set the Base Rent for that Extended Term. If either
Landlord or
Tenant does not appoint an appraiser within said ten (10) business days, the
single
appraiser appointed shall be the sole appraiser and shall set the Base Rent
during that
Extended Term. If two (2) appraisers are appointed by Landlord and Tenant as
stated
herein, they shall meet promptly and attempt to set the Base Rent for that
Extended Term.
If the two (2) appraisers are unable to agree within thirty (30) days after
the second
appraiser has been appointed, they shall attempt to select a third appraiser
meeting the
same qualifications within ten (10) business days after the last day the two
(2) appraisers
are given to set the Base Rent. If they are unable to agree on the third
appraiser, either
Landlord or Tenant, by giving ten (10) days’ notice to the other party, can
apply to the then
President of the Real Estate Board or to the Presiding Judge of the Superior
Court of the
County of Santa Clara, for the selection of a third appraiser who meets the
qualifications
stated herein. Landlord and Tenant each shall bear one-half (1/2) of the cost
of appointing
the third appraiser and of paying the third appraiser’s fee. The third
appraiser, however
selected, shall be a person who has not previously acted in any capacity for
either
Landlord or Tenant, or their affiliates.
	 
	 	3)  	Value Determined by Three (3) Appraisers. Within thirty (30) days
after the selection of
the third appraiser, a majority of the appraisers shall set the Base Rent for
that Extended
Term. If a majority of the appraisers are unable to set the Base Rent within
the stipulated
period of time, Landlord’s appraiser shall arrange for simultaneous exchange
of written
appraisals from each of the appraisers and the three (3) appraisals shall be
added
together and their total divided by three (3); the resulting quotient shall be
the Base Rent
for the Premises for that Extended Term. If, however, the low appraisal
and/or the high
appraisal are/is more than fifteen percent (15%) lower and/or higher than the
middle
appraisal, such low appraisal and/or high appraisal shall be disregarded. If
only one (1)
appraisal is disregarded, the remaining two (2) appraisals shall be added
together and

-19-

 

	 	   	their total divided by two (2); the resulting quotient shall be the Base
Rent for the Premises for that Extended Term. If both the low appraisal and
the high appraisal are disregarded as stated in this ¶ 29.c.3), the middle
appraisal shall be the Base Rent for the Premises at the commencement of that
Extended Term.

	30.  	PREVIOUS LEASE. The previous lease for the Premises
between the parties hereto (the “Prior
Lease”)
shall continue in full force and effect through December 31, 2003, but shall have no effect
thereafter except
as to obligations existing as of December 31, 2003 but not yet satisfied including, without
limitation, any
and all indemnification obligations.
	 
	31.  	MISCELLANEOUS PROVISIONS.

	 	a.  	Time of Essence. Time is of the essence of each provision of this Lease.
	 
	 	b.  	Successor. This Lease shall be binding on and inure to the benefit of the
parties and their
successors, except as provided in ¶ 19.
	 
	 	c.  	Landlord’s Consent. Any consent required by Landlord under this Lease must be
granted in
writing and may be withheld or conditioned by Landlord in its sole and absolute
discretion unless
otherwise provided.
	 
	 	d.  	Personal Rights. Notwithstanding any other provision(s) of this Lease to the
contrary, any
provisions of this Lease providing for the renewal, extension or early termination of
the Lease
and/or for the expansion of the Premises (to include without limitation rights to
negotiate, rights of
first refusal, etc.) shall be (i) personal to the original Tenant and shall not be
assignable or
otherwise transferable other than to a Permitted Transferee (either voluntarily or
involuntarily) to
any third party for any reason whatsoever, and (ii) conditioned upon Tenant not then
being in
default under this Lease.
	 
	 	e.  	Commissions. Each party represents that it has not had dealings with any real
estate broker,
finder or other person with respect to this Lease in any manner, except for the
Broker(s) identified
in ¶ 1., who shall be compensated by Landlord in accordance with the separate agreement
between Landlord and the Broker(s).
	 
	 	f.  	Other Charges; Legal Fees. If Landlord becomes a party to any litigation
concerning this Lease
or the Premises by reason of any act or omission of Tenant or Tenant’s authorized
representatives,
Tenant shall be liable to Landlord for reasonable attorneys’ fees and court costs
incurred by
Landlord in the litigation, after Landlord provides written notice of the action
to Tenant.
Notwithstanding the foregoing, Tenant will reimburse Landlord for up to $2,000 in
reasonable
attorney’s fees and court costs incurred prior to Landlord giving Tenant notice of the
action.
Should the court render a decision which is thereafter appealed by any party thereto,
Tenant shall
be liable to Landlord for reasonable attorneys’ fees and court costs incurred by
Landlord in
connection with such appeal.
	 
	 	   	If either party commences any litigation against the other party or files an appeal
of a decision arising out of or in connection with the Lease, the prevailing party
shall be entitled to recover from the other party reasonable attorneys’ fees and
costs of suit. If Landlord employs an attorney to recover delinquent charges,
Tenant agrees to pay all attorneys’ fees and costs charged to Landlord in addition
to Rent, late charges, interest and other sums payable under this Lease.
	 
	 	g.  	Landlord’s Successors. In the event of a sale or conveyance by Landlord of the
Premises, the
same shall operate to release Landlord from any liability under this Lease, including
as to any
Security Deposit to the extent transferred to Landlord’s successor-in-interest, and in
such event
Landlord’s successor in interest shall be solely responsible for all obligations of
Landlord under this
Lease.
	 
	 	h.  	Interpretation. This Lease shall be construed and interpreted in accordance
with the laws of the state in which the Premises are located. This Lease constitutes
the entire agreement between the parties with respect to the Premises, except for
such guarantees or modifications as may be executed in writing by the parties from
time to time. When required by the context of this Lease, the singular shall include
the plural, and the masculine shall include the feminine and/or neuter. “Party” shall
mean Landlord or Tenant. If more than one person or entity constitutes Landlord or
Tenant, the obligations imposed upon that party shall be joint and several. The
enforceability, invalidity or illegality of any provision shall not render the other
provisions unenforceable, invalid or illegal.
	 
	 	i.  	Auctions. Tenant shall not conduct, nor permit to be conducted, either voluntarily or
involuntarily,
any auction upon the Premises without first having obtained Landlord’s prior
written consent. Notwithstanding anything to the contrary in this Lease, Landlord
shall not be obligated to exercise any standard of reasonableness in determining
whether to grant such consent.
	 
	 	j.  	Quiet Possession. Upon payment by Tenant of the Rent for the Premises and the observance
and performance of all of the covenants, conditions and provisions on Tenant’s part
to be observed and performed under this Lease, Tenant shall have quiet possession
of the Premises for the entire Term hereof subject to all of the provisions of this
Lease.

-20-

 

	 	k.  	Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be controlled by
the typewritten or handwritten provisions.
	 
	 	l.  	Offer. Preparation of this Lease by Landlord or Landlord’s agent and submission of
same to
Tenant shall not be deemed an offer to lease to Tenant. This Lease is not
intended to be binding until executed by all Parties hereto.
	 
	 	m.  	Amendments. This Lease may be modified only in writing, signed
by the Parties in interest at the time of the modification. The parties
shall amend this Lease from time to time to reflect any adjustments that
are made to the Base Rent or other Rent payable under this Lease. As long
as they do not materially change Tenant’s obligations hereunder, Tenant
agrees to make reasonable non-monetary modifications to this Lease as may
be reasonably required by Lender(s) in connection with the obtaining of
normal financing or refinancing of the property of which the Premises are a
part.
	 
	 	n.  	Construction. The Landlord and Tenant acknowledge that each has
had its counsel review this Lease, and hereby agree that the normal rule of
construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this
Lease or in any amendments or exhibits hereto.
	 
	 	o.  	Captions. Article, section and paragraph captions
are not a part hereof
	 
	 	p.  	Exhibits. For reference
purposes the Exhibits are listed below:

	 	   	Exhibit A: The Premises
	 
	 	   	Exhibit B: Rules and Regulations
	 
	 	   	Exhibit C: Covenants, Conditions And Restrictions

	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 
	LIMAR REALITY CORP. #4, a California corporation	 	LSI LOGIC CORPORATION, a Delaware corporation
	 
	 	 	 	 	 	 
	BY:

	 	/s/ Theodore H. Kruttschnitt
	 	By:
	 	/s/ David G. Pursel
	

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name :

	 	Theodore H. Kruttschnitt
	 	Name :
	 	David G. Pursel
	 
	 	 	 	 	 	 
	Title:

	 	President
	 	Title :
	 	Vice President, General Counsel

&Corporate Secretary
	 
	 	 	 	 	 	 
	Date :

	 	3/29/04
	 	Date:
	 	March 15, 2004
	

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	LSI Logic Legal Department
	 
	 	 	 	 	 	 
	

	 	 	 	Date:
	 	03/15/04
	

	 	 	 	 	 	 
	 	 	 	 	Approved as to from
	 
	 	 	 	 	 	 
	

	 	 	 	By
	 	/s/ Andrew S. Hughes
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	LSI Logic Corporate Real Estate
	 
	

	 	 	 	Date :
	 	3-16-04
	

	 	 	 	 	 	 
	 	 	 	 	Approved as to from
	 
	 	 	 	 	 	 
	

	 	 	 	By
	 	/s/ Donald A. Costello
	

	 	 	 	 	 	 

-21-

 

EXHIBIT A

The Premises

This Exhibit A is
attached to and made a part of that certain Lease (the
“Lease”) dated December
31, 2003, by and between Limar Realty Corp. #4 as Landlord and LSI Logic Corporation, a Delaware
corporation, as Tenant.

 

 

EXHIBIT A

The Premises

(continued)

Legal Description

All that certain Real Property in the City of Milpitas, County of Santa Clara, State of California,
described as follows:

Parcel 2, as shown on Parcel Map filed March 6,1981 in Book 480 of Maps, at Pages 32 and 33,
Santa Clara County Records.

 

 

EXHIBIT B

Rules & Regulations

This Exhibit B is attached to and made a part of that certain Lease dated December 31, 2003 by and
between Limar Realty Corp. #4 as Landlord and LSI Logic Corporation, a Delaware corporation, as
Tenant.

For the purpose of these Rules & Regulations the word Premises shall refer to the Premises Tenant
is leasing as described in the Lease.

	 	1.  	No sign, placard, picture, advertisement, name or notice (collectively, “Signs”) shall
be installed or displayed on any part of the Premises after the Commencement Date without
the prior written consent of Landlord, except that Tenant may post Signs inside the
Building which are not visible from the exterior of the Building. Landlord shall have the
right to remove, at Tenant’s expense and without notice, any sign installed or displayed in
violation of this rule. All approved signs or lettering on doors and walls shall be
printed, painted, affixed or inscribed at the expense of Tenant.
	 
	 	2.  	Except for that which exists as of the Commencement Date or that consented to in
writing by Landlord, no draperies, curtains, blinds, shades, screens or other devices shall
be hung at or used in connection with any window or exterior door or doors of the Premises
and no awning shall be permitted on any part of the Premises. Tenant shall not place
anything against or near glass partitions or doors or windows which may appear unsightly
from outside the Premises.
	 
	 	3.  	Neither Tenant nor any employee or invitee of Tenant, shall make any structural roof or
terrace penetrations.
	 
	 	4.  	Tenant shall not cause any unnecessary labor by carelessness or indifference to the
good order and cleanliness of the Premises. Landlord shall not in any way be responsible
to any Tenant for any loss of property on the Premises, or for any damage to any Tenant’s
property.
	 
	 	5.  	Landlord will furnish Tenant, free of charge, with six (6) keys to the Premises.
Tenant shall not make or have made additional keys without Landlord’s prior written
consent, and Tenant shall not alter any lock or install a new additional lock or bolt on
any door of its Premises without Landlord’s prior written consent, except for electronic
locks existing at the Commencement Date. Tenant, upon the termination of its tenancy,
shall deliver to Landlord the keys of all locks for doors on the Premises, and in the event
of loss of any keys furnished by Landlord, shall pay Landlord therefor.
	 
	 	6.  	If Tenant requires telegraphic, telephonic, burglar alarm or similar services that do
not exist as of the Commencement Date, it shall first obtain, and comply with, Landlord’s
reasonable instructions in their installation.
	 
	 	7.  	Tenant shall not place a load upon any floor of the Premises which exceeds the load per
square foot which such floor was designed to carry and which is allowed by law. Landlord
shall have the reasonable right to prescribe the weight, size and position of all
equipment, materials, furniture or other property brought into the Premises. Heavy
objects shall, if considered necessary by Landlord, stand on such platforms as determined
by Landlord to be necessary to properly distribute the weight. Business machines and
mechanical equipment belonging to Tenant, which cause noise or vibration that may be
transmitted to the structure of the Premises to such a degree as to be objectionable to
Landlord, shall be placed and maintained by Tenant, at Tenant’s expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibrations. Landlord will not
be responsible for loss of, or damage to, any such equipment or other property from any
cause, and all damage done to the Premises by maintaining or moving such equipment or other
property shall be repaired at the expense of Tenant.
	 
	 	8.  	Tenant shall not use or keep in the Premises any kerosene, gasoline or inflammable or
combustible fluid or material other than those limited quantities necessary for the
operation or maintenance of office equipment. Tenant shall not use or permit to be used in
the Premises any foul or noxious gas or substance, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord by reason of noise,
odors or vibrations. Tenant shall not bring or keep or permit to be brought or kept in the
Premises any animal life form, other than human, except seeing eye dogs when in the company
of their masters.
	 
	 	9.  	Tenant agrees to cooperate fully with Landlord to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice.
	 
	 	10.  	Landlord reserves the right, exercisable with one hundred twenty (120) days prior
written notice but without liability to Tenant, to change the name and street address of
the Premises.
	 
	 	11.  	The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign substance of
any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or
damage resulting for the violation of this rule shall be borne by the Tenant who, or whose
employees or invitees, shall have caused it.

 

 

EXHIBIT B

Rules & Regulations

(continued)

	 	12.  	Tenant shall not sell, or permit the retail sale of newspapers, magazines, periodicals,
theater tickets or any other goods or merchandise to the general public in or on the Premises.
Tenant shall not use the Premises for any business or activity other than that specifically
provided for in this Lease. Notwithstanding the above, Tenant shall have the right to
install vending machines for use by Tenant, its employees and invitees.
	 
	 	13.  	Tenant shall not interfere with radio or television broadcasting or reception from or in
neighboring areas.
	 
	 	14.  	Canvassing, soliciting and distribution of handbills or any other written materials, and
peddling in the Property are prohibited, and Tenant shall cooperate to prevent same.
	 
	 	15.  	Landlord reserves the right to exclude or expel from the Premises any person who, in
Landlord’s judgment, is intoxicated or under the influence of liquor or drugs or who is in
violation of any of the Rules and Regulations of the Premises or in violation of the CC&R’s.
	 
	 	16.  	Tenant shall store all its trash and garbage within its Premises or in reasonable locations
specifically identified by Landlord for such purposes. Tenant shall not place in any trash
box or receptacle any material which cannot be disposed of in the ordinary and customary
manner of trash and garbage disposal. All garbage and refuse disposal shall be made in
accordance with reasonable directions issued from time to time by Landlord.
	 
	 	17.  	The Premises shall not be used for the storage of merchandise held for sale to the general
public, or for lodging nor shall the Premises by used for any improper, illegal or
objectionable purpose. No cooking (other than customary heating or ordinary lunchroom items
for Tenant’s employees, including existing cafeterias) shall be done or permitted by any
tenant on the Premises, except that use by Tenant in its kitchen, if any, located in the
Premises and Underwriters Laboratory’s approved equipment for brewing coffee, tea, hot
chocolate and similar beverages and microwaving food shall be permitted, provided that such
kitchen, equipment and use is in accordance with all applicable federal, state, county and
city laws, codes, ordinances, rules and regulations.
	 
	 	18.  	Without the written consent of Landlord, Tenant shall not use the name of the Premises in
connection with or in promoting or advertising the business of Tenant except as Tenant’s
address.
	 
	 	19.  	Tenant shall comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency.
	 
	 	20.  	Tenant assumes any and all responsibility for protecting its Premises from theft, robbery and
pilferage.
	 
	 	21.  	The requirements of Tenant will be attended to only upon appropriate application to the
office of Landlord by an authorized individual. Employees of Landlord shall not perform any
work or do anything outside of their regular duties unless under special instructions from
Landlord.
	 
	 	22.  	Tenant shall not park its vehicles in any parking areas outside the Premises. Tenant shall
not store or abandon vehicles in the Premises parking areas nor park any vehicles in the
Premises parking areas other than automobiles, motorcycles, motor driven or non-motor driven
bicycles, four-wheeled trucks, or other equipment used in the operation of Tenant’s business.
Tenant, its agents, employees and invitees shall not park any one (1) vehicle in more than one
(1) parking space.
	 
	 	23.  	Landlord reserves the right to make such other reasonable Rules and Regulations as, in its
judgment, may from time to time be appropriate for safety and security, for care and
cleanliness of the Premises and for the preservation of good order therein. Tenant agrees to
abide for all such Rules and Regulations hereinabove stated and any additional Rules and
Regulations which are adopted.
	 
	 	24.  	Tenant shall be responsible for the observance of all of the foregoing Rules and Regulations
by Tenant’s employees, agents, clients, customers, invitees and guests.

 

 

EXHIBIT C

Covenants, Conditions
And Restrictions

This Exhibit C is attached to and made a part of that certain Lease dated December 31, 2003 by and
between Limar Realty Corp. #4 as Landlord and LSI Logic Corporation, a Delaware corporation, as
Tenant.

E 545 PAGE 189

DECLARATION OF COVENANTS, CONDITIONS

AND RESTRICTIONS OF THE

          OAK CREEK BUSINESS PARK          

     THIS DECLARATION is made on May 15, 1979 by THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation (hereinafter called “Declarant”), as owner of that certain
real property (the “Subject Property”) situated in the City of Milpitas, County of Santa
Clara, State of California described in Exhibit “A” hereto which exhibit is by this reference
incorporated herein as if fully set forth herein.

ARTICLE 1 

DEFINITIONS

     1.1
Unless the context otherwise specifies or requires, the terms defined in this
Article shall, for all purposes of this Declaration, have the meanings herein specified.

     1.2 Architect: The term “Architect” shall mean a
person holding a certificate to practice architecture in the State of California under authority
of the Business and Professions Code of the State of California.

     1.3 Declaration: The term “Declaration” shall mean this Declaration of
Covenants, Conditions and Restrictions.

     1.4 Deed of Trust: The terra “Deed of Trust” or “Trust Deed” shall mean a
mortgage as well as a deed of trust.

 

 

E 545 PAGE 190

     1.5 Approving Agent: The term “Approving Agent” shall mean, in the following
order or precedence:

          A. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, whose present
address is 155 Moffett Park Drive, Building A, Suite 101, Sunnyvale, California 94086 (hereinafter
referred to as “Prudential”), shall be the Approving Agent until Prudential shall have resigned as
Approving Agent by executing a written resignation and causing an original of same to be recorded,
and by giving written notice of such resignation to each Owner of record, as shown on the most
recent county assessor’s roll, of real property then subject to this Declaration.

          B. Any association (whether or not incorporated) organized by the Owners of sixty-six and
two-thirds percent (66-2/3%) of the land area (exclusive of portions dedicated to a public agency
or authority for a public use) then subject to this Declaration for the purpose of acting as and
assuming the functions of an Approving Agent, in which membership is available to all Owners and
decisions are made on the basis of majority vote with one vote assigned for each square foot of
land owned by each Owner, but only if the Owners organizing such association within not less than
six (6) months from the date that Prudential shall have ceased to be the Approving Agent, shall
have (i) organized such association and (ii) executed and recorded a statement

-2-

 

E 545 PAGE 191

in the form of an amendment to this Declaration as described in Paragraph 8.2 setting forth
that such organization has been formed for the purpose of acting as Approving Agent pursuant to
this Declaration and (iii) shall have, given written notice to all Owners of record of real
property then subject to this Declaration that such association has been formed.

     1.6 Structures: The term “structure(s)” shall include all structures, buildings,
outbuildings, sheds, fences and screening walls over three (3) feet in height, barriers, or
retaining walls.

     1.7 Mortgagee: The term “Mortgagee” shall mean a beneficiary under or a holder of a
Deed of Trust as well as a mortgagee under a mortgage.

     1.8 The Oak Creek Business Park: The term “The Oak Creek Business Park” shall mean all
of the real property described in Exhibit “A” hereto.

     1.9 Restrictions: The term “Restrictions” shall mean the Covenants, Conditions and
Restrictions set forth in this Declaration, as it may from time to time be amended or supplemented.

     1.10 Owner: The term “Owner” shall mean and refer to any person owning a fee estate in
the land, or any portion thereof, contained within the Oak Creek Business Park, but
excluding either (a) any person who holds such interest as

-3-

 

E 545 PAGE 192

security for the payment of an obligation or (b) any person holding a leasehold estate.

     1.11 Record, Recorded: The terms “record” or “recorded” shall mean, with respect to
any document, the recordation of said document in the office of the County Recorder of the County
of Santa Clara, State of California.

     1.12 Sign: The term “sign” shall mean any structure, device or contrivance, electric or
non-electric, and all parts thereof which are erected or used for advertising purposes upon or
within which any poster, bill, bulletin, printing, lettering, painting, device or other advertising
of any kind whatsoever is used, placed, posted or otherwise fastened or affixed to ground or
structures.

     1.13 Streets: The term “street(s)” shall mean any publicly dedicated street, highway,
or other publicly dedicated thoroughfare within or adjacent to the Oak Creek Business Park and
shown on any recorded subdivision or parcel map, or record of survey, whether designated thereon as
a publicly dedicated street, boulevard, place, drive, road, terrace, way, lane, circle or court.

     1.14 Visible From Neighboring Property: The term “visible from neighboring property”
shall mean, with respect to any given object, that such object is or would be visible to a person
six (6) feet tall having 20/20 vision and standing on any part of such neighboring property at an
elevation

-4-

 

E 545 PAGE 193

no greater than the elevation of the base of the object being viewed.

     1.15 Person: The term “person” shall mean an individual, group of individuals,
corporation, partnership, trust, unincorporated business association or such other legal entity as
the context in which such term is used may imply.

     1.16 Lot: The term “lot” shall mean any parcel of land contained within the Oak Creek Business
Park as divided or subdivided on subdivision or parcel map(s) recorded in the official records of
the Recorder of Santa Clara County, California, as they from time to time become current.

     1.17 Front: The term “front” shall mean, with respect to any structure, any wall
facing a street.

ARTICLE 2 

PROPERTY SUBJECT TO THE

PARK RESTRICTIONS

     2.1 General Declaration Creating the Mutual Restrictions: Declarant hereby
declares that all of the real property located in the County of Santa Clara, State of California as
described in Exhibit “A”, which exhibit is attached hereto and incorporated herein by this
reference, (sometimes hereinafter called the “Oak Creek Business Park”) is and shall be, conveyed,
hypothecated, encumbered, leased, occupied, built upon or otherwise used, improved or trans-

-5-

 

E 545 PAGE 194

ferred, in whole or in part, subject to the Restrictions and that all of said Restrictions,
and all the covenants, conditions and agreements herein contained, are declared and agreed to be in
furtherance of a general plan for the subdivision, improvement and sale of said real property and
are established for the purpose of enhancing and perfecting the value, desirability, and
attractiveness of said real property and. every part thereof. Declarant further declares that (a)
that the Restrictions and each of the covenants, conditions and agreements herein contained are
made for the direct, mutual and reciprocal benefit of each and every lot contained within the Oak
Creek Business Park and that such Restrictions are and shall be mutual equitable servitudes
burdening each lot for the benefit of all other lots within the Oak Creek Business Park and (b) the
Restrictions and each of the covenants, conditions and agreements herein contained shall be
“covenants running with the land” burdening each lot within the Oak Creek Business Park for the
benefit of all other lots within the Oak Creek Business Park, the burdens of which shall be binding
upon each Owner, lessee, licensee, occupant or user of each lot within the Oak Creek Business Park,
his successors and assigns, for the benefit of each Owner of all other lots within the Oak Creek
Business Park, his successors and assigns.

-6-

 

E 545 PAGE 195

ARTICLE 3

APPROVAL OF PLANS FOR STRUCTURES

     3.1 Approval Required: So long as there is a then serving Approving Agent, no
structure shall be erected, placed, constructed, substantially remodeled, rebuilt or reconstructed
on any land subject to this Declaration until the following procedures have been fully complied
with and the Approving Agent has approved in writing the Preliminary Plans (as defined below) and
the Final Plans (as defined below):

          A. The owner, or lessee, licensee, or other occupant of the lot to be improved or his
authorized agent (the “Applicant”) shall deliver to the Approving Agent preliminary plans and
specifications (the “Preliminary Plans”) in such form and containing such information as may be
required by the Approving Agent for the following:

               (1) A site development plan showing the
location of all proposed driveways, parking areas, walkways, landscaped areas, storage and refuse
areas, and building area;

               (2) A landscaping plan for the particular lot;

               (3) A sign and lighting plan;

               (4) A building elevation plan showing dimensions, materials and exterior color schemes;

-7-

 

E 545 PAGE 196

               (5) A grading plan.

Such Preliminary Plans shall be submitted in writing in duplicate over the authorized
signature of the Applicant.

          B. At such time as the Approving Agent shall have approved in writing the Preliminary Plans
and prior to the submission of said Final Plans to the City of Milpitas, the Applicant shall
submit to the Approving Agent complete and detailed final plans, specifications and working drawing
(the “Final Plans”) with regard to the proposed
improvements, which Final Plans will be in such
form as may then be required by the City of Milpitas for review by said City and shall contain such
additional information as may be required by the Approving Agent; provided, such Final Plans need not include detailing with regard to interior
improvements such as interior partitioning walls.

          C. No such prior approval of any Preliminary Plans or Final Plans shall be required if there
is no then serving Approving Agent to so approve such plans. Changes in approved Preliminary Plans
or approved Final Plans which materially affect landscaping, signing, building size, placement or
external appearance must be similarly submitted to and approved by the Approving Agent.

     3.2 Additional Approval Required: So long as there is a then serving Approving Agent,
no exterior surface of any structure or improvement existing on any lot subject to this

-8-

 

E 545 PAGE 197

Declaration shall be painted, texturized or otherwise changed, no alterations, additions or
changes of any type whatsoever shall be made to any landscaping placed on any lot subject to this
Declaration, and no additions or alterations to any paved area on any lot subject to this
Declaration shall be made until plans for such painting, alterations, additions or changes,
including samples of colors, materials, landscaping plans, and/or plans and specifications with
regard to paving, as the case may require, together with such other information as shall be
required by the Approving Agent, shall have been submitted to the Approving Agent and the Approving
Agent shall have approved in writing such requested change.

     3.3 Basis for Approval: The Approving Agent shall have the right to disapprove any
plans and specifications submitted hereunder for any reason (provided that such approval shall not
be unreasonably withheld), including but not limited to any of the following:

          A. Failure to comply with any of the Restrictions;

          B. Failure to include information in such plans and specifications as may have been reasonably
requested by the Approving Agent;

          C. Objection to the exterior design of the proposed structures or the appearance of
materials to be

-9-

 

E 545 PAGE 198

used in the construction of any proposed structure which are found by the Approving Agent to
be incompatible with existing structures in the Oak Creek Business Park;

          D. Objections based upon the inadequacy of the number of onsite parking spaces considering (1)
the contemplated use or future possible use of the structures proposed and (2) the availability
of additional parking offsite.

          E. Objection to the location of any proposed structure upon any lot as it relates to other
lots within the Oak Creek Business Park;

          F. Objection to the grading plan for any lot;

          G. Objection to the color scheme, finish, proportions, style or architecture, height, bulk or
appropriateness of any structure as they relate to other structures within the Oak Creek Business
Park;

          H. Objection to the landscaping materials as they relate to other landscaping
materials then used or contemplated for use within the Oak Creek Business Park;

          I. Any other matter which, in the judgment of the Approving Agent, would render the proposed
structure or structures or use inharmonious with the general plan for improvement of the Oak Creek
Business Park or with structures or landscaping then located upon or proposed to be located upon
other lots or other properties within the Oak Creek Business Park.

-10-

 

E 545 PAGE 199

     3.4 Approval: Upon approval by the Approving Agent of any plans and
specifications submitted hereunder, a copy of such plans and specifications as approved shall be
deposited for permanent record with the Approving Agent, and a copy of such plans and
specifications bearing such approval, in writing, shall be returned to the applicant submitting the
same.

     3.5 Result of Inaction: If the Approving Agent fails either to approve or disapprove
either the Preliminary Plans or the Final Plans within thirty (30) days after such Preliminary
Plans or Final Plans, as the case may be, have been submitted to it, it shall be conclusively
presumed that the Approving Agent has approved said Preliminary or Final Plans; provided, however,
that if within said thirty (30) day period, the Approving Agent gives written notice of the fact
that more time is required for the review of such plans, there shall be no presumption that the
same are approved until the expiration of a reasonable period of time as set forth in said notice
not to exceed thirty (30) days. Such presumption shall not apply if the review fee required by
Paragraph 3.9 was not paid at the time the plans were first submitted to the Approving Agent.

     3.6 Proceeding with Work: Upon receipt of approval from the Approving Agent pursuant
to this Article, the Owner or lessee to whom the same is given shall as soon as practi-

-11-

 

E 545 PAGE 200

cable satisfy all conditions thereof and diligently proceed with the commencement and
completion of all approved construction, refinishing, alterations and excavations. In all cases
work shall be commenced within one (1) year from the date of such approval. If Applicant fails
to commence construction of the structures within one (1) year from date of such approval, then
the approval given pursuant to this Article shall be deemed revoked unless the Approving Agent
upon request made prior to the expiration of said one (1) year period extends in writing the time
for commencing work. In all cases work shall be completed in accordance with the Preliminary Plans
and the Final Plans within two years from date of issuance of the first (or only) building permit
with regard to such work.

     3.7 Limitation on Approving Agent: In no event shall the Approving Agent disapprove
any plans and specifications solely by reason of the Applicant’s proposed use of the lot if such
use is specifically permitted pursuant to Section 5.1.

     3.8 Liability: Neither the Declarant nor the Approving Agent shall be liable for any
damage, loss or prejudice suffered or claimed on account of:

          A. The approval or disapproval of any plans, drawings and specifications, whether or
not defective;

-12-

 

E 545 PAGE 201

          B. The construction or performance of any work, whether or not done pursuant to
approved plans, drawings and specifications; or

          C. The development of any property within Oak Creek Business Park.

     3.9 Review Fee: An architectural review fee shall be paid to the Approving Agent as
follows:

          A. At such time as Preliminary Plans pertaining to erection, placement, construction,
remodeling or reconstruction of structures within the Oak Creek Business Park are submitted for
approval based on the following schedule:

               (1) When the plans submitted are prepared by an architect, the architectural review fee shall
be Fifty Dollars ($50);

               (2) In all other cases the architectural review fee shall be One Hundred Dollars ($100).

          B. At such time as documents required to be submitted pursuant to paragraph 3.2 above are
submitted for approval, the architectural review fee shall be the sum of Fifty Dollars ($50).

     3.10 Certificate of Compliance: So long as there is an Approving Agent, such Approving
Agent shall within twenty one (21) days following written request therefor by an Owner, execute and
deliver to such requesting Owner a “Certificate of Compliance” stating that the lot specified

-13-

 

E 545 PAGE 202

by such Owner in said request for Certificate of Compliance is in compliance with Article 3 of
these Restrictions, or, if such lot shall not be in compliance with Article 3 of these
Restrictions, stating the nature of such non-compliance and the specific paragraph of this Article
3 with which said lot does not comply.

ARTICLE 4 

LIMITATIONS ON IMPROVEMENTS

     4.1 Utility Lines: All onsite utility transmission lines shall be placed
underground.

     4.2 Coverage: No more than forty five percent (45%) of the square foot area of any M-l
zoned lots shall be occupied by structures. No more than thirty five percent (35%) of the square
foot area of any MPD or HS zoned lots shall be occupied by structures.

     4.3 Minimum Setback Lines: No structures, and no part thereof, shall be placed closer
than fifty feet (50’) from a property line fronting any street (“frontage setback area”); provided,
however, no structure shall be placed closer than 20 feet (20’) from any property line not fronting
on any street (“interior setback area”).

     4.4 Parking Areas: Each parcel shall have facilities for parking sufficient to serve
the business conducted thereon without using adjacent streets therefor, and no use shall be made of
the structures in any parcel which would

-14-

 

E 545 PAGE 203

require parking in excess of the parking spaces on said parcel. No parking spaces shall be
located within, and no parking shall be permitted within, a frontage setback area adjacent to any
street, except that parking shall be permitted within said setback area if such parking is screened
from view from the street by landscaping consisting of shrubbery or berms extending at least forty
eight inches (48”) above the high point of the finished adjacent pavement in said parking area. In
no case shall such parking area be closer than twenty five feet (25’) from a property line fronting
on any street or closer than five feet (5’) from any property line not fronting on any street.

     4.5
On Street Parking. No parking shall be allowed in any public street paved areas or
rights of way located in the Oak Creek Business Park. Said restriction shall be enforced by
municipal ordinances of the City of Milpitas.

     4.6 Storage and Loading Areas: No loading dock, truck loading, storage area or other
such facility shall be located in the front of any building or structure or within any frontage
setback area or between a front of any building or structure and the street which said front faces.
All exterior storage areas shall be screened by chain link fence with redwood slats, a minimum of
six feet (6’) in height.

     4.7 Metal Buildings: No buildings or structures constructed with corragated metal
exterior walls or so-called

-15-

 

E 545 PAGE 204

“Butler type” buildings shall be constructed within the Oak Creek Business Park.

     4.8
Exterior Screening. All electrical and mechanical apparatus, equipment, fixtures
(other than lighting fixtures but including main electrical transformers), whether roof mounted,
exterior wall mounted or pad mounted at grade, including but not limited to, conduit, ducts, vents,
flues and pipes located on the exterior of any structure shall be concealed from view and shall be
treated in a manner acceptable to the Architectural Control Committee.

ARTICLE 5

RESTRICTIONS ON OPERATION AND USE

     5.1 Permitted Uses: Subject to compliance with these Restrictions, the
following uses shall be permitted in the Oak Creek Business Park.

          A. Manufacture (including storage of raw materials and finished products therefrom) of
the following:

               (1) Pharmaceutical and cosmetic products;

               (2) Optical, electronic, timing and measuring instruments for use in research,
development, business and professional facilities; and

               (3) Industrial, communication, transportation and utility equipment;

          B. Wholesaling, warehousing and distribution establishments and public utility
facilities (excluding

-16-

 

E 545 PAGE 205

storing and warehousing of acids, chemicals, cement, plaster, petroleum products
or explosive materials);

          C. Research, experimental and engineering laboratories;

          D. Catalog sales and mail order establishments;

          E. Establishments for the repair, cleaning and servicing of commercial or industrial equipment
or products;

          F. Construction firms, but only construction firms whose activities are carried on entirely
within an enclosed building and which have no construction yard on said lot;

          G. So long as there is an Approving Agent, any commercial use not specifically prohibited by
Paragraph 5.3 which is first approved in writing by the Approving Agent;

          H. So long as there is an Approving Agent, any industrial or manufacturing use not
specifically prohibited by Paragraph 5.3 which is first approved in writing by the Approving Agent;

          I. If there is no Approving Agent, any industrial manufacturing or commercial use permitted
by the then existing zoning or other applicable land use regulations as promulgated by requisite
governmental authorities, except those uses specifically prohibited by Paragraph 5.3.

     5.2 Conduct of Permitted Uses: All permitted uses shall be performed or carried out
entirely within a building

-17-

 

E 545 PAGE 206

that is so designed and constructed. Certain activities which cannot be carried on within a
building may be permitted, but only (a) so long as there is then serving an Approving Agent, if the
Approving Agent specifically consents to use and the location for such activity, in writing, or (b)
if there is no then serving Approving Agent, if allowed under then existing zoning or other
applicable land use regulations except for uses which are specifically prohibited pursuant to
Paragraph 5.3; provided, however, that in either of the foregoing situations such use shall be
permitted only if (i) such activity is screened so as not to be visible from neighboring
property and streets and (ii) all lighting required for such use is shielded from adjacent streets.

     5.3. Prohibited Uses: The following operations and uses shall not be permitted on any
property subject to these Restrictions:

          A. Residential of any type;

          B. Trailer courts, mobile home parks or recreation vehicle camp grounds;

          C. Junk yards or recycling facilities;

          D. Drilling for and/or the removal of oil, gas or other hydrocarbon substances (except
that this provision shall not be deemed to prohibit the entry of the property below a depth of five
hundred (500) feet for such purposes);

-18-

 

E 545 PAGE 207

          E. Commercial excavation except in the course of approved construction;

          F. Distillation of bones;

          G. Dumping, disposal, incineration or reduction of garbage, sewage, offal,
dead animals or refuse;

          H. Fat rendering;

          I. Stockyard or slaughter of animals;

          J. Cemeteries;

          K. Refining of petroleum or of its products;

          L. Smelting of iron, tin, zinc, or other ores;

          M. Jail or honor farms;

          N. Labor or migrant worker camps;

          O. Truck, bus terminals;

          P. Petroleum storage yards.

          Q. Auto wrecking, auto repair or auto painting
establishment.

     5.4 Emissions: No use shall be permitted to exist or operate any lot which:

          A. Emits dust, sweepings, dirt, cinders, fumes, odors, radiation, gases, vapors or
discharges liquid or solid wastes or other harmful matter into the atmosphere or any stream,
river or other body of water which may adversely affect (i) the health or safety of persons
within the area or (ii) the use of property within the Oak Creek Business Park or (iii)
vegetation within the Oak Creek Business Park,

-19-

 

E 545 PAGE 208

nor shall waste or any substance or materials of any kind be discharged into any public
sewer serving the Oak Creek Business Park or any part thereof, in violation of any regulations of
any public body having jurisdiction.

          B. Produces intense glare or heat unless such use is performed only within an enclosed or
screened area and then only in such manner that the glare or heat emitted will not be discernible
from any exterior lot line.

          C. Creates a sound pressure level in violation of any regulation of any public body
having jurisdiction.

          D. Allows the visible emissions of smoke (outside any building) other than the exhausts
emitted by motor vehicles or other transportation facilities in violation of any regulation of
any public body having jurisdiction. This requirement shall also be applicable to the disposal of
trash and waste materials.

          E. Creates a ground vibration that is perceptible, without instruments, at any point
along any of the exterior lot lines.

     5.5 Signs: The Approving Agent may, from time to time, enact sign criteria setting
forth such requirements for signs to be erected within the Oak Creek Business Park as the
Approving Agent may deem desirable, which sign criteria shall become effective upon recordation
thereof in the official records of Santa Clara County. All signs erected

-20-

 

E 545 PAGE 209

by any owner on a lot within the Oak Creek Business Park subsequent to the recoration of said
sign criteria shall be in conformance with the criteria set forth therein. Except as specifically
otherwise allowed in any then existing sign criteria, no sign shall be installed or erected or
placed on any lot other than those signs identifying the name, business and products of the person
or firm occupying the lot and those offering the lots for sale or lease. Until such time as sign
criteria is enacted, all signs shall be approved by the Approving Agent prior to the installation
of said signs.

     5.6 Landscaping Criteria: The Approving Agent may, from time to time, enact
landscaping criteria setting forth such requirements for landscaping to be placed on or in lots
located within the Oak Creek Business Park as the Approving Agent may deem desirable including,
without limitation, amount of area to be plated in sod lawns or other plantings, type of
plantings, placement of irrigation systems, requirements for trees and raised planter boxes, which
landscape criteria shall become effective upon recordation thereof in the official records of Santa
Clara County. All landscaping placed by any owner on a lot within the Oak Creek Business Park
subsequent to the recordation of said landscape criteria shall be in conformance with the criteria
set forth therein.

-21-

 

\

E 545 PAGE 210

     5.7 Storage and Refuse Collection Areas:

          A. No materials, supplies or equipment, including company owned or operated trucks or motor
vehicles, shall be stored in any area on a lot except inside a closed building, or behind a visual
barrier screening such areas so that they are not visible from the neighboring properties or
streets. No storage areas shall be maintained between a street and the front of the structure
nearest such street.

          B. All outdoor refuse collection areas shall be visually screened so as not to be visible from
streets and neighboring property. No refuse collection areas shall be maintained between a street
and the front of the structure nearest such street.

     5.8 Condition of Property: The Owner of each lot shall at all times keep and properly
maintain the premises, structures, improvements, landscaping, paving and appurtenances situate
thereon in a safe, clean, sightly and wholesome condition and in a good state of repair and shall
comply in all respects with all governmental, health, fire and police requirements and regulations,
and shall cause to be regularly removed at its own expense any rubbish of any character whatsoever
which may accumulate on such lot, and in particular and without limitation:

          A. All areas of each lot not used for structures, walkways, paved driveways, parking or
storage areas shall be

-22-

 

E 545 PAGE 211

at all times maintained by a professional landscape engineer or gardner in a fully and well
kept landscaped condition utilizing ground cover and/or shrub and tree materials. Undeveloped areas
proposed for future expansion shall be maintained in a weed-free condition. An automatic
underground landscape irrigation system shall be provided by the Owner of each lot which is
sufficient to properly irrigate all landscaped areas within such lot.

          B. Parking areas shall be paved so as to provide all-weather surfaces. Each parking space
shall be designated by lines painted on the paved surfaces and shall be adequate in area, and all parking areas
shall provide, in addition to parking spaces, adequate driveways and space for the movement of
vehicles.

     5.9 Excavation: No excavation shall be made on, and no sand, gravel, soil, or other
material shall be removed from, any lot, except in connection with the construction of structures.
Upon completion of such construction, exposed openings shall be backfilled to grade, and disturbed
ground shall be graded level and paved or landscaped in conformity with the requirements of this
Declaration.

ARTICLE 6

APPROVALS OR VARIANCES IF NO

APPROVING AGENT EXISTS

     6.1 Variance by Approving Agent: So long as there shall be Approving Agent
then serving, it shall have the

-23-

 

E 545 PAGE 212

exclusive right to grant variances from requirements set forth in Article 4 or waive entirely
the restrictions set forth in said Article 4 with respect to any given lot, as the Approving Agent,
in its sole discretion, shall determine is for the successful development of the Oak Creek Business
Park.

     6.2 Granting of Variance: Any variance granted hereunder shall be effective upon,
and only upon, the recordation of a Notice of Variance executed by the Approving Agent.

ARTICLE 7 

ENFORCEMENT

     7.1 Remedy: So long as there is an Approving Agent, it shall have the exclusive
right to enforce the provisions hereof, but without liability for failure so to do. In the event
that the Approving Agent shall fail to take action respecting the breach or violation of any of the
provisions of this Declaration within thirty (30) days from the written demand by any Owner within
the Oak Creek Business Park to take such action or if such breach or violation of this Declaration
shall occur at such time as there is no Approving Agent, then any Owner of a lot within the Oak
Creek Business Park shall have the right to enforce the provisions contained in this Declaration.

-24-

 

E 545 PAGE 213

     7.2 Right to Enter: So long as Prudential shall be serving as the Approving
Agent, Prudential, and only Prudential, in addition to any other remedy available, may, with
respect to a violation or breach of the covenants to maintain as set forth in Paragraph 5.8, and
only with respect to a breach or violation of the covenants to maintain as contained in paragraph
5.8, enter upon the lot on which such violation or breach shall then be occurring and take whatever
action it may deem necessary to effect compliance with the provisions of said Paragraph 5.8,
including without limitation making of such repairs or the performance of such required maintenance
necessary to conform to the requirements imposed by these Restrictions at the expense of the Owner
of said lot, provided that Prudential shall have first given to the Owner of such lot at least
sixty (60) days prior written notice of its intention to do so and then, only if, said Owner of
such lot shall have failed to correct said violation or breach within said sixty (60) day period if
such violation or breach was curable within sixty (60) days, or if not curable within sixty (60)
days then only if such Owner shall have failed to commence and then be diligently seeking to so
cure such violation or breach. In the event that Prudential shall, after having complied with the
above notice requirements, enter such lot and remedy such breach or violation, the Owner of such
lot shall be respons-

-25-

 

E 545 PAGE 214

ible to reimburse Prudential forthwith upon demand for all costs and expenses incurred in
connection therewith (“Non-Compliance Expenses”) in accordance with the provisions of this Section.
Each Owner of any lot within the Oak Creek Business Park by acceptance of a deed or other
conveyance whether or not it shall be so expressed in any such deed or other conveyance, is and
shall be deemed to covenant and agree to pay to Prudential an assessment for any Non-Compliance
Expenses incurred by Prudential in connection with such Owner’s lot.

          A. Prudential shall maintain accurate books and records reflecting any Non-Compliance
Expenses, and shall provide each Owner of an affected lot a statement
with respect thereto.’ Each
affected Owner shall pay Non-Compliance Expenses incurred applicable to such Owner’s lot within
ten (10) days of receipt of a statement. If such statement is deposited in the United States mail
duly, certified or registered with postage prepaid and addressed to the Owner affected thereby at
his lot, the same shall be deemed received by such Owner on the fifth (5th) business day after
such deposit.

          B. Any Non-Compliance Expenses assessments, together with such interest thereon and costs of
collection thereof as provided hereinbelow, shall be a charge on the lot and shall be a continuing
lien upon the lot against

-26-

 

E 545 PAGE 215

which such assessments are made. The lien shall become effective upon recordation of a notice
of claim of lien as provided herein. Such assessment, together with such interest and costs, shall
also be the personal obligation of the person who is the Owner of such lot at the time when the
assessment, or any portion thereof, fell due but in no event shall the person who is the Owner
of such lot be personally obligated for a sum in excess of Ten Thousand Dollars ($10,000) for any
given violation (but without limiting the amount that may become a lien upon such lot for any given
violation or the aggregate of the personal obligation for successive violations). Any personal
obligation created hereunder shall not pass to such Owners successors in title unless it is
expressly assumed by them but any lien created hereunder shall remain a charge against the lot
except as to “bonafide purchasers or encumbrancers for value”, without notice of same. No Owner
may waive or otherwise escape personal liability for the personal assessment provided herein by
non-use or abandonment of his lot.

          C. If any Non-Compliance Expenses assessment or any portion thereof is not paid within ten
(10) days after the date due it shall bear interest from the date of delinquency at the then legal
rate, and, in addition to all other legal and equitable rights or remedies, Prudential may, at its
option, bring an action at law against the Owner

-27-

 

E 545 PAGE 216

who is personally obligated to pay the same, or upon compliance with the notice provisions set
forth hereinbelow, to foreclose the lien against the affected lot, and there shall be added to the
amount of such assessment or any portion thereof, the interest thereon, all costs and expenses,
including reasonable attorneys fees, incurred by Prudential and in collecting the delinquent
assessment. In lieu of judicially foreclosing the lien, Prudential, at its option, may foreclose
such lien by proceeding under a power of sale as provided hereinbelow, such a power of sale being
given to Prudential, as to each and every lot for the purpose of collecting assessments.

          D. No action shall be brought to foreclose the lien, or to proceed under the power of sale,
less than thirty (30) days after the date that a notice of claim of lien, executed by Prudential,
is recorded, stating the amount claimed (which may include interest and cost of collection,
including reasonable attorneys’ fees), a good and sufficient legal description of the lot being
assessed, the name of the record Owner or reputed Owner thereof, and the name and address of
Prudential as claimant. A copy of said notice of claim shall be deposited in the United States
mail, certified or registered, with postage prepaid, to the Owner of said lot.

-28-

 

E 545 PAGE 217

          E. Any such sale provided for above shall be conducted in accordance with
Sections 2924, 2924(b), and 2924(c) of the Civil Code of the State of California, applicable
to the exercise of powers of sale in mortgages and deeds of trust, or in any other manner
permitted or provided by law. Prudential shall have the power to bid on the lot at the
foreclosure sale, and to acquire and hold, mortgage and convey the same.

          F. Upon the timely curing of any default for which a notice of claim of lien was recorded
by Prudential, Prudential is hereby authorized to file or record, as the case may be, an
appropriate release of such notice, upon payment by the defaulting Owner of a fee to be
determined by Prudential but not to exceed Five Hundred Dollars ($500), to cover the costs of
preparing and filing or recording such release together with the payment of such other costs,
interest or fees as shall have been incurred.

          G. The
assessment lien and the rights to foreclosure and sale thereunder shall be
in addition to and not in substitution for all other rights and remedies which
Prudential may have hereunder, at law or in equity.

     7.3 Result of Violation: The result of every action or omission whereby the
provisions of this Declaration are violated in whole or in part is hereby declared to be and
to constitute a nuisance, and every remedy allowed by law or

-29-

 

E 545 PAGE 218

equity shall be available to any Owner of any lot within the Oak Creek Business Park.

     7.4 Attorney’s Fees: In any legal or equitable proceeding for the enforcement of the
provisions of this Declaration, whether it be an action for damages, declaratory relief or
injunctive relief, the losing party or parties shall pay the attorneys’ fees of the prevailing
party or parties, in such reasonable amount as may be fixed by the court in such proceedings, or
in a separate action brought for that purpose. The prevailing party shall be entitled to said
attorneys’ fees, even though said proceeding is settled prior to judgment.

     7.5 Remedies Cumulative: All remedies provided herein, or at law or in equity
shall be cumulative and not exclusive.

     7.6 Waiver: Failure by the Approving Agent to enforce the provisions of this
Declaration shall in no event be deemed a waiver of the right to do so thereafter, nor of the
right to enforce any other covenants or restrictions herein, nor of the rights of other Owners
of the property within the Oak Creek Business Park to enforce same.

     7.7 Prudential: For purposes of this Article 7 the term “Prudential” shall include
Prudential’s authorized employees.

-30-

 

E 545 PAGE 219

ARTICLE 8

DURATION, MODIFICATION AND REPEAL

     8.1 Duration of Restrictions: These Restrictions shall continue and remain in
full force and effect at all times with respect to all property, and each part thereof, now or
hereafter made subject to these Restrictions (subject, however, to the right to amend and repeal
as provided for herein) until 2039.

     8.2 Termination and Modifications: This Declaration or any provision thereof, or any
covenant, condition or restriction contained herein, may be terminated, extended, modified or
amended, as to the whole of the Oak Creek Business Park upon the written consent of the Owners of
sixty-six and two-thirds percent (66-2/3%) of the total square
footage of the land area contained
within the Oak Creek Business Park (exclusive of dedicated public streets); provided, however, that
so long as Prudential is the Approving Agent, no such termination, extension or modification or
amendment shall be effective without the written approval of Prudential. No such termination,
extension, modification or amendment shall be effective until a
proper instrument in writing
describing such termination, extension, modification or amendment has been executed by the
requisite number of Owners and by Prudential and recorded.

-31-

 

E 545 PAGE 220

ARTICLE 9

MISCELLANEOUS PROVISIONS

     9.1 Constructive Notice and Acceptance: Every person who now or hereafter owns,
occupies or acquires any right, title or interest in or to any portion of the property made subject
to these Restrictions is and shall be conclusively deemed to have consented and agreed to every
covenant, condition and restriction contained herein, whether or not any reference to this
Declaration is contained in the instrument by which such person acquired an interest in said
property.

     9.2 Waiver of Liability: Neither the Declarant nor the Approving Agent shall be liable
to any Owner, lessee, licensee, or occupant of land subject to this Declaration by reason of any
mistake in judgment, negligence, nonfeasance, action or inaction or for the enforcement or failure
to enforce any provision of this Declaration. Every Owner, lessee, licensee or occupant of any of
said property by acquiring his interest therein agrees that he will not bring any action or suit
against Prudential or any other Approving Agent to recover any such damages from or to seek
equitable relief against the Declarant by reason of same.

     9.3 Rights of Mortgagee: No breach of the Restrictions and other provisions contained
herein, or any enforcement thereof, shall defeat or render invalid the lien

-32-

 

E 545 PAGE 221

of any mortgage or deed of trust now or hereafter executed upon land subject to these
Restrictions; provided, however, that if any portion of said property is sold under a foreclosure
of any mortgage or under the provisions of any deed of trust, any purchaser at such sale and his
successors and assigns shall hold any and all property so purchased subject to all of the
Restrictions and other provisions of this Declaration. Any notice of claim of lien recorded
pursuant to paragraph 7.2 hereof shall take its priority vis-a-vis other encumbrances as of the
date of its recordation.

     9.4 Paragraph Headings: Paragraph headings, where used herein, are inserted for
convenience only and are not intended to be a part of this Declaration or in any way to define,
limit or describe the scope and intent of the particular paragraphs to which they refer.

     9.5
Effect of Invalidation: If any provision of this Declaration is held to be
invalid by any Court, the invalidity of such provision shall not effect the validity of the
remaining provisions hereof.

     IN WITNESS WHEREOF, the undersigned have executed this Declaration the day and year first
above written.

	 	 	 	 	 
	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA 

 	 
	 	By	 -s-
A. K. Jacobson
 	 
	 	 	 A. K. Jacobson 	 
	Dated: 6/1/79 	 	 Title Regional
Vice-President, REO 	 

-33-exv10w32

 

Exhibit 10.32

1501 MCCARTHY BOULEVARD

MILPITAS, CALIFORNIA

STANDARD SINGLE TENANT NNN LEASE

W I
T N E S S E T
H

This lease (“Lease”) is entered into by and between Limar Realty Corp. #4, a California
corporation (“Landlord”) and LSI Logic Corporation,
a Delaware corporation (“Tenant”). For and in
consideration of the payment of rents and the performance of the covenants herein set forth by
Tenant, Landlord does lease to Tenant and Tenant accepts the Premises described below subject to
the agreements herein contained.

	 	 	 	 	 	 	 	 	 
	1.	 	BASIC LEASE TERMS	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	a.
	 	DATE OF LEASE:
	 	December 31, 2003	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	b.
	 	TENANT:
	 	LSI Logic Corporation	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Address (of the Premises):
	 	1501 McCarthy Blvd.

Milpitas, California 95035	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	Address (for Notices):	 	 
	

	 	 	 	 	 	LSI Logic Corporation

1621 Barber Lane, M/S D-106

Milpitas, CA 95035-7458

Attn: General Counsel	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	With a required copy to:	 	 
	

	 	 	 	 	 	LSI Logic Corporation

1621 Barber Lane, M/S D-129

Milpitas, CA 95035-7458

Attn: Corporate Real Estate	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	c.
	 	LANDLORD:
	 	Limar Realty Corp. #4	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Address (for Notices):
	 	1730 S. EI Camino Real

Suite 400

San Mateo, California 94402

Attn: Thomas A. Numainville	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	d.
	 	TENANT’S USE OF PREMISES:
	 	General Office and Engineering (dry) Labs	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	e.
	 	PREMISES AREA:
	 	128,820 Rentable Square Feet	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	f.
	 	INSURING PARTY:
	 	Landlord is the “Insuring Party” unless otherwise stated herein.	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	g.
	 	TERM (inclusive):
	 	Commencement Date: January 1, 2004
(“Commencement Date”)	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	Expiration Date: December 31, 2012 (“Expiration Date”)	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	Number of Months: 108	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	h.
	 	INITIAL BASE RENT:
	 	Fifty-Five Thousand Three Hundred Ninety-Two and 60/100 Dollars
($55,392.60) per month.	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	i.
	 	BASE RENT ADJUSTMENT	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Step Increase.
The step adjustment provisions of ¶ 4.b. apply for the periods shown
below:

	 	 	 	 	 
	Periods (inclusive)	 	Monthly Base Rent	 
	1/1/06 - 12/31/06
	 	$	86,309.40	 
	 
	 	 	 	 
	1/1/07 - 12/31/07
	 	 	88,898.68	 
	 
	 	 	 	 
	1/1/08 - 12/31/08
	 	 	91,565.64	 
	 
	 	 	 	 
	1/1/09 - 12/31/09
	 	 	94,312.61	 
	 
	 	 	 	 
	1/1/10 - 12/31/10
	 	 	97,141.99	 
	 
	 	 	 	 
	1/1/11 - 12/31/11
	 	 	100,056.25	 
	 
	 	 	 	 
	1/1/12 - 12/31/12
	 	 	103,057.94	 

	 	 	 	 	 
	

	 	j.
	 	TOTAL TERM BASE RENT: $9,265,532.52

- 1 -

 

	 	 	 	 	 	 	 	 	 	 	 
	

	 	k.
	 	PREPAID BASE RENT:
  None 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	I.
	 	SECURITY DEPOSIT: $ 85,472.47
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	m.	 	BROKER(S): Julien J. Studley, Inc. (Tenant)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	n.	 	EXHIBITS: Exhibits lettered “A” through “C” are attached hereto and made a part hereof.

	2.  	PREMISES

	 	a.  	Premises. Landlord leases to Tenant the premises
described in ¶ 1. and in
Exhibit A (the
“Premises”). The term “Premises” includes all the land and improvements (including
the buildings,
landscaping, parking lot, etc.) as described on Exhibit A. Subject to any
additional work Landlord
has agreed herein to do, Tenant hereby accepts the Premises in their condition
existing as of the
date of the execution hereof, subject to all applicable zoning, municipal, county and
state laws,
ordinances and regulations governing and regulating the use of the Premises, and
accepts this
Lease subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto.
Tenant acknowledges that neither Landlord nor Landlord’s Broker has made any
representation or
warranty as to the suitability of the Premises for the conduct of Tenant’s business.
Tenant agrees
with the square footage specified for the Premises in ¶ 1. and will not hereafter
challenge such
determination and agreement. The rental payable by Tenant pursuant to this Lease is
not subject
to revision in the event of any discrepancy in the rentable square footage for the
Premises.
	 
	 	b.  	Acceptance; Quiet Enjoyment. Landlord represents that it is the fee simple
owner of the
Premises and has full right and authority to make this Lease. Landlord hereby
leases the
Premises to Tenant and Tenant hereby accepts the same from Landlord, in accordance
with the
provisions of this Lease. Landlord covenants that Tenant shall have peaceful and
quiet enjoyment
of the Premises during the Term (as defined below) of this Lease.

	3.  	Term. The term (“Term”) of this Lease is for the period that commences at 12:01 a.m. on
the
Commencement Date and expires at 11:59 p.m. on the Expiration Date. If Landlord, for any
reason,
cannot deliver possession of the Premises to Tenant on or before the Commencement Date, this
Lease
shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting from
such delay. In that event, however, there shall be an abatement of Rent (as defined below)
covering the
period between the Commencement Date and the date when Landlord delivers possession to
Tenant, and
all other terms and conditions of this Lease shall remain in full force and effect. If a
delay in possession is
caused by Tenant’s failure to perform any obligation in accordance with this Lease, the Term
shall
commence as of the Commencement Date, and there shall be no reduction of Rent between the
Commencement Date and the time Tenant takes possession.

	4.  	RENT

	 	a.  	Base Rent. Tenant shall pay Landlord in lawful money of the United States,
without notice,
demand, offset or deduction, rent in the amount(s) set forth in ¶ 1. which shall be
payable in
advance on the first day of each and every calendar month (“Base Rent”). Unless
otherwise
specified in writing by Landlord, all installments of Base Rent shall be payable at
Limar Realty
Corp. #4, Department #44294, P.O. Box 44000, San Francisco, CA 94144-4294. Base
Rent for
any partial month at the beginning or end of this Lease will be prorated in
accordance with the
number of days in the subject month. Tenant shall be entitled, at its option, to a
refund or credit of
the difference between the Initial Base Rent specified in ¶ 1.h., paid monthly, and
$117,161.79, paid
monthly, from the date this Lease is signed by both Landlord and Tenant retroactive
to January 1,
2004.

For purposes of Section 467 of the Internal Revenue Code, the parties to this Lease
hereby agree to allocate the stated Base Rent provided herein to the periods which
correspond to the actual Base Rent payments as provided under the terms and
conditions of this Agreement.

	 	b.  	Step Increase. The Base Rent shall be increased periodically to the amounts and
at the times set
forth in ¶ 1.i.
	 
	 	c.  	Rent Without Offset and Late Charge. All Rent shall be paid without prior
demand or notice and
without any deduction or offset whatsoever. All Rent shall be paid in lawful currency
of the United
States of America. Tenant acknowledges that late payment by Tenant to Landlord of any
Rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount of
such cost being
extremely difficult and impracticable to ascertain. Such costs include, without
limitation, processing
and accounting charges and late charges that may be imposed on Landlord by the terms
of any
encumbrance or note secured by the Premises. Therefore, if any Rent is not received
by Landlord
within five (5) days of its due date, Tenant shall pay to Landlord a late charge
equal to six percent
(6%) of such overdue payment. Landlord and Tenant hereby agree that such late
charge
represents a fair and reasonable estimate of the costs that Landlord will incur by
reason of any
such late payment and that the late charge is in addition to any and all remedies
available to the
Landlord and that the assessment and/or collection of the late charge shall not be
deemed a
waiver of any other default. Additionally, all such delinquent Rent or other sums,
plus this late
charge, shall bear interest from the due date thereof at the lesser of ten percent
(10%) per annum
or the maximum legal interest rate permitted by law. Any payments of any kind
returned for
insufficient funds will be subject to an additional handling charge of $25.00, and if
a check is

- 2 -

 

	 	   	returned for non-sufficient funds more than twice during the Term of the Lease,
Landlord may require Tenant to pay all future payments of Rent or other sums due by
cashier’s check or by wire transfer.
	 
	 	d.  	Rent. The term “Rent” as used in this Lease shall refer to Base Rent, Real
Property Taxes, Operating Expenses, Security Deposit(s), Insurance Costs, repairs and
maintenance costs, utilities, late charges and other similar charges payable by Tenant
pursuant to this Lease either directly to Landlord or otherwise.

	5.  	OPERATING EXPENSES

	 	a.  	Payment by Tenant. During the Term of this Lease Tenant shall pay to
Landlord, as additional
Rent, on a monthly basis one hundred percent (100%) of the Operating Expenses.
	 
	 	b.  	Operating Expenses. The term “Operating Expenses” shall mean all expenses,
costs and
disbursements (not specifically excluded from the definition of Operating Expenses
below) of every
kind and nature which Landlord shall pay or become obligated to pay because of or in
connection
with the ownership, maintenance, repair and operation of the Premises. Operating
Expenses shall
include, but not be limited to, the following:

	 	1)  	Wages and salaries of all employees engaged in the operation,
maintenance and security
of the Premises, including taxes, insurance and benefits relating thereto; and
the rental
cost and overhead of any office and storage space used to provide such
services.
	 
	 	2)  	All supplies, materials and labor used in the operation, repair
or maintenance of the
Premises.
	 
	 	3)  	Cost of all utilities, including surcharges, for the Premises,
including the cost of water,
power and lighting which are not separately billed to and paid for by Tenant.
	 
	 	4)  	Cost of all maintenance and service agreements for the Premises
and the equipment
thereon, including but not limited to, security services, exterior window
cleaning, janitorial
service, engineers, gardeners and trash removal services.
	 
	 	5)  	All Insurance Costs, as such term is defined in ¶ 16.
	 
	 	6)  	Cost of all repairs and general maintenance (excluding repairs
and general maintenance
paid by proceeds of insurance or by Tenant or other third parties).
	 
	 	7)  	A reasonable management fee for the property management of the Premises.
	 
	 	8)  	The costs of any additional services not provided to the Premises
at the Commencement
Date but thereafter provided by Landlord in its management of the Premises.
	 
	 	9)  	The cost of any capital improvements made to the Premises after
the date of this Lease,
with such cost thereof to be amortized over the useful life of the
improvements as
reasonably determined by Landlord. Other than costs associated
with repairs,
replacements or refurbishments in the normal course and necessary for the
normal
operation of the Premises, Landlord shall not, without Tenant’s consent, which
consent
shall not be unreasonably withheld, conditioned or delayed, materially alter
the physical
features of the Premises in a manner which materially affects Tenant’s use, or
construct
additional square footage, the cost for either of which would be amortized
over its useful
life and passed through to Tenant as part of Operating Expenses. A roof
re-coating shall
be treated as an Operating Expense, while a roof replacement would be an
amortizable
capital expenditure.
	 
	 	10)  	Real Property Taxes as that term is defined in ¶ 11. c.
	 
	 	11)  	Assessments, dues and other amounts payable pursuant to the
CC&R’s described in ¶ 7.C.

	 	c.  	Operating Expenses shall not include:

	 	1)  	Costs paid for directly by Tenant or other tenants;
	 
	 	2)  	Costs incurred in connection with the financing, sale or
acquisition of the Premises or any
portion thereof;
	 
	 	3)  	Costs incurred in leasing or procuring tenants
(including without limitation, lease
commissions, advertising expenses, attorneys’ fees and expenses of renovating
space for
tenants);
	 
	 	4)  	Executive salaries of off-site personnel employed by Landlord
except for the charge (or pro
rata share) of the property manager of the Premises;
	 
	 	5)  	Subject to the provisions of ¶  5.b.9) above, depreciation on the
Building or other
improvements on the Premises;

- 3 -

 

	 	6)  	Legal expenses for disputes with Tenant and any other professional fees of
attorneys,
auditors or consultants not incurred in connection with the normal maintenance and
operation of the Premises;
	 
	 	7)  	Costs incurred that are reimbursed by Tenant, or third parties, including insurers;
	 
	 	8)  	Expenses for repair or replacement covered by warranties, and any costs due to
casualty
that are covered by insurance carried by Landlord;
	 
	 	9)  	Rentals and other payments by Landlord under any ground lease or other lease
underlying
the Lease, and interest, principal, points and other fees on debt or amortization of
any debt
secured in whole or part by all or any portion of the Premises;
	 
	 	10)  	Repairs or replacements caused by Landlord’s gross negligence or the gross
negligence
of Landlord’s employees or agents;
	 
	 	11)  	Net income, franchise, capital stock, estate or inheritance taxes or taxes
which are the
personal obligation of Landlord;
	 
	 	12)  	Landlord’s charitable or political contributions;
	 
	 	13)  	Payments to subsidiaries and affiliates of Landlord for services to the
Premises for
supplies or other materials to the extent that the cost of such services, supplies
or
materials exceed the cost which would have been paid had the services, supplies or
materials been provided by unaffiliated parties on a competitive basis (provided,
however,
any fee for management services paid to an affiliate of Landlord shall be in the
amount set
forth in ¶ 5.b.7);
	 
	 	14)  	Payments to subsidiaries and affiliates of Landlord for services to the Project
for supplies
or other materials to the extent that the cost of such services, supplies or
materials exceed
the cost which would have been paid had the services, supplies or materials been
provided by unaffiliated parties on a competitive basis (provided, however, any fee
for
management services paid to an affiliate of Landlord shall be in the amount set
forth in ¶ 4.d.1)b);
	 
	 	15)  	Any compensation paid to clerks, attendants or other persons in commercial
concessions
operated by Landlord;
	 
	 	16)  	Advertising and promotional expenditures;
	 
	 	17)  	Costs of repairs and other work occasioned by fire, windstorm or other casualty
of an
insurable nature to the extent covered by insurance; or
	 
	 	18)  	Costs for sculpture, paintings or other objects of art other than for normal
and customary
lobby furnishings (nor insurance thereon or extraordinary security in connection
therewith).

	 	d.  	Extraordinary Services. Tenant shall pay within thirty (30) days of receipt of an invoice
from
Landlord the cost of additional or extraordinary services provided to Tenant at Tenant’s
request
and not paid or payable by Tenant pursuant to other provisions of this Lease.
	 
	 	e.  	Impound. Landlord reserves the right, at Landlord’s option from time to time during the
calendar
year, to estimate the annual cost of Operating Expenses incurred by Landlord (“Projected
Operating Expenses”) and to require Tenant to pay Tenant’s Share thereof in advance. Except
as provided below in this 5.e., Tenant shall pay to Landlord, monthly in advance as
additional
Rent, one-twelfth (1/12) of Tenant’s Share of the Projected Operating Expenses. The
failure of
Landlord to timely furnish to Tenant a schedule of the Projected Operating Expenses for any
Calendar Year shall not preclude Landlord from enforcing its rights to collect any Projected
Operating Expenses under this 5. Tenant’s share is 100% of Operating Expenses.
	 
	 	   	When Landlord provides Tenant with a revised Projected Operating Expense Budget during any
calendar year, the following payment adjustments will be due Landlord: (1) Effective the
first of the month following notification of the new Projected Operating Expense Budget,
Tenant shall pay monthly in advance, one-twelfth (1/12) of Tenant’s Share of the new
Projected Operating Expenses, and 2) if the revised Projected Operating Expense Budget
exceeds the prior Budget, Landlord shall invoice to Tenant a retroactive billing and Tenant
shall pay said billing within thirty (30) days of receipt of same. The retroactive billing
will reflect the additional amount payable by the Tenant for Tenant’s Share of the new
Operating Expense Budget for the calendar year to date. For example, assume an annual
existing Operating Expense Budget of $144,000 for a tenant with a share of 50% and where
such tenant was initially making $6,000 a month of estimated payments. If the revised
Operating Expense Budget increases by $12,000 to $156,000 and the tenant is notified in
June, then the amounts due per 1) & 2) above are computed as follows:

                        1)

	 	 	 	 	 
	 New Monthly Payment (Effective July 1):	 	 	 	 
	Revised Annual Operating Expense Budget
	 	$	156,000	 
	 
	 	 	 
	Tenant’s Share @ 50%
	 	$	78,000	 
	 
	 	 	 
	New Payment @ 1/12 Monthly
	 	$	6,500	 
	 
	 	 	 

- 4 -

 

                        2)

	 	 	 	 	 
	2) Retroactive Billing:	 	 	 	 
	Revised Annual Operating Expense Budget
	 	$	156,000	 
	 
	 	 	 
	Tenant’s Share @ 50% for 6 (of 12) months
	 	$	39,000	 
	Less payments, to date (6 @ $6,000)
	 	 	(36,000	)
	 
	 	 	 
	Retroactive Balance Due
	 	$	3,000	 
	 
	 	 	 

As an alternative to a retroactive billing, Landlord may, at Landlord’s option, spread
the increase over the remaining months in the current calendar year in equal monthly
payments.

	 	f.  	Adjustment.

	 	1)  	Accounting. Within one hundred eighty (180) days (or as soon thereafter as
possible)
after the close of each calendar year or portion thereof of occupancy, Landlord
shall
provide Tenant a statement of such year’s actual Operating Expenses showing the
actual
Operating Expenses compared to the Projected Operating Expenses. If the actual
Operating Expenses are more than the Projected Operating Expenses then Tenant shall
pay Landlord, within thirty (30) days of receipt of a bill therefor, the difference.
If the actual
Operating Expenses are less than the Projected Operating Expenses, then Tenant shall
receive a credit against future Operating Expenses payments equal to the difference;
provided, that in the case of an overpayment for the final lease year of the Term,
Landlord
shall credit the difference against any sums due from Tenant to Landlord in
accordance
with the terms of this Lease; and if no sums are due and unpaid, shall promptly
refund the
amount to Tenant.
	 
	 	2)  	Tenant’s Right to Audit. Within ninety (90) days after receipt of Landlord’s
statement
setting forth actual Operating Expenses (the “Statement”), Tenant shall have the
right to
audit at Landlord’s local offices, at Tenant’s expense, Landlord’s accounts and
records
relating to Operating Expenses. Such audit shall be conducted by a certified
public
accountant approved by Landlord, which approval shall not be unreasonably withheld,
or
by Tenant’s independent lease administration consultants who shall not be
compensated
on a contingency or percentage basis. If such audit reveals that Landlord has
overcharged
Tenant, the amount overcharged shall be paid to Tenant within thirty (30) days after
the
audit is concluded. If such audit reveals that Landlord has undercharged Tenant,
the
amount of undercharge shall be paid by Tenant to Landlord within 30 days after the
audit is
conducted. In addition, if the Operating Expenses included in the Statement exceed
the
actual Operating Expenses which should have been charged to Tenant by more than five
percent (5%), the cost of the audit shall be paid by Landlord. Tenant may not
withhold any
payment due as set forth in this Lease pending completion of the audit.
	 
	 	3)  	Proration. Tenant’s liability to pay Operating Expenses shall be prorated on
the basis of a
365 (or 366, as the case may be) day year to account for any fractional portion of a
year
included at the commencement or expiration of the Term of this Lease.
	 
	 	4)  	Survival. Landlord and Tenant’s obligations to pay for or credit any increase
or decrease
in payments pursuant to this ¶ 5. shall survive this Lease.

	 	g.  	Failure to Pay. Except as otherwise provided herein, failure of Tenant to pay any of the
charges
required to be paid under this 5. shall constitute a material default and breach of this
Lease and
Landlord’s remedies shall be as specified in ¶ 21.

	6.  	SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall deposit a security deposit (“Security
Deposit”) in the amount set forth in ¶ 1. with Landlord. If Tenant is in default beyond applicable
cure periods, Landlord can (but without any requirement to do so) use the Security Deposit or any
portion of it to cure the default or to compensate Landlord for any damages sustained by Landlord
resulting from Tenant’s default. Upon demand, Tenant shall immediately pay to Landlord a sum equal
to the portion of the Security Deposit expended or applied by Landlord to restore the Security
Deposit to its full amount. In no event will Tenant have the right to apply any part of the
Security Deposit to any Rent due under this Lease. Landlord’s obligations with respect to the
Security Deposit are those of a debtor and not a trustee, and Landlord can commingle the Security
Deposit with Landlord’s general funds. Landlord shall not be required to pay Tenant interest on
the Security Deposit. Tenant hereby waives the provisions of California Civil Code Section 1950.7,
and all other provisions of law now in force or which may become in force after the date of
execution of this Lease that provide that Landlord may claim from its security deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair damages caused by
the tenant, or to clean the premises or otherwise limit the application of a security deposit.
With respect to the Security Deposit, Landlord and Tenant agree that Landlord may claim and employ
the Security Deposit in connection with any and all sums reasonably necessary to compensate
Landlord for any foreseeable or unforeseeable loss or damage caused by or resulting from any
default by Tenant pursuant to this Lease as well as any foreseeable or unforeseeable loss or
damage resulting from any act or omission by Tenant or Tenant’s officers, agents, employees,
independent contractors, or invitees. If Tenant is not in default at the expiration or termination
of this Lease and has fully complied with the provisions of 13.d.6) and 26., Landlord shall return
the Security Deposit to Tenant.

	7.  	USE OF PREMISES

	 	a.  	Tenant’s Use. Tenant shall use the Premises solely for the purposes stated in 1. and for no
other purposes without obtaining the prior written consent of Landlord. Tenant acknowledges
that neither Landlord nor any agent of Landlord has made any representation or warranty with
respect

- 5 -

 

	 	   	to the Premises or with respect to the suitability of the Premises to the
conduct of Tenant’s business, nor has Landlord agreed to undertake any modification,
alteration or improvement to the Premises, except as provided in writing in this
Lease. With reasonable notice to Tenant, Landlord may from time to time, at its sole
discretion, make such modifications, alterations, deletions or improvements to the
Premises as Landlord may reasonably deem necessary or desirable, without
compensation to Tenant. Tenant shall promptly comply with all laws, statutes,
ordinances, orders and governmental regulations now or hereafter existing affecting
the Premises. Tenant shall not do or permit anything to be done in or about the
Premises or bring or keep anything in the Premises that will in any way increase the
premiums paid by Landlord on its insurance related to the Premises. Tenant will not
perform any act or carry on any practices that may injure the Premises. Tenant shall
not use the Premises for sleeping, washing clothes or the preparation, manufacture
or mixing of anything that emits any objectionable odor, noises, vibrations or
lights onto such other tenants. If sound insulation is required to muffle noise
produced by Tenant on the Premises, Tenant at its own cost shall provide all
necessary insulation. Tenant shall not do anything on the Premises which will
overload any existing parking or service to the Premises. Pets and/or animals of any
type (other than seeing eye dogs) shall not be kept on the Premises. Tenant
covenants that it will not interfere with other tenants’ quiet enjoyment of their
premises.
	 
	 	b.  	Rules and Regulations. Tenant shall comply with and use the Premises in
accordance with the
Rules and Regulations attached hereto as Exhibit B and to any reasonable
modifications to such
Rules and Regulations as Landlord may adopt from time to time, provided however that
if any rule
or regulation is in conflict with any term, covenant or condition of this Lease, this
Lease shall
prevail. In addition, no such rule or regulation, or any subsequent amendment thereto
adopted by
Landlord, shall in any material way alter, reduce or adversely affect any of Tenant’s
rights or
materially enlarge Tenant’s obligations under this Lease.
	 
	 	c.  	CC&R’s. Tenant agrees that this Lease is subject and subordinate to the
Covenants, Conditions
and Restrictions, a copy of which is attached hereto as
Exhibit C, as they
may be amended from
time to time (“CC&R’s”), and further agrees that the CC&R’s are an integral part of
this Lease.
Throughout the Term or any extension thereof, notwithstanding any other provision
hereof, Tenant
shall faithfully and timely assume and perform all obligations of Landlord and/or
Tenant under the
CC&R’s and any modifications or amendments thereto, including the payment of any
periodic or
special dues or assessments against the Premises. Such dues and assessments shall
be
included within the definition of Operating Expenses pursuant to ¶ 5.b.11), and Tenant
shall pay
such amounts as further set forth in ¶ 5. Tenant shall hold Landlord, its subsidiaries,
shareholders,
directors, officers, agents and employees harmless and indemnify Landlord, its
subsidiaries,
shareholders, directors, officers, agents and employees against any loss, expense and
damage,
including attorneys’ fees and costs, arising out of the failure of Tenant to perform
or comply with
the CC&R’s.

	8.  	EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE

	 	a.  	Emissions. Tenant shall not:

	 	1)  	Knowingly permit any vehicle on the Premises to emit exhaust
which is in violation of any
governmental law, rule, regulation or requirement;
	 
	 	2)  	Discharge, emit or permit to be discharged or emitted, any
liquid, solid or gaseous matter,
or any combination thereof, into the atmosphere or on, into or under the
Premises, any
building or other improvements of which the Premises are a part, or the ground
or any
body of water which matter, as reasonably determined by Landlord or any
governmental

entity to be in violation of law or regulation, and does or may pollute or
contaminate the
same, or is, or may become, radioactive or does, or may, adversely affect the
(a) health or
safety of persons, wherever located, whether on the Premises or anywhere else,
(b)
condition, use or enjoyment of the Premises or any other real or personal
property,
whether on the Premises or anywhere else, or (c) Premises or any of the
improvements
thereto including buildings, foundations, pipes, utility lines, landscaping or
parking areas;
	 
	 	3)  	Produce, or permit to be produced, any intense glare, light or
heat in violation of law or
regulation;
	 
	 	4)  	Create, or permit to be created, any sound pressure level which
will interfere with the quiet
enjoyment of any real property outside the Premises, or which will create a
nuisance or
violate any governmental law, rule, regulation or requirement;
	 
	 	5)  	Create, or permit to be created, any vibration that is discernible outside the
Premises; or
	 
	 	6)  	Transmit, receive or permit to be transmitted or received from or
to the Premises, any
electromagnetic, microwave or other radiation which is or may be harmful or
hazardous to
any person or property in, or about the Premises, or anywhere else.

	 	b.  	Storage and Use.

	 	1)  	Storage. Subject to the uses permitted and prohibited to Tenant
under this Lease, Tenant shall store in appropriate leak proof containers all
solid, liquid or gaseous matter, or any combination thereof, which matter, if
discharged or emitted into the atmosphere, the ground or any body of water
would be in violation of law or regulation, and does or may (a)

- 6 -

 

	 	   	pollute or contaminate the same, or (b) adversely affect
the (i) health or
safety of persons, whether on the Premises or anywhere else, (ii) condition, use or
enjoyment of the Premises or any real or personal property, whether on the Premises
or anywhere else, or (iii) Premises.
	 
	 	2)  	Use. In addition, without Landlord’s prior written consent, Tenant shall not
use, store or
permit to remain on the Premises any solid, liquid or gaseous matter which is, or
may
become dangerously radioactive. If Landlord does give its consent, Tenant shall
store the
materials in such a manner that no radioactivity will be detectable outside a
designated
storage area and Tenant shall use the materials in such a manner that (a) no real or
personal property outside the designated storage area shall become contaminated
thereby
and (b) there are and shall be no adverse effects on the (i) health or safety of
persons,
whether on the Premises or anywhere else, (ii) condition, use or enjoyment of the
Premises or any real or personal property thereon or therein, or (iii) Premises or
any of the
improvements thereto or thereon.
	 
	 	3)  	Hazardous Materials. Subject to the uses permitted and prohibited to Tenant
under this
Lease, Tenant shall store, use, employ, transport and otherwise deal with all
Hazardous
Materials (as defined below) employed on or about the Premises in accordance with
all
federal, state, or local law, ordinances, rules or regulations applicable to
Hazardous
Materials in connection with or respect to the Premises.

	 	c.  	Disposal of Waste.

	 	1)  	Refuse Disposal. Tenant shall not keep any trash, garbage, waste or other
refuse on the
Premises except in sanitary containers and shall regularly and frequently remove
same
from the Premises. Tenant shall keep all incinerators, containers or other equipment
used
for storage or disposal of such materials in a clean and sanitary condition.
	 
	 	2)  	Sewage Disposal. Tenant shall properly dispose of all sanitary sewage and shall
not use
the sewage disposal system (a) for the disposal of anything except sanitary sewage
or (b)
amounts in excess of the lesser of: (i) that reasonably contemplated by the uses
permitted
under this Lease or (ii) that permitted by any governmental entity. Tenant shall
keep the
sewage disposal system free of all obstructions and in good operating condition.
	 
	 	3)  	Disposal of Other Waste. Tenant shall properly dispose of all other waste or
other matter
delivered to, stored upon, located upon or within, used on, or removed from, the
Premises
in such a manner that it does not, and will not, violate any law or regulation and
adversely
affect the (a) health or safety of persons, wherever located, whether on the
Premises or
elsewhere, (b) condition, use or enjoyment of the Premises or any other real or
personal
property, wherever located, whether on the Premises or anywhere else, or (c)
Premises or
any of the improvements thereto or thereon, foundations, pipes, utility lines,
landscaping or
parking areas.

	 	d.  	Information. Tenant or Landlord, as the case may be, shall each provide the other with any
and
all information regarding Hazardous Materials in the Premises, including copies of all
filings and
reports to governmental entities at the time they are originated, and any other information
reasonably requested by the other party. In the event of any accident, spill or other
incident
involving Hazardous Materials, Tenant or Landlord, as the case may be, shall immediately
report
the same to the other and supply the other with all information and reports with respect to
the
same. All information described herein shall be provided regardless of any claim by either
party
that it is confidential or privileged, provided that the provision of these documents will
not, in any
way, alter any aspect of the document’s confidentiality or privileged nature.
	 
	 	e.  	Compliance with Law. Notwithstanding any other provision in this Lease to the contrary,
Tenant
shall comply with all laws, statutes, ordinances, regulations, rules and other governmental
requirements now or hereafter existing in complying with its obligations under this Lease,
and in
particular, relating to the storage, use and disposal of Hazardous Materials.
	 
	 	f.  	Indemnity. Tenant hereby agrees to indemnify, defend and hold Landlord, its agents,
employees,
lenders, shareholders, directors, representatives, successors and assigns harmless from and
against any and all actions, causes of action, losses, damages, costs, claims, expenses,
penalties,
obligations or liabilities of any kind whatsoever (including but not limited to reasonable
attorneys’
fees) arising out of or relating to any Hazardous Materials employed, used, transported
across, or
otherwise dealt with by Tenant (or invitees, or persons or entities under the control of
Tenant) in
connection with or with respect to the Premises. Notwithstanding any of the provisions of
this
Lease, the indemnity obligation of Tenant pursuant to this ¶ 8.f. shall survive the
termination of this
Lease and shall relate to any occurrence as described in this 8.f. occurring in connection
with this
Lease. Landlord hereby agrees to indemnify, defend and hold Tenant harmless from and
against
any and all actions, causes of action, losses, damages, costs, claims, expenses, penalties,
obligations or liabilities of any kind whatsoever (including reasonable attorneys’ fees)
arising out of
or relating to (i) Hazardous Materials employed, used, transported to the Premises, for
which the
Premises are a part thereof, by Landlord, its agents or employees or (ii) Hazardous
Materials
existing on, in or under the Premises as of the date of this Lease. For purposes of this
Lease the
term “Hazardous Materials” shall mean any hazardous, toxic or dangerous waste, substance or
material, pollutant or contaminant, as defined for purposes of the Comprehensive
Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as

- 7 -

 

	 	   	amended, or the Resource Conservation and Recovery Act (42 U.S.C. Sections
6901 et seq.), as amended, or any other federal, state, or local law, ordinance,
rule or regulation applicable to the Premises, or any substance which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic,
or otherwise hazardous, or any substance which contains gasoline, diesel fuel or
other petroleum hydrocarbons, polychlorinated biphenyls (PCB’s), or radon gas, urea
formaldehyde, asbestos or lead.

	9.  	SIGNS AND COMMUNICATIONS ANTENNAE. Tenant shall not place any sign or communications
antennae upon or adjacent to the Premises, except that Tenant may, with Landlord’s prior
written consent,
install such signs (but not on the roof) as are reasonably required to indicate Tenant’s
company name or
logo provided such signs are in compliance with Landlord’s standard sign criteria or install
communications
antennae used exclusively by Tenant provided such signs and/or communications antennae are in
compliance with all applicable governmental requirements and the CC&R’s. The installation of
any sign or
communications antennae on or adjacent to the Premises by or for Tenant shall be subject to
the
provisions of ¶ 13. (Repairs and Maintenance). Tenant shall remove any sign or communications
antennae
placed on or adjacent to the Premises by Tenant upon the expiration of the Term or sooner
termination of
this Lease, and Tenant shall repair any damage or injury to the Premises caused thereby, all
at Tenant’s
expense. If any signs or communications antennae are not removed, or necessary repairs not
made,
Landlord shall have the right to remove the signs or communications antennae and repair any
damage or
injury to the Premises at Tenant’s sole cost and expense. Notwithstanding any other
provision of this
Lease to the contrary, Landlord reserves all rights to the use of the roof and the right to
install and receive
all revenues from the installation of such communications antennae on the Premises as do not
unreasonably interfere with the conduct of Tenant’s business on the Premises. Landlord
will, however,
consult with Tenant regarding the location of any antennae placed on the Premises and attempt
to comply
with Tenant’s reasonable request as to location.
	 
	10.  	PERSONAL PROPERTY TAXES. Tenant shall pay at least ten (10) days prior to delinquency all
taxes
assessed against and levied upon Tenant owned leasehold improvements, trade fixtures,
furnishings,
equipment and all personal property of Tenant contained in the Premises or elsewhere. When
possible,
Tenant shall cause its leasehold improvements, trade fixtures, furnishings, equipment and all
other
personal property to be assessed and billed separately from the real property of Landlord.
If any of
Tenant’s said personal property shall be assessed with Landlord’s real property, Tenant shall
pay Landlord
the taxes attributable to Tenant within thirty (30) days after receipt of a written statement
setting forth the
taxes applicable to Tenant’s property.
	 
	11.  	REAL PROPERTY TAXES

	 	a.  	Payment of Taxes. Landlord shall pay the Real Property Taxes, as defined in
¶  11.C., during the
Term of this Lease. Subject to 11.b., Tenant shall promptly reimburse Landlord for
such Real
Property Taxes paid by Landlord.
	 
	 	b.  	Advance Payment. In order to ensure payment when due and before delinquency of
any or all
Real Property Taxes, Landlord shall provide to Tenant a copy of the tax bill for the
current Real
Property Taxes applicable to the Premises upon receipt by Landlord, and Tenant shall
pay that
amount to Landlord at least ten (10) business days before the delinquency date of the
tax bill. If
the amounts paid to Landlord by Tenant under the provisions of this 11. are
insufficient to
discharge the obligations of Tenant to pay such Real Property Taxes as the same become
due,
Tenant shall pay to Landlord, upon Landlord’s demand, such additional sums as are
necessary to
pay such obligations. All moneys paid to Landlord under this 11. may be intermingled
with other
moneys of Landlord and shall not bear interest.
	 
	 	c.  	Definition of “Real Property Taxes”. As used herein, the term “Real Property
Taxes” shall
include any form of real estate tax or assessment, general, special, ordinary or
extraordinary, and
any license fee, commercial rental tax, improvement bond or bonds, levy or tax or
other fee,
charge, or excise which may be imposed as a substitute for any of the foregoing (other
than
inheritance, personal income or estate taxes) imposed upon the Premises by any
authority having
the direct or indirect power to tax, including any city, county, state or federal
government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement district
thereof, levied
against any legal or equitable interest of Landlord in the Premises, Landlord’s right
to rent or other
income therefrom, and/or Landlord’s business of leasing the Premises. The term “Real
Property
Taxes” shall also include any tax, fee, levy, assessment or charge, or any increase
therein,
imposed by reason of events occurring, or changes in applicable law taking effect,
during the Term
of this Lease, including but not limited to a change in the ownership of the Premises
or in the
improvements thereon, the execution of this Lease, or any modification, amendment or
transfer
thereof, and whether or not contemplated by the parties hereto.
	 
	 	d.  	Appeals. In the event that either Landlord or Tenant desires to appeal or
contest any aspect of
any assessment or payment of any Real Property Tax, that party shall consult with the
other and
the parties shall mutually agree on which party is better suited to pursue the appeal.
Whether
Landlord or Tenant is the appealing party, Tenant shall be responsible for payment of
the cost of
the appeal.

	12.  	UTILITIES. Tenant shall pay for all water, gas, heat, light, power, telephone, trash
disposal and other
utilities and services supplied to the Premises, together with any taxes thereon. If any
such services are
not separately metered to Tenant, Tenant shall pay a reasonable proportion, to be determined
by Landlord,
of all charges jointly metered with other premises.

- 8 -

 

	13.  	REPAIRS AND MAINTENANCE

	 	a.   	Tenant’s Obligations.

	 	1)  	General. Tenant shall, at Tenant’s sole cost and expense and at
all times, contract for
janitorial services and supplies and keep the Premises and every part thereof
in good
order, condition and repair, structural and non-structural (whether or not such
portion of the
Premises requiring repairs, or the means of repairing same, are reasonably or
readily
accessible to Tenant, and whether or not the need for such repairs occurs as a
result of
Tenant’s use, any prior use, the elements or the age of such portion of the
Premises),
including, without limiting the generality of the foregoing, all equipment or
facilities serving
the Premises, such as plumbing, heating, air conditioning, ventilating,
electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose
or other automatic fire extinguishing system, including fire alarm and/or smoke
detection
systems and equipment, fire hydrants, fixtures, walls (interior and exterior),
foundations,
ceilings, roofs, floors, windows, doors, plate glass, skylights, landscaping,
driveways,
parking lots, fences, retaining walls, signs, sidewalks and parkways located
in, on, about or
adjacent to the Premises. Tenant shall not cause or permit any Hazardous
Material to be
spilled or released in, on, under or about the Premises (including through the
plumbing or
sanitary sewer system) and shall promptly, at Tenant’s expense, take all
investigatory
and/or remedial action reasonably recommended, whether or not formally ordered
or
required, for the cleanup of any contamination of, and for the maintenance,
security and/or
monitoring of the Premises, the elements surrounding same, or neighboring
properties,
that was caused or materially contributed to by Tenant, or pertaining to or
involving any
Hazardous Materials and/or storage tank brought onto the Premises by or for
Tenant or
under its control. Tenant, in keeping the Premises in good order, condition
and repair,
shall exercise and perform good maintenance practices. Tenant’s obligations to
reimburse
Landlord as part of Operating Expenses shall include restorations, replacements
(i.e.,
parking lot, landscaping) or renewals when necessary in Landlord’s reasonable
discretion
to keep the Premises and all improvements thereon or a part thereof in good
order,
condition and state of repair.
	 
	 	2)  	Contracts. Tenant shall, at Tenant’s sole cost and expense,
procure and maintain
contracts, with copies to Landlord, in customary form and substance for, and
with
contractors specializing and experienced in, the inspection, maintenance and
service of
the following equipment and improvements, if any, located on the Premises: (i)
heating, air
conditioning and ventilation equipment, (ii) boiler, fired or unfired pressure
vessels, (iii) fire
sprinkler and/or standpipe and hose or other automatic fire extinguishing
systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v)
roof covering and drain maintenance and (vi) asphalt and parking lot
maintenance. Tenant

shall keep a detailed preventative maintenance schedule and log showing the
frequency of
maintenance on all HVAC, mechanical, electrical and other systems of the
Premises and
provide Landlord with a copy of same quarterly.
	 
	 	3)  	As-Is Condition. The parties affirm that Landlord, its
subsidiaries, officers, shareholders,
members, managers, directors, agents and/or employees have made no
representations
to Tenant respecting the condition of the Premises except as specifically
stated herein.
	 
	 	4)  	ADA. Tenant acknowledges that as of the Commencement Date, the
Premises may not
comply with the accessibility provisions of Title 24 of the California Code of
Regulations as
interpreted by the Office of the State Architect (“ADA”), and that Landlord
shall have no
obligation with respect to any such failure of the Premises to so comply.
Tenant shall, at
its cost, at any time during the Term as required by any applicable
governmental agency
having jurisdiction over the Premises, make such modifications and alterations
to the
Premises as may be required in order to fully comply with the provisions of the
ADA, as
from time to time amended, and any and all regulations issued pursuant to or in
connection
with the ADA in such a manner as to satisfy the applicable governmental agency
or
agencies requiring remediation. Tenant shall at least thirty (30) days prior
to the
commencement of any construction in connection with satisfaction of the ADA,
give written
notice to Landlord of its intended commencement of construction together with
sufficient
details so as to reasonably disclose to Landlord the nature of the proposed
construction,
copies of any notices received by Tenant from applicable governmental agencies
in
connection with the ADA and such other documents or information as Landlord may
reasonably request. In any event, notwithstanding anything to the contrary
contained in
this Lease, prior to the termination of the Term, Tenant shall, at its cost,
make such
modifications and alterations to the Premises as may be required to comply
fully with the
ADA as from time to time amended and any and all regulations issued thereunder.
Tenant
shall give the Landlord thirty (30) days prior written notice as described
above in
connection with any such construction. Any and all construction required to so
comply with
the ADA shall be completed by Tenant prior to the expiration of the Term.

	 	b.  	Landlord’s Obligations. Landlord shall have no obligation, in any manner
whatsoever, to repair
and maintain the Premises, or the equipment therein, whether structural or non
structural, all of
which obligations are intended to be that of the Tenant under ¶  13.a. hereof.
	 
	 	c.  	Compliance with Governmental Regulations. Tenant shall, at its own cost and
expense,
promptly and properly observe and comply with all present and future orders,
regulations,

- 9 -

 

	 	   	directions, rules, laws, ordinances, and requirements of all governmental
authorities (including but not limited to state, municipal, county and federal
governments and their departments, bureaus, boards and officials) arising from the
use or occupancy of, or applicable to, the Premises or privileges appurtenant to or
in connection with the enjoyment of the Premises. Tenant shall also comply with all
such rules, laws, ordinances and requirements at the time Tenant makes any
alteration, addition or change to the Premises.

	 	d.  	Miscellaneous.

	 	1)  	Landlord and Tenant shall each do all acts required to comply with
all applicable laws,
ordinances and rules of any public authority relating to their respective
maintenance
obligations as set forth herein.
	 
	 	2)  	Tenant expressly waives the benefits of any statute now or
hereafter in effect which would
otherwise afford the Tenant the right to make repairs at Landlord’s expense or
to terminate
this Lease because of Landlord’s failure to keep the Premises in good order,
condition and
repair and Tenant hereby specifically waives the provisions of California Civil
Code
Sections 1941 and 1942.
	 
	 	3)  	Tenant shall not place a load upon any floor of the Premises which
exceeds the load per
square foot which such floor was designed to carry, as determined by Landlord
or
Landlord’s structural engineer. The cost of any such determination made by
Landlord’s
structural engineer shall be paid for by Tenant upon demand.
	 
	 	4)  	Except as otherwise expressly provided in this Lease, and except in
instances of
Landlord’s gross negligence or willful misconduct, Landlord shall have no
liability to Tenant
nor shall Tenant’s obligations under this Lease be reduced or abated in any
manner
whatsoever by reason of any inconvenience, annoyance, interruption or injury to
business
arising from Landlord making any repairs or changes which Landlord is required
to make
or is permitted to make by this Lease or by any tenant’s lease or is required
by law to make
in or to any portion of the Premises. Landlord shall nevertheless use
reasonable efforts to
minimize any interference with Tenant’s business in the Premises.
	 
	 	5)  	Tenant shall give Landlord prompt notice of any damage to or
defective condition in any
part or appurtenance of the Premises’ mechanical, electrical, plumbing, HVAC or
other
systems serving, located in or passing through the Premises. Upon request by
Landlord,
Tenant shall provide Landlord with evidence reasonably acceptable to Landlord
of service
contracts on such systems.
	 
	 	6)  	Landlord may, at Landlord’s option, choose to perform any of the
Tenant’s obligations in
this ¶ 13. (“Tenant’s Obligations”) as to the exterior of the Premises (e.g.,
landscaping,
building exterior and parking lot). As to any Tenant’s Obligations as to the
interior of the
Premises, Landlord may perform only those Tenant’s Obligations which Tenant
fails to
perform itself. The cost of any such Tenant’s Obligations so performed by
Landlord shall
be at Tenant’s sole cost and expense. Tenant shall reimburse Landlord for any
such costs
incurred by Landlord in the performance of Tenant’s Obligations within thirty
(30) days of
receipt of a billing from Landlord.

	14.  	ALTERATIONS. Tenant shall not make any alterations to the Premises (“Alterations”) without
Landlord’s prior written consent, which consent shall not be unreasonably withheld, provided
however that Tenant may make non-structural alterations costing less than $10,000 per event
without Landlord’s consent. Regardless of whether Landlord’s consent for an Alteration is
required, Tenant must provide Landlord at least fifteen (15) business days prior to the
commencement of any Alteration with a complete description of each such Alteration including
any building permit drawing(s) and specifications. Landlord may post notices regarding
non-responsibility in accordance with the laws of the state in which the Premises are
located. All Alterations made by Tenant, whether or not subject to Landlord’s consent, shall
be performed by Tenant and its contractors in a first class workmanlike manner and permits
and inspections shall be obtained from all required governmental entities. Landlord shall
respond to Tenant within fifteen (15) business days of actual receipt of Tenant’s written
request for consent to any Alterations. If Landlord fails to respond within thirty (30) days
of actual receipt, the Alterations shall be deemed approved and not subject to removal at the
end of the Term. At the time Landlord gives its consent to any Alterations, it shall
designate whether Tenant will be required to remove some or all of such Alterations upon the
expiration or termination of this Lease or whether Tenant will be able to leave the
Alterations and surrender them with the Premises. Everything else notwithstanding, in no
event will Tenant be required to remove or restore Alterations that are generic office tenant
improvements or engineering (dry) labs. Landlord may, upon 60 days prior written notice
before the expiration of the Term, require Tenant to remove some or all of the Alterations
for which Landlord’s consent was not previously requested. Before the last day of the Term,
Tenant shall at its own cost also remove those Alterations for which Landlord previously
notified Tenant removal would be required. If Landlord so elects, Tenant shall at its own
cost restore those Alterations for which consent was not previously requested to the
condition designated by Landlord in its election, before the last day of the Term. Should
Landlord consent in writing to Tenant’s Alteration of the Premises, Tenant shall contract
with a contractor approved by Landlord for the construction of such Alterations, shall secure
all appropriate governmental approvals and permits, and shall complete such Alterations with
due diligence in compliance with plans and specifications approved by Landlord. Tenant shall
pay all costs for such construction and shall keep the Premises free and clear of all
mechanics’ liens which may result from construction by Tenant.

- 10 -

 

	   	Notwithstanding anything in this Lease to the contrary, Landlord will inspect the
existing alterations and improvements in the Premises within ninety (90) days of the date
the Lease is executed in full by both parties, and Tenant shall not be obligated to remove
any elements of the existing alterations and improvements that Landlord approves, but
subject to the paragraph immediately above, shall be obligated to remove as of the
Expiration Date of this Lease any alterations and improvements to the Premises made
subsequent to the Commencement Date of the Prior Lease (as defined below) which Landlord has
not approved in writing. If Landlord fails to inspect or provide written notice regarding
its approval to Tenant within the ninety (90) day period described above, all existing
alterations and improvements shall be deemed approved and need not be removed as of the
Expiration Date of this Lease.
	 
	15.  	RELEASE AND INDEMNITY. As material consideration to Landlord, Tenant agrees that Landlord
shall not
be liable to Tenant for any damage to Tenant or Tenant’s property from any cause, except for
damages
resulting from Landlord’s gross negligence or willful misconduct, and Tenant waives all
claims against
Landlord for damage to persons or property arising for any reason, except for damage
resulting directly
from Landlord’s gross negligence or willful misconduct. Tenant shall indemnify and hold
Landlord, its
subsidiaries, officers, shareholders, directors, agents and employees harmless from all
damages including
attorneys’ fees and costs arising out of any damage to any person or property occurring in,
on or about the
Premises or Tenant’s use of the Premises or Tenant’s breach of any term of this Lease.
	 
	16.  	INSURANCE

	 	a.  	Payment For Insurance. Regardless of whether the Landlord or Tenant is the
Insuring Party,
Tenant shall pay for all insurance for the Premises required under this ¶ 16.
(“Insurance Costs”)
either directly or by reimbursement to Landlord as set forth in this ¶ 16. Premiums
for policy
periods commencing prior to or extending beyond the Lease Term shall be prorated to
correspond
to the Lease Term. Payment shall be made by Tenant to Landlord within thirty (30) days
following
receipt of an invoice for any amount due.
	 
	 	b.  	Liability Insurance.

	 	1)  	Carried by Tenant. Whether or not Tenant is the Insuring Party,
Tenant shall obtain and
keep in force during the Term of this Lease a commercial general liability
policy of
insurance protecting Tenant and Landlord (as an additional insured) against
claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of
the ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant
thereto. Such insurance shall be on an occurrence basis providing single limit
coverage in
an amount not less than $5,000,000 per occurrence with an “Additional
Insured-Managers
or Landlords of Premises” endorsement and contain an “Amendment of the
Pollution
Exclusion” for damage caused by heat, smoke or fumes from a hostile fire. The
policy
shall not contain any intra-insured exclusions as between
insured persons or
organizations, but shall include coverage for liability assumed under this
Lease as an
“insured contract” for the performance of Tenant’s indemnity obligations under
this Lease.
The limits of said insurance required by this Lease or as carried by Tenant
shall not,
however, limit the liability of Tenant nor relieve Tenant of any obligation
hereunder. All
insurance to be carried by Tenant shall be primary to and not contributory
with any similar
insurance carried by Landlord, whose insurance shall be considered excess
insurance
only. All insurance coverage required pursuant to this ¶ 16. which is to name
Landlord as
an additional named insured shall also name Landlord’s subsidiaries,
directors, agents,
members, managers, officers and employees as named insureds.
	 
	 	2)  	Carried by Landlord. In the event Landlord is the Insuring
Party, Landlord shall also
maintain liability insurance as described in ¶ 16.b.1), in addition to, and not
in lieu of the
insurance required to be maintained by Tenant. In the event Tenant is the
Insuring Party,
Landlord shall in addition carry Lessor’s Risk Coverage and insure the
Premises on
Landlord’s umbrella policy. Tenant shall not be named as an additional
insured therein
under any insurance obtained by Landlord in accordance with this ¶ 16.b.2).

	 	c.  	Property Insurance - Building, Improvements and Rental Value.

	 	1)  	Building and Improvements. The Insuring Party shall obtain and
keep in force during the Term of this Lease a policy or policies with Landlord
named as an additional insured (if Tenant is the Insuring Party), with loss
payable to Landlord and to the holders of any mortgages, deeds of trust or
ground leases on the Premises (“Lender(s)”), insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by Lender(s), but in no event more than the commercially reasonable
and available insurable value thereof if, by reason of the unique nature or age
of the improvements involved, such latter amount is less than full replacement
cost. If the coverage is available at a commercially reasonable cost, such
policy or policies shall insure against all risks of direct physical loss or
damage (including Boiler and Machinery coverage and the perils of flood and
earthquake), including coverage for any additional costs resulting from debris
removal and reasonable amounts of coverage for the enforcement of any ordinance
or law regulating the reconstruction or replacement of any undamaged sections
of the Premises required to be demolished shall also contain an agreed
valuation provision in lieu of any coinsurance clause and waiver of
subrogation. If such insurance coverage has a deductible clause, then Tenant
shall be liable for such

- 11 -

 

	 	   	deductible amount. Even if Landlord is the Insuring Party, Tenant’s personal
property shall be insured by Tenant under ¶ 16.d. rather than by Landlord.
	 
	 	2)  	Rental Value. The Insuring Party shall, in addition, obtain and keep in force
during the
term of this Lease a policy or policies with Landlord named as an additional insured
(if
Tenant is the Insuring Party), with loss payable to Landlord and Lender(s), insuring
the
loss of the full rental and other charges payable by Tenant to Landlord under this
Lease for
one (1) year (including all Real Property Taxes, Insurance Costs and any scheduled
Rent
increases). Said insurance shall provide that in the event the Lease is terminated
by
reason of an insured loss, the period of indemnity for such coverage shall be
extended
beyond the date of the completion of repairs or replacement of the Premises, to
provide for
one full year’s loss of Rent from the date of any such loss. Said insurance shall
contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage
shall be adjusted annually to reflect the projected Rent, Real Property Taxes,
Insurance
Costs and other expenses, if any, otherwise payable by Tenant, for the next twelve
(12)
month period. Tenant shall be liable for any deductible amount in the event of such
loss.
	 
	 	3)  	Adjacent Premises. If the Premises are part of a larger building, or if the
Premises are
part of a group of buildings owned by Landlord which are adjacent to the Premises,
the
Tenant shall pay for any increase in the premiums for the property insurance of such
building or buildings if said increase is caused by Tenant’s acts, omissions, use or
occupancy of the Premises.
	 
	 	4)  	Tenant’s Improvements. If the Landlord is the Insuring Party, the Landlord
shall not be
required to insure Tenant’s personal property and leasehold improvements unless the
item
in question has become the property of Landlord under the terms of this Lease. If
Tenant
is the Insuring Party, the policy carried by Tenant under this ¶ 16.c. shall insure
Tenant’s
personal property and leasehold improvements.

	d.  	Tenant’s Property Insurance. Subject to the
requirements of ¶ 16.e., Tenant at its cost shall
either by separate policy or by endorsement to a policy already carried, maintain insurance
coverage on all of Tenant’s personal property and Tenant’s leasehold improvements in, on or
about the Premises similar in coverage to that carried by the
Insuring Party under ¶ 16.C.
Such
insurance shall be full replacement cost coverage with a deductible of not to exceed
$100,000 per
occurrence. The proceeds from any such insurance shall be used by Tenant for the replacement
of personal property or the restoration of Tenant owned leasehold improvements. Tenant shall
be
the Insuring Party with respect to the insurance required by this
¶ 16.d. and shall provide
Landlord
with written evidence that such insurance is in force.
	 
	e.  	Insurance Policies. If Tenant is the Insuring Party,
Insurance required per this ¶ 16. shall
be with
companies duly licensed to transact business in the state where the Premises are located,
and
maintaining during the policy term a “General Policyholders Rating” of at least A- X, or
such other
minimal rating as may be required by Lender(s) as set forth in the most current issue of
“Best’s
Insurance Guide”. Tenant shall not do or permit to be done anything which shall invalidate
the
insurance policies referred to in this ¶ 16. If Tenant is the Insuring Party, Tenant shall
cause to be
delivered to Landlord certificates evidencing the existence and amounts of such insurance
with the
insureds and loss payable clauses as required by this Lease. No such policy shall be
cancelable
or subject to modification or lapse except after thirty (30) days prior written notice to
Landlord.
Tenant shall at least thirty (30) days prior to the expiration of such policies, furnish
Landlord with
evidence of renewals or certificates of insurance evidencing renewal thereof, or Landlord
may
order such insurance and charge the cost thereof to Tenant, which amount shall be payable by
Tenant to Landlord upon demand. If the Insuring Party shall fail to procure and maintain
the
insurance required to be carried by the Insuring Party under this
¶ 16., the other Party may,
but
shall not be required to, procure and maintain the same, but at Tenant’s expense.
	 
	f.  	Mutual Waiver. Notwithstanding anything to the contrary contained in this Lease, to the
extent
that this release and waiver does not invalidate or impair their respective insurance
policies, the
parties hereto release each other and their respective agents, employees, officers,
directors,
shareholders, successors, assignees and subtenants from all liability for injury to any
person or
damage to any property that is caused by or results from a risk which is actually insured
against
pursuant to the provisions of this Lease without regard to the negligence or willful
misconduct of
the parties so released. Each party shall use its commercially reasonable efforts to cause
each
insurance policy it obtains to provide that the insurer thereunder waives all right of
recovery by way
of subrogation as required herein in connection with any injury or damage covered by the
policy. If
such insurance policy cannot be obtained with such waiver of subrogation, or if such waiver
of
subrogation is only available at additional cost and the party for whose benefit the waiver
is not
obtained does not pay such additional costs after reasonable notice, then the party
obtaining such
insurance shall promptly notify the other party of the inability to obtain insurance
coverage with the
waiver of subrogation.
	 
	g.  	Tenant’s Option. Notwithstanding anything to the contrary contained in this Lease, if for any
given
policy period, Tenant is able to obtain insurance coverage which meets the requirements of
this
16. at a cost lower than Landlord’s cost, then Tenant may be the Insuring Party. At least
thirty
(30) days prior to the beginning of any policy period for which Tenant desires to be the
Insuring
Party, Tenant shall submit to Landlord its insurance quote and proposed policy provisions.
Within
five (5) business days of receipt, Landlord shall review Tenant’s insurance quote and
proposed
policy provisions, and Landlord may request that the lender as to any loan(s) encumbering
the

- 12 -

 

	 	   	property described in Exhibit A hereto (“Lender”) also review Tenant’s
insurance quote and proposed policy provisions. Promptly following said reviews by
Lender and Landlord, Landlord may, in its reasonable discretion, approve or reject
Tenant’s proposed insurance. If approved, Tenant shall cause the approved policies to
be issued, with copies of the insurance certificate(s) to be immediately provided to
Landlord. If rejected, Landlord shall specify the reasons for such rejection in
writing. Tenant shall have three (3) business days from the receipt of Landlord’s
written notice of rejection to submit a revised insurance quote and proposed policy
provisions. Within three (3) business days after Landlord’s receipt of Tenant’s
revised insurance quote and policy provisions, Landlord shall accept Tenant’s revised
insurance if it adequately addresses the reasons initially specified by Landlord for
rejection. If in Landlord’s reasonable determination, such revised insurance quote
and policy provisions do not adequately address the reasons initially specified by
Landlord for rejection, Landlord may reject Tenant’s revised insurance quote and
policy provisions by stating the reasons therefor in writing; however, such rejection
shall be final in regard to that policy period, and Landlord shall be the Insuring
Party for that policy period. If Landlord approves Tenant’s insurance, Tenant’s
failure to provide the insurance certificate(s) to Landlord at least ten (10)
business days prior to the commencement of the applicable policy period shall result
in Landlord being the Insuring Party.

	17.  	DAMAGE AND DESTRUCTION

	 	a.  	Damage - Restoration Required. In the event that the Premises is damaged by
fire or other
casualty which is covered under insurance pursuant to the provisions
of ¶ 16. above,
Landlord shall
restore such damage provided that: (i) the cost to repair the destruction of the
Premises does not
exceed sixty percent (60%) of the then replacement value of the Premises; (ii) the
insurance
proceeds are available (inclusive of any deductible amounts) to pay one hundred
percent (100%)
of the cost of restoration; and (iii) there exists at least eighteen (18) months
before the end of the
Term and, in the reasonable judgment of Landlord, the restoration can be completed
within two
hundred and seventy (270) days after the date of the damage or casualty under the laws
and
regulations of the state, federal, county and municipal authorities having
jurisdiction. Regardless of
whether Tenant or Landlord is the Insuring Party, the deductible amount of any
insurance coverage
shall be paid by Tenant except in the case of flood or earthquake and in such case the
deductible
amount in excess of $10,000 per occurrence shall be paid by Landlord. If such
conditions apply so
as to require Landlord to restore such damage pursuant to this ¶ 17.a., this Lease shall
continue in
full force and effect, unless otherwise agreed to in writing by Landlord and Tenant.
Tenant shall be
entitled to a proportionate reduction of Rent while such restoration takes place, such
proportionate
reduction to be based on the extent to which the damage and restoration efforts
interfere with
Tenant’s business in the Premises. Tenant’s right to a reduction of Rent hereunder
shall be
Tenant’s sole and exclusive remedy in connection with any such damage.
	 
	 	b.  	Damage - Restoration Not Required. In the event that the Premises is damaged by
a fire or
other casualty and Landlord is not required to restore such damage in accordance with
the
provisions of ¶ 17.a. immediately above, Landlord shall have the option to either (i)
repair or restore
such damage, with the Lease continuing in full force and effect, but Rent to be
proportionately
abated as provided in ¶ 17.a. above; or (ii) give notice to Tenant at any time within
thirty (30) days
after the occurrence of such damage terminating this Lease as of a date to be
specified in such
notice which date shall not be less than thirty (30) nor more than sixty (60) days
after the date on
which such notice of termination is given. In the event of the giving of such notice
of termination,
this Lease shall expire and all interest of Tenant in the Premises shall terminate on
the date so
specified in such notice and the Rent, reduced by any proportionate reduction in Rent
as provided
for in ¶ 17.a. above, shall be paid to the date of such termination. Notwithstanding
the foregoing, if
Tenant delivers to Landlord the funds necessary to make up the shortage (or absence)
in
insurance proceeds and the restoration can be completed in a two hundred seventy (270)
day
period, as reasonably determined by Landlord, and the destruction of the Premises does
not
exceed sixty percent (60%) of the then replacement value, Landlord shall restore the
Premises as
provided in ¶ 17.a. above.
	 
	 	c.  	End of Term Casualty. Notwithstanding the provisions
of ¶ 17.a. and ¶ 17.b. above,
Landlord may
terminate this Lease if the Premises is damaged by fire or other casualty (and
Landlord’s
reasonably estimated cost of restoration of the Premises exceeds twenty-five percent
(25%) of the
then replacement value of the Premises) and such damage or casualty occurs during the
last
twelve (12) months of the Term of this Lease (or the Term of any renewal option, if
applicable) by
giving the other notice thereof at any time within thirty (30) days following the
occurrence of such
damage or casualty. Such notice shall specify the date of such termination which date
shall not be
less than thirty (30) nor more than sixty (60) days following the date on which such
notice of
termination is given. In the event of the giving of such notice of termination, this
Lease shall expire
and all interest of Tenant in the Premises shall terminate on the date so specified in
such notice
and the Rent shall be paid to the date of such termination.
	 
	 	d.  	Termination by Tenant. In the event that the destruction to the Premises cannot
be restored as
required herein under applicable laws and regulations within two hundred seventy (270)
days of
the damage or casualty, notwithstanding the availability of insurance proceeds, Tenant
shall have
the right to terminate this Lease by giving the Landlord notice thereof within thirty
(30) days of date
of the occurrence of such casualty specifying the date of termination which shall not
be less than
thirty (30) days nor more than sixty (60) days following the date on which such notice
of termination
is given. In the event of the giving of such notice of termination, this Lease shall
expire and all
interest of Tenant in the Premises shall terminate on the date so specified in such
notice and the

- 13 -

 

	 	   	Rent, reduced by any proportionate reduction in Rent as
provided for in ¶ 17.a.
above, shall be paid to the date of such termination.
	 
	 	e.  	Restoration. Landlord agrees that, in any case in which Landlord is required
to, or otherwise
agrees to restore the Premises, that Landlord shall proceed with due diligence to
make all
appropriate claims and applications for the proceeds of insurance and to apply for
and obtain all
permits necessary for the restoration of the Premises. Landlord shall use
reasonable efforts to
enforce any and all provisions in any mortgage, deed of trust or other encumbrance on
the
Premises requiring Landlord and Lender to permit insurance proceeds to be used for
restoration.
Landlord shall restore the Premises to the condition existing prior to the date of
the damage if
permitted by applicable law. Landlord shall not be required to restore alterations
made by Tenant,
Tenant’s improvements, Tenant’s trade fixtures and Tenant’s personal property, such
excluded
items being the sole responsibility of Tenant to restore provided, however, that
Landlord shall, to
the extent of available insurance proceeds, restore Tenant Improvements to the
Premises made by
Tenant such as interior offices, lab and production improvements and other like
improvements.
	 
	 	f.  	Waiver. Tenant waives the provisions of Civil Code §1932(2) and Civil Code
§1933(4) with
	 
	 	   	respect to any destruction of the Premises.

	18.  	CONDEMNATION

	 	a.  	Definitions. The following definitions shall apply: (1) “Condemnation” means (a)
the exercise of
any governmental power of eminent domain, whether by legal proceedings or otherwise by
condemnor, or (b) the voluntary sale or transfer by Landlord to any condemnor either
under threat
of condemnation or while legal proceedings for condemnation are proceeding; (2) “Date
of Taking”
means the date the condemnor has right to possession of the property being condemned; (3)
“Award” means all compensation, sums or anything of value awarded, paid or received on
a total
or partial condemnation; and (4) “Condemnor” means any public or quasi-public
authority, or
private corporation or individual having power of condemnation.
	 
	 	b.  	Obligations to be Governed by Lease. If during the Term of the Lease there is any
taking of all
or any part of the Premises, the rights and obligations of the parties shall be
determined strictly
pursuant to this Lease. Each party waives the provisions of Code of Civil Procedure
§1265.130
allowing either party to petition the Superior Court to terminate this Lease in the
event of a partial
condemnation of the Premises.
	 
	 	c.  	Total or Partial Taking. If the Premises are totally taken by Condemnation,
this Lease shall
terminate on the Date of Taking. If any portion of the Premises is taken by
Condemnation, this
Lease shall remain in effect, except that Tenant can elect to terminate this Lease if
the remaining
portion of the Premises is rendered unsuitable for Tenant’s continued use of the
Premises. If
Tenant elects to terminate this Lease, Tenant must exercise its right to terminate by
giving notice to
Landlord within thirty (30) days after the nature and extent of the Condemnation have
been finally
determined. If Tenant elects to terminate this Lease, Tenant shall also notify
Landlord of the date
of termination, which date shall not be earlier than thirty (30) days nor later than
ninety (90) days
after Tenant has notified Landlord of its election to terminate; except that this
Lease shall terminate
on the Date of Taking if the Date of Taking falls on a date before the date of
termination as
designated by Tenant. If any portion of the Premises is taken by Condemnation and
this Lease
remains in full force and effect, on the Date of Taking the Base Rent shall be reduced
by an
amount in the same ratio as the total number of square feet in the building(s) which
are a part of
the Premises taken bears to the total number of square feet in the building (s) which
are a part of
the Premises immediately before the Date of Taking. Any Award for the taking of all or
any part of
the Premises under the power of eminent domain or any payment made under threat of the
exercise of such power shall be the property of Landlord, whether such Award shall be
made as
compensation for diminution in value of the leasehold or for the taking of the fee, or
as severance
damages; provided, however, that Tenant shall be entitled to any compensation
separately
awarded to Tenant for Tenant’s relocation expenses and/or loss of Tenant’s trade
fixtures.

	19.  	ASSIGNMENT OR SUBLEASE

	 	a.  	Tenant shall not assign or encumber its interest in this Lease or the Premises
or sublease all or any part of the Premises or allow any other person or entity
(except Tenant’s authorized representatives, employees, invitees, guests or a
Permitted Transferee) to occupy or use all or any part of the Premises without first
obtaining Landlord’s consent, which consent shall not be unreasonably withheld. Any
assignment, encumbrance or sublease without Landlord’s prior written consent shall be
voidable and at Landlord’s election, shall constitute a default. If Tenant is a
partnership, a withdrawal or change, voluntary, involuntary or by operation of law of
any partner, or the dissolution of the partnership, shall be deemed a voluntary
assignment. If Tenant consists of more than one person, a purported assignment,
voluntary or involuntary or by operation of law from one person to the other shall be
deemed a voluntary assignment. If Tenant is a corporation, any dissolution, merger,
consolidation or other reorganization of Tenant, or sale or other transfer of a
controlling percentage of the capital stock of Tenant, or the sale of at least fifty
percent (50%) of the value of the assets of Tenant shall be deemed a voluntary
assignment. Notwithstanding the sentence immediately above, if the Tenant is a
corporation, the Tenant shall be entitled to assign this Lease without Landlord’s
prior written consent in the event of a reorganization of Tenant through the sale of
all or a portion of Tenant’s Capital Stock by Initial Public Offering (such event
shall be referred to as a transfer to a “Permitted Transferee”). In connection with
any assignment, Landlord shall be entitled to require an increase in the Security
Deposit to the extent that such

- 14 -

 

	 	   	increase should be commercially reasonable in Landlord’s discretion given the
financial condition of Tenant and the assignee following such event. In connection with any
Sublease, Landlord shall be entitled to hold any Security Deposit paid by Sublessee to
Sublessor, which Security Deposit shall be held by Landlord in accordance with the
provisions of the Sublease. Tenant shall give Landlord at least sixty (60) days prior
written notice of any intended transfer to a Permitted Transferee and in connection with
such transfer shall provide to Landlord copies of any documents or other information as
Landlord may reasonably request. Unless otherwise expressly agreed in writing by Landlord,
no assignment shall relieve Tenant of any of its obligations pursuant to this Lease.
	 
	 	   	In the event of a sublease all Sublease Rent received by Tenant in excess of the Rent
payable by Tenant to Landlord under this Lease applicable to the portion of the Premises
subleased shall be deemed the “Bonus Amount”, after deducting therefrom the “Subleasing
Costs” which shall include (i) commercially reasonable brokerage commissions, (ii) tenant
improvements made at the request of a subtenant and (iii) attorneys’ fees incurred by
Tenant in negotiating and documenting the sublease, which Subleasing Costs shall be
amortized over the Term of the Sublease for the purpose of determining the Bonus Amount.
Fifty percent (50%) of the Bonus Amount shall be promptly paid to Landlord following
receipt by Tenant. If the Subleasing Costs are not known at the commencement of the
sublease, the fifty percent (50%) of Bonus Amount due Landlord will be computed without
deduction of Subleasing Costs and promptly paid to Landlord. Once the Subleasing Costs are
presented to and verified by Landlord, the Bonus Amount paid by Tenant to date will be
adjusted and Landlord shall give Tenant a credit against the next payment(s) due to
Landlord from Tenant. The term “Sublease Rent” as used herein shall include any
consideration of any kind received by Tenant from or on behalf of any subtenant, if the
sums are related in any manner to the Premises, including, without limitation Rent,
operating expense payments, bonus money and payments for the purchase of or usage of
Tenant’s furniture, fixtures, inventory, equipment, accounts, goodwill, general intangibles
and other assets. Each sublease approved by Landlord shall stand alone as to the
computation of the Bonus Amount.
	 
	 	   	In the event of an assignment all Transfer Payments received by Tenant shall be deemed the
“Bonus Amount”, after deducting therefrom the “Assignment Costs” which shall include (i)
commercially reasonable brokerage commissions and (ii) attorneys’ fees incurred by Tenant
in negotiating and documenting the assignment. Fifty percent (50%) of the Bonus Amount
shall be promptly paid to Landlord following receipt by Tenant. If the Assignment Costs are
not known at the commencement of the Assignment, the fifty percent (50%) of Bonus Amount
due Landlord will be computed without deduction of Assignment Costs and promptly paid to
Landlord. Once the Assignment Costs are presented to and verified by Landlord, the Bonus
Amount paid by Tenant to date will be adjusted and Landlord shall give Tenant a credit
against the next payment(s) due to Landlord from Tenant. The term “Transfer Payments” as
used herein shall include any consideration of any kind received by Tenant from or on
behalf of any assignee, if the sums are related in any manner to the Premises, including,
without limitation assignment consideration, Rent, operating expense payments, bonus money
and payments for the purchase of or usage of Tenant’s furniture, fixtures, inventory,
equipment, accounts, goodwill, general intangibles and other assets.
	 
	 	   	If Tenant requests Landlord to consent to a proposed assignment or subletting, Tenant shall
pay to Landlord, whether or not consent is ultimately given, an amount equal to Landlord’s
reasonable attorneys’ fees and costs incurred in connection with such request, (not to
exceed $5,000). Each request for consent to an assignment or subletting shall be in
writing, and shall be accompanied by information as may be relevant to Landlord’s
determination as to the financial and operational responsibility and stability of the
proposed assignee or sublessee and the appropriateness of the proposed use by such assignee
or sublessee. Such information shall include a summary of the proposed use of, and any
proposed modifications to, the Premises. Tenant shall provide Landlord with such other or
additional information and/or documentation as may reasonably be requested by Landlord.
Tenant shall, upon completion of any assignment or subletting of all or any portion of the
Premises, immediately and irrevocably assign to Landlord as security for Tenant’s
obligations under the Lease, all Sublease Rent and/or Transfer Payments from any such
subletting or assignment. Landlord, as assignee and attorney in fact for Tenant, shall have
the right to collect all rent and other revenues collectable pursuant to any such sublet or
assignment and apply such rent and other revenues towards Tenant’s obligations under the
Lease.
	 
	 	b.  	No interest of Tenant in this Lease shall be assignable by involuntary assignment through
operation of law (including without limitation the transfer of this Lease by testacy or
intestacy).
Each of the following acts shall be considered an involuntary assignment: (a) if Tenant is
or
becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or
institutes
proceedings under the Bankruptcy Act in which Tenant is the bankrupt; or if Tenant is a
partnership
or consists of more than one person or entity, if any partner of the partnership or other
person or
entity is or becomes bankrupt or insolvent, or makes an assignment for the benefit of
creditors; or
(b) if a writ of attachment or execution is levied on this Lease; or (c) if in any
proceeding or action
to which Tenant is a party, a receiver is appointed with authority to take possession of the
Premises. An involuntary assignment shall constitute a default by Tenant and Landlord shall
have
the right to elect to terminate this Lease, in which case this Lease shall not be treated as
an asset
of Tenant.
	 
	 	c.  	Notwithstanding any provision to this Lease to the contrary, in any event where Landlord’s
consent
is required for assignment or sublease, Landlord may at its option, elect to terminate the
Lease
instead of approving the requested assignment or sublease, except if the requested
assignment or

- 15 -

 

	 	   	sublease is for a period of less than one year (including any renewal
periods). Should Landlord so elect to terminate this Lease, all of the obligations
of the parties thereunder, to the extent not accrued, shall terminate on the later
of sixty (60) days following Landlord’s notice to Tenant of its election hereunder,
or the effective date of the proposed assignment or subletting sought by the Tenant,
but in no event later than one hundred twenty (120) days following the date of
Landlord’s election under this ¶ 19.C. At the time of termination, all obligations of
both parties hereunder shall terminate as to obligations thereafter accruing except
as otherwise expressly provided in this Lease.

	20.  	DEFAULT. The occurrence of any of the following shall constitute a default by Tenant: (a) a
failure of
Tenant to pay Rent within ten (10) days of its due date; (b) abandonment of the Premises; or
(c) failure to
timely perform any other provision of this Lease where such failure continues for a period
in excess of thirty
days following notice of such failure, provided however, that if the nature of such failure
is such that it
cannot reasonably be cured within thirty days, then Tenant shall not be in default if Tenant
commences to
cure such failure within thirty days and thereafter diligently prosecutes the cure to
completion. Tenant shall
give written notice to Landlord of any default by Landlord of its obligations pursuant to
this Lease asserted
by Tenant (with a copy of such notice to any lender (“Lender”) against the Premises).
Landlord and
Landlord’s Lender shall be afforded a reasonable opportunity to cure any claimed default by
Landlord and
Landlord shall not be considered in default so long as Landlord (or Landlord’s Lender)
commences such
cure within a reasonable period of time and thereafter, continues to attempt to complete
such cure. Prior to
any obligation recited in this Lease to provide a Lender with any notice, Landlord shall
provide Tenant with
the name and address of its Lender in writing.
	 
	21.  	LANDLORD’S REMEDIES. Landlord shall have the following remedies if Tenant is in default
(these
remedies are not exclusive; they are cumulative and in addition to any remedies now or later
allowed by
law):

	 	a.  	Landlord may continue this Lease in full force and effect, and this Lease will
continue in effect so
long as Landlord does not terminate Tenant’s right to possession, and Landlord shall
have the right
to collect Rent when due. During the period Tenant is in default, Landlord can enter
the Premises
and relet the Premises, or any part of the Premises, to third parties for Tenant’s
account. Tenant
shall be liable immediately to Landlord for all costs Landlord incurs in reletting
the Premises,
including without limitation, brokers’ commissions, expenses of remodeling the
Premises required
by the reletting, and like costs. Reletting can be for a period shorter or longer
than the remaining
Term of this Lease. Tenant shall pay to Landlord the Rent due under this Lease on the
dates the
Rent is due, less the Rent Landlord receives from any reletting. No act by Landlord
allowed by this
¶ 21.a. shall terminate this Lease unless Landlord notifies Tenant in writing that
Landlord elects to
terminate this Lease. After Tenant’s default and for so long as Landlord does not
terminate
Tenant’s right to possession of the Premises, if Tenant obtains Landlord’s consent,
Tenant shall
have the right to assign or sublet its interest in this Lease, but Tenant shall not
be released from
liability. Landlord’s consent to such a proposed assignment or subletting shall not
be unreasonably
withheld. If Landlord elects to relet the Premises as provided in
this ¶ 21.a., Rent
that Landlord
receives from reletting shall be applied to the payment of: first, any indebtedness
from Tenant to
Landlord other than Rent due from Tenant; second, all costs, including for
maintenance incurred by
Landlord in reletting; and third, Rent due and unpaid under this Lease. After
deducting the
payments referred to in this ¶ 21.a., any sum remaining from the Rent Landlord receives
from
reletting shall be held by Landlord and applied in payment of future Rent as Rent
becomes due
under this Lease. In no event shall Tenant be entitled to any excess Rent received by
Landlord. If,
on the date Rent is due under this Lease, the Rent received from the reletting is
less than the Rent
due on that date, Tenant shall pay to Landlord, in addition to the remaining Rent
due, all costs
including for maintenance Landlord incurred in reletting that remain after applying
the Rent
received from the reletting as provided in this ¶ 21.a.; and
	 
	 	b.  	Landlord may terminate Tenant’s right to possession of the Premises at any such
time. No act by
Landlord other than giving express written notice thereof to Tenant shall terminate
this Lease. Acts
of maintenance, efforts to relet the Premises, or the appointment of a receiver on
Landlord’s
initiative to protect Landlord’s interest under this Lease shall not constitute a
termination of
Tenant’s right to possession. Upon termination of Tenant’s right to possession,
Landlord has the
right to recover from Tenant: (1) the Worth of the unpaid Rent that had been earned
at the time of
termination of Tenant’s right to possession; (2) the Worth of the amount by which the
unpaid Rent
that would have been earned after the date of termination until the time of award
exceeds the
amount of the loss of Rent that Tenant proves could have been reasonably avoided; (3)
the Worth
of the amount of the unpaid Rent that would have been earned after the award
throughout the
remaining Term of the Lease to the extent such unpaid Rent exceeds the amount of the
loss of
Rent that Tenant proves could have been reasonably avoided; and (4) any other amount,
including
but not limited to, reasonable expenses incurred to relet the Premises, court costs,
attorneys’ fees
and collection costs necessary to compensate Landlord for all detriment caused by
Tenant’s
default. The “Worth”, as used above in (1) and
(2) in this ¶ 21.b. is to be computed
by allowing
interest at the lesser of eighteen percent (18%) per annum or the maximum legal
interest rate
permitted by law. The “Worth”, as used above in (3) in
this ¶ 21.b. is to be computed
by discounting
the amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the
award, plus one percent (1%).

	22.  	ENTRY OF PREMISES. Landlord and/or its authorized representatives shall have the right
after
reasonable notice except for emergencies to enter the Premises at all reasonable times for
any of the
following purposes: (a) to determine whether the Premises are in good condition and whether
Tenant is
complying with its obligations under this Lease; (b) to do any necessary maintenance and to
make any

- 16 -

 

	   	restoration to the Premises that Landlord has the right or obligation to perform; (c)
to post “for sale” signs at any time during the Term, or to post “for rent” or “for lease”
signs during the last one hundred eighty (180) days of the Term or during any period while
Tenant is in default; (d) to show the Premises to prospective brokers, lenders, agents,
buyers, tenants or persons interested in leasing or purchasing the Premises, at any time
during the Term; or (e) to repair, maintain or improve the Premises and to erect
scaffolding and protective barricades around and about the Premises but not so as to
prevent entry to the Premises or to unreasonably interfere with Tenant’s use of the
Premises and to do any other act or thing necessary for the safety or preservation of the
Premises. Landlord shall not be liable in any manner for any inconvenience, disturbance,
loss of business, nuisance or other damage arising out of Landlord’s entry onto the
Premises as provided in this ¶ 22. Tenant shall not be entitled to an abatement or reduction
of Rent if Landlord exercises any rights reserved in this ¶ 22. Landlord shall conduct its
activities on the Premises as provided herein in a commercially reasonable manner that will
lessen the inconvenience, annoyance or disturbance to Tenant.
	 
	23.  	SUBORDINATION.

	 	a.  	Automatic Subordination. Without the necessity of any additional document being
executed by
Tenant for the purpose of effecting a subordination, and at the election of Landlord
or Landlord’s
Lender, this Lease shall be subject and subordinate at all times to (i) all ground
leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises, (ii) the lien
of any mortgage or deed of trust which may now exist or hereafter be executed
affecting the
Premises, and (iii) the lien of any mortgage or deed of trust which may hereafter be
executed in
any amount for which the Premises, ground leases or underlying leases, or Landlord’s
interest or
estate in any of said items is specified as security. In the event that any ground
lease or underlying
lease terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in
lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn
to and become the Tenant of the successor in interest (including without limitation
to Lender) to
Landlord (“Successor”). In connection with any such termination of a ground lease or
underlying
lease or any foreclosure or conveyance in lieu of foreclosure made in connection with
any
mortgage or deed of trust, then so long as Tenant is not in default after all
applicable notice and
cure periods pursuant to this Lease, Tenant shall not be disturbed in its possession
of the
Premises or in the enjoyment of its rights pursuant to this Lease during the Term of
this Lease or
any extension or renewal thereof. Notwithstanding any subordination of this Lease to
the lien of
any mortgage or deed of trust, the Lender, at any time, shall be entitled to
subordinate the lien of
its mortgage or deed of trust to this Lease by filing a notice of subordination in
the County in which
the Premises are located, and Lender shall agree in connection with any such filing,
that Tenant
shall not be disturbed in its possession of the Premises so long as Tenant is not in
default pursuant
to this Lease. In connection with any such filing, Tenant shall be obligated to
attorn to and to
become a Tenant of any Successor.
	 
	 	b.  	Additional Subordination. From time to time at the request of Landlord, Tenant
covenants and
agrees to execute and deliver within ten (10) business days following the date of
written request
from Landlord, documents evidencing the priority or subordination of this Lease with
respect to any
ground lease or underlying lease or the lien of any mortgage or deed of trust in
connection with the
Premises. Any and all such documents shall be in such form as is reasonably
acceptable to the
Lender(s). Any subordination agreement so requested by Landlord shall provide for
Tenant to
attorn to the Successor and shall further provide that Tenant shall not be disturbed
in its
possession of the Premises or in the enjoyment of its rights pursuant to this Lease
so long as
Tenant is not in default after all applicable notice and cure periods with respect to
its obligations
pursuant to the Lease. Any such Subordination, Non-disturbance and Attornment
Agreement shall
be recorded in the official records of the office of the County Recorder in the
County in which the
Premises is located.
	 
	 	c.  	Notice from Lender. Tenant shall be entitled to rely upon any notice given by
a Lender in
connection with the Premises requesting that Tenant make all future Rent payments to
such
Lender, and Tenant shall not be liable to Landlord for any payment made to such
Lender in
accordance with such notice. Notwithstanding any provision to the contrary of this
Lease, a
Successor shall not be (i) obligated to recognize the payment of Rent for a period of
more than one
month in advance; (ii) responsible for liabilities accrued pursuant to this Lease
prior to the date
(“Succession Date”) upon which the Successor becomes the “Landlord”
hereunder; (iii)
responsible to cure defaults of the Landlord pursuant to this Lease existing as of
the Succession
Date, except for defaults of a continuing nature of which Successor received notice
(as provided in
Paragraph 20) and in respect of which Tenant afforded Successor a reasonable cure
period
following such notice; (iv) responsible for any Security Deposit delivered by Tenant
pursuant to this
Lease not actually received by the Successor; or (v) bound by any execution,
modification,
termination or extension of this Lease or any grant of a purchase option or right of
first refusal or
any other action taken by the Landlord pursuant to this Lease, except in accordance
with the
provisions of an assignment of Leases executed by Landlord in favor of a Lender.

	24.  	ESTOPPEL CERTIFICATE; TENANT FINANCIAL STATEMENTS. Tenant, at any time and from time to
time, upon not less than ten (10) business days written notice from Landlord, will execute,
acknowledge
and deliver to Landlord and, at Landlord’s request, to any existing or prospective
purchaser, ground lessor
or mortgagee of any part of the Premises, a certificate of Tenant stating: (a) that Tenant
has accepted the
Premises (or, if Tenant has not done so, Tenant has not accepted the Premises and specifying
the reasons
therefor); (b) the Commencement and Expiration Dates of this Lease; (c) that this Lease is
unmodified and
in full force and effect (or, if there have been modifications, that same is in full force
and effect as modified
and stating the modifications); (d) whether or not to the best of Tenant’s knowledge there
are then existing

- 17 -

 

	   	any defenses against the enforcement of any of the obligations of Tenant under this
Lease (and, if so, specifying same); (e) whether or not to the best of Tenant’s knowledge
there are then existing any defaults by Landlord in the performance of its obligations
under this Lease (and, if so, specifying same); (f) the dates, if any, to which the Rent
and other charges under this Lease have been paid; (g) whether or not there are Rent
increases during the Lease Term and if so the amount of same; (h) whether or not the Lease
contains any options or rights of first offer or first refusal; (i) the amount of any
Security Deposit or other sums due Tenant; (j) the current notice address for Tenant; and
(k) any other information that may reasonably be required by any of such persons. It is
intended that any such certificate of Tenant delivered pursuant to
this ¶ 24. may be relied
upon by Landlord and any existing or prospective purchaser, ground lessor or mortgagee of
the Premises. Provided Tenant is not a publicly traded company which files with the SEC,
Tenant will, at any time upon request by Landlord, to deliver to Landlord the most recent
financial statements of Tenant with an opinion of a certified public accountant, if
available, including a balance sheet and profit and loss statement for the most recent
prior three years all prepared in accordance with generally accepted accounting principles
consistently applied. Landlord agrees to hold such financial statements confidential and to
share them only with prospective lenders and purchasers of the Premises. Other than for
prospective lenders and purchasers, Landlord shall not request financial statements more
often than twice in any calendar year.
	 
	25.  	WAIVER. No delay or omission in the exercise of any right or remedy by Landlord shall impair
such right
or remedy or be construed as a waiver. No act or conduct of Landlord, including without
limitation,
acceptance of the keys to the Premises, shall constitute an acceptance of the surrender of
the Premises by
Tenant before the expiration of the Term. Only written notice from Landlord to Tenant shall
constitute
acceptance of the surrender of the Premises and accomplish termination of the Lease.
Landlord’s consent
to or approval of any act by Tenant requiring Landlord’s consent or approval shall not be
deemed to waive
or render unnecessary Landlord’s consent to or approval of any subsequent act by Tenant. Any
waiver by
Landlord of any Default must be in writing and shall not be a waiver of any other Default
concerning the
same or any other provision of the Lease.
	 
	26.  	SURRENDER OF PREMISES. Upon expiration of the Term, Tenant shall surrender to Landlord the
Premises and all tenant improvements and alterations clean and in the same condition as
existed at the
Commencement Date, except for ordinary wear and tear and Alterations which Tenant has the
right or is
obligated to remove under the provisions of ¶ 14. herein. Tenant shall remove all personal
property
including, without limitation, all wallpaper, paneling and other decorative improvements or
fixtures and shall
perform all restoration made necessary by the removal of any alterations or Tenant’s
fixtures, furnishings,
equipment and other personal property before the expiration of the Term, including, for
example, restoring
all wall surfaces to their condition as of the Commencement Date. In any event, Tenant shall
cause the
following to be done prior to the expiration or the sooner termination of this Lease: (i) all
interior walls shall
be cleaned so that they appear freshly painted; (ii) all tiled floors shall be cleaned and
waxed; (iii) all
carpets shall be cleaned and shampooed; (iv) all broken, marred, stained or nonconforming
acoustical
ceiling tile shall be replaced; (v) all exterior and interior windows shall be washed; (vi)
the HVAC system
shall be serviced by a reputable and licensed service firm and left in good operating
condition and repair as
so certified by such firm; and (vii) the plumbing and electrical systems and lighting shall
be placed in good
order and repair (including replacement of any burned out, discolored or broken light bulbs,
ballasts, or
lenses). Landlord can elect to retain or dispose of in any manner Tenant’s personal property
not removed
from the Premises by Tenant prior to the expiration of the Term. Tenant waives all claims
against Landlord
for any damage to Tenant resulting from Landlord’s retention or disposition of Tenant’s
personal property.
Tenant shall be liable to Landlord for Landlord’s cost for storage, removal and disposal of
Tenant’s
personal property.
	 
	27.  	HOLDOVER. If Tenant with Landlord’s consent remains in possession of the Premises after
expiration of
the Term or after the date in any notice given by Landlord to Tenant terminating this Lease,
such
possession by Tenant shall be deemed to be a month to month tenancy cancelable by either
party on thirty
(30) days written notice given at any time by either party and all provisions of this Lease,
except those
pertaining to Term, renewal options and Base Rent, shall apply and Tenant shall thereafter
pay monthly
Base Rent computed on a per month basis, for each month or part thereof (without reduction
for any partial
month) that Tenant remains in possession, in an amount equal to one hundred thirty-five
percent (135%) of
the Base Rent that was in effect for the last full calendar month immediately preceding
expiration of the
Term.
	 
	   	If Tenant holds over after the expiration or earlier termination of the Term hereof,
without the consent of Landlord, Tenant shall become a Tenant at sufferance only with a
continuing obligation to pay Rent provided that the Base Rent shall be one hundred fifty
percent (150%) of the Base Rent that was in effect for the last full calendar month
immediately preceding expiration of the Term for the first thirty (30) days of such
holdover, and two hundred percent (200%) of such Base Rent thereafter during the pendency
of such holdover. In any such case of Holdover without the consent of Landlord, the monthly
Base Rent shall be computed on a per-month basis, for each month or part thereof (without
reduction for any partial month) that Tenant remains in possession. Acceptance by Landlord
of Rent after expiration or earlier termination of the Term shall not constitute a consent
to a holdover hereunder or result in a renewal. The foregoing
provisions of this ¶ 27 are in
addition to and do not affect Landlord’s right of re-entry or any rights of Landlord
hereunder or as otherwise provided by law. If Tenant fails to surrender the Premises upon
the expiration of this Lease despite demand to do so by Landlord, Tenant shall indemnify
and hold Landlord harmless from all loss or liability arising out of such failure,
including without limitation, any claim made by any succeeding tenant founded on or
resulting from such failure to surrender. No provision of this ¶ 27 shall be construed as
implied consent by Landlord to any holding over by Tenant. Landlord expressly reserves the
right to require Tenant to surrender possession of the Premises to Landlord as provided in
this Lease upon expiration or other termination of this Lease. The
provisions of this ¶ 27
shall not be

- 18 -

 

	   	considered to limit or constitute a waiver of any other rights or remedies of
Landlord provided in this Lease or at law.
	 
	28.  	NOTICES. All notices, demands, or other communications required or contemplated under this
Lease,
including any notice delivered to Tenant by the Lender, shall be in writing and shall be
deemed to have
been duly given 48 hours from the time of mailing if mailed by registered or certified mail,
return receipt
requested, postage prepaid, or 24 hours from the time of shipping by overnight carrier, or
the actual time of
delivery if delivered by personal service to the parties at the
addresses specified in ¶ 1.
Either Tenant or
Landlord may change the address to which notices are to be given to such party hereunder by
giving
written notice of such change of address to the other in accordance with the notice
provisions hereof.
	 
	29.  	OPTIONS TO EXTEND.

	 	a.  	Grant of Options. Tenant shall have the right, at its option, to extend the
Lease for two (2)
additional periods of thirty (30) months each (the “Extended Terms”) on an “as is”
basis, each
such Extended Term commencing at the expiration of the then current Term, provided
that at the
time of exercise and at the time of commencement of each Extended Term, Tenant is not
in default
under this Lease beyond the expiration of applicable notice and cure periods.
	 
	 	b.  	Exercise of Option. If Tenant decides to extend the Lease for an Extended
Term, Tenant shall
give written notice to Landlord of its election to extend not less than nine (9)
months prior to the
expiration of the then current Term. Tenant’s failure to give timely notice to
Landlord of Tenant’s
election to extend shall be deemed a waiver of Tenant’s right to extend. The terms
and conditions
applicable to each Extended Term shall be the same terms and conditions contained in
this Lease
except that Tenant shall not be entitled to any further option to extend beyond these
two extension
options. The Base Rent for each Extended Term shall be determined in accordance with
¶ 29.c.
below:
	 
	 	c.  	Determination of Base Rent During Each Extended Term

	 	1)  	Agreement of Base Rent. Landlord shall provide Tenant with
written notice of the
proposed Fair Market Rental Value (as defined below) no later than three (3)
months prior
to the expiration of the then current Term. Landlord and Tenant shall have
thirty (30) days
after Landlord provides the proposed Fair Market Rental Value in which to
agree on the
Base Rent for that Extended Term. The “Fair Market Rental Value” of the
Premises for
that Extended Term shall be the Base Rent per rentable square foot as of
the
commencement of that Extended Term, including three percent (3%) annual
increases,
taking into consideration all relevant market factors, including the use of
the Premises
permitted under this Lease, the quality, size, design and location of the
Premises, and the
rental value paid by tenants for lease renewals or extensions in premises of
comparable
size, quality and location. Base Rent for the first twelve (12) months of
that Extended
Term shall be 95% of the Fair Market Rental Value, with 3% annual increases to
be
effective at the beginning of each subsequent lease year. If Landlord and
Tenant agree on
the Base Rent for that Extended Term during the thirty (30) day period, they
shall
immediately execute an amendment to this Lease stating the new Base
Rent.
Notwithstanding any other provision of this Lease, the Base Rent for the first
twelve (12)
months of each Extended Term shall be no less than the scheduled Base Rent for
the last
month of the previous Lease Term plus three percent (3%), with three percent
(3%) annual
increases to be effective at the beginning of each subsequent lease year.
	 
	 	2)  	Selection of Appraisers. If Landlord and Tenant are unable to
agree on the Base Rent
for that Extended Term within the thirty (30) day period, then within ten (10)
business days
after the expiration of the thirty (30) day period and provided that Tenant
has timely
exercised the subject renewal option in accordance with ¶ 29.b., Landlord and
Tenant each
at its own cost and by giving notice to the other party, shall appoint a
competent and
disinterested real estate appraiser with at least five (5) years full-time
commercial appraisal
experience in the Milpitas, California, market area to appraise the Fair
Market Rental Value
of the Premises and set the Base Rent for that Extended Term. If either
Landlord or
Tenant does not appoint an appraiser within said ten (10) business days, the
single
appraiser appointed shall be the sole appraiser and shall set the Base Rent
during that
Extended Term. If two (2) appraisers are appointed by Landlord and Tenant as
stated
herein, they shall meet promptly and attempt to set the Base Rent for that
Extended Term.
If the two (2) appraisers are unable to agree within thirty (30) days after
the second
appraiser has been appointed, they shall attempt to select a third appraiser
meeting the
same qualifications within ten (10) business days after the last day the two
(2) appraisers
are given to set the Base Rent. If they are unable to agree on the third
appraiser, either
Landlord or Tenant, by giving ten (10) days’ notice to the other party, can
apply to the then
President of the Real Estate Board or to the Presiding Judge of the Superior
Court of the
County of Santa Clara, for the selection of a third appraiser who meets the
qualifications
stated herein. Landlord and Tenant each shall bear one-half
(1/2) of the cost of appointing
the third appraiser and of paying the third appraiser’s fee. The third
appraiser, however
selected, shall be a person who has not previously acted in any capacity for
either
Landlord or Tenant, or their affiliates.
	 
	 	3)  	Value Determined by Three (3) Appraisers. Within thirty (30) days
after the selection of
the third appraiser, a majority of the appraisers shall set the Base Rent for
that Extended
Term. If a majority of the appraisers are unable to set the Base Rent within
the stipulated

- 19 -

 

	 	   	period of time, Landlord’s appraiser shall arrange for simultaneous
exchange of written appraisals from each of the appraisers and the three (3)
appraisals shall be added together and their total divided by three (3); the
resulting quotient shall be the Base Rent for the Premises for that Extended
Term. If, however, the low appraisal and/or the high appraisal are/is more
than fifteen percent (15%) lower and/or higher than the middle appraisal,
such low appraisal and/or high appraisal shall be disregarded. If only one
(1) appraisal is disregarded, the remaining two (2) appraisals shall be added
together and their total divided by two (2); the resulting quotient shall be
the Base Rent for the Premises for that Extended Term. If both the low
appraisal and the high appraisal are disregarded as stated in this
¶ 29.c.3),
the middle appraisal shall be the Base Rent for the Premises at the
commencement of that Extended Term.

	30.  	PREVIOUS LEASE. The previous lease for the Premises
between the parties hereto (the “Prior
Lease”)
shall continue in full force and effect through December 31, 2003, but shall have no effect
thereafter except
as to obligations existing as of December 31, 2003 but not yet satisfied including, without
limitation, any
and all indemnification obligations.
	 
	31.  	MISCELLANEOUS PROVISIONS.

	 	a.  	Time of Essence. Time is of the essence of each provision of this Lease.
	 
	 	b.  	Successor. This Lease shall be binding on and inure to the benefit of the
parties and their
successors, except as provided in ¶ 19.
	 
	 	c.  	Landlord’s Consent. Any consent required by Landlord under this Lease must be
granted in
writing and may be withheld or conditioned by Landlord in its sole and absolute
discretion unless
otherwise provided.
	 
	 	d.  	Personal Rights. Notwithstanding any other provision(s) of this Lease to the
contrary, any
provisions of this Lease providing for the renewal, extension or early termination of
the Lease
and/or for the expansion of the Premises (to include without limitation rights to
negotiate, rights of
first refusal, etc.) shall be (i) personal to the original Tenant and shall not be
assignable or
otherwise transferable other than to a Permitted Transferee (either voluntarily or
involuntarily) to
any third party for any reason whatsoever, and (ii) conditioned upon Tenant not then
being in
default under this Lease.
	 
	 	e.  	Commissions. Each party represents that it has not had dealings with any real
estate broker,
finder or other person with respect to this Lease in any manner, except for the
Broker(s) identified
in 1., who shall be compensated by Landlord in accordance with the separate agreement
between Landlord and the Broker(s).
	 
	 	f.  	Other Charges; Legal Fees. If Landlord becomes a party to any litigation
concerning this Lease
or the Premises by reason of any act or omission of Tenant or Tenant’s authorized
representatives,
Tenant shall be liable to Landlord for reasonable attorneys’ fees and court costs
incurred by
Landlord in the litigation, after Landlord provides written notice of the action to
Tenant.
Notwithstanding the foregoing, Tenant will reimburse Landlord for up to $2,000 in
reasonable
attorney’s fees and court costs incurred prior to Landlord giving Tenant notice of
the action.
Should the court render a decision which is thereafter appealed by any party thereto,
Tenant shall
be liable to Landlord for reasonable attorneys’ fees and court costs incurred by
Landlord in
connection with such appeal.
	 
	 	   	If either party commences any litigation against the other party or files an appeal
of a decision arising out of or in connection with the Lease, the prevailing party
shall be entitled to recover from the other party reasonable attorneys’ fees and
costs of suit. If Landlord employs an attorney to recover delinquent charges, Tenant
agrees to pay all attorneys’ fees and costs charged to Landlord in addition to Rent,
late charges, interest and other sums payable under this Lease.
	 
	 	g.  	Landlord’s Successors. In the event of a sale or conveyance by Landlord of the
Premises, the
same shall operate to release Landlord from any liability under this Lease, including
as to any
Security Deposit to the extent transferred to Landlord’s successor-in-interest, and
in such event
Landlord’s successor in interest shall be solely responsible for all obligations of
Landlord under this
Lease.
	 
	 	h.  	Interpretation. This Lease shall be construed and interpreted in accordance
with the laws of the state in which the Premises are located. This Lease constitutes
the entire agreement between the parties with respect to the Premises, except for such
guarantees or modifications as may be executed in writing by the parties from time to
time. When required by the context of this Lease, the singular shall include the
plural, and the masculine shall include the feminine and/or neuter. “Party” shall mean
Landlord or Tenant. If more than one person or entity constitutes Landlord or Tenant,
the obligations imposed upon that party shall be joint and several. The
enforceability, invalidity or illegality of any provision shall not render the other
provisions unenforceable, invalid or illegal.
	 
	 	i.  	Auctions. Tenant shall not conduct, nor permit to be conducted, either voluntarily or
involuntarily,
any auction upon the Premises without first having obtained Landlord’s prior written
consent. Notwithstanding anything to the contrary in this Lease, Landlord shall not
be obligated to exercise any standard of reasonableness in determining whether to
grant such consent.

- 20 -

 

	 	j.  	Quiet Possession. Upon payment by Tenant of the Rent for the Premises and the observance
and performance of all of the covenants, conditions and provisions on Tenant’s part
to be observed and performed under this Lease, Tenant shall have quiet possession of
the Premises for the entire Term hereof subject to all of the provisions of this
Lease.
	 
	 	k.  	Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
	 
	 	I.  	Offer. Preparation of this Lease by Landlord or Landlord’s agent and submission of same to
Tenant shall not be deemed an offer to lease to Tenant. This Lease is not intended
to be binding until executed by all Parties hereto.
	 
	 	m.  	Amendments. This Lease may be modified only in writing, signed by the Parties in
interest at the time of the modification. The parties shall amend this Lease from time
to time to reflect any adjustments that are made to the Base Rent or other Rent payable
under this Lease. As long as they do not materially change Tenant’s obligations
hereunder, Tenant agrees to make reasonable non-monetary modifications to this Lease as
may be reasonably required by Lender(s) in connection with the obtaining of normal
financing or refinancing of the property of which the Premises are a part.
	 
	 	n.  	Construction. The Landlord and Tenant acknowledge that each has had its counsel
review this Lease, and hereby agree that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Lease or in any amendments or exhibits hereto.
	 
	 	o.  	Captions. Article, section and paragraph captions are not a
part hereof.
	 
	 	p.  	Exhibits. For reference purposes the Exhibits are listed below:

Exhibit A: The Premises

Exhibit B: Rules and Regulations

Exhibit C: Covenants, Conditions And Restrictions

	 	 	 	 	 	 	 	 
	 	LANDLORD:

	 	 	TENANT:	 
	 	 
	 	 	 	 	 	 
	 	LIMAR REALTY CORP. #4, a California corporation	 	LSI LOGIC CORPORATION, a Delaware corporation
	 	 
	 	 	 	 	 	 
	 	By:

	/s/ Theodore H. Kruttschnitt
	 	By:	/s/ David G. Pursel
	 	

	 	 
	 	 	 	 
	 	 
	 	 	 	 	 	 
	 	Name:

	Theodore H. Kruttschnitt
	 	Name:
	David G. Pursel
	 	 
	 	 	 	 	 	 
	 	Title:

	President
	 	Title:
	Vice President, General Counsel
	 	

	 	 	 	 	& Corporate Secretary 
	 	 
	 	 	 	 	 	 
	 	Date:
	3/29/04	 	 	Date:	February 24, 2004
	 	

	 	 
	 	 	 	 
	 	 
	 	 	 	 	 	 
	 	 	 	 	 	LSI Logic Legal Department
	 	 	 	 	 	 	 	 
	 	

	 	 	 	Date:	02/26/04
	 	

	 	 	 	 	 	 
	 	 	 	 	 	Approved as to form
	 	 	 	 	 	 	 	 
	 	

	 	 	 	By	/s/ Andrew S. Hughes
	 	

	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 
	 	 	 	 	 	LSI Logic Corporate Real Estate
	 	 
	 	 	 	 	 	 
	 	 	 	 	 	Date:	2/26/04	 
	 	

	 	 	 	 	 	 
	 	 	 	 	 	Approved as to form
	 	 
	 	 	 	 	 	 
	 	

	 	 	 	By	/s/ Donald A. Costello
	 	

	 	 	 	 	 	 

- 21 -

 

EXHIBIT A

The Premises

This Exhibit A is
attached to and made a part of that certain Lease (the
“Lease”) dated December 31, 2003, by
and between Limar Realty Corp. #4 as Landlord and LSI Logic Corporation, a Delaware corporation, as Tenant.

 

EXHIBIT B

Rules & Regulations

This Exhibit B is attached to and made a part of that certain Lease dated December 31, 2003 by and
between Limar Realty Corp. #4 as Landlord and LSI Logic Corporation, a Delaware corporation, as
Tenant.

For the purpose of these Rules & Regulations the word Premises shall refer to the Premises Tenant
is leasing as described in the Lease.

	 	1.  	No sign, placard, picture, advertisement, name or notice (collectively, “Signs”) shall be
installed or displayed on any part of the Premises after the Commencement Date without the
prior written consent of Landlord, except that Tenant may post Signs inside the Building
which are not visible from the exterior of the Building. Landlord shall have the right to
remove, at Tenant’s expense and without notice, any sign installed or displayed in violation
of this rule. All approved signs or lettering on doors and walls shall be printed, painted,
affixed or inscribed at the expense of Tenant.
	 
	 	2.  	Except for that which exists as of the Commencement Date or that consented to in writing
by Landlord, no draperies, curtains, blinds, shades, screens or other devices shall be hung
at or used in connection with any window or exterior door or doors of the Premises and no
awning shall be permitted on any part of the Premises. Tenant shall not place anything
against or near glass partitions or doors or windows which may appear unsightly from outside
the Premises.
	 
	 	3.  	Neither Tenant nor any employee or invitee of Tenant, shall make any structural roof or
terrace penetrations.
	 
	 	4.  	Tenant shall not cause any unnecessary labor by carelessness or indifference to the good
order and cleanliness of the Premises. Landlord shall not in any way be responsible to any
Tenant for any loss of property on the Premises, or for any damage to any Tenant’s property.
	 
	 	5.  	Landlord will furnish Tenant, free of charge, with six (6) keys to the Premises. Tenant
shall not make or have made additional keys without Landlord’s prior written consent, and
Tenant shall not alter any lock or install a new additional lock or bolt on any door of its
Premises without Landlord’s prior written consent, except for electronic locks existing at
the Commencement Date. Tenant, upon the termination of its tenancy, shall deliver to
Landlord the keys of all locks for doors on the Premises, and in the event of loss of any
keys furnished by Landlord, shall pay Landlord therefor.
	 
	 	6.  	If Tenant requires telegraphic, telephonic, burglar alarm or similar services that do not
exist as of the Commencement Date, it shall first obtain, and comply with, Landlord’s
reasonable instructions in their installation.
	 
	 	7.  	Tenant shall not place a load upon any floor of the Premises which exceeds the load per
square foot which such floor was designed to carry and which is allowed by law. Landlord
shall have the reasonable right to prescribe the weight, size and position of all equipment,
materials, furniture or other property brought into the Premises. Heavy objects shall, if
considered necessary by Landlord, stand on such platforms as determined by Landlord to be
necessary to properly distribute the weight. Business machines and mechanical equipment
belonging to Tenant, which cause noise or vibration that may be transmitted to the structure
of the Premises to such a degree as to be objectionable to Landlord, shall be placed and
maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient
to eliminate noise or vibrations. Landlord will not be responsible for loss of, or damage to,
any such equipment or other property from any cause, and all damage done to the Premises by
maintaining or moving such equipment or other property shall be repaired at the expense of
Tenant.
	 
	 	8.  	Tenant shall not use or keep in the Premises any kerosene, gasoline or inflammable or
combustible fluid or material other than those limited quantities necessary for the
operation or maintenance of office equipment. Tenant shall not use or permit to be used in
the Premises any foul or noxious gas or substance, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord by reason of noise,
odors or vibrations. Tenant shall not bring or keep or permit to be brought or kept in the
Premises any animal life form, other than human, except seeing eye dogs when in the company
of their masters.
	 
	 	9.  	Tenant agrees to cooperate fully with Landlord to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice.
	 
	 	10.  	Landlord reserves the right, exercisable with one hundred twenty (120) days prior written
notice but without liability to Tenant, to change the name and street address of the
Premises.
	 
	 	11.  	The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for
any purpose other than that for which they were constructed and no foreign substance of any
kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage
resulting for the violation of this rule shall be borne by the Tenant who, or whose
employees or invitees, shall have caused it.

 

 

EXHIBIT B

Rules & Regulations

(continued)

	 	12.  	Tenant shall not sell, or permit the retail sale of newspapers, magazines, periodicals,
theater tickets or any other goods or merchandise to the general public in or on the Premises.
Tenant shall not use the Premises for any business or activity other than that specifically
provided for in this Lease. Notwithstanding the above, Tenant shall have the right to
install vending machines for use by Tenant, its employees and invitees.
	 
	 	13.  	Tenant shall not interfere with radio or television broadcasting or reception from or in
neighboring areas.
	 
	 	14.  	Canvassing, soliciting and distribution of handbills or any other written materials, and
peddling in the Property are prohibited, and Tenant shall cooperate to prevent same.
	 
	 	15.  	Landlord reserves the right to exclude or expel from the Premises any person who, in
Landlord’s judgment, is intoxicated or under the influence of liquor or drugs or who is in
violation of any of the Rules and Regulations of the Premises or in violation of the CC&R’s.
	 
	 	16.  	Tenant shall store all its trash and garbage within its Premises or in reasonable locations
specifically identified by Landlord for such purposes. Tenant shall not place in any trash
box or receptacle any material which cannot be disposed of in the ordinary and customary
manner of trash and garbage disposal. All garbage and refuse disposal shall be made in
accordance with reasonable directions issued from time to time by Landlord.
	 
	 	17.  	The Premises shall not be used for the storage of merchandise held for sale to the general
public, or for lodging nor shall the Premises by used for any improper, illegal or
objectionable purpose. No cooking (other than customary heating or ordinary lunchroom items
for Tenant’s employees, including existing cafeterias) shall be done or permitted by any
tenant on the Premises, except that use by Tenant in its kitchen, if any, located in the
Premises and Underwriters Laboratory’s approved equipment for brewing coffee, tea, hot
chocolate and similar beverages and microwaving food shall be permitted, provided that
such kitchen, equipment and use is in accordance with all applicable federal, state, county and
city laws, codes, ordinances, rules and regulations.
	 
	 	18.  	Without the written consent of Landlord, Tenant shall not use the name of the Premises in
connection with or in promoting or advertising the business of Tenant except as Tenant’s
address.
	 
	 	19.  	Tenant shall comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency.
	 
	 	20.  	Tenant assumes any and all responsibility for protecting its Premises from theft, robbery and
pilferage.
	 
	 	21.  	The requirements of Tenant will be attended to only upon appropriate application to the
office of Landlord by an authorized individual. Employees of Landlord shall not perform any
work or do anything outside of their regular duties unless under special instructions from
Landlord.
	 
	 	22.  	Tenant shall not park its vehicles in any parking areas outside the Premises. Tenant shall
not store or abandon vehicles in the Premises parking areas nor park any vehicles in the
Premises parking areas other than automobiles, motorcycles, motor driven or non-motor driven
bicycles, four-wheeled trucks, or other equipment used in the operation of Tenant’s business.
Tenant, its agents, employees and invitees shall not park any one (1) vehicle in more than one
(1) parking space.
	 
	 	23.  	Landlord reserves the right to make such other reasonable Rules and Regulations as, in its
judgment, may from time to time be appropriate for safety and security, for care and
cleanliness of the Premises and for the preservation of good order therein. Tenant agrees
to abide for all such Rules and Regulations hereinabove stated and any additional Rules and
Regulations which are adopted.
	 
	 	24.  	Tenant shall be responsible for the observance of all of the foregoing Rules and Regulations
by Tenant’s employees, agents, clients, customers, invitees and guests.

 

 

E 545 PAGE 189

EXHIBIT C

Covenants, Conditions And Restrictions

This Exhibit C is attached to and made a part of that certain Lease dated December 31, 2003 by and
between Limar Realty Corp. #4 as Landlord and LSI Logic Corporation, a Delaware corporation, as
Tenant.

DECLARATION OF COVENANTS, CONDITIONS

AND RESTRICTIONS OF THE

OAK CREEK BUSINESS PARK

     THIS DECLARATION is made on May 15, 1979 by THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation (hereinafter called “Declarant”), as owner of that certain real property
(the “Subject Property”) situated in the City of Milpitas, County of Santa Clara, State of
California described in Exhibit “A” hereto which exhibit is by this reference incorporated
herein as if fully set forth herein.

ARTICLE 1 

DEFINITIONS

     1.1 Unless the context otherwise specifies or requires, the terms defined in this Article
shall, for all purposes of this Declaration, have the meanings herein specified.

     1.2
Architect: The term “Architect” shall mean a person holding a certificate
to practice architecture in the State of California under authority of the Business and
Professions Code of the State of California.

     1.3
Declaration: The term “Declaration” shall mean this Declaration of
Covenants, Conditions and Restrictions.

     1.4
Deed of Trust: The term “Deed of Trust” or “Trust Deed” shall mean a
mortgage as well as a deed of trust.

 

 

E 545 PAGE 190

     1.5
Approving Agent: The term “Approving Agent” shall mean, in the following order or
precedence:

          A. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, whose present
address is 155 Moffett Park Drive, Building A, Suite 101, Sunnyvale, California 94086 (hereinafter
referred to as “Prudential”), shall be the Approving Agent until Prudential shall have resigned as
Approving Agent by executing a written resignation and causing an original of same to be recorded,
and by giving written notice of such resignation to each Owner of record, as shown on the most
recent county assessor’s roll, of real property then subject to this Declaration.

          B. Any association (whether or not incorporated) organized by the Owners of sixty-six and
two-thirds percent (66-2/3%) of the land area (exclusive of portions dedicated to a public agency
or authority for a public use) then subject to this Declaration for the purpose of acting as and
assuming the functions of an Approving Agent, in which membership is available to all Owners and
decisions are made on the basis of majority vote with one vote assigned for
each square foot of land owned by each Owner, but only if the Owners organizing such
association within not less than six (6) months from the date that Prudential shall have ceased to
be the Approving Agent, shall have (i) organized such association and (ii) executed and recorded a
statement

-2-

 

E 545 PAGE 191

in the form of an amendment to this Declaration as described in Paragraph 8.2 setting forth that
such organization has been formed for the purpose of acting as Approving Agent pursuant to this
Declaration and (iii) shall have, given written notice to all Owners of record of real property
then subject to this Declaration that such association has been formed.

     1.6
Structures: The term “structure(s)” shall include all structures, buildings,
outbuildings, sheds, fences and screening walls over three (3) feet in height, barriers, or
retaining walls.

     1.7
Mortgagee: The term “Mortgagee” shall mean a beneficiary under or a holder of a
Deed of Trust as well as a mortgagee under a mortgage.

     1.8
The Oak Creek Business Park: The term “The Oak Creek Business Park” shall mean all
of the real property described in Exhibit “A” hereto.

     1.9
Restrictions: The term “Restrictions” shall mean the Covenants, Conditions and
Restrictions set forth in this Declaration, as it may from time to time be amended or supplemented.

     1.10
Owner: The term “Owner” shall mean and refer to any person owning a fee estate
in the land, or any portion thereof, contained within the Oak Creek Business Park, but excluding
either (a) any person who holds such interest as

-3-

 

E 545 PAGE 192

security for the payment of an obligation or (b) any person holding a leasehold estate.

     1.11 Record, Recorded: The terms “record” or “recorded” shall mean, with respect to
any document, the recordation of said document in the office of the County Recorder of the County
of Santa Clara, State of California.

     1.12 Sign: The term “sign” shall mean any structure, device or contrivance, electric or
non-electric, and all parts thereof which are erected or used for advertising purposes upon or
within which any poster, bill, bulletin, printing, lettering, painting, device or other advertising
of any kind whatsoever is used, placed, posted or otherwise fastened or affixed to ground or
structures.

     1.13 Streets: The term “street(s)” shall mean any publicly dedicated street, highway,
or other publicly dedicated thoroughfare within or adjacent to the Oak Creek Business Park and
shown on any recorded subdivision or parcel map, or record of survey, whether designated thereon as
a publicly dedicated street, boulevard, place, drive, road, terrace, way, lane, circle or court.

     1.14 Visible from Neighboring Property: The term “visible from neighboring property”
shall mean, with respect to any given object, that such object is or would be visible to a person
six (6) feet tall having 20/20 vision and standing on any part of such neighboring property at an
elevation

-4-

 

E 545 PAGE 193

no greater than the elevation of the base of the object being viewed.

     1.15
Person: The term “person” shall mean an individual, group of individuals, corporation,
partnership, trust, unincorporated business association or such other legal entity as the context
in which such term is used may imply.

     1.16
Lot: The term “lot” shall mean any parcel of land contained within the Oak Creek
Business Park as divided or subdivided on subdivision or parcel map(s) recorded in the official
records of the Recorder of Santa Clara County, California, as they from time to time become
current.

     1.17
Front: The term “front” shall mean, with respect to any structure, any wall facing a
street.

ARTICLE 2 

PROPERTY SUBJECT TO THE

 

PARK
RESTRICTIONS

     2.1
General Declaration Creating the Mutual Restrictions: Declarant hereby declares
that all of the real property located in the County of Santa Clara, State of California as
described in Exhibit “A”, which exhibit is attached hereto and incorporated herein by this
reference, (sometimes hereinafter called the “Oak Creek Business Park”) is and shall be, conveyed,
hypothecated, encumbered, leased, occupied, built upon or otherwise used, improved or trans-

-5-

 

E 545 PAGE 194

ferred, in whole or in part, subject to the Restrictions and that all of said Restrictions, and all
the covenants, conditions and agreements herein contained, are declared and agreed to be in
furtherance of a general plan for the subdivision, improvement and sale of said real property and
are established for the purpose of enhancing and perfecting the value, desirability, and
attractiveness of said real property and every part thereof. Declarant further declares that (a)
that the Restrictions and each of the covenants, conditions and agreements herein contained are
made for the direct, mutual and reciprocal benefit of each and every lot contained within the Oak
Creek Business Park and that such Restrictions are and shall be mutual equitable servitudes
burdening each lot for the benefit of all other lots within the Oak Creek Business Park and (b) the
Restrictions and each of the covenants, conditions and agreements herein contained shall be
“covenants running with the land” burdening each lot within the Oak Creek Business Park for the
benefit of all other lots within the Oak Creek Business Park, the burdens of which shall be binding
upon each Owner, lessee, licensee, occupant or user of each lot within the Oak Creek Business Park,
his successors and assigns, for the benefit of each Owner of all other lots within the Oak Creek
Business Park, his successors and assigns.

-6-

 

E 545 PAGE 195

ARTICLE 3

APPROVAL OF PLANS FOR STRUCTURES

     3.1
Approval Required: So long as there is a then serving Approving Agent, no
structure shall be erected, placed, constructed, substantially remodeled, rebuilt or reconstructed
on any land subject to this Declaration until the following procedures have been fully complied
with and the Approving Agent has approved in writing the Preliminary Plans (as defined below) and
the Final Plans (as defined below):

          A. The owner, or lessee, licensee, or other occupant of the lot to be improved or his
authorized agent (the “Applicant”) shall deliver to the Approving Agent preliminary plans and
specifications (the “Preliminary Plans”) in such form and containing such information as may be
required by the Approving Agent for the following:

               (1) A site development plan showing the
location of all proposed driveways, parking areas, walkways, landscaped areas, storage and refuse
areas, and building area;

               (2) A landscaping plan for the particular lot;

               (3) A sign and lighting plan;

               (4) A building elevation plan showing dimensions, materials and exterior color schemes;

-7-

 

E 545 PAGE 196

               (5) A grading plan.

Such Preliminary Plans shall be submitted in writing in duplicate over the authorized signature
of the Applicant.

          B. At such time as the Approving Agent shall have approved in writing the Preliminary Plans
and prior to the submission of said Final Plans to the City of Milpitas, the Applicant shall submit
to the Approving Agent complete and detailed final plans, specifications and working drawing (the
“Final Plans”) with regard to the proposed improvements, which Final Plans will be in such form as
may then be required by the City of Milpitas for review by said City and shall
contain such additional information as may be required by the Approving Agent; provided, such
Final Plans need not include detailing with regard to interior improvements such as interior
partitioning walls.

          C. No such prior approval of any Preliminary Plans or Final Plans shall be required if there
is no then serving Approving Agent to so approve such plans. Changes in approved Preliminary Plans
or approved Final Plans which materially affect landscaping, signing, building size, placement or
external appearance must be similarly submitted to and approved by the Approving Agent.

     3.2
Additional Approval Required: So long as there is a then serving Approving Agent,
no exterior surface of any structure or improvement existing on any lot subject to this

-8-

 

E 545 PAGE 197

Declaration shall be painted, texturized or otherwise changed, no alterations, additions or changes
of any type whatsoever shall be made to any landscaping placed on any lot subject to this
Declaration, and no additions or alterations to any paved area on any lot subject to this
Declaration shall be made until plans for such painting, alterations, additions or changes,
including samples of colors, materials, landscaping plans, and/or plans and specifications with
regard to paving, as the case may require, together with such other information as shall be
required by the Approving Agent, shall have been submitted to the Approving Agent and the Approving
Agent shall have approved in writing such requested change.

     3.3
Basis for Approval: The Approving Agent shall have the right to disapprove any
plans and specifications submitted hereunder for any reason (provided that such approval shall not
be unreasonably withheld), including but not limited to any of the following:

               A. Failure to comply with any of the Restrictions;

               B. Failure to include information in such plans and specifications as may have been reasonably
requested by the Approving Agent;

               C. Objection to the exterior design of the proposed structures or the appearance of
materials to be

-9-

 

E 545 PAGE 198

used in the construction of any proposed structure which are found by the Approving Agent to be
incompatible with existing structures in the Oak Creek Business Park;

          D. Objections based upon the inadequacy of the number of onsite parking spaces considering (1)
the contemplated use or future possible use of the structures proposed and (2) the availability of
additional parking offsite.

          E. Objection to the location of any proposed structure upon any lot as it relates to other
lots within the Oak Creek Business Park;

          F. Objection to the grading plan for any lot;

          G. Objection to the color scheme, finish, proportions, style or architecture, height, bulk or
appropriateness of any structure as they relate to other structures within the Oak Creek Business
Park;

          H. Objection to the landscaping materials as they relate to other landscaping materials
then used or contemplated for use within the Oak Creek Business Park;

          I. Any other matter which, in the judgment of the Approving Agent, would render the proposed
structure or structures or use inharmonious with the general plan for improvement of the Oak Creek
Business Park or with structures or landscaping then located upon or proposed to be located upon
other lots or other properties within the Oak Creek Business Park.

-10-

 

E 545 PAGE 199

     3.4 Approval: Upon approval by the Approving Agent of any plans and specifications
submitted hereunder, a copy of such plans and specifications as approved shall be deposited for
permanent record with the Approving Agent, and a copy of such plans and specifications bearing such
approval, in writing, shall be returned to the applicant submitting the same.

     3.5 Result of Inaction: If the Approving Agent fails either to approve or disapprove
either the Preliminary Plans or the Final Plans within thirty (30) days after such Preliminary
Plans or Final Plans, as the case may be, have been submitted to it, it shall be conclusively
presumed that the Approving Agent has approved said Preliminary or Final Plans; provided, however,
that if within said thirty (30) day period, the Approving Agent gives written notice of the
fact that more time is required for the review of such plans, there shall be no presumption
that the same are approved until the expiration of a reasonable period of time as set forth in said
notice not to exceed thirty (30) days. Such presumption shall not apply if the review fee required
by Paragraph 3.9 was not paid at the time the plans were first submitted to the Approving Agent.

     3.6 Proceeding with Work: Upon receipt of approval from the Approving Agent pursuant
to this Article, the Owner or lessee to whom the same is given shall as soon as practi-

-11-

 

E 545 PAGE 200

cable satisfy all conditions thereof and diligently proceed with the commencement and completion of
all approved construction, refinishing, alterations and excavations. In all cases work shall be
commenced within one (1) year from the date of such approval. If Applicant fails to commence
construction of the structures within one (1) year from date of such approval, then the approval
given pursuant to this Article shall be deemed revoked unless the Approving Agent upon request made
prior to the expiration of said one (1) year period extends in writing the time for commencing
work. In all cases work shall be completed in accordance with the Preliminary Plans and the Final
Plans within two years from date of issuance of the first (or only) building permit with regard to
such work.

     3.7 Limitation on Approving Agent: In no event shall the Approving Agent disapprove
any plans and specifications solely by reason of the Applicant’s proposed use of the lot if such
use is specifically permitted pursuant to Section 5.1.

     3.8 Liability: Neither the Declarant nor the Approving Agent shall be liable for any
damage, loss or prejudice suffered or claimed on account of:

          A. The approval or disapproval of any plans, drawings and specifications, whether or not
defective;

-12-

 

E 545 PAGE 201

          B. The construction or performance of any work, whether or not done pursuant to approved
plans, drawings and specifications; or

          C. The development of any property within Oak Creek Business Park.

     3.9 Review Fee: An architectural review fee shall be paid to the Approving Agent as
follows:

          A. At such time as Preliminary Plans pertaining to erection, placement, construction,
remodeling or reconstruction of structures within the Oak Creek Business Park are submitted for
approval based on the following schedule:

               (1) When the plans submitted are prepared by an architect, the architectural review fee shall
be Fifty Dollars ($50);

               (2) In all other cases the architectural review fee shall be One Hundred Dollars
($100).

          B. At such time as documents required to be submitted pursuant to paragraph 3.2 above are
submitted for approval, the architectural review fee shall be the sum of Fifty Dollars ($50).

     3.10 Certificate of Compliance: So long as there is an Approving Agent, such Approving
Agent shall within twenty one (21) days following written request therefor by an Owner, execute and
deliver to such requesting Owner a “Certificate of Compliance” stating that the lot specified

-13-

 

E 545 PAGE 202

by such Owner in said request for Certificate of Compliance is in compliance with Article 3 of
these Restrictions, or, if such lot shall not be in compliance with Article 3 of these
Restrictions, stating the nature of such non-compliance and the specific paragraph of this Article
3 with which said lot does not comply.

ARTICLE 4 

LIMITATIONS ON IMPROVEMENTS

     4.1 Utility Lines: All onsite utility transmission lines shall be placed underground.

     4.2 Coverage: No more than forty five percent (45%) of the square foot area of any M-l
zoned lots shall be occupied by structures. No more than thirty five percent (35%) of the square
foot area of any MPD or HS zoned lots shall be occupied by structures.

     4.3 Minimum Setback Lines: No structures, and no part thereof, shall be placed closer
than fifty feet (50¢) from a property line fronting any street (“frontage setback area”); provided,
however, no structure shall be placed closer than 20 feet
(20¢) from any property line not fronting
on any street (“interior setback area”).

     4.4 Parking Areas: Each parcel shall have facilities for parking sufficient to serve
the business conducted thereon without using adjacent streets therefor, and no use shall be made of
the structures in any parcel which would

-14-

 

E 545 PAGE 203

require parking in excess of the parking spaces on said parcel. No parking spaces shall be located
within, and no parking shall be permitted within, a frontage setback area adjacent to any street,
except that parking shall be permitted within said setback area if such parking is screened from
view from the street by landscaping consisting of shrubbery or berms extending at least forty eight
inches (482) above the high point of the finished adjacent pavement in said parking area. In no
case shall such parking area be closer than twenty five feet (25¢) from a property line fronting on
any street or closer than five feet (5¢) from any property line not fronting on any street.

     4.5
On Street Parking. No parking shall be allowed in any public street paved areas or
rights of way located in the Oak Creek Business Park. Said restriction shall be enforced by
municipal ordinances of the City of Milpitas.

     4.6 Storage and Loading Areas: No loading dock, truck loading, storage area or other
such facility shall be located in the front of any building or structure or within any frontage
setback area or between a front of any building or structure and the street which said front faces.
All exterior storage areas shall be screened by chain link fence with redwood slats, a minimum of
six feet (6¢) in height.

     4.7 Metal Buildings: No buildings or structures constructed with corragated metal
exterior walls or so-called

-15-

 

E 545 PAGE 204

“Butler type” buildings shall be constructed within the Oak Creek Business Park.

     4.8
Exterior Screening. All electrical and mechanical apparatus, equipment, fixtures
(other than lighting fixtures but including main electrical transformers), whether roof mounted,
exterior wall mounted or pad mounted at grade, including but not limited to, conduit, ducts,
vents, flues and pipes located on the exterior of any structure shall be concealed from view and
shall be treated in a manner acceptable to the Architectural Control Committee.

ARTICLE 5

RESTRICTIONS ON OPERATION AND USE

     5.1 Permitted Uses: Subject to compliance with these Restrictions, the following uses
shall be permitted in the Oak Creek Business Park.

          A. Manufacture (including storage of raw materials and finished products therefrom) of the
following:

               (1) Pharmaceutical and cosmetic products;

               (2) Optical, electronic, timing and measuring instruments for use in research, development,
business
and professional facilities; and

               (3) Industrial, communication, transportation and utility equipment;

          B. Wholesaling, warehousing and distribution establishments and public utility facilities
(excluding

-16-

 

E 545 PAGE 205

storing and warehousing of acids, chemicals, cement, plaster, petroleum products or
explosive materials);

          C. Research, experimental and engineering laboratories;

          D. Catalog sales and mail order establishments;

          E. Establishments for the repair, cleaning and servicing of commercial or industrial equipment
or products;

          F. Construction firms, but only construction firms whose activities are carried on entirely
within an enclosed building and which have no construction yard on said lot;

          G. So long as there is an Approving Agent, any commercial use not specifically prohibited by
Paragraph 5.3 which is first approved in writing by the Approving Agent;

          H. So long as there is an Approving Agent, any industrial or manufacturing use not
specifically prohibited by Paragraph 5.3 which is first approved in writing by the Approving Agent;

          I. If there is no Approving Agent, any industrial manufacturing or commercial use permitted
by the then existing zoning or other applicable land use regulations as promulgated by requisite
governmental authorities, except those uses specifically prohibited by Paragraph 5.3.

     5.2 Conduct of Permitted Uses: All permitted uses shall be performed or carried out
entirely within a building

-17-

 

E 545 PAGE 206

that is so designed and constructed. Certain activities which cannot be carried on within a
building may be permitted, but only (a) so long as there is then serving an Approving Agent, if the
Approving Agent specifically consents to use and the location for such activity, in writing, or (b)
if there is no then serving Approving Agent, if allowed under then existing zoning or other
applicable land use regulations except for uses which are specifically prohibited pursuant to
Paragraph 5.3; provided, however, that in either of the foregoing situations such use shall be
permitted only if (i) such activity is screened so as not to be visible from neighboring
property and streets and (ii) all lighting required for such use is shielded from adjacent streets.

     5.3
Prohibited Uses: The following operations and uses shall not be permitted on any
property subject to these Restrictions:

          A. Residential of any type;

          B. Trailer courts, mobile home parks or recreation vehicle camp grounds;

          C. Junk yards or recycling facilities;

          D. Drilling for and/or the removal of oil, gas
or other hydrocarbon substances (except that this provision shall not be deemed to prohibit
the entry of the property below a depth of five hundred (500) feet for such purposes);

-18-

 

E 545 PAGE 207

          E. Commercial excavation except in the course of approved construction;

          F. Distillation of bones;

          G. Dumping, disposal, incineration or reduction of garbage, sewage, offal, dead animals or
refuse;

          H. Fat rendering;

          I. Stockyard or slaughter of animals;

          J. Cemeteries;

          K. Refining of petroleum or of its products;

          L. Smelting of iron, tin, zinc, or other ores;

          M. Jail or honor farms;

          N. Labor or migrant worker camps;

          O. Truck, bus terminals;

          P. Petroleum storage yards.

          Q. Auto wrecking, auto repair or auto painting establishment.

     5.4 Emissions: No use shall be permitted to exist or operate any lot which:

          A. Emits dust, sweepings, dirt, cinders, fumes, odors, radiation, gases, vapors or discharges
liquid or solid wastes or other harmful matter into the atmosphere or any stream, river or other
body of water which may adversely affect (i) the health or safety of persons within the area or
(ii) the use of property within the Oak Creek Business Park or (iii) vegetation within the Oak
Creek Business Park,

-19-

 

E 545 PAGE 208

nor shall waste or any substance or materials of any kind be discharged into any public sewer
serving the Oak Creek Business Park or any part thereof, in violation of any regulations of any
public body having jurisdiction.

          B. Produces intense glare or heat unless such use is performed only within an enclosed or
screened area and then only in such manner that the glare or heat emitted will not be discernible
from any exterior lot line.

          C. Creates a sound pressure level in violation of any regulation of any public body having
jurisdiction.

          D. Allows the visible emissions of smoke (outside any building) other than the exhausts
emitted by motor vehicles or other transportation facilities in violation of any regulation of any
public body having jurisdiction. This requirement shall also be applicable to the disposal of
trash and waste materials.

          E. Creates a ground vibration that is perceptible, without instruments, at any point along
any of the exterior lot lines.

     5.5 Signs: The Approving Agent may, from time to time, enact sign criteria setting
forth such requirements for signs to be erected within the Oak Creek Business Park as the
Approving Agent may deem desirable, which sign criteria shall become effective upon recordation
thereof in the official records of Santa Clara County. All signs erected

-20-

 

E 545 PAGE 209

by any owner on a lot within the Oak Creek Business Park subsequent to the recoration of said sign
criteria shall be in conformance with the criteria set forth therein. Except as specifically
otherwise allowed in any then existing sign criteria, no sign shall be installed or erected or
placed on any lot other than those signs identifying the name, business and products of the person
or firm occupying the lot and those offering the lots for sale or lease. Until such time as sign
criteria is enacted, all signs shall be approved by the Approving Agent prior to the installation
of said signs.

     5.6 Landscaping Criteria: The Approving Agent may, from time to time, enact
landscaping criteria setting forth such requirements for landscaping to be placed on or in lots
located within the Oak Creek Business Park as the Approving Agent may deem desirable including,
without limitation, amount of area to be plated in sod lawns or other
plantings, type of plantings, placement of irrigation systems, requirements for trees and raised planter boxes, which
landscape criteria shall become effective upon recordation thereof in the official records of Santa
Clara County. All landscaping placed by any owner on a lot within the Oak Creek Business Park
subsequent to the recordation of said landscape criteria shall be in conformance with the criteria
set forth therein.

-21-

 

E 545 PAGE 210

     5.7
Storage and Refuse Collection Areas:

          A. No materials, supplies or equipment, including company owned or operated trucks or motor
vehicles, shall be stored in any area on a lot except inside a closed building, or behind a
visual barrier screening such areas so that they are not visible from the neighboring properties
or streets. No storage areas shall be maintained between a street and the front of the structure
nearest such street.

          B. All outdoor refuse collection areas shall be visually screened so as not to be visible
from streets and neighboring property. No refuse collection areas shall be maintained between a
street and the front of the structure nearest such street.

     5.8
Condition of Property: The Owner of each lot shall at all times keep and
properly maintain the premises, structures, improvements, landscaping, paving and appurtenances
situate thereon in a safe, clean, sightly and wholesome condition and in a good state of repair and
shall comply in all respects with all governmental, health, fire and police requirements and
regulations, and shall cause to be regularly removed at its own expense any rubbish of any
character whatsoever which may accumulate on such lot, and in particular and without limitation:

          A. All areas of each lot not used for structures, walkways, paved driveways, parking or
storage areas shall be

-22-

 

E 545 PAGE 211

at all times maintained by a professional landscape engineer or gardner in a fully and well
kept landscaped condition utilizing ground cover and/or shrub and tree materials. Undeveloped
areas proposed for future expansion shall be maintained in a weed-free condition. An automatic
underground landscape irrigation system shall be provided by the owner of each lot which is
sufficient to properly irrigate all landscaped areas within such lot.

          B. Parking areas shall be paved so as to provide all-weather surfaces. Each parking space
shall be designated by lines painted on the paved surfaces and shall be adequate in area and all
parking areas shall provide, in addition to parking spaces, adequate driveways and space for the
movement of vehicles.

     5.9 Excavation: No excavation shall be made on and no sand, gravel, soil, or other
material shall be removed from, any lot, except in connection with the construction of
structures. Upon completion of such construction, exposed openings shall be backfilled to grade,
and disturbed ground shall be graded level and paved or landscaped in conformity with the
requirements of this Declaration.

ARTICLE 6 

APPROVALS OR VARIANCES IF NO

APPROVING AGENT EXISTS

     6.1 Variance by Approving Agent: So long as there shall be Approving
Agent then serving, it shall have the

-23-

 

E 545 PAGE 212

exclusive right to grant variances from requirements set
 forth in
 Article 4 or waive entirely the restrictions set
forth in said Article 4 with respect to any given lot, as
the Approving Agent, in its sole discretion, shall determine
is for the successful development of the Oak Creek Business
Park.

     6.2
Granting of Variance: Any variance granted hereunder shall be effective upon, and
only upon, the recordation of a Notice of Variance executed by the Approving Agent.

ARTICLE 7

ENFORCEMENT

     7.1
Remedy: So long as there is an Approving Agent, it shall have the exclusive
right to enforce the provisions hereof, but without liability for failure so to do. In the event
that the Approving Agent shall fail to take action respecting the breach or violation of any of the
provisions of this Declaration within thirty (30) days from the written demand by any Owner within
the Oak Creek Business Park to take such action or if such breach or violation of this Declaration
shall occur at such time as there is no Approving Agent, then any Owner of a lot within the Oak
Creek Business Park shall have the right to enforce the provisions contained in this Declaration.

-24-

 

E 545 PAGE 213

     7.2
Right to Enter: So long as Prudential shall be serving as the Approving
Agent, Prudential, and only Prudential, in addition to any other remedy available, may, with
respect to a violation or breach of the covenants to maintain as set forth in Paragraph 5.8, and
only with respect to a breach or violation of the covenants to maintain as contained in paragraph
5.8, enter upon the lot on which such violation or breach shall then be occurring and take whatever
action it may deem necessary to effect compliance with the provisions of said Paragraph 5.8,
including without limitation making of such repairs or the performance of such required maintenance
necessary to conform to the requirements imposed by these Restrictions at the expense of the Owner
of said lot, provided that Prudential shall have first given to the Owner of such lot at least
sixty (60) days prior written notice of its intention to do so and then, only if, said Owner of
such lot shall have failed to correct said violation or breach within said sixty (60) day period if
such, violation or breach was curable within sixty (60) days, or if not curable within sixty (60)
days then only if such Owner shall have failed to commence and then be diligently seeking to so
cure such violation or breach. In the event that Prudential shall, after having complied with the
above notice requirements, enter such lot and remedy such breach or violation, the Owner of such
lot shall be response-

-25-

 

E 545 PAGE 214

ible to reimburse Prudential forthwith upon demand for all costs and expenses incurred in
connection therewith (“Non-Compliance Expenses”) in accordance with the provisions of this Section.
Each Owner of any lot within the Oak Creek Business Park by acceptance of a deed or other
conveyance whether or not it shall be so expressed in any such deed or other conveyance, is and
shall be deemed to covenant and agree to pay to Prudential an assessment for any Non-Compliance
Expenses incurred by Prudential in connection with such Owner’s lot.

          A. Prudential shall maintain accurate books and
records reflecting any Non-Compliance Expenses, and shall
provide each Owner of an affected lot a statement with
respect thereto. Each affected Owner shall pay Non-Compliance Expenses incurred applicable to such Owner’s lot within
ten (10) days of receipt of a statement. If such statement
is deposited in the United States mail duly certified or
registered with postage prepaid and addressed to the Owner
affected thereby at his lot, the same shall be deemed received by such Owner on the fifth (5th) business day after
such deposit.

          B. Any Non-Compliance Expenses assessments,
together with such interest thereon and costs of collection
thereof as provided hereinbelow, shall be a charge on the
lot and shall be a continuing lien upon the lot against

-26-

 

E 545 PAGE 215

which such assessments are made. The lien shall become effective upon recordation of a notice of
claim of lien as provided herein. Such assessment, together with such interest and costs, shall
also be the personal obligation of the person who is the Owner of such lot at the time when the
assessment, or any portion thereof, fell due but in no event shall the person who is the Owner of
such lot be personally obligated for a sum in excess of Ten Thousand
Dollars ($10,000) for any given
violation (but without limiting the amount that may become a lien upon such lot for any given
violation or the aggregate of the personal obligation for successive violations). Any personal
obligation created hereunder shall not pass to such Owners successors in title unless it is
expressly assumed by them but any lien created hereunder shall remain a charge against the lot
except as to “bona fide purchasers or encumbrancers for value”, without notice of same. No Owner
may waive or otherwise escape personal liability for the personal assessment provided herein by
non-use or abandonment of his lot.

          C. If any Non-Compliance Expenses assessment or any portion thereof is not paid within ten
(10) days after the date due it shall bear interest from the date of delinquency at the then legal
rate, and, in addition to all other legal and equitable rights or remedies, Prudential may, at its
option, bring an action at law against the Owner

-27-

 

E 545 PAGE 216

who is personally obligated to pay the same, or upon compliance with the notice provisions set
forth hereinbelow, to foreclose the lien against the affected lot, and there shall be added to the
amount of such assessment or any portion thereof, the interest thereon, all costs and expenses,
including reasonable attorneys fees, incurred by Prudential and in collecting the delinquent
assessment. In lieu of judicially foreclosing the lien, Prudential, at its option, may foreclose
such lien by proceeding under a power of sale as provided hereinbelow, such a power of sale being
given to Prudential, as to each and every lot for the purpose of collecting assessments.

          D. No action shall be brought to foreclose the lien, or to proceed under the power of sale,
less than thirty (30) days after the date that a notice of claim of lien, executed by Prudential,
is recorded, stating the amount claimed (which may include interest and cost of collection,
including reasonable attorneys’ fees), a good and sufficient legal description of the lot being
assessed, the name of the record Owner or reputed Owner thereof, and the name and address of
Prudential as claimant. A copy of said notice of claim shall be deposited in the United States
mail, certified or registered, with postage prepaid, to the Owner of said lot.

-28-

 

E 545 PAGE 217

          E. Any such sale provided for above shall be conducted in accordance with Sections 2924,
2924(b), and 2924(c) of the Civil Code of the State of California, applicable to the exercise of
powers of sale in mortgages and deeds of trust, or in any other manner permitted or provided by
law. Prudential shall have the power to bid on the lot at the foreclosure sale, and to acquire and
hold, mortgage and convey the same.

          F. Upon the timely curing of any default for which a notice of claim of lien was recorded
by Prudential, Prudential is hereby authorized to file or record, as the case may be, an
appropriate release of such notice, upon payment by the defaulting Owner of a fee to be
determined by Prudential but not to exceed Five Hundred Dollars ($500), to cover the costs of
preparing and filing or recording such release together with the payment of such other costs,
interest or fees as shall have been incurred.

          G. The assessment lien and the rights to foreclosure and sale thereunder shall be in
addition to and not in substitution for all other rights and remedies which
Prudential may have hereunder, at law or in equity.

     7.3
Result of Violation: The result of every action or omission whereby the
provisions of this Declaration are violated in whole or in part is hereby declared to be and to
constitute a nuisance, and every remedy allowed by law or

-29-

 

E 545 PAGE 218

equity shall be available to any Owner of any lot within the Oak Creek Business Park.

     7.4
Attorney’s Fees: In any legal or equitable proceeding for the enforcement
of the provisions of this Declaration, whether it be an action for damages, declaratory
relief or injunctive relief, the losing party or parties shall pay the attorneys’ fees of the
prevailing party or parties, in such reasonable amount as may be fixed by the court in such
proceedings, or in a separate action brought for that purpose. The prevailing party shall be
entitled to said, attorneys’ fees, even though said proceeding is settled prior to judgment.

     7.5
Remedies Cumulative: All remedies provided herein, or at law or in equity
shall be cumulative and not exclusive.

     7.6
Waiver: Failure by the Approving Agent to enforce
the provisions of this Declaration shall in no event be
deemed a waiver of the right to do so thereafter, nor of the
right to enforce any other covenants or restrictions herein,
nor of the rights of other Owners of the property within the
Oak Creek Business Park to enforce same.

     7.7
Prudential: For purposes of this Article 7 the
term “Prudential” shall include Prudential’s authorized
employees.

-30-

 

E 545 PAGE 219

ARTICLE 8

DURATION, MODIFICATION AND REPEAL

     8.1
Duration of Restrictions: These Restrictions shall continue and
remain in full force and effect at all times with respect to all property, and each part
thereof, now or hereafter made subject to these Restrictions (subject, however, to the
right to amend and repeal as provided for herein) until 2039.

     8.2
Termination and Modifications: This Declaration or any provision thereof, or any
covenant, condition or restriction contained herein, may be terminated, extended, modified or
amended, as to the whole of the Oak Creek Business Park upon the written consent of the Owners of
sixty-six and two-thirds percent (66-2/3%) of the total square footage of the land area contained
within the Oak Creek Business Park (exclusive of dedicated public streets); provided,
however, that so long as Prudential is the
Approving Agent, no such termination, extension or modification or amendment shall be
effective without the written approval of Prudential. No such termination, extension,
modification or amendment shall be effective until a proper instrument in writing
describing such termination, extension, modification or amendment has been executed by
the requisite number of Owners and by Prudential and recorded.

-31-

 

E 545 PAGE 220

ARTICLE 9

MISCELLANEOUS PROVISIONS

     9.1
Constructive Notice and Acceptance: Every person who now or hereafter owns,
occupies or acquires any right, title or interest in or to any portion of the property made subject
to these Restrictions is and shall be conclusively deemed to have consented and agreed to every
covenant, condition and restriction contained herein, whether or not any reference to this
Declaration is contained in the instrument by which such person acquired an interest in said property.

     9.2
Waiver of Liability: Neither the Declarant nor
the Approving Agent shall be liable to any Owner, lessee,
licensee, or occupant of land subject to this Declaration by reason of any mistake in judgment,
negligence, nonfeasance, action or inaction or for the enforcement or failure to enforce any
provision of this Declaration. Every Owner, lessee, licensee or occupant of any of said property
by acquiring his interest therein agrees that he will not bring any action or suit against
Prudential or any other Approving Agent to recover any such damages from or to seek equitable
relief against the Declarant by reason of same.

     9.3
Rights of Mortgagee: No breach of the Restrictions and other provisions
contained herein, or any enforcement thereof, shall defeat or render invalid the lien

-32-

 

E 545 PAGE 221

of any mortgage or deed of trust now or hereafter executed upon land subject to these
Restrictions; provided, however, that if any portion of said property is sold under a foreclosure
of any mortgage or under the provisions of any deed of trust, any purchaser at such sale and his
successors and assigns shall hold any and all property so purchased subject to all of the
Restrictions and other provisions of this Declaration. Any notice of claim of lien recorded
pursuant to paragraph 7.2 hereof shall take its priority vis-a-vis other encumbrances as of the
date of its recordation.

     9.4
Paragraph Headings: Paragraph headings, where
used herein, are inserted for convenience only and are not
intended to be a part of this Declaration or in any way to
define, limit or describe the scope and intent of the particular paragraphs to which they
refer.

     9.5
Effect of Invalidation: If any provision of this
Declaration is held to be invalid by any Court, the invalidity of such provision shall not effect the validity of the
remaining provisions hereof.

     IN WITNESS WHEREOF, the undersigned have executed this Declaration the day and year first
above written.

	 	 	 	 	 	 	 
	 	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
	 
	 	 	 	 	 	 
	

	 	By
	 	/s/ A.K. Jacobson	 	 
	

	 	 	 	 	 	 
	

	 	 	 	A.K. Jacobson	 	 
	Dated: 6/1/79

	 	 	 	Title Regional Vice-President, REO	 	 

-33-

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