Document:

exv10w12

 

Exhibit 10.12

SECOND
AMENDMENT TO LEASE AGREEMENT

     THIS
SECOND AMENDMENT TO LEASE AGREEMENT (this “Second
Amendment”) is made and shall be effective for all purposes
as of the 24th day of February,
2005, by and between SOLECTRON USA, Inc., a Delaware corporation with a principal place of
business at 847 Gibraltar Drive, Mllpitas, California 95035
(“Landlord”) and SMART Modular
Technologies, Inc., a California corporation with a principal place of business at 4211
Starboard Drive, Fremont, California (“Tenant”).

WITNESSETH

     WHEREAS, Tenant and Landlord entered into (i) that certain Lease Agreement dated
April 16, 2004 for certain premises located in the building known and numbered at 4211 Starboard
Drive, Fremont, California, and (ii) that certain First Amendment to Lease Agreement, dated as of January
17, 2005 (collectively, the “Lease”).

     “WHEREAS, Tenant and Landlord desire to further modify the Lease in order to address
certain provisions relating to the Master Lease (as defined in the
Lease).

     NOW
THEREFORE, in consideration of the mutual promises herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree to follows:

     1. Capitalized terms not specifically defined in this Second Amendment shall have the
same meaning given in terms in the Lease.

     2. Landlord and Tenant acknowledge and agree that notwithstanding anything contained
in the Lease to the contrary, in the event that Landlord and/or Landlord’s successors and
assigns, as the case may be, acquires the Property and the Master Lease is terminated, the Lease shall
remain in full force and effect as a direct lease of the Premises between Landlord and/or Landlord’s
successors and assigns, as the case may be, as landlord, and Tenant, as tenant, upon all of the terms,
covenants and conditions set forth in the Lease. In such event Tenant shall attorn to Landlord or such
suscessor or assignee, as the landlord under the Lease. Upon such acquisition of the Property by
Landlord and/or Landlord’s successors and assigns, as the case may be and the termination of the Master
Lease, the Lease, as amended by this Second Amendment, shall be deemed further amended to
delete all references therein to the Master Lease to the extent necessary to reflect
the termination of such Master Lease, including, without limitation,
Section 1.12, clause (iv) of Section 1.14,
clause (iii) of each of the first and second paragraphs of
Section 4.2, Section 16.1, and Section
16.6.1. The provisions of this Paragraph 2 shall be self-operative, and no further instrument shall be
required to give effect thereto.

     3. Landlord will consent to the occupancy (by sublease or license), of approximately one thousand
(1,000) square feet of the premises (the “sublease Space”) by a third party (the “Occupant”) at dc
minimis rent and/or other charges so long as Tenant delivers to Landlord the following information
and documents and such information and documents are reasonably acceptable to Landlord: (a)the
legal name of the Occupant; (b) the location and description of the Sublease Space; (c) a true and
complete copy of the

1

 

sublease or license agreement, if any; (d) any financial
statements for the Occupant; and (e) a description of the nature
of the business to be conducted by the Occupant and the type of
use to be made of the Sublease Space by the Occupant Landlord will deliver to Tenant written notice of its
approval or disapproval of said sublease or license, as the case may be, within ten (10) business
days after receiving all of the aforesaid information and documents. Additionally, Tenant hereby
acknowledges and agrees that notwithstanding any such sublease of license to the Occupant, Tenant
will continue to be fully responsible and liable for the payment of the rent and the performance
of all obligations of Tenant under the Lease. Nothing contained herein shall be consumed as Landlord’s
waiver of any bonus sublease rem or the equivalent thereof which Landlord is entitled to receive
under the Lease. This Second Amendment shall be deemed t6 be the notice referred to in Section
14.1.2 of the Lease. In the event of any conflict between the provisions of this
Paragraph 3 and the provisions of Section 14.1.3 of the Lease with respect to the proposed sublease or license
contemplated by this Paragraph 3, the provisions of this Paragraph 3 shall control.

     4. In all other respects, the Lease is hereby ratified, confirmed and approved. This
Second Amendment shall become effective and binding only if and when it shall be executed and
delivered by both Landlord and Tenant. Any future reference to the Lease shall be deemed to be
a reference to the Lease, as amended by this Second Amendment, and as it may, from time to time,
hereafter be further amended.

     5. This
Second Amendment may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which together shall constitute
a single agreement.

     WITNESS the execution hereof as an instrument under seal as of the date first set forth
above.

	 	 	 	 	 	 	 
	LANDLORD:	 	TENANT:
	 
	 	 	 	 	 	 
	SOLECTRON USA,
 INC.	 	SMART MODULAR TECHNOLOGIES, INC.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Tim Chu
	 	By:
	 	/s/ Jack Pacheco
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Printed Name: Tim Chu	 	Printed Name: Jack
Pacheco
	 
	 	 	 	 	 	 
	Title: Assistant Secretary	 	Title: VP/CFO

2

 

FIRST
AMENDMENT TO LEASE AGREEMENT

     THIS
FIRST AMENDMENT TO LEASE AGREEMENT (“Amendment”) is made
and shall be effective for all purposes as of the 17th day of January, 2005 by and between
SOLECTRON USA, Inc., a Delaware corporation with a principal place of business at 847
Gibraltar Drive, Milpitas, California 95035 (“Landlord”) and SMART Modular Technologies,
Inc., a California corporation with a principal place of business at 4211 Starboard Drive,
Fremont, California (“Tenant”).

WITNESSETH

     WHEREAS, Tenant and Landlord entered into a Lease (“Lease”) dated April 16, 2004
for certain premises located in the building known and numbered at 4211 Starboard Drive,
Fremont, California;

     WHEREAS, Landlord has certain obligations to the Tenant under Section 5.5 of the
Lease to install a physical separation of the Building between Tenant and Force Computers,
Inc. (“Force”) or a 3rd party tenant in order to better facilitate a multi-tenant use
of the Building;

     WHEREAS, Tenant is agreeing to waive such requirements under the Lease since
Tenant is agreeing in this Amendment to occupy the entire Building on the terms and
conditions of the Lease, as amended by this Amendment, such occupation effective upon vacation of the
Building by Force.

     NOW
THEREFORE, in consideration of the mutual promises herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1. Landlord and Tenant hereby amend the Lease as is specifically set forth in this
Amendment. Capitalized terms not specifically defined in this Amendment shall have the same
meaning given to terms in the Lease.

2. Tenant and Landlord agree: (a) that the “Separation Period” as defined in Paragraph 5.5
of the Lease shall be extended to the earlier of (i) June 30, 2005, or (ii) the Force Move Out Date
as defined in Paragraph 4 below; and (b) in the first sentence of Paragraph 6.3 to replace “of the
lesser of (i) one (1) year following” with “starting from” and replace “(ii) the date of the
Separation” with “ending on the Force Move Out Date”.

1

 

3. Landlord or its designee shall pay Tenant One Million Six Hundred Thousand Dollars
and NO/100 ($1,600,000.00) on or before January 18, 2005, via wire transfer:

	 	 	 	 	 
	ACCT. NAME:

	 	SMART MODULAR TECHNOLOGIES, INC.

	ACCT. #:

	 	4100063098	 
	BANK:

	 	WELLS FARGO BANK

121 PARK CENTER PLAZA

SAN JOSE, CA 95113

	ABA#:

	 	121000248	 
	SWIFT #:

	 	WFBIUS6S

4. Effective upon the vacation of the Building by Force, which shall occur no earlier than
February 15, 2005 and no later than June 30, 2005 (“Force Move Out Date”), the Lease shall be
amended as follows:

     A. The text of Paragraph 1.5 of the Lease (Definition of “Common Areas”) is hereby
deleted in its entirety and in lieu thereof the following definition is inserted:

     ““Common Areas” means those areas of the Building designated for non-exclusive use
by Tenant, which definition shall be a nullity while Tenant leases the entire Building (i.e.,
Tenant shall have exclusive use of hallways, bathrooms, lobby areas and loading and shipping
areas/loading dock).”

B. The text of Paragraph 1.10 (“Lease Term”) is deleted in its entirety and in lieu thereof the
following definition is inserted:

     ““Lease Term” means the period of time commencing on April 16, 2004 (the
“Commencement Date”) and ending on April 30, 2009, subject to the Option to Extend Lease
Term pursuant to Paragraph 2.2.”

C. The text of Paragraph 1.15 (“Other Areas”) is deleted in its entirety and in lieu thereof the
following definition is inserted:

     ““Other Areas” means all areas and facilities outside of the Building made available for
Tenant’s non-exclusive use (including the parking areas, driveways, pedestrian sidewalk,
landscaped areas, trash enclosures, and the like), which definition shall be a nullity while
Tenant leases the entire Building (i.e., Tenant shall have exclusive use of such areas).”

D. The text of Paragraph 1.16 (“Other Premises”) shall be deleted in its entirety.

E. The text of Paragraph 1.18 (“Premises”) is deleted in its entirety and in lieu thereof the
following definition is inserted:

     ““Premises” shall mean 83,029 square feet prior to the Force Move Out Date and 129,808
square feet following the Force Move Out Date. For the purposes of the Lease, the Force Move

2

 

Out Date shall be defined in that First Amendment to Lease Agreement dated as of
January 17, 2005.”

F. The text of Paragraph 1.21 (“Pro Rata Share’’) is deleted in its entirety and in lieu thereof
the following definition is inserted:

     ““Pro Rata Share” means Sixty Four percent (64%) prior to the Force Move Out Date and
One Hundred percent (100%) of the Building after the Force Move Out Date.”

G. The first paragraph of Paragraph 2.2 (“Options to Extend Lease Term”) is deleted in its
entirety and in lieu thereof the following paragraph is inserted:

     “Landlord grants Tenant one (1) option (the “Option”) to extend the Lease Term for a
three (3) year period (“Option Term”) following the end of the initial Lease Term. The
exercise of the Option is subject to the following terms and conditions:”

H. The first sentence of Subparagraph 2.2.4 is deleted in its entirety and in lieu thereof the
following sentences are inserted:

     “The Monthly Rent for the Option Term shall be Ninety-Five percent (95%) of the “fair
market rent for the Premises” for such term as of the commencement of such term determined
pursuant to Subparagraphs 2.2.5 and 2.2.6. For the avoidance of doubt, once the Monthly
Rent for the Option Term has been established, such Monthly Rent shall remain fixed throughout
the Option Term.”

I. The text of Paragraph 3.1 (“Monthly Payments”) is deleted in its entirety and in lieu
thereof the following text is inserted:

     “Tenant shall pay to Landlord monthly rent (“Monthly Rent”) on the first day of each
month through the Lease Term (excluding the extension option) the following rent:

	 	 	 
	4/16/04 — 4/30/07

	 	Fifty Cents ($.50) per square foot*
	5/1/07 — 4/30/08

	 	Fifty One and One-Half Cents ($.515) per square foot
	5/1/08 — 4/30/09

	 	Fifty Three Cents ($.53) per square foot”

 

			
	*	 	 Monthly Rent and Additional Rent shall be abated on 46,779 square feet (129,808 square
feet — 83,029 square feet) through March 31, 2005 if the Force Move Out Date is on or before
March 31, 2005. Otherwise, Monthly Rent and Additional Rent on such 46,779 square feet shall
continue to be abated until the Force Move Out Date, which shall be no later than June 30, 2005.

J. The dollar amounts set forth in the fourth line of Paragraph 5.2 shall be increased from
$25,000 per event and $100,000 per year in the aggregate to $100,000
per event and $500,000 per
year in the aggregate. Notwithstanding the foregoing, all tenant improvements in excess of
$25,000 per event will require a licensed contractor approved by Landlord, which approval shall
not be withheld unreasonably.

3

 

K. Notwithstanding anything to the contrary in Paragraphs 5.2 and 16.4 of the Lease,
Landlord’s requirement that Tenant remove any Tenant Improvements from the Building at the
end of the Term shall be limited to those installed in the Building by or on behalf of Tenant
after
the Force Move Out Date.

L. Paragraph 5.5 shall be deleted in its entirety.

M. Paragraph 6.3 shall be amended as follows:

     Delete parenthetical starting on line 14: “(with Landlord, at its cost, to install a separate
system for itself or any occupant of the Other Premises)”.

N. Landlord shall use commercially reasonable efforts to require Force to: (i) remove its
machinery and equipment (including employees’ personal effects and business documents) and
vacate the Building, leaving it in broom-clean condition; and (ii) leave fixtures, lighting,
electrical, phone/data/networking cables, and cages, in place or as-is. Landlord shall also use
commercially reasonable efforts to waive its requirements of Force (or Motorola, Force’s new
corporate parent) to remove the cubicles standing on the floor, remove data cabling and coil up
excess in the ceiling, remove fencing, and move electrical drops back to the junction boxes.

     In all other respects, the Lease dated April 16, 2004 is hereby ratified, confirmed and
approved. This First Amendment of Lease Agreement shall become effective and binding only
if and when it shall be executed and delivered by both Landlord and Tenant.

     WITNESS the execution hereof as an instrument under seal as of the date first set forth
above.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SOLECTRON USA,
INC.	 	 	 	SMART MODULAR
TECHNOLOGIES, INC.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Perry G. Hayes
	 	 
	 	By:
	 	 /s/ Ann T. Nguyen	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Printed Name: Perry G. Hayes	 	 	 	Printed Name: Ann T. Nguyen
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Title: Treasurer & VP, IR	 	 	 	Title: General Counsel & Corporate Secretary

4

 

LEASE AGREEMENT

by and between

SOLECTRON USA, INC. (Landlord)

and

SMART MODULAR TECHNOLOGIES, INC. (Tenant)

April 16, 2004 Final

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.

	 	DEFINITIONS 	 	 	1	 
	 

	 	1.1 Affiliate
	 	 	1	 
	 

	 	1.2 Agreed Interest Rate
	 	 	1	 
	 

	 	1.3 Building
	 	 	1	 
	 

	 	1.4 Commencement Date
	 	 	1	 
	 

	 	1.5 Common Areas
	 	 	1	 
	 

	 	1.6 Force
	 	 	1	 
	 

	 	1.7 Effective Date
	 	 	1	 
	 

	 	1.8 Law
	 	 	1	 
	 

	 	1.9 Lease
	 	 	2	 
	 

	 	1.10 Lease Term
	 	 	2	 
	 

	 	1.11 Lender
	 	 	2	 
	 

	 	1.12 Master Lease
	 	 	2	 
	 

	 	1.13 Monthly Rent
	 	 	2	 
	 

	 	1.14 Operating Costs
	 	 	2	 
	 

	 	1.15 Other Areas:
	 	 	3	 
	 

	 	1.16 Other Premises
	 	 	3	 
	 

	 	1.17 Permitted Use
	 	 	3	 
	 

	 	1.18 Premises
	 	 	4	 
	 

	 	1.19 Property
	 	 	4	 
	 

	 	1.20 Private Restrictions
	 	 	4	 
	 

	 	1.21 Pro Rata Share
	 	 	4	 
	 

	 	1.22 Tenant Improvements
	 	 	4	 
	 

	 	1.23 Tenant’s Minimum Liability Insurance Coverage
	 	 	5	 
	 

	 	1.24 Trade Fixtures
	 	 	5	 
	2.

	 	TERM AND ACCEPTANCE
	 	 	5	 
	 

	 	2.1 Acceptance of Possession
	 	 	5	 
	 

	 	2.2 Options to Extend Lease Term
	 	 	5	 
	3.

	 	RENT
	 	 	7	 
	 

	 	3.1 Monthly Payments
	 	 	7	 
	 

	 	3.2 Additional Rent
	 	 	7	 
	 

	 	3.3 Payment of Rent
	 	 	7	 
	 

	 	3.4 Late Charge and Interest on Rent in Default
	 	 	7	 
	 

	 	3.5 Landlord’s Operating Costs
	 	 	8	 
	4.

	 	USE OF PREMISES
	 	 	9	 
	 

	 	4.1 Limitation on Type
	 	 	9	 
	 

	 	4.2 Compliance with Laws and Private Restrictions
	 	 	9	 
	 

	 	4.3 Insurance Requirements
	 	 	10	 

-i-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 

	 	4.4 Outside Areas
	 	 	10	 
	 

	 	4.5 Signs
	 	 	10	 
	 

	 	4.6 Rules and Regulations
	 	 	11	 
	 

	 	4.7 Parking
	 	 	11	 
	 

	 	4.8 Window Coverings
	 	 	11	 
	 

	 	4.9 Auctions
	 	 	11	 
	5.

	 	TRADE FIXTURES/TENANT IMPROVEMENTS AND SEPARATE DEMISE OF	 	 	 	 
	 

	 	PREMISES
	 	 	11	 
	 

	 	5.1 Trade Fixtures
	 	 	11	 
	 

	 	5.2 Tenant Improvements
	 	 	11	 
	 

	 	5.3 Alterations Required by Law
	 	 	12	 
	 

	 	5.4 Liens
	 	 	12	 
	6.

	 	REPAIR AND MAINTENANCE
	 	 	13	 
	 

	 	6.1 Tenant’s Obligation to Maintain
	 	 	13	 
	 

	 	6.2 Landlord’s Repair Obligations
	 	 	14	 
	 

	 	6.3 Tenant’s Temporary Service Obligations
	 	 	14	 
	 

	 	6.4 Control of Other Areas
	 	 	15	 
	 

	 	6.5 Tenant’s Negligence
	 	 	15	 
	7.

	 	UTILITIES
	 	 	15	 
	 

	 	7.1 Utilities
	 	 	15	 
	 

	 	7.2 Compliance with Governmental Regulations
	 	 	15	 
	8.

	 	REAL PROPERTY TAXES
	 	 	16	 
	 

	 	8.1 Real Property Taxes Defined
	 	 	16	 
	 

	 	8.2 Tenant’s Obligation to Reimburse
	 	 	16	 
	 

	 	8.3 Taxes on Tenant’s Property
	 	 	17	 
	9.

	 	INSURANCE
	 	 	17	 
	 

	 	9.1 Tenant’s Insurance
	 	 	17	 
	 

	 	9.2 Landlord’s Insurance
	 	 	18	 
	 

	 	9.3 Tenant’s Obligation to Reimburse
	 	 	19	 
	 

	 	9.4 Release and Waiver of Subrogation
	 	 	19	 
	10.

	 	LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY
	 	 	19	 
	 

	 	10.1 Limitation on Landlord’s Liability
	 	 	19	 
	 

	 	10.2 Limitation on Tenant’s Recourse
	 	 	19	 
	 

	 	10.3 Indemnification of Landlord
	 	 	20	 
	11.

	 	DAMAGE TO PREMISES
	 	 	20	 
	 

	 	11.1 Landlord’s Duty to Restore
	 	 	20	 

-ii-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 

	 	11.2 Landlord’s Right to Terminate
	 	 	21	 
	 

	 	11.3 Tenant’s Right to Terminate
	 	 	21	 
	 

	 	11.4 Abatement of Rent
	 	 	21	 
	12.

	 	CONDEMNATION
	 	 	22	 
	 

	 	12.1 Taking of Premises
	 	 	22	 
	 

	 	12.2 Termination By Tenant
	 	 	22	 
	 

	 	12.3 Restoration and Abatement of Rent
	 	 	22	 
	 

	 	12.4 Temporary Taking
	 	 	22	 
	 

	 	12.5 Division of Condemnation Award
	 	 	23	 
	13.

	 	DEFAULT AND REMEDIES
	 	 	23	 
	 

	 	13.1 Events of Tenant’s Default
	 	 	23	 
	 

	 	13.2 Landlord’s Remedies
	 	 	24	 
	 

	 	13.3 Landlord’s Default and Tenant’s Remedies
	 	 	26	 
	 

	 	13.4 Waiver
	 	 	26	 
	14.

	 	ASSIGNMENT AND SUBLETTING
	 	 	26	 
	 

	 	14.1 By Tenant
	 	 	27	 
	 

	 	14.2 By Landlord
	 	 	29	 
	15.

	 	WASTE DISPOSAL AND HAZARDOUS MATERIALS
	 	 	29	 
	 

	 	15.1 Waste Disposal
	 	 	29	 
	 

	 	15.2 Hazardous Materials
	 	 	30	 
	16.

	 	GENERAL PROVISIONS
	 	 	31	 
	 

	 	16.1 Relationship to Master Lease
	 	 	31	 
	 

	 	16.2 Relationship to Transaction Agreement
	 	 	31	 
	 

	 	16.3 Landlord’s Right to Enter
	 	 	31	 
	 

	 	16.4 Surrender of the Premises
	 	 	32	 
	 

	 	16.5 Holding Over	 	 	32	 
	 

	 	16.6 Subordination
	 	 	32	 
	 

	 	16.7 Tenant’s Attornment
	 	 	33	 
	 

	 	16.8 Lender Protection
	 	 	33	 
	 

	 	16.9 Estoppel Certificates and Financial Statements
	 	 	33	 
	 

	 	16.10 Force Majeure
	 	 	33	 
	 

	 	16.11 Notices
	 	 	34	 
	 

	 	16.12 Attorneys’ Fees
	 	 	34	 
	 

	 	16.13 Corporate Authority
	 	 	34	 
	 

	 	16.14 Miscellaneous
	 	 	35	 
	 

	 	16.15 Brokerage Commissions
	 	 	35	 
	 

	 	16.16 Consents and Approvals
	 	 	36	 

-iii-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	16.17

	 	Entire Agreement
	 	 	36	 

-iv-

 

LEASE AGREEMENT

     THIS LEASE AGREEMENT, dated April 15, 2004 for reference purposes only, is
made by and between Solectron USA, Inc., a Delaware corporation (“Landlord”), and SMART
Modular Technologies, Inc., a California corporation (“Tenant”).

     1. DEFINITIONS. Any term that is given a special meaning by this Article 1 or by any
other provision of this Lease (including the exhibits attached hereto) shall have such
meaning when
used in this Lease or any addendum or amendment hereto.

          1.1 Affiliate. “Affiliate” means any corporation or other entity directly or
indirectly
controlling, controlled by or under common control with Tenant or Landlord, as applicable.

          1.2 Agreed Interest Rate. “Agreed Interest Rate” means that interest rate determined
as of the time it is to be applied that is equal to the lesser of (i) two percent (2%) plus
the “prime
rate” quoted from time-to-time and charged by the Bank of America, N.T. & S.A., or (ii) the
maximum interest rate permitted by law.

          1.3
Building. “Building” means that certain building comprising approximately
129,808 square feet located at 4211 Starboard Drive, Fremont, California.

          1.4
Commencement Date. “Commencement Date” means the date on which the
“Closing” as defined in that certain Transaction Agreement By And Among Solectron Corporation,
Solectron Global Holdings L.P., Solectron Services E Manufactura Do Brasil Ltda, Smart Modular
Technologies, Inc., Modular, Inc., Modular Merger Corporation and Modular (Cayman), Inc.,
dated
as of February 11,2004 (“Transaction Agreement”), shall have occurred.

          1.5 Common Areas. “Common Areas” means those areas designated for non-
exclusive use by Tenant (including hallways, Bathrooms, lobby areas and loading and shipping
areas/loading dock) and the Common Space shown on Exhibit B attached hereto. Effective
on
Separation, as set forth in Paragraph 5.5 below, the Common Areas will be adjusted and a new
Exhibit depicting the Common Areas shall be reasonably agreed to by Landlord and Tenant at
that
time.

          1.6 Force. “Force” means Force Computers, Inc., a Delaware corporation and
wholly-owned subsidiary of Landlord.

          1.7 Effective Date. “Effective Date” means the date the last signatory to this Lease
whose execution is required to make it binding on the parties hereto shall have executed this
Lease.

          1.8 Law. “Law” means any judicial decision, statute, constitution, ordinance,
resolution, regulation, rule, administrative order, or other requirement of any municipal,
county,
state, federal, or other government agency or authority having jurisdiction over the parties
to this
Lease or the Premises or both, in effect either at the Effective Date of this Lease or any
time during

 

 

the Lease Term, including, without limitation, any regulation, order, or policy of any
quasi-official
entity or body (e.g., board of fire examiners, public utilities or special districts).

     1.9 Lease. “Lease” means this printed lease, Exhibit A (“Legal
Description”),
Exhibit B (“Leased Premises”), Exhibit C (“Private Restrictions”), as the
same may be amended in
accordance with this Lease from time to time; all of which are attached hereto and
incorporated
herein by this reference.

          1.10 Lease Term. “Lease Term” shall be for a period of time commencing on the
Commencement Date and ending on the last day of the thirty-sixth (36th) full calendar month
succeeding the Commencement Date, subject to extension pursuant to Paragraph 2.2.

          1.11 Lender. “Lender” means (i) any beneficiary, mortgage, secured party, or
other holder of any deed of trust, mortgage or other written security device or agreement
affecting
the Premises, and the note or other obligations secured by it, and (ii) the lessor under any
underlying
ground lease under which Landlord holds an interest in the Premises.

          1.12
Master Lease. “Master Lease” means that Lease Agreement dated as of
August 26, 2002 between SMART Modular Technologies, Inc., as tenant, and BNP Paribas Leasing
Corporation (“BNP”), as landlord, which is being assigned on the Closing to Landlord pursuant
to
the Transaction Agreement.

          1.13
Monthly Rent. “Monthly Rent” means the monthly rent payable by Tenant
pursuant to Paragraph 3.1.

          1.14 Operating Costs. “Operating Costs” means the following (to the extent not a
repair or restoration obligation of Tenant hereunder): all costs of managing, operating,
maintaining,
and repairing the Premises, the Building and/or the Property or any part thereof, including all
costs,
expenditures, fees and charges and allocable to the Lease Term for: (A) operation, maintenance and
repair of the Property (including maintenance, repair and replacement of glass, the roof covering
or
membrane, resurfacing, painting, restriping, cleaning and sweeping, landscaping and fountains); (B)
utilities and services (including telecommunications facilities and equipment to the extent shared
by
Tenant, recycling programs and trash removal), and associated supplies and materials; (C)
expenditures for deductible amounts under Landlord’s insurance maintained hereunder; (E) licenses,
permits and inspections; (D) complying with Laws; (E) amortization of capital repairs or
replacements to the Property, capital improvements required to comply with Laws, or capital
improvements which are intended to reduce Operating Costs or improve the utility, efficiency or
capacity of any Building System, with interest on the unamortized balance at the rate paid by
Landlord on funds borrowed to finance such capital improvements (or, if Landlord finances such
improvements out of Landlord’s funds without borrowing, the rate that Landlord would have paid to
borrow such funds, as reasonably determined by Landlord), over such useful life as Landlord shall
reasonably determine in accordance with generally accepted accounting principles consistently
applied; (F) property management fees of three percent (3%) of Monthly Rent (and not a Pro Rata
Share of such amount), provided that SMART Modular Technologies, Inc. (“SMART”) and any

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Affiliate of SMART shall not be required to pay this amount during the Term but any sublessee
or
assignee (other than an Affiliate of SMART) shall pay such amounts, and; (H) accounting, legal
and
other professional services incurred in connection with the operation of the Property and the
calculation of Operating Costs and Taxes; (I) contesting, on a reasonable basis, the validity
or
applicability of any Laws that may affect the Property; (K) any Common Area or Other Area
maintenance expenses; and (L) any other cost or expenditure, whether or not hereinbefore
described,
which in accordance with generally accepted property management practices would be considered
an
expense of managing, operating, maintaining and repairing the
Property. Notwithstanding the
foregoing, the cost for any item that is reasonably expected to have a useful life, or to be
usable or
applicable to any period, beyond the Lease Term shall be capitalized and only the portions
thereof
properly allocable to the Lease Term pursuant to clause (E) above shall be chargeable as
Operating
Costs under this Lease. Notwithstanding the foregoing, the following costs shall not be
included in
Operating Costs: (i) Real Estate Taxes (subject to reimbursement by Tenant as Additional Rent
as
provided in Paragraph 8.2), (ii) the cost of insurance (subject to reimbursement by Tenant as
Additional Rent as provided in Paragraph 9.3) and any increases in the cost of insurance
(which
Tenant shall not reimburse Landlord for as Additional Rent) to the extent resulting from the
Landlord’s or any other occupant of the Property’s particular use of the Property, (iii) costs
which
are the obligation of other tenants of the Property of the type to be paid for by Tenant under
Paragraph 6.1 and 6.3, (iv) rent, financing charges and other charges under the Master Lease,
(v)
depreciation, (vi) amortization, except as expressly provided, (vii) reserves, (viii)
alterations and
improvements to the Property for the sole exclusive use of another tenant in any Other
Premises, (ix)
costs relating to the negotiation, execution, delivery and enforcement of leases on the Other
Premises
and/or this Lease and (x) services to the Other Premises that are not rendered to, or to the
extent
disproportionate to the services to the Premises (as reasonably determined by Tenant), and
(xi) costs
of complying with Laws due to the particular use of the Other Premises by the occupant thereof
or
the cost of complying with Laws with respect to the Premises to the extent such costs are to
be paid
by Tenant under other provisions of this Lease.

          1.15
Other Areas. “Other Areas” means all areas and facilities outside of the
Building made available for Tenant’s non-exclusive use (including the parking areas,
driveways,
pedestrian sidewalk, landscaped areas, trash enclosures, and the like).

          1.16
Other Premises. “Other Premises” means any area of the Building that is not
included in the Premises, including, without limitation, the “Force Total Allocated Space” as
set
forth on Exhibit B attached hereto.

          1.17
Permitted Use. “Permitted Use” means the use of the Property for general
office, light assembly and light manufacturing activities in accordance with applicable laws
and
Private Restrictions, including, without limitation, with respect to the Premises, Tenant’s
use thereof
existing as of the Commencement Date (and, with respect to the Other Premises, Force’s use
thereof
existing as of the Commencement Date until the date of the Separation). The “Permitted Use”
may
be modified only with the consent of the Landlord, which consent may be withheld, if (i) the
requested use is incompatible with any other tenants of the Premises, (ii) involves the use of
Hazardous Materials (as defined in Paragraph 15) or other dangerous materials or processes
other

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than those currently in use by Tenant, (iii) violates applicable Laws or Private
Restrictions,
(iv) reduces the Landlord’s financial security in the Lease, or (v) is otherwise
unsuitable in
Landlord’s reasonable opinion.

          1.18 Premises. “Premises” means that certain area of the Building identified in
Exhibit B attached hereto consisting of approximately 83,029 square feet (including
the Haz-Mat
Storage as defined in Paragraph 15.1) comprised of (i) the “Smart Total Allocated Space” shown
on
Exhibit B and (ii) the “Smart Portion of Common Space” shown on Exhibit B;
provided the parties
agree and acknowledge that upon Separation as set forth in Paragraph 5.5 below, the square
feet of
the Premises shall be adjusted as reasonably agreed to by Landlord and Tenant prior to
Separation to
reflect an occupancy not exceeding 85,000 square feet (as adjusted to reflect Common Area
adjustments to be determined in cooperation with Tenant prior to Separation). The parties
hereto
acknowledge that prior to Separation, Tenant and Force shall be collocated at the Property as
set
forth on Exhibit B and that the square footages allocated to Force, Tenant and Common
Space are
approved by Landlord and Tenant despite any different actual measurement.

          1.19 Property. “Property” shall mean that certain real property and improvements,
including the Building located at 4211 Starboard Drive, Fremont, California, which is further
described on Exhibit A attached hereto.

          1.20 Private Restrictions. “Private Restrictions” means all covenants, conditions
and restrictions, private agreements, reciprocal easement agreements and any other instruments
(herein “encumbrances”) affecting the use of the Premises recorded as of the Effective Date
which
are listed on Exhibit C attached hereto and all encumbrances recorded after the
Effective Date which
do not materially interfere with Tenant’s then existing use of the Premises or, alternatively,
which are
approved by Tenant, which approval shall not be unreasonably withheld or delayed. Nothing
herein
shall be deemed to require Tenant’s consent to any encumbrance of the Premises.

          1.21 Pro Rata Share. “Pro Rata Share” means that percentage of rentable square
feet of the Building that is occupied by the Premises. Unless this Lease is amended by Tenant
and
Landlord after the Commencement Date, Tenant’s Pro Rata Share shall be Sixty-Four percent
(64%)
provided that, (i) following the Separation (as defined in Section 5.5 below), the Pro Rata
Share shall
be that percentage of the square footage of the Building (129,808) that comprises the Premises
(which, based on an expected occupancy post-Separation of 85,000 square feet by Tenant, would
be
approximately 65.5%), and (ii) with respect to utilities, Tenant shall pay such amount, as
reasonably
determined by Landlord, as is equitably allocated to the Premises to reflect any
disproportionate use
of utilities, but in no event greater than a pro rata share of Eighty-Five percent (85%) of
such
amount.

          1.22 Tenant Improvements. “Tenant Improvements” means all improvements,
additions, alterations, and fixtures installed in the Premises by Tenant after the
Commencement Date
at its expense which are not Trade Fixtures.

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          1.23 Tenant’s Minimum Liability Insurance Coverage. “Tenant’s Minimum
Liability Insurance Coverage” means a minimum limit of Three Million Dollars ($3,000,000) per
occurrence.

          1.24 Trade Fixtures. “Trade Fixtures” means anything affixed to the Building or
Other Areas by Tenant at its expense for purposes of trade, manufacture, ornament, or
domestic use
(except replacement of similar work or material originally installed by Landlord) which can
be
removed without material injury to the Building or Other Areas unless such thing has, by the
manner
in which it is affixed, become an integral part of the Building or Other Areas and a building
fixture
under applicable law; provided, however, that all of Tenant’s signs shall be Trade Fixtures
regardless
of how affixed to the Building or Other Areas.

     2. TERM AND ACCEPTANCE. Landlord hereby leases the Premises to Tenant, and
Tenant leases the Premises from Landlord, for the Lease Term upon the terms and conditions
stated

in this Lease.

          2.1 Acceptance of Possession. By taking possession of the Premises, Tenant shall be
conclusively deemed to have accepted the Premises in their then existing condition as of the
Commencement Date, “AS-IS.” Tenant acknowledges that it has occupied the Premises prior to the
Commencement Date and is fully aware of the condition of the Premises, Building and Other
Areas.

          2.2 Options to Extend Lease Term. Landlord grants to Tenant one (I) option (the
“Option”) to extend the Lease Term for a one (1) year period (“Option Term”) following the end
of
the initial Lease Term. The exercise of the Option is subject to the following terms and
conditions:

               2.2.1 Tenant must give Landlord notice in writing by United States Certified
Mail, return receipt requested, of its intention to exercise the Option no later than one
hundred and
twenty (120) days prior to the date of expiration of the initial Lease Term.

               2.2.2 Notwithstanding anything to the contrary contained herein, if either
(i) Tenant is in default under this Lease beyond any applicable grace or cure period on the
date the
Tenant gives its written Option notice to Landlord beyond any applicable cure period, (ii)
Tenant is
in default beyond any applicable grace or cure period under this Lease on the date the Option
Term
is to commence, or (iii) Tenant fails to deliver its written Option notice to Landlord on or
before one
hundred and twenty (120) days prior to the date of the expiration of the initial Lease Term,
then the
Option Term shall not commence, any such Option notice given by Tenant shall be deemed
ineffective, and this Lease shall expire at the end of the initial Lease Term.

               2.2.3 All terms and conditions of this Lease shall apply during the Option
Term, except that the Monthly Rent for the Option Term shall be determined as provided in
subparagraph 2.2.4 below.

               2.2.4 The Monthly Rent for the Option Term shall be the “fair market rent
for the Premises” for such term as of the commencement of such term determined pursuant to
Subparagraphs 2.2.5 and 2.2.6. For purposes of this Lease, the term “fair market rent for the

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Premises” shall mean the projected going market rent for the Premises as of the commencement of
the Option Term; provided, however, that in no event shall the fair market rent for the term of
the
option in question be less than the Monthly Rent payable during the last year of the initial Lease
Term.

               2.2.5 For a period of thirty (30) days following delivery to Landlord of
Tenant’s notice pursuant to Subparagraph 2.2.1 (the “Negotiation Period”), Landlord and Tenant
shall confer to attempt to reach agreement upon the fair market rent for the Premises for the
term of
the option in question. If Landlord and Tenant are unable to reach agreement in writing within
the
Negotiation Period, for purposes of establishing the Monthly Rent for the term of the option
in
question, then the fair market rent for the Premises for the term of the option in question
shall be
established by the appraisal process described in Subparagraph 2.2.6.

               2.2.6 The fair market rent for the Premises shall be determined by three (3)
real estate appraisers, all of whom shall be members of the American Institute of Real Estate
Appraisers with not less than five (5) years experience appraising real property (other than
residential or agricultural property) located in Alameda County, California, in accordance
with the
following procedures:

                    2.2.6.1 Within ten (10) days after the expiration of the Negotiation
Period, Landlord and Tenant shall each select an appraiser and notify the other, in writing, of the
name, address and qualifications of the appraiser that each has selected. Failure by either party
to
select a qualified appraiser within ten (10) days after notice of the identity of the other party’s
appraiser shall be deemed a waiver of such party’s right to select an appraiser on its own behalf
and
the other party shall select a second appraiser within five (5) days after the expiration of said
ten (10)
day period. Within ten (10) days from the date the two (2) appraisers shall have been appointed,
the
two (2) appraisers selected by the parties shall appoint a third appraiser. If the two (2)
appraisers fail
to select a third qualified appraiser, the third appraiser shall be appointed by the then Presiding
Judge
of the Superior Court of the State of California for the County of Alameda.

                    2.2.6.2 The three (3) appraisers so selected shall meet not later than
twenty (20) days following the selection of the third appraiser. At said meeting, the appraisers
shall
attempt to determine the fair market rent for the Premises for the term of option in question.

                    2.2.6.3 If the appraisers are unable to complete their determinations
in
one meeting, they may continue to consult at such times as they deem necessary for a fifteen (15)
day period from the date of their first meeting, in an attempt to have at least two (2) of them
agree.
If, at the initial meeting or at any time during said fifteen (15) day period, two (2) or more of
the
appraisers agree on the fair market rent for the Premises, such agreement shall be determinative
and
binding on the parties hereto, and the agreeing appraisers shall, in simple letter form executed by
the
agreeing appraisers, forthwith notify both Landlord and Tenant of the amount set by such agreement.

                    2.2.6.4 If two (2) or more appraisers do not agree within said
fifteen (15) day period as set forth above, then each appraiser shall, within five (5) days
after the

 

 

expiration of said fifteen (15) day period, submit his/her independent appraisal in simple letter
form
to Landlord and Tenant stating his/her determination of the fair market rent for the Premises for
the
Option Term. Landlord and Tenant shall then determine the fair market rent for the Premises for
the
Option Term by determining the average of the fair market rent set by each of the appraisers;
provided, however, if the lowest appraisal is less than eighty-five percent (85%) of the middle
appraisal then such lowest appraisal shall be increased to be eighty-five percent (85%) of the
middle
value, and/or if the highest appraisal is greater than one hundred fifteen percent (115%) of the
middle appraisal then such highest appraisal shall be decreased to one hundred and fifteen percent
(115%) of the middle value. If any appraisal is disregarded, then the average shall be determined
by
computing the average set by the other appraisals that have not been disregarded.

                    2.2.6.5 Each party shall bear the fees and expenses of the
appraisers

selected by or for it, and the fees and expenses of the third appraiser shall be borne fifty
percent
(50%) by Landlord and fifty percent (50%) by Tenant.

     3. RENT.

          3.1 Monthly Payments. Commencing on the Commencement Date and continuing on
the first day of each month throughout the Lease Term (excluding extension options), Tenant
shall
pay to Landlord monthly rent (“Monthly Rent”) for the Premises of Fifty Cents per square foot
($.50) which upon the Commencement Date and prior to Separation shall equal Forty-One Thousand
Five Hundred Fourteen Dollars and Fifty Cents ($41,514.50) and shall be subject to adjustment
upon
Separation to reflect the then existing square footage of the Premises.

          3.2
Additional Rent. Commencing on the Commencement Date and continuing
throughout the Lease Term, Tenant shall pay, as additional rent (the “Additional Rent”), (i)
any late
charges or interest due Landlord pursuant to Paragraph 3.4, (ii) any legal fees and costs due
Landlord
pursuant to Paragraph 16.10, (iii) its Pro Rata Share of Real Property Taxes pursuant to
Paragraph 8.2, (iv) Tenant’s Pro Rata Share of Landlord’s insurance costs pursuant to
Paragraph 9.3,
and (iv) Landlord’s Operating Costs pursuant to Paragraph 3.5 below, and (vi) any other
charges due
Landlord pursuant to this Lease.

          3.3 Payment of Rent. All Monthly Rent and any other amounts required to be paid in
monthly installments shall be paid in advance on the first day of each calendar month during
the
Lease Term except as otherwise specifically provided in this Lease. All amounts due hereunder
shall be paid in lawful money of the United States, without any abatement, deduction or offset
whatsoever, and without any prior demand therefor (unless otherwise expressly provided
herein), to
Landlord at its address staled in Paragraph 16.9 or at such other place as Landlord may
designate
from time to time. Tenant’s obligation to pay Monthly Rent shall be prorated for any partial
month
based on the number of days in that calendar month.

          3.4
Late Charge and Interest on Rent in Default. Tenant acknowledges that the late
payment by Tenant of any monthly installment of Monthly Rent or any Additional Rent will cause
Landlord to incur certain costs and expenses not contemplated under this Lease, the exact
amount of

 

 

which are extremely difficult or impractical to fix. Such costs and expenses will include, without
limitation, administration and collection costs and processing and accounting expenses. Therefore,
if any such Monthly or Additional Rent is not received by Landlord from Tenant within five (5) days
after the delinquent amount became due, Tenant shall immediately pay to Landlord a late charge
equal to five percent (5%) of such delinquent rent. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair compensation to Landlord
for
its loss suffered by Tenant’s failure to make timely payment. In no event shall this provision for
a
late charge be deemed to grant to Tenant a grace period or extension of time within which to pay
any
rent or prevent Landlord from exercising any right or remedy available to Landlord upon Tenant’s
failure to pay any rent due under this Lease in a timely fashion, including the right to terminate
this
Lease. If any amount due hereunder is not paid on or before the tenth (10th) day following the due
date, then, without prejudice to any of Landlord’s other rights and remedies and in addition to
such
late charge, Tenant shall pay to Landlord interest on the delinquent amount at the Agreed Interest
Rate from the date such amount became due until paid.

          3.5 Landlord’s Operating Costs. Tenant shall pay its Pro Rata Share of Operating
Costs to Landlord as follows. Landlord shall invoice Tenant for Operating Costs on a monthly
basis
itemized in reasonable detail (“Operating Expense Invoice”). Landlord shall be permitted to
reasonably estimate its costs for Operating Costs for each calendar year and bill to Tenant
one
twelfth of such amount per month. Landlord shall adjust such monthly estimated amount based on
material unexpected changes in Operating Costs (provided that Landlord’s failure to promptly
adjust
the estimated Operating Costs promptly upon a material change in actual Operating Expenses
shall
not preclude Landlord from including such increase on an Expense Statement). Tenant shall pay
the
Operating Expense Invoice no later than thirty (30) days following its receipt from Landlord
of the
monthly Operating Expense Invoice. As soon as reasonably practicable, but not later than
ninety
(90) days after the end of the calendar year, Landlord shall furnish Tenant a statement with
respect to
such year, showing the actual Operating Costs itemized in reasonable detail (“Expense
Statement”).
Unless Tenant raises any objections to Landlord’s Expense Statement within ninety (90) days
after
receipt of the same, such Expense Statement shall conclusively be deemed correct and Tenant
shall
have no right thereafter to dispute such Expense Statement or any item therein or the
computation of
Additional Rent based thereon. If Tenant does object to such Expense Statement, then Landlord
shall provide Tenant with reasonable verification of the figures shown on the Expense
Statement and
the parties shall negotiate in good faith to resolve any disputes. Any objection of Tenant to
Landlord’s Expense Statement and resolution of any dispute shall not postpone the time for
payment
of any amounts due Tenant or Landlord based on Landlord’s Expense Statement, nor shall any
failure of Landlord to deliver Landlord’s Expense Statement in a timely manner relieve Tenant
of
Tenant’s obligation to pay any amounts due Landlord based on Landlord’s Expense Statement. If
Tenant’s Additional Rent as finally determined for any calendar year exceeds the total
payments
made by Tenant on account thereof, Tenant shall pay Landlord the deficiency within ten (10)
days of
Tenant’s receipt of Landlord’s Expense Statement. If the total payments made by Tenant on
account
thereof exceed Tenant’s Additional Rent as finally determined for such year, Tenant’s excess
payment shall be credited toward the rent next due from Tenant under this Lease (or if no
additional
rent is due or is not sufficient to cover the excess, Landlord shall pay such excess to Tenant
at the

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time it renders the Expense Statement or is required to render the Expense Statement, whichever is
sooner).

     Tenant, at its expense (except as set forth below), may cause an audit of Landlord’s books
and records during business hours to determine the* accuracy of the Expense Statement using a
reputable auditing firm that is not being compensated on a contingency fee basis. If such
audit
reveals that the Operating Costs for any given year were less than the amount that Tenant
paid for
such costs for any such year, then Landlord shall pay to Tenant the excess within thirty (30)
days of
the receipt of the audit results, and the reasonable costs of the audit, if it is determined
that the
Operating Costs for any given year were overstated by ten percent (10%) or more. If such
audit
reveals that the Operating Costs for any given year were more than the amount that Tenant
paid for
such costs for any such year, Tenant shall pay to Landlord any shortfall within thirty (30)
days of the
receipt of the audit results. The provisions of this paragraph shall survive the expiration
or
termination of this Lease.

     4. USE OF PREMISES.

          4.1 Limitation on Type. Tenant shall use the Premises, if used at all, solely for the
Permitted Use (as described in Paragraph 1.17). Tenant shall not do or permit anything to be
done in
or about the Premises which will (i) cause structural injury to the Premises, or (ii) cause
damage to
any part of the Premises except to the extent reasonably necessary for the installation of
Tenant’s
equipment and trade fixtures, or (iii) violate, or cause Landlord to be in violation of any
Laws or
Private Restrictions. Tenant shall not operate any equipment within the Premises which will
(i) injure, vibrate or shake the Building, (ii) overload existing electrical systems or other
mechanical
equipment servicing the Building, (iii) impair the efficient operation of the sprinkler system
or the
heating, ventilating or air conditioning (“HVAC”) equipment within or servicing the Building,
or
(iv) damage, overload, or corrode the sanitary sewer system. Tenant shall not attach, hang or
suspend anything from the ceiling, roof, walls or columns of the Building or set any load on
the floor
in excess of approved structural limits as reasonably defined by Landlord’s architect. Any
dust,
fumes, or waste products generated by Tenant’s use of the Premises shall be contained and
disposed
of (i) so that they do not (a) create a fire or health hazard and (b) damage the Premises and
(ii) in
compliance with applicable Environmental Laws (as defined in subparagraph 15.2.1.1). Tenant
shall
not change the exterior of the Building or install any equipment or antennas on or make any
penetrations of the exterior or roof of the Building except as currently in place and/or used
at the
Commencement Date. Tenant shall not commit nor permit to be committed any waste in or about
the Premises, and Tenant shall keep the Premises in a neat, clean, attractive and orderly
condition,
free of any Hazardous Materials (except in compliance with Environmental Laws), and any
objectionable noises, odors, dust or nuisances.

     Prior to the Separation, Landlord shall, and shall cause its tenants of the Other Premises, to
use the Other Premises, if used at all, solely for the Permitted Use.

     4.2 Compliance with Laws and Private Restrictions. Tenant’s lease of the Premises
shall be subject to (i) all applicable Laws, (ii) all Private Restrictions, easements and
other matters of

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public record, (iii) the Master Lease and (iv) the reasonable rules and regulations from time to
time
promulgated by Landlord governing the use of the Property. Tenant shall not use or permit any
person to use the Premises in any manner which violates any Laws or Private Restrictions. Tenant
shall abide by and promptly observe and comply with all Laws that relate to the particular use of
the
Premises by Tenant other than the Permitted Uses and Private Restrictions.

     Prior to the Separation, any lease of the Other Premises shall be subject to (i) all Laws,
(ii) all
easements and other matters of public record, (iii) the Master Lease, and (iv) the reasonable
rules
and regulations from time to time promulgated by Landlord governing the use of the Property.
Prior
to Separation, Landlord shall use commercially reasonable efforts to insure that any use of
the
Property by Force does not violates any Laws.

          4.3 Insurance Requirements. Tenant shall not use or permit any person to use the
Property in any manner which will cause the existing rate of insurance upon the Property, or
any of
its contents, to be increased (unless Tenant pays the increase upon demand) or cause a
cancellation
of any insurance policy covering the Premises. Tenant shall not sell, or permit to be kept,
used, or
sold in or about the Property any article which may be prohibited by the standard form of fire
insurance policy. Tenant shall comply with all requirements of any insurance company,
insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain, at standard rates,
the
insurance coverage carried by either Landlord or Tenant pursuant to this Lease.

          4.4 Outside Areas. No materials, supplies, tanks or containers, equipment, finished
products or semi-finished products, raw materials, inoperable vehicles or articles of any
nature shall
be stored upon or permitted to remain outside of the Building by Tenant, Landlord or other
occupants except in fully fenced and screened areas, which have been reasonably designed for
such
purpose by Landlord.

          4.5 Signs. Tenant shall not place on any portion of the Premises any sign, placard,
lettering in or on windows, banners, displays or other advertising or communicative material
which
is visible from the exterior of the Premises without the prior written approval of Landlord.
All such
approved signs shall strictly conform to all Laws and Private Restrictions and shall be
installed at the
expense of Tenant. If Landlord so elects, Tenant shall, at the expiration or sooner
termination of this
Lease, remove all signs installed by it and repair any damage caused by such removal. Tenant
shall
at all times maintain such signs in good condition and repair. Notwithstanding anything to the
contrary contained herein, (i) Tenant’s existing signage at the Premises shall be permitted to
remain
during the Term (as may be extended pursuant to Paragraph 2.2), (ii) Tenant may remove from
such
signage all references to Tenant being “a Solectron Company” at Tenant’s sole cost. Tenant
acknowledges that an additional tenant shall also be permitted to place signage on the
Property and
that, in the event such tenant can not construct an additional monument sign, Tenant shall
share the
existing monument sign on a reasonable basis, as determined by Landlord, with Landlord or such
new tenant to bear the costs of such new signage (including any replacement or alteration of
Tenant’s signage, if necessary).

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          4.6 Rules and Regulations. Landlord may from time to time promulgate reasonable
and non-discriminatory rules and regulations for the care and orderly management of the
Property
and the safety of its occupants and invitees. Such rules and regulations shall be binding
upon Tenant
upon delivery of a copy thereof to Tenant, and Tenant agrees to abide by such rules and
regulations
and Landlord agrees to enforce such rules and regulations against Tenant other occupants of
the
Property in a non-discriminatory fashion. Such rules and regulations shall not unreasonably
interfere
with the Permitted Use as stated in Paragraph 1.17.

          4.7 Parking. Tenant shall be entitled to the non-exclusive use of a Pro Rata Share of
the parking at the Property. Landlord shall maintain and make available all of the parking on
the
Property on a non-exclusive basis.

          4.8 Window Coverings. The window coverings currently in use at the Property shall
be the coverings in use during the Term.

          4.9 Auctions. Landlord and Tenant shall not conduct or permit to be conducted on
any portion of the Property any sale of any kind, including (i) any public or private auction,
fire sale,
going-out-of-business sale, distress sale, or other liquidation sale, or (ii) any so-called
“flea market,”
open-air market, or any other similar activity.

     5. TRADE FIXTURES/TENANT IMPROVEMENTS AND SEPARATE DEMISE OF
PREMISES.

          5.1 Trade Fixtures. Throughout the Lease Term, Tenant shall provide, install, and
maintain in good condition all Trade Fixtures required in the conduct of its business in the
Building.
All Trade Fixtures shall remain Tenant’s property.

          5.2 Tenant Improvements. Tenant shall not construct any Tenant Improvements or
otherwise alter the Building or Other Areas (except for any of the foregoing that are
non-structural in
nature, do not materially and adversely impact major building systems and that cost less than
Twenty-Five Thousand Dollars ($25,000) per event or One Hundred Thousand Dollars per year in
the aggregate) without Landlord’s prior written approval and not until Landlord shall have
first
approved the plans and specifications therefor, which approval shall not be unreasonably
withheld.
In no event shall Tenant make any alterations to the Building which could affect the
structural
integrity or the exterior design of the Building. All such approved Tenant Improvements shall
be
installed by Tenant at Tenant’s expense using a licensed contractor first reasonably approved
by
Landlord in substantial compliance with the approved plans and specifications therefor. All
construction undertaken by Tenant shall be done in accordance with all Laws and in a good and
workmanlike manner using new materials of good quality. Tenant shall not commence construction
of any Tenant Improvements until (i) all required governmental approvals and permits shall
have
been obtained and copies of same have been provided to Landlord, (ii) all requirements
regarding
insurance imposed by this Lease have been satisfied, (iii) Tenant shall have given Landlord at
least
thirty (30) days prior written notice of its intention to commence such construction, (iv)
Tenant shall

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have notified Landlord by telephone of the commencement of construction on the day it commences,
and (v) if requested by Landlord in its reasonable discretion, Tenant shall have obtained
contingent
liability and broad form builders risk insurance or completion and performance bonds in an amount
reasonably satisfactory to Landlord. All Tenant Improvements shall remain the property of Tenant
during the Lease Term, but shall not be damaged, altered, or removed from the Premises. At the
expiration or sooner termination of the Lease Term, all Tenant Improvements shall be surrendered to
Landlord as a part of the realty and shall then become Landlord’s property, and Landlord shall have
no obligation to reimburse Tenant for all or any portion of the value or cost thereof; provided,
however, that if requested by Landlord, Tenant shall remove any Tenant Improvements in
accordance with the provisions of Paragraph 16.4.

          5.3 Alterations Required by Law. Tenant shall, in accordance with Paragraph 5.2,
make any alteration, addition or change of any sort, whether structural or otherwise, to the
Premises
that is required by any Law due to Tenant’s particular use of the Premises.

          5.4 Liens. Tenant shall keep the Premises free from any liens created by Tenant or its
employees, representatives, agents or contractors and shall pay when due all bills arising out
of any
work performed, materials furnished, or obligations incurred by Tenant or any of Tenant’s
agents,
employees, contractors, assignees, subtenants or invitees (collectively, “Tenant’s Agents”)
relating to
the Premises. If any such claim of lien is recorded, Tenant shall bond against or discharge
the same
within fifteen (15) days after notice that the same has been recorded against the Premises.
Should
any lien be filed against the Premises or any action commenced affecting title to the
Premises, the
party receiving notice of such lien or action shall promptly give the other party written
notice
thereof.

          5.5 Sharing of Space and Separate Demise. Landlord and Tenant acknowledge that
Tenant and Force shall be sharing space in the Premises at the Commencement Date as provided
in
Exhibit B attached hereto. As of the Commencement Date, the Landlord and Tenant are
reorganizing the Property, in a manner reasonably agreed upon, with the intention of moving
current
employees and operations that are not associated with the business of Tenant to an area of the
Property outside of the Premises. In the event that (i) Force ceases to be a wholly-owned
subsidiary
of Landlord, or (ii) Force ceases to occupy the Property and Landlord desires to lease any
Other
Premises to any third party, Landlord, at Landlord’s sole cost and expense, shall be required
to
provide a secure separate premises to Tenant not to exceed 85,000 square feet or as Landlord
and
Tenant otherwise agree (the “Separation”). In the case of clause (i), Landlord shall notify
Tenant
immediately upon the execution by Landlord of a written binding commitment for a change in
ownership of Force and shall complete the Separation prior to that date which is Two Hundred
and
Forty (240) Days following the such execution by Landlord of a written binding commitment for
a
change in ownership of Force. In the case of clause (ii), Landlord shall give Tenant no less
than one
hundred eighty (180) days advance notice of its intent to complete such separation (such 240
and
180 day period, as the case may be, as may be extended as provided below in this Section 5.5,
referred to herein as the “Separation Period”) and shall complete the Separation by the end of the
Separation Period. Upon completion of the Separation or in stages as Landlord and Tenant
otherwise agree, Tenant shall relocate its employees, personal property and operations to the

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Premises designated for Tenant, at Landlord’s expense, pursuant to a plan for the relocation
to be
mutually agreed to by Landlord and Tenant no later than thirty (30) days following the
commencement of the Separation Period (“Relocation Plan”). Upon the completion of the
Separation, the Building will be configured, at Landlord’s cost and expense, in such a
condition that
the Premises and all conference rooms, labs, loading bays, warehouse space, manufacturing
areas
and other portions of the Premises shall have been physically separated from the remainder of
the
Building, including installation of hard walls and/or installation of locking doors and
separate
security systems with secure joint access to the truck access loading dock (“Truck Dock”) and
including equipment relocated, and including floor covering, wall covering and finishes
comparable
to and harmonious with those in the relevant portions of the Premises, and ready for Tenant’s
occupancy. Tenant acknowledges that while the Track Dock shall be located in the premises that
Tenant will occupy and control following the Separation, Tenant shall provide reasonable
access to
the Truck Dock to other occupant(s) of the Building upon request. Landlord and Tenant agree to
cooperate in good faith to complete the Separation within the schedules described in clause
(i) above
or clause (ii) above, as applicable, and with the least disruption to Tenant’s business
possible. In the
event that the Separation is not completed by the end of the Separation Period (except to the
extent
the failure to complete such Separation results from a mutual agreement of Tenant and Landlord
to
delay completion of the Separation), the Monthly Rent and Additional Rent shall be temporarily
abated until such time as the Separation is completed, provided, however, that the
Separation Period
shall be extended one (1) day for each day of delay resulting from: (i) Tenant’s unreasonable
refusal
to accept, within thirty (30) days following the commencement of the Separation Period, a
reasonable relocation plan proposed by Landlord or (ii) any other unreasonable interference by
Tenant with Landlord’s performance of the Separation. Tenant shall be permitted to retain use
of the
existing phone switch and, unless agreed to by Tenant, Landlord shall provide a separate phone
switch for any other tenant. After the Separation, Landlord shall provide or cause to be
provided
phone services to its tenants in the Other Premises. Notwithstanding anything to the contrary
in this
Lease, if, as a result of the Separation and the provision of access to restrooms and loading
dock(s),
the square footage of the Premises changes (up to but not exceeding 85,000 square feet), the
Rent
and Pro Rata Share shall be adjusted accordingly.

     6. REPAIR AND MAINTENANCE.

          6.1 Tenant’s Obligation to Maintain. Except as otherwise provided in Paragraphs 6.2,
6.3 and 11 (restoration of damage caused by fire and other perils) Tenant shall, at all times
during
the Lease Term, at its sole cost and expense, service, clean, keep, and maintain in good
order,
condition, and repair the interior of the Premises, and every part thereof. Tenant’s
obligations shall
include, without limitation, (i) all plumbing and sewage facilities (including all sinks,
toilets, faucets
and drains), and all ducts, pipes, vents, or other parts of the HVAC or plumbing system to the
extent
located in and solely serving the Premises, (ii) all fixtures, interior walls, floors, carpets
and ceilings,
(iii) all windows, doors, entrances, showcases, and skylights (cleaning interior surfaces
only), (iv) all
electrical facilities and equipment (including all lighting fixtures, lamps, bulbs, tubes,
fans, vents,
exhaust equipment and systems), to the extent located in and solely serving the Premises, (v)
any
automatic fire extinguisher equipment in the Premises, and (iv) subject to Paragraph 9.4
hereof, any
portion of the Property damaged by Tenant or Tenant’s Agents. With respect to utility facilities

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serving the Premises (including electrical wiring and conduits, gas lines, water
pipes, and plumbing
and sewage fixtures and pipes), Tenant shall be responsible for the maintenance and repair of any
such facilities which serve the Premises, including all such facilities that are within or outside
the
walls, floor, or on the roof of the Building. All repairs and replacements required of Tenant shall
be
promptly made with new materials of like kind and quality. If the work affects the structural parts
of
the Premises or if the estimated cost of any item of repair or replacement is in excess of Five
Thousand Dollars ($5,000), then Tenant shall first obtain Landlord’s written approval of the scope
of
work, plans therefor, materials to be used, and the contractor.

     For the purposes of Paragraphs 6.1 and 6.2 the Common Space and Common Areas shall be
deemed not to be part of the Premises.

          6.2 Landlord’s Repair Obligations. Subject to Paragraphs 6.1 and 6.3 hereof and
subject to recovery of Landlord’s Operating Costs as permitted under this Lease, Landlord
shall
service, clean, keep, and maintain in good order, condition, and repair: (i) all plumbing and
sewage
facilities (including all sinks, toilets, faucets and drains), and all ducts, pipes, vents, or
other parts of
the HVAC or plumbing system located at the Property except those located in and solely serving
the
Premises, (ii) all fixtures, interior walls, floors, carpets and ceilings outside of the
Premises, (iii) all
windows, doors, entrances, showcases, and skylights (including cleaning both interior and
exterior
surfaces) outside of the Premises and cleaning the exterior surfaces of the windows and
skylights of
the Premises, (iv) all electrical facilities and equipment (including all lighting fixtures,
lamps, bulbs,
tubes, fans, vents, exhaust equipment and systems), to the extent not solely located in and
solely
serving the Premises, (v) the roof, exterior walls and exterior finishes of the Building, and
(vi) all
other structural elements of the Building.

          6.3 Tenant’s Temporary Service Obligations. Notwithstanding anything to the
contrary in this Lease, Tenant hereby agrees to provide the following services to the Building
and
Force for a period of the lesser of (i) one (1) year following the Commencement Date (the
“SMART
Service Period”), and (ii) the date of the Separation, and Landlord will reimburse SMART an
amount equal to thirty six percent (36%) of the invoiced amount of each such cost with respect
to the
Property within thirty (30) days of receipt of an invoice therefor (“SMART Services”): (i)
janitorial
services, (ii) internal maintenance of the entire Building excluding major building systems
and those
items set forth in Paragraph 6.2(v) and (vi), (iii) mail services for the Building, (iv)
office and coffee
supplies for the Building, (v) reception services (provided that Landlord’s share of these
costs shall
be 50%), and (vi) security services. Security services shall be the sole responsibility of
Tenant, with
respect to the Building, during the SMART Service Period and with respect to the Premises, for
the
Term (as may be extended). Tenant shall have the right to use the existing security system
during
the SMART Service Period as well as during the remainder of the Term with respect to the
Premises
(with Landlord, at its cost, to install a new separate system for itself or any occupant of
the Other
Premises). After the expiration of the SMART Service Period, Tenant shall pay the full cost of
the
SMART Services which Tenant shall provide only to the Premises and for its own sole benefit,
except as otherwise set forth in other provisions of this Lease.

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     6.4 Control of Other Areas. Landlord shall at all times have control of the Other
Areas. Landlord shall have the right, without the same constituting an actual or constructive
eviction
and without entitling Tenant to any abatement of rent, to: (i) close any part of the Other
Areas to
whatever extent required in the reasonable opinion of Landlord’s counsel to prevent a
dedication
thereof or the accrual of any prescriptive rights therein; (ii) change the shape, size,
location, number
and extent of improvements on the Other Areas including, without limitation, changes in the
location
of driveways, entrances, passageways, exits, parking spaces, parking areas, sidewalks or the
direction of the flow of traffic and the site of the Other Areas; and (iii) change the name or
address
of the Premises, provided such change does not affect or disturb any existing signs of Tenant.
The
use of the Other Areas shall be subject to such reasonable regulation and changes therein as
Landlord shall make from time to time. Landlord shall not exercise its rights to control the
Other
Areas in a manner that would materially interfere with Tenant’s use of the Premises without
first
obtaining Tenant’s approval, which approval shall not unreasonably be withheld or delayed.
Tenant
shall keep the Other Areas free and clear of all obstructions created or permitted by Tenant.
Nothing
herein shall affect the right of Landlord at any time to remove such unauthorized person from
the
Other Areas nor to prohibit the use of the Other Areas by unauthorized persons. In exercising
any
such rights regarding the Other Areas, Landlord shall make a reasonable effort to minimize any
disruption to Tenant’s business.

          6.5
Tenant’s Negligence. Tenant shall pay for all damage to the Premises caused by
the negligent act or omission of Tenant, its employees, contractors, or invitees or by the
failure of
Tenant to discharge promptly its obligations under this Lease or comply with the terms of this
Lease.

     7. UTILITIES.

          7.1 Utilities. Tenant shall promptly pay, as the same become due, all charges for
water, gas, electricity, telephone, communication, sewer service, waste pick-up, and any other
utilities, materials or services furnished directly and billed directly to Tenant on or about
the
Premises during the Lease Term, including, without limitation, (i) meter, use and/or
connection fees,
hook-up fees, standby fees, and (ii) penalties for discontinued or interrupted service.
Utilities billed
to Landlord shall be paid by Tenant as part of Operating Costs pursuant to Paragraph 3.5
hereof,
provided that Landlord shall have the right, at any time, to install separate meters at
Landlord’s sole
cost and require Tenant to directly contract with the utility provider for its services. Prior
to the
Separation, Landlord shall reimburse Tenant (or cause Tenant to be reimbursed for) for all
telephone
services billed to Tenant and allocable to Landlord or the occupants in the Other Premises.

          7.2 Compliance with Governmental Regulations. Landlord and Tenant shall comply
with all rules, regulations and requirements promulgated by national, state or local
governmental
agencies or utility suppliers concerning the use of utility services, including any rationing,
limitation
or other control. Landlord may voluntarily cooperate in a reasonable manner with the efforts
of all
governmental agencies or utility suppliers in reducing energy or other resources consumption.
Tenant shall not be entitled to terminate this Lease nor to any abatement in rent by reason of
such
compliance or cooperation. Tenant shall be entitled to an abatement of rent to the extent that
Landlord’s voluntary cooperation with local rules and regulations materially interferes with
Tenant’s

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use of the Premises for more than five (5) consecutive days. Tenant agrees at all times to
cooperate
fully with Landlord and to abide by all reasonable rules, regulations and requirements which
Landlord may prescribe in order to maximize the efficient operation of the HVAC system and all
other utility systems.

     8. REAL PROPERTY TAXES.

          8.1 Real Property Taxes Defined. “Real Property Taxes” as used herein means (i) all
taxes, assessments, levies, and other charges of any kind or nature whatsoever, general and
special,
foreseen and unforeseen (including all installments of principal and interest required to pay
any
existing or future general or special assessments for public improvements, services, or
benefits and
any increases resulting from reassessments or resulting from a change in ownership or any
other
cause), now or hereafter imposed by any governmental or quasi-governmental authority or
special
district having the direct or indirect power to tax or levy assessments, which are levied or
assessed
against, or with respect to the value, occupancy or use of, all or any portion of the Premises
(as now
constructed or as may at any time hereafter be constructed, altered, or otherwise changed) or
Landlord’s interest therein, the fixtures, equipment and other property of Landlord, real or
personal,
that are an integral part of and located on the Premises, the gross receipts, income, or
rentals from
the Premises, or the use of parking areas, public utilities, or energy within the Premises
(but
excluding Landlord’s federal, state and local income taxes), and all costs and fees (including
attorneys’ fees) incurred by Landlord in contesting any Real Property Tax and in negotiating
with
public authorities as to any Real Property Tax. If at any time during the Lease Term the
method of
taxation or assessment of the Premises prevailing as of the Effective Date shall be altered so
that in
lieu of or in addition to any Real Property Tax described above there shall be levied,
assessed or
imposed (whether by reason of a change in the method of taxation or assessment, creation of a
new
tax or charge, or any other cause) an alternate or additional tax or charge (i) on the value,
use or
occupancy of the Premises or Landlord’s interest therein, or (ii) on or measured by the gross
receipts,
income, or rentals from the Premises, on Landlord’s business of leasing the Premises, or
computed in
any manner with respect to the operation of the Premises (but excluding Landlord’s federal,
state and
local income taxes), then any such tax or charge, however designated, shall be included within
the
meaning of the term “Real Property Taxes” for purposes of this Lease. If any Real Property Tax
is
based upon property or rents unrelated to the Premises, then only that part of such Real
Property Tax
that is fairly allocable to the Premises shall be included within the meaning of the term
“Real
Property Taxes.” Notwithstanding the foregoing, the term “Real Property Taxes” shall not
include
estate, inheritance, transfer, gift or franchise taxes of Landlord or the federal or state net
income tax
imposed on Landlord’s income from all sources.

          8.2 Tenant’s Obligation to Reimburse. As Additional Rent, Tenant shall pay its Pro
Rata Share of Real Property Taxes which becomes due during the Lease Term which are properly
allocable to the Lease Term. Tenant shall pay such Real Property Taxes to Landlord within ten
(10)
days of written demand therefor by Landlord accompanied by a statement describing in
reasonable
detail the allocation of Real Property Taxes along with a copy of the tax bill in question and
a
statement of Landlord certifying that it has paid such taxes. If any assessments are levied
against the
Premises, Landlord may elect either to pay the assessment in full or allow the assessment to
go to

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bond. If Landlord pays the assessment in full, only that amount which would have been payable
(both principal and interest) had Landlord allowed the assessment to go to bond shall be included
in
the annual amount of Real Property Taxes payable hereunder.

          8.3 Taxes on Tenant’s Property. Tenant shall pay before delinquency any and all
taxes, assessments, license fees, and public charges levied, assessed, or imposed against
Tenant or
Tenant’s estate in this Lease or the property of Tenant situated within the Premises which
become
due during the Lease Term. On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments.

     9. INSURANCE.

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

               9.1.1 Tenant shall procure, pay for and keep in full force and effect the
following:

                    9.1.1.1 Commercial general liability insurance, including property

damage, against liability for personal injury, bodily injury, death and damage to property
occurring
in or about, or resulting from an occurrence in or about, the Premises with combined single limit
coverage of not less than the amount of Tenant’s Minimum Liability Insurance Coverage set forth in
Paragraph 1.22, which insurance shall contain “fire legal” endorsement coverage and a “contractual
liability” endorsement insuring Tenant’s performance of Tenant’s obligation to indemnify Landlord
contained in Paragraph 10.3;

                    9.1.1.2
Fire and property damage insurance against Loss caused by fire,
extended coverage perils including steam boiler insurance, sprinkler leakage, if applicable,
vandalism, malicious mischief and such other additional perils as now are or hereafter may be
included in a standard extended coverage endorsement from time to time in general use in the
county
in which the Premises is located, insuring Tenant’s personal property and inventory, Trade
Fixtures
and Tenant Improvements within the Building or located on the Other
Areas for the full actual
replacement cost thereof;

                    9.1.1.3 Worker’s compensation coverage and any other employee
benefit insurance sufficient to comply with all Laws;

                    9.1.1.4 With respect to construction, alterations, improvements, or
the
like undertaken by Tenant, upon reasonable demand by Landlord based on such factors as the size
and risk of the work, contingent liability and broad form builder’s risk insurance, in an amount,
if
any, necessary to protect Landlord;

                    9.1.1.5 Such other insurance that is required by any Lender; provided,
however, that such insurance shall not exceed that which is normally required by landlords
engaged

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in leasing
comparable premises located in the vicinity of the Premises under
comparable terms and conditions.

               9.1.2 Each policy of insurance required to be carried by Tenant pursuant to
this Paragraph (i) shall name Landlord and such other parties in interest as Landlord
designates as
additional insureds, provided, however that such parties shall be added as named insureds on
the
commercial general liability policy required pursuant to Subparagraph 9.1.1.1, (ii) shall be
primary
insurance which provides that the insurer shall be liable for the full amount of the loss up
to and
including the total amount of liability stated in the declarations without the right of
contribution from
any other insurance coverage of Landlord, (iii) shall be in a form reasonably satisfactory to
Landlord, (iv) shall be carried with companies having a
Best rating of at least AVII, (v)
shall provide
that such policy shall not be subject to cancellation, lapse or change except after at least
thirty (30)
days prior written notice to Landlord, (vi) shall not have a “deductible” in excess of an
amount
reasonably satisfactory to Landlord, (vii) shall contain a cross liability endorsement, and
(viii) shall
contain a “severability” clause.

               9.1.3 A copy of each paid-up policy evidencing the insurance required to be
carried by Tenant pursuant to this Paragraph (appropriately authenticated by the insurer) or a
certificate of the insurer or insurance broker, certifying that such policy has been issued,
providing
the coverage required by this Paragraph, and containing the provisions specified herein, shall
be
delivered to Landlord prior to the time Tenant or any of Tenant’s Agents enters the Premises
and
upon renewal of such policies, but not less than five (5) business days prior to the
expiration of the
term of such coverage, it being agreed that the ACORD form of insurance certificate will
satisfy this
requirement. Landlord may, at any time, and from time to time, inspect and/or copy any and all
insurance policies required to be procured by Tenant pursuant to this Paragraph. If Landlord’s
lender
or insurance adviser reasonably determines at any time that the amount of coverage required
for any
policy of insurance Tenant is to obtain pursuant to this Paragraph is not adequate, then
Tenant shall
increase such coverage for such insurance to such amount as Landlord’s lender or insurance
adviser
reasonably deems adequate, not to exceed the level of coverage commonly required by prudent
landlords of comparable buildings in the vicinity.

          9.2
Landlord’s Insurance. Landlord shall maintain at least the following
insurance:

               9.2.1 Landlord shall maintain a policy or policies of fire and property
damage insurance in so-called “fire and extended coverage” form insuring Landlord (and such others
as Landlord may designate) against loss of rents for a period of not less than six (6) months and
from
physical damage to the Building with coverage at such level as Landlord shall select, but not less
than ninety percent (90%) of the full replacement cost of the Building. Such fire and property
damage insurance, at Landlord’s election, (i) shall be written in so-called “all risk” form to
include
such perils as are commonly covered by such form of coverage, (ii) shall provide coverage for
physical damage to the improvements so insured up to the then full replacement cost thereof,
(iii) may be endorsed to cover loss caused by such additional perils against which Landlord may
elect to insure, including earthquake and/or flood, and (iv) may provide coverage for loss of rents
for
a period of up to twelve (12) months. Landlord shall not be required to cause such insurance to

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cover any Trade Fixtures, Tenant Improvements or any inventory or other personal property of
Tenant.

               9.2.2 Upon demand, Landlord shall provide Tenant with reasonable
evidence of the existence of insurance required of Landlord hereunder.

               9.2.3 Landlord shall also carry commercial general liability insurance,
including property damage, against liability for personal injury, bodily injury, death and damage
to
property occurring in or about, or resulting from an occurrence in or about, the Property with
combined single limit coverage of not less than the same amount as Tenant’s Minimum Liability
Insurance Coverage set forth in Paragraph 1.22

          9.3
Tenant’s Obligation to Reimburse. As Additional Rent, Tenant shall pay to
Landlord Tenant’s Pro Rata Share of the cost of the insurance carried by Landlord pursuant to
Paragraph 9.2.1 properly allocated to the Property and the Lease Term within ten (10) days of
written demand therefor by Landlord which demand shall be accompanied by a statement showing
in
reasonable detail the amount owed and the basis of the allocation.

          9.4
Release and Waiver of Subrogation. The parties hereto waive all rights against
each other for damages to property caused by fire or other perils to the extent such damages
are
covered by insurance obtained pursuant to any provision of this Article 9, or any other
property
insurance applicable to the Premises; provided, however, that such waivers are effective only
if the
applicable insurance policies of both parties contain a clause to the effect that this release
shall not
affect the right of the insured to recover under such policy. Each party shall use reasonable
efforts to
cause each insurance policy obtained by it to provide that the insurer waives all right of
recovery by
way of subrogation against the other party in connection with any injury or damage covered by
such
policy.

     10.
LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY.

          10.1 Limitation on Landlord’s Liability. Except to the extent of its negligence or
willful misconduct, Landlord shall not be liable to Tenant, nor shall Tenant be entitled to
terminate
this Lease or to any abatement of rent, for any injury to Tenant or any of Tenant’s Agents’
damage to
Tenant’s property, or loss to Tenant’s business resulting from any cause, including, without
limitation, any (i) failure, interruption or installation of any HVAC or other utility system
or service,
(ii) repairs or improvements to the Premises, (iii) limitation, curtailment, rationing or
restriction on
the use of water or electricity, gas or any other form of energy or any services or utility
serving the
Premises, (iv) vandalism or forcible entry by unauthorized persons, or (v) penetration of
water into
or onto any portion of the Premises through roof leaks or otherwise.

          10.2
Limitation on Tenant’s Recourse. Notwithstanding any other term or
provision of this Lease, the liability of Landlord for its obligations under this Lease is
limited solely
to Landlord’s interest in the Premises as the same may from time to time be encumbered, and no
personal liability shall at any time be asserted or enforceable against any other assets of
Landlord or

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against Landlord’s stockholders, directors, principals, representatives, trustees or
partners on account
of any of Landlord’s obligations or actions under this Lease. In addition, in the event of
conveyance
of Landlord’s interest in the Premises, then from and after the date of such conveyance, Landlord
shall be relieved of all liability with respect to Landlord’s obligations to be performed under
this
Lease after the date of such conveyance. Upon any such conveyance by Landlord, the grantee or
transferee, by accepting such conveyance, shall be deemed to have assumed Landlord’s obligations
to be performed under this Lease from and after the date of such transfer.

          10.3 Indemnification of Landlord, In addition to any other indemnity obligations of Tenant stated in this Lease, Tenant shall hold harmless, protect, indemnify and defend
Landlord, and its employees, agents, contractors, successors and assigns, with competent counsel
reasonably satisfactory to Landlord, from and against all liabilities, penalties, losses, damages, costs,
expenses, causes of action, claims and/or judgments arising in whole or in part out of (a) any breach of
this Lease by Tenant or any of its Affiliates, or (b) by reason of any death, bodily injury,
personal injury or property damage (i) any cause or causes whatsoever (except to the extent of the negligence
or willful misconduct of Landlord) occurring in or about or resulting from an occurrence in or
about the Premises, or (ii) resulting from the negligence or willful misconduct of Tenant or any of
Tenant’s Affiliates or Agents, wherever the same may occur. The provisions of this Paragraph shall
survive the expiration or sooner termination of this Lease with respect to any claims or liability
occurring prior to such expiration or sooner termination.

     11. DAMAGE
TO PREMISES.

          11.1 Landlord’s Duty to Restore. If the Premises are damaged by any peril after
the Effective Date of this Lease, Landlord shall restore the Premises unless the Lease is
terminated by Landlord pursuant to Paragraph 11.2 or by Tenant pursuant to Paragraph 11.3. All insurance
proceeds available from the fire and property damage insurance carried by Landlord pursuant to
Paragraph 9.2 shall be paid to and become the property of Landlord. If this Lease is not so
terminated, then upon receipt of the insurance proceeds (if the loss is covered by insurance)
and the issuance of all necessary governmental permits, Landlord shall use reasonable efforts to
commence and complete the restoration of the Premises, to the extent then allowed by Law, to
substantially the same condition in which the Premises were immediately prior to such damage; provided, however,
that in no event shall Landlord have any obligation to repair or replace the Building or the
Other Areas beyond the extent of the insurance proceeds received by Landlord for the repair or
restoration thereof plus any deductible or self-insured retention. Landlord’s obligation to restore shall
be further limited to the Premises as they existed as of the Commencement Date, excluding any Tenant
Improvements, Trade Fixtures and/or personal property constructed or installed in the
Premises. If this Lease is not terminated pursuant to Paragraph 11.2 or 11.3, then Tenant shall forthwith
commence and thereafter prosecute to completion the replacement and repair of all Tenant
Improvements and Trade Fixtures, if any, existing at the time of such damage or destruction,
and which were to have been surrendered to Landlord hereunder; and all insurance proceeds received
by Tenant from the insurance carried by it pursuant to Subparagraph 9.1.1.3 shall be used for
such purpose.

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          11.2
Landlord’s Right to Terminate. Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be exercised only by
delivery to Tenant of a written notice of election to terminate within ninety (90) days after the date
of such damage or such later date as is reasonably necessary under the circumstances:

               11.2.1 The Building or Other Areas are damaged by any peril either (i) covered by the type of insurance Landlord is required to carry pursuant to Paragraph 9.2
or (ii) covered by valid and collectible insurance actually carried by Landlord and in force at the
time of such damage or destruction, to such an extent that the estimated cost to restore equals or
exceeds twenty-five percent (25%) of the then actual replacement cost thereof;

               11.2.2 The Building or Other Areas are damaged by any peril and the cost to
restore the Premises less the amount of valid and collectible insurance actually carried by
Landlord and in force at the time of such damage or destruction equals or exceeds Five Hundred Thousand
Dollars ($500,000);

               11.2.3 The Building or Other Areas are damaged by any peril within twelve (12) months of the last day of the Lease Term to such an extent that the estimated cost
to restore equals or exceeds an amount equal to One Hundred Filly Thousand Dollars ($150,000);

               11.2.4 The Building or Other Areas are damaged by any peril and, because of the Laws then in force, (i) may not be restored at reasonable cost to substantially the same
condition in which it was prior to such damage, or (ii) may not be used for the same use being made
thereof before such damage whether or not restored as required by this Paragraph.

          11.3
Tenant’s Right to Terminate. If the Premises are damaged by any peril and
Landlord does not elect to terminate this Lease or is not entitled to terminate this Lease
pursuant to Paragraph 11.2, then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord’s architect or construction consultant as to when the restoration
work required of Landlord may be completed. Tenant shall have the option to terminate this Lease in
the event any of the following occurs, which option may be exercised only by delivery to Landlord
of a written notice of election to terminate within fifteen (15) days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:

               11.3.1 The Premises are damaged by any peril and, in the reasonable opinion
of Landlord’s architect or construction consultant, the restoration of the Premises cannot be
substantially completed within one hundred eighty (180) days after the date of such damage; or

               11.3.2 The Premises are damaged by any peril within twelve (12) months of
the last day of the Lease Term and in the reasonable opinion of Landlord’s architect or
construction consultant the restoration of the Premises cannot be substantially completed within sixty (60)
days after the date of such damage.

          11.4 Abatement of Rent. In the event of damage to the Premises which does not
result in the termination of this Lease, the Monthly Rent and the Pro Rata Share shall be
temporarily

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abated from the time of the damage during the period of restoration in proportion to the degree to
which Tenant’s use of the Premises is impaired by such damage. Tenant shall not be entitled to any
compensation or damages from Landlord for loss of Tenant’s business or property or for any
inconvenience or annoyance caused by such damage or restoration. Tenant hereby waives the
provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the California
Civil Code, and the provisions of any similar law hereinafter enacted.

     12. CONDEMNATION.

          12.1 Taking of Premises. Landlord shall have the option to terminate this Lease if,
as a result of a taking by means of the exercise of the power of eminent domain (including a
voluntary sale or transfer by Landlord to a condemnor under threat of condemnation), (i)
twenty five percent (25%) or more of the Building is so taken, or (ii) more than fifty percent (50%) of
the Other Areas are so taken. Any such option to terminate by Landlord must be exercised within a
reasonable period of time after the condemnor has commenced judicial action or entered into a binding
agreement to effect such taking. If Landlord so exercises such option to terminate, such
termination shall be effective as of the date possession is taken by the condemnor.

          12.2 Termination By Tenant. Tenant shall have the option to terminate this Lease
if, as a result of any taking by means of the exercise of the power of eminent domain
(including any voluntary sale or transfer by Landlord to any condemnor under threat of condemnation), (i)
twenty-five percent (25%) or more of the Building or the Premises is so taken and that part of the
Building that remains cannot be constructed within a reasonable period of time and thereby made
reasonably suitable for the continued operation of Tenant’s business, or (iii) there is a taking of more
than fifty percent (50%) of the Other Areas and, as a result of such taking, Tenant’s access to the
Premises is materially impeded or Landlord cannot provide parking spaces within walking distance of the
Premises equal in number to at least seventy five percent (75%) of the number of spaces
available on the Property at the Commencement Date, whether by rearrangement of the remaining parking areas
in the Other Areas, (including construction of multi-deck parking structures or restriping for
compact cars where permitted by law) or by alternative parking facilities on other land. Tenant must
exercise such option within a reasonable period of time, to be effective on the date that possession of
that portion of the Other Areas that is condemned is taken by the condemnor.

          12.3 Restoration and Abatement of Rent. If any part of the Building or the Other
Areas is taken by Condemnation and this Lease is not terminated, then, (i) to the extent
reasonably practicable, Landlord shall restore the remaining portion of the Building and Other Areas as
they existed as of the Commencement Date, excluding any Tenant Improvements, Trade Fixtures and/or
personal property constructed or installed after the Commencement Date and (ii) except in the
case of a temporary taking, as of the date possession is taken the Monthly Rent and Pro Rata Share
shall be reduced in the same proportion that the floor area of that part of the Building so taken
(less any addition thereto by reason of any reconstruction) bears to the original floor area of the
Building.

          12.4 Temporary Taking. If all or any portion of the Building is temporarily taken
for six (6) months or less and does not extend beyond the natural expiration of the Lease
Term, this

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Lease shall remain in effect. If any portion of the Building is temporarily taken by condemnation
for a period which exceeds six (6) months or which extends beyond the natural expiration of the Lease
Term, and such taking materially and adversely affects Tenant’s ability to use the Building for
the Permitted Use, then Landlord and Tenant shall each independently have the option to terminate this
Lease. Such option must be exercised within a reasonable period of time, and shall be effective on
the date possession is taken by the condemnor.

          12.5 Division of Condemnation Award. Any award made as a result of any
condemnation of the Building or the Other Areas shall belong to and be paid to Landlord, and
Tenant hereby assigns to Landlord all of its right, title and interest in any such award;
provided, however, that Tenant shall be entitled to receive any condemnation award that is made directly
to Tenant (i) for the taking of personal property or Trade Fixtures belonging to Tenant, (ii) for
the interruption of Tenant’s business or its moving costs, (iii) for loss of Tenant’s goodwill, or
(iv) for any temporary taking where this Lease is not terminated as a result of such taking (subject to
the requirements of Subparagraph 14.1.6). The rights of Landlord and Tenant regarding any
condemnation shall be determined as provided in this Section, and each party waives the
provisions of Section 1265.130 of the California Code of Civil Procedure and the provisions of any
similar law hereinafter enacted allowing either party to petition the Superior Court to terminate this
Lease in the event of a partial taking of the Premises.

     13. DEFAULT AND REMEDIES.

          13.1 Events of Tenant’s Default. Tenant shall be in default of its obligations
under this Lease if any of the following events occur:

               13.1.1 Tenant shall have failed to pay Monthly Rent or any Additional Rent when due and such failure is not cured within five (5) days after delivery of written notice
from Landlord specifying such failure to pay; or

               13.1.2 Tenant shall have failed to perform any term, covenant, or condition of this Lease except those requiring the payment of Monthly Rent or Additional Rent, and Tenant
shall have failed to commence cure of such breach within thirty (30) days after written notice from
Landlord specifying the nature of such breach or to thereafter expeditiously complete such
cure within a reasonable time; or

               13.1.3 Tenant shall have made a general assignment of its assets for the benefit of its creditors; or

               13.1.4 Tenant shall have sublet the Premises or assigned its interest in the Lease in violation of the provisions contained in Section 14, whether voluntarily or by
operation of law; or

               13.1.5 Tenant shall have permitted the sequestration or attachment of, or
execution on, or the appointment of a custodian or receiver with respect to, all or any substantial
part of the property of Tenant or any property essential to the conduct of Tenant’s business and Tenant

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shall have failed to obtain a return or release of such property within sixty (60) days
thereafter, or prior to sale pursuant to such sequestration, attachment or levy, whichever is earlier; or

               13.1.6 Tenant shall have abandoned the Premises for more than fourteen (14) days in any sixty (60) day period; or

               13.1.7 A court shall have made or entered any decree or order with respect to
Tenant or Tenant shall have submitted to or sought a decree or order (or a petition or
pleading shall have been filed in connection therewith) which: (i) grants or constitutes (or seeks) an order
for relief, appointment of a trustee, or confirmation of a reorganization plan under the
bankruptcy laws of the United States; (ii) approves as properly filed (or seeks such approval of) a petition
seeking liquidation or reorganization under said bankruptcy laws or any other debtor’s relief law or
statute of the United States or any state thereof; or (iii) otherwise directs (or seeks) the winding up
or liquidation of Tenant; and such petition, decree or order shall have continued in effect for a
period of sixty (60) or more days.

          13.2
Landlord’s Remedies. In the event of any default by Tenant, Landlord shall
have the following remedies, in addition to all other rights and remedies provided by any Law
or otherwise provided in this Lease, to which Landlord may resort cumulatively, or in the
alternative:

               13.2.1 Landlord may, at Landlord’s election, continue this Lease in full force
and effect and may enforce all its rights and remedies under this Lease, including, but not
limited to, the right to recover rent and any other sums payable hereunder as they become due. In
addition, Landlord may enter the Premises without terminating this Lease and sublet all or any part of
the Premises for Tenant’s account to any person, for such term
(which may be a period beyond the
remaining term of this Lease), at such rents and on such other terms and conditions as
Landlord deems advisable. In the event of any such subletting, rents received by Landlord from such
subletting shall be applied (i) first, to the payment of the costs of maintaining, preserving,
altering and preparing the Premises for subletting and other costs of subletting, including but not
limited to brokers’ commissions, attorneys’ fees and expenses of removal of Tenant’s personal property,
Trade Fixtures, and Tenant Improvements (to the extent required in Paragraph 16.4), (ii) second, to
the payment of rent or any other sums then due and payable, (iii) third, to the payment of future
rent or any other sums as the same may become due and payable hereunder, and (iv) fourth, the balance,
if any, shall be paid to Tenant upon (but not before) expiration of the term of this Lease. If
the rents received by Landlord from such subletting, after application as provided above, are
insufficient in any month to pay the Monthly Rent and any Additional Rent due and payable hereunder for such
month, Tenant shall pay such deficiency to Landlord monthly upon demand. Notwithstanding any
such subletting for Tenant’s account without termination, Landlord may at any time thereafter,
by written notice to Tenant, elect to terminate this Lease by virtue of any previous default
hereunder by Tenant.

               13.2.2 Landlord may, at Landlord’s election, terminate this Lease by giving
Tenant written notice of termination, in which event this Lease shall terminate on the date
set forth for termination in such notice. Tenant expressly acknowledges that in the absence of such
written

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notice from Landlord, no other act of Landlord, including, without limitation, its re-entry
into the Premises, its efforts to relet the Premises, its reletting of the Premises for Tenant’s
account, its storage of Tenant’s personal property and Trade Fixtures, its acceptance of keys to
the Premises from Tenant or its exercise of any other rights and remedies under this Paragraph
13.2, shall constitute an acceptance of Tenant’s surrender of the Premises or constitute a
termination of this Lease or of Tenant’s right to possession of the Premises. Upon such
termination in writing of Tenant’s right to possession of the Premises, as herein provided, this
Lease shall terminate and Landlord shall be entitled to recover damages from Tenant as provided in
California Civil Code Section 1951.2 or any other applicable existing or future law, ordinance or
regulation providing for recovery of damages for such breach, including, without limitation, the
following:

                    13.2.2.1 The reasonable cost of recovering the Premises; plus

                    13.2.2.2 The reasonable cost of removing Tenant’s Trade Fixtures
and Tenant Improvements to the extent required in paragraph 16.4; plus

                    13.2.2.3 All unpaid rent and any other sums due or earned hereunder
prior to the date of termination, less the proceeds of any reletting or any rental received
from subtenants prior to the date of termination applied as provided in subparagraph 13.2.1,
together with interest at the Agreed Interest Rate, on such sums from the date such rent and any other sums
are due and payable until the date of the award of damages; plus

                    13.2.2.4 The amount by which the rent and any other sums which
would be payable by Tenant hereunder, as reasonably estimated by Landlord, from the date of
termination until the date of the award of damages (or the end of the Lease Term, whichever is
sooner) exceeds the amount of such rental loss as Tenant proves could have been reasonably avoided
together with interest at the Agreed Interest Rate on such sums from the date such rent and any
other sums are due and payable until the date of the award of damages; plus

                    13.2.2.5 The amount by which the rent and any other sums which
would be payable by Tenant hereunder, as reasonably estimated by Landlord, for the remainder of the
then term, after the date of the award of damages exceeds the amount of such rental loss as Tenant
proves could reasonably have been avoided, discounted at the discount rate published by the Federal
Reserve Bank of San Francisco for member banks at the time of the
award plus one percent (l%); plus

                    13.2.2.6 For purposes of this Paragraph 13.2, (i) the term “rent”
includes the Monthly Rent and all Additional Rent, and (ii) if it becomes necessary to determine
the amount of Additional Rent that would have become due had Tenant not breached its obligations
under this Lease, all such Additional Rent shall be computed on the basis of the average monthly
amount thereof accruing during the immediately preceding sixty (60) month period, except that if it
becomes necessary to compute such Additional Rent before such a sixty (60) month period has
occurred, then such rent shall be computed on the basis of the average monthly amount thereof
accruing during such shorter period.

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                    13.2.2.7 Such other amounts in addition to or in lieu of the foregoing as may be permitted
from time to time by applicable law.

               13.2.3 In the event Tenant breaches this Lease and abandons the Premises,
this Lease shall not terminate unless Landlord gives Tenant written notice of its election to
so terminate this Lease. No act by or on behalf of Landlord intended to mitigate the adverse
effect of such breach, including those described by Subparagraph 13.2.2 immediately preceding, shall
constitute a termination of Tenant’s right to possession unless Landlord gives Tenant written
notice of termination. Should Landlord not terminate this Lease by giving Tenant written notice,
Landlord may enforce all its rights and remedies under this Lease, including the right to recover the
rent as it becomes due under the Lease as provided in California Civil Code Section 1951.4, as in effect
on the Effective Date of this Lease.

               13.2.4 Nothing in this Paragraph shall limit Landlord’s right to
indemnification from Tenant as provided elsewhere in this Lease, including, without limitation,
Paragraphs 10.3 and 15.2.3. Any notice given by Landlord in order to satisfy the requirements of
Subparagraphs 13.1.1 or 13.1.2 above shall also satisfy the notice requirements of California Code
of Civil Procedure Section 1161 regarding unlawful detainer proceedings.

          13.3
Landlord’s Default and Tenant’s Remedies. If, through no fault of Tenant or
any of Tenant’s Agents, Landlord fails to perform any of its obligations under this Lease and
fails to cure such default within thirty (30) days after written notice from Tenant specifying the
nature of such default where such default could reasonably be cured within said thirty (30) day period,
or fails to commence such cure within said thirty (30) day period and thereafter continuously with due
diligence prosecute such cure to completion where such default could not reasonably be cured
within said thirty (30) day period, then Tenant, as its sole and exclusive remedy, may proceed in
equity or at law to compel Landlord to perform its obligations. Tenant waives the provisions of
Sections 1932(1), 1941 and 1942 of the California Civil Code and/or any similar or successor
law regarding Tenant’s right to terminate this Lease or to make repairs and deduct the expenses
of such repairs from the rent due under the Lease.

          13.4
Waiver. One party’s consent to or approval of any act by the other party
requiring the first party’s consent or approval shall not be deemed to waive or render
unnecessary the first party’s consent to or approval of any subsequent similar act by the other party. The
receipt by Landlord of any rent or payment with or without knowledge of the breach of any other provision
hereof shall not be deemed a waiver of any such breach unless such waiver is in writing and
signed by Landlord. No delay or omission in the exercise of any right or remedy accruing to either
party upon any breach by the other party under this Lease shall impair such right or remedy or be
construed as a waiver of any such breach theretofore or hereafter occurring. The waiver by
either party of any breach of any provision of this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or any other provisions herein contained.

     14.
ASSIGNMENT AND SUBLETTING.

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          14.1 By Tenant. The following provisions shall apply to any assignment,
subletting or other transfer by Tenant or any subtenant or assignee or other successor in interest
of the original Tenant (collectively referred to in this Paragraph as “Tenant”):

               14.1.1 Tenant shall not do any of the following (subject to Paragraph 14.1.4 collectively
referred to herein as a “Transfer”), whether voluntarily, involuntarily, or by operation of laws,
without the prior written consent of Landlord, which consent shall not unreasonably be withheld:
(i) sublet all or any part of the Building or Other Areas or allow it to be sublet, occupied or
used by any person or entity other than Tenant (except a sublet to, or occupancy by an Affiliate of
Tenant provided that Tenant shall remain liable for all obligations under this Lease after such
subletting); (ii) assign its interest in this Lease (except an assignment to an Affiliate of Tenant
provided that Tenant shall remain liable for all obligations under this Lease after such
assignment); (iii) transfer any right appurtenant to this Lease or the Premises (except a transfer
to an Affiliate of Tenant provided that Tenant shall remain liable for all obligations under this
Lease after such transfer); (iv) mortgage or encumber the Lease (or otherwise use the Lease as a
security device) in any manner; or (v) terminate or materially amend or modify an assignment,
sublease, or other transfer that has been previously approved by Landlord. Tenant shall reimburse
Landlord for all reasonable costs and attorneys’ fees incurred by Landlord in connection with the
processing and/or documentation of any requested Transfer whether or not Landlord’s consent is
granted. Any Transfer so approved by Landlord shall not be effective until Tenant has paid all such
costs and attorneys’ fees to Landlord and delivered to Landlord an executed counterpart of the
document evidencing the Transfer which (i) is in form approved by Landlord, (ii) contains the same
terms and conditions as stated in Tenant’s notice given to Landlord pursuant to Subparagraph 14.1.2
below, and (iii) contains the agreement of the proposed Transferee to assume all obligations of
Tenant related to the Transfer arising after the effective date of such Transfer and to remain
jointly and severally liable therefor with Tenant. Any attempted Transfer without Landlord’s
consent shall constitute a default by Tenant and shall be voidable at Landlord’s option. Landlord’s
consent to any one Transfer shall not constitute a waiver of the provisions of Paragraph 14.1 as to
any subsequent Transfer nor a consent to any subsequent Transfer. No Transfer, even with the
consent of Landlord, shall relieve Tenant of its personal and primary obligation to pay the rent
and to perform all of the other obligations to be performed by Tenant hereunder. The acceptance of
rent by Landlord from any person shall not be deemed to be a waiver by Landlord of any provision of
this Lease nor to be a consent to any Transfer.

               14.1.2 Tenant shall give Landlord at least thirty (30) days prior written notice of any
desired Transfer and of the proposed terms of such Transfer including but not limited to (i) the
name and legal composition of the proposed Transferee; (ii) a current financial statement of the
Transferee, financial statements of the Transferee covering the preceding three years, and the
“best available” financial statement of the Transferee for a period ending not more than one year
prior to the proposed effective date of the Transfer, all of which statements are prepared in
accordance with generally accepted accounting principles; (iii) the nature of the proposed
Transferee’s business to be carried on in or on the Premises; (iv) all consideration to be given on
account of the Transfer; (v) a current financial statement of Tenant; and (vi) such other
information as may be reasonably requested by Landlord. Tenant’s notice shall not be deemed to have
been

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served or given until such time as Tenant has provided Landlord with all information reasonably
requested by Landlord pursuant to this Subparagraph 14.1.2. Tenant shall promptly notify Landlord
of any modification to the proposed terms of such Transfer.

               14.1.3 If Tenant seeks to make any Transfer, then Landlord may withhold its consent to such
Transfer, as permitted pursuant to Subparagraph 14.1.1 above, by giving Tenant written notice of
its election within thirty (30) days after Tenant’s notice of intent to Transfer has been deemed
given to Landlord. Without otherwise limiting the criteria upon which Landlord may withhold its
consent to any proposed Transfer, if Landlord withholds its consent where the proposed Transferee’s
net worth (according to generally accepted accounting principles) is less than the greater of (i)
the net worth of Tenant (or guarantor if any) immediately prior to the Transfer, or (ii) the net
worth of Tenant (or guarantor if any) as of the Effective Date, such withholding of consent shall
be presumptively reasonable. Additionally, such withholding of consent by Landlord shall be
presumptively reasonable if (i) at the time consent is requested or at any time prior to the grant
of consent, Tenant is in default under this Lease or would be in default under this Lease but for
the pendency if any grace or cure period specified in this lease; or (ii) in Landlord’s reasonable
judgment, the use of the premises by the proposed Transferee would involve occupancy in violation
of this Lease. If Landlord approves of any such Transfer, then Tenant may sublease such part of the
Premises, and Tenant shall not be released of its liability for the performance of all of its
obligations under the Lease. If Tenant assigns its interest in this Lease in accordance with this
Subparagraph 14.1.3 (except to an Affiliate of Tenant), then Tenant shall pay to Landlord fifty
percent (50%)of all consideration received by Tenant over and above the assignee’s agreement to
assume the obligations of Tenant under this Lease. If Tenant sublets all or part of the Premises
(except to an Affiliate of Tenant), then Tenant shall not be entitled to keep, and shall pay to
Landlord immediately upon receipt, fifty percent (50%) of any difference, if any, between (i) all
rent and other consideration paid by the subtenant to Tenant, less (ii) all rent paid by Tenant to
Landlord pursuant to this Lease which is allocable to the area so sublet. As used herein, the term
“consideration” shall mean any consideration of any kind received, or to be received, by Tenant as
a result of the Transfer, if such sums are related to Tenant’s interest in this lease or in the
Premises, including payments (in excess of the fair market value thereof) for Tenant’s assets,
fixtures, leasehold improvements, inventory, accounts, goodwill, equipment, furniture and general
intangibles, provided that Tenant shall first be entitled to deduct from such consideration the
costs of any commissions and reasonable attorneys fees incurred by Tenant with respect to any such
assignment or subletting and reasonable costs incurred by Tenant for improvements made specifically
for such assignee or sublessee.

               14.1.4 If Tenant is a corporation, any dissolution, merger, consolidation, or other
reorganization of Tenant, or the sale or transfer in the aggregate over the Lease Term of a
controlling percentage of the capital stock of Tenant, shall be deemed a voluntary assignment of
Tenant’s interest in this Lease, provided, however, that (i) the foregoing shall not apply to
corporations whose capital stock is then publicly traded, or to an assignment to, or occupancy by,
an entity resulting from a merger, consolidation or non-bankruptcy reorganization of Tenant, or to
an acquisition of substantially all of Tenant’s assets, or to an acquisition of a controlling
percentage of Tenant’s stock, or to a transaction by which the Tenant’s stock becomes publicly
traded, where the entity occupying the Premises following such transaction (if other than Tenant)
assumes all of

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Tenant’s obligations under this Lease by operation of law or otherwise and has a net worth no less
than the net worth of Tenant immediately prior to the occurrence of such transaction and (ii) any
transaction referred to in clause (i) shall be deemed to be a Transfer. The phrase “controlling
percentage” means the ownership of and the right to vote stock possessing more than fifty percent
(50%) of the total combined voting power of all classes of Tenant’s capital stock issued,
outstanding and entitled to vote for the election of directors. If Tenant is a partnership, any
withdrawal or substitution (whether voluntary, involuntary, or by operation of law and whether
occurring at one time or over a period of time) of any partners) owning twenty-five percent (25%)
or more (cumulatively) of any interest in the capital or profits of the partnership, or the
dissolution of the partnership, shall be deemed a voluntary assignment of Tenant’s interest in
this Lease.

               14.1.5 It is the intent of the parties hereto that this Lease shall confer upon
Tenant only the right to use and occupy the Premises and to exercise such other rights as are
conferred upon Tenant by this Lease. The parties agree that this Lease is not intended to have
a bonus value, nor to serve as a vehicle whereby Tenant may profit by a future Transfer of this
Lease or the right to use or occupy the Premises as a result of any favorable terms contained herein
or any future changes in the market for leased space. Tenant expressly agrees that the provisions of
this Paragraph 14.1 are not unreasonable standards or conditions for purposes of Section
1951.4(b)(2) of the California Civil Code, as amended from time to time.

               14.1.6 Tenant irrevocably assigns to Landlord, as security for Tenant’s obligations under this Lease, all rent or other consideration not otherwise payable to
Landlord by reason of any Transfer. Landlord, as assignee of Tenant, or a receiver for Tenant appointed on
Landlord’s application, may collect such rent or other consideration and apply it toward
Tenant’s obligation under this Lease, provided, however, that until occurrence of any default by
Tenant, Tenant may collect and retain such rent or other consideration not otherwise payable to
Landlord.

          14.2 By Landlord. Landlord and its successors in interest shall have the right to
transfer their interest in the Premises at any time and to any person or entity. In the event of
any such transfer, the Landlord originally named herein (and in the case of any subsequent
transfer, the transferor) from the date of such transfer, (i) shall be automatically relieved,
without any further act by any person or entity, of all liability for the performance of the
obligations of the Landlord hereunder which may accrue after the date of such transfer provided
that the transferee agrees to assume and perform the liabilities and obligations of Landlord under
this Lease accruing from and after the date of the transfer, and (ii) shall be relieved of all
liability for the performance of the obligations of the Landlord hereunder which have accrued
before the date of transfer if its transferee agrees to assume and perform all such obligations of
the Landlord hereunder whenever occurring. After the date of any such transfer, the term “Landlord”
as used herein shall mean the transferee of such interest in the Premises.

     15.
WASTE DISPOSAL AND HAZARDOUS MATERIALS.

          15.1
Waste Disposal. Tenant shall store its non-Hazardous Materials waste either
inside the Premises or within outside trash enclosures that are designated for such storage. Tenant

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shall keep all fire corridors and mechanical equipment rooms in the Premises free and clear of all
obstructions at all times. Tenant shall store its Hazardous Materials and Hazardous Materials
wastes in the storage area designated for such materials outside the Building and near the loading
dock (“Haz-Mat Storage”). Tenant shall cause all of its Hazardous Materials waste and other waste
to be regularly removed from the Premises at Tenant’s sole cost and in compliance with all Laws.

          15.2
Hazardous Materials.

               15.2.1
Definitions.

                    15.2.1.1 Environmental Laws. “Environmental Laws” means all
local, state or federal laws, statutes, ordinances, rules, regulations, judgments,
injunctions, stipulations, decrees, orders, permits, approvals, treaties or protocols now or hereafter
enacted, issued or promulgated by any governmental authority which relate to any Hazardous Material or
to the use, handling, transportation, disposal, discharge, release, emission, or storage of, or
the exposure of any person to, a Hazardous Material.

                    15.2.1.2 Hazardous Material. “Hazardous Material” means any
pollutant, contaminant, waste, chemical or any other material or substance that is now or hereafter
prohibited or regulated by any governmental authority as pollutants, contaminants, or radioactive,
toxic, or hazardous materials or substances, including, without limitation, crude oil or any
fraction thereof, asbestos or radon gas or solid or hazardous waste.

               15.2.2 Indemnity. Tenant shall cause any handling, transportation, storage,
treatment, disposal or use of Hazardous Materials by Tenant or Tenant’s Agents after the
Commencement Date in or about the Premises to comply strictly with all applicable Laws,
including, without limitation, applicable Environmental Laws. In addition to Tenant’s other indemnity
obligations under this Lease, Tenant shall protect, indemnify, defend upon demand with counsel
reasonably acceptable to Landlord, and hold harmless Landlord and its employees, agents,
contractors, successors and assigns from and against any and all liabilities, losses, claims,
damages, interest, penalties, fines, monetary sanctions, reasonable attorneys’ fees, reasonable
experts’ fees, court costs, remediation costs, investigation costs, and other expenses which result from or
arise in any manner whatsoever in whole or in pan, out of (i) the use, storage, treatment,
transportation, release, or disposal of Hazardous Materials on or about the Premises, by Tenant or Tenant’s
Agents after the Commencement Date, or (ii) the disposal or release of any Hazardous Materials on the
surface of the Premises occurring after the Commencement Date and prior to the termination of
this Lease that is not the result of the negligent acts or willful misconduct of Landlord or its
agents. Tenant shall not suffer any lien to be recorded against the Premises as a consequence of the
release, discharge or disposal of any Hazardous Materials in, on under or about the Premises by Tenant
or any of Tenant’s Agents, including any state, federal, or local “superfund” lien related to the
removal or remediation of any Hazardous Materials in, over, on, under, through, or about the Premises;
provided if such lien is recorded, Tenant shall not be deemed to have breached or violated
this Lease if it posts or causes to be posted bonds or other financial assurances sufficient to satisfy
the obligations or liability evidenced by such lien.

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               15.2.3 Confidentiality. Tenant shall give prompt written notice to Landlord
of (i) any communication received from any governmental authority concerning Hazardous
Materials violation or other liability which relates to the Premises, and (ii) any
contamination of the Premises by Hazardous Materials which constitutes a violation of any applicable Environmental
Law or other applicable Laws.

               15.2.4 Survival of Obligations. The obligations of Tenant under
Paragraph 15.2.2 shall survive the expiration or earlier termination of the Lease Term. In the
event of any inconsistency between any other part of this Lease and Paragraph 15.2, the terms of
Paragraph 15.2 shall control.

     16. GENERAL PROVISIONS.

          16.1 Relationship to Master Lease. Tenant acknowledges that the Property is
subject to all of terms and conditions of the Master Lease although this agreement is entitled
a Lease. Tenant further acknowledges that Landlord has the option to purchase the property and remarket
the property and Tenant shall recognize as Landlord any future owner of the Property. In the event
that any action taken by Tenant under the Lease would require the consent of BNP under the Master
Lease, Tenant shall be required to obtain both the consent of Landlord and BNP pursuant to the
terms of the Master Lease, provided that consent of Landlord shall not be unreasonably
withheld, conditioned or delayed and Landlord shall reasonably cooperate with Tenant to obtain BNP’s
consent.

          16.2 Relationship to Transaction Agreement. Solectron USA, Inc. and SMART
Modular Technologies, Inc. acknowledge that none of the provisions of this Lease are intended
to limit or modify in any manner any rights and remedies of SMART Modular Technologies, Inc. or
any of the “Buyers” under the Transaction Agreement and that in the event of any conflict
between the terms and conditions of this Lease and any rights and remedies of SMART Modular
Technologies, Inc. and such Buyers contained in the Transaction Agreement (including without
limitation any right of recovery for a breach of representation or warranty thereunder), as
between SMART Modular Technologies, Inc. and any of the “Buyers” under the Transaction Agreement on
the one hand, and Solectron USA, Inc., and any of its “Affiliates” (as defined in the
Transaction Agreement) on the other, the terms of the Transaction Agreement shall prevail.

          16.3
Landlord’s Right to Enter. Landlord and its agents may enter the Premises at
any reasonable time, following twenty-four (24) hours notice except in the case of an emergency,
for the purpose of (i) inspecting the same, (ii) posting notices of non-responsibility, (iii)
showing the Premises to prospective purchasers, mortgagees or tenants, (iv) making necessary
alterations, additions, or repairs, (v) performing Tenant’s obligation when Tenant has failed to do
so after written notice from Landlord, (vi) placing upon the Premises ordinary “for lease” or “for
sale” signs, and/or (vii) in case of an emergency. For each of the aforesaid purposes, Landlord may
enter the Premises by means of a master key, and Landlord may use any and all means either may deem
necessary and proper to open the doors of the Premises in an emergency. Any entry into the Premises
or portions thereof obtained by Landlord by any of said means, or otherwise, shall not under any
circumstances

-31-

 

be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the
Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portion
thereof. Tenant shall have the right to accompany Landlord during any such entry and Landlord
shall use all reasonable efforts to avoid interfering with Tenant’s use of the Premises during
such entry.

          16.4 Surrender of the Premises. Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant’s Trade Fixtures and other
personal property and vacate and surrender the Premises to Landlord in the same condition as
existed as of the Commencement Date, reasonable wear and tear excepted, with all of Tenant’s
personal property removed and in broom clean condition. If Landlord so requests, Tenant shall,
prior to the expiration or sooner termination of this Lease, remove any Tenant Improvements
and
repair all damage caused by such removal. If the Premises are not so surrendered at the
termination
of this Lease, then Tenant shall be liable to Landlord for all costs incurred by Landlord in
returning
the Premises to the required condition, plus interest on all costs incurred at the Agreed
Interest Rate.
Tenant shall indemnify Landlord against loss or liability resulting from delay by Tenant in so
surrendering the Premises, including, without limitation, any claims made by any succeeding
tenant.

          16.5 Holding Over. This Lease shall terminate without further notice at the
expiration of the Lease Term. Any holding over by Tenant after expiration of the Lease Term
shall
not constitute a renewal or extension of the Lease or give Tenant any rights in or to the
Premises,
except as expressly provided in this Lease. Any holding over after such expiration with the
consent
of Landlord shall be construed to be a tenancy from month-to-month on the same terms and
conditions herein specified insofar as applicable, except that Monthly Rent shall be increased
to an
amount equal to one hundred fifty percent (150%) of the Monthly Rent required during the last
month of the Lease Term.

          16.6 Subordination. The following provisions shall govern the relationship of this
Lease to the Master Lease and any underlying lease, mortgage or deed of trust which now or
hereafter affects the Premises, and any renewal, modification, consolidation, replacement or
extension thereof (collectively “Security Instruments”), which have been or may hereafter be
executed affecting the Premises.

               16.6.1 This Lease is subject and subordinate to the Master Lease and the
Security Instruments relating thereto existing as of the Effective Date. However, if any
Lender so
requires, this Lease shall become prior and superior to any such Security Instrument.

               16.6.2 At Landlord’s election, this Lease shall become subject and
subordinate to any Security Instruments created after the Effective Date, provided that the holder
of such Security Instruments executes and delivers to Tenant for execution by such holder and
Tenant a commercially reasonable form of Subordination Non-Disturbance Agreement under the terms of
which Tenant’s occupancy of the Premises shall not be disturbed so long as Tenant is not in default
under this Lease.

-32-

 

               16.6.3 Tenant shall execute any document or instrument required by Landlord
or any Lender to make this Lease either prior or subordinate to any of the Security
Instruments
which shall include the matters set forth in Paragraph 16.6.2 above and which may include
such
other matters as the Lender customarily requires in connection with such agreements,
including
provisions that the Lender not be liable for (i) the return of the Security Deposit unless
the Lender
receives it from Landlord, and (ii) any defaults on the part of Landlord occurring prior to
the time
the Lender takes possession of the Premises in connection with the enforcement of its
Security
Instrument. Tenant’s failure to execute any such document or instrument within ten (10) days
after
written demand therefor shall constitute a default by Tenant.

               16.6.4 Intentionally Omitted.

          16.7 Tenant’s Attornment. Tenant shall attorn (i) to any purchaser of the Premises
at any foreclosure sale or private sale conducted pursuant to any security instrument
encumbering
the Premises, and (ii) to any grantee or transferee designated in any deed given in lieu of
foreclosure;
provided the transferee agrees to recognize Tenant’s rights under this Lease which accrue
after the
date of the transfer in question.

          16.8 Lender Protection. In the event of any default on the part of the Landlord,
Tenant will give notice by registered or certified mail to any Lender who has delivered to
Tenant a
notice requesting such notice of default and giving Tenant such Lender’s address for such
purpose.

          16.9 Estoppel Certificates and Financial Statements. At all times during the Lease
Term, Tenant and Landlord each agree, within ten (10) days after any request by the other,
promptly
to execute and deliver to the other an estoppel certificate, (i) certifying that this Lease is
unmodified
and in full force and effect, or if modified, stating the nature of such modification and
certifying that
this Lease, as so modified, is in full force and effect, (ii) stating the date to which the
rent and other
charges are paid in advance, if any, (iii) acknowledging that there are not, to the certifying
party’s
knowledge, any uncured defaults on the part of the other party hereunder, or if there are
uncured
defaults, stating the nature of such uncured defaults, and (iv) certifying such other
information about
the Lease as may be reasonably required by the party requesting the certification. Tenant’s
failure to
deliver an estoppel certificate within ten (10) days after delivery of Landlord’s request
therefore shall
be a conclusive admission by Tenant that, as of the date of the request for such statement,
(i) this
Lease is unmodified except as may be represented by Landlord in said request and is in full
force
and effect, (ii) there are no uncured defaults in Landlord’s performance, and (iii) no rent
has been
paid in advance.

          16.10 Force Majeure. Any prevention, delay, or stoppage due to strikes, lockouts,
inclement weather, labor disputes, inability to obtain labor, materials, fuels or reasonable
substitutes
therefor, governmental restrictions, regulations, controls, action or inaction, civil
commotion, fire or
other acts of God, and other causes beyond the reasonable control of the party obligated to
perform
(except financial inability) shall excuse the performance, for a period equal to the period of
any said
prevention, delay, or stoppage, of any obligation hereunder, except the obligation of Tenant
to pay
rent or any other sums due hereunder or the obligation of Landlord to pay any sums due
hereunder.

-33-

 

          16.11 Notices. Any notice required or desired to be given regarding this Lease
shall be in writing and shall be personally served, or in lieu of personal service may be given by
mail. Personally served notices shall be deemed to have been given when received by the party. If
served by mail, such notice shall be deemed to have been given (i) on the third business day after
mailing to the party if such notice was deposited in the United States mail, registered or
certified and postage prepaid, addressed to the party to be served at the address set forth below,
and (ii) in all other cases when actually received. Either party may change its address by giving
notice of same in accordance with this Paragraph.

	 	 	 	 	 
	 

	 	Address For Landlord:
	 	Solectron USA, Inc.
	 

	 	 	 	c/o Solectron Corporation
	 

	 	 	 	5799 Fontanoso Way
	 

	 	 	 	San Jose, CA 95138-1015
	 

	 	 	 	Attn: Bob Fernandes, Corporate Facilities Real Estate
	 

	 	 	 	Director
	 
	 	 	 	 
	 

	 	with copy to:
	 	Wilson, Sonsini, Goodrich & Rosati
	 

	 	 	 	650 Page Mill Road
	 

	 	 	 	Palo Alto, CA 94304- 1050
	 

	 	 	 	Attn: Marc Gottschalk, Esq.
	 
	 	 	 	 
	 

	 	Address For Tenant:
	 	Smart Modular Technologies, Inc.
	 

	 	 	 	4211 Starboard Drive
	 

	 	 	 	Fremont, CA 94538
	 

	 	 	 	Attn: Ann Nguyen
	 
	 	 	 	 
	 

	 	with copy to:
	 	Davis Polk & Wardwell
	 

	 	 	 	1600 El Camino Real
	 

	 	 	 	Menlo Park, CA 94025
	 

	 	 	 	Attn: David W. Ferguson
	 

	 	 	 	Alan F. Denenberg

          16.12 Attorneys’ Fees. If either party shall bring any action or legal
proceeding for
an alleged breach of any provision of this Lease, to recover rent, to terminate this Lease or
to
otherwise enforce, protect or establish any term or covenant of this Lease, then the
prevailing party
shall be entitled to recover as a part of such action or proceedings, or in a separate action
brought for
that purpose, reasonable attorneys’ fees and court costs as may be fixed by the court.

          16.13 Corporate Authority. (a) If Tenant is a corporation (or a partnership), each
individual executing this Lease on behalf of said corporation (or partnership) represents and
warrants
that he/she is duly authorized to execute and deliver this Lease on behalf of said corporation
in
accordance with the bylaws of said corporation (or partnership in accordance with the
partnership

-34-

 

agreement of said partnership) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, each of the persons
executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly
authorized and existing corporation, that Tenant has and is qualified to do business in California
and that the corporation has full right and authority to enter into this Lease. If Tenant is a
corporation Tenant shall, at the time of execution of this Lease, deliver to Landlord a certified
copy of the resolution of the board of directors of said corporation authorizing or ratifying the
execution of this Lease.

          If Landlord is a corporation (or a partnership), each individual executing this Lease on
behalf of said corporation (or partnership) represents and warrants that he/she is duly authorized
to execute and deliver this Lease on behalf of said corporation in accordance with the bylaws of
said corporation (or partnership in accordance with the partnership agreement of said partnership)
and that this Lease is binding upon said corporation (or partnership) in accordance with its terms.
If Landlord is a corporation, each of the persons executing this Lease on behalf of Landlord does
hereby covenant and warrant that Landlord is a duly authorized and existing corporation, that
Landlord has and is qualified to do business in California and that the corporation has full right
and authority to enter into this Lease.

             16.14 Miscellaneous. Should any provisions of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or invalidate any other
provision hereof, and such remaining provisions shall remain in full force and effect. Time is of
the essence with respect to the performance of every provision of this Lease in which time of
performance is a factor. The captions used in this Lease are for convenience only and shall not be
considered in the construction or interpretation of any provision hereof. Any executed copy of this
Lease shall be deemed an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors, executors, administrators
and assigns of Landlord and Tenant. This Lease shall be construed and enforced in accordance with
the laws of the State of California. The language in all parts of this Lease shall in all cases be
construed as a whole according to its fair meaning, and not strictly for or against either Landlord
or Tenant. When the context of this Lease requires, the neuter gender includes the masculine, the
feminine, a partnership or corporation or joint venture, and the singular includes the plural. When
a party is required to do something by this Lease, it shall do so at its sole cost and expense
without right of reimbursement from the other party unless specific provision is made therefor. If
a party hereto is a corporation, nothing in this Section 16.14 is intended to confer personal
liability upon the officers or shareholders of such party. All measurements of gross leasable area
shall be made from the outside faces of exterior walls and the centerline of joint partitions.
Landlord makes no covenant or warranty as to the exact square footage of any area. Where Tenant is
obligated not to perform any act, Tenant is also obligated to restrain any others within its
control from performing said act, including agents, invitees, contractors, subcontractors and
employees. Landlord shall not become or be deemed a partner nor a joint venturer with Tenant by
reason of the provisions of this Lease.

              16.15 Brokerage Commissions. Tenant and Landlord warrant to each other that each has
not had any dealings with any real estate brokers, leasing agents, salesmen, or incurred any

-35-

 

obligations for the payment of real estate brokerage commissions or finder’s fees which would be
earned or due and payable by reason of the execution of this Lease.

          16.16 Consents and Approvals. Except as expressly provided otherwise herein, if
either party’s consent or approval is required as a condition to the doing of any act by the
other party,
such consent shall not be unreasonably withheld, delayed or conditioned. Notwithstanding
anything
to the contrary contained in this Lease, if it is determined that either party failed to give
its consent
where it was required to do so under this Lease, the other party shall be entitled to specific
performance but not to monetary damages for such failure. The review and/or approval by either
party of any item to be reviewed or approved by such party under the terms of this Lease or
any
Exhibits hereto shall not impose upon the reviewing party any liability for accuracy or
sufficiency of
any such item or the quality or suitability of such item for its intended use. Any such review
or
approval is for the sole purpose of protecting the reviewing party’s interest under this
Lease, and no
third parties, including the other party, its agents, employees, contractors, invitees or any
person or
entity claiming by, through or under the other party, shall have any rights hereunder.

          16.17 Entire Agreement. This Lease constitutes the entire agreement between the
parties, and there are no binding agreements or representations between the parties except as
expressed herein. Tenant acknowledges that neither Landlord nor Landlord’s agent(s) has made
any
representation or warranty as to (i) whether the Premises may be used for Tenant’s intended
use
under existing Law or (ii) the suitability of the Premises for the conduct of Tenant’s
business or the
condition of any improvements located thereon. Tenant expressly waives all claims for damage
by
reason of any statement, representation, warranty, promise or other agreement of Landlord or
Landlord’s agent(s), if any, not contained in this Lease or in any addendum or amendment
hereto.
No subsequent change or addition to this Lease shall be binding unless in writing and signed
by the
parties hereto.

[Signatures continued on next page]

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     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease with the intent to be
legally bound thereby, to be effective as of the Effective Date of this Lease.

	 	 	 	 	 	 	 
	AS LANDLORD:	 	AS TENANT:
	 
	 	 	 	 	 	 
	Solectron USA, Inc., a Delaware	 	SMART Modular Technologies, Inc., a
	corporation	 	California corporation
	 
	 	 	 	 	 	 
	By :

	 	/s/ Michael F. Grady
	 	By:
	 	/s/ Iain MacKenzie
	 

	 	 
	 	 	 	 
	Printed Name: Michael F. Grady	 	Printed Name: Iain MacKenzie
	 

	 	 
	 	 	 	 
	Its :

	 	Secretary
	 	Its:
	 	Presidentexv10w13

 

Exhibit 10.13

	 		
	Compaq Computer Corporation / Smart Modular Technologies, Inc.
	 	Rev 1.0
	Corporate Purchase Agreement
	 	Contract No. 2171-080101

 

Compaq Computer Corporation &

Smart Modular Technologies, Inc.

Corporate Purchase Agreement

     This Corporate Purchase Agreement (this “Agreement”) is made and entered into as of the
1st day of May 2001 by Compaq Computer Corporation, a Delaware corporation (“Compaq”), and by
Smart Modular Technologies, Inc., a California Corporation (“Smart Modular”) with its principal
place of business as 4305 Cushing Parkway, Fremont, CA 94538 and Subsidiaries as identified in
Exhibit A.

WHEREAS, Compaq desires to purchase memory, memory modules, and memory kits from Smart Modular as
defined herein;

WHEREAS, Compaq desires for Smart Modular to assemble, kit and deliver high quality, low cost
memory modules and options to Compaq and to Compaq customers for same business day and next
business day delivery;

WHEREAS, Smart Modular is willing to sell memory modules and memory kits to Compaq and provide for
assembly, kitting and delivery of memory kits, as defined herein;

NOW THEREFORE, For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Compaq and Smart Modular hereby agree as follows:

1. DEFINITIONS

1.1. In addition to terms defined elsewhere in this Agreement, capitalized terms used in this
Agreement shall have the meanings given thereto in Annex 1 hereto.

2. PRODUCT PURCHASES

2.1. The terms and conditions contained in this Agreement shall govern the purchase and sale of
product (the “Product”) listed in a product schedule (the “Product Schedule”) entered into from
time to time by Compaq and Smart Modular, which schedule shall be substantially in the form of Exhibit B.

2.2. This Agreement is not a requirements contract and does not obligate Compaq to purchase any
minimum quantity of Product but only establishes the terms and conditions for such purchases if, as
and when Compaq submits orders in accordance with this Agreement.

2.3. In the event that Compaq begins using an additional supplier to support the Memory Options
program, Compaq will provide written notice to Smart Modular 60 calendar days prior to the addition
of a supplier.

3. ORDERS

3.1. Upon execution of this Agreement, Smart Modular agrees that it shall be fully capable
of processing all Orders through Compaq’s system for Electronic Data Interchange (“EDI”).

3.2. Compaq may purchase Products by issuing to Smart Modular written purchase orders (“Written
Orders”) or purchase orders by electronic data interchange (“EDI Orders”); collectively, Written
Orders and EDI Orders are referred to herein as “Order” or
“Orders”. Orders shall set forth the following items:
quantity, price, ship-to location, shipping date, delivery date, part number and revision level. Smart
Modular shall accept any Order that materially conforms with the terms of this Agreement.

 

					
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	Compaq Computer Corporation / Smart Modular Technologies, Inc.
	 	Rev 1.0
	Corporate Purchase Agreement
	 	Contract No. 2171-080101

 

3.3. If Compaq issues a Written Order, Smart Modular shall use commercially reasonable efforts
to send written confirmation of such acceptance within two (2) business days after Smart Modular’s
receipt of a Written Order from Compaq.

3.4. If Compaq issues an EDI Order, Smart Modular shall electronically acknowledge receipt of the
EDI Order which shall be confirmed by a Functional 997 (same information as covered in EDI 855)
issued from Smart Modular’s mailbox upon receipt of the EDI Older, or by an EDI Order Verify signal sent
no later than 3 hours after receipt of the EDI Order.

3.5. “Verify”, or “Verification”, as used herein shall mean Smart Modular’s determination of
successful receipt, from electronic mailbox, of all necessary Order information and requirements (e.g.,
quantity, price, ship-to location, shipping date, delivery dates, part number, and revision level), and
“notification to Compaq, of both the receipt of the EDI Order from Compaq and any discrepancies relating to the
readability of such EDI Order. Smart Modular shall electronically verify receipt of an Order as per
Table 1: Verify. EDI Order issued on a non-Business Day shall be “verified” on the next Business Day by
11:00AM.

Table 1: Verify

	 	 	 
	Functional 997 sent by Smart Modular mailbox	 	Verify report sent to Compaq by
	12:00AM to 8:00AM

	 	11:00 AM
	8:01 AM to 2:00 PM

	 	7:00 PM
	2:01 PM to 11:59 PM

	 	11:00 AM Next Business Day

3.6 Smart Modular shall be conclusively presumed to have
accepted all EDI Orders issued by Compaq
that Smart Modular has confirmed by a Functional 997, unless
Compaq is notified specifically, that Smart
Modular has not accepted a particular EDI Order. Such
notification by Smart Modular must take place
within fourteen (14) hours from Smart Modular’s Verification of
Compaq’s EDI Order transmission.

3.7 All EDI Orders, Verifications, and EDI Acknowledgments (collectively, “EDI Transmissions”)
and other related data electronically transmitted shall (i) reference and be subject to the terms and
conditions of this Agreement, and (ii) contain information in a specified format in accordance with
Compaq’s policies, specifications and procedures regarding electronic data interchange information.

3.8 No additional or different provisions proposed by either party hereto in any oral, written or
electronic data interchange acceptance, Written Order, EDI Order, confirmation, verification or
acknowledgment shall apply unless expressly agreed to in writing by the other party. Smart Modular
and Compaq hereby give notice of their objection to any additional or
different terms.

3.9 Smart
Modular agrees that all of Compaq’s Affiliates, wherever located, shall be entitled to
make purchases under this Agreement.

4. TERM OF AGREEMENT

4.1. The term of this Agreement shall be three (3) years, commencing on the dale of this Agreement
(the “Effective Date”). This Agreement will be automatically renewed at the conclusion of the
initial 3 year period for a 12 month period unless one of the parties notifies the other party not
less than 180 calendar days prior to the end of such 1 year period that it does not intend to
renew this Agreement. Such automatic renewal provision shall apply at the end of each successive
12 month period unless either party indicates, in

 

					
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	Compaq Computer Corporation / Smart Modular Technologies, Inc.
	 	Rev 1.0
	Corporate Purchase Agreement
	 	Contract No. 2171-080101

 

accordance with the 180 calendar day notice provision described in the preceding sentence,
that renewal is not intended. This Agreement may terminate prior to the aforementioned stated
term under the circumstances set forth in Section 15. Notwithstanding the foregoing, this
Agreement shall remain in full force and effect and shall be applicable to any Order issued by
Compaq and received by Smart Modular during the term of this Agreement until all obligations
under such Order have been fulfilled.

5. PRICING

5.1. The prices for the Products, including memory components, memory module
assembly, kitting material and kitting services, shall be established from
time to time by the parties executing and delivering a pricing schedule in the
form set forth as Exhibit B (the “Pricing Schedule”). The Product prices (the
“Prices”) set forth in any Pricing Schedule shall be fixed for the period set
forth therein.

5.2 Smart Modular will use commercially reasonable efforts to purchase memory
components based on supplier share as designated by Compaq. Compaq will update
the price/allocation matrix as contract- pricing changes occur.

5.3 The Prices shall include all inbound costs to Smart Modular direct,
indirect and incidental charges relating to the sale of the Product to Compaq
including, without limitation, packaging and kitting, in-bound freight shipping
charges, forwarding agent and brokerage fees, insurance costs, document fees,
and duties, and any and all sales, use, excise and similar taxes, provided that
all such charges for semiconductor memory devices shall be included in the
Compaq Contract Price, other than value added taxes. All Product sold hereunder
shall be shipped to Compaq Ex-Works upon delivery to a common carrier. Each
month and based upon each Product’s sale during the previous month from Smart
Modular to Compaq, Smart Modular shall charge through a separate invoice, and
Compaq shall pay, the applicable sale, use and/or value added taxes arising out
of said Product sales.

5.4 Smart Modular must receive written authorization from Compaq prior to all
spot market transactions that exceed the percentage of Spot Market purchases
targeted at 30% Compaq Approved Spot Market Supplier and 70% Compaq Contract
Suppliers. Spot market transactions by Smart Modular will follow the terms and
conditions outlined within Exhibit B.

5.5 Smart Modular is responsible for monitoring and determining the inventory
levels which will allow Smart Modular to reach the On-Time-Delivery
requirements of this Agreement.

5.6 Compaq shall determine the weighted average price based on Compaq
negotiated pricing, Compaq supplier market share commitments and supplier
commitments to the Compaq forecast. It shall be Smart Modular’s responsibility
to inform Compaq when the supplier is unable to deliver to the commitments.
Compaq will use commercially reasonable efforts to ensure that the supplier can
meet the commitments. In the event that product can not be obtained to the
allocation, Smart Modular shall use commercially reasonable efforts to obtain
supply from the other Compaq Contract Suppliers.

5.7 Smart Modular acknowledges that Compaq’s agreement to purchase Product for
incorporation into Compaq’s computer systems represents a valuable and
substantial endorsement of Smart Modular’s Products. In addition, Smart
Modular acknowledges that Compaq’s (i) engineering expertise, (ii) early
requirements input, (iii) architectural contributions, evaluation and testing
of prototypes and samples and subsequent feedback to Smart Modular of the
results regarding test results, (iv) integration and product compatibility
testing; (v) warehouse that increase Smart Modular’s efficiency, and (vi)
marketing and promotional activities provide substantial value to Smart
Modular. In consideration of the value and benefit that Smart Modular
receives from Compaq, including, but not limited to, those set forth above, and
the potential substantial quantities to be purchased by Compaq, Smart Modular
represents that the maximum Effective Price, as defined below, charged to
Compaq for Products will be the lowest price offered by Smart Modular with
terms no less favorable than accorded by Smart Modular to any of its other
customers in each case for equivalent products manufactured by Smart
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circumstances, regardless of the quantities that Compaq actually
purchases. This Section 5.9 shall apply to all Products purchased and services
provided by Compaq hereunder, including but not limited to all memory modules,
memory option kitting and DRAM’s, as identified in Exhibit B.

5.8 N/A.

5.9 Smart Modular shall use its best efforts to maintain a vigorous cost
reduction program and to ensure that the Prices and terms set forth in this
Agreement and Exhibit B hereunder are aggressive and competitive at all times.
If Compaq does not consider the quoted pricing and terms to be aggressive and
competitive, Compaq shall have the right, at any time and from time to time, to
request an immediate meeting with Smart Modular, and Smart Modular shall use its
best efforts to amend the quoted pricing and terms to comply with Section 5.11
by entering into a new Pricing Schedule (if required).

5.10 Compaq may, upon reasonable written notice to Smart Modular, appoint an
independent auditor to review Smart Modular’s records to determine if Compaq is
receiving pricing as agreed to hereunder and that Smart Modular is complying
with the terms of this Agreement. Smart Modular shall allow such independent
auditor access to all applicable records of Smart Modular for the purpose of
conducting such audit. The independent auditor shall only report to Compaq
whether Smart Modular is complying with the terms of this Agreement.

5.11 In the event that Smart Modular provides Effective Prices and/or terms for
Product to any one or more of its customers, which results in Compaq’s
Effective Price exceeding the maximum Effective Price to Compaq as defined
above, Compaq shall be entitled to a price reduction and/or amendment
retroactive to the date such Effective Prices are/or terms were made available
to such other customers. Thereafter, Compaq shall be entitled to such lower
Effective Price from that date forward. For purposes of this Agreement,
Effective Price shall mean Smart Modular’s purchase order price to its customer
minus any and all rebates of any kind, performance based incentives,
allowances, and/or other special considerations applicable to such
customer.

5.12 Smart Modular agrees that Compaq will be in a preferred position relative
to any of its other customers with respect to allocation of Products, resources
and support.

6. EXCLUSIVITY AND MANUFACTURING RIGHTS

6.1 Compaq may, from time to time, engage Smart Modular in the design and
manufacture of Compaq unique memory modules. Compaq unique memory modules will
be separately identified in Exhibit B (Pricing), Exhibit C (Specifications) of
the Corporate Purchase Agreement and may include unique terms and conditions
regarding their purchase. All unique terms and conditions will be negotiated
during Compaq’s and Smart Modular’s regular negotiations sessions and
incorporated into the Exhibits. Compaq and Smart Modular further agree that
Compaq is hereby granted exclusive use of Compaq unique memory module designs,
whether created by Compaq or Smart Modular, for all Products purchased by
Compaq, as defined in Exhibits B, C and D hereunder; provided that Compaq
notifies Smart Modular in writing which modules it considers to be Compaq unique
memory modules prior to the design of such modules.

6.2 SMART Modular shall maintain adequate manufacturing, test and fulfillment
capacity to meet the needs of this program.

6.3. Factory loading of greater than 70% of the theoretical limits for more
than thirty (30) days in any consecutive ninety (90) calendar day period, shall
be defined as insufficient capacity. The theoretical manufacturing capacity
limit shall be established as three (3) eight hour shifts per day operating six
(6) days per week in Smart’s Compaq qualified manufacturing operations.

6.4 If Compaq determines pursuant to Sections 6.2 and 6.3 that Smart
Modular lacks sufficient production capacity to meet Compaq’s forecast
production requirements, Smart Modular Shall provide

 

					
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Compaq the information required to manufacture and/or to have
manufactured the Product, including but not limited to Smart Modular’s then
current drawings, bills of material, Gerber files, and vendor lists, and Smart
Modular agrees to provide to Compaq the support and information required by
Compaq to manufacture or to have manufactured such product, including
authorization to purchase any necessary proprietary components from Smart
Modular’s suppliers.

6.5 Upon
Compaq’s determination pursuant to Sections 6.2, 6.3 and 6.4, Smart
Modular will also provide to Compaq, at Compaq’s request and on a commercially
reasonable basis, telephone and on-site personnel support as Compaq may request
from Smart Modular to assist and enable Compaq to manufacture or to have
manufactured such Product in commercial quantities.

6.6 Compaq is hereby granted a license under trade secrets and patents to access
and to use all of Smart Modular’s drawings, bills of material, and suppliers to
make or to have made Products and to create improvements. Compaq shall be
prohibited from exercising such grant except in the event that (i) Smart Modular
merges into or is acquired by any third party and materially becomes unable to
meet Compaq’s demand for Product as required by this Agreement, and/or (ii)
Smart Modular is acquired by a Compaq competitor, and/or (iii) Smart Modular
enters into business proceedings including, going out of business, filing for
bankruptcy or reorganization, or going into receivership. Smart Modular agrees
that the presentation of this Agreement by Compaq to Smart Modular’s successors
and assigns shall be sufficient for such successors and assigns to make Smart
Modular drawings, bills of material, and vendor lists accessible to Compaq.

6.7 N/A.

7. SHIPMENT AND DELIVERY

7.1. Smart Modular shall ship Product to Compaq, its Affiliates, and/or to
Compaq’s authorized resellers on the date (the “On-dock Date”) and to the
location (the “Specified Location”) specified in the related Order. Smart
Modular shall ship all Orders complete, unless authorized by Compaq to ship a
partial order. Smart Modular and Compaq agree to the terms in Table 3A: EMEA
Options On-Time Shipment Metrics and Table 3B: North America Options On-Time
Shipment Metrics to establish Smart Modular’s performance against this term.

Table 3A: North America, EMEA & APD Options On-Time Shipment Metrics

	 	 	 	 	 	 	 
	 	 	On-Time Shipment Metric	 	 	 	 
	Shipment	 	Desktop (1 & 2), Video,	 	On-Time Shipment Metric	 	 
	Period	 	Portables	 	Servers	 	Comment:
	Effective May

1, 2001

	 	95% On-Time to
1 Working Day
Metric
	 	95% On Time to
2 Working Days
Metric
	 	Specialty SKUs such as modules
requiring
stacking will be assigned
lead-times as agreed upon by both parties

7.2. Smart Modular should use commercially reasonable efforts to ship
Orders on a First In First Out (FIFO) basis by ship date. In the event that
Smart Modular fails to ship an Order based on the On-Time Shipment Metrics,
then that Order should be shipped prior to shipping new Orders of the same part
number.

7.3. The failure of Smart Modular to meet the On-Time Shipment Metrics over a
calendar quarter, provided that the Orders received are in compliance with the
terms, conditions and lead times of this Agreement, shall constitute a material
breach of this Agreement. Smart Modular shall notify Compaq in writing
immediately if Smart Modular has knowledge of any event which is reasonably
likely to delay any agreed ship date or shipment plan.

 

					
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7.4. Title shall pass to Compaq on Smart Modular’s outgoing shipping dock.
All Product sold hereunder shall be shipped from Smart Ex-Works upon delivery
by Smart to a Compaq-approved carrier. Compaq will identify primary and
alternate approved common carriers and Smart agrees to use only Compaq approved
carriers.

7.5. If Smart Modular delivers Product more than two business days in advance
of the On-dock Date then, Compaq may, at its option, either (i) return such
Product to Smart Modular at Smart Modular’s risk and expense, including but not
limited to any transportation, import, or export related expenses or duties,
(in which case Smart Modular, at its expense, shall redeliver such Product to
Compaq on the correct On- dock Date therefor) or (ii) retain such Product and
make payment on the date payment would have been due based on the correct
On-dock Date therefor.

7.6. Changes to shipping and/or delivery dates may only be made by Compaq’s
authorized purchasing representatives as designated in writing from time to
time. Compaq may, without cost or liability, issue change orders for Product
quantities and schedule dates in accordance with the flexibility agreement
attached as Exhibit D (the “Memory Flexibility
Agreement”) [Does not Exist - N/A]. If any change Order
is made orally, Compaq shall provide an Order confirming such change within one
(1) Business Day, and Smart Modular shall provide written confirmation of such
change within one (1) Business Day of receiving Compaq’s confirming Order.

7.7. Compaq may measure Smart Modular’s On Time Delivery performance against
commitments for the purpose of establishing Smart Modular’s rate of On Time
Delivery, lead time and cycle time improvement against Compaq’s requirements.
On Time Delivery shall mean delivery of scheduled Product no more than two (2)
business days early and zero (0) business days late as measured on Compaq’s
and/or Compaq’s reseller’s receiving dock.

7.8. In addition, Compaq may measure Smart Modular’s On-Time Order Receipt to
Shipment Cycle Time as a function of the elapsed time between Smart Modular’s
receipt of Compaq’s EDI 850 Order Release and Compaq’s receipt of Smart
Modular’s EDI 856 Ship Notification. On-Time Shipping Performance Metrics
are defined in Table 4: Desktop1, Desktop2, Portables, Server Products.

Table 4A: Desktop and Portable Products:

	 	 	 	 	 	 	 
	Compaq EDI 850 Order	 	Compaq EDI 850 Order	 	Smart EDI 856	 	Smart EDI 856 Ship
	Transmit	 	Transmit Date	 	Ship Notice	 	Date
	12:00 AM to 8:00 AM
	 	Business Day 0
	 	11:59 PM
	 	Business Day I
	8:0l AM to 2:00 PM
	 	Business Day 0
	 	11:59 PM
	 	Business Day 1
	2:01 PM to 11:59 PM
	 	Business Day 0
	 	11:59 PM
	 	Business Day 2

Table 4B: Server Products:

	 	 	 	 	 	 	 
	Compaq EDI 850 Order	 	Compaq EDI 850 Order	 	Smart EDI 856	 	Smart EDI 856 Ship
	Transmit	 	Transmit Date	 	Ship Notice	 	Date
	12:00 AM to 8:00 AM
	 	Business Day 0
	 	11:59 PM
	 	Business Day 2
	8:0l AM to 2:00 PM
	 	Business Day 0
	 	11:59 PM
	 	Business Day 2
	2:01 PM to 11:59 PM
	 	Business Day 0
	 	11:59 PM
	 	Business Day 3

7.9. Lead times for all Product ordered hereunder shall not exceed that
listed in the Exhibit D — Memory Module Flexibility Agreement. Smart Modular
shall provide status reports identified in Exhibit J on Smart Modular’s
manufacturing cycle times.

7.10. Within twelve (12) months of the date in which Compaq receives Product,
Compaq may request the return, at Compaq’s expense, of unused standard Product
to Smart Modular for credit. Product may be returned and credited at a then
negotiated price.

7.11. Smart Modular shall use commercially reasonable efforts to ship on the
same business day for Orders of Desktop/Portable Product received prior to 8:00
AM at SMART’s supporting facility.

 

					
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Contract No. 2171-080101

 

8. PACKING, MARKING, AND SHIPPING INSTRUCTIONS

8.1. All product shall be prepared and packaged in accordance with Compaq’s
Memory Option Kit packaging specifications and bills of materials. A sample
Memory Option Kit packaging specification and bill of material is included in
Exhibit C. Compaq, at its sole discretion, from time to time may alter
packaging specifications. If Compaq’s alterations result in a material change
in Smart Modular’s costs or on-time for performance, Smart Modular and Compaq
shall negotiate in good faith such adjustments as the parties deem appropriate
to address such changes.

8.2. Smart Modular shall mark, or cause to be marked, each shipping container
to adequately show Compaq’s Order number, part number, revision level, lot
number, and quantity contained therein, and appropriate country of origin
marking. In addition, Smart Modular will conform to Compaq’s bar code
specification which will be provided to Smart Modular. A packing list showing
the Order number shall be included in each shipment. These data fields are
identified in Compaq’s Bar Code Label Specification, Rev. K, in Exhibit C.

9. QUALITY

9.1. Smart Modular commits to use commercially reasonable efforts to provide
defect free Product to Compaq. Smart Modular shall ensure that all Products
conform to the specifications, drawings, samples, revision levels and other
descriptions designated in the Product Schedule for such Product (the
“Specifications”). The Specifications shall include any labeling requirements
imposed by applicable law.

9.2. Compaq’s Approved Vendor List (AVL) shall only come from Compaq. Smart
Modular may request an updated AVL at any time from Compaq. Smart Modular
shall use Compaq’s AVL for all Memory Components to be used for Compaq unless a
written waiver is provided from Compaq. Smart Modular shall use Compaq’s AVL
for all Memory Modules to be used for Compaq unless a written waiver is provided
from Compaq.

Example of Compaq AVL:

     
**COMPAQ CONFIDENTIAL**

Date of
report: January 1, 1997

	 	 	 
	 

	Compatible Supplier Parts List for..
	 

	 	Compaq Part Number : XXXXXX       Page: X
	 

	 	Part Description : DIMM, BUFF,XMxX,ECC,EDO.XOnS
	 

	 	Part Revision Level: X
	 

	 	Part Class Code : XXXX
	 

	 	Part Project Number: XXXXX

Supplier Part #

	 	 	 	 	 
	ABCABC-6

DEFDEF-6
	 	ABC SUPPLIER

DEF SUPLLIER
	 	APPROVED

DISAPPROV

9.3. Smart
Modular and Compaq agree that a statistically significant 250 DPPM
threshold, measured at the module level, will be used to trigger Supplier
Corrective Action Requests (SCARS). Smart Modular shall report the outgoing
module level DPPM as identified in Exhibit J to Compaq.

9.4 Smart Modular shall establish and/or maintain a Quality Manual acceptable to
Compaq. Smart Modular’s Quality Manual is attached to this Agreement as
Exhibit E (the “Quality Manual”) and shall not be amended without written notice
to Compaq.

9.5 Upon reasonable notice, Compaq shall be entitled to visit and inspect Smart
Modular’s facility sites during normal business hours and Smart Modular shall
cooperate to facilitate such visits. Compaq’s

 

					
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inspections shall in no way relieve Smart Modular of its obligation to deliver
conforming Product or waive Compaq’s right of inspection and acceptance at the
time the Products are delivered.

9.6 At Compaq’s request, Smart Modular shall provide Compaq with relevant
inspection, quality, and reliability data.

9.7 Smart Modular agrees to provide reports identified
in Exhibit J.

10. CHANGE ORDERS

10.1. Compaq may from time to time change the Specifications for the Products, and
Smart Modular shall use its best efforts to ensure that all Product complies
therewith. If Compaq’s changes result in a material change in Smart Modular’s
costs or on-time for performance, Smart Modular and Compaq shall negotiate in good
faith such adjustments as the parties deem appropriate to address such changes. Any
request by Smart Modular for any such adjustment must be made in writing to Compaq
within ten (10) business days’ of Smart Modular’s receipt of Compaq’s notice of
change in specifications.

10.2. Smart Modular agrees to advise Compaq of any changes to process, materials,
or sources of supply and ensure that such changes do not compromise specifications,
quality, reliability or availability of Products ordered by Compaq.

11. INSPECTION AND ACCEPTANCE

11.1. Products purchased or to be purchased pursuant to this Agreement shall be
subject to inspection and test by Compaq, its Affiliates, and its authorized
resellers including during the period of manufacture or development. Inspection may
occur at Compaq, its Affiliate, or reseller locations as well as at Smart Modular’s
facilities and/or those of Smart Modular’s subcontractors. Unless otherwise
specified in the Order, final inspection and acceptance of Product by Compaq shall
be at (i) Compaq’s facilities and/or (ii) those of Compaq’s authorized resellers.
Compaq reserves the right to reject Product which does not conform to the
Specifications or that contains any defect in material, workmanship or Smart
Modular design (the “Defective Product”). Compaq may in accordance with Section
11.2 return Defective Product to Smart Modular, at Smart Modular’s expense, for
corrective action, which corrective action shall include and be prioritized as
follows: (i) Smart Modular shall first attempt to repair or replace said
Defective Product, (ii) if repair or replacement is not possible, then Smart
Modular shall credit Compaq for an amount equal to (a) the current Compaq contract
price for said Defective Product, unless the defect arose from or was related to
any DRAM component failure, which occurred inside the applicable DRAM supplier’s
warranty period, or (b) the current Compaq contract price minus the current Compaq
contract cost of the DRAM components contained in such Product for said Defective
Product, if the defect arose from or was related to any DRAM component failure,

which occurred outside the applicable DRAM supplier’s warranty period, (iii)
exercise any other rights as Compaq may have at law or in equity that are
consistent with the other provisions of this Agreement. Product required to be
corrected or replaced shall be subject to the same inspection and acceptance
provisions of this Agreement as Product originally delivered under any Order. Smart
Modular shall reimburse Compaq for the costs of any reasonable inspection measures
deemed necessary by Compaq.

11.2. If Compaq returns Defective Product to Smart Modular for correction or
replacement, Smart Modular shall repair or replace same within ten (10) business
days of receipt thereof. Smart Modular will issue a “Return Material Authorization”
(“RMA”) within twenty four (24) hours of request to minimize field exposure
associated with any suspect material, Prior to shipping any defective Product back
to Smart Modular, Compaq shall use commercially reasonable efforts, including
performing testing, to verify that said product is defective. Compaq will include a
statement with each lot returned explaining the basis and reason for said Product’s
return and including the appropriate RMA number.

 

					
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Contract No. 2171-080101

 

11.3. Smart Modular agrees to provide failure analysis of Defective Product
within 5 business days after receipt thereof. Smart Modular will also provide
Compaq with a written corrective action report addressing the steps that will
he taken to eliminate the recurrence of the problem, and will use commercially
best efforts to implement the actions addressed in such report.

11.4. If Product changes are necessary to correct Smart Modular design,
material, or workmanship defects, Smart Modular shall bare the costs of
correction. If Compaq incurs any direct costs associated with such
corrections arising out of Compaq stock, reseller, and end user inventory
purges and service costs, Smart Modular will reimburse Compaq for the direct
costs incurred.

12. WARRANTY

12.1. Smart Modular hereby warrants to Compaq that Product purchased hereunder
shall (i) vest in Compaq good and valid title to such Product free and clear of
all liens, encumbrances, security interests, burdens and other claims and (ii)
be free from infringements or violations described in Section 19.1. In
addition, from the date of Compaq’s acceptance of Product delivered hereunder,
Smart Modular hereby warrants to Compaq that such Product shall be free for the
Product’s lifetime from defects in material (except for DRAM components),
workmanship and Smart Modular design and be in conformity with the
Specifications. The warranty for replaced or repaired Product will be the same
as the original Product. With respect to defects arising out of or related to
DRAM components, Smart Modular hereby warrants to Compaq that such Product
shall be free from such defects for the warranty period granted directly to
Smart Modular by each respective DRAM supplier or the warranty period granted
indirectly to Smart Modular through Compaq by each respective DRAM supplier, as
applicable. In the case of Epidemic Failure as defined by a statistically
significant Compaq line fallout equal to 7,500 DPPM or a statistically
significant Customer return rate equal to 5,000 DPPM, Smart Modular shall
repair, replace or credit Compaq in accordance with the provisions of Section
11. Upon discovery of a defect in material, workmanship or Smart Modular
design in any Product or the discovery of a Product that is not in compliance
with the Specifications during the warranty period as provided above, Smart
Modular shall repair, replace or credit Compaq in accordance with the
provisions of Section 11.

12.2. Smart Modular warrants that there are no claims of infringement or
violation of the type described in Section 18.1 with respect to
the Product.

13. OUT OF WARRANTY REPAIRS

13.1. Smart Modular agrees to use commercially reasonable efforts to refurbish
to a “like new” condition any Memory Module no longer covered by the express
warranties set forth elsewhere in this Agreement (an “Out of Warranty
Product”). Refurbishment prices shall be set at the time refurbishment is
required and will not exceed 1.2X the then current material and conversion
costs.

14. PAYMENT

14.1. Compaq shall make payment in full for the purchase price of all Product
purchased hereunder (other than items disputed by Compaq in good faith) and
received by Compaq on or before the 45th calendar day after the date of Smart
Modular’s invoice; provided, Smart Modular’s invoice shall not be dated earlier
man the shipment date of Product covered thereby. Payment of invoices shall not
constitute acceptance of the Product.

14.2. Payment shall be made in U.S. dollars.

15. TERMINATION

15.1. Either parry (the “Non-Defaulting Party”) may terminate this Agreement
and/or any Order issued hereunder at any time by written notice to the other
party (the “Defaulting Party”) upon the occurrence of a

 

					
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Default by
the Defaulting Party. In addition, Compaq may terminate this
Agreement and/or any Order issued hereunder at any time for any reason upon
giving 30 calendar days written notice of termination to Smart Modular. This
Agreement shall terminate at the end of the notice period.

15.2. Upon termination by Smart Modular of this Agreement and/or any Order due to
Compaq’s default or upon termination by Compaq for reasons other than Smart
Modular’s Default, Compaq’s entire liability shall be to purchase the following,
without duplication: (i) at the Order purchase price, all finished goods, and at
Smart Modular’s cost all work in progress, and unique materials that have been
purchased within reasonable lead times as identified in Exhibit B, and (ii) all
Product that Compaq has received and had not previously paid for.

15.3. Upon termination by Compaq of this Agreement and/or any Order due to Smart
Modular’s Default, (i) Compaq shall have the option to purchase any materials or
work in progress which Smart Modular may have purchased or processed for the
fulfillment of any Order at Smart Modular’s cost, (ii) Compaq shall have such
additional remedies as may be available at law or in equity and that are consistent
with the terms of this Agreement and (iii) Compaq shall have no obligation to Smart
Modular other than payment of any balance due for Products delivered by Smart
Modular before termination.

16. FORCE MAJEURE

16.1. Neither party shall be liable for its failure to perform any of its
obligations hereunder during any period in which performance is delayed by fire,
flood, hurricane, tornado, earthquake, war, embargo, riot or an unforeseeable
intervention of any government authority that causes a complete interruption of
manufacturing operations, (“Force Majeure”), provided that the party suffering such
delay immediately notifies the other party of the delay.

16.2. If, however, either party’s performance is delayed for reasons set forth
above for a cumulative period of 30 calendar days or more, the other party,
notwithstanding any other provision of this Agreement to the contrary, may
terminate this Agreement and/or any Order issued hereunder by notice to the delayed
party. In the event Smart Modular claims delay due to Force Majeure and Compaq
elects to terminate this Agreement as provided herein, Compaq’s sole liability
hereunder shall be for the payment to Smart Modular of any balance due and owing
for Product previously delivered by Smart Modular and accepted by Compaq. In the
event the parties do not terminate this Agreement and/or Order due to a Force
Majeure, the time for performance or cure will be extended for a period equal to
the duration of the Force Majeure.

17. PRODUCT NOTICES

17.1. Any notice given under this Agreement shall be in writing and will be
effective (i) when delivered, if delivered in person, (ii) during the business
hour of receipt (or the next business hour if not received during a normal
business hour), if by telecopy or (iii) 3 business days after depositing same
in the U.S. mail, postage prepaid and addressed to Smart Modular at the address
set forth below or to such other address as Smart Modular may specify to Compaq
in accordance with this Section 17.1 or to Compaq at the address set forth
below or at such other address as Compaq may specify to Smart Modular in
accordance with this Section 17.1:

	 	 	 	 
	 	If to Compaq:

	 	If to Smart Modular:
	 	 
	 	 
	 	COMPAQ COMPUTER CORPORATION

	 	SMART MODULAR TECHNOLOGIES, INC.
	 	P.O. BOX 692000

	 	4305 CUSHING PARKWAY
	 	20555 S.H. 249

	 	FREMONT, CA 94538
	 	HOUSTON, TEXAS 77269-2000

	 	ATTN: President
	 	ATTN.: Director, Corporate Memory Procurement
	 	 

 

					
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	with
a copy to:

	 	with a copy to:
	 
	 	 
	COMPAQ COMPUTER CORPORATION

	 	SMART MODULAR TECHNOLOGIES, INC.
	P.O. BOX 692000

	 	4305 CUSHING PARKWAY
	20555 S.H. 249

	 	FREMONT, CA 94538
	HOUSTON, TX 77269-2000

	 	ATTN: Ann T. Nguyen
	ATTN.: Division Counsel — Operations

	 	           Associate General Counsel

17.2. For the purpose of this Agreement Table 5: Contacts shall
be used for determining point of contact.

Table 5: Contacts

	 	 	 
	Compaq Corporate Memory Procurement	 	Compaq Operations
	Memory component pricing

	 	Order Processing / Verification
	Supplier allocation / weighted average price

	 	Product pricing
	Product qualification

	 	Approval for partial shipments
	Approved Vendor List

	 	Adjust Product Schedule
	Approval for spot market purchases

	 	Product Transportation
	Supplier commitments

	 	Customs
	Waiver for non-AVL product usage

	 	Invoice Reconciliation
	New Product Information (Spec, BOM, artwork,
etc.)

	 	Smart Program Reviews
	DRAM Program Reviews
	 	 

18. COMPLIANCE WITH LAWS

18.1. All Product supplied and work performed under this Agreement shall
comply with all applicable laws and regulations including, without limitation,
all laws governing Smart Modular’s relationship with its employees, agents or
subcontractors. Upon request, Smart Modular shall certify compliance with such
applicable laws and regulations, and provide such evidence of compliance as
Compaq may reasonably request.

19. INDEMNIFICATION; REMEDIES

19.1. Except as otherwise provided herein, Smart Modular shall indemnify,
defend and hold harmless Compaq and its Affiliates and their respective
directors, officers, shareholders, employees and agents (collectively, the
“Compaq Indemnified Parties”) from and against any and all claims, demands,
suits, actions, judgments, costs and liabilities (including reasonable
attorneys’ fees) (each, an “Indemnified Loss”) relating to or arising out of
any allegation that Products furnished under this Agreement infringe or
violate any third party’s patent, copyright, trade secret, trade name, trade
dress, mask work, mask rights, trademark or any other proprietary right (each,
an “IP Claim”) and shall pay all coats and damages awarded; provided, Smart
Modular shall have no obligation whatsoever pursuant to this Agreement or
otherwise (i) for or with respect to any IP Claim relating to or arising out
of designs, instructions specifications or intellectual property furnished by
Compaq, (ii) for or with respect to any IP Claim relating to or arising out
of the combination of the Products with any hardware, products, equipment,
materials, text, graphics, software or the like supplied by a party other than
Smart Modular where such combination is beyond the Products intended use, or
(iii) for any settlement entered into without Smart Modular’s prior written
consent. Compaq shall notify Smart Modular of such claim, cooperate and assist
Smart Modular with the defense of such claim, and permit Smart Modular to
defend and compromise such claim; provided, Compaq’s failure to so notify
Smart Modular shall not diminish Smart Modular’s indemnity obligations
hereunder except to the extent any Compaq delay in notifying Smart Modular
materially prejudices Smart Modular’s defense of such matter.

 

					
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	Compaq Computer Corporation / Smart Modular Technologies, Inc.

Corporate Purchase Agreement
	 	Rev 1.0

Contract No. 2171-080101

 

19.2. If during the course of any IP Claim covered under Section 19.1 herein the use of the
allegedly infringing Product is finally enjoined, Smart Modular shall, at Smart Modular’s option
and expense, use commercially reasonable efforts to do one of the following (in addition to its
obligations under Section 19.1 herein): (i) procure for Compaq the right to use or sell, as
applicable, the allegedly infringing Product, (ii) replace the allegedly infringing Product or the
affected part thereof with equivalent non-infringing technology, (iii) modify the allegedly
infringing Product or the affected part thereof to make it non-infringing Product, (iv) refund to
Compaq an amount equal to the price paid by Compaq for said allegedly infringing Product less any
discounts or credits granted to Compaq. Compaq agrees to return allegedly infringing product to
Smart Modular in the event of refund under (iv).

19.3. Smart Modular shall indemnify, defend and hold harmless the Compaq Indemnified Parties from
and against any Indemnified Loss relating to or arising out of any personal injury or death
resulting from (i) the use of any Product or (ii) Smart Modular’s acts or omissions; provided, the
foregoing indemnity shall not apply to the extent any such claim is attributable solely to design
specifications furnished by Compaq to Smart Modular.

19.4. Except as otherwise provided herein, COMPAQ shall indemnify, defend and hold harmless SMART
and its subsidiaries from and against (i) any and all IP Claims arising out of or related to
designs, instructions, specifications or intellectual property developed by COMPAQ or furnished by
COMPAQ, (ii) any and all IP Claims arising out of or related to any components of the Products,
including without limitation memory semiconductors, consigned or sold to SMART by COMPAQ or
specified by COMPAQ, (iii) any and all IP Claims arising out of or related to the combination of
the Products with any hardware, products, equipment, materials, text, graphics, software or the
like supplied by a party other than SMART, (iv) any and all IP Claims arising out of or related to
the modification of the Products by a party other than SMART, and (v) any and all liens,
liabilities, awards, judgments, costs and expenses (including reasonable attorney’s fees) arising
out of or related to any IP Claim covered under this Section 19.4; provided, however, that the
foregoing indemnity and defense obligation is conditioned on each of the following: (i) prompt
written notice by SMART to COMPAQ of any IP Claim for which indemnity is claimed hereunder, (ii)
complete control of the defense and settlement thereof by COMPAQ, and (iii) complete cooperation by
SMART in such defense. COMPAQ shall have no obligation whatsoever pursuant to this Section 19.4 for
any settlement entered into without the prior written consent of an authorized representative of
COMPAQ. Notwithstanding the foregoing, SMART may defend and/or settle any IP Claim for which COMPAQ
materially fails to perform its indemnity obligation under this Section 19.4 without adversely
affecting SMART’S indemnity rights under this Section 19.4.

19.5 THIS SECTION 19 SHALL BE ENFORCEABLE TO THE EXTENT SET FORTH ABOVE NOTWITHSTANDING THE SOLE,
CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OF ANY OF THE COMPAQ INDEMNIFIED PARTIES.

19.6 Subject to Section 19.7, upon the occurrence of a Default by a party hereto the other party
shall be entitled to exercise such rights and remedies as are available at law or in equity
including the right to seek specific performance upon Smart Modular’s failure to deliver on a
timely basis unique products in conformity with the Specifications.

19.7 NEITHER PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, LOST PROFITS AND UNLIQUIDATED INVENTORY), INDIRECT, SPECIAL OR PUNITIVE DAMAGES EVEN IF
THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES EXCEPT (I) IN CONNECTION WITH A
BREACH OF THE CONFIDENTIALITY PROVISIONS SET FORTH IN THIS AGREEMENT AND (II) TO THE EXTENT ANY
SUCH DAMAGES OF A THIRD PARTY ARE A PART OF AN INDEMNIFIED LOSS AGAINST WHICH. COMPAQ IS
ENTITLED TO BE INDEMNIFIED PURSUANT TO THE OTHER PROVISIONS OF THIS SECTION 19.

 

					
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Corporate Purchase Agreement
	 	Rev 1.0

Contract No. 2171-080101

 

20. TRADEMARKS; LOGOS

20.1. Smart Modular is authorized to use the Compaq logo and trademark only to the extent necessary
to meet the required specification for the Product. Smart Modular is authorized to use Compaq
labels only as necessary to identify Product for sale hereunder. No other rights with respect to
Compaq’s logos, labels, trademarks, trade names or brand names are conferred, either expressly or
by implication, upon Smart Modular.

20.2. Smart Modular shall maintain strict accountability for Compaq’s security labels. Compaq
security labels identified in the kit bills of materials must be maintained as a secure stock room
item, kitted and issued for each module assembly build, and managed under Smart Modular’s daily
cycle count process for A-Item materials. Smart Modular will provide Compaq with a monthly
reconciliation of module shipments and security label consumption in addition security labels held
in stock, work-in-process, and finished goods.

21. CAPACITY PLANNING

21.1. Smart Modular agrees to review weekly forecasts of at least 6 months duration, as
provided by Compaq, and to advise Compaq if Smart Modular anticipates
that it will be unable to
achieve the requested volumes. Smart Modular may from time to time request Compaq to review
Compaq’s forecast and advise of any changes.

22. GRATUITIES

22.1. Each party represents that it has not offered nor given and will not (i) offer nor give
any employee, agent, or representative of the other party any gratuity, or (ii) influence such
person’s normal job responsibilities in any way with a view toward securing any business from the
other party or influencing such person with respect to the business between the parties.

23.
INSURANCE.

23.1. Smart Modular shall maintain such minimum insurance coverage as is described in Exhibit H.
All insurance policies maintained by Smart Modular in accordance with this Section 23 shall name
Compaq as an additional insured and loss payee.

24. CONFIDENTIAL INFORMATION

24.1. Each party recognizes that it may have previously entered or will in the future enter
into various agreements with the other party which obligates it to maintain as confidential
certain information disclosed to it by the other party. To the extent that such information or any
further confidential information, which might include but is not limited to business plans,
forecasts, capacity, pricing, inventory levels, etc., (collectively referred to hereinafter as
“Information”) is disclosed in furtherance of this Agreement or any Order issued hereunder, such
Information shall be so disclosed pursuant to the minimum terms and conditions listed below;
provided, however, the minimum terms and conditions listed below shall in no way relieve the
parties from any obligation or modify such obligations previously agreed to in other agreements.
Both parties agree that this Agreement and any other agreements regarding confidential information
shall hereafter be considered as coterminous, and shall expire no earlier than the date of
expiration or termination of this Agreement.

24.2. Both parties agree that the party receiving Information will maintain such Information in
confidence for a period of three years from the date of disclosure of such Information and will
not use such information except for the purposes contemplated hereby or in any other applicable
agreements regarding said information.

 

					
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Corporate Purchase Agreement
	 	Rev 1.0

Contract No. 2171-080101

 

24.3. Each party shall protect the other party’s Information to the same extent that it protects
its own confidential and proprietary information and shall take all reasonable precautions to
prevent unauthorized disclosure to third parties.

24.4. The parties acknowledge that the unauthorized disclosure of such Information will cause
irreparable harm. Accordingly, the parties agree that the injured party shall have the right to
seek immediate injunctive relief enjoining such unauthorized disclosure.

24.5. The provisions of this Section 24 shall not apply to information (i) known to the receiving
party at the time of receipt from the other party, (ii) generally known or available to the public
through no act or failure to act by the receiving party, (iii) furnished to third parties by the
disclosing party without restriction on disclosure, (iv) furnished to the receiving party by a
third party as a matter of right and without restriction on disclosure or (v) furnished as required
by court order or similar governmental authority or by the imminent likelihood thereof or by
applicable law.

24.6. Immediately upon termination of this Agreement or at the request of the other party, each of
the parties shall promptly return all materials in its possession containing Information of the
other party.

25. COUNTRY OF ORIGIN

25.1. For each Product purchased under this Agreement, Smart Modular shall furnish Compaq with the
manufacturer and date code, by quantity and part number (Compaq’s and Smart Modular’s). Product
shall be marked with the country of origin as required by applicable law.

25.2. Smart Modular agrees to provide necessary documents to facilitate the import and export of
Product. Smart Modular further agrees to assist Compaq’s import and export of Product as
reasonably requested by Compaq.

26. MATERIAL FURNISHED BY COMPAQ

26.1. The parties anticipate that, from time to time, Compaq shall sell or consign to Smart Modular
certain material to be used in manufacturing Product (the “Compaq Furnished Material”). Smart
Modular agrees that each item of Compaq Furnished Material shall be used solely for the purpose of
manufacturing Product ordered by Compaq under this Agreement.

26.2. Each item of material furnished by Compaq to Smart Modular on a consignment basis shall be
identified on the books and records of Smart Modular by the letter “CQ” following such item’s part
number or by such other distinguishing mark as Compaq and Smart Modular may agree upon. Title to
consigned material shall remain with Compaq at all times.

26.3. Compaq shall issue an invoice and a debit memo with respect to the purchase price of Compaq
Furnished Material sold by Compaq to Smart Modular, and Compaq immediately may apply such debit
memo against any amounts then owing by Compaq to Smart Modular. In the event any amount reflected
in an invoice has not been satisfied in full by means of applying the corresponding debit memo
against amounts owed by Compaq to Smart Modular within 30 days following the invoice date, Smart
Modular shall pay Compaq in US dollars (or such other currency as Compaq and Smart Modular may
agree upon) the remaining balance of such invoice on or before such 30 day period. To secure
Smart Modular’s payment obligations hereunder, Smart Modular hereby grants to Compaq a security
interest and purchase money security interest in all Compaq Furnished Material and all accounts
receivable and other proceeds thereof. Compaq may take any action (without notice, presently,
demand, protest, notice of protest or dishonor, notice of acceleration or notice of intent to
accelerate, all of which Smart Modular hereby waives) afforded a secured party under the Uniform
Commercial Code upon the occurrence of a Default by Smart Modular, and upon such occurrence, all
payment obligations of Smart Modular to Compaq shall, upon notice by Compaq, become immediately due
and payable; provided, if the Default giving rise to the

 

					
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	 	Rev 1.0

Contract No. 2171-080101

 

foregoing remedies is attributable to Smart Modular’s insolvency or any bankruptcy related
proceeding affecting Smart Modular, all obligations of Smart Modular to Compaq shall automatically
become due and payable.

26.4. Smart Modular shall not allow or permit to exist any lien, security interest or other
encumbrance to be placed on or otherwise affect the Compaq Furnished Material other than security
interests and other encumbrances granted to Compaq.

26.5. Smart Modular agrees to sign financing statements, continuation statements, notices to other
creditors and such other instruments as Compaq may reasonably request to maintain a first priority,
perfected security interest in the Compaq Furnished Material that Compaq sells to Smart Modular
from time to time. Smart Modular agrees that a copy of this Agreement shall be sufficient to serve
as a financing statement and may be filed or recorded by Compaq in any public records or offices
reasonably required by Compaq. In addition, with respect to consigned materials, Smart Modular
agrees to make such filings and given notice to its creditors to ensure that such consigned
materials remain free from claims of Smart Modular’s creditors.

26.6. Smart Modular shall receive Compaq’s consigned material per the Sub-Contract Physical
Inventory Process.

26.7. Compaq shall carry the insurance for all the Compaq’s consigned inventory and equipment while
at Smart Modular’s facility, with the exception of the first $1,000,000 of any loss (per
occurrence). Smart Modular shall reimburse Compaq for any loss up to and including $1,000,000.
Compaq will insure the losses above that point.

26.8. Compaq understands that a certain amount of material furnished to Smart Modular to assemble
under consigned Orders will be subject to scrap. Component material and finished assemblies will be
considered in total scrap count. Over a period of three (3) months the ratio of scrap dollars to
delivered Product dollars for which Compaq will accept liability up to twenty five hundredths of
one percent (0.25%) for SOJ packaged devices and up to forty five hundredths of one percent (0.45)
for TSOP packaged devices. Smart Modular accepts liability for scrap Product over and above these
limits. At the end of three (3) month time frame, Smart Modular will provide Compaq an accounting
of scrap versus delivered Product and, if due, a credit memo will be issued to Compaq. Reporting
period will commence within one month of execution of this Agreement.

26.9. Smart Modular shall report and dispose of all the Compaq’s consigned material to either
Compaq’s facility or other site as requested by Compaq per the material transfer process.

26.10 All Compaq consigned material shall be acceptable and supplied to Smart Modular’s dock (i)
if said material is to be used in desktop product, forty-eight (48) hours prior to start of
production for mutually agreed production start schedule, and (ii) if said material is to be used
in server or portable products, seventy-two (72) hours prior to start of production for a mutually
agreed production start schedule. Each shipment of Compaq consigned material shall contain a
packing list itemizing material contained within each container. Smart Modular shall have a
reasonable amount of time not less than one (1) Business Day to verify any discrepancies between
said packing lists and the Compaq consigned material actually delivered.

26.10. Any tools, drawings, specifications, or other materials furnished by Compaq for use by Smart
Modular in its performance under this Agreement or any Order issued hereunder shall be identified
and shall remain the property of Compaq and shall be used by Smart Modular only in its performance
hereunder, Such property shall be delivered, upon request, to a destination specified by Compaq in
good condition, except for normal wear and tear.

 

					
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Corporate Purchase Agreement
	 	Rev 1.0

Contract No. 2171-080101

 

27. GENERAL

27.1. Any obligations and duties which by their nature extend beyond the expiration or earlier
termination of this Agreement shall survive any such expiration or termination and remain in
effect.

27.2. If any provision or provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, such provision shall be enforced to the fullest extent permitted by applicable law
and the validity, legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

27.3. Any waiver of any kind by a party of a breach of this Agreement must be in writing, shall be
effective only to the extent set forth in such writing and shall not operate or be construed as
a waiver of any subsequent breach. Any delay or omission in exercising any right, power or remedy
pursuant to a breach or default by a party shall not impair any right, power or remedy which either
party may have with respect to a future breach or default.

27.4. Smart Modular shall not export, re-export or otherwise disclose, directly or indirectly,
technical data received from Compaq or the direct product of such technical data to any person or
destination when such export, re-export or disclosure is prohibited by the laws of the United
States or regulations of a Department of the United States. Similarly, Compaq shall not export,
re-export or otherwise disclose, directly or indirectly, technical data received from Smart Modular
or the direct product of such technical data to any person or destination when such export,
re-export or disclosure is prohibited by the laws of the United States or regulations of a
Department of the United States.

27.5. With respect to any payment, reimbursement or other amount owed by one party (the “First
Party”) to the other (the “Second Party”) under this Agreement, the First Party may offset, with
notice, any such amount owed against any amount then owing (including amounts to be owed under
future invoices) by the Second Party to the First Party under this Agreement or any other
agreement.

27.6. This Agreement is hereby identified as “Compaq and Smart Modular Confidential,” and any
additional confidentiality requirements between the parties (now or in the future) applicable to
material identified as such shall apply to this Agreement.

27.7. Except to the extent the confidentiality provisions set forth in Section 24 conflict with
confidentiality provisions set forth in any other confidentiality or non-disclosure agreement
between the parties hereto, this Agreement represents the entire agreement with respect to the
subject matter hereof and supersedes all prior discussions and agreements between the parties
relating to the subject matter hereof. Including without limitation that certain Corporate Purchase
Agreement dated March
1st 1997 between Compaq and Smart Modular. This Agreement can be modified only
by a written amendment duly signed by persons authorized to sign agreements on behalf of both
parties, and shall not be supplemented or modified by any course of dealing or trade usage.
Variance from or addition to the terms and conditions of this Agreement in any Order, or other
written notification from either party will be of no effect.

27.8. THE CONSTRUCTION, VALIDITY, AND PERFORMANCE OF THIS AGREEMENT AND ANY ORDER ISSUED UNDER IT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, U.S.A. THE PARTIES HEREBY WAIVE APPLICATION OF
THE U.N. CONVENTION ON
CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.

 

					
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	 	Rev 1.0

Contract No. 2171-080101

 

27.9. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT WARRANTIES (EXPRESS OR IMPLIED, STATUTORY
OR OTHERWISE) OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED IN
THEIR ENTIRETY.

IN WITNESS, THE AUTHORIZED REPRESENTATIVES OF THE PARTIES HAVE EXECUTED THIS AGREEMENT AS OF THE
DATE FIRST WRITTEN ABOVE.

	 	 	 	 	 	 	 	 	 
	For Compaq	 	 	 	For Smart Modular
	 
	 	 	 	 	 	 	 	 
	/s/ Jackie Gross

	 	10/11/01
	 	 	 	/s/ Ajay Shah
	 	10/11/01
	 	 	 	 	 
	Signature

	 	Date
	 	 	 	Signature
	 	Date
	Jackie Gross

	 	 	 	 	 	Ajay Shah	 	 
	Director, Memory Procurement

	 	 	 	 	 	President & CEO	 	 

 

					
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