Document:

exv10w29

 

Exhibit 10.29

FIRST AMENDMENT TO LEASE

          THIS FIRST AMENDMENT TO LEASE (“Amendment”) is entered into as of October 28, by and
between The Irvine Company, a Delaware corporation (“Landlord”), and
Engenio Information
Technologies, Inc., a Delaware corporation (“Tenant”).

RECITALS

	 	A.  	Landlord, as lessor, and Tenant, as lessee, entered into that certain Lease
(Multi-Tenant; Net)
dated for reference purposes as of June 30, 2004 (“Lease”), for certain premises
commonly
known 670 North McCarthy Boulevard, Suite 100, Milpitas, California
(“Original Premises”). The capitalized terms used and not otherwise defined herein shall
have the same
meanings and definitions as set forth in the Lease.
	 
	 	B.  	Landlord has received an Acceptable LOI with respect to the First Refusal Space and
provided written notice of such to Tenant.
	 
	 	C.  	Tenant has elected not to exercise the First Refusal Right.
	 
	 	D.  	Tenant has delivered written notice to Landlord exercising the Suite 120 Leasing Right.
	 
	 	E.  	Landlord and Tenant desire to amend the Lease to, amongst other matters, provide for
the
terms under which the Tenant will lease Suite 120 from the Landlord, all on the terms
and
conditions set forth below.

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

	 	1.  	Recitals. The above Recitals are incorporated herein as if fully set forth
herein.
	 
	 	2.  	Leased Premises. Landlord leases to Tenant and Tenant leases from
Landlord Suite 120,
containing approximately the rentable square footage set forth in Section 2.4(b) of
the
Lease. Except as expressly set forth herein, (i) Suite 120 is added to the
Original
Premises and shall be considered a part of the Premises for all purposes under the
Lease
and the term “Premises” is hereby amended to include Suite 120; and (ii) Suite 120
is
leased by Tenant on all of the terms and conditions set forth in the Lease for
Tenant’s
lease of the Original Premises. All references to “Floor Area” in the Lease shall
mean
approximately 38,251 rentable square feet of and approximately 34,436 useable square
feet. The Suite 120 rentable square footage set forth in Section 2.4(b) of the Lease
may
include or have been adjusted by various factors, including, without limitation, a
load
factor to allocate a proportionate share of any vertical penetrations, stairwells,
common
lobby or common features or areas of the Building. Tenant agrees that the Floor Area
set
forth herein shall be binding on Landlord and Tenant for purposes of this Lease
regardless of whether any future or differing measurements of the Premises or the
Building are consistent or inconsistent with the Floor Area set forth herein.
	 
	 	3.  	Acceptance of Suite 120. The first paragraph of Section 2.2 of the
Lease is incorporated
herein as if fully set forth herein with the words “Suite 120” replacing the word
“Premises.” Notwithstanding the foregoing, Landlord shall deliver Suite 120 to
Tenant
clean and free of debris with all items of Landlord’s work pursuant to the Suite 120
Work
Letter (as defined below), if any, completed in accordance with the terms of the
Suite 120
Work Letter. Landlord warrants to Tenant that the roof, plumbing, fire sprinkler
system,

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	 	   	lighting, heating, ventilation and air conditioning systems and electrical
systems in Suite 120, shall be in good operating condition on the Commencement Date and
during the initial twelve (12) months of the Term. In the event of a non-compliance with
such warranty, Landlord shall, except as otherwise provided in the Lease, promptly after
receipt of written notice from Tenant setting forth the nature and extent of such
non-compliance, rectify same at Landlord’s cost and expense. Further, in connection with
the construction of the Suite 120 Tenant Improvements (as defined below) pursuant to the
Suite 120 Work Letter, Tenant shall use commercially reasonable efforts to obtain
customary warranties and guaranties from the contractor(s) performing such work and/or
the manufacturers of equipment installed therein, but shall be under no obligation to
incur additional expense in order to obtain or extend such warranties. If Tenant is
required to make repairs to any component of Suite 120 or any of its systems not covered
by the Landlord’s warranty contained in this Section but for which Landlord has obtained
a contractor’s or manufacturer’s warranty, then Landlord shall, upon request by Tenant,
use its commercially reasonable efforts to pursue its rights under any such warranties
for the benefit of Tenant. Under no circumstances will Tenant have the right to enforce
any of the warranties and guaranties obtained by Landlord.
	 
	 	4.  	Delivery Date. Landlord shall deliver Suite 120 to Tenant as soon as reasonably
practicable following the date hereof (but not later than three (3) business days following
the date hereof).
	 
	 	5.  	Term and Commencement Date. The lease term for Suite 120 shall commence
concurrently with the Commencement Date for the Original Premises and shall expire
concurrently with the Expiration Date for the Original Premises, unless terminated earlier
pursuant to the terms of the Lease. Notwithstanding anything contained herein to the
contrary, the Commencement Date shall be determined without consideration of the
Suite 120 Tenant Improvements and substantial completion thereof.
	 
	 	6.  	Basic Rent. Basic Rent for the Premises is hereby amended
to be:

	 	 	 	 	 	 	 	 
	 
	 	Period:	 	 	Basic Rent:	 	 
	 	The initial six (6) months of
the Term (and subject to the
provisions of Section 14.2(d)
of the Lease)
	 	 	$	00.00	 	 
	 	Commencing six (6) months
following the Commencement
Date
	 	 	$	31,365.82	 	 
	 	Commencing twelve (12) months
following the Commencement
Date
	 	 	$	32,130.84	 	 
	 	Commencing twenty four (24)
months following the
Commencement Date
	 	 	$	33,278.37	 	 
	 	Commencing thirty six (36)
months following the
Commencement Date
	 	 	$	34,425.90	 	 
	 	Commencing forty eight (48)
months following the
Commencement Date
	 	 	$	35,190.92	 	 
	 

	 	   	In addition to the foregoing, the Basic Rent may be increased pursuant to Section II(D) of
the Work Letter and/or Section II(D) of the Suite 120 Work Letter.
	 
	 	7.  	 Security Deposit. The Security Deposit is hereby increased from $24,195.08
to $35,190.92. Concurrently with Tenant’s execution of this Amendment, Tenant shall

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	 	   	deposit with Landlord the additional sum of $10,995.84, which sum shall be
included by Landlord as part of the Security Deposit held under the Lease (as increased
herein) and shall be held and applied by Landlord in accordance with the terms of the
Lease.
	 
	 	8.  	Vehicle Parking Spaces. Vehicle Parking Spaces are hereby amended to be one hundred
fifty three (153).
	 
	 	9.  	Right of First Refusal. Tenant hereby acknowledges that it has elected not to
exercise its
First Refusal Right and such right is hereafter void and of no further force and effect.
	 
	 	10.  	Suite 120 Tenant Improvements. Except as expressly set forth herein, all references
to
“Tenant Improvements” in the Lease shall include the Suite 120 Tenant Improvements
and all references to “Work Letter” in the Lease shall include the Suite 120 Work Letter.
Tenant shall construct certain tenant improvements (“Suite 120 Tenant Improvements”)
to Suite 120 as set forth in that certain Work Letter attached hereto as Exhibit A
(“Suite 120 Work Letter”).
	 
	 	11.  	Other Improvements.

	 	(a)  	Landlord acknowledges that Tenant may need to install additional HVAC
equipment
on the roof of the Building to serve the HVAC needs of Suite 120. Landlord hereby
agrees that Tenant may install such additional HVAC units subject to Landlord’s
consent pursuant to Section 7.3 of the Lease. Landlord acknowledges that Tenant
may desire to install such HVAC equipment on the roof over the portion of the
Buildings’ second floor not occupied by Tenant. If Tenant desires to install HVAC
equipment in or around this location, Tenant shall provide for such installation when
requesting Landlord’s consent pursuant to Section 7.3 of the Lease and Landlord
shall consider such request pursuant to the procedures set forth in Section 7.3.
	 
	 	(b)  	Landlord shall, at its sole cost and expense, remodel the lobby of the
Building
pursuant to plans and specifications prepared by the Architect (as defined in the
Work Letter), which plans and specifications shall contain Landlord’s standard
specifications for lobbies located in the Project and shall be subject to Tenant’s
reasonable consent (the “Lobby
Remodel”). If Tenant does not object to the
plans
and specifications within two (2) business days after receipt of such plans and
specifications, Tenant shall be deemed to have consented to such. Landlord shall
substantially complete the Lobby Remodel on or before February 10, 2005; provided,
however, Landlord’s failure to substantially complete the Lobby Remodel shall
neither constitute a default by Landlord nor permit Tenant any rights or remedies
with respect to such failure.

	 	12.  	Brokers. The parties recognize as the broker(s) who negotiated this Amendment, the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions,
and agree that Landlord shall be responsible for the payment of brokerage commissions
to those broker(s) unless otherwise provided in this Amendment. Tenant warrants that it
has had no dealings with any other real estate broker or agent in connection with the
negotiation of this Amendment, and Tenant agrees to indemnify and hold Landlord
harmless from any cost, expense or liability (including reasonable attorneys’ fees) for any
compensation, commissions or charges claimed by any other real estate broker or agent
employed or claiming to represent or to have been employed by Tenant in connection
with the negotiation of this Amendment. The foregoing agreement shall survive the
termination of the Lease. If Tenant fails to take possession of the Premises or if the

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	 	   	Lease otherwise terminates prior to the Expiration Date as the
result of failure of performance by Tenant, Landlord shall be entitled
to recover from Tenant the unamortized portion of any brokerage
commission funded by Landlord in addition to any other damages to
which Landlord may be entitled.
	 
	 	13.  	Execution Date of Lease. The parties acknowledge that the
Lease contains references to
the “date of execution of this Lease” or other similar references and that
the Lease does
not include the date on which it was executed. The parties agree that for
all purposes
under the Lease, the date of execution of the Lease shall be September
29, 2004.
	 
	 	14.  	Effect of Amendment. Except as otherwise modified by this
Amendment, the Lease shall
remain unmodified and in full force and effect. In the event of any
conflict or
inconsistency between the terms and conditions of the Lease, on the one
hand, and the
terms and conditions of this Amendment, on the other hand, the terms and
conditions of
this Amendment shall prevail.
	 
	 	15.  	Counterparts. This Amendment may be executed in multiple
counterparts, each of which
shall be deemed an original, all of which taken together shall be one and
the same
document.

             IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date
and year first above written.

	 	 	 	 	 
	Landlord:

	 	
	 	Tenant:
	 
	 	 	 	 
	The
Irvine company
	 	 	Engenio
Information Technologies, Inc.
	a Delaware corporation

	 	 	a Delaware corporation

	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Steven Case
	 	 	 	By:
	 	/s/ Tom Georgens
	

	 	 
	 	 	 	 	 	 
	Steven Case	 	 	 	Name: Tom Georgens
	Senior Vice President, Office Properties	 	 	 	Its : President
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ Danielle Sim
	 	 	 	By:
	 	/s/ Flavio Santoni
	

	 	 
	 	 	 	 	 	 
	Danielle Sim	 	 	 	Name: Flavio Santoni
	Senior Vice President, Operations	 	 	 	Its: Sr. VP Sales, Marketing & Customer Support
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Engenio — Legal Department
	 	 	 	 	 	 	Date: 10/21/04
	 	 	 	 	 	 	Approved as to form
	 	 	 	 	 	 	By: /s/ Peter McCabe

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EXHIBIT A

WORK LETTER

[see attached]

Exhibit A

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EXHIBIT A

WORK LETTER 

(Tenant Buildout with Landlord’s Contribution)

	1.  	SUITE 120 TENANT IMPROVEMENTS. The tenant improvement work (“Suite 120 Tenant
Improvements”) shall consist of the work required to complete certain improvements to
Suite 120 pursuant to approved “Suite 120 Working Drawings and Specifications” (as
defined below). Tenant shall employ Gensler & Associates (the “Architect”) for
preparation of the Suite 120 Preliminary Plan and Suite 120 Working Drawings and
Specifications (as hereinafter defined), and shall cause the Architect to inspect Suite 120 to
become acquainted with all existing conditions. Tenant shall contract with San Jose
Construction Co., Inc. (the “TI Contractor”), to construct the Suite 120 Tenant Improvements
at Tenant’s sole cost and expense, subject to Article II below. The Suite 120 Tenant
Improvements work shall be undertaken and prosecuted in accordance with the following
requirements:

	 	a.  	Tenant and Landlord have approved a detailed space plan for Suite 120, prepared by the
Architect, a
copy of which is attached hereto as Exhibit A-1 (“Suite 120 Preliminary Plan”). Within
three (3)days
after the date of this Work Letter, Tenant shall cause the Architect to prepare Suite 120
Working
Drawings and Specifications based on the approved Suite 120 Preliminary Plan (the “Suite
120 Working Drawings and Specifications”), and any change proposed by Tenant to the
approved Suite
120 Working Drawings and Specifications (“Change”). Within three (3) business days
following its
submission to Landlord, Landlord shall approve (by signing a copy thereof) or shall disapprove
the
Suite 120 Working Drawings and Specifications and/or the Change. If Landlord disapproves the
Suite
120 Working Drawings and Specifications or Change as a result of a failure of the foregoing to
comply
with the Suite 120 Preliminary Plan, Landlord shall specify in detail the reasons for
disapproval and
Tenant shall cause the Architect to modify the Suite 120 Working Drawings and Specifications or
Change to incorporate Landlord’s suggested revisions in a mutually satisfactory manner. Tenant
agrees and acknowledges that Landlord will not check the Suite 120 Preliminary Plan, the Suite
120
Working Drawings and Specifications and/or any Change for building code compliance (or other
federal, state or local law, ordinance or regulations compliance), and that Tenant and its
Architect shall
be solely responsible for such matters.
	 
	 	b.  	It is understood that except as provided below, the Suite 120 Tenant Improvements shall only
include
actual improvements to Suite 120 set forth in the Suite 120 Preliminary Plan or the approved
Suite 120
Working Drawings and Specifications, and shall exclude (but not by way of limitation) Tenant’s
furniture, trade fixtures, partitions, equipment and signage improvements, if any. Further, the
Suite
120 Tenant Improvements shall incorporate Landlord’s building standard materials and
specifications
(“Standards”). All aspects of the Suite 120 Preliminary Plan are considered Standards
for purposes
of this Work Letter. No deviations from the Standards may be required by Tenant with respect to
doors and frames, finish hardware, entry graphics, the ceiling system, light fixtures and
switches,
mechanical systems, life and safety systems, and/or window coverings; provided that Landlord
may,
in its sole discretion, authorize in writing one or more of such deviations, in which event
Tenant shall
be solely responsible for the cost of replacing same with the applicable Standard item(s) upon
the
expiration or termination of the Lease. All non-standard items
(“Non-Standard
Improvements”) and Changes to the Suite 120 Preliminary Plan or Suite 120 Working Drawings
and Specifications that are not customarily included in Landlord’s tenant improvements of other
premises located in the Project shall be considered Non-Standard Improvements and shall be
subject to the prior approval of Landlord, which may be withheld in Landlord’s sole discretion.
Landlord shall in no event be required to approve any Non-Standard Improvement if Landlord
determines that such improvements (i) is of a lesser quality than the corresponding Standard,
(ii) fails to conform to applicable governmental requirements, (iii) requires building services
beyond the level Landlord has agreed to provide Tenant under the Lease, or (iv) would have an
adverse aesthetic impact from the exterior of Suite 120.

Exhibit A

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	 	c.  	Tenant shall submit the approved Suite 120 Working Drawings and Specifications to the
TI
Contractor, who shall be the general contractor hired to construct the Suite 120 Tenant
Improvements.
TI Contractor shall solicit bids from at least three (3) subcontractors for each major trade,
provided
that, a bidding process shall not be required with respect to mechanical, electrical and
plumbing. All
subcontractors shall be subject to Landlord’s reasonable approval. Tenant shall provide copies
of the
bid responses to Landlord. Tenant shall enter into a “lump sum” construction contract (the
“TI Contract”) with the TI Contractor for construction of the Suite 120 Tenant
Improvements. If
requested by Landlord, Tenant shall deliver a copy of the TI Contract to Landlord. Tenant shall
cause
the Suite 120 Tenant Improvements work to be constructed in a good and workmanlike manner in
accordance with the approved Suite 120 Working Drawings and Specifications.
	 
	 	d.  	Prior to the commencement of the Suite 120 Tenant Improvements work, Tenant shall deliver to
Landlord a copy of the final application for permit and issued permit for the work.
	 
	 	e.  	The TI Contractor and each of its subcontractors shall comply with Landlord’s requirements as
generally imposed on third party contractors, including without limitation all insurance
coverage
requirements and the obligation to furnish appropriate certificates of insurance to Landlord,
prior to
commencement of construction or the Suite 120 Tenant Improvements work.
	 
	 	f.  	A construction schedule shall be provided to Landlord prior to commencement of the
construction of
the Suite 120 Tenant Improvements work, and weekly updates shall be supplied during the
progress
of the work; provided however, that the completion of the Suite 120 Tenant Improvements shall
not
be a condition of, or affect, the Commencement Date of the Lease.
	 
	 	g.  	Tenant shall give Landlord ten (10) days prior written notice of the commencement of
construction
of the Suite 120 Tenant Improvements work so that Landlord may cause an appropriate notice of
non-
responsibility to be posted.
	 
	 	h.  	The Suite 120 Tenant Improvements work shall be subject to inspection at all times by
Landlord and its construction manager, and Landlord and/or its construction manager shall be
permitted to attend weekly job meetings with the TI Contractor.
	 
	 	i.  	Tenant shall apply and pay for all utility services required for the Suite 120 Tenant
Improvements work.
	 
	 	j.  	Upon completion of the work, Tenant shall cause to be provided to Landlord (i) as-built
drawings of the Suite 120 Tenant Improvements work signed by the Architect, (ii) CADD tapes
of the improved space compatible with Landlord’s CADD system, (iii) a final punch list signed
by Tenant, (iv) final and unconditional lien waivers from the TI Contractor and all
subcontractors, (v) a duly recorded notice of completion of the improvement work, and (vi) a
certificate of occupancy for Suite 120 (collectively, the
“Close-Out Package”).
	 
	 	k.  	The Suite 120 Tenant Improvements work shall be prosecuted at all times in accordance with
all state, federal and local laws, regulations and ordinances, including without limitation
all OSHA and other safety laws, the Americans with Disabilities Act
(“ADA”) and all
applicable governmental permit and code requirements.
	 
	 	l.  	All of the provisions of the Lease (including, without limitation, the provisions of
Sections 7.4,10.1 and 10.3) shall apply to, and shall be binding on Tenant with respect to,
the construction of the Suite 120 Tenant Improvements.
	 
	 	m.  	Landlord shall permit Tenant and its contractors to enter Suite 120 prior to the
Commencement Date of the Lease in order that Tenant may construct the Suite 120 Tenant
Improvements in Suite 120 through Tenant’s own contractors prior to the Commencement Date.
The foregoing license to enter

Exhibit A

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	 	   	Suite 120 prior to the Commencement Date is, however, conditioned upon the
compliance by Tenant’s contractors with all requirements imposed by Landlord on third
party contractors, including without limitation the maintenance by Tenant and its
contractors and subcontractors of workers’ compensation and public liability and
property damage insurance in amounts and with companies and on forms satisfactory to
Landlord, with certificates of such insurance being furnished to landlord prior to
proceeding with any such entry. The entry shall be deemed to be under all of the
provisions of the Lease. Landlord shall not be liable in any way for any injury, loss
or damage which may occur to any such work being performed by Tenant, the same being
solely at Tenant’s risk.
	 
	 	n.  	Tenant hereby designates Don Higbee and Mark Avila (“Tenant’s Construction
Representatives”), Telephone Nos. (408) 433-8140 and (408) 433-8284, each as its
representative and agent for all matters related to the Suite 120 Tenant Improvements,
including but not by way of limitation, for purposes of receiving notices, approving
submittals and issuing requests for Changes, and Landlord shall be entitled to rely
upon authorizations and directives of such person(s) as if given
directly by Tenant. The
foregoing authorization is intended to provide assurance to Landlord that it may rely
upon the directives and decision making of the Tenant’s Construction Representatives
with respect to the Tenant Improvement and is not intended to limit or reduce
Landlord’s right to reasonably rely upon any decisions or directives given by other
officers or representatives of Tenant. Tenant may amend the designation of its Tenant’s
Construction Representative(s) at any time upon delivery of written notice to Landlord.
	 
	 	o.  	Landlord hereby designates Steve Aldapa (“Landlord’s Construction
Representative”), Telephone No. (310) 996-0202 as its representative and agent for all
matters related to the Suite 120 Tenant Improvements, including but not by way of
limitation, for purposes of receiving notices, approving submittals and Changes, and
Tenant shall be entitled to rely upon authorizations and directives of such persons)
as if given directly by Landlord. The foregoing authorization is intended to provide
assurance to Tenant that it may rely upon the directives and decision making of the
Landlord’s Construction Representative with respect to the Suite 120 Tenant
Improvements and is not intended to limit or reduce Tenant’s right to
reasonably rely upon any decisions or directives given by other officers or
representatives of Landlord. Landlord may amend the designation of its Landlord’s
Construction Representative(s) at any time upon delivery of written notice to Tenant.

	II.  	COST OF THE SUITE 120 TENANT IMPROVEMENTS WORK

	 	a.  	Subject to Section II(d) below, Landlord shall provide to Tenant a tenant
improvement allowance in
the amount of Two Hundred Eighty Nine Thousand Five Hundred Twenty One Dollars
($289,521.00)
(the “Suite 120 Landlord’s Contribution”) based on Twenty Seven Dollars ($27.00)
per useable
square foot of Suite 120, with any excess cost of the Suite 120 Tenant Improvements in
accordance
with the approved Suite 120 Working Drawings and Specifications, to be borne solely by
Tenant. It
is further understood and agreed that Landlord’s construction manager shall be entitled
to a
supervision/administrative fee equal to five percent (5%) of the cost of the Suite 120
Tenant
Improvements work, which fee shall be paid from the Suite 120 Landlord’s Contribution;
provided,
however, such supervision/administrative fee when combined with the
supervision/administrative fee
payable pursuant to the original Work Letter under the Lease shall in no event exceed
Forty Three
Thousand Five Hundred Fifty Three Dollars ($43,553.00) in the aggregate. If the actual
cost of
completion of the Suite 120 Tenant Improvements is less than the maximum amount provided
for the
Suite 120 Landlord’s Contribution and the Suite 120 Additional Landlord Funding, such
savings shall
inure to the benefit of Landlord and Tenant shall not be entitled to any credit or
payment.
	 
	 	b.  	Landlord shall pay the Suite 120 Landlord’s Contribution and the Suite 120
Additional Landlord
Funding (defined in Section II(d) below), provided Tenant has elected to exercise its
right to the Suite
120 Additional Landlord Funding, in whole or in part to Tenant or Tenant’s designee
within twenty
(20) days in accordance with the following:

Exhibit A

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	 	i.  	Tenant must deliver to Landlord an invoice(s) with appropriate
backup documents for the work performed that Tenant desires to be paid by the
Suite 120 Landlord’s Contribution and/or Suite 120 Additional Landlord
Funding.
	 
	 	ii.  	Within twenty (20) days of Landlord’s receipt of such
invoice(s) and backup documents, Landlord shall pay Tenant or Tenant’s
designee a portion of the Suite 120 Landlord’s Contribution and/or Suite 120
Additional Landlord Funding sufficient to pay the invoice in full (unless the
amount claimed under the invoice(s) exceeds the Suite 120 Landlord’s
Contribution and/or the Suite 120 Additional Landlord Funding).
Notwithstanding the foregoing, Landlord may retain ten percent (10%) of all
invoiced amounts until Tenant submits the Close-Out Package to Landlord at
which point Landlord shall pay Tenant any retained portions of the Suite 120
Landlord’s Contribution and Suite 120 Additional Landlord Funding within
twenty (20) days.
	 
	 	iii.  	Tenant may only request payments by Landlord from the Suite
120 Landlord’s Contribution and the Suite 120 Additional Landlord Funding once
construction of the Suite 120 Tenant Improvements has been at least fifty
percent (50%) completed and once construction of the Suite 120 Tenant
Improvements has been substantially completed.

	 	c.  	It is understood that the foregoing Suite 120 Tenant Improvements may be done
during Tenant’s
occupancy of Suite 120 and, in this regard, Tenant agrees to assume any risk of injury,
loss or damage
which may result (unless caused by the willful misconduct of Landlord or Landlord’s
authorized
employees, agents or contractors). Tenant further agrees that it shall be solely
responsible for
relocating its office equipment and furniture in Suite 120 in order for the foregoing
Suite 120 Tenant
Improvements to be completed in Suite 120, that the Commencement Date of the Lease is
not
conditioned upon nor shall such Commencement Date be extended by the completion of the
foregoing
Suite 120 Tenant Improvements, and that no rental abatement shall result while the
foregoing Suite
120 Tenant Improvements are completed in Suite 120. It is further understood and agreed
that the
Suite 120 Tenant Improvements shall be scheduled and shall be substantially completed
not later than
February 10, 2005, to be eligible for funding by Landlord, and that Landlord shall not
be obligated
to fund any Suite 120 Tenant Improvements commenced after such date. Notwithstanding
the
foregoing, each day after the deadline set forth in Section I(a) above that Landlord
fails to deliver its
approval or disapproval shall delay the date set forth in Section 3.1 (c) of the Lease
by one (1) day.
	 
	 	d.  	If requested by Tenant, Landlord shall fund the additional costs related to
the Suite 120 Tenant
Improvements in excess of Suite 120 Landlord’s Contribution by up to an additional Three
Dollars
($3.00) per useable square foot (for a total additional funding of up to Thirty Two
Thousand One
Hundred Sixty Nine Dollars ($32,169.00) (“Suite 120 Additional Landlord
Funding”). To the extent
of the Suite 120 Additional Landlord Funding, Basic Rent shall increase, retroactive to
the
Commencement Date of the Lease, by an amount equal to the Suite 120 Additional Landlord
Funding
plus interest at the annual rate of eight percent (8%) amortized equally over the first
sixty (60) months
of the Lease. Upon request by Landlord, the amount of such rental adjustment shall be
memorialized in
a form provided by Landlord. In the event that the amount of the rental adjustment is
finally determined
subsequent to the Commencement Date, Tenant shall promptly pay to Landlord a lump sum
amount equal
to the total accrued sums owing due to the retroactive adjustment.

	III.  	DISPUTE RESOLUTION

	 	a.  	All claims or disputes between Landlord and Tenant arising out of, or relating
to, this Work Letter shall be decided by the JAMS/ENDISPUTE (“JAMS”), or its
successor, with such arbitration to be held in Santa Clara County, California, unless
the parties mutually agree otherwise. Within ten (10) business days following
submission to JAMS, JAMS shall designate three arbitrators and each party may, within
five (5) business days thereafter, veto one of the three persons so designated. If two
different designated arbitrators have been vetoed, the third arbitrator shall hear and
decide the matter. If less than two (2)

Exhibit A

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	 	   	arbitrators are timely vetoed, JAMS shall select a single arbitrator from the non-vetoed arbitrators originally designated
by JAMS, who shall hear and decide the matter. Any arbitration pursuant to this section shall be decided within thirty (30)
days of submission to JAMS. The decision of the arbitrator shall be final and binding on the parties. All costs associated with the
arbitration shall be awarded to the prevailing party as determined by the arbitrator.
	 
	 	b.  	Notice of the demand for arbitration by either party to the Work Letter shall be filed in writing with the
other party to the Work Letter and with JAMS and shall be made within a reasonable time after the
dispute has arisen. The award rendered by the arbitrator shall be final, and judgment may be entered upon
it in accordance with applicable law in any court having jurisdiction thereof. Except by written consent
of the person or entity sought to be joined, no arbitration arising out of or relating to this Work Letter
shall include, by consolidation, joinder or in any other manner, any person or entity not a party to the
Work Letter unless (1) such person or entity is substantially involved in a common question of fact or law,
(2) the presence of such person or entity is required if complete relief is to be accorded in the arbitration,
or (3) the interest or responsibility of such person or entity in the matter is not insubstantial.
	 
	 	c.  	The agreement herein among the parties to arbitrate shall be specifically enforceable under prevailing law.
The agreement to arbitrate hereunder shall apply only to disputes arising out of, or relating to, this Work Letter,
and shall not apply to other matters of dispute under the Lease except as may be expressly provided in the Lease.

Exhibit A

Page 5 of 5

 

 

EXHIBIT A-l

APPROVED SUITE 120 PRELIMINARY PLAN

[SEE ATTACHED]

Exhibit A-l

Page 1 of 1

 

 

	THE IRVINE COMPANY            project            Issuer/Rev            date            By            Drawing
THE IRVINE COMPANY 1 10/06/04 PAR            A
Gensler 670 N. McCARTHY BLVD.
Project No. 35.4178.000
325 South first street Description REVISED FIT PLAN — 1ST FLOOR
SAN JOES CA 95113 OPTION A. MODIFIED
Tel: [ILLEGIBLE] [ILLEGIBLE]
Fax: [ILLEGIBLE] [ILLEGIBLE]exv10w30

 

Exhibit 10.30

1621 BARBER LANE

MILPITAS, CALIFORNIA

STANDARD SINGLE TENANT NNN LEASE

w i t n e s s e t h

This lease (“Lease”) is entered into by and between Limar Realty Corp. #9, a California
corporation (“Landlord”) and LSI Logic Corporation, a Delaware corporation (“Tenant”). For and in
consideration of the payment of rents and the performance of the covenants herein set forth by
Tenant, Landlord does lease to Tenant and Tenant accepts the Premises described below subject to
the agreements herein contained.

	1.  	BASIC LEASE TERMS

	 	 	 	 	 	 	 
	

	 	a.
	 	DATE OF LEASE:
	 	December 31, 2003
	 
	 	 	 	 	 	 
	

	 	b.
	 	TENANT:
	 	LSI Logic Corporation
	 
	 	 	 	 	 	 
	

	 	 	 	Address (of the Premises):
	 	1621 Barber Lane
	

	 	 	 	 	 	Milpitas, California 95035
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Address (for Notices):
	

	 	 	 	 	 	LSI Logic Corporation
	

	 	 	 	 	 	1621 Barber Lane, M/S D-106 

Milpitas, CA 95035-7458
	

	 	 	 	 	 	Attn: General Counsel
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	With a required copy to:
	

	 	 	 	 	 	LSI Logic Corporation
	

	 	 	 	 	 	1621 Barber Lane, M/S D-129

Milpitas, CA 95035-7458
	

	 	 	 	 	 	Attn: Corporate Real Estate
	 
	 	 	 	 	 	 
	

	 	c.
	 	LANDLORD:
	 	Limar Realty Corp. #9
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	Suite 400
	

	 	 	 	 	 	San Mateo, California 94402
	

	 	 	 	 	 	Attn: Thomas A. Numainville
	 
	 	 	 	 	 	 
	

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

	 	e.
	 	PREMISES AREA:
	 	181,812 Rentable Square Feet
	 
	 	 	 	 	 	 
	

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

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

	 	 	 	 	 	Expiration Date: December 31, 2014 (“Expiration Date”)
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Number of Months: 132
	 
	 	 	 	 	 	 
	

	 	h.
	 	INITIAL BASE RENT:
	 	Seventy-Eight Thousand One Hundred Seventy-Nine and 16/100 Dollars ($78,179.16) per month.
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	Periods (inclusive)
	 	Monthly Base Rent
	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	1/1/06 – 12/31/06
	 	$	121,814.04	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	1/1/07 – 12/31/07
	 	 	125,468.46	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	1/1/08 – 12/31/08
	 	 	129,232.51	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	1/1/09 – 12/31/09
	 	 	133,109.49	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	1/1/10 – 12/31/10
	 	 	137,102.77	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	1/1/11 – 12/31/11
	 	 	141,215.85	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	1/1/12 – 12/31/12
	 	 	145,452.33	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	1/1/13 – 12/31/13
	 	 	149,815.90	 	 	 
	 
	 	 	 	 	 	 	 	 

- 1 -

 

	 	 	 	 	 	 	 	 	 
	

	 	1/1/14 – 12/31/14
	 	 	154,310.38	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	

	 	j.
	 	TOTAL TERM BASE RENT:
	 	$	16,726,560.60	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	k.
	 	PREPAID BASE RENT:
	 	None
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	I.
	 	SECURITY DEPOSIT:
	 	$	120,632.82	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	m.	 	BROKER(S):      Julien J. Studley, Inc. (Tenant)
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	n.	 	EXHIBITS:       Exhibits lettered “A” through “C” are attached hereto and made a part hereof.

	2.  	PREMISES

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

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

	4.  	RENT

	 	a.  	Base Rent. Tenant shall pay Landlord in lawful money of the United States,
without notice,
demand, offset or deduction, rent in the amount(s) set forth in  ¶1. which shall be
payable in
advance on the first day of each and every calendar month (“Base Rent”). Unless
otherwise
specified in writing by Landlord, all installments of Base Rent shall be payable at
Limar Realty
Corp. #9, Department #44294, P.O. Box 44000, San Francisco, CA 94144-4294. Base
Rent for
any partial month at the beginning or end of this Lease will be prorated in
accordance with the
number of days in the subject month. Tenant shall be entitled, at its option, to a
refund or credit of
the difference between the Initial Base Rent specified  ¶1.h., paid monthly, and
$105,451.00, paid
monthly, from the date this Lease is signed by both Landlord and Tenant retroactive
to January 1,
2004.
	 
	 	   	For purposes of Section 467 of the Internal Revenue Code, the parties to this Lease
hereby agree to allocate the stated Base Rent provided herein to the periods which
correspond to the actual Base Rent payments as provided under the terms and
conditions of this Agreement.
	 
	 	b.  	Step Increase. The Base Rent shall be increased periodically to the amounts and
at the times set
forth in  ¶1.i.
	 
	 	c.  	Rent Without Offset and Late Charge. All Rent shall be paid without prior
demand or notice and
without any deduction or offset whatsoever. All Rent shall be paid in lawful currency
of the United
States of America. Tenant acknowledges that late payment by Tenant to Landlord of any
Rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount of
such cost being
extremely difficult and impracticable to ascertain. Such costs include, without
limitation, processing
and accounting charges and late charges that may be imposed on Landlord by the terms
of any
encumbrance or note secured by the Premises. Therefore, if any Rent is not received
by Landlord
within five (5) days of its due date, Tenant shall pay to Landlord a late charge
equal to six percent
(6%) of such overdue payment. Landlord and Tenant hereby agree that such late
charge
represents a fair and reasonable estimate of the costs that Landlord will incur by
reason of any
such late payment and that the late charge is in addition to any and all remedies
available to the
Landlord and that the assessment and/or collection of the late charge shall not be
deemed a

- 2 -

 

	 	   	waiver of any other default. Additionally, all such delinquent Rent or other
sums, plus this late charge, shall bear interest from the due date thereof at the
lesser of ten percent (10%) per annum or the maximum legal interest rate permitted
by law. Any payments of any kind returned for insufficient funds will be subject to
an additional handling charge of $25.00, and if a check is returned for
non-sufficient funds more than twice during the Term of the Lease, Landlord may
require Tenant to pay all future payments of Rent or other sums due by cashier’s
check or by wire transfer.
	 
	 	d.  	Rent. The term “Rent” as used in this Lease shall refer to Base Rent, Real
Property Taxes, Operating Expenses, Security Deposit(s), Insurance Costs, repairs and
maintenance costs, utilities, late charges and other similar charges payable by Tenant
pursuant to this Lease either directly to Landlord or otherwise.

	5.  	OPERATING EXPENSES

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

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

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

	 	c.  	Operating Expenses shall not include:

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

- 3 -

 

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

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

- 4 -

 

	 	 	 	 	 	 	 	 
	1	)	 	New Monthly Payment (Effective July 1):	 	 	 	 
	 	 	 	Revised Annual Operating Expense Budget
	 	$	156,000	 
	 	 	 	 	 	 	 	 
	 	 	 	Tenant’s Share @ 50%
	 	$	78,000	 
	 	 	 	 	 	 	 	 
	 	 	 	New Payment @ 1/12 Monthly
	 	$	6,500	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	2	)	 	Retroactive Billing:	 	 	 	 
	 	 	 	Revised Annual Operating Expense Budget
	 	$	156,000	 
	 	 	 	 	 	 	 	 
	 	 	 	Tenant’s Share @ 50% for 6 (of 12) months
	 	$	39,000	 
	 	 	 	Less payments, to date (6 @ $6,000)
	 	 	(36,000	)
	 	 	 	 	 	 	 	 
	 	 	 	Retroactive Balance Due
	 	$	3,000	 
	 	 	 	 	 	 	 	 

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

	 	f.  	Adjustment.

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

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

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

- 5 -

 

	   	expiration or termination of this Lease and has fully complied with the provisions of
 ¶13.d.6) and 26., Landlord shall return the Security Deposit to Tenant.

7.
      USE OF PREMISES

	 	a.  	Tenant’s Use. Tenant shall use the Premises solely for the purposes stated in
 ¶1 and for no
other purposes without obtaining the prior written consent of Landlord. Tenant
acknowledges that
neither Landlord nor any agent of Landlord has made any representation or warranty
with respect
to the Premises or with respect to the suitability of the Premises to the conduct of
Tenant’s
business, nor has Landlord agreed to undertake any modification, alteration or
improvement to the
Premises, except as provided in writing in this Lease. With reasonable notice to
Tenant, Landlord
may from time to time, at its sole discretion, make such modifications, alterations,
deletions or
improvements to the Premises as Landlord may reasonably deem necessary or desirable,
without
compensation to Tenant. Tenant shall promptly comply with all laws, statutes,
ordinances, orders
and governmental regulations now or hereafter existing affecting the Premises.
Tenant shall not
do or permit anything to be done in or about the Premises or bring or keep anything
in the
Premises that will in any way increase the premiums paid by Landlord on its insurance
related to
the Premises. Tenant will not perform any act or carry on any practices that may
injure the
Premises. Tenant shall not use the Premises for sleeping, washing clothes or the
preparation,
manufacture or mixing of anything that emits any objectionable odor, noises,
vibrations or lights
onto such other tenants. If sound insulation is required to muffle noise produced by
Tenant on the
Premises, Tenant at its own cost shall provide all necessary insulation. Tenant
shall not do
anything on the Premises which will overload any existing parking or service to the
Premises. Pets
and/or animals of any type (other than seeing eye dogs) shall not be kept on the
Premises. Tenant
covenants that it will not interfere with other tenants’ quiet enjoyment of their
premises.
	 
	 	b.  	Rules and Regulations. Tenant shall comply with and use the Premises in
accordance with the
Rules and Regulations attached hereto as Exhibit B and to any reasonable
modifications to such
Rules and Regulations as Landlord may adopt from time to time, provided however that
if any rule
or regulation is in conflict with any term, covenant or condition of this Lease, this
Lease shall
prevail. In addition, no such rule or regulation, or any subsequent amendment
thereto adopted by
Landlord, shall in any material way alter, reduce or adversely affect any of Tenant’s
rights or
materially enlarge Tenant’s obligations under this Lease.
	 
	 	c.  	CC&R’s. Tenant agrees that this Lease is subject and subordinate to the
Covenants, Conditions
and Restrictions, a copy of which is attached hereto as
Exhibit C, as they
may be amended from
time to time (“CC&R’s”), and further agrees that the CC&R’s are an integral part of
this Lease.
Throughout the Term or any extension thereof, notwithstanding any other provision
hereof, Tenant
shall faithfully and timely assume and perform all obligations of Landlord and/or
Tenant under the
CC&R’s and any modifications or amendments thereto, including the payment of any
periodic or
special dues or assessments against the Premises. Such dues and assessments shall
be
included within the definition of Operating Expenses pursuant to
¶5.b.11), and Tenant
shall pay
such amounts as further set forth in ¶5. Tenant shall hold Landlord, its subsidiaries,
shareholders,
directors, officers, agents and employees harmless and indemnify Landlord, its
subsidiaries,
shareholders, directors, officers, agents and employees against any loss, expense and
damage,
including attorneys’ fees and costs, arising out of the failure of Tenant to perform
or comply with
the CC&R’s.

	8.  	EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE

	 	a.  	Emissions. Tenant shall not:

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

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	 	6)  	Transmit, receive or permit to be transmitted or received from or to the
Premises, any electromagnetic, microwave or other radiation which is or may be
harmful or hazardous to any person or property in, or about the Premises, or
anywhere else.

	 	b.  	Storage and Use.

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

	 	c.  	Disposal of Waste.

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

	 	d.  	Information. Tenant or Landlord, as the case may be, shall each provide the other with any
and
all information regarding Hazardous Materials in the Premises, including copies of all
filings and
reports to governmental entities at the time they are originated, and any other information
reasonably requested by the other party. In the event of any accident, spill or other
incident
involving Hazardous Materials, Tenant or Landlord, as the case may be, shall immediately
report
the same to the other and supply the other with all information and reports with respect to
the
same. All information described herein shall be provided regardless of any claim by either
party
that it is confidential or privileged, provided that the provision of these documents will
not, in any
way, alter any aspect of the document’s confidentiality or privileged nature.
	 
	 	e.  	Compliance with Law. Notwithstanding any other provision in this Lease to the contrary,
Tenant
shall comply with all laws, statutes, ordinances, regulations, rules and other governmental
requirements now or hereafter existing in complying with its obligations under this Lease,
and in
particular, relating to the storage, use and disposal of Hazardous Materials.
	 
	 	f.  	Indemnity. Tenant hereby agrees to indemnify, defend and hold Landlord, its agents,
employees,
lenders, shareholders, directors, representatives, successors and assigns harmless from and
against any and all actions, causes of action, losses, damages, costs, claims, expenses,
penalties,
obligations or liabilities of any kind whatsoever (including but not limited to reasonable
attorneys’
fees) arising out of or relating to any Hazardous Materials employed, used, transported
across, or
otherwise dealt with by Tenant (or invitees, or persons or entities under the control of
Tenant) in
connection with or with respect to the Premises. Notwithstanding any of the provisions of
this
Lease, the indemnity obligation of Tenant pursuant to this ¶8.f. shall survive the
termination of this

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	 	   	Lease and shall relate to any occurrence as described in this ¶8.f. occurring in
connection with this Lease. Landlord hereby agrees to indemnify, defend and hold
Tenant harmless from and against any and all actions, causes of action, losses,
damages, costs, claims, expenses, penalties, obligations or liabilities of any kind
whatsoever (including reasonable attorneys’ fees) arising out of or relating to (i)
Hazardous Materials employed, used, transported to the Premises, for which the
Premises are a part thereof, by Landlord, its agents or employees or (ii) Hazardous
Materials existing on, in or under the Premises as of the date of this Lease. For
purposes of this Lease the term “Hazardous Materials” shall mean any hazardous,
toxic or dangerous waste, substance or material, pollutant or contaminant, as
defined for purposes of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as amended, or the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), as amended, or any
other federal, state, or local law, ordinance, rule or regulation applicable to the
Premises, or any substance which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous, or any
substance which contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCB’s), or radon gas, urea formaldehyde, asbestos or
lead.

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

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

- 8 -

 

	 	d.  	Appeals. In the event that either Landlord or Tenant desires to appeal or
contest any aspect of any assessment or payment of any Real Property Tax, that party
shall consult with the other and the parties shall mutually agree on which party is
better suited to pursue the appeal. Whether Landlord or Tenant is the appealing
party, Tenant shall be responsible for payment of the cost of the appeal.

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

	 	a.  	Tenant’s Obligations.

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

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	 	   	ADA as from time to time amended and any and all regulations issued
thereunder. Tenant shall give the Landlord thirty (30) days prior written
notice as described above in connection with any such construction. Any and
all construction required to so comply with the ADA shall be completed by
Tenant prior to the expiration of the Term.

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

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

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

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	   	Landlord’s consent was not previously requested. Before the last day of the Term,
Tenant shall at its own cost also remove those Alterations for which Landlord previously
notified Tenant removal would be required. If Landlord so elects, Tenant shall at its own
cost restore those Alterations for which consent was not previously requested to the
condition designated by Landlord in its election, before the last day of the Term. Should
Landlord consent in writing to Tenant’s Alteration of the Premises, Tenant shall contract
with a contractor approved by Landlord for the construction of such Alterations, shall
secure all appropriate governmental approvals and permits, and shall complete such
Alterations with due diligence in compliance with plans and specifications approved by
Landlord. Tenant shall pay all costs for such construction and shall keep the Premises free
and clear of all mechanics’ liens which may result from construction by Tenant.
	 
	   	Notwithstanding anything in this Lease to the contrary, Landlord will inspect the existing
alterations and improvements in the Premises within ninety (90) days of the date the Lease
is executed in full by both parties, and Tenant shall not be obligated to remove any
elements of the existing alterations and improvements that Landlord approves, but subject to
the paragraph immediately above, shall be obligated to remove as of the Expiration Date of
this Lease any alterations and improvements to the Premises made subsequent to the
Commencement Date of the Prior Lease (as defined below) which Landlord has not approved in
writing. If Landlord fails to inspect or provide written notice regarding its approval to
Tenant within the ninety (90) day period described above, all existing alterations and
improvements shall be deemed approved and need not be removed as of the Expiration Date of
this Lease.
	 
	15.  	RELEASE AND INDEMNITY. As material consideration to Landlord, Tenant agrees that Landlord
shall not
be liable to Tenant for any damage to Tenant or Tenant’s property from any cause, except for
damages
resulting from Landlord’s gross negligence or willful misconduct, and Tenant waives all
claims against
Landlord for damage to persons or property arising for any reason, except for damage
resulting directly
from Landlord’s gross negligence or willful misconduct. Tenant shall indemnify and hold
Landlord, its
subsidiaries, officers, shareholders, directors, agents and employees harmless from all
damages including
attorneys’ fees and costs arising out of any damage to any person or property occurring in,
on or about the
Premises or Tenant’s use of the Premises or Tenant’s breach of any term of this Lease.
	 
	16.  	INSURANCE

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

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

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

	 	1)  	Building and Improvements. The Insuring Party shall obtain and
keep in force during the Term of this Lease a policy or policies with Landlord
named as an additional insured (if Tenant is the Insuring Party), with loss
payable to Landlord and to the holders of any mortgages, deeds of trust or
ground leases on the Premises (“Lender(s)”), insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by Lender(s), but in no event more than the commercially reasonable
and

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	 	   	available insurable value thereof if, by reason of the unique nature or age of the
improvements involved, such latter amount is less than full replacement cost. If
the coverage is available at a commercially reasonable cost, such policy or
policies shall insure against all risks of direct physical loss or damage
(including Boiler and Machinery coverage and the perils of flood and earthquake),
including coverage for any additional costs resulting from debris removal and
reasonable amounts of coverage for the enforcement of any ordinance or law
regulating the reconstruction or replacement of any undamaged sections of the
Premises required to be demolished shall also contain an agreed valuation provision
in lieu of any coinsurance clause and waiver of subrogation. If such insurance
coverage has a deductible clause, then Tenant shall be liable for such deductible
amount. Even if Landlord is the Insuring Party, Tenant’s personal property shall be
insured by Tenant under ¶16.d. rather than by Landlord.
	 
	 	2)  	Rental Value. The Insuring Party shall, in addition, obtain and keep in force
during the
term of this Lease a policy or policies with Landlord named as an additional insured
(if
Tenant is the Insuring Party), with loss payable to Landlord and Lender(s), insuring
the
loss of the full rental and other charges payable by Tenant to Landlord under this
Lease for
one (1) year (including all Real Property Taxes, Insurance Costs and any scheduled
Rent
increases). Said insurance shall provide that in the event the Lease is terminated
by
reason of an insured loss, the period of indemnity for such coverage shall be
extended
beyond the date of the completion of repairs or replacement of the Premises, to
provide for
one full year’s loss of Rent from the date of any such loss. Said insurance shall
contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage
shall be adjusted annually to reflect the projected Rent, Real Property Taxes,
Insurance
Costs and other expenses, if any, otherwise payable by Tenant, for the next twelve
(12)
month period. Tenant shall be liable for any deductible amount in the event of such
loss.
	 
	 	3)  	Adjacent Premises. If the Premises are part of a larger building, or if the
Premises are
part of a group of buildings owned by Landlord which are adjacent to the Premises,
the
Tenant shall pay for any increase in the premiums for the property insurance of such
building or buildings if said increase is caused by Tenant’s acts, omissions, use or
occupancy of the Premises.
	 
	 	4)  	Tenant’s Improvements. If the Landlord is the Insuring Party, the Landlord
shall not be
required to insure Tenant’s personal property and leasehold improvements unless the
item
in question has become the property of Landlord under the terms of this Lease. If
Tenant
is the Insuring Party, the policy carried by Tenant under this ¶16.c. shall insure
Tenant’s
personal property and leasehold improvements.

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

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	 	   	insurance shall promptly notify the other party of the inability to obtain
insurance coverage with the waiver of subrogation.
	 
	 	g.  	Tenant’s Option. Notwithstanding anything to the contrary contained in this
Lease, if for any given policy period, Tenant is able to obtain insurance coverage
which meets the requirements of this 16. at a cost lower than Landlord’s cost, then
Tenant may be the Insuring Party. At least thirty (30) days prior to the beginning of
any policy period for which Tenant desires to be the Insuring Party, Tenant shall
submit to Landlord its insurance quote and proposed policy provisions. Within five (5)
business days of receipt, Landlord shall review Tenant’s insurance quote and proposed
policy provisions, and Landlord may request that the lender as to any loan(s)
encumbering the property described in Exhibit A hereto (“Lender”) also review
Tenant’s insurance quote and proposed policy provisions. Promptly following said
reviews by Lender and Landlord, Landlord may, in its reasonable discretion, approve or
reject Tenant’s proposed insurance. If approved, Tenant shall cause the approved
policies to be issued, with copies of the insurance certificate(s) to be immediately
provided to Landlord. If rejected, Landlord shall specify the reasons for such
rejection in writing. Tenant shall have three (3) business days from the receipt of
Landlord’s written notice of rejection to submit a revised insurance quote and proposed
policy provisions. Within three (3) business days after Landlord’s receipt of Tenant’s
revised insurance quote and policy provisions, Landlord shall accept Tenant’s revised
insurance if it adequately addresses the reasons initially specified by Landlord for
rejection. If in Landlord’s reasonable determination, such revised insurance quote and
policy provisions do not adequately address the reasons initially specified by Landlord
for rejection, Landlord may reject Tenant’s revised insurance quote and policy
provisions by stating the reasons therefor in writing; however, such rejection shall be
final in regard to that policy period, and Landlord shall be the Insuring Party for
that policy period. If Landlord approves Tenant’s insurance, Tenant’s failure to
provide the insurance certificate(s) to Landlord at least ten (10) business days prior
to the commencement of the applicable policy period shall result in Landlord being the
Insuring Party.

	17.  	DAMAGE AND DESTRUCTION

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

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	 	d.  	Termination by Tenant. In the event that the
destruction to the Premises cannot be restored as
required herein under applicable laws and regulations
within two hundred seventy (270) days of the damage or
casualty, notwithstanding the availability of insurance
proceeds, Tenant shall have the right to terminate this
Lease by giving the Landlord notice thereof within thirty
(30) days of date of the occurrence of such casualty
specifying the date of termination which shall not be
less than thirty (30) days nor more than sixty (60) days
following the date on which such notice of termination is
given. In the event of the giving of such notice of
termination, this Lease shall expire and all interest of
Tenant in the Premises shall terminate on the date so
specified in such notice and the Rent, reduced by any
proportionate reduction in Rent as provided for in ¶17.a.
above, shall be paid to the date of such termination.
	 
	 	e.  	Restoration. Landlord agrees that, in any case in which
Landlord is required to, or otherwise agrees to restore
the Premises, that Landlord shall proceed with due
diligence to make all appropriate claims and applications
for the proceeds of insurance and to apply for and obtain
all permits necessary for the restoration of the
Premises. Landlord shall use reasonable efforts to
enforce any and all provisions in any mortgage, deed of
trust or other encumbrance on the Premises requiring
Landlord and Lender to permit insurance proceeds to be
used for restoration. Landlord shall restore the Premises
to the condition existing prior to the date of the damage
if permitted by applicable law. Landlord shall not be
required to restore alterations made by Tenant, Tenant’s
improvements, Tenant’s trade fixtures and Tenant’s
personal property, such excluded items being the sole
responsibility of Tenant to restore provided, however,
that Landlord shall, to the extent of available insurance
proceeds, restore Tenant Improvements to the Premises
made by Tenant such as interior offices, lab and
production improvements and other like improvements.
	 
	 	f.  	Waiver. Tenant waives the provisions of Civil Code
§1932(2) and Civil Code §1933(4) with respect to any
destruction of the Premises.

	18.  	CONDEMNATION

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

	19.  	ASSIGNMENT OR SUBLEASE

	 	a.  	Tenant shall not assign or encumber its interest in this Lease or the
Premises or sublease all or
any part of the Premises or allow any other person or entity (except
Tenant’s authorized
representatives, employees, invitees, guests or a Permitted
Transferee) to occupy or use all or any
part of the Premises without first obtaining Landlord’s consent, which
consent shall not be
unreasonably withheld. Any assignment, encumbrance or sublease without Landlord’s prior written
consent shall be voidable and at Landlord’s election, shall constitute
a default. If Tenant is a
partnership, a withdrawal or change, voluntary, involuntary or by
operation of law of any partner, or
the dissolution of the partnership shall be deemed a voluntary
assignment. If Tenant consists of
more than one person, a purported assignment, voluntary or involuntary
or by operation of law

- 14 -

 

	 	   	from one person to the other shall be deemed a voluntary
assignment. If Tenant is a corporation, any dissolution,
merger, consolidation or other reorganization of Tenant,
or sale or other transfer of a controlling percentage of
the capital stock of Tenant, or the sale of at least fifty
percent (50%) of the value of the assets of Tenant shall
be deemed a voluntary assignment. Notwithstanding the
sentence immediately above, if the Tenant is a
corporation, the Tenant shall be entitled to assign this
Lease without Landlord’s prior written consent in the
event of a reorganization of Tenant through the sale of
all or a portion of Tenant’s Capital Stock by Initial
Public Offering (such event shall be referred to as a
transfer to a “Permitted Transferee”). In connection with
any assignment, Landlord shall be entitled to require an
increase in the Security Deposit to the extent that such
increase should be commercially reasonable in Landlord’s
discretion given the financial condition of Tenant and the
assignee following such event. In connection with any
Sublease, Landlord shall be entitled to hold any Security
Deposit paid by Sublessee to Sublessor, which Security Deposit shall
be held by landlord in accordance with the
provisions of the Sublease. Tenant shall give Landlord at
least sixty (60) days prior written notice of any intended
transfer to a Permitted Transferee and in connection with
such transfer shall provide to Landlord copies of any
documents or other information as Landlord may reasonably
request. Unless otherwise expressly agreed in writing by
Landlord, no assignment shall relieve Tenant of any of its
obligations pursuant to this Lease.
	 
	 	   	In the event of a sublease all Sublease Rent received by
Tenant in excess of the Rent payable by Tenant to Landlord
under this Lease applicable to the portion of the Premises
subleased shall be deemed the “Bonus Amount”, after
deducting therefrom the “Subleasing Costs” which shall
include (i) commercially reasonable brokerage commissions,
(ii) tenant improvements made at the request of a
subtenant and (iii) attorneys’ fees incurred by Tenant in
negotiating and documenting the sublease, which Subleasing
Costs shall be amortized over the Term of the Sublease for
the purpose of determining the Bonus Amount. Fifty percent
(50%) of the Bonus Amount shall be promptly paid to
Landlord following receipt by Tenant. If the Subleasing
Costs are not known at the commencement of the sublease,
the fifty percent (50%) of Bonus Amount due Landlord will
be computed without deduction of Subleasing Costs and
promptly paid to Landlord. Once the Subleasing Costs are
presented to and verified by Landlord, the Bonus Amount
paid by Tenant to date will be adjusted and Landlord shall
give Tenant a credit against the next payment(s) due to
Landlord from Tenant. The term “Sublease Rent” as used
herein shall include any consideration of any kind
received by Tenant from or on behalf of any subtenant, if
the sums are related in any manner to the Premises,
including, without limitation Rent, operating expense
payments, bonus money and payments for the purchase of or
usage of Tenant’s furniture, fixtures, inventory,
equipment, accounts, goodwill, general intangibles and
other assets. Each sublease approved by Landlord shall
stand alone as to the computation of the Bonus Amount.
	 
	 	   	In the event of an assignment all Transfer Payments
received by Tenant shall be deemed the “Bonus Amount”,
after deducting there from the “Assignment Costs” which
shall include (i) commercially reasonable brokerage
commissions and (ii) attorneys’ fees incurred by Tenant in
negotiating and documenting the assignment. Fifty percent
(50%) of the Bonus Amount shall be promptly paid to
Landlord following receipt by Tenant. If the Assignment
Costs are not known at the commencement of the Assignment,
the fifty percent (50%) of Bonus Amount due Landlord will
be computed without deduction of Assignment Costs and
promptly paid to Landlord. Once the Assignment Costs are
presented to and verified by Landlord, the Bonus Amount
paid by Tenant to date will be adjusted and Landlord shall
give Tenant a credit against the next payment(s) due to
Landlord from Tenant. The term “Transfer Payments” as used
herein shall include any consideration of any kind
received by Tenant from or on behalf of any assignee, if
the sums are related in any manner to the Premises,
including, without limitation assignment consideration,
Rent, operating expense payments, bonus money and payments
for the purchase of or usage of Tenant’s furniture,
fixtures, inventory, equipment, accounts, goodwill,
general intangibles and other assets.
	 
	 	   	If Tenant requests Landlord to consent to a proposed assignment or
subletting, Tenant shall pay to

Landlord, whether or not consent is ultimately given, an amount equal
to Landlord’s reasonable
attorneys’ fees and costs incurred in connection with such request,
(not to exceed $5,000). Each
request for consent to an assignment or subletting shall be in
writing, and shall be accompanied by
information as may be relevant to Landlord’s determination as to the
financial and operational
responsibility and stability of the proposed assignee or sublessee and
the appropriateness of the
proposed use by such assignee or sublessee. Such information shall
include a summary of the
proposed use of, and any proposed modifications to, the Premises.
Tenant shall provide Landlord
with such other or additional information and/or documentation as may
reasonably be requested by
Landlord. Tenant shall, upon completion of any assignment or
subletting of all or any portion of the
Premises, immediately and irrevocably assign to Landlord as security
for Tenant’s obligations
under the Lease, all Sublease Rent and/or Transfer Payments from any
such subletting or
assignment. Landlord, as assignee and attorney in fact for Tenant,
shall have the right to collect all
rent and other revenues collectable pursuant to any such sublet or assignment and apply such rent
and other revenues towards Tenant’s obligations under the Lease.

	 	b.  	No interest of Tenant in this Lease shall be assignable by involuntary assignment through
operation of law (including without limitation the transfer of this Lease by testacy or intestacy).
Each of the following acts shall be considered an involuntary assignment: (a) if Tenant is or
becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or institutes
proceedings under the Bankruptcy Act in which Tenant is the bankrupt; or if Tenant is a partnership
or consists of more than one person or entity, if any partner of the partnership or other person or
entity is or becomes bankrupt or insolvent, or makes an assignment for the benefit of creditors; or

- 15 -

 

	 	   	(b) if a writ of attachment or execution is levied on this
Lease; or (c) if in any proceeding or action to which
Tenant is a party, a receiver is appointed with authority
to take possession of the Premises. An involuntary
assignment shall constitute a default by Tenant and
Landlord shall have the right to elect to terminate this
Lease, in which case this Lease shall not be treated as an
asset of Tenant.
	 
	 	c.  	Notwithstanding any provision to
this Lease to the contrary, in any event where Landlord’s
consent is required for assignment or sublease, Landlord
may at its option, elect to terminate the Lease instead of
approving the requested assignment or sublease, except if
the requested assignment or sublease is for a period of
less than one year (including any renewal periods). Should
Landlord so elect to terminate this Lease, all of the
obligations of the parties thereunder, to the extent not
accrued, shall terminate on the later of sixty (60) days
following Landlord’s notice to Tenant of its election
hereunder, or the effective date of the proposed assignment
or subletting sought by the Tenant, but in no event later
than one hundred twenty (120) days following the date of
Landlord’s election under this ¶19.C. At the time of
termination, all obligations of both parties hereunder
shall terminate as to obligations thereafter accruing
except as otherwise expressly provided in this Lease.

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

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

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

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	 	   	interest at the lesser of eighteen percent (18%) per annum
or the maximum legal interest rate permitted by law. The
“Worth”, as used above in (3) in this ¶21.b. is to be
computed by discounting the amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of
the award, plus one percent (1%).

	22.  	ENTRY OF PREMISES. Landlord and/or its
authorized representatives shall have the right after
reasonable notice except for emergencies to enter the Premises
at all reasonable times for any of the
following purposes: (a) to determine whether the Premises are in
good condition and whether Tenant is
complying with its obligations under this Lease; (b) to do any
necessary maintenance and to make any
restoration to the Premises that Landlord has the right or
obligation to perform; (c) to post “for sale” signs at
any time during the Term, or to post “for rent” or “for lease”
signs during the last one hundred eighty (180)
days of the Term or during any period while Tenant is in
default; (d) to show the Premises to prospective
brokers, lenders, agents, buyers, tenants or persons interested
in leasing or purchasing the Premises, at
any time during the Term; or (e) to repair, maintain or improve
the Premises and to erect scaffolding and
protective barricades around and about the Premises but not so
as to prevent entry to the Premises or to
unreasonably interfere with Tenant’s use of the Premises and to
do any other act or thing necessary for the
safety or preservation of the Premises. Landlord shall not be
liable in any manner for any inconvenience,
disturbance, loss of business, nuisance or other damage arising
out of Landlord’s entry onto the Premises
as provided in this ¶22. Tenant shall not be entitled to an
abatement or reduction of Rent if Landlord
exercises any rights reserved in this ¶22. Landlord shall
conduct its activities on the Premises as provided
herein in a commercially reasonable manner that will lessen the
inconvenience, annoyance or disturbance
to Tenant.

	23.  	SUBORDINATION.

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

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	24.  	ESTOPPEL CERTIFICATE; TENANT FINANCIAL STATEMENTS. Tenant,
at any time and from time to
time, upon not less than ten (10) business days written notice
from Landlord, will execute, acknowledge
and deliver to Landlord and, at Landlord’s request, to any
existing or prospective purchaser, ground lessor
or mortgagee of any part of the Premises, a certificate of Tenant
stating: (a) that Tenant has accepted the
Premises (or, if Tenant has not done so, Tenant has not accepted
the Premises and specifying the reasons
therefor); (b) the Commencement and Expiration Dates of this
Lease; (c) that this Lease is unmodified and
in full force and effect (or, if there have been modifications,
that same is in full force and effect as modified
and stating the modifications); (d) whether or not to the best of
Tenant’s knowledge there are then existing
any defenses against the enforcement of any of the obligations of
Tenant under this Lease (and, if so,
specifying same); (e) whether or not to the best of Tenant’s
knowledge there are then existing any defaults
by Landlord in the performance of its obligations under this
Lease (and, if so, specifying same); (f) the
dates, if any, to which the Rent and other charges under this
Lease have been paid; (g) whether or not
there are Rent increases during the Lease Term and if so the
amount of same; (h) whether or not the
Lease contains any options or rights of first offer or first
refusal; (i) the amount of any Security Deposit or
other sums due Tenant; (j) the current notice address for Tenant;
and (k) any other information that may
reasonably be required by any of such persons. It is intended
that any such certificate of Tenant delivered
pursuant to this ¶24. may be relied upon by Landlord and any
existing or prospective purchaser, ground
lessor or mortgagee of the Premises. Provided Tenant is not a
publicly traded company which files with
the SEC, Tenant will, at any time upon request by Landlord, to
deliver to Landlord the most recent financial
statements of Tenant with an opinion of a certified public
accountant, if available, including a balance sheet
and profit and loss statement for the most recent prior three
years all prepared in accordance with
generally accepted accounting principles consistently applied.
Landlord agrees to hold such financial
statements confidential and to share them only with prospective
lenders and purchasers of the Premises.
Other than for prospective lenders and purchasers, Landlord shall
not request financial statements more
often than twice in any calendar year.
	 
	25.  	WAIVER. No delay or omission in the exercise
of any right or remedy by Landlord shall impair such right
or remedy or be construed as a waiver. No act or conduct of
Landlord, including without limitation,
acceptance of the keys to the Premises, shall constitute an
acceptance of the surrender of the Premises by
Tenant before the expiration of the Term. Only written notice
from Landlord to Tenant shall constitute
acceptance of the surrender of the Premises and accomplish
termination of the Lease. Landlord’s consent
to or approval of any act by Tenant requiring Landlord’s consent
or approval shall not be deemed to waive
or render unnecessary Landlord’s consent to or approval of any
subsequent act by Tenant. Any waiver by
Landlord of any Default must be in writing and shall not be a
waiver of any other Default concerning the
same or any other provision of the Lease.
	 
	26.  	SURRENDER OF PREMISES. Upon expiration of
the Term, Tenant shall surrender to Landlord the
Premises and all tenant improvements and alterations clean and in
the same condition as existed at the
Commencement Date, except for ordinary wear and tear and
Alterations which Tenant has the right or is
obligated to remove under the provisions of ¶14. herein. Tenant
shall remove all personal property
including, without limitation, all wallpaper, paneling and other
decorative improvements or fixtures and shall
perform all restoration made necessary by the removal of any
alterations or Tenant’s fixtures, furnishings,
equipment and other personal property before the expiration of
the Term, including, for example, restoring
all wall surfaces to their condition as of the Commencement Date.
In any event, Tenant shall cause the
following to be done prior to the expiration or the sooner
termination of this Lease: (i) all interior walls shall
be cleaned so that they appear freshly painted; (ii) all tiled
floors shall be cleaned and waxed; (iii) all
carpets shall be cleaned and shampooed; (iv) all broken, marred,
stained or nonconforming acoustical
ceiling tile shall be replaced; (v) all exterior and interior
windows shall be washed; (vi) the HVAC system
shall be serviced by a reputable and licensed service firm and
left in good operating condition and repair as
so certified by such firm; and (vii) the plumbing and electrical
systems and lighting shall be placed in good
order and repair (including replacement of any burned out,
discolored or broken light bulbs, ballasts, or
lenses). Landlord can elect to retain or dispose of in any manner
Tenant’s personal property not removed
from the Premises by Tenant prior to the expiration of the Term.
Tenant waives all claims against Landlord
for any damage to Tenant resulting from Landlord’s retention or
disposition of Tenant’s personal property.
Tenant shall be liable to Landlord for Landlord’s cost for
storage, removal and disposal of Tenant’s
personal property.
	 
	27.  	HOLDOVER. If Tenant with Landlord’s consent
remains in possession of the Premises after expiration of
the Term or after the date in any notice given by Landlord to
Tenant terminating this Lease, such
possession by Tenant shall be deemed to be a month to month
tenancy cancelable by either party on thirty
(30) days written notice given at any time by either party and
all provisions of this Lease, except those
pertaining to Term, renewal options and Base Rent, shall apply
and Tenant shall thereafter pay monthly
Base Rent computed on a per month basis, for each month or part
thereof
(without reduction for any partial
month) that Tenant remains in possession, in an amount equal to
one hundred thirty-five percent (135%) of
the Base Rent that was in effect for the last full calendar month
immediately preceding expiration of the
Term.
	 
	   	If Tenant holds over after the expiration or earlier termination of the
Term hereof, without the consent of
Landlord, Tenant shall become a Tenant at sufferance only with a continuing
obligation to pay Rent
provided that the Base Rent shall be one hundred fifty percent (150%) of
the Base Rent that was in effect
for the last full calendar month immediately preceding expiration of the Term for the first thirty
(30) days of
such holdover, and two hundred percent (200%) of such Base Rent thereafter
during the pendency of such
holdover. In any such case of Holdover without the consent of Landlord,
the monthly Base Rent shall be
computed on a per-month basis, for each month or part thereof (without
reduction for any partial month)
that Tenant remains in possession. Acceptance by Landlord of Rent after
expiration or earlier termination
of the Term shall not constitute a consent to a holdover hereunder or
result in a renewal. The foregoing

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	   	provisions of this ¶27 are in addition to and do not affect
Landlord’s right of re-entry or any rights of Landlord
hereunder or as otherwise provided by law. If Tenant fails
to surrender the Premises upon the expiration of this Lease
despite demand to do so by Landlord, Tenant shall indemnify
and hold Landlord harmless from all loss or liability
arising out of such failure, including without limitation,
any claim made by any succeeding tenant founded on or
resulting from such failure to surrender. No provision of
this ¶27 shall be construed as implied consent by Landlord to
any holding over by Tenant. Landlord expressly reserves the
right to require Tenant to surrender possession of the
Premises to Landlord as provided in this Lease upon
expiration or other termination of this Lease. The
provisions of this ¶27 shall not be considered to limit or
constitute a waiver of any other rights or remedies of
Landlord provided in this Lease or at law.

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

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

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

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	 	   	stated herein. Landlord and Tenant each shall bear
one-half
(1⁄2) of the cost of appointing
the third appraiser and of paying the third
appraiser’s fee. The third appraiser, however
selected, shall be a person who has not previously
acted in any capacity for either Landlord or Tenant,
or their affiliates.
	 
	 	3)  	Value Determined by Three (3) Appraisers. Within thirty (30) days after
the selection of the third appraiser, a majority of
the appraisers shall set the Base Rent for that
Extended Term. If a majority of the appraisers are
unable to set the Base Rent within the stipulated
period of time, Landlord’s appraiser shall arrange
for simultaneous exchange of written appraisals from
each of the appraisers and the three (3) appraisals
shall be added together and their total divided by
three (3); the resulting quotient shall be the Base
Rent for the Premises for that Extended Term. If,
however, the low appraisal and/or the high appraisal
are/is more than fifteen percent (15%) lower and/or
higher than the middle appraisal, such low appraisal
and/or high appraisal shall be disregarded. If only
one (1) appraisal is disregarded, the remaining two
(2) appraisals shall be added together and their
total divided by two (2); the resulting quotient
shall be the Base Rent for the Premises for that
Extended Term. If both the low appraisal and the
high appraisal are disregarded as stated in this
¶29.c.3), the middle appraisal shall be the Base Rent
for the Premises at the commencement of that
Extended Term.

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

	 	a.  	Time of Essence. Time is of the essence of each provision of this Lease.
	 
	 	b.  	Successor. This Lease shall be
binding on and inure to the benefit of the parties and
their
successors, except as provided in ¶19.
	 
	 	c.  	Landlord’s Consent. Any
consent required by Landlord under this Lease must be
granted in
writing and may be withheld or conditioned by Landlord in
its sole and absolute discretion unless
otherwise provided.
	 
	 	d.  	Personal Rights.
Notwithstanding any other provision(s) of this Lease to
the contrary, any
provisions of this Lease providing for the renewal,
extension or early termination of the Lease
and/or for the expansion of the Premises (to include
without limitation rights to negotiate, rights of
first refusal, etc.) shall be (i) personal to the
original Tenant and shall not be assignable or
otherwise transferable other than to a Permitted
Transferee (either voluntarily or involuntarily) to
any third party for any reason whatsoever, and (ii)
conditioned upon Tenant not then being in
default under this Lease.
	 
	 	e.  	Commissions. Each party
represents that it has not had dealings with any real
estate broker,
finder or other person with respect to this Lease in any
manner, except for the Broker(s) identified
in ¶1., who shall be compensated by Landlord in accordance
with the separate agreement
between Landlord and the Broker(s).
	 
	 	f.  	Other Charges; Legal Fees. If
Landlord becomes a party to any litigation concerning
this Lease
or the Premises by reason of any act or omission of
Tenant or Tenant’s authorized representatives,
Tenant shall be liable to Landlord for reasonable
attorneys’ fees and court costs incurred by
Landlord in the litigation, after Landlord provides
written notice of the action to Tenant.
Notwithstanding the foregoing, Tenant will reimburse
Landlord for up to $2,000 in reasonable
attorney’s fees and court costs incurred prior to
Landlord giving Tenant notice of the action.
Should the court render a decision which is thereafter
appealed by any party thereto, Tenant shall
be liable to Landlord for reasonable attorneys’ fees and
court costs incurred by Landlord in
connection with such appeal.
	 
	 	   	If either party commences any litigation against the
other party or files an appeal of a decision arising out
of or in connection with the Lease, the prevailing party
shall be entitled to recover from the other party
reasonable attorneys’ fees and costs of suit. If Landlord
employs an attorney to recover delinquent charges, Tenant
agrees to pay all attorneys’ fees and costs charged to
Landlord in addition to Rent, late charges, interest and
other sums payable under this Lease.
	 
	 	g.  	Landlord’s Successors. In the event of a
sale or conveyance by Landlord of the Premises, the
same shall operate to release Landlord from any liability under this
Lease, including as to any
Security Deposit to the extent transferred to Landlord’s
successor-in-interest, and in such event
Landlord’s successor in interest shall be solely responsible for all
obligations of Landlord under this
Lease.
	 
	 	h.  	Interpretation. This Lease shall be construed and interpreted in accordance with the
laws of the
state in which the Premises are located. This Lease constitutes the entire agreement between the
parties with respect to the Premises, except for such guarantees or modifications as may be
executed in writing by the parties from time to time. When required by
the context of this Lease,
the singular shall include the plural, and the masculine shall include
the feminine and/or neuter.“Party” shall mean Landlord or Tenant. If more than one person or entity constitutes Landlord or

- 20 -

 

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

	 	 	 
	

	 	Exhibit A: The Premises
	

	 	Exhibit B: Rules and Regulations
	

	 	Exhibit C: Covenants, Conditions And Restrictions

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

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

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

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

	 	President
	 	Title:
	 	Vice President, General Counsel

& Corporate Secretary
	 
	 	 	 	 	 	 
	Date:

	 	3/29/04
	 	Date:
	 	March 15, 2004
	 
	 	 	 	 	 	 
	 	 	 	 	LSI Logic Legal Department
	 
	 	 	 	 	 	 
	

	 	 	 	Date:
	 	03/15/04
	 	 	 	 	Approved as to form
	 
	 	 	 	 	 	 
	

	 	 	 	By
	 	/s/ Andrew S. Hughes
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	LSI Logic Corporate Real Estate
	 
	 	 	 	 	 	 
	

	 	 	 	Date:
	 	3-16-04
	 	 	 	 	Approved as to form
	 
	 	 	 	 	 	 
	

	 	 	 	By
	 	/s/ Donald A. Costello
	

	 	 	 	 	 	 

- 21 -

 

EXHIBIT A

The Premises

This Exhibit A is
attached to and made a part of that certain Lease (the
“Lease”) dated
December 31, 2003, by and between Limar Realty Corp. #9 as Landlord and LSI Logic
Corporation, a Delaware corporation, as Tenant.

 

 

EXHIBIT A

The Premises

(continued)

Legal Description

The land
referred to herein is situated in the State of California, County of Santa
Clara, City of Milpitas, described as follows:

PARCEL ONE:

Parcel A, as shown on that certain Map entitled, “Parcel Map” which Map was filed for record
in the office of the Recorder of the County of Santa Clara, State of California, on November
17, 1981, in Book 492 of Maps, at Page 37.

PARCEL ONE-A:

10 foot Private Storm Drain Easement.

In, on, under, over and across all that real property situate in the city of Milpitas,
County of Santa Clara, state of California and more particularly described as follows:

A 10 foot
wide strip of land, the centerline of which begins at a point distant
North 63°
59’ 20” East 108.98 feet from the Northwesterly corner of
that certain parcel of land shown
as Parcel A on that certain Parcel Map recorded in Book 492 of Maps,
at Page 37, Santa Clara
County Records.

Thence from said point of beginning North 19° 15’ 26” West 38.70 feet; thence North 55° 21’
31” West 71.75 feet; thence North 68° 49’ 41” East 537.36 feet; thence North 54° 29’ 32”
East 54.62 feet to the Easterly line of Parcel A, as said parcel is shown on that certain
Parcel Map recorded in Book 510 of Maps, at Page 10, Santa Clara County Records.

APN 086-03-081 (Affects Parcel 1)

	 	 	 	 	 
	

	COMMONLY KNOWN AS:	 	 	481 Cottonwood Drive
	

	 	 	 	Milpitas, CA (Parcel One)

 

 

EXHIBIT B

Rules & Regulations

This Exhibit B is attached to and made a part of that certain Lease
dated December 31, 2003 by and between Limar Realty Corp. #9 as
Landlord and LSI Logic Corporation, a Delaware corporation, as Tenant.

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

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

 

 

EXHIBIT B

Rules & Regulations

(continued)

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

 

 

EXHIBIT C

Covenants, Conditions
And Restrictions

This Exhibit C is attached to and made a part of that certain Lease dated December 31, 2003 by and
between Limar Realty Corp. #9 as Landlord and LSI Logic Corporation, a Delaware corporation, as
Tenant.

E 545 PAGE 189

DECLARATION OF COVENANTS, CONDITIONS

AND RESTRICTIONS OF THE

OAK CREEK BUSINESS PARK

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

ARTICLE
1
 

DEFINITIONS

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

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

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

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

 

 

E 545 PAGE 190

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

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

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

          

-2-

 

E 545 PAGE 191

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

     1.6 Structures: The term “structure(s)” shall
include
all structures, buildings, outbuildings, sheds, fences and

screening walls over three (3) feet in height, barriers, or retaining walls.

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

a mortgagee under a mortgage.

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

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

supplemented.

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

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E 545 PAGE 192

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

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

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

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

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

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E 545 PAGE 193

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

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

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

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

ARTICLE 2

PROPERTY SUBJECT TO THE

PARK RESTRICTIONS

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

-5-

 

E 545 PAGE 194

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

-6-

 

E 545 PAGE 195

ARTICLE 3

APPROVAL OF PLANS FOR STRUCTURES

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

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

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

               (2) A
landscaping plan for the particular lot;

               (3) A sign and lighting plan;

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

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E 545 PAGE 196

               (5) A grading plan.

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

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

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

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

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E 545 PAGE 197

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

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

          A. Failure to comply with any of the Restrictions;

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

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

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E 545 PAGE 198

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

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

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

          F. Objection to the grading plan for any lot;

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

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

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

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E 545 PAGE 199

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

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

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

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E 545 PAGE 200

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

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

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

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

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E 545 PAGE 201

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

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

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

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

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

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

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

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

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E 545 PAGE 202

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

ARTICLE 4 

LIMITATIONS ON IMPROVEMENTS

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

     4.2
Coverage: No more than forty five percent (45%)
of the square foot area of any M-1 zoned lots shall be
occupied by structures. No more than thirty five percent
(35%) of the square foot area of any MPD or HS zoned lots
shall be occupied by structures.

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

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

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

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

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

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

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

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

ARTICLE 5 

RESTRICTIONS ON OPERATION AND USE

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

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

               (1) Pharmaceutical and cosmetic products;

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

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

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

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

          C. Research, experimental and engineering
laboratories;

          D. Catalog sales and mail order establishments;

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

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

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

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

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

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

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

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

          A. Residential of any type;

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

          C. Junk yards or recycling facilities;

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

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

          F. Distillation of bones;

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

          H. Fat rendering;

          I. Stockyard or slaughter of animals;

          J. Cemeteries;

          K. Refining of petroleum or of its products;

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

          M. Jail or honor farms;

          N. Labor or migrant worker camps;

          O. Truck, bus terminals;

          P. Petroleum storage yards.

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

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

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

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

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

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

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

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

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

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

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

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     5.7
Storage and Refuse Collection Areas:

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

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

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

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

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

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

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

ARTICLE 6 

APPROVALS OR VARIANCES IF NO

APPROVING AGENT EXISTS

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

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

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

ARTICLE 7 

ENFORCEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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ARTICLE 8

DURATION, MODIFICATION AND REPEAL

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

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

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ARTICLE 9

MISCELLANEOUS PROVISIONS

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

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

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

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

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

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

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

	 	 	 
	

	 	THE PRUDENTIAL INSURANCE COMPANY

OF AMERICA
	 
	 	 
	

	By	 /s/ A.K, Jacobson
	

	 	 
	 
	 	 
	

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

	Title: Regional Vice-President, REO

-33-

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