Document:

Exhibit 10.20

 

RELIANT TECHNOLOGIES, INC.

 

AMENDED AND RESTATED

CONSULTING AGREEMENT

 

THIS
AGREEMENT is made by RELIANT TECHNOLOGIES, INC.
and  its successors (“Reliant”) and HENRY E. GAUTHIER (“Contractor”), effective as of this 1st
day of October, 2006, for the purpose of setting forth
the exclusive terms and conditions by which Reliant will acquire Contractor’s
services on a temporary basis. Reliant and Contractor hereby agree and
acknowledge that this Agreement amends and supersedes in its entirety that certain
Consulting Agreement dated July 1, 2005
(the “Prior Agreement”). The parties hereby confirm that Contractor’s
consulting arrangement under the Prior Agreement has continued by mutual
agreement following September 30, 2006 and this Agreement memorializes the
terms of such arrangement.

 

In consideration
of the mutual obligations specified in this Agreement, and any compensation
paid to Contractor for her or his services as a consultant, the parties agree to the following:

 

1.             Work and Payment. Attached
to this Agreement as Exhibit A
hereto is a statement of the work to be performed by Contractor, Contractor’s
rate of payment for such work, expenses to be paid in connection with such
work, the term of this Agreement and such other terms and conditions as shall
be deemed appropriate or necessary for the performance of the work.

 

Reliant is not
obligated to issue any additional orders for work by Contractor under this
Agreement. Contractor should not commence services under this Agreement until
this Agreement is signed and delivered by an authorized representative of
Reliant.

 

2.             Nondisclosure and
Trade Secrets. During the term of this Agreement and in the course of
Contractor’s performance hereunder, Contractor may receive and otherwise be
exposed to confidential and proprietary information relating to Reliant’s
business practices, strategies and technologies. Such confidential and
proprietary information may include but not be limited to confidential and
proprietary information supplied to Contractor with the legend “Reliant
Confidential and Proprietary,” or equivalent, Reliant’s marketing and customer
support strategies, Reliant’s financial information, including sales, costs,
profits and pricing methods, Reliant’s internal organization, employee
information and customer lists, Reliant’s technology, including discoveries,
inventions, research and development efforts, processes, hardware/software
design and maintenance tools, samples, media and/or cell lines (and procedures
and formulations for producing any such samples, media and/or cell lines),
formulas, methods, product know-how and show-how, and all derivatives,
improvements and enhancements to any of the above which are created or
developed by Contractor under this Agreement and information of third parties
as to which Reliant has an obligation of confidentiality (collectively referred
to as “Information”).

 

 

Contractor
acknowledges the confidential and secret character of the Information, and
agrees that the Information is the sole, exclusive and extremely valuable
property of Reliant. Accordingly, Contractor agrees not to reproduce any of the
Information without the applicable prior written consent of Reliant, not to use
the Information except in the performance of this Agreement, and not to
disclose all or any part of the Information in any form to any third party,
either during or after the term of this Agreement. Upon termination of this
Agreement for any reason, including expiration of term, Contractor agrees to
cease using and to return to Reliant all whole and partial copies and
derivatives of the Information, whether in Contractor’s possession or under
Contractor’s direct or indirect control.

 

Contractor shall
not disclose or otherwise make available to Reliant in any manner any
confidential information of Contractor or received by Contractor from third
parties.

 

Contractor agrees
not to export, directly or indirectly, any U.S. source technical data acquired
from Reliant or any products utilizing such data to any countries outside the
United States which export may be in violation of the United States Export Laws
or Regulations. Nothing in this section releases Contractor from any obligation
stated elsewhere in this Agreement not to disclose such data.

 

This Section 2
shall survive the termination of this Agreement for any reason, including
expiration of term.

 

3.             Ownership of Work
Product. Contractor shall specifically describe and identify in Exhibit A to this Agreement all technology (a) which
Contractor intends to use in performing under this Agreement (b) which is
either owned solely by Contractor or licensed to Contractor with a right to
sublicense, and (c) which is in existence in the form of a writing or working
prototype prior to the effective date of this Agreement (“Background Technology”).

 

Contractor agrees
that any and all ideas, improvements, inventions and works of authorship
conceived, written, created or first reduced to practice in the performance of
work under this Agreement shall be the sole and exclusive property of Reliant
and hereby assigns to Reliant all its right, title and interest in and to any
and all such ideas, improvements, inventions and works of authorship.

 

Contractor further
agrees that except for Contractor’s rights in Background Technology, Reliant is
and shall be vested with all rights, title and interests including patent,
copyright, trade secret and trademark rights in all of Contractor’s work
product under this Agreement. Contractor hereby grants to Reliant a
non-exclusive, royalty free and worldwide right to use and sublicense the use
of Background Technology for the purpose of developing and marketing Reliant
products, but not for the purpose of marketing Background Technology separate
from Reliant products.

 

Contractor shall
execute all papers, including patent applications, invention assignments and
copyright assignments, and otherwise shall assist Reliant as reasonably
required to perfect in Reliant the rights, title and other interests in
Contractor’s work product expressly granted to Reliant under this Agreement. Costs
related to such assistance, if required, shall be paid by Reliant.

 

2

 

This Section 3
shall survive the termination of this Agreement for any reason, including
expiration of term.

 

4.             Indemnification/Release.
Contractor agrees to take reasonable steps to prevent injury to any persons
(including employees of Reliant) or damage to property (including Reliant’s
property) during the term of this Agreement and shall indemnify and hold
harmless Reliant and its officers, agents, directors and employees against any
claim, loss, judgment, expense (including reasonable attorneys’ and expert
witnesses’ fees and costs) and injury to person or property (including death)
resulting in any way from any act, omission or negligence on the part of
Contractor in the performance or failure to perform the scope of work under
this Agreement, excepting only those losses which are due to Reliant’s
negligence or misconduct.

 

Contractor
warrants that it has good and marketable title to all of the inventions,
Information, material, or work product made, created, conceived, written,
invented or provided by Contractor pursuant to the provisions of this Agreement
(“Work Product”). Contractor further warrants that the Work Product shall be
free and clear of all liens, claims, encumbrances or demands of third parties,
including any claims by any such third parties of any right, title or interest
in or to the Work Product arising out of any trade secret, copyright or patent.
Contractor shall indemnify, defend and hold harmless Reliant and its officers,
agents, directors, employees, and customers from and against any claim, loss,
judgment or expense (including reasonable attorneys’ and expert witnesses’ fees
and costs) resulting from or arising in any way out of any such claims by any
third parties which are based upon or are the result of any breach of the
warranties contained in this Section 4. In the event of a breach or threatened
breach of the foregoing warranty, Contractor shall, at no additional cost to
Reliant, replace or modify the Work Product with a functionally equivalent and
conforming Work Product, obtain for Reliant the right to continue using the
Work Product and, in all other respects, use its best efforts to remedy the
breach. Contractor shall have no liability under this Section 4 for any Work
Product created in accordance with detailed and specific design instructions
provided to Contractor by Reliant.

 

Should Reliant
permit Contractor to use any of Reliant’s equipment, tools or facilities during
the term of this Agreement, such permission will be gratuitous and Contractor
shall indemnify and hold harmless Reliant and its officers, agents, directors,
and employees from and against any claim, loss, judgment, expense (including
reasonable attorneys’ and expert witnesses’ fees and costs) and injury to
person or property (including death) arising out of the use of any such
equipment, tools or facilities, except for any such claim that is based upon
the alleged negligence of Reliant in permitting its use.

 

5.             Compliance With
Applicable Laws. Contractor warrants that to the best of his knowledge, all
material supplied and work performed under this Agreement complies with or will
comply with all applicable United States and foreign laws and regulations.

 

6.             Independent
Contractor. Contractor is an independent contractor, is not an agent or
employee of Reliant and is not authorized to act on behalf of Reliant. Contractor
will not be eligible for any employee benefits, nor will Reliant make
deductions from any amounts payable pursuant to this Agreement to Contractor
for taxes (income or other payroll-related taxes). Such taxes shall be the sole
responsibility of Contractor.

 

3

 

7.             Legal And Equitable
Remedies. Contractor hereby acknowledges and agrees that in the event of
any breach of this Agreement by Contractor, including, without limitation, the
actual or threatened disclosure of Information without the prior express
written consent of Reliant, Reliant will suffer an irreparable injury, such
that no remedy at law will afford it adequate protection against, or
appropriate compensation for, such injury. Accordingly, Contractor hereby
agrees that Reliant shall be entitled to specific performance of Contractor’s
obligations under this Agreement, as well as such further relief as may be
granted by a court of competent jurisdiction.

 

8.             General. The
parties’ rights and obligations under this Agreement will bind and inure to the
benefit of their respective successors, heirs, executors, and administrators
and permitted assigns. This Agreement and its Exhibits attached hereto and
hereby incorporated herein constitute the parties’ final, exclusive and
complete understanding and agreement with respect to the subject matter hereof,
and supersede all prior and contemporaneous understandings and agreements
relating to its subject matter. This Agreement may not be waived, modified,
amended or assigned unless mutually agreed upon in writing by both parties. In
the event any provision of this Agreement is found to be legally unenforceable,
such unenforceability shall not prevent enforcement of any other provision of
the Agreement. This Agreement shall be governed by the laws of the State of
California, excluding its conflicts of laws principles. Any notices required or
permitted hereunder shall be given to the appropriate party at the address
specified below or at such other address as the party shall specify in writing.
Such notice shall be deemed given upon personal delivery, or sent by certified
or registered mail, postage prepaid, three (3) days after the date of mailing.

 

4

 

IN
WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Consulting
Agreement as of the date first set forth above.

 

	
  RELIANT TECHNOLOGIES, INC.

  	
   

  	
  HENRY E. GAUTHIER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Eric Stang

  	
   

  	
  By:

  	
  /s/ Henry E. Gauthier

  	
   

  
	
  Eric Stang

  	
   

  	
   

  	
   

  
	
  Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIAL SECURITY NUMBER

  	
   

  
					

 

5

 

EXHIBIT A

 

WORK TO BE PERFORMED:

 

Contractor will act at the direction of Reliant’s Board of Directors
and Chief Executive Officer (the “CEO”) and perform the services requested by
the CEO and/or Reliant’s Board of Directors. Contractor will work at Reliant’s
Mountain View, California office at reasonable times, upon reasonable notice
and be available for consultation via e-mail or telephone. Duties of Consultant
shall include, without limitation: (i) continuing to actively monitor and
manage the Company’s involvement in the Black litigation, (ii) continuing
to actively monitor and manage the Company’s involvement in a potential
strategic patent arrangement as specified by the Board of Directors, and
(iii) continuing to be involved in the planning and introduction of new
products, including serving as a resource for Mr. DeBenedictis.

 

PAYMENT OF CONSULTING FEE:

 

Contractor will be paid a consulting fee of $8750 semi-monthly for
October and November 2006. Unless otherwise agreed by the Company Contractor
will not receive any cash compensation following November 30, 2006.

 

Contractor was entitled to earn up to four weeks of paid time off under
the Prior Agreement, and the parties agree that such vacation entitlement and
accrual terminated as of September 30, 2006, and that the balance of all
accrued time as of such date shall be paid to Consultant by October 31, 2006.

 

EQUITY COMPENSATION:

 

Reliant issued Contractor Warrant No. 38 (the “Warrant”) on February 1,
2005, a copy of which is attached hereto as Exhibit B,
which shall remain in full force and effect pursuant to the terms contained
therein, except as set forth below.

 

1.             The parties acknowledge and agree that a
total of 350,000 shares of Reliant Common Stock are vested under the Warrant,
pursuant to Sections 2.1, 2.2 and 2.3 thereof.

 

2.             The parties agree that the vesting
acceleration trigger of $35 million of net revenue for 2005 as specified in the
Warrant, was not achieved by Reliant and therefore, none of the 112,500 shares of
Common Stock potentially issuable under Section 2.4 of the Warrant are
currently vested. The parties further agree in consideration of the terms of
this Agreement, Section 2.4 of the Warrant is hereby deleted in its entirety.

 

3.             The parties agree that Section 2.5 of the
Warrant shall be amended and restated to read in full as follows:

 

2.5           112,500 shares will vest in the event that the Company completes its
initial public offering of the Company’s common stock pursuant to a
registration

 

A-1

 

statement filed pursuant to
the Securities Act of 1933, as amended (the “Act”),
the vesting of these shares to occur upon the effective date of such offering;

 

EXPENSES TO BE PAID:

 

For all Reliant-related travel, nationally or internationally, Reliant
will incur the expenses of Contractor’s spouse (or other travel companion) for
up to six trips per year.

 

Travel reimbursement shall include first class for travel in the United
States and business class for travel internationally, otherwise reimbursement
in accordance with the Company’s standard policies.

 

TERM OF AGREEMENT:

 

This Agreement shall terminate on December 31, 2007 unless otherwise
extended by Reliant and Contractor. This Agreement may be terminated by either
Reliant or Contractor with or without Cause (as such term is defined in the
Warrant). In the event this Agreement is terminated by Reliant without Cause or
Contractor resigns for Good Reason (as such term is defined in the Warrant)
prior to December 31, 2007, then Contractor will be entitled to receive the
accelerated vesting to which Contractor is entitled pursuant to the Warrant.

 

BACKGROUND TECHNOLOGY:

 

None.

 

OTHER MATTERS:

 

It is noted that Consultant is the Chairman of the Board of Directors
of Reliant and may be entitled to receive separate compensation for such
services.

 

A-2

 

EXHIBIT B

 

WARRANT

 

B-1Exhibit 10.21

 

AGREEMENT OF SUB-SUBLEASE

 

THIS AGREEMENT OF SUB-SUBLEASE
(this “Sub-Sublease:”) is made and
entered into as of this 22nd day of August, 2005, by and between MERCURY INTERACTIVE CORPORATION, a Delaware corporation
(hereinafter referred to as “Mercury”),
and RELIANT TECHNOLOGIES, INC., a Delaware
corporation (hereinafter referred to as “Reliant”).

 

RECITALS

 

This Sub-Sublease is made with reference to the
following facts and understandings, and with the following intentions:

 

A.                                   Pursuant
to that certain Lease, dated as of January 31, 1997, as subsequently amended by
that certain First Amendment to Lease Agreement, dated as of March 31, 1997,
that certain Second Amendment to Lease Agreement, dated as of April 15, 1997,
and that certain Third Amendment to Lease Agreement, dated as of April 30, 1997
(collectively, the “Prime Lease”), 464 Ellis
Street Associates, L.P., a California limited partnership (“Prime Landlord”), presently leases
to Netscape Communications Corporation, a Delaware corporation (“Master Sublandlord”) three (3)
separate, adjacent buildings having addresses at 464 Ellis Street (“Building 20”), 466 Ellis Street (“Building 21”) and 468 Ellis Street (“Building 22”), Mountain View,
California (collectively, “Phase 1”). A
copy of the Prime Lease is attached hereto and made a part hereof as Exhibit A.

 

B.                                     Pursuant
to that certain Agreement of Sublease, dated as of February 28, 2005 (“Sublease”), Master Sublandlord
subleases Phase I to Mercury. A copy of the Sublease is attached hereto and
made a part hereof as Exhibit B.

 

C.                                     Mercury
desires to sub-sublease to Reliant a portion of Building 20, consisting of
approximately 53,118 square feet, and Reliant desires to sub-sublease that
portion of Building 20 from Mercury, on the terms and conditions set forth in
this Sub-Sublease.

 

D.                                    Capitalized
terms used in this Sub-Sublease but not otherwise defined shall have the
meaning ascribed to such terms in the Prime Lease and/or the Sublease, as
applicable.

 

NOW THEREFORE, for and in
consideration of the mutual covenants and agreements hereinafter set forth, the
parties hereto agree as follows:

 

1.                                      Subleased
Premises

 

a.                                       Subleased
Premises Defined. Subject to receipt of Prime Landlord’s written Consent
and Master Sublandlord’s written Consent to this Sub-Sublease in accordance
with Section 28 below, Mercury does hereby
sub-sublease to Reliant, and Reliant does hereby sub-sublease from Mercury, for
the term and upon the conditions hereinafter provided, the Subleased Premises,
as more particularly described on the plan attached hereto and made part hereof
as Exhibit C. Mercury and Reliant hereby
stipulate that the aggregate rentable area of the Subleased Premises is
fifty-three thousand one hundred eighteen (53,118) rentable square feet and
agree that this square footage shall be conclusive for all purposes under this
Sub-Sublease.

 

1

 

b.                                       Condition
of Subleased Premises. Subject to the provisions of this Section 1(b), the Subleased Premises are sub-sublet to Reliant
in their “as is, where-is” condition existing on the date delivered to Reliant.
Mercury shall have no obligation to complete any alterations, improvements,
repairs or decorations to the Subleased Premises either prior to the time
possession is given to Reliant or during the Term (as defined below). The
foregoing sentence notwithstanding, the roof, roof membrane, mechanical,
electrical, plumbing and HVAC systems serving the Subleased Premises, and the
sidewalks, driveways and parking lot serving Building 20, shall be in good
working condition on the date that Mercury delivers possession of the Subleased
Premises to Reliant pursuant to Section 3
below.

 

c.                                       Initial
Improvements. Reliant may, at its option and subject to the provisions of
the Prime Lease, including, without limitation, Article 8
thereof, and the Sublease, including, without limitation, Section 1.c,
thereof, complete certain initial improvements to prepare the Subleased
Premises for Reliant’s occupancy thereof as more particularly described in the
Work Letter Agreement (“Workletter”)
attached hereto and made a part hereof as Exhibit D (the “Initial Improvements”), at Reliant’s
sole cost and expense without any contribution or improvement allowance from
Mercury except for the Allowance described in the Workletter; provided,
however, Reliant shall not make or permit anyone to make any Initial
Improvements without the prior written consent of Mercury, which shall not be unreasonably
withheld or delayed, and of Prime Landlord in accordance with the Prime Lease
and of Master Sublandlord in accordance with the Sublease. In connection with
the foregoing, Reliant shall submit to Mercury, for prior written approval by
Mercury, which shall not be unreasonably withheld or delayed, and Prime
Landlord and Sublandlord, complete plans and specifications for any and all Initial
Improvements, including, without limitation, schematic designs and work
drawings. Any and all costs and expenses associated with the acquisition of
cabling, equipment, furniture, security systems (other than the card key/badge
access system to be maintained by Mercury pursuant to this Sub-Sublease), or
other personal property for Reliant or the Subleased Premises or the
installation or placement of any of the foregoing within the Subleased Premises
or with the project management for performance of the Initial Improvements (collectively,
“Reliant’s Personal Property and Services”),
shall be paid for by and be the sole responsibility of Reliant, and the
Allowance shall not be applicable thereto. Mercury acknowledges and agrees that
Reliant shall not be required to remove any Initial Improvements upon the
expiration or earlier termination of this Sub-Sublease, and that if removal is
required by Prime Landlord or Sublandlord, the obligation for such removal and
the costs in connection therewith shall be the responsibility of Mercury.

 

2.                                      Term.
Provided Mercury has received Prime Landlord’s Consent to this Sub-Sublease in
accordance with the Prime Lease and Master Sublandlord’s Consent to this Sub-Sublease
in accordance with the Sublease, the term of this Sub-Sublease (the “Term”) shall be for that period
commencing on the earlier of (i) the date that is sixty (60) days after the
Subleased Premises has been delivered to Reliant in the required condition, and
(ii) the date upon which Reliant has substantially completed the Initial
Improvements and obtained all governmental approvals required to permit
occupancy of the Initial Improvements (“Commencement Date”),
and expiring at 11:59 p.m. on the date that is the last day of the thirty-sixth
(36th) month following the Commencement Date (“Expiration
Date”).

 

 

2

 

3.                                      Delivery
of Subleased Premises.

 

a.                                       Delivery.
Mercury shall deliver the Subleased Premises to Reliant in the condition
required by this Sub-Sublease promptly following receipt of Prime Landlord’s
and Master Sublandlord’s Consents to this Sub-Subleases, as set forth in Section 28.a.(i) and (ii)
below, and the Consents to the Testing Lab Use, as set forth in Section 28.a.(iii) below, and, from and after the date on
which Mercury delivers the Subleased Premises to Reliant (the ”Delivery Date”) until the
Commencement Date (“Early Access Period”),
Reliant shall have the right, subject, however, to having obtained Prime
Landlord’s and Master Sublandlord’s prior written consents to such early access
for purposes of the following, to enter the Subleased Premises for purposes of
moving Reliant’s personal property into, performing the Initial Improvements
to, and otherwise preparing the Subleased Premises for Reliant’s occupancy. All
terms and conditions of this Sub-Sublease shall apply to the Early Access Period
except for the obligation to pay Rent (as defined below). Notwithstanding
anything to the contrary contained in this Sub-Sublease, Reliant shall not have
the right to commence the Initial Improvements (which commencement shall
include demolition work) until (i) Mercury, Prime Landlord and Master
Sublandlord have approved the Sublease, the Testing Lab Use and the Project
Plans for the Initial Improvements as set forth in Sections
 28.a.(i) through (iv) below, and
(ii) Reliant has delivered to Mercury the Letter of Credit pursuant to the
provisions of Section 12.b below. For
avoidance of doubt, if Reliant does not submit the Project Plans as required by
the Workletter at the time of execution and delivery of this Sub-Sublease, the “Delivery Date” for all purposes of
this Sub-Sublease shall be the date on which Mercury delivers the Subleased
Premises to Reliant after receipt of the Consents set forth in Sections  28.a.(i) through (iii)
below.

 

b.                                       Outside
Termination Date. Notwithstanding the foregoing, in the event Mercury
fails, as a result of occurrences other than a Reliant default hereunder or
Force Majeure Events, to deliver (i) all of the Consents (as defined in Section 28.a. below, but subject to the provisions of Section 28.b below) and (ii) the Subleased Premises to
Reliant within sixty (60) days following the date of this Sub-Sublease (the “Outside Termination Date”), then
Reliant, or Mercury may terminate this Sub-Sublease by providing written notice
thereof to the other within ten (10) days after the Outside Termination Date,
in which case this Sub-Sublease shall terminate on the day following the last
day of the ten (10 day notice period (unless Mercury delivers the Subleased
Premises to Reliant during such ten (10) day period, in which case this
Sub-Sublease shall remain in full force and effect), neither party shall have
any further rights or obligations hereunder (subject, however, to Reliant’s
obligations and Mercury’s right pursuant to Section 28.b
below regarding removal of Initial Improvements and/or restoration of the
Subleased Premises, if applicable), and Mercury shall return to Reliant all
sums paid by Reliant to Mercury in connection with Reliant’s execution hereof. The
return of all sums paid by Reliant to Mercury shall be Reliant’s sole and
exclusive remedy in the event of a termination pursuant to this Section.

 

4.                                      Use.
Reliant shall use and occupy the Subleased Premises solely for office,
distribution, research, development, and/or light manufacturing, and for no
other purpose, pursuant to and in accordance with the Prime Lease and the
Sublease. Notwithstanding the foregoing, Mercury acknowledges that Sublessee
intends to use a portion of the Subleased Premises for testing laboratory space
in which Reliant’s product are tested by doctors, and patients (“Testing Lab Use”). Mercury makes no
representation or warranty of any kind with 

 

3

 

respect to whether the Testing Lab Use is permitted by
applicable law (including, without limitation, zoning and land use regulations
and laws, and health and safety codes and regulations), or by applicable
encumbrances affecting the Subleased Premises, including, without limitation,
covenants, conditions and restrictions, declarations and easements
(collectively “Applicable Requirements”). Reliant
shall be solely responsible for determining whether the Testing Lab Use is
permitted for the Subleased Premises under Applicable Requirements. Subject to
having obtained the prior written consent of Prime Landlord and Master
Sublandlord to the Testing Lab Use, and subject to the Testing Lab Use being
permitted by Applicable Requirements, Mercury hereby agrees that Reliant may
use up to 2,300 square feet of the Subleased Premises for the Testing Lab Use. If,
however, either or both of Prime Landlord and Master Sublessor do not consent
to the Testing Lab Use, or if Applicable Requirements do not permit the Testing
Lab Use, Mercury’s consent shall be deemed rescinded without any further action
required on the part of Mercury.

 

5.                                      Base
Rent.

 

a.                                       Base
Rent. Subject to the provisions of Section 5.b.
below, from and after the Commencement Date and throughout the Term, Reliant
shall pay, as base rent for the Subleased Premises, in advance and in lawful
currency of the United States on or before the first day of each calendar
month, without deduction or offset, in the amounts set forth below. (“Base Rent”):

 

	
  Term

  	
   

  	
  Rental Rates/SF/Month

  
	
   

  	
   

  	
   

  
	
  Rent Commencement Date
  - 

  last day of twelfth month of Term

  	
   

  	
  $1.05 psf, or
  $55.773.90/mo

  
	
   

  	
   

  	
   

  
	
  First anniversary of
  Commencement Date - 

  last day of twenty-fourth month of Term

  	
   

  	
  $1.08 psf, or
  $57.367.44/mo

  
	
   

  	
   

  	
   

  
	
  Second anniversary of
  Commencement Date 

  - Expiration Date

  	
   

  	
  $1.11 psf, or
  $58.960.98/mo

  

 

Reliant shall pay said
Base Rent to Mercury or to such other party as Mercury may designate at its
address set forth in Section 22
below, or at such other address as Mercury may hereafter designate in writing.

 

b.                                       Base
Rent Abatement. Notwithstanding anything to the contrary contained in this
Sublease, Reliant shall not be obligated to pay Base Rent under this Sub-Sublease
(“Rent Abatement Period”) until the
later of (i) January 1, 2006, or (ii) the sixty-first (61st) day
following the Delivery Date (“Rent Commencement Date”).
Additional Rent, as defined below, shall not be abated during the Rent
Abatement Period.

 

c.                                       Payment
of First Month’s Rent. Upon execution of this Sub-Sublease by Reliant,
Reliant shall pay to Mercury the sum of $55,773.90, which sum shall constitute
Base Rent for the month of the Term commencing on the Rent Commencement Date.

 

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6.                                      Additional
Rent.

 

a.                                       Real
Estate Taxes, Expenses. Commencing on the Commencement Date, Reliant shall
pay to Mercury, as additional rent (“Additional Rent”),
all Additional Charges (as defined in the Prime Lease), including but not
limited to Real Estate Taxes, Expenses, and all other such amounts payable by
Mercury under the Sublease and allocable to the Subleased Premises (excluding
Specific Default Charges). As used herein, “Specific
Default Charges” shall mean, to the extent not caused in whole or
in part by Reliant’s default hereunder, any amounts resulting solely from a
default by Mercury under the Sublease and identified in a notice of default
delivered by Master Sublandlord to Mercury, which amounts may include, without
limitation, any late fees or interest payable by Mercury pursuant to Section 4(e) of the Prime Lease. Without limiting the
generality of the foregoing, Reliant shall pay to Mercury, as Additional Rent,
all charges for (1) alterations (excluding charges for alterations made by Mercury
prior to the date hereof), (ii) all amounts payable to by Reliant pursuant to Section 2(c) of the Workletter, and (iii) any additional
services provided to the Subleased Premises or otherwise in connection wit the
Prime Lease, including, without limitation, charges and fees for after-hours
heating and air conditioning services, if any. Mercury shall provide Reliant
with copies of all relevant statements and bills received by Mercury pursuant
to the applicable provisions of the Prime Lease and Sublease. Reliant shall pay
one-twelfth of the annual Expenses and Real Property Taxes, as defined and
estimated pursuant to Article 4 of
the Prime Lease, respect to the Subleased Premises and Sublease Term not later
than the first day of each month during the Term until the Rent Commencement
Date and, thereafter, to Mercury together with each monthly payment of Base
Rent, subject to annual reconciliation in accordance with Section
4(c)(3) of the Prime Lease. Notwithstanding the foregoing, if the
Prime Lease requires Mercury to pay Expenses or Real Estate Taxes other than on
a monthly basis based on estimates of such costs, Reliant shall make payments
of each element of Expenses or Real Estate Taxes on the later of (i) two (2)
business days prior to the date on which Mercury in obligated to pay the
applicable sum under the Prime Lease (only if the applicable element of
Expenses and/or Real Estate Taxes is payable by Mercury under the Prim Lease),
or (ii) twenty (20) business days after receipt of a statement from Mercury
setting forth the amount of Real Estate Taxes and/or Expenses due. Reliant
shall pay all other Additional Rent within twenty (20) business days after
receipt of an invoice therefore from Mercury. Reliant’s obligation to pay
Additional Rent shall survive the expiration or earlier termination of this
Sub-Sublease with respect to the Subleased Premises and Sublease Term.

 

b.                                       Utilities,
Janitorial, Telecommunications. In addition to Base Rent and the Additional
Rent described in Section 6.a
above, Reliant shall pay directly to the provider Reliant’s own telephone,
telecommunications, internet and data communications, utilities, janitorial and
security charges. All monies required to be paid by Reliant under this
Sub-Sublease (except for Base Rent, as defined above), including, without
limitation, any amounts payable by Mercury to Master Sublandlord under the
Sublease or to Prime Landlord under the Prime Lease with respect to the
Subleased Premises which arise as a result of Reliant’s default, beyond
applicable notice and cure periods, under this Sub-Sublease, shall be deemed
Additional Rent. Monthly Base Rent and Additional Rent hereinafter collectively
shall be referred to as “Rent.”

 

5

 

7.                                      Furniture.
During the Term, Reliant may use the furniture, including, without limitation,
the work stations, and office and conference room tables and chairs, currently
located in the Subleased Premises, all as more particularly described in Exhibit D hereto (the “Furniture”),
at no additional Base Rent expense to Reliant. Without limiting the generality
of the foregoing, “Furniture” shall also include
the cables connecting each desktop area within the Subleased Premises to the
central computer room, including all related patch panels and the racks upon
which such patch panels are situated, and all data and voice wiring currently
located in the Subleased Premises, but excluding Mercury’s telephone switches
and other telephone and computer equipment. Reliant shall be responsible for
maintaining, repairing and insuring the Furniture during the Term, but Mercury
shall pay the personal property taxes with respect thereto. Upon the expiration
or earlier termination of this Sub-Sublease, Reliant shall surrender the
Furniture to Mercury in the condition received, normal wear and tear excepted. Reliant
shall use the furniture in its “as is, where is, with all faults” condition,
and Mercury makes no representations or warranties of any kind whatsoever,
express or implied, with respect to the Furniture, including, without
limitation, any implied warranties as to merchantability or fitness for a
particular purpose. Mercury shall not be responsible for the maintenance,
repair or replacement of any furniture.

 

8.                                      Maintenance
and Repair.

 

a.                                       Mercury’s
Obligations. Notwithstanding anything to the contrary contained in the
Prime Lease or the Sublease, Mercury, at no cost to Reliant, shall be
responsible for the cost of maintaining the roof, roof structure, foundation,
structural components and exterior walls of the Sublease Premises. Mercury also
shall maintain and repair, at no cost to Reliant, the card key/badge access
security system for Building 20, the Cafeteria (as defined below) and the
Fitness Center (as defined below). In addition, Mercury shall Mercury’s vendor
monitor and maintain the fire panels serving the Subleased Premise at no cost
to Reliant. Notwithstanding the foregoing to the contrary, however, if any
maintenance or repair of any of the foregoing items is the result of any negligence
or willful misconduct of Reliant, its agents, employees, contractors or
invitees, Mercury shall perform the same at Reliant’s sole cost and expense,
subject to the waiver of subrogation set forth in this Sub-Sublease, and
Reliant shall reimburse Mercury for such costs as Additional Rent upon demand,
together with interest thereon at the maximum rate permitted by law from the
date incurred by Mercury until paid by Reliant.

 

b.                                       Reliant’s
Obligations. Except as set forth in Section 8.a.
above and Section 9.a below, Reliant shall
be responsible for the maintenance and repair obligations with respect to the
Sublease Premises imposed upon “Tenant”
pursuant to the Prime Lease and “Subtenant”
pursuant to the Sublease.

 

9.                                      Obligations
Under the Prime Lease, Sublease.

 

a.                                       Incorporation
of Prime Lease. This Sub-sublease and Reliant’s rights under this
Sub-Sublease shall at all times be subject to and subordinate to the Prime
Lease, and is made upon the terms, covenants, and conditions of the Prime Lease
incorporated herein with the same force and effect as if fully set forth herein
at length, and except as otherwise expressly provided for in this Sub-Sublease,
Reliant shall keep, observe and perform or cause to be kept, 

 

6

 

observed and performed, faithfully those terms,
covenants and conditions of the “Tenant”
under the Prime Lease which are incorporated herein with respect to the
Subleased Premises and the Sublease Term. In the event of a conflict between
the terms and conditions of this Sub-Sublease and the Prime Lease, as between
Mercury and Reliant, the terms and conditions of this Sub-Sublease shall
control. The parties specifically agree that any provisions relating to any
construction obligations of “Landlord” under
the Prime Lease, are not incorporated herein; provided, however, the foregoing
provision shall in no way be construed as limiting Mercury’s obligation to use
commercially reasonable, good faith efforts to enforce, pursuant to Section 9(b) below, to enforce the obligation of Master
Sublandlord to use commercially reasonable good faith efforts to enforce the
obligations of Prime Landlord under the Prime Lease, including, without
limitation, the obligations of Prime Landlord set forth in Section 8(a)
of the Prime Lease. For the  purposes of
this Sub-Sublease and for purposes of the Prime Lease as incorporated herein,
all references to the “Premises”
in the Prime Lease shall be deemed to refer only to the Subleased Premises, all
references to the “Term” or “Initial Term” therein shall refer to
the Term under this Sub-Sublease, all references to “Landlord”
therein shall, except as provided otherwise herein and subject to the first
sentence of Section 9(b) of this
Sub-Sublease, refer to Mercury, excluding any such references to “Landlord” under Article 40
of the Prime Lease and further excluding any liabilities assumed by “Landlord” under the Prime Lease that
are not expressly assumed by Mercury pursuant to the Sublease; and all
references to “Tenant” therein shall refer to Reliant except as expressly set
forth in this Sub-Sublease. Notwithstanding the foregoing, the following
provisions of the Prime Lease are hereby expressly excluded and shall not be
incorporated in this Sub-Sublease:  Basic
Lease information pertaining to Tenant, Tenant’s Address, the Premises, the
permitted uses of the Subleased Premises, the Lease Term Scheduled Occupancy
Date, Scheduled Rent Commencement Date, Expiration Date, Monthly Base Rent,
Base Rent Adjustments, Security Deposit, Broker and Broker’s Fees; Sections 1(a) and (b); Section 3(other than the first
three (3) sentences of Section 3(b)
which are incorporated herein but are subject to the limitations set forth in Section 9(b) of this Sub-Sublease); Section 4(b); Section 8(e);
subsection (ii) in Section 13;
the second sentence of Section 14;
subsection (iii) in Section 21(a);
Section 21(b); the third sentence
of Section 21(e)(1); 21(e)(2); Section 24; Section 34; the last two sentences of Section 36; 38; 39; 40(d); 43; 44; Exhibits “D” and “M”; and the
First, Second and Third Amendments to Lease Agreement. In addition, (1)
references to “Tenant” in the first sentence
of Section 4(a)(1) shall mean only
Mercury; and (2) references to “Landlord”
in Section 1(d), Section 5
(with respect only to “Landlord’s”
assumption of the management of the Premises and Common Area, which management
obligations have been assumed by Prime Landlord), Section 8(a),
Section 9 (with respect only to
Landlord’s maintenance, repair and replacement obligations but not with respect
to the limitations on “Landlord’s”
liability set forth in Section 9(f)
of the Prime Lease), Section 12(e),
Section 17, Section 22,
Section 23, the first sentence of Section 24 and Section 40(c)(1)
shall mean only Prime Landlord. In addition, for purposes of this Sub-Sublease,
the reference to “Occupancy Date”, as first
described in Section 3(a) of the Prime Lease,
and used throughout the Prime Lease, shall mean the Delivery Date with respect
to the Subleased Premises. Further, all grace periods specified in the Prime
Lease shall be deemed deleted from this Sub-Sublease, and Reliant’s grace
periods shall be as set forth in Section 9.c.
below. Further, Section 26(b) of the Prime Lease
is incorporated herein, subject, however, to the provisions of this
Sub-Sublease. Notwithstanding any provision of the Prime Lease, including
without limitation Section 9(b)
of the Prime Lease, Reliant shall have no obligation to perform maintenance and
repairs on the 

 

7

 

Common Areas or any portion of the Project other than
the Subleased Premises. Further, notwithstanding the provisions of Section 12(c)(1) of the Prime Lease, Reliant shall not
have any obligation to insure or add as an additional insured the SFWD, the
City and County of San Francisco, its Public Utilities Commission or any
other person or entity with an interest in the Common Area for any liability
arising out of the ownership, maintenance, repair or improvement of any Common
Areas, subject, however, to any objection by Prime Landlord or Master
Sublandlord, in which case Reliant shall be required to comply with Prime
Landlord’s and/or Master Sublandlord’s requirements with respect thereto. Tenant’s
business income and extra expense insurance shall be for a period of not less
than twelve (12) months.

 

b.                                       Mercury’s
Obligations Under Prime Lease. Mercury does not assume any obligation to
perform the terms, covenants, conditions, provisions and agreements contained
in the Prime Lease on the part of Prime Landlord to be performed. In the event
Prime Landlord shall fail to perform any of the terms, covenants, conditions,
provisions and agreements contained in the Prime Lease on its part to be
performed, Mercury shall have no liability to Reliant unless such failure by
Prime Landlord is a result of a breach by Mercury. Notwithstanding anything to
the contrary contained in this Sub-Sublease, Mercury shall use commercially
reasonable good faith efforts to enforce the obligation of Master Sublandlord
to use commercially reasonable good faith efforts to enforce the obligations of
Prime Landlord under the Prime Lease, and such efforts shall include, without
limitation:  (i) upon Reliant’s
written request, notifying Master Sublandlord of any nonperformance of Prime
Landlord under the Prime Lease and requesting that Master Sublandlord perform
its obligation to enforce Prime Landlord’s obligations thereunder; and
(ii) after the time for Master Sublandlord to use its commercially
reasonable good faith efforts to obtain Prime Landlord’s performance has
expired, cooperating with Reliant, at Reliant’s sole cost and expense, to
enforce Master Sublandlord’s obligation to use commercially reasonable good
faith efforts to obtain performance of Prime Landlord’s obligations, which
cooperation shall include, in cases of any uncured breach by Prime Landlord
that, in Reliant’s and Mercury’s reasonable opinions, materially impairs the
conduct of Reliant’s business operations within the Subleased Premises,
instituting legal proceedings so long as Reliant is not in default, beyond any
applicable notice and cure periods, of its payment obligations under this Sub-Sublease,
in the name of Reliant with legal counsel selected by Mercury and reasonably
approved by Reliant, to enforce the aforesaid unperformed, material Prime
Landlord obligation under the Prime Lease (including executing such documents
as may be reasonably required by such legal counsel). Mercury and Reliant shall
be entitled to jointly control the conduct of the litigation; provided, however
that in the conduct of any such litigation, both Mercury and Reliant shall have
an obligation to act in a commercially reasonable manner and with the goal of
employing a strategy which is designed to secure performance by Master Sublandlord
of the obligation to use commercially reasonable good faith efforts to obtain
performance of the aforesaid unperformed, material Prime Landlord obligation
under the Prime Lease, provided no action, including settlement, may be taken
or required by either party in connection with such litigation to the extent
such action may materially and adversely affect the other party’s rights or
obligations under the Prime Lease, the Sublease or this Sub-Sublease without
such other party’s consent, which shall not be unreasonably withheld,
conditioned, or delayed. All costs incurred in connection with any enforcement
action (including reasonable attorneys’ fees and consultant and expert witness
fees) undertaken by Mercury at the request of Reliant shall be paid to Mercury
by Reliant, as Additional Rent, upon Mercury’s delivery to Reliant of
reasonably detailed invoices therefore, after deduction of any damages,
settlement 

 

8

 

proceeds, award or other amounts paid to Mercury on
account of such action. In the event of any dispute regarding responsibility
for payment of such costs, or any dispute regarding whether either party is
acting in a commercially reasonable manner and with the goal of employing a
strategy which is designed to secure, subject to the conditions above,
performance by Master Sublandlord of the obligation to use commercially
reasonable good faith efforts to obtain performance of the aforesaid
unperformed, material Prime Landlord obligation under the Prime Lease, such
dispute shall be resolved by arbitration as set forth in Article 41
of the Prime Lease. Reliant shall indemnify Mercury against, and hold Mercury
harmless from, all costs, expenses, claims, counter-claims, cross-claims,
losses, and liabilities incurred by Mercury in connection with any initiation
of litigation by Mercury pursuant to the foregoing provisions, except to the
extent such litigation is caused by Mercury’s default under this Sub-Sublease
or, to the extent not caused by Reliant, by Mercury’s default under the Prime
Lease or the Sublease. The execution of this Sub-Sublease and Prime Landlord’s
Consent thereto shall not relieve Mercury of any of its obligations to Prime
Landlord under the Prime Lease as incorporated into the Sublease.

 

c.                                       Subject
to Sublease. This Sub-Sublease and Reliant’s rights under this Sub-Sublease
shall at all times be subject to and subordinate to, and is made upon all of
the terms, covenants, and conditions of, the Sublease, with the same force and
effect as if fully set forth herein at length, and except as otherwise
expressly provided for in this Sub-Sublease, Reliant shall keep, observe and
perform or cause to be kept, observed and performed, faithfully all those
terms, covenants and conditions of Mercury under the Sublease with respect to
the Subleased Premises. In the event of a conflict between the terms and
conditions of this Sub-Sublease and the Sublease, as between Mercury and
Reliant, the terms and conditions of this Sub-Sublease shall control. For the
purposes of this Sub-Sublease and for purposes of the Sublease as applied to
the Reliant, all references to the “Demised Premises”
in the Sublease shall be deemed to refer only to the Subleased Premises, all
references to the “term” therein shall refer to the Term under this
Sub-Sublease, all references to “Sublandlord”
therein shall, except as provided otherwise herein and subject to the first
sentence of Section 9(d) of this
Sub-Sublease, refer to Mercury, excluding any liabilities assumed by “Sublandlord” under the Sublease that
are not expressly assumed by Mercury pursuant to this Sub-Sublease; and all
references to “Subtenant” therein shall
refer to Reliant except as expressly set forth in this Sub-Sublease. In
addition, except as expressly set forth to the contrary in this Sub-Sublease,
all representations, warranties, and obligations of “Subtenant”
with respect to “Initial Improvements” under the Sublease shall be deemed to be
representations, warranties, and obligations of Reliant with respect to the “Initial Improvements” under this
Sub-Sublease. Notwithstanding the foregoing, the following provisions of the
Sublease are hereby expressly excluded and shall not be incorporated in this
Sub-Sublease:  Sections 1,
2, 3, 5, 6, 7, 8, 12, 17.d, 18, 19, 20, 24, 25, 26, 31, 32, 33, 34 and 35, and
Exhibits A, B, D, E, F and G. Anything in the Prime Lease and the Sublease
notwithstanding, for purposes of determining compliance by Reliant with the
provisions hereof, each grace period set forth in the Prime Lease shall be
reduced by (i) five (5) days for all grace periods ten (10) days or
longer, (ii) three (3) days for all grace periods less than ten (10) days
and longer than five (5) days, and (iii) two (2) days for all grace
periods of five (5) days or shorter. Mercury shall have all of the rights of
Prime Landlord under the Prime Lease and of Master Sublandlord under the
Sublease as against Reliant.

 

9

 

d.                                       Mercury’s
Obligations Under Sublease. Mercury does not assume any obligation to
perform the terms, covenants, conditions, provisions and agreements contained
in the Sublease on the part of Master Sublandlord to be performed. In the event
Master Sublandlord shall fail to perform any of the terms, covenants,
conditions, provisions and agreements contained in the Sublease on its
part  to be performed, Mercury shall have
no liability to Reliant unless such failure by Master Sublandlord is a result
of a default by Mercury. Notwithstanding anything to the contrary contained in
this Sub-Sublease. Mercury shall use commercially reasonable good faith efforts
to enforce the obligation of Master Sublandlord under the Sublease, and such
efforts shall include, without limitation: 
(i) upon Reliant’s written request, notifying Master Sublandlord of
any nonperformance under the Sublease and requesting that Master Sublandlord
perform its obligations thereunder; and (ii) after the time for Master
Sublandlord to cure a breach has expired, cooperating with Reliant, at Reliant’s
sole cost and expense, to enforce Master Sublandlord’s obligations, which
cooperation shall include, in cases of any uncured breach by master Sublandlord
that, in Reliant’s and Mercury’s reasonable opinions, materially impairs the
conduct of Reliant’s business operations within the Subleased Premises,
instituting legal proceedings so long as Reliant is not in default, beyond any
applicable notice and cure periods, of its payment obligations under this Sub-Sublease,
in the name of Reliant with legal counsel selected by Mercury and reasonably
approved by Reliant, to enforce the aforesaid unperformed, material Master
Sublandlord obligation under the Sublease (including executing such documents
as may be reasonably required by such legal counsel). Mercury and Reliant shall
be entitled to jointly control the conduct of the litigation; provided, however
that in the conduct of any such litigation, both Mercury and Reliant shall have
an obligation to act in a commercially reasonable manner and with the goal of
employing a strategy which is designed to secure performance by Master
Sublandlord of the obligation to use commercially reasonable good faith efforts
to obtain performance of the aforesaid unperformed, material Sublandlord
obligation under the Sublease, provided no action, including settlement, may be
taken or required by either party in connection with such litigation to the
extent such action may materially and adversely affect the other party’s rights
or obligations under the Prime Lease, the Sublease or this Sub-Sublease without
such other party’s consent, which shall not be unreasonably withheld,
conditioned, or delayed. All costs incurred in connection with any enforcement
action (including reasonable attorneys’ fees and consultant and expert witness
fees) undertaken by Mercury at the request of Reliant shall be paid to Mercury
by Reliant, as Additional Rent, upon Mercury’s delivery to Reliant of
reasonably detailed invoices therefore, after deduction of any damages,
settlement proceeds, award or other amounts paid to Mercury on account of such
action. In the event of any dispute regarding responsibility for payment of
such costs, or any dispute regarding whether either party is acting in a
commercially reasonable manner and with the goal of employing a strategy which
is designed to secure, subject to the conditions above, performance by Master
Sublandlord of the aforesaid unperformed, material Master Sublandlord
obligation under Sublease, such dispute shall be resolved by arbitration as set
forth in Article 41 of the Prime Lease. Reliant
shall indemnify Mercury against, and hold Mercury harmless from, all costs,
expense, claims, counter-claims, cross-claims, losses, and liabilities incurred
by Mercury in connection with any initiation of litigation by Mercury pursuant
to the foregoing provisions, except to the extent such litigation is caused by
Mercury’s default under this Sub-Sublease or, to the extent not caused by
Reliant, by Mercury’s default under the Prime Lease or the Sublease. The
execution of this Sub-Sublease and Master Sublandlord’s consent thereto shall
not relieve Mercury of any of its obligations to Master Sublandlord under the
Sublease. The execution of 

 

10

 

this Sub-Sublease and Master Sublandlord’s Consent thereto
shall not relieve Mercury of any of its obligations to Master Sublandlord under
the Sublease.

 

e.                                       Limitation
on Liability. Anything in the Prime Lease and/or the Sublease to the
contrary notwithstanding, and excluding Mercury’s indemnity obligation under Section 11.d hereof, the liability of Mercury for its
obligations under this Sub-Sublease shall in no event exceed (i) the
aggregate of all Base Rent payable by Reliant hereunder during the twenty-four
(24) month period immediately preceding the applicable event giving rise to
such Mercury liability, or (ii) if twenty-four (24) months have not passed
at the time of such event, the calculation of the twenty-four (24) month
aggregate of all Base Rent payable by Reliant shall be based on the Base Rent payable
by Reliant during the month in which such event occurs. No personal liability
shall at any time be asserted or enforceable against Mercury’s stockholders,
directors, officers or partners on account of any of Mercury’s obligations or
actions under this Sub-Sublease.

 

10.                               Insurance.
Reliant shall obtain and at all times during the term hereof maintain, at
its sole cost and expense, policies of insurance required by Article 12 of the Prime Lease. Reliant shall deliver to
Mercury certificates of such insurance at the beginning of the term of this
Sub-Sublease. All such insurance policies shall name Mercury, Sublandlord and
Prime Landlord and any other entity named in Article 12
of the Prime Lease as additional insureds, as their interests may appear.

 

11.                               Liability
for Hazardous Materials.

 

a.                                       Obligations.
Pursuant to Article 40 of the Prime
Lease, Reliant is aware that the Subleased Premises are subject to remediation
orders issued by the U.S. Environmental Protection Agency (“EPA”) as set forth on Exhibit L to the Prime Lease. Reliant acknowledges
receipt of copies of the reports listed on Schedule 1
to such Exhibit L and has been provided
sufficient opportunity to review the additional reports listed on Schedule 2 to such Exhibit L.
Reliant agrees to comply with all obligations of “Tenant”
under such Article 40, including,
without limitation, the restrictions and disclosure requirements set forth in Section 40(f) and, for the avoidance of doubt, Reliant
acknowledges and agrees that all limitations on the rights of “Tenant” under Article 40
of the Prime Lease shall apply to and similarly limit the rights of Reliant
hereunder. To the extent that the “Tenant”
under Section 40(b) of the Prime Lease
has agreed to release, waive and indemnify the “Landlord”
thereunder, but only with respect to the Subleased Premises, Sublease Term or
the acts or omissions of Reliant, its agents, servants, contractors and
employees, Reliant releases Mercury, Master Sublandlord and Prime Landlord from
any liability for, and waives all claims against Mercury, Master Sublandlord
and Prime Landlord, and shall indemnify, defend and hold harmless Mercury, its
agents, servants, contractors and employees, Master Sublandlord, its agents,
servants, contractors and employees, and all Landlord Parties (as defined in
the Prime Lease) against any and all claims, suits, loss, costs and other
liabilities for which the “Tenant” is
responsible as described in and subject to Section 40(b)
of the Prime Lease.

 

b.                                       Master
Sublandlord Indemnity. Mercury shall defend (with counsel reasonably
acceptable to Reliant), indemnify and hold Reliant, its agents, servants,
contractors and employees harmless, to the extent Reliant incurs any loss,
cost, or liability or is subject to 

 

11

 

any third party claim or regulatory order, that Master
Sublandlord indemnifies Mercury for under Section 11.b
of the Sublease. Mercury hereby agrees to use diligent, good-faith efforts, so
long as Reliant is not in default beyond any applicable notice and cure
periods, of its payment obligations under this Sub-Sublease, to enforce such
indemnity obligations, which efforts shall include, without limitation, where
necessary in Mercury’s and Reliant’s commercially reasonable discretion, the
commencement and/or prosecution of litigation. Mercury and Reliant shall be
entitled to jointly control the conduct of the litigation; provided, however
that in the conduct of any such litigation, both Mercury and Reliant shall have
an obligation to act in a commercially reasonable manner and with the goal of
employing a strategy which is designed to secure performance of the aforesaid
indemnity obligation of Master Sublandlord under Section 11.b
of the Sublease, provided no action, including settlement, may be taken or
required by either party in connection with such litigation to the extent such
action may materially and adversely affect the other party’s rights or
obligations under the Prime Lease, the Sublease or this Sub-Sublease without
such other party’s consent, which shall not be unreasonably withheld,
conditioned, or delayed. All costs incurred in connection with any enforcement
action (including reasonable attorneys’ fees and consultant and expert witness
fees) undertaken by Mercury hereunder shall be paid to Mercury by Reliant, as
Additional Rent, upon Mercury’s delivery to Reliant of reasonably detailed
invoices therefore, after deduction of any damages, settlement proceeds, award
or other amounts paid to Mercury on account of such action. In the event of any
dispute regarding responsibility for payment of such costs, or any dispute
regarding whether either party is acting in a commercially reasonable manner
and with the goal of employing a strategy which is designed to secure, subject
to the conditions above, performance of the aforesaid indemnity obligation of
Master Sublandlord under Section 11.b
of the Sublease, such dispute shall be resolved by arbitration as set forth in Article 41 of the Prime Lease. Reliant shall indemnify
Mercury against, and hold Mercury harmless from, all costs, expenses, claims,
counter-claims, cross-claims, losses, and liabilities incurred by Mercury in
connection with any initiation of litigation by Mercury pursuant to the
foregoing provisions, except to the extent such litigation is caused by Mercury’s
default under this Sub-Sublease or, to the extent not caused by Reliant, by
Mercury’s default under the Prime Lease or the Sublease. Notwithstanding the
foregoing, in the event Master Sublandlord extends the indemnity rights granted
under Section 11.b of the Sublease to
Reliant pursuant to a written agreement, Mercury’s indemnity obligations under
this Section 11(b) shall automatically
terminate and be of no further force or effect.

 

c.                                       Seller
Indemnity. Mercury shall defend, (with counsel reasonably acceptable to
Reliant) indemnify and hold Reliant harmless, to the extent Reliant incurs any
loss, cost, or liability or is subject to any third party claim or regulatory
order that Master Sublandlord indemnifies Mercury for under Section 11.c of the Sublease. Mercury hereby agrees to
use diligent, good-faith efforts, so long as Reliant is not in default beyond
any applicable notice and cure periods, of its payment obligations under this
Sub-Sublease, to enforce such indemnity obligations, which efforts shall
include, without limitation, where necessary in Mercury’s and Reliant’s
commercially reasonable discretion, the commencement and/or prosecution of
litigation. Mercury and Reliant shall be entitled to jointly control the conduct
of the litigation; provided, however that in the conduct of any such
litigation, both Mercury and Reliant shall have an obligation to act in a
commercially reasonable manner and with the goal of employing a strategy which
is designed to secure performance of the aforesaid indemnity obligation of
Master Sublandlord under Section 11.c
of the Sublease, provided no action, including settlement, may be taken or
required by either party in connection with such litigation to the extent such
action 

 

12

 

may materially and adversely affect the other party’s
rights or obligations under the Prime Lease, the Sublease or this Sub-Sublease
without such other party’s consent, which shall not be unreasonably withheld,
conditioned, or delayed. All costs incurred in connection with any enforcement
action (including reasonable attorneys’ fees and consultant and expert witness
fees) undertaken by Mercury hereunder shall be paid to Mercury by Reliant, as
Additional Rent, upon Mercury’s delivery to Reliant of reasonably detailed
invoices therefore, after deduction of any damages, settlement proceeds, award
or other amounts paid to Mercury on account of such action. Reliant shall
indemnify Mercury against, and hold Mercury harmless from, all costs, expenses,
claims, counter-claims, cross-claims, losses, and liabilities incurred by
Mercury in connection with any initiation of litigation by Mercury pursuant to
the foregoing provisions, except to the extent such litigation is caused by
Mercury’s default under this Sub-Sublease or, to the extent not caused by
Reliant, by Mercury’s default under the Prime Lease or the Sublease. In the
event of any dispute regarding responsibility for payment of such costs, or any
dispute regarding whether either party is acting in a commercially reasonable
manner and with the goal of employing a strategy which is designed to secure,
subject to the conditions above, performance of the aforesaid indemnity
obligation of Master Sublandlord under Section 11.c
of the Sublease, such dispute shall be resolved by arbitration as set forth in Article 41 of the Prime Lease. Notwithstanding the
foregoing, in the event Master Sublandlord extends the indemnity rights granted
in Section 11.c of the Sublease to Reliant
pursuant to a written agreement, Mercury’s indemnity obligations under this Section 11(c) shall automatically terminate and be of
no further force or effect.

 

d.                                       Mercury’s
Indemnity. Mercury shall indemnify, defend (with counsel reasonably
acceptable to Reliant), and hold Reliant harmless from and against any loss,
cost, liability, or any third party claim or regulatory order to the extent
arising from or in connection with the use, generation, treatment, storage,
disposal or discharge of Hazardous Materials by Mercury, its agents, employees,
or contractors.

 

12.                               Security
Deposit.

 

a.                                       Letter
of Credit. As a security deposit and as additional collateral to compensate
Mercury for future damages it may suffer by reason of Reliant’s default under
this Sub-Sublease, Reliant shall deliver to Mercury a letter of credit in
accordance with the provisions of this Section.

 

b.                                       Terms
of Letter of Credit. Not later than five (5) days after Reliant’s receipt
of the written consent of Prime Landlord and Master Sublandlord to this
Sub-Sublease, the Testing lab Use and the Initial Improvements, Reliant shall
deliver to Mercury an unconditional, clean, irrevocable letter of credit in the
amount of One hundred Seventy-Six Thousand Eight Hundred Eighty-Two and 94/100
dollars ($176,882.94) (“LC Amount”),
which letter of credit shall be issued by a money-center bank (a bank which
accepts deposits, maintains accounts, has a local San Jose, California or San
Francisco, California office which will negotiate a letter of credit and whose deposits
are insured by the FDIC) reasonably acceptable to Mercury, shall be for a term
continuing through the last day of the thirty (30 day period following the
Expiration Date (or shall contain an “evergreen”
provision which provides that it automatically is renewed through the date that
is thirty (30) days after the Expiration Date on an annual basis unless the
issuer delivers at least forty-five (45) days’ prior written notice to 

 

13

 

Mercury and Reliant), shall permit partial draws,
shall provide that draws thereunder will be honored upon receipt by issuer of a
written statement signed by Mercury or its authorized agent stating that Mercury
is entitled to draw down on the letter of credit, and shall be in a form and
content reasonably acceptable to Mercury. The LOC shall provide that it is
freely transferable by Sublandlord, without charge and without recourse, to the
assignee or transferee of Sublandlord’s interest in the Subleased Premises, and
that the issuer will confirm the same to Mercury and such assignee or
transferee upon request. Such letter of credit, together with any other renewal
or replacement letters of credit delivered or to be delivered by Reliant
hereunder shall be referred to collectively herein as the “LC”.
The LC shall be held by Mercury without liability for interest and as security
for the performance by Reliant of its obligations under this Sub-Sublease. The
LC is not an advance payment of Rent or a measure of limit of mercury’s damages
upon Reliant’s default under this Sub-Sublease. The LC shall provide for at
least forty-five (45) days’ prior written notice to Mercury of cancellation or
material change thereof, and shall further provide that, in the event of any
non-extension of the LC (if the term of the LC is for a period shorter than the
Term of this Sub-Sublease) at least forty-five (45) days prior to its
expiration, Mercury shall be entitled to present its written demand for payment
of the entire face amount of the LC, and the funds so obtained shall be held as
provided below. Reliant shall pay all expenses, points and/or fees incurred in
obtaining or drawing down upon the LC.’ 
Additionally, upon a proposed sale or other transfer of any interest in
the Subleased Premises, this Sub-Sublease or Mercury (including consolidations,
mergers or other entity changes), Reliant’s sole cost and expense and upon ten
(10) business days’ notice, shall, concurrent with Mercury’s delivery to
Reliant of the then outstanding LC, deliver to any such transferee, successor
or assign a replacement LC on identical terms (except for the stated
beneficiary) from the same issuer or another issuer reasonably acceptable to
Mercury, naming the sub-sublandlord as the beneficiary thereof. The LC shall
not be mortgaged, assigned or encumbered in any manner whatsoever by Reliant
without Mercury’s prior written consent, which may be withheld in Mercury’s
sole discretion.

 

c.                                       Application
of Letter of Credit. If Reliant  defaults (following any applicable grace periods,
it being understood that no notice of a default by Reliant hereunder need be
given by Mercury to Reliant if Reliant is the subject of an insolvency event or
bankruptcy proceeding) with respect to any provision of this Sub-Sublease,
including, but not limited to, provisions relating to the payment of Rent,
Mercury may, but shall not be required to, draw down upon all or any portion of
the LC for payment of and Rent or other sum in default, and for the payment of
any amount that Mercury may spend or may become obligated to spend by reason of
Reliant’s default or to compensate Mercury for any loss or damage which Mercury
has suffered thereby. The use, application or retention of the LC, or any
portion thereof, by Mercury shall not prevent Mercury from exercising any other
right or remedy provided by this Sub-Sublease or by law or in equity, it being
intended that Mercury shall not first be required to proceed against the LC,
and the LC shall not operate as a limitation on any recovery to which Mercury
otherwise may be entitled. If all or any portion of the LC is drawn upon,
Reliant, within five (5) business days after written notification from the bank
or Mercury of the amount so applied, shall reinstate the LC to the LC Amount
required under this Sub-Sublease by providing either cash (so that the full
amount of cash and LC proceeds held by Mercury equals the LC Amount) or a
replacement LC upon the identical terms and conditions set forth in this
Section (so that the excess LC proceeds and the replacement LC equals the LC
Amount). Reliant’s failure to provide Mercury with cash in the required amount
or to reinstate the LC as 

 

14

 

required hereunder shall be further material default
under this Sub-Sublease, in which case Mercury, without notice to Reliant,
shall be permitted to draw down the entire balance of the LC and apply it to
any current or future obligations of Reliant. Reliant waives any restriction on
the use or application of any proceeds of the LC as set forth in California
Civil Code Sections 1950.7(a) and (c) or any successor statute thereto.

 

d.                                       Return
of LC. Mercury shall return the LC and/or any cash proceeds therefrom to
Reliant (except to the extent of any portion thereof which has been applied by
mercury hereunder and not restored by Reliant) within forty-five (45) days
following the expiration or termination of the Term.

 

e.                                       Reduction
in LC Amount. So long as Reliant has not been in material default under
this Sub-Sublease, beyond applicable notice and cure periods, at any time
during the Term, on the first anniversary of the Commencement Date and on the
second anniversary of the Commencement Date, respectively, the LC shall be
reduced by the sum of $58,960.98 per year. Any reduction may be accomplished by
either a replacement LC (“Replacement LC”)
meeting all of the requirements for the original LC as set forth in this
Section, or by an amendment to the original LC. If, however, after any
reduction in the LC Amount Reliant is in material default hereunder, beyond
applicable notice and cure periods, the LC immediately shall be restored to the
original LC Amount and Reliant, not more than five (5) days after receipt of
notice from Mercury, shall either provide cash or a replacement LC so that
Mercury again is holding security in an amount equal to the original LC amount.

 

f.                                         Extension
Term. If Reliant is entitled to, and properly does, elect to extend the
Term, Mercury shall be entitled to hold the LC in the amount held by Mercury
during the last month of the initial Term for the entire balance  of the extended Term, without any further
reduction, subject, however, to the provisions of Section 12.a.
above.

 

13.                               Default.
If Reliant shall default with respect to this Sub-Sublease and the Sublease Premises,
Mercury shall have all of the rights and remedies accorded to Prime Landlord
under the Prime Lease and to Master Sublandlord under the Sublease.

 

14.                               Subordination.
This Sub-Sublease is subject and subordinate to the Prime Lease, to the
Declaration (as defined in Article 40 of
the Prime Lease), to the Sublease, to all ground and underlying leases, and to
all mortgages and deeds of trust which may now or hereafter affect such leases,
the leasehold estate or estates thereby created or the real property of which
the Subleased Premises form a part, and to any and all renewals, modifications,
consolidations, replacements and extensions thereof.

 

15.                               Quiet
Enjoyment. Mercury covenants and agrees with Reliant that, upon Reliant
paying the Base Rent and Additional Rent reserved in this Sub-Sublease and
observing and performing all the terms, covenants and conditions of this
Sub-Sublease on Reliant’s part to be observed and performed, Reliant may
peaceably and quietly enjoy the Sublease Premises during the Term of this
Sub-Sublease, in accordance with the terms, covenants and conditions of this
Sub-Sublease, but subject to the exceptions, reservations and conditions
hereof.

 

15

 

16.                               Alterations.
Except as expressly provided in Exhibit D
attached hereto, Reliant shall not make any alterations, additions, or other
physical changes in or about the Subleased Premises without the consent of
Mercury, which shall not be unreasonably withheld or delayed, and Prime
Landlord in accordance with Article 8 of
the Prime Lease and Master Sublandlord in accordance with Section 16
of the Sublease and the Workletter. Prior to the installation of any
Alterations hereunder, Mercury shall request that Prime Landlord and Master
Sublandlord notify Mercury of Prime Landlord’s and/or Master Sublandlord’s
election to require that such Alterations be removed upon expiration or earlier
termination of this Sub-Sublease. If Prime Landlord or Master Sublandlord
delivers Mercury a notice of its intent to exercise such election pursuant Section 8(e) of the Prime Lease or Section 16
of the Sublease or otherwise, respectively, Mercury shall be responsible for
removing such Alteration upon the expiration or earlier termination of this
Sub-Sublease, and for all costs in connection therewith. Any failure by Prime
Landlord or Master Sublandlord to notify Mercury of Prime Landlord’s or Master
Sublandlord’s election to require removal of such Alterations shall be deemed
Prime Landlord’s and/or Master Sublandlord’s election to require such removal
of the Alterations, and Mercury shall be responsible for such removal as set
forth in the preceding sentence.

 

17.                               Assignments
and further Subleases.

 

a.                                       Restriction
on Transfers. Reliant agrees that it will not assign or encumber, or permit
to be encumbered, its rights or interest under this Sub-Sublease, nor sublet
the whole or any part of the Subleased Premises, directly or indirectly, by
operation of law, a change of control transaction, or otherwise, without the
prior written consent of Prime Landlord in accordance with the Prime Lease, the
consent of Master Sublandlord in accordance with the Sublease, and the consent
of Mercury, which shall not be unreasonably withheld or delayed. Without
limiting Mercury’s right or obligations hereunder, Mercury shall in no event
consent to a proposed sublease for less than a contiguous, full-floor within
the Subleased Premises. In the event that Reliant shall be permitted to either
assign or sublet the Subleased Premises, and excluding any Permitted Transfer
hereunder, all Net Profit (as defined in the next sentence) realized from such
assignment or sublease shall be split equally between the Mercury and the
Reliant, after the Prime Landlord’s share and/or the Master Sublandlord’s share,
if any, is deducted out of such amounts pursuant to Section 11(e)
of the Prime Lease. As used herein, “Net Profits”
shall mean any sums received by Reliant in excess of the amounts payable by
Reliant to Mercury, on a per-square-foot basis, for the applicable term
pursuant to this Sub-Sublease after deducting from such excess only the actual
and reasonable, third-party, out of pocket expenses incurred by Reliant in
connection with such assignment or subletting, together with the actual, fair
market rental or sales proceeds received by Reliant that are equitably
allocable to the sale or rental of Reliant’s personal property (but not to the
furniture described on Exhibit E
or the Initial Improvements paid for by the Tenant Improvement Allowance) to
the assignee or sublessee (all such deducted expenses and proceeds shall be
referred to herein as the “Deducted and Unrelated
Costs”). All Deducted and Unrelated Costs shall be amortized, on
a straight-line basis, over the period commencing on the date such costs are
incurred and expiring on the Expiration Date. Reliant shall use commercially
reasonable efforts to provide Mercury reasonable advance notice of Reliant’s
calculations of any Net Profits and Deducted and Unrelated Costs but, in all
cases, shall have an obligation to provide Mercury such calculations on or
before the date of delivery to Mercury of the assignment or sublease agreement
for which Mercury’s consent is requested hereunder. As used herein, “change of control transaction” 

 

16

 

shall mean any transaction or series of transactions
resulting in (i) the transfer of control of Reliant, other than by reason
of death, or, (ii) if Reliant is a corporation, the direct or indirect
change in the control of Reliant or in the ownership by the stockholders or an
affiliated group of stockholders of fifty percent (50%) or more of the
outstanding stock as of the date of the execution and delivery of this
Sub-Sublease. As used in this Section 17,
“control” means the power to direct
or cause the direction of the day-to-day management and policies of a company,
whether through the ownership of voting securities, or partnership or
membership interests, by contract, by interlocking boards of directors, or
otherwise. Notwithstanding anything to the contrary contained in this
Sub-Sublease, any transfer or issuance of stock over the New York Stock
Exchange, the American Stock Exchange, or NASDAQ shall not be deemed an
assignment, subletting or other transfer of this Sub-Sublease or the Subleased
Premises requiring Mercury’s consent for purposes of this Section 17.

 

b.                                       Permitted
Transfers. Provided Reliant is not then in default of its obligations under
this Sub-Sublease and provides Mercury no less than thirty (30) days’ prior written
notice of the applicable Permitted Transfer, Reliant shall have the right to
assign this Sub-Sublease without Mercury’s consent (but subject to Prime
Landlord’s consent to the extent required under the Prime Lease and to Master
Sublandlord’s consent to the extent required under the Sublease) pursuant to a
Permitted Transfer permitted under Section 11(g)
of the Prime Lease. Notwithstanding any such assignment, Reliant shall remain
liable for performance and compliance with all of the terms, conditions and
provisions of this Sub-Sublease. Except as expressly provided otherwise in this
Section 17 above, Article 12 of the Prime Lease and Section 17
of the Sublease (to the extent incorporated herein) shall apply to and govern
all assignments, and sublettings, encumbrances, and transfers of the Subleased
Premises or Reliance’s interest therein, and all attempts to effect the
foregoing, it being the intent of the parties that this Section 17
supplements, but does not supersede, Article 11
of the Prime Lease of Section 17
of the Sublease.

 

c.                                       Mercury’s
Right to Transfer. In addition, Reliant acknowledges and agrees that, as
between Mercury and Reliant, Mercury shall be entitled to freely assign this
Sub-Sublease and its interest in the Subleased Premises so long as such
transfer is not a default under the Prime Lease or the Sublease, and the
proposed assignee assumes in writing the obligations of Mercury under this
Sub-Sublease that are based on or arise out of events or conditions occurring
on or after the date of any such assignment. In such event, Mercury shall not
be liable to Reliant for any obligations or liabilities based on or arising out
of events or conditions occurring on or after the date of any such transfer. Furthermore,
Reliant agrees to attorn to any such transferee upon all the terms and
conditions of this Sub-Sublease.

 

d.                                       Additional
Conditions. Notwithstanding anything to the contrary contained in Master
Lease or the Sublease, if Reliant desires to assign this Sub-Sublease to any
person other than a Permitted Transferee, or sub-sublease all or a portion of
the Subleased Premises to any person other than a Permitted Transferee, Mercury
shall have the right to terminate this Sub-Sublease by providing Reliant with
written notice of termination within ten (10) business days after Reliant’s
written notice to Mercury of its intent to so assign or sublease. If Mercury
terminates this Sub-Sublease pursuant to this Section 17.d.
termination shall be effective on a date to be agreed upon by Mercury and Reliant,
but in no event later than the date that is forty-five (45) days after the date
of Mercury’s notice. For the avoidance of doubt, 

 

17

 

Mercury and Reliant acknowledge and agree that neither
Mercury nor Reliant shall have the right to sublease the Subleased Premises
pursuant to Section 11(h) of the Prime
Lease and that such provision is expressly excluded from this Sub-Sublease.

 

18.                               Parking.

 

Subject to and in
accordance with Article 36 of the Prime Lease,
Reliant shall be entitled to use, on a non-exclusive basis, the number of
parking spaces at Building 20 in the same proportion that square footage
of the Premises bears to the total rentable area of Building 20, which
shall not be less than the parking required for Building 20 by the City of
Mountain View (“Parking Facilities”). Reliant
shall use the Parking Facilities without any additional Base Rent charge
throughout the Term and any extension. Additionally, Reliant shall have the
right to label five (5) exclusive reserved spaces for its Testing Lab, subject
to having obtained the prior written consent of Prime Landlord and Master
Sublandlord. Reliant and its agents, employees, contractors and invitees shall
comply with Article 36 of the Prime Lease
and all reasonable rules and regulations promulgated by Mercury, Sublandlord
and/or Prime Landlord for the safe and orderly functioning of the Parking
Facilities.

 

19.                               Cafeteria
and Fitness Center Facilities; Card Key Access; Entry by Mercury.

 

a.                                       Operations
During the Amenities Period. Mercury currently operates the existing retail
cafeteria located in Building 22 (“Cafeteria”)
and the fitness center facility located in Building 22 (“Fitness Center”). During the period
commencing on the Commencement Date and continuing through April 30, 2009
(“Amenities Period”), Mercury shall
operate the Cafeteria and Fitness Center as they currently are being operated
by Mercury without materially changing the operating hours or making other
material modifications to the Cafeteria and Fitness Center operations. Reliant,
and its employees, officers and directors (“Reliant
Parties”) shall have the right to access and use the Cafeteria
and Fitness Center subject to and in accordance with this Section 19.
Notwithstanding the foregoing, Mercury shall have the right, up to two (2)
times in any calendar year during the Term, upon forty-eight (48) hours’ prior notice
to Reliant, to close the Cafeteria for up to twenty-four (24) hours for
Mercury-only events. Also notwithstanding the foregoing, Mercury shall have the
option, exercisable upon delivery of at least sixty (60) days’ prior written
notice to Reliant, to close and cease operations of the Fitness Center at any
time after April 30, 2008 (“Fitness Center Expiration
Date”). Mercury may elect to discontinue operation of the
Cafeteria and/or Fitness Center and the Outdoor Courts altogether or to limit
usage to Mercury’s employees, officers, directors, consultants, customers and
visitors (the “Mercury Parties”) at any time
after the expiration of the Amenities Period without obligation or liability of
any kind to Reliant.

 

b.                                       Cafeteria.
During the Amenities Period, the Reliant Parties shall have the right to
use the Cafeteria on a non-exclusive basis during the Cafeteria’s regular hours
of operation. The Reliant Parties shall be required to comply with all
reasonable rules and regulations with respect to the Cafeteria, as reasonably
promulgated by Mercury from time to time and shall be responsible for paying
for all Cafeteria purchases when ordered. Mercury shall have the right to
request from the Reliant Parties reasonable identification in connection with
the use of the Cafeteria. Except to the extent caused by the negligence or
willful misconduct of Mercury, its agents, employees or contractors, Reliant
hereby releases Mercury and agrees to 

 

18

 

indemnify, defend and hold Mercury harmless from and
against any liability arising from the use of the Cafeteria by the Reliant
Parties, including, without limitation, any claims asserted or caused by the
Mercury Parties or their invitees.

 

c.                                       Fitness
Center and Outdoor Courts. During the Amenities Period, subject to
subsection (a) above, the Reliant Parties shall have the right to use the
Fitness Center on a non-exclusive basis during its regular hours of operation. The
first fifty (50) employees, officers or directors of Reliant (“Initial Users”) shall have the right
to use the Fitness Center at no cost to Reliant. Reliant shall provide Mercury
with a list of the Initial Users not later than the Commencement Date. Reliant
shall pay Twenty and No/100 Dollars ($20.00) per month per employee, officer or
director using the Fitness Center in excess of the Initial users (“Use Fee”). Reliant may not substitute
other employees, officers or directors for any Initial User unless such Initial
User no longer is employed by Reliant. The Use Fee shall be paid by Reliant in
the manner and at the time that Base Rent is due and payable, and in the event
of non-payment of the Use Fee, Mercury shall have the right, at its sole
option, to deny all Reliant employees, officers and directors, other than the
Initial Users, access to the Fitness Center from and after the date of the
non-payment for the balance of the Term. The foregoing right shall be in lieu
of all other rights and remedies Mercury may have in the event of any other
default by Reliant under this Sub-Sublease, which are hereby waived solely with
respect to Reliant’s failure to pay the User Fee. The Reliant Parties also may
use the outdoor volleyball, basketball courts and  roller hockey rink (“Outdoor
Courts”) within the Project during the Term on a non-exclusive
basis at no additional charge, subject to availability and after having
reserved such use at least twelve (12) hours in advance with either the Fitness
Center or Mercury’s facilities department. Notwithstanding anything to the
contrary contained in the foregoing, Mercury shall have the right to close
down, block off, eliminate or otherwise cease operation of and access to the
roller hockey rink at any time during the Term upon three (3) business days’
prior notice to Reliant. The Reliant Parties shall be required to comply with
all reasonable rules and regulations as promulgated by Mercury from time to
time with respect to the Fitness Center and the Outdoor Courts. Except to the
extent caused by the negligence or willful misconduct of Mercury, its agents,
employees or contractors, Reliant hereby releases Mercury and agrees to
indemnify, defend and hold Mercury harmless from and against any liability
arising from the use of the Fitness Center and/or the Outdoor Courts by the
Reliant Parties, including, without limitation, any claims asserted or caused
by the Mercury Parties or their invitees.

 

d.                                       Access
Cards. During the Term, Mercury shall administer Mercury’s card key/badge
access system for Reliant’s entry into Building 20, the Cafeteria and the
Fitness Center. Prior to the Commencement Date, Reliant shall provide Mercury a
written list of the Reliant Parties requiring card key/badge access, and
Mercury shall, at no cost to Reliant, take photographs and prepare card
key/badge access cards (“Access cards”)
for such persons, which Access Cards shall be available on the Commencement
Date. Thereafter, promptly after receipt of written notice thereof from
Reliant, Mercury shall provide Reliant, at no cost to Reliant, with additional
Access Cards for new Reliant Parties. Notwithstanding anything to the contrary
contained in this Sub-Sublease, Reliant promptly shall notify Mercury when any
Access Card has been lost or stolen. In no event shall Mercury be liable to
Reliant in any manner, including, without limitation, for any loss, damage to
property or personal injury of any kind, occurring prior to Reliant’s written
notification to Mercury that any Access Card has been lost or stolen, and
Reliant shall indemnify, defend and hold Mercury free and harmless from and
against any 

 

19

 

and all claims and related liabilities, judgments,
causes of action, damages (including reasonable attorneys’ fees), costs and
expenses incurred by or claimed against Mercury to the extent arising from any
loss or theft of an Access Card that occurs prior to Reliant’s written
notification to Mercury of such loss or theft. In the event of lost or stolen
Access Cards, promptly after receipt of written notice from Reliant, Mercury
shall replace such Access Cards at a cost to Reliant of Five Dollars ($5.00)
each. Reliant shall be solely responsible and liable for providing, maintaining
and operating any other security system for the Subleased Premises desired by
Reliant (the installation of which shall be subject to the provisions of Section 16 above), and for any failure in the performance of
such system. Any other security system installed by Reliant shall not interfere
with Mercury’s card key/badge access system.

 

e.                                       Right
to Enter. Notwithstanding anything to the contrary contained in the
Sub-Sublease, the Sublease or the Prime Lease, Reliant shall permit Mercury,
its agents, employees, contractors and representatives,  to enter the Subleased Premises, without
charge therefore to Mercury and without diminution of the rent payable by
Reliant, (i) to examine, inspect and protect the Subleased Premises, and (ii)
to otherwise comply with and carry out Mercury’s obligations under the Prime
Lease, the Sublease or this Sub-Sublease. In connection with any such entry,
Mercury shall (A) use commercially reasonable efforts to minimize the
disruption to Reliant’s use of the Subleased Premises, and (B) give Reliant
reasonable advance written or email notice of such entry (except in the event
of an emergency). Reliant may, at its option, require that Mercury be
accompanied by a representative of Reliant during any such entry (except in the
case of emergency).

 

20.                               Signage.
Subject to the signage rights granted to Mercury, as subtenant under the
Sublease, and to Articles 8 and 42 of the Prime
Lease and Section 20 of the Sublease, Reliant
shall have the right, at Reliant’s sole cost and expense, to install and
display its company name on the monument sign located on Ellis Street, on the
exterior of Building 20, on the entry door to the Subleased Premises and on the
Project directory signage, in each case, subject to the terms of the Prime
Lease and the Sublease provided Reliant has obtained the prior written consent
of Mercury, which shall not be unreasonably withheld or delayed, Prime Landlord
pursuant to the provisions of the Prime Lease, including, without limitation, Article 42 thereof, and Master Sublandlord pursuant to the
provisions of the Sublease. Upon the expiration or earlier termination of this
Sub-Sublease, Reliant shall remove all signage from the Subleased Premises and
Building 20, and shall repair any damage caused by such removal, at Reliant’s
sole cost and expense.

 

21.                               Compliance.
Reliant covenants and agrees that Reliant will not do anything which would
constitute a default under the Prime Lease or the Sublease, or omit to do
anything which Reliant is obligated to do under the terms of this Sub-Sublease
and which would constitute a default under the Prime Lease or under the
Sublease.

 

22.                               Notices.
Any notice, demand or other communication which must or may be given or
made by either party thereto shall be in writing and shall be in accordance
with the provisions of the Prime Lease, addressed:

 

20

 

In the case of Mercury, to:

 

Mercury Interactive Corporation

379 N. Whisman Road

Mountain View, California 94043

Attn:  Vice
President and General Counsel

Fax:  
650/584-3572

 

In the case of Reliant, prior to the Commencement
Date, to:

 

Reliant Technologies, Inc.

260 Sheridan Avenue, 3rd Floor

Palo Alto, California
94306

Attn:  Harvard Sung

Fax:  
650/473-0357

 

After the Commencement Date, to the Subleased
Premises:

 

With a copy to:

 

Helen Sedwick, Esq.

Cooley Godward LLP

One Maritime Plaza

Suite 2000

San Francisco, CA 94111

 

Either party may, by
notice to the other given as aforesaid, designate a new or additional address
to which any such notice, demand or other communication thereafter shall be
given, made or mailed. Any notice, demand or communication given hereunder
shall be deemed delivered when actually received. The methods for delivery of
notice shall be as set forth in Article 28 of
the Prime Lease.

 

23.                               Indemnity.

 

a.                                       Mercury’s
Indemnity. Mercury agrees to perform its obligations to Master Sublandlord
under the Sublease (to the extent those obligations are not made the obligation
of Reliant hereunder and to the extent such performance is not adversely
affected by a Reliant default hereunder), including, without limitation, the
obligation to pay all rent required to be paid by “Subtenant”
to “Sublandlord” in accordance with the
terms of the Sublease, in order to keep the Sublease in full force and effect
during the entire Term of this Sub-Sublease; subject, however, to any earlier
termination of the Sublease or the Prime Lease not caused by Mercury or caused
by Reliant. Mercury shall promptly provide Reliant copies of all default
notices relative to the Subleased Premises received by Mercury from Master
Sublandlord or Prime Landlord during the Term. Further, in addition to Mercury’s
other indemnification obligations hereunder, Mercury agrees to indemnify,
defend and hold Reliant free and harmless from and against any and all claims
and related liabilities, judgments, causes of action, damages (including
reasonable attorneys’ fees), costs and expenses incurred by or claimed against
Reliant to the extent arising out of (i) any default by Mercury under this
Sub-Sublease (through no fault of Reliant); (ii) any 

 

21

 

default by Mercury of Mercury’s remaining obligations
under the Prime Lease (through no fault of Reliant); (iii) any default by
Mercury of Mercury’s remaining obligations under the Sublease (through no fault
of Reliant; and/or (iv) the gross negligence or willful misconduct of Mercury
or any of its agents, employees or contractors. Reliant shall provide notice to
Mercury of any claim for which it is seeking indemnification hereunder promptly
after it actually becomes aware of such claim, and Mercury shall defend such
claim with counsel reasonably acceptable to Reliant. Reliant shall, at Mercury’s
sole cost and expense, cooperate with Mercury in the prosecution of such
defense.

 

b.                                       Reliant’s
Indemnity. Reliant agrees (i) to comply with all provisions of this
Sub-Sublease and, to the extent incorporated into this Sub-Sublease, the Prime
Lease and the Sublease; and (ii) to perform all the obligations on the part of
the “Subtenant” to be performed under the
terms of the Sublease with respect to the Subleased Premises to the extent
incorporated herein. In addition to Reliant’s other indemnification obligations
hereunder, Reliant shall indemnify, defend, and hold Mercury free and harmless
from and against any and all claims and related liabilities, judgments, causes
of action, damages (including reasonable attorneys’ fees), costs and expenses
incurred by or claimed against Mercury to the extent arising out of (i) any
default by Reliant under this Sub-Sublease (through no fault of Mercury); (ii)
any default by Reliant under the Prime Lease (through no fault of Mercury), to
the extent incorporated into this Sub-Sublease; (iii) any default by Reliant
under the Sublease (through no fault of Mercury), to the extent incorporated
into this Sub-Sublease; (iv) the gross negligence of willful misconduct of
Reliant or any of its agents, employees, contractors or invitees, and/or (v)
any accident, injury, or damage to any person or property occurring on or after
the Delivery Date within the Subleased Premises, except to the extent caused by
the gross negligence or willful misconduct of Mercury, its agents, employees,
or contractors. Mercury shall provide notice to Reliant of any claim for which
it is seeking indemnification hereunder promptly after it actually becomes
aware of such claim, and Reliant shall defend such claim with counsel
reasonably acceptable to Mercury. Mercury shall, at Reliant’s sole cost and
expense, cooperate with Reliant in the prosecution of such defense.

 

The indemnification obligations set forth in this
Section and elsewhere in the Sub-Sublease (and the Prime Lease and the Sublease
to the extent incorporated herein) shall survive the expiration or earlier
termination of this Sub-Sublease with respect to occurrences prior to the
expiration or termination, and no indemnification set forth in this
Sub-Sublease or, as between Mercury and Reliant, the Prime Lease or the
Sublease, shall include the obligation to indemnify either for punitive damages
or, (excluding the indemnification set forth in Section 25
below), for consequential damages (e.g., lost profits or lost business
opportunity). In addition, except as expressly provided otherwise in this
Sub-Sublease, neither party shall have any liability to the other party
hereunder for any indirect, consequential, or punitive damages. Reliant party
covenants and agrees that it will not do anything which would constitute a
default under the Prime Lease or the Sublease, or omit to do anything which it
is obligated to do under the terms of the Sub-Sublease and which would
constitute a default under the Prime Lease or the Sublease.

 

24.                               Surrender.
Not later than the Expiration Date, as it may be extended, Reliant shall
quit and surrender to Mercury the Subleased Premises, broom clean and in as
good order and condition as they were on the Commencement Date and, to the
extent excepted under the Prime Lease and the Sublease, excepting ordinary wear
and tear, acts of God, casualty, 

 

22

 

condemnation, and Alterations with respect to which
neither Mercury, Master Sublandlord nor Prime Landlord has a right to require
removal, or the payment of the costs of removal, as set forth in this
Sub-Sublease, the Sublease or the Prime Lease. In connection with the
foregoing, Reliant shall remove from the Subleased Premises all of its personal
property, fixtures and equipment, excluding the Furniture.

 

25.                               Holdover.
Reliant shall surrender the Subleased Premises on or before the Expiration
Date without any delay. In the event Reliant does not immediately surrender the
Subleased Premises on the Expiration Date, Reliant’s continued possession shall
be on the basis of a tenancy at the sufferance of Mercury. In such event,
Reliant shall continue to comply with and perform all of the terms and
obligations of this Sub-Sublease except that the Rent payable during each month
or portion thereof shall be equal to one hundred fifty Percent (150%) of the
Rent payable during the last full month prior to the expiration or termination
of the Sublease, as applicable. Reliant shall be liable to Mercury for, and
shall indemnify and hold Mercury harmless against, all damage which Mercury
suffers because of any holding over by Reliant, including without limitation,
all claims made against Mercury resulting from Mercury’s delay in delivering
possession of the Subleased Premises to any succeeding tenant.

 

26.                               Brokers.
Mercury and Reliant each represent and warrant that neither has dealt with
any brokers or consultants in connection with this transaction, except for (i)
Doug Marks of Colliers International, Reliant’s exclusive “Reliant
Broker” for this Sub-Sublease, and (ii) Bruce McLellan of
McLellan Commercial Real Estate, Inc., Mercury’s exclusive “Mercury Broker” for this
Sub-Sublease. Mercury shall pay all commissions due such brokers pursuant to a
separate agreement with the Mercury Broker and the Reliant Broker. In
particular, Mercury shall pay to the Reliant Broker Mercury’s advertised fee of
One and 25/100 Dollars ($1.25) per year per rentable square foot of the
Subleased Premises for the Sublease Term (“Advertised Fee”).
Mercury also shall pay the Advertised Fee to Reliant Broker if, at the time
Reliant exercises any rights to expand the Subleased Premises or extend the
Term the Reliant Broker is then representing Reliant. Each party shall hold and
save the other harmless of and from any and all loss, costs, damage, injury or
expenses arising out of or in any way related to claims for any other real
estate brokers, sales persons or finder’s commissions or fees based upon
allegations made by the claimant that it is entitled to such a fee from the
indemnified party arising out of contact with the indemnified party or alleged
introductions of the indemnifying party to the indemnified party.

 

27.                               Confidentiality.
Each party agrees to hold the material terms and conditions of this
Sub-Sublease and the transactions contemplated or permitted hereby, including,
without limitation, any assignment of this Sub-Sublease, strictly confidential.
Accordingly, except to the extent required by law, including, without
limitation, any law requiring Reliant or Mercury to disclose all or certain
terms of this Sub-Sublease in a filing required by the Securities and Exchange
Commission or any successor thereto, or by court order (in the case of a court
order, following advanced written notice to the non-disclosing party), neither
party shall, without the other party’s prior written consent, release, publish
or otherwise distribute (and shall not authorize or permit any other person or
entitled to release, publish or otherwise distribute) any information
concerning the material terms or conditions of the Sublease, or the
transactions contemplated or permitted hereby, to any person or entity,
including, without limitation, any other sub-subtenant or tenant of Mercury, or
other occupant of Mercury’s space in Mountain 

 

23

 

View, California. Notwithstanding the foregoing, each
party may disclose such information to the its prospective lenders, legal and
financial advisors, accountants, engineers or other persons if and to the
extent such persons have a legitimate business purpose for needing such
information in furtherance of, or consistent with, the transactions
contemplated hereby and provided that such persons agree to hold such
information strictly confidential to the same degree as if such persons were
bound by the provisions of this Section 27. The
terms of this Section 27 shall survive the
expiration or earlier termination of this Sub-Sublease for a period of five (5)
years.

 

28.                               Prime
Landlord, Master Sublandlord Consents.

 

a.                                       Consents.
This Sub-Sublease and the obligations of Mercury and Reliant under this
Sub-Sublease and the Workletter are expressly conditioned upon receipt of the
prior written consents of Prime Landlord and of Master Sublandlord to this
Sub-Sublease including specific consents to the Testing Lab Use and the Initial
Improvements (the “Consents”), the form and
content of which shall: (i) be acceptable to Mercury and Reliant in their
respective reasonable discretion, (ii) constitute a consent to this
Sub-Sublease by Prime Landlord as required by Article 11
of the Prime Lease and by Master Sublandlord as required by Section 28 of the Sublease, (iii) contain an acknowledgement
of and consent to the fact that up to 2,300 square feet of the Sublease
Premises may be used by Reliant for the Testing Lab Use, and (iv) subject to
the provisions set forth below in Section 28.b.
below, approve the Initial Improvements. If Prime Landlord and/or Master
Sublandlord fail to provide the required Consents upon terms and conditions
acceptable to Mercury in its sole but reasonable discretion within thirty (30)
days after the date on which Mercury delivers a fully executed copy of this
Sub-Sublease to Prime Landlord and Master Sublandlord, then either Mercury or
Reliant may terminate this Sub-Sublease by giving the other party ten (10)-days’
prior written notice, in which case this Sub-Sublease shall terminate on the
day following the last day of the ten (10) day notice period (unless both Prime
Landlord’s and Master Sublandlord’s Consents are obtained during such ten (10)-day
period, in which case this Sub-Sublease shall remain in full force and effect),
neither party shall have any further rights or obligations hereunder and
Mercury shall return to Reliant all sums paid by Reliant to Mercury in connection
with Reliant’s execution hereof. The return of all sums paid by Reliant to
Mercury shall be Reliant’s sole and exclusive remedy in the event of a
termination pursuant to this Section, including, without limitation, a
termination resulting from Mercury’s determination that any term or condition
proposed by Prime Landlord or Master Sublandlord to be included in its Consent
is unacceptable.

 

b.                                       Consent
to Project Plans. Notwithstanding anything to the contrary contained in
this Section 28, if at the time that Mercury
and Reliant execute and deliver this Sub-Sublease Reliant has not prepared and
submitted to Mercury the Project Plans, as defined in Section 2.b of the
Workletter, or if Reliant has submitted the Project Plans at the time of
execution and delivery of this Sub-Sublease by the parties but such Project
Plans are not approved as submitted by Prime Landlord, Master Sublandlord or
Mercury, the Consents (as defined above), if and when granted as referenced
above, shall be deemed to include only the Consents to this Sub-Sublease as set
forth in Section 28.a.(i) and (ii) above, and to
the Testing Lab Use as set forth in Section 28.a.(iii)
above, and once received neither party shall have any right to terminate this
Sub-Sublease with respect to such Consents after such date. If not  submitted at the time of execution and delivery of the
Sub-Sublease, Reliant shall promptly prepare and submit the Project Plans by
the date set forth in Section 2.b of the Workletter. If 

 

24

 

Prime Landlord, Master Sublandlord and/or Mercury fail
to provide the required Consents to the Project Plans within forty-five (45)
days after the later of (i) the initial delivery thereof by Reliant to Mercury
pursuant to Section 2.b of the Workletter; and (ii) if Reliant has delivered
the Project Plans at the time of execution and delivery of this Sub-Sublease by
the parties, re-delivery to Mercury after notice of disapproval of the Project
Plans from Prime Landlord, Master Sublandlord and/or Mercury, then Reliant may
terminate this Sub-Sublease by giving Mercury ten (10) days’ prior written
notice, in which case this Sub-Sublease shall terminate on the day following
the last day of the ten (10)-day notice period (unless Prime Landlord’s Master
Sublandlord’s and Mercury’s Consents to the Project Plans are obtained during
such ten (10)-day period, in which case this Sub-Sublease shall remain in full
force and effect), neither party shall have any further rights or obligations
hereunder (subject, however, to the following sentence) and Mercury shall
return to Reliant all sums paid by Reliant to Mercury in connection with
Reliant’s execution hereof. If Reliant elects to exercise the foregoing
termination right, and if, notwithstanding anything to the contrary contained
in this Sub-Sublease, Reliant has commenced demolition of the Subleased
Premises or construction of the Initial Improvements, Reliant shall remove any
improvements so constructed and restore the Subleased Premises to its condition
immediately prior to demolition or commencement, all at Reliant’s sole cost and
expense without contribution or reimbursement by or from Mercury, and Mercury
shall not be obligated to return any sums previously paid by Reliant to Mercury
until Reliant has completed the removal and/or restoration. The return of all
sums paid by Reliant to Mercury shall be Reliant’s sole and exclusive remedy in
the event of a termination pursuant to this Section 28.b.
For avoidance of doubt, if the ten (10)-day notice period following
the forty-five (45)–day period referenced in this Section
28.b. expires after the Outside Termination Date referenced in Section 3.b. above, the Outside Termination Date shall be
the day following the last day of such ten (10)-day notice period.

 

29.                               General
Provisions.

 

a.                                       Benefit
and Burden. The covenants, conditions, agreements, terms and provisions
herein contained shall be binding upon, and shall inure to the benefit of, the
parties hereto and each of their respective personal representatives, successors,
heirs, executors, administrators and assigns.

 

b.                                       Governing
Law. It is the intention of the parties hereto that this Sub-Sublease (and
the terms and provisions hereof) shall be construed and enforced in accordance
with the laws of the State of California.

 

c.                                       Entire
Agreement. This Sub-Sublease, which includes all exhibits attached hereto,
contains all of the covenants, agreements, terms, provisions, conditions,
warranties and understandings relating to the leasing of the Subleased Premises
and Mercury’s obligations in connection therewith, and neither Mercury nor any
agent or representative of Mercury has made or is making, and Reliant in
executing and delivering this Sub-Sublease is not relying upon, any warranties,
representations, promises or statements whatsoever, except to the extent
expressly set forth in this Sub-Sublease. All understandings and agreements, if
any, heretofore had between the parties are merged to this Sub-Sublease, which
alone fully and completely expresses the agreement of the parties. The failure
of Mercury or Reliant to insist in any instance upon the strict keeping,
observance or performance of any covenant, agreement, 

 

25

 

term, provision or condition of this Sub-Sublease or
to exercise any election herein contained shall not be construed as a waiver or
relinquishment for the future of such covenant, agreement, term, provision,
condition or election, but the same shall continue and remain in full force and
effect. No waiver or modification of any covenant, agreement, term provision or
condition of this Sub-Sublease shall be deemed to have been made unless
expressed in writing and signed by Reliant and Mercury. No surrender of
possession of the Subleased Premises or of any part thereof or of any remainder
of the Term shall release Reliant from any of its obligations hereunder unless
accepted by Mercury in writing. The receipt and retention by Mercury of monthly
Base Rent or Additional Rent from anyone other than Reliant shall not be deemed
a waiver of the breach by Reliant of any covenant, agreement, term or provision
of this Sub-Sublease, or as the acceptance of such other person as a tenant, or
as a release of Reliant of the covenants, agreements, terms, provisions and conditions
herein contained. The receipt and retention by Mercury of monthly Base Rent or
Additional Rent with knowledge of the breach of any covenant, agreement, term,
provision or condition herein contained shall not be deemed a waiver of such
breach.

 

d.                                       Conflicts.
As between Mercury and Master Sublandlord, nothing herein shall be
construed in any way to affect the rights and obligations of Mercury and Master
Sublandlord under the Sublease.

 

e.                                       Captions.
The captions throughout this Sub-Sublease are for convenience of reference
only and the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the interpretation,
construction or meaning of any provision of or the scope or intent of this Sub-Sublease,
nor in any way affect this Sub-Sublease.

 

f.                                         Singular
and Plural. Wherever appropriate herein, the singular includes the plural
and the plural includes the singular.

 

g.                                      Counterparts;
Facsimile. This Sub-Sublease may be executed in several counterparts, but
all counterparts shall constitute but one and the same instrument. The parties
agree and intend that a signature delivered by facsimile machine shall bind the
party so signing with the same effect as though the signature were an original
signature.

 

h.                                      No
Recordation. Neither this Sub-Sublease nor any short-form memorandum or
version hereof shall be recorded by either party.

 

30.                               Release
and Waiver of Subrogation. Notwithstanding anything to the contrary
contained in this Sub-Sublease, the Sublease or the Prime Lease, Mercury shall
use diligent efforts during the first twelve (12) months of the Term to obtain
a written agreement from Master Sublandlord providing that the release of
subrogation provisions set forth in Section 30 of
the Sublease shall be deemed an agreement between Master Sublandlord and
Reliant as if Reliant were “Subtenant”
under the Sublease. In addition, subject to Section 9(a)
above, the release and waiver of subrogation provisions of Article 13  of the Prime Lease shall be deemed to apply to
Mercury and Reliant as if they were respectively “Landlord”
and “Tenant” thereunder; provided,
however, for purposes of construing such release and waiver provisions as
incorporated herein, the parties acknowledge and agree that Mercury shall have
no obligation to 

 

26

 

maintain the insurance requirements of “Landlord”
under the Prime Lease but rather shall be required to continue to maintain the
insurance requirements of “Tenant” thereunder.

 

31.                               Amendment
or Modification. Notwithstanding anything to the contrary contained in this
Sub-Sublease, the Sublease or the Prime Lease, Mercury shall not amend or
modify the Sublease in any way so as to materially and adversely affect Reliant
or its interest hereunder, materially increase Reliant’s obligations hereunder
or materially restrict Reliant’s rights hereunder, without the prior written
consent of Reliant, which may be withheld in Reliant’s sole but reasonably
exercised discretion.

 

32.                               Representations.
Mercury represents that, to Mercury’s current knowledge, without duty to
investigate (i) the copies of the Prime Lease and the Sublease attached hereto
are true, correct and complete copies thereof; (ii) there exist no amendments
or modifications to the Prime Lease or the Sublease (whether oral or written)
except as attached thereto; (iii) neither Mercury, Master Sublandlord nor Prime
Landlord is in default under the provisions of the Prime Lease or the Sublease,
as applicable, nor is there any event, condition or circumstance existing which
with notice, or the passage of time or both, would constitute a “default” thereunder; (iv) the
Sublease is in full force and effect and are valid and binding obligations of
Mercury and of Master Sublandlord, and (v) there are no pending actions, suits
or proceedings before any governmental entity, court or administrative agency
against Mercury that are reasonably likely to materially and adversely affect
the ability of Mercury to perform its obligations under this Sub-Sublease or
the Sublease. Reliant represents, to Reliant’s current knowledge, that there
are no pending actions, suits or proceedings before any governmental entity,
court or administrative agency against Reliant that are reasonably likely to
materially and adversely affect the ability of Reliant to perform its
obligations under this Sub-Sublease.

 

33.                               Voluntary
Termination. For so long as Reliant is not in default of its obligations
under this Sub-Sublease beyond any applicable notice and cure periods, Mercury
shall not voluntarily terminate the Sublease or surrender the Subleased
Premises during the Term unless and until Master Sublandlord has agreed to
thereafter assume all rights and obligations of “Mercury”
under this Sub-Sublease (a “Master Sublandlord
Assumption”). If Master Sublandlord consents to a Master
Sublandlord Assumption, Reliant shall attorn to Master Sublandlord in
connection with any such voluntary termination or surrender, and shall execute
an attornment agreement in such form as may reasonably be requested by Master
Sublandlord and reasonably acceptable to Reliant. The terms of this Section 33 shall not apply with respect to Mercury’s
exercise of its termination rights in the event of casualty pursuant to the
Sublease, incorporating Sections 22 (c) and (d) of
the Prime Lease, but Mercury shall notify Reliant in writing at the time
Mercury notifies Master Sublandlord of the exercise of any such termination
right. In addition, if the Prime Lease and/or the Sublease is/are terminated
for any reason other than a default, beyond applicable notice and cure periods,
by Mercury under this Sub-Sublease, this Sub-Sublease shall terminate
simultaneously with such termination, and such termination shall be without any
liability of Mercury to Reliant.

 

34.                               Option
to Expand.

 

a.                                       Option.
At any time during the Term, Reliant shall have an option to expand (“Expansion Option”) into the balance
of Building 20 (“Adjacent Space”). The 

 

27

 

Expansion Option may be exercised by Reliant by giving
Mercury written notice of the exercise at least sixty (60) days prior to the
date that Mercury shall be required to deliver the Adjacent Space to Reliant (“Adjacent Space Delivery Date”). If
Reliant exercises its Expansion Option, the Sub-Sublease of the Adjacent Space
shall be on the same terms and conditions then in effect with respect to the
Subleased Premises for the remaining balance of the Term, including, without
limitation, the Base Rent then payable, except that Mercury shall not be
required to provide a tenant improvement allowance with respect to the Adjacent
Space. In no event shall Mercury be obligated to perform any alterations or
improvements to the Adjacent Space. All references in this Sub-Sublease to “Subleased Premises” shall be deemed
to include the Adjacent Space. Mercury and Reliant agree to enter an amendment
to this Sub-Sublease to document the exercise of Reliant’s Expansion Option
within thirty (30) days after Reliant’s written notice of exercise of the
Expansion Option.

 

b.                                       Mercury
Rights. During the Term, Mercury shall have the right to enter the Adjacent
Space for purposes of installing, maintaining, repairing and replacing
telephone, telecommunications, internet and data cabling and wiring in the Adjacent
Space. Prior to the Adjacent Space Delivery Date, Mercury shall have the right
to store personal property, equipment, furniture and similar items in the
Adjacent Space. Any entry upon or use by Mercury of the Adjacent Space shall
not unreasonably interfere with Reliant’s use of the Subleased Premises, and,
if Reliant exercises the Expansion Option, with Reliant’s use of the Adjacent
Space. Reliant shall not unreasonably interfere with Mercury’s rights pursuant
to this Sub-Sublease with respect to the Adjacent Space.

 

35.                               Option
to Extend Term. Mercury grants to Reliant one (1) option to extend the Term
of this Sub-Sublease (“Extension Option”)
for an additional twelve (12) months (“Extension Term”)
upon all of the terms and conditions of this Sub-Sublease, except that
(i) Base Rent for the Extension Term shall be $1.14 per rentable square
foot of the then Subleased Premises, and (ii) Reliant shall have no further
option to extend the Term. Reliant may exercise the Extension Option by giving
written notice to Mercury not more than two hundred forty (240) nor fewer than
one hundred fifty (150) days prior to the Expiration Date. If, as of the date
that is sixty (60) days prior to the commencement date for the Extension Term,
Reliant has not yet exercised its Expansion Option, Reliant may exercise the
Expansion Option for the Adjacent Space on the date that is sixty (60) days
prior to the commencement date for the Extension Term, and may Sub-Sublease the
Adjacent Space during the Extension Term upon all of the terms and conditions
set forth in Section 34 above. Mercury and
Reliant agree to enter an amendment to this Sub-Sublease to document the
exercise of Reliant’s Extension Option within thirty (30) days after Reliant’s
written notice of exercise of the Extension Option.

 

[SIGNATURES APPEAR ON NEXT PAGE]

 

28

 

IN WITNESS WHEREOF, Mercury and Reliant have each executed this
Sub-Sublease on the day and year first hereinabove written.

 

 

	
   

  	
  MERCURY:

  
	
   

  	
   

  
	
   

  	
  MERCURY INTERACTIVE
  CORPORATION, A

  
	
   

  	
  DELAWARE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Doug Smith

  
	
   

  	
  Name:

  	
  Doug Smith

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RELIANT:

  
	
   

  	
   

  
	
   

  	
  RELIANT TECHNOLOGIES, INC., A

  
	
   

  	
  DELAWARE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey S. James

  
	
   

  	
  Name:

  	
  Jeffrey S. James

  
	
   

  	
  Title:

  	
  Chief Operating Officer

  
					

 

1

 

EXHIBIT A

 

PRIME LEASE

 

January 23, 1997

 

 

 

 

LEASE AGREEMENT

(PHASE I)

 

 

by and between

 

 

464 Ellis Street
Associates, L.P.,

a California limited
partnership

 

 

(“Landlord”)

 

 

and

 

 

Netscape Communications
Corporation,

a Delaware corporation

 

 

(“Tenant”)

 

 

Dated as of January 23,
1997

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  PAGE

  
	
   

  	
   

  
	
  BASIC LEASE INFORMATION

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.

  	
  LEASED PREMISES

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Premises

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Phase II
  Lease

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Project;
  Common Areas; Access & Cooperation

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  Definition of
  Project

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  Definition of
  Common Area

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
  Use of Common
  Area

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)

  	
  Landlord’s
  Access

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Reconfiguration
  of Phase I

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  OCCUPANCY AND USE

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  TERM AND POSSESSION

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Term;
  Occupancy Date; Expiration Date

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Initial
  Construction

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Occupancy By
  Tenant

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Rent
  Commencement Date; Certificate of Occupancy

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Conditions;
  Window Dates

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Credit
  Termination Right

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND TAXES

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Payment of
  Rent

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  Monthly Base
  Rent

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  Other Rent

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
  Partial
  Months

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Adjustments
  in Base Rent

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Additional
  Charges for Expenses and Taxes

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  Definitions
  of Certain Additional Charges

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (A)

  	
  “Tax Year”

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (B)

  	
  “Real Estate
  Taxes”

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (C)

  	
  “Expenses”

  	
  8

  

 

i

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (D)

  	
  “Expense
  Year”

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  Payment of
  Real Estate Taxes

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (A)

  	
  Payment as
  Due

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (B)

  	
  Impounds

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
  Payment of
  Expenses

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (A)

  	
  Payment as
  Due

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (B)

  	
  Monthly
  Payments

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)

  	
  Other

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Audit Rights

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Late Charges;
  Default Rate

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  MANAGEMENT

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Management of
  the Premises

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Management of
  the Common Area

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Third Party
  Management

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Dispute of
  Assumption of Management

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  RESTRICTIONS ON USE

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  COMPLIANCE WITH LAWS

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Tenant’s
  Compliance Obligations

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Insurance
  Requirements

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  No Limitation
  on Obligations

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  ADDITIONAL ALTERATIONS

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Landlord’s
  Alterations

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Landlord’s
  Consent to Tenant’s Alterations

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Permitted
  Alterations

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Requirements
  for Tenant Alterations

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Removal of
  Alterations and Restoration

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Reimbursement
  of Landlord’s Review Costs

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  REPAIR AND MAINTENANCE

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Landlord’s
  Obligations

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Tenant’s
  Obligations

  	
  17

  

 

ii

 

	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Tenant’s
  Obligations for Structural Maintenance

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Maintenance
  Service Contracts

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Cure Rights

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  No Liability
  of Landlord

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  LIENS

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  ASSIGNMENT AND SUBLETTING

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Restriction
  on Assignment and Subleasing

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Required
  Notice

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Landlord’s
  Response To Proposed Assignment

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Landlord’s
  Response To Proposed Sublease

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Bonus Rent

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Effect of
  Transfer

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Permitted
  Transfer

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Strategic
  Partners

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Assumption by
  Transferee

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Effect on
  Extension Option

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  INSURANCE AND INDEMNIFICATION

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Release of
  Landlord

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Tenant
  Indemnity

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Tenant’s
  Insurance Requirements

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  Commercial
  General Liability Insurance

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  Time Element
  Insurance

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
  Property
  Insurance

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)

  	
  Workers
  Compensation Insurance

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Survival

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Landlord’s
  Insurance Obligations

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  WAIVER OF SUBROGATION

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  SERVICES AND UTILITIES

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Tenant’s
  Responsibility

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  No Excessive
  Load

  	
  27

  

 

iii

 

	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  No Liability
  of Landlord

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  TENANT’S CERTIFICATES

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  HOLDING OVER

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  SUBORDINATION

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  RULES AND REGULATIONS

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  RE-ENTRY BY LANDLORD

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  INSOLVENCY OR BANKRUPTCY

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  DEFAULT

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Tenant’s
  Default

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Phase II
  Lease Default

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Landlord’s
  Remedies

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Landlord’s
  Default

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Tenant’s
  Remedies

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  Limitation on
  Remedies

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  Remedy for
  Construction Default

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Chronic
  Default

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  DAMAGE AND DESTRUCTION

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Restoration

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Insurance
  Proceeds

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Casualty at
  End of Term

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Mutual
  Termination Option; Insured Casualty

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Destruction
  Where No Proceeds Are Available

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Proceeds Upon
  Termination

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Rent
  Abatement

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Waiver of
  Statutory Provisions

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  EMINENT DOMAIN

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Entire
  Building

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Partial
  Building; Termination

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Partial
  Building; Restoration

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  End of Term
  Taking

  	
  36

  

 

iv

 

	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Taking of
  Common Area

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Award

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Temporary
  Taking

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Waiver of
  Statutory Provisions

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  SALE BY LANDLORD

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
  RIGHT OF LANDLORD TO PERFORM

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
  OWNERSHIP OF IMPROVEMENTS; SURRENDER OF PREMISES

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Ownership of
  Tenant Improvements & Alterations

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Delivery and
  Restoration of Premises

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  No Merger

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
  WAIVER

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
  NOTICES

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
  TAXES PAYABLE BY TENANT

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
  ABANDONMENT

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
  SUCCESSORS AND ASSIGNS

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
  ATTORNEY’S FEES

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
  LIGHT AND AIR

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
  SECURITY DEPOSIT

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Letter of
  Credit

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Reduction
  After Occupancy

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Further
  Reduction

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Substitution
  of Cash Collateral

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.

  	
  FINANCIAL INFORMATION

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36.

  	
  PARKING

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  37.

  	
  MISCELLANEOUS

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Defined
  Terms

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Other Terms

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Quiet
  Enjoyment

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Survival of
  Indemnities; Immediate Obligation to Defend

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  38.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  43

  

 

v

 

	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Landlord’s
  Representations and Warranties

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Tenant’s
  Representations and Warranties

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  39.

  	
  REAL ESTATE BROKERS

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  40.

  	
  HAZARDOUS MATERIALS LIABILITY

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Definitions
  of Hazardous Materials and Environmental Laws

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Tenant
  Indemnity

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Landlord
  Indemnity

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Seller
  Indemnity

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Release of
  Landlord

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Tenant’s
  Disclosure Obligations

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  41.

  	
  ARBITRATION OF DISPUTES

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  42.

  	
  SIGNAGE

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  43.

  	
  OPTION TO RENEW

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  44.

  	
  RENT DURING EXTENSION TERM

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Determination
  of Fair Market Rental Value

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Definition
  of Fair Market Rental Value

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Interim Rent

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Lease Terms
  Continue

  	
  52

  

 

vi

 

INDEX OF DEFINED TERMS

 

	
  Defined Term

  	
  Paragraph

  
	
   

  	
   

  
	
  Additional Charges

  	
  4(a)(2)

  
	
   

  	
   

  
	
  AirProducts Easement

  	
  1(c)(3)

  
	
   

  	
   

  
	
  Alterations

  	
  8(b)

  
	
   

  	
   

  
	
  Assignment

  	
  11(a)

  
	
   

  	
   

  
	
  Base Building
  Improvements

  	
  2 of Work Letter

  
	
   

  	
   

  
	
  Base Rent

  	
  4(a)(1)

  
	
   

  	
   

  
	
  Base Rent Adjustments

  	
  Basic Lease Information

  
	
   

  	
   

  
	
  Building

  	
  Basic Lease Information
  & 1(a)

  
	
   

  	
   

  
	
  Buildings

  	
  Basic Lease Information
  & 1(a)

  
	
   

  	
   

  
	
  Building Systems

  	
  9(b)

  
	
   

  	
   

  
	
  CAA

  	
  40(a)

  
	
   

  	
   

  
	
  CC&Rs

  	
  1(c)(3)

  
	
   

  	
   

  
	
  CERCLA

  	
  40(a)

  
	
   

  	
   

  
	
  Change Order for Tenant
  Modification(s)

  	
  3 of Work Letter

  
	
   

  	
   

  
	
  Chronic Default

  	
  21(f)

  
	
   

  	
   

  
	
  Clean-Up Facilities

  	
  1(c)(2)

  
	
   

  	
   

  
	
  Common Area

  	
  1(c)(2)

  
	
   

  	
   

  
	
  Common Area Expenses

  	
  5(b)

  
	
   

  	
   

  
	
  Completion Assurance

  	
  11 of Work Letter

  
	
   

  	
   

  
	
  Condition

  	
  3(e)

  
	
   

  	
   

  
	
  Cost of Tenant
  Improvements

  	
  11(e)

  
	
   

  	
   

  
	
  Credit Termination
  Right

  	
  3(f)

  
	
   

  	
   

  
	
  Declaration

  	
  40

  

 

1

 

	
  Default Rate

  	
  4(e)

  
	
   

  	
   

  
	
  Draw Event

  	
  11(a)(iii) of Work
  Letter

  
	
   

  	
   

  
	
  Environmental Laws

  	
  40(a)

  
	
   

  	
   

  
	
  Environmental Reports

  	
  40

  
	
   

  	
   

  
	
  EPA

  	
  40

  
	
   

  	
   

  
	
  Expenses

  	
  4(c)(1)(C)

  
	
   

  	
   

  
	
  Expense Year

  	
  4(c)(1)(D)

  
	
   

  	
   

  
	
  Exercise Notice

  	
  43

  
	
   

  	
   

  
	
  Existing Hazardous
  Materials

  	
  40(c)

  
	
   

  	
   

  
	
  Expiration Date

  	
  Basic Lease Information

  
	
   

  	
   

  
	
  Extension Term

  	
  43

  
	
   

  	
   

  
	
  Fair Market Rental
  Value

  	
  44(b)

  
	
   

  	
   

  
	
  Force Majeure Events

  	
  14(c)

  
	
   

  	
   

  
	
  FWPCA

  	
  40(a)

  
	
   

  	
   

  
	
  Hazardous Materials

  	
  40(a)

  
	
   

  	
   

  
	
  Hetch Hetchy Easement

  	
  1(a)

  
	
   

  	
   

  
	
  Identified Hazardous
  Materials

  	
  40(c)

  
	
   

  	
   

  
	
  Initial Window Date

  	
  3(e)

  
	
   

  	
   

  
	
  Insolvency Proceeding

  	
  20

  
	
   

  	
   

  
	
  Land

  	
  1(a)

  
	
   

  	
   

  
	
  Land Improvements

  	
  2 of Work Letter

  
	
   

  	
   

  
	
  Landlord

  	
  Recitals & 37(a)

  
	
   

  	
   

  
	
  Landlord Default Notice

  	
  21(d)

  
	
   

  	
   

  
	
  Landlord Delays

  	
  8 of Work Letter

  
	
   

  	
   

  
	
  Landlord Parties

  	
  12(a)

  

 

2

 

	
  Landlord’s Contractor

  	
  3 of Work Letter

  
	
   

  	
   

  
	
  Landlord’s Core
  Drawings

  	
  5(a) of Work Letter

  
	
   

  	
   

  
	
  Landlord’s Expense
  Statement

  	
  4(c)(3)(B)

  
	
   

  	
   

  
	
  Landlord’s Plans

  	
  2 of Work Letter

  
	
   

  	
   

  
	
  Landlord’s
  Representatives

  	
  38(a)

  
	
   

  	
   

  
	
  Landlord’s Tax
  Statement

  	
  4(c)(2)(A)

  
	
   

  	
   

  
	
  Landscape Reserves

  	
  36

  
	
   

  	
   

  
	
  Laws

  	
  7(a)

  
	
   

  	
   

  
	
  Lease

  	
  Basic Lease Information

  
	
   

  	
   

  
	
  Letter of Credit

  	
  34(a)

  
	
   

  	
   

  
	
  Minimum Parking

  	
  36

  
	
   

  	
   

  
	
  Monthly Base Rent

  	
  Basic Lease Information

  
	
   

  	
   

  
	
  Mortgage

  	
  17

  
	
   

  	
   

  
	
  Mortgagee

  	
  17

  
	
   

  	
   

  
	
  Occupancy Date

  	
  3(a)

  
	
   

  	
   

  
	
  PacBell

  	
  26(b)

  
	
   

  	
   

  
	
  Permitted Alterations

  	
  8(c)

  
	
   

  	
   

  
	
  Permitted Transfer

  	
  11(g)

  
	
   

  	
   

  
	
  PG&E

  	
  26(b)

  
	
   

  	
   

  
	
  Phase I

  	
  1(a)

  
	
   

  	
   

  
	
  Phase II

  	
  1(b)

  
	
   

  	
   

  
	
  Phase II Buildings

  	
  1(b)

  
	
   

  	
   

  
	
  Phase II Land

  	
  1(b)

  
	
   

  	
   

  
	
  Phase II Lease

  	
  1(b)

  
	
   

  	
   

  
	
  Premises

  	
  1(a)

  

 

3

 

	
  Project

  	
  1(c)(1)

  
	
   

  	
   

  
	
  RCRA

  	
  40(a)

  
	
   

  	
   

  
	
  Real Estate Taxes

  	
  4(c)(1)(B)

  
	
   

  	
   

  
	
  Reconfiguration

  	
  1(d)

  
	
   

  	
   

  
	
  Recreational Facilities

  	
  36

  
	
   

  	
   

  
	
  Rent

  	
  4(a)(2)

  
	
   

  	
   

  
	
  Rent Commencement Date

  	
  3(d)

  
	
   

  	
   

  
	
  Rentable Area

  	
  Basic Lease Information

  
	
   

  	
   

  
	
  Restrictive Documents

  	
  6

  
	
   

  	
   

  
	
  Required Modifications

  	
  5(c)of Work Letter

  
	
   

  	
   

  
	
  Seller

  	
  1(a)

  
	
   

  	
   

  
	
  Seller Indemnity

  	
  40(d)

  
	
   

  	
   

  
	
  SFWD

  	
  1(a)

  
	
   

  	
   

  
	
  SFWD Facilities

  	
  1(c)(2)

  
	
   

  	
   

  
	
  Strategic Partner

  	
  11(h)

  
	
   

  	
   

  
	
  Sublease

  	
  11(a)

  
	
   

  	
   

  
	
  Substantially complete

  	
  9 of Work Letter

  
	
   

  	
   

  
	
  Sufficiently complete

  	
  3(a)

  
	
   

  	
   

  
	
  Taking

  	
  23(a)

  
	
   

  	
   

  
	
  Tax Year

  	
  4(c)(1)(A)

  
	
   

  	
   

  
	
  Tenant

  	
  Recitals & 37(a)

  
	
   

  	
   

  
	
  Tenant Delays

  	
  7 of Work Letter

  
	
   

  	
   

  
	
  Tenant Improvements

  	
  1 of Work Letter

  
	
   

  	
   

  
	
  Tenant Modifications

  	
  3 of Work Letter

  
	
   

  	
   

  
	
  Tenant Parties

  	
  12(b)

  

 

4

 

	
  Tenant’s Contractor

  	
  5(d) of Work Letter

  
	
   

  	
   

  
	
  Tenant’s Plans

  	
  5(a) of Work Letter

  
	
   

  	
   

  
	
  Tenant’s
  Representatives

  	
  38(b)

  
	
   

  	
   

  
	
  Term

  	
  3(a)

  
	
   

  	
   

  
	
  Three Party Agreement

  	
  11(a)(v) of Work Letter

  
	
   

  	
   

  
	
  Transfer Standards

  	
  11(g)

  
	
   

  	
   

  
	
  TSCA

  	
  40(a)

  
	
   

  	
   

  
	
  Window Date

  	
  3(e)

  
	
   

  	
   

  
	
  Work Letter

  	
  3(b)

  
	
   

  	
   

  
	
  Working Drawings

  	
  5(a) of Work Letter

  

 

5

 

BASIC LEASE INFORMATION

 

	
  Lease
  Date:

  	
   

  	
  January     ,
  1997

  
	
   

  	
   

  	
   

  
	
  LANDLORD:

  	
   

  	
  464 Ellis Street
  Associates, L.P.,

  
	
   

  	
   

  	
  a California Limited
  Partnership

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address:

  	
   

  	
  700 Emerson

  
	
   

  	
   

  	
  Palo Alto, CA 94301

  
	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
  Netscape Communications
  Corporation,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Tenant’s Address:

  	
   

  	
  FOR NOTICE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  501 Middlefield Ave.

  
	
   

  	
   

  	
  Mountain View, CA 94043

  
	
   

  	
   

  	
  Attn: Director, Real
  Estate

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FOR BILLING:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  501 Middlefield Ave.

  
	
   

  	
   

  	
  Mountain View, CA 94043

  
	
   

  	
   

  	
  Attn: Director, Accounts
  Payable

  
	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
  Three (3) separate
  buildings to be constructed on the Land in accordance with this Lease (each,
  a “Building” and collectively, the “Buildings”).

  
	
   

  	
   

  	
   

  
	
  Phase I:

  	
   

  	
  The Buildings, land and
  improvements located in the area shown on Exhibit
  “A” attached hereto.

  
	
   

  	
   

  	
   

  
	
  Project:

  	
   

  	
  The Project shall consist
  of Phase I. The Project may be expanded to include other land and
  improvements, in accordance with Subparagraph 1(c) [Project; Common Areas;
  Access & Cooperation].

  
	
   

  	
   

  	
   

  
	
  Rentable Area of the
  Premises:

  	
   

  	
  195,003 Rentable Square
  Feet (“Rentable Area”). The parties agree that the Rentable Area is
  conclusive for purposes of calculating Rent under this Lease and is not
  subject to remeasurement.

  
	
   

  	
   

  	
   

  
	
  Tenant’s Use of the
  Premises:

  	
   

  	
  Tenant shall use the
  Premises for office, distribution, research and development, and/or light
  manufacturing, and for no other purposes.

  
	
   

  	
   

  	
   

  
	
  Lease Term:

  	
   

  	
  Commencing on the
  Occupancy Date and ending on the Expiration Date, with the right to extend
  for an additional 

  

 

1

 

	
   

  	
   

  	
  term of five (5) years in
  accordance with Paragraph 43 [Option to Renew].

  
	
   

  	
   

  	
   

  
	
  Scheduled Occupancy Date:

  	
   

  	
  May 5, 1997

  
	
   

  	
   

  	
   

  
	
  Scheduled Rent

  Commencement Date:

  	
   

  	
  One Hundred Twenty (120)
  days after the Occupancy Date.

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  Fifteen (15) years and six
  (6) months after the Rent Commencement Date (“Expiration Date”).

  
	
   

  	
   

  	
   

  
	
  Rent:

  	
   

  	
  Base Rent plus Additional
  Charges.

  
	
   

  	
   

  	
   

  
	
  Monthly Base Rent:

  	
   

  	
  $1.35 per Rentable Square
  Foot of the Rentable Area of the Premises (“Monthly Base Rent”).

  
	
   

  	
   

  	
   

  
	
  Base Rent Adjustments:

  	
   

  	
  On each anniversary of the
  Rent Commencement Date, the Monthly Base Rent shall increase by $.05 per
  Rentable Square Foot (“Base Rent Adjustments”):

  
	
   

  	
   

  	
   

  
	
  Security Deposit:

  	
   

  	
  Tenant shall provide and
  maintain a letter of credit or cash collateral in the initial amount of Seven
  Million Five Hundred Thousand Dollars ($7,500,000) as more specifically
  provided in Paragraph 34 [Security Deposit], which amount may be reduced
  during the Term in accordance with such paragraph.

  
	
   

  	
   

  	
   

  
	
  Guarantor of Lease:

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  Broker:

  	
   

  	
  Cornish & Carey

  
	
   

  	
   

  	
   

  
	
  Broker’s Fee or Commission
  Paid By:

  	
   

  	
  Landlord

  

 

2

 

The foregoing Basic Lease Information is hereby
incorporated into and made a part of this Lease. Each reference in this Lease
to any of the Basic Lease Information shall mean the information hereinabove
set forth and shall be construed to incorporate all of the terms provided under
the particular paragraph pertaining to such information. In the event of any
conflict between any Basic Lease Information and any other portion of the
Lease, the latter shall control.

 

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  464 Ellis Street
  Associates, L.P.,

  
	
   

  	
  a California limited
  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Cañada Corp.,

  
	
   

  	
   

  	
  a California
  corporation,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Virginia Land Company,
  Inc.,

  
	
   

  	
   

  	
  a California
  corporation,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
  Netscape Communications
  Corporation, a Delaware 

  
	
   

  	
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter Currie

  
	
   

  	
   

  	
  Its Chief Financial
  Officer

  
					

 

3

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this “Lease”)
is made and entered into as of January     , 1997, by and
between 464 Ellis Street Associates, L.P., a California limited partnership
(herein called “Landlord”), and Netscape
Communications Corporation, a Delaware corporation (herein called “Tenant”).

 

1.                                      LEASED PREMISES.

 

(a)                                  Premises. Upon and subject to the terms, covenants
and conditions hereinafter set forth, Landlord agrees to lease to Tenant and Tenant
agrees to hire from Landlord those premises (the “Premises”)
comprising three (3) entire buildings to be constructed as shown on Exhibit “A” attached hereto (collectively, the “Buildings” and each individually, a “Building”). The Buildings will be located
on the parcel or parcels of real property shown on Exhibit “A”
(the “Land”). The Land includes an
easement over certain real property adjacent to the Land that Landlord has the
contractual right to acquire from the City and County of San Francisco, acting
by and through its Public Utilities Commission, San Francisco Water Department
(“SFWD”), in the form attached hereto
as Exhibit “0” (the “Hetch
Hetchy Easement”). Landlord currently has the contractual right
to acquire title to the Land (other than the Hetch Hetchy Easement) from
Schlumberger Technology Corporation (“Seller”). The
Buildings, together with the Land, the Hetch Hetchy Easement and associated
improvements now or in the future located on the Land the Hetch Hetchy Easement
are collectively referred to as “Phase I”. Landlord
shall use commercially reasonable efforts to acquire the Land and construct the
Buildings in accordance with the terms and conditions of this Lease and the
Work Letter, provided that Tenant’s rights and remedies for any breach of such
obligation shall be limited as provided in Subparagraphs 3(e) [Conditions;
Window Dates] and 21(e)(2) [Tenant’s Remedies].

 

(b)                                  Phase II Lease. Landlord and Tenant intend to enter into
a separate lease (the “Phase II Lease”)
of four (4) buildings (the “Phase II Buildings”)
to be constructed on land adjacent to Phase I (the “Phase
II Land”), including the right of Tenant to use certain
improvements and facilities on such adjacent land (such buildings,
improvements, facilities and land collectively, “Phase
II”); provided, however, that failure to enter into the Phase II
Lease shall not affect the respective rights and obligations of the parties
hereunder except as expressly and specifically provided herein. Landlord
currently has the contractual right to acquire title to the Phase II Land from
Seller.

 

(c)                                  Project; Common Areas; Access
& Cooperation.

 

(1)                                 Definition of Project. The term “Project” shall mean Phase I. In
addition, if Landlord (or its affiliate) and Tenant enter into the Phase II Lease,
after the commencement of the Phase II Lease the term “Project” shall include
Phase I and Phase II. Subject to the requirements of Subparagraph 5(b)
[Management of Common Area], Landlord shall have the right, at any time and
from time to time, to expand the land and improvements which are included in
the “Project” to include (i) all or any portion of Phase II, and/or (ii) any
other property acquired by Landlord or its affiliates which is contiguous to
the Project (as such term is defined at any given time), regardless of whether
Phase II or any such other property is 

 

1

 

leased to Tenant or leased to, sold to or occupied by
a third party or third parties. Landlord shall deliver written notice to Tenant
of Landlord’s intent to expand the Project, identifying the property and
improvements which will be added to the Project.

 

(2)                                 Definition of Common Area. The term “Common Area” shall mean all
areas and facilities within Phase I located outside the perimeter footings of
the Buildings, including the landscaped areas, service areas, parking areas,
recreation areas, trash enclosures, plaza, walkways, driveways, sidewalks,
access and perimeter roads, and the like; but excluding from the Common Area
all monitoring wells, slurry walls, extraction wells, remediation equipment,
piping, and other equipment (collectively, the “Clean-up
Facilities”) which have been or may be installed on the Project
for the purpose of conducting monitoring and remediation of Hazardous Materials,
and all water pipelines, drainage pipelines, hatch covers, wells and other
surface and subsurface utility facilities owned by SFWD which have been or may
be installed on or under the Hetch Hetchy Easement (collectively, the “SFWD Facilities”). The Clean-up
Facilities are or will be owned and controlled by Seller.

 

(3)                                 Use of Common Area. During any time that Tenant leases all of
the rentable area located in the Project, Tenant shall have the right to
exclusive use of the Common Area (subject to an easement for underground
pipelines and related above ground facilities in favor of Air Products (the “AirProducts Easement”), and all
other existing and future easements, licenses and other rights and interests in
favor of or required by public utilities or public, governmental or regulatory
entities; rights reserved to SFWD under the Hetch Hetchy Easement; rights of
third parties pursuant to the Declaration and the CC&Rs; and rights
retained by Landlord pursuant to this Lease), and Landlord shall not grant the
right to use of the surface of the Common Area to any other tenant, occupant or
owner of any property located adjacent to the Project. During any time that the
Project includes any rentable area not leased to Tenant, Tenant shall have the
right to non-exclusive use of the Common Area and any other common area located
in the Project, together with other tenants, occupants and owners of portions
of the Project, subject to the terms of this Lease. The operation and use of
the Common Area shall be governed by conditions, covenants and restrictions (“CC&Rs”) between the owners of
portions of the Project, in the form attached hereto as Exhibit “B”,
with such modifications as Landlord may reasonably determine to be appropriate.
The CC&Rs may be recorded against the Project by Landlord at any time, at
Landlord’s election, and will at all times be superior in priority to this
Lease. Landlord shall have the right to make reasonable modifications to the
CC&Rs during the Term, including, without limitation, in order to provide
necessary or appropriate access over, across and from the Common Area
(including any roadways and drive aisles located thereon) to any property which
is included in the Project; provided that such modifications do not materially
adversely affect Tenant’s use of the Premises, Minimum Parking, or access to
the Premises.

 

(4)                                 Landlord’s Access. Landlord shall have reasonable and
appropriate access across the Common Area to other land which is included, or
which Landlord intends to include, in the Project, at all reasonable times for
purposes of construction and development of the Project. In connection with the
development of Phase II and other portions of the Project, Tenant shall
cooperate with Landlord in the establishment, execution and recordation of the
CC&Rs and any other conditions, covenants, restrictions, easements,
licenses and/or other rights and interests which encumber Phase I for the
benefit of other portions of the Project, and which are required in order to
provide sufficient parking for any portion of the 

 

2

 

Project or in connection with other development
requirements for any portion of the Project; provided that such conditions,
covenants, restrictions, easements, licenses, and/or other rights and interests
do not materially adversely affect Tenant’s use of the Premises, Minimum
Parking or access to the Premises and Tenant shall not be required to incur any
out-of-pocket cost in connection with such cooperation. Tenant shall execute and
deliver any documents or instruments reasonably required in connection
therewith upon Landlord’s request.

 

(d)                                  Reconfiguration of Phase I. Landlord reserves the right, in
connection with the development of Phase II, without incurring any liability to
Tenant and without constituting an eviction (constructive or otherwise), and
without entitling Tenant to any abatement of Rent or to terminate this Lease or
otherwise releasing Tenant from any of Tenant’s obligations under this Lease,
to take any of the following actions (each, a “Reconfiguration”):

 

(1)                                 Reconfigure the property line between
Phase I and Phase II, even if such reconfiguration would cause a reduction in
the size of the Land, so long as the portions of the Land on which the
Buildings (and any required setbacks) are located are not affected by such
action, the remaining Phase I continues to be in compliance with all applicable
Laws (as defined in Subparagraph 7(a) (Tenant’s Compliance Obligations))
(including, without limitation, city parking requirements and other development
approvals), Tenant’s use of the Premises as contemplated by this Lease is not
impaired thereby, and Tenant continues to have use of the Minimum Parking in
accordance with Paragraph 36 [Parking]; or

 

(2)                                 Subdivide the Land into two or more legal
parcels, so long as Tenant’s use of the Premises as contemplated by this Lease
is not impaired thereby and Tenant continues to have use of the Minimum Parking
in accordance with Paragraph 36 [Parking]:

 

Landlord shall deliver
written notice to Tenant of Landlord’s intent to Reconfigure, identifying the
portion of Phase I affected by the Reconfiguration and including a new Exhibit “A” reflecting such Reconfiguration. Any
Reconfiguration shall be effective on the date designated by Landlord in its
notice to Tenant. On the effective date of such Reconfiguration, the
description of the Land shall automatically be revised, and the terms and
conditions of the original Lease shall remain in full force and effect except
that the revised Exhibit “A” reflecting the
location of the newly configured Land shall become part of this Lease. From and
after the date of such Reconfiguration, the term “Land” shall mean the
reconfigured space. The Base Rent shall not be revised as a result of any
Reconfiguration. Tenant shall cooperate with Landlord in any subdivision or lot
line adjustment process in connection with any Reconfiguration, provided that
Tenant shall not be required to incur any out-of-pocket cost in connection with
such cooperation. Upon Landlord’s request, Tenant shall execute and deliver any
documents or instruments reasonably required in connection with the
Reconfiguration, or the amendment of the Lease or any subdivision or lot line
adjustment process in connection therewith.

 

2.                                      OCCUPANCY AND USE. Tenant shall use and occupy the Premises
for the purpose specified in the Basic Lease Information and for no other use
or purpose without the prior written consent of Landlord. Landlord may grant or
withhold consent to a proposed change of use in its sole discretion. Notwithstanding
anything in this Lease, Tenant’s use and occupancy 

 

3

 

of the Premises and Common Area will be subject at all
times to the terms and conditions of the CC&Rs, the Declaration and the
Hetch Hetchy Easement.

 

3.                                      TERM AND POSSESSION.

 

(a)                                  Term; Occupancy Date; Expiration
Date. The term of
this Lease (the “Term”) shall commence on the
Occupancy Date and, unless sooner terminated as herein provided, shall expire
on the Expiration Date, provided that Tenant shall have an option to extend the
Term in accordance with the terms and conditions of Paragraph 43 [Option to
Renew]. “Occupancy Date” shall mean the date on which (i) Landlord notifies
Tenant in writing that the base building shell for each of the Buildings is
sufficiently complete such that Tenant’s contractor may commence construction
of the Tenant Improvements (as defined in the Work Letter), and (ii) Landlord
has tendered possession of the Premises to Tenant; provided, however, that
Landlord and Tenant may mutually agree to an earlier Occupancy Date. After the
Occupancy Date, Landlord shall reserve a continuing right to access the
Premises to take all steps required to complete the Base Building Improvements
(as defined in the Work Letter), and Tenant acknowledges that substantial work
may be required by Landlord to complete the Base Building Improvements after
the Occupancy Date. “Sufficiently Complete” (as used in the preceding sentence)
means that the roof structure shall be in place, shell sprinklers shall be
installed, concrete floors shall be poured, and access shall be available for
the delivery and placement of construction materials. All of the rights and
obligations of the parties under this Lease (other than Tenant’s obligation to
pay Base Rent and Additional Charges and Tenant’s maintenance and repair
obligations with respect to portions of the Base Building Improvements which
are not substantially complete) shall commence on the Occupancy Date. At
Landlord’s option, the Occupancy Date may be determined separately for each
Building, in which event the Rent Commencement Date will be determined
separately for each Building, but Base Rent Adjustments and the Expiration Date
for the entire Premises will be based on the last Occupancy Date to occur. The
parties anticipate that the Occupancy Date will occur on the Scheduled
Occupancy Date set forth in the Basic Lease Information. However, except as
provided in Subparagraphs 3(e) [Conditions; Window Dates] and 21(e)(2) [Tenant’s
Remedies], this Lease shall not be void or voidable as a result of any delay in
the Occupancy Date, nor shall Landlord be liable to Tenant for any loss or
damage resulting therefrom.

 

(b)                                  Initial Construction. Completion of the Base Building
Improvements by Landlord and the Tenant Improvements by Tenant shall be
governed by the terms and conditions of the separate work letter (“Work Letter”)
attached hereto as Exhibit “D”. Tenant’s
obligation to construct the Tenant Improvements pursuant to the Work Letter is
independent of, and in addition to, Tenant’s obligation to pay Rent under this
Lease. Landlord’s general contract for the Base Building Improvements
(including the roof membrane) will include or provide for the construction warranties
described in the provisions of such contract attached hereto as Exhibit ”G”. Upon Tenant’s request, Landlord shall use
reasonable efforts to enforce any warranties furnished to Landlord by Landlord’s
general contractor, Landlord’s architect, and any other persons in connection
with the provision of labor and/or material for the Base Building Improvements
(including the roof membrane). If Tenant is not satisfied with Landlord’s
actions in enforcing such warranties, Tenant may upon written notice to
Landlord take any actions necessary in Tenant’s reasonable judgment to enforce
such warranties directly, and Landlord shall take all commercially reasonable
action to cooperate with Tenant, including assigning to 

 

4

 

Tenant Landlord’s rights with respect to such
warranties. Tenant acknowledges that Landlord has not made any representation
or warranty with respect to the construction of the Base. Building Improvements
or the condition of the Premises or the Common Area or with respect to ‘the
suitability or fitness of either for the conduct of Tenant’s permitted use or
for any other purpose, except as may be expressly and specifically provided
herein.

 

(c)                                  Occupancy By Tenant. Tenant shall be deemed to occupy the
Premises from and after the Occupancy Date. This Paragraph 3(c) shall not be
construed as an obligation of Tenant to continuously occupy the Premises. Within
five (5) days after the Occupancy Date, Landlord shall deliver to Tenant a
certificate confirming the Occupancy Date, in the form of Exhibit “E”
hereto. If Tenant does not agree with Landlord’s determination of the Occupancy
Date, Tenant may submit such matter to arbitration in accordance with Paragraph
41 [Arbitration of Disputes], provided that prior to the resolution of such
matter by arbitration, the parties shall proceed under this Lease as if the
Occupancy Date were the date designated by Landlord, with any required
adjustments to the Rent Commencement Date made after the matter is ultimately
determined by arbitration.

 

(d)                                  Rent Commencement Date;
Certificate of Occupancy. Tenant’s obligation to pay Base Rent and Additional
Charges hereunder shall commence on the earlier to occur of (1) the Scheduled
Rent Commencement Date set forth in the Basic Lease Information, or (ii) the
date on which Tenant has substantially completed the Tenant Improvements for
all of the Buildings (or, if Landlord elects to determine the Occupancy Date
for each Building separately pursuant to Subparagraph 3(a), the date on which
Tenant has substantially completed the Tenant Improvements for the applicable
Building) in accordance with the Work Letter (the “Rent
Commencement Date”). After substantial completion of the Tenant
Improvements (as defined in the Work Letter), Tenant shall immediately apply
for, and use best efforts to obtain within fifteen (15) business days, a
certificate of occupancy (or equivalent documentation) for each Building. Tenant
shall promptly deliver to Landlord copies of the certificate(s) of occupancy.

 

(e)                                  Conditions; Window Dates. The parties have set forth certain events
which must occur prior to or during the construction of the Buildings (each, a “Condition”), together with an “Initial
Window Date” for each Condition, on Exhibit “F”
attached hereto. If any Condition is not satisfied on or before its Initial
Window Date (subject to extension pursuant to Paragraph 7 [Tenant Delays] of
the Work Letter), Tenant shall have the option to terminate this Lease by
delivering written notice to Landlord within five (5) business days after the
applicable Initial Window Date; provided, however, that the Initial Window
Dates for the Occupancy Date and Substantial Completion of Base Building
Improvements shall be subject to extension (not to exceed ninety (90) days) for
any delay resulting from Force Majeure Events. If Tenant does not elect to
terminate this Lease during such period, Tenant shall again have the option to
terminate this Lease by delivering written notice to Landlord within five (5)
business days after the thirtieth day following the applicable Initial Window
Date, and each thirtieth day thereafter (each such date, together with the
Initial Window Date, a “Window Date”), if the applicable Condition is not
satisfied on or before any such Window Date. If Tenant does not deliver written
notice of termination to Landlord within any such five day period after a
Window Date, all rights and obligations of the parties under this Lease shall
continue notwithstanding the delay in the satisfaction of any Condition. If any
Condition is not satisfied after the third 

 

5

 

Window Date with respect to such Condition, both
Landlord and Tenant shall have the option to terminate this Lease by delivering
written notice to the other party within five (5) business days after the
applicable Window Date, or within five (5) business days after each Window Date
thereafter in connection with such Condition; provided, however, that Landlord
shall not have the option to terminate this Lease pursuant to this paragraph
after Tenant has commenced construction of the Tenant Improvements. If this
Lease is terminated by Tenant pursuant to this Subparagraph 3(e) after
construction of the Tenant Improvements has commenced, at Landlord’s option and
upon Landlord’s request, Tenant shall assign to Landlord all of Tenant’s rights
under Tenant’s general contract, architect and/or engineer agreements and any
other agreements with contractors or suppliers in connection with the Tenant
Improvements, and Landlord shall assume Tenant’s obligations under any such
assigned agreements to the extent such obligations arise from work or materials
provided to the Premises after termination of the Lease. In such event Tenant
shall indemnify and hold the Landlord Parties harmless from, and defend the
Landlord Parties against, all liens filed and claims made by any contractors,
architects, subcontractors, or suppliers who provided work or materials to the
Premises prior to the termination of the Lease in connection with the Tenant
Improvements.

 

(f)                                    Credit Termination Right. Notwithstanding any other provision of
this Lease, Landlord shall have the option to terminate this Lease by
delivering written notice to Tenant at any time on or before the earlier to
occur of (i) the closing of an acquisition and construction loan to Landlord
with respect to Phase I, on terms and conditions satisfactory to Landlord, or
(ii) March 31, 1997, if a material adverse change in the business, assets,
financial condition, income or prospects of Tenant has occurred since the
execution of this Lease (the “Credit Termination Right”). Landlord shall not be
liable to Tenant for any termination of this Lease pursuant to the Credit
Termination Right.

 

4.                                      RENT; RENT ADJUSTMENTS;
ADDITIONAL CHARGES FOR EXPENSES AND TAXES.

 

(a)                                  Payment of Rent.

 

(1)                                 Monthly Base Rent. Commencing on the Rent Commencement Date,
Tenant shall pay to Landlord throughout the Term Base Rent in an amount equal
to the Monthly Base Rent specified in the Basic Lease Information multiplied by
the Rentable Area of the Premises, as specified in the Basic Lease Information
(“Base Rent”). Monthly Base Rent shall
be payable by Tenant on or, at Tenant’s election, before the first day of each
month, in advance, in lawful money of the United States (without any prior
demand therefor and without deduction or offset whatsoever, except for
abatement as may be expressly and specifically provided for in Paragraphs 22
[Damage and Destruction) and 23 [Eminent Domain)), to Landlord at the address
specified in the Basic Lease Information or to such other firm or at such other
place as Landlord may from time to time designate in writing.

 

(2)                                 Other Rent. Tenant shall pay all charges and other
amounts whatsoever as provided in this Lease (“Additional
Charges”) to Landlord at the place where the Base Rent is
payable, and Landlord shall have the same remedies for a default in the payment
of Additional Charges as for a default in the payment of Base Rent. As used
herein, the term “Rent” shall include all Base Rent and Additional Charges
(including, without limitation, 

 

6

 

Additional Charges pursuant to Paragraph 5
[Management] and Paragraph 25 [Right of Landlord to Perform]).

 

(3)                                 Partial Months. If the Rent Commencement Date occurs on a
day other than the first day of a calendar month, or the Expiration Date occurs
on a day other than the last day of a calendar month, then the Base Rent and
Additional Charges for such fractional month shall be prorated by multiplying
the Monthly Base Rent by a fraction, the numerator of which shall be (A) the
actual number of days remaining in such month including and after the Rent
Commencement Date, if determining Rent for the fractional first month, or (B)
the actual number of days elapsed in such month prior to and including the
Expiration Date, if determining Rent for the fractional last month, and the
denominator of which shall be the actual number of days in such month.

 

(b)                                  Adjustments in Base Rent. The Monthly Base Rent under Paragraph 4(a)
[Monthly Base Rent] shall be adjusted as provided in the Basic Lease
Information.

 

(c)                                  Additional Charges for Expenses
and Taxes.

 

(1)                                 Definitions of Certain Additional
Charges. For
purposes of this Subparagraph 4(c), the following terms shall have the meanings
hereinafter set forth:

 

(A)                               “Tax Year” shall mean each twelve (12) consecutive
month period commencing July 1st of the calendar year during which the Rent
Commencement Date of this Lease occurs.

 

(B)                               “Real Estate Taxes” shall mean all taxes, assessments and
charges levied upon or with respect to Phase I or any personal property of
Landlord used in the operation thereof, or Landlord’s interest in Phase I or
such personal property. Real Estate Taxes shall include, without limitation,
all general real property taxes, possessory interest taxes, and general and
special assessments, charges, fees or assessments for transit (including,
without limitation, shuttle fees and roadways), housing, police, fire,
utilities, sewers, emergency response or other governmental services or
purported benefits to Phase I (provided, however, that any refunds of Real
Estate Taxes paid by Tenant shall be credited against Tenant’s further
obligation to pay Real Estate Taxes during the Term or refunded to Tenant at
the end of the Term), service payments in lieu of taxes, and any tax, fee or
excise on the act of entering into this Lease, or any other lease of space
in-Phase I, or on he use or occupancy of Phase I or any part thereof, or on the
rent payable under any lease or in connection with the business of renting
space in Phase I, that are now or hereafter levied or assessed against Landlord
by the United States of America, the State of California, or any political
subdivision, public corporation, district or any other political or public
entity, and shall also include any other tax, fee or other excise, however
described, that may be levied or assessed as a substitute for, or as an
addition to, in whole or in part, any other Real Estate Taxes, whether or not
now customary or in the contemplation of the parties on the date of this Lease.
Real Estate Taxes shall not include franchise, transfer, inheritance or capital
stock taxes or income taxes measured by the net income of Landlord from all
sources unless, due to a change in the method of taxation, any of such taxes is
levied or assessed against Landlord as a substitute for, or as an addition to,
in whole or in part, any other tax that would otherwise constitute a Real
Estate Tax. Additionally, Real Estate Taxes shall not 

 

7

 

include any assessments or like charges to pay for any
remediation of contamination from any Hazardous Materials other than liens,
assessments and like charges resulting from Tenant’s failure to pay any costs for
which Tenant has indemnified Landlord pursuant to Subparagraph 40(b) [Tenant
Indemnity]. Real Estate Taxes shall also include reasonable legal fees, costs
and disbursements incurred in connection with proceedings to contest, determine
or reduce Real Estate Taxes. If any assessments are levied on Phase I and
Landlord pays the assessment in full, Tenant shall have no obligation to pay
more than the amount of annual installments of principal and interest that
would become due during the Lease Term had Landlord elected to pay the
assessment in installment payments.

 

(C)                               “Expenses” shall mean the total costs and
reasonable expenses paid or incurred by Landlord in connection with the
management, operation, maintenance and repair of Phase I, including, without limitation,
(i) the cost of fire, extended coverage, boiler, sprinkler, commercial general
liability, property, rent, earthquake, flood, and all other insurance obtained
by Landlord pursuant to Subparagraph 12(e) [Landlord’s Insurance Obligations)
or required to be carried by Landlord under the Hetch Hetchy Easement,
including, without limitation, insurance premiums and any deductible amounts
paid by Landlord; (ii) the cost of air conditioning, electricity, steam,
heating, mechanical, ventilating, water, gas, elevator systems and all other
utilities, the cost of supplies and equipment and maintenance and service
contracts in connection therewith, and the cost of refuse and recycling
services, parking lot sweeping and similar maintenance services; (iii) the cost
of repairs and general maintenance and cleaning, including, without limitation,
cost incurred for any repairs, maintenance or cleaning required by the Hetch
Hetchy Easement; (iv) fees, charges and other costs for any project
engineers for the Project, and fees, charges and costs of all independent
contractors (including attorneys, accountants and consultants) engaged by
Landlord and related solely to the operation of Phase I (or, if any such costs,
fees and charges are attributable to other property managed by Landlord, the
portion of such costs, fees and charges allocable to Phase I, as reasonably
determined by Landlord); (v) the cost of any capital improvements made to the
Building or the Common Areas as required or permitted by this Lease (including,
without limitation, any costs incurred in order to comply with the Declaration
or Hetch Hetchy Easement in connection with such improvements or in the repair
or replacement of any improvements which are altered, damaged or removed
pursuant to the Hetch Hetchy Easement); (vi) a management fee for Landlord’s
management and administrative services in connection with Phase I in the amount
of one-quarter of one percent (.25%) of Base Rent and Additional Charges
(excluding the management fee), subject to increase pursuant to Paragraph 5
[Management]; (vii) any expenses allocated to Phase I under the CC&Rs and
expenses incurred by Landlord if Landlord (either itself or through its agent)
assumes management of the Premises and/or Common Area pursuant to Paragraph 5 [Management];
and (viii) any other expenses of any other kind whatsoever incurred in
managing, operating, maintaining and repairing the Premises and/or Common Areas.
Notwithstanding anything to the contrary herein contained, Expenses shall not
include, and in no event shall Tenant have any obligation to pay for pursuant
to this Subparagraph 4(c) or Subparagraph 9(b) [Repair and Maintenance; Tenant’s
Obligations], (aa) the initial cost of the Base Building Improvements which is
to be paid by Landlord pursuant to the Work Letter with respect to any Building
or the Common Area; (bb) the cost of providing tenant improvements to any other
tenant in Phase I; (cc) debt service (including, but without limitation,
interest and principal) required to be made on debt incurred by Landlord and
relating to the Project; (dd) ground lease payments or payments to SFWD in
consideration for the grant of the Hetch 

 

8

 

Hetchy Easement; tee) the portion of a management fee
paid to Landlord or an affiliate in excess of one-quarter of one percent (.25%)
of the sum of Base Rent and Additional Charges (excluding the management fee),
subject to increase pursuant to Paragraph 5 [Management]; (ff) the cost of
special services, goods or materials provided to any other tenant; (gg)
depreciation; (hh) costs for which Landlord has a right to receive
reimbursement from others; (ii) costs occasioned by Landlord’s fraud or willful
misconduct under applicable Laws; (jj) costs to correct any construction
defects in the original construction of the Base Building Improvements for any
of the Buildings or the Common Area; (kk) costs arising from a disproportionate
use of any utility or service supplied by Landlord to any other occupant of the
Project to the extent that Landlord has the ability to charge such other tenant
for said costs under the terms of a lease comparable to terms governing said
costs in this Lease; (11) environmental pollution remediation related costs
(provided that such exclusion shall not limit Tenant’s indemnity pursuant to
Subparagraph 40(b) [Hazardous Materials, Tenant’s Indemnity]); (mm) any
maintenance, repair or replacement costs for which Landlord is responsible
pursuant to Subparagraph 9(a). [Repair and Maintenance; Landlord’s Obligations];
(nn) advertising or promotional costs; (oo) leasing commissions; and (pp)
reserves for expenses. All costs and expenses shall be determined on a cash
basis, with accruals appropriate to Landlord’s business. Expenses shall not
include specific costs incurred for the account of, separately billed to and
paid by specific tenants in Phase I.

 

(D)                               “Expense Year” shall mean each twelve (12) consecutive
month period commencing January 1 of the calendar year during which the Rent
Commencement Date of the Lease occurs. Landlord, upon notice to Tenant, may
change the Expense Year from time to time to any other twelve (12) consecutive
month period, and, in the event of any such change, Expenses shall be equitably
adjusted for the Expense Years involved in any such change.

 

(2)                                 Payment of Real Estate Taxes.

 

(A)                               Payment as Due. With reasonable promptness after Landlord
has received the tax bills for any Tax Year, Landlord shall furnish Tenant with
a statement (herein called “Landlord’s Tax Statement”) setting forth the amount
of Real Estate Taxes for such Tax Year. Unless otherwise required pursuant to
clause (B) below, Tenant shall pay to Landlord actual Real Estate Taxes in
installments, twice each Tax Year, no later than fifteen (15) business days
prior to the due date of each Real Estate Tax installment.

 

(B)                               Impounds. Notwithstanding clause (A) above, if
required by any Mortgagee or, at Landlord’s election, after any default by
Tenant in the timely payment of Real Estate Taxes, Tenant shall pay to Landlord
as Additional Charges one-twelfth (1/12th) of Real Estate Taxes for each Tax
Year on or before the first day of each month during such Tax Year, in advance,
in an amount reasonably estimated by Landlord and billed by Landlord to Tenant.
Landlord shall have the right initially to determine monthly estimates and to
revise such estimates from time to time. If the actual Real Estate Taxes for
such Tax Year (as shown on Landlord’s Tax Statement) exceed the estimated Real
Estate Taxes paid by Tenant for such Tax Year, Tenant shall pay to Landlord the
difference between the amount paid by Tenant and the actual Real Estate Taxes
within fifteen (15) days after the receipt of Landlord’s Tax Statement, and if
the total amount paid by Tenant for any such Tax Year shall exceed the actual
Real Estate Taxes for such Tax Year, such excess shall be credited against the
next installment of Real Estate 

 

9

 

Taxes due from Tenant to Landlord hereunder. If it has
been determined that Tenant has overpaid Real Estate Taxes during the last year
of the Lease Term, then Landlord shall reimburse Tenant for such overage on or
before the thirtieth (30th) day following the Expiration Date.

 

(3)                                 Payment of Expenses.

 

(A)                               Payment as Due. With reasonable promptness after Landlord’s
receipt thereof, Landlord shall furnish Tenant with a copy of any invoices with
respect to Expenses. Unless otherwise required pursuant to clause (B) below,
Tenant shall pay to Landlord any Expenses no later than twenty (20) days after
receipt of the invoice with respect to such Expenses.

 

(B)                               Monthly Payments. Notwithstanding clause (A) above, Tenant
shall pay to Landlord as Additional Charges one-twelfth (1/12th) of the
Expenses for each Expense Year on or before the first day of each month of such
Expense Year, in advance; in an amount reasonably estimated by Landlord and
billed by Landlord to Tenant in any of the following events: (i) if required by
any Mortgagee (with respect to all or any particular Expenses); (ii) if
Landlord assumes management of the Premises and/or Common Area pursuant to
Paragraph 5 [Management]; or (iii) at Landlord’s election, after any default by
Tenant in the timely payment of Expenses. Landlord shall have the right
initially to determine monthly estimates and to revise such estimates from time
to time. With reasonable promptness after the expiration of each Expense Year,
Landlord shall furnish Tenant with a statement (herein called “Landlord’s Expense Statement”),
setting forth in reasonable detail the Expenses for such Expense Year. If the
actual Expenses for such Expense Year exceed the estimated Expenses paid by
Tenant for such Expense Year, Tenant shall pay to Landlord the difference
between the amount paid by Tenant and the actual Expenses within fifteen (15)
days after the receipt of Landlord’s Expense Statement, and if the total amount
paid by Tenant for any such Expense Year shall exceed the actual Expenses for
such Expense Year, such excess shall be credited against the next installment
of the estimated Expenses due from Tenant to Landlord hereunder or if the Term
has ended it shall be returned to Tenant within thirty (30) days. If Tenant has
overpaid Expenses during the last year of the Lease Term, then Landlord shall
reimburse Tenant for such overage on or before the thirtieth (30th) day
following the later of the Expiration Date or the end of the last Expense Year.
To the extent any item of Expenses is payable by Landlord in advance of the
period to which it is applicable (e.g. insurance and tax escrows required by
any Mortgagee), or to the extent that prepayment is customary for the service
or matter, Landlord may (aa) include such items in Landlord’s estimate for
periods prior to the date such item is to be paid by Landlord, and (bb) to the
extent Landlord has not collected the full amount of such item prior to the
date such item is to be paid by Landlord, Landlord may include the balance of
such full amount in a revised monthly estimate for Additional Charges.

 

(4)                                 Other. If either the Rent Commencement Date or
the Expiration Date shall occur on a date other than the first day of a Tax
Year and/or Expense Year, Real Estate Taxes and Expenses for the Tax Year
and/or Expense Year in which the Rent Commencement Date or the Expiration Date
occurs shall be prorated.

 

(d)                                  Audit Rights. Within ninety (90) days after receipt of
any Landlord’s Expense Statement or Landlord’s Tax Statement, Tenant shall have
the right to audit, at 

 

10

 

Landlord’s office located in the San Francisco Bay
Area, at Tenant’s expense, Landlord’s accounts and records relating to Expenses
and Real Estate Taxes. Such audit shall be conducted by an independent
certified public accountant approved by Landlord, which approval shall not be
unreasonably withheld so long as such accountant is not being paid on a
contingency fee or similar basis. If such audit reveals that Landlord has
overcharged Tenant, Tenant shall notify Landlord within one hundred twenty
(120) days after the date the applicable Landlord’s Expense Statement or
Landlord’s Tax Statement was received by Tenant. Landlord may dispute such
audit by arbitration pursuant to Paragraph 41 [Arbitration of Disputes]. If
Landlord does not dispute such amount, or if Tenant prevails in any such
arbitration, the amount overcharged shall be paid to Tenant within thirty (30)
days thereafter, together with interest thereon at the “prime rate” of interest
announced by the Wall Street Journal for Wells Fargo Bank (or, if Wells Fargo
Bank ceases to exist, by another bank mutually acceptable to Landlord and
Tenant), from the date Landlord’s Expense Statement or Landlord’s Tax
Statement, as applicable, was delivered to Tenant until payment of the
overcharge is made to Tenant. In addition, if Landlord’s Expense Statement or
Landlord’s Tax Statement, as applicable, exceeds the actual Expenses and Real
Estate Taxes which should have been charged to Tenant by more than five percent
(5%), the cost of the audit shall be paid by Landlord. If Tenant fails to
object to any Landlord’s Expense Statement or Landlord’s Tax Statement within
one hundred twenty (120) days after receipt thereof, such statement shall be
final and shall not be subject to any audit, challenge or adjustment.

 

(e)                                  Late Charges; Default Rate. Tenant recognizes that late payment of
any Base Rent or Additional Charges will result in administrative expenses to
Landlord, the extent of which additional expense is extremely difficult and
economically impractical to ascertain. Tenant therefore agrees that if any Base
Rent or Additional Charges remain unpaid ten (10) days after such amount is
due, the amount of such unpaid Base Rent or Additional Charges shall be
increased by a late charge to be paid to Landlord by Tenant, as an Additional
Charge, in an amount equal to five percent (5%) (or such greater amount not to
exceed six percent (6%) if a higher rate is charged by any Mortgagee for a late
payment of a monthly mortgage payment) of the amount of the delinquent Base
Rent or Additional Charges. In addition, any outstanding Base Rent, Additional
Charges, late charges and other outstanding amounts shall accrue interest at an
annualized rate of the greater of 10% or The Ninth Circuit Federal Reserve
Discount Rate plus 5% (the “Default Rate”),
until paid to Landlord. Tenant agrees that such amount is a reasonable estimate
of the loss and expense to be suffered by Landlord as a result of such late
payment by Tenant and may be charged by Landlord to defray such loss and
expense. The provisions of this Subparagraph 4(d) shall not relieve Tenant of
the obligation to pay Base Rent or Additional Charges on or before the date
they are due, or affect Landlord’s remedies pursuant to Subparagraph 21(c)
[Landlord’s Remedies] if any Base Rent or Additional Charges are unpaid after
they are due.

 

5.                                      MANAGEMENT.

 

(a)                                  Management of the Premises. Tenant shall act as property manager for
the Premises throughout the Term, at Tenant’s cost and expense; provided,
however, that Landlord may elect, by delivery of written notice to Tenant, to
assume management of the Premises if (i) Tenant does not cure any breach of its
obligations under Paragraph 9 [Repair and Maintenance], as provided in
Subparagraph 9(e) [Cure Rights], or if Tenant is in “Chronic 

 

11

 

Default” (as defined in Subparagraph 21(f) [Chronic
Default] of its obligations under Paragraph 9 [Repair and Maintenance]; or
(ii) at any time during the Term Tenant directly occupies less than sixty
percent (60%) of the Rentable Area of the Premises (provided, however; that if
Tenant subsequently occupies sixty percent (60%) or more of the Rentable Area
of the Premises, Tenant may elect by delivery of written notice to Landlord, to
resume management of the Premises on a date designated by Tenant but no earlier
than forty-five (45) days after Landlord’s receipt of such notice). If Landlord
assumes the management of the Premises, Landlord agrees that it will assume
Tenant’s maintenance, repair and replacement obligations contained in
Subparagraphs 9(b), (c) and (d) [Repair and Maintenance], and that all costs
incurred by Landlord in connection therewith shall be deemed Additional Charges
payable by Tenant in accordance with Subparagraph 4(c) [Additional Charges for
Expenses and Taxes], subject to the limitations contained in Subparagraph 4(c).
In addition, Landlord’s monthly management fee shall be increased from one
quarter of one percent (.25%), to two percent (2%) of Base Rent and Additional
Charges, and Subparagraphs 4(c)(1)(C)(vi) and (ee) shall be revised
accordingly.

 

(b)                                  Management of the Common Area. Tenant shall act as property manager for
the Common Area throughout the Term, at Tenant’s cost and expense; provided,
however, that Landlord may elect, by delivery of written notice to Tenant, to
assume management of the Common Area at any time during the Term if (i) Tenant
does not cure any breach of its obligations under Paragraph 9 [Repair and
Maintenance] as they relate to the Common Area, or if Tenant is in Chronic
Default of such obligations; or (ii) Landlord elects to manage the Common Area
together with the common area located on portions of the Project that are not
leased by Tenant. In addition, if Landlord assumes management of the Premises
pursuant to Subparagraph 5(a) [Management of the Premises], Landlord shall also
assume management of the Common Area. If Landlord assumes the management of the
Common Area, Landlord agrees that it will assume Tenant’s maintenance, repair
and replacement obligations contained in Subparagraphs 9(b), (c) and (d)
[Repair and Maintenance] to the extent they apply to Common Area, and that all
costs incurred by Landlord in connection therewith (“Common
Area Expenses”) shall be deemed Additional Charges payable by
Tenant in accordance with Subparagraph 4(c) [Additional Charges for Expenses
and Taxes]. In addition, if Landlord assumes management of the Common Area
independently of assuming management of the Premises, Landlord’s monthly
management fee shall be increased to two percent (2%) of Base Rent and
Additional Charges, and subparagraphs 4(c)(1)(C)(vi) and (ee) shall be revised
accordingly. If Landlord assumes management of the Common Area at any time that
the entire rentable area of the Project is not leased to Tenant, any Common
Area Expenses which are shared with other common areas in the Project shall be
allocated among the tenants and occupants of the Project based on the rentable
area leased to or occupied by each such tenant or occupant, divided by the
total leased or occupied rentable area of the Project.

 

(c)                                  Third Party Management. At any time after Landlord has assumed
management of the Premises and/or Common Area pursuant to this Paragraph 5, if
Landlord does not cure any breach of its obligations (including any of Tenant’s
obligations assumed by Landlord) under Paragraph 9 [Repair and Maintenance]
during the cure period provided in Subparagraph 21(d) [Landlord’s Default], or
if Landlord is in Chronic Default of such obligations, Tenant may elect, by
delivery of written notice to Landlord, to require that a third party manager
assume management of the Premises and/or Common Area, as applicable. Within ten
(10) business days after receipt of Tenant’s notice, Landlord shall provide to
Tenant a list of 

 

12

 

at least three (3) third party management companies
which are acceptable to Landlord, and Tenant shall chose one to manage the
Premises and/or Common Areas. Each of such proposed management companies shall
be reputable, with sufficient financial capability to perform the obligations
of the Project manager and with sufficient experience managing similar projects
in the South Bay Area, all in Landlord’s reasonable judgment. After receipt of
written notice from Tenant designating the manager, Landlord shall use
commercially reasonable efforts to enter into a property management contract
with such manager in a timely manner. Tenant shall pay Landlord, as an Expense,
any management fee charged by such manager, in addition to Landlord’s
management fee of .25%.

 

(d)                                  Dispute of Assumption of
Management. If a
dispute arises between the parties in connection with the assumption of
management by Landlord or a third party management company, as applicable,
pursuant to this Paragraph 5, and such dispute is submitted to arbitration in
accordance with Paragraph 41 [Arbitration of Disputes], prior to the resolution
of such matter by arbitration the disputed assumption of management shall
proceed, with any required transfer of management and/or other required
adjustments made after the matter is ultimately determined by arbitration.

 

6.                                      RESTRICTIONS ON USE. Tenant acknowledges that the Premises and
Common Areas may not be used or operated in violation of the requirements of
the Declaration, the CC&Rs or the Retch Hetchy Easement, and Hazardous
Materials may not be used or located on the Premises or Common Area in a manner
which would adversely affect Landlord’s rights and benefits under the Seller
Indemnity described in Subparagraph 40(d) [Seller Indemnity] (all such
documents are collectively referred to as the “Restrictive Documents”);
provided, however, that the parties agree that Tenant’s permitted use under
this Lease and parking rights under Paragraph 36 [Parking] do not violate the
Restrictive Documents. Landlord has listed certain specific uses and activities
that are prohibited on all or certain portions of the Premises and Common Area
pursuant to the Restrictive Documents on Exhibit “P”
attached hereto. In addition, Landlord shall have the right to modify Exhibit “P” to add other restrictions on use and activities
on the Premises and Common Area under the Restrictive Documents, by written
notice to Tenant, so long as such restrictions do not materially adversely
affect Tenant’s permitted use of the Premises, Tenant’s Minimum Parking or
Tenant’s access to the Premises. Tenant shall not use the Premises or Common
Area in a manner in violation of the requirements listed on Exhibit “P”, as it may be amended by Landlord from time to time
in accordance with the preceding sentence, and upon written notice from
Landlord Tenant shall discontinue any such use of the Premises or Common Area. In
addition, Tenant shall not do or permit anything to be done in or about the
Premises or Common Area which will obstruct or interfere with the Clean-up
Facilities, or with the rights of any parties to the Declaration or the
CC&Rs or any other tenant occupant in the Project, or injure them, nor use
or allow the Premises or Common Area to be used for any unlawful purpose, shall
Tenant cause or maintain or permit any nuisance in, on or about the Premises or
Common Area. Tenant shall not commit or suffer the commission of any waste in,
on or about the Premises or Common Area. Landlord acknowledges that, for purpose
of this Paragraph, the existence of the Existing Hazardous Materials (as
defined in Paragraph 40 [Hazardous Materials Liability]) on the Project on the
Occupancy Date, and Tenant’s failure to remediate such Existing Hazardous
Materials, shall not be a violation of Tenant’s obligations under this
Paragraph 6 with respect to nuisance or waste.

 

13

 

7.                                      COMPLIANCE WITH LAWS.

 

(a)                                  Tenant’s Compliance Obligations. Tenant shall promptly, at its sole
expense, maintain the Premises and Common Area, any Alterations permitted
hereunder and Tenant’s use and operations thereon in strict compliance at all
times with all present and future laws, statutes, ordinances, resolutions,
regulations, proclamations, orders or decrees of any municipal, county, state
or federal government or other governmental or regulatory authority with
jurisdiction over the Project, or any portion thereof, whether currently in
effect or adopted in the future and whether or not in the contemplation of the
parties hereto (collectively, “Laws”). Such Laws shall include, without
limitation, all Laws relating to health and safety (including, without
limitation, the California Occupational Safety and Health Act of 1973 and the
California Safe Drinking Water and Toxic Enforcement Act of 1986, including
posting and delivery of notices required by such Laws with respect to the
Premises and Common Area) and disabled accessibility (including, without
limitation, the Americans with Disabilities Act, 42 U.S.C. section 12101 et
seq.), Environmental Laws, and all present and future life safety, fire,
sprinkler, seismic retrofit, building code and municipal code requirements;
provided however, that Tenant’s obligation to comply with Environmental Laws is
subject to the terms and conditions of Paragraph 40 [Hazardous Materials
Liability], and Tenant shall not be responsible for compliance with clean-up
provisions of any Environmental Laws except to the extent of any release caused
or permitted by the Tenant Parties or otherwise included in Tenant’s indemnity
contained in Subparagraph 40(b) [Tenant Indemnity]. Notwithstanding the
foregoing, Tenant shall not be required to make any structural alterations to
the Base Building Improvements in order to comply with Laws unless the
requirement that such alterations be made is triggered by any of the following
(or, if such requirement results from the cumulative effect of any of the
following when added to other acts, omissions, negligence or events, to the
extent such alterations are required by any of the following): (i) the
installation, use or operation of the Tenant Improvements, any Alterations, or
any of Tenant’s trade fixtures or personal property; (ii) the acts,
omissions or negligence of Tenant, or any of its servants, employees,
contractors, agents or licensees; or (iii) the particular use or particular
occupancy or manner of use or occupancy of the Premises or Common Area by
Tenant, or any of its servants, employees, contractors, agents or licensees. The
parties acknowledge and agree that Tenant’s obligation to comply with all Laws
as provided in this paragraph (subject to the limitations contained herein) is
a material part of the bargained for consideration under this Lease. Tenant’s obligations
under this Paragraph shall include, without limitation, the responsibility of
Tenant to make substantial or structural repairs and alterations to the
Premises (including the Base Building Improvements, Tenant Improvements, and
any Alterations) to the extent provided above, regardless of, among other
factors, the relationship of the cost of curative action to the Rent under this
Lease, the length of the then remaining Term hereof, the relative benefit of
the repairs to Tenant or Landlord, the degree to which the curative action may
interfere with Tenant’s use or enjoyment of the Premises, and the likelihood
that the parties contemplated the particular Law involved. Tenant waives any
rights now or hereafter conferred upon it by any existing or future Law to
terminate this Lease, to receive any abatement, diminution, reduction or
suspension of payment of Rent, or to compel Landlord to make any repairs to
comply with any such Laws, on account of any occurrence or situation arising
during the Term.

 

(b)                                  Insurance Requirements. Tenant shall not do or permit anything to
be done in or about the Project or bring or keep anything therein which will
cause a cancellation of 

 

14

 

any insurance on the Project or otherwise violate any
requirements, guidelines, conditions, rules or orders with respect to such
insurance. Tenant shall at its sole cost and expense promptly comply with the
requirements of the board of fire underwriters or other similar body now or
hereafter constituted relating to or affecting the condition, use or occupancy
of the Premises or the Common Area (other than in situations where compliance
involves repair, maintenance or replacement of items that Landlord is expressly
required to repair, maintain or replace under this Lease).

 

(c)                                  No Limitation on Obligations. The provisions of this Paragraph 7 shall
in no way limit Tenant’s maintenance, repair and replacement obligations under
Paragraph 9 [Repair and Maintenance], or Tenant’s obligation to pay Expenses
under Subparagraph 4(c) [Additional Charges for Expenses and Taxes]. The
judgment of any court of competent jurisdiction or the admission of Tenant in
an action against Tenant, whether Landlord is a party thereto or not, that
Tenant has so violated any such Law shall be conclusive of such violation as
between Landlord and Tenant.

 

8.                                      ADDITIONAL ALTERATIONS.

 

(a)                                  Landlord’s Alterations. After completion of the Base Building
Improvements, Landlord shall not be permitted to make or suffer to be made any
additional alterations, additions or improvements in, on or to the Buildings or
any part thereof without the prior written consent of Tenant, except as may be required
by Law or as expressly required or permitted by this Lease.

 

(b)                                  Landlord’s Consent to Tenant’s
Alterations. Tenant
shall not make or suffer to be made any additional alterations, additions or
improvements (“Alterations”) in, on or to
the Premises or Common Area or any part thereof, without the prior written
consent of Landlord. Alterations do not include initial construction of the
Tenant Improvements. Failure of Landlord to give its disapproval to any
Alterations within fifteen (15) calendar days after receipt of Tenant’s written
request for approval shall constitute approval by Landlord of such Alterations
so long as Tenant’s request includes the following statement in capitalized and
boldfaced letters:  BY FAILING
TO RESPOND TO THIS REQUEST WITHIN FIFTEEN DAYS, YOU WILL BE DEEMED TO HAVE
APPROVED THE TENANT’S INSTALLATION OF THE ALTERATIONS DESCRIBED IN THIS REQUEST.
Any Alterations in, on or to the Premises or Common Areas, except
for Tenant’s movable furniture and equipment, trade fixtures and Alterations
which may be removed without damage to the Premises, shall become the property
of Landlord upon their completion without compensation to Tenant. Landlord
shall not unreasonably withhold its consent to Alterations that (i) do not
materially affect the structure of the Buildings, the Building Systems (as
defined below) or the Buildings’ security or other systems; (ii) are not
visible from the exterior of the Buildings; (iii) are consistent with
Tenant’s permitted use hereunder; and (iv) comply with the Declaration; the
CC&Rs; the Hetch Hetchy Easement; any easements, licenses or other use
agreements or encumbrances on Landlord’s title to the Land (including, without
limitation, any underground easements in favor of PG&E or AirProducts); and
any Mortgage.

 

(c)                                  Permitted Alterations. Notwithstanding Subparagraph 8(b), Tenant
may make Alterations to the Premises (but not the Common Area, or the interior
courtyard or roof of 

 

15

 

any Building) without Landlord’s prior consent so long
as (x) such Alterations comply with items (i) through (iv) in Paragraph 8(b)
[Landlord’s Consent to Tenant’s Alterations], (y) such Alterations do not
require underground digging, and (z) the cost of each such Alteration (or group
of Alterations, if occurring substantially at the same time and as part of a
single project) does not exceed Fifty Thousand Dollars ($50,000), and the cost
of all such Alterations in any twelve (12) month period during the Term in the
aggregate does not exceed One Hundred Thousand Dollars ($100,000) (any such
Alterations being defined herein as “Permitted Alterations”).

 

(d)                                  Requirements for Tenant
Alterations. Tenant
shall make any Alterations consented to or permitted under this Paragraph 8 at
Tenant’s sole cost and expense, in compliance with the following requirements:
(i) Alterations (other than Permitted Alterations) shall be made in accordance
with plans and specifications reasonably approved by Landlord, and all
Alterations shall be made in accordance ‘with the requirements of Paragraph 10
[Liens); (ii) any contractor or person selected by Tenant to make
Alterations (other than Permitted Alterations) must first be approved in
writing by Landlord, in its reasonable discretion; (iii) Alterations shall
be made in compliance with all applicable Laws; (iv) Alterations shall not
alter or interfere with the ceiling of any Building (all partitions being below
the ceiling grid, except in areas designated by Landlord on plans and
specifications), unless approved by Landlord in its sole discretion; and (v)
Alterations shall not cause more than fifty percent (50%) of the rentable floor
area on any floor in any Building to be enclosed as hard wall office unless
approved by Landlord in its sole discretion; provided, however, that Tenant may
make Alterations that do not comply with the standards set forth in items (iv)
and (v) above (subject to any other applicable Landlord consent requirement) if
Tenant agrees to reconfigure the affected floor to such standard upon
expiration or earlier termination of this Lease. By making Alterations which do
not comply with the standards set forth in items (iv) and (v) above, Tenant
shall be deemed to have agreed to reconfigure the Premises upon expiration or
termination of the Lease as provided above unless Landlord specifically agrees
otherwise in writing. Upon completion of any Alterations (other than Permitted
Alterations), Tenant shall furnish Landlord with a complete set of final
as-built plans and specifications, at Tenant’s cost and expense. If Tenant
fails to provide Landlord with any such final as-built plans and specifications
within one hundred twenty (120) days after completion of the applicable
Alterations, Landlord may, at Landlord’s election, cause such final as-built
plans and specifications to be prepared at Tenant’s cost and expense, and the
expenses thereof incurred by Landlord shall be reimbursed as Additional Charges
within thirty (30) days after submission of a bill or statement therefor. With
respect to items (i) and (ii) above, failure of Landlord to give its
disapproval to any plans and specifications or general contractor within
fifteen (15) calendar days after receipt of Tenant’s written request for
approval shall constitute approval by Landlord of such matters so long as
Tenant’s request includes the following statement in capitalized and boldfaced
letters:  BY FAILING
TO RESPOND TO THIS REQUEST WITHIN FIFTEEN DAYS, YOU WILL BE DEEMED TO HAVE
APPROVED THE PLANS AND SPECIFICATIONS AND/OR GENERAL CONTRACTOR FOR TENANT’S
ALTERATIONS DESCRIBED IN THIS REQUEST.

 

(e)                                  Removal of Alterations and
Restoration. Upon
the expiration or sooner termination of the Term, Tenant shall upon demand by
Landlord, at Landlord’s election, either (i) at Tenant’s sole cost and expense,
forthwith and with all due diligence remove any Alterations 

 

16

 

made by or for the account of Tenant that are
designated by Landlord to be removed and restore the Premises to its original
condition as of the Rent Commencement Date, subject to normal wear and tear and
the rights and obligations of Tenant concerning casualty damage pursuant to
Paragraph 22 [Damage and Destruction], or (ii) pay Landlord the reasonable
estimated cost thereof as required by Subparagraph 26 (b) [Delivery and
Restoration of Premises]. Upon the written request of Tenant prior to
installation of any Alterations, Landlord shall notify Tenant of its election
to require that such Alterations must be removed upon the expiration or sooner
termination of this Lease, so long as such written request clearly requests
Landlord’s election regarding the removal of such Alterations. Landlord’s
failure to specifically notify Tenant of Landlord’ election shall be deemed
Landlord’s election to require removal of the Alterations upon expiration of
the Term, notwithstanding any deemed approval by Landlord of the Alterations
pursuant to this paragraph.

 

(f)                                    Reimbursement of Landlord’s
Review Costs. Tenant
shall reimburse Landlord upon demand for any reasonable out-of-pocket expenses
incurred by Landlord in connection with the review of any Alterations made by
Tenant, including reasonable fees charged by Landlord’s contractors or
consultants to review plans and specifications prepared by Tenant.

 

9.                                      REPAIR AND MAINTENANCE.

 

(a)                                  Landlord’s Obligations. Landlord shall maintain, repair and replace,
at its sole cost and expense, the following, except as provided in Subparagraph
9(c) [Tenant’s Obligations for Structural Maintenance] below: (i) the roof
structure (but not the roof membrane) and structural portions of the Buildings
(including load bearing walls and foundations); (ii) all underground plumbing
owned by Landlord from the point of connection to the City of Mountain View’s main
line to the point of entry into each of the Buildings; and (iii) structural
portions of the parking facilities in Phase I, to the extent the required
maintenance, repair or replacement results from defects in the original design
or construction of the parking facilities (but not including resurfacing,
pothole repair or a new slurry seal, if required by use of the parking
facilities or from other causes). Tenant shall notify Landlord in writing
within fifteen (15) days (or immediately by telephone or facsimile in the event
of emergency, with prompt confirmation delivered in accordance with Paragraph
28 [Notices]) after Tenant becomes aware of any circumstances which Tenant
believes may trigger Landlord’s obligations under this Subparagraph 9(a). Landlord
shall not be in breach of its obligations under this Subparagraph 9(a) with
respect to any particular repair, replacement or maintenance requirement unless
and until Landlord has received such written notice from Tenant and had
sufficient opportunity to satisfy such obligations. Tenant shall be liable to
Landlord for any additional cost incurred by Landlord in satisfying such
obligations, or any damage to the Project, resulting from Tenant’s failure to
timely notify Landlord of such circumstances as required by this paragraph.

 

(b)                                  Tenant’s Obligations. Tenant shall maintain, repair and
replace, at its sole cost and expense, all portions of the Premises and Common
Areas included in Phase I which are not Landlord’s obligations under
Subparagraph 9(a) [Landlord’s Obligations], including, without limitation, (i)
the roof membrane and exterior of each Building, (ii) the Building systems for
electrical, mechanical, HVAC and plumbing and all controls appurtenant thereto
(collectively, “Building Systems”),
(iii) parking areas, courtyards, sidewalks, entry ways, lawns, 

 

17

 

landscaping and other similar facilities of the
Buildings and Common Areas, and (iv) the interior portion of the Buildings, the
Tenant Improvements, the Alterations, and any additional tenant improvements,
alterations or additions installed by or on behalf of Tenant within the
Premises. Phase I shall at all times be maintained by Tenant in the condition
of a first-class office and research and development park. Without limiting the
foregoing, certain portions of the Common Area, Building exteriors and Building
Systems shall be maintained in accordance with certain standards and a
maintenance schedule which shall be provided by Landlord to Tenant after
completion of the Base Building Improvements in accordance with commercially
reasonable recommendations of Landlord’s landscaping and/or building contractors,
manufacturers and/or consultants. Tenant agrees to review the maintenance
standards and schedule proposed by Landlord within ten (10) business days
following the date they are submitted by Landlord to Tenant and to notify
Landlord, in writing, of any objections to the standards and schedule, in
Tenant’s reasonable discretion. If Tenant fails to notify Landlord of any
objection within such ten (10) business day period, Tenant shall be deemed to
have approved the proposed standards and schedule. If Tenant objects to the
proposed standards and schedule and the parties are unable to resolve Tenant’s
objections, either party may submit such dispute to arbitration pursuant to
Paragraph 41 [Arbitration of Disputes], provided that prior to the resolution
of such matter by arbitration, Tenant shall maintain the Project in accordance
with Landlord’s proposed standards and schedule. The maintenance standard and
schedule which are placed into effect pursuant to this paragraph shall be added
to the Lease as Exhibit “R”, and may be amended by
Landlord from time to time during the Term, by delivering written notice
thereof to Tenant, subject to Tenant’s approval in its reasonable discretion in
accordance with the procedure set forth in this paragraph. Tenant’s obligations
under this Paragraph 9 include, without limitation, the replacement, at Tenant’s
sole cost and expense, of any portions of Phase I which are not Landlord’s
express responsibility under Subparagraph 9(a) [Landlord’s Obligations], if it
would be commercially prudent to replace, rather than repair, such portions of
Phase I, regardless of whether such replacement would be considered a capital
expenditure. Tenant hereby waives and releases its right to make repairs at
Landlord’s expense under Sections 1941 and 1942 of the California Civil Code or
under any similar law, statute or ordinance now or hereafter in effect. In
addition, Tenant hereby waives and releases its right to terminate this Lease
under Section 1932(1) of the California Civil Code or under any similar law,
statute or ordinance now or hereafter in effect.

 

(c)                                  Tenant’s Obligations for
Structural Maintenance. Notwithstanding the provisions of Subparagraph 9(a) [Landlord’s
Obligations] and without limiting Tenant’s other obligations hereunder, Tenant
shall bear the full cost of structural repairs or maintenance to preserve the
Buildings in good working order and condition, to the extent such structural
repair and/or maintenance is required due to the following (except to the
extent any claims arising from any of the following are reimbursed by insurance
carried by Landlord, are covered by the waiver of subrogation in Paragraph 13
[Waiver of Subrogation] or are otherwise provided for in Paragraph 22 [Damage
and Destruction]): (i) the installation, use or operation of any Alterations or
other modification to the Premises or Common Area made by Tenant; (ii) the
installation, use or operation of Tenant’s property or fixtures; (iii) the
moving of Tenant’s property or fixtures in or out of any Building or in and
about the Project; or (iv) the acts, omissions or negligence of Tenant, or any
of its servants, employees, contractors, agents or licensees, or the particular
use or particular occupancy or manner of use or occupancy of the Premises or
Common Area by Tenant or any such person. In addition, if at any time during
the Term Hazardous Materials are released, 

 

18

 

discharged, or disposed of on any portion of the
Premises or Common Area, in violation of Tenant’s obligations hereunder,
repairs of the storm drains and/or plumbing from the point of connection to the
City of Mountain View’s main line to the point of entry into each of the
Buildings shall be excluded from Landlord’s obligations under Subparagraph 9(a).
Tenant shall not cause or permit any disposal or release of Hazardous
Substances into the plumbing systems at the Project. Prior to Tenant’s
performance of any structural repairs or maintenance required under this
paragraph, the parties shall agree on the scope of the required structural
repair or maintenance, and shall agree upon which alternative method is
appropriate if more than one alternative exists. If the parties are unable to
agree on the scope or alternative, despite reasonable efforts, such dispute
shall be submitted to arbitration pursuant to Paragraph 41 [Arbitration of
Disputes]; provided, however, that if the failure to make, any such structural
repair or maintenance during the pendency of such arbitration would have a
material, detrimental effect on the condition or operation of any Building,
Tenant shall either (x) delay the activity which would trigger the required
structural repair or maintenance, or (y) if such activity already has occurred
or cannot be delayed, commence and diligently pursue the required structural
repair or maintenance based on the scope and alternative (if more than one)
specified by Landlord, with a reasonable adjustment to be made by the parties
after the matter is ultimately determined by arbitration.

 

(d)                                  Maintenance Service Contracts. In connection with Tenant’s maintenance
and repair obligations contained in this Paragraph 9, Tenant shall, at its own
cost and expense, enter into regularly scheduled preventive maintenance service
contracts with maintenance contractors approved by Landlord, in its reasonable
discretion, for servicing all hot and cold water, heating, air conditioning and
electrical systems, elevators and equipment within Phase I, and shall provide
copies of such contracts to Landlord. At Landlord’s option at any time in which
Tenant is in default hereunder, maintenance service contracts shall be prepaid
by Tenant on an annual basis. Tenant shall use commercially reasonable efforts
to cause each maintenance service contract to specifically name Landlord as a
third party beneficiary, with the right to receive copies of all notices
delivered under such contract and the ability to exercise Tenant’s rights
thereunder upon Tenant’s default under this Paragraph 9 or upon Landlord’s
assumption of management of the Premises pursuant to Subparagraph 5(a)
[Management of Premises], at Landlord’s election. If Tenant is unable, despite
such efforts, to include such rights in any maintenance service contract,
Tenant agrees to itself provide Landlord with copies of notices delivered under
such contract, and at Landlord’s election Tenant shall assign Tenant’s rights
under such contract to Landlord upon Landlord’s assumption of management of the
Premises.

 

(e)                                  Cure Rights. Tenant shall have a period of thirty (30)
days from the date of written notice from Landlord within which to cure any
failure to fulfill any of its obligations under this Paragraph 9; provided,
however, that if such failure is curable but cannot be cured within such thirty
(30) day period, Tenant shall have such additional time as may be reasonably
required to cure so long as Tenant commences such cure within the initial
thirty (30) day period and diligently prosecutes such cure to completion. If
Tenant fails to cure such failure as provided above, or in the event of an
emergency which materially adversely affects the Project, Landlord may, at
Landlord’s election, cure such failure, at Tenant’s cost and expense, and the
expenses thereof incurred by Landlord shall be reimbursed as Additional Charges
within thirty (30) days after submission of a bill or statement therefor. The
remedies described in this 

 

19

 

paragraph and in Paragraph 5 [Management) are
cumulative and constitute Landlord’s exclusive remedies if Tenant fails to
maintain, repair or replace any portions of the Premises or Common Area in
accordance with its obligations under this Paragraph 9; provided, however, that
nothing contained in this Subparagraph 9(e) shall limit Landlord’s right to receive
reimbursement for attorneys’ fees or waive or affect Tenant’s indemnity and
insurance obligations under this Lease and Landlord’s rights to those indemnity
and insurance obligations.

 

(f)                                    No Liability of Landlord. There shall be no abatement of Rent with
respect to, and Landlord shall not be liable for any injury to or interference
with Tenant’s business arising from, any repairs, maintenance, alteration or
improvement in or to any portion of the Project or the Clean-up Facilities by
any party, except as expressly and specifically provided in Paragraph 22
[Damage and Destruction], provided, however that (i) Base Rent and
Additional Charges may be abated during the period of any interference to
Tenant’s business which exceeds ninety (90) days, in proportion to the portion
of the Premises Tenant is unable to use, only if such interruption results from
an insured casualty such that proceeds are payable to Landlord under the rental
interruption insurance carried by Landlord pursuant to Subparagraph 12(e) [Landlord’s
Insurance Obligations] and only to the extent of such proceeds actually
received by Landlord, and (ii) subject to the limitations on Tenant’s
recourse against Landlord contained in Subparagraph 21(e) [Tenant’s Remedies],
Landlord shall be liable for any actual damage to Tenant to the extent caused
by Landlord’s gross negligence or willful misconduct in connection with any
such repairs, maintenance, alteration or improvement.

 

10.                               LIENS. Tenant shall keep the Project free from
any liens arising out of any work performed, material furnished or obligations
incurred by Tenant. If Tenant does not, within thirty (30) days following
notice by Landlord of any such lien, cause it to be released of record by
payment or posting of a proper bond (or such shorter period of time as may be
required to avoid a default under any Mortgage), Landlord shall have, in
addition to all other remedies provided herein and by law, the right, but not
the obligation, to cause it to be released by such means as Landlord deems proper,
including payment of the claim giving rise to such lien. All sums paid and
expenses incurred by Landlord in connection therewith shall be considered
Additional Charges and shall be payable to Landlord by Tenant on demand, with
interest at the Default Rate. Landlord shall have the right at all times to
post and keep posted on the Premises and Common Area any notices permitted or
required by law or by any Mortgagee, for the protection of the Premises, the
Buildings, the Land, the Common Area, the Project, Landlord, any Mortgagee, and
any other party having an interest in any portion of the Project from mechanics’
and materialmen’s liens. Tenant shall give Landlord at least five (5) business
days’ prior notice of commencement of any construction on the Premises or
Common Area other than Permitted Alterations. This Paragraph 10 shall survive
any termination of this Lease.

 

11.                               ASSIGNMENT AND SUBLETTING.

 

(a)                                  Restriction on Assignment and
Subleasing. Tenant
shall not directly or indirectly, voluntarily or by operation of law, (i) sell,
assign, encumber, pledge or otherwise transfer or hypothecate all or any part
of the Premises, the Tenant Improvements, or Tenant’s leasehold estate
hereunder (collectively, “Assignment”),
or (ii) sublet the Premises or any portion thereof or otherwise permit the
Premises to be occupied by anyone other than Tenant (collectively, “Sublease”), without Landlord’s prior
written consent to each Assignment or 

 

20

 

Sublease, which consent shall not be unreasonably
withheld or delayed by Landlord; provided, however, that Landlord may withhold
its consent, in its sole discretion, to any Assignment which affects less than
the entire Premises, or any Sublease which would result in more than two (2)
separate entities (including Tenant and any subtenants or other occupants)
occupying any floor in any Building. Without otherwise limiting the criteria
upon which Landlord may withhold its consent to any proposed Sublease or
Assignment, if Landlord withholds its consent where either (i) the
creditworthiness of the proposed Sublessee or Assignee is not reasonably
acceptable to, Landlord or any Mortgagee, or (ii) the proposed Sublessee’s or
Assignee’s use of the Premises is not in compliance with the allowed Tenant’s
Use of the Premises as described in the Basic Lease Information or, in Landlord’s
judgment, would require or result in presence of Hazardous Materials on the
Premises and/or Common Area in excess of those described in Subparagraph 40(f)
[Tenant’s Disclosure Obligations), such withholding of consent shall be
presumptively reasonable. If Landlord consents to the Sublease or Assignment,
Tenant may thereafter enter into a valid Sublease or Assignment upon the terms
and conditions set forth in this Paragraph 11.

 

(b)                                  Required Notice. If Tenant desires at any time to enter
into an Assignment of this Lease or a Sublease of the Premises or any portion
thereof, it shall first give written notice to Landlord containing (i) the name
of the proposed assignee, subtenant or occupant; a description of proposed
assignee’s, subtenant’s, or occupant’s business and activities to be carried on
in the Premises; (iii) the terms and provisions of the proposed Assignment or
Sublease; and (iv) such financial information as Landlord may reasonably
request concerning the proposed assignee, subtenant or occupant.

 

(c)                                  Landlord’s Response To Proposed
Assignment. Within
fifteen (15) days after Landlord’s receipt of the notice specified in
Subparagraph 11(b) [Required Notice] with respect to an Assignment of Tenant’s
interest under this Lease, Landlord may by written notice to Tenant elect to
(i) terminate this Lease, (ii) consent to the Assignment, or (iii) disapprove
the Assignment. Notwithstanding anything in this Subparagraph 11(c) to the
contrary, Landlord shall not have the right to terminate this Lease in
connection with any “Permitted Transfer” (as defined below).

 

(d)                                  Landlord’s Response To Proposed
Sublease. Within
fifteen (15) days after Landlord’s receipt of the notice specified in
Subparagraph 11(b) [Required Notice] with respect to a Sublease, Landlord may
by written notice to Tenant elect to (i) sublease itself the portion of the
Premises specified in Tenant’s notice; (ii) consent to the Sublease; or
(iii) disapprove the Sublease. Notwithstanding anything in this
Subparagraph 11(d) to the contrary, Landlord shall not have the rights set
forth in (i) and (iii) of this Subparagraph 11(d) in connection with any
Sublease to a “Strategic Partner” (as defined below) in compliance with
Subparagraph 11(h) [Strategic Partners]. If Landlord elects to Sublease from
Tenant as described in clause (i) above, the Monthly Base Rent payable by
Landlord shall be the rent set forth in Tenant’s notice (which shall be
allocated between Landlord and Tenant in accordance with Subparagraph 11(e)
[Bonus Rent]). If Landlord exercises the option set forth in clause (i) above
with respect to a portion of the Premises, Landlord shall have the right to
further sublease that portion of the Premises at Landlord’s election without
the consent of Tenant.

 

(e)                                  Bonus Rent. If Landlord consents to any Assignment or
Sublease pursuant to Subparagraph 11(c) [Landlord’s Response To Proposed
Assignment] or 

 

21

 

Subparagraph 11(d) [Landlord’s Response To Proposed
Sublease], Tenant may within one hundred twenty (120) days after Landlord’s
consent, but not later than the expiration of said one hundred twenty (120)
days, enter into such Assignment or Sublease of the Premises or portion thereof
upon the terms and conditions set forth in the notice furnished by Tenant to
Landlord pursuant to Subparagraph 11(b) [Required Notice]. However, fifty
percent (50%) of any rent or other consideration realized by Tenant under any
such Assignment or Sublease in excess of the Base Rent and Additional Charges
payable hereunder (or the amount thereof proportionate to the portion of the
Premises subject to such Sublease or Assignment) shall be paid to Landlord,
after deducting therefrom the unamortized Cost of Tenant Improvements
(calculated as provided below) located on the portion of the Premises subject
to such Sublease or Assignment as of the effective date of such Assignment or
Sublease which are attributable to and allocated in equal installments over the
term of the Sublease or Assignment, determined by assuming a useful life equal
to fifteen (15) years and amortization on a straight line basis (without
interest), and after deducting therefrom any customary brokers’ commissions
that Tenant has incurred in connection with such Assignment or Sublease
amortized on a straight line basis (without interest) over the term of the
Sublease or Assignment. Tenant shall, not later than ninety (90) days after the
Rent Commencement Date, deliver evidence of the cost of the Tenant
Improvements, which shall be acceptable to Landlord in its reasonable
discretion, for Landlord’s use as the basis for calculating the cost of the
Tenant Improvements for purposes of this Subparagraph 11(e) (such resulting
calculation being referred to herein as the “Cost
of Tenant Improvements”). The Cost of Tenant Improvements shall
be allocated evenly over the Premises. Failure by Landlord to either consent or
refuse such consent to a proposed Assignment or Sublease within the fifteen
(15) day time period specified above shall be deemed to be Landlord’s consent
thereto.

 

(f)                                    Effect of Transfer. Landlord’s consent to any Assignment or
Sublease shall not relieve Tenant of any obligation to be performed by Tenant
under this Lease, whether arising before or after the Assignment or Sublease. Landlord’s
consent to any Assignment or Sublease shall not relieve Tenant from the
obligation to obtain Landlord’s express written consent to any other Assignment
or Sublease. Any Assignment or Sublease that is not in compliance with this
Paragraph 11 shall be void and, at the option of Landlord, shall constitute a
material default by Tenant under this Lease. The acceptance of Base Rent or
Additional Charges by Landlord from a proposed assignee or sublessee shall not
constitute the consent to such Assignment or Sublease by Landlord.

 

(g)                                 Permitted Transfer. The following shall be deemed a voluntary
Assignment of Tenant’s interest in this Lease:  (i) any dissolution, merger, consolidation, or
other reorganization of Tenant; and (ii) if the capital stock of Tenant is not
publicly traded, the sale or transfer of stock to one person or entity
possessing or controlling more than fifty percent (50%) of the total combined
voting power of all classes of Tenant’s stock issued, outstanding and entitled
to vote for the election of directors. Notwithstanding anything to the contrary
contained in this Paragraph 11, Tenant may enter into any of the following
transfers (a “Permitted Transfer”) without
Landlord’s prior written consent: (1) Tenant may assign its interest in the
Lease to a corporation which results from a merger, consolidation or other
reorganization, so long as immediately following such transaction the surviving
corporation satisfies each of the Transfer Standards (as defined below); and
(2) Tenant may assign this Lease to a corporation which purchases or otherwise
acquires all or substantially all of the assets of Tenant, so long as
immediately following such transaction such acquiring corporation satisfies
each of the Transfer

 

22

 

Standards. For purposes of this Subparagraph 11(g),
the Transfer Standards shall mean each of the following, as reflected in
audited financial statements (which include an unqualified certification by a
licensed certified pubic accountant reasonably acceptable to Landlord) provided
to Landlord:  (a) a tangible net worth of
at least One Hundred Eighty Million Dollars ($180,000,000); (b) a ratio of
current assets to current liabilities of at least 1.75:1; (c) unencumbered
and unrestricted cash and cash equivalents of the greater of One Hundred
Million Dollars ($100,000,000) or five percent (5%) of Tenant’s total assets;
(d) a ratio of debt to equity (on an historic cost basis) not in excess of 2:1;
and (e) no operating losses (exclusive of losses due to acquisitions) for the
prior two (2) years (combined operations of pre-existing entities).

 

(h)                                 Strategic Partners. Tenant may Sublease portions of the
Premises to Tenant’s Strategic Partners (as defined below) without Landlord’s
prior consent, subject to the following conditions: (1) after any such
Sublease, Tenant shall continue to directly occupy at least eighty percent
(80%) of the Rentable Area in the Premises; and (2) Tenant shall provide
Landlord with written notice at least thirty (30) days’ prior to, any such
Sublease including the name of the Strategic Partner, the location of the
subleased space, the name and address of the Strategic Partner’s agent for
service of process and delivery of notices under this Lease, and a
certification by an officer of Tenant that the subtenant is a “Strategic
Partner” as defined in this Subparagraph 11(h). Any Strategic Partner
subleasing a portion of the Premises shall maintain an agent for service of
process and notice, and notify Landlord of any changes in such agent, at all
times during the term of such sublease. The term “Strategic Partner” shall
refer to any entity (i) in which Tenant holds an unsubordinated ownership
interest of at least ten percent (10%), (ii) that is engaged in a business
which Tenant believes to be of strategic importance to its own business, and
(iii) that Tenant determines, in its reasonable business judgment, would
benefit Tenant’s business by conducting its own business within Tenant’s
Premises.

 

(i)                                    Assumption by Transferee. Each assignee, sublessee or other
transferee, other than Landlord, shall assume all obligations of Tenant under
this Lease arising after the date of transfer, as provided in this Subparagraph
11(1), and shall be and remain liable jointly and severally with Tenant for the
payment of Base Rent and Additional Charges, and for the performance of all the
terms, covenants, conditions and agreements herein contained on Tenant’s part
to be performed for the Term; provided, however, that the assignee, sublessee,
mortgagee, pledgee or other transferee shall be liable to Landlord for
rent-only in the amount set forth in the Assignment or Sublease and shall only
be required to perform those obligations under the Lease to the extent that
they relate to the portion of the Premises subleased or interest in the Lease
assigned. Any Sublease or Assignment shall expressly provide that if this Lease
terminates, the subtenant or assignee will attorn to and become the tenant of
the Landlord at the option of Landlord if Landlord elects to recognize such
assignment or sublease upon such termination. No Assignment shall be binding on
Landlord unless the assignee or Tenant delivers to Landlord a counterpart of the
Assignment and an instrument that contains a covenant of assumption by the
assignee satisfactory in substance and form to Landlord, consistent with the
requirements of this Subparagraph 11(i), but the failure or refusal of the
assignee to execute such instrument of assumption shall not release or
discharge the assignee from its liability as set forth above.

 

(j)                                    Effect on Extension Option. Notwithstanding any other provision of
this Lease, Tenant may not enter into any Sublease (including, without limitation,
a Sublease to a 

 

23

 

Strategic Partner) with a term which exceeds the
Expiration Date unless (i) the conditions to Tenant’s right to extend the Term
contained in Paragraph 43 [Option to Renew] have been met at or prior to Tenant’s
execution of such Sublease, and (ii) Tenant delivers its Exercise Notice
pursuant to Paragraph 43 [Option to Renew] at or prior to Tenant’s execution of
such Sublease.

 

12.                               INSURANCE AND INDEMNIFICATION.

 

(a)                                  Release of Landlord. Landlord shall not be liable to Tenant,
and Tenant hereby waives all claims against Landlord Parties for any injury or
damage to any person or property in or about the Premises or Common Area by or
from any cause whatsoever (other than the gross negligence or willful
misconduct of Landlord or its agents, servants, contractors or employees
(collectively, including Landlord, “Landlord Parties”)),
and without limiting the generality of the foregoing, whether caused by water
leakage of any character from the roof, walls, or other portion of the
Buildings or Common Area, or caused by gas, fire, oil, electricity, or any
cause whatsoever, in, on, or about the Project or any part thereof (other than
that caused by the gross negligence or willful misconduct of Landlord Parties).
Tenant acknowledges that any casualty insurance carried by Landlord will not
cover, and Landlord shall not be responsible for, loss of income to Tenant or
damage to the Alterations in the Premises installed by Tenant or Tenant’s
personal property located within the Premises, including, without limitation,
during construction of Base Building Improvements and Tenant Improvements. Tenant
shall be required to maintain the insurance described in Subparagraph 12(c)
[Tenant’s Insurance Requirements] below during the Term.

 

(b)                                  Tenant Indemnity. Except to the extent caused by the gross
negligence or willful misconduct of the Landlord Parties, Tenant shall
indemnify, and hold the Landlord Parties harmless from and defend the Landlord
Parties against any and all claims or liability for any injury or damage to any
person or property whatsoever occurring in or on the Premises. Tenant further
agrees to indemnify and hold the Landlord Parties harmless from, and defend the
Landlord Parties against, any and all claims, losses, or liabilities (including
damage to Landlord’s property) arising from (x) any breach of this Lease by
Tenant and/or (y) the conduct of any work, business or activities of Tenant,
its agents, servants, employees, or invitees (collectively, including Tenant, “Tenant Parties”), in or about the
Project.

 

(c)                                  Tenant’s Insurance Requirements. Tenant shall procure at its cost and
expense and keep in effect during the Term (including, without limitation,
during the course of construction of Tenant Improvements) the following
insurance:

 

(1)                                 Commercial General Liability
Insurance. A
policy of Commercial General Liability insurance written on an occurrence form,
insuring Landlord, any Mortgagee, Tenant and any manager under the CC&Rs
with respect to Phase I, SFWD with respect to the Hetch Hetchy Easement area,
and any other entity with an interest in any portion of the Common Area if
designated by Landlord, against any liability arising out of the ownership,
use, occupancy, maintenance, repair or improvement of the Premises or the
Common Area and as appurtenant thereto. Such insurance shall provide $5,000,000
combined single limit for bodily injury and property damage. The limits of said
insurance shall not, however, limit the liability of the Tenant hereunder, and
Tenant is responsible for ensuring that the amount of liability insurance
carried by Tenant is sufficient for Tenant’s purposes. Tenant may carry said 

 

24

 

insurance under a blanket policy so long as “per
location” liability aggregate limit is maintained, satisfactory to Landlord. If
Tenant shall fail to procure and maintain said insurance, Landlord may, but
shall not be required to, procure and maintain same, but at the expense of
Tenant. In addition, Landlord may elect, at Landlord’s sole option, to procure
and maintain the liability insurance required by this Subparagraph 12(c)(i)
with respect to the Common Area, at the expense of Tenant. Tenant shall deliver
to Landlord prior to occupancy of the Premises copies of policies of liability
insurance required herein; and certificates evidencing the existence and
amounts of such insurance which name as additional insured the City and County
of San Francisco, its Public Utilities Commission and SFWD (with respect to the
Hetch Hetchy Easement areas), Landlord, any Mortgagee, any manager under the
CC&Rs, and any other entity with an interest in any portion of The Common Area
if designated by Landlord, with evidence satisfactory to Landlord and any such
parties of payment of premiums. No policy shall be cancelable or subject to
reduction of coverage except after thirty (30) days’ prior written notice to
Landlord. Tenant acknowledges and agrees that insurance coverage carried by
Landlord will not cover Tenant’s property within the Premises and that Tenant
shall be responsible, at Tenant’s sole cost and expense, for providing
insurance coverage for Tenant’s movable equipment, furnishings, trade fixtures
and other personal property in or upon the Premises and for any alterations,
additions or improvements (other than the initial construction of the Tenant
Improvements) to or of the Premises or any part thereof made by Tenant, in the
event of damage or loss thereto from any cause whatsoever.

 

(2)                                 Time Element Insurance. Business income and extra expense
insurance, insuring Tenant for a period of eighteen (18) months against losses
arising from the interruption of Tenant’s business, and for lost profits, and
charges and expenses which Continue but would have been earned if the business
had gone on without interruption, insuring against such perils, in such form as
is reasonably satisfactory to Landlord. Such insurance should be without
deductible and on an agreed amount basis with no coinsurance payable.

 

(3)                                 Property Insurance. Tenant shall maintain a policy or
policies of fire and property damage insurance under “special form” causes of
loss (formerly known as “all risk”), with an earthquake sprinkler leakage
endorsement, insuring the personal property, inventory, trade fixtures, and if
applicable boiler and machinery, within the Premises for the full replacement
value thereof. The proceeds from any of such policies shall be used for the
repair or replacement of such items so insured.

 

(4)                                 Workers Compensation Insurance. Tenant shall also maintain a policy or
policies of workers’ compensation insurance and any other employee benefit
insurance sufficient to comply with all Laws.

 

Insurance required
hereunder shall be in companies rated “A” VI or better in “Best’s Insurance
Guide.”  Tenant shall deliver policies of
such insurance or certificates thereof to Landlord on or before the Occupancy
Date, and thereafter at least thirty (30) days before the expiration dates of
expiring policies; and, in the event Tenant shall fail to procure such
insurance, or to deliver such policies or certificates, Landlord may, at its
option, procure same for the account of Tenant, and the cost thereof shall be
paid to Landlord as Additional Charges within fifteen (15) days after delivery
to Tenant of bills therefor.

 

25

 

(d)                                  Survival. The provisions of this Paragraph 12 shall
survive the expiration or termination of this Lease with respect to any claims
or liability arising out of events occurring prior to such expiration or
termination.

 

(e)                                  Landlord’s Insurance Obligations.
Landlord shall
purchase and keep in force a policy or policies of liability, fire and property
damage insurance, including provisions allowing the payment of deductibles
(which shall be payable by Tenant pursuant to Subparagraph 4(c)) and
pre-payment for coverage up to one year, covering loss or damage to the
Premises (including the Tenant Improvements) and Common Area in the amount of
the full replacement value thereof, insuring direct physical loss or damage
included within the “special form” classification of coverage and flood and
earthquake insurance, if available, plus a policy of rental income insurance in
the amount of eighteen (18) months Base Rent and Additional Charges and, at
Landlord’s election pursuant to Subparagraph 12(c)(i) [Commercial General
Liability Insurance), Commercial General Liability insurance for the Common
Area. At Tenant’s request, Landlord shall include any specific Alterations made
in accordance with this Lease in such policies, provided that Tenant provides
Landlord with all information reasonably required by Landlord or its insurer in
connection with such Alterations. In addition, during the course of
construction of the Base Building Improvements and Tenant Improvements,
Landlord shall purchase and keep in force Comprehensive Builder’s Risk/Course
of Construction insurance, with the same requirements as policies described
above but with appropriate adjustments to reflect that the Project is under
construction. Tenant shall pay to Landlord the cost of all such policy or
policies of insurance pursuant to Subparagraph 4(c) [Additional Charges for
Expenses and Taxes], except for the cost of Builder’s Risk/Course of
Construction insurance which is attributable to construction of the Base
Building Improvements (as determined by Landlord, in its reasonable discretion).
If Landlord’s insurance cost is increased due to Tenant’s use of the Premises,
Tenant agrees to pay to Landlord the full cost of such increase. Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord for the Premises or the Common Area. Notwithstanding the foregoing
obligations of Landlord to carry insurance, Landlord may modify the foregoing
coverages if and to the extent it is commercially reasonable to do so;
provided, however, that such coverages shall not be voluntarily reduced by
Landlord without Tenant’s prior consent.

 

13.                               WAIVER OF SUBROGATION. Notwithstanding anything to the contrary
in this Lease, to the extent that this waiver does not invalidate or impair
their respective insurance policies, the parties hereto release each other and
their respective contractors, subcontractors, agents, employees, successors,
assignees and subtenants, and any manager under the CC&Rs, from all
liability for injury to any person or damage to any property that is caused by
or results from a risk (i) which is actually insured against, to the extent of
receipt of payment under such policy (unless the failure to receive payment
under any such policy results from a failure of the insured party to comply
with or observe the terms and conditions of the insurance policy covering such
liability, in which event, such release shall not be so limited), (ii) which is
required to be insured against under this Lease or the Work Letter, or (iii)
which would normally be covered by the standard ISO “special” form of casualty
insurance, without regard to the negligence or willful misconduct of the entity
so released. Landlord and Tenant shall each obtain a similar waiver of
subrogation requirement in their respective construction contracts for the Base
Building Improvements and Tenant Improvements, respectively, and shall require
that their respective contractors obtain a similar waiver from all
subcontractors of all tiers. Landlord 

 

26

 

and Tenant shall each obtain, and shall cause their
respective contractors and subcontractors to obtain, from their respective
insurers under all policies of fire, theft and other property insurance
maintained by either of them at any time during, the Term (including during the
course of construction of the Base Building Improvements and the Tenant
Improvements) insuring or covering the Project or any portion thereof of its
contents therein, a waiver of all rights of subrogation which the insurer of
one party might otherwise, if at all, have against the other party, and
Landlord and Tenant shall each indemnify the other against any loss or expense,
including reasonable attorneys’ fees, resulting from the failure to obtain such
waiver.

 

14.                               SERVICES AND UTILITIES.

 

(a)                                  Tenant’s Responsibility. Subject to the provisions elsewhere
herein contained and to the Rules and ‘Regulations, Tenant shall be responsible
for arranging for, and direct payment of any and all cost of, garbage pickup,
recycling, janitorial, security, landscape maintenance, street and parking lot
sweeping and resurfacing, transportation management programs, water,
electricity, gas, telephone, cable and digital communications equipment,
required inspections and testing of elevators, fire sprinklers and other life
safety equipment and Building Systems, and any and all other utilities and
services, and Tenant shall provide the maintenance, repair and replacement of
Building Systems in connection with such utilities and services as described in
Subparagraph 9(b) [Repair and Maintenance; Tenant’s Obligations]. Without
limiting the foregoing, Tenant shall be responsible for the expense of installation,
operation, and maintenance of its electrical distribution system, and telephone
and other communications cabling, throughout Phase I, subject to Paragraph 4
[Electrical Systems, Telephone Systems and Dedicated Communications Lines] of the
Work Letter. Landlord shall cooperate with Tenant’s efforts to arrange all such
services. If Landlord assumes management of the Premises pursuant to
Subparagraph 5(a) [Management of the Premises], Tenant shall cooperate fully
with Landlord and abide by all the reasonable regulations and requirements that
Landlord May prescribe for the proper functioning and protection of the
Building Systems.

 

(b)                                  No Excessive Load. Tenant will not without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed, use any apparatus or device in the Premises which, when used, puts an
excessive load on any Building or its structure or systems.

 

(c)                                  No Liability of Landlord. Landlord shall not be in default
hereunder or be liable for any damages directly or indirectly resulting from,
nor shall Rent be abated by reason of, (i) the installation (but not including
installation which is Landlord’s obligation pursuant to the Work Letter), use
or interruption of use of any equipment in connection with the foregoing
utilities and services; (ii) failure to furnish or delay in furnishing any
services to be provided by Landlord when such failure or delay is caused by
Force Majeure Events, or by the making of repairs or improvements to Phase I or
any portion thereof which are the responsibility of Landlord under this Lease;
or (iii) the limitation, curtailment, rationing or restriction on use of
water or electricity, gas or any other form of energy or any other service or
utility whatsoever serving Phase I or any Building; provided, however, that
(aa) Base Rent and Additional Charges may be abated during the period of any
total interruption of utilities to the Premises which exceeds thirty (30) days
only if such interruption results from an insured casualty such that proceeds
are payable to Landlord under the rental interruption insurance carried by
Landlord 

 

27

 

pursuant to Subparagraph 12(e) [Landlord’s Insurance
Obligations] and only to the extent of such proceeds actually received by
Landlord, and (bb) subject to the limitations on Tenant’s recourse against
Landlord contained in Subparagraph 21(e) [Tenant’s Remedies], Landlord shall be
liable for any actual damage to Tenant’s property to the extent caused by
Landlord’s gross negligence or willful misconduct in connection with the
failure to furnish or delay in furnishing any services to be provided by
Landlord. For purposes of this Lease and the Work Letter, “Force Majeure Events”
shall mean Acts of God or the elements, Acts of the government, labor
disturbances of any character, and other similar conditions, beyond the
reasonable control of the party whose performance, obligation or liability is
excused or delayed by such event (collectively, “Force
Majeure Events”).

 

15.                               TENANT’S CERTIFICATES. Tenant, at any time and from time to
time, within ten (10) days after written request from Landlord, will execute,
acknowledge and deliver to Landlord and, at Landlord’s request to any
prospective purchaser, ground or underlying lessor or Mortgagee of any part of
the Project or any other party acquiring an interest in Landlord, a certificate
of Tenant substantially in the form attached as Exhibit “H”
(with changes required to make such certificate true). The certificate may also
contain any other information reasonably required by any such persons. It is
intended that any certificate of Tenant delivered pursuant to this Paragraph 15
may be relied upon by Landlord and any prospective purchaser, ground or
underlying lessor or Mortgagee of any part of the Project or such other party. If
requested by Tenant, Landlord shall provide Tenant with a similar certificate.

 

16.                               HOLDING OVER. If Tenant (directly or through any
successor-in-interest of Tenant) remains in possession of all or any portion of
the Premises after the expiration or termination of this Lease without the
consent of Landlord, Tenant’s continued possession shall be on the basis of a
tenancy at the sufferance of Landlord. In such event, Tenant shall continue to
comply with or perform all the terms and obligations of Tenant under this
Lease, except that the Monthly Base Rent during Tenant’s holding over shall be
the greater of the then fair market rent for the Premises (as reasonably
determined by Landlord) or one hundred twenty-five percent (125%) of the
Monthly Base Rent payable in the last full month prior to the termination
hereof (and shall be increased in accordance with Subparagraph 4(b)
[Adjustments in Base Rent]). In addition to Rent, Tenant shall pay Landlord for
all damages proximately caused by reason of the Tenant’s retention of
possession. Landlord’s acceptance of Rent after such termination shall not
constitute a renewal of this Lease, and nothing contained in this provision
shall be deemed to waive Landlord’s right of re-entry or any other right
hereunder or at law. Tenant acknowledges that, in Landlord’s marketing and re-leasing
efforts for the Premises, Landlord is relying on Tenant’s vacation of the
Premises on the Expiration Date. Accordingly, Tenant shall indemnify, defend
and hold Landlord harmless from and against all claims, liabilities, losses,
costs, expenses and damages arising or resulting directly or indirectly from
Tenant’s failure to timely surrender the Premises, including (i) any loss, cost
or damages suffered by, any prospective tenant of all or any part of the
Premises, and (ii) Landlord’s damages as a result of such prospective tenant
rescinding or refusing to enter into the prospective lease of all or any
portion of the Premises by reason of such failure of Tenant to timely surrender
the Premises.

 

17.                               SUBORDINATION. Without the necessity of any additional
document, this Lease shall be subject and subordinate at all times to: (i) all
ground leases or underlying leases that may now exist or hereafter be executed
affecting any portion of the Premises or Common 

 

28

 

Area; and (ii) the lien of any mortgage or deed of
trust that may now exist or hereafter be executed in any amount for which any
portion of the Premises or Common Area or any ground leases or underlying
leases, or Landlord’s interest or estate in any of said items, is specified as
security (any such 1 en being herein defined as a “Mortgage” and tire holder of
any Mortgage being a “Mortgagee”). Notwithstanding the foregoing, Landlord
shall have the right to subordinate or cause to be subordinated any such ground
leases or underlying leases or any Mortgage to this Lease. If any ground lease
or underlying lease terminates, or any Mortgage 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
to Landlord at the option of such successor in interest. Notwithstanding
anything to the contrary contained herein, this Lease shall not be subject or
subordinate to any ground or underlying lease or to any lien, Mortgage, or
other security interest affecting the Premises, and Tenant shall not attorn to
the ground lessor, Mortgagee or other holder of the interest to which this
Lease would be subordinated unless such ground lessor, Mortgagee or holder
executes a reasonable recognition and non-disturbance agreement which provides
that Tenant shall be entitled to continue in possession of the Premises on the
terms and conditions of this Lease if and for so long as Tenant fully performs
all of its obligations hereunder. Tenant shall execute and deliver upon demand
by Landlord, and in the form requested by Landlord or any Mortgagee and
reasonably acceptable to Tenant, any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground leases
or underlying leases or the lien of any such Mortgage. Tenant shall execute,
deliver and authorize recordation of any such documents within twenty (20) days
after Landlord’s written request.

 

18.                               RULES AND REGULATIONS. Tenant shall faithfully observe and
comply with the rules and regulations attached to this Lease as Exhibit “J” and all reasonable nondiscriminatory
modifications thereof and additions thereto from time to time put into effect
by Landlord, provided such rules and regulations do not unreasonably interfere
with Tenant’s use of the Premises and the Common Areas as contemplated by this Lease.
In the event of an express and direct conflict between the terms, covenants,
agreements and conditions of this Lease and those set forth in the rules and
regulations, as modified and, amended from time to time by Landlord, this Lease
shall control.

 

19.                               RE-ENTRY BY LANDLORD. Landlord reserves and shall at all
reasonable times have the right to re-enter the Premises and the Common Area
(upon reasonable prior notice (except in the case of an emergency), and subject
to Tenant’s reasonable security precautions and the right of Tenant to
accompany Landlord at all times, if such entry is to the Premises) to inspect
the same; to supply any service to be provided by Landlord to Tenant hereunder
(unless Tenant is supplying such service); to show the Premises and Common Area
to prospective purchasers, Mortgagees or tenants (as to prospective tenants
other than prospective tenants of any recaptured space, only during the last
twelve (12) months of the initial Term or the last twenty-four (24) months of
any Extension Term); to post notices of nonresponsibility; to alter, improve or
repair the Premises and Common Area and any portion thereof as required or
allowed by this Lease or by law (and Landlord may for that purpose erect, use,
and maintain scaffolding, pipes, conduits, and other necessary structures in
and through the Premises and Common Area where reasonably required by the
character of the work to be performed); and to take, or allow other parties to
take, any actions contemplated by the Declaration or the CC&Rs, or in
connection with the remediation orders described in Paragraph 40 [Hazardous
Materials 

 

29

 

Liability], the Clean-up Facilities, or related
monitoring or remediation of Hazardous Materials. Landlord shall not be liable
in any manner for any inconvenience, disturbance, loss of business, nuisance or
other damage arising from Landlord’s or any third party’s (including without
limitation pursuant to the Declaration or the CC&Rs) entry and acts
pursuant to this Paragraph 19. Tenant shall not be entitled to an abatement or
reduction of Base Rent or Additional Charges if Landlord exercises any rights
reserved in this paragraph. Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with Tenant’s business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby, except to the extent caused by Landlord’s gross negligence or willful
misconduct. For each Of the aforesaid purposes, Landlord shall have the right
to use any and all means which Landlord reasonably determines are necessary or
proper to open doors on the Premises in an emergency in order to obtain entry
to any portion of the Premises. Any entry to the Premises, or portion thereof
obtained by Landlord by any of said means, or otherwise, shall not under any
emergency circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises or any portions thereof. Landlord
shall use best efforts during re-entry to not unreasonably interfere with
Tenant’s use of the Premises or its business conducted therein.

 

20.                               INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take
possession of all or substantially all of the assets of Tenant, or an
assignment by Tenant for the benefit of creditors, or any action taken or
suffered by Tenant under any insolvency, bankruptcy, reorganization or other
debtor relief proceedings, (each of the foregoing, an “Insolvency
Proceeding”), whether now existing or hereafter amended or
enacted, shall, at Landlord’s option, constitute a breach of this Lease by
Tenant, unless a petition in bankruptcy, receiver attachment, or other remedy
pursued by a third party is discharged within sixty (60) days. Upon the
happening of any such event (including the expiration of such 60 day period, if
applicable) or at any time thereafter, this Lease shall terminate five (5) days
after written notice of termination from Landlord to Tenant. In no event shall
this Lease be assigned or assignable by operation of law (except as provided in
Paragraph 11 [Assignment and Subletting]) or by voluntary or involuntary
bankruptcy proceedings or otherwise. In no event shall this Lease or any rights
or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency,
reorganization or other debtor relief proceedings.

 

21.                               DEFAULT.

 

(a)                                  Tenant’s Default. The failure to perform or honor any
covenant, condition or representation made under this Lease shall constitute a
default hereunder by Tenant upon expiration of the appropriate grace period
hereinafter provided, except as expressly and specifically provided in
Subparagraph 9(e) [Repair and Maintenance; Cure Rights]. Tenant shall have a
period of three (3) days from the date of written notice from Landlord (which
notice shall be in lieu of and not in addition to the notice required by 

 

30

 

Section 1161 of the California Code of Civil
Procedure) within which to cure any default in the payment of Base Rent or
Additional Charges; provided, however, that Landlord shall not be required to
provide such notice more than twice during any four (4) year period during the
Term with respect to non-payment of Base Rent or Additional Charges, the third
such non-payment constituting default without requirement of notice. Tenant
shall have a period of thirty (30) days from the date of written notice from
Landlord (which notice shall be in lieu of and not in addition to the notice
required by Section 1161 of the California Code of Civil Procedure) within
which to cure any other curable default under this Lease; provided, however,
that with respect to any curable default other than the payment of Base Rent or
Additional Charges that cannot reasonably be cured within thirty (30) days, the
default shall not be deemed to be uncured if Tenant commences to cure within
thirty (30) days from Landlord’s notice and continues to prosecute diligently
the curing thereof. Notwithstanding the foregoing, (i) if a different cure
period is specified elsewhere in this Lease or the Work Letter with respect to
any specific obligation of Tenant, such specific cure period shall apply with
respect to a default of such obligation; (ii) the foregoing cure rights shall
not extend the specified time for compliance with any required delivery,
approval or performance obligation of Tenant under the Work Letter; and (iii)
the foregoing cure rights shall not apply to any Draw Event (as defined in the
Work Letter).

 

(b)                                  Phase II Lease Default. From and after Landlord’s completion of
its obligation to construct initial improvements under the Phase II Lease (if
any), any default under the Phase II Lease (if any) by Tenant or a subtenant of
Tenant which is not cured within any applicable grace or cure period provided
therein shall constitute a default under this Lease by Tenant; provided,
however, that an Insolvency Proceeding with respect to any subtenant shall not
constitute a default hereunder by Tenant so long as Tenant is not in breach of
any monetary, maintenance and repair obligations under the Phase II Lease and
Tenant is not itself then the subject of an Insolvency Proceeding. At any time
during the Term of this Lease, Landlord, in its sole discretion, may delete
this Subparagraph 21(b) from this Lease by delivering written notice thereof to
Tenant, without any further action required by Tenant. Upon request by either
party, the parties shall execute and deliver an amendment to this Lease
documenting any such deletion of this Paragraph by Landlord.

 

(c)                                  Landlord’s Remedies. Upon an uncured default of this Lease by
Tenant, Landlord shall have the following rights and remedies in addition to
any other rights or remedies available to Landlord at law or in equity:

 

(1)                                 The rights and remedies provided by California
Civil Code, Section 1951.2, including but not limited to, recovery of the worth
at the time of award of the amount by which the unpaid Base Rent and Additional
Charges for the balance of the Term after the time of award exceeds the amount
of rental loss for the same period that the Tenant proves could be reasonably
avoided, as computed pursuant to subsection (b) of said Section 1951.2;

 

(2)                                 The rights and remedies provided by
California Civil Code, Section 1951.4, that allows Landlord to continue this
Lease in effect and to enforce all of its rights and remedies under this Lease,
including the right to recover Base Rent and Additional Charges as they become
due, for so long as Landlord does not terminate Tenant’s right to possession. Acts
of maintenance or preservation, efforts to relet the Premises or the
appointment of a receiver upon Landlord’s initiative to protect its interest
under this Lease shall not constitute a termination of Tenant’s rights to
possession;

 

(3)                                 The right to terminate this Lease by
giving notice to Tenant in accordance with applicable law;

 

31

 

(4)                                 If Landlord elects to terminate this
Lease, the right and power to enter the Premises and remove therefrom all
persons and property, and to store such property in a public warehouse or
elsewhere at the cost of and for the account of Tenant, and to sell such
property and apply such proceeds therefrom pursuant to applicable California
law.

 

(d)                                  Landlord’s Default. Landlord shall have a period of thirty
(30) days from the date of written notice from Tenant of Landlord’s default
(any such notice, a “Landlord Default Notice”) to cure any default by Landlord
under this Lease; provided, however, that with respect to any default that
cannot reasonably be cured within thirty (30) days, the default shall not be
deemed to be uncured if Landlord commences to cure within thirty (30) days from
receipt of the Landlord Default Notice and continues to prosecute diligently the
curing thereof. Tenant agrees to give any Mortgagee, by registered or certified
mail, a copy of any Landlord Default Notice served upon the Landlord, provided
that prior to such notice Tenant has been notified in writing of the address of
such Mortgagee. If Landlord fails to cure such default within the time provided
for in this Lease, then the Mortgagee shall have an additional thirty (30) days
after the expiration of such cure period within which to cure such default
(provided that Tenant notifies Mortgagee concurrently with Tenant’s delivery of
the Landlord Default Notice to Landlord; otherwise, Mortgagee shall have thirty
(30) days from the later of the date on which it receives notice of the default
from Tenant and the expiration of Landlord’s cure period). If such default
cannot be cured by Mortgagee within, the cure period, Tenant may not exercise
any of its remedies so long as Mortgagee has commenced and is diligently
pursuing the remedies necessary to cure such default (including, but not
limited to, commencement of foreclosure proceedings, if necessary to effect
such cure).

 

(e)                                  Tenant’s Remedies.

 

(1)                                 Limitation on Remedies. If any default hereunder by Landlord is
not cured within the applicable cure period provided in Subparagraph 21(d)
[Landlord’s Default], Tenant’s exclusive remedies shall be an action for
specific performance or action for actual damages. Tenant hereby waives the
benefit of any laws granting it (A) the right to perform Landlord’s obligation,
or (B) the right to terminate this Lease or withhold Rent on account of any
Landlord default. Tenant shall look solely to Landlord’s interest in Phase I
for the recovery of any judgment from Landlord. Landlord, or if Landlord is a
partnership, its partners whether general or limited, or if Landlord is a
corporation, its directors, officers or shareholders, shall never be personally
liable for any such judgment. Any lien obtained to enforce such judgment and
any levy of execution thereon shall be subject and subordinate to any Mortgage
(excluding any Mortgage which was created as part of an effort to defraud
creditors, i.e. a fraudulent conveyance); provided, however that any such
judgment and any such levy of execution thereon shall not be subject or
subordinated to any Mortgage that is created or recorded in the Official
Records of Santa Clara County after the date of the judgment giving rise to
such lien. Notwithstanding the foregoing limitation of recourse to Landlord’s
interest in Phase I, Tenant shall have the right to recover from Landlord
the full amount of the Letter of Credit, the Completion Assurance, or any other
security deposit or letter of credit provided by Tenant to Landlord pursuant to
this Lease or the Work Letter, to the extent that it is drawn upon, retained,
or applied by Landlord in violation of this Lease or the Work Letter.

 

32

 

(2)                                 Remedy for Construction Default. Notwithstanding the limitation of
recourse to Landlord’s interest in Phase I contained in Subparagraph 21(e)(1)
above (but without negating Tenant’s right of recovery with respect to any
letter of credit or security deposit pursuant to the last sentence of such’
paragraph), if Landlord fails to use commercially reasonable efforts (taking
into account any Force Majeure Events) to meet any Condition prior to its
Initial Window Date (as it may be extended pursuant to Paragraph 7 [Tenant
Delays] of the Work Letter), Tenant’s exclusive remedy shall be to terminate
this Lease pursuant to Subparagraph 3(e) [Conditions; Window Dates) and
commence an action for actual damages incurred by Tenant as a result of such
failure, up to a maximum aggregate sum of Five Hundred Thousand Dollars
($500,000).

 

(f)                                    Chronic Default. A party shall be in “Chronic Default”
under this Lease at any time that the other party has delivered more than two
(2) notices of default to such party hereunder during the previous four (4)
years, regardless of whether such defaults were cured within any applicable grace
or cure period; provided, however, that any such notice of default relating to
a default which was disputed, in good faith, and ultimately determined (by
agreement of the parties, arbitration or judicial action) not to be a default
shall not be considered for purposes of determining whether a party is in
Chronic Default.

 

22.                               DAMAGE AND DESTRUCTION.

 

(a)                                  Restoration. Subject to the termination rights set
forth in Subparagraphs 22(c) [Casualty at End of Term] and Subparagraph 22(d)
[Mutual Termination Option; Insured Casualty], if the Premises or any portion
thereof are damaged or destroyed by fire or other casualty, Tenant will
promptly give written notice thereof to Landlord, and:

 

(1)                                 Tenant, at Tenant’s sole cost and
expense, and pursuant to the provisions of Paragraph 8 [Additional Alterations]
and/or the Work Letter, as applicable, will promptly repair, restore and
rebuild the Tenant Improvements and any Alterations as nearly as possible to
the condition they were in immediately prior to such damage or destruction or
with such changes or alterations as may be made pursuant to Paragraph 8
[Additional Alterations]; and

 

(2)                                 to the extent that any such damage or
destruction affects the Base Building Improvements, Landlord shall repair the
same at Landlord’s cost to the extent of Landlord’s obligations under the Work
Letter.

 

(b)                                  Insurance Proceeds. Subject to the provisions of Subparagraph
22(f) [Proceeds Upon Termination], all insurance proceeds recovered by the
Landlord on account of such damage or destruction, less the cost, if any, to
the Landlord of such recovery and/or of any repair to the Base Building
Improvements for which Landlord is responsible, shall be paid out from time to
time to or at the direction of Tenant to the extent required to repair, restore
and rebuild the Tenant Improvements and any Alterations covered by Landlord’s
insurance as required by Subparagraph 22(a)(1) [Restoration], pursuant to
disbursement procedures established by Landlord and/or any Mortgagee. The
amount of available insurance proceeds shall not limit Tenant’s or Landlord’s
obligation to repair, restore and rebuild the Tenant

 

33

 

Improvements and Alterations and the Base Building
Improvements, respectively, in accordance with this Paragraph 22.

 

(c)                                  Casualty at End of Term. Notwithstanding anything to the contrary
contained in this Lease, if during the twelve (12) months prior to the
expiration of the Term, any of the Buildings or a substantial portion thereof
are damaged or destroyed by fire or other casualty, either Tenant or Landlord
shall have the option to terminate this Lease with respect to the affected
Building as of the date of such damage or destruction by written notice to the
other party given within thirty (30) days after such damage or destruction, in
which event the Landlord shall make a proportionate refund to the Tenant of
such Rent as may have been paid in advance. For the purposes of this paragraph,
a “substantial portion” of a Building shall mean twenty percent (20%) or more
of the Rentable Area thereof. If neither party elects to terminate this Lease,
Landlord and/or Tenant shall repair, restore and rebuild the Premises in
accordance with Subparagraph 22(a) [Restoration].

 

(d)                                  Mutual Termination Option; Insured
Casualty. Notwithstanding
anything to the contrary contained herein, if at any time during the Term the
Base Building Improvements for any Building shall be damaged or destroyed to
the extent that, in Landlord’s reasonable judgment, they cannot be reconstructed
within eighteen (18) months following the date such reconstruction is
commenced, either Landlord or Tenant shall have the right to terminate this
Lease as of the date of such damage or destruction with respect to the affected
Building by written notice to the other party. Within forty-five (45) days
after any damage or destruction described in this Subparagraph 22(d), Landlord
shall either terminate the Lease with respect to the affected Building or
deliver notice to Tenant advising of Landlord’s election not to so terminate. If
Tenant is so notified, but Landlord does not elect to terminate, Tenant may
terminate this Lease as of the date of such damage or destruction with respect
to the affected Building by written notice to Landlord given within forty-five
(45) days after receipt of Landlord’s notice. If neither party elects to
terminate this Lease, Landlord and/or Tenant shall repair, restore and rebuild
the Premises in accordance with Subparagraph 22(a) [Restoration].

 

(e)                                  Destruction Where No Proceeds Are
Available. Subject
to Tenant’s termination right under Subparagraph 22(c) [Casualty at End of
Term), in the event of a total or partial destruction of any Building (i) by a
casualty of a type not required to be insured against by Landlord under the
terms of this Lease, or (ii) under circumstances where Landlord has been
required by any Mortgagee to utilize substantially all of the insurance
proceeds to pay down the Mortgage, which destruction exceeds five percent (5%)
of the replacement cost of the Base Building Improvements, this Lease shall
automatically terminate, unless (x) Landlord elects to reconstruct the
Base Building Improvements, and (y) the damage can be reconstructed within eighteen
(18) months following commencement of reconstruction. If Landlord elects to
reconstruct, the cost incurred by Landlord for such reconstruction shall be
amortized over the useful life of the Base Building Improvements and such
amortization shall be reimbursed by Tenant to Landlord as an Additional. Charge
together with interest at the prime rate of Wells Fargo Bank plus two percent
(2%) (adjusted monthly); provided, however, that Tenant shall not be obligated
to pay for any portion of the useful life of the Base Building Improvements
which extends beyond the Expiration Date. If Landlord elects to reconstruct the
Base Building Improvements, Tenant shall be obligated to reconstruct the Tenant
Improvements, at Tenant’s cost.

 

34

 

(f)                                    Proceeds Upon Termination. If this Lease is terminated under
Subparagraph 22(c) [Casualty at End of Term] or Subparagraph 22(d) [Mutual
Termination Option; Insured Casualty] with respect to any Building(s), Landlord
shall be entitled to retain any and all insurance proceeds arising out of the
damage or destruction (including, without limitation, proceeds attributable to
the Tenant Improvements), except for any portion of the award specifically
compensating Tenant for the loss of its personal property, equipment and trade
fixtures. If Landlord elects to terminate this Lease pursuant to Subparagraph
22(d), Landlord shall reimburse Tenant for the unamortized Cost of Tenant
Improvements (determined in accordance with Subparagraph 11(e) [Bonus Rent]) as
of the date of termination to the extent of available insurance proceeds (so
long as Landlord is in compliance with its obligations, under Subparagraph
12(e) [Landlord’s Insurance Obligations] with respect to such insurance) after
deducting the cost to Landlord of recovery of such proceeds and/or repair to
the Base Building Improvements. Upon any termination, Tenant shall assign all
of its rights to any insurance proceeds to which it is entitled (except any
portion specifically compensating Tenant for the loss of its personal property,
equipment and trade fixtures) to Landlord and shall pay to Landlord the amount
of any deductible under any insurance policy attributable to the casualty
resulting in such termination.

 

(g)                                 Rent Abatement. In the event of an insured casualty, the
Base Rent and Additional Charges during the period from the date of the damage
or destruction until completion of the restoration, repair, replacement or
rebuilding shall be abated by an amount that is in the same ratio to the Base
Rent and Additional Charges as the area of the Premises rendered unusable for
the permitted use hereunder bears to the area of the Premises prior to the
damage or destruction, but only to the extent of the amount of proceeds payable
to Landlord (taking into account any applicable waiting period or deductibles)
under the rental interruption insurance required to be carried by Landlord
pursuant to Subparagraph 12(e) [Landlord’s Insurance Obligations].

 

(h)                                 Waiver of Statutory Provisions. Tenant hereby waives the provisions of
Section 1932.2, and Section 1933.4, of the Civil Code of California, or any
similar laws now or hereafter in effect, that would relieve the Tenant from any
obligation to pay Rent under this Lease due to any damage or destruction.

 

23.                               EMINENT DOMAIN.

 

(a)                                  Entire Building. If an entire Building shall be taken or
appropriated under the power of eminent domain or conveyed in lieu thereof (any
such event, a “Taking”), (i) this Lease
and all right, title and interest of the Tenant hereunder shall cease and come
to an end on the date of vesting of title pursuant to such Taking with respect
to such Building, (ii) the Base Rent and Additional Charges payable with
respect to said Building shall be apportioned as of the date of such vesting,
and (iii) this Lease shall be and remain unaffected with respect to any portion
of the Premises not taken.

 

(b)                                  Partial Building; Termination. If there is a Taking of less than an
entire Building, this Lease shall terminate as to the portion of the Building
so taken upon vesting of title pursuant to such Taking, and if, but only if,
such Taking is so extensive that it renders the remaining portion of such
Building unsuitable for the use being made of the Building on the date 

 

35

 

immediately preceding such Taking, either the Tenant
or the Landlord may terminate this Lease as to the remainder of such Building
by written notice to the other party not later than thirty (30) days after the
date of such vesting, specifying as the date for termination a date not later
than thirty (30) days after such notice. On the date specified in such notice,
(i) the term of this Lease and all right, title and interest of Tenant
hereunder shall cease with respect to said Building, (ii) the Base Rent and
Additional Charges payable with respect to said Building shall be apportioned
as of the date of such termination, and (iii) this Lease shall be and remain
unaffected with respect to any Building not included in such Taking.

 

(c)           Partial Building; Restoration. If there is a Taking of less than an
entire Building and this Lease is not terminated with respect to said Building
as provided in (b) above, this Lease shall terminate as to the portion of the
Building so taken upon vesting of title pursuant to such Taking. In any such
case, Landlord shall restore the Base Building Improvements (to the extent of
Landlord’s obligations under the Work Letter) for the portion of the Building
continuing under this Lease at Landlord’s cost and expense; provided, however,
that Landlord shall not be required to repair or restore any injury or damage
to the property of Tenant or to make any repairs or restoration of any Tenant
Improvements or Alterations installed on the Premises by or at the expense of
Tenant. Tenant shall, at Tenant’s sole cost and expense, promptly and pursuant
to the provisions of Paragraph 8 [Additional Alterations], restore those
portions of the Tenant Improvements and Alterations not so taken. Thereafter,
the Base Rent and Additional Charges to be paid under this Lease for the
remainder of the Term shall be proportionately reduced, such that thereafter
the amounts to be paid by Tenant with respect to such Building shall be in the
ratio that the portion of the Building not so taken bears to the total area of
the Building; prior to such Taking.

 

(d)           End of Term Taking. If, during the twelve (12) months prior
to the expiration of the Term, there is a Taking of a portion of the Building,
both Landlord and Tenant shall have the option, exercisable by written notice
to the other party given within thirty (30) days after such vesting of title,
of terminating this Lease with respect to said Building as of the date of
vesting of title pursuant to the Taking, in which event Landlord shall make a
proportionate refund to Tenant of any Base Rent and Additional Charges that
have been paid in advance.

 

(e)           Taking of Common Area. If there is a Taking of any portion of
the Common Area which causes the Premises to violate parking requirements,
building setbacks or access requirements under any applicable Laws, Landlord
shall cure such non-compliance by any reasonable means (including, without
limitation, by a Reconfiguration). If Landlord determines that such violation
is not curable by reasonable means, Landlord shall have the option, exercisable
by written notice to Tenant of terminating this Lease as of the date of vesting
of title pursuant to the Taking. If Landlord does not terminate this Lease
pursuant to the preceding sentence and fails to commence to cure such violation
within thirty (30) days after such Taking, Tenant shall have the option,
exercisable by written notice to Landlord, of terminating this Lease as of the
date of vesting of title pursuant to the Taking. If this Lease is terminated
pursuant to this Subparagraph 23(e), Landlord shall make a proportionate refund
to Tenant of any Base Rent and Additional Charges that have been paid in
advance. In addition, if Landlord exercises its right to terminate this Lease
pursuant to this Subparagraph 23(e), Tenant shall be entitled to any portion of
any award paid in connection with such Taking which is 

 

36

 

received by Landlord and which is attributable to the
then unamortized value of the Tenant Improvements.

 

(f)            Award. Landlord shall receive (and Tenant shall
assign to Landlord upon demand from Landlord) any income, rent, award or any
interest therein which may be paid in connection with any Taking, whether
partial or total, and whether or not either Landlord or Tenant exercises any
right it may have to terminate this Lease. Tenant shall have no claim against
Landlord for any part of such sum paid by virtue of the Taking, whether or not
attributable to the value of the unexpired term of this Lease. However, Tenant
shall be entitled to petition the condemning authority for the following: (i)
the then unamortized value of any Tenant Improvements or Alterations paid for
by Tenant which Tenant is required to remove upon termination of the Lease;
(ii) the value of Tenant’s trade fixtures; (iii) Tenant’s relocation costs; and
(iv) Tenant’s goodwill, loss of business and business interruption.

 

(g)           Temporary Taking. Notwithstanding anything to the contrary
contained in this Paragraph 23, if there is a Taking of the temporary use or
occupancy of any part of the Premises during the Term, this Lease shall be and
remain unaffected by such Taking and Tenant shall continue to pay in full all
Base-Rent and Additional Charges payable hereunder by Tenant during the Term. In
such event, Tenant shall be entitled to receive that portion of any award which
represents compensation for the use or occupancy of the Premises during the
Term, and Landlord shall be entitled to receive that portion of any award which
represents the cost of restoration of the Premises and the use and occupancy of
the Premises after, the end of the Term. Notwithstanding the foregoing, if
Landlord determines in its reasonable judgment that any Taking of the temporary
use or occupancy of any part of the Premises will continue until the end of the
Term, either party may elect to terminate this Lease by written notice to the
other party at any time after Landlord has made such determination and
delivered written notice thereof to Tenant, and Landlord shall be entitled to receive
the entire award for the Taking, except for that portion which represents
compensation for the use or occupancy of the Premises during the period of time
prior to such termination.

 

(h)           Waiver of Statutory Provisions. Landlord and Tenant understand and agree
that the provisions of this Paragraph 23 are intended to govern fully the
rights and obligations of the parties in the event of a Taking of all or any
portion of the Premises. Accordingly, the parties each hereby waives any right
to terminate this Lease in whole or in part under Sections 1265.120 and
1265.130 of the California Code of Civil Procedure or under any similar Law now
or hereafter in effect.

 

24.          SALE BY LANDLORD. Landlord shall not sell or otherwise convey its interest
in any portion of the Premises prior to substantial completion of the Base
Building Improvements, other than by foreclosure by, or a conveyance in lieu of
foreclosure to, a Mortgagee who has executed a recognition and non-disturbance agreement
as contemplated by Paragraph 17 [Subordination], or a subsequent conveyance by
such Mortgagee. If Landlord sells or otherwise conveys its interest in all or
any portion of the Premises, Landlord shall be relieved of its obligations
under the Lease with respect to the conveyed portion from and after the date of
sale or conveyance only when Landlord transfers the proportionate amount of any
security deposit of Tenant to its successor and the successor assumes in
writing the obligations to be 

 

37

 

performed by Landlord on and after the effective date
of the transfer, whereupon Tenant shall attorn to such successor.

 

25.          RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed by Tenant
under any of the terms of this Lease shall be performed by Tenant at Tenant’s
sole cost and expense and without any abatement of Base Rent or Additional
Charges. If Tenant defaults in the payment of any sum of money, other than Base
Rent or Additional Charges, required to be paid by it hereunder or fails to
perform any other act on its part to be performed hereunder, and such failure
continues for ten (10) days after notice thereof by Landlord (or such longer
period as noted in Subparagraph 9(e) [Cure Rights] or Subparagraph 21(a)
[Tenant’s Default], except in the event of emergency), Landlord may, but shall,
not be obligated to, make any such payment or perform any such act on Tenant’s
part to be made or performed as provided in this Lease without waiving or
releasing Tenant from any obligations of Tenant. All sums so paid by Landlord
and all reasonable and necessary incidental costs incurred by Landlord in
connection therewith, together with interest thereon at the Default Rate from
the date of such payment by Landlord, shall be payable to Landlord on demand as
Additional Charges.

 

26.          OWNERSHIP OF IMPROVEMENTS; SURRENDER OF PREMISES.

 

(a)           Ownership of Tenant Improvements
& Alterations. The
Tenant Improvements and any Alterations constructed on or affixed to the
Premises by or on behalf of Tenant pursuant to the terms and conditions of this
Lease and the Work Letter, except for Tenant’s movable furniture and equipment,
trade fixtures and Alterations which can be removed without damage to the
Premises, but including without limitation all electrical conduits and wiring
and other equipment located in such conduits, shall become Tenant’s property
upon their completion, shall remain Tenant’s property throughout the Term of
this Lease and shall become Landlord’s property upon the expiration or earlier
termination of this Lease.

 

(b)           Delivery and Restoration of
Premises. At the
end of the Term or any renewal thereof or other sooner termination of this
Lease, Tenant will peaceably deliver to Landlord possession of the Premises,
together with all improvements or additions thereon (including, without
limitation, the Tenant Improvements and Alterations which Landlord does not
require Tenant to remove pursuant to Paragraph 8 [Additional Alterations) or
the Work Letter), and all electrical conduits, substructures, switches and
wiring located on or under the Premises or Common Area and communications
equipment, cable conduits and wiring, and other related equipment located
within any such conduits, in the same condition as received or first installed,
subject to normal wear and tear but in the condition described on Exhibit attached
hereto, subject to the terms of Paragraph 23 [Eminent Domain], and the rights
and obligations of Landlord and Tenant concerning casualty damage pursuant to
Paragraph 22 [Damage and Destruction]. At Landlord’s election, in lieu of
requiring Tenant to restore the Premises (or any portion thereof) to the condition
required by this Paragraph, Landlord may require Tenant to pay Landlord the
reasonable estimated cost thereof. In addition, upon the termination of this
Lease, Tenant shall deliver the electrical facilities and distribution system
and the telephone and other communications facilities and equipment serving the
Premises (including each Building) in a condition and configuration acceptable
at such time for transfer of its ownership and control to Pacific Gas and
Electric (or any successor provider of electric services) (“PG&E”) with
respect 

 

38

 

to the electrical distribution system, and in an
appropriate and usable condition and configuration for the provision of
telephone and other communications services by Pacific Bell (or any successor
provider of local telephone services) (“PacBell”) with respect to the
communications facilities, such that each Building may be separately metered
for electric service and provided with appropriate telephone and other
communications service. Any repair, upgrading or reconfiguration of the
electrical distribution system or the telephone and other communications
facilities and equipment required in order to meet then-existing PG&E
requirements or then current PacBell communication standards, as applicable,
shall be completed by Tenant, at Tenant’s expense, prior to the termination of
the Lease (or, at Landlord’s election, Tenant shall pay Landlord the reasonable
estimated cost of such repair, upgrading or reconfiguration). Any cable or
electrical or communications conduits or other portions of Tenant’s electrical
distribution system or communications system located throughout the Project
shall not create any easement, license or other property interest or right of
any kind in Tenant, other than Tenant’s right to the use of such improvements
pursuant to the terms and conditions of this Lease, and such right shall not
survive the expiration or earlier termination of this Lease. Tenant may, upon
the termination of this Lease, remove all movable furniture, trade fixtures and
equipment belonging to Tenant which is not an integral part of any Building
System, at Tenant’s sole cost, provided that Tenant repairs any damage caused
by such removal. Property not so removed shall be deemed abandoned by Tenant,
and title to the same shall thereupon pass to Landlord. Upon request by
Landlord, and unless otherwise agreed to in writing by Landlord pursuant to
Paragraph 8 [Additional Alterations] or the Work Letter, Tenant shall either
(i) remove, at Tenant’s sole cost, any or all Tenant Improvements and
Alterations to the Premises installed by or at the expense of Tenant and all
movable furniture and equipment belonging to Tenant which may be left by Tenant
and repair any damage resulting from such removal, or (ii) pay Landlord the
reasonable estimated cost thereof.

 

(c)           No Merger. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an assignment to it
of any or all such subleases or subtenancies.

 

27.          WAIVER. If
either Landlord or Tenant waives the performance of any term, covenant or
condition contained in this Lease, such waiver shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition contained herein. Furthermore, the acceptance of Base Rent or
Additional Charges by Landlord shall not constitute a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, regardless
of Landlord’s knowledge of such preceding breach at the time Landlord accepted
such Base Rent or Additional Charges. Failure by Landlord to enforce any of the
terms, covenants or conditions of this Lease for any length of time shall not
be deemed to waive or to decrease the right of Landlord to insist thereafter
upon strict performance by Tenant. Waiver by Landlord of any term, covenant or
condition contained in this Lease may only be made by a written document signed
by Landlord.

 

28.          NOTICES. Except
as otherwise expressly provided in this Lease, and except for routine bills or
invoices for Base Rent or Additional Charges delivered by Landlord pursuant to
Paragraph 4 [Rent] which Landlord may elect to deliver by first class U.S.
mail, any bills, statements, notices, demands, requests or other communications
given or required to be given 

 

39

 

under this Lease shall be effective only if rendered
or given in writing, sent by certified mail (return receipt requested),
reputable overnight carrier, or delivered personally, (i) to Tenant at Tenant’s
address set forth in the Basic Lease Information, or (ii) to Landlord at
Landlord’s address set forth in the Basic Lease Information; or (iii) to such
other address as either Landlord or Tenant may designate as its new address,
for such purpose by notice given to the other in accordance with the provisions
of this Paragraph 28. Any bill, statement, notice, demand, request or other
communication shall be deemed to have been rendered or given on the date the
return receipt indicates delivery of or refusal of delivery if sent by
certified mail, the day upon which recipient accepts and signs for delivery
from a reputable overnight carrier or on the date a reputable overnight carrier
indicates refusal of delivery, upon the date personal delivery is made, or
three (3) days after mailed by first class U.S. mail.

 

29.          TAXES PAYABLE BY TENANT. Prior to delinquency Tenant shall pay all taxes levied
or assessed upon Tenant’s equipment, furniture, fixtures and other personal
property located in or about the Premises. If the assessed value of Landlord’s
property is increased by the inclusion therein of a value placed upon Tenant’s
equipment, furniture, fixtures or other personal property, Tenant shall pay to Landlord,
upon written demand, the taxes so levied against Landlord, or the proportion,
thereof resulting from said increase in assessment.

 

30.          ABANDONMENT. Tenant shall not abandon the Premises and cease performing its
financial and maintenance obligations under this Lease at any time during the
Term. If Tenant abandons and ceases performing its financial and maintenance
obligations under this Lease, or surrenders the Premises or is dispossessed by
process of law or otherwise, any personal property belonging to Tenant and left
on the Premises shall, at the option of Landlord, be deemed to be abandoned and
title thereto shall thereupon pass to Landlord. Notwithstanding anything to the
contrary contained herein, Tenant may not vacate the Premises if such would
result in a termination of Landlord’s insurance. Upon Tenant’s request,
Landlord will ask its insurer if such vacation of the Premises would result in
termination of its current insurance policy. Solely for purposes of this
Paragraph 30, Tenant shall not be deemed to have abandoned the Premises solely
because Tenant is not occupying the Premises.

 

31.          SUCCESSORS AND ASSIGNS. Subject to the provisions of Paragraphs 11 [Assignment
and Subletting] and 24 [Sale by Landlord), the terms, covenants and conditions
contained herein shall be binding upon and inure to the benefit of the parties
hereto and their respective legal and personal representatives, successors and
assigns.

 

32.          ATTORNEY’S FEES. If Tenant or Landlord brings any action for any relief against the
other, declaratory or otherwise, arising out of this Lease, including any suit
by Landlord for the recovery of Base Rent or Additional Charges or possession
of the Premises, the losing party shall pay to the prevailing party a
reasonable sum for attorney’s fees, which shall be deemed to have accrued on
the commencement of such action and shall be paid whether or not the action is
prosecuted to judgment.

 

33.          LIGHT AND AIR. Tenant covenants and agrees that no diminution of light, air or view by
any structure which may hereafter be erected (whether or not by Landlord) shall
entitle Tenant to any reduction of Rent under this Lease, result in any
liability of Landlord to Tenant, or in any other way affect this Lease or
Tenant’s obligations hereunder.

 

40

 

34.          SECURITY DEPOSIT.

 

(a)           Letter of Credit. At such time as Landlord acquires the
Land and the Credit Termination Right expires or is waived by Landlord, Tenant
shall deliver to Landlord an unconditional, irrevocable, transferable letter of
credit, in the amount of Seven Million Five Hundred Thousand Dollars
($7,500,000), issued by Bank of America NT & SA, or another financial
institution reasonably acceptable to Landlord, in the form attached hereto as Exhibit ”M”, with an original term of no less than one
year and automatic extensions through the end of the Term of this Lease and
sixty (60) days thereafter (the “Letter of Credit”).
Tenant shall keep the Letter of Credit,’ at its expense, in full force and
effect until the sixtieth (60th) day after the Expiration Date or other
termination of this Lease, to insure the faithful performance by Tenant of all
of the covenants, terms and conditions of this Lease, including, without
limitation, Tenant’s obligations to repair, replace or maintain the Premises
and to maintain the Letter of Credit, and Tenant’s payment obligations with
respect to Tenant Modifications (as defined in the Work Letter) being made by
Change Order to Landlord’s construction contract. The Letter of Credit shall
provide thirty (30) days’ prior written notice to Landlord of cancellation or
material change thereof, and shall further provide that, in the event of any
nonextension of the Letter of Credit at least thirty (30) days prior to its
expiration, the entire face amount shall be payable to Landlord, and Landlord
shall hold any funds so obtained as the security deposit required under this
Lease. Such funds so obtained by Landlord, or any unused portion thereof, shall
be returned to Tenant upon replacement of the Letter of Credit. If Landlord
uses any portion of any cash security deposit to cure any default by Tenant
hereunder, Tenant shall replenish the security deposit to the original amount
within ten (10) days of notice from Landlord. Tenant’s failure to do so shall
become a material default under this Lease. Landlord shall keep any cash
security funds separate from its general funds, and shall invest such cash
security at Tenant’s reasonable direction, and any interest actually earned by
Landlord on such cash security shall be paid to Tenant on a quarterly basis
within ten (10) business days after receipt thereof by Landlord. If an uncured
or incurable default occurs under this Lease, or if Tenant is the subject of an
Insolvency. Proceeding, Landlord may present its written demand for payment of
the entire face amount of the Letter of Credit and the funds so obtained shall
be paid to, or as otherwise directed by, Landlord. Landlord may retain such
funds to the extent required to compensate Landlord for damages incurred, or to
reimburse Landlord as provided herein, in connection with any such default, and
any remaining funds shall be held as a cash security deposit.

 

(b)           Reduction After Occupancy. The face amount of the Letter of Credit
may be reduced to Three Million Two Hundred Seventy Thousand Dollars ‘($3,270,000)
either (i) if the Phase II Lease is terminated by either party due to the
failure of any of the Conditions Precedent (as defined in the Phase II Lease)
or if Landlord exercises its Credit Termination Right under the Phase II Lease;
or (ii) so long as Tenant has not defaulted under this Lease, when Tenant has
completed and paid the entire cost of all Tenant Improvements and Tenant
Modifications, has fully discharged any mechanics’ or materialmen’s liens
against the Premises in connection with the Tenant Improvements, and Tenant
Modifications, and is conducting business at the Premises.

 

(c)           Further Reduction. The face amount of the Letter of Credit
may be reduced to One Million Six Hundred Thirty-Five Thousand Dollars
($1,635,000) on the eighth (8th) anniversary of the Rent Commencement Date, so
long as (i) Tenant is not in default under 

 

41

 

the Lease on such date, and (ii) Tenant is not in Chronic
Default under this Lease on such date. In addition, the face amount of the
Letter of Credit may be reduced to an amount equal to one month’s Base Rent
when Tenant can establish to Landlord’s reasonable satisfaction that Tenant has
achieved annual net income of at least Fifty Million Dollars ($50,000,000), as
reflected in audited financial statements (which include an unqualified
certification by a licensed certified public accountant reasonably acceptable
to Landlord), for either (x) three consecutive years, or (y) three out of ‘four
consecutive years.

 

(d)           Substitution of Cash Collateral. In lieu of, or in replacement of, the
Letter of Credit, Tenant may deliver to Landlord at any time during the Term a
cash security deposit in the face amount required of the Letter of Credit,
provided that Landlord shall have no additional liability or reduced benefits
from that which Landlord would have if Tenant provided a Letter of Credit. All
terms, conditions and requirements with respect to the Letter of Credit
contained in this Paragraph 34, including, without limitation, application of
proceeds, reduction of amount, and investment requirements for cash security,
shall apply to any such cash security deposit.

 

35.          FINANCIAL INFORMATION. Tenant will furnish to the Landlord within ninety (90)
days after the end of each calendar year, copies of audited, consolidated
financial statements, which shall include, without limitation, balance sheets,
statements of income and expenses and sources and uses of funds of the Tenant
and its subsidiaries for such calendar year, all in reasonable detail and
stating in comparative form the figures as of the end of and for the previous
calendar year and including appropriate footnotes, prepared in accordance with
generally accepted accounting principles, and certified and audited by
independent public accountants of recognized standing reasonably satisfactory
to the Landlord; provided, however, that so long as Tenant is a publicly traded
corporation, in lieu of the foregoing Tenant shall provide Landlord with copies
of Tenant’s annual report and 10K Filing when such documents are released to
the public. Tenant hereby covenants and warrants to Landlord that all financial
information and other descriptive information regarding Tenant’s business,
which has been or shall be furnished to Landlord, is and shall be accurate and
complete at the time of delivery to Landlord.

 

36.          PARKING. Tenant
shall have the right to use the number of parking spaces in the Common Area and
the common area elsewhere in the Project, collectively, which is in the same
proportion to the total parking spaces as the Rentable Area of the Premises is
to the total rentable area in the Project, which shall not be less than the
parking required for Phase I by the City of Mountain View (the “Minimum Parking”). Tenant shall have
the right to use the Minimum Parking either on the Common Area or, if a
Reconfiguration or expansion of the Project occurs,, on the common area located
in Phase I and/or Phase II. These spaces shall be used in common with other
tenants and occupants of the Project, if any, subject to the CC&Rs and the
Rules and Regulations. Tenant and Landlord acknowledge that, (a) the City of
Mountain View has approved portions of the Common Area for landscape reserves
(the “Landscape Reserves”), and (b) Tenant has requested that a portion of the
Common Area be improved with certain recreational facilities (including
sporting courts and facilities) (the “Recreational Facilities”),
and such Landscape Reserves and Recreational Facilities are located on portions
of the Common Area that could otherwise accommodate additional parking. If at
any time during the Term Tenant desires to increase the parking on the Common
Area by the removal or 

 

42

 

alteration of all or a portion of the Recreational
Facilities or Landscape Reserves, any such demolition or alteration shall be
accomplished at Tenant’s cost and expense, in accordance with the terms of the
Work Letter applicable to Tenant Modifications or as otherwise agreed by
Landlord.

 

37.          MISCELLANEOUS.

 

(a)           Defined Terms. The term “Landlord” shall include
Landlord and its successors and assigns. In any case where this Lease is signed
by more than one person, the obligations hereunder shall be joint and several. The
term “Tenant” shall include Tenant and its successors and assigns.

 

(b)           Other Terms. Time is of the essence of this Lease and
all of its provisions. This Lease shall in all respects be governed by the laws
of the State of California. This Lease, together with its exhibits, contains
all the agreements of the parties hereto and supersedes any previous
negotiations. There have been no representations made by the Landlord or
understandings made between the parties other than those set forth in this
Lease and its exhibits. This Lease may not be, modified except by a written
instrument by the parties hereto, except as expressly and specifically provided
in Subparagraphs 1(d) (Reconfiguration of Phase I) and 21(b) [Phase II Lease Default]:
The paragraph headings herein are for convenience of reference and shall in no
way define, increase, limit or describe the scope or intent of any provision of
this Lease:

 

(c)           Quiet Enjoyment. Upon Tenant paying the Base Rent and
Additional Charges and performing all of Tenant’s obligations under this Lease,
Tenant may peacefully and quietly enjoy the Premises during the Term as against
all persons or entities lawfully claiming by or through Landlord; subject,
however, to the provisions of this Lease.

 

(d)           Survival of Indemnities;
Immediate Obligation to Defend. All indemnities contained herein shall survive the
expiration or earlier termination of this Lease. With respect to each of the
indemnities contained in this Lease, the indemnitor has an immediate and
independent obligation to defend the indemnitee from any claim which actually
or potentially falls within the indemnity provision, which obligation arises at
the time such claim is tendered to the indemnitor by the indemnitee and
continues at all times thereafter.

 

38.          REPRESENTATIONS AND WARRANTIES.

 

(a)           Landlord’s Representations and
Warranties. Landlord
represents and warrants to Tenant that, (i) to Landlord’s best knowledge, the
Premises are not now in violation of any applicable Laws other than
Environmental Laws; (ii) the zoning requirements currently applicable to the
Premises permit the permitted use under this Lease; and (iii) to Landlord’s
best knowledge, upon substantial completion of the Base Building Improvements,
the Premises will not be in violation of any applicable Laws other than
Environmental Laws (subject to completion of the Tenant Improvements, to the
extent such completion is required for compliance with any Law). For purposes
of this Paragraph 38, the term “to Landlord’s best knowledge” shall mean the
actual knowledge of Charles J. Keenan, III, John B. Lovewell and Perry F.
Palmer (“Landlord’s Representatives”)
after reasonably appropriate and diligent inquiry in connection 

 

43

 

with the acquisitions of the Land and construction of
the Base Building Improvements. Landlord hereby represent that Landlord’s
Representatives are the representatives of Landlord with supervisory
responsibilities concerning the Premises, the acquisition of the Land and the
construction of the Base Building Improvements who would, in the ordinary
course of their responsibilities, receive notice from persons or entities of
any of the matters described in the representations and warranties in this
Lease.

 

(b)           Tenant’s Representations and
Warranties. Tenant
represents and warrants to Landlord that, to Tenant’s best knowledge, upon
substantial completion of the Tenant Improvements, the Premises will not be in
violation of any applicable Laws other than Environmental Laws. For purposes of
this Paragraph 38, the term “to Tenant’s best knowledge” shall mean the actual
knowledge of Ed Axelson, Steve Payne, Joyce Ryan, Abe Mobley and Melinda
Carlisle (“Tenant’s Representatives”) after reasonably appropriate and diligent
inquiry in connection with construction of the Tenant Improvements. Tenant
hereby represents that Tenant’s Representations are the representatives of
Tenant with supervisory responsibilities concerning the Premises, this Lease
and the construction of the Tenant Improvements who would, in the ordinary
course of their receive notice from persons or entities of any of the matters
described in the representations and warranties in this Lease.

 

39.          REAL ESTATE BROKERS. 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 any broker named in the Basic Lease Information,
whose fees or commission, if earned, shall be paid by the party designated in
the Basic Lease Information, in accordance with a separate agreement with such
party. Each party shall hold harmless the other party from all damages
resulting from any claims that may be asserted against the other party by any
other broker, finder or other person with whom the other party has or
purportedly has dealt.

 

40.          HAZARDOUS MATERIALS LIABILITY. Tenant is aware that Phase I is subject to remediation
orders issued by the U.S. Environmental Protection Agency (“EPA”), as disclosed on Exhibit “L”. In addition, Tenant acknowledges that Tenant
has received from Landlord a copy of the reports listed on Schedule 1 to Exhibit “L”, and has been given sufficient opportunity to
review “the reports listed on Schedule 2 to Exhibit “L”
which are located at Landlord’s office (all such reports being collectively
defined as the “Environmental Reports”). In, addition, in connection with the
remediation orders, the Clean-up Facilities and related monitoring and
remediation of Hazardous Materials, a Declaration of Restrictions and Access
Agreement (as such document may be modified from time to time as provided in
Paragraph 6 [Restrictions on Use], the “Declaration”), in substantially the
form attached hereto as Exhibit ”C”,
encumbers or will encumber Phase I and Phase II (including the Premises) and,
regardless of when it is recorded, will at all times be superior in priority to
this Lease, and Tenant’s occupancy and use of the Premises may be restricted by
the Declaration. Landlord shall have the right to modify the Declaration during
the Term as may be reasonably required in connection with the remediation of
Hazardous Materials and Clean-Up Facilities, so long as such modification does
not materially adversely affect Tenant’s permitted use of the Premises, Tenant’s
Minimum Parking or Tenant’s access to the Premises. If necessary, Tenant shall
execute such documents as are reasonably necessary to cause this Lease to
become subordinate to the Declaration, as it may be modified from time to time
in accordance with the preceding sentence.

 

44

 

(a)           Definitions of Hazardous
Materials and Environmental Laws. For the purpose of this Lease, “Hazardous Materials”
shall be defined, collectively, as any and all substances, chemicals, wastes,
sewage or other materials that are now or hereafter regulated, controlled or
prohibited by any local, state or federal law or regulation requiring removal,
warning or restrictions on the use, generation, disposal or transportation
thereof including, without limitation, (a) any substance defined as a “hazardous
substance”, “hazardous material”, “hazardous waste”, “toxic substance”, or “air
pollutant” in the Comprehensive Environmental Response, Compensation and
Liability Act (“CERCLA”), 42 U.S.C. §9601, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. §1801, et seq., the Resource Conservation and
Recovery Act (“RCRA”), 42 U.S.C. §6901, et seq., the Federal Water Pollution
Control Act (“FWPCA”), 33 U.S.C. §1251 et seq., the Clean Air Act (“CAA”), 42 U.S.C.
§7401 et seq., or the Toxic Substances Control Act (“TSCA”), 15 U.S.C. §2601,
et seq., all as previously amended and amended hereafter; and (b) any hazardous
substance, hazardous waste, toxic substance, toxic waste, air pollutant,
hazardous material, waste, chemical, or compound described in any other
federal, state, or local statute, ordinance, code, rule, regulation, order,
decree or other law now or at any time hereafter in effect regulating, relating
to or imposing liability or standards of conduct concerning any hazardous,
toxic, or dangerous substance, chemical, material, compound or waste. As used
herein, the term “Hazardous Materials” also means and includes, without
limitation, asbestos; flammable, explosive or radioactive materials; gasoline or
gasoline additives; oil; motor oil; waste oil; petroleum (including, without
limitation, crude oil or any component thereof); petroleum-based products;
paints and solvents; lead; cyanide; DDT; printing inks; acids; pesticides;
ammonium compounds; polychlorinated biphenyls; and other regulated chemical
products. The statutes, regulations, court and administrative agency decisions,
and other laws now or at any time hereafter in effect that govern or regulate
Hazardous Materials are herein collectively referred to:  as “Environmental Laws”.

 

(b)           Tenant Indemnity. Tenant releases Landlord from any
liability for, waives all claims against Landlord and shall indemnify, defend
and hold harmless the Landlord Parties against, any and all claims, suits,
loss, costs (including costs of investigation, clean up, monitoring,
restoration and reasonable attorney fees), damage or liability, whether
foreseeable or unforeseeable, by reason of property damage (including
diminution in the value of the property of the Landlord Parties), personal
injury or death directly arising from or related to Hazardous Materials
released, manufactured discharged, disposed, used or stored on, in, or under
Phase I during the initial Term and any extensions of this Lease, regardless of
who caused the same, except for Hazardous Material (i) which migrates through
the air, groundwater or otherwise to Phase I unless the Hazardous Material
migrating through the air, soil or groundwater to Phase I originated from a
site where Tenant caused the contamination by such Hazardous Material or
(ii) which was present on Phase immediately prior to the Occupancy Date
and was not caused by Tenant, its employees, invitees, subtenants, agents,
assignees, licensees or servants. The provisions of this Tenant Indemnity
regarding Hazardous Materials shall survive the termination of the Lease.

 

(c)           Landlord Indemnity. Landlord releases Tenant from any
liability for, waives all claims against Tenant and shall indemnify, defend and
hold harmless Tenant, its officers, employees, and agents to the extent of
Landlord’s interest in Phase I, against an and all actions by any governmental
agency for clean up of Hazardous Materials on or under Phase I, including costs
of legal proceedings, investigation, clean up, monitoring, and restoration, 

 

45

 

including reasonable attorney fees, if, and to the
extent, the Hazardous Materials occur on Phase I under the following
circumstances: (i) the Hazardous Materials are not “Identified Hazardous
Materials” or “Existing Hazardous Materials” (as both terms are defined in the
Seller Indemnity), and were released or disposed of on property which was not
at the time of such disposal or release leased, owned or otherwise used or
controlled by Tenant and such Hazardous Material migrated through the air or
groundwater to Phase I; or (ii) the contamination of Phase I was caused by the
release, disposal, use or storage of Hazardous Materials in, on or about Phase I
by Landlord( its employees, agents, licensees or servants. The provisions of
this Landlord Indemnity regarding Hazardous Materials shall survive the
termination of the Lease.

 

(d)           Seller Indemnity. It is a condition precedent to Tenant’s
obligations under this Lease, and to Tenant’s obligation to commence
construction of the Tenant Improvements pursuant to the Work Letter, that
Landlord will obtain from Seller an indemnity with respect to certain Hazardous
Materials existing on Phase I as of the date of Landlord’s acquisition of Phase
I, in substantially the form attached hereto as Exhibit “O”
(the “Seller Indemnity”), (which
directly indemnifies Tenant; provided, however, that Tenant may, at its
election, commence construction of Tenant Improvements before the Seller
Indemnity has been obtained without waiving the foregoing condition with
respect to Tenant’s obligations under this Lease.

 

(e)           Release of Landlord. Notwithstanding any other provision of
this Lease, Tenant releases the Landlord Parties from any liability for, an
waives all claims against the Landlord Parties with respect to, the presence of
Hazardous Materials in, on or about Phase I prior to the Occupancy Date (except
claims and liability which are included in Landlord’s indemnity contained in
(c) above and not covered by the Seller Indemnity). Tenant agrees that its
recourse with respect to any liability or claims released by this Paragraph
shall be limited to direct claims against Seller pursuant, to the Seller
Indemnity.

 

(f)            Tenant’s Disclosure Obligations. Tenant represents that during the’ Term
it will not be a User (as such term is defined in the form of Seller Indemnity
attached as Exhibit “Q”). Except for
immaterial amounts of toxic materials incidental to office use (e.g. copier
toner, cleaning supplies, petroleum products in cars), hydraulic fluids used in
Building Systems, Hazardous Materials used in the operation of any generators,
and those materials listed on Exhibit “N”,
Tenant will not use any Hazardous Materials within Phase I and shall comply
with an applicable Environmental Laws and with the Seller Indemnity relates to
Tenant. Without limiting the foregoing, Tenant shall not use any Hazardous
Materials within Phase I in a manner that would reduce or limit Seller’s
obligation under the Seller Indemnity. Tenant s a immediately notify Landlord
and Seller if and when Tenant learns or has reason to believe there has been
any release of Hazardous Materials in, on or about the Project during the Term.

 

41.          ARBITRATION OF DISPUTES.

 

ANY CONTROVERSY OR CLAIM ARISING OUT OF THE SPECIFIC
PROVISIONS OF THE LEASE LISTED BELOW, OR ANY OTHER PROVISION OF THIS LEASE THAT
EXPRESSLY PROVIDES FOR ARBITRATION PURSUANT TO THIS PARAGRAPH, OR A BREACH OF
ANY SUCH PARAGRAPHS OR PROVISIONS SOLELY BETWEEN LANDLORD AND TENANT, BUT NOT
INCLUDING A DEFAULT WITH RESPECT TO 

 

46

 

THE TIMELY PAYMENT OF BASE RENT AND ADDITIONAL
CHARGES, SHALL BE SETTLED BY ARBITRATION IN ACCORDANCE WITH THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION, AND JUDGMENT ON THE AWARD RENDERED BY THE
ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THE PREVAILING
PARTY IN SUCH ARBITRATION SHALL BE ENTITLED TO ATTORNEYS’ FEES AND COSTS. THE
FOLLOWING PROVISIONS OF THIS LEASE SHALL BE SUBJECT TO ARBITRATION PURSUANT TO
THIS PARAGRAPH 41:

 

(1)           SUBPARAGRAPH 1(c)(3) [PROJECT; COMMON AREAS; ACCESS
AND COOPERATION], ONLY WITH RESPECT TO MODIFICATIONS TO CC&RS;

 

(2)           SUBPARAGRAPH 1(c)(4) [PROJECT; COMMON AREAS; ACCESS
AND COOPERATION], ONLY WITH RESPECT TO ACCESS, ENCUMBRANCES AND COOPERATION;

 

(3)           SUBPARAGRAPH 1(d) [RECONFIGURATION OF PHASE I];

 

(4)           PARAGRAPH 2 [OCCUPANCY AND USE], ONLY WITH RESPECT. TO
WHETHER TENANT’S USE COMPLIES WITH THE USE SPECIFIED IN THE BASIC LEASE
INFORMATION;

 

(5)           SUBPARAGRAPHS 3(a) [TERM; OCCUPANCY DATE; EXPIRATION
DATE] AND 3(c) [OCCUPANCY BY TENANT], ONLY WITH RESPECT TO DETERMINATION OF THE
OCCUPANCY DATE;

 

(6)           SUBPARAGRAPH 3(b) [INITIAL CONSTRUCTION], ONLY WITH
RESPECT TO LANDLORD’S ENFORCEMENT OF CONSTRUCTION WARRANTIES;

 

(7)           SUBPARAGRAPH 3(e) [CONDITIONS; WINDOW DATES];

 

(8)           SUBPARAGRAPH 3(f) [CREDIT TERMINATION RIGHT];

 

(9)           SUBPARAGRAPH 4(d) [AUDIT RIGHTS);

 

(10)         PARAGRAPH 5 [MANAGEMENT];

 

(11)         PARAGRAPH 6 [RESTRICTIONS ON USE], ONLY WITH RESPECT
TO MODIFICATIONS TO EXHIBIT P AND/OR THE RESTRICTIVE DOCUMENTS;

 

(12)         PARAGRAPH 7 [COMPLIANCE WITH LAWS];

 

(13)         PARAGRAPH 8 [ADDITIONAL ALTERATIONS];

 

(14)         PARAGRAPH 9 [REPAIRS AND MAINTENANCE];

 

(15)         PARAGRAPH 11 [ASSIGNMENT AND SUBLETTING];

 

47

 

(16)         SUBPARAGRAPHS 14(b) [NO EXCESSIVE LOAD] AND 14(c) [NO
LIABILITY OF LANDLORD];

 

(17)         PARAGRAPH 18 [RULES AND REGULATIONS];

 

(18)         SUBPARAGRAPH 22(c) [CASUALTY AT END OF TERM], ONLY
WITH RESPECT TO WHETHER A SUBSTANTIAL PORTION OF A BUILDING IS DAMAGED OR DESTROYED;

 

(19)         SUBPARAGRAPHS 22(d) [MUTUAL TERMINATION OPTION;
INSURED CASUALTY] AND 22(e) [DESTRUCTION WHERE NO PROCEEDS ARE AVAILABLE], ONLY
WITH RESPECT LANDLORD’S DETERMINATION OF THE LENGTH OF TIME TO RECONSTRUCT;

 

(20)         SUBPARAGRAPH 23(b) [PARTIAL BUILDING; TERMINATION],
ONLY WITH RESPECT TO WHETHER THE PORTION TAKEN RENDERS THE REMAINING BUILDING
UNSUITABLE FOR EXISTING USE;

 

(21)         SUBPARAGRAPH 23(e) [TAKING OF COMMON AREA];

 

(22)         SUBPARAGRAPH 26(b) [DELIVERY AND RESTORATION OF
PREMISES];

 

(23)         PARAGRAPH 36 [PARKING];

 

(24)         PARAGRAPH 42 [SIGNAGE]; AND

 

(25)         ANY PROVISIONS OF THE WORK LETTER WHICH ARE EXPRESSLY
MADE SUBJECT TO THIS PARAGRAPH 41 THEREIN.

 

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE
AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION
OF DISPUTES” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA
LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION. IF YOU REFUSE
TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED
TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

 

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO
SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF
DISPUTES” PROVISION TO NEUTRAL ARBITRATION.

 

48

 

Consent to neutral arbitration by:

 

	
   

  	
  (Landlord)

  	
   

  	
  (Tenant)

  

 

42.          SIGNAGE. Tenant
shall have the right to use a portion of the monument sign located at the front
of Phase I, as designated by Landlord and reasonably acceptable to Tenant, for
purposes of attaching lettering identifying Tenant’s use and occupancy at the
Project. Tenant shall be responsible for its proportionate share of costs
related to such signage, with each party using such sign paying a proportionate
share of such costs (based on space on the sign). Such sign, and any other
signage Tenant proposes to place on the Project, shall be subject to approval
from Landlord and applicable governing entities, and shall not violate the
Declaration, the CC&Rs, any ground lease, any Mortgage, or any Rules and
Regulations with respect to the Project.

 

43.          OPTION TO RENEW. Tenant shall have the right to extend the Term for one (1) period of
five (5) years (“Extension Term”) following the initial Expiration Date, by
giving written notice (“Exercise Notice”)
to Landlord at least twelve (12) months prior to the Expiration Date, subject
to the following conditions: (i) no event of default is continuing under this
Lease at the time of the Exercise Notice or at the commencement of the
Extension Term; and (ii) Landlord has not delivered a notice of default to
Tenant hereunder during the twenty-four (24) month period immediately preceding
the Exercise. Notice regardless of whether any such default was cured by Tenant
within any applicable grace or cure period; provided, however, that any such
notice of default relating to a non-monetary default which was disputed, in
good faith, by Tenant and ultimately determined (by agreement of the parties,
arbitration or judicial action) not to be a default shall not be considered for
purposes of determining whether such condition has been met.

 

44.          RENT DURING EXTENSION TERM. Commencing on the first day of the Extension Term,
Tenant shall pay to Landlord throughout the Extension Term Base Rent in the
amount determined pursuant to this Paragraph 44. The Monthly Base Rent during
the five-year Extension Term shall be the greater of the Base Rent paid during
the last month of the immediately preceding Term or ninety-five percent (95%)
of the Fair Market Rental Value for the Premises as of the commencement of the
Extension Term, with the Fair Market Rental Value as determined below:

 

(a)           Determination of Fair Market
Rental Value. Within
the later of thirty (30’) days after receipt of Tenant’s Exercise Notice or
eleven (11) months prior to the Expiration Date, Landlord shall notify Tenant
of Landlord’s estimate of the Fair Market Rental Value for the Premises, as
determined below, for determining Monthly Base Rent during the ensuing
Extension Term. Within fifteen (15) days after receipt of such notice from
Landlord, Tenant shall notify Landlord in writing that it (i) agrees with such
Fair Market Rental Value or (ii) disagrees with such Fair Market Rental
Value. No response shall constitute disagreement. If Tenant disagrees with
Landlord’s estimate of Fair Market Rental Value for the Premises, then the
parties shall meet and endeavor to agree within fifteen (15) business days after
Landlord receives Tenant’s notice described in the immediately preceding
sentence. If the parties cannot agree upon the Fair Market Rental Value within
said fifteen (15) day period, Tenant may make written demand upon Landlord for
arbitration in accordance with the following paragraph. The 

 

49

 

judgment or the award rendered in any such arbitration
may be entered in any court having jurisdiction and shall be final and binding
between the parties. The arbitration shall be conducted and determined in the
City of Mountain View (or another location mutually acceptable to Landlord and
Tenant) in accordance with the then prevailing rules of the American
Arbitration Association or its successor for arbitration or commercial disputes,
except to the extent the procedures mandated by said rules shall be modified as
follows:

 

(1)           Tenant shall, by the applicable date specified
therefor in this Lease, make written demand upon Landlord pursuant to this
Lease for arbitration, specifying therein the name and address of the person to
act as the arbitrator on Tenant’s behalf. The arbitrator shall be qualified as
a real estate appraiser, with at least five (5) years experience in appraising
major commercial property in Santa Clara County and a member of a recognized
society of real estate appraisers, who would qualify as an expert witness over
objection to give opinion testimony addressed to the issue in a court of
competent jurisdiction. Failure on the part of Tenant to make a timely and
proper demand for such arbitration (specifying the arbitrator to act on Tenant’s
behalf, as aforesaid) shall constitute a waiver of the right thereto. Within
ten (10) business days after receipt of Tenant’s demand for arbitration,
Landlord shall give written notice to Tenant pursuant to this Lease, specifying
the name and address of the person designated by Landlord to act as arbitrator
on its behalf who shall be similarly qualified. If Landlord fails to notify
Tenant of the appointment of its arbitrator, within or by the time above
specified, then the arbitrator appointed by Tenant shall be the arbitrator to
determine the issue. Notwithstanding the foregoing, upon receipt of Tenant’s
demand for arbitration Landlord may, in its sole discretion, deliver a revised
estimate of the Fair Market Value of the Premises, and within fifteen (15) days
after receipt of such notice from Landlord, Tenant shall notify Landlord in
writing that it (i) agrees with such revised Fair Market Rental Value, or
(ii) disagrees with such revised Fair Market Rental Value, with no
response constituting agreement. If Tenant disagrees with Landlord’s Fair
Market Value, then within ten (10) business days after receipt of Tenant’s
notice of such disagreement Landlord shall give Tenant written notice
specifying Landlord’s designated arbitrator as provided in this paragraph
above.

 

(2)           If two (2) arbitrators are chosen pursuant to
paragraph (1) above, the arbitrators so chosen shall meet within ten (10)
business days after Landlord notifies Tenant of the appointment of Landlord’s
arbitrator as aforesaid. If the two appraisers reach agreement on the Fair
Market Rental Value, that value shall be binding and conclusive upon the
parties. If within ten (10) business days after such first meeting the two arbitrators
shall be unable to agree upon a determination of Fair Market Rental Value,
they, themselves, shall appoint a third arbitrator, who shall be a competent
and impartial person with qualifications similar to those required of the first
two arbitrators pursuant to Subparagraph 44(a)(1). If the first two arbitrators
are unable to agree upon such appointment within five business days after
expiration of said ten (10) days period, the third arbitrator shall be selected
by Landlord and Tenant, if they can agree thereon, within a further period of
ten (10) business days. If Landlord and Tenant do not so agree, then either
party, on behalf of both, may request appointment of such a qualified person by
the then Chief Judge of the United States District Court having jurisdiction
over the City of San Jose, and the other party shall not raise any question as
to such Judge’s full power and jurisdiction to entertain the application for
and make the appointment. The three (3) arbitrators shall decide the dispute if
it has not previously been resolved by following the procedure set forth in the
following paragraph.

 

50

 

(3)           If an issue cannot be resolved by agreement between
the two arbitrators selected by Landlord and Tenant or settlement between
Landlord and Tenant during the course of arbitration, the issue shall be
resolved by the three arbitrators in accordance with the following procedures. Within
ten (10) business days after appointment of the third arbitrator, each of the
two arbitrators selected by Landlord and Tenant shall state in writing his
determination of the Fair Market Rental Value supported by the reasons therefor
with counterpart copies to each party. The arbitrators shall arrange for a
simultaneous exchange of such proposed resolutions. The role of the third
arbitrator shall be to select, within ten (10) business days after submission
to the third arbitrator of the two proposed resolutions, which of the two
proposed resolutions most closely approximates the third arbitrator’s
determination of Fair Market Rental Value. The third arbitrator shall have no
right to propose a middle ground or any modification of either of the two
proposed resolutions. The resolution he chooses as most closely approximating
his determination shall constitute the decision of the arbitrators and be final
and binding upon the parties.

 

(4)           If any arbitrator fails, refuses or is unable to act,
his successor shall be appointed by the party who originally appointed him, but
in the case of the third arbitrator, his successor shall be appointed in the
same manner as provided for appointment of the third arbitrator. Landlord and
Tenant shall each pay the fees and expenses of its respective arbitrator, if
any, and shall each pay half of the fees and expenses of the third arbitrator,
if any. The attorneys’ fees and expenses of counsel for the respective parties
and of witnesses shall be paid by the respective party engaging such counsel or
calling such witnesses.

 

(5)           The arbitrators shall have the right to consult
experts and competent authorities with factual information or evidence
pertaining to a determination of Fair Market Rental Value, but any such
consultation shall be made in the presence of both Landlord and Tenant with
full right on their part to cross-examine. The arbitrators shall render their
decision and award in Writing with counterpart copies to Landlord and Tenant. The
arbitrators shall have no power to modify the provisions of this Lease.

 

(b)           Definition of Fair Market Rental
Value. Wherever
used throughout this Paragraph 44 [Rent During Extension Term] the term “Fair
Market Rental Value” shall mean the fair market rental value of the Premises,
using as a guide the monthly base rent (on a per rentable square foot basis)
which would be charged during the Extension Term (including periodic increases
during the Extension Term, if any) in a comparable location in the Mountain
View Area for comparable commercial space of comparable size, in comparable
condition, and of comparable quality as of the time that the Extension Term
commences, taking into account that the Premises can be used either by a single
tenant as a campus or by multiple tenants, and with appropriate adjustments
regarding taxes, insurance and operating expenses as necessary to insure
comparability to this Lease, as the case may be. Without limiting the
foregoing, the Fair Market Rental Value shall reflect the amount and type of
parking, existing utilities, communications facilities and leasehold
improvements (regardless of who paid for them and with the assumption, for
purposes of the determination of Fair Market Rental Value, that they are fully
usable by Tenant), proposed term of lease, amount of space leased, extent of
service provided or to be provided, and any other relevant terms or conditions;
provided, however that the Fair Market Rental Value shall not reflect, or
provide any discount for, the fact that otherwise comparable leases vary with
this Lease with respect to tenant improvement allowances; phase-ins or early 

 

51

 

Occupancy agreements; moving costs; rebates; signing
bonuses; early lease terminations; lease buy-outs; free rent and other rent
concessions; leasing commissions; and other related costs.

 

(c)           Interim Rent. If binding arbitration has not been
completed prior to the expiration of any preceding period for which Monthly
Base Rent has been determined, Tenant shall pay Monthly Base Rent at the
greater of the Base Rent paid during the last month of the immediately
preceding Term or ninety-five percent (95%) of the Fair Market Rental Value
estimated by Landlord, with an adjustment to be made once Fair Market Rental
Value is ultimately determined by binding arbitration. Such adjustment shall
not result in a decrease of the Monthly Base Rent for the Premises below the
amount payable by Tenant as of the period immediately preceding the ensuing
Extension Term.

 

(d)           Lease Terms Continue. From and after the commencement of the
Extension Term, all of the other terms, covenants and conditions of the Lease
shall also apply; provided, however, that Tenant shall have no further rights
to extend the Term. No broker’s commissions or allowance for new tenant
improvements will be payable by Landlord in connection with the Extension Term.

 

52

 

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

 

 

	
   

  	
  LANDLORD

  
	
   

  	
   

  
	
   

  	
  464 Ellis Street
  Associates, L.P.,

  
	
   

  	
  a California limited
  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Cañada Corp.,

  
	
   

  	
   

  	
  a California corporation,

  
	
   

  	
   

  	
  Its General

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Virginia Land Company,
  Inc.,

  
	
   

  	
   

  	
  a California corporation,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
   

  	
  Netscape Communications
  Corporation, a Delaware

  
	
   

  	
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter Currie

  
	
   

  	
   

  	
  Its Chief Financial
  Officer

  
						

 

53

 

FIRST AMENDMENT TO

LEASE AGREEMENT (PHASE 1)

 

This First Amendment to Lease Agreement (Phase I)
(this “Amendment”) is entered into as
of March 31, 1997, by and between Netscape Communications Corporation, a
Delaware corporation (“Tenant”),
and 464 Ellis Street Associates, L.P., a California limited partnership (“Landlord”).

 

RECITALS

 

A.            Tenant and Landlord have entered into
that certain Lease Agreement (Phase I) (the “Lease”),
dated as of January 31, 1997, pursuant to which Tenant has agreed to lease from
owner, and Owner has agreed to lease to Tenant, the Premises described therein
on the terms and conditions thereof. A Work Letter with respect to Landlord’s
and Tenant’s respective obligations to complete Base Building Improvements and
Tenant Improvements on the Premises is attached to the Lease as Exhibit D (the “Work Letter”).

 

B.            Tenant and Landlord now desire to amend
the Lease (including the Work Letter) in accordance with this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration the adequacy of
which is hereby acknowledged by the parties. Tenant and Landlord hereby agree
as follows:

 

1.             Amendment to Exhibit F. Exhibit F to the Lease is hereby amended
to change the Initial Window Date with respect to the Condition “Acquisition of
Phase I” to 4/15/97.

 

2.             Amendment to Work Letter. Paragraph 10 of the Work Letter is hereby
amended to provide that Landlord’s and Tenant’s respective architects shall be
required to maintain Commercial, General Liability insurance in the form
required in such paragraph but with a combined single limit of not lees than
one million Dollars ($1,000,000). The requirements with respect to Commercial
General Liability insurance carried by Landlord’s and Tenant’s respective
contractors shall not be revised by this amendment.

 

3.             Defined Terms. All capitalized terms used in this
Amendment and not defined herein shall have the meanings set forth in the Lease
and Work Letter.

 

4.             Counterparts. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

 

5.             No Other Amendments. Except as amended hereby, the terms of
the Lease and Work Letter, including all exhibits and schedules attached
thereto, shall remain unmodified and in full force and effect.

 

1

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

 

	
  TENANT:

  	
   

  
	
   

  	
   

  
	
  NETSCAPE COMMUNICATIONS
  CORPORATION,

  	
   

  
	
  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
  Director of Real Estate
  and Facilities

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
  464 Ellis Street
  Associates, L.P.,

  	
   

  
	
  a California limited
  partnership

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Cañada Corp.,

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  
	
   

  	
  Its General

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Virginia Land Company,
  Inc.,

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  
	
   

  	
  Its General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  
									

 

2

 

SECOND AMENDMENT TO

LEASE AGREEMENT (PHASE I)

 

This Second Amendment to Lease Agreement (Phase I)
(this “Amendment”) is entered into
as of April 15, 1997, by and between Netscape Communications Corporation, a
Delaware corporation (“Tenant”),
and 464 Ellie Street Associates, L.P., a California Limited partnership (“Landlord”).

 

RECITALS

 

A.            Tenant and Landlord have entered into
that certain Lease Agreement (Phase 7), dated as of January 31, 1997, as
amended by that certain First Amendment to Lease Agreement (Phase I), dated as
of March 31, 1997 (as so amended, the “Lease”).

 

B.            Tenant and Landlord now desire to further
amend the Lease in accordance with this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the adequacy of
which is hereby acknowledged by the :parties, Tenant and Landlord hereby agree
as follow s:

 

1.             Amendment to Exhibit F. Exhibit F to the Lease is hereby amended
to change the Initial Window Date With respect to the Condition “Acquisition of
Phase I” to 4/30/97.

 

2.             Defined Terms. All capitalized terms used in this
Amendment and not defined herein shall have the meanings set forth in the
Lease.

 

3.             Counterparts. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

 

4.             No Other Amendments. Except as amended hereby, the terms of
the Lease, including all exhibits and schedules attached thereto, shall remain
unmodified and in full force and effect.

 

1

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

 

	
  TENANT:

  	
   

  
	
   

  	
   

  
	
  NETSCAPE COMMUNICATIONS
  CORPORATION,

  	
   

  
	
  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ signatory

  	
   

  	
   

  
	
  Its:

  	
  signatory

  	
   

  	
   

  
	
   

  	
  Director of Real Estate
  and Facilities

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
  464 Ellis Street
  Associates, L.P.,

  	
   

  
	
  a California limited
  partnership

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Cañada Corp.,

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  
	
   

  	
  Its General

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ signatory

  	
   

  	
   

  
	
   

  	
  Its:

  	
  signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Virginia Land Company,
  Inc.,

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  
	
   

  	
  Its General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ signatory

  	
   

  	
   

  
	
   

  	
  Its:

  	
  /s/ signatory

  	
   

  	
   

  
									

 

2

 

THIRD AMENDMENT TO LEASE
AGREEMENT (PRASE 1)

 

This Third Amendment to Lease Agreement (Phase I)
(this “Amendment”) is entered into
as of April 30, 1997, by and between Netscape Communications Corporation, a
Delaware corporation (“Tenant”),
and 454 Ellis Street Associates, L.P., a California limited partnership (“Landlord”).

 

RECITALS

 

A.            Tenant and Landlord have entered into
that certain Lease Agreement (Phase I), dated as of January 31, 1997, as
amended by that certain First Amendment to Lease Agreement (Phase I), dated as
of March 31, 1997, and by that certain Second Amendment to Lease Agreement
(Phase I), dated as of April 15, 1997 (as so amended, the “Lease”).

 

B.            Tenant and Landlord now desire to further
amend the Lease in accordance with this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the adequacy of
which is hereby acknowledged by the parties. Tenant and Landlord hereby agree
as follows:

 

1.             Amendment to Exhibit F. Exhibit F to the Lease is hereby amended
to change the Initial Window Date with respect co the Condition “Acquisition of
Phase I” to S/15/97.

 

2.             Defined Terms. All capitalized terms used In this
Amendment and not defined herein shall have the meanings set forth in the
Lease.

 

3.             Counterparts. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

 

4.             Other Amendments. Except as amended hereby, the terms of
the Lease, including all exhibits and schedules attached thereto, shall remain
unmodified and in full force and effect.

 

1

 

IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.

 

	
  TENANT:

  	
   

  
	
   

  	
   

  
	
  NETSCAPE COMMUNICATIONS
  CORPORATION,

  	
   

  
	
  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ signatory

  	
   

  	
   

  
	
  Its:

  	
  signatory

  	
   

  	
   

  
	
   

  	
  Director of Real Estate
  and Facilities

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
  464 Ellis Street
  Associates, L.P.,

  	
   

  
	
  a California limited
  partnership

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Cañada Corp.,

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  
	
   

  	
  Its General

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ signatory

  	
   

  	
   

  
	
   

  	
  Its:

  	
  signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Virginia Land Company,
  Inc.,

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  
	
   

  	
  Its General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ signatory

  	
   

  	
   

  
	
   

  	
  Its:

  	
  /s/ signatory

  	
   

  	
   

  
									

 

2

 

EXHIBIT B

 

SUBLEASE

 

AGREEMENT OF SUBLEASE

 

THIS AGREEMENT OF SUBLEASE (this
“Sublease”) is made and entered into
this 28th day of February, 2005, by and between NETSCAPE
COMMUNICATIONS CORPORATION, a Delaware corporation (hereinafter
referred to as the “Sublandlord”), and MERCURY INTERACTIVE CORPORATION, a Delaware corporation
(hereinafter referred to as the “Subtenant”).

 

WITNESSETH:

 

WHEREAS, pursuant to that
certain Lease Agreement by and between 464 Ellis Street Associates, L.P. (the “Prime Landlord”) and Sublandlord,
dated as of January 31, 1997 (the “Prime Lease”),
Sublandlord presently leases three (3) separate, adjacent buildings having
addresses at 464 Ellis Street (“Building 20”),
466 Ellis Street (“Building 21”) & 468 Ellis
Street (“Building 22”), Mountain View,
California (collectively, “Phase I”);

 

WHEREAS, Subtenant desires to
sublease from Sublandlord the entirety of Phase I including each of the
following buildings (each a “Building”):
(i) the entirety of Building 20, which contains approximately sixty four
thousand one hundred eight (64,108) rentable square feet of office space (the “Building 20 Premises”), (ii) the
entirety of Building 21 which contains approximately seventy five thousand two
hundred thirty three (75,233) rentable square feet of office space (the “Building 21 Premises”), and (iii)
the entirety of Building 22, which contains approximately 55,662 rentable
square feet, including (a) approximately 15,400 rentable square feet of office
space located on the 2nd floor of the Building (“Building
22 Office Space”), (b) approximately 25,775 rentable square
feet of cafeteria and kitchen area (“Cafeteria Space”);
and (c) approximately 14,487 rentable square feet of fitness center space (“Fitness Center Space”)
(collectively, the “Building 22 Premises”). The
Building 20 Premises, Building 21 Premises, and Building 22 Premises shall be
referred to hereinafter collectively as the “Demised
Premises”. Capitalized terms used in this Sublease but not
otherwise defined shall have the meaning ascribed to such terms in the Prime
Lease;

 

WHEREAS, Sublandlord and
Subtenant acknowledge that they are parties to that certain Side Agreement,
dated as of December 15, 2003 (“Side Agreement”),
pursuant to which, among other things, Subtenant currently has certain rights
to use the Cafeteria and Fitness Center located in Building 22. The Side
Agreement superseded that certain Agreement of Sublease, dated as of October
21, 2003 (“Phase II Sublease”), pursuant
to which Subtenant subleased from Sublandlord the buildings located at 389
Whisman Road, 399 Whisman Road, 369 Whisman Road and 379 Whisman Road (“Phase II Buildings”). As of the date
that the Side Agreement became effective, Sublandlord’s master lease for the
Phase II Buildings and the Phase II Sublease terminated, and Subtenant’s direct
lease with Sublandlord’s landlord for the Phase II Buildings became effective;
and

 

WHEREAS, the Side Agreement
shall remain in effect until terminated on April 30, 2005 in accordance with
the terms of this Sublease.

 

NOW, THEREFORE, for and in
consideration of the mutual covenants and agreements hereinafter set forth, the
parties hereto agree as follows:

 

 

1.             Demised Premises.

 

a.             Demised Premises Defined.
Subject to receipt of Prime Landlord’s written consent to this Sublease in
accordance with Section 28 below, Sublandlord does
hereby sublease to Subtenant, and Subtenant does hereby sublease from
Sublandlord, for the term and upon the conditions hereinafter provided, the
Demised Premises, as more particularly described on the plan attached hereto
and made part hereof as Exhibit A. Sublandlord
and Subtenant hereby stipulate that the aggregate rentable area of the Demised
Premises is one hundred ninety-five thousand three (195,003) rentable square
feet and agree that this square footage shall be conclusive for all purposes
under this Sublease.

 

b.             Condition of Premises.
Subject to the provisions of this Section 1(b),
the Demised Premises are sublet to Subtenant in their “as is” condition
existing on the date delivered to Subtenant. Sublandlord shall have no
obligation to complete any alterations, improvements, repairs or decorations to
the Demised Premises either prior to the time possession is given to Subtenant
or during the Term. The foregoing sentence notwithstanding, Sublandlord
represents to the best of Sublandlord’s knowledge, all building systems serving
the Demised Premises, including without limitation, all (mechanical,
electrical, HVAC and life safety systems, and the plumbing systems and fixtures
(collectively, “Building Systems”), are in
good working condition as of the date hereof, and the Building Systems shall be
in good working condition on the date that Sublandlord delivers possession of
the Demised Premises to Subtenant pursuant to Section 3
below. In addition, Sublandlord hereby transfers to Subtenant, during the Early
Access Period (as defined below) and during the Term, all warranties (to the
extent the same are freely transferable) of improvements made by or at the
direction of Sublandlord or Prime Landlord, for the benefit of Sublandlord,
under the Prime Lease.

 

c.             Initial Improvements.
Subtenant may, at its option and subject to the provisions of the Prime Lease,
including, without limitation, Article 8
thereof, complete certain initial improvements to prepare the Demised Premises
for Subtenant’s occupancy thereof as described in the Work Letter Agreement
attached hereto and made a part hereof as Exhibit B (the “Initial Improvements”), at Subtenant’s
sole cost and expense without any contribution or improvement allowance from
Sublandlord described in the Work Letter Agreement attached hereto and made a
part hereof as Exhibit B); provided, however,
Subtenant shall not make or permit anyone to make any Initial Improvements
without the prior written consent of Sublandlord, which shall not be
unreasonably withheld or delayed, and of Prime Landlord in accordance with the
Prime Lease. In connection with the foregoing, Subtenant shall submit to
Sublandlord, for prior written approval by Sublandlord, which shall not be
unreasonably withheld or delayed, and Prime Landlord, complete plans and
specifications for any and all Initial Improvements; including, without
limitation, schematic designs and work drawings. Any and all costs and expenses
associated with the acquisition of cabling, equipment, furniture, security
systems, or other personal property for Subtenant or the Demised Premises or
the installation or placement of any of the foregoing within the Demised
Premises or with the project management for the performance of the Initial
Improvements (collectively, “Subtenant’s Personal
Property and Services”), shall be paid for by and be the sole
responsibility of Subtenant. Sublandlord acknowledges and agrees that Subtenant
shall not be required to remove any Initial Improvements upon the expiration or
earlier termination of this Sublease unless the removal is required by Prime
Landlord or Sublandlord is otherwise obligated to pay Prime 

 

2

 

Landlord the costs of any
removal of any Initial Improvements pursuant to Section 8(e)
of the Prime Lease.

 

2.             Term. Provided
Sublandlord has received Prime Landlord’s consent to this Sublease in
accordance with the Prime Lease and this Sublease, the term of this Sublease
(the “Term”) shall be for a period
commencing: (a) for Building 22 - May 1, 2005 (the “Building
22 Commencement Date”), and (b) for Buildings 20 and 21 - July
1, 2005 (the “Building 20 and 21 Commencement Date”)
(each a “Commencement Date”) and,
unless this Sublease is earlier terminated pursuant to its terms or pursuant to
the terms of the Prime Lease that are incorporated herein, expiring at midnight
(PST) on March 26, 2013 (the “Expiration Date”).

 

3.             Delivery of Demised Premises.

 

a.             Early Access. Sublandlord
shall deliver the Building 22 Office Space to Subtenant in the condition
required by this Sublease promptly following receipt of Prime Landlord’s
consent to this Sublease in accordance with Section 28
and, from and after the date on which Sublandlord delivers the Building 22
Office Space to Subtenant (the “Delivery Date”)
until the Building 22 Commencement Date, Subtenant shall have the right,
subject to Prime Landlord’s prior written consent, to enter the Building 22
Office Space for purposes of moving Subtenant’s personal property into,
performing the Initial Improvements to, and otherwise preparing the Building 22
Office Space for Subtenant’s occupancy. In connection with the foregoing,
Subtenant acknowledges and agrees that the foregoing early access rights shall
be non-exclusive and that Sublandlord will have the right, to perform
de-commissioning work in Building 22, and continue operating the Cafeteria and
Fitness Center facilities pursuant to Section 19
below, between the date hereof and the Building 22 Commencement Date. All terms
and conditions of this Sublease shall apply to Subtenant’s early access prior
to the Building 22 Commencement Date except that Base Rent shall not begin to
accrue with respect to any particular Building until the Commencement Date for
such Building (as defined below), provided Subtenant shall pay, within twenty
(20) days after receipt of demand by Sublandlord therefore, all utility costs
and other Additional Rent allocable to the Building 22 Office Space during the
period commencing on the Delivery Date and expiring on the Building 22
Commencement Date (the “Early  Access Period”).

 

b.             Delivery of the Remainder of the
Demised Premises. Subject to receipt of Prime Landlord’s
consent to this Sublease in accordance with Section 28,
Sublandlord presently anticipates delivering the remainder of the Demised
Premises to Subtenant, in the condition required under this Sublease, as
follows: (i) the Cafeteria Space and the Fitness Center Space on the Building
22 Commencement Date; and (ii) Buildings 20 and 21 on the Building 20 and 21
Commencement Date. If Sublandlord is unable to
deliver possession of the applicable space by such dates, Sublandlord shall not
have any liability whatsoever to Subtenant, this Sublease shall not be rendered
void or voidable, and, subject to the provisions of Section 3(c)
below, Subtenant’s sole remedy in such event will be an extension of the
Commencement Date for the applicable space or Building on a day-for-day basis
based upon the number of days delay in delivery of such space or Building.

 

3

 

c.             Outside Termination Date. Notwithstanding
the foregoing, in the event Sublandlord fails, as result of occurrences other
than a Subtenant default hereunder or Force Majeure Events, to deliver all
Buildings comprising the Demised Premises to Subtenant on or before December
31, 2005 (the “Outside Termination Date”),
then Subtenant may terminate this Sublease by providing written notice thereof
to Sublandlord within ten (10) days after the Outside Termination Date;
provided, however, notwithstanding any other provision to the contrary in this
Sublease or the Prime Lease, upon any such termination of this Sublease
pursuant to this Section 3, all Initial
Improvements and other Alterations made by or for Subtenant in the Demised
Premises prior to the effective date of such termination (collectively, the “Build-Out Improvements”) shall,
unless Sublandlord provides Subtenant written notice otherwise, become the
property of Sublandlord and Subtenant shall neither have an obligation nor a
right to remove any of the Build-Out Improvements upon such termination of this
Sublease. In addition, Subtenant shall assign any and all contracts for the
design or construction of the Build-Out Improvements and for engineering or
construction management services relating thereto (collectively, the “Build-Out Contracts”), to the extent
assignable, to Sublandlord, along with any and all plans, specifications,
designs, drawings, reports, and other work product produced in connection with
any such contracts (collectively, the “Build-Out Work Product”).
In connection with the foregoing, Subtenant shall use good-faith, diligent
efforts to obtain a right to freely assign each of the Build-Out Contracts and
all Build-Out Work Product pursuant to the terms of such contracts. Immediately
prior to any termination of this Sublease pursuant to this Section 3,
and as a condition precedent to the effectiveness of such termination,
Subtenant agrees to deliver to Sublandlord originals of all fully-executed
Build-Out Contracts and of all Build-Out Work Product and to assign, to the
extent assignable, all such Build-Out Contracts and Build-Out Work Product to
Sublandlord as of the effective date of such termination.

 

4.             Use. Subtenant
shall use and occupy the Demised Premises solely for office, distribution,
research, development, and/or light manufacturing, and for no other purpose,
pursuant to and in accordance with the Prime Lease. In addition, subject to
obtaining Prime Landlord’s prior written consent, Sublandlord also agrees that
Subtenant may use the Demised Premises for customer training and sales
presentations purposes.

 

5.             Base Rent. From
and after the Commencement Date for each Building and throughout the Term,
Subtenant shall pay, as base rent for the Demised Premises, in advance and in
lawful currency of the United States on or before the first day of each
calendar month, without deduction or offset, in the amounts set forth below (“Base Rent”):

 

	
  Term

  	
   

  	
  Rental Rate/SF/Month-NNN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2005 - June 30, 2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July 1, 2005 - April 30, 2006

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2006 - April 30, 2007

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2007- April 30, 2008

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May, 1 2008 - April 30, 2009

  	
   

  	
   

  	
   

  

 

4

 

	
  May 1, 2009 - April 30, 2010

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2010 - April 30, 2011

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2011 - April 30 2012

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2012 - March 26, 2013

  	
   

  	
   

  	
   

  

 

* Subtenant will pay said
Base Rent to Sublandlord or to such other party as Sublandlord may designate at
its address set forth in Section 22
below, or at such other address as Sublandlord may hereafter designate in
writing.

 

6.             Additional Rent. Commencing
on the earlier of: (i) the Delivery Date for each Building or (ii) the
Commencement Date for the applicable Building, Subtenant shall pay to
Sublandlord, as additional rent (“Additional Rent”),
all Additional Charges (as defined in the Prime Lease), including but not
limited to Real Estate Taxes, Expenses, and all other such amounts payable by Sublandlord
under the Prime Lease allocable to such Building, and, following the Building
20 and 21 Commencement Date for the entire Demised Premises (excluding Specific
Default Charges). As used herein, “Specific Default Charges”
shall mean, to the extent not caused in whole or in part by Subtenant’s default
hereunder, any amounts resulting solely from a default by Sublandlord under the
Prime Lease and identified in a notice of default delivered by Prime Landlord
to Sublandlord, which amounts may include, without limitation, any late fees or
interest payable by Sublandlord pursuant to Section 4(e)
of the Prime Lease. Without limiting the generality of the foregoing, Subtenant
shall pay to Sublandlord, as Additional Rent, all charges for (i) alterations
(excluding charges for alterations made by Sublandlord prior to the date
hereof), (ii) all amounts payable to by Subtenant pursuant to Section 2(c) of
the Work Letter Agreement attached as Exhibit B
hereto, (iii) any additional services provided to the Demised Premises or
otherwise in connection with the Prime Lease, including, without limitation,
charges and fees for after-hours heating and air conditioning services, if any,
and (iv) all costs for electricity consumed at the Demised Premises. Sublandlord
shall provide Subtenant with copies of all relevant statements and bills
received by Sublandlord pursuant to the applicable provisions of the Prime
Lease. Subtenant shall pay one-twelfth of the annual Expenses and Real Property
Taxes, as defined and estimated pursuant to Article 4
of the Prime Lease, to Sublandlord together with each monthly payment of Base
Rent subject to annual reconciliation in accordance with Section
4(c)(3) of the Prime Lease. Notwithstanding the foregoing, if the
Prime Lease requires Sublandlord to pay Expenses or Real Estate Taxes other
than on a monthly basis based on estimates of such costs, Subtenant shall make
payments of each element of Expenses or Real Estate Taxes on the later of (i)
two (2) business days prior to the date on which Sublandlord is obligated to
pay the applicable sum under the Prime Lease (only if the applicable element of
Expenses and/or Real Estate Taxes is payable by Sublandlord under the Prime
Lease), or (ii) twenty (20) business days after receipt of a statement from
Sublandlord setting forth the amount of Real Estate Taxes and/or Expenses due. Subtenant
shall pay all other Additional Rent within twenty (20) business days after
receipt of an invoice therefore from Sublandlord. Subtenant’s obligation to pay
Additional Rent shall survive the expiration or earlier termination of this
Sublease.

 

5

 

7.             Furniture. During
the Term, Subtenant may use the furniture, including, without limitation, the
work stations, and office and conference room tables and chairs, owned by
Sublandlord and existing in the Demised Premises as of the Commencement Date,
all as more particularly described in Exhibit D
hereto (the “Furniture”), at no additional
cost or expense to Subtenant. Without limiting the generality of the foregoing,
“Furniture” shall also include the cables connecting each desktop area within
the Demised Premises to the central computer room, including all related patch
panels and the racks upon which such patch panels are situated, but excluding
Sublandlord’s telephone switches and other telephone and computer equipment. Subtenant
shall be responsible for, the maintenance and repair of the Furniture during
the Term, but Sublandlord shall pay the personal property taxes with respect
thereto. Provided no default, beyond applicable notice and cure periods, under
the terms of this Sublease is then-existing, Subtenant shall have an option,
exercisable by delivering written notice thereof to Sublandlord no later than
the date that is sixty (60) days before the Expiration Date, to purchase, for
$10.00, the Furniture on an “as-is”, “where-is” basis, without warranty, except
as to ownership free and clear of all liens created by or through Sublandlord
based on the best of Sublandlord’s then-current knowledge, upon expiration of
the Prime Lease, pursuant to the terms of a bill of sale reasonably acceptable
to both parties. Otherwise, Subtenant shall remove and return the Furniture to
Sublandlord upon the expiration or earlier termination of this Sublease, or, at
Sublandlord’s option in the event this Sublease terminates prior to the
Expiration Date, surrender the Furniture to Sublandlord at the Demised Premises
in its then existing and configured condition.

 

8.             Security.

 

a.             Phase I Security System. On
the Phase 22 Building Commencement Date, Sublandlord shall transfer to
Subtenant all of Sublandlord’s right, title and interest in and to the
electronic card reader system and security cameras currently serving the
Demised Premises (the “Phase I Security System”)
for the sum of $1.00. Such transfer will be on an “as-is” “where-is” basis,
without warranty except as to ownership free and clear of all liens based on
the best of Sublandlord’s then-current knowledge, and, in confirmation of the
foregoing, Sublandlord will deliver to Subtenant a fully executed bill of sale
in substantially the form of Exhibit G
attached hereto. Subject to the terms of the Prime Lease, Subtenant may, in its
sole discretion, determine the vendor or vendors it will use in connection with
the operation, maintenance, and repair of the Phase I Security System or any
other security system used by Subtenant as permitted hereunder (any such new
security system, a “New Security System”). On the
Building 22 Commencement Date, Subtenant shall at Subtenant’s cost, provide
access cards to Sublandlord and its employees, and any other subtenant of
Sublandlord occupying space in the buildings listed on Exhibit E
attached hereto and such subtenants’ permitted assignees or sub-subtenants (such
third parties collectively “Access Parties”),
for use in connection with the Cafeteria (as defined in Section 19
below) and/or the Fitness Center (as defined in Section 19
below), in each case pursuant to and in accordance with Section 19
below. Within fifteen (15) days after the Building 22 Commencement Date,
Sublandlord shall provide Subtenant with a list of all individuals or Access
Parties to whom Sublandlord has provided or intends to provide active access
cards and the corresponding code numbers of the cards held by each individual
or Access Party. Sublandlord agrees to promptly provide Subtenant with
reasonable notice of any changes to the information on such list. Additionally,
Sublandlord shall obtain from the Access Parties and deliver to Subtenant, a
similar list of all individuals to whom such Access Parties 

 

6

 

have provided or intend
to provide access cards and will promptly forward any updated information
received from such Access Parties to Subtenant. Subtenant shall be solely
responsible and liable for the operation of the Phase I Security System and for
any failure in the performance of such system or any other New Security System.
Notwithstanding the foregoing, Subtenant will permit Sublandlord, its agents,
and representatives, to enter the Demised Premises, without charge therefor to
Sublandlord and without diminution of the rent payable by Subtenant, (i) to
examine, inspect and protect the Demised Premises, and (ii) to otherwise comply
with and carry out Sublandlord’s obligations under the Prime Lease. In
connection with any such entry, Sublandlord shall (A) use commercially
reasonable efforts to minimize the disruption to Subtenant’s use of the Demised
Premises, and (B) give Tenant reasonable advance written or email notice of
such entry which shall not be less than twenty-four (24) hours advanced notice
(except in the event of an emergency). Subtenant may, at its option, require
that Sublandlord be accompanied by a representative of Subtenant during any
such entry (except in the case of emergency).

 

b.             Security System for Phase II
Buildings. Effective as of the Building 22 Commencement Date,
Sublandlord shall transfer to Subtenant all of Sublandlord’s right, title and
interest in and to the Phase II security system as described in Section 4 of
the Side Agreement (the “Phase II Security System”)
for the sum of $1.00. Such transfer will be on an “as-is” “where-is” basis,
without warranty except as to ownership free and clear of all liens based on
the best of Sublandlord’s then-current knowledge, and, in confirmation of the
foregoing, Sublandlord will deliver to Subtenant a fully executed bill of sale
in substantially the form of Exhibit G
attached hereto.

 

9.             Obligations Under the Prime Lease.

 

a.             Incorporation of Prime Lease. This
Sublease and Subtenant’s rights under this Sublease shall at all times be
subject to and is made upon all of the terms, covenants, and conditions of the
Prime Lease, with the same force and effect as if fully set forth herein at
length, and except as otherwise expressly provided for in this Sublease,
Subtenant shall keep, observe and perform or cause to be kept, observed and
performed, faithfully all those terms, covenants and conditions of Sublandlord
under the Prime Lease with respect to the Demised Premises. The parties
specifically agree that any provisions relating to any construction obligations
of “Prime Landlord” under the Prime
Lease, are hereby deleted; provided, however, the foregoing provision shall in
no way be construed as limiting Sublandlord’s obligation to use commercially
reasonable, good faith efforts to be enforce, pursuant to Section 9(b)
below, the obligations of Prime Landlord under the Prime Lease, including,
without limitation, the obligations of Prime Landlord set forth in Section 8(a) of the Prime Lease. For the purposes of this
Sublease and for purposes of the Prime Lease as applied to the Subtenant, all
references to the Premises in the Prime Lease shall be deemed to refer only to
the Demised Premises, all references to the “Term”
or “initial Term” therein all refer to
the Term under this Sublease, all references to “Landlord”
therein shall, except as provided otherwise herein and subject to the first
sentence of Section 9(b) of this Sublease,
refer to Sublandlord, excluding any such references to “Landlord”
under Article 40 of the Prime Lease and
further excluding any liabilities assumed by Landlord under the Prime Lease
that are not expressly assumed by Sublandlord hereunder; and all references to “Tenant” therein shall refer to
Subtenant except as expressly set forth herein. In addition, all
representations, warranties, and obligations of Tenant 

 

7

 

with respect to “Tenant Improvements” under the Prime
Lease shall be deemed to be representations, warranties, and obligations of
Subtenant with respect to the “Initial Improvements”
under this Sublease. Notwithstanding the foregoing, the following provisions of
the Prime Lease are hereby expressly excluded and shall not be incorporated in
this Sublease: Basic Lease Information pertaining to Tenant, Tenant’s Address,
the permitted uses of the Demised Premises, Scheduled Occupancy Date, Scheduled
Rent Commencement Date, Expiration Date, Monthly Base Rent, Base Rent
Adjustments, Security Deposit, Broker and Broker’s Fees; Sections
1(b); 3 (except that the definition of “Occupancy
Date” in Section 3(a) is
incorporated herein, all but the first three (3) sentences of Section 3(b) are incorporated herein but are subject to the
limitations set forth in Section 9(b) of
this Sublease; Section 4(b); subsection (iii) in Section  13, subsection
(iii) in Section  21(a);
21(b); 21(e)(2);
34; 38,
39; 40(d),
43, 44,
and Exhibit “D”. In addition, (1)
references to “Tenant” in the first sentence
of Section 4(a)(1) shall mean only
Sublandlord; and (2) references to “Landlord”
in Section 1(d), Section 5
(with respect only to “Landlord’s”
assumption of the management of the Premises and Common Area), Section 8(a), Section 9 (with
respect only to Landlord’s maintenance, repair and replacement obligations but
not with respect to the limitations on Landlord’s liability set forth in Section 9(f) of the Prime Lease), Section
12(e), Section 17 and Section 23 shall mean only Prime Landlord. Finally, in
addition, for purposes of this Sublease, the reference to “Occupancy
Date”, as first described in Section 3(a)
of the Prime Lease, and used throughout the Prime Lease, shall mean the
Delivery Date with respect to the Building 22 Office Space and, with respect to
the remainder of the Demised Premises, the date on which Sublandlord delivers
the remainder of the Demised Premises to Subtenant in accordance with the terms
of this Sublease. Further, notwithstanding the foregoing, all grace periods
specified in the Prime Lease shall, for purposes of determining compliance by
Subtenant with the provisions hereof, be each reduced by (i) three (3) days for
all grace periods ten (10) days or longer, (ii) two (2) days for all grace
periods less than ten (10) days and longer than five (5) days, and (iii) one
(1) day for all grace periods of five (5) days or shorter. Sublandlord shall
have all of the rights of Prime Landlord under the Prime Lease as against
Subtenant. Anything in the Prime Lease to the contrary notwithstanding, and
excluding Sublandlord’s indemnity obligations under Section 11
hereof, the liability of Sublandlord for its obligations under this Sublease
shall in no event exceed (i) the aggregate of all Base Rent payable by
Subtenant hereunder during the twenty-four (24) month period immediately
preceding the applicable event giving rise to such Sublandlord liability, or
(ii) if twenty-four (24) months have not passed at the time of such event, the
calculation of the twenty-four (24) month aggregate of all Base Rent payable by
Subtenant shall be based on the Base Rent payable by Subtenant during the month
in which such event occurs. No personal liability shall at any time be asserted
or enforceable against Sublandlord’s stockholders, directors, officers or
partners on account of any of Sublandlord’s obligations or actions under this
Sublease.

 

b.             Sublandlord’s Obligations. Sublandlord
does not assume any obligation to perform the terms, covenants, conditions,
provisions and agreements contained in the Prime Lease on the part of Prime
Landlord to be performed. In the event Prime Landlord shall fail to perform any
of the terms, covenants, conditions, provisions and agreements contained in the
Prime Lease on its part to be performed, Sublandlord shall have no liability to
Subtenant. Notwithstanding anything to the contrary contained in this Sublease,
Sublandlord shall use commercially reasonable, good-faith efforts to enforce
the obligations of Prime Landlord under the Prime Lease, and such efforts shall
include, without limitation: (i) upon Subtenant’s written 

 

8

 

request, notifying Prime
Landlord of any nonperformance under the Prime Lease and requesting that Prime
Landlord perform its obligations thereunder; and (ii) after the time for Prime
Landlord to cure a breach has expired, cooperating with Subtenant, at Subtenant’s
sole cost and expense, to enforce Prime Landlord’s obligations, which
cooperation shall include, in cases of any uncured breach by Prime Landlord
that, in Subtenant’s reasonable opinion, materially impairs the conduct of
Subtenant’s business operations within the Demised Premises, instituting legal
proceedings so long as Subtenant is not in default, beyond any applicable
notice and cure periods, of its payment obligations under this Section 9(b), in the name of Subtenant with legal counsel
selected by Sublandlord and reasonably approved by Subtenant, to enforce the
aforesaid unperformed, material Prime Landlord obligation under the Prime Lease
(including executing such documents as may be reasonably required by such legal
counsel). Sublandlord and Subtenant shall be entitled to jointly control the
conduct of the litigation; provided, however that in the conduct of any such
litigation, both Sublandlord and Subtenant shall have an obligation to act in a
commercially reasonable manner and with the goal of employing a strategy which
is designed to secure performance of the aforesaid unperformed, material Prime
Landlord obligation under the Prime Lease, provided no action, including
settlement, may be taken or required by either party in connection with such
litigation to the extent such action may materially and adversely affect the
other party’s rights or obligations under the Prime Lease or Sublease without
such other party’s consent, which shall not be unreasonably withheld,
conditioned, or delayed. All costs incurred in connection with any enforcement
action (including reasonable attorneys’ fees and consultant and expert witness
fees) undertaken by Sublandlord at the request of Subtenant shall be paid to
Sublandlord by Subtenant, as Additional Rent, upon Sublandlord’s delivery to
Subtenant of reasonably detailed invoices therefor. In the event of any dispute
regarding responsibility for payment of such costs, or any dispute regarding
whether either party is acting in a commercially reasonable manner and with the
goal of employing a strategy which is designed to secure, subject to the
conditions above, performance of the aforesaid unperformed, material Prime
Landlord obligation under the Prime Lease, such dispute shall be resolved by
arbitration as set forth in Article 41 of
the Prime Lease. Subtenant shall indemnify Sublandlord against, and hold
Sublandlord harmless from, all costs, expenses, claims, counter-claims,
cross-claims, losses, and liabilities incurred by Sublandlord in connection
with any initiation of litigation by Sublandlord pursuant to the foregoing
provisions, except to the extent such litigation is caused by Sublandlord’s default
under this Sublease or, to the extent not caused by Subtenant, by Sublandlord’s
default under the Prime Lease. The execution of this Sublease and Prime
Landlord’s consent thereto, shall not relieve Sublandlord of any of its
obligations to Prime Landlord under the Prime Lease. A copy of the Prime Lease
is attached hereto and made a part hereof as Exhibit C.

 

10.          Insurance. Subtenant
shall obtain and at all times during the term hereof maintain, at its sole cost
and expense, policies of insurance required by Article 12
of the Prime Lease. Subtenant shall deliver to Sublandlord certificates of such
insurance at the beginning of the term of this Sublease. All such insurance
policies shall name Sublandlord and Prime Landlord and any other entity named
in Article 12 of the Prime Lease as additional insureds, as their interests may
appear.

 

9

 

11.          Liability for Hazardous Materials.

 

a.             Obligations. Pursuant
to Article 40, of the Prime Lease,
Subtenant is aware that the Demised Premises are subject to remediation orders
issued by the U.S. Environmental Protection Agency (“EPA”)
as set forth on Exhibit L to the Prime Lease. Subtenant
acknowledges receipt of copies of the reports listed on Schedule 1
to such Exhibit L and has been provided
sufficient opportunity to review the additional reports listed on Schedule 2 to such Exhibit L. Subtenant
agrees to comply with all obligations of “Tenant”
under such Article 40, including, without
limitation, the restrictions and disclosure requirements set forth in Section 40(f) and, for the avoidance of doubt, Subtenant
acknowledges and agrees that all limitations on the rights of “Tenant” under Article 40
of the Prime Lease shall apply to and similarly limit the rights of Subtenant
hereunder. Subtenant releases Sublandlord and Prime Landlord from any liability
for, and waives all claims against Sublandlord and Prime Landlord, and shall
indemnify, defend and hold harmless Sublandlord, its agents, servants,
contractors and employees, and all Landlord Parties (as defined in the Prime
Lease) against any and all claims, suits, loss, costs and other liabilities
described in and subject to Section 40(b)
of the Prime Lease.

 

b.             Prime Landlord Indemnity. Sublandlord
shall defend, (with counsel reasonably acceptable to Subtenant) indemnify and
hold Subtenant harmless, to the extent Subtenant incurs any loss, cost, or
liability or is subject to any third party claim or regulatory order, that
Prime Landlord indemnifies Sublandlord for under Section
40(c) of the Prime Lease. Sublandlord hereby agrees to use diligent,
good-faith efforts, so long as Subtenant is not in default, beyond any
applicable notice and cure periods, of its payment obligations under this Section 11(b), to enforce such indemnity obligations, which
efforts shall include, without limitation, where reasonably necessary, the
commencement and/or prosecution of litigation. Sublandlord and Subtenant shall
be entitled to jointly control the conduct of the litigation; provided, however
that in the conduct of any such litigation, both Sublandlord and Subtenant
shall have an obligation to act in a commercially reasonable manner and with
the goal of employing a strategy which is designed to secure performance of the
aforesaid indemnity obligation of Prime Landlord under Section
40(c) of the Prime Lease, provided no action, including settlement,
may be taken or required by either party in connection with such litigation to
the extent such action may materially and adversely affect the other party’s
rights or obligations under the Prime Lease or this Sublease without such other
party’s consent, which shall not be unreasonably withheld, conditioned, or
delayed. All costs incurred in connection with any enforcement action
(including reasonable attorneys’ fees and consultant and expert witness fees)
undertaken by Sublandlord hereunder (shall be paid to Sublandlord by Subtenant,
as Additional Rent, upon Sublandlord’s delivery to Subtenant of reasonably
detailed invoices therefor. In the event of any dispute regarding
responsibility for payment of such costs, or any dispute regarding whether
either party is acting in a commercially reasonable manner and with the goal of
employing a strategy which is designed to secure, subject to the conditions above,
performance of the aforesaid indemnity obligation of Prime Landlord under Section 40(c) of the Prime Lease, such dispute shall be
resolved by arbitration as set forth in Article 41 of
the Prime Lease. Subtenant shall indemnify Sublandlord against, and hold
Sublandlord harmless from, all costs, expenses, claims, counter-claims,
cross-claims, losses, and liabilities incurred by Sublandlord in connection
with any initiation of litigation by Sublandlord pursuant to the foregoing
provision, except to the extent such litigation is caused by Sublandlord’s
default under 

 

10

 

this Sublease or, to the
extent not caused by Subtenant, by Sublandlord’s default under the Prime Lease.
Notwithstanding the foregoing, in the event Prime Landlord extends the
indemnity rights granted under Section 40(c)
of the Prime Lease to Subtenant pursuant to a written agreement, Sublandlord’s
indemnity obligations under this Section 11(b)
shall automatically terminate and be of no further force or effect.

 

c.             Seller Indemnity. Sublandlord
shall defend, (with counsel reasonably acceptable to Subtenant) indemnify and
hold Subtenant harmless, to the extent Subtenant incurs any loss, cost, or
liability or is subject to any third party claim or regulatory order that
Seller indemnifies Sublandlord for under the Seller Indemnity described in Section 40(d) of the Prime Lease. Sublandlord hereby agrees
to use diligent, good-faith efforts, so long as Subtenant is not in default,
beyond any applicable notice and cure periods, of its payment obligations under
this Section 11(c), to enforce such
indemnity obligations, which efforts shall include, without limitation, where
reasonably necessary, the commencement and/or prosecution of litigation. Sublandlord
and Subtenant shall be entitled to jointly control the conduct of the
litigation; provided, however that in the conduct of any such litigation, both
Sublandlord and Subtenant shall have an obligation to act in a commercially
reasonable manner and with the goal of employing a strategy which is designed
to secure performance of the aforesaid indemnity obligation of Seller under the
Seller Indemnity, provided no action, including settlement, may be taken or
required by either party in connection with such litigation to the extent such
action may materially and adversely affect the other party’s rights or
obligations under the Prime Lease or Sublease without such other party’s
consent, which shall not be unreasonably withheld, conditioned; or delayed. All
costs incurred in connection with any enforcement action (including reasonable
attorneys’ fees and consultant and expert witness fees) undertaken by
Sublandlord hereunder shall be paid to Sublandlord by Subtenant, as Additional
Rent, upon Sublandlord’s delivery to Subtenant of reasonably detailed invoices
therefore. In the event of any dispute regarding responsibility for payment of
such costs, or any dispute regarding whether either party is acting in a
commercially reasonable manner and with the goal of employing a strategy which
is designed to secure, subject to the conditions above, performance of the
aforesaid indemnity obligation of Seller under the Seller Indemnity, such
dispute be resolved by arbitration as set forth in Article 41
of the Prime Lease. Subtenant shall indemnify Sublandlord against, and hold
Sublandlord harmless from, all costs, expenses, claims, counter-claims,
cross-claims, losses, and liabilities incurred by Sublandlord in connection
with any initiation of litigation by Sublandlord pursuant to the foregoing
provisions, except to the extent such litigation is caused by Sublandlord’s
default under this Sublease or, to the extent not caused by Subtenant, by
Sublandlord’s default under the Prime Lease. Notwithstanding the foregoing, in
the event Seller extends the indemnity rights granted in the Seller Indemnity
to Subtenant pursuant to a written agreement, Sublandlord’s indemnity
obligations under this Section 10(c)
shall automatically terminate and be of no further force or effect.

 

d.             Sublandlord’s Indemnity. Sublandlord
shall indemnify, defend (with counsel reasonably acceptable to Subtenant), and
hold Subtenant harmless from and against any loss, cost, liability, or any
third party claim or regulatory order to the extent arising from or in connection
with the use, generation, treatment, storage, disposal or discharge of
Hazardous Materials by Sublandlord, its agents, employees, or contractors in
violation of any Environmental Law.

 

11

 

12.          Security Deposit.

 

a.             Form of Security Deposit. Within
five (5) days of the execution and delivery of this Sublease, Subtenant shall
deliver to Sublandlord as collateral security (and not prepaid rent) for the
payment by Subtenant of all Base Rent and Additional Rent due hereunder and the
performance by Subtenant of all other obligations, covenants and agreements set
forth in this Sublease a security deposit in the amount of                                            
(the “Security Deposit”) in the
form of an unconditional, irrevocable letter of credit (“LOC’).
At any time during the Term, Subtenant shall have the right to replace the LOC
with a cash security deposit in the required amount, and within three (3)
business days after the receipt of such cash security deposit by Sublandlord,
Sublandlord shall return the LOC, undrawn, to Subtenant.

 

b.             Letter of Credit Security Deposit. Any
such LOC shall be issued by an LOC Bank (as hereinafter defined) selected by
Subtenant and reasonably acceptable to Sublandlord. An LOC Bank is a bank that
accepts deposits, maintains accounts, has an office in the City of Mountain
View, California that will negotiate a letter of credit, and the deposits of
which are insured by the Federal Deposit Insurance Corporation. Subtenant represents
and warrants that, at the time of issuance of any LOC hereunder by Wells Fargo
Bank, such bank shall be an LOC Bank. Accordingly, Sublandlord hereby
acknowledges and agrees that Wells Fargo Bank is an acceptable LOC Bank. Subtenant
shall pay all expenses, points or fees incurred to obtain the LOC. The LOC
shall provide that drafts will be honored on sight if accompanied by a
statement signed by Sublandlord asserting either (i) that Subtenant is in
default, beyond applicable notice and cure periods, under this Sublease or that
Subtenant is in default under this Sublease and is not entitled to a notice
and/or cure period for the applicable default, and that Sublandlord is entitled
to draw upon the LOC pursuant to the terms of this Sublease, or (ii) Subtenant
failed to renew or replace the LOC at least thirty (30) days prior, to its
expiration date. The LOC shall provide that it is freely transferable by
Sublandlord, without charge and without recourse, to the assignee or transferee
of Sublandlord’s interest in the Demised Premises, and that the LOC Bank will
confirm the same to Sublandlord and such assignee or transferee upon request. The
LOC shall be automatically renewable on an annual basis, subject to the
reduction provisions of the last sentence of Section
12(a) above, during the Term and for thirty (30) days following the
expiration or earlier termination of this Sublease. If Subtenant fails to renew
or replace any LOC at least thirty (30) days prior to its expiration,
Sublandlord may, without prejudice to any other remedy it has and upon ten (10)
days’ written notice to Subtenant, draw on all of the LOC and such drawn amount
shall be held as a cash Security Deposit.

 

c.             Rights and Obligations of Parties. If
any sum payable by Subtenant to Sublandlord shall be due and owing beyond
applicable notice and cure periods, or if Sublandlord makes any payments on
behalf of Subtenant due to Subtenant’s default hereunder beyond applicable
notice and cure periods, or if Subtenant fails, beyond applicable notice and
cure periods, to perform any of its other obligations under this Sublease, then
Sublandlord, at its option, and without prejudice to ground and underlying
leases, and to all mortgages and deeds of trust which may now or hereafter
affect such leases, the leasehold estate or estates thereby created or the real
property of which the Demised Premises form a part, and to any and all
renewals, modifications, consolidations, replacements and extensions thereof.

 

12

 

13.          [MISSING PAGE 14]

 

14.

 

15.          Quiet Enjoyment. Sublandlord
covenants and agrees with Subtenant that, upon Subtenant paying the Base Rent
and Additional Rent reserved in this Sublease and observing and performing all
the terms, covenants and conditions of this Sublease on Subtenant’s part to be
observed and performed, Subtenant may peaceably and quietly enjoy the Demised
Premises during the Term of this Sublease, in accordance with the terms,
covenants and conditions of this Sublease, but subject to the exceptions,
reservations and conditions hereof.

 

16.          Alterations. Except
as expressly provided in Exhibit B
attached hereto, Subtenant shall not make any alterations, additions, or other
physical changes in or about the Demised Premises without the consent of
Sublandlord, which shall not be unreasonably withheld or delayed, and Prime
Landlord in accordance with Article 8 of
the Prime Lease. Upon the written request of Subtenant in accordance with Section 8(e) of the Prime Lease and prior to the installation
of the applicable Initial Improvements or other Alterations hereunder,
Sublandlord shall request that Prime Landlord notify Sublandlord of Prime
Landlord’s election to require that such Alterations be removed upon expiration
or earlier termination of the Prime Lease. If Prime Landlord Delivers
Sublandlord a notice of its intent to exercise, or not exercise, such election
pursuant Section 8(e) of the Prime Lease,
Sublandlord will promptly deliver such notice to Subtenant and such election
shall be deemed to be an election by Sublandlord to require Subtenant to remove
or not to remove (as stated in Prime Landlord’s election notice) such
Alterations upon expiration or earlier termination of this Sublease. Any
failure by Prime Landlord to notify Sublandlord of Prime Landlord’s election to
require removal of such Alterations shall be deemed Prime Landlord’s election
to require such removal of the Alterations pursuant to Section 8(e)
of the Prime Lease, and, therefore, shall further be deemed to be an election by
Sublandlord to require Subtenant to remove such Alterations upon expiration or
earlier termination of this Sublease.

 

17.          Assignments and Further Subleases.

 

a.             Restriction on Transfers. Subtenant
agrees that it will not assign or encumber, or permit to be encumbered, its
rights or interests under this Sublease, nor sublet the whole or any part of
the Demised Premises, directly or indirectly, by operation of law, a change of
control transaction, or otherwise, without the prior written consent of Prime Landlord
in accordance with the Prime Lease, and the consent of Sublandlord, which shall
not be unreasonably withheld or delayed. Without limiting Sublandlord’s rights
hereunder, Sublandlord shall in no event consent to a proposed sublease for
less than a contiguous, full-floor within the Demised Premises. In the event
that Subtenant shall be permitted to either assign or sublet the Demised
Premises, and excluding any Permitted Transfers hereunder, all Net Profits (as
defined in the next sentence) realized from such assignment or sublease shall
be split equally between the Sublandlord and the Subtenant, after the Prime
Landlord’s share, if any, is deducted out of such amounts pursuant to Section 11(e) of the Prime Lease. As used herein, “Net Profits” shall mean any sums
received by Subtenant in excess of the amounts payable by Subtenant to
Sublandlord, on a per-square-foot basis, for the applicable term pursuant to
this Sublease after deducting from such excess only the actual and reasonable,
third-party, out of pocket expenses incurred by 

 

13

 

Subtenant in connection
with such assignment or subletting, together with the actual, fair market
rental or sales proceeds received by Subtenant that are equitably allocable to
the sale or rental of Subtenant’s personal property (but not to the furniture
described on Exhibit D or the Initial
Improvements) to the assignee or sublessee (all such deducted expenses and
proceeds shall be referred to herein as the “Deducted
and Unrelated Costs”). All Deducted and Unrelated Costs shall be
amortized, on a straight-line basis, over the period commencing on the date
such costs are incurred and expiring on the Expiration Date. Subtenant shall
use commercially reasonable efforts to provide Sublandlord reasonable advance
notice of Subtenant’s calculations of any Net Profits and Deducted and
Unrelated Costs but, in all cases, shall have an obligation to provide
Sublandlord such calculations on or before the date of delivery to Sublandlord
of the assignment or sublease agreement for which Sublandlord’s consent is
requested hereunder. As used herein, “change of control
transaction” shall mean any transaction or series of
transactions resulting in (i) the transfer of control of Subtenant, other than
by reason of death, or, (ii) if Subtenant is a corporation, the direct or
indirect change in the control of Subtenant or in the ownership by the
stockholders or an affiliated group of stockholders of fifty percent (50%) or
more of the outstanding stock as of the date of the execution and delivery of
this Sublease. As used in this Section 17, “control” means the power to direct
or cause the direction of the day-to-day management and policies of a company,
whether through the ownership of voting securities, or partnership or
membership interests, by contract, by interlocking boards of directors, or
otherwise. Notwithstanding anything to the contrary contained in this Sublease,
any transfer or issuance of stock over the New York Stock Exchange, the American
Stock Exchange, or NASDAQ shall not be deemed an assignment, subletting or
other transfer of this Sublease or the Demised Premises requiring Sublandlord’s
consent for purposes of this Section 17.

 

b.             Permitted Transfers. Provided
Subtenant is not then in default of its obligations under this Sublease and
provides Sublandlord no less than thirty (30) days’ prior written notice of the
applicable Permitted Transfer, Subtenant shall have the right to assign this
Sublease without Sublandlord’s consent (but subject to Prime Landlord’s consent
to the extent required under the Prime Lease) pursuant to a Permitted Transfer
permitted under Section 11(g) of the Prime Lease. Notwithstanding
any such assignment, the original Subtenant shall remain liable for performance
and compliance with all of the terms, conditions and provisions of this
Sublease. Except as expressly provided otherwise in this Section 17
above, Article 11 of the Prime Lease shall
apply to and govern all assignments, and sublettings, encumbrances, and
transfers of the Demised Premises or Subtenant’s interest therein, and all
attempts to effect the foregoing, it being the intent of the parties that this Section 17 supplements, but does not supersede, Article 11 of the Prime Lease.

 

c.             Sublandlord’s Right to Transfer. In
addition, Subtenant acknowledges and agrees that, as between Sublandlord and
Subtenant, Sublandlord shall be entitled to freely assign this Sublease and its
interest in the Demised Premises so long as such transfer is not a default
under the Prime Lease, and the proposed assignee assumes in writing the
obligations of Sublandlord under this Sublease that are based on or arise out
of events or conditions occurring on or after the date of any such assignment. In
such event, the Sublandlord named herein shall not be liable to Subtenant for
any obligations or liabilities based on or arising out of events or conditions
occurring on or after the date of any such transfer. Furthermore, Subtenant
agrees to attorn to any such transferee upon all the terms and conditions of
this Sublease.

 

14

 

d.             Additional Conditions. Notwithstanding
anything to the contrary contained in this Sublease, Sublandlord shall have no
right to terminate this sublease pursuant to Section
11(c) of the Prime Lease, or to recapture the Demised Premises
pursuant to Section 11(d) of the Prime
Lease. However, nothing in the preceding sentence shall be deemed to modify or
terminate Prime Landlord’s rights with respect to Sections
11(c), (d) and (e) of
the Prime Lease. For the avoidance of doubt, Sublandlord and Subtenant
acknowledge and agree that Subtenant shall have no right to sublease the
Demised Premises pursuant to Section 17(h)
of the Prime Lease and that such provision is expressly excluded from this
Sublease.

 

18.          Parking.

 

Subject to and in
accordance with Article 36 of the Prime Lease,
Subtenant shall be entitled to use, on a non-exclusive basis during the Term,
the parking spaces available to Sublandlord within the parking facilities
serving Phase I (the “Parking Facilities”).
Subtenant and its agents, employees, contractors and invitees shall comply with
Article  36
of the Prime Lease and all reasonable rules and regulations promulgated by
Sublandlord and Prime Landlord for the safe and orderly functioning of the
Parking Facilities.

 

19.          Cafeteria and Fitness Center
Facilities.

 

a.             Transfer of Operation and Control. Sublandlord
will continue operating the existing retail cafeteria facility within the
Building 22 Cafeteria Space (the “Cafeteria”),
and the fitness center facility located within the Building 22 Fitness Center
Space, together with the outdoor volleyball, basketball and hockey courts
within Phase I (collectively, the “Fitness Center”)
until April 30, 2005 (the “Amenity Transfer Date”)
in accordance with the terms of Section 5 of
the Side Agreement. The terms of the Side Agreement, including without
limitation, Subtenant’s obligation to pay the Monthly Fitness Center Fee as
defined in Section 5(b) thereof, shall continue
to govern Subtenant’s use of the Cafeteria and Fitness Center through and
including the Amenity Transfer Date. Notwithstanding anything to the contrary
in the Side Agreement, the Side Agreement shall automatically terminate, and
the Side Agreement Term (as defined in the Side Agreement) shall automatically
expire at midnight (PST) on the Amenity Transfer Date, without requiring
further action on the part of Sublandlord or Subtenant. Prior to the Amenity
Transfer Date, Subtenant agrees to cooperate with Sublandlord to ensure that
Sublandlord’s third party contracts for the operation of the Cafeteria and
Fitness Center are terminated and replaced by Subtenant’s contracts by the
Building 22 Commencement Date and facilitate uninterrupted operation of the
Cafeteria and Fitness Center. On the Building 22 Commencement Date, Subtenant
shall assume control and operation of the Cafeteria and Fitness Center subject
to the terms of this Section 19, and
Sublandlord shall no longer be required to provide such amenities for the
remainder of the Term.

 

b.             Cafeteria and Fitness Center
Equipment. Provided no default, beyond applicable notice and
cure periods, then exists under the terms of this Sublease, Sublandlord will
convey title to the equipment located within the Cafeteria Space and the
Fitness Center Space owned by Sublandlord and used in connection with Cafeteria
and Fitness Center operations, all as more particularly described on Exhibit F attached hereto (hereinafter, the “Cafeteria Equipment” and the “Fitness Center Equipment,” as
applicable) on the Building 22 Commencement Date at no additional cost to
Subtenant. Sublandlord will convey the Cafeteria 

 

15

 

Equipment and Fitness
Center Equipment on an “as-is”, “where-is” basis, without warranty, except as
to ownership free and clear of all liens created by or through Sublandlord
based on the best of Sublandlord’s then-current knowledge, pursuant to the
terms of a bill of sale in substantially the form of Exhibit G
attached hereto.

 

c.             Operations During the Amenities
Period. During the four (4) year period from and after the
Building 22 Commencement Date (the “Amenities Period”),
Subtenant shall: (i) continuously operate the Cafeteria and Fitness Center as
they currently are being operated by Sublandlord without materially changing
the operating hours or making other material modifications to the Cafeteria and
Fitness Center operations, and (ii) permit Sublandlord, America Online, Inc.
and their respective employees (collectively, the “Sublandlord
Parties”), and the Access Parties to access and use the
Cafeteria and Fitness Center without charge to the Sublandlord Parties or such
Access Parties subject to and in accordance with this Section 19.
Notwithstanding the foregoing, Subtenant shall have the right up to two (2)
times in any calendar year during the Term, upon forty-eight (48) hours’ prior
notice to Sublandlord and the Access Parties, to close the Cafeteria for up to
twenty-four (24) hours for Subtenant-only events. Also notwithstanding the
foregoing, Subtenant shall have the option, exercisable upon delivery of at
least sixty (60) days’ prior written notice to Sublandlord, to close and cease
operations of the Fitness Center at any time after the end of the thirty-sixth
(36th) month of the Amenities Period. Subtenant’s exercise of the
foregoing option is conditioned upon Subtenant paying a termination fee to
Sublandlord in the amount of $25,000.00 simultaneously with delivery of written
notice of the termination. Subtenant may elect to discontinue operations of the
Cafeteria and/or Fitness Center altogether or to limit usage to Subtenant’s
employees, officers, directors, consultants, customers and visitors (the “Subtenant Parties”) at any time
after the expiration of the Amenities Period without paying a termination fee
to Sublandlord. In the event that Subtenant elects to continue operations of
the Cafeteria and/or Fitness Center after the Amenities Period expires, the
Sublandlord Parties may continue using such facilities subject to Sublandlord
and Subtenant agreeing upon mutually acceptable terms and conditions applicable
to such use prior to the expiration of the Amenities Period.

 

d.             Cafeteria. During
the Amenities Period, the Sublandlord Parties, and the Access Parties shall
have the right to use the Cafeteria on a non-exclusive basis during the
Cafeteria’s regular hours of operation. Sublandlord’s employees and the Access
Parties shall be required to comply with all reasonable rules and regulations
with respect to the Cafeteria, as reasonably promulgated by Subtenant from time
to time and shall be responsible for paying for all Cafeteria purchases when
ordered. Additionally, the Sublandlord Parties, but not the Access Parties,
shall receive a twenty-percent (20%) discount (“Discount”)
on all Cafeteria purchases calculated based upon the published and/or public
food and beverage prices charged by Subtenant. Subtenant shall have the right
to request from the Sublandlord Parties reasonable identification in connection
with the granting of the Discount. In addition, the Discount shall not be
applicable to catering or to bulk purchases of food requested by the
Sublandlord Parties. Except to the extent caused by the negligence or willful
misconduct of Subtenant, its agents, employees or contractors, Sublandlord
hereby releases Subtenant and agrees to indemnify, defend and hold Subtenant
harmless from and against any liability arising from the use of the Cafeteria
during the Amenities Period by the Sublandlord Parties (but not the Access
Parties), including, without limitation, any claims asserted or caused by the
Sublandlord Parties or their invitees.

 

16

 

e.             Fitness Center and Outdoor Courts. During
the Amenities Period, subject to subsection (c)
above, up to 100 employees of the Access Parties and up to 450 of the
Sublandlord Parties shall have the right to use the Fitness Center on a
non-exclusive basis during its regular hours of operation at no additional cost
to the Sublandlord Parties. Subtenant shall be permitted to condition the
Access Parties’ use of the Fitness Center upon the Access Parties paying a
fitness center fee directly to Subtenant in an amount not to exceed the amounts
specified for each Access Party on Exhibit E
hereto. Sublandlord shall not be liable for payment or collection of such
fitness center fees or any costs incurred by Subtenant in connection therewith,
but in the event of non-payment of the fitness center fee, Subtenant shall have
the right to deny the Access Parties access to the Fitness Center. The
Sublandlord Parties and the Access Parties shall be required to comply with all
reasonable rules and regulations as promulgated by Subtenant from time to time
with respect to the Fitness Center. Except to the extent caused by the
negligence or willful misconduct of Subtenant, its agents, employees or
contractors, Sublandlord hereby releases Subtenant and agrees to indemnify,
defend and hold Subtenant harmless from and against any liability arising from
the use of the Fitness Center during the Amenities Period by the Sublandlord
Parties (but not the Access Parties), including, without limitation, any claims
asserted or caused by the Sublandlord Parties or their invitees.

 

20.          Signage. Subject to
the signage rights granted to Sublandlord, as tenant, under Article 42 of the Prime Lease and to the provisions of Article 8 of the Prime Lease, Subtenant shall have the
right, at Subtenant’s sole cost and expense, to install and display its company
name on the exterior of each Building, the entry doors of each Building, and
within the lobby of each Building, in each case, subject to the terms of the
Prime Lease and provided Subtenant has obtained the prior written consent of
Sublandlord, which shall not be unreasonably withheld or delayed, and Prime
Landlord pursuant to the provisions of the Prime Lease, including, without
limitation, Article 42 thereof.

 

21.          Compliance. Subtenant
covenants and agrees that Subtenant will not do anything which would constitute
a default under the Prime Lease or omit to do anything which Subtenant is
obligated to do under the terms of this Sublease and which would constitute a
default under the Prime Lease.

 

22.          Notices. Any notice,
demand or other communication which must or may be given or made by either
party hereto shall be in writing and shall be in accordance with the provisions
of the Prime Lease, addressed:

 

In the case of Subtenant, prior to the Commencement
Date, to:

 

Mercury Interactive Corporation

379 N. Whisman Road

Mountain View, California

Attn: Vice President and General Counsel

Fax: 650/584-3572

 

17

 

In the case of Sublandlord, to:

 

c/o America Online, Inc.

22110 Pacific Boulevard

Dulles, Virginia 20166

Attn: Director of Real Estate

Fax: 703/265-1509

 

With a copy (default notices only) to:

 

c/o America Online, Inc.

22000 AOL Way

Dulles, Virginia 20166-9323

Attn: Legal Department

Fax: 703/265-1008

 

Either party may, by
notice to the other given as aforesaid, designate a new or additional address
to which any such notice, demand or other communication thereafter shall be
given, made or mailed. Any notice, demand or communication given hereunder
shall be deemed delivered when actually received.

 

23.          Indemnity.

 

a.             Sublandlord’s Indemnity. Sublandlord
agrees to perform its obligations to Prime Landlord under the Prime Lease (to
the extent those obligations are not made the obligation of Subtenant hereunder
and to the extent such performance is not adversely affected by a Subtenant default
hereunder), including, without limitation, the obligation to pay all rent
required to be paid by “Tenant” to
Prime Landlord in accordance with the terms of the Prime Lease, in order to
keep the Prime Lease in full force and effect during the entire Term of this
Sublease; subject, however, to any earlier Termination of the Prime Lease not
caused by Sublandlord or caused by Subtenant. Sublandlord shall promptly
provide Subtenant copies of all default notices relative to the Demised
Premises received by Sublandlord from Prime Landlord during the Term. Further,
in addition to Sublandlord’s other indemnification obligations hereunder,
Sublandlord agrees to indemnify, defend and hold Subtenant free and harmless
from and against any and all claims and related liabilities, judgments, causes
of action, damages (including reasonable attorneys’ fees), costs and expenses
incurred by or claimed against Subtenant to the extent arising out of (i) any
default by Sublandlord under this Sublease (through no fault of Subtenant);
(ii) any default by Sublandlord of Sublandlord’s remaining obligations under
the Prime Lease (through no fault of Subtenant); and/or (iii) the gross
negligence or willful misconduct of Sublandlord or any of its agents, employees
or contractors. Subtenant shall provide notice to Sublandlord of any claim for
which it is seeking indemnification hereunder promptly after it actually
becomes aware of such claim, and Sublandlord shall defend such claim with
counsel reasonably acceptable to Subtenant. Subtenant shall, at Sublandlord’s
sole cost and expense, cooperate with Sublandlord in the prosecution of such
defense.

 

b.             Subtenant’s indemnity. Subtenant
agrees (i) to comply with all provisions of this Sublease and, to the extent
incorporated into this Sublease, the Prime Lease; 

 

18

 

and (ii) to perform all
the obligations on the part of the “Tenant” to
be performed under the terms of the Prime Lease with respect to the Demised
Premises to the extent incorporated herein. In addition to Subtenant’s other
indemnification obligations hereunder, Subtenant shall indemnify, defend, and
hold Sublandlord free and harmless from and against any and all claims and
related liabilities, judgments, causes of action, damages (including reasonable
attorneys’ fees), costs and expenses incurred by or claimed against Sublandlord
to the extent arising out of (i) any default by Subtenant under this Sublease
(through no fault of Sublandlord); (ii) any default by Subtenant under the Prime
Lease (through no fault of Sublandlord), to the extent incorporated into this
Sublease; (iii) the gross negligence of willful misconduct of Subtenant or any
of its agents, employees, contractors or invitees, and/or (iv) any accident,
injury, or damage to any person or property occurring on or after the Delivery
Date within the Demised Premises, except to the extent caused by the negligence
or willful misconduct of Sublandlord, its agents, employees, or contractors. Sublandlord
shall provide notice to Subtenant of any claim for which it is seeking
indemnification hereunder promptly after it actually becomes aware of such
claim, and Subtenant shall defend such claim with counsel reasonably acceptable
to Sublandlord. Sublandlord shall, at Subtenant’s sole cost and expense,
cooperate with Subtenant in the prosecution of such defense.

 

The indemnification
obligations set forth in this Section and elsewhere in this Sublease (and the
Prime Lease to the extent incorporated herein) shall survive the expiration or earlier
termination of this Sublease, and no indemnification set forth in this Sublease
or, as between Sublandlord and Subtenant, the Prime Lease, shall include the
obligation to indemnify either for punitive damages or, (excluding the
indemnification set forth in Section 25
below), for consequential damages (e.g., lost profits or lost business opportunity).
In addition, except as expressly provided otherwise in this Sublease, neither
party shall have any liability to the other party hereunder for any indirect,
consequential, or punitive damages. Subtenant covenants and agrees that
Subtenant will not do anything which would constitute a default under the Prime
Lease or omit to do anything which Subtenant is obligated to do under the terms
of this Sublease and which would constitute a default under the Prime Lease.

 

24.          Surrender. Not later
than the Expiration Date, Subtenant shall quit and surrender to Sublandlord the
Demised Premises, broom clean and in as good order and condition as they were
on the Commencement Date and, to the extent excepted under the Prime Lease,
excepting ordinary wear and tear, acts of God, casualty, condemnation, and
alterations with respect to which neither Sublandlord nor Prime Landlord has a
right to require removal, or the payment of the costs of removal, as set forth
in this Sublease or the Prime Lease. In connection with the foregoing,
Subtenant shall remove from the Demised Premises all of its property including,
without limitation, the Furniture (subject to Section 7
above), the Fitness Equipment and the Cafeteria Equipment. In addition, and
notwithstanding anything to the contrary in Section 9
of this Sublease, Subtenant hereby expressly assumes all restoration and
removal obligations of “Tenant”
under the Prime Lease, including, without limitation, the obligation to pay for
the removal of any Alterations and other improvements from the Demised Premises
to the extent Sublandlord is required to make such payments to Prime Landlord
pursuant to the terms of the Prime Lease. Subtenant’s obligations to perform
and observe the foregoing covenants shall survive the expiration or other
termination of the Term of this Sublease. If the last day of this Sublease
shall fall on a Saturday, Sunday or legal holiday, this Sublease shall expire on
the last business day preceding such last day, provided, however, that if
Subtenant and Prime Landlord 

 

19

 

have executed and
delivered a direct lease with a commencement date immediately following the Expiration
Date and Prime Landlord has signed and delivered to Sublandlord a written
waiver of any and all obligations of Tenant under the Prime Lease to comply
with the obligations described in the foregoing provisions, Subtenant shall not
be required to comply with the provisions of this Section, and may remain in
the Demised Premises through the last day of the term of the Prime Lease.

 

25.          Holdover. Subtenant
shall surrender the Demised Premises on or before the Expiration Date without
any delay. In the event Subtenant does not immediately surrender the Demised
Premises on the Expiration Date, Subtenant’s continued possession shall be on
the basis of a tenancy at the sufferance of the Sublandlord. In such event,
Subtenant shall continue to comply with and perform all of the terms and
obligations of this Sublease except that the Rent payable during each month or
portion thereof shall be equal to One Hundred Fifty Percent (150%) of the Rent
payable during the last full month prior to the expiration or termination of
the Sublease, as applicable. Subtenant shall be liable to Sublandlord for, and
shall indemnify and hold Sublandlord harmless against, all damage which
Sublandlord suffers because of any holding over by Subtenant, including without
limitation, all claims made against Sublandlord resulting from Sublandlord’s
delay in delivering possession of the Demised Premises to Prime Landlord. Notwithstanding
anything to the contrary contained in this Sublease, if Subtenant and Prime
Landlord have executed and delivered a direct lease with a commencement date
immediately following the Expiration Date and Prime Landlord has signed and
delivered to Sublandlord a written waiver of Prime Landlord’s rights under Article 16 of the Prime Lease, Subtenant may remain in the Demised
Premises through the last day of the term of the Prime Lease without being
subject to the provisions of this Section 25.

 

26.          Brokers. Sublandlord
and Subtenant each represent and warrant that neither has dealt with any
brokers or consultants in connection with this transaction, except for (i)
Roger Gage, Matt Hargrove, Mike Shellow and Janet Polanchyck, collectively
of Cushman & Wakefield, Inc. of California, Sublandlord’s exclusive “Leasing Broker” for this Sublease,
and (ii) Bruce McLellan of McLellan Commercial Real Estate, Inc., Subtenant’s
exclusive “Tenant Broker” for this
Sublease. Sublandlord shall pay all commissions due such brokers pursuant to a
separate agreement with the Leasing Broker and Tenant Broker. Each party shall
hold and save the other harmless of and from any and all loss, costs, damage,
injury or expense arising out of or in any way related to claims for any other
real estate brokers, sales persons or finder’s commissions or fees based upon
allegations made by the claimant that it is entitled to such a fee from the
indemnified party arising out of contact with the indemnified party or alleged
introductions of the indemnifying party to the indemnified party.

 

27.          Confidentiality. Each
party agrees to hold the material terms and conditions of this Sublease and the
transactions contemplated or permitted hereby, including, without limitation,
any assignment of this Sublease, strictly confidential. Accordingly, except to
the extent required by law, including, without limitation, any law requiring
Subtenant or Sublandlord to disclose all or certain terms of this Sublease in a
filing required by the Securities and Exchange Commission or any successor
thereto, or by court order (in the case of a court order, following advanced
written notice to the non-disclosing party), neither party shall, without the
other party’s prior written consent, release, publish or otherwise distribute
(and shall not authorize or permit any other person or entity to release,
publish or otherwise distribute) any 

 

20

 

information concerning
the material terms or conditions of the Sublease, or the transactions
contemplated or permitted hereby, to any person or entity, including, without
limitation, any other subtenant or potential subtenant of Sublandlord or other
occupant of Sublandlord’s space in Mountain View, California. Notwithstanding
the foregoing, each party may disclose such information to the its prospective
lenders, legal and financial advisors, accountants, engineers or other persons
if and to the extent such persons have a legitimate business purpose for
needing such information in furtherance of, or consistent with, the
transactions contemplated hereby and provided that such persons agree to hold
such information strictly confidential to the same degree as if such persons
were bound by the provisions of this Section 27. The
terms of this Section 27 shall survive the
expiration or earlier termination of this Sublease for a period of five (5)
years.

 

28.          Prime Landlord Consent. This
Sublease and the obligations of Sublandlord and Subtenant under this Sublease
and the Work Letter Agreement are expressly conditioned upon receipt of the
prior written consent of Prime Landlord to this Sublease, the form and content
of which shall: (a) be acceptable to Sublandlord and Subtenant in their
reasonably exercised discretion, (b) constitute a consent to this Sublease by
Prime Landlord as required by Article 11 of
the Prime Lease, and (c) contain an acknowledgement that the Demised Premises
may be used by Subtenant for customer training and sales presentation purposes.
Notwithstanding the foregoing, Subtenant and Sublandlord shall be deemed to
have accepted, for purposes of subsection (a) above, a consent to this Sublease
by Prime Landlord if such consent satisfies the conditions set forth in
subsections (b)-(c), unless such consent contains additional terms that are not
customary in the current Mountain View leasing market for comparable buildings
and, if agreed to by Subtenant and/or Sublandlord, would materially and
adversely change Subtenant’s rights or obligations hereunder. In addition,
Sublandlord shall use commercially reasonable efforts, at no cost or expense to
Sublandlord, to obtain a subordination, nondisturbance and attornment agreement
from Prime Landlord for the benefit of Subtenant or the inclusion of
subordination, nondisturbance, and attornment language within the written
consent to this Sublease signed and delivered by Prime Landlord.

 

29.          General Provisions.

 

(a)           Benefit and Burden. The
covenants, conditions, agreements, terms and provisions herein contained shall
be binding upon, and shall inure to the benefit of, the parties hereto and each
of their respective personal representatives, successors, heirs, executors,
administrators and assigns.

 

(b)           Governing Law. It
is the intention of the parties hereto that this Sublease (and the terms and
provisions hereof) shall be construed and enforced in accordance with the laws
of the State of California.

 

(c)           Entire Agreement. This
Sublease, which includes all exhibits attached hereto, contains all of the
covenants, agreements, terms, provisions, conditions, warranties and
understandings relating to the leasing of the Demised Premises and Sublandlord’s
obligations in connection therewith, and neither Sublandlord nor any agent or
representative of Sublandlord has made or is making, and Subtenant in executing
and delivering this Sublease is not relying upon, any warranties,
representations, promises or statements whatsoever, except to the extent
expressly set forth in this Sublease. All understandings and agreements, if
any, heretofore had 

 

21

 

between the parties are
merged to this Sublease, which alone fully and completely expresses the
agreement of the parties. The failure of Sublandlord or Subtenant to insist in
any instance upon the strict keeping, observance or performance of any
covenant, agreement, term, provision or condition of this Sublease or to
exercise any election herein contained shall not be construed as a waiver or
relinquishment for the future of such covenant, agreement, term, provision,
condition or election, but the same shall continue and remain in full force and
effect. No waiver or modification of any covenant, agreement, term, provision
or condition of this Sublease shall be deemed to have been made unless
expressed in writing and signed by Subtenant and Sublandlord. No surrender of
possession of the Demised Premises or of any part thereof or of any remainder
of the Term shall release Subtenant from any of its obligations hereunder
unless accepted by Sublandlord in writing. The receipt and retention by
Sublandlord of monthly Base Rent or Additional Rent from anyone other than
Subtenant shall not be deemed a waiver of the breach by Subtenant of any
covenant, agreement, term or provision of this Sublease, or as the acceptance
of such other person as a tenant, or as a release of Subtenant of the
covenants, agreements, terms, provisions and conditions herein contained. The
receipt and retention by Sublandlord of monthly Base Rent or Additional Rent
with knowledge of the breach of any covenant, agreement, term, provision or
condition herein contained shall not be deemed a waiver of such breach.

 

(d)           Conflicts Between this Sublease and
the Prime Sublease. With respect to the relationship between
the Sublandlord and the Subtenant, the terms and conditions of this Sublease
shall take precedence with respect to any conflict between the terms and
conditions contained herein and the terms and conditions of the Prime Lease. As
between Sublandlord and Prime Landlord, nothing herein shall be construed in
any way to affect the rights and obligations of the Sublandlord and the Prime
Landlord under the Prime Lease.

 

(e)           Captions. The
captions throughout this Sublease are for convenience of reference only and the
words contained therein shall in no way be held or deemed to define, limit,
describe, explain, modify, amplify or add to the interpretation, construction
or meaning of any provision of or the scope or intent of this Sublease, nor in
any way affect this Sublease.

 

(f)            Singular and Plural. Wherever
appropriate herein, the singular includes the plural and the plural includes
the singular.

 

(g)           Counterparts; Facsimile. This
Sublease may be executed in several counterparts, but all counterparts shall
constitute but one and the same instrument. The parties agree and intend that a
signature delivered by facsimile machine shall bind the party so signing with
the same effect as though the signature were an original signature.

 

(h)           No Recordation. Neither
this Sublease nor any short-form memorandum or version hereof shall be recorded
by either party.

 

30.          Release and Waiver of Subrogation. Notwithstanding
anything to the contrary contained in this Sublease or the Prime Lease,
Sublandlord shall use diligent efforts during the first twelve (12) months of
the Term to obtain a written agreement from Prime Landlord providing that the
release of subrogation provisions set forth in the last two sentences of Article 13 of the Prime Lease shall be deemed an
agreement between Prime Landlord and 

 

22

 

Subtenant as if Subtenant
were “Tenant” under the Prime Lease.
In addition, subject to Section 9(a)
above, the release and waiver of subrogation provisions of Article 13
of the Prime Lease shall be deemed to apply to Sublandlord and Subtenant as if
they were respectively “Landlord”
and “Tenant” thereunder; provided,
however, for purposes of construing such release and waiver provisions as
incorporated herein, the parties acknowledge and agree that Sublandlord shall
have no obligation to maintain the insurance requirements of “Landlord” under the Prime Lease but
rather shall be required to continue to maintain the insurance requirements of “Tenant” thereunder.

 

31.          Right to Cure. Notwithstanding
anything to the contrary contained in this Sublease or the Prime Lease, in the
event that Sublandlord defaults in the performance or observance of any of Sublandlord’s
obligations under the Prime Lease (to the extent not the obligation of
Subtenant hereunder or caused by Subtenant’s default hereunder) or this
Sublease, or fails to perform Sublandlord’s stated obligations under Section 9(b) of this Sublease and such default or failure,
in Subtenant’s reasonable opinion, materially impairs the conduct by Subtenant
of its business operations in the Demised Premises, then Subtenant shall give
Sublandlord notice specifying in what manner Sublandlord has defaulted, and if
such default shall not be cured by Sublandlord within a reasonable time, but in
no event longer than thirty (30) days thereafter (except that if such default
cannot be cured within said period, this period shall be extended for an
additional reasonable time, provided that Sublandlord commences to cure such
default within such period and proceeds diligently thereafter to effect the
cure as quickly as reasonably practicable), then Subtenant shall be entitled,
at Subtenant’s option, to cure such default and promptly collect from
Sublandlord the reasonable, out-of-pocket expenses actually incurred by
Subtenant in curing such default. Subtenant shall not be required, however, to
wait the entire cure period described herein if earlier action is required to comply
with the Prime Lease or with any applicable governmental law, regulation or
order. For the avoidance of doubt, the parties acknowledge and agree that the
foregoing self-help remedies shall not be construed as exclusive remedies of
Subtenant and that an- exercise of such remedies pursuant to the terms set
forth herein shall not be deemed to constitute a waiver of any other remedies
available to Subtenant under this Sublease or applicable law.

 

32.          Amendment or Modification. Notwithstanding
anything to the contrary contained in this Sublease or the Prime Lease,
Sublandlord shall not amend or modify the Prime Lease in any way so as to
materially and adversely affect Subtenant or its interest hereunder, materially
increase Subtenant’s obligations hereunder or materially restrict Subtenant’s
rights hereunder, without the prior written consent of Subtenant, which may be
withheld in Subtenant’s sole but reasonably exercised discretion.

 

33.          Representations. Sublandlord
represents that, to Sublandlord’s current knowledge, (i) the copy of the Prime
Lease attached hereto is a true, correct and complete copy thereof; (ii) there
exist no amendments, or modifications to the Prime Lease (whether oral or
written) except as attached thereto; (iii) neither Sublandlord nor Prime
Landlord is in default under the provisions of the Prime Lease, nor is there
any event, condition or circumstance existing which with notice, or the passage
of time or both, would constitute a “default” thereunder; (iv) the Prime Lease
is in full force and effect and is a valid and binding obligation of
Sublandlord and of Prime Landlord, and (v) there are no pending actions, suits
or proceedings before any governmental entity, court or administrative agency
against Sublandlord that are 

 

23

 

reasonably likely to
materially and adversely affect the ability of Sublandlord to perform its
obligations under this Sublease or the Prime Lease. Subtenant represents, to
Subtenant’s current knowledge, that there are no pending actions, suits or
proceedings before any governmental entity, court or administrative agency
against Subtenant that are reasonably likely to materially and adversely affect
the ability of Subtenant to perform its obligations under this Sublease.

 

34.          Voluntary Termination. For
so long as Subtenant is not in default of its obligations under this Sublease
beyond any applicable notice and cure periods, Sublandlord shall not
voluntarily terminate the Prime Lease or surrender the Demised Premises during
the Term unless and until Prime Landlord has agreed to (i) thereafter assume
all rights and obligations of “Sublandlord” under this Sublease (a “Prime Landlord Assumption”), or (ii)
simultaneously enter into a direct lease with Subtenant (the “Direct Lease”) upon substantially
the same terms and conditions of this Sublease, including without, limitation,
the Base Rent payable by Subtenant hereunder, such that the terms and
conditions of the Direct Lease do not materially and adversely change Subtenant’s
rights or obligations under this Sublease. If Prime Landlord consents to a
Prime Landlord Assumption, Subtenant shall attorn to Prime Landlord in
connection with any such voluntary termination or surrender, and shall execute
an attornment agreement in such form as may reasonably be requested by Prime
Landlord and reasonably acceptable to Subtenant. The terms of this Section 34 shall not apply with respect to Sublandlord’s
exercise of its termination rights in the event of casualty pursuant to Sections 22 (c) or (d) of the Prime Lease, but Sublandlord
shall notify Subtenant in writing at the time Sublandlord notifies Prime
Landlord of the exercise of any such termination right.

 

35.          Acknowledgment of Sublandlord. Sublandlord
acknowledges that Subtenant intends to negotiate with Prime Landlord a Direct
Lease with a commencement date immediately following the Expiration Date of
this Sublease. Provided  that
this Sublease remains in effect as of the date on which Sublandlord’s Exercise
Notice is due pursuant to Section 43 of
the Prime Lease and that Subtenant is not in default of its obligations under
this Sublease beyond any applicable notice and cure period as of such date,
Sublandlord hereby agrees not to exercise its Option to Renew pursuant to Article 43 of the Prime Lease without the prior written
consent of Subtenant, which may be withheld in Subtenant’s sole but reasonably
exercised discretion.

 

[SIGNATURES APPEAR ON NEXT PAGE]

 

24

 

IN WITNESS WHEREOF, Sublandlord
and Subtenant have each executed this Sublease on the day and year first
hereinabove written.

 

	
   

  	
  SUBLANDLORD:

  
	
   

  	
   

  
	
   

  	
  NETSCAPE COMMUNICATIONS
  CORPORATION,

  
	
   

  	
  A DELAWARE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Bartscherer

  
	
   

  	
  Name:

  	
  Michael Bartscherer

  
	
   

  	
  Title:

  	
  Vice president,
  Corporate Services

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUBTENANT:

  
	
   

  	
   

  
	
   

  	
  MERCURY INTERACTIVE
  CORPORATION,

  
	
   

  	
  A DELAWARE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony Zingale

  
	
   

  	
  Name:

  	
  Anthony Zingale

  
	
   

  	
  Title:

  	
  President & COO

  
	
   

  	
   

  
					

 

25

 

EXHIBIT A

 

OUTLINE OF DEMISED PREMISES

 

1

 

 

2

 

 

3

 

 

4

 

 

5

 

 

6

 

 

7

 

EXHIBIT B

 

WORK LETTER AGREEMENT

 

In consideration of the mutual covenants contained in
the Sublease, of which this Exhibit B
is a part, Subtenant and Sublandlord agree that the Demised Premises shall be
improved as hereinafter set forth. Except as defined in this Work Agreement to
the contrary, all terms utilized in this Work Agreement shall have the same
meaning as the defined terms in the Sublease. The provisions of the Sublease,
except where clearly inconsistent or inapplicable to this Work Agreement, are
hereby incorporated into this Exhibit B.

 

1.             General. The
purpose of this Work Agreement is to set forth how the Initial Improvements in
the Demised Premises as set forth on the Construction Documents, as defined
below in Section 2(c), are to be designed and
constructed. Notwithstanding the terms of this Work Agreement, Subtenant
acknowledges and agrees that any construction of the Initial Improvements
permitted in this Exhibit B shall
also be subject to the terms and provisions of the Prime Lease, including,
without limitation, Article 8
thereof.

 

2.             Initial Improvement Plans.

 

(a)           Base Building Tenant Improvement
Standards. Sublandlord has submitted a copy of the Tenant
Improvement Standards (“Standards”)
to Subtenant and Subtenant stipulates that such Standards, together with
additional information Subtenant has received and/or developed, are sufficient
to allow Subtenant’s contractors and consultants to prepare all necessary
layout, design, engineering, and construction plans for the full and complete
construction of the Initial Improvements. The Standards are listed on the
attached Schedule I. Subtenant, in designing and
constructing its Initial Improvements, must use materials which are equal to or
better than the quality of the materials specified on Schedule I.

 

(b)           Development and Approval of Plans. Subtenant
shall employ, at its sole cost and expense, architects, engineers and/or other
design contractors (each a “Design Professional”),
to prepare and deliver to Sublandlord (i) on or before December 31, 2005 for
Building 22, (ii) on or before December 31, 2006 for Building 21, and (iii) on
or before December 31, 2007 for Building 20, space plans, architectural plans,
engineering plans, and other customary project documents (collectively, the “Project Plans”) showing in specific
detail the Initial Improvements that Subtenant desires to make in the Demised
Premises. Each of Subtenant’s Design Professional(s) shall be duly licensed and
subject to Sublandlord’s prior written approval, which approval shall not be
unreasonably withheld or delayed, and shall be conditioned on the Design
Professional’s reputation for quality of work, timeliness of performance,
integrity and Sublandlord’s prior experience (if any) with such Design
Professional, and to Prime Landlord’s approval in accordance with the terms of
the Prime Lease. The foregoing Project Plans shall be subject to Sublandlord’s
approval, which approval shall not be unreasonably withheld, conditioned, or
delayed, and to Prime Landlord’s approval pursuant to the terms of the Prime
Lease. Once received by Sublandlord, Sublandlord shall (i) submit the Project
Plans to the Prime Landlord for approval; and (ii) review the Project Plans and
notify Subtenant, within seven (7) business days, if Sublandlord has any
material objections. In the event that either Sublandlord or Prime Landlord has
material objections, Subtenant shall revise 

 

1

 

the Project Plans only as
to such objections and shall, within three (3) business days of Subtenant’s
receipt of such objections, resubmit them to Sublandlord, for Sublandlord’s and
Prime Landlord’s review and approval, in which event, the foregoing procedure
shall be repeated until Sublandlord and Prime Landlord ultimately approve the
Project Plans.

 

(c)           Construction Documents. As
approved, the Project Plans shall be deemed the “Construction
Documents.” Subtenant shall reimburse Subandlord, as Additional
Rent under the Sublease, Sublandlord’s actual and reasonable costs, including
any charges payable to Prime Landlord pursuant to Section 8(f)
of the Prime Lease, as demonstrated by Sublandlord’s invoice(s) therefor or
other reasonably-detailed documentation, incurred in connection with the
preparation, review and approval of the Project Plans. Deliveries of the
Project Plans (or any subpart thereof) shall be delivered by messenger service,
by personal hand delivery or by overnight parcel service.

 

(d)           Standards for Sublandlord’s Approval.
Sublandlord’s criteria for approvals of the Project Plans
shall be based on reasonable criteria established from time to time by
Sublandlord. Without limiting the generality of the foregoing, Sublandlord will
automatically be deemed to have acted reasonably if a Sublandlord disapproval
is predicated upon (i) Prime Landlord’s disapproval of the Project Plans; (ii)
non-compliance with the terms of the Sublease or Prime Lease; (iii) any affect
on the structural integrity of any Building, (iv) reasonably anticipated damage
to any Building’s mechanical, electrical, plumbing or HVAC systems,
(v) non-compliance with applicable laws, codes, regulations, or generally
accepted industry standards, (vi) failure to use materials equal to or better
than those required by Schedule I
pertaining to Standards, and (vii) any affect on the exterior appearance of any
Building (“Approved Criteria”). While
Sublandlord has the right to approve the Project Plans, Sublandlord’s interest
in doing so is to protect each Building’s and Sublandlord’s interests. Accordingly,
Subtenant shall not rely upon Sublandlord’s approvals and Sublandlord shall not
be the guarantor of, nor responsible for, the correctness or accuracy of any
such Project Plans, or the compliance thereof with applicable laws, statutes,
codes, ordinances, rates, and regulations (collectively “Laws”),
and Sublandlord shall incur no liability or cost of any kind by reason of
granting such approvals.

 

(e)           Change Orders. In
the event that Subtenant requests or approves of any changes to the
Construction Documents (each, a “Change Order”),
Sublandlord shall not unreasonably withhold or delay its consent to any such
Change Order, but subject to the Approval Criteria listed above.

 

(f)            Standards of Performance. Subtenant
represents and warrants that all Design Professionals and Contractors (as
defined in Section 4 below) performing work
relating to the Initial Improvements shall (i) comply with all Laws, (ii) be
familiar with each Building (including all systems therein) and the Standards,
and (iii) exercise due care and diligence in the performance of services
relating to the Initial Improvements and shall perform such services in a good
and workmanlike manner. In addition, the Project Plans shall clearly identify
any impact of such plans on the structure, equipment, appearance, or systems of
each Building.

 

3.             Permits. Subtenant
shall be responsible for obtaining all governmental approvals of the
Construction Documents to the full extent necessary for the issuance of a
building permit 

 

2

 

for the Initial
Improvements based upon such Construction Documents. Thereafter, Subtenant
shall also cause to be obtained all other necessary approvals and permits from
all governmental agencies having authority over the construction and
installation of the Initial Improvements in accordance with the approved
Construction Documents and shall undertake all steps necessary to insure that
the construction of the Initial Improvements is accomplished in strict
compliance with all Laws applicable to such construction and the requirements
and standards of any insurance underwriting board, inspection bureau, or
insurance carrier insuring the Demised Premises pursuant to the Sublease.

 

4.             Construction. Subtenant
shall employ an outside contractor or contractors of Subtenant’s choice (each a
“Contractor”) to construct the
Initial Improvements in substantial conformance with the Construction Documents.
Each of Subtenant’s Contractor(s) and all lower-tier contractors shall be duly
licensed and subject to Sublandlord’s prior written approval, which approval
shall not be unreasonably withheld or delayed and shall be conditioned on the
contractor’s reputation for quality of work, timeliness of performance,
integrity and Sublandlord’s prior experience (if any) with such contractor, and
Prime Landlord’s approval in accordance with the terms of the Prime Lease. Subtenant
shall pay for the entire cost of design and construction of the Initial
Improvements (including the supply of all materials thereto) and all permits,
review and approval fees in connection therewith. Subtenant shall use its
Contractor or Contractors to commence construction of the Initial Improvements
within thirty (30) days following Sublandlord’s and Prime Landlord’s approval
of the Project Plans, or following’ plan approval by the City of Mountain View,
whichever is later, and shall use reasonable commercial efforts to cause the
Initial Improvements to be completed no later than twelve (12) months
thereafter. Subtenant, each Subtenant Contractor and the performance of all
work relating to the Initial Improvements shall be subject to the following
conditions:

 

(a)           Sublandlord and
Prime Landlord and their respective agents shall each have the right to inspect
the construction of the Initial Improvements during the progress thereof, at
reasonable times and without unreasonable interference with the construction of
the Initial Improvements, it being the intent of the parties hereto that
Sublandlord shall be reasonable in its inspection of the construction of the
Initial Improvements and that Sublandlord shall recognize, to the extent
commercially reasonable and practicable, the necessity of field changes based
on field conditions. However, neither the privilege herein granted to
Sublandlord to make such inspections, nor the making of such inspections by
Sublandlord, shall operate as a waiver of any rights of Sublandlord to require
good and workmanlike construction and improvements erected in accordance with
the Construction Documents and the Prime Lease.

 

(b)           The Initial
Improvements shall, be constructed in accordance with the Construction
Documents and the Prime Lease, and Subtenant or Subtenant’s Contractor(s) shall
submit schedules of all work relating to the Initial Improvements to
Sublandlord before any such Contractor may be approved by Sublandlord. Subtenant
shall abide by all rules made by Prime Landlord or reasonably made by Sublandlord
with respect to the use of parking and loading areas, storage of materials, and
any other matter in connection with this Work Agreement, including, without
limitation, the construction of the Initial Improvements.

 

(c)           Subtenant’s
Contractors and the respective subcontractors and sub-subcontractors performing
any part of the Initial Improvements shall guarantee to Subtenant and 

 

3

 

for the benefit of
Sublandlord and Prime Landlord that the portion of the Initial Improvements for
which such contractor is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. All such warranties or guarantees as to materials
or workmanship of or with respect to the Initial Improvements shall be
contained in the applicable contract or subcontract and shall be written such
that such guarantees or warranties shall inure to the benefit of Prime
Landlord, Sublandlord, and Subtenant, as their respective interests may appear,
and can be directly enforced by any such parties.

 

5.             Default. Any
default by either party under the terms of this Work Agreement shall constitute
a default under the Sublease. Each party shall have any and all rights to
remedy such defaults of the other party pursuant to the provisions of the
Sublease.

 

6.             Reasonable Diligence. Both
Sublandlord and Subtenant agree to use reasonable diligence in performing all
of their respective obligations and duties under this Work Agreement and in
proceeding with the construction and completion of the Initial Improvements in
the Demised Premises.

 

7.             Insurance Requirements.

 

(a)           General Coverages. Subtenant
shall require all Subtenant’s Contractors and all other lower-tier contractors
(i.e., subcontractors and sub-subcontractors) to carry worker’s compensation
insurance covering all of their respective employees, and to carry public
liability insurance, including property damage, all with limits, in form and
with companies as are required to be carried by Subtenant as set forth in Section 10 of the Sublease.

 

(b)           Special Coverages. Subtenant
shall carry “Builder’s All Risk” insurance in an amount approved by Sublandlord
covering the construction of the Initial Improvements, and such other insurance
as Sublandlord reasonably may require, it being understood and agreed that the
Initial Improvements shall be insured by Subtenant pursuant to Section 10 of the Sublease immediately upon completion
thereof. Such insurance shall be in amounts and shall include such extended
coverage endorsements as may be reasonably required by Sublandlord including,
but not limited to, the requirement that all of Subtenant’s Contractors and
lower-tier contractors shall carry excess liability and Products and Completed
Operation Coverage insurance, each in amounts not less than $500,000 per
incident, $1,000,000 in aggregate, and in form and with companies as are
required to be carried by Subtenant as provided in Section 10
of the Sublease.

 

(c)           General Terms. Certificates
for all insurance carried pursuant to this Work Agreement must comply with the
requirements of Section 10 of the Sublease and
shall be delivered to Sublandlord before the commencement of construction of
the Initial Improvements and before the Contractor’s equipment is moved into
the Demised Premises. In the event that the Initial Improvements are damaged by
any cause during the course of the construction thereof, Subtenant shall
immediately repair the same at Subtenant’s sole cost and expense. Subtenant’s
Contractors and all lower-tier contractors shall maintain all of the foregoing
insurance coverage in force until the Initial Improvements are fully completed
and accepted by Sublandlord, except for any Products and Completed Operation
Coverage insurance required by Sublandlord, which 

 

4

 

is to be maintained for
ten (10) years following completion of the work and acceptance by Sublandlord
and Subtenant. All policies carried under this Section 7
shall insure Prime Landlord, Sublandlord, and Subtenant, as their interests may
appear, as well as the Contractor. All insurance, except Workers’ Compensation,
maintained by Subtenant’s Contractors and all lower-tier contractors shall
preclude subrogation claims by the insurer against anyone insured thereunder. Such
insurance shall provide that it is primary insurance as respects the owner and
that any other insurance maintained by owner is excess and noncontributing with
the insurance required hereunder.

 

8.             Notice of Completion; Copy of
Record Set of Plans. Within ten (10) days after completion of
construction of the Initial Improvements, Subtenant shall cause a Notice of
Completion to be recorded in the office of the Recorder of Santa Clara County
in accordance with Section 3093 of the Civil Code of the State of California or
any successor statute, and shall furnish a copy thereof to Sublandlord upon
such recordation. If Subtenant fails to do so, Sublandlord may execute and file
the same on behalf of Subtenant as Subtenant’s agent for such purpose, at
Subtenant’s sole cost and expense. At the conclusion of construction, (i)
Subtenant shall cause the Design Professionals and Contractors (A) to update
the Construction Documents as necessary to reflect all changes made to the
Construction Documents during the course of construction, (B) to certify to the
best of their knowledge that the “record-set”
of as-built drawings are true and correct, which certification shall survive
the expiration or termination of this Sublease, and (C) to deliver to
Sublandlord two (2) sets of copies of such record set of drawings and one (1)
additional electronic copy (in .dwg format in accordance with AIA layering
standards) within ninety (90) days following issuance of a certificate of
occupancy for the Demised Premises, and (ii) Subtenant shall deliver to
Sublandlord a copy of all warranties, guaranties, and operating manuals and
information relating to the improvements, equipment, and systems in the Demised
Premises.

 

5

 

SCHEDULE I TO

 

EXHIBIT B

 

TENANT IMPROVEMENT STANDARDS

 

 

GENERAL TENANT IMPROVEMENT STANDARDS

 

ACOUSTICAL CEILINGS:

 

2 x 4 flat white T-Bar
grid with drop-in ceiling tiles (rated as required). Tenant may provide specifications
for ceiling tiles, subject to Landlord’s approval. Compression post and seismic
wires as required by code, All required light wires.

 

Open ceiling plan
permitted, subject to Landlord approval.

 

CARPET & RESILIENT FLOORING:

 

	
  Carpet:

  	
   

  	
  28 oz. loop pile glue
  down carpet

  
	
   

  	
   

  	
   

  
	
  Base:

  	
   

  	
  2” to 4” rubber base
  (top set base at resilient floors).

  
	
   

  	
   

  	
   

  
	
  Resilient:

  	
   

  	
  Armstrong Stonetex

  

 

PAINT:

 

Two coats of paint over
prime coat. Standard manufacturers are Kelly Moore, Sinclair or equal.

 

WALL COVERINGS:

 

Walls shall have a smooth
finish.

 

Not otherwise
specifically required by Landlord.

 

PLUMBING:

 

Coffee bar sinks with
single handle faucets, 2 1/2 gallon under counter hot water or other
arrangements acceptable to Landlord.

 

HVAC:

 

Tenant to provide design
by licensed mechanical engineer based on design criteria by Super Symmetry. The
design is subject to Landlord’s approval.

 

FIRE SPRINKLERS:

 

Base Building
Improvements include mains and up heads at the structure. Tenant Improvements
include all necessary drop heads with semi-recessed chrome heads with white
escutcheons. Drop heads to be tile-centered where possible and otherwise placed
in aesthetically pleasing locations.

 

CASEWORK:

 

Base cabinets with
Countertops - Flush overlay construction, plastic laminate exteriors, drawers
over doors, 6” drawer fronts, one selply shelf adjustable on 32 mm pins, 4”
back splash, 4” painted plywood base, locking rail behind face frame between
doors and drawers (no locks, unless specifically requested), 2’-3” deep, 3’-0”
high, polished chrome wire pulls, hinges adjustable with 170 degrees opening,
shelf span not to exceed 32”, countertops to be plywood under plastic laminate.

 

1

 

Wall Cabinets - Flush
overlay construction laminate exteriors, mounted from 4’-8” above finished
floor to 7’-6” above finished floor, seal top with backing material, two selply
shelves adjustable on 32 mm pins, 3” apron at bottom, brushed chrome wire
pulls, hinges adjustable with 170 degree opening, shelf span not to exceed 32”.

 

Standard Plastics
Laminates - Formica, Wilson art or Nevamar.

 

DOORS. FRAMES, HARDWARE &
GLASS:

 

	
  Doors:

  	
   

  	
  3’-0” x 9’0” x 1-3/4”
  solid core, prefinished wood (wood veneer or paint grade, rated as required).
  Proposed upgrades shall be submitted to Landlord for approval.

  
	
   

  	
   

  	
   

  
	
  Frames:

  	
   

  	
  Brushed aluminum with
  clear finish (rated as required). Sidelight frames integral with door frame
  2’-0” x 9’-0”.

  
	
   

  	
   

  	
   

  
	
  Hardware:

  	
   

  	
  Schlage lever hardware.
  Two pair butts per door. Dome floor stops. Closers, automatic flush bolts,
  astragals, and coordinators with finish to be mutually acceptable to Tenant
  and Landlord.

  
	
   

  	
   

  	
   

  
	
  Glass:

  	
   

  	
  1/4” clear tempered or
  square wired glass where required by code.

  

 

METAL FRAMING & DRYWALL

 

Corridor walls and
demising walls for bathrooms, elevator pits and stairwell enclosures/1-Hr.
construction with 3 5/8” 25 gauge metal studs, 24” on center to underside of
structure with 5/8” sheetrock on each side and R-11 batt insulation full
height.

 

Tenant demising
walls/full height (slab to structure) 3 5/8” 25 gauge metal studs, 24” on
center with R-l1 insulation and 5/8” type “X” sheetrock full height both sides
(the height of the wall may be adjusted for return air plenium).

 

Tenant interior
walls/ceiling height (floor to underside of acoustical ceiling), 3 5/8” 25
gauge studs, 24” on center with 5/8” sheetrock on each side and J-mold at top.

 

Finish: Smooth (level 4)
wall.

 

ELECTRICAL:

 

Light fixtures: 2’ x 4’
three lamp fixtures with 18 cell parabolic lenses or other fixtures mutually acceptable
to Tenant and Landlord.

 

Downlight and wall
washers as accent lighting in conference rooms and reception areas as
appropriate.

 

Exit lights: Quantity as
required by code, to be specified by Tenant subject to Landlord’s approval.

 

Outlets and switches:
Private offices receive two duplex electrical outlets, two telephone and data
outlets (ring/string) and one dual light switch. Conference rooms receive four
duplex 

 

2

 

outlets, two telephone
and data outlets (ring/string) and one dual light switch. All other rooms are
addressed based on specific layouts. Any changes to the foregoing
specifications shall be subject to approval by Landlord.

 

EXTERIOR WINDOW COVERING:

 

1” horizontal mini-blinds
at interior of each exterior window, top lock controls. Standard typical
manufactures, Levelor, Hunter-Douglas or equal. Color to be consistent
throughout the Premises and acceptable to Landlord. Alternatives may be
specified in some areas subject to Landlord’s approval.

 

CEILINGS:

 

Ceiling height on all
floors shall be a minimum of ten feet, except as otherwise approved by
Landlord.

 

Ail partitions shall be
below the ceiling grid, except as specifically indicated in Tenant’s space plan
and/or Working Drawings and approved by Landlord in Landlord’s sole discretion.

 

LIMITATION ON HARD WALL OFFICE:

 

No more than Fifty
percent (50%) of the rentable floor area on any floor of any Building shall be
enclosed as hard wall office, unless approved by Landlord at its sole discretion;
provided, however, that Tenant may exceed this limitation if Tenant agrees to
reconfigure the affected floor to such standard upon expiration or earlier
termination of this Lease.

 

SOUND INSULATION:

 

Adequate sound insulation
shall be provided for bathrooms, conference rooms and copy rooms.

 

3

 

SCHEDULE D-1

MINIMUM STANDARDS

FOR

TENANT IMPROVEMENTS

 

NETSCAPE COMMUNICATIONS
CORPORATION

464 Ellis Street •
Mountain View

Phase I

 

RESTROOMS:

 

•                  Walls & Floors - Dal Tile or
American Olean unglazed mosaic 2”x 2” ceramic tile thinset

•                  Ceramic tile wainscot- 6’-0” high @
wet walls

•                  Stipple enamel painter gyp.bd.
ceiling @ min. 9’ high.

 

SINK TOPS:

 

•                  Tile, granite or Conan

 

DRINKING FOUNTAIN:

 

•                  Haws Model HWCF8-2 Dual Heights

 

URINAL:

 

•                  American Standard Allbrook Urinal
6541.132

 

LAVATORY:

 

•                  American Standard Ovalyn Under
Counter 0470.013.

 

FAUCET:

 

•                  Kohler Triton K-7113-4B

 

TOILETS:

 

•                  Wall mounted American Standard
Elongated Cadet 9463-018 with Sloan 115 PYV flush valve.

 

4

 

TOILET ACCESSORIES:

 

	
   

  	
  •                  Paper towel
  dispenser:

  	
  Bobrick B38032

  
	
   

  	
   

  	
  (Women’s dual)

  

 

•                  Combination Unit, Toilet Seat Cover,
Toilet Tissue:

 

•      Bobrick B-3571 (Women’s single)

•      Bobrick B-357 (Women’s dual)

•      Bobrick B-3479 (Men’s single)

•      Bobrick B-3471 (Men’s dual)

 

	
   

  	
  •                  Liquid
  Soap Dispenser:

  	
  Brobrick B-822

  
	
   

  	
   

  	
  (Counter Mounted)

  
	
   

  	
   

  	
   

  
	
   

  	
  •                 Recessed
  Feminine Napkin

  	
  Brobrick B-3500

  
	
   

  	
                         Dispenser:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  •                                          Grab
  Bar:

  	
  Brobrick B-490-36

  
	
   

  	
   

  	
  Brobrick B-490-48

  

 

MIRROR OVER SINKS:

 

•                  1/4” thick float mirror wall-to-wall
from tight valance to vanity splash

 

P.L. TOILET PARTITIONS:

 

•                  Floor mounted. Additional
specifications to be provided by Tenant, subject to Landlord’s approval.

 

JANITORIAL CLOSETS (BOTH FLOORS):

 

•                  Broom/mop holder

•                  Fiberglass floor sink

•                  4’-0” high Marlite wainscot behind
sink

 

LOBBY:

 

•                  Elevator Finishes/Features:

 

•      Carpet

•      4500 lb. Front/Rear Service in Buildings 1
and 3; Front service only in Building 2

•      Wall panels - plastic laminate

•      Ceiling/Lighting - Eggcrate

 

CEREMONIAL STAIRWAY

 

•                  Carpet with or without pad

 

5

 

MISCELLANEOUS:

 

•                  Cafeteria & Health Club to be
reviewed and approved

•                  ADA Compliance required throughout
project

 

6

 

EXHIBIT C

 

OUTLINE OF SUBLEASED PREMISES

 

SECOND FLOOR

 

 

 

 

EXHIBIT C

 

OUTLINE OF SUBLEASED PREMISES

 

FIRST FLOOR

 

 

2

 

EXHIBIT D

 

WORK LETTER AGREEMENT

 

In consideration of the mutual covenants contained in
the Sub-Sub-Sublease, of which this Exhibit D is a
part, Reliant and Mercury agree that the Subleased Premises shall be improved
as hereinafter set forth. Except as defined in this Work Letter Agreement (“Workletter”) to the contrary, all
terms utilized in this Workletter shall have the same meaning as the defined
terms in the Sub-Sublease. The provisions of the Sub-Sublease, except where
clearly inconsistent or inapplicable to this Workletter, are hereby
incorporated into this Exhibit D.

 

1.             General. The
purpose of this Workletter is to set forth how the Initial Improvements in the
Subleased Premises as set forth on the Construction Documents, as defined below
in Section 2(c), are to be designed and
constructed. Notwithstanding the terms of this Workletter, Reliant acknowledges
and agrees that any construction of the Initial Improvements permitted in this Exhibit D shall also be subject to the terms and provisions
of the Prime Lease, including, without limitation, Article 8
thereof. Conceptually, the Initial Improvements shall consist of construction
of the following:  Conceptually, the
Initial Improvements shall consist of construction of the following:  (i) first floor improvements including a
testing laboratory (clinic) and restroom, not to exceed 2,300 rentable square
feet, a manufacturing area with tiled floor and benches, a manufacturing room
with a tiled floor and HEPA filters, and a warehouse area with a tiled floor,
(ii) second floor improvements including the addition of tiled floors in
several conference rooms, HEPA filters in an optics lab and the addition of a
non-firewall wall to bifurcate a conference room; (iii) the addition and
removal of several non-firewall walls and doors on the first and second floors,
and (iv) the construction of other related improvements to be shown on the
Project Plans, as defined below.

 

2.             Initial Improvement Plans.

 

a.             Base Building Tenant Improvement
Standards. Mercury has submitted a copy of the Tenant
Improvement Standards (“Standards”)
to Reliant and Reliant stipulates that such Standards, together with additional
information Reliant has received and/or developed, are sufficient to allow
Reliant’s contractors and consultants to prepare all necessary layout, design,
engineering, and construction plans for the full and complete construction of
the Initial Improvements. The Standards are listed on the attached Schedule I. Reliant, in designing and constructing its
Initial Improvements, must use materials which are equal to or better than the
quality of the materials specified on Schedule I.

 

b.             Development and Approval of Plans. Reliant
shall employ, at its sole cost and expense, architects, engineers and/or other
design contractors (each a “Design Professional”),
to prepare and deliver to Mercury, on or before October 1, 2005, space
plans, architectural plans, engineering plans, and other customary project
documents (collectively, the “Project Plans”)
showing in specific detail the Initial Improvements that Reliant desires to
make in the Subleased Premises. Each of Reliant’s Design Professional(s) shall
be duly licensed and subject to Mercury’s prior written approval, which
approval shall not be unreasonably withheld

 

1

 

or delayed, and shall be
conditioned on the Design Professional’s reputation for quality of work,
timeliness of performance, integrity and Mercury’s prior experience (if any)
with such Design Professional, and to Master Sublandlord’s approval in
accordance with the terms of the Sublease and Prime Landlord’s approval in
accordance with the terms of the Prime Lease. The foregoing Project Plans shall
be subject to Mercury’s approval, which approval shall not be unreasonably
withheld, conditioned, or delayed, and to Master Sublandlord’s approval pursuant
to the terms of the Sublease and Prime Landlord’s approval pursuant to the
terms of the Prime Lease. Once received by Mercury, Mercury shall
(i) submit the Project Plans to Master Sublandlord and Prime Landlord for
approval; and (ii) review the Project Plans and notify Reliant, within
seven (7) business days, if Mercury has any material objections. In the event
that Mercury, Master Sublandlord or Prime Landlord has material objections,
Reliant shall revise the Project Plans only as to such objections and shall,
within five (5) business days of Reliant’s receipt of such objections, resubmit
them to Mercury, for Mercury’s, Master Sublandlord’s and Prime Landlord’s
review and approval, in which event, the foregoing procedure shall be repeated
until Mercury, Master Sublandlord and Prime Landlord ultimately approve the
Project Plans.

 

c.             Construction Documents. As
approved, the Project Plans shall be deemed the “Construction
Documents.”  Reliant shall
reimburse Mercury, as Additional Rent under the Sub-Sublease, for any charges
payable to Master Sublandlord and Prime Landlord pursuant to Section 8(f) of the Prime Lease, as demonstrated by
Master Sublandlord’s and/or Prime Landlord’s invoice(s) therefore or other
reasonably-detailed documentation, incurred in connection with the preparation,
review and approval of the Project Plans. Deliveries of the Project Plans (or
any subpart thereof) shall be delivered by messenger service, by personal hand
delivery or by overnight parcel service.

 

d.             Standards for Mercury’s Approval. Mercury’s
criteria for approvals of the Project Plans shall be based on reasonable
criteria established from time to time by Mercury. Without limiting the
generality of the foregoing, Mercury will automatically be deemed to have acted
reasonably if a Mercury disapproval is predicated upon (i) Master
Sublandlord’s and/or Prime Landlord’s disapproval of the Project Plans;
(ii) non-compliance with the terms of the Sub-Sublease, the Sublease or
Prime Lease; (iii) any effect on the structural integrity of the Building,
(iv) reasonably anticipated damage to the Building’s mechanical,
electrical, plumbing or HVAC systems, (v) non-compliance with applicable
laws, codes, regulations, or generally accepted industry standards,
(vi) failure to use materials equal to or better than those required by Schedule I pertaining to Standards, and (vii) any
effect on the exterior appearance of the Building (“Approved
Criteria”). While Mercury has the right to approve the Project
Plans, Mercury’s interest in doing so is to protect Building 20 and Mercury’s
interest therein. Accordingly, Reliant shall not rely upon Mercury’s approvals
and Mercury shall not be the guarantor of, nor responsible for, the correctness
or accuracy of any such Project Plans, or the compliance thereof with
applicable laws, statutes, codes, ordinances, rates, and regulations
(collectively “Laws”), and Mercury shall
incur no liability or cost of any kind by reason of granting such approvals.

 

e.             Change Orders. In
the event that Reliant requests or approves of any changes to the Construction
Documents (each, a “Change Order”), Mercury shall
not unreasonably withhold or delay its consent to any such Change Order, but
subject to the Approval Criteria listed above.

 

2

 

f.              Standards of Performance. Reliant
represents and warrants that all Design Professionals and Contractors (as
defined in Section 4 below) performing
work relating to the Initial Improvements shall (i) comply with all Laws,
(ii) be familiar with the Building (including all systems therein) and the
Standards, and (iii) exercise due care and diligence in the performance of
services relating to the Initial Improvements and shall perform such services
in a good and workmanlike manner. In addition, the Project Plans shall clearly
identify any impact of such plans on the structure, equipment, appearance, or
systems of the Building.

 

3.             Permits. Reliant
shall be responsible for obtaining all governmental approvals of the
Construction Documents to the full extent necessary for the issuance of a
building permit for the Initial Improvements based upon such Construction
Documents. Thereafter, Reliant shall also cause to be obtained all other
necessary approvals and permits from all governmental agencies having authority
over the construction and installation of the Initial Improvements in
accordance with the approved Construction Documents and shall undertake all
steps necessary to insure that the construction of the Initial Improvements is
accomplished in strict compliance with all Laws applicable to such construction
and the requirements and standards of any insurance underwriting board,
inspection bureau, or insurance carrier insuring the Subleased Premises
pursuant to the Sub-Sublease.

 

4.             Construction. Reliant
shall employ an outside contractor or contractors of Reliant’s choice (each a “Contractor”) to construct the
Initial Improvements in substantial conformance with the Construction Documents.
Each of Reliant’s Contractor(s) and all lower-tier contractors shall be duly
licensed and subject to Mercury’s prior written approval, which approval shall
not be unreasonably withheld or delayed and shall be conditioned on the
contractor’s reputation for quality of work, timeliness of performance,
integrity and Mercury’s prior experience (if any) with such contractor, and
Master Sublandlord’s approval in accordance with the terms of the Sublease and
Prime Landlord’s approval in accordance with the terms of the Prime Lease. Reliant
shall pay for the entire cost of design and construction of the Initial
Improvements (including the supply of all materials thereto) and all permits,
review and approval fees in connection therewith, subject to the Allowance to
the extent the same may be used pursuant to the provisions below of this
Workletter to reimburse Subtenant for the foregoing costs. Reliant shall cause
its Contractor or Contractors to commence construction of the Initial
Improvements within sixty (60) days following Mercury’s, Master Sublandlord’s
and Prime Landlord’s approval of the Project Plans, or following plan approval
by the City of Mountain View, whichever is later, and shall use reasonable
commercial efforts to cause the Initial Improvements to be completed no later
than six (6) months thereafter. Reliant, each Reliant Contractor and the
performance of all work relating to the Initial Improvements shall be subject
to the following conditions:

 

a.             Mercury, Master
Sublandlord and Prime Landlord and their respective agents shall each have the
right to inspect the construction of the Initial Improvements during the
progress thereof, at reasonable times and without unreasonable interference
with the construction of the Initial Improvements, it being the intent of the
parties hereto that Mercury shall be reasonable in its inspection of the
construction of the Initial Improvements and that Mercury shall recognize, to
the extent commercially reasonable and practicable, the necessity of field
changes based on field conditions. However, neither the privilege herein granted
to Mercury to make such inspections, nor the making of such inspections by Mercury,
shall operate as a waiver

 

3

 

of any rights of Mercury to
require good and workmanlike construction and improvements erected in
accordance with the Construction Documents, the Sub-Sublease, the Sublease and
the Prime Lease.

 

b.             The Initial
Improvements shall be constructed in accordance with the Construction
Documents, the Sub-Sublease, the Sublease and the Prime Lease, and Reliant or
Reliant’s Contractor(s) shall submit schedules of all work relating to the
Initial Improvements to Mercury before any such Contractor may be approved by
Mercury. Reliant shall abide by all rules made by Master Sublandlord or Prime
Landlord or reasonably made by Mercury with respect to the use of parking and
loading areas, storage of materials, and any other matter in connection with
this Workletter, including, without limitation, the construction of the Initial
Improvements.

 

c.             Reliant’s
Contractors and the respective subcontractors and sub-subcontractors performing
any part of the Initial Improvements shall guarantee to Reliant and for the
benefit of Mercury, Master Sublandlord and Prime Landlord that the portion of
the Initial Improvements for which such contractor is responsible shall be free
from any defects in workmanship and materials for a period of not less than one
(1) year from the date of completion thereof. All such warranties or guarantees
as to materials or workmanship of or with respect to the Initial Improvements
shall be contained in the applicable contract or subcontract and shall be
written such that such guarantees or warranties shall inure to the benefit of
Prime Landlord, Master Sublandlord, Mercury, and Reliant, as their respective
interests may appear, and can be directly enforced by any such parties.

 

5.             Default. Any
default by either party under the terms of this Workletter shall constitute a
default under the Sub-Sublease. Each party shall have any and all rights to
remedy such defaults of the other party pursuant to the provisions of the
Sub-Sublease.

 

6.             Reasonable Diligence. Both
Mercury and Reliant agree to use reasonable diligence in performing all of
their respective obligations and duties under this Workletter and in proceeding
with the construction and completion of the Initial Improvements in the
Subleased Premises.

 

7.             Insurance Requirements.

 

a.             General Coverages. Reliant
shall require all Reliant’s Contractors and all other lower-tier contractors
(i.e., subcontractors and sub-subcontractors) to carry worker’s compensation
insurance covering all of their respective employees, and to carry public
liability insurance, including property damage, all with limits, in form and
with companies as are required to be carried by Reliant as set forth in Section 10 of the Sub-Sublease.

 

b.             Special Coverages. Reliant
shall carry “Builder’s All Risk” insurance
in an amount approved by Mercury covering the construction of the Initial
Improvements, and such other insurance as Mercury reasonably may require, it
being understood and agreed that the Initial Improvements shall be insured by
Reliant pursuant to Section 10
of the Sub-Sublease immediately upon completion thereof. Such insurance shall
be in amounts and shall include such extended coverage endorsements as may be
reasonably required by Mercury including, but

 

4

 

not limited to, the
requirement that all of Reliant’s Contractors and lower-tier contractors shall
carry excess liability and Products and Completed Operation Coverage insurance,
each in amounts not less than $500,000 per incident, $1,000,000 in aggregate,
and in form and with companies as are required to be carried by Reliant as
provided in Section 10 of the
Sub-Sublease.

 

c.             General Terms. Certificates
for all insurance carried pursuant to this Workletter must comply with the
requirements of Section 10 of the
Sub-Sublease and shall be delivered to Mercury before the commencement of
construction of the Initial Improvements and before the Contractor’s equipment
is moved into the Sub-Subleased Premises. In the event that the Initial
Improvements are damaged by any cause during the course of the construction
thereof, Reliant shall immediately repair the same as Reliant’s sole cost and
expense. Reliant’s Contractors and all lower-tier contractors shall maintain
all of the foregoing insurance coverage in force until the Initial Improvements
are fully completed and accepted by Mercury, except for any Products and
Completed Operation Coverage insurance required by Mercury, which is to be
maintained for ten (10) years following completion of the work and acceptance
by Mercury and Reliant. All policies carried under this Section 7
shall insure Prime; Landlord, Master Sublandlord, Mercury, and Reliant, as
their interests may appear, as well as the Contractor. All insurance, except
Workers’ Compensation maintained by Reliant’s Contractors and all lower-tier
contractors shall preclude subrogation claims by the insurer against anyone
insured thereunder. Such insurance shall provide that it is primary insurance
as respects the owner and that any other insurance maintained by owner is
excess and noncontributing with the insurance required hereunder.

 

8.             Notice of Completion; Copy of
Record Set of Plans. Within ten (10) days after completion of
construction of the Initial Improvements, Reliant shall cause a Notice of
Completion to be recorded in the office of the Recorder of Santa Clara County
in accordance with Section 3093 of the Civil Code of the State of
California or any successor statute, and shall furnish a copy thereof to
Mercury upon such recordation. If Reliant fails to do so, Mercury may execute
and file the same on behalf of Reliant as Reliant’s agent for such purpose, at
Reliant’s sole cost and expense. At the conclusion of construction,
(i) Reliant shall cause the Design Professionals and Contractors
(a) to update the Construction Documents as necessary to reflect all
changes made to the Construction Documents during the course of construction, (B) to
certify to the best of their knowledge that the “record-set” of as-built
drawings are true and correct, which certification shall survive the expiration
or termination of this Sub-Sublease, and (C) to deliver to Mercury two (2)
sets of copies of such record set of drawings and one (1) additional electronic
copy (in .dwg format in accordance with AIA layering standards) within ninety
(90) days following issuance of a certificate of occupancy for the Subleased
Premises, and (ii) Reliant shall deliver to Mercury a copy of all
warranties, guaranties, and operating manuals and information relating to the
Improvements, equipment, and systems in the Subleased Premises.

 

9.             Initial Improvement Allowance. Provided
Reliant is not then in default, beyond applicable notice and cure periods, and
has not defaulted, beyond applicable notice and cure periods, in its
obligations under the Sub-Sublease (the “Default Conditions”),
Mercury will, commencing on the Allowance Date (as defined in this paragraph
below), contribute up to Two Hundred Sixty-Five Thousand Five Hundred Ninety
and No/100 Dollars ($265,590.00) (i.e., $5.00 per rentable square foot in the
Subleased Premises) (the “Allowance”)
to be applied

 

5

 

exclusively toward costs
incurred by Reliant for the design, construction and permitting of the Initial
Improvements (the “Construction Costs”), which
Construction Costs expressly exclude any direct or indirect costs of Reliant’s
Personal Property and Services. Following execution and delivery of the
Sub-Sublease and the receipt of Master Sublandlord’s and Prime Landlord’s
approval thereof, Reliant may request draws from the Allowance to pay the
Construction Costs. As used herein, “Allowance Date”
shall mean the date that is one (1) business day after the date Mercury obtains
Master Sublandlord’s and Prime Landlord’s written consents to the Sub-Sublease.
As a condition precedent to any disbursement of the Allowance by Mercury,
Reliant shall furnish a written requisition for reimbursement of such
Construction Costs from the Allowance, accompanied by appropriate corresponding
invoices for Construction Costs from Reliant’s Contractors and Design
Professionals, receipts evidencing the payment of such invoices by Reliant, and
unconditional mechanics’ lien releases with respect to all contractors,
subcontractors and suppliers (of any tier), performing work or supplying
materials for which Reliant seeks reimbursement, or as Mercury may otherwise
reasonably request. Provided that Mercury receives such requisition and
supporting documentation no later than the twenty-fifth (25th) day
of a calendar month, and subject to the Default Conditions, Mercury shall pay
the amount of such requisition (up to the amount of the Allowance) by the
thirtieth (30th) day of the immediately-succeeding calendar month. In
the event the Construction Costs exceed the Allowance, such excess costs shall
be borne exclusively by Reliant. In the event the cost of the Construction
Costs are less than the allowance, the difference shall be retained by Mercury.

 

6

 

SCHEDULE I

TO EXHIBIT D

 

TENANT IMPROVEMENT STANDARDS

 

 

GENERAL
TENANT IMPROVEMENT STANDARDS

 

ACOUSTICAL
CEILINGS:

 

2 x 4 flat white T-Bar grid
with drop-in ceiling tiles (rated as required). Tenant may provide
specifications for ceiling tiles, subject to Landlord’s approval. Compression
post and seismic wires as required by code. All required light wires.

 

Open ceiling plan
permitted, subject to Landlord approval.

 

CARPET
& RESILIENT FLOORING:

 

	
  Carpet:

  	
   

  	
  28 oz. loop pile glue
  down carpet

  
	
   

  	
   

  	
   

  
	
  Base:

  	
   

  	
  2” to 4” rubber base
  (top set base at resilient floors)

  
	
   

  	
   

  	
   

  
	
  Resilient:

  	
   

  	
  Armstrong Stonetex

  

 

PAINT:

 

Two costs of paint over
prime coat. Standard manufacturers are Kelly Moore, Sinclair or equal.

 

WALL
COVERINGS:

 

Walls shall have a smooth
finish.

 

Not otherwise
specifically required by Landlord.

 

PLUMBING:

 

Coffee bar sinks with
single handle faucets, 2 1⁄2 gallon under counter hot water or other arrangements
acceptable to Landlord.

 

HVAC:

 

Tenant to provide design
by licensed mechanical engineer based on design criteria by Super Symmetry. The
design is subject to Landlord’s approval.

 

FIRE
SPRINKLERS:

 

Base Building
Improvements include mains and up heads at the structure. Tenant Improvements
include all necessary drop heads with semi-recessed chrome heads with white
escutcheons. Drop heads to be tile-centered where possible and otherwise placed
in aesthetically pleasing locations.

 

1

 

CASEWORK:

 

Base cabinets with
Countertops – Flush overlay construction, plastic laminate exteriors, drawers
over doors, 6” drawer fronts, one selply shelf adjustable on 32 mm pins, 4”
back splash, 4” painted plywood base, locking rail behind face frame between
doors and drawers (no locks, unless specifically requested), 2’-3” deep, 3’-0”
high, polished chrome wire pulls, hinges adjustable with 170 degrees opening,
shelf span not to exceed 32”, countertops to be plywood under plastic laminate.

 

Wall Cabinets – Flush
overlay construction laminate exteriors, mounted from 4’-8” above finished
floor to 7’-6” above finished floor, seal top with backing material, two seply
shelves adjustable on 32 mm pins, 3” apron at bottom, brushed chrome wire
pulls, hinges adjustable with 170 degree opening, shelf span not to exceed 32”.

 

Standard Plastics
Laminates – Formica, Wilsonart or Nevamar.

 

DOORS,
FRAMES, HARDWARE & GLASS:

 

	
  Doors:

  	
   

  	
  3’-0” x 9’0” x 1-3/4”
  solid core, prefinished wood (wood veneer or paint grade, rated as required).
  Proposed upgrades shall be submitted to Landlord for approval.

  
	
   

  	
   

  	
   

  
	
  Frames:

  	
   

  	
  Brushed aluminum with
  clear finish (rated as required). Sidelight frames integral with door frame
  2’-0” x 9’-0”.

  
	
   

  	
   

  	
   

  
	
  Hardware:

  	
   

  	
  Schlage lever hardware.
  Two pair butts per door. Dome floor stops. Closers, automatic flush bolts,
  astragals, and coordinators with finish to be mutually acceptable to Tenant
  and Landlord.

  
	
   

  	
   

  	
   

  
	
  Glass:

  	
   

  	
  1⁄4” clear tempered or
  square wired glass where required by code.

  

 

METAL
FRAMING & DRYWALL:

 

Corridor walls and
demising walls for bathrooms, elevator pits and stairwell enclosures/1-Hr.
construction with 3 5/8” 25 gauge metal studs, 24” on center to underside of
structure with 5/8” sheetrock on each side and R-11 batt insulation full
height.

 

Tenant demising
walls/full height (slab to structure) 3 5/8” 25 gauge metal studs, 24” on
center with R-11 insulation and 5/8” type “X” sheetrock full height both sides
(the height of the wall may be adjusted for return air plenium).

 

Tenant interior
walls/ceiling height (floor to underside of acoustical ceiling), 3 5/8” 25
gauge studs, 24” on center with 5/8” sheetrock on each side and J-mold at top.

 

Finish:    Smooth (level 4) wall.

 

2

 

ELECTRICAL:

 

Light fixtures:  2’ x 4’ three lamp fixtures with 18 cell
parabolic lenses or other fixtures mutually acceptable to Tenant and Landlord.

 

Downlight and wall
washers as accent lighting in conference rooms and reception areas as appropriate.

 

Exit lights:  Quantity as required by code, to be specified
by Tenant subject to Landlord’s approval.

 

Outlets and
switches:  Private offices receive two
duplex electrical outlets, two telephone and data outlets (ring/string) and one
dual light switch. Conference rooms receive four duplex outlets, two telephone
and data outlets (ring/string) and one dual light switch. All other rooms are
addressed based on specific layouts. Any changes to the foregoing
specifications shall be subject to approval by Landlord.

 

EXTERIOR
WINDOW COVERING:

 

1” horizontal mini-blinds
at interior of each exterior window, top lock controls. Standard typical
manufactures, Levelor, Hunter-Douglas or equal. Color to be consistent
throughout the Premises and acceptable to Landlord. Alternatives may be
specified in some areas subject to Landlord’s approval.

 

CEILINGS:

 

Ceiling height on all
floors shall be a minimum of ten feet, except as otherwise approved by
Landlord.

 

All partitions shall be
below the ceiling grid, except as specifically indicated in Tenant’s space plan
and/or Working Drawings and approved by Landlord in Landlord’s sole discretion.

 

LIMITATION
ON HARD WALL OFFICE:

 

No more than Fifty
percent (50%) of the rentable floor area on any floor of any Building shall be
enclosed as hard wall office, unless approved by Landlord at its sole
discretion; provided, however, that Tenant may exceed this limitation if Tenant
agrees to reconfigure the affected floor to such standard upon expiration or
earlier termination of this Lease.

 

SOUND
INSULATION:

 

Adequate sound insulation
shall be provided for bathrooms, conference rooms and copy rooms.

 

3

 

SCHEDULE D-I

 

MINIMUM STANDARDS

FOR

TENANT IMPROVEMENTS

 

NETSCAPE COMMUNICATIONS CORPORATION

464 Ellis Street • Mountain View

Phase I

 

RESTROOMS:

 

	
  •

  	
  Walls &
  Floors – Dal Tile or American Olean unglazed mosaic

  
	
   

  	
  2” x 2” ceramic tile
  thinset

  
	
  •

  	
  Ceramic tile wainscot –
  6’-0” high @ wet walls

  
	
  •

  	
  Stipple enamel painted
  gyp.bd. ceiling @ min. 9’ high.

  
	
   

  	
   

  
	
  SINK TOPS:

  
	
   

  	
   

  
	
  •

  	
  Tile, granite or Corian

  
	
   

  	
   

  
	
  DRINKING FOUNTAIN:

  
	
   

  	
   

  
	
  •

  	
  Haws Model HWCF8-2 Dual
  Heights

  
	
   

  	
   

  
	
  URINAL:

  
	
   

  	
   

  
	
  •

  	
  American Standard
  Allbrook Urinal 6541.132

  
	
   

  	
   

  
	
  LAVATORY:

  
	
   

  	
   

  
	
  •

  	
  American Standard
  Ovalyn Under Counter 0470.013.

  
	
   

  	
   

  
	
  FAUCET:

  
	
   

  	
   

  
	
  •

  	
  Kohler Triton K-7443-4B

  
	
   

  	
   

  
	
  TOILETS:

  
	
   

  	
   

  
	
  •

  	
  Wall mounted American
  Standard Elongated Cadet 9468-018

  
	
   

  	
  with Sloan 115 PYV
  flush valve.

  

 

1

 

TOILET ACCESSORIES:

 

	
  •

  	
  Paper towel Dispenser:

  	
  Bobrick B38032

  
	
   

  	
   

  	
  (Women’s dual)

  
	
   

  	
   

  	
   

  
	
  •

  	
  Combination
  Unit, Toilet Seat Cover, Toilet Tissue:

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  Bobrick B-3571 (Women’s
  single)

  
	
   

  	
  •

  	
  Bobrick B-357 (Women’s
  dual)

  
	
   

  	
  •

  	
  Bobrick B-3479 (Men’s
  single)

  
	
   

  	
  •

  	
  Bobrick B-3471 (Men’s
  dual)

  
	
   

  	
   

  	
   

  
	
  •

  	
  Liquid Soap Dispenser:

  	
  Bobrick B-822

  
	
   

  	
   

  	
  (Counter Mounted)

  
	
   

  	
   

  	
   

  
	
  •

  	
  Recessed Feminine
  Napkin:

  	
  Bobrick B-3500

  
	
   

  	
  Dispenser

  	
   

  
	
   

  	
   

  	
   

  
	
  •

  	
  Grab Bar:

  	
  Bobrick B-490-36

  
	
   

  	
   

  	
  Bobrick
  B-490-48

  
	
   

  	
   

  	
   

  
	
  MIRROR OVER SINKS:

  	
   

  
	
   

  	
   

  	
   

  
	
  •

  	
  1⁄4” thick float mirror
  wall-to-wall from light valance to vanity splash.

  
	
   

  	
   

  	
   

  
	
  P.L. TOILET PARTITIONS:

  	
   

  
	
   

  	
   

  	
   

  
	
  •

  	
  Floor mounted.
  Additional specifications to be provided by Tenant, subject to Landlord’s
  approval.

  
	
   

  	
   

  	
   

  
	
  JANITORIAL CLOSETS (BOTH
  FLOORS):

  
	
   

  	
   

  	
   

  
	
  •

  	
  Broom/mop holder

  	
   

  
	
  •

  	
  Fiberglass floor sink

  	
   

  
	
  •

  	
  4’-0” high Marlite
  wainscot behind sink

  
				

 

2

 

	
  LOBBY:

  
	
   

  
	
  •

  	
  Elevator
  Finishes/Features:

  
	
   

  	
  •

  	
  Carpet

  
	
   

  	
  •

  	
  4500 lb. Front/Rear
  Service in Buildings 1 and 3;

  Front service only in Building 2

  
	
   

  	
  •

  	
  Wall panels – plastic
  laminate

  
	
   

  	
  •

  	
  Ceiling/Lighting -
  Eggcrate

  
	
   

  	
   

  	
   

  
	
  CEREMONIAL STAIRWAY:

  
	
   

  	
   

  	
   

  
	
  •

  	
  Carpet with or without
  pad

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS:

  
	
   

  	
   

  	
   

  
	
  •

  	
  Cafeteria & Health
  Club to be reviewed and approved

  
	
  •

  	
  ADA Compliance required
  throughout project

  

 

3

 

EXHIBIT E

 

LIST OF FURNITURE

 

 

EXHIBIT E

 

LIST OF FURNITURE

 

Inventory for 464 Ellis Street,
Mountain View, CA – Subleased Premises

Building 20

 

FIRST FLOOR:

 

Cubicles:  (95) 10 x 10 Consisting of:  Teknion TOS panel systems furniture

Panels:  (7) 66/60 panels and (1) 66/30 panel

Worksurfaces:  (2) 60/30 corners and (1) 60/30 straight

Components:  (1) Shelf w/task light, (1) Overhead Bin w/
task light, (1) 60x30 whiteboard element, (1) pencil drawer, (1) file, file
pedestal, (1) box, box file pedestal and (1) task chair (optional)

 

Labs:  (2) Consisting of:  Symbiote Lab furniture

(1) room is empty – (1)
consists of:  Panels:  (9) 80/48 panels, (1) 80/24 panel

Worksurfaces:  (2) 48/30 corners, (5) 48/30 str. surfaces,
(1) 24/30 str. surface, (10) 48/18 str. Shelves

 

Conference Rooms: 
(8) Consisting of:

(3-5) 60 x 30 KI tables, (1) phone table, and (8-12)
chairs

 

SECOND FLOOR:

 

*Cubicles:  (68) 10 x 10 Consisting of:  Teknion TOS systems furniture

Panels:  (7) 66/60 panels and (1-2) 66/30 panels

Worksurfaces:  (2) 60/30 corners and (1) 60/30 straight

Components:  (1) Shelf w/ task light, (1) Overhead Bin w/
task light, (1) 60x30 whiteboard element, (1) pencil drawer, (1) file, file
pedestal, (1) box, box file pedestal and (1) task chair (optional)

 

Labs:  (3) Consisting of:  Symbiote Lab furniture and/or Teknion panel
furniture 

(1) room is empty – (1) consists of: 
Symbiote Panels:  (9) 80/48
panels, (1) 80/24 panel, (16) 62/48 panels

Worksurfaces:  (2-3) 48/30 corners, (1-5)
48/30 str. surfaces, (1) 24/30 str. surface, (4) 72/30 str. (3) 96/30 str. and
(10) 48/18 str. shelves

Teknion furniture:  Panels: 
(12) 66/60 panels, (1) 66/38 panel, (1) 66/24 panel

Worksurfaces:  (2) 60/30 corners, (1)
96/30 str. (7) 60/30 str. and (7) 48/24 shelves

 

**Conference Rooms:  (7) Consisting of:

(3-6) 80 x 30 KI tables,
(1) phone table and/or (1) credenza, and (8-12) chairs

 

*Located in the Adjacent
Space are 45 cubicles meeting the foregoing description

**Located in the Adjacent
Space are 3 conference rooms meeting the foregoing description

 

4

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