Document:

Exhibit 10.5

 

AMENDED
AND RESTATED LEASE

 

BETWEEN

 

WXIII/CRITTENDEN REALTY
A/B, L.L.C.

 

(LANDLORD)

 

AND

 

SILICON GRAPHICS, INC.

 

(TENANT)

 

July 9, 2003

 

(Crittenden A)

 

 

 TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.A.

  	
  BASIC LEASE INFORMATION

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  GENERAL
  INTERPRETIVE PROVISIONS

  	
  4

  
	
   

  	
   

  	
   

  
	
  2.

  	
  PREMISES

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Premises

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Common
  Area

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Parking

  	
  6

  
	
   

  	
   

  	
   

  
	
  3.

  	
  TERM

  	
  7

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Term

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Renewal Option

  	
  7

  
	
   

  	
   

  	
   

  
	
  4.

  	
  RENT

  	
  8

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Net Lease – Net Rent

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Base Rent

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Rent Adjustment

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Additional Rent

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Late Payment

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Covenant

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Credit Enhancement

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.8

  	
  Legal Requirements

  	
  13

  
	
   

  	
   

  	
   

  
	
  5.

  	
  OPERATING EXPENSES

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Operating Expenses

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Payment of Operating Expenses

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Proration

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Normalization

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5

  	
  Other Buildings

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6

  	
  Utility Costs

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7

  	
  Taxes on Tenant’s Property and Business

  	
  18

  
	
   

  	
   

  	
   

  
	
  6.

  	
  GROUND
  LEASE

  	
  18

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Ground Lease

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Compliance with Obligations; Conflicts

  	
  18

  

 

i

 

	
   

  	
  6.3

  	
  Landlord Ground Rent Obligation

  	
  19

  
	
   

  	
   

  	
   

  
	
  7.

  	
  USE OF
  PREMISES AND CONDUCT OF BUSINESS

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Permitted Use

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Prohibited Uses

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Food and Beverage

  	
  20

  
	
   

  	
   

  	
   

  
	
  8.

  	
  REPAIRS AND
  MAINTENANCE; SERVICES

  	
  20

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Landlord’s Obligations

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Tenant’s Obligations

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Security

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Special Services

  	
  22

  
	
   

  	
   

  	
   

  
	
  9.

  	
  ACCEPTANCE

  	
  22

  
	
   

  	
   

  	
   

  
	
  10.

  	
  ALTERATIONS

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Alterations by Tenant

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Project Requirements

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Restoration
  Obligations

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4

  	
  Ownership of
  Improvements

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5

  	
  Tenant’s
  Personal Property

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.6

  	
  Tenant
  Improvement Allowance

  	
  30

  
	
   

  	
   

  	
   

  
	
  11.

  	
  LIENS

  	
  30

  
	
   

  	
   

  	
   

  
	
  12.

  	
  COMPLIANCE
  WITH LAWS AND INSURANCE REQUIREMENTS

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Legal
  Requirements

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2

  	
  Insurance
  Requirements

  	
  31

  
	
   

  	
   

  	
   

  
	
  13.

  	
  HAZARDOUS MATERIALS

  	
  32

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Definitions

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2

  	
  Environmental
  Release

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3

  	
  Use of
  Hazardous Materials

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.4

  	
  Indemnity

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.5

  	
  No Lien

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.6

  	
  Investigation

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.7

  	
  Notices

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.8

  	
  Surrender

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.9

  	
  Survival

  	
  35

  

 

ii

 

	
  14.

  	
  INDEMNITY; INSURANCE

  	
  35

  
	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Indemnity

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.2

  	
  Insurance

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.3

  	
  Policies

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.4

  	
  Landlord’s
  Rights

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.5

  	
  Waiver of
  Subrogation

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.6

  	
  No Liability

  	
  37

  
	
   

  	
   

  	
   

  
	
  15.

  	
  ASSIGNMENT AND SUBLETTING

  	
  37

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Consent
  Required

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.2

  	
  Notice

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.3

  	
  Terms of
  Approval

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.4

  	
  Certain
  Conditions Applicable to All Sublettings and Assignments

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.5

  	
  No Release

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.6

  	
  Change in
  Control; Successor Entity

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.7

  	
  Assumption
  of Obligations

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.8

  	
  Insolvency
  or Bankruptcy

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.9

  	
  Recovery of
  Premises

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.10

  	
  Easements

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.11

  	
  Short Term
  Subletting

  	
  41

  
	
   

  	
   

  	
   

  
	
  16.

  	
  DEFAULT

  	
  42

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Event of Default

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.2

  	
  Remedies

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.3

  	
  Cumulative
  Remedies

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.4

  	
  Waiver of
  Redemption by Tenant

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.5

  	
  Landlord’s
  Right to Cure

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.6

  	
  Landlord’s
  Default

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.7

  	
  Survival

  	
  46

  
	
   

  	
   

  	
   

  
	
  17.

  	
  LANDLORD’S RESERVED
  RIGHTS

  	
  46

  
	
   

  	
   

  	
   

  
	
   

  	
  17.1

  	
  Control of
  Common Area

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.2

  	
  Access

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.3

  	
  Easements

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.4

  	
  Use of
  Additional Areas

  	
  47

  

 

iii

 

	
   

  	
  17.5

  	
  Subordination

  	
  48

  
	
   

  	
   

  	
   

  
	
  18.

  	
  LIMITATION OF
  LANDLORD’S LIABILITY

  	
  50

  
	
   

  	
   

  	
   

  
	
   

  	
  18.1

  	
  Limitation

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.2

  	
  Sale of
  Property

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.3

  	
  No Personal
  Liability

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.4

  	
  Landlord’s
  Consent or Approval; Limitation on Damages

  	
  51

  
	
   

  	
   

  	
   

  
	
  19.

  	
  DESTRUCTION

  	
  52

  
	
   

  	
   

  	
   

  
	
   

  	
  19.1

  	
  Landlord’s
  Repair Obligation

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.2

  	
  Termination
  Option

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.3

  	
  Tenant
  Obligations

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.4

  	
  No Claim

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.5

  	
  No Damages

  	
  54

  
	
   

  	
   

  	
   

  
	
  20.

  	
  EMINENT DOMAIN

  	
  54

  
	
   

  	
   

  	
   

  
	
   

  	
  20.1

  	
  Taking

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.2

  	
  Award

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.3

  	
  Partial
  Taking

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.4

  	
  Temporary
  Taking

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.5

  	
  Sale in Lieu
  of Condemnation

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.6

  	
  Waiver

  	
  55

  
	
   

  	
   

  	
   

  
	
  21.

  	
  SURRENDER

  	
  55

  
	
   

  	
   

  	
   

  
	
   

  	
  21.1

  	
  Surrender

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  21.2

  	
  Holding Over

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  21.3

  	
  Quitclaim

  	
  56

  
	
   

  	
   

  	
   

  
	
  22.

  	
  FINANCIAL STATEMENTS

  	
  56

  
	
   

  	
   

  	
   

  
	
  23.

  	
  ESTOPPEL CERTIFICATES

  	
  56

  
	
   

  	
   

  	
   

  
	
  24.

  	
  RULES AND REGULATIONS

  	
  57

  
	
   

  	
   

  	
   

  
	
   

  	
  24.1

  	
  Rules and
  Regulations

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  24.2

  	
  Signs

  	
  57

  

 

iv

 

	
  25.

  	
  INABILITY TO PERFORM

  	
  57

  
	
   

  	
   

  	
   

  
	
  26.

  	
  NOTICES

  	
  58

  
	
   

  	
   

  	
   

  
	
  27.

  	
  QUIET ENJOYMENT

  	
  58

  
	
   

  	
   

  	
   

  
	
  28.

  	
  NO RENT ABATEMENT

  	
  58

  
	
   

  	
   

  	
   

  
	
  29.

  	
  AUTHORITY

  	
  58

  
	
   

  	
   

  	
   

  
	
  30.

  	
  BROKERS

  	
  59

  
	
   

  	
   

  	
   

  
	
  31.

  	
  BANKRUPTCY OR INSOLVENCY

  	
  59

  
	
   

  	
   

  	
   

  
	
   

  	
  31.1

  	
  No Transfer

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  31.2

  	
  Termination
  Right

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  31.3

  	
  No Cause for
  Appointment

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  31.4

  	
  Bankruptcy
  Filings

  	
  60

  
	
   

  	
   

  	
   

  
	
  32.

  	
  ANTENNA AND ROOFTOP
  SPACE

  	
  61

  
	
   

  	
   

  	
   

  
	
   

  	
  32.1

  	
  Antennae

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.2

  	
  Non-Exclusive

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.3

  	
  Access

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.4

  	
  Compliance
  with Legal Requirements

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.5

  	
  Tenant
  Expense

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.6

  	
  Tenant’s
  Property

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.7

  	
  No
  Interference

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.8

  	
  Relocation

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.9

  	
  Indemnification

  	
  64

  
	
   

  	
   

  	
   

  
	
  33.

  	
  MISCELLANEOUS

  	
  64

  
	
   

  	
   

  	
   

  
	
   

  	
  33.1

  	
  Entire
  Agreement

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.2

  	
  No Waiver

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.3

  	
  Modification

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.4

  	
  Successors
  and Assigns

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.5

  	
  Validity

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.6

  	
  Jurisdiction

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.7

  	
  Attorneys’
  Fees

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.8

  	
  Waiver of
  Jury Trial

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.9

  	
  No
  Counterclaim by Tenant

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.10

  	
  Light and
  Air

  	
  65

  

 

v

 

	
   

  	
  33.11

  	
  Lease
  Memorandum

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.12

  	
  Confidentiality

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.13

  	
  Terms

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.14

  	
  Review and
  Approval

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.15

  	
  No
  Beneficiaries

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.16

  	
  Time of
  the Essence

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.17

  	
  Modification
  of Lease

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.18

  	
  Construction

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.19

  	
  Survival

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.20

  	
  Termination

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.21

  	
  Effectiveness

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.22

  	
  Counterparts

  	
  70

  

 

vi

 

AMENDED AND RESTATED

COMMERCIAL LEASE

(Crittenden Parcel A)

 

THIS AMENDED AND RESTATED
LEASE (“Lease”) is entered into as of July 9, 2003, by and
between WXIII/Crittenden Realty A/B, L.L.C., a Delaware limited liability
company (“Landlord”),
and Silicon Graphics, Inc., a Delaware corporation (“SGI”, or the “Tenant”),
amending and restating the Original Lease, as such term is defined herein.

 

1.             A. BASIC LEASE
INFORMATION.  The following is a summary of basic lease
information.  Each item in this Article 1
incorporates all of the terms set forth in this Lease pertaining to such item
and to the extent there is any conflict between the provisions of this Article 1
and any more specific provisions of this Lease, the more specific provisions
shall control.  Any capitalized term not
defined in this Lease shall have the meaning set forth in the Glossary which
appears at the end of this Lease.

 

	
  Description of Premises:

  	
   

  	
  One (1) building as more particularly
  described on Exhibit A-1.

  
	
   

  	
   

  	
   

  
	
  Address of Premises:

  	
   

  	
  1200 Crittenden Lane Mountain View,
  California

  
	
   

  	
   

  	
   

  
	
  Rentable Area of Building and of Top Floors
  and Lower Floors:

  	
   

  	
  113,488 square feet of Rentable Area
  through December 31, 2004; 115,857 square feet of Rentable Area from January 1,
  2005 through and including December 31, 2005; and 118,215 square feet of
  Rentable Area thereafter, located in one (1) building as further
  described on Exhibit A-1.  [Exhibit to include Rentable Area per
  floor]. As used herein, “Top Floors” means the top two (2) floors of the
  Premises, containing 56,868 square feet of Rentable Area through and
  including December 31, 2004, and 59,236 square feet of Rentable Area
  thereafter. “Lower Floors” means the lower two (2) floors of the
  Premises, containing 56,621 square feet of Rentable Area through and
  including December 31, 2005, and 58,979 square feet of Rentable Area
  thereafter.

  
	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  Thirteen (13) years from the Commencement
  Date.

  
	
   

  	
   

  	
   

  
	
  Commencement Date:

  	
   

  	
  December 29, 2000.

  

 

 

	
  Expiration Date:

  	
   

  	
  November 30, 2013.

  
	
   

  	
   

  	
   

  
	
  Initial Base Rent:

  	
   

  	
  $32.18 per sq. ft. of Rentable Area per
  annum.

  
	
   

  	
   

  	
   

  
	
  Base Rent Adjustments:

  	
   

  	
  See attached schedule on Exhibit B.

  
	
   

  	
   

  	
   

  
	
  Base Rent Reset Date:

  	
   

  	
  January 1, 2006 and every December 1
  thereafter.

  
	
   

  	
   

  	
   

  
	
  Top Floors 

  Base Rent Reset Date:

  	
   

  	
  January 1, 2005 and every December 1
  thereafter.

  
	
   

  	
   

  	
   

  
	
  Tenant’s Share of 

  Operating Expenses:

  	
   

  	
  100%, subject to adjustment as provided
  herein

  
	
   

  	
   

  	
   

  
	
  Use:

  	
   

  	
  General office, research and development
  and other legal uses ancillary thereto

  
	
   

  	
   

  	
   

  
	
  Credit Enhancement:

  	
   

  	
  Letter of Credit in an amount (the “Required Amount”) determined as follows: (a) $5,009,890
  during the period from the Commencement Date to January 1, 2006, (b) $4,500,000
  during the period from January 1, 2006 to January 1, 2007 (the “Initial
  Determination Date”), (c) beginning on the Initial
  Determination Date and on each anniversary thereof (together with the Initial
  Determination Date, a “Determination
  Date”) the Letter of Credit shall be reduced by $250,000 until
  the Letter of Credit amount equals an amount no less than $3,500,000 and (d) $3,500,000
  thereafter during the Term and any Renewal Term.  If an Event of Default shall exist on any
  date on which the amount of the Letter of Credit is to be reduced in
  accordance with the above provisions, then the amount of the Letter of Credit
  shall not be so reduced and shall instead be reduced in accordance with the
  above schedule only on the next scheduled reduction date upon which an
  Event of Default is not existing.

  

 

2

 

	
  Addresses for Notice:

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
   

  
	
   

  	
   

  	
  WXIII/Crittenden Realty A/B, L.L.C. 

  c/o Whitehall Parallel Real Estate Limited 

  Partnership XIII 

  85 Broad Street 

  New York, NY  10004 

  Attention:  Adam Brooks 

  Telecopy:  212-357-5505

  
	
   

  	
   

  	
   

  
	
  with copies
  to:

  	
   

  	
   

  
	
   

  	
   

  	
  WXIII/Crittenden Realty A/B, L.L.C. 

  c/o Whitehall Parallel Real Estate Limited 

  Partnership XIII 

  Goldman Sachs Group, Inc. 

  100 Crescent Court 

  Dallas, TX 75201 

  Attention:  Aaron Wetherill 

  Telecopy:  214-855-6305

  
	
   

  	
   

  	
   

  
	
  and to:

  	
   

  	
   

  
	
   

  	
   

  	
  Legacy Partners 

  4000 East 3rd Avenue 

  Foster City, CA 94404 

  Attention: Steve Dunn and Hanna Eyal 

  Telecopy: 650-571-2211

  
	
   

  	
   

  	
   

  
	
  and to:

  	
   

  	
   

  
	
   

  	
   

  	
  Sullivan & Cromwell LLP

  125 Broad Street

  New York, NY  10004

  Attention:  Arthur Adler

  Telecopy: 212-558-3588

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
  Silicon Graphics, Inc. 

  1400 Crittenden Lane 

  Mountain View, CA 94043 

  Attention:  Michael L. Hirahara 

  Telecopy:  650-932-0504

  

 

3

 

	
  with copies
  to:

  	
   

  	
   

  
	
   

  	
   

  	
  Silicon Graphics, Inc. 

  1500 Crittenden Lane 

  Mountain View, CA  94043 

  Attention:  Sandra Escher 

  Telecopy:  650-933-0298

  
	
   

  	
   

  	
   

  
	
  and to:

  	
   

  	
   

  
	
   

  	
   

  	
  Berliner Cohen 

  10 Almaden Blvd., 11th Floor 

  San Jose, CA 95113 

  Attention:  Kathy Siple 

  Telecopy:  408-998-5388

  
	
   

  	
   

  	
   

  
	
  Brokers:

  	
   

  	
   

  
	
   

  	
   

  	
  Liberty Greenfield 

  717 17th St., Suite 2700 

  Denver, CO 80202 

  Attention:  Kenneth Gilbert 

  Telecopy:  817-599-3333

  

 

B.            GENERAL
INTERPRETIVE PROVISIONS.

 

(a)           The
terms “herein”, “hereto”, “hereunder” and all terms of
similar import shall be deemed to refer to this Lease as a whole rather than to
any Article, Section or Exhibit to this Lease.

 

(b)           Unless
otherwise specified, references in this Lease to the “Section     ”,
“Subsection     ” or “Article     ”
shall be deemed to refer to the Section, Subsection or Article of
this Lease bearing the number so specified. 
References in this Lease to “Exhibit     ”
shall be deemed to refer to the Exhibit or Schedule of this Lease
bearing the letter or number so specified.

 

(c)           Unless
otherwise specified or unless inappropriate in any specific context, all
references in this Lease to any singular noun shall be deemed equally
applicable to the plural of such noun, and all references to the plural of any
noun shall be deemed equally applicable to the singular of such noun.

 

(d)           Captions used for or in Sections, Articles,
Schedules and Exhibits of this Lease are for convenience of reference only and
shall not affect the construction of this Lease.

 

(e)           The term “mortgage” shall include a
mortgage, deed of trust or similar instrument, and shall include any such
instrument to a trustee to secure an issue of 

 

4

 

bonds, and the term “mortgagee”
shall include the secured party thereunder, including, such a trustee.

 

(f)            The terms “include”, “including”
and “such as” shall each be construed as if followed by the phrase “without
being limited to”.

 

(g)           The term “obligations of this Lease” and
words of like import, shall mean the covenants to pay Base Rent and Additional
Rent under this Lease and all of the other covenants and conditions contained
in this Lease. Any provision in this Lease that one party or the other party or
both shall do or not do or shall cause or permit or not cause or permit a
particular act, condition or circumstance shall be deemed to mean that such
party so covenants or both parties so covenant, as the case may be.

 

(h)           The term “Tenant’s obligations hereunder”,
and words of like import, and the term “Landlord’s obligations hereunder”,
and words of like import, shall mean the obligations, terms, covenants,
provisions or conditions of this Lease which are to be performed or observed by
Tenant, or by Landlord, as the case may be. Reference to “performance”
of either party’s obligations under this Lease shall be construed as “performance
and observance”.

 

(i)            Reference to Tenant being “in default
hereunder”, or words of like import, shall mean that Tenant is in default
in the performance of one or more of Tenant’s obligations hereunder, and
reference to Tenant not being “in default hereunder” shall mean that Tenant is
not in default in the performance of any of Tenant’s obligations.

 

(j)            The term “repair” shall be deemed to
include restoration and replacement as may be necessary to achieve and/or
maintain good working order and condition.

 

(k)           Reference to “termination of this Lease”
includes expiration or earlier termination of the Term or cancellation of this
Lease pursuant to any of the provisions of this Lease or of any Legal
Requirement.  Upon a termination of this
Lease, the Term and estate granted by this Lease shall end at 11:59 p.m.
of the date of termination as if such date were the Expiration Date and neither
party shall have any further obligation or liability to the other after such
termination (i) except as shall be expressly provided for in this Lease,
or (ii) except for such obligations as by their nature or under the
circumstances can only be, or by the express provisions of this Lease, may be,
performed after such termination, and, in any event, unless expressly otherwise
provided in this Lease, any liability for payment which shall have accrued to
or with respect to any period ending at the time of termination shall survive
the termination of this Lease.

 

(l)            The term “Tenant” shall mean Tenant herein named
or any immediate or remote assignee of or other successor to the Tenant’s
estate and interest under this Lease, provided that the foregoing shall not
modify the provisions of Article 15.

 

5

 

(m)          Whenever this Lease provides that Tenant shall
indemnify the Landlord, such provision shall be deemed to mean that Tenant
shall indemnify, defend and hold harmless Landlord in accordance with Article 14.

 

(n)           Except as the context may otherwise require,
references to this “Lease” means the Original Lease as amended and restated by
this Lease and the Tenant Work Letter and any other exhibits and attachments
hereto.

 

2.                                      PREMISES.

 

2.1          Premises.  Subject to the
terms, covenants and conditions set forth in this Lease, Landlord hereby leases
to Tenant and Tenant hereby leases from Landlord those premises (the “Premises”) consisting of the
building shown on Exhibit A-1
and identified in Article 1 (the “Building”).  The approximate total Rentable Area of the
Premises and the Building are specified in Article 1.  Together, the Building, any other buildings
located in the vicinity of the Building on the land described on Exhibit A-2 and operated as a
common project with the Building, and the Common Area for the joint operation
of the Building and such other buildings, are referred to as the “Property”.

 

2.2          Common Area.  Landlord hereby
grants to Tenant and its employees, agents, contractors and invitees
(collectively, “Tenant’s Agents”)
a non-exclusive license in common with other tenants of the Property to use the
Common Area during the Term.  Tenant’s
rights to the Common Area shall be subject to the Rules and Regulations
described in Section 24.1 and to Landlord’s reserved rights described in Article 17.

 

2.3          Parking.  Landlord hereby
grants to Tenant and Tenant’s Agents a non-exclusive license in common with
other tenants of the Property to use parking areas located on the Property for
parking and for ingress to and egress from the Property. Tenant’s license shall
not be assigned, sublet or otherwise transferred separately from the
Premises.  Tenant agrees that neither
Tenant nor Tenant’s Agents shall use parking spaces in areas not designated for
Tenant’s use.  Landlord shall have the
right, at Landlord’s sole discretion (but subject to any covenants or
restrictions encumbering the Property), to specifically designate the location
of Tenant’s parking spaces (if any) within the parking areas of the Common
Area.  Tenant’s parking spaces (if any)
may be relocated by Landlord from time to time upon written notice.  Tenant shall not, at any time, park, or
permit the parking of the trucks or vehicles of Tenant or Tenant’s Agents in
any portion of the Common Area not designated by Landlord for such use by
Tenant.  Provided that Landlord and its
agents may also use the parking areas in connection with the performance of its
obligations or exercise of its rights under this Lease, Tenant’s right to use
parking shall be equal to Tenant’s Share of parking (where the denominator used
to determine such share shall equal the sum of the square footages of all of
the Rentable Area of the Property). 
Tenant shall not park nor permit to be parked any inoperative vehicles
or store any materials or equipment on any portion of the parking area or other
areas of the Common Area.  Tenant agrees
to assume responsibility for compliance by Tenant’s Agents with the parking
provisions contained in this Section. 
Tenant hereby authorizes Landlord at Tenant’s expense to attach
violation stickers or notices 

 

6

 

to such
vehicles not parked in compliance with this Section and to tow away any
such vehicles.  In addition, a specific section of
the parking area may be set aside by Landlord for visitor parking for the
Property.

 

3.                                      TERM.

 

3.1          Term.  The Premises
are leased for a term (the “Term”) commencing on the
Commencement Date and expiring on the Expiration Date.  The Term shall end on the Expiration Date, or
such earlier date on which this Lease terminates pursuant to its terms.  The date upon which this Lease actually
terminates, whether by expiration of the Term or in the event of default or
surrender of the Premises is sometimes referred to in this Lease as the “Termination Date”.

 

3.2          Renewal Option.  Tenant shall have two (2) options (the “Renewal Options”)
to extend the Term for a period of five (5) years (each, a “Renewal Term”,
and respectively the “First
Renewal Term” and the “Second Renewal Term”).  Each Renewal Term (i) must be exercised,
if at all, as to the entire Premises subject to this Lease as of the
Commencement Date (unless reduced pursuant to condemnation) and (ii) will
be void if this Lease has previously expired or terminated with respect to any
part of the Premises leased by Tenant hereunder as of the Commencement Date
(other than as a result of condemnation), or if the Premises then leased by
Tenant hereunder shall be less than 100% of the Building.  Each Renewal Option shall be void if an Event
of Default by Tenant exists, either at the time of exercise of the applicable
Renewal Option or the time of commencement of the applicable Renewal Term.  Each Renewal Option must be exercised, if at
all, by written notice from Tenant to Landlord given not less than twelve (12)
months prior to the expiration of the Term (in the case of the First Renewal
Term), and not less than twelve (12) months prior to the expiration of the
First Renewal Term (in the case of the Second Renewal Term).  For the avoidance of doubt, the Second Renewal
Term shall be void unless the First Renewal Option shall be timely exercised by
Tenant.  Each Renewal Term shall be upon
the same terms and conditions as the original Term, except that the Base Rent
applicable to the relevant Renewal Term shall be equal to the greater of (i) Base
Rent payable under this Lease for the full year immediately preceding the
effectiveness of that Renewal Term or (ii) Prevailing Market Rent as of
the commencement of that Renewal Term, as determined pursuant to Exhibit C.  As a condition to the exercise and the effectiveness
of the Renewal Option, Tenant shall be required to modify the Letter of Credit
so that the Letter of Credit will have a face amount equal to the Required
Amount and otherwise meet the requirements of Section 4.7 with respect to
the Term as extended by Tenant’s exercise of the Renewal Option.  The Renewal Option is personal to Tenant and
shall be inapplicable and null and void if Tenant assigns its interest under
this Lease (including an “Assignment” as defined in Section 15.1 but
excluding short-term Subleases contemplated by Section 15.11).

 

7

 

4.                                      RENT.

 

4.1          Net Lease – Net Rent.  It
is the purpose and intent of Landlord and Tenant that, except as expressly
provided otherwise herein, this Lease shall be deemed and construed to be a
so-called “triple net lease” and that the Base Rent and Additional Rent shall
be absolutely net to Landlord throughout the Term, so that this Lease shall
yield, absolutely net to Landlord, the Base Rent and Additional Rent throughout
the Term, free of any charges, assessments, impositions, Real Estate Taxes or
deductions of any kind charged, assessed or imposed on or against the Premises
and without abatement, deduction, deferment, reduction, defense, credit,
set-off or counterclaim (except as may otherwise be expressly provided herein)
whatsoever by Tenant, and Landlord shall not under any circumstances or
conditions, whether now existing or hereafter arising, or whether beyond the
present contemplation of the parties, be expected or required to pay any such
charge, assessment, imposition, Real Estate Tax or deduction, or be under any
obligation or liability hereunder except as expressly otherwise provided
herein.  It is agreed that except as
expressly otherwise provided herein all costs, expenses and charges of every
kind and nature whatsoever relating to the Premises, or the use, operation or
maintenance thereof, which may arise or become due during the Term of this
Lease, including, without limitation, those relating to the maintenance,
preservation, care, repair and operation of the Premises (including, without
limitation, all costs, expenses and charges for water, sewer, natural gas,
electricity, telephone and any other utility used upon or furnished to the
Premises) and all restorations, replacements, Alterations and additions in and
to the Premises as herein provided, including Monthly Rent under the Ground
Lease (in accordance with and subject to the terms set forth below in Article 5,
including Section 5.1(b)(i) and Section 5.1(b)(F))  shall be paid and/or performed by Tenant, at
Tenant’s sole cost and expense, and Landlord shall be indemnified and saved
harmless by Tenant from and against the same.

 

4.2          Base Rent.  Commencing upon the Commencement Date, and
thereafter during the Term, Base Rent will be payable in monthly installments
in advance on or before the first day of each month at the rate of one-twelfth
(1/12) of the annual Base Rent specified in Article 1.  Landlord will, on or after the first day of
each calendar month or the immediately preceding business day if the first day
of a month is not a business day, draw upon the Letter of Credit each month for
payment of monthly Base Rent then due. 
If Landlord notifies Tenant that Landlord does not intend or is unable
to draw on the Letter of Credit, Tenant shall pay the Base Rent due to Landlord
by wire transfer of immediately available funds, to Landlord’s account
specified in writing to Tenant, without any prior notice or demand and without
any deductions or setoff whatsoever, other than as expressly provided
herein.  If the Commencement Date occurs
on a day other than the first day of a calendar month, or the Termination Date
occurs on a day other than the last day of a calendar month, then the Base Rent
for such fractional month will be prorated on the basis of the actual number of
days in such month.  The Rentable Area of
the Premises and the Building shall be conclusively presumed to be as stated in
Article 1, and shall not be subject to adjustment by either Landlord or
Tenant during the Term, other than as described herein.

 

8

 

4.3          Rent Adjustment.  Commencing on January 1, 2002 and every January 1
thereafter up to and including the Base Rent Reset Date (except with respect to
the Top Floors in which case up to the Top Floors Base Rent Reset Date) the
Base Rent shall be adjusted as stated in Article 1, and from the Base Rent
Reset Date (except with respect to the Top Floors in which case from the Top
Floors Base Rent Reset Date) and every December 1 thereafter through the
Term the Base Rent shall be increased as stated in Article 1.

 

4.4          Additional Rent.  All sums due from Tenant to Landlord (other
than the Base Rent) or to any third party under the terms of this Lease shall
be additional rent (“Additional
Rent”), including, without limitation the charges for
Operating Expenses (described in Article 5) and all sums incurred by
Landlord due to Tenant’s failure to perform its obligations under this Lease.
In accordance with Section 5.1, so long as Tenant leases 100% of the
Building, (a) Tenant shall pay directly to the person entitled thereto all
Operating Expenses identified in clauses (iii), (vii) and (viii) of Section 5.1(b),
and (b) Landlord shall pay directly Operating Expenses identified in Section 5.1(b) (other
than in clauses (iii), (vii) and (viii)), for which Tenant shall reimburse
Landlord as Additional Rent payable in monthly installments in advance equal to
one-twelfth (1/12) of Tenant’s Share of the annual amount thereof.  All Additional Rent which is payable to
Landlord shall be paid at the time and place that Base Rent is paid.  For the avoidance of doubt, Landlord will
draw upon the Letter of Credit each month on the same day that Base Rent is
drawn in an amount equal to the Additional Rent then due, provided that if
Landlord delivers the notice described in Section 4.2, Tenant shall pay
the Additional Rent to Landlord in the same manner as Base Rent.  Landlord will have the same remedies for a
default in the payment of any Additional Rent as for a default in the payment
of Base Rent.  Together, Base Rent and
Additional Rent are sometimes referred to in this Lease as “Rent”. 
There shall be no abatement of, deduction from, counterclaim or setoff
against Rent except as otherwise specifically provided in this Lease.

 

4.5          Late Payment.  Any unpaid Rent shall bear interest from the
date due until paid at the lesser of (i) fifteen percent (15%) per annum
or (ii) the maximum interest rate allowed by law (the “Interest Rate”). 
Tenant agrees that the interest charge provided for herein is equal to
or less than a reasonable estimate of the additional administrative costs and
detriment that will be incurred by Landlord as a result of the failure by
Tenant to pay Rent in a timely manner. 
In the event of nonpayment of interest on overdue Rent, Landlord shall
have, in addition to all other rights and remedies, the rights and remedies
provided in this Lease and by law for nonpayment of rent.

 

4.6          Covenant.  Tenant covenants to pay (a) Rent when
due and (b) observe and perform and not to suffer or permit any violation
of Tenant’s obligations under this Lease.

 

4.7          Credit Enhancement.  (a)  Pursuant to the Original
Lease, Tenant delivered to Landlord a Letter of Credit as security for the full
and punctual performance by Tenant of all of the terms of this Lease.  For so long as the Letter of Credit is in
effect and sufficient funds thereunder shall be available for draw, Landlord
shall be entitled to draw 

 

9

 

such Letter of
Credit each month for payment of Base Rent and Additional Rent.  In addition, if Landlord shall be entitled to
draw the Letter of Credit in whole or in part pursuant to the other provisions
of this Lease, Landlord shall have the right, at its option, either to deposit
the cash proceeds of any such draw upon the Letter of Credit into a cash
collateral account (the “Cash Collateral Account”)
established in Landlord’s name and maintained by Landlord or to apply the
proceeds to the obligations of Tenant due or to become due hereunder.  The Cash Collateral Account shall be under
the sole dominion and control of Landlord and Landlord shall have the sole
right to make withdrawals from the Cash Collateral Account and to exercise all
rights with respect to the amounts deposited in the Cash Collateral Account.

 

(b)           The
initial letter of credit and any replacement letter of credit issued to
Landlord shall satisfy the requirements set forth in this Section 4.7
(each, a “Letter of Credit”).  Each Letter of Credit shall be a clean,
irrevocable, non-documentary and unconditional letter of credit issued by and
drawable upon any commercial bank, trust company, national banking association
or savings and loan association with offices for banking and drawing purposes
in The City of San Francisco or the City of New York (the “Issuing
Bank”), which has outstanding, unsecured, uninsured and
unguaranteed indebtedness, or shall have issued a letter of credit or other
credit facility that constitutes the primary security for an outstanding
indebtedness (which is otherwise uninsured and unguaranteed), that is then
rated, without regard to qualification of such rating by symbols such as “+” or
“-” or numerical notation, “A” or better by Moody’s Investment Service and “A”
or better by Standard & Poor’s Ratings Service (and is not on
credit-watch or similar credit review with negative implication), and has
combined capital, surplus and undivided profits of not less than
$1,000,000,000.  Each Letter of Credit
shall (i) name Landlord as beneficiary, (ii) be in the amount of the
Required Amount, (iii) have a term of not less than one (1) year, (iv) permit
multiple drawings, (v) be fully transferable by Landlord without payment
of any fees or charges, (vi) at Landlord’s request, name any Leasehold
Mortgagee as a co-beneficiary and (vii) otherwise be in form and content
satisfactory to Landlord in its sole discretion.  If upon the transfer of any Letter of Credit,
any fees or charges shall so be imposed, then such fees or charges shall be
payable solely by Tenant and the Letter of Credit shall so specify.  Regardless of the initial expiration date of
any Letter of Credit, each Letter of Credit shall expressly provide that
(unless notice of non-renewal is delivered in accordance with the following
sentence) it shall be deemed automatically renewed, without amendment, for
consecutive periods after such expiration date of one year each during the Term
through the date that is at least one hundred twenty (120) days after the
Expiration Date.  If the Issuing Bank
desires not to renew a Letter of Credit, it shall deliver a notice (the “Non-Renewal Notice”) to Landlord by
certified mail, return receipt requested, not less than sixty (60) days prior
to the then-current expiration date of the Letter of Credit, stating that the
Issuing Bank has elected not to renew the Letter of Credit.  In such event or if (a) for any other
reason the Letter of Credit would expire by its terms in sixty (60) days or
less from such date or (b) the Issuing Bank is downgraded so that it no
longer satisfies the rating requirements set forth in this Section 4.7,  Landlord shall have the right, at its option,
either (x) to draw the full amount of the Letter of Credit, by sight draft on the
Issuing Bank, and thereafter hold the proceeds in the Cash Collateral Account
and apply them pursuant to the 

 

10

 

terms of this Article 4, or (y) to require Tenant
to procure, or Landlord to procure on Tenant’s behalf at Tenant’s cost and
utilizing if necessary the cash proceeds so drawn, a replacement Letter of
Credit that satisfies the requirements of this Section 4.7; provided that
Landlord shall provide Tenant with notice of any such event at least ten (10) business
days before exercising such rights and Tenant may, within ten (10) business
days after such notice is provided, deliver a replacement Letter of Credit that
satisfies the requirements of this Section 4.7, and provided further that
such notice shall not be required in the event Landlord determines in good
faith that the delay caused by providing such notice presents a risk that
Landlord will not be able to exercise its rights to draw upon the Letter of
Credit following such delay.  In the event
that Tenant’s Letter of Credit expires at any time without the proceeds being
drawn down and deposited in the Cash Collateral Account, Tenant shall be
obligated to deliver a new Letter of Credit to Landlord complying with the
terms of this Section 4.7.  Each
Letter of Credit shall be governed by the International Standby Practices-ISP98
or any standard set of practices replacing ISP98.  Each Letter of Credit shall be substantially
in the form attached hereto as Exhibit D.

 

(c)           Within
three (3) business days following any draw under the Letter of Credit or
such shorter period as may be required under the Tenant’s reimbursement
agreement with the Issuing Bank, Tenant shall reimburse the Issuing Bank for
each such draw in an amount sufficient to insure that the face value of the
Letter of Credit is an amount at least equal to the Required Amount and will
cause the Issuing Bank to provide written notice to Landlord if such
reimbursement is not timely made.  In the
event Tenant fails to timely reimburse the Letter of Credit bank or increase
the face amount of the Letter of Credit required, such failure shall constitute
an Event of Default hereunder, and, in addition to all other rights and
remedies available to Landlord for Tenant’s default, Landlord shall have the
right to draw the full amount of the Letter of Credit, by sight draft on the
Issuing Bank, and shall thereafter hold in the Cash Collateral Account or apply
the cash proceeds of the Letter of Credit pursuant to the terms of this Article 4.

 

(d)           In
addition to the foregoing, if an Event of Default occurs under this Lease,
Landlord may draw the full amount of the Letter of Credit, by sight draft on
the Issuing Bank, and thereupon receive all or a portion of the face amount of
the Letter of Credit, and use, apply or retain the whole or any part of such
proceeds, as the case may be, to the extent required for the payment of any
Base Rent, Additional Rent or other amounts due or to become due hereunder or
for any reasonable sum which Landlord may expend or may be required to expend
by reason of Tenant’s default in respect of any of the terms of this Lease,
including any damages or deficiency in the re-letting of the Premises, whether
accruing before or after summary proceedings or other re-entry by
Landlord.  In the event Landlord obtains
an arbitration award or judicial determination entitling Landlord to
indemnification or monetary damages under the Purchase Agreements or the Ground
Lease Assignments, Landlord may draw upon the full amount of the Letter of Credit,
by sight draft on the Issuing Bank, and thereupon receive all or a portion of
the face amount of the Letter of Credit, in an amount equal to the amount which
Landlord is so entitled under the Purchase Agreements or Ground Lease
Assignments.  In the case of every such
use, application or retention, Tenant shall, within three (3) business
days following any such use, 

 

11

 

application or retention or such shorter period as may
be required under the Tenant’s reimbursement agreement with the Issuing Bank,
cause the face value of the Letter of Credit to be restored to the Required
Amount, and Tenant shall cause the Issuing Bank to acknowledge to Landlord that
such restoration of the Required Amount occurred in a timely manner.  In the event the Landlord draws upon the
Letter of Credit as provided in this Section 4.7 and retains excess
proceeds of such draw in the Cash Collateral Account, Tenant shall only be
required to cause the face value of the Letter of Credit to be restored to an
amount equal to the Required Amount less the amount of excess proceeds
which Landlord has deposited in the Cash Collateral Account.  In the event Landlord withdraws funds in the
Cash Collateral Account for amounts secured by the Letter of Credit as set
forth in this Section 4.7, Tenant shall within three (3) days
following Landlord’s notice to Tenant of such withdrawal, cause the face value
of the Letter of Credit to be increased by the amount of funds withdrawn from
the Cash Collateral Account.  Subject to Section 33.20,
if Tenant shall fully and punctually comply with all of the terms of this
Lease, the Letter of Credit shall be terminated on the one hundred twentieth
(120th) day after the termination of this Lease in its entirety and
delivery of exclusive possession of the Premises to Landlord; provided,
however, if there shall be more than one Option Termination Date by operation
of the second proviso of Section 33.20(b), then if Tenant shall fully and
punctually comply with all of the terms of this Lease, (x) upon the one hundred
twentieth (120th) day after the Option Termination Date for the Top Floors
and delivery of exclusive possession of the Top Floors to Landlord, the
Required Amount shall be reduced to $2,504,945, and (y) upon the one hundred
twentieth (120th) day after the Option Termination Date for the Lower
Floors and delivery of exclusive possession of the Lower Floors to Landlord,
the Letter of Credit shall be terminated.

 

(e)           In
the event of a transfer of Landlord’s interest in the Building or the Property,
Landlord shall have the right to transfer the Letter of Credit or Cash
Collateral to the transferee and upon such transfer to such transferee,
Landlord shall ipso facto be released by Tenant
from all liability for the return of the Letter of Credit or Cash Collateral;
provided the transferee agrees to assume Landlord’s obligation to return the
Letter of Credit or Cash Collateral; and Tenant agrees to look solely to the
new landlord for the return of said Letter of Credit or Cash Collateral; and it
is agreed that the provisions hereof shall apply to every transfer or
assignment made of the Letter of Credit or Cash Collateral to a new
landlord.  Tenant shall promptly execute
such documents reasonably requested by Landlord as may be necessary to
accomplish any such transfer or assignment of the Letter of Credit or Cash
Collateral.  Tenant shall not assign or
encumber or attempt to assign or encumber the Letter of Credit or Cash Collateral
and neither Landlord nor its successors or assigns shall be bound by any such
assignment, encumbrance or attempted assignment or encumbrance.  Upon ten (10) days prior written notice
from Landlord, Tenant shall cause any Letter of Credit to be modified so that
it names any Leasehold Mortgagee as the co-beneficiary under the Letter of
Credit.  The Letter of Credit shall
provide that sight drafts presented for payment of monthly Base Rent shall
identify the monthly Base Rent payment to which they relate.  In the event the Issuing Bank is presented
with multiple sight drafts from the beneficiary and co-beneficiary for payment
of the same monthly Base Rent, the Issuing Bank shall honor the first sight
draft received by the Issuing Bank for such monthly 

 

12

 

Base Rent payment. 
If at any time the Issuing Bank is presented with multiple sight drafts
from the beneficiary and co-beneficiary for draw of amounts other than the same
monthly Base Rent payment, and such requested amounts in the aggregate exceed
the face value of the Letter of Credit, the Issuing Bank shall honor the sight
draft presented by the co-beneficiary and not the sight draft presented by the
beneficiary.

 

(f)            From
time to time, Tenant may substitute the letter of credit then in effect with a
substitute letter of credit meeting the requirements of this Section 4.7
and otherwise in substantially the form of the letter of credit then in effect.

 

4.8          Legal Requirements.  If any of the Rent payable under the terms of
this Lease shall be or become uncollectible, reduced or required to be refunded
because of any Legal Requirement, Tenant shall enter into such agreements and
take such other steps as Landlord may reasonably request and as may be legally
permissible, to permit Landlord to collect the maximum rents which from time to
time during the continuance of such legal rent restriction may be legally
permissible.  Upon the termination of
such legal rent restriction, (a) the rents shall become and thereafter be
payable in accordance with the amounts reserved herein for the periods
following such termination and (b) Tenant shall pay to Landlord, to the
maximum amount legally permissible, an amount equal to, (i) the rents
which would have been paid pursuant to this Lease but for such legal restriction,
less (ii) the rents and payments in lieu of rents paid by Tenant during
the period such legal restriction was in effect.

 

5.                                      OPERATING
EXPENSES.

 

5.1          Operating Expenses.  For purposes of this Article 5, the
following terms shall have the meanings described below:

 

(a)           “Tenant’s Share” means 100%
for the period commencing with the Commencement Date and ending on the date the
Premises leased by Tenant hereunder shall be less than 100% of the
Building.  In such event, Tenant’s Share
shall be reduced to the proportionate share of the Rentable Area then leased by
Tenant at the Building.  Notwithstanding
the foregoing, to the extent incurred by Landlord in connection with the
ownership, management, operation, maintenance, repair and replacement of the
Common Area, Tenant’s Share with respect to (b)(iv), (b)(v), (b)(vi), (b)(x),
(b)(xii), (b)(xiii), (b)(xiv), (b)(xv), (b)(xvii), (b)(xviii) and (b)(xix)
shall be the percentage determined by dividing the Rentable Area then leased by
Tenant at the Building by the total Rentable Area at the Property (except to
the extent that any of the foregoing are dependent or based on usage, in which
case, Tenant’s Share shall be determined by reference to Tenant’s usage
relative to the usage of other occupants of the Property).  The parties hereto acknowledge that Tenant’s
Share is based upon an assumption that the entire Building contains a total of
118,215 square feet of Rentable Area and the Property contains a total of
471,749 square feet of Rentable Area (of which 115,023 is attributable to
Crittenden B), and that the calculation of Tenant’s Share is based upon a
fraction, the denominator of which is 118,215 (for the Premises) or 471,749
(for the Property), in accordance with the terms of this section.

 

13

 

(b)           “Operating Expenses” means the
total costs and expenses paid or incurred by Landlord in connection with the
ownership, management, operation, maintenance, repair and replacement of the
Building and the Common Area in connection with its obligations hereunder,
including, without limitation, all costs of:

 

(i)            Monthly
Rent (including escalations) due to the City of Mountain View from Landlord, as
tenant under the Ground Lease, as follows: (x) from the Commencement Date through
December 31, 2004, all Monthly Rent due in respect of the Premises, (y) in
the period January 1, 2005 through December 31, 2005, fifty percent
(50%) of all Monthly Rent due in respect of the Premises, and (z) from and
after January 1, 2006, none of such Monthly Rent shall be included in
Operating Expenses;

 

(ii)           taxes,
assessments and charges levied upon or with respect to the Property or any
personal property of Landlord used in the operation of the Property, or on
Landlord’s interest in the Property or such personal property (“Real Estate Taxes”).  Real Estate Taxes shall include, without
limitation, all general real property taxes and general and special
assessments, charges, fees, or assessments for transit, housing, police, fire,
or other governmental services or purported benefits to the Property or the
occupants thereof, service payments in lieu of taxes that are now or hereafter
levied or assessed against Landlord by the United States of America, the State
of California or any political subdivision thereof, or any other political or
public entity, and shall also include any other tax, assessment or fee, 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 as of the Commencement
Date.  Real Estate Taxes shall not
include franchise, transfer, succession, gift, inheritance, gross receipts or
capital stock taxes or income taxes measured by the net income of Landlord
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.  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;

 

(iii)          repair,
maintenance, replacement and supply of air conditioning, electricity, steam,
water, heating, ventilating, mechanical, escalator and elevator systems,
sanitary and storm drainage systems and all other utilities and mechanical
systems which are commonly used by all Building tenants;

 

(iv)          landscaping
and gardening;

 

(v)           security,
repaving, repairing, maintaining and restriping of parking areas;

 

(vi)          repairs and
maintenance to the Common Area, and all labor and material costs related
thereto;

 

14

 

(vii)         security
and fire protection to the Building (other than areas occupied by tenants);

 

(viii)        general
maintenance, janitorial services, trash removal, cleaning and service contracts
for the Building and the cost of all supplies, tools and equipment required in
connection therewith;

 

(ix)           all
insurance (including earthquake coverage) carried by Landlord on the Building,
the Common Area and the Property, or in connection with the use or occupancy
thereof, including fire and extended coverage, vandalism and malicious
mischief, public liability and property damage, worker’s compensation
insurance, rental income insurance, terrorism insurance and any other insurance
commonly carried by prudent owners of comparable buildings;

 

(x)            wages,
salaries, payroll taxes and other labor costs and employee benefits for all
persons engaged in the operation, management, maintenance and security of the
Property and not otherwise on the general payroll of Landlord or an affiliate
of Landlord or any property manager other than a person located on site at the
Property based on the proportionate amount of time such person devotes to the
management of the Property relative to other properties;

 

(xi)           management
fees at commercially reasonable rates, provided that, so long as Tenant leases
hereunder 100% of the Building, Tenant shall have the right to approve the
Property manager, such approval not to be unreasonably withheld or delayed, and
Tenant hereby agrees that Legacy Property Management, L.P. is an acceptable
manager; provided further, it is agreed that (x) as of the date hereof, 1.25%
per annum of the annual Base Rent and Operating Expenses payable by Tenant to
Landlord (and not directly to third parties as permitted by Section 5.2)
hereunder constitutes a commercially reasonable rate and (y) the same shall not
be subject to increase or decrease to reflect changing market conditions until
after the first anniversary of the date hereof;

 

(xii)          fees,
charges and other costs of all independent contractors engaged by Landlord;

 

(xiii)         license,
permit and inspection fees;

 

(xiv)        charges
on or surcharges imposed by any governmental agencies on or with respect to
transit or automobile usage or parking facilities;

 

(xv)         the cost of
supplies, tools, machines and equipment used in operation and maintenance of the
Common Area;

 

(xvi)        any
Ordinary Capital Improvements; provided that the cost of any such Ordinary
Capital Improvements shall be amortized over the useful life of the 

 

15

 

improvement in question, together with interest on the unamortized
balance at the Interest Rate;

 

(xvii)       the
cost of contesting the validity or applicability of any governmental enactments
including taxes which may affect operating expenses;

 

(xviii)      audit
and bookkeeping fees, and legal fees and expenses; and

 

(xix)         any
other expenses of any kind whatsoever reasonably incurred in connection with
the management, operation, maintenance, repair and replacement of the Building
and the Common Area.

 

Notwithstanding anything
in the definition of Operating Expenses to the contrary, Operating Expenses
shall not include the following, except to the extent specifically permitted by
a specific exception to the following:

 

(A)          Costs
actually reimbursed to Landlord by insurance proceeds for the repair of damage
to the Building;

 

(B)           Marketing
costs, including without limitation, leasing commissions, space planning costs,
and other costs and expenses incurred in connection with lease, sublease and/or
assignment negotiations and transactions with Tenant or present or prospective
tenants of the Building;

 

(C)           Overhead
and profit increment paid to Landlord or to subsidiaries or affiliates of
Landlord for goods and/or services in or to the Building to the extent the same
exceeds the costs of such goods and/or services generally available to
unaffiliated third parties;

 

(D)          Costs
of capital improvements that do not constitute Ordinary Capital Improvements
unless Tenant shall request or approve any such capital improvements;

 

(E)           Interest,
principal, points and fees on debts or amortization on any mortgage or
mortgages or any other debt instrument encumbering the Building or the
Property; and

 

(F)           Monthly
Rent (including escalations) to the City of Mountain View from Landlord, as
tenant under the Ground Lease not to be included in Operating Expenses pursuant
to Section 5.1(b)(i) above.

 

5.2          Payment of Operating
Expenses.  Commencing on the
Commencement Date, Tenant shall pay to Landlord as Additional Rent one twelfth
(1/12) of Tenant’s Share of Operating Expenses paid or incurred by Landlord for
each calendar year 

 

16

 

or portion
thereof during the Term, in advance, on or before the first day of each month
in an amount estimated by Landlord as stated in a written notice to Tenant.
Landlord shall pay Operating Expenses and be reimbursed for the same in
accordance herewith (except that Tenant shall pay directly to the parties
entitled thereto, as Additional Rent, items (iii), (vii) and (viii) of
Section 5.1(b) above).  Landlord may by written notice to Tenant
revise such estimates from time to time and Tenant shall thereafter make
payments on the basis of such revised estimates, commencing on the date
immediately following the receipt of such revised estimates that is the earlier
of January 1 and August 1. 
With reasonable promptness after the expiration of each calendar year,
Landlord will furnish Tenant with a statement (“Landlord’s Expense Statement”) setting forth in
reasonable detail the actual Operating Expenses for such year and Tenant’s
Share.  If Tenant’s Share of the actual
Operating Expenses for such year exceeds the estimated Operating Expenses paid
by Tenant for such year, Tenant shall pay to Landlord (whether or not this
Lease has terminated) the difference between the amount of estimated Operating
Expenses paid by Tenant and Tenant’s Share of the actual Operating Expenses
within fifteen (15) days after the receipt of Landlord’s Expense
Statement.  If the total amount paid by
Tenant for any year exceeds Tenant’s Share of the actual Operating Expenses for
that year, the excess shall be credited against the next installments of Base
Rent due from Tenant to Landlord, or, if after the Termination Date, the excess
shall first be credited against any unpaid Base Rent or Additional Rent due and
remaining any excess shall be refunded to Tenant concurrently with the
furnishing of Landlord’s Expense Statement.

 

5.3          Proration.  If either the Commencement Date or the
Termination Date occurs on a date other than the first or last day,
respectively, of a calendar year, Tenant’s Share of Operating Expenses for the
year in which the Commencement Date or Termination Date occurs shall be
prorated based on a 365-day year.

 

5.4          Normalization.  For the purpose of determining Operating
Expenses for any partial year, Operating Expenses shall be deemed to accrue
uniformly during the entire calendar year. 
If any part of the Building or (with respect to those Operating Expenses
for which Tenant’s Share is determined by the Rentable Area of the Property)
other rentable areas of the Property is not fully leased during a calendar
year, Operating Expenses shall be adjusted to add amounts and items of
Operating Expenses which would normally have been incurred if the Building or
other rentable areas of the Property (as applicable) had been fully leased
during such calendar year and Tenant’s Share of Operating Expenses (both for
the purposes of the initial estimate and year-end reconciliation) shall be
based on an assumed full occupancy of the Building or the Property (as
applicable).

 

5.5          Other Buildings.  In the event any facilities, services or
utilities used in connection with the Building are provided from another
building owned or operated by Landlord or vice versa, the costs incurred by Landlord
in connection with the operation of the Building shall be allocated to
Operating Expenses by Landlord on a reasonably equitable basis, subject to the
terms of existing covenants and restrictions encumbering the Property.

 

17

 

5.6          Utility Costs.  Subject to the provisions of Section 8.1(c),
Tenant shall be solely responsible for and shall make all arrangements for all
utilities and services exclusively furnished to or used at the Premises,
including, without limitation, all water, gas, electricity, sewer service,
waste pick-up and any other utilities, materials or services.

 

5.7          Taxes on Tenant’s
Property and Business.  At least ten (10) days
prior to delinquency, Tenant shall pay all taxes levied or assessed by any
local, state or federal authority upon the conduct of Tenant’s business in the
Premises or upon Tenant’s Property (as defined in Section 10.5).  Upon Landlord’s request, Tenant shall deliver
satisfactory evidence of payment of all such taxes.  If the assessed value of the Property is
increased by the inclusion of a value placed upon Tenant’s Property, Tenant
shall pay to Landlord, upon written demand, the taxes so levied against
Landlord, or the portion of Landlord’s taxes resulting from said increase in
assessment, as determined from time to time by Landlord.

 

6.                                      GROUND
LEASE.

 

6.1          Ground Lease.  A copy of the Ground Lease is attached hereto
as Exhibit E and the
obligations of “Tenant” thereunder (which Tenant hereby agrees it will perform)
(except only those excluded provisions identified in Section 6.2 of this
Lease) are hereby incorporated herein by this reference.  In addition, to the extent practicable,
Landlord shall have all of the rights and remedies granted to the “Landlord”
under the Ground Lease, which rights and remedies are incorporated herein by
this reference.  In accordance with Section 17.5
of this Lease, this Lease is subordinate and subject to the Ground Lease, and
Tenant agrees to be bound by and subject to the terms of the Ground Lease.

 

6.2          Compliance with
Obligations; Conflicts.  (a)  Tenant
shall, at Tenant’s sole cost and expense, throughout the Term, comply with,
satisfy and cause the Premises to comply with and satisfy, each of the
provisions of the Ground Lease within the period of time and in the manner
required by the Ground Lease, excluding, however the following provisions of
the Ground Lease: Article 1 (Definitions) (unless such definitions are
used in the incorporated sections), Article 2 (Demise, Term and Surrender)
(other than Section 2.9), Article 3 (Rent), Sections 4.4, 4.5.1,
4.5.3, 4.5.9.1, 4.5.9.2, 4.5.9.3, 4.5.12 and 4.6 of Article 4 (Use), Article 5 (Payment
of Real Property Taxes and Facility Charges), Sections 6.1, 6.2, and 6.3 of Article 6
(Construction of Improvements and Mechanic’s Liens), Sections 7.1.1 and 7.4 of Article 7
(Insurance and Indemnity), Article 9 (Condemnation), Article 10
(Default and Remedies), Article 11 (Assignment and Subletting), Article 12 (Transfer
of Leased Premises by Landlord), Article 13 (Tenant Mortgages) and Article 14
(General Provisions, except to the extent relevant to the incorporated
sections).  Tenant shall not do, permit,
suffer or refrain from doing anything which is Tenant’s obligation under this
Lease to do, as a result of which there could be a default under the Ground
Lease.  Notwithstanding anything to the
contrary contained in this Lease, in the event the time given to Landlord as
tenant under the Ground Lease is shorter than the time given to Tenant by this
Lease to perform or do the same act or thing, then Tenant shall perform or do
said thing within the time specified in the Ground Lease.

 

18

 

(b)           So
long as this Lease is in effect as to, and Tenant is currently occupying, more
than 25% of the Building and no Event of Default has occurred, Landlord shall
not, without Tenant’s prior consent, exercise any right to terminate the Ground
Lease pursuant to the terms thereof. 
Tenant shall respond to any request for consent to such termination
within five (5) business days following receipt thereof, and, if Tenant
does not respond within such five (5) business day period, Tenant shall be
deemed to have consented.  If Landlord
terminates the Ground Lease in accordance with the foregoing, this Lease shall
terminate.

 

6.3          Landlord Ground Rent
Obligation.  Landlord covenants and
agrees that (i) as of January 1, 2005, Landlord shall pay to Ground
Lessor fifty percent (50%) of Monthly Rent (including escalations), and any
late charge and interest due in connection with the payment thereof, under Article 3
of the Ground Lease in respect of the Premises and (ii) as of January 1,
2006, Landlord shall pay to Ground Lessor all Monthly Rent (including
escalations), and any late charge and interest due in connection with the
payment thereof, under Article 3 of the Ground Lease.

 

7.                                      USE
OF PREMISES AND CONDUCT OF BUSINESS.

 

7.1          Permitted Use.  (a)  Tenant (and any permitted
successor, assign or subtenant of Tenant, whether by Landlord’s consent or by
operation of law) may use and occupy the Premises during the Term solely for
the uses specified and permitted in Article 1 and for no other purpose
without the prior written consent of Landlord, such consent to be granted or
withheld in Landlord’s sole discretion. 
The foregoing statement shall not constitute a representation or
guaranty by Landlord that such business may be conducted in the Premises or is
lawful or permissible under any certificates of occupancy issued for the
Premises or the Building, or is otherwise permitted by law.  Tenant’s use of the Premises shall in all
respects comply with all Legal Requirements.

 

(b)           If
any governmental license or permit shall be required for the proper and lawful
conduct of Tenant’s business in the Premises or any part thereof, then Tenant,
at its expense, shall duly procure and thereafter maintain such license or
permit and shall submit same to Landlord for inspection.  Tenant shall at all times comply with the terms
and conditions of such license and permit, but in no event shall failure to
procure or maintain such license or permit affect Tenant’s obligations
hereunder.

 

7.2          Prohibited Uses.  Tenant shall not use the Premises or allow
the Premises to be used for any illegal or immoral purpose, or so as to create
waste, constitute a private or public nuisance, or disturb other occupants of
the Property.  Tenant shall not place any
loads upon the floors, walls, or ceiling which endanger the structure, or place
any harmful fluids or other materials in the drainage system of the Building,
or overload existing electrical or other mechanical systems.  Tenant shall not use any machinery or
equipment which causes any substantial noise or vibration.  No waste materials or refuse shall be dumped
upon or permitted to remain upon any part of the Premises or outside of the
Premises except in trash containers placed inside exterior enclosures
designated by Landlord 

 

19

 

for that
purpose or inside of the Premises where approved by Landlord.  No materials, supplies, equipment, finished
products or semi-finished products, raw materials or articles of any nature
shall be stored upon or permitted to remain outside the Premises or on any portion
of the Common Area unless otherwise approved by Landlord in its sole
discretion.  No loudspeaker or other
device, system or apparatus which can be heard outside the Premises shall be
used in or at the Premises without the prior written consent of Landlord.  No explosives or firearms shall be brought
into the Premises, except that firearms may be carried by personnel of security
firms retained by Landlord or Tenant for the provision of security services to
the Premises.

 

7.3          Food and Beverage.  If Tenant engages in the cooking of food, beverages
or baked goods, Tenant shall, at Tenant’s sole cost and expense, comply with
all applicable Legal Requirements and insurance requirements.

 

8.                                      REPAIRS
AND MAINTENANCE; SERVICES.

 

8.1          Landlord’s
Obligations.  (a)  Except as
specifically provided in this Lease, Landlord shall not be required to furnish
any services, facilities or utilities to the Premises or to Tenant, and Tenant
assumes full responsibility for obtaining and paying for all services,
facilities and utilities to the Premises. 
Landlord will maintain casualty insurance as required by Section 7.2
of the Ground Lease.  Landlord will
repair and maintain the Common Area and the Structural Components in good
working order and in a clean, safe and sanitary condition.  All repairs and maintenance performed by
Landlord shall be made and performed so that the same shall be comparable in
quality, value and utility to the original work or installation and in a manner
and using equipment and materials that will not interfere with or impair the
operations, use or occupancy of the Premises by Tenant.  Tenant shall notify Landlord in writing of
the need for any repair or maintenance which is Landlord’s responsibility under
this Section.  The costs of such repair
and maintenance shall be included in Operating Expenses to the extent provided
in Article 5; provided that Tenant shall reimburse Landlord upon written
demand for the cost of any repair to the Structural Components or the Common
Area which is attributable to the conduct or misuse of Tenant or its Agents.  The reimbursement shall be Additional
Rent.  Tenant hereby waives and releases
any right it may have under any law, statute or ordinance now or hereafter in
effect to make any repairs which are Landlord’s obligation under this Section.

 

(b)           Tenant
recognizes and acknowledges that the operation of the Building Systems may
cause vibration, noise, heat or cold which may be transmitted throughout the
Premises.  Landlord shall have no
obligation to endeavor to reduce such vibration, noise, heat or cold.

 

(c)           Tenant
shall contract directly with utility companies for the provision of water,
electricity and (except as provided for herein) such other services and
utilities as Tenant may require for the use and occupancy of the Premises, and
Tenant shall timely pay all charges incurred in connection therewith. Landlord
shall have no responsibility or liability in connection with the provision (or
failure to provide) such services or utilities or 

 

20

 

any obligation to modify, supplement or replace the
Building Systems, Structural Components or any other portion of the Building or
Property to the extent required for Tenant to obtain such services or
utilities.

 

(i)            Landlord
does not warrant that any services or utilities that Tenant may obtain in
respect of the Premises (whether from Landlord, a utility company, municipality
or otherwise, and regardless whether the same are available at the Premises as
of the date hereof or hereafter) will be free from shortages, failures,
variations, or interruptions caused by strikes, lockouts, labor controversies,
accidents, inability to obtain services, fuel, steam, water or supplies or
reasonable substitutes therefor, governmental requirements or restrictions,
acts of war or acts of God or other causes beyond Landlord’s reasonable
control.  None of the same shall be
deemed an eviction or disturbance of Tenant’s use and possession of the
Premises or any part thereof, or, render Landlord liable to Tenant for
abatement of Rent, or relieve Tenant from performance of Tenant’s obligations
under this Lease.  Landlord in no event
shall be liable for damages by reason of loss of profits, business interruption
or other consequential damages.

 

(ii)           Landlord
shall have the right to use electricity, water and other utilities and services
available in the Building, at no cost or charge, to the extent necessary or
reasonable for the performance of its obligations or the enforcement of its
rights hereunder.

 

(iii)          If
Tenant requires electrical service in excess of the service currently
capable of being provided to and within the Building or in excess of the
Property-wide electrical capacity allocated to the Building (as determined by
reference to the maximum capacity of the Building’s meter for electrical
service), then Tenant shall pay any equipment, installation and other
costs required to obtain such service.

 

8.2          Tenant’s
Obligations.  Except as provided in Section 8.1,
Tenant assumes full responsibility for the repair and maintenance of the Premises
and the Building Systems.  Tenant shall
take good care of the Premises and the Building Systems and keep the Premises
and the Building Systems (and not the Common Area and Structural Components,
which are the responsibility of Landlord) in good working order and in a clean,
safe and sanitary condition.  The
Premises and the Building Systems shall continue throughout the Term to be in
as good condition as at the Commencement Date, reasonable wear and tear
excepted; and Tenant shall prevent waste. 
All repairs and replacements by Tenant shall be made and performed:  (a) at Tenant’s cost and expense, (b) by
contractors or mechanics approved by Landlord, such approval not to be
unreasonably withheld or delayed, provided that, absent reasonable grounds to
object to the same arising subsequent to the date hereof, the contractors
listed in Exhibit G are deemed
approved,  (c) so that same shall be
comparable in quality, value and utility to the original work or installation, (d) in
a manner and using equipment and materials that will not interfere with or
impair the operations, use or occupation of the Building, the Building Systems,
or the activities of other tenants of the Building, and (e) in accordance
with Article 10 (if applicable), the Rules and 

 

21

 

Regulations,
and all Legal Requirements.  Tenant shall
reimburse Landlord upon demand for any out-of-pocket expenses incurred by
Landlord in connection with any repairs or replacements required to be made by
Tenant, including, without limitation, any fees charged by Landlord’s
contractors to review plans and specifications prepared by Tenant.  Within ten (10) business days following
Landlord’s request therefor, Tenant shall deliver to Landlord copies of all
service and maintenance contracts and reports for Building Systems in the
possession or control of Tenant with respect to the Property, including but not
limited to HVAC maintenance, elevator and fire records.

 

8.3          Security.  Tenant shall provide and be solely responsible
for the security of the Premises and Tenant’s Agents while in or about the
Premises.  Landlord in its discretion may
engage its own security service for the Property. To the extent, and only to
the extent, that security services provided to the Property by Landlord are of
a supplemental or different scope from those provided by Tenant as of the date
hereof, or otherwise as to which Tenant shall have given Landlord reasonable
notice, Landlord’s cost for such security services shall be an Operating
Expense. In addition, if Landlord is providing security services pursuant to Section 16.5,
Tenant shall be liable to reimburse Landlord’s cost for such services.  Landlord shall not be liable to Tenant or
Tenant’s Agents for any failure to provide security services or any loss,
injury or damage suffered as a result of a failure to provide security
services.

 

8.4          Special Services.  If Tenant requests any services from Landlord
other than those for which Landlord is obligated under this Lease, Tenant shall
make its request in writing and Landlord may elect in its sole discretion
whether to provide the requested services. 
If Landlord provides any special services to Tenant, Landlord shall
charge Tenant for such services at the prevailing rate being charged for such
services by other property owners and property managers of comparable buildings
in the area of the Property, and Tenant shall pay the cost of such services as
Additional Rent within fifteen (15) business days after receipt of Landlord’s
invoice.

 

9.                                      ACCEPTANCE.

 

The Premises as furnished
by Landlord consist of the improvements as they exist as of the Commencement
Date and Landlord shall have no obligation for construction work or
improvements on or to the Premises. 
Prior to entering into this Lease, Tenant has made a thorough and
independent examination of the Premises and all matters related to Tenant’s
decision to enter into this Lease. 
Tenant is thoroughly familiar with all aspects of the Premises and is
satisfied that they are in an acceptable condition and meet Tenant’s
needs.  Tenant does not rely on, and
Landlord does not make, any express or implied representations or warranties as
to any matters including, without limitation, (a) the physical condition
of the Premises, the Building, the Structural Components, Building Systems, or
the Common Area, (b) the existence, quality, adequacy or availability of
utilities serving the Premises, (c) the use, habitability,
merchantability, fitness or suitability of the Premises for Tenant’s intended
use, (d) the likelihood of deriving business from Tenant’s location or the
economic feasibility of Tenant’s business, (e) Hazardous Materials in the
Premises, the 

 

22

 

Building, or on,
in under or around the Property, (f) zoning, entitlements or any laws,
ordinances or regulations which may apply to Tenant’s use of the Premises or
business operations, or (g) any other matter relating to the
Premises.  Tenant has satisfied itself as
to such suitability and other pertinent matters by Tenant’s own inquiries and
tests into all matters relevant in determining whether to enter into this
Lease.  Tenant accepts the Premises in
their existing “as-is” condition.  Tenant
shall, by entering into this Lease, be deemed to have accepted the Premises and
to have acknowledged that the same are in good order, condition and repair.

 

10.                               ALTERATIONS.

 

10.1        Alterations by Tenant.  Tenant shall make no improvements, changes or
alterations in or to the Premises (“Alterations”)
without Landlord’s prior approval. 
Landlord shall not unreasonably withhold approval to any Alteration that
is not a Material Alteration.  “Material Alteration” means an
Alteration that (i) is not limited to the interior of the Premises or
affects the exterior (including the appearance) of the Building or entry ways, (ii) is
structural or affects the structural integrity of the Building or the
structural integrity of the Structural Components, (iii) affects the usage
or the proper functioning of the Building Systems other than to a de minimis extent, (iv) requires the
consent of any Leasehold Mortgagee or the Landlord under the Ground Lease or (v) requires
a change to the Building’s certificate of occupancy.  In its sole discretion, Landlord may
designate certain Material Alterations non-severable Material Alterations (“Non-Severable Material Alterations”).
Notwithstanding the foregoing, Landlord’s consent shall not be required in the
case of Alterations (“Permitted Alterations”)
that are not Material Alterations and that do not exceed a total cost of Two
Hundred Fifty Thousand Dollars ($250,000) per project.

 

Any determination to be
made pursuant to this Section 10.1 as to the cost or price of an
Alteration shall be made on a “job-by-job basis” and all work that is part of
the same Alteration or integrated or related, whether or not performed in
phases or stages, shall be treated as a single Alteration for the purposes of
such determination.

 

10.2        Project Requirements.  The following provisions of this Section 10.2
shall apply to all Alterations, whether or not requiring Landlord’s approval
(unless otherwise noted):

 

(a)           Tenant,
in connection with any Alteration, shall comply with any rules and
regulations as may be from time to time established by Landlord and communicated
in writing to Tenant. Tenant shall not proceed with any Alteration (other than
Permitted Alterations) unless and until Landlord approves Tenant’s plans and
specifications therefor. Any review or approval by Landlord of plans and
specifications with respect to any Alteration is solely for Landlord’ benefit,
and without any representation or warranty to Tenant with respect to the
adequacy, correctness or efficiency thereof, its compliance with Legal
Requirements or otherwise.  Landlord
shall, within ten (10) business days following receipt of Tenant’s plans
and specifications for the performance of any Alteration that is not a Material
Alteration (and within twenty (20) business days following receipt of Tenant’s 

 

23

 

plans and specifications for the performance of any
Alteration that is a Material Alteration) 
advise Tenant of Landlord’s approval or disapproval of such plans and
specifications for such an Alteration or any part thereof and, if approved,
shall advise Tenant, contemporaneously with such approval, whether, upon
completion of any Material Alteration, such Material Alteration shall be deemed
a Non-Severable Material Alteration.  If
Landlord shall fail to approve or disapprove Tenant’s plans and specifications
for such an Alteration or any part thereof within such ten (10) business
day period (or such twenty (20) business day period in the case of Material
Alterations), Tenant shall have the right to give a reminder notice (as
described further below) to Landlord and if Landlord fails to approve or
disapprove Tenant’s plans and specifications or any part thereof within such
two (2) business days after receipt of such reminder notice, Landlord
shall be deemed to have approved such plans and specifications for such an
Alteration or the applicable part thereof. 
If Landlord shall disapprove such plans and specifications for such an
Alteration (or any part thereof), Landlord shall set forth in reasonable detail
its reasons for such disapproval in writing.  Landlord shall advise Tenant within five (5) business
days (or ten (10) business days in the case of Material Alterations)
following receipt of Tenant’s revised plans and specifications, or portions
thereof, of Landlord’s approval or disapproval of the revised plans and
specifications or any portion thereof, and shall set forth in reasonable detail
Landlord’s reasons for any such further disapproval in writing and in
reasonable detail.  If Landlord fails to
approve or disapprove the revised plans and specifications for such an
Alteration or any portion thereof within such five (5) business day period
(or such ten (10) business day period in the case of Material
Alterations), Tenant shall have the right to give a reminder notice to Landlord
and if Landlord fails to approve or disapprove Tenant’s plans and
specifications for such an Alteration or any part thereof within two (2) business
days after receipt of such reminder notice, Landlord shall be deemed to have
approved the revised plans and specifications or such portions thereof.  For the avoidance of doubt, Landlord shall
not unreasonably withhold its approval of plans and specifications for any
Material Alteration.  As used herein, a “reminder
notice” shall include a conspicuous statement that Landlord’s failure to
respond within the specified time shall result in Landlord being deemed to have
approved the Alteration in question.

 

(b)           Upon the
completion of the Alteration in accordance with the terms of this Article 10
Tenant shall submit to Landlord (x) proof evidencing the payment in full
for said Alteration, (y) written unconditional lien waivers of mechanics’
liens and other liens on the Property from all contractors performing said
Alteration and (z) all other submissions as may be, from time to time reasonably
required by Landlord.

 

(c)           Before
commencing the construction of any Alterations, Tenant shall procure or cause
to be procured the insurance coverage described below and provide Landlord with
certificates of such insurance in form reasonably satisfactory to
Landlord.  All such insurance shall
comply with the following requirements of this Section and of Section 14.2.

 

(i)            During
the course of construction, to the extent not covered by property insurance
maintained by Landlord or Tenant pursuant to Article 14, 

 

24

 

covering all improvements in place on the Premises, all materials and
equipment stored at the site and furnished under contract, and all materials
and equipment that are in the process of fabrication at the premises of any
third party or that have been placed in transit to the Premises when such
fabrication or transit is at the risk of, or when title to or an insurable
interest in such materials or equipment has passed to, Tenant or its construction
manager, contractors or subcontractors (excluding any contractors’,
subcontractors’ and construction managers’ tools and equipment, and property
owned by the employees of the construction manager, any contractor or any
subcontractor), such insurance to be written on a completed value basis in an
amount not less than the full estimated replacement value of Alterations.

 

(ii)           Commercial
general liability insurance covering Tenant, Landlord and each construction
manager, contractor and subcontractor engaged in any work on the Premises.

 

(iii)          Workers’
Compensation Insurance approved by the State of California, in the amounts and
coverages required under workers’ compensation laws applicable to the Premises,
and Employer’s Liability Insurance with limits not less than One Million
Dollars ($1,000,000) or such higher amounts as may be required by law.

 

(d)           All
construction and other work in connection with any Alterations shall be done at
Tenant’s sole cost and expense (except as provided in Section 10.3) and in
a prudent and first class manner.  Tenant
shall construct the Alterations in accordance with all Legal Requirements, and
with plans and specifications that are in accordance with the provisions of
this Article 10 and all other provisions of this Lease.

 

(e)           Prior
to the commencement of any construction, alteration, addition, improvements,
repair or landscaping in excess of Fifty Thousand Dollars ($50,000), Landlord
shall have the right to post in a conspicuous location on the Premises and to
record in the public records a notice of Landlord’s nonresponsibility.  Tenant covenants and agrees to give Landlord
at least ten (10) days prior written notice (or concurrent notice in
the event of an emergency repair required to protect human health or safety) of
the commencement of any such construction, alteration, addition, improvement,
repair or landscaping in order that Landlord shall have sufficient time to post
such notice.

 

(f)            Tenant
shall take all necessary safety precautions during any construction.

 

(g)           Tenant
shall prepare and maintain (i) on a current basis during construction,
annotated plans and specifications showing clearly all changes, revisions and
substitutions during construction, and (ii) upon completion of
construction, as-built drawings showing clearly all changes, revisions and
substitutions during construction, including, without limitation, field changes
and the final location of all mechanical equipment, utility lines, ducts,
outlets, structural members, walls, partitions and other significant
features.  These as-built drawings and
annotated plans and specifications shall be 

 

25

 

kept at the Premises and Tenant shall update them as
often as necessary to keep them current. 
The as-built drawings and annotated plans and specifications shall be
made available for copying and inspection by Landlord at all reasonable times,
and are subject to Landlord’s approval as provided in subsection (a) above.

 

(h)           Upon
completion of the construction of any Alterations in excess of Fifty Thousand
Dollars ($50,000) during the Term, Tenant shall file for recordation, or cause
to be filed for recordation, a notice of completion and shall deliver to
Landlord evidence satisfactory to Landlord of payment of all costs, expenses,
liabilities and Liens arising out of or in any way connected with such
construction (except for Liens that are contested in the manner provided
herein).

 

(i)            Tenant
shall reimburse Landlord within five (5) days following demand for any
out-of-pocket expenses incurred by Landlord in the review of any Alterations
proposed to be made by Tenant, including fees charged by Landlord’s contractors
or consultants to review plans and specifications, and such reimbursement
obligation shall constitute Additional Rent hereunder.

 

(j)            Should
any Liens be filed against any portion of the Property by reason of the acts or
omissions of, or because of a claim against, Tenant or anyone claiming under or
through Tenant, Tenant shall cause the same to be canceled or discharged of
record by bond or otherwise within twenty (20) business days after notice from
Landlord.  If Tenant shall fail to cancel
or discharge said lien or liens within said twenty (20) business day period, Landlord
may cancel or discharge the same and, upon Landlord=s demand, Tenant shall
reimburse Landlord for all costs incurred in canceling or discharging such
liens, together with interest thereon at the Interest Rate from the date
incurred by Landlord to the date of payment by Tenant, such reimbursement to be
made within twenty (20) days after receipt by Tenant of a written statement
from Landlord as to the amount of such costs. Tenant shall indemnify and hold
Landlord harmless from and against all costs (including, without limitation,
attorneys= fees and disbursements and costs of suit), losses, liabilities or
causes of action arising out of or relating to any Alteration, including,
without limitation, any mechanics= or other liens asserted in connection with
such Alteration.

 

(k)           Tenant
shall deliver to Landlord, within sixty (60) days after the completion of an
Alteration costing in excess of $50,000, “as-built” drawings thereof.  During the Term, Tenant shall keep records of
Alterations costing in excess of $50,000 including plans and specifications,
copies of contracts, invoices, evidence of payment and all other records
customarily maintained in the real estate business relating to Alterations and
the cost thereof and shall, within thirty (30) days after demand by Landlord,
furnish to Landlord copies of such records.

 

(l)            All
Alterations to and fixtures installed by Tenant in the Premises (other than
Tenant’s Property) shall be fully paid for by Tenant in cash and not be subject
to conditional bills of sale, chattel mortgages, or other title retention
agreements.

 

26

 

10.3        Restoration Obligations.  (a)  Landlord shall have the right to
require Tenant to restore the Premises or any portion or component thereof,
including any Building System or any portion or component thereof, affected by
any Alteration to its condition prior to the commencement of such Alteration,
which restoration Tenant shall have the obligation to complete by no later than
the Expiration Date.  Landlord shall
notify Tenant in writing at the time of Landlord’s approval of the Alterations,
as applicable, whether or not the proposed Alterations will be required to be
removed by Tenant at the end of the Term. 
Tenant shall have no obligation to remove any Alterations that Landlord
has not designated in writing for removal. 
Tenant shall repair or pay the cost of repairing any damage to the
Premises or to the Building caused by the removal of Alterations.

 

(b)           (i)  Tenant
shall be required to deposit security with Landlord to secure Tenant’s
obligation to restore any Alteration in an amount sufficient to secure the
restoration of the Alteration in the manner discussed below.  For the elimination of doubt, all such
restoration shall be subject to the provisions hereof relating to the
performance of Alterations.  Prior to
undertaking the Alteration, Tenant shall furnish to Landlord one of the
following (as selected by Tenant): (i) a cash deposit or (ii) an
irrevocable, unconditional, negotiable letter of credit, issued by a bank and
in a form satisfactory to Landlord, each to be equal to 100% of the cost of the
restoration, as reasonably estimated by Landlord, in an amount not to exceed an
aggregate of $1 million during the Term. 
Any such letter of credit shall be for one year and shall be renewed by
Tenant each and every year until the restoration in question is completed and
shall be delivered to Landlord not less than 30 days prior to the expiration of
the then current letter of credit, failing which Landlord may present the then
current letter of credit for payment.  Upon
(A) the completion of the restoration in accordance with the terms of this
Article 10 and (B) the submission to Landlord of the items described
in clauses (x), (y) and (z) of Section 10.2(b), the security deposited
with Landlord (or the balance of the proceeds thereof, if Landlord has drawn on
the same) shall be returned to Tenant. 
Upon Tenant’s failure properly to perform, complete and fully pay for
the restoration, as reasonably determined by Landlord, Landlord may, upon
notice to Tenant, draw on the security deposited under this Section 10.4(b) to
the extent Landlord deems reasonably necessary in connection with the
restoration and/or protection of the Premises or the Property and the payment
of any costs, damages or expenses resulting therefrom.

 

(ii)           To the
extent that Landlord shall be holding any such security, Landlord shall have
the right from time-to-time, subject to the $1 million limit of Section 10.4(b)(i) above,
to require Tenant to deposit additional security as it pertains to any and all
Alterations made by Tenant which Tenant shall be obligated to restore under
this Article 10, if Landlord shall reasonably establish that the security
then held by Landlord with respect to any and all such Alterations will be
inadequate for their intended purposes. 
Any dispute regarding the sufficiency of any security deposited with
Landlord which the parties shall be unable to resolve within fifteen (15) days
after one party shall have notified the other party that such a bona fide
dispute exists and shall be resolved by arbitration in accordance with Section 18.4.

 

27

 

(iii)          To
the extent that Landlord shall be holding any such security, Landlord shall be
permitted to use such security to complete Tenant’s obligation to restore the
Alteration with respect to which such security has been deposited by Tenant if
Tenant shall default in Tenant’s obligation to restore the applicable
Alteration.  If at any time Landlord
shall notify Tenant that Landlord or its consultants shall have concluded that
there is a substantial likelihood that any Alteration that Tenant is obligated
to restore or any Turnover Alteration will not be completed by the date by
which it shall be required to be completed hereunder, then for the period of
thirty (30) days following such notification by Landlord to Tenant, Landlord
and Tenant and their respective architects and/or engineers shall endeavor to
resolve the matter.  If the parties shall
be unable to resolve the matter, then at any time after the expiration of such
thirty (30) day period, either party may submit the matter to arbitration under
Section 18.4 hereof, with the sole question to be determined by such
arbitration being whether or not there is a substantial likelihood that any
such Alteration will not be completed by the date by which it shall be required
to be completed hereunder. If the arbitration is determined in favor of
Landlord, then Landlord shall have the right (but shall not be obligated) to
use any security then on deposit with Landlord to complete the same. In the
event that Landlord shall complete such Alteration for a cost that is less than
the then available balance of any security deposited to secure Tenant’s
obligation to perform the Alteration in question, then any excess unused
portion of such security being held by Landlord after the restoration of the
applicable Alteration with respect to which it was deposited with Landlord
shall belong to and promptly be refunded by Landlord to Tenant.

 

(c)           Notwithstanding
anything to the contrary contained in this Article 10 or elsewhere in this
Lease, Tenant shall be obligated to surrender the Premises and the Building on
the Expiration Date in the condition and quality that the Premises and the
Building (including, without limitation, the Building Systems) would have been
in at the time of such surrender had Tenant complied with the terms of this
Lease (any such Alteration required to be performed by Tenant to satisfy the
foregoing requirement being herein referred to as a “Turnover Alteration”).  At least one hundred and twenty days (120)
days prior to, but no earlier than one hundred and eighty (180) days prior to,
the Expiration Date, Landlord shall notify Tenant, and Landlord and Tenant
shall endeavor to agree upon any Turnover Alteration remaining to be performed
by Tenant.  If the parties shall be
unable to resolve any dispute regarding whether Tenant has an obligation to
perform any Turnover Alteration or regarding the manner in which the same shall
be required to be performed within such one hundred and twenty (120) day
period, then either party may submit the matter to arbitration in accordance
with Section 18.4.  All Turnover
Alterations shall be performed in accordance with the provisions of this Article 10
and other portions of this Lease applicable to Alterations.

 

(d)           Notwithstanding
anything to the contrary contained in this Article 10 or elsewhere in this
Lease, Tenant shall not perform any Alteration which Tenant shall be 

 

28

 

obligated to restore under this Article 10 unless
the restoration of such Alteration can be completed as and when required under Article 10.

 

(e)           Without
limiting the generality of any other provision of this Lease, in the event that
Tenant shall fail to restore any Alteration that it is obligated hereunder to
restore or shall fail to perform any Turnover Alteration, and the failure to
perform same shall interfere with the use and occupancy of the Premises or any
portion thereof, then Tenant shall be liable to Landlord for failure to make
such Turnover Alterations.

 

10.4        Ownership of Improvements.  Except as provided in Section 10.5, all
Alterations, and any other appurtenances, fixtures, improvements, equipment,
additions and property permanently attached to or installed in the Premises at
the commencement of or during the Term, shall at the end of the Term become
Landlord’s property without compensation to Tenant, or be removed in accordance
with this Section.  Landlord shall notify
Tenant in writing at the time of Landlord’s approval of the Alterations, as
applicable, whether or not the proposed Alterations will be required to be
removed by Tenant at the end of the Term. 
Tenant shall have no obligation to remove any Alterations that Landlord
has not designated in writing for removal. 
Tenant shall repair or pay the cost of repairing any damage to the
Premises or to the Building caused by the removal of Alterations.  If Tenant fails to perform its repair obligations,
without limiting any other right or remedy, Landlord may on five (5) business
days’ prior written notice to Tenant perform such obligations at Tenant’s
expense and Tenant shall promptly reimburse Landlord upon demand for all
out-of-pocket costs and expenses incurred by Landlord in connection with such
repair.  In addition, any such
reimbursement shall include a fifteen percent (15%) administrative fee to cover
Landlord’s overhead in undertaking such repair. 
The reimbursement and administrative fee shall be Additional Rent.
Tenant’s obligations under this Section shall survive the termination of
this Lease.

 

10.5        Tenant’s Personal
Property.  All furniture, trade
fixtures, furnishings, equipment and articles of movable personal property
installed in the Premises by or for the account of Tenant (except for ceiling
and related fixtures, HVAC equipment and floor coverings), and which can be
removed without structural or other material damage to the Building
(collectively, “Tenant’s Property”) shall be
and remain the property of Tenant and may be removed by it at any time during
the Term and Tenant may grant a Lien on such personal property.  Tenant shall remove from the Premises all
Tenant’s Property on or before the Termination Date, except such items as the
parties have agreed pursuant to the provisions of this Lease or by separate
agreement are to remain and to become the property of Landlord.  Tenant shall repair or pay the cost of
repairing any damage to the Premises or to the Building resulting from such
removal, and the provisions of Section 10.4 above shall apply in the event
Tenant fails to do so.  Any items of
Tenant’s Property which remain in the Premises after the Termination Date may,
on five (5) business days’ prior written notice to Tenant, at the option
of Landlord, be deemed abandoned and in such case may either be retained by
Landlord as its property or be disposed of, without accountability, at Tenant’s
expense in such manner as Landlord may see fit.

 

29

 

10.6        Tenant Improvement Allowance. 
Landlord agrees to pay to Tenant in connection with Tenant’s initial
build-out of the Premises (“Tenant Improvements”) a maximum amount of $350,000,
hereinafter referred to as the “Tenant Improvement Allowance”.  The Tenant Improvement Allowance shall
represent Landlord’s sole and total contribution to Tenant Improvements.  The Tenant Improvements shall be made and the
Tenant Improvement Allowance shall be applied in accordance with the terms of
the Tenant Work Letter attached as Exhibit F
hereto.

 

11.                               LIENS.

 

Tenant shall promptly
pay, in cash, the cost of all Alterations, repairs, restorations or
replacements made by or on behalf of Tenant. 
Tenant shall keep the Premises free from any Liens arising out of any
work performed, material furnished or obligations incurred by or for Tenant.  Tenant hereby indemnifies Landlord against
liability for any and all Liens arising out of work performed, material furnish
or obligations incurred by or for Tenant. 
If Tenant shall not, within ten (10) days following notice of the
imposition of any such Lien, cause the Lien to be released of record by payment
or posting of a proper bond, Landlord shall have, in addition to all other
remedies provided in this Lease and by law, the right but not the obligation to
cause any such Lien to be released by such means as it shall deem proper,
including payment of the claim giving rise to such Lien.  All such sums paid by Landlord and all
expenses incurred by it in connection therewith (including, without limitation,
reasonable counsel fees) shall be payable to Landlord by Tenant within five (5) days
of Landlord’s demand with interest from the date incurred at the Interest
Rate.  Landlord shall have the right at
all times to post and keep posted on the Premises any notices permitted or
required by law or that Landlord shall deem proper for the protection of
Landlord, the Premises, and the Building from Liens.

 

Landlord shall at its own
cost and expense, take such action as may be necessary (by bonding or other
appropriate action) to duly discharge and satisfy in full promptly any Lessor
Lien, provided, however, Landlord need not discharge or satisfy any Lessor Lien
being contested by Landlord in good faith and by appropriate proceedings so
long as such proceedings do not involve any material danger of sale, forfeiture
or loss of any part of Tenant’s leasehold interest in the Property.  In addition, Landlord shall use commercially
reasonable efforts to cause persons claiming by, through or under Landlord
(excluding Tenant) to promptly discharge and satisfy in full any Lien against
Tenant’s leasehold interest in the Property. 
“Lessor Liens” means Liens
against the Property or the Ground Lease that result from (i) claims
against the Landlord or (ii) Real Estate Taxes payable by Landlord which
are not required to be paid by Tenant. 
For the avoidance of doubt, the foregoing shall not apply to any
Leasehold Mortgage or Lien related thereto, any Prior Lease, any Lien in effect
as of the Commencement Date or any other Lien permitted by the terms of this
Lease.

 

12.                               COMPLIANCE
WITH LAWS AND INSURANCE REQUIREMENTS.

 

12.1        Legal Requirements.  Tenant, at Tenant’s cost and expense, shall
comply with all Legal Requirements relating to its use or occupancy of the
Premises or any 

 

30

 

Alterations
and Landlord shall comply with all Legal Requirements applicable with respect
to Landlord’s obligations under this Lease. 
Without limiting the foregoing, Tenant shall be solely responsible for
compliance with and shall make or cause to be made all such improvements and
alterations to the Premises (including, without limitation, removing barriers
and providing alternative services) as shall be required to comply with all
applicable building codes, laws and ordinances relating to public accommodations,
including the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12111
et seq. (the “ADA”),
and the ADA Accessibility Guidelines promulgated by the Architectural and
Transportation Barriers Compliance Board, the public accommodations title of
the Civil Rights Act of 1964, 42 U.S.C. §§ 2000a et seq., the
Architectural Barriers Act of 1968, 42 U.S.C. §§ 4151 et seq., as amended,
Title V of the Rehabilitation Act of 1973, 29 U.S.C. §§ 790 et seq., the
Minimum Guidelines and Requirements for Accessible Design, 36 C.F.R. Part 1190,
the Uniform Federal Accessibility Standards, and applicable State law, as the
same may be amended from time to time, or any similar or successor laws,
ordinances and regulations, now or hereafter adopted.  Tenant’s liability shall be primary and
Tenant shall indemnify Landlord in accordance with Section 14.1 in the
event of any failure or alleged failure of Tenant to comply with Legal
Requirements.  Any work or installations
made or performed by or on behalf of Tenant or any person or entity claiming
through or under Tenant pursuant to the provisions of this Section shall
be made in conformity with and subject to the provisions of Article  10.

 

12.2        Insurance Requirements.  (a)  Tenant shall not do anything, or
permit anything to be done, in or about the Premises that would:  (i) invalidate or be in conflict with
the provisions of or cause any increase in the applicable rates for any fire or
other property insurance policies covering the Building or any property located
therein (unless Tenant pays for such increased costs and the basis for such
increased costs can be eliminated by Landlord without any material expense or
delay upon Landlord’s repossession of the Premises at the expiration or earlier
termination of the Term), or (ii) result in a refusal by fire insurance
companies of good standing to insure the Building or any such property in
amounts reasonably satisfactory to Landlord (which amounts shall be comparable
to the amounts required by comparable landlords of comparable buildings, or (iii) result
in the cancellation of any fire or other property insurance policy maintained
by or for the benefit of Landlord (subject to the same parenthetical contained
in clause (i) above).  Tenant, at
Tenant’s expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body that shall hereafter perform
the function of such Association.

 

(b)           If,
by reason of any act or omission on the part of Tenant which is inconsistent
with the use permitted hereunder, whether or not Landlord has consented to the
same, the rate of “all risk” or other type of insurance maintained by Landlord
on the Property or the Building or other property of Landlord shall be higher
than it otherwise would be, but for such act or omission, Tenant shall
reimburse Landlord for that part of the premiums for such insurance paid by
Landlord because of such act or omission on the part of Tenant, which sum shall
be Additional Rent and payable within five (5) days of demand.  If, due to the occupancy or abandonment of,
or Tenant’s failure to occupy, the Premises as 

 

31

 

herein provided, any such insurance shall be canceled
by the insurance carrier, then, in any of such events, Tenant hereby
indemnifies Landlord against liability which would have been covered by such
insurance.  Landlord shall give Tenant
notice of any such cancellation promptly after Landlord shall have received
written notice thereof.  Tenant shall
also pay any increase in premiums on any rent insurance carried by Landlord for
its protection against rent loss through fire or casualty if such increase shall
result from any of the foregoing events.

 

13.                               HAZARDOUS
MATERIALS.

 

13.1        Definitions.  As used in this Lease, the following terms
shall have the following meanings:

 

(a)           “Environmental Activity” means
any use, storage, holding, release, emission, discharge, manufacturing,
generation, processing, abatement, removal, disposition, handling,
transportation, discharge or release of any Hazardous Materials from, into, on
or under the Building, the Common Area or the Property.

 

(b)           “Environmental Laws” mean all
Legal Requirements, now or hereafter in effect, relating to environmental
conditions, industrial hygiene or Hazardous Materials on, under or about the
Property, including without limitation the comprehensive environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601,
et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801,
et seq., the Solid Waste Disposal Act, 42 U.S.C. Section 6901, et
seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., the Clean
Air Act, 42 U.S.C. Section 7401, et seq., the Toxic Substances Control
Act, 15 U.S.C. Section 2601 through 2629, the Safe Drinking Water Act, 42
U.S.C. Sections 300f through 300j, and any similar state and local laws and
ordinances and the regulations now or hereafter adopted and published and/or
promulgated pursuant thereto.

 

(c)           “Hazardous Material” means any
chemical, substance, medical or other waste or combination thereof which is or
may be hazardous to the environment or human or animal health or safety due to
its radioactivity, ignitability, corrosivity, reactivity, explosivity,
toxicity, carcinogenicity, mutagenicity, phytotoxicity or other harmful or
potentially harmful properties or effects. 
Hazardous Materials shall include, without limitation, petroleum
hydrocarbons, including crude oil or any fraction thereof, asbestos, radon,
polychlorinated biphenyls (PCBs), methane and all substances which now or in
the future may be defined as “hazardous substances,” “hazardous wastes,” “extremely
hazardous wastes,” “hazardous materials,” “toxic substances,” “infectious
wastes,” “biohazardous wastes,” “medical wastes,” “radioactive wastes” or which
are otherwise listed, defined or regulated in any manner pursuant to any
Environmental Laws.

 

(d)           “Tenant’s Hazardous Materials”
means any Hazardous Materials resulting from the Environmental Activity by
Tenant or any of Tenant’s Agents.

 

32

 

13.2        Environmental Release.  Tenant represents to Landlord that Tenant is
aware that detectable amounts of Hazardous Materials have come to be located
on, beneath and/or in the vicinity of the Premises.  Tenant has made such investigations and
inquiries as it deems appropriate to ascertain the effects, if any, of such substances
and contaminants on its operations and persons using the Building and the
Common Area.  Landlord makes no
representation or warranty with regard to the environmental condition of the
Building, the Common Area or the Property. 
Tenant hereby releases Landlord and Landlord’s officers, directors,
trustees, agents and employees from any and all claims, demands, debts,
liabilities, and causes of action of whatever kind or nature, whether known or
unknown or suspected or unsuspected which Tenant or any of Tenant’s Agents may
have, claim to have, or which may hereafter accrue against the released parties
or any of them, arising out of or relating to or in any way connected with
Hazardous Materials presently in, on or under, or now or hereafter emanating
from or migrating onto the Building or the Property (except to the extent such
existence, emanation or migration is caused by Landlord or Landlord’s
Agents).  In connection with such
release, Tenant hereby waives any and all rights conferred upon it by the
provisions of Section 1542 of the California Civil Code, which reads as
follows:

 

A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.

 

13.3        Use of Hazardous
Materials.  Tenant shall not cause or
permit any Hazardous Materials to be used, stored, discharged, released or
disposed of in the Premises or cause any Hazardous Materials to be used,
stored, discharged, released or disposed of in, from, under or about, the
Property, or any other land or improvements in the vicinity of the Property,
excepting only the types and minor quantities of Hazardous Materials which are
normally used in connection with Tenant’s permitted use, operation and
maintenance of the Premises and then only in strict accordance with all Legal
Requirements, including all Environmental Laws (“Permitted
Substances”).  Tenant
shall, at its own expense, procure, maintain in effect and comply with all
conditions of any and all permits, licenses, and other governmental and
regulatory approvals required for Tenant’s use of Hazardous Materials at the
Premises, including, without limitation, discharge of appropriately treated
materials or wastes into or through any sanitary sewer serving the
Building.  Tenant shall in all respects
handle, treat, deal with and manage any and all Tenant’s Hazardous Materials in
total conformity with all Environmental Laws and prudent industry practices
regarding management of such Hazardous Materials.  Without limiting the foregoing, if any Tenant’s
Hazardous Materials result in contamination of the Building, or any soil or
groundwater in, under or about the Property in each case to the extent the
presence of same amounts to a violation of any Legal Requirement or poses a
threat to human health or safety, Tenant, at its expense, shall promptly take
all actions necessary to return the Building and/or the Property, to the
condition existing prior to the appearance of the Tenant’s Hazardous Material,
subject to Landlord’s right to approve Tenant’s proposed remediation
method.  On or prior to the Termination
Date, Tenant shall cause all Tenant’s Hazardous Materials in, on, under or 

 

33

 

about the
Building to be removed in accordance with and in compliance with all Legal
Requirements.  Tenant shall promptly
notify Landlord and obtain Landlord’s written approval before taking any
remedial action in response to the presence of any Tenant’s Hazardous Materials
or entering into any settlement agreement, consent decree or other compromise
with respect to any claims relating to Tenant’s Hazardous Materials.

 

13.4        Indemnity.  Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord), protect and hold Landlord and Landlord’s
trustees, directors, officers, agents, shareholders, direct or indirect
beneficial owners and employees, any Leasehold Mortgagees, and any Prior
Lessors, and their respective successors and assigns (collectively, “Landlord’s Agents”), free and
harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including reasonable attorneys’ and
consultants’ fees and oversight and response costs) to the extent arising from (a) Environmental
Activity by Tenant or Tenant’s Agents; or (b) failure of Tenant or Tenant’s
Agents to comply with any Environmental Law with respect to Tenant’s
Environmental Activity; or (c) Tenant’s failure to remove Tenant’s
Hazardous Materials as required in Section 13.3.

 

13.5        No Lien.  Tenant shall not suffer any Lien to be
recorded against the Building or the Property as a consequence of any Tenant’s
Hazardous Materials, including any so called state, federal or local “super
fund” Lien related to the remediation of any Tenant’s Hazardous Materials in or
about the Building or the Property.

 

13.6        Investigation.  In the event Hazardous Materials are
discovered in or about the Building or the Property, and Landlord reasonably
believes that such Hazardous Materials are Tenant’s Hazardous Materials, then
Landlord shall have the right to appoint a consultant to conduct an
investigation to determine the nature and extent of such Hazardous Materials,
whether such Hazardous Materials are Tenant’s Hazardous Materials, and the
corrective measures, if any, required to remove such Hazardous Materials.  If such Hazardous Materials are determined to
be Tenant’s Hazardous Materials, Tenant, at its expense, shall comply with all
investigation, remediation or other actions required by any applicable
governmental authority and reasonably approved by Landlord and shall promptly
reimburse Landlord for all costs incurred by Landlord in connection with such
investigation, along with a fifteen percent (15%) administrative fee to cover
Landlord’s costs and overhead in undertaking or supervising such work.  The reimbursement and administrative fee
shall be Additional Rent.

 

13.7        Notices.  Tenant shall notify Landlord of any inquiry,
test, claim, investigation or enforcement proceeding by or against Tenant or
the Premises or the Property known to Tenant within five (5) business days
of obtaining knowledge thereof concerning any Hazardous Materials.  Tenant shall immediately notify Landlord of
any release or discharge of Hazardous Materials on, in under or about the
Property.  Tenant acknowledges that
Landlord, as the owner of the Property, shall have the sole right at its
election and at Tenant’s expense, to negotiate, defend, approve and appeal any
action taken 

 

34

 

or order
issued with regard to Tenant’s Hazardous Materials by any applicable
governmental authority.

 

13.8        Surrender.  Tenant shall surrender the Premises to
Landlord, upon the expiration or earlier termination of the Lease, free of
Tenant’s Hazardous Materials except for Permitted Substances and other
Hazardous Materials the presence of which would not and could not reasonably be
expected to result in a violation of any Legal Requirements or pose a threat to
human health or safety.  If Tenant fails
to so surrender the Premises, Tenant shall indemnify and hold Landlord harmless
from all losses, costs, claims, damages and liabilities resulting from Tenant’s
failure to surrender the Premises as required by this Section 13.8,
including, without limitation, (a) any claims or damages arising in
connection with the condition of the Premises, and (b) damages occasioned
by Landlord’s inability to relet the Premises or a reduction in the fair market
and/or rental value of the Building or any portion thereof, by reason of the
existence of any Tenant’s Hazardous Materials.

 

13.9        Survival.  The provisions of this Article 13 shall
survive the expiration or earlier termination of this Lease.

 

14.                               INDEMNITY;
INSURANCE.

 

14.1        Indemnity.  Tenant shall indemnify, protect, defend and
save and hold Landlord, Landlord’s Agents (the “Indemnified
Parties”) harmless from and against any and all losses, costs,
liabilities, claims, judgments, liens, damages (including consequential
damages) and expenses, including, without limitation, reasonable attorneys’
fees and costs, and reasonable investigation costs, incurred in connection with
or arising from:  (a) any default by
Tenant in the observance or performance of any of the terms, covenants or
conditions of this Lease on Tenant’s part to be observed or performed,
including Tenants obligations under Article 6 with respect to the Ground
Lease, (b) the use or occupancy or manner of use or occupancy of the
Premises, the Building and the Property by Tenant and Tenant’s Agents or any
person claiming under Tenant, (c) the condition of the Premises, and any
occurrence on the Premises, the Building or the Property from any cause
whatsoever, except to the extent caused by the gross negligence or willful
misconduct of the Indemnified Parties, and (d) any negligence of Tenant or
of Tenant’s Agents, in, on or about the Premises, the Building or the Common
Area.  In case any action or proceeding
be brought, made or initiated against the Indemnified Parties relating to any
matter covered by Tenant’s indemnification obligations under this Section or
under Section 13.4, Tenant, upon notice from the Landlord, shall at its
sole cost and expense, resist or defend such claim, action or proceeding by
counsel approved by the Indemnified Parties. 
Notwithstanding the foregoing, to the extent any Indemnified Party
reasonably believes a conflict of interest exists between such Indemnified
Party and any other Indemnified Party, each of the Indemnified Parties may
retain its own counsel to defend or assist in defending any claim, action or
proceeding, and Tenant shall pay the reasonable fees and disbursements of such
counsel.  Tenant’s obligations under this
Section shall survive the expiration or earlier termination of this
Lease.  Each of the Indemnified Parties
is an intended third-party beneficiary of this Section 14.1 and shall be
entitled to enforce the provisions hereof.

 

35

 

14.2        Insurance.  Tenant shall procure at its sole cost and
expense and keep in effect during the Term:

 

(a)           commercial
general liability insurance covering Tenant’s operations in the Premises and
the use and occupancy of the Premises. 
Such insurance shall include contractual liability. Such coverage shall
be written on an “occurrence” form and shall have a minimum combined single
limit of liability of not less than Ten Million Dollars ($10,000,000).  Tenant’s policy shall be written to apply to
all bodily injury, property damage and personal injury and provide for coverage
of owned and non-owned automobile liability, if applicable.  Such insurance shall name Landlord and
Indemnified Parties as an Additional Insured, and shall provide that Landlord
will receive thirty (30) days’ written notice from the insurer prior to any
cancellation and shall provide that it is primary insurance;

 

(b)           “All
Risk” commercial property insurance with respect to Tenant’s Property,
including furniture, fittings, installations, alterations, additions,
partitions and fixtures or anything in the nature of a leasehold improvement
made or installed by or on behalf of the Tenant in an amount of not less than
one hundred percent (100%) of the full replacement cost thereof as shall from
time to time be determined by Tenant in form satisfactory to Landlord;

 

(c)           Worker’s
Compensation Insurance in the amounts and coverages required under worker’s
compensation laws applicable to Tenant and/or the Premises from time to time,
and Employer’s Liability Insurance, with limits of not less than one million
dollars ($1,000,000) such higher amounts as may be required by law; and

 

(d)           any
other form or forms of insurance as Landlord may reasonably require from time
to time (other than insurance that Landlord is required to maintain) in amounts
and for insurable risks (on commercially reasonable terms) against which a
prudent tenant would protect itself to the extent landlords of comparable
buildings in the vicinity of the Building require their tenants to carry such
other form(s) of insurance.

 

14.3        Policies.  All policies of insurance provided for herein
shall be issued by insurance companies with general policyholders’ rating of
not less than A, as rated in the most current available “Best’s Insurance
Reports,” and not prohibited from doing business in the State of California.  Certificates of insurance shall be delivered
to Landlord prior to the delivery of possession of the Premises to Tenant and
thereafter prior to the expiration of the term of each such policy.  All such policies of insurance shall provide
that the company writing said policy will give to Landlord thirty (30) days
notice in writing in advance of any cancellation.  No policy shall have a deductible in excess
of $500,000 for any one occurrence.

 

14.4        Landlord’s Rights.  Should Tenant fail to take out and keep in
force each insurance policy required under this Article 14, or should such
insurance not be approved by Landlord and should the Tenant not rectify the
situation within two (2) business days after written notice from Landlord
to Tenant, Landlord shall have the right, without 

 

36

 

assuming any
obligation in connection therewith, to purchase such insurance at the sole cost
of Tenant, and all costs incurred by Landlord shall be payable within five (5) days
of demand to Landlord by Tenant as Additional Rent and without prejudice to any
other rights and remedies of Landlord under this Lease.  Notwithstanding anything to the contrary set
forth herein, at any time and from time to time, upon reasonable notice to
Tenant, Landlord may elect to insure all or any part of the Premises under its
own policy or policies of insurance, in which event, during the period of such
coverage the cost of any such policies shall be an Operating Expense hereunder
and Tenant may elect to discontinue insurance coverage it is otherwise required
to carry hereunder to the extent of such insurance provided by Landlord.

 

14.5        Waiver of Subrogation.  Notwithstanding anything to the contrary in
this Lease, the parties hereto (and their respective agents, employees,
successor, assignees and, as to Tenant, its subtenants) release each other and
their respective agents, employees, successor, assignees and, as to Tenant, its
subtenants from 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, (ii) which is required to be insured against under this
Lease, or (iii) which would normally be covered by the standard “all risk”
property insurance.  Landlord and Tenant
(and each of Tenant’s subtenants) shall each obtain from their respective
Commercial Property insurers at any time during the Term insuring or covering
the Property 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.

 

14.6        No Liability.  No approval by Landlord of any Tenant
insurer, or the terms or conditions of any policy, or any coverage or amount of
insurance, or any deductible amount shall be construed as a representation by
Landlord of the solvency of the insurer or the sufficiency of any policy or any
coverage or amount of insurance or deductible and Tenant assumes full risk and
responsibility for any inadequacy of insurance coverage or any failure of
insurers.

 

15.                               ASSIGNMENT
AND SUBLETTING.

 

15.1        Consent Required.  Except as otherwise explicitly provided
herein, 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 its interest in or rights with respect to the
Premises or its leasehold estate (collectively, “Assignment”), without Landlord’s written consent,
which consent Landlord may withhold in its sole and absolute discretion, or (ii) permit
all or any portion of the Premises to be occupied by anyone other than itself
or sublet all or any portion of the Premises (collectively, “Sublease”) without Landlord’s
prior written consent, such consent not to be unreasonably withheld.

 

15.2        Notice.  If Tenant desires to enter into a Sublease of
the Premises or Assignment of this Lease, it shall give written notice (the “Transfer Notice”) to Landlord
of 

 

37

 

its intention
to do so, which notice shall contain (a) the name and address of the
proposed assignee, subtenant or occupant (the “Transferee”), (b) the nature of the proposed
Transferee’s business to be carried on in the Premises, (c) the terms and
provisions of the proposed Assignment or Sublease, and (d) such financial
information as Landlord may reasonably request concerning the proposed
Transferee.

 

15.3        Terms of Approval.  Landlord shall respond to Tenant’s request
for approval within fifteen (15) business days after receipt of the
Transfer Notice, and if Landlord fails to respond within such fifteen
(15) day period, Landlord shall be deemed to have disapproved such
proposed Assignment or Sublease.  If Landlord
approves the proposed Assignment or Sublease, or if an Assignment or Sublease
is permitted by operation of law, Tenant may, not later than thirty
(30) days thereafter, enter into the Assignment or Sublease with the
proposed Transferee upon the terms and conditions set forth in the Transfer
Notice, and sixty percent (60%) of the Excess Rent received by Tenant shall be
paid to Landlord as and when received by Tenant and forty percent (40%) of the
Excess Rent received by Tenant shall be retained by Tenant. “Excess Rent” means the gross
revenue received from the Transferee during the Sublease term or with respect
to the Assignment, less (a) the gross revenue paid to Landlord by Tenant
during the period of the Sublease term or during the Assignment; (b) any
reasonably documented tenant improvement allowance or other economic concession
(planning allowance, moving expenses, etc.), paid by Tenant to the Transferee
or to a third party in connection with the transfer; (c) customary and
reasonable external brokers’ commissions to the extent paid and documented; (d) reasonable
attorneys’ fees; and (e) reasonable costs of advertising the space for
Sublease or Assignment (collectively, “Transfer
Costs”).  Tenant
shall not have to pay to Landlord any Excess Rent until Tenant has recovered
its Transfer Costs.

 

15.4        Certain Conditions
Applicable to All Sublettings and Assignments.  Any assignment or subletting will also be
subject to the following conditions:

 

(a)           At
least thirty (30) days prior to the date on which such subletting or assignment
shall become effective, Tenant shall furnish to Landlord all of the documents
and information required under this Section 15.4 together with the
Transfer Notice.

 

(b)           At
both the time of Tenant’s furnishing to Landlord the information and documents
required under this Section 15.4 and the time at which the subletting or
assignment becomes effective, an Event of Default shall not have occurred.

 

(c)           If
required, the consent of the Leasehold Mortgagee under such Leasehold Mortgage
shall have been obtained and Tenant shall have paid to Landlord, or at Landlord’s
election reimbursed Landlord for, any charges or payments which are the
responsibility of Landlord under the Leasehold Mortgage in connection with such
subletting or assignment.

 

(d)           Tenant
shall furnish to Landlord a copy of the final executed copy of the Sublease or
Assignment documents used in connection with the Sublease or Assignment, 

 

38

 

and of each instrument delivered in connection
therewith within five (5) business days after the execution and delivery
thereof.

 

(e)           Such
Sublease or Assignment shall be for the actual use and physical occupancy of
the Premises, in the case of an Assignment, and the portion of the Premises
sublet, in the case of a Sublease, by the assignee or subtenant, as applicable.

 

(f)            No
assignee or subtenant shall be a person having, directly or indirectly,
sovereign or diplomatic immunity or having immunity from (or otherwise not
being subject to) the service of process in and the jurisdiction of the courts
of California.

 

(g)           Following
the proposed Assignment or Sublease, the assignee or subtenant shall use the
Premises only for the specific use permitted under Article 7.

 

(h)           The
instrument of Sublease or Assignment shall not purport to grant to the
subtenant or assignee thereunder any rights greater than or inconsistent with
those granted to Tenant under this Lease, including for this purpose any term
in the instrument of assignment or sublease for which there is no corresponding
term in this Lease resulting in such greater rights or inconsistency.

 

(i)            In
the case of any subletting, the term thereof (including any extension options)
shall in all respects be consistent with Article 10 and shall not prevent
Tenant from delivering vacant possession, free and clear of any subtenancies,
of the Premises or the applicable portion thereof, on the Expiration Date.

 

15.5        No Release.  No Sublease or Assignment by Tenant nor any
consent by Landlord thereto shall relieve Tenant of any obligation to be performed
by Tenant under this Lease.  Any Sublease
or Assignment that is not in compliance with this Article shall be null
and void and, at the option of Landlord, shall constitute an Event of Default
by Tenant under this Lease, and Landlord shall be entitled to pursue any right
or remedy available to Landlord under the terms of this Lease or under the laws
of the State of California.  The
acceptance of any Rent or other payments by Landlord from a proposed Transferee
shall not constitute consent to such Sublease or Assignment by Landlord or a
recognition of any Transferee, or a waiver by Landlord of any failure of Tenant
or other Transferor to comply with this Article.

 

15.6        Change in Control;
Successor Entity.  (a)  For the
purposes of this Lease, any transfer of control of Tenant, by operation of law
or otherwise, whether pursuant to one transaction or a series of transactions
and whether at one time or over a period of time (a “Change
in Control”), shall be deemed an Assignment and shall be subject
to all of the provisions of this Article 15, including, without
limitation, the requirement that Tenant obtain Landlord’s prior written consent
thereto, except as provided in Section 15.11.  For purposes of this Section 15.6, a
transfer of control of Tenant shall be deemed to have occurred if there shall
be any of the following: (i) a transfer of the ultimate beneficial
ownership of fifty percent (50%) or more of the equity interests in Tenant or
of any class of equity interests in Tenant, including, without limitation, by
the issuance of additional shares 

 

39

 

or other
equity interests in Tenant, (ii) a transfer of the right to receive fifty
percent (50%) or more of any category of distributions made by Tenant, or (iii) a
transfer of the right to direct the management of Tenant, by contract or
otherwise.  Notwithstanding the
foregoing, (A) if Tenant is a Public Company, Landlord’s consent shall not
be required with respect to transfers of the capital stock of such Tenant on a
national securities exchange, unless such transfers constitute a Change of
Control and (B) Landlord’s consent shall not be required with respect to
transfers to Successor Entities permitted in paragraph (b) below.

 

(b)           Tenant
shall have the right, subject to Tenant’s complying with Section 15.4,
upon not less than fifteen (15) days’ prior written notice to Landlord, to
assign its entire interest in this Lease and the leasehold estate hereby
created to a Successor Entity (as such term is
hereinafter defined) of Tenant, provided that the Successor Entity shall not be
entitled, either directly or indirectly, to diplomatic or sovereign immunity
and shall be subject to the service of process in and the jurisdiction of the
courts of the State of California.   A “Successor Entity”, as used in
this Section shall mean a corporation or other business entity (i) into
which or with which Tenant, its corporate or other successors or permitted
assigns, is merged or consolidated, in accordance with applicable statutory
provisions for the merger or consolidation of a corporation or other business
entity or (ii) which acquires all or substantially all of the Tenant’s
assets, provided that by operation of law or by effective provisions contained
in the instruments of merger or consolidation or acquisition, the liabilities
of the entities participating in such merger or consolidation or acquisition
are assumed by the corporation or other business entity surviving such merger
or consolidation or acquisition, above, provided that, (x) immediately after
giving effect to any such merger or consolidation or acquisition, as the case
may be, the corporation or other business entity surviving such merger or
acquisition shall have a Net Worth no less than the Minimum Net Worth and (y)
proof of such assets, capitalization and Net Worth, as evidenced by a statement
from an Acceptable Accounting Firm, shall have been delivered to Landlord at
least ten (10) days prior to the effective date of any such merger or
consolidation, or acquisition and assumption, as the case may be.

 

15.7        Assumption of
Obligations.  Any Transferee shall,
from and after the effective date of the Assignment, assume all obligations of
Tenant under this Lease with respect to the transferred space and shall be and
remain liable jointly and severally with Tenant for the payment of Base Rent
and Additional Rent, and for the performance of all of the terms, covenants,
conditions and agreements herein contained on Tenant’s part to be performed for
the Term as it relates to the transferred space.  No Assignment shall be binding on Landlord
unless Tenant complies with the provisions of this Article 15 and delivers
to Landlord a counterpart of the Assignment and an instrument that contains a
covenant of assumption reasonably satisfactory in substance and form to
Landlord, and consistent with the requirements of this Section.

 

15.8        Insolvency or
Bankruptcy.  In no event shall this
Lease be assigned or assignable by operation of law or by voluntary or
involuntary bankruptcy proceedings or otherwise and 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.

 

40

 

15.9        Recovery of Premises.  If Landlord shall recover or come into
possession of the Premises before the date herein fixed for the termination of
this Lease, Landlord shall have the right, at its option, to take over any and
all Subleases of the Premises or any part thereof made by Tenant and to succeed
to all the rights of said Subleases or such of them as it may elect to take
over.  Tenant hereby expressly assigns
and transfers to Landlord such of the Subleases as Landlord may elect to take
over at the time of such recovery of possession, such assignment and transfer
not to be effective until the termination of this Lease or re-entry by Landlord
hereunder or if Landlord shall otherwise succeed to Tenant’s interest in the
Premises, at which time Tenant shall upon request of Landlord, execute
acknowledge and deliver to Landlord such further assignments and transfers as
may be necessary to vest in Landlord the then existing Subleases.  Each subletting hereunder is subject to the
condition and by its acceptance of and entry into a Sublease, each subtenant
thereunder shall be deemed conclusively to have thereby agreed from and after
the termination of this Lease or re-entry by Landlord hereunder or if Landlord
shall otherwise succeed to Tenant’s interest in the Premises, that such
subtenant shall waive any right to surrender possession or terminate the
Sublease and, at Landlord’s election, such subtenant shall be bound to Landlord
for the balance of the term of such Sublease and shall attorn to and recognize
Landlord as its landlord under all of the then executory terms of such
Sublease, except that Landlord shall not (i) be liable for any previous
act, omission or negligence of Tenant under such Sublease, (ii) be subject
to any counterclaim, defense or offset not expressly provided for in such
Sublease, (iii) be bound by any previous modification or amendment of such
Sublease or by any previous payment of more than one month’s rent and
additional rent which shall be payable as provided in the Sublease, (iv) be
obligated to repair the subleased space or the Building or any part thereof in
the event of casualty or condemnation except as otherwise required herein, or (v) be
obligated to perform any work in the subleased space beyond the requirements of
this Lease.

 

15.10      Easements.  Tenant shall not, without the prior
written consent of Landlord (in Landlord’s sole and absolute discretion),
impose any easements or similar encumbrances upon the Premises or any part
thereof.

 

15.11      Short Term Subletting.  With Landlord’s prior consent which
consent shall not be unreasonably withheld or delayed, Tenant can enter into a
Sublease of one floor or less of Rentable Area with one (1) or more
sublessees (but all of such subleases shall cover, individually or
collectively, not greater than fifteen percent (15%) of Rentable Area in the
aggregate at any given time) for a term of less than the lesser of (i) twenty-four
(24) months or (ii) the remainder of the Term, provided that fifty percent
(50%) of the Excess Rent received by Tenant shall be paid to Landlord as and
when received by Tenant and Tenant shall be entitled to keep the remaining
fifty percent (50%).  If Landlord does
not respond to Tenant’s written request to a proposed short term Sublease
meeting the requirements set forth above, within ten (10) business days
following receipt thereof, Landlord shall be deemed to have approved such short
term Sublease. Except as expressly set forth in this Section 15.11 with
respect to Tenant’s entitlement to 50% of the Excess Rent and the ten business
day period within which Landlord is to approve or disapprove the 

 

41

 

proposed
short-term Sublease, all of the other terms and conditions of this Article 15
shall be applicable to such short-term Sublease.

 

16.                               DEFAULT.

 

16.1        Event of Default.  The occurrence of any of the following
shall be an “Event of Default”:

 

(a)           Failure
on the part of Tenant to pay any part of the Base Rent or Additional Rent, or
any other sums of money that Tenant is required to pay under this Lease where
such failure continues for a period of five (5) business days after
written notice of default from Landlord to Tenant; provided, however, that
Landlord shall not be required to provide such notice more than three (3) times
during any twenty-four (24) month period during the Term with respect to
non-payment of Base Rent or Additional Rent payable to Landlord, the third such
non-payment constituting default without requirement of notice.  Landlord’s notice to Tenant pursuant to this
subsection shall be deemed to be the notice required under California Code
of Civil Procedure Section 1161.

 

(b)           Failure
on the part of Tenant to comply with the obligations under Section 4.7
which failure, unless otherwise provided in Section 4.7, continues for a
period of ten (10) days after written notice from Landlord.

 

(c)           Failure
on the part of either or both of the SGI Parties to: (i) timely pay any
amounts due and owing under the indemnity provisions of the Purchase Agreements
or the Ground Lease Assignments which failure continues for a period of ten (10) days
after written notice from Landlord; or (ii) otherwise perform under the
indemnity provisions of the Purchase Agreements or the Ground Lease Assignments
which failure continues for a period of. thirty (30) days, provided that, with
regard to this subpart (ii), if the nature of the default is such that more
than thirty (30) days are reasonably required for its cure, then an Event of
Default shall not be deemed to have occurred if Tenant shall commence such cure
within said thirty (30) day period and thereafter diligently and continuously
prosecute such cure to completion and shall complete such cure within one
hundred twenty (120) days after such failure shall first occur.

 

(d)           Failure
of Tenant to perform any other covenant, condition or requirement of this Lease
(including the Tenant Work Letter) when such failure shall continue for a
period of thirty (30) days; provided that if the nature of the default is such
that more than thirty (30) days are reasonably required for its cure, then an
Event of Default shall not be deemed to have occurred if Tenant shall commence
such cure within said thirty (30) day period and thereafter diligently and
continuously prosecute such cure to completion and shall complete such cure
within one hundred twenty (120) days after such failure shall first occur.  Landlord’s notice to Tenant pursuant to this
subsection shall be deemed to be the notice required under California Code
of Civil Procedure Section 1161.

 

(e)           The
abandonment of the entire Premises by Tenant.

 

42

 

(f)            Tenant
shall admit in writing its inability to pay its debts generally as they become
due, file a petition in bankruptcy, insolvency, reorganization, dissolution or
liquidation under any law or statute of any government or any subdivision
thereof either now or hereafter in effect, make an assignment for the benefit
of its creditors, consent to or acquiesce in the appointment of a receiver of
itself or of the whole or any substantial part of the Premises.

 

(g)           A
court of competent jurisdiction shall enter an order, judgment or decree
appointing a receiver of Tenant or of the whole or any substantial part of the
Premises and such order, judgment or decree shall not be vacated, set aside or
stayed within thirty (30) days after the date of entry of such order, judgment,
or decree, or a stay thereof shall be thereafter set aside.

 

(h)           A
court of competent jurisdiction shall enter an order, judgment or decree approving
a petition filed against Tenant under any bankruptcy, insolvency,
reorganization, dissolution or liquidation law or statute of the federal or
state government or any subdivision of either now or hereafter in effect, and
such order, judgment or decree shall not be vacated, set aside or stayed within
thirty (30) days from the date of entry of such order, judgment or decree, or a
stay thereof shall be thereafter set aside.

 

(i)            The
occurrence of (i) the acceleration of the obligations of Tenant under any
Indebtedness or other obligations under which it is liable for more than
$20,000,000 or (ii) the maturity of $20,000,000 or more of Indebtedness of
Tenant by its terms which has not been paid or (iii) the entry of any
judgment against Tenant for $20,000,000 or more which has not been vacated or
appealed and stayed; provided that for the purposes of clauses (i) and
(ii), the term indebtedness shall not include indebtedness for the deferred
purchase price of property or services.

 

(j)            The
occurrence of an Event of Default under any of the Other Leases.

 

16.2        Remedies.  Upon the occurrence of an Event of
Default, Landlord shall have the following rights and remedies:

 

(a)           The
right to terminate this Lease upon written notice to Tenant, in which event
Tenant shall immediately surrender possession of the Premises in accordance
with Article 20.

 

(b)           The
right to bring a summary action for possession of the Premises.

 

(c)           Upon
termination of the Lease by Landlord pursuant to Section 16.2(a), the
right to recover from Tenant the following: 
(i) the worth at the time of award of any unpaid Rent which has
been earned at the time of such termination; plus, (ii) the worth at the
time of award of the amount by which the unpaid Rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus, (iii) the
worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of 

 

43

 

award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; plus, (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom which includes,
without limitation, (A) the unamortized portion of any brokerage or real
estate agent’s commissions paid by or on behalf of Landlord in connection with
the execution of this Lease, (B) any direct costs or expenses incurred by
Landlord in recovering possession of the Premises, maintaining or preserving
the Premises after such default, (C) preparing the Premises for reletting
to a new tenant, (D) any repairs or alterations to the Premises for such
reletting, (E) leasing commissions, architect’s fees and any other costs
necessary or appropriate either to relet the Premises or, if reasonably
necessary in order to relet the Premises, to adapt them to another beneficial
use by Landlord and (F) such amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by Applicable Law to the extent
that such payment would not result in a duplicative recovery.   The term “Rent” as used in this Section 16.2(c) shall
be deemed to be and to mean all sums of every nature required to be paid by
Tenant pursuant to the terms of this Lease, whether to Landlord or to
others.  As used in Sections 16.2(c)(i) and
(ii), above, the “worth at the time of award” shall be computed by allowing
interest at the Interest Rate, but in no case greater than the maximum amount
of such interest permitted by Applicable Law. 
As used in Section 16.2(c)(iii) above, the “worth at the time
of award” shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus one
percent.

 

(d)           The
rights and remedies described in California Civil Code Section 1951.4
which allow Landlord to continue this Lease in effect and to enforce all of
Landlord’s rights and remedies under this Lease, including the right to recover
Base Rent, Additional Rent and other charges payable hereunder as they become
due.  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 right to possession.

 

(e)           The
right and power, as attorney-in-fact for Tenant, to sublet the Premises, to
collect rents from all subtenants and to provide or arrange for the provision
of all services and fulfill all obligations of Tenant under any permitted
subleases.  Landlord is hereby authorized
on behalf of Tenant, but shall have absolutely no obligation, to provide such
services and fulfill such obligations and to incur all such expenses and costs
as Landlord deems necessary.  Landlord is
hereby authorized, but not obligated, to relet the Premises or any part thereof
on behalf of Tenant, to incur such expenses as may be necessary to effect a
relet and make said relet for such term or terms, upon such conditions and at
such rental as Landlord in its reasonable discretion may deem proper.  Tenant shall be liable immediately to
Landlord for all costs and expenses Landlord incurs in reletting the Premises
including, without limitation, brokers’ commissions, expenses of remodeling the
Premises required by the reletting, and the cost of collecting rents and
fulfilling the obligations of Tenant to any subtenant.  If Landlord relets the Premises or any
portion thereof, such reletting shall not relieve Tenant of any obligation
hereunder, except that Landlord shall apply the rent or other proceeds actually
collected by it as a result of such 

 

44

 

reletting against any amounts due from Tenant
hereunder to the extent that such rent or other proceeds compensate Landlord
for the nonperformance of any obligation of Tenant hereunder.  Such payments by Tenant shall be due at such
times as are provided elsewhere in this Lease, and Landlord need not wait until
the termination of this Lease, by expiration of the Term or otherwise, to
recover them by legal action or in any other manner.  Landlord may execute any sublease made
pursuant to this Section in its own name, and the tenant thereunder shall
be under no obligation to see to the application by Landlord of any rent or
other proceeds, nor shall Tenant have any right to collect any such rent or
other proceeds.  Landlord shall not by
any reentry or other act be deemed to have accepted any surrender by Tenant of
the Premises or Tenant’s interest therein, or be deemed to have otherwise
terminated this Lease, or to have relieved Tenant of any obligation hereunder,
unless Landlord shall have given Tenant express written notice of Landlord’s
election to do so as set forth herein.

 

(f)            The
right to enjoin, and any other remedy or right now or hereafter available to a
Landlord against a defaulting tenant under the laws of the State of California
or the equitable powers of its courts, and not otherwise specifically reserved
herein.

 

(g)           If
this Lease provides for a postponement of deferral of any Rent, or for
commencement of payment of Rent to a date later than the Commencement Date, or
for a period of “free” Rent or any other Rent concession (collectively, “Abated Rent”), the right upon
an Event of Default to demand immediate payment of the value of the Abated
Rent.

 

16.3        Cumulative Remedies.  The various rights and remedies reserved
to Landlord, including those not specifically described herein, shall, to the
extent that the exercise of such right and/or remedy does not result in a
duplicative recovery,  be cumulative and
shall be in addition to every other right or remedy provided for in this Lease
or now or hereafter existing at law or in equity and the exercise of the rights
or remedies provided for in this Lease or now or hereafter existing at law or
in equity shall not preclude the simultaneous or later exercise by Landlord of
any or all other rights and remedies.

 

16.4        Waiver of Redemption by
Tenant.  Tenant hereby waives any
right to redeem, by order or judgment of any court or by any legal process or
writ, Tenant’s right of occupancy of the Premises after any termination of this
Lease.

 

16.5        Landlord’s Right to Cure.  If Tenant shall fail or neglect to do or
perform any covenant or condition required under this Lease and such failure
shall not be cured within any applicable grace period, Landlord may, without
waiving such default, on five (5) business days notice to Tenant, but
shall not be required to, make any payment payable by Tenant hereunder,
discharge any lien, take out, pay for and maintain any insurance required
hereunder, or do or perform or cause to be done or performed any such other act
or thing (entering upon the Premises for such purposes, if Landlord shall so
elect), and Landlord shall not be or be held liable or in any way responsible
for any loss, disturbance, inconvenience, annoyance or damage resulting to
Tenant on account thereof.  Tenant shall
repay to Landlord within five (5) business days following demand the
entire 

 

45

 

out-of-pocket
cost and expense incurred by Landlord in connection with the cure, including,
without limitation, compensation to the agents, consultants and contractors of
Landlord and reasonable attorneys’ fees and expenses.  Landlord shall also impose a thirty percent
(30%) administrative fee to compensate Landlord for the cost of performing on
behalf of Tenant.  Landlord may act upon
shorter notice or no notice at all if necessary in Landlord’s reasonable
judgment to meet an emergency situation to protect Landlord’s interest in the
Premises.  Landlord shall not be required
to inquire into the correctness of the amount of validity or any tax or lien
that may be paid by Landlord and Landlord shall be duly protected in paying the
amount of any such tax or lien claimed and in such event Landlord also shall
have the full authority, in Landlord’s sole judgment and discretion and without
prior notice to or approval by Tenant, to settle or compromise any such lien or
tax.  Any act or thing done by Landlord
pursuant to the provisions of this Section shall not be or be construed as
a waiver of any such failure by Tenant, or as a waiver of any term, covenant,
agreement or condition herein contained or of the performance thereof.

 

16.6        Landlord’s Default.  Landlord shall be in default under this Lease
if Landlord fails to perform obligations required of Landlord within thirty
(30) days after written notice by Tenant to Landlord and to any Leasehold
Mortgagee or Prior Lessor whose name and address shall have heretofore been
furnished to Tenant in writing, specifying wherein Landlord has failed to
perform such obligations; provided, however, that if the nature of Landlord’s
obligations is such that more than thirty (30) days are required for
performance, then Landlord shall not be in default if Landlord commences
performance within such thirty (30) day period and thereafter diligently
prosecutes the same to completion. 
Tenant shall be entitled to actual (but not consequential) damages in
the event of an uncured default by Landlord, but the provisions of Article 18
shall apply to any Landlord default and Tenant shall not have the right to
terminate this Lease as a result of a Landlord default.

 

16.7        Survival.  The provisions of this Article 16 shall
survive termination of this Lease.

 

17.                               LANDLORD’S
RESERVED RIGHTS.

 

17.1        Control of Common Area.  Landlord reserves the right, at any time and
from time to time, to make alterations, additions, repairs or improvements to
all or any part of the Building (including the Structural Components and
Building Systems), the Common Area and the Property; provided, however, that
Landlord shall not materially and adversely affect Tenant’s use of the Premises
or its rights of access and parking and not unreasonably interfere with Tenant’s
business or properties.  Landlord may
make changes at any time and from time to time in the size, shape, location,
use and extent of the Common Area, and no such change shall entitle Tenant to
any abatement of rent or damages; provided, however, that Landlord shall not
materially and adversely affect Tenant’s use of the Premises or its rights of
access and parking and not unreasonably interfere with Tenant’s business or
properties.  Landlord shall at all times
during the Term have the sole and exclusive control of the Structural
Components and the Common Area, and may at any time 

 

46

 

and from time
to time during the Term restrain any use or occupancy of the Common Area except
as authorized by the Rules and Regulations.  Landlord may temporarily close any portion of
the Common Area for repairs or alterations, to prevent a dedication or the
accrual of prescriptive rights, or for any other reason deemed sufficient by
Landlord; provided, however, that Landlord shall not materially and adversely
affect Tenant’s use of the Premises or its rights of access and parking and not
unreasonably interfere with Tenant’s business or properties.  Tenant’s rights in and to the Common Area
shall at all times be subject to the rights of Landlord and Tenant shall keep
the Common Area free and clear of any obstructions created or permitted by
Tenant or resulting from Tenant’s operations.

 

17.2        Access.  Landlord reserves (for itself and its agents,
consultants, contractors and employees) the right to enter the Premises at all
reasonable times and, except in cases of emergency, after giving Tenant
reasonable notice, to inspect the Premises, to supply any service to be
provided by Landlord hereunder, to show the Premises to prospective purchasers,
mortgagees or tenants (during the last year of the Term), to post notices of
nonresponsibility, and to alter, improve or repair the Premises and any portion
of the Building, without abatement of Rent, and may for that purpose erect, use
and maintain necessary structures in and through the Premises and the Building
where reasonably required by the character of the work to be performed.  Landlord will comply with legal access
restrictions applicable to special security areas in the Premises.  Landlord shall use reasonable efforts not to
unreasonably interfere with Tenant’s use of the Premises.  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 or any other loss
occasioned thereby.  All locks for all of
the doors in, upon and about the Premises, excluding Tenant’s vaults and safes
or special security areas (designated in advance in writing by Tenant) shall at
all times be keyed to the Building master system and Landlord shall at all
times have and retain a key with which to unlock all of said doors.  Landlord shall have the right to use any and
all means that Landlord may deem necessary or proper to open said doors in an
emergency in order to obtain entry to any portion of the Premises, and any
entry to the Premises or portions thereof obtained by Landlord by any of said
means, or otherwise, shall not under any 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 portion
thereof.

 

17.3        Easements.  Subject to the term of covenants and
restrictions encumbering the premises, Landlord reserves the right to grant or
relocate all easements and rights of way which Landlord in its sole discretion
may deem necessary or appropriate, provided that the grant or relocation of
easements shall not materially and adversely affect Tenant’s use of the
Premises or its rights of access and parking and not unreasonably interfere
with Tenant’s business or properties. If any such grant or relocation will
incur costs or expenses which are Operating Expenses hereunder, Landlord’s
rights under this Section 17.3 shall be exercised in its reasonable
discretion.

 

17.4        Use of Additional Areas.  Subject to the provisions of Articles 32,
Landlord reserves the exclusive right to use any air space above the Building
and the 

 

47

 

Property, the
roof and exterior walls of the Building and the land beneath the Building;
provided that such use shall not materially impede Tenant’s use of and access
to the Premises.

 

17.5        Subordination.  (a)  Leasehold
Mortgages.  Landlord shall
have the right to enter into such Leasehold Mortgages as Landlord shall elect
in its sole discretion.  This Lease is
and shall be subject and subordinate to each and any Leasehold Mortgage and to
all advances under any Leasehold Mortgage, and any restatements, renewals,
increases, supplements, modifications, consolidations, spreaders, replacements,
substitutions, or extensions of any Leasehold Mortgage, provided that (i) the
Leasehold Mortgagee thereunder shall have entered into an SNDA in favor of
Tenant in such Leasehold Mortgagee’s customary form and (ii) the Leasehold
Mortgage shall provide that, subject to compliance with procedures and
conditions customary for construction loan disbursements (including obtaining
lien waivers and title insurance endorsements), the proceeds of any casualty
insurance policy shall be made available to Landlord for purposes of a
restoration to the extent that Landlord would under Section 19.3 be
required to make such proceeds available to Tenant.

 

(b)           Prior Leases. 
Landlord shall have the right to enter into such Prior Leases and any
modifications, amendments, supplements, replacements, extensions, renewals or
substitutions thereto or thereof as Landlord shall elect in its sole
discretion, provided the same does not result in the imposition on Tenant of
any obligations that are materially more onerous than those imposed under this
Lease or that otherwise materially adversely affect Tenant. This Lease is and
shall be subject and subordinate to each and any Prior Lease provided that the
Prior Lessor thereunder shall have entered into an SNDA in favor of Tenant,
modified as appropriate, and to any modifications, amendments, supplements,
replacements, extensions, renewals or substitutions thereto or thereof.

 

(c)           Attornment.  Tenant
agrees that this Lease shall not be terminable by Tenant by reason of any foreclosure
of a Leasehold Mortgage or any other mortgage affecting the Premises, nor by
reason of the institution of any suit, action, summary or other proceeding
against Landlord or any foreclosure proceeding brought by the holder of any
Leasehold Mortgage or other mortgage affecting the Premises to recover
possession of the Premises by operation of law or otherwise or by reason of the
termination of any Prior Lease and that the same shall not result in the
cancellation or termination of this Lease by Tenant or of the obligations of
Tenant hereunder.  If at any time prior
to the expiration of the Term, any Prior Lessor or Leasehold Mortgagee comes
into possession of the Premises or a receiver shall be appointed for Landlord’s
interest in the Premises, Tenant agrees, at the election and upon demand of any
such Prior Lessor or Leasehold Mortgagee in possession, to attorn, from time to
time, to any such Prior Lessor or Leasehold Mortgagee or any person acquiring
the interest of Landlord as a result of any such Prior Lease termination or as
a foreclosure of a Leasehold Mortgage or the granting of a deed or assignment
in lieu of foreclosure, upon the then executory terms and conditions of this
Lease for the remainder of the Term.  The
provisions of this Section 17.5 shall inure to the benefit of any such
successor Landlord, shall apply notwithstanding that, as a matter of law, this
Lease may 

 

48

 

terminate upon the termination of a Prior Lease or
foreclosure of a Leasehold Mortgage, and shall be self-operative upon any such
demand, and no further instrument shall be required to give effect to said
provisions.  Tenant, however, upon demand
of any such successor Landlord, shall execute, from time to time, instruments
in confirmation of the forgoing provisions of this Section 17.5 reasonably
satisfactory to any such successor Landlord and Tenant, acknowledging such
attornment and setting forth in the terms and conditions of its tenancy.  Nothing contained in this Section shall
be construed to impair any right otherwise exercisable by any such successor
Landlord.

 

(d)           Leasehold Mortgagee Cure Rights.  In the event of any act or omission by
Landlord which would give Tenant the right to terminate this Lease or to claim
a partial or total eviction, pursuant to the terms of this Lease, if any,
Tenant will not exercise any such right until (i) it has given written
notice of such act or omission to the holder(s) of any Leasehold Mortgages to
which this Lease shall be subordinate, whose name and address shall previously
have been furnished to Tenant, by delivering such notice of such act or
omission addressed to such holders at the last address so furnished, and (ii) 
in the case of any such act, omission or default that can be cured by the
payment of money, until thirty (30) days shall have elapsed following the
giving of such notice, or (ii) in the case of any other such act, omission
or default, until a reasonable period for remedying such act, omission or
default shall have elapsed following the giving of such notice and following
the time when any such holder shall have become entitled under its Leasehold
Mortgage to remedy the same, including such time as may be necessary to acquire
possession of the Premises if possession is necessary to effect such cure,
provided any such holder with reasonable diligence, shall (x) pursue such
remedies as are available to it under its Leasehold Mortgage so as to be able
to remedy the act, omission or default, and (y) thereafter shall have commenced
and continued to remedy such act, omission or default or cause the same to be
remedied; provided, however, that the agreements of Tenant contained in this Section 17.5
shall be subject to the terms of any SNDA between Tenant and any such
holder(s).

 

(e)           Amendments Requested by Leasehold Mortgagee.  If, in connection with obtaining any
financing or refinancing or any increases, restatements, renewals, supplements,
modifications, consolidations, replacements, substitutions or extensions
thereof, a prospective or existing Leasehold Mortgagee and/or holder of an
interest in any loan secured by a Leasehold Mortgage, as the case may be, shall
request amendments to or modifications of this Lease as a condition to the
same, Tenant shall promptly execute such amendments or modifications upon
demand as long as (i) the modifications do not affect the Rent or the Term
or the Letter of Credit and (ii) such amendments or modifications do not
otherwise materially increase Tenant’s obligations or materially diminish
Tenant’s rights hereunder.  In addition,
Tenant shall deliver any financial statements or other information requested by
Landlord (or any prospective or existing lender) in order to obtain such
financing or refinancing, provided that Tenant shall not be required to
disclose any non-public information relating to Tenant.  Furthermore, Tenant shall cause counsel
reasonably acceptable to a prospective Leasehold Mortgagee to deliver legal
opinions reasonably required by such prospective Leasehold Mortgagee relating
to the due authorization, execution and delivery of this Lease and any
amendments 

 

49

 

thereto, the validity and enforceability of such
agreements, and other customary matters. Landlord agrees to pay reasonable
out-of-pocket costs and expenses of Tenant, including reasonable attorneys’
fees and expenses, in excess of $15,000 incurred solely in connection with
amendments to or modifications of this Lease, or the delivery of legal
opinions, requested by Leasehold Mortgagee, and Tenant shall be responsible for
the balance of such costs and expenses.

 

18.                               LIMITATION
OF LANDLORD’S LIABILITY.

 

18.1        Limitation.  Landlord shall not be responsible for or
liable to Tenant and Tenant hereby releases Landlord, waives all claims against
Landlord and assumes the risk for any injury, loss or damage to any person or
property in or about the Premises, the Building or the Property by or from any
cause whatsoever (other than Landlord’s gross negligence or willful misconduct)
including, without limitation, (a) acts or omissions of persons occupying
adjoining premises, (b) theft or vandalism, (c) burst, stopped or
leaking water, gas, sewer or steam pipes, (d) loss of utility service, (e) accident,
fire or casualty, (f) nuisance, and (g) work done by Landlord in the
Property, the Building, the Common Area or the Premises; notwithstanding the
foregoing, Landlord shall remain liable for compliance with its express
obligations hereunder.  Even if due to
the gross negligence or willful misconduct of Landlord, Tenant hereby waives
any claim for consequential damages in connection therewith.  There shall be no abatement of Rent and no
liability of Landlord by reason of any injury to or interference with Tenant’s
business or inconvenience or annoyance to Tenant arising from the making of any
repairs, alterations or improvements to any portion of the Building or to
fixtures, appurtenances and equipment therein, other than such liability as may
be imposed upon Landlord by law or for Landlord’s negligence or willful
misconduct.  No interference with Tenant’s
operations in the Premises shall constitute a constructive or other eviction of
Tenant.  Tenant hereby waives and
releases any right it may have 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 other than as expressly
provided in this Lease.

 

18.2        Sale of Property.  It is agreed that Landlord may at any time
sell, assign or transfer its interest as landlord in and to this Lease, and may
at any time sell, assign or transfer its interest in and to the Property.  In the event of any transfer of Landlord’s
interest in the Property, the transferor shall be automatically relieved of any
and all of Landlord’s obligations and liabilities accruing from and after the
date of such transfer; provided that the transferee assumes all of Landlord’s
obligations under this Lease from and after the date of such transfer.  Tenant hereby agrees to attorn to Landlord’s
assignee, transferee, or purchaser from and after the date of notice to Tenant
of such assignment, transfer or sale, in the same manner and with the same
force and effect as though this Lease were made in the first instance by and
between Tenant and the assignee, transferee or purchaser.

 

18.3        No Personal Liability.  In the event of any default by Landlord
hereunder, Tenant shall look only to Landlord’s interest in the Property and
rents therefrom 

 

50

 

and any
available insurance proceeds for the satisfaction of Tenant’s remedies, and no
other property or assets of Landlord or any trustee, partner, member, officer
or director thereof, disclosed or undisclosed, shall be subject to levy, execution
or other enforcement procedure for the satisfaction of Tenant’s remedies under
or with respect to this Lease.

 

18.4        Landlord’s Consent or Approval; Limitation on Damages.  (a)  In the
event that Tenant shall claim or assert that Landlord has violated or failed to
perform a covenant of Landlord not to unreasonably withhold, delay or condition
Landlord’s consent or approval, or in any case where Landlord’s reasonableness
in exercising its judgment is in issue, Tenant’s sole remedy shall be an action
for specific performance, declaratory judgment or injunction, and in no event
shall Tenant be entitled to any money damages for a breach of such covenant,
and in no event shall Tenant claim or assert any claims for money damages in
any action or by way of set-off, defense or counterclaim, and Tenant hereby
specifically waives the right to any money damages, set-off, defense,
counterclaim or other remedies; provided, however, that Tenant shall have the
right to determine any dispute between Landlord and Tenant as to whether
Landlord has violated or failed to perform a covenant of Landlord not
unreasonably to withhold, delay or condition Landlord’s consent or where
Landlord’s reasonableness in exercising its judgment is in issue, or any other
dispute which by the express terms of this Lease provides that it shall be
resolved by arbitration, in each case by arbitration in the County of Santa
Clara, California in accordance with the provisions of this Section 18.4.  Within ten (10) days next following the
giving of any notice by Tenant to Landlord stating that it wishes such dispute
to be so determined, Landlord and Tenant shall each give notice to each other
setting forth the name and address of an arbitrator designated by the party
giving notice. If either party shall fail to give notice of such designation
within said ten (10) days, then the arbitrator chosen by the other side
shall make the determination alone.  The
two arbitrators shall designate a third arbitrator.  If the two arbitrators shall fail to agree upon
the designation of a third arbitrator within five (5) days after the
designation of the second arbitrator, then either party may apply to any court
having jurisdiction, requesting the designation of such arbitrator.  Notwithstanding the foregoing, in the event
of disputes relating to less than $100,000, one (1) arbitrator shall be
selected in accordance with the then prevailing Commercial Rules of the
American Arbitration Association.  All
arbitrators shall be persons who shall have had at least ten (10) years
experience arbitrating or mediating disputes relating to California office
leases or who shall otherwise be approved by the parties, and shall not be
financially or contractually related to Landlord or Tenant.  The three arbitrators shall conduct such
hearings as they deem appropriate, making their determination in writing and
give notice to Landlord and Tenant; the concurrence of any two of said
arbitrators shall be binding upon Landlord and Tenant.  The sole question to be determined shall be
whether or not Landlord has unreasonably withheld or delayed its consent or
approval, and the sole remedy shall be the determination that such consent or
approval must be granted.  The
determination in any arbitration held pursuant to this Section shall be
final and binding upon Landlord and Tenant. 
Each party shall pay its own counsel fees and expenses, if any, in
connection with any arbitration under this Section 18.4, including the
expenses and fees of any arbitrator selected by it in accordance with provisions
of this Section, and the parties shall share all other expenses and fees of any
such arbitration, provided that the foregoing shall not 

 

51

 

prohibit the
arbitrators from determining that the prevailing party shall be entitled to
recover all costs and expenses from the non-prevailing party.  The arbitrators shall be bound by the
provisions of this Lease, and shall not add to, subtract from or otherwise
modify such provisions.

 

(b)           In
no event shall Tenant have the right to seek or recover from Landlord any
consequential damages on account of any claim or matter arising out of or
relating to this Lease of the Premises, and Tenant hereby irrevocably waives
any right which it might otherwise have to seek or receive any such
consequential damages.

 

19.                               DESTRUCTION.

 

19.1        Landlord’s Repair
Obligation.  (a)  If the
Premises or the Building or any portion thereof (whether or not the Premises
are affected) are damaged by fire or other casualty (“Casualty”), Landlord shall repair the same (including Non-Severable
Material Alterations but not including any Tenant’s Property or other
Alterations); provided that (i) such repairs can be made under the laws
and regulations of the federal, state and local governmental authorities having
jurisdiction within twelve (12) months (plus any incremental time as may
be required to restore any Non-Severable Material Alterations) after the date
of such damage (or in the case of damage occurring during the last twelve (12) months
of the Term, provided that such repairs can be made within ninety
(90) days (plus any incremental time as may be required to restore any
Non-Severable Material Alterations) after the date of such damage), (ii) such
repairs are fully covered (except for any deductible) by the proceeds of
insurance maintained by Landlord or Tenant and (iii) the damage does not
affect more than fifty percent (50%) of the assessed value of the Building. The
repairs to be made by Landlord under this Article shall not include, and
Landlord shall not be required to repair, any Casualty damage to Tenant’s
Property or any Alterations (other than Non-Severable Material Alterations).

 

(b)           If
all or any part of the Premises shall be rendered Untenantable by reason of a
Casualty, the Base Rent and the Additional Rent shall be abated in the
proportion that the Untenantable area of the Premises bears to the total area
of the Premises, for the period from the date of the Casualty to the earlier of
(i) the date the Premises is no longer Untenantable (provided that, if the
Premises would no longer have been Untenantable at an earlier date but for
Tenant having failed diligently to prosecute repairs or restoration required of
Tenant under this Lease, then the Premises shall be deemed to no longer be
Untenantable on such earlier date and the abatement shall cease) or (ii) the
date Tenant or any subtenant reoccupies any Untenantable portion of the
Premises for the ordinary conduct of business (in which case the Base Rent and
the Additional Rent allocable to such reoccupied portion shall be payable by
Tenant from the date of such occupancy). 
Pending resolution of any dispute with respect to the period or amount
of such abatement, Tenant shall pay Rent in accordance with Landlord’s
determination.  Notwithstanding the
foregoing, if by reason of any act or omission by Tenant, any subtenant or any
of their respective partners, directors, officers, servants, employees, agents
or contractors, Landlord or any Leasehold Mortgagee shall be unable to collect
all of the insurance proceeds 

 

52

 

(including, without limitation, rent insurance
proceeds) applicable to the Casualty, then, without prejudice to any other
remedies which may be available against Tenant, there shall be no abatement of
Rent.

 

(c)           Landlord
shall not be liable for any inconvenience or annoyance to Tenant or injury to
the business of Tenant resulting in any way from such damage by Casualty or the
repair thereof.  Landlord shall not be
obligated to carry insurance of any kind on Tenant’s Property or any
Alterations or any other improvements made at Tenant’s sole cost and expense
(other than Non-Severable Material Alterations), and Landlord shall not be
obligated to repair any damage thereto or replace the same, other than as
specifically set forth in Section 19.2.

 

19.2        Termination Option.  Landlord shall notify Tenant within sixty
(60) days after the date of damage whether or not the requirements for
reconstruction and repair described in Section 19.1 are met.  If such requirements are not met, Landlord
shall have the option, exercisable within sixty (60) days after the date of
such damage either to:  (a) notify
Tenant of Landlord’s intention to repair such damage, in which event this Lease
shall continue in full force and effect (unless terminated by Tenant and
whether in Landlord’s reasonable judgment, such repairs can be completed in
eighteen (18) months (plus any incremental time as may be required to restore
any Non-Severable Material Alterations) or less as provided below), or (b) notify
Tenant of Landlord’s election to terminate this Lease as of the date of the
damage.  If such notice to terminate is
given by Landlord, this Lease shall terminate as of the date of such
damage.  If Landlord notifies Tenant of
its intention to repair Casualty damages and Landlord reasonably estimates that
such repairs cannot be completed within eighteen (18) months (plus any
incremental time as may be required to restore any Non-Severable Material
Alterations), Tenant shall have the right to terminate this Lease upon fifteen
(15) days written notice to Landlord.  If
pursuant to the above terms of this Section 19.2, Landlord notifies Tenant
of Landlord’s intention to repair Casualty damages and this Lease is not
terminated pursuant to the above terms of this Section 19.2, then Landlord
shall repair, reconstruct and restore the Premises, including Non-Severable
Material Alterations but excluding other Alterations and Tenant’s Property,
with reasonable diligence, so that the same shall be reasonably comparable in
quality, value and utility to the Premises immediately prior to such Casualty
damage.

 

19.3        Tenant Obligations.  If Landlord elects or is required to repair,
reconstruct or restore the Premises after any damage or destruction, Tenant
shall be responsible at its own expense for the repair and replacement of
Tenant’s Property and any Alterations (other than Non-Severable Material
Alterations) which Tenant elects to replace. 
Tenant hereby waives the provisions of any statute or law that may be in
effect at the time of the occurrence of any such damage or destruction, under
which a lease is automatically terminated or a tenant is given the right to
terminate a lease upon such an occurrence.

 

19.4        No Claim.  Tenant shall have no interest in or claim to
any portion of the proceeds of any insurance or self-insurance maintained by
Landlord.  If Landlord is entitled and
elects not to rebuild the Premises, Landlord shall relinquish to Tenant such 

 

53

 

claim as
Landlord may have for any part of the proceeds of any insurance maintained by
Tenant under Section 14.2 of this Lease.

 

19.5        No Damages.  If Landlord is required or elects to make any
repairs, reconstruction or restoration of any damage or destruction to the
Premises under any of the provisions of this Article 19, Tenant shall not
be entitled to any damages by reason of any inconvenience or loss sustained by
Tenant as a result thereof.  Except as
expressly provided in Section 19.1 or 19.4, there shall be no reduction,
change or abatement of any rental or other charge payable by Tenant to Landlord
hereunder, or in the method of computing, accounting for or paying the same.
Each party hereby waives the provisions of Section 1932(2) and Section 1933(4) of
the California Civil Code, or any other statute or law that may be in effect at
the time of a casualty under which a lease is automatically terminated or a
tenant is given the right to terminate a lease due to a casualty other than as
provided in Section 19.1.

 

20.                               EMINENT
DOMAIN.

 

20.1        Taking.  If all or any part of the Premises shall be
taken as a result of the exercise of the power of eminent domain or any
transfer in lieu thereof, this Lease shall terminate as to the part so taken as
of the date of taking or as of the date of final judgment, whichever is
earlier, and, in the case of a material partial taking of the Premises,
Landlord shall have the right to terminate this Lease as to the balance of the
Premises by written notice to Tenant within thirty (30) days after such
date.  If any material part of the Common
Area, the Building or the Property shall be taken as a result of the exercise
of the power of eminent domain or any transfer in lieu thereof, whether or not
the Premises are affected, Landlord shall have the right to terminate this
Lease by written notice to Tenant within thirty (30) days of the date of
taking.  If there shall be a taking of
the Property of such scope that the untaken part of the Property would in Tenant’s
reasonable judgment be uneconomic to operate, then Tenant may terminate this
Lease and the term and estate granted hereby by giving notice to Landlord
within thirty (30) days after the date of taking of possession by the
condemning authority.

 

20.2        Award.  In the event of any taking, Landlord shall be
entitled to any and all compensation, damages, income, rent, awards, or any
interest therein whatsoever which may be paid or made in connection therewith,
and Tenant shall assign to Landlord any right to compensation or damages for
the condemnation of its leasehold interest; provided that Tenant may file a
claim for (a) Tenant’s relocation expenses, (b) the taking of Tenant’s
Property, and (c) the loss of Tenant’s goodwill.

 

20.3        Partial Taking.  In the event of a partial taking of the
Premises which does not result in a termination of this Lease (other than with
respect to the taken portion of the Premises), the Base Rent and Operating
Expenses shall be adjusted as follows:

 

(a)           During
the period between the date of the partial taking and the completion of any
necessary repairs, reconstruction or restoration, Tenant shall be entitled to 

 

54

 

a reduction of Base Rent and Operating Expenses by a
proportionate amount based on Rentable Area taken; and

 

(b)           Upon
completion of said repairs, reconstruction or restoration, and thereafter
throughout the remainder of the Term, the Base Rent and Operating Expenses
shall be recalculated based on the remaining total number of square feet of
Rentable Area of the Premises.

 

20.4        Temporary Taking.  Notwithstanding any other provision of this
Article, if a taking occurs with respect to all or any portion of the Premises
for a period of twelve (12) months or less, this Lease shall remain unaffected
thereby and Tenant shall continue to pay Base Rent and Additional Rent and to
perform all of the terms, conditions and covenants of this Lease, provided that
Tenant shall have the right to terminate this Lease if the taking continues beyond
twelve (12) months.  In the event of any
such temporary taking, and if this Lease is not terminated, 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 up to the total Base Rent
and Additional Rent owing by Tenant for the period of the taking, and Landlord
shall be entitled to receive the balance of any award.

 

20.5        Sale in Lieu of
Condemnation.  A voluntary sale by
Landlord of all or any part of the Building or the Common Area to any public or
quasi-public body, agency or person, corporate or otherwise, having the power
of eminent domain, either under threat of condemnation or while condemnation
proceedings are pending, shall be deemed to be a taking under the power of
eminent domain for the purposes of this Article.

 

20.6        Waiver.  Except as provided in this Article, each
party hereto hereby waives and releases any right it may have under any
Applicable Law to terminate this Lease as a result of a taking, including
without limitation Sections 1265.120 and 1265.130 of the California Code of
Civil Procedure, or any similar law, statute or ordinance now or hereafter in
effect other than as expressly provided in this Lease.

 

21.                               SURRENDER.

 

21.1        Surrender.  Upon the Termination Date, Tenant shall
surrender the Premises to Landlord in good order and repair, reasonable wear
and tear and damage by casualty excepted, free and clear of all letting and
occupancies.  Subject to Article 10,
upon any termination of this Lease, all improvements, except for Tenant’s
Property, shall automatically and without further act by Landlord or Tenant,
become the property of Landlord, free and clear of any claim or interest
therein by Tenant, and without payment therefor by Landlord.

 

21.2        Holding Over.  Any holding over after the expiration of the
Term with the consent of Landlord shall be construed to automatically extend
the Term on a month-to-month basis at a Base Rent equal to the greater of (a) two
(2) times the then-current Base Rent, and (b) one and one-half
(1-1/2) times the prevailing rate at which Landlord is then offering space in
buildings reasonably determined by Landlord to be 

 

55

 

comparable to
the Building, in either case together with an amount estimated by Landlord as
Tenant’s Share of Operating Expenses payable under this Lease, and shall
otherwise be on the terms and conditions of this Lease to the extent
applicable.  Any holding over without
Landlord’s consent shall entitle Landlord to exercise any or all of its
remedies provided in Article 16, notwithstanding that Landlord may elect
to accept one or more payments of Base Rent and Operating Expenses from Tenant.

 

21.3        Quitclaim.  At the expiration or earlier termination of
this Lease, Tenant shall execute, acknowledge and deliver to Landlord, within
ten (10) days after written demand from Landlord to Tenant, any quitclaim
deed or other document required by any reputable title company, licensed to
operate in the State of California, to remove the cloud or encumbrance created
by this Lease from the Property.

 

22.                               FINANCIAL
STATEMENTS.

 

Tenant shall tender to
Landlord within ten (10) business days after receipt of a written request
any information reasonably requested by Landlord regarding the financial
stability, credit worthiness or ability of Tenant to pay the Rent due under
this Lease. Notwithstanding the foregoing, if the Tenant is a Public Company
subject to the reporting requirements of the Securities Exchange Act of 1934
(the “Exchange Act”), Tenant shall,
in lieu of the foregoing requirements, promptly deliver to Landlord all filings
made by or on behalf of Tenant with the Securities Exchange Commission or with
any securities exchange.  Landlord shall
be entitled to rely upon the information provided in determining whether or not
to enter into this Lease or for the purpose of any financing or other
transaction subsequently undertaken by Landlord.  Tenant hereby represents and warrants to
Landlord the following:  (a) that
all documents provided by Tenant to Landlord in connection with the negotiation
of this Lease are true and correct copies of the originals, (b) Tenant has
not withheld any information from Landlord that is material to Tenant’s credit
worthiness, financial condition or ability to perform its obligations
hereunder, (c) all information supplied by Tenant to Landlord is true,
correct and accurate, and (d) no part of the information supplied by
Tenant to Landlord contains any misleading or fraudulent statements.

 

23.                               ESTOPPEL
CERTIFICATES.

 

Tenant, at any time and
from time to time within five (5) business days after receipt of written
notice from Landlord, shall execute, acknowledge and deliver to Landlord or to
any party designated by Landlord, a certificate of Tenant stating:  (a) that Tenant has accepted the
Premises, (b) the Commencement Date and Expiration Date of this Lease, (c) that
this Lease is unmodified and in full force and effect (or, if there have been
modifications, that same is in full force and effect as modified and stating
the modifications), (d) whether or not there are then existing any
defenses against the enforcement of any of the obligations of Tenant under this
Lease (and, if so, specifying same), (e) whether or not there are then
existing any defaults by Landlord in the performance of its obligations under
this Lease (and, if so, specifying same), (f) the dates, if 

 

56

 

any, to which the
Base Rent and Operating Expenses have been paid, and (g) any other factual
information relating to the rights and obligations under this Lease that may
reasonably be required by any of such persons. 
Failure to deliver such certificate shall constitute an Event of
Default.  At the request of Tenant,
Landlord shall execute, acknowledge and deliver to Tenant a certificate with
similar types of information and in the time period set forth above.  Failure by Tenant to execute, acknowledge and
deliver such certificate within such five (5) business day period shall be
conclusive evidence that this Lease is in full force and effect and has not
been modified except as may be represented by the requesting party.

 

24.                               RULES
AND REGULATIONS.

 

24.1        Rules and
Regulations.  Tenant shall faithfully
observe and comply with any reasonable rules and regulations and all
reasonable modifications thereof and additions thereto from time to time put
into effect by Landlord and communicated in writing to Tenant (the “Rules and Regulations”).  Landlord shall not enforce such Rules and
Regulations in an unreasonable or discriminatory manner.  In the event of any conflict between the
terms of this Lease and the terms, covenants, agreements and conditions of the Rules and
Regulations, this Lease shall control. Notwithstanding the foregoing, so long
as Tenant leases 100% of the Building, Landlord shall not impose any Rules and
Regulations.

 

24.2        Signs.  Without Landlord’s written consent, which may
be given or withheld in Landlord’s sole discretion, Tenant shall not place or
permit to be placed on the front of the Premises any sign, picture,
advertisement, name, notice, marquee or awning; provided that upon Landlord’s
reasonable approval, Tenant shall have the right to place a sign on or adjacent
to the entrance doors to Tenant’s Premises identifying Tenant.  Landlord hereby consents to the location,
size and appearance of Tenant’s signage existing as of the Commencement
Date.  Landlord hereby reserves the
exclusive right to the exterior side walls, rear walls and roof of the
Premises.

 

25.                               INABILITY
TO PERFORM.

 

If Landlord is unable to
fulfill or is delayed in fulfilling any of Landlord’s obligations under this
Lease, by reason of acts of God, strikes, lockouts, other labor disputes,
inability to obtain utilities or materials or by any other reason beyond
Landlord’s reasonable control, then no such inability or delay by Landlord
shall constitute an actual or constructive eviction, in whole or in part, or
entitle Tenant to any abatement or diminution of Base Rent or Additional Rent,
or relieve Tenant from any of its obligations under this Lease, or impose any
liability upon Landlord, or Landlord’s Agents by reason of inconvenience,
annoyance, interruption, injury or loss to or interference with Tenant’s
business or use and occupancy or quiet enjoyment of the Premises or any loss or
damage occasioned thereby.  If Tenant is
unable to fulfill or is delayed in fulfilling any of Tenant’s obligations under
this Lease (other than the payment of Rent), by reason of acts of God, strikes,
lockouts, other labor disputes, inability to obtain utilities or materials or
by any other reason beyond Tenant’s reasonable control, then such inability or
delay by Tenant shall excuse the performance of Tenant for a 

 

57

 

period equal to
the duration of such prevention, delay or stoppage.  Tenant hereby waives and releases any right
to terminate this Lease under Section 1932(1) of the California Civil
Code, or any similar law, statute or ordinance now or hereafter in effect.

 

26.                               NOTICES.

 

Notices or other
communications given or required to be given under this Lease shall be
effective only if rendered or given in writing, sent by certified mail with a
return receipt requested, or delivered in person or by reputable overnight
courier (e.g., Federal Express, DHL, etc.) or by telecopier or facsimile (with
confirmation by one of the other methods specified herein):  (a) to Tenant (i) at the Premises
and at the address specified in Article 1, or (ii) at the place where
Tenant designates subsequent to Tenant’s vacating, deserting, abandoning or
surrendering the Premises; or (b) to Landlord at Landlord’s address set
forth in Article 1; or (c) 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 Article.  Any such notice or other communication shall
be deemed to have been rendered or given five (5) days after the date
mailed, if sent by certified mail, or upon the date of delivery in person or by
courier, or when delivery is attempted but refused.

 

27.                               QUIET
ENJOYMENT.

 

Landlord covenants that
so long as an Event of Default by Tenant is not in existence, upon paying the
Base Rent and Additional Rent, Tenant shall peaceably and quietly enjoy the
Premises, subject to the terms and provisions of this Lease.

 

28.                               NO
RENT ABATEMENT.

 

No abatement, diminution
or reduction of rent, charges or other compensation shall be claimed by or
allowed to Tenant, or any persons claiming under Tenant, under any
circumstances, whether for inconvenience, discomfort, interruption of business
or otherwise, arising from the making of Alterations or repairs to any
improvements now on or which may hereafter be erected on the Premises, by virtue
or because of any present or future Legal Requirements or by virtue or arising
from, and during, the restoration of the Premises after the destruction or
damage thereof by Casualty or other cause or the taking or condemnation of the
Premises (except as otherwise expressly provided for in Article 19 or 20)
or arising from any other cause or reason.

 

29.                               AUTHORITY.

 

If Tenant is a
corporation or a partnership, Tenant represents and warrants as follows:  Tenant is an entity as identified in Article 1,
duly formed and validly existing and in good standing under the laws of the
state of organization specified in Article 1 and qualified to do business
in the State of California.  Tenant has
the power, legal capacity and authority to enter into and perform its obligations
under this Lease and no approval or consent of any person is required in
connection with the execution and performance hereof.  The execution and performance of Tenant’s
obligations under this Lease will not result in or 

 

58

 

constitute any
default or event that would be, or with notice or the lapse of time would be, a
default, breach or violation of the organizational instruments governing Tenant
or any agreement or any order or decree of any court or other governmental authority
to which Tenant is a party or to which it is subject.  Tenant has taken all necessary action to
authorize the execution, delivery and performance of this Lease and this Lease
constitutes the legal, valid and binding obligation of Tenant subject to general
principles of equity and to bankruptcy, insolvency, reorganization, moratorium,
or other similar laws now or hereafter in effect affecting the rights of
creditors generally.  Upon Landlord’s
request, Tenant shall provide Landlord with evidence reasonably satisfactory to
Landlord confirming the foregoing representations and warranties.

 

30.                               BROKERS.

 

Tenant and Landlord
warrant that they have had dealings with only the real estate brokers or agents
listed in Article 1 in connection with the negotiation of this Lease and
that they know of no other real estate broker or agent who is entitled to a
commission in connection with this Lease. 
The brokerage commission earned in connection with this transaction
shall be paid by Landlord, and Landlord shall indemnify, defend and hold Tenant
harmless from and against all liabilities arising from any claims by or under
the broker listed in Article 1. 
Tenant and Landlord shall indemnify, defend and hold the other harmless
from and against all liabilities arising from any other claims of brokerage
commissions or finder’s fees based on Tenant’s or Landlord’s dealings or
contacts with brokers or agents other than those listed in Article 1.

 

31.                               BANKRUPTCY
OR INSOLVENCY.

 

31.1        No Transfer.  Neither Tenant’s interest in this Lease, nor
any estate hereby created in Tenant nor any interest herein or therein, shall
pass to any debtor-in-possession, trustee, or receiver or assignee for the
benefit of creditors or otherwise by operation of law except as may
specifically be provided pursuant to the Bankruptcy Code.

 

31.2        Termination Right.  If (a) Tenant shall file a voluntary
petition in bankruptcy or insolvency, or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy act or any other present or future
applicable federal, state or other statute or law (foreign or domestic), or
shall make an assignment for the benefit of creditors or shall seek or consent
or acquiesce in the appointment of any trustee, receiver or liquidator of
Tenant or of all or any part of Tenant’s Property; or (b) within sixty
(60) days after the commencement of any proceeding against Tenant, whether by
the filing of a petition or otherwise, seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future federal bankruptcy law or any other present or future
applicable federal, state or other statute or law (foreign or domestic), such
proceeding shall not have been dismissed, or if, within sixty (60) days after
the appointment of any trustee, receiver or liquidator of Tenant or of all or
any part of Tenant’s Property, without the 

 

59

 

consent or
acquiescence of Tenant, such appointment shall not have been vacated or
otherwise discharged, or if any execution or attachment shall be issued against
Tenant or any of Tenant’s Property pursuant to which the Premises shall be
taken or occupied or attempted to be taken or occupied; or (c) in a
bankruptcy proceeding or a proceeding described in clause (a) or (b) above,
the interest or estate created in Tenant hereby shall be taken in execution or
by other process of law, or (d) any assignment shall be made of the
property of Tenant for the benefit of creditors, then and in any such events,
notwithstanding any automatic stay applicable in bankruptcy or any other law(s),
Landlord may give to Tenant notice of intention to terminate this Lease to end
the Term and the estate hereby granted at the expiration of three (3) days
from the date of the giving of such notice, and, in the event such notice is
given, this Lease and the Term and estate hereby granted (whether or not the
Term shall have commenced) shall terminate upon the expiration of said three (3) days
with the same effect as if that day were the Expiration Date, but Tenant shall
remain liable for damages as provided in Article 16 and Tenant shall
remain liable as herein provided.

 

31.3        No Cause for Appointment.  Tenant shall not cause or give cause for the
appointment of a trustee or receiver of the assets of Tenant and shall not make
any assignment for the benefit of creditors, or become or be adjudicated
insolvent. The allowance of any petition under any insolvency law except under
the Bankruptcy Code or the appointment of a trustee or receiver of Tenant or of
the assets of either of them, shall be conclusive evidence that Tenant caused,
or gave cause therefor, unless such allowance of the petition, or the
appointment of a trustee or receiver, is vacated within thirty (30) days after
such allowance or appointment. Any act described in this Section 31.3
shall be deemed a material breach of Tenant’s obligations hereunder, and this
Lease shall thereupon automatically terminate. Landlord does, in addition,
reserve any and all other remedies provided in this Lease or in law.

 

31.4        Bankruptcy Filings.  (a)  Upon the filing of a petition
by or against Tenant under any chapter of the Bankruptcy Code, Tenant, as
debtor and as debtor in possession, and any trustee who may be appointed agree
as follows: (i) to perform each and every obligation of Tenant under this
Lease including, without limitation, the continuous and uninterrupted occupancy
of the Premises as is required under Article 16 until such time as this
Lease is either rejected or assumed by order of the United States Bankruptcy
Court; (ii) to pay monthly in advance on the first day of each month as
reasonable compensation for use and occupancy of the Premises an amount equal
to all Rent and other charges otherwise due pursuant to this Lease; (iii) to
reject or assume this Lease within sixty (60) days of the filing of such
petition under Chapter 7 of the Bankruptcy Code or within one hundred twenty
(120) days (or such shorter term as Landlord, in its sole discretion, may deem
reasonable so long as notice of such period is given) of the filing of a
petition under any other chapter of the Bankruptcy Code, Tenant hereby
knowingly and voluntarily waiving any right to seek time additional to the
minimum period set forth in 11 U.S.C. § 365(d)(4) or any similar
statute to assume or reject this Lease and hereby acknowledging that there does
not exist, nor could there exist, cause to seek such extension; (iv) to
give Landlord at least forty-five (45) days prior written notice of any
proceeding relating to any assumption of this Lease; (v) to give Landlord
at least thirty (30) days’ prior written notice of any abandonment 

 

60

 

of the
Premises; any such abandonment to be deemed a rejection of this Lease; (vi) to
do all other things of benefit to Landlord otherwise required under the Bankruptcy
Code; (vii) to be deemed to have rejected this Lease in the event of the
failure to comply with any of the above; and (viii) to have consented to
the entry of an order by an appropriate United State Bankruptcy Court providing
all of the above, waiving notice and hearing of the entry of same.

 

(b)           No
default of this Lease by Tenant, either prior to or subsequent to the filing of
such a petition, shall be deemed to have been waived unless expressly done so
in writing by Landlord.

 

(c)           Included
within and in addition to any other conditions or obligations imposed upon
Tenant, any Trustee, or any successor of Tenant as adequate assurance of future
performance in the event of assumption and/or assignment pursuant to the
Bankruptcy Code are the following: (i) the cure of any monetary defaults
and the reimbursement of pecuniary loss within not more than thirty (30) days
of assumption and/or assignment; (ii) the deposit of a Letter of Credit
pursuant to the terms of this Lease; (iii) the use of the Premises as set
forth herein is unchanged; (iv) the prior written consent of each
Leasehold Mortgagee; and (v) no physical changes of any kind may be made
to the Premises unless in compliance with the applicable provisions of this
Lease.  Tenant also expressly acknowledges
and agrees that neither Tenant nor any successor in interest (including but not
limited to a trustee in bankruptcy appointed to serve as trustee for Tenant)
may assume or assign Tenant’s rights under this Lease pursuant to 11 U.S.C. § 365
(or any similar statute) unless, in addition to the provisions of 11 U.S.C. § 365(b)(3),
each of the following conditions, which Landlord and Tenant acknowledge are
commercially reasonable in the context of a bankruptcy proceeding, have been
fully satisfied and Landlord has so acknowledged in writing that: (A) The
assumption of the Lease will not breach any provision in any other lease,
mortgage, financing agreement or other agreement by which Landlord is bound
relating to the Building; (B) The assumption of the Lease will not
disrupt, in Landlord’s judgment, the tenant mix of the Building which, in
Landlord’s judgment, would be most beneficial to all of the tenants of the
Building and would enhance the image, reputation, and profitability of the
Building; (C) The assumption of the Lease will not result in alteration of
the Premises or the making of physical changes of any kind to the Premises
unless in compliance with the applicable provisions of this Lease.

 

(d)           For
purposes of this Section 31.4, the word “Tenant” shall mean any one or
more persons primarily or secondarily liable for Tenant’s obligations under the
Lease.

 

32.                               ANTENNA
AND ROOFTOP SPACE.

 

32.1        Antennae.  Landlord agrees that, subject to all Legal
Requirements, insurance requirements, this Lease and the conditions and
limitations hereinafter stipulated, during the Term, Tenant, at its sole cost
and expense, shall have a non-exclusive license to install in a location on a
30% portion of the rooftop of the Building to be designated by 

 

61

 

Landlord in
its sole and absolute discretion (the “Antenna Area”) and thereafter
maintain, repair, operate and replace satellite antenna(e) (the “antenna”)
provided that, with respect to each antenna, (i) the antenna shall not
exceed three (3) feet in height by three (3) feet in length, by three
(3) feet in width or, if applicable, three (3) feet in diameter; (ii) the
size and dimensions of the antenna and any reasonably required support
structures and associated maintenance access structures shall be subject to
Landlord’s prior written consent in Landlord’s sole discretion; (iii) such
antenna installation and position of such antenna and reasonably required
support structures and associated maintenance access structures shall comply
with all Legal Requirements; (iv) the installation of any electrical or
communications lines (“Wiring”) and related equipment in connection with the installation
and operation of the antenna, (including, without limitation, the location and
the routing of all Wiring and related equipment in connection therewith) shall (A) be
at Tenant’s sole cost and expense, (B) be subject to Landlord’s prior
written consent, in Landlord’s sole discretion and in accordance with the
provisions of Article 10 (and Landlord hereby consents to Tenant’s antenna(e) existing
as of the Commencement Date), and (C) comply with Legal Requirements and
insurance requirements; and (v) the antenna, reasonably required support
structures, maintenance access structures, Wiring and related equipment shall
be installed, maintained and kept in repair by Tenant, at Tenant’s sole cost
and expense. Tenant shall be responsible for the payments of any fees and taxes
which may be imposed by any governmental agency in connection with the installation
and use of such antenna.  Landlord
acknowledges that Landlord has consented to Tenant’s antennae existing as of
the Commencement Date for purposes of this Section 32.1.

 

32.2        Non-Exclusive.  The parties agree that Tenant’s use of the
rooftop of the Building, is a non-exclusive use and Landlord may permit the use
of any other portion of the roof to any other person, firm or corporation (“Permitted User”) for any use including the
installation of other antennae, rooftop equipment, wiring and support equipment
provided the same do not unreasonably interfere with Tenant’s installations on
the roof or reception or transmission of signals or Tenant’s use or occupancy
of the Premises in accordance with the terms hereof.  Landlord, at its sole cost and expense, shall
be responsible for the repair and maintenance of any damage to the rooftop
caused by a Permitted User’s use of the rooftop and shall not be allowed to
request reimbursement therefore from Tenant as an Operating Expense, provided that Landlord shall have the
right first to prosecute its claims against such Permitted User.

 

32.3        Access.  For the purpose of installing, servicing or
repairing the antennae, Wiring and related equipment, Tenant shall have access
to the rooftop of the Building at all reasonable times upon reasonable advance
notice, subject to Landlord’s reasonable safeguards for the security and
protection of the Building, the Building Systems, Structural Components, and
installations and equipment of other tenants or occupants of the Building as
may be located on the roof of the Building. Landlord shall have the right, at
Tenant’s expense, to assign a representative to be present during the duration
of Tenant’s access to the rooftop.

 

62

 

32.4        Compliance with Legal
Requirements.  Without limiting
Landlord’s obligations under this Lease, Tenant, at Tenant’s sole cost and
expense, agrees to promptly and faithfully obey, observe and comply with all
Legal Requirements, insurance requirements and this Lease in any manner
affecting or relating to Tenant’s use of said roof, and the installation,
repair, maintenance and operation of the antenna, Wiring and related equipment
erected or installed by Tenant pursuant to the provisions of this Article 32.  Tenant, at Tenant’s sole cost and expense,
shall secure and thereafter maintain all permits and licenses required for the
installation and operation of the antenna, and any support structures and
related equipment erected or installed by Tenant, including, without
limitation, any approval, license or permit required from the Federal
Communications Commission or otherwise pursuant to Legal Requirements.  Landlord shall, at no cost to it, reasonably
cooperate (which shall include executing and delivering all necessary and
proper filings with governmental or quasi-governmental entities) with Tenant in
obtaining such approvals, licenses and permits.

 

32.5        Tenant Expense.  Tenant agrees that Tenant will pay for all
electrical service required for Tenant’s use of the antennae, and related
equipment erected or installed by Tenant and Tenant further agrees that such
electric service shall feed off the supply of electrical energy furnished to
the Premises as provided in this Lease.

 

32.6        Tenant’s Property.  The antennae, support structures, Wiring and
related equipment installed by Tenant, pursuant to the provisions of Article 32
shall be Tenant’s personal property, and, upon the expiration of the Term of
this Lease, or upon its earlier termination in any manner, shall be removable
by Tenant at Tenant’s sole cost and expense. 
Tenant, at Tenant’s sole cost and expense, shall promptly repair any and
all damage to the rooftop of the Building and to any other part of the Building
caused by or resulting from the installation, maintenance and repair, operation
or removal of the antenna, support structures, Wiring and related equipment
erected or installed by Tenant and restore said affected areas to their
condition as existed prior to the installation of the antenna, and related
equipment, ordinary wear and tear and casualty excepted.

 

32.7        No Interference.  Tenant’s antennae, Wiring and related
equipment shall not interfere with (i) Building Equipment or other
installations located on the roof, (ii) other portions of the Building, (iii) other
tenants in the Building, and/or (iv) the reception and transmission of
communications signals by other tenants; provided that Tenant’s antennae
existing as of the Commencement Date shall not have to be modified to comply
with the foregoing.

 

32.8        Relocation.  Landlord shall have the right at its sole and
absolute discretion, upon not less than fifteen (15) days prior written
notice to Tenant, to relocate the antenna (and all Wiring and other equipment
related thereto), to any reasonably comparable space on the rooftop of the
Building.  Landlord shall reimburse
Tenant for all actual, reasonable costs and expenses incurred by Tenant in
connection with any such relocation.

 

63

 

32.9        Indemnification.  Tenant hereby indemnifies Landlord against
liability in connection with or arising from the installation, maintenance, use
and operation of any antenna installed by Tenant. The foregoing indemnification
is in addition to, and not in lieu of, the obligations of Tenant under Section 13.4
or 14.1.

 

33.                               MISCELLANEOUS.

 

33.1        Entire Agreement.  This Lease, including the exhibits which are
incorporated herein and made a part of this Lease, contains the entire
agreement between the parties and all prior negotiations and agreements are
merged herein. Tenant hereby acknowledges that neither Landlord nor Landlord’s
Agents have made any representations or warranties with respect to the
Premises, the Building, the Property, or this Lease except as expressly set forth
herein, and no rights, easements or licenses are or shall be acquired by Tenant
by implication or otherwise unless expressly set forth herein.

 

33.2        No Waiver.  No failure by Landlord or Tenant to insist
upon the strict performance of any obligation of Tenant or Landlord under this
Lease or to exercise any right, power or remedy consequent upon a breach
thereof, no acceptance of full or partial Base Rent or Additional Rent during
the continuance of any such breach by Landlord, or payment of Base Rent or
Additional Rent by Tenant to Landlord, and no acceptance of the keys to or
possession of the Premises prior to the expiration of the Term by any employee
or agent of Landlord shall constitute a waiver of any such breach or of such
term, covenant or condition or operate as a surrender of this Lease.  No waiver of any breach shall affect or alter
this Lease, but each and every term, covenant and condition of this Lease shall
continue in full force and effect with respect to any other then-existing or
subsequent breach thereof.  The consent
of Landlord or Tenant given in any instance under the terms of this Lease shall
not relieve Tenant or Landlord, as applicable, of any obligation to secure the
consent of the other in any other or future instance under the terms of this
Lease.

 

33.3        Modification.  Neither this Lease nor any term or provisions
hereof may be changed, waived, discharged or terminated orally, and no breach
thereof shall be waived, altered or modified, except by a written instrument
signed by the party against which the enforcement of the change, waiver,
discharge or termination is sought.

 

33.4        Successors and Assigns.  The terms, covenants and conditions contained
in this Lease shall bind and inure to the benefit of Landlord and Tenant and,
except as otherwise provided or limited herein, their respective personal
representatives and successors and assigns.

 

33.5        Validity.  If any provision of this Lease or the
application thereof to any person, entity or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons, entities or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
provision of this Lease shall be valid and be enforced to the full extent
permitted by law.

 

64

 

33.6        Jurisdiction.  This Lease shall be construed and enforced in
accordance with the laws of the State of California.  Any action that in any way involves the
rights, duties and obligations of the parties under this Lease may (and if
against Landlord, shall) be brought in the courts of the State of California in
the County of Santa Clara or the United States District Court for the Northern District
of California, and the parties hereto hereby submit to the personal
jurisdiction of said courts.

 

33.7        Attorneys’ Fees.  In the event that either Landlord or Tenant
fails to perform any of its obligations under this Lease or in the event a
dispute arises concerning the meaning or interpretation of any provision of
this Lease, the defaulting party or the party not prevailing in such dispute,
as the case may be, shall pay any and all costs and expenses incurred by the
other party in enforcing or establishing its rights hereunder, including,
without limitation, court costs, costs of arbitration and reasonable attorneys’
fees.  Should Landlord be named as a
defendant in any suit brought against Tenant in connection with or arising out
of Tenant’s occupancy hereunder Tenant shall pay to Landlord its costs and
expenses incurred in such suit, including reasonable attorneys’ fees.

 

33.8        Waiver of Jury Trial.  Landlord and Tenant each hereby voluntarily
and knowingly waive and relinquish their right to a trial by jury in any
action, proceeding or counterclaim brought by either against the other on any
matter whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord with Tenant, or Tenant’s use or occupancy of the
Premises, including any claim of injury or damage, and any emergency and other
statutory remedy with respect thereto.

 

33.9        No Counterclaim by Tenant.  In the event Landlord commence any
proceedings for nonpayment of rent or other charges payable by Tenant under
this Lease, Tenant will not interpose any counterclaim of whatever nature or
description in any such proceedings. 
This shall not, however, be construed as a waiver of the Tenant’s right
to assert such claims in any separate action or actions brought by the Tenant.

 

33.10      Light and Air.  Tenant covenants and agrees that no
diminution of light, air or view by any structure that may hereafter be erected
(whether or not by Landlord) shall entitle Tenant to any reduction of the Base
Rent or Additional 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.

 

33.11      Lease Memorandum.  Neither Landlord or Tenant shall record this
Lease or a short form memorandum hereof without the consent of the other.

 

33.12      Confidentiality.  Except as required by law or regulation, the
parties agree that neither of them shall make public the terms and conditions
of this Lease or the fact that they have entered into this Lease without first
obtaining the written permission from the other party; provided, however, that
either party can, without the other’s permission, share this Lease and
information relating thereto with such party’s attorneys, accountants and other
professional advisors and with existing or potential lenders or 

 

65

 

investors with
respect to the Property, and provided that this Lease will be submitted to the
City of Mountain View and may therefore be a public document.

 

33.13      Terms.  The term “Premises” includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto.  The words “Landlord” and “Tenant”
as used herein shall include the plural as well as the singular.  If there is more than one Tenant or Landlord,
the obligations under this Lease imposed on Tenant or Landlord shall be joint
and several.  The captions preceding the
articles of this Lease have been inserted solely as a matter of convenience and
such captions in no way define or limit the scope or intent of any provision of
this Lease.

 

33.14      Review and Approval.  The review, approval, inspection or
examination by Landlord of any item to be reviewed, approved, inspected or
examined by Landlord under the terms of this Lease or the exhibits attached
hereto shall not constitute the assumption of any responsibility by Landlord
for either the accuracy or sufficiency of any such item or the quality of
suitability of such item for its intended use. 
Any such review, approval, inspection or examination by Landlord is for
the sole purpose of protecting Landlord’s interests in the and under this
Lease, and no third parties, including, without limitation, Tenant or any
person or entity claiming through or under Tenant, or the contractors, agents,
servants, employees, visitors or licensees of Tenant or any such person or
entity, shall have any rights hereunder with respect to such review, approval,
inspection or examination by Landlord.

 

33.15      No Beneficiaries.  This Lease shall not confer or be deemed to
confer upon any person or entity other than the parties hereto, any right or
interest, including without limitation, any third party status or any right to
enforce any provision of this Lease.

 

33.16      Time of the Essence.  Time is of the essence in respect of all
provisions of this Lease in which a definite time for performance is specified.

 

33.17      Modification of Lease.  In the event of any ruling or threat by the
Internal Revenue Service, or opinion of counsel, that all or part of the Rent
paid or to be paid to Landlord under this Lease will be subject to the income
tax on unrelated business taxable income, Tenant agrees to make reasonable
modifications to this Lease to minimize such tax; provided that such
modifications will not result in any increase in Rent, change the Term or
impose any additional liability or obligation on Tenant or diminish Tenant’s
rights hereby under.  Landlord will pay
all Tenant’s reasonable costs incurred in reviewing and negotiating any such
lease modification, including reasonable attorneys’ and accountants’ fees.

 

33.18      Construction.  This Lease has been negotiated extensively by
Landlord and Tenant with and upon the advice of their respective legal counsel,
all of whom have participated in the drafting hereof.  Consequently, Landlord and Tenant agree that
no party shall be deemed to be the drafter of this Lease and in the event this
Lease is ever construed by a court of law, such court shall not construe this
Lease or any provision of this Lease against any party as the drafter of the
Lease.

 

66

 

33.19      Survival.  The obligations of this Lease shall survive
the expiration of the Term to the extent necessary to implement any requirement
for the performance of obligations or forbearance of an act by either party
hereto which has not been completed prior to the termination of this
Lease.  Such survival shall be to the
extent reasonably necessary to fulfill the intent thereof, or if specified, to
the extent of such specification, as same is reasonably necessary to perform
the obligations and/or forbearance of an act set forth in such term, covenant
or condition.  Notwithstanding the
foregoing, in the event a specific term, covenant or condition is expressly
provided for in such a clear fashion as to indicate that such performance of an
obligation or forbearance of an act is no longer required, then the specific
shall govern over this general provisions of this Lease.

 

33.20      Termination.  (a)  Upon (i) the commencement by
or against Google Technology, Inc. (hereinafter referred to as the “Amphitheatre Subtenant”)
pursuant to the Amphitheatre Sublease (the “Google Lease”) of any state or federal
proceedings in respect of bankruptcy, insolvency or dissolution, or the
appointment of any trustee, liquidator, receiver, or similar officer for Google
(each, a “Google
Insolvency”) and the entry or issuance of an order or decree in
any Google Insolvency rejecting, avoiding, disaffirming or otherwise
terminating the Google Lease (pursuant to the 11 U.S.C § 365 or otherwise)
and such order or decree not having been stayed, and (ii) Google having
surrendered substantially all of the Premises leased under the Google Lease,
Tenant may, at Tenant’s sole and exclusive option, elect to terminate this Lease
and the Other Lease for Crittenden C/D (the “Termination Option”), during the Option
Period.  The Termination Option and its
exercise shall be void if an Event of Default by Tenant exists, either at the
time of exercise of the Termination Option or on the Option Termination Date
(and if there shall be more than one Option Termination Date by reason of the
operation of the second proviso of Section 33.20(b),
then if an Event of Default by Tenant exists on any Option Termination Date,
the Termination Option exercise shall be void with respect to the premises as
to which the termination would otherwise have been effective on such date and
on any subsequent Option Termination Date), or if, at either of such times, the
Tenant named herein has assigned its interest hereunder or has subleased all or
substantially all of the premises demised hereunder for all or substantially
all of the remainder of the term of this Lease. 
The “Option
Period” shall mean the period commencing one (1) business
day after the later of the occurrence of the both (i) and (ii) above
and ending on the thirtieth (30th) business day thereafter.  Tenant may exercise the Termination Option at
any time during the Option Period by serving written notice of that exercise to
Landlord in the manner set forth in Section 33.20(b) (a “Notice of Exercise”).

 

(b)           Notice
of Exercise.  The Notice of Exercise
shall set forth the date (subject to the other provisions of this Section 33.20(b),
the “Option Termination
Date”) for the termination by Tenant of this Lease and the Other
Lease for Crittenden C/D, which Option Termination Date shall not be less
than 90 days, and not more than 180 days, after the date of service of the
Notice of Exercise, provided that Landlord in its
reasonable discretion may consent to a schedule for the release of
portions of the Premises and the premises under the Other Lease for
Crittenden C/D at different times between the 90th day and 180th
day referred to above (each portion of which shall not be less than an entire 

 

67

 

building), and provided further,
that if, pursuant to the above terms of this Section 33.20(b) and Section 33.20(b) of
such Other Lease:

 

(i)            the
Option Termination Date would be a date prior to December 31, 2004, then:

 

(A)          the Option Termination Date with respect to the Top
Floors shall instead be December 31, 2004,

 

(B)           the Option Termination Date with respect to the Lower
Floors shall instead be December 31, 2005, and

 

(C)           the Option Termination Date with respect to the Other
Lease for Crittenden C/D shall be the date as determined pursuant to the
above provisions of this Section 33.20(b) and Section 33.20(b) of
such Other Lease; and

 

(ii)           the Option
Termination Date would be a date on or after December 31, 2004, and prior
to December 31, 2005, then:

 

(A)          the Option Termination Date with respect to the Lower
Floors shall instead be December 31, 2005, and

 

(B)           the Option Termination Date with respect to the Top
Floors and for the Other Lease for Crittenden C/D shall be the date as
determined pursuant to the above provisions of this Section 33.20(b) and
Section 33.20(b) of such Other Lease;

 

and until the Option Termination Date occurs in
accordance with the foregoing, Tenant shall be obligated to perform all of its obligations
under this Lease in respect of the Premises or the portion thereof for which
the Option Termination Date shall have not yet occurred.

 

(c)           Termination
Payment.  If Tenant shall exercise
the Termination Option, then on the Option Termination Date, as consideration
for Tenant’s exercise of its option to terminate this Lease and the Other Lease
for Crittenden C/D, Landlord shall be entitled to draw upon the Letter of
Credit (as well as the “Letter of Credit” delivered under the Other Lease for
Crittenden C/D) by sight draft on the Issuing Bank in an aggregate amount
as set forth below, or at Landlord’s election shall have the right to receive
directly from Tenant a payment (in either case, the “Termination Payment”)
determined as follows: (i)  $11,000,000 if the Option Termination Date
occurs during the period from the Commencement Date through and including December 31,
2005 (or, if there shall be more than one Option Termination Date by operation
of the second proviso of Section 33.20(b), any Option Termination Date
occurs during the period from the Commencement Date through and including December 31,
2005), (ii) $10,000,000 if the Option Termination Date occurs during the
period from January 1, 2006 through and including December 31, 2006, (iii) $9,000,000
if the Option Termination Date occurs during the period from January 1, 

 

68

 

2007 through and including December 31, 2007, (iv) $8,250,000
if the Option Termination Date occurs during the period from January 1,
2008 through and including December 31, 2008, (v) $7,500,000 if the
Option Termination Date occurs during the period from January 1, 2009
through and including December 31, 2009, (vi) $7,000,000 if the
Option Termination Date occurs during the period from January 1, 2010
through and including December 31, 2010, (vii) $6,500,000 if the
Option Termination Date occurs during the period from January 1, 2011
through and including December 31, 2011, (viii) $6,000,000 if the
Option Termination Date occurs during the period from January 1, 2012
through and including the last day of the Term. 
Notwithstanding the foregoing, if there shall be more than one Option
Termination Date by reason of the operation of the second proviso of Section 33.20(b),
then the $11,000,000 Termination Payment shall be payable as follows: (A) $7,354,600
(attributable to the termination of the Other Lease for Crittenden C/D) shall
be payable on the first Option Termination Date to occur, (B) $1,827,100
(attributable to the termination of the Top Floors) shall be payable on the
Option Termination Date for the Top Floors, and (C) $1,818,300
(attributable to the termination of the Lower Floors) shall be payable on the
Option Termination Date for the Lower Floors. 
The Termination Payment is an aggregate amount, of which 33.14% is
attributable to the termination of this Lease (as further specified in the
previous sentence solely with regard to the $11,000,000 Termination Payment)
and 66.86% is attributable to the termination of the Other Lease for Crittenden
C/D.  Upon Landlord’s receipt of the
Termination Payment in its entirety (including any portion attributable to the
Other Lease for Crittenden C/D), subject to the other terms and conditions of
this Section 33.20, this Lease and the Other Lease for Crittenden C/D
shall terminate and the respective terms and provisions of this Lease and the
Other Lease for Crittenden C/D regarding the parties’ conduct upon the
expiration of the Term hereof and the term thereof shall govern and control,
including with respect to any amounts that remain drawable under the Letter of
Credit; provided that, if there shall be more than one Option Termination Date
by reason of the operation of the second proviso of Section 33.20(b), then
(x) the Other Lease for Crittenden C/D shall terminate as provided above in
this sentence on the first Option Termination Date to occur, (y) this Lease
shall terminate as provided above in this sentence only with respect to the
portion of the Premises (if any) to be affected by such Option Termination
Date, and (z) the Lease shall continue in full force and effect in respect of
the Premises or the portion thereof for which the Option Termination Date shall
have not yet occurred and, upon such occurrence, shall terminate in accordance
with and subject to the terms hereof. 
Notwithstanding anything herein to the contrary, Tenant hereby
acknowledges and agrees that the entire Termination Payment (including any
amount attributable to the Other Lease for Crittenden C/D) must be paid in
full, and that, in the case of multiple Option Termination Dates (as discussed
in the previous sentence), any failure by Tenant to fully pay the balance of
the Termination Payment as it becomes payable shall, at the election of
Landlord, render any previous termination void and thereupon cause this Lease
and the Other Lease for Crittenden C/D to be reinstated in their entirety and
continued in existence and effectiveness, as though such previous termination
had never occurred; provided that if Landlord elects to reinstate the leases
pursuant to this sentence and Landlord has received a letter of credit as
required by the last sentence of Section 33.20(c) of the Other Lease
for Crittenden C/D and Tenant has restored the Letter of Credit under this
Lease to the Required Amount as if no termination had occurred, then Landlord
shall return to 

 

69

 

Tenant the portion of the Termination Payment received
minus all rent obligations that would have been incurred by Tenant during any
period of termination of any part of this Lease and the Other Lease for
Crittenden C/D and any other reasonable costs and expenses (including attorneys’
fees) incurred by Landlord as a result of Tenant’s termination and subsequent
non-payment of the balance of the Termination Payment.  Tenant agrees that, notwithstanding anything
herein to the contrary, if at any time all or any part of the Termination
Payment paid to Landlord is or must be rescinded or returned by the Landlord
for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of Tenant), then this Lease and the Other Lease
for Crittenden C/D, and Tenant’s obligations hereunder and thereunder, shall be
deemed to have been reinstated and continued in existence and effectiveness, as
though such previous payment had never been made.  In the event of any reinstatement of this
Lease (whether pursuant to the immediately preceding sentence or otherwise), Tenant
shall thereupon deliver to Landlord a letter of credit that satisfies all of
the terms and provisions of Section 4.7.

 

33.21      Effectiveness.  (a) This
Agreement shall come into full force and effect upon (i) the delivery of a
written approval of this Lease by the current holder of the loan (the “Crittenden A Lender”)
made pursuant to that certain Leasehold Deed of Trust and Security Agreement,
dated as of August 7, 2001 (the “Security  Agreement”), by Landlord to Fidelity National
Title Insurance Company for the benefit of GMAC Commercial Mortgage Corporation
pursuant to Section 3.8 of the Security Agreement, (ii) the delivery
of a written approval of that certain Second Amendment to Commercial Lease
(Amphitheatre), dated as of July 9, 2003, between WXIII/Amphitheatre
Realty, L.L.C. (the “Amphitheatre
Landlord”), Tenant and Amphitheatre Subtenant by the current
holder of the loan (the “Amphitheatre
Lender”) made pursuant to that certain Loan Agreement, dated as
of July 2, 2002 (the “Loan
Agreement”), by and between Landlord and German American Capital
Corporation pursuant to Sections 8.7 and 20.2.2 of the Loan Agreement, and (iii) the delivery
by Amphitheatre Lender to Amphitheatre Subtenant of a nondisturbance and
attornment agreement in form and substance reasonably satisfactory to
Amphitheatre Subtenant (the latter of such three deliveries, the “Effective Date”).

 

(b)           If
the Effective Date, as defined in Section 33.21(a)(iii) above, shall
have not occurred on or before July 31, 2003, then this Lease as well as
the Other Lease for Crittenden C/D (except for Section 33.23 thereof)
shall terminate, and the Original Lease shall be reinstated.

 

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

 

70

 

IN WITNESS
WHEREOF, Landlord and Tenant have executed this Lease as of the date first
above written.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WXIII/CRITTENDEN
  REALTY A/B, L.L.C., 

  a Delaware limited liability company

  	
   

  	
  SILICON
  GRAPHICS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Whitehall
  Parallel Real Estate Limited 

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
  Partnership
  XIII, its managing member

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  WH Parallel
  Advisors, L.L.C. XIII, 

  its general partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

71

 

GLOSSARY

 

DEFINITIONS

 

As used in this Lease,
the following terms shall have the following meanings, applicable, as
appropriate, to both the singular and plural form of the terms defined below:

 

“Acceptable
Accounting Firm” shall mean an independent
certified public accounting firm which shall be a nationally recognized
accounting firm in the United States or its successor.

 

“Acceptable
Accounting Principles” shall mean generally
accepted accounting principles consistently applied (i.e., GAAP).

 

“ADA”
is defined in Section 12.1.

 

“Additional
Rent” is defined in Section 4.4.

 

“Adjustment
Date” is defined in Section 4.3.

 

“Alterations”
is as defined in Section 10.1.

 

“Amphitheatre
Ground Lease Assignment” means
that certain Assignment and Assumption of Ground Lease dated of even date
herewith between SGRE and Landlord with respect to the Amphitheater Property.

 

“Amphitheatre
Landlord” is
defined in Section 33.21(a).

 

“Amphitheatre
Lender” is
defined in Section 33.21(a).

 

“Amphitheatre
Property” means the
property commonly known as 1600 Amphitheatre Parkway, Mountain View,
California.

 

“Amphitheatre Subtenant”
is defined in Section 33.20(a).

 

“Assignment”
is defined in Section 15.1.

 

“Assumed Lease” is
defined in Section 33.20(a).

 

“Bankruptcy
Code” means Title 11 of the United States Code, as
amended.

 

“Base Rent”
means the amount stated in Article 1, to be adjusted and payable in
accordance with Article 4.

 

“Building”
is defined in Section 2.1.

 

“Building
Systems” shall mean the mechanical, electrical,
heating, ventilating, air conditioning, elevator, plumbing, sanitary,
life-safety and related communications apparatus, 

 

72

 

Common Area lighting and
other utility and service systems of the Premises and all components thereof,
as the same shall exist from time to time, and all Alterations, renewals and
replacements thereof, additions thereto and substitutions therefor,  excluding, however, the sprinklers and the
horizontal distribution systems within and servicing the Premises and by which
mechanical, electrical, communications, and other utility and service systems
are distributed from the base risers, feeders, panelboards, etc. for provision
of such services (it being agreed, however, that any such horizontal
distribution systems and sprinklers that service more than one floor of the
Premises shall constitute Building Systems).

 

“business
days”  means
Monday through Friday, excluding Saturdays, Sundays and federal or state legal
holidays.

 

“Cash
Collateral” 
means the cash proceeds of any draw upon the Letter of Credit that are
held in the Cash Collateral Account.

 

“Cash
Collateral Account”  is defined in Section 4.7.

 

“Change
in Control” is defined in Section 15.6.

 

“Commencement
Date” means the date specified in Article 1.

 

“Common Area” shall mean (i) the land upon which the Building and
other improvements comprising the Premises are erected, including appurtenant
easement rights, (ii) all Structural Components and all staircases,
landings and stairs (except for those stairways located within any portion of
the Premises), (iii) all shafts, passageways and corridors, mechanical and
other rooms, areas and spaces which are not part of any portion of the Premises,
(iv) all pump rooms, refuse rooms, storage rooms, telephone rooms, gas
meter and other utility rooms and electrical rooms and closets that are not
part of any portion of the Premises, (v) the elevators (including their
shafts, pits and machine rooms that are not part of any portion of the
Premises), (vi) the entrances to the outer public lobbies, service
entrances, loading docks, elevators lobbies and ground floor plaza that are not
part of any portion of the Premises and (vii) all other parts of the
Building, which are not part of the Premises.

 

“Credit
Enhancement” is defined in Article 1.

 

“Crittenden
A Lender” is defined in Section 33.21(a).

 

“Crittenden
B” means the property commonly known as 1300 Crittenden Lane.

 

“Crittenden
Ground Lease Assignment” means collectively those certain
Assignments and Assumption of Ground Lease between SGRE and Landlord with
respect to the Crittenden Property.

 

73

 

“Crittenden
Property” means, collectively, the property
commonly known as 1200 Crittenden Lane, 1300 Crittenden Lane, 1400 Crittenden
Lane, and 1500 Crittenden Lane, each in Mountain View, California.

 

“Effective
Date” is
defined in Section 33.21(a).

 

“Environmental
Activity” is defined in Section 13.1(a).

 

“Environmental
Laws” are defined in Section 13.1(b).

 

“Event of
Default” is defined in Section 16.1.

 

“Excess Rent”
is defined in Section 15.3.

 

“Expiration
Date” means the date specified in Article 1.

 

“Goldman”
means The Goldman Sachs Group, Inc.

 

“Google” is defined in Section 33.20(a).

 

“Google Landlord” is
defined in Section 33.20(a).

 

“Google Lease” means that
certain sublease agreement entered into on July 9, 2003 between Tenant and
Amphitheatre Subtenant.

 

 “Ground
Lease” means the certain Amended and Restated
Ground Lease (Parcel A) by and between the City of Mountain View, a
municipal corporation, as ground lessor, and Landlord, as ground lessee and
successor-in-interest to SGRE and Goldman, dated as of November 8, 2000,
as assigned to Landlord pursuant to an Assignment and Assumption of Ground
Lease Agreement (Crittenden Parcel A), dated as of May 22, 2001, as
amended by First Amendment to Parcel A Ground Lease, dated May 22, 2001,
by and among the City of Mountain View, Goldman, and Landlord.

 

“Ground
Lease Assignments” means the Amphitheatre Ground Lease
Assignment and the Crittenden Ground Lease Assignment.

 

“Hazardous
Material” is defined in Section 13.1(c).

 

“Indebtedness”
means indebtedness for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services or any other indebtedness which is evidenced by a note,
bond, debenture or similar instrument.

 

“Interest
Rate” is defined in Section 4.5.

 

“Landlord’s
Agents” is defined in Section 13.4.

 

“Landlord’s
Expense Statement” is defined in Section 5.2.

 

74

 

“Leasehold
Mortgage” means any mortgage or deed of trust or security
agreement or collateral assignment now or at any time encumbering all or any
part of the Property or Landlord’s interest therein.

 

“Leasehold
Mortgagee” means the holder of a Leasehold Mortgage.

 

“Legal
Requirements” means applicable laws, statutes,
codes, ordinances, orders, rules, regulations, conditions of approval, and
requirements, of all federal, state, county, municipal and other governmental
authorities and the departments, commissions, boards, bureaus,
instrumentalities, and officers thereof, and all administrative or judicial
orders or decrees and all permits, licenses, approvals, and other entitlements
issued by governmental entities, and rules of common law, relating to or
affecting the Building or the use, operation or occupancy of the Premises,
whether now existing or hereafter enacted.

 

“Lien”
means any lien, mortgage, deed of trust, encumbrance, chattel mortgage,
security agreement, or order for the payment of money filed against the
Premises or the Property, whether or not enforceable as such.

 

“Loan
Agreement” is defined in Section 33.21(a).

 

“Lower
Floors” is defined in Article 1.

 

“Minimum
Net Worth” shall mean a Net Worth of not less than
$500,000,000.

 

“Monthly
Rent” shall have the meaning ascribed to such term
under the Ground Lease.

 

“Net
Worth” shall mean, at the time in question, a net worth
(exclusive of goodwill) determined in accordance with Acceptable Accounting
Principles, and in order for Tenant to establish the Net Worth of Tenant,
Tenant shall have provided Landlord with financial statements audited by an
Acceptable Accounting Firm, which shall express its unqualified opinion
thereon, and provided to Landlord.

 

“Notice of Exercise” is
defined in Section 33.20(a).

 

“Operating
Expenses” are defined in Section 5.1(b).

 

“Option Period” is
defined in Section 33.20(a).

 

“Option Termination Date”
is defined in Section 33.20(b).

 

“Ordinary
Capital Improvement” means any capital improvement which (i) is
required to be made in order to cause the Building to comply with Legal
Requirements, or (ii) is a replacement or repair of existing Structures,
systems, improvements or equipments or (iii) is necessary to keep the
Building in good repair and working order or (iv) will reduce the amount
of repair or operating expenses and is approved by Tenant, such approval not to
be unreasonably withheld or delayed.

 

75

 

“Original
Lease”  means the Commercial Lease (Crittenden Parcel
A) dated as of December 29, 2000 between Goldman and Tenant, as amended by
First Amendment to Commercial Lease dated as of January 26, 2001, and an
omnibus amendment dated as of April 18, 2001, as assigned by Goldman to
Landlord by Assignment and Assumption of Commerical Lease (Crittencen Parcel A)
dated as of May 22, 2001, as amended by Second Amendment to Commercial
Lease (Crittenden Parcel A) dated as of July 23, 2001.

 

“Other
Leases” means each of the following Commercial
Leases:  (i) that certain Commercial
Lease between WXIII/Amphitheatre Realty L.L.C., as Landlord, and Tenant, dated December 29,
2000, relating to the Amphitheatre Property and (ii) that certain
Commercial Lease between WXIII/Crittenden Realty C, L.L.C. (as landlord) and
WXIII/Crittenden Realty D, L.L.C. (also as landlord), and Tenant, dated as of
the date hereof, relating to the Crittenden C/D Property.

 

“Premises”
is defined in Section 2.1.

 

“Prevailing
Market Rent” is defined in Exhibit C.

 

“Prior
Lease” means any lease of the Property or any portion
thereof that is prior in estate to this Lease.

 

“Prior
Lessor” means any lessor under a Prior Lease.

 

“Property”
is defined in Section 2.1.

 

“Public
Company” means an entity, the shares, units or
other equity interest of which are traded on a recognized stock exchange or “over
the counter market”.

 

“Purchase
Agreements” means those three (3) certain Ground
Lease Assignments dated as of December 29, 2000 and that certain Ground
Lease Assignment dated as of April 19, 2001, each between the SGI Parties
and one or more of and the Goldman Parties.

 

“Real Estate
Taxes” is defined in Section 5.1(b)(ii).

 

“Renewal
Option” is defined in Section 3.2.

 

“Renewal Term”
is defined in Section 3.2.

 

“Rent”
means Base Rent, Additional Rent, and all other sums due from Tenant under this
Lease.

 

“Rentable
Area” means the enclosed areas of the Building
measured to the inside face of the exterior wall or glassline, but excluding
outside balconies, seating areas, arcades, penetrations, covered entrances &
docks, elevator and ventilation shafts and stairwells.  Rentable Area shall include Tenant’s Share of
all Common Area.

 

“Required
Amount” is
defined in Section 1.A.

 

76

 

“Rules and
Regulations” are defined in Section 24.1.

 

“Security
Agreement” is defined in Section 33.21(a).

 

“SGI”
means Silicon Graphics, Inc.

 

“SGI
Parties” means SGI and SGRE.

 

“SGRE”
means Silicon Graphics Real Estate, Inc.

 

“SNDA”
shall mean a subordination, nondisturbance and attornment agreement or any
other agreement, in each case relating to the Premises, pursuant to which a
Leasehold Mortgagee or a Prior Lessor grants Tenant the right not to be
disturbed in its possession of the Premises provided and for so long as no
Event of Default has occurred hereunder.

 

“Structural
Components” shall mean (i) the foundations, columns,
girders, beams, supports, concrete slabs, roofs and other structural members of
the Building, and (ii) those portions of the exterior walls of the
Building lying outside of a plane which is the interior face of the window
glass of such walls.

 

“Sublease”
is defined in Section 15.1.

 

“Successor
Entity”  is defined
in Section 15.6(b).

 

“Tenant”
means SGI or any permitted Successor Entity in accordance with Section 15.6

 

“Tenant Improvement Allowance”
is defined in Section 10.6.

 

“Tenant
Improvements”
is defined in Section 10.6.

 

“Tenant’s
Agents” is defined in Section 2.2.

 

“Tenant’s
Hazardous Materials” is defined in Section 13.1(d).

 

“Tenant’s
Property” is defined in Section 10.5.

 

“Tenant’s
Share” is defined in Article 1.

 

“Term”
is defined in Article 1 and Section 3.1.

 

“Termination
Date” is defined in Section 3.1.

 

“Termination Option” is
defined in Section 33.20(a).

 

“Termination Payment” is
defined in Section 33.20(c).

 

“Top
Floors” is defined in Article 1.

 

77

 

“Transfer
Costs” is defined in Section 15.3.

 

“Transfer
Notice” is defined in Section 15.2.

 

“Transferee”
is defined in Section 15.2.

 

“Turnover
Alteration” is defined in Section 10.3(c).

 

“Untenantable”
means that Tenant shall be unable to occupy, and shall not be occupying, the
Premises or the applicable portion thereof for the ordinary conduct of Tenant’s
business.

 

78

 

EXHIBIT A-1

LOCATION OF PREMISES

 

A-1

 

EXHIBIT A-2

PROPERTY

 

A-2

 

EXHIBIT B

CRITTENDEN A BASE RENT

 

Annual Base Rent for the
initial Term of the Lease will be as follows:

 

	
  Lower Floors Base Rate

  	
   

  
	
  Year

  	
   

  	
  Dates

  	
   

  	
  Base Rent

  	
   

  
	
  1

  	
   

  	
  12/29/00 –
  12/28/01

  	
   

  	
  32.18

  	
   

  
	
  2

  	
   

  	
  12/29/01 –
  12/28/02

  	
   

  	
  32.90

  	
   

  
	
  3

  	
   

  	
  12/29/02 –
  12/28/03

  	
   

  	
  33.65

  	
   

  
	
  4

  	
   

  	
  12/29/03 –
  12/28/04

  	
   

  	
  34.41

  	
   

  
	
  5

  	
   

  	
  12/29/04 –
  12/28/05

  	
   

  	
  35.19

  	
   

  
	
  6

  	
   

  	
  12/29/05 –
  11/30/06

  	
   

  	
  26.10

  	
   

  
	
  7

  	
   

  	
  12/01/06 –
  11/30/07

  	
   

  	
  26.88

  	
   

  
	
  8

  	
   

  	
  12/01/07 –
  11/30/08

  	
   

  	
  27.69

  	
   

  
	
  9

  	
   

  	
  12/01/08 –
  11/30/09

  	
   

  	
  28.52

  	
   

  
	
  10

  	
   

  	
  12/01/09 –
  11/30/10

  	
   

  	
  29.37

  	
   

  
	
  11

  	
   

  	
  12/01/10 –
  11/30/11

  	
   

  	
  30.25

  	
   

  
	
  12

  	
   

  	
  12/01/11 –
  11/30/12

  	
   

  	
  31.16

  	
   

  
	
  13

  	
   

  	
  12/01/12 –
  11/30/13

  	
   

  	
  32.10

  	
   

  

 

	
  Top Floors Base Rate

  	
   

  
	
  Year

  	
   

  	
  Dates

  	
   

  	
  Top Floor Base Rent

  	
   

  
	
  1

  	
   

  	
  12/29/00 –
  12/28/01

  	
   

  	
  32.18

  	
   

  
	
  2

  	
   

  	
  12/29/01 –
  12/28/02

  	
   

  	
  32.90

  	
   

  
	
  3

  	
   

  	
  12/29/02 –
  12/28/03

  	
   

  	
  33.65

  	
   

  
	
  4

  	
   

  	
  12/29/03 –
  12/28/04

  	
   

  	
  34.41

  	
   

  
	
  5A

  	
   

  	
  12/29/04 –
  12/31/04

  	
   

  	
  35.19

  	
   

  
	
  5

  	
   

  	
  1/01/05 –
  11/30/05

  	
   

  	
  25.34

  	
   

  
	
  6

  	
   

  	
  12/01/05 –
  11/30/06

  	
   

  	
  26.10

  	
   

  
	
  7

  	
   

  	
  12/01/06 –
  11/30/07

  	
   

  	
  26.88

  	
   

  
	
  8

  	
   

  	
  12/01/07 –
  11/30/08

  	
   

  	
  27.69

  	
   

  
	
  9

  	
   

  	
  12/01/08 –
  11/30/09

  	
   

  	
  28.52

  	
   

  
	
  10

  	
   

  	
  12/01/09 –
  11/30/10

  	
   

  	
  29.37

  	
   

  
	
  11

  	
   

  	
  12/01/10 –
  11/30/11

  	
   

  	
  30.25

  	
   

  
	
  12

  	
   

  	
  12/01/11 –
  11/30/12

  	
   

  	
  31.16

  	
   

  
	
  13

  	
   

  	
  12/01/12 –
  11/30/13

  	
   

  	
  32.10

  	
   

  

 

B-1

 

EXHIBIT C

DETERMINATION OF PREVAILING MARKET RENT

 

The term “Prevailing Market Rent” means the
base monthly rent (net of all expenses) for space of comparable size and
location to the Premises and in buildings similar in age and quality to the
Building, taking into account any additional rent and all other payments or
escalations then being charged (including charging rent for parking) and
allowances and economic concessions being given in the market area for such
comparable space over a comparable term. 
The Prevailing Market Rent shall be determined by Landlord and Landlord
shall give Tenant written notice of such determination not later than thirty
(30) days after delivery by Tenant of Tenant’s notice of exercise of the
Option.  If Tenant disputes Landlord’s
determination of the Prevailing Market Rent, Tenant shall so notify Landlord
within ten (10) days following Landlord’s notice to Tenant of Landlord’s
determination and, in such case, the Prevailing Market Rent shall be determined
as follows:

 

(a)           Within
thirty (30) days following Landlord’s notice to Tenant of the Prevailing Market
Rent, Landlord and Tenant shall meet no less than two (2) times, at a
mutually agreeable time and place, to attempt to agree upon the Prevailing
Market Rent.

 

(b)           If
within this 30-day period Landlord and Tenant cannot reach agreement as to the
Prevailing Market Rent, they shall each select one appraiser to determine the
Prevailing Market Rent.  Each such
appraiser shall arrive at a determination of the Prevailing Market Rent and
submit his or her conclusions to Landlord and Tenant within thirty (30) days
after the expiration of the 30-day consultation period described in (a) above.

 

(c)           If
only one appraisal is submitted within the requisite time period, it shall be
deemed to be the Prevailing Market Rent. 
If both appraisals are submitted within such time period, and if the two
appraisals so submitted differ by less than ten (10) percent of the higher
of the two, the average of the two shall be the Prevailing Market Rent.  If the two appraisals differ by more than ten
(10) percent of the higher of the two, then the two appraisers shall
immediately select a third appraiser who will within thirty (30) days of his or
her selection make a determination of the Prevailing Market Rent and submit
such determination to Landlord and Tenant. 
This third appraisal will then be averaged with the closer of the two
previous appraisals and the result shall be the Prevailing Market Rent.

 

(d)           All
appraisers specified pursuant hereto shall be members of the Appraisal
Institute with not less than five (5) years experience appraising office,
research and development and industrial properties in the San Francisco Bay
Area of California.  Each party shall pay
the cost of the appraiser selected by such party and one-half of the cost of
the third appraiser plus one-half of any other costs incurred in the
determination.

 

C-1

 

(e)           The
appraisers will be instructed to (i) assume permitted use as specified in
this Lease, (ii) exclude Alterations that Tenant can remove in accordance
with the terms of this Lease, and (iii) take into account that Landlord
will not have to incur tenant improvements costs or leasing commissions.

 

C-2

 

EXHIBIT D

FORM OF LETTER OF CREDIT

 

D-1

 

EXHIBIT E

GROUND LEASE

 

E-1

 

EXHIBIT F

 

TENANT
WORK LETTER

 

F-1

 

EXHIBIT G

 

LIST OF APPROVED CONTRACTORS

 

	
  Trade / Type of Service

  	
   

  	
  Company / Service Provider

  
	
  Architect

  	
   

  	
  Studios

  
	
  Construction

  	
   

  	
  Devcon Construction

  
	
  Electrical

  	
   

  	
  Frank Electric

  
	
  Elevators

  	
   

  	
  ThyssenKrupp

  
	
  Fire suppression

  	
   

  	
  LPM

  RTS

  
	
  Fountain maintenance

  	
   

  	
  Water Works Ind.

  
	
  General maintenance

  	
   

  	
  Devcon Construction

  
	
  HVAC

  	
   

  	
  ACCO

  
	
  Landscaping

  	
   

  	
  TruGreen

  
	
  Lighting

  	
   

  	
  Sylvania

  
	
  Locksmith

  	
   

  	
  Mountain View Lock

  
	
  Painting

  	
   

  	
  SW Painting

  
	
  Plumbing

  	
   

  	
  Rescue Rooter

  
	
  Roll-up doors/Gates

  	
   

  	
  Statcomm

  

 

G-1Gaynor Employment Agreement

                                                                                        EXHIBIT
      10.1

    
 

    EMPLOYMENT
      AGREEMENT

     

    THIS
      AGREEMENT ("Agreement"), dated May 31, 2005 and effective as of the 30th day
      of
      June, 2005 (the "Effective Date"), is made and entered into by and between
      AtheroGenics,
      Inc.,
      a
      Georgia corporation (hereinafter called the "Employer"), and Joseph
      M. Gaynor, Jr.,
      a
      resident of the State of Georgia (hereinafter the "Executive").

     

    W
      I T N E S S E T H :

     

    WHEREAS,
      the
      Executive shall be employed by Employer effective June 30, 2005.

     

    WHEREAS,
      the
      Employer and Executive mutually desire to enter into an employment contract
      which will supersede any prior contracts; 

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants and agreements herein
      contained, the parties hereto agree as follows:

     

    1.  Period
      of Employment.

     

    In
      exchange for the compensation, benefits and perquisites described in this
      Agreement, and upon such other terms and conditions hereinafter set forth,
      the
      Employer agrees to employ the Executive for the "Period of Employment" (as
      hereinafter defined). For purposes of this Agreement, the "Period of Employment"
      shall commence as of the Effective Date of this Agreement and, unless earlier
      terminated as provided in this Agreement, shall consist of an initial period
      of
      one (1) year (the "Initial Term"), and shall automatically be extended for
      additional one (1) year terms (each additional one (1) year term called a
      "Renewal Term") unless Employer or Executive shall notify the other not less
      than 30 days prior to the expiration of either the Initial Term or any Renewal
      Term that Executive's employment will end at the expiration of the then existing
      Initial Term or Renewal Term.

     

    2.  Position
      and Responsibilities.

     

    During
      the Period of Employment, the Executive agrees to serve as the Vice President
      General Counsel of AtheroGenics, Inc. reporting directly to the President of
      the
      Employer (hereinafter the "President"), and to perform those functions and
      duties customarily assigned to individuals serving in the position in which
      the
      Executive serves hereunder. Without limiting the foregoing, Executive shall
      be a
      member of Employer's management executive committee. In addition, Executive
      shall keep the Board of Directors of Employer and the CEO of Employer fully
      apprised of all material developments occurring under Executive's supervision
      and responsibility. 

     

    Executive
      shall be responsible for keeping senior management and Board of Directors of
      Employer apprised of Employer’s progress in the legal arena. Executive is
      expected to insure that legal activities are carried out with the highest
      standards of excellence, integrity and commercial utility. Executive’s duties
      shall include supervision of other employees in the Legal
      Department.

     

    
      
        
           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Except
      as
      may otherwise be approved in advance by the President of Employer, the Executive
      shall devote his full working time throughout the Period of Employment to the
      services required of him hereunder. The Executive shall render his services
      exclusively to the Employer during the Period of Employment, and shall use
      his
      best efforts, judgment and energy to improve and advance the business and
      interests of the Employer in a manner consistent with the duties of his
      position. 

     

    3.  Compensation,
      Benefits and Perquisites.

     

    (a)  Base
      Salary

     

    In
      exchange for the performance of his duties and responsibilities hereunder and
      all other services rendered by the Executive in any capacity to the Employer,
      the Employer agrees to pay base salary ("Base Salary") to the Executive for
      the
      Initial Term equal to $250,000.00 per year. For any Renewal Term thereafter
      during which this Agreement remains in effect, the Executive's Base Salary
      for
      each such Renewal Term shall be reviewed based upon an annual performance
      appraisal and competitive market conditions and may be increased from time
      to
      time by the Employer (at the sole discretion of Employer). Base Salary shall
      be
      payable according to the customary payroll practices of the
      Employer.

     

    (b)  Incentive
      Compensation

     

    In
      addition to Base Salary, the Executive shall be eligible to receive such
      incentive compensation ("Incentive Compensation") as shall be determined by
      the
      President and the Board of Directors of Employer (or a committee of the Board).
      The amount of such Incentive Compensation to be earned in any year shall be
      based upon certain strategic and financial goals which shall be determined
      by
      the Executive and the President of the Employer. Such strategic and financial
      goals and target Incentive Compensation shall be set forth in the Employer's
      annual budget during the term of this Agreement. On an annual basis, the target
      Incentive Compensation shall be $62,500.00. Incentive Compensation earned
      pursuant to this Agreement shall be payable no later than sixty (60) days
      following the expiration of each calendar year.

     

    (c)  Equity
      Compensation

     

    The
      Executive shall be eligible to participate in the Employer's Equity Ownership
      Plans and receive such awards of stock and/or options thereunder as shall be
      determined by the Board of Directors or a committee thereof. 

     

    (d)  General
      Benefits and Perquisites

     

    During
      the term of this Agreement, the Executive shall be entitled to participate,
      in
      accordance with the terms and conditions thereof, in all employee benefit plans
      or perquisite programs generally available to all executive management personnel
      of the Employer which may be in effect from time to time during the term of
      this
      Agreement; provided, however, that nothing contained herein shall require the
      Employer to establish, or maintain, any such plan. These benefits are provided
      in accordance with the provisions of each individual plan, which may be amended
      from time to time at the sole discretion of the Employer.

     

    
      
        
           

          

        

        
        

      

      
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        (e) Additional
      Disability Coverage

     

    In
      addition to the employee benefit plan coverage provided under Section 3(d)
      above, during the term of this Agreement the Executive will be provided with
      additional "Disability" (as hereinafter defined) benefits in an amount such
      that
      the total annual Disability benefit payable under this provision, together
      with
      payments under any short-term and/or long-term disability program or policy
      maintained by the Employer and from workers compensation with respect to the
      disabling condition, will be equal to 70% of the Executive's annualized Base
      Salary immediately prior to the Disability. The Disability benefit provided
      under this Section 3(e) will be paid from the date of the Disability until
      the
      earliest of (i) the cessation of the Disability; (ii) the Executive's
      death; (iii) the Executive's attainment of age 65; (iv) the date when short-term
      disability benefits terminate if long-term disability benefits do not
      immediately commence thereafter pursuant to the terms of that policy; or (v)
      the
      date when long-term disability policy benefits terminate pursuant to the terms
      of that policy.

     

    For
      purposes of this Agreement, the term "Disability" or "Disabled" has the same
      meaning as provided in the long-term disability plan maintained by the Employer,
      not taking into account any exclusion or waiting period under such plan. In
      the
      event of a dispute, the determination of Disability or Disabled shall be made
      by
      the Board of Directors or its designee. In the event that the Executive shall
      dispute the determination of the Board of Directors or its designee as to the
      Disability of the Executive, the Executive may appeal the determination to
      a
      panel of three doctors, one to be selected by the Executive at his expense,
      one
      to be selected by the Board of Directors or its designee at its expense, and
      one
      to be selected by the doctors chosen by the Executive and the Board of Directors
      or its designee whose expense shall be shared equally between Executive and
      Employer. The decision of the panel of doctors shall be final. Any termination
      for Disability under this Agreement shall not affect the rights, if any, that
      the Executive may otherwise have under the long-term disability plan the
      Employer may have in effect at the date of such termination and in which the
      Executive is then participating. Employer shall have the right to review any
      determination of Disability no more frequently than bi-annually. 

     

    (f) Reimbursement
      of Business Expenses

     

    The
      Employer will reimburse the Executive for all reasonable and necessary business
      expenses (including, but not limited to, professional and service organization
      dues, journal subscriptions and educational seminars, conferences, symposiums
      and other meetings) and related travel expenses, incurred or expended in
      connection with the performance of his duties and responsibilities as Executive
      under this Agreement in accordance with the reimbursement policies of
      Employer.

     

    (g) Change
      of
      Control

     

    In
      the
      event of a Change of Control, as defined in Section 4(g) hereof, 18 months
      of
      vesting for unvested stock options granted to the Executive pursuant to the
      Employer's Equity Ownership Plans (or any other or successor plans) shall be
      immediately accelerated.

     

     

    
      
        
        

      

      
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    4.  Termination
      of Agreement.

     

    (a)  General

     

    Upon
      termination of Executive for any reason, (i) the Employer shall pay the
      Executive any Base Salary that was earned through the effective date of his
      termination but which remained unpaid as of that date, and (ii) Executive shall
      be entitled to any benefits that have been accrued and vested under any of
      Employer's employee benefit plans in accordance with and to the extent provided
      in such benefit plans. Except as otherwise provided in this Agreement, Executive
      shall not be entitled to any other benefits or payments under this Agreement
      in
      the event of termination of Employment.

     

    (b)  Involuntary
      Termination

     

    Employer
      recognizes that the Executive would incur substantial damage to personal and
      professional reputation in the event of an Involuntary Termination.
      Consequently, should such Involuntary Termination occur during the Period of
      Employment, the Employer shall pay to the Executive, as liquidated damages,
      an
      amount (the "Severance Amount") equivalent to the sum of (i) one times
      Executive's then current annualized Base Salary and (ii) a percentage of the
      target Incentive Compensation otherwise stipulated for the benefit of Executive
      pursuant to Section 3(b) of this Agreement for the calendar year in which the
      Involuntary Termination occurs as follows: 

     

    
      	
              Aggregate
                Period of  Employment

              with
                Employer

            	
              Percentage
                of Target Incentive

               Compensation
                Payable

            
	 	 
	
                      Under
                one year

               

            	
              None

               

            
	
                      One
                year up to two years

               

            	
              50%

               

            
	
                      Two
                years and over

               

            	
              100%

               

            
	 	 

    

    One-half
      of the Severance Amount shall be paid in a lump sum in cash within thirty (30)
      days following the date of termination of employment and the remaining one-half
      (1⁄2) of the Severance Amount shall be paid in installments over a twelve month
      period commencing on the first day of the month following the month in which
      such termination of employment occurs in the same manner and at the same time
      that Base Salary would have been paid had this Agreement continued. Payment
      of
      the Severance Amount shall be contingent upon Executive signing (and not
      revoking) a general release of all claims, in a form attached hereto as
Exhibit
      A.
      

     

    Upon
      Executive's becoming ineligible to participate in the group health plan(s)
      sponsored by the Employer, Executive may elect continuation coverage
      ("Continuation Coverage") under such plan(s) as permitted by the Consolidated
      Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"). During such
      COBRA coverage period, the Employer will pay the premiums for COBRA Continuation
      Coverage (excluding any medical flexible spending account coverage) until the
      first to occur of (i) the first anniversary of the Involuntary Termination,
      or
      (ii) the date on which the Executive commences employment with a new employer
      and is eligible to 

     

    
      
        
           

          

        

        
        

      

      
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    participate
      in a subsequent employer's medical and healthcare employee benefits program
      with
      respect to the Employer's insured group health plan, provided however that
      such
      payments shall not exceed the amount paid by Employer for the medical and
      healthcare coverage in effect for Executive and his dependents immediately
      prior
      to the COBRA coverage period. All other premiums shall be paid by
      Executive.

     

    If
      the
      Executive's employment terminates due to an Involuntary Termination, the
      Employer shall accelerate the vesting of its stock options previously granted
      to
      Executive pursuant to the Employer's Equity Ownership Plan (or any other or
      successor plans) as follows:

     

    
      	
               

              Aggregate
                Period of 

              Employment
                with Employer

            	
              Options
                to Have Accelerated 

              Vesting
                as of Date of 

              Involuntary
                Termination

            
	 	 
	
                      Under
                one year

               

            	
              None

               

            
	
                      One
                year up to two years

               

            	
              Options
                otherwise vesting within 3 months following Involuntary
                Termination

               

            
	
                      Two
                years and over

               

            	
              Options
                otherwise vesting within 6 months following Involuntary
                Termination

               

            
	 	 

    

    If
      the
      Involuntary Termination or a Constructive Discharge occurs within 13 months
      following a Change of Control, in lieu of the Severance Amount provided in
      the
      first paragraph of this Section 4(b) (but paid in the same manner as earlier
      provided), the Severance Amount shall be the aggregate of (i) 2 times annualized
      Base Salary and (ii) 100% of the target Incentive Compensation otherwise payable
      to him for the year in which the Involuntary Termination or Constructive
      Discharge occurs. In addition, vesting for all unvested stock options granted
      pursuant to the Employer's Equity Ownership Plan (or any other or successor
      plans) shall be immediately accelerated. 

     

    Except
      as
      provided under this Section 4(b), as of the effective date of an Involuntary
      Termination, all other obligations of the Employer to Executive under this
      Agreement shall cease.

     

    Payment
      of deferred compensation:  In the event Executive makes a good
      faith
      determination that the payment schedules described herein would result in
      Executive's incurring penalty taxes under Section 409A of the Internal Revenue
      Code, Employer will agree with Executive to modify the payment schedules
      so that such penalty taxes
      are
      minimized to the Executive.

    
 

    
      
        
        

      

      
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    (c)  Voluntary
      Resignation

     

    Except
      in
      the case of a voluntary resignation which results from a Constructive Discharge,
      if the Executive voluntarily resigns from the positions described in Section
      2
      during the period in which this Agreement is in effect, then the Employer shall
      pay the Executive the benefits provided in Section 4(a) of this Agreement.
      No
      Incentive Compensation will be paid to the Executive following the date of
      a
      voluntary resignation. The respective terms and provisions of any other employee
      benefit or perquisite program shall control in the case of a voluntary
      resignation.

     

    Unless
      otherwise specifically stated in this Agreement, as of the effective date of
      a
      voluntary resignation, all obligations of the Employer to Executive under this
      Agreement shall cease.

     

    The
      Executive must notify the Board of Directors in writing of his intent to
      voluntarily terminate employment at least thirty (30) days prior to the
      effective date of such voluntary resignation.

     

    (d)  Termination
      for Cause

     

    Notwithstanding
      any other provision contained in this Agreement, the Employer has the right,
      at
      any time, to effect a "Termination for Cause" (as defined in Section 4(g)),
      of
      Executive's employment under this Agreement. Upon the date of such Termination
      for Cause, the Employer shall pay the Executive the benefits provided in Section
      4(a) of this Agreement. No Incentive Compensation will be paid to the Executive
      following the date of a Termination for Cause. The respective terms and
      provisions of any other employee benefit or perquisite program shall control
      in
      the case of a Termination for Cause.

     

    Unless
      otherwise specifically stated in this Agreement, as of the effective date of
      a
      Termination for Cause, all obligations of the Employer to Executive under this
      Agreement shall cease.

     

    (e)  Disability

     

    In
      the
      event the Executive becomes Disabled at any time during the term of this
      Agreement, the Employer shall make payments to the Executive in amounts equal
      solely to those specified in Section 3(e) and for the time period specified
      in
      Section 3(e). Such payments shall be paid in the same manner and at the same
      time that Base Salary would have been paid had this Agreement continued.
      Notwithstanding the foregoing, the Executive shall also be entitled to a pro
      rata portion of his target Incentive Compensation otherwise stipulated for
      the
      benefit of Executive for the calendar year in which he became Disabled, provided
      Executive is Disabled as of the end of such calendar year. Such pro rata portion
      shall be determined by multiplying (i) the total target Incentive Compensation
      that the Executive was projected to receive in respect of the year of his
      Disability by (ii) the quotient of the number of days in such year prior to
      his
      Disability, divided by 365. Such pro rata Incentive Compensation will be payable
      at the same 

     

    
      
        
           

          

        

        
        

      

      
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    time
      that
      the full Incentive Compensation would have been payable to the Executive as
      provided in Section 3(b) hereof.

     

    Except
      as
      provided under this Section 4(e) and Section 3(e), as of the effective date
      of
      the Disability, all other obligations of the Employer to Executive under this
      Agreement shall cease.

     

    (f)  Death

     

    In
      the
      event of the death of Executive during the term of this Agreement, the heirs,
      personal representatives or beneficiaries designated in writing by Executive,
      as
      required by applicable law, shall receive (i) the benefits and payments
      described in Section 4(a) of this Agreement; (ii) a pro rata portion of the
      target Incentive Compensation otherwise stipulated for the benefit of Executive
      for the calendar year in which Executive dies (such pro rata portion determined
      by multiplying (x) the total target Incentive Compensation that the Executive
      was projected to receive in respect of the year of his death by (y) the quotient
      of the number of days in such year prior to his death, divided by 365); and
      (iii) accelerated vesting of stock options previously granted to Executive
      that
      otherwise would have vested within 12 months following Executive's death. Such
      pro rata Incentive Compensation will be payable at the same time that the full
      Incentive Compensation would have been payable to the Executive as provided
      in
      Section 3(b) hereof. 

     

    (g)  Certain
      Definitions

     

    "Change
      of Control"
      shall be
      deemed to have occurred if (i) a tender offer shall be made and consummated
      for
      the ownership of 50% or more of the outstanding voting securities of the
      Employer, (ii) the Employer shall be merged or consolidated with another
      corporation and as a result of such merger or consolidation less than 50% of
      the
      outstanding voting securities of the surviving or resulting corporation shall
      be
      owned in the aggregate by the former shareholders of the Employer, (iii) the
      Employer shall sell all or substantially all of its assets to another
      corporation which corporation is not wholly owned by the Employer, (iv) a
      person, within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in
      effect on the date hereof) of the Securities Exchange Act of 1934, as amended
      ("Exchange Act"), or other legal entity shall acquire 50% or more of the
      outstanding voting securities of the Employer (whether directly, indirectly,
      beneficially or of record), or (v) individuals who, as of the date hereof,
      together with those directors (x) for whose election proxies shall have been
      solicited by the board and (y) who are then serving as directors appointed
      by
      the board to fill pre-existing vacancies on the board or vacancies caused by
      death or resignation, but not by either removal or to fill newly created
      directorships, constitute the Board of Directors of the Employer (the “Incumbent
      Board”) cease to constitute at least a majority of the Board as a result of an
      actual or threatened election contest with respect to the election or removal
      of
      directors or other actual or threatened solicitation of proxies or consents
      by
      or on behalf of a person other than the Incumbent Board. For purposes hereof,
      ownership of voting securities shall take into account and shall include
      ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) (as
      in
      effect on the date hereof) pursuant to the Exchange Act. 

     

    
      
        
           

          

        

        
        

      

      
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    "Constructive
      Discharge"
      means
      the termination of the Executive's employment by the Executive on account of
      (i)
      any reduction in the Executive's then-current Base Salary without the consent
      of
      the Executive, (ii) any material reduction in the level or scope of the job
      responsibility or status of the Executive occurring without the consent of
      the
      Executive (including not reporting directly to the Chief Executive Officer
      of
      the Company or its successor; not retaining “Officer” status, such as Chief
      Medical Officer, Chief Financial Officer or Chief Scientific Officer of the
      Company or its successor; or ceasing to have responsibility for a significant
      department or function), or (iii) any relocation to any Employer location which
      is more than 50 miles from its current location and to which the Executive
      has
      not agreed; provided, however, that no termination by Executive shall be
      considered a Constructive Discharge unless Executive has first provided written
      notice to the Chief Executive Officer of Employer of the factual circumstances
      forming the basis for the claim of constructive discharge and of Executive’s
      intent to treat those circumstances as a Constructive Discharge under this
      Agreement, and has further provided the Employer with a period of at least
      fifteen (15) days in which to cure such alleged breach.

     

    "Involuntary
      Termination"
      means
      the Executive's (i) involuntary separation from service with the Employer,
      other
      than as a result of his death, Disability, mandatory retirement pursuant to
      a
      retirement policy of Employer or Termination for Cause, or (ii) receipt of
      notice of the Employer's intent not to extend the Period of Employment as
      specified in Section 1. Involuntary Termination also means Executive's voluntary
      resignation of employment within 90 days following events constituting a
      Constructive Discharge. Any other type of voluntary termination of employment
      shall not be deemed an Involuntary Termination. 

     

    "Termination
      for Cause"
      means
      the termination of the Executive's employment as a result of conduct by the
      Executive amounting to (i) fraud or dishonesty against the Employer,
      (ii) willful misconduct, or repeated refusal to follow the reasonable
      directions of the Board of Directors or chief executive officer of the Employer,
      (iii) knowing violation of law in the course of performance of the duties of
      Executive's employment with the Employer, (iv) any violation of the Employer’s
      formal policies regarding nondiscrimination and equal employment opportunity,
      sexual harassment and other forms of unlawful workplace harassment, or insider
      trading of Employer’s securities (whether directly or indirectly),
      (v) repeated and frequent absences from work without a reasonable excuse,
      (vi) intoxication with alcohol or drugs while on the Employer's premises
      during regular business hours, (vii) a conviction or plea of guilty
      or
nolo contendere
      to a
      felony or other crime of moral turpitude in the course of his employment (e.g.,
      fraud, theft, embezzlement and the like), (viii) gross negligence in the
      performance of Executive’s duties; or (ix) a breach or violation of the terms of
      this Agreement. With respect to (ii) above, Termination for Cause shall not
      be
      permitted until after the Executive has been given written notice of his alleged
      actions described in clause (ii), listing in reasonable specificity such alleged
      actions, and after the Executive shall have failed to improve such performance
      within the time period (which shall have been a reasonable time period)
      specified in such notice, such time period to be not less than 15 days.

     

    5.  Indemnification.

     

    The
      Employer will indemnify the Executive to the fullest extent permitted by
      applicable laws and regulations in accordance with the Bylaws and Amended and
      Restated Articles of 

     

    
      
        
           

          

        

        
        

      

      
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    Incorporation
      of the Employer. The Employer shall insure and provide a defense to the
      Executive against all costs, charges and expenses incurred in connection with
      any action, suit or proceeding to which he may be made a party by reason of
      his
      good faith execution of his duties as described in Section 2. In the event
      that
      the Executive is found to be liable or culpable, in any action, suit or
      proceeding involving sexual harassment, discrimination or fraud, the Executive
      will be obliged to repay to the Employer any costs, charges or expenses incurred
      by the Employer in connection therewith.

     

    6.  Consolidation,
      Merger or Sale of Assets.

     

    Nothing
      in this Agreement shall preclude the Employer from consolidating or merging
      into
      or with, or transferring all or substantially all of its assets to another
      organization which assumes this Agreement and all obligations and undertakings
      of the Employer hereunder. Upon such a consolidation, merger or sale of assets,
      the term "Employer" as used will mean the other organization, no termination
      of
      Executive's employment under this Agreement shall be deemed to have occurred
      merely because of the consummation of a transaction described in this Section
      6,
      and this Agreement shall continue in full force and effect.

     

    7.  Assignment.

     

    The
      Employer, with the prior written approval of the Executive, shall have the
      right
      to assign this Agreement to an affiliate or subsidiary corporation, and all
      covenants and agreements hereunder shall inure to the benefit of and be
      enforceable by or against its successors and assigns.

     

      
This
      Agreement provides
      for the personal services of the Executive. The Executive shall not have the
      right to assign or transfer any of the rights or benefits hereunder, nor shall
      they be subject to voluntary or involuntary alienation.

     

    8.  Amendment,
      Modification, Termination or Waiver.

     

    The
      parties hereby irrevocably agree that no attempted amendment, modification,
      restatement, termination, discharge or change (collectively, "Amendment") of
      this Agreement shall be valid and effective, unless the parties shall
      unanimously agree in writing to such Amendment. No waiver of any provision
      of
      this Agreement shall be effective unless it is in writing and signed by the
      party against whom it is asserted, and any such written waiver shall only be
      applicable to the specific instance to which it relates and shall not be deemed
      to be a continuing or future waiver.

     

    9.  Non-Competition.
      

     

            (a)  Noncompetition

     

    The
      parties acknowledge and agree that, because of Executive's access to the Trade
      Secrets and Confidential Information (each as hereinafter defined) as well
      as
      his duties as described in Section 2, efforts by Executive to engage in directly
      competitive activities would cause significant, irreparable harm to Employer.
      The parties further agree that the relevant 

     

    
      
        
           

          

        

        
        

      

      
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    competitive
      market for the Restricted Activities (defined below) is nationwide, that
      Executive will be actively working on behalf of Employer throughout the United
      States of America, and that Employer would be directly and severely harmed
      by
      competitive activities anywhere in the United States of America. Therefore,
      the
      parties agree that, during his employment and the applicable Restricted Period,
      except on behalf of the Employer, Executive shall not engage in the Restricted
      Activities within the United States of America. For purposes of this Section,
      the "Restricted Activities" shall mean activities substantially similar to
      the
      Executive's responsibilities described in Section 2 of this Agreement for any
      company, entity or individual that engages in the research, development,
      marketing or commercialization of pharmaceuticals or biopharmaceuticals that
      use
      an anti-inflammatory mechanism to treat or prevent atherosclerosis. For purposes
      of this Section, the "Restricted Period" shall be one (1) year after termination
      of employment.

     

    (b)  Nonsolicitation
      of joint venture partners.

     

    During
      his employment and for one (1) year thereafter, Executive will not solicit
      or
      induce any company with whom (i) Employer had a joint venture relationship
      or
      similar partnering relationship during the last 24 months of Executive’s
      employment and (ii) Executive had material contact within the last 24 months
      of
      Executive’s employment, for the purpose of establishing a similar joint venture
      relationship on behalf of another entity with regard to the research,
      development, marketing or commercialization of pharmaceuticals or
      biopharmaceuticals that use an anti-inflammatory mechanism to treat or prevent
      atherosclerosis.

     

    (c)  Nonsolicitation
      of customers

     

    During
      his employment and for one (1) year thereafter, Executive will not solicit
      or
      induce any customer or actively sought prospective customer of Employer, with
      whom Executive had material contact during the last 24 months of his employment,
      for the purpose of providing products or services relating to pharmaceuticals
      or
      biopharmaceuticals used to treat or prevent atherosclerosis by an
      anti-inflammatory mechanism.

     

    (d)  Nonsolicitation
      of employees

     

    During
      his employment and for one (1) year thereafter, Executive will not solicit
      or
      hire any employee of Employer who was employed by Employer at any time during
      the three (3) month period prior to the date of Executive's termination, and
      will not solicit, encourage, or induce any such employee to leave the employ
      of
      Employer.

     

    (e)  Nondisparagement.

     

    During
      his employment and for three (3) years thereafter, Executive will refrain from
      making derogatory or disparaging statements to any person or entity regarding
      the Company, its management, its products or its services. This provision shall
      not prohibit Executive from responding truthfully to a subpoena or an inquiry
      from a governmental agency or as otherwise required by law.

     

    
      
        
           

          

        

        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

     

    (f)  Reasonableness
      of covenants

     

    Executive
      acknowledges and agrees that the covenants in this section are reasonably
      limited and are necessary to protect the legitimate business interests of
      Employer. Executive further acknowledges and agrees that he is capable of
      finding adequate employment and making a living without violating these
      covenants.

     

    (g)  Remedies

     

    Executive
      acknowledges and agrees that, in the event of a breach of the above covenants,
      the harm to Employer would be immediate, significant, and irreparable. Executive
      agrees that, in addition to and without waiving any other remedies to which
      Employer may be entitled (including recovery of damages), Employer shall be
      entitled to obtain an injunction to prevent actual or threatened violation
      of
      these covenants, and shall not be required to post a bond or other security
      in
      order to obtain preliminary or permanent injunctive relief.

     

    10.  Intellectual
      Property.

     

    (a)  For
      purposes of this Agreement, the following definitions apply:

     

    (i)  "Trade
      Secret" means any scientific, technical or non-technical data or information
      of
      Employer, without regard to form, including but not limited to, formulas,
      techniques, processes, procedures, improvements, know-how, patterns,
      compilations, programs, computer software, devices, methods, techniques,
      drawings, processes, financial data, financial plans, product or website plans,
      market feasibility studies, designs and design concepts, documents and manuals
      related to product plans, designs and design concepts, or lists (whether in
      written form or otherwise) of actual or potential customers or suppliers, which
      (i) derive economic value, actual or potential, from not being generally known
      to and not being readily ascertainable by proper means by other persons who
      can
      obtain economic value from its disclosure or use and (ii) are the subject of
      efforts that are reasonable under the circumstances to maintain its secrecy.
      Trade Secrets also include any information described in this Section 10(a)(i)
      which Employer obtains from another party and which Employer treats as
      proprietary or designates as trade secrets, whether or not owned or developed
      by
      Employer.

     

    (ii)  "Confidential
      Information" means any data or information, without regard to form, other than
      Trade Secrets, that is of value to Employer and is not generally known to
      competitors of Employer, including without limitation, lists of any information
      about Employer's employees, sales and marketing techniques and information,
      price lists, pricing policies, Employer's business methods, training and
      operations materials, and contracts, records and contractual relations with
      Employer's customers and suppliers. Confidential Information also includes
      any
      information described in this Section 10(a)(ii) which Employer obtains from
      another party and which Employer treats as proprietary or designates as
      confidential information, whether or not owned or developed by
      Employer.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (iii)  Failure
      to mark any of the Trade Secrets or Confidential Information as confidential
      shall not affect its status as Trade Secrets or Confidential Information under
      this Agreement.

     

    (b)  Executive
      recognizes and acknowledges that Employer is engaged in the business of
      research, development, marketing and commercialization of pharmaceuticals and
      biopharmaceuticals used to treat or prevent specific medical conditions, which
      activities involve the use of skilled experts and the expenditure of substantial
      amounts of time and money. As a result of such investments of skill, time and
      money, Employer has developed certain Confidential Information and Trade Secrets
      which give Employer significant advantages over its competitors. Due to the
      nature of Executive's employment with Employer, Executive understands that
      he
      has had, and may have in the future, frequent direct and indirect contact with
      various suppliers, sources and customers of Employer and may be presented with,
      have access to, and/or participate in the development of both Confidential
      Information and Trade Secrets. These Trade Secrets and Confidential Information
      constitute valuable, special and unique assets of Employer and any disclosure
      thereof contrary to the terms of this Agreement would cause substantial loss
      of
      competitive advantage and other serious injury to Employer.

     

    (c)  For
      the
      reasons recited in Section 10(b) above, Executive covenants and agrees
      that:

     

    (i)  During
      Executive's employment with Employer and after the termination thereof, whether
      such termination is at Executive's instance or Employer's, Executive will not,
      except as expressly authorized or directed by Employer, use, copy, or disclose,
      or permit any unauthorized person access to, any Trade Secrets belonging to
      Employer or any third party; and

     

    (ii)  During
      Executive's employment with Employer and for a period of five (5) years after
      termination, whether such termination is at Executive's instance or Employer's,
      Executive will not use, copy, or disclose, or permit any unauthorized person
      access to, any Confidential Information belonging to Employer or any third
      party.

     

    (iii)  Upon
      request of Employer and in any event upon the termination of Executive's
      employment with Employer, Executive will deliver to Employer all memoranda,
      notes, records, tapes, documentation, disks, manuals, files or other documents,
      and all copies thereof, concerning or containing Confidential Information or
      Trade Secrets in his possession, whether made or compiled by Executive or
      furnished to Executive by Employer.

     

    (iv)  All
      inventions, discoveries, developments, designs, Trade Secrets, trademarks,
      copyrightable subject matter and other proprietary information or work product,
      whether or not patentable (collectively, "Inventions"), which Executive has
      made
      or conceived, or may make or conceive, either solely or jointly with others,
      while providing services to Employer or relating to any of Employer's actual
      or
      anticipated business known to Executive while employed by Employer, or suggested
      by or resulting from any task assigned to Executive or work performed by
      Executive for or on behalf of Employer, shall be the exclusive property of
      Employer. During Executive's employment and thereafter, Executive will promptly
      disclose any 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        
and
        all
        such Inventions to Employer and will promptly execute and deliver, without
        requiring Employer to provide any further consideration therefor, such
        confirmatory assignments, instruments or documents as Employer deems necessary
        or desirable to vest title thereto in Employer. During Executive’s employment
        and thereafter, Executive will assist Employer in obtaining, maintaining,
        and
        enforcing patents and other proprietary rights in connection with any Invention,
        without requiring Employer to provide any further consideration therefor.
        In
        addition, during Executive’s employment and thereafter, Executive will promptly
        execute and deliver, without requiring Employer to provide any further
        consideration therefor, any documents necessary or appropriate to comply
        with
        any regulatory requirements, inquiries or requests by the Food and Drug
        Administration or other regulatory bodies, agencies, political entities or
        the
        like regarding matters for which Executive had responsibility during his
        employment.

    

    
      
         

        (d)  Executive
          acknowledges that Employer does not wish to incorporate any unlicensed
          or
          unauthorized materials into its products or technology. Therefore, Executive
          agrees that Executive will not knowingly disclose to Employer, knowingly
          use in
          Employer's business, or knowingly cause Employer to use, any information
          or
          material which is confidential to any third party unless Employer has a
          written
          agreement with such third party or Employer otherwise has the right to
          receive
          and use such information. Executive will not knowingly incorporate into
          Executive's work any material which is subject to the copyrights or patent
          of
          any third party unless Employer has a written agreement with such third
          party or
          otherwise has the right to receive and use such material.

      

       

    

    (e)  Executive
      represents that there are no other contracts to assign inventions that are
      now
      in existence between Executive and any other person or entity. Executive further
      represents that there are no contracts or other restrictions which would
      restrict or impair Executive’s performance under this Agreement. As a matter of
      record, Executive attaches as Exhibit B a brief description of all Inventions
      made or conceived by Executive prior to Executive’s employment with the Employer
      which Executive desires to be excluded from this Agreement.

     

    11.  Litigation
      Assistance.

     

    Following
      the termination of Executive's employment for whatever reason, Executive agrees
      to assist the Employer (upon the Employer's request) with regard to threatened
      or actual litigation concerning the Employer where Executive has knowledge
      of
      the facts relating to such threatened or actual litigation. Executive's
      assistance in such matter may include, but not be limited to, meeting with
      the
      Employer's attorneys and other professional advisors; providing truthful
      testimony at a deposition, hearing and/or trial; and providing witness
      statements or affidavits. Employer agrees to provide Executive with reasonable
      notice of the need for such assistance and to use reasonable efforts to
      accommodate Executive's schedule and minimize the burdens on Executive. Employer
      shall reimburse Executive's reasonable out-of-pocket expenses associated with
      such assistance and shall pay to Executive the sum of $150 per hour for
      Executive's time devoted to these obligations. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

         12.  Dispute
      Resolution.

     

    Any
      controversy or claim arising out of or relating to the interpretation or
      application of this Agreement, or any breach hereof, shall be settled by
      arbitration in the Fulton County, Georgia area in accordance with the rules
      of
      the American Arbitration Association ("AAA") then in effect, and judgment upon
      the award rendered by the arbitrator(s) shall be final and binding on the
      parties hereto and may be entered in any court having jurisdiction
      thereof.

     

    All
      arbitrations pursuant to this Agreement shall be determined by a single
      arbitrator selected from a panel proposed by the AAA pursuant to the
      then-current arbitrator selection procedures of the AAA. Each party will bear
      equally the costs and expenses of arbitration, and each party will bear the
      costs and expenses of its own counsel, technical advisors and expert witnesses,
      unless the decision of the arbitrator otherwise directs. 

     

    Any
      arbitration award rendered in accordance with this Section 12 will be satisfied
      promptly and without the need for the prevailing party to seek enforcement,
      which may be sought in any court having competent jurisdiction. In the event
      resort to enforcement proceedings are required for any award or decision, the
      party which has not complied with the arbitral award or decision will be
      responsible for both parties' reasonable attorneys' fees and all costs in the
      enforcement proceeding. The decision of the arbitrators shall be tendered within
      sixty (60) days of final submission of the parties in writing or any hearing
      before the arbitrators and shall include their individual votes.

     

    Notwithstanding
      the foregoing, in the event of a breach or threatened breach of sections 9
      or
      10, Employer shall be permitted to seek temporary injunctive relief in a court
      of competent jurisdiction. Any damages claims arising out of an alleged breach
      of sections 9 or 10 shall be resolved by arbitration in accordance with this
      Section 12.

     

    The
      parties hereto expressly agree to this arbitration provision: 

     

    Initials:
      ________   Initials:
      ________

     

    13.  Amendment
      of Equity Ownership Agreements.

     

    The
      various Equity Ownership Agreements entered into with respect to stock option
      grants made by the Employer to Executive on or before December 31, 2003 (the
      "Equity Ownership Agreements"), are hereby amended to reflect the accelerated
      option vesting and other option-related provisions of this Agreement. Except
      as
      modified herein, the terms of the Equity Ownership Agreements shall remain
      in
      full force and effect.

     

    14.  Entire
      Agreement.

     

    This
      Agreement sets forth all the promises, covenants, agreements, conditions and
      understandings between the parties hereto with respect to the subject matter
      hereof, and supersedes all prior and contemporaneous agreements, understandings,
      inducements or conditions expressed or implied, oral or written, except as
      herein contained. This
      Agreement 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        
shall
        not
        supersede any prior grant of stock options to Executive pursuant to a formal
        written stock option agreement. 

    

     

    15.  Change
      in Taxation.

     

    If
      subsequent to the effective date of this Agreement, there occurs a change in
      the
      tax laws, regulations or administrative interpretations which would materially
      impact the taxation of the benefits hereunder, either party to this Agreement
      may propose an amendment. Any such proposed amendment shall be subject to
      Section 8.

     

    16.  Provisions
      Severable.

     

    This
      Agreement is intended to be performed in accordance with, and only to the extent
      permitted by, all applicable laws, ordinances, rules, and regulations of the
      jurisdiction in which the parties do business. If any provision of this
      Agreement, or the application thereof to any person or circumstance shall,
      for
      any reason or to any extent, be invalid or unenforceable, the remainder of
      this
      Agreement and the application of such provision to other persons or
      circumstances shall not be affected thereby, but rather shall be enforced to
      the
      greatest extent permitted by law.

     

    17.  Withholding.

     

    The
      Employer shall have the right to withhold from any and all payments required
      to
      be made to the Executive pursuant to this Agreement all federal, state, local,
      and/or other taxes which the Employer determines are required to be withheld
      in
      accordance with applicable statutes or regulations.

     

    18.  Governing
      Law.

     

    This
      Agreement shall be construed in accordance with the laws of the State of Georgia
      and the venue of any dispute or litigation shall be Fulton County,
      Georgia.

     

    19.  ERISA
      Rules.

     

    Notwithstanding
      anything to the contrary contained in this Agreement, all benefits provided
      hereunder will be subject to applicable rules and regulations promulgated under
      the Employee Retirement Income Security Act of 1974, as amended.

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

     

    

     

    

     

    

     

     

    

    
 

     

    

     

    ATHEROGENICS,
      INC.

     

                                 

    By:                                                                                    
            

                                    Title:                                                                                 
            

                                    Date:                                                                                
            

     

    

     

    

     

    EXECUTIVE:

     

     

                                                                                                       
                    

    Joseph
      M.
      Gaynor, Jr.

                                    Date:                                                                                   
            

     

    

     

    

     

    [NOTE:
      The parties must initial paragraph 12 in addition to signing on this
      page.]

     

    

     

    

     

    
      
        
           

          

        

        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    FORM
      OF GENERAL RELEASE

     

    For
      and
      in consideration of the severance payments provided to _______________
      (“Executive”) pursuant to the Employment Agreement between AtheroGenics, Inc.
      (“Employer”) and Executive, effective as of ________________, 200__, which is
      expressly incorporated by reference herein, along with other consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, Executive does hereby
      release, acquit, and forever discharge Employer (or any affiliate, officer,
      director or employee of Employer) from, and does hereby covenant and agree
      never
      to institute or cause to be instituted any suit or other form of action or
      proceeding of any kind or nature whatsoever against Employer (or any affiliate,
      officer, director, or employee of Employer) based upon, any and all claims,
      demands, indebtedness, agreements, promises, causes of action, obligations,
      damages, or liabilities of any nature whatsoever, in law or in equity, whether
      or not known, suspected or claimed, that Executive ever had, has claimed to
      have, now has, or may hereafter have or claim to have against Employer by reason
      of any act, event, occurrence, or thing occurring on or before the date of
      this
      General Release.

    The
      claims released herein specifically include, but are not limited to, any claims
      arising in tort or contract, any claim based on wrongful discharge, any claim
      based on breach of contract, any claim based on sexual harassment or any other
      form of workplace harassment, and any claim arising under federal, state or
      local law prohibiting race, sex, age, religion, national origin, handicap,
      disability or other forms of discrimination, or retaliation, including but
      not
      limited to Title VII of the Civil Rights Act of 1964, as amended; 42 U.S.C.
§
      1981; the Age Discrimination in Employment Act; the Older Workers Benefit
      Protection Act; the Pregnancy Discrimination Act; the Americans with
      Disabilities Act; the Family and Medical Leave Act; and the Employee Retirement
      Income Security Act, each as amended.

    Executive
      acknowledges that he has been advised to consult with an attorney of his choice
      regarding the form and content of this General Release, and that he enters
      into
      this General Release voluntarily and of his own free will. Executive further
      acknowledges that he has been provided with a period of at least twenty-one
      (21)
      days within which to consider the terms of this General Release. Executive
      understands that he may revoke this General Release within seven (7) days after
      signing it, by delivering written notice of revocation to the Chief

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        
Executive
        Officer of Employer, and that this General Release will not become effective
        or
        enforceable until the seven-day revocation period has expired. Executive
        acknowledges that execution of this General Release is a condition precedent
        to
        receipt of the severance payments provided in the Employment Agreement, and
        that, in the absence of fulfilling this condition precedent by executing
        this
        General Release, Executive would not be entitled to receive those severance
        payments. If Executive revokes this General Release within seven (7) days
        after
        signing it, it will become null and void, and Executive will not be entitled
        to
        any of the severance benefits provided in the Employment
        Agreement.

    

    This
      General Release and the releases and covenants contained herein shall be binding
      upon Executive, his heirs, executors, administrators, assigns, agents, attorneys
      in fact, attorneys at law, and representatives. This General Release and the
      releases and covenants contained herein shall inure to the benefit of Employer
      and each of its predecessors, successors, and assigns, and to each of its and
      their past and present employees, agents, attorneys in fact, attorneys at law,
      representatives, officers, directors, shareholders, partners, joint venturers,
      and all of said individuals’ heirs, executors, administrators and
      assigns.

     

    Witness
      the execution of this General Release on the ____ day of ________,
      200__.

     

    __________________________________

    Executive

    

     

    

     

    
      
        
           

          

        

        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    LIST
      OF PRIOR INVENTIONS

     

     

     

     

     

     

     

     

     

     

    
       

      
        19

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