Document:

Exhibit 10.28

 

LAKE MARRIOTT BUSINESS PARK

 

LAKE MARRIOTT BUILDINGS 5, 6 & 7

SINGLE TENANT BUILDINGS

 

3001, 3003 AND 3101 TASMAN DRIVE

SANTA CLARA, CALIFORNIA

 

 

OFFICE LEASE AGREEMENT

 

 

BETWEEN

 

 

CA-LAKE MARRIOTT BUSINESS PARK LIMITED PARTNERSHIP

(“LANDLORD”)

 

 

AND

 

 

SILICON VALLEY BANK, a California banking corporation

(“TENANT”)

 

 

OFFICE LEASE AGREEMENT

 

THIS OFFICE LEASE AGREEMENT (the “Lease”)
is made and entered into as of the 15th day of September, 2004, by and between CA-LAKE MARRIOTT BUSINESS PARK LIMITED PARTNERSHIP, a
Delaware limited partnership (“Landlord”)
and SILICON VALLEY BANK, a California banking
corporation (“Tenant”).  The following exhibits and attachments are
incorporated into and made a part of the Lease: Exhibit A (Outline and Location of Premises), Exhibit B (Expenses and Taxes), Exhibit C (Work Letter, if required), Exhibit D (Commencement Letter), Exhibit E (Building Rules and Regulations),
Exhibit F (Additional Provisions),
Exhibit G (Parking Agreement); Exhibits H and H-1 (Asbestos Notifications
for Building 5 and Building 7); Exhibit I
(Form of Letter of Credit) and Exhibit J
(Holding company Test-Fit Plan #3).

 

1.     Basic Lease Information.

 

1.01                “Building 5”
shall mean the building located at 3101 Tasman Drive, Santa Clara, California,
commonly known as Lake Marriott Building 5, in the project commonly known as
Lake Marriott Business Park.  “Building 6” shall mean the building located
at 3003 Tasman Drive, Santa Clara, California, commonly known as Lake Marriott
Building 6, in the project commonly known as Lake Marriott Business Park.  “Building
7” shall mean the building located at 3001 Tasman Drive, Santa
Clara, California, commonly known as Lake Marriott Building 7, in the project
commonly known as Lake Marriott Business Park. 
“Rentable Square Footage of the
Building” is deemed to be 213,625 square
feet.  For purposes of this Lease,
“Building” and “Buildings” shall each mean, collectively, Building 5, Building
6 and Building 7.  In addition, Building
6 and Building 7 are sometimes collectively referred to herein as the “Initial Premises”.

 

1.02                “Premises”
shall mean the area shown on Exhibit A
to this Lease.  The Premises is
comprised of the Buildings.  All
corridors and restroom facilities located on any full floor shall be considered
part of the Premises. The “Rentable Square
Footage of the Premises” is deemed to be 213,625 square feet. Building 5 is comprised of approximately
56,448 rentable square feet.  Building 6
is comprised of approximately 100,729 rentable square feet.  Building 7 is comprised of approximately
56,448 rentable square feet.  Landlord
and Tenant stipulate and agree that the Rentable Square Footage of the Building
and the Rentable Square Footage of the Premises are correct.

 

1.03                “Base Rent”:  

 

With
respect to the Initial Premises (collectively comprising approximately 157,177
rentable square feet):

 

	
  Period

  	
   

  	
  Annual
  Rate

  Per Square Foot

  	
   

  	
  Monthly

  Base Rent

  	
   

  
	
  8/1/2004 – 9/30/2005

  	
   

  	
  $

  	
  11.22

  	
   

  	
  $

  	
  146,960.50

  	
   

  
	
  10/1/2005 – 9/30/2006

  	
   

  	
  $

  	
  11.56

  	
   

  	
  $

  	
  151,361.45

  	
   

  
	
  10/1/2006 – 9/30/2007

  	
   

  	
  $

  	
  11.90

  	
   

  	
  $

  	
  155,867.19

  	
   

  
	
  10/1/2007 – 9/30/2008

  	
   

  	
  $

  	
  12.26

  	
   

  	
  $

  	
  160,582.50

  	
   

  
	
  10/1/2008 – 9/30/2009

  	
   

  	
  $

  	
  12.63

  	
   

  	
  $

  	
  165,428.79

  	
   

  
	
  10/1/2009 – 9/30/2010

  	
   

  	
  $

  	
  13.01

  	
   

  	
  $

  	
  170,406.06

  	
   

  
	
  10/1/2010 – 9/30/2011

  	
   

  	
  $

  	
  13.39

  	
   

  	
  $

  	
  175,383.34

  	
   

  
	
  10/1/2011 – 9/30/2012

  	
   

  	
  $

  	
  13.80

  	
   

  	
  $

  	
  180,753.55

  	
   

  
	
  10/1/2012 – 9/30/2013

  	
   

  	
  $

  	
  14.21

  	
   

  	
  $

  	
  186,123.76

  	
   

  
	
  10/1/2013 – 9/30/2014

  	
   

  	
  $

  	
  14.64

  	
   

  	
  $

  	
  191,755.94

  	
   

  

 

Notwithstanding anything in this Lease to the
contrary, Tenant shall be entitled to an abatement of Base Rent with respect to
the Initial Premises only, as originally described in this Lease, in the amount
of $146,960.50 per month for two (2) full calendar months of the Term,
commencing with the first full calendar month of the Term.  The maximum total amount of Base Rent abated
with respect to the Initial Premises in accordance with the foregoing shall
equal $293,921.00 (the “Initial Premises
Abated Base Rent”).  Only
Base Rent with respect to the Initial Premises shall be abated pursuant to this
Section, as more particularly described herein, and all Additional Rent and
other costs and charges specified in this Lease shall remain as due and payable
pursuant to the provisions of this Lease.

 

1

 

With
respect to Building 5 only:

 

	
  Period

  	
   

  	
  Annual
  Rate

  Per Square Foot

  	
   

  	
  Monthly

  Base Rent

  	
   

  
	
  Building 5 Rent Commencement Date – 9/30/2005

  	
   

  	
  $

  	
  11.22

  	
   

  	
  $

  	
  52,778.88

  	
   

  
	
  10/1/2005 – 9/30/2006

  	
   

  	
  $

  	
  11.56

  	
   

  	
  $

  	
  54,359.42

  	
   

  
	
  10/1/2006 – 9/30/2007

  	
   

  	
  $

  	
  11.90

  	
   

  	
  $

  	
  55,977.60

  	
   

  
	
  10/1/2007 – 9/30/2008

  	
   

  	
  $

  	
  12.26

  	
   

  	
  $

  	
  57,671.04

  	
   

  
	
  10/1/2008 – 9/30/2009

  	
   

  	
  $

  	
  12.63

  	
   

  	
  $

  	
  59,411.52

  	
   

  
	
  10/1/2009 – 9/30/2010

  	
   

  	
  $

  	
  13.01

  	
   

  	
  $

  	
  61,199.04

  	
   

  
	
  10/1/2010 – 9/30/2011

  	
   

  	
  $

  	
  13.39

  	
   

  	
  $

  	
  62,986.56

  	
   

  
	
  10/1/2011 – 9/30/2012

  	
   

  	
  $

  	
  13.80

  	
   

  	
  $

  	
  64,915.20

  	
   

  
	
  10/1/2012 – 9/30/2013

  	
   

  	
  $

  	
  14.21

  	
   

  	
  $

  	
  66,843.84

  	
   

  
	
  10/1/2013 – 9/30/2014

  	
   

  	
  $

  	
  14.64

  	
   

  	
  $

  	
  68,866.56

  	
   

  

 

1.04                “Tenant’s
Pro Rata Share”: For Building 5: 
100%; For Building 6:  100%;
For Building 7:  100%; For the Property: 53.22%.

 

 “Tenant’s
Monthly Expense and Tax Payment” means Tenant’s Pro Rata Share of
the monthly estimated Expenses and monthly estimated Taxes (as more fully
described in, and subject to adjustment as described in, Exhibit B attached hereto) and is as
follows: For the period commencing upon the Commencement Date through and
including the day preceding the Building 5 Rent Commencement Date:  $56,273.00, and commencing upon the Building
5 Rent Commencement Date: $75,973.00. 
The first monthly installment of Tenant’s Monthly Expense and Tax
Payment shall be due and payable upon execution and delivery of this Lease by
Tenant.

 

1.05                Intentionally Omitted.  

 

1.06                “Term”:
A period of 122 months from the Commencement Date.  Subject to Section 3, the Term shall commence with respect to the
Initial Premises only retroactively on August 1, 2004 (the “Commencement Date”) and, unless terminated
early in accordance with this Lease, the Term with respect to the entire
Premises shall end on September 30, 2014 (the “Termination Date”). The Term shall commence with respect to
Building 5 on the date Landlord delivers possession of Building 5 to Tenant
(the “Building 5 Commencement Date”);
provided, however, that Tenant’s obligation to pay Base Rent and Tenant’s Pro
Rata Share of Expenses and Taxes with respect to only Building 5 shall commence
on the date which is six (6) months following the Building 5 Commencement Date
(the “Building 5 Rent Commencement Date”).

 

1.07                Allowance: 
$6,346,775.00 as more fully described in the Work Letter attached hereto
as Exhibit C.

 

1.08                “Security
Deposit”:  As of the date of
this Lease, there is no Security Deposit.

 

1.09                “Guarantor(s)”:  As of the date of this Lease, there is no
Guarantor.

 

1.10                “Broker(s)”:  CRESA Partners and Cornish & Carey.

 

1.11                “Permitted
Use”:  General office,
administrative, retail banking and training.

 

1.12                “Notice
Address(es)”:

 

	
  Landlord:

  	
   

  	
  Tenant:

  
	
  CA-Lake
  Marriott Business Park Limited Partnership

  c/o Equity Office

  1740 Technology Drive, Suite 150

  San Jose, California 95110

  Attention:  Lake Marriott Property
  Manager

  	
   

  	
  The
  Premises

  

 

A
copy of any notices to Landlord shall be sent to Equity Office, One Market,
Spear Street Tower, Suite 600, San Francisco, California 94105, Attention:  San Jose Regional Counsel.  

 

2

 

1.13                “Business
Day(s)” are Monday through Friday of each week, exclusive of New
Year’s Day, Presidents Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day (“Holidays”).  Landlord may designate additional Holidays
that are commonly recognized by other office buildings in the area where the
Building is located.  “Building Service Hours” are 7:00 a.m. to
7:00 p.m. on Business Days.

 

1.14                “Initial
Alterations” means the work that Tenant shall perform in the
Premises pursuant to a separate agreement (the “Work Letter”), if any, attached to this Lease as Exhibit C.

 

1.15                “Property”
means the Buildings and the parcel(s) of land on which they are located and, at
Landlord’s discretion, the parking facilities and other improvements, if any,
serving the Building and the parcel(s) of land on which they are located.

 

1.16                “Letter of
Credit”:   $260,622.00, as more fully described in
Section 2 of Exhibit I.

 

2.     Lease Grant.

 

The
Premises are hereby leased to Tenant from Landlord, together with the right to
use any portions of the Property that are designated by Landlord for the common
use of tenants and others (the “Common Areas”).

 

3.     Adjustment of Commencement
Date; Possession.

 

3.01  At Landlord’s request, with respect to each
of the Initial Premises and Building 5, Landlord and Tenant shall enter into a
commencement letter agreement in the form attached as Exhibit D. 

 

3.02
The Premises are accepted by Tenant in “as is” condition and configuration
without any representations or warranties by Landlord. By taking possession of
the Premises, Tenant agrees that the Premises are in good order and
satisfactory condition.  Tenant hereby
acknowledges and agrees that Tenant is currently in possession of Building 6
and Building 7 pursuant to the terms of that certain lease dated March 8, 1995
by and between Tenant and Landlord’s predecessor-in-interest, WRC Properties,
Inc. (the “Prior Lease”).  Landlord shall make commercially reasonable
efforts to deliver possession of Building 5 to Tenant on or before November 1,
2004.  Landlord shall not be liable for
a failure to deliver possession of Building 5 or any other space due to the
holdover or unlawful possession of such space by another party, however
Landlord shall use reasonably diligent efforts to obtain possession of the
space.  

 

Notwithstanding
the foregoing, if Landlord has not delivered possession of Building 5 on or
before January 1, 2005 (the “Required
Delivery Date”), Tenant, as its sole remedy, may terminate this
Lease by giving Landlord written notice of termination on or before the earlier
to occur of:  (i) 5 Business Days after
the Required Delivery Date; and (ii) the date Landlord delivers possession of
Building 5 to Tenant.  In such event,
this Lease shall be deemed null and void and of no further force and effect and
the parties hereto shall have no further responsibilities or obligations to
each other.  Landlord and Tenant
acknowledge and agree that the Required Delivery Date shall be postponed by the
number of days Landlord’s delivery of possession of Building 5 is delayed due to
events of Force Majeure.

 

4.     Rent.

 

4.01  Tenant shall pay Landlord, without any
setoff or deduction, unless expressly set forth in this Lease, all Base Rent
and Additional Rent due for the Term (collectively referred to as “Rent”). “Additional
Rent” means all sums (exclusive of Base Rent) that Tenant is
required to pay Landlord under this Lease. Tenant shall pay and be liable for
all rental, sales and use taxes (but excluding income taxes), if any, imposed
upon or measured by Rent.  Base Rent and
recurring monthly charges of Additional Rent shall be due and payable in
advance on the first day of each calendar month without notice or demand,
provided that the installment of Base Rent for the first full calendar month of
the Term when such Base Rent is due under this Lease for the Initial Premises
and Building 5 collectively, and the first monthly installment of Additional
Rent for Expenses and Taxes when such Additional Rent is due under this Lease
for the Initial Premises and Building 5 collectively, shall be payable upon the
execution of this Lease by Tenant.  All
other items of Rent shall be due and payable by Tenant on or before 30 days
after billing by Landlord.  Rent shall
be made payable to the entity, and sent to the address, Landlord designates and
shall be made by good and sufficient check or by other means acceptable to
Landlord.  Tenant shall pay Landlord an
administration fee equal to 5% of all past due Rent, provided that Tenant shall
be entitled to a grace period of 5 days following written notice of delinquency
from Landlord for the first 2 late payments of Rent in a calendar year. In
addition, past due Rent shall accrue interest at 8% per annum. Landlord’s
acceptance of less than the correct amount of Rent shall be considered a
payment on account of the earliest Rent due. Rent for any partial month during
the Term shall be prorated. No endorsement or statement on a check or letter
accompanying payment shall be

 

3

 

considered
an accord and satisfaction.  Tenant’s
covenant to pay Rent is independent of every other covenant in this Lease.

 

4.02  Tenant shall pay Tenant’s Pro Rata Share of
Taxes and Expenses in accordance with Exhibit
B of this Lease. 

 

5.     Compliance with Laws; Use.

 

The
Premises shall be used for the Permitted Use and for no other use whatsoever.
Tenant shall comply with all statutes, codes, ordinances, orders, rules and
regulations of any municipal or governmental entity whether in effect now or
later, including the Americans with Disabilities Act (“Law(s)”), regarding the operation of
Tenant’s business and the use, condition, configuration and occupancy of the
Premises. In addition, Tenant shall, at its sole cost and expense, promptly
comply with any Laws that relate to the “Base Building” (defined below), but
only to the extent such obligations are triggered by Tenant’s use of the
Premises (but subject to the terms and conditions of the Work Letter), other
than for general office use, or Alterations or improvements in the Premises performed
or requested by Tenant.  “Base Building” shall include the structural
portions of the Building, the public restrooms and the Building mechanical,
electrical and plumbing systems and equipment located in the internal core of
the Building on the floor or floors on which the Premises are located. Tenant
shall promptly provide Landlord with copies of any notices it receives
regarding an alleged violation of Law. 
Tenant shall comply with the rules and regulations of the Building
attached as Exhibit E and such
other reasonable rules and regulations adopted by Landlord from time to time,
including rules and regulations for the performance of Alterations (defined in
Section 9). As of the date hereof, Landlord has not received notice from any
governmental agencies that the Building is in violation of any Environmental
Laws (as defined below with respect to Hazardous Materials (as defined below).  As
used in this Lease, “Hazardous Materials”
shall mean any material or substance that is now or hereafter prohibited or
regulated by any statute, law, rule, regulation or ordinance or that is now or
hereafter designated by any governmental authority to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the environment
including but not limited to (i) oil and petroleum products, (ii) radioactive
materials, (iii) asbestos and asbestos-containing materials, (iv)
polychlorinated biphenyls and (v) substances defined as “hazardous substances”,
“hazardous materials”, or “toxic substances” in the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601
et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§1801 et seq.;
the Resource Conservation and Recovery Act, 42 U.S.C. §§6901, et seq.; the
Toxic Substances Control Act, 15 U.S.C. §§2601, et seq.; the Clean Water Act,
33 U.S.C. §§1251 et seq.; the California Hazardous Waste Control Act, Health
and Safety Code §§25330, et seq.; the California Safe Drinking Water and Toxic
Enforcement Act, Health and Safety Code §§25249.5, et seq.; California Health
and Safety Code §§25280, et seq. 
(Underground Storage of Hazardous Substances); the California Hazardous
Waste Management Act, Health and Safety Code §§25170, et seq.  (Hazardous Materials Release Response Plans
and Inventory); the California Porter-Cologne Water Quality Control Act, Water
Code §§13000, et seq.; all as amended. 
As used in this Lease, “Environmental
Laws” shall mean all local, state, or federal laws, statutes,
ordinances, rules and regulations now or hereafter enacted, issued or
promulgated by any governmental authority which relate to any Hazardous
Material or the use, manufacture, handling, treatment, transportation,
production, disposal, discharge, distribution, release, recycling, emission,
sale, or storage of, or the exposure of any person to, a Hazardous
Material.  Landlord has disclosed to
Tenant the asbestos notification letters attached to this Lease as Exhibits H and H-1 hereto.

 

6.             Security Deposit.

 

The
Security Deposit, if any, shall be delivered to Landlord upon the execution of
this Lease by Tenant and held by Landlord without liability for interest
(unless required by Law) as security for the performance of Tenant’s
obligations.  The Security Deposit is
not an advance payment of Rent or a measure of damages.  Landlord may use all or a portion of the
Security Deposit to satisfy past due Rent or to cure any Default (defined in
Section 18) by Tenant.  If Landlord uses
any portion of the Security Deposit, Tenant shall, within 5 days after demand,
restore the Security Deposit to its original amount. Landlord shall return any
unapplied portion of the Security Deposit to Tenant within 45 days after the
later to occur of: (a) determination of the final Rent due from Tenant; or (b)
the later to occur of the Termination Date or the date Tenant surrenders the
Premises to Landlord in compliance with Section 25. Landlord may assign the
Security Deposit to a successor or transferee and, following the assignment,
Landlord shall have no further liability for the return of the Security
Deposit. Landlord shall not be required to keep the Security Deposit separate
from its other accounts.  Tenant hereby
waives the provisions of Section 1950.7 of the California Civil Code, or any
similar or successor Laws now or hereinafter in effect.

 

7.             Building Services.

 

7.01         Services
to the Building and Premises shall be provided as follows:

 

(1)           If
Tenant is leasing 100% of the rentable area in the Building or if Tenant’s Pro

 

4

 

Rata
Share, as defined in Section 1.04 above, is 100% (in either event, for purposes
of this Lease, Tenant shall be deemed the “Sole
Tenant of the Building”), Landlord agrees to furnish Tenant with
elevator service in the Building during the Term of this Lease and to provide
heat and air conditioning to the Premises, and Tenant, at its cost, shall
provide the following services: (a) Water service for use in the lavatories on
each floor on which the Premises are located; (b) Maintenance and repair of the
Buildings as described in Section 9.01; (c) Janitor service; (d) Electricity to
the Premises for Tenant’s use, in accordance with and subject to the terms and
conditions this Lease; (e) gas for boilers of the Building and water heaters,
if any; (f) pest control service; (g) refuse collection; and (h) such other
services as Tenant desires and which Landlord reasonably determines are
necessary or appropriate for the Building. 

 

If
Tenant was required to provide the above services (other than elevator service
or heating, ventilating and air conditioning) at any time during the Term, and,
thereafter, by mutual agreement between Landlord and Tenant, or by operation of
law or otherwise, Tenant is not the Sole Tenant of the Building or is otherwise
not required to provide the above services, then, at Landlord’s request and, at
Landlord’s option, as a condition to Landlord providing the services described
in Section 7.01(2) below, Tenant shall transfer to Landlord any utility
accounts and/or service contracts (including, without limitation, any
maintenance service agreements entered into by Tenant, as described in Section
9.01. below or otherwise) relating to all or any of the services to be provided
by Landlord described in Section 7.01(2) below, and Tenant shall otherwise
cooperate with Landlord in transferring control of, and responsibility for,
such services from Tenant to Landlord. 
Tenant shall remain liable for all sums incurred in connection with such
accounts or service contracts relating to the period prior to the date such
accounts and service contracts are transferred to, and assumed by, Landlord.

 

(2)           If
Tenant is not the Sole Tenant of the Building (as defined in Section 7.01(1)
above), Landlord agrees to furnish Tenant with elevator service in the Building
during the Term of this Lease, and, subject to the terms of the second
paragraph of Section 7.01(1) above, Landlord also agrees to provide the
following services: (a) Water service for use in the lavatories on each floor
on which the Premises are located; (b) Heat and air conditioning in season
during Building Service Hours, at such temperatures and in such amounts as are
standard for comparable buildings or as required by governmental authority.,
provided that, Tenant, upon such advance notice as is reasonably required by
Landlord, shall have the right to receive HVAC service during hours other than
Normal Business Hours and Tenant shall pay Landlord the standard charge for the
additional service as reasonably determined by Landlord from time to time; (c)
Maintenance and repair of the Property as described in Section 9.02; (d)
Janitor service on Business Days, provided if Tenant’s use, floor covering or
other improvements require special services in excess of the standard services
for the Building, Tenant shall pay the additional cost attributable to the
special services; (e) Electricity to the Premises for general office use, in
accordance with and subject to the terms and conditions in Article X; (f) gas
for boilers of the Building and water heaters serving the Building generally,
if any; (g) pest control service for the Common Areas of the Building; (h)
refuse collection for the Building; and (i) such other services as Landlord
reasonably determines are necessary or appropriate for the Building or the
Property.  Further, Tenant shall have
access to the Building for Tenant and its employees 24 hours per day/7 days per
week, subject to the terms of this Lease and such security or monitoring systems
as Landlord may reasonably impose, including, without limitation, sign-in
procedures and/or presentation of identification cards.

 

7.02  Electricity used by Tenant in the Premises
shall be paid for by Tenant by separate charge billed by the applicable utility
company and payable directly by Tenant. Without the consent of Landlord,
Tenant’s use of electrical service shall not exceed, either in voltage, rated
capacity, use beyond overall load, that which Landlord reasonably deems to be
standard for the Building. Landlord shall have the right to measure electrical
usage by commonly accepted methods. 

 

7.03  Landlord’s failure to furnish, or any
interruption, diminishment or termination of services required to be provided
by Landlord pursuant to this Lease which is due to the application of Laws, the
failure of any equipment, the performance of repairs, improvements or
alterations, utility interruptions or the occurrence of an event of Force
Majeure (defined in Section 26.03) (collectively a “Service Failure”) shall not render Landlord liable to Tenant,
constitute a constructive eviction of Tenant, give rise to an abatement of
Rent, nor relieve Tenant from the obligation to fulfill any covenant or
agreement. However, if the Premises, or a material portion of the Premises, are
made untenantable for a period in excess of 3 consecutive Business Days as a
result of a Service Failure that is reasonably within the control of Landlord
to correct (other than a Service Failure in connection with Tenant’s failure to
perform Tenant’s obligations under this Lease, in which event Tenant shall not
be entitled to any abatement or other

 

5

 

remedy), then Tenant, as its
sole remedy, shall be entitled to receive an abatement of Rent payable
hereunder during the period beginning on the 4th consecutive
Business Day of the Service Failure and ending on the day the service has been
restored.  If the entire Premises have
not been rendered untenantable by the Service Failure, the amount of abatement
shall be equitably prorated.  

 

8.             Leasehold Improvements.

 

All
improvements in and to the Premises, including any Alterations (collectively, “Leasehold Improvements”) shall remain upon
the Premises at the end of the Term without compensation to Tenant.  Landlord, however, by written notice to
Tenant at least 30 days prior to the Termination Date, may require Tenant, at
its expense, to remove (a) any Cable (defined in Section 9.01) installed by or
for the benefit of Tenant, and (b) any Alterations that, in Landlord’s
reasonable judgment, are of a nature that would require removal and repair
costs that are materially in excess of the removal and repair costs associated
with standard office improvements (collectively referred to as “Required Removables”).  Following Landlord’s receipt of final,
approved plans for the Initial Alterations (as defined in Exhibit C attached to this Lease) which
plans are sufficient to obtain all required permits for the construction of the
Initial Alterations, Tenant may request in writing and Landlord shall respond
within 30 days following Landlord’s receipt of such written request, which
items of the Initial Alterations, if any, shall be deemed Required
Removables.  Notwithstanding the
foregoing, Tenant shall not be required to remove at the expiration or earlier
termination of this Lease that portion of the Initial Alterations to Building 5
only which portion is constructed substantially in accordance with Exhibit J to this Lease (“Holding company
Test-Fit Plan #3” prepared by RMW Architects) as reasonably and mutually
determined by Landlord and Tenant. 
Required Removables shall include, without limitation, internal
stairways, raised floors, personal baths and showers, vaults, rolling file
systems and structural alterations and modifications. The designated Required
Removables shall be removed by Tenant before the Termination Date. Tenant shall
repair damage caused by the installation or removal of Required
Removables.  If Tenant fails to perform
its obligations in a timely manner, Landlord may perform such work at Tenant’s
expense. Tenant, at the time it requests approval for a proposed Alteration,
may request in writing that Landlord advise Tenant whether the Alteration or
any portion of the Alteration is a Required Removable.  Within 10 days after receipt of Tenant’s
request, Landlord shall advise Tenant in writing as to which portions of the
Alteration are Required Removables. 

 

9.             Repairs and Alterations.

 

9.01
Tenant shall periodically inspect the Premises to identify any conditions that
are dangerous or in need of maintenance or repair.  Tenant shall promptly provide Landlord with notice of any such
conditions. Tenant shall, at its sole cost and expense, perform all maintenance
and repairs to the Premises that are not Landlord’s express responsibility under
this Lease, and keep the Premises in good condition and repair, reasonable wear
and tear excepted. Tenant’s repair and maintenance obligations include, without
limitation, repairs to: (a) floor covering; (b) interior partitions; (c) doors;
(d) the interior side of demising walls; (e) electronic, phone and data cabling
and related equipment that is installed by or for the exclusive benefit of
Tenant (collectively, “Cable”);
(f) supplemental air conditioning units, kitchens, including hot water heaters,
plumbing, and similar facilities exclusively serving Tenant; and (g)
Alterations. In addition and notwithstanding anything to the contrary contain
in Section IX.B below, if Tenant is the Sole Tenant of the Building (as defined
in Section 7.01(1)), Tenant’s repair obligations shall also include, without
limitation, the following: (a) electrical and plumbing systems serving the
Building in general (including any equipment related thereto and located upon
the roof of the Building); (b) the interior Common Areas of the Building
(Landlord shall maintain the exterior Common Areas of the Building in
accordance with its obligations as provided in Section 9.02 below); and (c)
exterior windows of the Building.  To
the extent Landlord is not reimbursed by insurance proceeds, Tenant shall
reimburse Landlord for the cost of repairing damage to the Building caused by
the acts of Tenant, Tenant Related Parties and their respective contractors and
vendors. If Tenant fails to make any repairs to the Premises for more than 30 days
after notice from Landlord (although notice shall not be required in an
emergency), Landlord may make the repairs, and Tenant shall pay the reasonable
cost of the repairs, together with an administrative charge in an amount equal
to 3% of the cost of the repairs.

 

If
Tenant is the Sole Tenant of the Building (as defined in Section 7.01(1) above)
Tenant, at Tenant’s own expense, shall procure and maintain in full force and
effect, a maintenance/service contract(s) (the “Service Contract”), in a form and with a maintenance
contractor approved by Landlord, providing for the service, maintenance and
repair of all plumbing and electrical systems and equipment serving the
Building.  The service contract(s) must
include all services suggested by the equipment manufacturer within the
operation/maintenance manual relating to such equipment and systems and must
become effective and a copy thereof delivered to Landlord: (x) within thirty
(30) days after the Commencement Date for the Initial Premises, and (y) within
thirty (30) days after the Building 5 Commencement Date for Building 5, each
with respect to items (i) and (ii) above, or within 30 days after requested by
Landlord with respect to item (iii) above. 
Tenant shall follow all reasonable recommendations of said contractor
for the maintenance and repair of the equipment and systems covered by the
Service Contract.  The Service Contract
shall provide that the contractor shall perform  regularly scheduled inspections, preventative maintenance and
service on the covered equipment and

 

6

 

systems,
and that having made such inspections, said contractor shall furnish a complete
report of any defective conditions found to be existing with respect to such
equipment, together with any recommendations for maintenance, repair and/or
replacement thereof.  Said report shall
be furnished to Tenant with a copy to Landlord.  Landlord may, upon notice to Tenant, enter into such a service
contract on behalf of Tenant or perform the work and in either case charge
Tenant the cost thereof along with a reasonable amount for Landlord’s overhead.

 

9.02
Except to the extent the same is a Tenant obligation when Tenant is the Sole
Tenant of the Building as such obligations are described in Section 9.01 above,
Landlord shall keep and maintain in good repair and working order and perform
maintenance upon the: (a) structural elements of the Building (including
foundations); (b) electrical and plumbing systems serving the Building in
general and mechanical (including HVAC), and fire/life safety systems serving
the Building in general and serving the Premises; (c) Common Areas; (d) roof of
the Building; (e) exterior windows of the Building; and (f) elevators serving
the Building. Landlord shall promptly make repairs for which Landlord is
responsible.  Tenant hereby waives any
and all rights under and benefits of subsection 1 of Section 1932, and Sections
1941 and 1942 of the California Civil Code, or any similar or successor Laws
now or hereinafter in effect.

 

9.03
Tenant shall not make alterations, repairs, additions or improvements
(collectively referred to as “Alterations”)
without first obtaining the written consent of Landlord in each instance, which
consent shall not be unreasonably withheld or delayed. However, Landlord’s
consent shall not be required for any Alteration that satisfies all of the
following criteria (a “Cosmetic Alteration”):  (a) is of a cosmetic nature such as
painting, wallpapering, hanging pictures and installing carpeting; (b) is not
visible from the exterior of the Premises or Building; (c) will not affect the
Base Building; and (d) does not require work to be performed inside the walls
or above the ceiling of the Premises. 
Cosmetic Alterations shall be subject to all the other provisions of
this Section 9.03.  Prior to starting work, Tenant shall furnish Landlord
with plans and specifications; names of contractors reasonably acceptable to
Landlord (provided that Landlord may designate specific contractors with
respect to Base Building); required permits and approvals; evidence of
contractor’s and subcontractor’s insurance in amounts reasonably required by
Landlord and naming Landlord as an additional insured; and any security for
performance in amounts reasonably required by Landlord.  Changes to the plans and specifications must
also be submitted to Landlord for its approval. Alterations shall be
constructed in a good and workmanlike manner using materials of a quality
reasonably approved by Landlord. Tenant shall reimburse Landlord for any sums
paid by Landlord for third party examination of Tenant’s plans for non-Cosmetic
Alterations.  In addition, Tenant shall
pay Landlord a fee for Landlord’s oversight and coordination of any non-Cosmetic
Alterations equal to 3% of the cost of the Alterations.  Upon completion, Tenant shall furnish
“as-built” plans for non-Cosmetic Alterations, completion affidavits and full
and final waivers of lien. Landlord’s approval of an Alteration shall not be
deemed a representation by Landlord that the Alteration complies with Law. 

 

10.          Entry by Landlord.

 

Landlord
may enter the Premises to inspect, show or clean the Premises or to perform or
facilitate the performance of repairs, alterations or additions to the Premises
or any portion of the Building.  Except
in emergencies or to provide Building services, Landlord shall provide Tenant
with reasonable prior verbal notice of entry and shall use reasonable efforts
to minimize any interference with Tenant’s use of the Premises.  If reasonably necessary, Landlord may
temporarily close all or a portion of the Premises to perform repairs,
alterations and additions.  However,
except in emergencies, Landlord will not close the Premises if the work can
reasonably be completed on weekends and after Building Service Hours.  Entry by Landlord shall not constitute a
constructive eviction or entitle Tenant to an abatement or reduction of Rent.

 

11.          Assignment and Subletting.

 

11.01  Except in connection with a Permitted
Transfer (defined in Section 11.04), Tenant shall not assign, sublease,
transfer or encumber any interest in this Lease or allow any third party to use
any portion of the Premises (collectively or individually, a “Transfer”) without the prior written
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed if Landlord does not exercise its recapture rights under
Section 11.02.  If the entity which
controls the voting shares/rights of Tenant changes at any time, such change of
ownership or control shall constitute a Transfer unless Tenant is an entity
whose outstanding stock is listed on a recognized securities exchange or if at
least 80% of its voting stock is owned by another entity, the voting stock of
which is so listed.  Tenant hereby
waives the provisions of Section 1995.310 of the California Civil Code, or any
similar or successor Laws, now or hereinafter in effect, and all other
remedies, including, without limitation, any right at law or equity to
terminate this Lease, on its own behalf and, to the extent permitted under all
applicable Laws, on behalf of the proposed transferee.  Any attempted Transfer in violation of this
Section is voidable by Landlord. In no event shall any Transfer, including a
Permitted Transfer, release or relieve Tenant from any obligation under this
Lease.  

 

7

 

Notwithstanding
anything to the contrary contained herein, Landlord’s consent shall not be
required with respect to a sublease or a series of subleases to a management
company or management companies of venture or investment funds: (i) which funds
are syndicated or sponsored by Tenant or any of its Affiliates, and (ii) which
in the aggregate at any one time, all such subleases to such management
company(ies) collectively cover no more than the lesser of:  (X) 5% of the total amount of the Premises
(as the same may be modified from time to time) and (Y) 10,000 rentable square
feet of the Premises, and (iii) which subleases pertain to this Lease only and
to no other properties or leased space; and (iv) which subleases are necessary
to comply with applicable regulations and/or Laws respecting Tenant’s business
operations (a “Management Company Sublease”).  Any such Management Company Sublease shall
provide that (1) the portion of the Premises covered by the Management Company
Sublease shall be used for the Permitted Use hereunder and for no other
purpose; (2) Tenant notifies Landlord, in writing, of the identity of the
sublease under any such Management Company Sublease no less than 15 days prior
to the effective date of the subject Management Company Sublease; (3) Tenant
provides to Landlord a copy of the subject final, executed Management Company
Sublease; (4) the Management Company Sublease shall expressly provide by its
terms that the Management Company Sublease is subject and subordinate to this
Lease, the subtenant under any such Management Company Sublease shall indemnify
Landlord in the same manner that Tenant indemnifies Landlord under the terms
and conditions of this Lease, and such subtenant(s) shall carry in place during
the entire term of the Management Company Sublease (and provide to Landlord a
certificate of insurance evidencing the same) all insurance required of Tenant
but with respect to portion of the Premises covered by the subject Management
Company Sublease.  The term of any
Management Company Sublease shall expire prior to the termination date of this
Lease.

 

11.02  Tenant shall provide Landlord with financial
statements for the proposed transferee, a fully executed copy of the proposed
assignment, sublease or other Transfer documentation and such other information
as Landlord may reasonably request. Within 15 Business Days after receipt of
the required information and documentation, Landlord shall either: (a) consent
to the Transfer by execution of a consent agreement in a form reasonably
designated by Landlord; (b) reasonably refuse to consent to the Transfer in
writing; or (c) in the event of an assignment of this Lease or subletting of
more than: (i) 80% of the Rentable Area of the Premises located in Building 5
for more than 80% of the remaining Term (excluding unexercised options) (the “Building 5 Recapture Right”), and/or (ii)
80% of the Rentable Area of the Premises located in Building 6 for more than
80% of the remaining Term (excluding unexercised options) (the “Building 6 Recapture Right” and together
with the Building 5 Recapture Right, collectively, the “Recapture Right”), recapture the portion of
the Premises that Tenant is proposing to Transfer.  If Landlord exercises its Recapture Right, this Lease shall
automatically be amended to delete the applicable portion of the Premises
effective on the proposed effective date of the Transfer.  Tenant shall pay Landlord a review fee of
$1,500.00 for Landlord’s review of any requested Transfer.  The review fee shall not apply to any
Permitted Transfers.

 

11.03  Tenant shall pay Landlord 50% of all rent
and other consideration which Tenant receives as a result of a Transfer that is
in excess of the Rent payable to Landlord for the portion of the Premises and
Term covered by the Transfer.  Tenant
shall pay Landlord for Landlord’s share of the excess within 30 days after
Tenant’s receipt of the excess.  Tenant
may deduct from the excess, on a straight-line basis, all reasonable and
customary expenses directly incurred by Tenant attributable to the Transfer,
including, without limitation, reasonable brokers’ commissions and attorneys’
fees, and the cost of tenant improvements made specifically for the subject
Transfer.  If Tenant is in Default,
Landlord may require that all sublease payments be made directly to Landlord,
in which case Tenant shall receive a credit against Rent in the amount of
Tenant’s share of payments received by Landlord.

 

11.04
Tenant may assign this Lease to a successor to Tenant by purchase, merger,
consolidation or reorganization (an “Ownership
Change”) or assign this Lease or sublet all or a portion of the
Premises to an Affiliate without the consent of Landlord, provided that all of
the following conditions are satisfied (a “Permitted
Transfer”):  (a) Tenant is
not then in Default or with the passage of time would be in Default; (b) in the
event of an Ownership Change, Tenant’s successor shall own substantially all of
the assets of Tenant and have a net worth which is at least equal to Tenant’s
net worth as of the day prior to the proposed Ownership Change; (c) Tenant’s
successor shall use the Premises for the permitted use expressly described in
this Lease; and (d) Tenant shall give Landlord written notice at least 15
Business Days prior to the effective date of the Permitted Transfer (provided
that, if prohibited by confidentiality in connection with a proposed purchase,
merger, consolidation or reorganization, then Tenant shall give Landlord written
notice within 10 days after the effective date of the proposed purchase,
merger, consolidation or reorganization). Tenant’s notice to Landlord shall
include information and documentation evidencing the Permitted Transfer and
showing that each of the above conditions has been satisfied.  If requested by Landlord, Tenant’s successor
shall sign a commercially reasonable form of assumption agreement. “Affiliate” shall mean an entity controlled
by, controlling or under common control with Tenant.

 

8

 

12.          Liens.

 

Tenant
shall not permit mechanics’ or other liens to be placed upon the Property,
Premises or Tenant’s leasehold interest in connection with any work or service
done or purportedly done by or for the benefit of Tenant or its
transferees.  Tenant shall give Landlord
notice at least 15 days prior to the commencement of any work in the Premises
to afford Landlord the opportunity, where applicable, to post and record notices
of non-responsibility. Tenant, within 10 days of notice from Landlord, shall
fully discharge any lien by settlement, by bonding or by insuring over the lien
in the manner prescribed by the applicable lien Law.  If Tenant fails to do so, Landlord may bond, insure over or
otherwise discharge the lien.  Tenant
shall reimburse Landlord for any amount paid by Landlord, including, without
limitation, reasonable attorneys’ fees. 

 

13.          Indemnity and Waiver of
Claims.

 

Tenant
hereby waives all claims against and releases Landlord and its trustees, members,
principals, beneficiaries, partners, officers, directors, employees, Mortgagees
(defined in Section 23) and agents (the “Landlord
Related Parties”) from all claims for any injury to or death of
persons, damage to property or business loss in any manner related to (a) Force
Majeure, (b) acts of third parties, (c) the bursting or leaking of any tank,
water closet, drain or other pipe, (d) the inadequacy or failure of any
security services, personnel or equipment,  or
(e) any matter not within the reasonable control of Landlord. Except to the
extent caused by the negligence or willful misconduct of Landlord or any
Landlord Related Parties or Landlord’s breach of this Lease, Tenant shall
indemnify, defend and hold Landlord and Landlord Related Parties harmless
against and from all liabilities, obligations, damages, penalties, claims,
actions, costs, charges and expenses, including, without limitation, reasonable
attorneys’ fees and other professional fees (if and to the extent permitted by
Law) (collectively referred to as “Losses”),
which may be imposed upon, incurred by or asserted against Landlord or any of
the Landlord Related Parties by any third party and arising out of or in
connection with any damage or injury occurring in the Premises or any acts or omissions
(including violations of Law) of Tenant, the Tenant Related Parties or any of
Tenant’s transferees, contractors or licensees.  Except to the extent caused by the negligence or willful
misconduct of Tenant or any Tenant Related Parties or Tenant’s breach of this
Lease, Landlord shall indemnify, defend and hold Tenant, its trustees, members,
principals, beneficiaries, partners, officers, directors, employees and agents
(“Tenant Related Parties”)
harmless against and from all Losses which may be imposed upon, incurred by or
asserted against Tenant or any of the Tenant Related Parties by any third party
and arising out of or in connection with the acts or omissions (including
violations of Law) of Landlord or the Landlord Related Parties.

 

14.          Insurance.

 

Tenant
shall maintain the following insurance (“Tenant’s
Insurance”):  (a) Commercial
General Liability Insurance applicable to the Premises and its appurtenances
providing, on an occurrence basis, a minimum combined single limit of
$2,000,000.00; (b)  Property/Business
Interruption Insurance written on an All Risk or Special Perils form, with
coverage for broad form water damage including earthquake sprinkler leakage, at
replacement cost value and with a replacement cost endorsement covering all of
Tenant’s business and trade fixtures, equipment, movable partitions, furniture,
merchandise and other personal property within the Premises (“Tenant’s Property”) and any Leasehold
Improvements performed by or for the benefit of Tenant; (c) Workers’ Compensation
Insurance in amounts required by Law; and (d) Employers Liability Coverage of
at least $1,000,000.00 per occurrence. 
Any company writing Tenant’s Insurance shall have an A.M. Best rating of
not less than A-VIII.  All Commercial
General Liability Insurance policies shall name as additional insureds Landlord
(or its successors and assignees), the managing agent for the Building (or any
successor), EOP Operating Limited Partnership, Equity Office Properties Trust
and their respective members, principals, beneficiaries, partners, officers,
directors, employees, and agents, and other designees of Landlord and its
successors as the interest of such designees shall appear. All policies of
Tenant’s Insurance shall contain endorsements that the insurer(s) shall give
Landlord and its designees at least 30 days’ advance written notice of any
cancellation, termination, material change or lapse of insurance. Tenant shall
provide Landlord with a certificate of insurance evidencing Tenant’s Insurance:
(x) with respect to the Initial Premises, prior to the earlier to occur of the
Commencement Date or the date Tenant is provided with possession of the
Premises, and (y) with respect to Building 5, prior to the Building 5
Commencement Date, and, respecting each of clause (x) and clause (y),
thereafter as necessary to assure that Landlord always has current certificates
evidencing Tenant’s Insurance. 

 

Landlord
shall maintain so called All Risk property insurance on the Building at
replacement cost value as reasonably estimated by Landlord.  Landlord shall maintain Commercial General
Liability insurance applicable to the Property, Building and Common Areas
providing, on an occurrence basis, a minimum combined single limit of at least
$2,000,000.00.

 

9

 

15.          Subrogation.

 

Landlord
and Tenant hereby waive and shall cause their respective insurance carriers to
waive any and all rights of recovery, claims, actions or causes of action
against the other for any loss or damage with respect to Tenant’s Property,
Leasehold Improvements, the Building, the Premises, or any contents thereof,
including rights, claims, actions and causes of action based on negligence,
which loss or damage is (or would have been, had the insurance required by this
Lease been carried) covered by insurance.

 

16.          Casualty Damage.

 

16.01  If all or any portion of the Premises
becomes untenantable by fire or other casualty to the Premises (collectively a
“Casualty”), Landlord, with
reasonable promptness, shall cause a general contractor selected by Landlord to
provide Landlord and Tenant with a written estimate of the amount of time
required using standard working methods to Substantially Complete the repair
and restoration of the Premises and any Common Areas necessary to provide
access to the Premises (“Completion Estimate”).  If the Completion Estimate indicates that
the Premises located within a Building or any Common Areas necessary to provide
access to the Premises located within such Building cannot be made tenantable
within 300 days from the date of the Casualty, then either party shall have the
right to terminate this Lease with respect to the Building in which the
Casualty occurred upon written notice to the other within 10 Business Days
after receipt of the Completion Estimate. 
Tenant, however, shall not have the right to terminate this Lease if the
Casualty was caused by the negligence or intentional misconduct of Tenant or
any Tenant Related Parties. In addition, Landlord, by notice to Tenant within
90 days after the date of the Casualty, shall have the right to terminate this
Lease with respect to the Building in which the Casualty occurred if:  (1) the Premises have been materially
damaged and there is less than 2 years of the Term remaining on the date of the
Casualty; (2) any Mortgagee requires that the insurance proceeds be applied to
the payment of the mortgage debt; or (3) a material uninsured loss to the
Building occurs.  In addition to
Landlord’s right to terminate as provided herein, Tenant shall have the right
to terminate this Lease with respect to the Building I which the Casualty
occurred if:  (a) a substantial portion
of the Premises in the subject Building has been damaged by Casualty and such
damage cannot reasonably be repaired (as reasonably determined by Landlord)
within 60 days after Landlord’s receipt of all required permits to restore the
subject portion of the Premises; (b) there is less than 1 year of the Term
remaining on the date of such Casualty; (c) the Casualty was not caused by the
negligence or willful misconduct of Tenant or its agents, employees or
contractors; and (d) Tenant provides Landlord with written notice of its intent
to terminate within 30 days after the date of the Casualty.

 

16.02  If this Lease is not terminated (with respect
to either all or a portion of the Premises as provided in Section 16.01 above),
Landlord shall promptly and diligently, subject to reasonable delays for
insurance adjustment or other matters beyond Landlord’s reasonable control,
restore the Premises and Common Areas. Such restoration shall be to
substantially the same condition that existed prior to the Casualty, except for
modifications required by Law or any other modifications to the Common Areas
deemed desirable by Landlord. Upon notice from Landlord, Tenant shall assign to
Landlord (or to any party designated by Landlord) all property insurance
proceeds payable to Tenant under Tenant’s Insurance with respect to any
Leasehold Improvements performed by or for the benefit of Tenant; provided if the
estimated cost to repair such Leasehold Improvements exceeds the amount of
insurance proceeds received by Landlord from Tenant’s insurance carrier, the
excess cost of such repairs shall be paid by Tenant to Landlord prior to
Landlord’s commencement of repairs (the “Excess
Casualty Costs”).  Within 15
days of demand, Tenant shall also pay Landlord for any additional excess costs
that are determined during the performance of the repairs. If the estimated
Excess Casualty Costs exceed the actual cost to repair such Leasehold
Improvements (and Tenant has paid to Landlord funds covering all such Excess
Casualty Costs), Landlord shall reimburse to Tenant any such overpayment.  Landlord shall not be liable for any
inconvenience to Tenant, or injury to Tenant’s business resulting in any way
from the Casualty or the repair thereof. 
Provided that Tenant is not in Default, during any period of time that
all or a material portion of the Premises is rendered untenantable as a result
of a Casualty, the Rent shall abate for the portion of the Premises that is
untenantable and not used by Tenant. The terms of this Article 16 shall not
diminish the parties rights and/or obligations provided in Article 13 of this
Lease.

 

16.03  The provisions of this Lease, including this
Section 16, constitute an express agreement between Landlord and Tenant with
respect to any and all damage to, or destruction of, all or any part of the
Premises or the Property, and any Laws, including, without limitation, Sections
1932(2) and 1933(4) of the California Civil Code, with respect to any rights or
obligations concerning damage or destruction in the absence of an express
agreement between the parties, and any similar or successor Laws now or
hereinafter in effect, shall have no application to this Lease or any damage or
destruction to all or any part of the Premises or the Property.

 

17.          Condemnation.

 

If
more than 50% of a Building is taken or condemned for any public or
quasi-public use under Law, by eminent domain or private purchase in lieu thereof
(a “Taking”), then either party
may terminate this

 

10

 

Lease
with respect to the Premises located in the subject Building only.  Landlord shall also have the right to
terminate this Lease if there is a Taking of 50% or more of any Building or 50%
or more of any building on the Property which Taking would have a material
adverse effect on Landlord’s ability to profitably operate the remainder of the
Property.  The terminating party shall
provide written notice of termination to the other party within 45 days after
it first receives notice of the Taking. 
The termination shall be effective on the date the physical taking
occurs.  If this Lease is not
terminated, Base Rent and Tenant’s Pro Rata Share shall be appropriately
adjusted to account for any reduction in the square footage of the Building or
Premises. All compensation awarded for a Taking shall be the property of
Landlord.  The right to receive
compensation or proceeds are expressly waived by Tenant, however, Tenant may
file a separate claim for Tenant’s Property and Tenant’s reasonable relocation
expenses, provided the filing of the claim does not diminish the amount of
Landlord’s award.  If only a part of the
Premises is subject to a Taking and this Lease is not terminated, Landlord,
with reasonable diligence, will restore the remaining portion of the Premises
as nearly as practicable to the condition immediately prior to the Taking.  Tenant hereby waives any and all rights it
might otherwise have pursuant to Section 1265.130 of the California Code of
Civil Procedure, or any similar or successor Laws.

 

18.          Events of Default.

 

Each
of the following occurrences shall be a “Default”:
(a) Tenant’s failure to pay any portion of Rent when due, if the failure
continues for 3 Business Days after written notice to Tenant (“Monetary Default”); (b) Tenant’s failure
(other than a Monetary Default) to comply with any term, provision, condition
or covenant of this Lease, if the failure is not cured within 20 days after
written notice to Tenant provided, however, if Tenant’s failure to comply
cannot reasonably be cured within 20 days, Tenant shall be allowed additional
time (not to exceed 60 days) as is reasonably necessary to cure the failure so
long as Tenant begins the cure within 20 days and diligently pursues the cure
to completion; (c) Tenant or any Guarantor becomes insolvent, makes a transfer
in fraud of creditors, makes an assignment for the benefit of creditors, admits
in writing its inability to pay its debts when due or forfeits or loses its
right to conduct business; (d) the leasehold estate is taken by process or
operation of Law; or (e) in the case of any ground floor or retail Tenant,
Tenant does not take possession of or abandons or vacates all or any portion of
the Premises. If Landlord provides Tenant with notice of Tenant’s failure to
comply with any specific provision of this Lease on 3 separate occasions during
any 12 month period, Tenant’s subsequent violation of such provision shall, at
Landlord’s option, be an incurable Default by Tenant. All notices sent under
this Section shall be in satisfaction of, and not in addition to, notice
required by Law.

 

19.          Remedies.

 

19.01  Upon the occurrence of any Default under
this Lease, whether enumerated in Section 18 or not, Landlord shall have the
option to pursue any one or more of the following remedies without any notice
(except as expressly prescribed herein) or demand whatsoever (and without
limiting the generality of the foregoing, Tenant hereby specifically waives
notice and demand for payment of Rent or other obligations, except for those
notices specifically required pursuant to the terms of Section 18 or this
Section 19, and waives any and all other notices or demand requirements imposed
by applicable law):

 

(a)           Terminate
this Lease and Tenant’s right to possession of the Premises and recover from
Tenant an award of damages equal to the sum of the following:

 

(i)            The
Worth at the Time of Award of the unpaid Rent which had been earned at the time
of termination;

 

(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 Rent loss that Tenant affirmatively proves could have been reasonably avoided;

 

(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 award exceeds the amount of such Rent
loss that Tenant affirmatively proves could be reasonably avoided;

 

(iv)          Any
other amount necessary to compensate Landlord for all the detriment either
proximately caused by Tenant’s failure to perform Tenant’s obligations under
this Lease or which in the ordinary course of things would be likely to result
therefrom; and

 

(v)           All
such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time under applicable law.

 

The
“Worth at the Time of Award” of
the amounts referred to in parts (i) and (ii) above, shall be computed by
allowing interest at the lesser of a per annum rate equal to: (A) the greatest
per annum rate of interest permitted from time to time under applicable law, or

 

11

 

(B)
the Prime Rate plus 5%.  For purposes
hereof, the “Prime Rate” shall be the
per annum interest rate publicly announced as its prime or base rate by a
federally insured bank selected by Landlord in the State of California.  The “Worth
at the Time of Award” of the amount referred to in part (iii),
above, 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 1%;

 

(b)           Employ
the remedy described in California Civil Code § 1951.4 (Landlord may continue
this Lease in effect after Tenant’s breach and abandonment and recover Rent as
it becomes due, if Tenant has the right to sublet or assign, subject only to
reasonable limitations); or

 

(c)           Notwithstanding
Landlord’s exercise of the remedy described in California Civil Code § 1951.4
in respect of an event or events of default, at such time thereafter as
Landlord may elect in writing, to terminate this Lease and Tenant’s right to
possession of the Premises and recover an award of damages as provided above in
Paragraph 19.01(a).

 

19.02  The subsequent acceptance of Rent hereunder
by Landlord shall not be deemed to be a waiver of any preceding breach by
Tenant of any term, covenant or condition of this Lease, other than the failure
of Tenant to pay the particular Rent so accepted, regardless of Landlord’s knowledge
of such preceding breach at the time of acceptance of such Rent.  No waiver by Landlord of any breach hereof
shall be effective unless such waiver is in writing and signed by Landlord.

 

19.03  TENANT HEREBY WAIVES ANY AND ALL RIGHTS
CONFERRED BY SECTION 3275 OF THE CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174
(c) AND 1179 OF THE CODE OF CIVIL PROCEDURE OF CALIFORNIA AND ANY AND ALL OTHER
LAWS AND RULES OF LAW FROM TIME TO TIME IN EFFECT DURING THE LEASE TERM
PROVIDING THAT TENANT SHALL HAVE ANY RIGHT TO REDEEM, REINSTATE OR RESTORE THIS
LEASE FOLLOWING ITS TERMINATION BY REASON OF TENANT’S BREACH.  TENANT ALSO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING
OUT OF OR RELATING TO THIS LEASE.

 

19.04  No right or remedy herein conferred upon or
reserved to Landlord is intended to be exclusive of any other right or remedy,
and each and every right and remedy shall be cumulative and in addition to any
other right or remedy given hereunder or now or hereafter existing by
agreement, applicable law or in equity. 
In addition to other remedies provided in this Lease, Landlord shall be
entitled, to the extent permitted by applicable law, to injunctive relief, or to
a decree compelling performance of any of the covenants, agreements, conditions
or provisions of this Lease, or to any other remedy allowed to Landlord at law
or in equity.  Forbearance by Landlord
to enforce one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such default.

 

19.05  If Tenant is in Default of any of its
non-monetary obligations under the Lease, Landlord shall have the right to
perform such obligations.  Tenant shall
reimburse Landlord for the cost of such performance upon demand together with
an administrative charge equal to 10% of the cost of the work performed by
Landlord.

 

19.06  This Section 19 shall be enforceable to the
maximum extent such enforcement is not prohibited by applicable law, and the
unenforceability of any portion thereof shall not thereby render unenforceable
any other portion.

 

20.          Limitation of Liability.

 

NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD
(AND OF ANY SUCCESSOR LANDLORD) SHALL BE LIMITED TO THE LESSER OF (A) THE
INTEREST OF LANDLORD IN THE PROPERTY, OR (B) THE EQUITY INTEREST LANDLORD WOULD
HAVE IN THE PROPERTY IF THE PROPERTY WERE ENCUMBERED BY THIRD PARTY DEBT IN AN
AMOUNT EQUAL TO 50% OF THE VALUE OF THE PROPERTY.  TENANT SHALL LOOK SOLELY TO LANDLORD’S INTEREST IN THE PROPERTY
FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD OR ANY LANDLORD
RELATED PARTY. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE
PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY, AND IN NO EVENT SHALL
LANDLORD OR ANY LANDLORD RELATED PARTY BE LIABLE TO TENANT FOR ANY LOST PROFIT,
DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGE.  BEFORE FILING SUIT FOR AN ALLEGED
DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) WHOM
TENANT HAS BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN SECTION 23 BELOW), NOTICE
AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT. FOR PURPOSES HEREOF, “INTEREST
OF LANDLORD IN THE PROPERTY” SHALL INCLUDE RENTS DUE FROM TENANTS, INSURANCE
PROCEEDS, PROCEEDS FROM CONDEMNATION OR EMINENT DOMAIN PROCEEDINGS (PRIOR TO
THE DISTRIBUTION OF SAME TO ANY PARTNER OR SHAREHOLDER OF LANDLORD OR ANY OTHER

 

12

 

THIRD
PARTY), AND PROCEEDS FROM THE SALE OF THE PROPERTY; PROVIDED, HOWEVER, THAT
WITH RESPECT TO PROCEEDS FROM THE SALE OF THE PROPERTY, LANDLORD’S LIABILITY
SHALL EXTEND ONLY TO ADJUDICATED CLAIMS WHICH ARISE DURING LANDLORD’S PERIOD OF
OWNERSHIP AND DURING THE TERM OF THIS LEASE BUT ONLY AFTER LANDLORD FIRST
APPLIES ANY SUCH SALE PROCEEDS TO ANY OUTSTANDING MORTGAGES AND/OR ANY OTHER
ENCUMBRANCES EXISTING UPON OR OTHERWISE AFFECTING THE PROPERTY (INCLUDING ANY
GROUND LEASE PAYMENTS) AND ANY TAX LIABILITY RESPECTING THE PROPERTY.

 

21.          Intentionally Omitted.

 

22.          Holding Over.

 

If
Tenant fails to surrender all or any part of the Premises at the termination of
this Lease, occupancy of the Premises after termination shall be that of a
tenancy at sufferance.  Tenant’s
occupancy shall be subject to all the terms and provisions of this Lease, and
Tenant shall pay an amount (on a per month basis without reduction for partial
months during the holdover) equal to 150% of the sum of the Base Rent and
Additional Rent due for the period immediately preceding the holdover but only
with respect to the Building or Buildings in which the holdover occurs.  No holdover by Tenant or payment by Tenant
after the termination of this Lease shall be construed to extend the Term or
prevent Landlord from immediate recovery of possession of the Premises by
summary proceedings or otherwise. If Landlord is unable to deliver possession
of the Premises to a new tenant or to perform improvements for a new tenant as
a result of Tenant’s holdover and Tenant fails to vacate the Premises within 15
days after notice from Landlord, Tenant shall be liable for all damages that
Landlord suffers from the holdover.

 

23.          Subordination to Mortgages;
Estoppel Certificate.

 

Tenant
accepts this Lease subject and subordinate to any mortgage(s), deed(s) of
trust, ground lease(s) or other lien(s) now or subsequently arising upon the
Premises, the Building or the Property, and to renewals, modifications,
refinancings and extensions thereof (collectively referred to as a “Mortgage”). The party having the benefit of
a Mortgage shall be referred to as a “Mortgagee”.
This clause shall be self-operative, but upon request from a Mortgagee, Tenant
shall execute a commercially reasonable subordination agreement in favor of the
Mortgagee. As an alternative, a Mortgagee shall have the right at any time to
subordinate its Mortgage to this Lease. 
Notwithstanding the foregoing in this Article to the contrary, as a
condition precedent to the future subordination of this Lease to a future
Mortgage, Landlord shall be required to provide Tenant with a non-disturbance,
subordination, and attornment agreement in favor of Tenant from any Mortgagee
who comes into existence after the Commencement Date.  Such non-disturbance, subordination, and attornment agreement in
favor of Tenant shall provide that, so long as Tenant is paying the Rent due
under the Lease and is not otherwise in default under the Lease beyond any
applicable cure period, its right to possession and the other terms of the
Lease shall remain in full force and effect. 
Such non-disturbance, subordination, and attornment agreement may
include other commercially reasonable provisions in favor of the Mortgagee,
including, without limitation, additional time on behalf of the Mortgagee to
cure defaults of the Landlord and provide that (a) neither Mortgagee nor any
successor-in-interest shall be bound by (i) any payment of the Base Rent,
Additional Rent, or other sum due under this Lease for more than 1 month in
advance or (ii) any amendment or modification of the Lease made without the
express written consent of Mortgagee or any successor-in-interest; (b) neither
Mortgagee nor any successor-in-interest will be liable for (i) any act or
omission or warranties of any prior landlord (including Landlord), (ii) the
breach of any warranties or obligations relating to construction of
improvements on the Property or any tenant finish work performed or to have
been performed by any prior landlord (including Landlord), or (iii) the return
of any security deposit, except to the extent such deposits have been received
by Mortgagee; and (c) neither Mortgagee nor any successor-in-interest shall be
subject to any offsets or defenses which Tenant might have against any prior
landlord (including Landlord).

 

Upon
request, Tenant, without charge, shall attorn to any successor to Landlord’s
interest in this Lease.  Landlord and
Tenant shall each, within 10 days after receipt of a written request from the
other, execute and deliver a commercially reasonable estoppel certificate to
those parties as are reasonably requested by the other (including a Mortgagee
or prospective purchaser). Without limitation, such estoppel certificate may
include a certification as to the status of this Lease, the existence of any
defaults and the amount of Rent that is due and payable.

 

24.          Notice.

 

All
demands, approvals, consents or notices (collectively referred to as a “notice”) shall be in writing and delivered
by hand or sent by registered or certified mail with return receipt requested
or sent by overnight or same day courier service at the party’s respective
Notice Address(es) set forth in Section 1. 
Each notice shall be deemed to have been received on the earlier to
occur of actual delivery or the date on which delivery is refused, or, if Tenant
has vacated the Premises or any other Notice Address of Tenant without
providing a new Notice Address, 3 days after notice is deposited in the U.S.
mail or with

 

13

 

a
courier service in the manner described above. 
Either party may, at any time, change its Notice Address (other than to
a post office box address) by giving the other party written notice of the new
address. 

 

25.          Surrender of Premises.

 

At
the termination of this Lease or Tenant’s right of possession, Tenant shall
remove Tenant’s Property from the Premises, and quit and surrender the Premises
to Landlord, broom clean, and in good order, condition and repair, ordinary
wear and tear and damage which Landlord is obligated to repair hereunder excepted.
If Tenant fails to remove any of Tenant’s Property within 5 Business Days after
termination of this Lease or Tenant’s right to possession, Landlord, at
Tenant’s sole cost and expense, shall be entitled (but not obligated) to remove
and store Tenant’s Property.  Landlord
shall not be responsible for the value, preservation or safekeeping of Tenant’s
Property.  Tenant shall pay Landlord,
upon demand, the expenses and storage charges incurred. If Tenant fails to
remove Tenant’s Property from the Premises or storage, within 30 days after
notice, Landlord may deem all or any part of Tenant’s Property to be abandoned
and title to Tenant’s Property shall vest in Landlord.

 

26.          Miscellaneous.

 

26.01  This Lease shall be interpreted and enforced
in accordance with the Laws of the State of California and Landlord and Tenant
hereby irrevocably consent to the jurisdiction and proper venue of such state
or commonwealth.  If any term or
provision of this Lease shall to any extent be void or unenforceable, the
remainder of this Lease shall not be affected. If there is more than one Tenant
or if Tenant is comprised of more than one party or entity, the obligations
imposed upon Tenant shall be joint and several obligations of all the parties
and entities, and requests or demands from any one person or entity comprising
Tenant shall be deemed to have been made by all such persons or entities.  Notices to any one person or entity shall be
deemed to have been given to all persons and entities. Tenant represents and
warrants to Landlord that each individual executing this Lease on behalf of
Tenant is authorized to do so on behalf of Tenant and that Tenant is not, and
the entities or individuals constituting Tenant or which may own or control
Tenant or which may be owned or controlled by Tenant are not, among the
individuals or entities identified on any list compiled pursuant to Executive
Order 13224 for the purpose of identifying suspected terrorists.

 

26.02  If either party institutes a suit against
the other for violation of or to enforce any covenant, term or condition of
this Lease, the prevailing party shall be entitled to all of its costs and
expenses, including, without limitation, reasonable attorneys’ fees.  Landlord and Tenant hereby waive any right
to trial by jury in any proceeding based upon a breach of this Lease.  Either party’s failure to declare a default
immediately upon its occurrence, or delay in taking action for a default, shall
not constitute a waiver of the default, nor shall it constitute an estoppel. 

 

26.03  Whenever a period of time is prescribed for
the taking of an action by Landlord or Tenant (other than the payment of the
Security Deposit or Rent), the period of time for the performance of such
action shall be extended by the number of days that the performance is actually
delayed due to strikes, acts of God, shortages of labor or materials, war,
terrorist acts, civil disturbances and other causes beyond the reasonable
control of the performing party (“Force
Majeure”). 

 

26.04  Landlord shall have the right to transfer
and assign, in whole or in part, all of its rights and obligations under this
Lease and in the Building and Property. 
Upon transfer Landlord shall be released from any obligations thereafter
accruing hereunder and Tenant agrees to look solely to the successor in
interest of Landlord for the performance of such obligations, provided that,
any successor pursuant to a voluntary, third party transfer (but not as part of
an involuntary transfer resulting from a foreclosure or deed in lieu thereof)
shall have assumed Landlord’s obligations under this Lease.

 

26.05  Landlord has delivered a copy of this Lease
to Tenant for Tenant’s review only and the delivery of it does not constitute
an offer to Tenant or an option. Tenant represents that it has dealt directly
with and only with the Broker in connection with this Lease.  Tenant shall indemnify and hold Landlord and
the Landlord Related Parties harmless from all claims of any other brokers
claiming to have represented Tenant in connection with this Lease. Landlord
shall indemnify and hold Tenant and the Tenant Related Parties harmless from
all claims of any brokers claiming to have represented Landlord in connection
with this Lease.  Equity Office Properties
Management Corp. (“EOPMC”) is an
affiliate of Landlord and represents only the Landlord in this
transaction.  Any assistance rendered by
any agent or employee of EOPMC in connection with this Lease or any subsequent
amendment or modification hereto has been or will be made as an accommodation
to Tenant solely in furtherance of consummating the transaction on behalf of
Landlord, and not as agent for Tenant.

 

26.06
Time is of the essence with respect to Tenant’s exercise of any expansion,
renewal or extension rights granted to Tenant. The expiration of the Term,
whether by lapse of time, termination or otherwise, shall not relieve either
party of any obligations which accrued prior to or which may continue to accrue
after the expiration or termination of this Lease.

 

14

 

26.07  Tenant may peacefully have, hold and enjoy
the Premises, subject to the terms of this Lease, provided Tenant pays the Rent
and fully performs all of its covenants and agreements.  This covenant shall be binding upon Landlord
and its successors only during its or their respective periods of ownership of
the Building.

 

26.08  This Lease does not grant any rights to
light or air over or about the Building. 
Landlord excepts and reserves exclusively to itself any and all rights not
specifically granted to Tenant under this Lease. This Lease constitutes the
entire agreement between the parties and supersedes all prior agreements and
understandings related to the Premises, including all lease proposals, letters
of intent and other documents.  Neither
party is relying upon any warranty, statement or representation not contained
in this Lease.  This Lease may be
modified only by a written agreement signed by an authorized representative of
Landlord and Tenant.

 

15

 

Landlord
and Tenant have executed this Lease as of the day and year first above written.

 

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  CA-LAKE MARRIOTT BUSINESS PARK LIMITED PARTNERSHIP, a
  Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  EOM
  GP, L.L.C., a Delaware limited liability company, its

  general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Equity
  Office Management, L.L.C., a Delaware

  limited liability company, its non-member manager

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   /s/ JOHN W. PTERSON

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:
  John W. Peterson

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:   Regional Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  SILICON VALLEY BANK, a California banking corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ JACK JENKINS-STARK

  	
   

  
	
   

  	
  Name:

  	
  Jack
  Jenkins-Stark

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ MARC VERISSIMO

  	
   

  
	
   

  	
  Name:

  	
  Marc
  Verissimo

  
	
   

  	
  Title:

  	
  Chief
  Strategic Risk Officer

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Tenant’s Tax ID Number (SSN or FEIN)

  	
   

  
								

 

16

 

EXHIBIT A

 

OUTLINE AND LOCATION OF PREMISES

 

 

1

 

EXHIBIT B

 

EXPENSES AND TAXES

 

This
Exhibit is attached to and made a part of the Lease by and between CA-LAKE MARRIOTT BUSINESS PARK LIMITED PARTNERSHIP (“Landlord”)
and SILICON VALLEY BANK (“Tenant”)
for space in the Building located at 3001, 3003 and3101 Tasman Drive, Santa
Clara, California.

 

1.             Payments.  

 

1.01  Tenant shall pay Tenant’s Pro Rata Share of
the total amount of Expenses and Taxes for each calendar year during the Term.
Landlord shall provide Tenant with a good faith estimate of the total amount of
Expenses and Taxes for each calendar year during the Term.  On or before the first day of each month,
Tenant shall pay to Landlord a monthly installment equal to one-twelfth of
Tenant’s Pro Rata Share of Landlord’s estimate of the total amount of Expenses
and Taxes. If Landlord determines that its good faith estimate was incorrect by
a material amount, Landlord may provide Tenant with a revised estimate.  After its receipt of the revised estimate,
Tenant’s monthly payments shall be based upon the revised estimate.  If Landlord does not provide Tenant with an
estimate of the total amount of Expenses and Taxes by January 1 of a calendar
year, Tenant shall continue to pay monthly installments based on the previous
year’s estimate until Landlord provides Tenant with the new estimate.  Upon delivery of the new estimate, an
adjustment shall be made for any month for which Tenant paid monthly
installments based on the previous year’s estimate.  Tenant shall pay Landlord the amount of any underpayment within
30 days after receipt of the new estimate. 
Any overpayment shall be refunded to Tenant within 30 days or credited
against the next due future installment(s) of Additional Rent. 

 

1.02  As soon as is practical following the end of
each calendar year, Landlord shall furnish Tenant with a statement of the
actual amount and Tenant’s Pro Rata Share of Expenses and Taxes for the prior
calendar year.  If the estimated amount
of Expenses and Taxes for the prior calendar year is more than the actual
amount of Expenses and Taxes for the prior calendar year, Landlord shall apply
any overpayment by Tenant against Additional Rent due or next becoming due,
provided if the Term expires before the determination of the overpayment,
Landlord shall refund any overpayment to Tenant after first deducting the amount
of Rent due.  If the estimated amount of
Expenses and Taxes for the prior calendar year is less than the actual amount
of Expenses and Taxes for such prior year, Tenant shall pay Landlord, within 30
days after its receipt of the statement of Expenses and Taxes, any underpayment
for the prior calendar year.

 

2.     Expenses.  

 

2.01  “Expenses”
means all costs and expenses incurred in each calendar year in connection with
operating, maintaining, repairing, and managing the Buildings and the
Property.  Landlord agrees to act in a
commercially reasonable manner in incurring Expenses, taking into consideration
the class and the quality of the Building. 
Expenses include, without limitation: (a) all labor and labor related
costs, including wages, salaries, bonuses, taxes, insurance, uniforms,
training, retirement plans, pension plans and other employee benefits; (b)
management fees equal to one and one-half percent (1.5%) of the applicable
annual Base Rent payable by Tenant hereunder (the “Management Fee”); provided, however, that notwithstanding
anything to the contrary set forth herein or in the Lease, for purposes of
computing the Additional Rent payable by Tenant pursuant to this Exhibit B and
Article 4 of the Lease, Tenant’s Proportionate Share of the Management Fee
shall be equal to 100% of such Management Fee; (c) the cost of equipping,
staffing and operating an on-site and/or off-site management office for the
Building, provided if the management office services one or more other
buildings or properties, the shared costs and expenses of equipping, staffing
and operating such management office(s) shall be equitably prorated and
apportioned between the Building and the other buildings or properties; (d)
accounting costs; (e) the cost of services; (f) rental and purchase cost of
parts, supplies, tools and equipment; (g) insurance premiums and deductibles;
(h) electricity, gas and other utility costs; and (i) the amortized cost of
capital improvements (as distinguished from replacement parts or components
installed in the ordinary course of business) which are:  (1) performed primarily to reduce current or
future operating expense costs, upgrade Building security or otherwise improve
the operating efficiency of the Property; or (2) required to comply with any
Laws that are enacted, or first interpreted to apply to the Property, after the
date of this Lease, or with respect to Building 5 only, as of the date Landlord
delivers possession of Building 5 to Tenant. 
The cost of capital improvements shall be amortized by Landlord over the
lesser of the Payback Period (defined below) or the useful life of the capital
improvement as reasonably determined by Landlord.  The amortized cost of capital improvements may, at Landlord’s option,
include actual or imputed interest at the rate that Landlord would reasonably
be required to pay to finance the cost of the capital improvement. “Payback Period” means the reasonably
estimated period of time that it takes for the cost savings resulting from a
capital improvement to equal the total cost of the capital improvement.
Landlord, by itself or through an affiliate, shall have the right to directly
perform, provide and be compensated for any services under this Lease. If
Landlord incurs Expenses for the Building or Property together with one or more
other buildings or properties, whether pursuant to a reciprocal easement
agreement, common area agreement or otherwise, the shared costs

 

1

 

and
expenses shall be equitably prorated and apportioned between the Building and
Property and the other buildings or properties. 

 

2.02  Expenses shall not include: the cost of
capital improvements (except as set forth above); depreciation; principal
payments of mortgage and other non-operating debts of Landlord; the cost of
repairs or other work to the extent Landlord is reimbursed by insurance or
condemnation proceeds (or would have been reimbursed by insurance had Landlord
carried the insurance required to be carried by Landlord under this Lease); costs
in connection with leasing space in the Building, including brokerage
commissions; lease concessions, rental abatements and construction allowances
granted to specific tenants; costs incurred in connection with the sale,
financing or refinancing of the Building; fines, interest and penalties
incurred due to the late payment of Taxes or Expenses; organizational expenses
associated with the creation and operation of the entity which constitutes
Landlord; or any penalties or damages that Landlord pays to Tenant under this
Lease or to other tenants in the Building under their respective leases. 

 

The
following items are also excluded from Expenses:

 

(a)           Sums
(other than the Management Fees, it being agreed that the management fees
included in Expenses are as described in Section 2.01 above) paid to
subsidiaries or other affiliates of Landlord for services on or to the
Property, Building and/or Premises, but only to the extent that the costs of
such services exceed the competitive cost for such services rendered by persons
or entities of similar skill, competence and experience. 

 

(b)           Any
fines, penalties or interest resulting from the negligence or willful
misconduct of the Landlord or its agents, contractors, or employees.

 

(c)           Advertising
and promotional expenditures. 

 

(d)           Landlord’s
charitable and political contributions.

 

(e)           Ground
lease rental.

 

(f)            Attorney’s
fees and other expenses incurred in connection with negotiations or disputes
with prospective tenants or tenants or other occupants of the Building.

 

(g)           The
cost or expense of any services or benefits provided generally to other tenants
in the Building and not provided or available to Tenant.

 

(h)           All
costs of purchasing or leasing major sculptures, paintings or other major works
or objects of art (as opposed to decorations purchased or leased by Landlord
for display in the Common Areas of the Building).

 

(i)            Any
expenses for which Landlord has received actual reimbursement (other than
through Expenses).

 

(j)            Costs
incurred by Landlord in connection with the correction of defects in design and
original construction of the Building or Property.

 

(k)           Expenses
for the replacement of any item covered under warranty, unless Landlord has not
received payment under such warranty and it would not be fiscally prudent to
pursue legal action to collect on such warranty.

 

(l)            Fines
or penalties incurred as a result of violation by Landlord of any applicable
Laws.

 

(m)          The
cost of complying with any Laws in effect (and interpreted and enforced) on the
date of this Lease, provided that if any portion of the Building that was in
compliance with all applicable Laws on the date of this Lease becomes out of
compliance due to normal wear and tear, the cost of bringing such portion of
the Building into compliance shall be included in Expenses unless otherwise
excluded pursuant to the terms hereof.

 

(n)           Any
cost or expense related to removal, cleaning, abatement or remediation of
Hazardous Materials in or about the Building, Common Area or Property,
including, without limitation, hazardous substances in the ground water or
soil, except to the extent such removal, cleaning, abatement or remediation is
incidental to the general repair and maintenance of the Building, Common Area
or Property.

 

2

 

(o)           The
cost of capital improvements (except as provided in Section 2.01 above of this Exhibit B).

 

(p)           The
cost of the installation of any separate utility meters Landlord may install
solely for other tenants of the Property, unless installation is required by a
utility company or governmental entity.

 

(q)           Any
costs of Landlord’s general overhead, including general administrative
expenses, which costs would not be chargeable to operating expenses of the
Building in accordance with generally accepted accounting principals,
consistently applied.

 

(r)            All
“tenant allowances”, “tenant concessions” and other costs or expenses incurred
in fixturing, furnishing, renovating or otherwise improving, decorating or
redecorating space for tenants or other occupants of the Building, or vacant
leaseable space in the Building, except in connection with general maintenance
and repairs provided to the tenants of the Building in general.

 

2.03  If the Building is not at least 95% occupied
during any calendar year or if Landlord is not supplying services to at least
95% of the total Rentable Square Footage of the Building at any time during a
calendar year, Expenses shall, at Landlord’s option, be determined as if the
Building had been 95% occupied and Landlord had been supplying services to 95%
of the Rentable Square Footage of the Building during that calendar year.  The extrapolation of Expenses under this
Section shall be performed in accordance with the methodology specified by the
Building Owners and Managers Association. 
In no event shall Landlord be entitled to a reimbursement from tenants
for Expenses and Taxes in excess of 100% of the costs actually paid or incurred
by Landlord in any applicable calendar year.

 

3.  “Taxes”
shall mean:  (a) all real property taxes
and other assessments on the Building and/or Property, including, but not
limited to, gross receipts taxes, assessments for special improvement districts
and building improvement districts, governmental charges, fees and assessments
for police, fire, traffic mitigation or other governmental service of purported
benefit to the Property, taxes and assessments levied in substitution or
supplementation in whole or in part of any such taxes and assessments and the
Property’s share of any real estate taxes and assessments under any reciprocal
easement agreement, common area agreement or similar agreement as to the
Property; (b) all personal property taxes for property that is owned by
Landlord and used in connection with the operation, maintenance and repair of
the Property; and (c) all costs and fees incurred in connection with seeking
reductions in any tax liabilities described in (a) and (b), including, without
limitation, any costs incurred by Landlord for compliance, review and appeal of
tax liabilities.  Without limitation,
Taxes shall not include any income, capital levy, transfer, capital stock,
gift, estate or inheritance tax. If a change in Taxes is obtained for any year
of the Term during which Tenant paid Tenant’s Pro Rata Share of any Taxes, then
Taxes for that year will be retroactively adjusted and Landlord shall provide
Tenant with a credit, if any, based on the adjustment. Tenant shall pay
Landlord the amount of Tenant’s Pro Rata Share of any such increase in Taxes
within 30 days after Tenant’s receipt of a statement from Landlord.

 

4.  Audit
Rights. Tenant, within 365 days after receiving Landlord’s statement
of Expenses, may give Landlord written notice (“Review Notice”) that Tenant intends to review Landlord’s
records of the Expenses for that calendar year to which the statement
applies.  Within a reasonable time after
receipt of the Review Notice, Landlord shall make all pertinent records
available for inspection that are reasonably necessary for Tenant to conduct
its review.  If any records are
maintained at a location other than the management office for the Building,
Tenant may either inspect the records at such other location or pay for the
reasonable cost of copying and shipping the records.  If Tenant retains an agent to review Landlord’s records, the
agent must be with a CPA firm licensed to do business in the state or
commonwealth where the Property is located. 
Tenant shall be solely responsible for all costs, expenses and fees
incurred for the audit.  However,
notwithstanding the foregoing, if Landlord and Tenant determine that Expenses
for the Building for the year in question were less than stated by more than
7%, Landlord, within 30 days after its receipt of paid invoices therefor from
Tenant, shall reimburse Tenant for the reasonable amounts paid by Tenant to
third parties in connection with such review by Tenant.  Within 90 days after the records are made
available to Tenant, Tenant shall have the right to give Landlord written
notice (an “Objection Notice”)
stating in reasonable detail any objection to Landlord’s statement of Expenses
for that year. If Tenant fails to give Landlord an Objection Notice within the
90 day period or fails to provide Landlord with a Review Notice within the 365
day period described above, Tenant shall be deemed to have approved Landlord’s
statement of Expenses and shall be barred from raising any claims regarding the
Expenses for that year.  The records
obtained by Tenant shall be treated as confidential.  In no event shall Tenant be permitted to examine Landlord’s
records or to dispute any statement of Expenses unless Tenant has paid and
continues to pay all Rent when due.

 

3

 

EXHIBIT C 

 

WORK LETTER

 

This
Exhibit is attached to and made a part of the Lease by and between CA-LAKE MARRIOTT BUSINESS PARK LIMITED PARTNERSHIP (“Landlord”)
and SILICON VALLEY BANK (“Tenant”)
for space in the Building located at 3001, 3003 and 3101 Tasman Drive, Santa
Clara, California.

 

As
used in this Work Letter, the “Premises” shall be deemed to mean the Premises,
as initially defined in the attached Lease, unless otherwise expressly stated
herein.

 

1.             Tenant Work.

 

A.            Tenant, following the full and final
execution and delivery of the Lease to which this Work Letter is attached and
all prepaid rental and security deposits or letters of credit required under
such agreement, shall have the right to perform alterations and improvements in
Building 6 and Building 7 and, following delivery of Building 5 by Landlord to
Tenant, Tenant shall have the right to perform alterations and improvements in
Building 5 (collectively, the “Initial
Alterations”).  Tenant hereby
acknowledges and agrees that Tenant shall perform, and the Initial Alterations
shall include, upgrades to the structure of Building 5 sufficient to
accommodate the balance of the Initial Alterations and the full reconstruction
of the interior of Building 5 to a general office condition suitable for
Tenant’s bank holding company’s offices (the “Building
5 Reconstruction”).  Within a
reasonable period of time following execution of the Lease, Tenant shall cause
its architect to provide to Landlord architectural and construction drawings of
Tenant’s proposed Building 5 Reconstruction for Landlord’s review and
approval.  Landlord agrees that upon
Landlord’s receipt of any plans, drawings and/or change orders hereunder
submitted to Landlord for Landlord’s review and approval, Landlord shall review
and either approve or disapprove (and, in the event that Landlord disapproves any
of the same, provide to Tenant a reasonably detailed written statement
describing the basis for such disapproval) within 5 Business Days following
Landlord’s receipt of such plans, drawings and/or change orders.  The Building 5 Reconstruction shall be mutually
and reasonably acceptable to each of Landlord and Tenant and shall otherwise be
subject to the terms and conditions of this Work Letter as a part of the
Initial Alterations.

 

In
addition, the Initial Alterations shall include and Tenant shall perform
architectural enhancements to the exterior of each of Building 5, Building 6
and Building 7 (the “Exterior Enhancements”),
which Exterior Enhancements are consistent with Landlord’s long-term exterior
enhancement plans for the Lake Marriott Business Park project and otherwise
reasonably acceptable to each of Landlord and Tenant.  Landlord shall provide Tenant with an allowance (the “Exterior Enhancement Allowance”) in an
amount not to exceed $400,000.00 to be applied toward the costs of the Exterior
Enhancements.  Landlord shall disburse
the Exterior Enhancements Allowance, or applicable portion thereof, to Tenant
in accordance with Section 1.B of this Work Letter.  Tenant shall not be required to spend an amount in excess of the
Exterior Enhancement Allowance on the Exterior Enhancements (nor shall Landlord
be required to provide any funds in addition to the Exterior Enhancement
Allowance in connection with the Exterior Enhancement).

 

Notwithstanding
the foregoing, Tenant and its contractors shall not have the right to perform
Initial Alterations in the Premises unless and until Tenant has complied with
all of the terms and conditions of Section 9.03 of the Lease, including,
without limitation, approval by Landlord of the final plans for the Initial
Alterations and the contractors to be retained by Tenant to perform such
Initial Alterations, which approval shall not be unreasonably withheld,
conditioned or delayed. Tenant shall be responsible for all elements of the
design of Tenant’s plans (including, without limitation, compliance with law,
functionality of design, the structural integrity of the design, the
configuration of the premises and the placement of Tenant’s furniture,
appliances and equipment), and Landlord’s approval of Tenant’s plans shall in no
event relieve Tenant of the responsibility for such design.  The parties agree that Landlord’s approval
of the general contractor to perform the Initial Alterations shall not be
considered to be unreasonably withheld if any such general contractor (i) does
not have trade references reasonably acceptable to Landlord, (ii) does not
maintain insurance as required pursuant to the terms of this Lease, (iii) does
not

 

1

 

have
the ability to be bonded for the work in an amount of no less than 150% of the
total estimated cost of the Initial Alterations, (iv) does not provide current
financial statements reasonably acceptable to Landlord, or (v) is not licensed
as a contractor in the state/municipality in which the Premises is
located.  Tenant acknowledges the
foregoing is not intended to be an exclusive list of the reasons why Landlord
may reasonably withhold its consent to a general contractor.  Landlord hereby approves W.L. Butler, Inc.,
a California corporation, as Tenant’s general contractor for the Initial
Alterations.

 

B.            Provided Tenant is not then in default or
with the passage of time would be in default under the Lease (including this
Work Letter), Landlord agrees to contribute the sum of $6,346,775.00 (which
amount based on approximately $29.71 per rentable square foot of the Premises)
(the “Allowance”) toward the cost
of performing the Initial Alterations. 
The Allowance may only be used for the cost of preparing design and
construction documents and mechanical and electrical plans for the Initial
Alterations, taxes, insurance and bonds related to the Initial Alterations,
permit fees, cabling, the Construction Management Fee (defined herein below),
changes to the Base Building required as a result of the installation of the
Initial Alterations, change orders, alarm systems and access controls, approved
signage and for hard costs in connection with the Initial Alterations.  The Allowance (and/or the Exterior Enhancement
Allowance, as applicable), less a 10% retainage (which retainage shall be
payable as part of the final draw), shall be paid to Tenant or, at Landlord’s
option, to the order of the general contractor that performs the Initial
Alterations (or the Exterior Enhancements, as the case may be), in periodic
disbursements within 30 days after receipt of the following documentation: (i)
an application for payment and sworn statement of contractor substantially in
the form of AIA Document G-702 covering all work for which disbursement is to
be made to a date specified therein; (ii) a certification from an AIA architect
substantially in the form of the Architect’s Certificate for Payment which is
located on AIA Document G702, Application and Certificate of Payment; (iii)
Contractor’s, subcontractor’s and material supplier’s waivers of liens which
shall cover all Initial Alterations (or Exterior Enhancements, as the case may
be) for which disbursement is being requested and all other statements and
forms required for compliance with the mechanics’ lien laws of the state in
which the Premises is located, together with all such invoices, contracts, or
other supporting data as Landlord or Landlord’s Mortgagee may reasonably
require; (iv) a cost breakdown for each trade or subcontractor performing the
Initial Alterations (or the Exterior Enhancements, as the case may be); (v)
plans and specifications for the Initial Alterations (or the Exterior
Enhancements, as the case may be), together with a certificate from an AIA
architect that such plans and specifications comply in all material respects
with all laws affecting the Building, Property and Premises; (vi) copies of all
construction contracts for the Initial Alterations (or the Exterior
Enhancements, as the case may be), together with copies of all change orders, if
any; and (vii) a request to disburse from Tenant containing an approval by
Tenant of the work done and a good faith estimate of the cost to complete the
Initial Alterations (or the Exterior Enhancements, as the case may be).  Upon completion of the Initial Alterations
(or the Exterior Enhancements, as the case may be), and prior to final
disbursement of the Allowance (or the Exterior Enhancement Allowance, as the
case may be), Tenant shall furnish Landlord with:  (1) general contractor and architect’s completion affidavits, (2)
full and final waivers of lien, (3) receipted bills covering all labor and
materials expended and used, (4) as-built plans of the Initial Alterations (or
the Exterior Enhancements, as the case may be), and (5) the certification of Tenant
and its architect that the Initial Alterations (or the Exterior Enhancements,
as the case may be) have been installed in a good and workmanlike manner in
accordance with the approved plans, and in accordance with applicable laws,
codes and ordinances.  In no event shall
Landlord be required to disburse the Allowance or the Exterior Enhancement
Allowance more than one time per month. 
If the Initial Alterations exceed the Allowance or the Exterior
Enhancements exceed the Exterior Enhancement Allowance, Tenant shall be
entitled to the Allowance (or the Exterior Enhancement Allowance, as the case
may be) in accordance with the terms hereof, but each individual disbursement
of the Allowance (or the Exterior Enhancement Allowance, as the case may be)
shall be disbursed in the proportion that the Allowance (or the Exterior
Enhancement Allowance, as the case may be) bears to the total cost for the
Initial Alterations (or the Exterior Enhancements, as the case may be), less
the 10% retainage referenced above.  Notwithstanding anything herein to the contrary, Landlord shall
not be obligated to disburse any portion of the Allowance (or the Exterior
Enhancement Allowance, as the case may be) during the continuance of an uncured
default under the Lease, and Landlord’s obligation to disburse shall only
resume when and if such default is cured.

 

2

 

C.            In no event shall the Allowance or the
Exterior Enhancements Allowance be used for the purchase of equipment,
furniture or other items of personal property of Tenant.  If Tenant does not submit a request for
payment of the entire Allowance and/or the Exterior Enhancements Allowance to
Landlord in accordance with the provisions contained in this Work Letter by
December 31, 2005 (the “Final Request Date”),
any unused amount shall accrue to the sole benefit of Landlord, it being
understood that Tenant shall not be entitled to any credit, abatement or other
concession in connection therewith.  In
the event that Tenant fails to so submit a request for payment of all of the
remaining Allowance on or before the Final Request Date, Landlord shall provide
to Tenant written notice no less than 10 Business Days prior to the Final
Request Date notifying Tenant that Tenant has not, as of the date of Landlord’s
notice, submitted a request for such balance of the Allowance.  In the event Landlord fails to so notify
Tenant, such failure shall not be deemed to be a default or breach by Landlord,
but the Final Request Date shall be extended one day for each day Landlord
fails to timely notify Tenant of such remaining balance.  Tenant shall be responsible for all
applicable state sales or use taxes, if any, payable in connection with the
Initial Alterations, Exterior Enhancements Allowance and/or Allowance.  Landlord
shall be entitled to deduct from the Allowance a construction management fee
for Landlord’s oversight of the Initial Alterations in an amount equal to 1% of
the Allowance (the “Construction Management
Fee”).

 

D.            The Tenant Improvement Work.

 

1.             Tenant shall perform improvements to Building
5 in accordance with the following work list (the “Work List”) using Building standard methods, materials and
finishes.  The improvements to be
performed in accordance with the Work List are hereinafter referred to as the “Tenant Improvement Work”.  Provided Tenant is not then in default of
the Lease or with the passage of time would be in default of the Lease,
Landlord agrees to contribute the Maximum Amount toward the cost of performing
certain items of the Tenant Improvement Work as follows:  with respect to the HVAC Item (as defined
below), the maximum amount of Landlord’s contribution is $175,000.00 and with
respect to the Roof Item (as defined below), Landlord’s maximum contribution is
$70,000.00 (collectively, the “Maximum Amount”).  Tenant shall be responsible for the cost of
Tenant Improvement Work, plus any applicable state sales or use tax, if any, to
the extent that it exceeds the Maximum Amount. 
Tenant shall perform the Tenant Improvement Work subject to and in a
manner consistent with the terms of Section 1.A above of this Work Letter.  The Maximum Amount shall be distributed
subject to and in a manner consistent with the terms of Section 1.B above of
this Work Letter.

 

	
  WORK LIST

  
	
   

  
	
  1.  Replace two (2) boxcar HVAC units (one 75 ton unit and one 60 ton
  unit) and replace two (2) duct furnaces (the “HVAC Items”) in Building 5; and

  
	
   

  
	
  2.  Replace roof of Building 5 in accordance with the specifications
  attached hereto as Schedule I (the
  “Roof Item”).

  

 

2.             Landlord’s Work.

 

A.            Landlord Common Area Improvement Work.

 

(i)            On
or before December 31, 2005,  Landlord,
at its sole cost and expense shall perform exterior improvements to the
exterior Common Areas of the project in accordance with the following itemized
improvement list (the “Common Area
Improvement List”) using Building standard methods, materials and
finishes.  Notwithstanding the
foregoing, Landlord shall perform item 1 of the Common Area Improvement List
(exterior painting of buildings) with respect to Building 5, Building 6 and
Building 7 on or before June 1, 2005. 
The improvements to be performed in accordance with the Common Area
Improvement List are hereinafter referred to as the “Landlord Common Area Work”. 
Landlord shall enter into a direct contract for the Landlord Common Area
Work with a general contractor selected by Landlord.  Landlord shall perform the Landlord Common Area Work in a manner
consistent with Landlord’s long term exterior plans for the Lake

 

3

 

Marriott
Business Park.  In addition, Landlord
shall have the right to select and/or approve of any subcontractors used in
connection with the Landlord Common Area Work. 
The cost of the construction of the Common Area Improvement Work shall
be excluded from Expenses under the Lease.

 

	
  COMMON AREA IMPROVEMENT LIST

  
	
   

  
	
  1.  Exterior painting of all buildings of the Lake Marriott Business
  Park;

  
	
  2.  Renovate lake currently existing at Lake Marriott Business Park;

  
	
  3.  Upgrade and modify landscaping proximate to the lake and other
  exterior areas;

  
	
  4.  General hardscape upgrades and repairs in the lake area.

  

 

3.             Miscellaneous.

 

A.            Tenant agrees to accept the Premises in its
“as-is” condition and configuration, it being agreed that Landlord shall not be
required to perform any work or, except as provided above with respect to the
Allowance, incur any costs in connection with the construction or demolition of
any improvements in the Premises and except as provided above with respect to
the Exterior Enhancement Allowance and payment for the Landlord Common Area
Work, incur any costs in connection with the construction or demolition of any
improvements in the Common Area.  The
foregoing shall not reduce or delete Landlord’s obligation to perform the
Landlord Common Area Work.

 

B.            This Work Letter shall not be deemed
applicable to any additional space added to the Premises at any time or from
time to time, whether by any options under the Lease or otherwise, or to any
portion of the original Premises or any additions to the Premises in the event
of a renewal or extension of the original Term of the Lease, whether by any
options under the Lease or otherwise, unless expressly so provided in the Lease
or any amendment or supplement to the Lease.

 

C.            Landlord and Tenant agree to cooperate with
each other in order to enable the Landlord Common Area Work, the Exterior
Enhancements, the Tenant Improvement Work and the Initial Alterations to be
performed in a timely manner and with as little inconvenience to the operation
of Tenant’s business as is reasonably possible.  Notwithstanding anything herein to the contrary, any delay in the
completion of the Landlord Common Area Work or inconvenience suffered by Tenant
during the performance of the Landlord Common Area Work shall not delay the
Commencement Date or the Building 5 Commencement Date nor shall it subject
Landlord to any liability for any loss or damage resulting therefrom or entitle
Tenant to any credit, abatement or adjustment of Rent or other sums payable
under the Lease.

 

D.            During the period of the construction of the
Initial Alterations and Tenant’s relocation into the Premises (but not beyond
the Building 5 Commencement Date), Tenant shall not be charged, directly or
indirectly, for elevator usage, hoists, access to loading docks, freight
elevator usage; provided, however, that during such period, Tenant shall be
liable for the cost of all utilities servicing the Premises (including
electricity and water) and any costs and expenses associated with the
construction of the Initial Alterations and the Tenant Improvement Work.

 

F.             Notwithstanding anything set forth in this
Work Letter to the contrary, the Building 5 Rent Commencement Date shall be
delayed in accordance with the terms hereof as a result of any Landlord Delay
(as defined herein).  As used herein, a
“Landlord Delay” shall mean a
delay in substantial completion of the Initial Alterations prior to the
Building 5 Rent Commencement Date, to the extent such delay is caused solely by
Landlord’s failure to approve or disapprove plans, drawings and/or change
orders within the time periods required by the terms of this Work Letter,
absent Force Majeure or any delays by Tenant or any of Tenant’s contractors,
agents or employees.  Notwithstanding
the foregoing, Landlord shall only be responsible for Landlord Delays to the
extent that they actually prevent Tenant from substantially completing the
Initial Alterations by the Building 5 Rent Commencement Date.  Accordingly, the number of days of Landlord
Delay shall not exceed the actual number of days between the Building 5 Rent
Commencement Date and the date of substantial completion of Initial
Alterations.

 

4

 

SCHEDULE I TO EXHIBIT C

ROOF ITEM

 

SPECIFICATIONS

 

PART 1.00 -
GENERAL

 

1.01        DESCRIPTION

 

A.    Scope of work:

 

Furnish all labor,
materials, equipment and services necessary to install a new built-up roof and
flashings as indicated and specified herein.

 

B.    Work included in this section:

 

1.     Installation of new roofing.

2.     Inspection by the contractor’s field
supervisory personnel.

 

C.    Work not included in this section:

 

1.     Sheet metal work

2.     Electrical

3.     Plumbing

4.     Carpentry

5.     Asbestos (Unless predetermined with building
owner and proper parameters have been followed with regards to membrane testing
for friability).

 

1.02        QUALITY ASSURANCE AND GUARANTEE

 

A.    Roofing contractor shall be authorized by the
manufacturer.  All work shall be done
with their specifications and conditions.

 

B.    A unit guarantee shall be provided by the
contractor for materials and installation.

 

1.03        MATERIALS HANDLING

 

A.            Delivery of Materials:

 

All roofing materials shall
be delivered to the site in the original unbroken manufacturer’s wrappings;
materials and containers with the original label thereon intact.  If any bulk or unlabeled materials are to be
used, a properly attested certificate from the manufacturer stating that such
materials shall comply with the specification requirements shall be furnished
to the contractor prior to installation.

 

B.            Storage of materials at job site:

 

1.     Roofing materials shall be raised above the
supporting surfaces, such as on pallets. 
Roll goods, insulation and any other materials which may have moisture
contact shall be kept dry.  Wet
materials shall not be permitted to be used on the job and shall be removed
promptly.

2.     Materials containing solvents shall be stored
in a dry, cool area with proper fire and safety precautions.

3.     Roll good shall be stored on end.

4.     If stored on other than the ground, all
material shall be distributed so that their resultant weight does not exceed
the design live load of the deck.

 

1.04        PROTECTION AND CLEANING

 

A.            Protection:

 

1.     Any work or materials damaged during the
handling of bitumens and roofing materials shall be restored to their original
(undamaged) condition or replaced by the roofing applicator.

 

2.     Protective covering shall be installed at all
paving and exposed building walls adjacent to hoist and kettles prior to the
start of work.

 

5

 

3.     Protection shall remain in place for the
duration of the roofing work.

 

1.05        GUARANTEE

 

Contractor shall provide a
written guarantee that all roofing materials and installation will be
maintained in a waterproof condition for a period of ten (10) years from the
date of final approval of the roofing at no charge to the building owner.

 

PART 2.00 -
PRODUCTS

 

2.01        MATERIALS

 

A.    All materials shall be as manufactured by
Manville Corporation or equal.

 

B.    Asphalt: 
ASTM D-312-78, Type III.  Bitumen
when labeled with a Softening Point (SP), Minimum Flash Point (FP), Minimum
Finished Blowing Temperature (FBT), and Equiviscous Temperature Range (EVT)
shall not be heated above the FP, held at the FBT longer than 4 hours and must
be applied within 25 degrees of the EVT.If the asphalt is not so labeled or the
foregoing information is not otherwise available, the asphalt shall be heated
in accordance with information contained in the current Manufacturer’s manual.

 

C.    GlasBase. 
Asphalt coated fiberglass mat. Approximate weight 100 square feet, 28
lbs.

 

D.    GlasPly. 
Asphalt coated fiberglass mat. Approximate weight per 100 square feet,
12 lbs. ASTM D02178-76 Type IV.

 

E.     GlasKap. 
Mineral surfaced cap sheet. 
Asphalt coated fiberglass mat with ceramic granule surfacing.
Approximate weight per 100 square feet, 72 lbs.  Federal Specification #SS-R-630D Class III.

 

2.02        SUMMARY OF MATERIALS PER 100 SQUARE FEET

 

A.    Built-up roofing system shall be
Specification #3GNC

 

	
  Glasbase Felt

  	
   

  	
  28
  lbs.

  	
   

  
	
  Asphalt

  	
   

  	
  25
  lbs.

  	
   

  
	
  GlasPly Felt

  	
   

  	
  12
  lbs.

  	
   

  
	
  Asphalt

  	
   

  	
  25
  lbs.

  	
   

  
	
  GlasKap

  	
   

  	
  72
  lbs.

  	
   

  
	
  Total Average Weight

  	
   

  	
  162
  lbs.

  	
   

  

 

B.    Roofing and flashings shall be installed in
strict accordance with Manufacturer’s recommendations and as specified herein.

 

PART 3.00 -
EXECUTION

 

3.01        GENERAL INSTALLATION REQUIREMENTS

 

A.    All surfaces shall be adequately anchored,
even and free of any foreign material, moisture, or unevenness.

 

B.    Immediately notify owner of any defects.
Built-up roofing shall not be installed until defects have been corrected. (We
anticipate no significant defects on this project.)

 

C.    Verify that any curbs or nailers are in place
and properly installed.

 

3.02        DEMOLITION AND REMOVAL OF EXISTING MEMBRANE

 

A.    Remove and dispose of the roofing and
flashings down to the deck.  If complete
removal is not possible because of solid attachment, the materials shall be
removed down to the original membrane.

 

B.    Minor deck repairs shall be made at no charge
to the owner.  If major deck repairs are
necessary, the owner shall be informed of the additional cost.

 

6

 

3.03        INSTALLATION OF MATERIALS

 

A.    Asphalt:

 

1.     All kettles and tankers shall have both thermostatic
controls and an accurate visible thermometer.

 

2.     Heat and apply at correct EVT between 400 and
500 degrees Fahrenheit.

 

3.     Solidly mop heated asphalt between and under
layers of felt and insulation so that at no point does felt touch felt.

 

B.    Deck Preparation:

 

Existing
roof membrane shall be torn off to the deck as outlined in Section 3.2 above.

 

C.    Base Sheet:          Schuller #28 GlasBase (or equal)

 

Nail and/or mechanically
fasten as necessary to the prepared deck. 
Side laps to be 2”, end laps 4”. Broom felts to insure total adhesion
where necessary.

 

D.    Ply Felts:   
Schuller #12 GlasPly (or equal)

 

Starting at low edge apply
one 18” wide, then a full 36” wide GlasPly overlapping the preceding felt by
2”.  All following felts are to be applied
full width with the same 2” overlap. 
Install each felts so that it shall be uniformly set, without voids.

 

E.     Cap Sheet:          Schuller #72 GlasKap (or equal)

 

Before starting application
of the cap sheet, cut it into 12’ to 18’ lengths and allot it to flatten.  This is especially important in cold weather
to assure good contact with the asphalt.

 

Starting at the low edge (on
slopes up to 2”) or at the side opposite of the prevailing wind (on slopes over
2”), apply one layer of cap sheet, lapping each layer over the selvage edge of
the preceding one.  Lap the end 6” over
the preceding felt.  Mop the full width
under each layer with asphalt at the rate of 25 lbs. Per 100 square feet,
making sure that all edges are well sealed with the cap sheet uniformly set
without voids into the hot asphalt.

 

F.     Angle reinforcement:   

 

1.     Curbs and walls with metal counterflashing
apply one layer of Reinforced Base Flashing in the angle formed by the roof and
vertical surface.  Base flashing shall
be set in a solid bed of asphalt and nailed at 4” centers adjacent to the top
edge.

 

2.     Voids are not acceptable.  Rub materials into all angles.

 

3.     Coat any concrete surfaces with primer and
allow to dry.

 

4.     At low curbs, wrap flashing over top of
curb.  Extend down over cant area onto
roof surface at least 4”.

 

5.     At air conditioning housing curbs, which are
to receive roofing on top of housing, run flashing from at least 4” on roof
surface up cant area and over curb at least 4” and stagger felts, top felt
overlapping bottom felt by at least 4”.

 

G.    Sheet Metal:

 

All sheet metal which shall
have contact and be bonded to any roofing material shall be primed and allowed
to dry before applying roofing materials.

 

H.    Vent Pipe Flashing:

 

Metal roof jacks and other
metal flashing with metal deck flanges shall be removed, as necessary, prior to
the installation of new roofing. 
Contractor shall provide and install new jacks to replace those damaged
or otherwise deemed unserviceable. The new jacks, either new or existing shall
be installed as follows:  Install on top
of completed membrane.  The deck flange
shall be set in a solid bed of industrial roof cement (nailed if over a
nailable deck) and shall be covered with two collars of roofing felt.  Felts to extend 4’ and 6” beyond the outside
dimension of the deck flange and extend to the inside of the base of the
protrusion.  Felts to be set in a solid
be of industrial roof cement or hot asphalt.

 

7

 

I.      Cant Strip:

 

Provide new cant strip in
angles of roof deck and curbs where present cant strip is unserviceable or
non-existent.  Fit flush at ends and to
wall surface.  Secure to deck with
adhesive or hot asphalt.

 

J.     Nosing:

 

New galvanized metal nosing
shall be installed as necessary to the roof edge.  Side laps to be set in industrial roof cement.

 

K.    Pitch Pans:

 

New sheet metal pitch pans
shall be installed around all poles, brackets, pipe supports, and other items
which rest upon or are attached to the roof deck.  Pitch pans shall have dimensions at least 2” larger than the
dimensions of the pole, brackets, pipe supports, etc.  They shall have flanges not less than 3” wide which shall be set
on top of all roofing plies in a full bed of industrial roof cement.  The flange shall then be flashed with two
strips of felt set in hot asphalt.  The
top strip shall be wider than that below by at least 3” on all sides.  Pitch pans shall be filled about 1/3 full
with roof cement and the balance with asphalt. 
After the asphalt has cooled and settled, refill pitch pans with roof
cement and slope tops to the outside edge.

 

8

 

EXHIBIT D

COMMENCEMENT LETTER

(EXAMPLE)

 

	
  Date

  	
   

  
	
   

  	
   

  
	
  Tenant

  	
   

  
	
  Address

  	
   

  

 

 

Re:          Commencement Letter with respect to that
certain Lease dated as of
the                   day
of                   ,           ,
by and between CA-LAKE MARRIOTT BUSINESS PARK
LIMITED PARTNERSHIP, as Landlord, and SILICON VALLEY BANK, as Tenant, for
                  
rentable square feet on
the             floor
of the Building located
at                    .

 

Dear                       :

 

In accordance with the terms
and conditions of the above referenced Lease, Tenant accepts possession of the
Premises and agrees:

 

1.             The [Commencement Date/Building 5 Commencement Date] of
the Lease
is                                    ;

 

2.             The Termination Date of the Lease
is                       .

 

Please acknowledge your
acceptance of possession and agreement to the terms set forth above by signing
all 3 counterparts of this Commencement Letter in the space provided and
returning 2 fully executed counterparts to my attention.

 

	
  Sincerely,

  
	
   

  
	
   

  	
   

  
	
  Authorized Signatory

  
	
   

  
	
  Agreed and Accepted:

  

 

	
  Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

1

 

EXHIBIT E

 

BUILDING RULES AND REGULATIONS

 

The following rules and
regulations shall apply, where applicable, to the Premises, the Building, the
parking facilities (if any), the Property and the appurtenances.  In the event of a conflict between the
following rules and regulations and the remainder of the terms of the Lease,
the remainder of the terms of the Lease shall control.  Capitalized terms have the same meaning as
defined in the Lease.

 

1.             Sidewalks, doorways, vestibules, halls,
stairways and other similar areas outside the Premises shall not be obstructed
by Tenant or used by Tenant for any purpose other than ingress and egress to
and from the Premises.  No rubbish,
litter, trash, or material shall be placed, emptied, or thrown in those
areas.  At no time shall Tenant permit
Tenant’s employees to loiter in Common Areas or elsewhere about the Building or
Property.

 

2.             Plumbing fixtures and appliances shall be
used only for the purposes for which designed and no sweepings, rubbish, rags
or other unsuitable material shall be thrown or placed in the fixtures or
appliances.  Damage resulting to
fixtures or appliances by Tenant, its agents, employees or invitees shall be
paid for by Tenant and Landlord shall not be responsible for the damage.

 

3.             No signs, advertisements or notices shall be
painted or affixed to windows, doors or other parts of the Building, except
those of such color, size, style and in such places as are first approved in
writing by Landlord.  All tenant
identification and suite numbers at the entrance to the Premises shall be
installed by Landlord, at Tenant’s cost and expense, using the standard
graphics for the Building. Except in connection with the hanging of lightweight
pictures and wall decorations, no nails, hooks or screws shall be inserted into
any part of the Premises or Building except by the Building maintenance
personnel without Landlord’s prior approval, which approval shall not be
unreasonably withheld. 

 

4.             Intentionally omitted.

 

5.             Tenant shall not place any lock(s) on any
door in the Premises or Building without Landlord’s prior written consent,
which consent shall not be unreasonably withheld, and Landlord shall have the
right at all times to retain and use keys or other access codes or devices to
all locks within and into the Premises. 
A reasonable number of keys to the locks on the entry doors in the
Premises shall be furnished by Landlord to Tenant at Tenant’s cost.  All keys shall be returned to Landlord at
the expiration or early termination of the Lease.

 

6.             All contractors, contractor’s representatives
and installation technicians performing work in the Building shall be subject
to Landlord’s prior approval, which approval shall not be unreasonably
withheld, and shall be required to comply with Landlord’s standard rules,
regulations, policies and procedures, which may be revised from time to time. 

 

7.             Tenant shall assume all risk for damage to
articles moved and injury to any persons resulting from the activity.  If equipment, property, or personnel of
Landlord or of any other party is damaged or injured as a result of or in
connection with the activity, Tenant shall be solely liable for any resulting
damage, loss or injury.

 

8.             Landlord shall have the right to approve the
weight, size, or location of heavy equipment or articles in and about the
Premises, which approval shall not be unreasonably withheld.  Damage to the Building by the installation,
maintenance, operation, existence or removal of Tenant’s Property shall be
repaired at Tenant’s sole expense.

 

9.             Intentionally omitted.

 

10.           Tenant shall not:  (1) make or permit any improper, objectionable or unpleasant
noises or odors in the Building, or otherwise interfere in any way with other
tenants or persons having business with them; (2) solicit business or
distribute or cause to be distributed, in any portion of the Building,
handbills, promotional materials or other advertising; or (3) conduct or permit
other activities in the Building that might, in Landlord’s sole opinion,
constitute a nuisance.

 

11.           No animals, except those assisting
handicapped persons, shall be brought into the Building or kept in or about the
Premises.

 

12.           No inflammable, explosive or dangerous fluids
or substances shall be used or kept by Tenant in the Premises, Building or
about the Property, except for those substances as are typically found in
similar premises used for general office purposes and are being used by Tenant
in a safe manner and in accordance with all applicable Laws.  Tenant shall not, without Landlord’s prior
written consent, use, store, install, spill, remove, release or dispose of,
within or about the Premises or

 

1

 

any other portion of the
Property, any asbestos-containing materials or any solid, liquid or gaseous
material now or subsequently considered toxic or hazardous under the provisions
of 42 U.S.C. Section 9601 et seq. or any other applicable environmental Law
which may now or later be in effect. 
Tenant shall comply with all Laws pertaining to and governing the use of
these materials by Tenant and shall remain solely liable for the costs of
abatement and removal.

 

13.           Tenant shall not use or occupy the Premises
in any manner or for any purpose which might injure the reputation or impair the
present or future value of the Premises or the Building. Tenant shall not use,
or permit any part of the Premises to be used for lodging, sleeping or for any
illegal purpose.

 

14.           Tenant shall not take any action which would
violate Landlord’s labor contracts or which would cause a work stoppage,
picketing, labor disruption or dispute or interfere with Landlord’s or any
other tenant’s or occupant’s business or with the rights and privileges of any
person lawfully in the Building (“Labor
Disruption”).  Tenant shall
take the actions necessary to resolve the Labor Disruption, and shall have
pickets removed and, at the request of Landlord, immediately terminate any work
in the Premises that gave rise to the Labor Disruption, until Landlord gives
its written consent for the work to resume. 
Tenant shall have no claim for damages against Landlord or any of the
Landlord Related Parties nor shall the Commencement Date or the Building 5
Commencement Date be extended as a result of the above actions.

 

15.           Tenant shall not install, operate or maintain
in the Premises or in any other area of the Building, electrical equipment that
would overload the electrical system beyond its capacity for proper, efficient
and safe operation as determined solely by Landlord.  Tenant shall not furnish cooling or heating to the Premises,
including, without limitation, the use of electric or gas heating devices,
without Landlord’s prior written consent. 
Tenant shall not use more than its proportionate share of telephone
lines and other telecommunication facilities available to service the Building.

 

16.           Tenant shall not operate or permit to be
operated a coin or token operated vending machine or similar device (including,
without limitation, telephones, lockers, toilets, scales, amusement devices and
machines for sale of beverages, foods, candy, cigarettes and other goods),
except for machines for the exclusive use of Tenant’s employees and invitees.

 

17.           Bicycles and other vehicles are not permitted
inside the Building or on the walkways outside the Building, except in areas
designated by Landlord.

 

18.           Landlord may from time to time adopt systems
and procedures for the security and safety of the Building and the Property,
its occupants, entry, use and contents. 
Tenant, its agents, employees, contractors, guests and invitees shall
comply with Landlord’s systems and procedures.

 

19.           Landlord shall have the right to prohibit the
use of the name of the Building or any other publicity by Tenant that in
Landlord’s sole opinion may impair the reputation of the Building or its
desirability.  Upon written notice from
Landlord, Tenant shall refrain from and discontinue such publicity immediately.

 

20.           Neither Tenant nor its agents, employees,
contractors, guests or invitees shall smoke or permit smoking in the Common
Areas, unless a portion of the Common Areas have been declared a designated
smoking area by Landlord, nor shall the above parties allow smoke from the
Premises to emanate into the Common Areas or any other part of the Building.  Landlord shall have the right to designate
the Building (including the Premises) as a non-smoking building.

 

21.           Landlord shall have the right to designate
and approve standard window coverings for the Premises and to establish rules
to assure that the Building presents a uniform exterior appearance.  Tenant shall ensure, to the extent
reasonably practicable, that window coverings are closed on windows in the
Premises while they are exposed to the direct rays of the sun.

 

22.           Deliveries to and from the Premises shall be
made only at the times in the areas and through the entrances and exits
reasonably designated by Landlord. 
Tenant shall not make deliveries to or from the Premises in a manner
that might interfere with the use by any other tenant of its premises or of the
Common Areas, any pedestrian use, or any use which is inconsistent with good
business practice.

 

23.           Intentionally omitted.

 

2

 

EXHIBIT F

 

ADDITIONAL PROVISIONS

 

This Exhibit is attached to and made a part
of the Lease by and between CA-LAKE MARRIOTT
BUSINESS PARK LIMITED PARTNERSHIP (“Landlord”) and SILICON VALLEY BANK (“Tenant”) for space in
the Building located at 3001, 3003 and 3101 Tasman Drive, Santa Clara,
California.

 

1.             Asbestos Notification. 
Tenant acknowledges that Tenant has received the asbestos notification
letters attached to this Lease as Exhibits H
and H-1 hereto, disclosing the
existence of asbestos in the Building. 
As part of Tenant’s obligations under this Lease, Tenant agrees to
comply with the California “Connelly Act” and other applicable Laws, including
providing copies of Landlord’s asbestos notification letter to all of Tenant’s
“employees” and “owners”, as those terms are defined in the Connelly Act and
other applicable Laws.

 

2.             Letter of Credit.  

 

2.01         General Provisions. 
Concurrently with Tenant’s execution of this Lease, Tenant shall deliver
to Landlord, as collateral for the full performance by Tenant of all of its
obligations under this Lease and for all losses and damages Landlord may suffer
as a result of any default by Tenant under the Lease, including, but not
limited to, any post lease termination damages under section 1951.2 of the
California Civil Code, a standby, unconditional, irrevocable, transferable letter
of credit (the “Letter of Credit”)
in the form of Exhibit I to the
Lease and containing the terms required herein, in the face amount of $260,622.00 (the “Letter of Credit Amount”), naming Landlord
as beneficiary, issued (or confirmed) by a financial institution acceptable to
Landlord in Landlord’s sole discretion, permitting multiple and partial draws
thereon, and otherwise in form acceptable to Landlord in its sole
discretion.  Tenant shall cause the
Letter of Credit to be continuously maintained in effect (whether through
replacement, renewal or extension) in the Letter of Credit Amount through the
date (the “Final LC Expiration Date”)
that is 120 days after the scheduled expiration date of the Term or any renewal
Term.  If the Letter of Credit held by Landlord
expires earlier than the Final LC Expiration Date (whether by reason of a
stated expiration date or a notice of termination or non-renewal given by the
issuing bank), Tenant shall deliver a new Letter of Credit or certificate of
renewal or extension to Landlord not later than 30 days prior to the expiration
date of the Letter of Credit then held by Landlord.  Any renewal or replacement Letter of Credit shall comply with all
of the provisions of this Section 2, shall be irrevocable, transferable and shall
remain in effect (or be automatically renewable) through the Final LC
Expiration Date upon the same terms as the expiring Letter of Credit or such
other terms as may be acceptable to Landlord in its sole discretion.

 

2.02         Drawings under Letter of Credit. 
Landlord shall have the immediate right to draw upon the Letter of
Credit, in whole or in part, at any time and from time to time:  (i) If a Default occurs; or (ii) If the Letter
of Credit held by Landlord expires earlier than the Final LC Expiration Date
(whether by reason of a stated expiration date or a notice of termination or
non-renewal given by the issuing bank), and Tenant fails to deliver to
Landlord, at least 30 days prior to the expiration date of the Letter of Credit
then held by Landlord, a renewal or substitute Letter of Credit that is in
effect and that complies with the provisions of this Section 2.  In the event Landlord draws upon the Letter
of Credit pursuant to clause 2.02(ii) above, Landlord shall hold such cash as
collateral in accordance with the terms of the Lease for the performance of
Tenant’s obligations under the Lease No condition or term of this Lease shall
be deemed to render the Letter of Credit conditional to justify the issuer of
the Letter of Credit in failing to honor a drawing upon such Letter of Credit
in a timely manner.  Tenant hereby
acknowledges and agrees that Landlord is entering into this Lease in material
reliance upon the ability of Landlord to draw upon the Letter of Credit upon
the occurrence of any Default by Tenant under this Lease or upon the occurrence
of any of the other events described above in this Section 2.02.

 

2.03         Use of Proceeds by Landlord.  The
proceeds of the Letter of Credit shall constitute Landlord’s sole and separate
property (and not Tenant’s property or the property of Tenant’s bankruptcy
estate) and Landlord may immediately upon any draw (and without notice to
Tenant) apply or offset the proceeds of the Letter of Credit: (i)  against any Rent payable by Tenant under
this Lease that is not paid when due; (ii) against all losses and damages that
Landlord has suffered or that Landlord reasonably estimates that it may suffer
as a result of any Default by Tenant under this Lease, including any damages
arising under section 1951.2 of the California Civil Code following termination
of the Lease; (iii) against any costs incurred by Landlord in connection with
the Lease (including attorneys’ fees); and (iv) against any other amount that
Landlord may spend or become obligated to spend by reason of Tenant’s
Default.  Provided Tenant has performed
all of

 

1

 

its obligations under the
Lease, as the same may be amended from time to time, Landlord agrees to pay to
Tenant within 30 days after the Final LC Expiration Date the amount of any
proceeds of the Letter of Credit received by Landlord and not applied as
allowed above; provided, that if prior to the Final LC Expiration Date a
voluntary petition is filed by Tenant or any Guarantor, or an involuntary
petition is filed against Tenant or any Guarantor by any of Tenant’s or
Guarantor’s creditors, under the Federal Bankruptcy Code, then Landlord shall
not be obligated to make such payment in the amount of the unused Letter of
Credit proceeds until either all preference issues relating to payments under
this Lease have been resolved in such bankruptcy or reorganization case or such
bankruptcy or reorganization case has been dismissed, in each case pursuant to
a final court order not subject to appeal or any stay pending appeal.  In the event that following the Final LC
Expiration Date, Tenant has not performed all of its obligations under the
Lease, as amended, and Landlord is holding unapplied proceeds of the Letter of
Credit, Landlord shall apply such proceeds of the Letter of Credit to satisfy
such Tenant obligations in accordance with the terms of the Lease and, within
30 days the full satisfaction such obligations, Landlord shall deliver to
Tenant the remaining proceeds of the Letter of Credit received by Landlord and
not so applied.

 

2.04         Additional Covenants of
Tenant.  If, as result of any application or use by
Landlord of all or any part of the Letter of Credit, the amount of the Letter
of Credit shall be less than the Letter of Credit Amount, Tenant shall, within
5 days thereafter, provide Landlord with additional letter(s) of credit in an
amount equal to the deficiency (or a replacement letter of credit in the total
Letter of Credit Amount), and any such additional (or replacement) letter of
credit shall comply with all of the provisions of this Section 2.04, and if
Tenant fails to comply with the foregoing, notwithstanding anything to the
contrary contained in this Lease, the same shall constitute an uncurable
Default by Tenant.  Tenant further covenants
and warrants that it will neither assign nor encumber the Letter of Credit or
any part thereof and that neither Landlord nor its successors or assigns will
be bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.

 

2.05         Transfer of Letter of Credit. 
Landlord may, at any time and without notice to Tenant and without first
obtaining Tenant’s consent thereto, transfer all or any portion of its interest
in and to the Letter of Credit to another party, person or entity, including
Landlord’s mortgagee and/or to have the Letter of Credit reissued in the name
of Landlord’s Mortgagee.  If Landlord
transfers its interest in the Building and transfers the Letter of Credit (or
any proceeds thereof then held by Landlord) in whole or in part to the
transferee, Landlord shall, without any further agreement between the parties
hereto, thereupon be released by Tenant from all liability therefor. The
provisions hereof shall apply to every transfer or assignment of all or any
part of the Letter of Credit to a new landlord.  In connection with any such transfer of the Letter of Credit by
Landlord, Tenant shall, at Tenant’s sole cost and expense, execute and submit
to the issuer of the Letter of Credit such applications, documents and instruments
as may be necessary to effectuate such transfer. If the issuing bank of the
Letter of Credit approved by Landlord is Tenant, Tenant shall be responsible
for paying the issuer’s transfer and processing fees in connection with any
transfer of the Letter of Credit and, if Landlord advances any such fees
(without having any obligation to do so), Tenant shall reimburse Landlord for
any such transfer or processing fees within 10 days after Landlord’s written
request therefor.  If Tenant is not the
approved issuing bank for the Letter of Credit, Tenant shall be responsible for
paying the issuer’s transfer and processing fees in connection with the first
transfer of the Letter of Credit only (and landlord shall be liable for such
transfer fees in connection with all subsequent transfers) and, if Landlord
advances any such fees (without having any obligation to do so), Tenant shall
reimburse Landlord for any such transfer or processing fees within 10 days
after Landlord’s written request therefor. 

 

2.06         Intentionally Omitted.  

 

2.07         Nature of Letter of Credit. 
Landlord and Tenant (1) acknowledge and agree that in no event or
circumstance shall the Letter of Credit or any renewal thereof or substitute
therefor or any proceeds thereof (including the LC Proceeds Account) be deemed
to be or treated as a “security deposit” under any Law applicable to security
deposits in the commercial context including Section 1950.7 of the California
Civil Code, as such section now exist or as may be hereafter amended or succeeded” (“Security
Deposit Laws”), (2) acknowledge and agree that the Letter of Credit
(including any renewal thereof or substitute therefor or any proceeds thereof)
is not intended to serve as a security deposit, and the Security Deposit Laws
shall have no applicability or relevancy thereto, and (3) waive any and all
rights, duties and obligations either party may now or, in the future, will
have relating to or arising from the Security Deposit Laws.

 

2

 

Tenant hereby waives the
provisions of Section 1950.7 of the California Civil Code and all other
provisions of Law, now or hereafter in effect, which (i) establish the time
frame by which Landlord must refund a security deposit under a lease, and/or
(ii) provide that Landlord may claim from the Security Deposit only those sums
reasonably necessary to remedy defaults in the payment of rent, to repair
damage caused by Tenant or to clean the Premises, it being agreed that Landlord
may, in addition, claim those sums specified in this Section 2 above and/or
those sums reasonably necessary to compensate Landlord for any loss or damage
caused by Tenant’s breach of this Lease or the acts or omission of Tenant or
any other Tenant Related Parties, including any damages Landlord suffers
following termination of the Lease. 

 

3.             Renewal Options.

 

3.01         Grant of Option; Conditions. 
Tenant shall have the right to extend the Term (the “Renewal Option”) for two (2) additional
periods of five (5) years with the first such renewal period commencing on the
day following the Termination Date of the initial Term and ending on the fifth
(5th) anniversary of the Termination Date and the second such
renewal period commencing on the day following the expiration of the first
renewal period and ending on the fifth (5th) annual anniversary of
the expiration of the first renewal period (each a “Renewal Term”), if:

 

(i)            With respect to each such Renewal Option,
Landlord receives notice of exercise (“Initial
Renewal Notice”) not less than 9 full calendar months prior to the
expiration of the then-current Term and not more than 12 full calendar months
prior to the expiration of the then-current Term; and

 

(ii)           Tenant is not in material default under the
Lease beyond any applicable notice and cure periods at the time that Tenant
delivers its Initial Renewal Notice or at the time Tenant delivers its Binding
Notice (as defined below); and

 

(iii)          Less than 50% of the Premises (or the Partial
Premises Renewal Space (as defined in Section 3.07 below) if Tenant exercises a
Renewal Option with respect to the Partial Premises Renewal Space only) is
sublet (other than pursuant to a Permitted Transfer, as defined in Section 11
of the Lease) at the time that Tenant delivers its Initial Renewal Notice or at
the time Tenant delivers its Binding Notice; and

 

(iv)          The Lease has not been assigned by Tenant
(other than pursuant to a Permitted Transfer, as defined in Section 11 of the
Lease) prior to the date that Tenant delivers its Initial Renewal Notice or
prior to the date Tenant delivers its Binding Notice.

 

(v)           With respect to the second Renewal Option,
Tenant validly exercised its first Renewal Option.

 

3.02         Terms Applicable to Premises During Subject
Renewal Term. 

 

(i)            The initial Base Rent rate per rentable
square foot for the Premises (or the Partial Premises Renewal Space, as the
case may be) during a subject Renewal Term shall equal 95% of the Prevailing
Market (hereinafter defined) rate per rentable square foot for the Premises (or
the Partial Premises Renewal Space, as the case may be).  Base Rent during the subject Renewal Term
shall increase in accordance with the increases assumed in the determination of
Prevailing Market rate.  Base Rent
attributable to the Premises (or the Partial Premises Renewal Space, as the
case may be) shall be payable in monthly installments in accordance with the
terms and conditions of Article 4 of the Lease.

 

(ii)           Tenant shall pay Additional Rent (i.e. Taxes
and Expenses) for the Premises (or the Partial Premises Renewal Space, as the
case may be) during the subject Renewal Term in accordance with Article 4 of
and Exhibit B to the Lease, and the manner and method in which Tenant
reimburses Landlord for Tenant’s share of Taxes and Expenses, shall be some of
the factors considered in determining the Prevailing Market rate for the
subject Renewal Term.

 

3.03         Procedure for Determining Prevailing Market. 
Within 30 days after receipt of Tenant’s Initial Renewal Notice,
Landlord shall advise Tenant of the applicable Base Rent rate for the Premises
(or the Partial Premises Renewal Space, as the case may be) for the subject
Renewal Term.  Tenant, within 15 days
after the date on which Landlord advises Tenant of the applicable Base Rent
rate for the subject Renewal Term, shall either (i) give Landlord final binding
written notice (“Binding Notice”)
of Tenant’s exercise of the

 

3

 

subject Renewal Option, or
(ii) if Tenant disagrees with Landlord’s determination, provide Landlord with
written notice of rejection (the “Rejection
Notice”).  If Tenant fails to
provide Landlord with either a Binding Notice or Rejection Notice within such
15 day period, Tenant’s Renewal Option shall be null and void and of no further
force and effect.  If Tenant provides
Landlord with a Binding Notice, Landlord and Tenant shall enter into the
Renewal Amendment (as defined below) upon the terms and conditions set forth
herein.  If Tenant provides Landlord
with a Rejection Notice, Landlord and Tenant shall work together in good faith
to agree upon the Prevailing Market rate for the Premises (or the Partial
Premises Renewal Space, as the case may be) during the Renewal Term.  Upon agreement, Landlord and Tenant shall
enter into the Renewal Amendment in accordance with the terms and conditions
hereof.  Notwithstanding the foregoing,
if Landlord and Tenant fail to agree upon the Prevailing Market rate within 30
days after the date Tenant provides Landlord with the Rejection Notice, Tenant,
by written notice to Landlord (the “Arbitration
Notice”) within 5 days after the expiration of such 30 day period,
shall have the right to have the Prevailing Market rate determined in
accordance with the arbitration procedures described in Section 3.04
below.  If Landlord and Tenant fail to
agree upon the Prevailing Market rate within the 30 day period described and
Tenant fails to timely exercise its right to arbitrate, Tenant’s Renewal Option
shall be deemed to be null and void and of no further force and effect.

 

3.04         Arbitration Procedure.  

 

(i)            If Tenant provides Landlord with an
Arbitration Notice, Landlord and Tenant, within 5 days after the date of the
Arbitration Notice, shall each simultaneously submit to the other, in a sealed
envelope, its good faith estimate of the Prevailing Market rate for the
Premises during the Renewal Term (collectively referred to as the “Estimates”).  If the higher of such Estimates is not more than 105% of the
lower of such Estimates, then Prevailing Market rate shall be the average of
the two Estimates.  If the Prevailing
Market rate is not resolved by the exchange of Estimates, then, within 7 days
after the exchange of Estimates, Landlord and Tenant shall each select an
appraiser to determine which of the two Estimates most closely reflects the
Prevailing Market rate for the Premises during the Renewal Term.  Each appraiser so selected shall be
certified as an MAI appraiser or as an ASA appraiser and shall have had at
least 5 years experience within the previous 10 years as a real estate
appraiser working in Santa Clara, California, with working knowledge of current
rental rates and practices.  For
purposes hereof, an “MAI” appraiser means an individual who holds an MAI
designation conferred by, and is an independent member of, the American
Institute of Real Estate Appraisers (or its successor organization, or in the
event there is no successor organization, the organization and designation most
similar), and an “ASA” appraiser means an individual who holds the Senior
Member designation conferred by, and is an independent member of, the American
Society of Appraisers (or its successor organization, or, in the event there is
no successor organization, the organization and designation most similar).  

 

(ii)           Upon selection, Landlord’s and Tenant’s
appraisers shall work together in good faith to agree upon which of the two
Estimates most closely reflects the Prevailing Market rate for the Premises (or
the Partial Premises Renewal Space, as the case may be).  The Estimate chosen by such appraisers shall
be binding on both Landlord and Tenant as the Base Rent rate for the Premises
during the Renewal Term.  If
either Landlord or Tenant fails to appoint an appraiser within the 7 day period
referred to above, the appraiser appointed by the other party shall be the sole
appraiser for the purposes hereof.  If
the two appraisers cannot agree upon which of the two Estimates most closely
reflects the Prevailing Market within 20 days after their appointment, then,
within 10 days after the expiration of such 20 day period, the two appraisers
shall select a third appraiser meeting the aforementioned criteria.  Once the third appraiser (i.e. arbitrator)
has been selected as provided for above, then, as soon thereafter as
practicable but in any case within 14 days, the arbitrator shall make his
determination of which of the two Estimates most closely reflects the
Prevailing Market rate and such Estimate shall be binding on both Landlord and
Tenant as the Base Rent rate for the Premises (or the Partial Premises Renewal
Space, as the case may be).  If the
arbitrator believes that expert advice would materially assist him, he may
retain one or more qualified persons to provide such expert advice.  The parties shall share equally in the costs
of the arbitrator and of any experts retained by the arbitrator.  Any fees of any appraiser, counsel or
experts engaged directly by Landlord or Tenant, however, shall be borne by the
party retaining such appraiser, counsel or expert. 

 

(iii)          If the Prevailing Market rate has not been
determined by the commencement date

 

4

 

of the Renewal Term, Tenant
shall pay Base Rent upon the terms and conditions in effect during the last
month of the initial Term for the Premises (or, if Tenant exercised the first
Renewal Option for the Partial Premises Renewal Space only, then, with respect
to the second Renewal Option only, during the last month of the Renewal Term
for the Partial Premises Renewal Space) until such time as the Prevailing
Market rate has been determined.  Upon
such determination, the Base Rent for the Premises (or the Partial Premises
Renewal Space, as the case may be) shall be retroactively adjusted to the
commencement of the Renewal Term for the Premises (or the Partial Premises
Renewal Space, as the case may be).  If
such adjustment results in an underpayment of Base Rent by Tenant, Tenant shall
pay Landlord the amount of such underpayment within 30 days after the
determination thereof.  If such
adjustment results in an overpayment of Base Rent by Tenant, Landlord shall
credit such overpayment against the next installment of Base Rent due under the
Lease and, to the extent necessary, any subsequent installments, until the
entire amount of such overpayment has been credited against Base Rent.

 

3.05         Renewal Amendment.  If
Tenant is entitled to and properly exercises a Renewal Option hereunder,
Landlord shall prepare an amendment (the “Renewal
Amendment”) to reflect changes in the Base Rent, Term, Termination
Date and other appropriate terms.  The
Renewal Amendment shall be sent to Tenant within a reasonable time after
receipt of the Binding Notice and Tenant shall execute and return the Renewal
Amendment to Landlord within 15 days after Tenant’s receipt of same, but, upon
final determination of the Prevailing Market rate applicable during the Renewal
Term as described herein, an otherwise valid exercise of the Renewal Option
shall be fully effective whether or not the Renewal Amendment is executed.

 

3.06         Definition of Prevailing Market.  For
purposes of this Renewal Option, “Prevailing
Market” shall mean the arms length fair market annual rental rate
per rentable square foot under renewal leases and amendments entered into on or
about the date on which the Prevailing Market is being determined hereunder for
space comparable to the Premises (or the Partial Premises Renewal Space, as the
case may be) in the Building and office buildings comparable to the Building in
the Santa Clara, California area.  The
determination of Prevailing Market shall take into account any material
economic differences between the terms of this Lease and any comparison lease
or amendment, such as rent abatements, construction costs and other concessions
and the manner, if any, in which the landlord under any such lease is
reimbursed for operating expenses and taxes. 
The determination of Prevailing Market shall also take into
consideration any reasonably anticipated changes in the Prevailing Market rate
from the time such Prevailing Market rate is being determined and the time such
Prevailing Market rate will become effective under this Lease.

 

3.07         Partial Premises Renewal.  The
valid exercise by Tenant of a Renewal Option shall be irrevocable and, at
Tenant’s discretion, and otherwise pursuant to the terms hereof, shall cover
either: (X) all of the Premises, or (Y) Building 5 and Building 6 only (for
purposes of this Section 3.07, Building 5 and Building 6 shall sometimes be
referred to herein as the “Partial Premises
Renewal Space”).  Tenant’s
Initial Renewal Notice shall indicate with particularity whether Tenant elects
to exercise a Renewal Option for the Premises or the Partial Premises Renewal
Space.  With respect to Tenant’s first
Renewal Option to occur, in the event Tenant elects to exercise such Renewal
Option with respect to the Partial Premises Renewal Space only, Tenant’s
remaining Renewal Option, to the extent Tenant is entitled to exercise the
same, shall apply only to the Partial Premises Renewal Space and Tenant shall
be deemed to have waived any of its rights with respect to Building 7.  In the event that Tenant exercises any
Renewal Option for the Partial Premises Renewal Space only, Tenant shall be
liable for the removal of the Bridge (as defined in Section 4.02 of this Exhibit F).  Accordingly, in such event, the Bridge shall be deemed a Required
Removable.  Tenant shall remove the
Bridge prior to the expiration of the Term with respect to Building 7 in
accordance with the terms of the Lease and repair damage caused by the installation
or removal of the Bridge.  If Tenant
fails to perform such obligation in a timely manner and/or otherwise in
accordance with the terms of the Lease and this Section 3.07, Landlord may
perform such work at Tenant’s expense, plus a 3% administrative fee and Tenant
shall pay such amounts upon demand by Landlord.  In the event that Tenant’s Initial Renewal Notice does not so
indicate the foregoing, Tenant shall be deemed to have exercised the subject
Renewal Option for the entire Premises.

 

4.             Acceleration Option.

 

4.01         Tenant shall have the right to accelerate the
Termination Date (“Acceleration Option”)
of the Lease with respect to Building 7 only as follows: either (i) from
September 30, 2014 to

 

5

 

September 30, 2009 (the “First Accelerated Termination Date”) or
(ii) from September 30, 2014 to September 30, 2010 (the “Second Accelerated Termination Date”) and
with respect to the foregoing, only if:

 

1.             Tenant is not in material default under the
Lease (after expiration of applicable notice and cure periods) at the date
Tenant provides Landlord with an Acceleration Notice (hereinafter defined); and

 

2.             no part of Building 7 is sublet for a term
extending past the subject Accelerated Termination Date; and

 

3.             the Lease has not been assigned by Tenant
other than pursuant to a Permitted Transfer, as defined in Section 11 of the
Lease; and

 

4.             Landlord receives notice of acceleration
(“Acceleration Notice”) not less than 270 days prior to the subject Accelerated
Termination Date.

 

The First Accelerated
Termination Date and the Second Accelerated Termination Date each is sometimes
referred to herein as the “Accelerated
Termination Date” and are applicable in the context of such
references.

 

4.02         If Tenant exercises the First Acceleration
Option, Tenant, simultaneously with delivery of the Acceleration Notice shall
pay to Landlord the sum of $1,254,654.00  (the
“First Acceleration Fee”) as a fee
in connection with the earliest acceleration of the Termination Date and not as
a penalty.  Alternatively, if Tenant
exercises the Second Acceleration Option, Tenant, simultaneously with delivery
of the Acceleration Notice shall pay to Landlord the sum of $1,042,065.00  (the “Second
Acceleration Fee”) as a fee in connection with the later
acceleration of the Termination Date and not as a penalty.  In addition to the foregoing, Tenant shall
remain liable for all Base Rent, Additional Rent and other sums due under the
Lease up to and including the applicable Accelerated Termination Date even
though billings for such may occur subsequent to the Accelerated Termination
Date.  The “unamortized portion” of any
of the foregoing shall be determined using an interest rate of 8% per annum. 
The First Acceleration Fee and the Second Acceleration Fee each are
sometimes referred to herein as the “Acceleration
Fee” and are applicable in the context of such references.

 

In the event that Tenant so
exercises the Acceleration Option as provided herein, Tenant shall be liable
for the removal of the bridge existing as of the date of this Lease which
bridge connects Building 6 and Building 7 (the “Bridge”).  Accordingly,
in such event, the Bridge shall be deemed a Required Removable.  Tenant shall remove the Bridge prior to the
subject Accelerated Termination Date in accordance with the terms of the Lease
and repair damage caused by the installation or removal of the Bridge.  If Tenant fails to perform such obligation
in a timely manner and/or otherwise in accordance with the terms of the Lease
and this Section 4, Landlord may perform such work at Tenant’s expense, plus a
3% administrative fee and Tenant shall pay such amounts upon demand by
Landlord.

 

6

 

4.03         If Tenant, subsequent to providing Landlord
with an Acceleration Notice, defaults in any of the provisions of this Lease
(including, without limitation, a failure to pay the applicable Acceleration
Fee due hereunder), Landlord, at its option, may (i) declare Tenant’s exercise
of the Acceleration Option to be null and void, and any Acceleration Fee paid
to Landlord shall be returned to Tenant, after first applying such Acceleration
Fee against any past due Rent under the Lease (and in such event, if the
Acceleration Option so exercised would otherwise trigger the First Accelerated
Termination Date, the Acceleration Option granted herein with respect to the
Second Accelerated Termination Date shall be automatically deemed null and void
and of no further force or effect), or (ii) continue to honor Tenant’s exercise
of its Acceleration Option, in which case, Tenant shall remain liable for the
payment of the subject Acceleration Fee and for all Base Rent, Additional Rent
and other sums due under the Lease up to and including the subject Accelerated
Termination Date even though billings for such may occur subsequent to such
Accelerated Termination Date.  

 

4.04         As of the date Tenant provides Landlord with
an Acceleration Notice, any unexercised rights or options of Tenant to renew
the Term of the Lease or to expand the Premises (whether expansion options,
rights of first or second refusal, rights of first or second offer, or other
similar rights), and any outstanding tenant improvement allowance not claimed
and properly utilized by Tenant in accordance with the Lease as of such date,
shall immediately be deemed terminated with respect to Building 7 only and no
longer available or of any further force or effect with respect to Building 7
only.

 

5.             Right of First Offer.

 

5.01         Grant of Option; Conditions. 
Tenant shall have the continuing right of first offer (the “Right of First Offer”) with respect to any
available and vacated rentable space in the Lake Marriott Business Park (so
long as Landlord or its affiliate owns the subject building at the Property)
(the “Offering Space”).  Tenant’s Right of First Offer shall be
exercised as follows: at any time after Landlord has determined that the
existing tenant in a portion of the Offering Space will not extend or renew the
term of its lease for the Offering Space (but prior to leasing such Offering
Space to a party other than the existing tenant), Landlord shall advise Tenant
(the “Advice”) of the terms under
which Landlord is prepared to lease the subject Offering Space to Tenant for
the remainder of the Term, which terms shall reflect the Prevailing Market (hereinafter
defined) rate for such Offering Space as reasonably determined by
Landlord.  Tenant may lease such
Offering Space in its entirety only, under such terms, by delivering written
notice of exercise to Landlord (the “Notice
of Exercise”) within 5 Business Days after the date of the Advice,
except that Tenant shall have no such Right of First Offer and Landlord need
not provide Tenant with an Advice, if:

 

1.             Tenant is in material default under the Lease
beyond any applicable notice and cure periods at the time that Landlord would
otherwise deliver the Advice; or

 

2.             50% or more of the Premises, or any portion
thereof, is sublet (other than pursuant to a Permitted Transfer) at the time
Landlord would otherwise deliver the Advice; or

 

3.             the Lease has been assigned by Tenant (other
than pursuant to a Permitted Transfer) prior to the date Landlord would
otherwise deliver the Advice; or

 

4.             Tenant is not occupying the Premises on the
date Landlord would otherwise deliver the Advice; or

 

5.             the Offering Space is not intended for the
exclusive use of Tenant and/or any Permitted Transferee during the Term; or

 

6.             the existing tenant in the Offering Space is
interested in extending or renewing its lease for the Offering Space or
entering into a new lease for such Offering Space and subsequently extends and
leases such Offering Space.

 

7

 

5.02         Terms for Offering Space.

 

1.             The term for the subject Offering Space shall
commence upon the commencement date stated in the applicable Advice and
thereupon such Offering Space shall be considered a part of the Premises,
provided that all of the terms stated in the Advice shall govern Tenant’s
leasing of the Offering Space and only to the extent that they do not conflict
with the Advice, the terms and conditions of this Lease shall apply to the
subject Offering Space.  

 

2.             Tenant shall pay Base Rent and Additional
Rent for the Offering Space in accordance with the terms and conditions of the
Advice, which terms and conditions shall reflect the Prevailing Market rate for
the Offering Space as determined in Landlord’s reasonable judgment.

 

3.             The Offering Space (including improvements
and personalty, if any) shall be accepted by Tenant in its condition and
as-built configuration existing on the earlier of the date Tenant takes
possession of the subject Offering Space or as of the date the term for such
Offering Space commences, unless the Advice specifies any work to be performed
by Landlord in the subject Offering Space, in which case Landlord shall perform
such work in the subject Offering Space. 
If Landlord is delayed delivering possession of the subject Offering
Space due to the holdover or unlawful possession of such space by any party,
Landlord shall use reasonable efforts to obtain possession of the space, and
the commencement of the term for the subject Offering Space shall be postponed
until the date Landlord delivers possession of the subject Offering Space to
Tenant free from occupancy by any party.

 

5.03         Termination of Right of First Offer.  The
rights of Tenant hereunder with respect to the Offering Space shall terminate
nine (9) full calendar prior to the expiration of the Term of this Lease or, if
the Term is extended in accordance with Article 3 of this Exhibit F, the last occurring Renewal Term.

 

5.04         Offering Amendment.  If
Tenant exercises its Right of First Offer, Landlord shall prepare an amendment
(the “Offering Amendment”) adding
the subject Offering Space to the Premises on the terms set forth in the Advice
and reflecting the changes in the Base Rent, Rentable Square Footage of the
Premises, Tenant’s Pro Rata Share and other appropriate terms.  A copy of the Offering Amendment shall be
sent to Tenant within a reasonable time after Landlord’s receipt of the Notice
of Exercise executed by Tenant, and Tenant shall execute and return the
Offering Amendment to Landlord within 15 days thereafter, but an otherwise
valid exercise of the Right of First Offer shall be fully effective whether or
not the Offering Amendment is executed.

 

5.05         Definition of Prevailing Market.  For
purposes of this Right of First Offer provision, “Prevailing Market” shall mean
the annual rental rate per square foot for space comparable to the Offering
Space in the Building and buildings comparable to the Building in the Santa
Clara area under leases and renewal and expansion amendments being entered into
at or about the time that Prevailing Market is being determined, giving
appropriate consideration to tenant concessions, brokerage commissions, tenant
improvement allowances, existing improvements in the space in question, and the
method of allocating operating expenses and taxes.  

 

6.             Contingency. 
This Lease specifically is contingent upon the termination of that
certain lease dated April 28, 1989 by and between Landlord’s predecessor in
interest, WRC properties, Inc. and Hitachi Computer Products (America), Inc., a
Delaware corporation relating to Building 5 and to premises located at 3052
Bunker Hill Lane, Santa Clara, California (as amended, the “Hitachi Lease”).  Landlord currently is negotiating the terms of an agreement with
Hitachi to terminate the Hitachi Lease with respect to Building 5 only (the “Hitachi Lease Termination Agreement”).  If Landlord fails to enter into the Hitachi
Lease Termination Agreement with Hitachi on or before 30 days following the
date this Lease, executed by Tenant, together with all prepaid rental and
security deposits required hereunder, if any, delivered to Landlord, then
Landlord and Tenant may each terminate this Lease by providing written notice
thereof to the other party prior to the date the Hitachi Lease Termination
Agreement is executed by Hitachi.

 

8

 

EXHIBIT G

 

PARKING AGREEMENT

 

This Exhibit (the “Parking Agreement”) is attached to and made
a part of the Lease by and between CA-LAKE
MARRIOTT BUSINESS PARK LIMITED PARTNERSHIP (“Landlord”) and SILICON VALLEY BANK (“Tenant”) for space in
the Building located at 3001, 3003 and 3101 Tasman Drive, Santa Clara,
California.

 

1.             The capitalized terms used in this Parking
Agreement shall have the same definitions as set forth in the Lease to the
extent that such capitalized terms are defined therein and not redefined in
this Parking Agreement.  In the event of
any conflict between the Lease and this Parking Agreement, the latter shall
control.

 

2.             During the initial Term, Tenant agrees to
lease from Landlord and Landlord agrees to lease to Tenant a total of 855 non-reserved parking spaces in the
parking facility servicing the Building (“Parking
Facility”). 

 

3.             Tenant shall at all times comply with all
applicable ordinances, rules, regulations, codes, laws, statutes and
requirements of all federal, state, county and municipal governmental bodies or
their subdivisions respecting the use of the Parking Facility.  Landlord reserves the right to adopt, modify
and enforce reasonable rules (“Rules”)
governing the use of the Parking Facility from time to time including any
key-card, sticker or other identification or entrance system and hours of
operation.  The Rules set forth herein
are currently in effect.  Landlord may
refuse to permit any person who violates such Rules to park in the Parking Facility,
and any violation of the Rules shall subject the car to removal from the
Parking Facility.  

 

4.             Unless specified to the contrary above, the
parking spaces hereunder shall be provided on a non-designated “first-come,
first-served” basis.  Tenant
acknowledges that Landlord has no liability for claims arising through acts or
omissions of any independent operator of the Parking Facility.  Except to the extent caused by the gross
negligence or willful misconduct of Landlord, Landlord shall have no liability
whatsoever for any damage to items located in the Parking Facility, nor for any
personal injuries or death arising out of any matter relating to the Parking
Facility, and in all events, Tenant agrees to look first to its insurance
carrier and to require that Tenant’s employees look first to their respective
insurance carriers for payment of any losses sustained in connection with any
use of the Parking Facility.  Tenant
hereby waives on behalf of its insurance carriers all rights of subrogation
against Landlord or Landlord’s agents. 
Landlord reserves the right to assign specific parking spaces, and to
reserve parking spaces for visitors, small cars, handicapped persons and for
other tenants, guests of tenants or other parties, which assignment and
reservation or spaces may be relocated as determined by Landlord from time to
time, and Tenant and persons designated by Tenant hereunder shall not park in
any location designated for such assigned or reserved parking spaces.  Tenant acknowledges that the Parking
Facility may be closed entirely or in part in order to make repairs or perform
maintenance services, or to alter, modify, re-stripe or renovate the Parking
Facility, or if required by casualty, strike, condemnation, act of God,
governmental law or requirement or other reason beyond the operator’s
reasonable control.  

 

5.             If Tenant shall default under this Parking
Agreement, the operator shall have the right to remove from the Parking
Facility any vehicles hereunder which shall have been involved or shall have
been owned or driven by parties involved in causing such default, without
liability therefor whatsoever.  In
addition, if Tenant shall default under a material term of this Parking
Agreement, Landlord shall have the right to cancel this Parking Agreement on 15
days’ written notice, provided that Landlord shall not cancel this Parking
Agreement if:  (1) Tenant commences to
cure the default within 10 days of Landlord’s notice to Tenant, and (2) Tenant
diligently and consistently pursues a course of action that will cure the
default and bring Tenant back into compliance with this Paring Agreement.  If Tenant defaults with respect to Rules
(iii), (iv), (v), (vi) or (viii) each stated below on more than 3 occasions
during any 12 month period, and Landlord notifies Tenant thereof promptly after
each such default, the next default of such term or condition during the
succeeding 12 month period, shall, at Landlord’s election, constitute an
incurable default under this Parking Agreement.  Such cancellation right shall be cumulative and in addition to
any other rights or remedies available to Landlord at law or equity with
respect to this Parking Agreement.  

 

RULES

 

(i)            Subject to any access systems, procedures or
rules and regulations as Landlord may reasonably impose, Tenant shall have
access to the Parking Facility on a 24-hour basis, 7 days a week, subject to
the other terms of this Parking Agreement. 
Tenant shall not store or permit its employees to store any automobiles
in the Parking Facility without the prior written consent of the operator.  Except for emergency repairs, Tenant and its
employees shall not perform any work on any automobiles while located in the
Parking Facility, or on

 

1

 

the Property.  If it is necessary for Tenant or its
employees to leave an automobile in the Parking Facility overnight, Tenant
shall provide the operator with prior notice thereof designating the license
plate number and model of such automobile. 

 

(ii)           Cars must be parked entirely within the stall
lines painted on the floor, and only small cars may be parked in areas reserved
for small cars.

 

(iii)          All directional signs and arrows must be
observed.

 

(iv)          The speed limit shall be 5 miles per hour.

 

(v)           Parking spaces reserved for handicapped
persons must be used only by vehicles properly designated.

 

(vi)          Parking is prohibited in all areas not
expressly designated for parking, including without limitation:

 

(a)           Areas not striped for parking

(b)           aisles

(c)           where “no parking” signs are posted

(d)           ramps

(e)           loading zones

 

(vii)         Parking stickers, key cards or any other
devices or forms of identification or entry supplied by the operator shall
remain the property of the operator. 
Such device must be displayed as requested and may not be mutilated in
any manner.  The serial number of the
parking identification device may not be obliterated.  Parking passes and devices are not transferable and any pass or
device in the possession of an unauthorized holder will be void.

 

(viii)        Intentionally omitted.

 

(ix)           Parking Facility managers or attendants are
not authorized to make or allow any exceptions to these Rules.

 

(x)            Every parker is required to park and lock
his/her own car.

 

(xi)           Loss or theft of parking pass,
identification, key cards or other such devices must be reported to Landlord
and to the Parking Facility manager immediately.  Any parking devices reported lost or stolen found on any
authorized car will be confiscated and the illegal holder will be subject to
prosecution.  Lost or stolen passes and
devices found by Tenant or its employees must be reported to the office of the
Parking Facility immediately.

 

(xii)          Washing, waxing, cleaning or servicing of any
vehicle by the customer and/or his agents is prohibited.  Parking spaces may be used only for parking
automobiles.

 

(xiii)         Tenant agrees to acquaint all persons to whom
Tenant assigns a parking space with these Rules.

 

6.             TENANT ACKNOWLEDGES AND AGREES THAT, TO THE
FULLEST EXTENT PERMITTED BY LAW, LANDLORD SHALL NOT BE RESPONSIBLE FOR ANY LOSS
OR DAMAGE TO TENANT OR TENANT’S PROPERTY (INCLUDING, WITHOUT LIMITATIONS, ANY
LOSS OR DAMAGE TO TENANT’S AUTOMOBILE OR THE CONTENTS THEREOF DUE TO THEFT,
VANDALISM OR ACCIDENT) ARISING FROM OR RELATED TO TENANT’S USE OF THE PARKING
FACILITY OR EXERCISE OF ANY RIGHTS UNDER THIS PARKING AGREEMENT, WHETHER OR NOT
SUCH LOSS OR DAMAGE RESULTS FROM LANDLORD’S ACTIVE NEGLIGENCE OR NEGLIGENT
OMISSION.  THE LIMITATION ON LANDLORD’S
LIABILITY UNDER THE PRECEDING SENTENCE SHALL NOT APPLY HOWEVER TO LOSS OR
DAMAGE ARISING DIRECTLY FROM LANDLORD’S WILLFUL MISCONDUCT OR LANDLORD’S GROSS
NEGLIGENCE.

 

7.             Without limiting the provisions of Paragraph
6 above, Tenant hereby voluntarily releases, discharges, waives and
relinquishes any and all actions or causes of action for personal injury or
property damage occurring to Tenant arising as a result of parking in the
Parking Facility, or any activities incidental thereto, wherever or however the
same may occur, and further agrees that Tenant will not prosecute any claim for
personal injury or property damage against Landlord or any of its officers,
agents, servants or employees for any said causes of action.  It is the intention of Tenant by this
instrument, to exempt and relieve Landlord from liability for personal injury
or property damage caused by negligence.

 

2

 

8.             The provisions of Section 20 of the Lease are
hereby incorporated by reference as if fully recited.

 

Tenant acknowledges that
Tenant has read the provisions of this Parking Agreement, has been fully and
completely advised of the potential dangers incidental to parking in the
Parking Facility and is fully aware of the legal consequences of agreeing to
this instrument.  

 

3

 

EXHIBIT H

 

ASBESTOS NOTIFICATION

FOR

LAKE MARRIOTT BUILDING 5

AT

3101 TASMAN DRIVE, SANTA CLARA, CALIFORNIA

 

This Exhibit is attached to and made a part
of the Lease by and between CA-LAKE MARRIOTT
BUSINESS PARK LIMITED PARTNERSHIP (“Landlord”) and SILICON VALLEY BANK (“Tenant”) for space in
the Building located at 3101 Tasman Drive, Santa Clara, California. 

 

[In the following, “we” refers to Landlord,
and “our” refers to “Landlord’s”; and “you” refers to “Tenant”; and the
“Building” or “building” refers to the Building, as defined in this Lease to
which this Exhibit H is attached.]

 

Asbestos, because of its insulating and
fire-resistant properties, was historically used in some construction
materials.  California’s Connelly Act,
as well as federal OSHA and some other California rules, now require building
owners and landlords to make certain notifications regarding known
asbestos-containing materials (“ACM”) and presumed ACMs (“PACM”).  PACM consists of certain older construction
materials which commonly contained asbestos. 
This notification is designed to provide you with the required ACM and
PACM notifications.

 

ACM:        Landlord’s asbestos survey(s) for the
building at 3101 Tasman Drive note the presence, location and quantity of ACM
in the building as follows:

 

•          Roof: 
black roofing mastic, 400 sq. ft., 5% asbestos.

 

PACM:      PACM consists of certain construction
materials located in buildings constructed prior to 1981.  This building was not constructed prior to
1981.

 

Because of the presence of  ACM  in
the building, we are providing you with the following warning, which is
commonly known as a California Proposition 65 warning:

 

WARNING:  This
building contains asbestos, a chemical known to the state of California to
cause cancer.

 

In addition, you should be aware that there
are certain potential health risks that may result from exposure to
asbestos.  Because we are not
physicians, scientists or industrial hygienists, we have no special knowledge
of the health impact of exposure to asbestos. 
However, we hired an environmental consulting firm to prepare an asbestos
Operations and Maintenance Plan (“O&M Plan”) to address asbestos matters at
the building.  The O&M Plan is
designed to minimize the potential for a release of asbestos fibers and
outlines a schedule of actions to be undertaken with respect to asbestos.  A copy of the written O&M Plan is located
in our Building Management Office and, upon your request, will be made
available for you to review and copy during regular business hours.

 

In general, the written O&M Plan
describes the risks associated with asbestos exposure and how to prevent such
exposure.  The O&M Plan describes
those risks as follows:  asbestos is not
a significant health concern unless asbestos fibers are released and
inhaled.  If inhaled, asbestos fibers
can accumulate in the lungs and, as exposure increases, the risk of disease
(such as asbestosis and cancer) increases. 
However, measures to minimize exposure and consequently minimize the
accumulation of fibers, reduces the risk of adverse health effects.

 

The O&M Plan is designed to safely manage
the ACM and PACM in the building and to avoid the inadvertent disturbance of
such ACM or PACM.  To that end, the
O&M Plan provides for the training of building housekeeping and maintenance
personnel so that they can conduct their work without causing a release of
asbestos fibers.  As part of the O&M
Plan, we maintain records of all asbestos-related activities and the results of
any asbestos survey, sampling or monitoring conducted in the building.

 

The written O&M Plan describes a number
of activities which should be avoided in order to prevent a release of asbestos
fibers in the building.  In particular,
you should be aware that some of the activities which may present a health risk
by causing an airborne release of asbestos fibers include moving, drilling,
boring or otherwise disturbing ACM or PACM. 
Consequently, such activities should not be attempted by any person not
qualified to handle ACM or PACM.  In
other words, you must obtain the approval of building management prior to
engaging in any such activities.  Please
contact the Building Manager for more information in this regard.  In addition, please contact the Building
Manager if you notice any deterioration or disturbance of ACM or PACM.  Also, note that the identification of ACM
and PACM in this notification is based on actual knowledge and assumptions that
the law requires us to

 

4

 

make. 
Such materials do not necessarily comprise all asbestos in the building.

 

Tenant may have certain obligations under
California and federal laws with regard to the ACM and PACM in the building,
including obligations to notify your own employees, contractors, subtenants,
agents and others of the presence of ACM and PACM.  Tenant is solely responsible for complying with all such
applicable laws. 

 

5

 

EXHIBIT H - 1

 

ASBESTOS NOTIFICATION

FOR

LAKE MARRIOTT BUILDING 7

AT

3001 TASMAN DRIVE, SANTA CLARA, CALIFORNIA

 

This Exhibit is attached to and made a part
of the Lease by and between CA-LAKE MARRIOTT
BUSINESS PARK LIMITED PARTNERSHIP (“Landlord”) and SILICON VALLEY BANK (“Tenant”) for space in
the Building located at 3001 Tasman Drive, Santa Clara, California. 

 

[In the following, “we” refers to Landlord,
and “our” refers to “Landlord’s”; and “you” refers to “Tenant”; and the
“Building” or “building” refers to the Building, as defined in this Lease to
which this Exhibit H is attached.]

 

Asbestos, because of its insulating and
fire-resistant properties, was historically used in some construction
materials.  California’s Connelly Act,
as well as federal OSHA and some other California rules, now require building
owners and landlords to make certain notifications regarding known asbestos-containing
materials (“ACM”) and presumed ACMs (“PACM”). 
PACM consists of certain older construction materials which commonly
contained asbestos.  This notification
is designed to provide you with the required ACM and PACM notifications.

 

ACM:        Landlord’s asbestos survey(s) for the
building at 3001 Tasman Drive note the presence, location and quantity of ACM
in the building as follows:

 

•          Roof: 
Black roofing mastic, 400 sq. ft., 15 % asbestos; gray roofing mastic,
320 sq. ft., 20 % asbestos; and white sheet metal duct putty, 60 sq. ft., 5% asbestos.

 

PACM:      PACM consists of certain construction
materials located in buildings constructed prior to 1981.  This building was not constructed prior to
1981.

 

Because of the presence of  ACM  in
the building, we are providing you with the following warning, which is
commonly known as a California Proposition 65 warning:

 

WARNING:  This
building contains asbestos, a chemical known to the state of California to
cause cancer.

 

In addition, you should be aware that there
are certain potential health risks that may result from exposure to
asbestos.  Because we are not
physicians, scientists or industrial hygienists, we have no special knowledge
of the health impact of exposure to asbestos. 
However, we hired an environmental consulting firm to prepare an asbestos
Operations and Maintenance Plan (“O&M Plan”) to address asbestos matters at
the building.  The O&M Plan is
designed to minimize the potential for a release of asbestos fibers and
outlines a schedule of actions to be undertaken with respect to asbestos.  A copy of the written O&M Plan is located
in our Building Management Office and, upon your request, will be made
available for you to review and copy during regular business hours.

 

In general, the written O&M Plan
describes the risks associated with asbestos exposure and how to prevent such
exposure.  The O&M Plan describes
those risks as follows:  asbestos is not
a significant health concern unless asbestos fibers are released and
inhaled.  If inhaled, asbestos fibers
can accumulate in the lungs and, as exposure increases, the risk of disease
(such as asbestosis and cancer) increases. 
However, measures to minimize exposure and consequently minimize the
accumulation of fibers, reduces the risk of adverse health effects.

 

The O&M Plan is designed to safely manage
the ACM and PACM in the building and to avoid the inadvertent disturbance of
such ACM or PACM.  To that end, the
O&M Plan provides for the training of building housekeeping and maintenance
personnel so that they can conduct their work without causing a release of
asbestos fibers.  As part of the O&M
Plan, we maintain records of all asbestos-related activities and the results of
any asbestos survey, sampling or monitoring conducted in the building.

 

The written O&M Plan describes a number
of activities which should be avoided in order to prevent a release of asbestos
fibers in the building.  In particular,
you should be aware that some of the activities which may present a health risk
by causing an airborne release of asbestos fibers include moving, drilling,
boring or otherwise disturbing ACM or PACM. 
Consequently, such activities should not be attempted by any person not
qualified to handle ACM or PACM.  In
other words, you must obtain the approval of building management prior to
engaging in any such activities.  Please
contact the Building Manager for more information in this regard.  In addition, please contact the Building
Manager if you notice any deterioration or disturbance of ACM or PACM.  Also, note that the identification of ACM
and

 

6

 

PACM in this notification is based on actual
knowledge and assumptions that the law requires us to make.  Such materials do not necessarily comprise
all asbestos in the building.

 

Tenant may have certain obligations under
California and federal laws with regard to the ACM and PACM in the building,
including obligations to notify your own employees, contractors, subtenants,
agents and others of the presence of ACM and PACM.  Tenant is solely responsible for complying with all such
applicable laws. 

 

7

 

EXHIBIT I

 

FORM OF LETTER OF CREDIT

 

This Exhibit is attached to and made a part
of the Lease by and between CA-LAKE MARRIOTT
BUSINESS PARK LIMITED PARTNERSHIP (“Landlord”) and SILICON VALLEY BANK (“Tenant”) for space in
the Building located at 3001, 3003 and 3101 Tasman Drive, Santa Clara,
California. 

 

 

	
  [Name
  of Financial Institution]

  
	
   

  
	
   

  	
  Irrevocable Standby

  
	
   

  	
  Letter of Credit

  
	
   

  	
  No.

  
	
   

  	
  Issuance Date:

  
	
   

  	
  Expiration Date:

  
	
   

  	
  Applicant: SILICON VALLEY BANK

  

 

Beneficiary

 

CA-Lake Marriott Business Park Limited
Partnership 

c/o Equity Office Management, L.L.C.

1740 Technology Drive, Suite 150

San Jose, California  95110

Attn: 
Project Manager

 

Ladies/Gentlemen:

 

We hereby establish our
Irrevocable Standby Letter of Credit in your favor for the account of the above
referenced Applicant in the amount of Two Hundred Sixty Thousand Six Hundred
Twenty-Two and No/100 U.S. Dollars ($260.622.00) available for payment at sight
by your draft drawn on us when accompanied by the following documents:

 

1.             An original copy of this Irrevocable Standby
Letter of Credit.

 

2.             Beneficiary’s dated statement purportedly
signed by an authorized signatory or agent reading: “This draw in the amount of
                             U.S.
Dollars ($                         )
under your Irrevocable Standby Letter of Credit
No.                       
represents funds due and owing to us pursuant to the terms of that certain
lease by and between CA-LAKE MARRIOTT
BUSINESS PARK LIMITED PARTNERSHIP, as landlord, and SILICON VALLEY BANK, as tenant, and/or any
amendment to the lease or any other agreement or assignment related to the
lease.”

 

It is a condition of this
Irrevocable Standby Letter of Credit that it will be considered automatically
renewed for a one year period upon the expiration date set forth above and upon
each anniversary of such date, unless at least 60 days prior to such expiration
date or applicable anniversary thereof, we notify you in writing, by certified
mail return receipt requested or by recognized overnight courier service, that
we elect not to so renew this Irrevocable Standby Letter of Credit.  A copy of any such notice shall also be
sent, in the same manner, to:  Equity
Office Properties Trust, 2 North Riverside Plaza, Suite 2100, Chicago, Illinois
60606, Attention: Treasury Department. 
In addition to the foregoing, we understand and agree that you shall be
entitled to draw upon this Irrevocable Standby Letter of Credit in accordance
with 1 and 2 above in the event that we elect not to renew this Irrevocable
Standby Letter of Credit and, in addition, you provide us with a dated
statement purportedly signed by an authorized signatory or agent of Beneficiary
stating that the Applicant has failed to provide you with an acceptable
substitute irrevocable standby letter of credit in accordance with the terms of
the above referenced lease.  We further
acknowledge and agree that:  (a) upon
receipt of the documentation required herein, we will honor your draws against
this Irrevocable Standby Letter of Credit without inquiry into the accuracy of
Beneficiary’s signed statement and regardless of whether Applicant disputes the
content of such statement; (b) this Irrevocable Standby Letter of Credit shall
permit partial draws and, in the event you elect to draw upon less than the
full stated amount hereof, the stated amount of this Irrevocable Standby Letter
of Credit shall be automatically reduced by the amount of such partial draw;
and (c) you shall be entitled to transfer your interest in this Irrevocable
Standby Letter of Credit from time to time and more than one time without our
approval and without charge.  In the
event of a transfer, we reserve the right to require reasonable evidence of
such transfer as a condition to any draw hereunder.

 

This Irrevocable Standby
Letter of Credit is subject to the Uniform Customs and Practice for Documentary
Credits (1993 revision) ICC Publication No. 500.

 

8

 

We hereby engage with you to
honor drafts and documents drawn under and in compliance with the terms of this
Irrevocable Standby Letter of Credit.

 

All communications to us
with respect to this Irrevocable Standby Letter of Credit must be addressed to
our office located at
                                                           
to the attention
of                                                   .

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  [name]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [title}

  	
   

  
					

 

9

 

EXHIBIT J

 

HOLDING COMPANY TEST-FIT PLAN #3

 

This Exhibit is attached to and made a part
of the Lease by and between CA-LAKE MARRIOTT
BUSINESS PARK LIMITED PARTNERSHIP (“Landlord”) and SILICON VALLEY BANK (“Tenant”) for space in
the Building located at 3001, 3003 and 3101 Tasman Drive, Santa Clara,
California. 

 

10Exhibit 10.18

 

BUSINESS LOAN AGREEMENT

 

This Agreement dated as of
March 28,  2003, is among
Bank of America N.A. (the “Bank”), bebe stores, inc. (“Borrower 1”) and bebe
management, inc. (“Borrower 2”), and bebe studio, inc. (“Borrower 3”),
(Borrower 1, Borrower 2, and Borrower 3 are sometimes referred to collectively
as the “Borrowers” and individually as the “Borrower”).

 

1.
LINE OF CREDIT AMOUNT AND TERMS 

 

1.1                                 Line of Credit Amount.

 

(a)          During the availability period described
below, the Bank will provide a line of credit to the Borrowers. The amount of
the line of credit (the “Commitment”) is Ten Million Dollars ($10,000,000).

 

(b)         This is a revolving line of credit providing
for cash advances, letters of credit and air releases. During the availability
period, the Borrowers may repay principal amounts and reborrow them.

 

(c)          The aggregate principal balance of cash
advances outstanding at any one time may not exceed Seven Million Dollars
($7,000,000).

 

(d)         The Borrowers agree not to permit the sum of
the outstanding principal balance of advances under the line of credit, plus
the outstanding amounts of any letters of credit, including amounts drawn on
letters of credit and not yet reimbursed, plus the amount of outstanding air
releases, to exceed the Commitment.

 

1.2                                 Availability Period. The line of credit is available between the
date of this Agreement and December 1, 2003, or such earlier date as the
availability may terminate as provided in this Agreement (the “Expiration
Date”).

 

1.3                                 Interest Rate.

 

(a)          Unless the Borrowers elect an optional
interest rate as described below, the interest rate is a rate per year equal to
the Bank’s Prime Rate.

 

(b)         The Prime Rate is the rate of interest
publicly announced from time to time by the Bank as its Prime Rate. The Prime
Rate is set by the Bank básed on various factors, including the Bank’s costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans. The Bank may price loans to its
customers at, above, or below the Prime Rate. Any change in the Prime Rate
shall take effect at the opening of business on the day specified in the public
announcement of a change in the Bank’s Prime Rate.

 

1.4                                 Repayment Terms.

 

(a)          The Borrowers will pay interest on February 1,
2003, and then monthly thereafter until payment in full of any principal
outstanding under this line of credit.

 

1

 

(b)         The Borrowers will repay in full all
principal and any unpaid interest or other charges outstanding under this line
of credit no later than the Expiration Date. Any amount bearing interest at an
optional interest rate (as described below) may be repaid at the end of the
applicable interest period, which shall be no later than the Expiration Date.

 

1.5                                 Optional Interest Rates. Instead of the interest rate based on the
Bank’s Prime Rate, the Borrowers may elect the optional interest rates listed
below for this Facility No. 1 during interest periods agreed to by the Bank and
the Borrowers. The optional interest rates shall be subject to the terms and
conditions described later in this Agreement. Any principal amount bearing
interest at an optional rate under this Agreement is referred to as a
“Portion.” The following optional interest rates are available:

 

(a)                                  the
LIBOR Rate plus 1.75 percentage points.

 

1.6                                 Letters of Credit.

 

(a)          This line of credit may be used for
financing:

 

(i)                           commercial letters of credit with a maximum
maturity of 150 days but not to extend more than 90 days beyond the Expiration
Date. Each commercial letter of credit will require drafts payable at sight or
up to 60 days after sight.

 

(ii)                        standby letters of credit with a maximum
maturity of 365 days but not to extend more than 90 days beyond the Expiration
Date. The standby letters of credit may include a provision providing that the
maturity date will be automatically extended each year for an additional year
unless the Bank gives written notice to the contrary.

 

(iii)                     The amount of letters of credit outstanding
at any one time (including amounts drawn on letters of credit and not yet
reimbursed) may not exceed Ten Million Dollars ($10,000,000) for commercial
letters of credit and Seven Million Dollars ($7,000,000) for standby letters of
credit.

 

(iv)                    The commercial letters of credit set forth on
Exhibit A attached hereto are outstanding from the Bank for the account of the
Borrowers. As of the date of this Agreement, these commercial letters of credit
shall be deemed to be outstanding under this Agreement, and shall be subject to
all the terms and conditions stated in this Agreement.

 

(b)         Each Borrower agrees:

 

(i)                           any sum drawn under a letter of credit may,
at the option of the Bank, be added to the principal amount outstanding under
this Agreement. The amount will bear interest and be due as described elsewhere
in this Agreement.

 

(ii)                        if there is a default under this Agreement,
to immediately prepay and make the Bank whole for any outstanding letters of
credit.

 

2

 

(iii)                     the issuance of any letter of credit and any
amendment to a letter of credit is subject to the Bank’s written approval and
must be in form and content satisfactory to the Bank and in favor of a
beneficiary acceptable to the Bank.

 

(iv)                    to sign the Bank’s form Application and
Agreement for Commercial Letter of Credit or Application and Agreement for
Standby Letter of Credit, as applicable.

 

(v)                       to pay any issuance and/or other fees that
the Bank notifies the Borrowers will be charged for issuing and processing
letters of credit for the Borrowers.

 

(vi)                    to allow the Bank to automatically charge its
checking account for applicable fees, discounts, and other charges.

 

(vii)                 to pay the Bank a non-refundable fee equal to
1.50% per annum of the outstanding undrawn amount of each standby letter of
credit, payable annually in advance, calculated on the basis of the face amount
outstanding on the day the fee is calculated.

 

1.7                                 Air Releases. 
This line of credit may be used for financing air releases up to an
aggregate principal sum of Two Hundred Fifty Thousand Dollars ($250,000). The
Borrower agrees:

 

(a)                                  any sum owed to the Bank under an air release
may, at the option of the Bank, be added to the principal amount outstanding
under this Agreement. The amount will bear interest and be due as described
elsewhere in this Agreement.

 

(b)                                 if there is a default under this Agreement,
to immediately prepay and make the Bank whole for any outstanding air releases.

 

(c)                                  the issuance of any air release is subject to
the Bank’s express approval and must be in form and content satisfactory to the
Bank.

 

(d)                                 to sign the Bank’s standard forms for air
releases, and to pay any issuance and/or other fees that the Bank notifies the
Borrower will be charged for issuing and processing air releases for the
Borrower.

 

(e)                                  to allow the Bank to automatically charge its
checking account for applicable fees, discounts, and other charges.

 

2. OPTIONAL INTEREST RATES

 

2.1                                 Optional Rates. Each optional interest rate is a rate per
year. Interest will be paid on the last day of each interest period, and on the
first day of each month during the interest period. At the end of any interest
period, the interest rate will revert to the rate based on

 

3

 

the
Prime Rate, unless the Borrowers have designated another optional interest rate
for the Portion. No Portion will be converted to a different interest rate
during the applicable interest period. Upon the occurrence of an event of
default under this Agreement, the Bank may terminate the availability of
optional interest rates for interest periods commencing after the default
occurs.

 

2.2                                 LIBOR Rate. The election of LIBOR Rates shall be subject to the following terms
and requirements:

 

(a)          The interest period during which the LIBOR
Rate will be in effect will be one, two, three, four, five or six months. The
first day of the interest period must be a day other than a Saturday or a
Sunday on which the Bank is open for business in New York and London and
dealing in offshore dollars (a “LIBOR Banking Day”). The last day of the
interest period will be determined by the Bank using the practices of the
London inter-bank market.

 

(b)         Each LIBOR Rate Portion will be for an amount
not less than the following:

 

(i)                  for interest periods of four months or
longer, Five Hundred Thousand Dollars ($500,000).

 

(ii)               for interest periods of between one month and
three months, One Million Dollars ($1,000,000).

 

(c)          The Borrower may not elect a LIBOR Rate with
respect to any principal amount which is scheduled to be repaid before the last
day of the applicable interest period.

 

(d)         The “LIBOR Rate” means the interest rate
determined by the following formula, rounded upward to the nearest 1/100 of one
percent. (All amounts in the calculation will be determined by the Bank as of
the first day of the interest period.)

 

	
  LIBOR
  Rate =

  	
   

  	
  London
  Inter-Bank Offered Rate

  
	
   

  	
   

  	
  (1.00
  - Reserve Percentage)

  

 

Where,

 

(i)                  “London Inter-Bank Offered Rate” means the
average per annum interest rate at which U.S. dollar deposits would be offered
for the applicable interest period by major banks in the London inter-bank
market, as shown on the Telerate Page 3750 (or any successor page) at
approximately 11 :00 a.m, London time two (2) London Banking Days before the
commencement of the interest period. If such rate does not appear on the
Telerate Page 3750 (or any successor page), the rate for that interest period
will be determined by such alternate method as reasonably selected by the Bank.
A “London Banking Day” is a day on which the Bank’s London Banking Center is
open for business and dealing in offshore dollars.

 

4

 

(ii)               “Reserve Percentage” means the total of the
maximum reserve percentages for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the nearest
1/100 of one percent. The percentage will be expressed as a decimal, and will
include, but not be limited to, marginal, emergency, supplemental, special, and
other reserve percentages.

 

(e)          The Borrower shall irrevocably request a
LIBOR Rate Portion no later than 12:00 noon California time on the LIBOR
Banking Day preceding the day on which the London Inter-Bank Offered Rate will
be set, as specified above. For example, if there are no intervening holidays
or weekend days in any of the relevant locations, the request must be made at
least three days before the LIBOR Rate takes effect.

 

(f)            Each prepayment of an LIBOR Rate Portion,
whether voluntary, by reason of acceleration or otherwise, will be accompanied
by the amount of accrued interest on the amount prepaid, and a prepayment fee
as described below. A “prepayment” is a payment of an amount on a date earlier
than the scheduled payment date for such amount as required by this Agreement.

 

(g)         The prepayment fee shall be equal to the
amount (if any) by which:

 

(i)                  the additional interest which would have been
payable during the interest period on the amount prepaid had it not been
prepaid, exceeds

 

(ii)               the interest which would have been
recoverable by the Bank by placing the amount prepaid on deposit in the
domestic certificate of deposit market, the eurodollar deposit market, or other
appropriate money market selected by the Bank for a period starting on the date
on which it was prepaid and ending on the last day of the interest period for
such Portion (or the scheduled payment date for the amount prepaid, if earlier).

 

(h)         The Bank will have no obligation to accept an
election for an LIBOR Rate Portion if any of the following described events has
occurred and is continuing:

 

(i)                  Dollar deposits in the principal amount, and
for periods equal to the interest period, of an LIBOR Rate Portion are not
available in the London inter-bank market; or

 

(ii)               the LIBOR Rate does not accurately reflect
the cost of an LIBOR Rate Portion.

 

3. FEES AND EXPENSES

 

3.1                                 Fees.

 

(a)          Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any terms of
this Agreement, the Borrowers will, at the Bank’s option, pay the Bank a fee

 

5

 

for each waiver or amendment
in an amount advised by the Bank at the time the Borrowers request the waiver
or amendment. Nothing in this paragraph shall imply that the Bank is obligated
to agree to any waiver or amendment requested by the Borrowers. The Bank may
impose additional requirements as a condition to any waiver or amendment.

 

(b)         Late Fee. To the extent permitted by law, the Borrowers agree to pay a late fee
in an amount not to exceed four percent (4%) of any payment that is more than
fifteen (15) days late. The imposition and payment of a late fee shall not
constitute a waiver of the Bank’s rights with respect to the default.

 

3.2                                 Expenses. The Borrowers agree to immediately repay the Bank for expenses that
include, but are not limited to, filing, recording and search fees, appraisal
fees, title report fees and documentation fees.

 

3.3                                 Reimbursement Costs. The Borrowers agree to reimburse the Bank
for any expenses it incurs in the preparation of this Agreement and any
agreement or instrument required by this Agreement. Expenses include, but are
not limited to, reasonable attorneys’ fees, including any allocated costs of
the Bank’s in-house counsel

 

4. DISBURSEMENTS, PAYMENTS AND COSTS

 

4.1                                 Requests for Credit; Equal Access by all
Borrowers. Any Borrower (or
a person or persons authorized in writing by any one of the Borrowers), acting
alone, can borrow up to the full amount of credit provided under this
Agreement. Each Borrower will be liable for all extensions of credit made under
this Agreement to any other Borrower.

 

4.2                                 Disbursements and Payments.

 

(a)          Each payment by the Borrowers will be made at
the Bank’s banking center (or other location) selected by the Bank from time to
time; and will be made in immediately available funds, or such other type of
funds selected by the Bank.

 

(b)         Each disbursement by the Bank and each
payment by the Borrowers will be evidenced by records kept by the Bank. In
addition, the Bank may, at its discretion, require the Borrowers to sign one or
more promissory notes.

 

4.3                                 Telephone
and Telefax Authorization.

 

(a)          The Bank may honor telephone or telefax
instructions for advances or repayments or for the designation of optional
interest rates and telefax requests for the issuance of letters of credit
given, or purported to be given, by any one of the individuals authorized to
sign loan agreements on behalf of each Borrower, or any other individual
designated by any one of such authorized signers.

 

(b)         Advances will be deposited in and repayments
will be withdrawn from Borrower 1’s account number
                                 
or such other accounts with the Bank as designated in writing by the Borrowers.

 

6

 

(c)          The Borrowers will indemnify and hold the
Bank harmless from all liability, loss, and costs in connection with any act
resulting from telephone or telefax instructions the Bank reasonably believes
are made by any individual authorized by the Borrowers to give such
instructions. This paragraph will survive this Agreement’s termination, and
will benefit the Bank and its officers, employees, and agents.

 

4.4                                 Direct Debit (Pre-Billing).

 

(a)          The Borrowers agree that the Bank will debit
Borrower 1’s account number
                         
or such other of the Borrowers’ accounts with the Bank as designated in writing
by the Borrowers (the “Designated Account”) on the date each payment of
principal and interest and any fees from the Borrowers becomes due (the “Due
Date”).

 

(b)         Approximately 7 days prior to each Due Date,
the Bank will mail to the Borrowers a statement of the amounts that will be due
on that Due Date (the “Billed Amount”). The calculation will be made on the
assumption that no new extensions of credit or payments will be made between
the date of the billing statement and the Due Date, and that there will be no
changes in the applicable interest rate.

 

(c)          The Bank will debit the Designated Account
for the Billed Amount, regardless of the actual amount due on that date (the
“Accrued Amount”). If the Billed Amount debited to the Designated Account
differs from the Accrued Amount, the discrepancy will be treated as follows:

 

(i)                  If the Billed Amount is less than the Accrued
Amount, the Billed Amount for the following Due Date will be increased by the
amount of the discrepancy. The Borrowers will not be in default by reason of
any such discrepancy.

 

(ii)               If the Billed Amount is more than the Accrued
Amount, the Billed Amount for the following Due Date will be decreased by the
amount of the discrepancy.

 

Regardless of any such
discrepancy, interest will continue to accrue based on the actual amount of
principal outstanding without compounding. The Bank will not pay the Borrowers
interest on any overpayment.

 

(d)         The Borrowers will maintain sufficient funds
in the Designated Account to cover each debit. If there are insufficient funds
in the Designated Account on the date the Bank enters any debit authorized by
this Agreement, the Bank may reverse the debit.

 

4.5                                 Banking Days. Unless otherwise provided in this
Agreement, a banking day is a day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close, or are in fact closed, in the
state where the Bank’s lending office is located, and, if such day relates to
amounts bearing interest at an offshore rate (if any), means any such day on
which dealings in dollar deposits are conducted among banks in the offshore
dollar interbank market. All payments and disbursements which would be

 

7

 

due on a day which is not a
banking day will be due on the next banking day.  All payments received on a day which is not a banking day will be
applied to the credit on the next banking day.

 

4.6                                 Taxes.

 

(a)          If any payments to the Bank under this
Agreement are made from outside the United States, the Borrowers will not
deduct any foreign taxes from any payments they make to the Bank. If any such
taxes are imposed on any payments made by the Borrowers (including payments
under this paragraph), the Borrowers will pay the taxes and will also pay to
the Bank, at the time interest is paid, any additional amount which the Bank
specifies as necessary to preserve the after-tax yield the Bank would have
received if such taxes had not been imposed. The Borrowers will confirm that
they have paid the taxes by giving the Bank official tax receipts (or notarized
copies) within 30 days after the due date.

 

(b)         Payments made by the Borrowers to the Bank
will be made without deduction of United States withholding or similar taxes.
If any Borrower is required to pay U.S. withholding taxes, the Borrowers will
pay such taxes in addition to the amounts due to the Bank under this Agreement.
If the Borrowers fail to make such tax payments when due, each Borrower
indemnifies the Bank against any liability for such taxes, as well as for any
related interest, expenses, additions to tax, or penalties asserted against or
suffered by the Bank with respect to such taxes.

 

4.7                                 Additional Costs. The Borrowers will pay the Bank, on demand,
for the Bank’s costs or losses arising from any statute or regulation, or any
request or requirement of a regulatory agency which is applicable to all
national banks or a class of all national banks. The costs and losses will be
allocated to the loan in a manner determined by the Bank, using any reasonable
method. The costs include the following:

 

(a)          any reserve or deposit requirements; and

 

(b)         any capital requirements relating to the
Bank’s assets and commitments for credit.

 

4.8                                 Interest Calculation. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the basis of a
360-day year and the actual number of days elapsed. This results in more
interest or a higher fee than if a 365-day year is used. Installments of
principal which are not paid when due under this Agreement shall continue to
bear interest until paid.

 

4.9                                 Default Rate. Upon the occurrence of any default under
this Agreement, principal amounts outstanding under this Agreement will at the
option of the Bank bear interest at a rate which is two (2) percentage point(s)
higher than the rate of interest otherwise provided under this Agreement. This
will not constitute a waiver of any default.

 

8

 

4.10                           Interest Compounding. At the Bank’s sole option in each instance,
any interest, fees or costs which are not paid when due under this Agreement
shall bear interest from the due date at the Bank’s Prime Rate plus one (1)
percentage point. This may result in compounding of interest.

 

5.                                       CONDITIONS

 

The Bank must receive the
following items, in form and content acceptable to the Bank, before it is
required to extend any credit to the Borrowers under this Agreement:

 

5.1                                 Authorizations. Evidence that the execution, delivery and
performance by each Borrower of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.

 

5.2                                 Governing Documents. A copy of each Borrower’s articles of
incorporation.

 

5.3                                 Good Standing. Certificates of good standing for each
Borrower from its state of formation and from any other state in which such
Borrower is required to qualify to conduct its business.

 

5.4                                 Other Items. Any other items that the Bank reasonably requires.

 

6.                                       REPRESENTATIONS AND WARRANTIES

 

When the Borrowers sign this
Agreement, and until the Bank is repaid in full, each Borrower makes the following
representations and warranties. Each request for an extension of credit
constitutes a renewal of these representations and warranties as of the date of
the request:

 

6.1                                 Organization of Borrowers. Each Borrower is a corporation duly formed
and existing under the laws of the state where organized.

 

6.2                                 Authorization. This Agreement, and any instrument or
agreement required hereunder, are within each Borrower’s powers, have been duly
authorized, and do not conflict with any of its organizational papers.

 

6.3                                 Enforceable Agreement. This Agreement is a legal, valid and
binding agreement of each Borrower, enforceable against each Borrower in
accordance with its terms, and any instrument or agreement required hereunder,
when executed and delivered, will be similarly legal, valid, binding and
enforceable.

 

6.4                                 Good Standing. In each state in which each Borrower does
business, it is properly licensed, in good standing, and, where required, in
compliance with fictitious name statutes.

 

6.5                                 No Conflicts. This Agreement does not conflict with any
law, agreement, or obligation by which any Borrower is bound.

 

9

 

6.6                                 Financial Information. All financial and other information that
has been or will be supplied to the Bank is sufficiently complete to give the
Bank accurate knowledge of the Borrowers’ (and any guarantor’s) financial
condition, including all material contingent liabilities. Since the date of the
most recent financial statement provided to the Bank, there has been no
material adverse change in the business condition (financial or otherwise),
operations, properties or prospects of any Borrower (or any guarantor).

 

6.7                                 Lawsuits. There is no lawsuit, tax claim or other dispute pending or threatened
against the Borrowers or any one of them which, if lost, would impair the
Borrowers’ or any Borrower’s financial condition or ability to repay the loan,
except as have been disclosed in writing to the Bank.

 

6.8                                 Permits, Franchises. Each Borrower possesses all permits,
 memberships, franchises,
contracts and licenses required and all trademark rights, trade name rights,
patent rights and fictitious name rights necessary to enable it to conduct the
business in which it is now engaged.

 

6.9                                 Other Obligations. No Borrower is in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.

 

6.10                           Private Label Credit Card Program. Borrowers have entered or will enter into a
private label credit card agreement (the “Private Label Agreement”) with
Monogram Credit Card Bank of Georgia (“Monogram”). Borrowers do not presently
have, and will not have in the future, any material direct or contingent
liabilities to Monogram under the Private Label Agreement. Borrowers will not
permit or allow any security interest or lien on any of Borrower’s assets in
favor of Monogram, except as permitted under Section 7.7 (e) hereof.

 

6.11                           Tax Matters. No Borrower has any knowledge of any pending assessments or
adjustments of its income tax for any year and all taxes due have been paid.

 

6.12                           No Tax Avoidance Plan. The Borrowers’ obtaining of credit from the
Bank under this Agreement does not have as a principal purpose the avoidance of
U.S. withholding taxes.

 

6.13                           No Event of Default. There is no event which is, or with notice
or lapse of time or both would be, a default under this Agreement.

 

6.14                           Insurance. The Borrowers have obtained, and maintained in effect, the insurance
coverage required in the “Covenants” section of this Agreement.

 

6.15                           ERISA Plans.

 

(a)          Each Plan (other than a multiemployer plan)
is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan has received a favorable
determination letter from the IRS and to the best knowledge of the Borrowers,
nothing has occurred which would cause the loss of such qualification.  Each Borrower has fulfilled its obligations,
if any, under the

 

10

 

minimum funding standards of
ERISA and the Code with respect to each Plan and has not incurred any liability
with respect to any Plan under Title IV of ERISA.

 

(b)         There are no claims, lawsuits or actions
(including by any governmental authority), and there has been no prohibited
transaction or violation of the fiduciary responsibility rules, with respect to
any Plan which has resulted or could reasonably be expected to result in a
material adverse effect.

 

(c)          With respect to any Plan subject to Title IV
of ERISA:

 

(i)
No reportable event has occurred under Section 4043(c) of ERISA for which
the PBGC requires 30-day notice.

 

(ii)
No action by any Borrower or any ERISA Affiliate to terminate or withdraw from
any Plan has been taken and no notice of intent to terminate a Plan has been
filed under Section 4041 of ERISA.

 

(iii)
No termination proceeding has been commenced with respect to a Plan under
Section 4042 of ERISA, and no event has occurred or condition exists which
might constitute grounds for the commencement of such a proceeding.

 

(d)         The following terms have the meanings
indicated for purposes of this Agreement:

 

(i)
“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

(ii)
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

(iii)
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with any Borrower within the meaning of
Section 4l4(b) or (c) of the Code.

 

(iv)
“PBGC” means the Pension Benefit Guaranty Corporation.

 

(v)
“Plan” means a pension, profit-sharing, or stock bonus plan intended to qualify
under Section 401 (a) of the Code, maintained or contributed to by any
Borrower or any ERISA Affiliate, including any multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA.

 

6.16                           Location of Borrowers. Each Borrower’s place of business (or, if
any Borrower has more than one place of business, its chief executive office)
is located at the address listed under the Borrowers’ signature on this
Agreement.

 

7. COVENANTS

 

The Borrowers agree, so long
as credit is available under this Agreement and

 

11

 

until the Bank is repaid in full:

 

7.1                                 Use of Proceeds. To use the proceeds of the credit only for
working capital and to support the importation of inventory and general
corporate purposes.

 

7.2                                 Financial Information. To provide the following financial
information and statements in form and content acceptable to the Bank, and such
additional information as requested by the Bank from time to time:

 

(a)          Within 90 days of the Borrowers’ fiscal year
end, the Borrowers’ annual financial statements. These financial statements
must be audited (with an unqualified opinion) by a Certified Public Accountant
acceptable to the Bank. The statements shall be prepared on a consolidated
basis.

 

(b)         Within 45 days of the period’s end (including
the last period in each fiscal year), the Borrowers’ quarterly financial
statements, certified and dated by an authorized financial officer. These
financial statements may be Borrower prepared. The statements shall be prepared
on a consolidated basis.

 

(c)          Promptly upon the Bank’s request, such other
books, records, statements, lists of property and accounts, budgets, forecasts
or reports as to the Borrowers as the Bank may request.

 

7.3                                 Tangible Net Worth. To maintain tangible net worth equal to at
least One Hundred Twenty Five Million Dollars ($125,000,000).

 

“Tangible net worth” means the gross book
value of the Borrowers’ assets (excluding goodwill, patents, trademarks, trade
names, organization expense, unamortized debt discount and expense, capitalized
or deferred research and development costs, deferred marketing expenses,
deferred receivables, and other like intangibles) less total liabilities,
including but not limited to accrued and deferred income taxes, and any
reserves against assets.

 

7.4                                 Unencumbered Liquid Assets. To maintain Unencumbered Liquid Assets
having an aggregate market value of not less than Sixty Million Dollars
($60,000,000).

 

“Unencumbered Liquid Assets” means the
following assets (excluding assets of any retirement plan) which (i) are not
the subject of any lien, pledge, security interest or other arrangement with
any creditor to have his claim satisfied out of the asset (or proceeds thereof)
prior to the general creditors of the Borrowers, and (ii) may be converted to
cash within five (5) days:

 

(a)          Cash or cash equivalent held in the United
States;

 

(b)         United States Treasury or governmental agency
obligations which constitute full faith and credit of the United States of
America;

 

(c)          Commercial paper rated P-1 or A1 by Moody’s
or S&P, respectively;

 

(d)         Medium and long-term securities rated AA or
better by one of the rating agencies described in (c) above.

 

12

 

7.5                                 Profitability. To maintain a positive net income before
taxes and extraordinary items for each quarterly accounting period and on a
year-to-date basis.

 

7.6                                 Other Debts. Not to have outstanding or incur any direct or contingent liabilities
(other than those to the Bank), or become liable for the liabilities of others,
without the Bank’s written consent. This does not prohibit:

 

(a)          Acquiring goods, supplies, or merchandise on
normal trade credit.

 

(b)         Endorsing negotiable instruments received in
the usual course of business.

 

(c)          Obtaining surety bonds in the usual course of
business.

 

(d)         Liabilities and lines of credit and leases in
existence on the date of this Agreement disclosed in writing to the Bank.

 

(e)          Additional debts for equipment purchases
which do not exceed a total principal amount of Five Hundred Thousand Dollars
($500,000) outstanding at any one time.

 

7.7                                 Other Liens. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property any Borrower now or later owns, except:

 

(a)          Liens and security interests in favor of the
Bank.

 

(b)         Liens for taxes not yet due.

 

(c)          Liens outstanding on the date of this
Agreement disclosed in writing to the Bank.

 

(d)         Additional purchase money security interests
in equipment acquired after the date of this Agreement if the total principal
amount of debts secured by such liens does not exceed Five Hundred Thousand
Dollars($500,000) in any single fiscal year.

 

(e)          Liens in favor of Monogram Credit Card Bank
of Georgia (“Monogram”) relating to returned merchandise sold by Borrowers and
financed on private label credit cards issued by Monogram to certain qualified
customers of Borrowers.

 

7.8                                 Out of Debt Period.   To
repay any advances in full, and not to draw any additional advances for at
least 30 consecutive days in each fiscal year of Borrowers. For the purposes of
this paragraph, advances do not include undrawn amounts to outstanding letters ofcredit.

 

7.9                                 Loans and Investments. Not to have any existing, or make any new
loans or other extensions of credit to, or investments in, any individual or
entity, or make any capital

 

13

 

contributions or other
transfers of assets to any individual or entity, except for:

 

(a)          existing investments in any Borrower’s
current subsidiaries.

 

(b)         extensions of credit in the nature of
accounts receivable or notes receivable arising from the sale or lease of goods
or services in the ordinary course of business to non-affiliated entities.

 

7.10                           Dividends. Not to declare or pay any dividends on any of its shares, except
dividends payable in capital stock of the Borrower, or purchase, redeem or
otherwise acquire for value any of its shares, or create any sinking fund in
relation thereto, in an aggregate amount exceeding Forty Million Dollars
($40,000,000) per annum.

 

7.11                           Notices to Bank. To promptly notify the Bank in writing of:

 

(a)          any lawsuit over One Million Dollars
($1,000,000) against any one or more of the Borrowers (or any guarantor), in
excess of any insurance coverage.

 

(b)         any substantial dispute between any Borrower
(or any guarantor) or any trustor and any government authority.

 

(c)          any event of default under this Agreement, or
any event which, with notice or lapse of time or both, would constitute an
event of default.

 

(d)         any material adverse change in any Borrower’s
(or any guarantor’s) or any trustor’s business condition (financial or
otherwise), operations, properties or prospects, or ability to repay the
credit.

 

(e)          any change in any Borrower’s name, legal
structure, place of business, or chief executive office if such Borrower has
more than one place of business.

 

(f)            any actual contingent liabilities of any
Borrower (or any guarantor), and any such contingent liabilities which are
reasonably foreseeable, where such liabilities are in excess of One Million
Dollars ($1,000,000) in the aggregate.

 

7.12                           Books and Records. To maintain adequate books and records.

 

7.13                           Audits. To allow the Bank and its agents to inspect the Borrowers’ properties
and examine, audit, and make copies of books and records at any reasonable
time. If any of the Borrowers’ properties, books or records are in the
possession of a third party, the Borrowers authorize that third party to permit
the Bank or its agents to have access to perform inspections or audits and to
respond to the Bank’s requests for information concerning such properties,
books and records.

 

7.14                           Compliance with Laws. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body with
authority over each Borrower’s business.

 

14

 

7.15                           Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises each Borrower now has.

 

7.16                           Maintenance of Properties. To make any repairs, renewals, or
replacements to keep each Borrower’s properties in good working condition.

 

7.17                           Cooperation. To take any action reasonably requested by the Bank to carry out the
intent of this Agreement.

 

7.18                           Insurance.

 

(a)          General Business Insurance. To maintain insurance satisfactory to the
Bank as to amount, nature and carrier covering property damage (including loss
of use and occupancy) to any of the Borrowers’ properties, public liability
insurance including coverage for contractual liability, product liability and
workers’ compensation, and any other insurance which is usual for the
Borrowers’ business.

 

(b)         Evidence of Insurance. Upon the request of the Bank, to deliver to
the Bank a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.

 

7.19                           Additional Negative Covenants. Not to, without the Bank’s written consent:

 

(a)          engage in any business activities
substantially different from the Borrowers’ or any Borrower’s present business.

 

(b)         liquidate or dissolve the Borrowers’ or any
Borrower’s business.

 

(c)          enter into any consolidation, merger, or
other combination, or become a partner in a partnership, a member of a joint
venture, or a member of a limited liability company.

 

(d)         sell, assign, lease, transfer or otherwise
dispose of any assets for less than fair market value, or enter into any
agreement to do so.

 

(e)          sell, assign, lease, transfer or otherwise
dispose of all or a substantial part of the Borrowers’ or any Borrower’s
business or the Borrowers’ or any Borrower’s assets.

 

(f)            enter into any sale and leaseback agreement
covering the Borrowers’ or any Borrower’s fixed assets.

 

(g)         acquire or purchase a business or its assets;
except that any acquisition in the same line of business as the Borrowers that
is not opposed by such business entity’s board of directors or controlling
shareholders is permitted.

 

(h)         voluntarily suspend the Borrowers’ or any
Borrower’s business for more than 7 days in any 30 day period.

 

15

 

7.20                           ERISA Plans. Promptly during each year, to pay and cause any subsidiaries to pay
contributions adequate to meet at least the minimum funding standards under
ERISA with respect to each and every Plan; file each annual report required to
be filed pursuant to ERISA in connection with each Plan for each year; and
notify the Bank within ten (10) days of the occurrence of any Reportable Event
that might constitute grounds for termination of any capital Plan by the
Pension Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer any Plan. “ERISA” means
the Employee Retirement Income Security Act of 1974, as amended from time to
time. Capitalized terms in this paragraph shall have the meanings defined
within ERISA.

 

8. DEFAULT

 

If any of the following
events occurs, the Bank may do one or more of the following: declare the
Borrowers in default, stop making any additional credit available to the
Borrowers, and require the Borrowers to repay their entire debt immediately and
without prior notice. If an event of default occurs under the paragraph
entitled “Bankruptcy,” below, with respect to any Borrower, then the entire
debt outstanding under this Agreement will automatically be due immediately.

 

8.1                                 Failure to Pay. Any Borrower fails to make a payment of
principal, interest, any fee or other sum under this Agreement when due.

 

8.2                                 False Information. Any Borrower or any guarantor or any party
pledging collateral to the Bank (each an “Obligor”) has given the Bank false or
misleading information or representations.

 

8.3                                 Bankruptcy. Any Borrower (or any Obligor) files a bankruptcy petition, a
bankruptcy petition is filed against any Borrower (or any Obligor), or any
Borrower (or any Obligor) makes a general assignment for the benefit of
creditors.

 

8.4                                 Receivers. A receiver or similar official is appointed for a substantial portion
of any Borrower’s (or any Obligor’s) business, or the business is terminated.

 

8.5                                 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or more trade
creditors against any one or more of the Borrowers (or any Obligor) in an
aggregate amount of One Million Dollars ($1,000,000) or more in excess of any
insurance coverage.

 

8.6                                 Judgments. Any judgments or arbitration awards are entered against any one or
more of the Borrowers (or any Obligor), or any one or more of the Borrowers (or
any Obligor) enters into any settlement agreements with respect to any
litigation or arbitration, in an aggregate amount of One Million Dollars
($1,000,000) or more in excess of any insurance coverage.

 

8.7                                 Government Action. Any government authority takes action that
the Bank believes materially adversely affects any Borrower’s (or any
Obligor’s) financial condition or ability to repay.

 

8.8                                 Material Adverse Change. A material adverse change occurs, or is

 

16

 

reasonably likely to occur, in
any Borrower’s (or any Obligor’s) business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit.

 

8.9                                 Cross-default. Any default occurs under any agreement in
connection with any credit any Borrower (or any Obligor) has obtained from
anyone else or which any Borrower (or any Obligor) has guaranteed.

 

8.10                           Default under Related Documents. Any default occurs under any guaranty,
subordination agreement, security agreement, deed of trust, mortgage, or other
document required by or delivered in connection with this Agreement or any such
document is no longer in effect, or any guarantor purports to revoke or disavow
the guaranty.

 

8.11                           Other Bank Agreements. Any Borrower (or any Obligor) fails to meet
the conditions of, or fails to perform any obligation under any other agreement
any Borrower (or any Obligor) has with the Bank or any affiliate of the Bank.

 

8.12                           ERISA Plans. Any one or more of the following events occurs with respect to a Plan
of any Borrower subject to Title IV of ERISA, provided such event or events
could reasonably be expected, in the judgment of the Bank, to subject such
Borrower to any tax, penalty or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of such Borrower:

 

(a)          A reportable event shall occur under
Section 4043(c) of ERISA with respect to a Plan.

 

(b)         Any Plan termination (or commencement of
proceedings to terminate a Plan) or the full or partial withdrawal from a Plan
by such Borrower or any ERISA Affiliate.

 

8.13                           Other Breach Under Agreement. Any Borrower fails to meet the conditions
of, or falls to perform any obligation under, any term of this Agreement not
specifically referred to in this Article. This includes any failure or
anticipated failure by any Borrower to comply with any financial covenants set
forth in this Agreement, whether such failure is evidenced by financial statements
delivered to the Bank or is otherwise known to any Borrower or the Bank.

 

9.
ENFORCING THIS AGREEMENT; MISCELLANEOUS

 

9.1                                 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.

 

9.2                                 California Law. This Agreement is governed by California
law.

 

9.3                                 Successors and Assigns. This Agreement is binding on the Borrowers’
and the Bank’s successors and assignees. The Borrowers agree that they may not
assign this Agreement without the Bank’s prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrowers with actual or potential

 

17

 

participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the
right of set-off against the Borrowers.

 

9.4                                 Arbitration and Waiver of Jury Trial.

 

(a)          This paragraph concerns the resolution of any
controversies or claims between one or more of the Borrowers and the Bank,
whether arising in contract, tort or by statute, including but not limited to
controversies or claims that arise out of or relate to: (i) this Agreement (including
any renewals, extensions or modifications); or (ii) any document related to
this Agreement (collectively a “Claim”).

 

(b)         At the request of any Borrower or the Bank,
any Claim shall be resolved by binding arbitration in accordance with the
Federal Arbitration Act (Title 9, U. S. Code) (the “Act”). The Act will apply
even though this Agreement provides that it is governed by the law of a
specified state.

 

(c)          Arbitration proceedings will be determined in
accordance with the Act, the applicable rules and procedures for the
arbitration of disputes of JAMS or any successor thereof (“JAMS”), and the
terms of this paragraph. In the event of any inconsistency, the terms of this
paragraph shall control.

 

(d)         The arbitration shall be administered by JAMS
and conducted in any U.S. state where real or tangible personal property
collateral for this credit is located or if there is no such collateral, in
California. All Claims shall be determined by one arbitrator; however, if
Claims exceed Five Million Dollars ($5,000,000), upon the request of any party,
the Claims shall be decided by three arbitrators. All arbitration hearings
shall commence within ninety (90) days of the demand for arbitration and close
within ninety (90) days of commencement and the award of the arbitrator(s)
shall be issued within thirty (30) days of the close of the hearing. However,
the arbitrator(s), upon a showing of good cause, may extend the commencement of
the hearing for up to an additional sixty (60) days. The arbitrator(s) shall
provide a concise written statement of reasons for the award. The arbitration
award may be submitted to any court having jurisdiction to be confirmed and
enforced.

 

(e)          The arbitrator(s) will have the authority to
decide whether any Claim is barred by the statute of limitations and, if so, to
dismiss the arbitration on that basis. For purposes of the application of the
statute of limitations, the service on JAMS under applicable JAMS rules of a
notice of Claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a Claim is arbitrable shall be
determined by the arbitrator(s). The arbitrator(s) shall have the power to
award legal fees pursuant to the terms of this Agreement.

 

(f)            This paragraph does not limit the right of
the Borrowers or the Bank to: (i) exercise self-help remedies, such as but not
limited to, setoff; (ii) initiate judicial or nonjudicial foreclosure against
any real or personal property collateral; (iii) exercise any judicial or power
of sale rights, or (iv) act in a court of law to obtain an interim remedy, such
as but not limited to, injunctive relief, writ of possession or appointment of
a receiver, or additional or supplementary remedies.

 

18

 

(g)         The procedure described above will not apply
if the Claim, at the time of the proposed submission to arbitration, arises
from or relates to an obligation to the Bank secured by real property. In this
case, both the Borrowers and the Bank must consent to submission of the Claim
to arbitration. If both parties do not consent to arbitration, the Claim will
be resolved as follows: The Borrowers and the Bank will designate a referee (or
a panel of referees) selected under the auspices of JAMS in the same manner as
arbitrators are selected in JAMS administered proceedings. The designated
referee(s) will be appointed by a court as provided in California Code of
Civil Procedure Section 638 and the following related sections. The
referee (or the presiding referee of the panel) will be an active attorney or a
retired judge. The award that results from the decision of the referee(s) will
be entered as a judgment in the court that appointed the referee, in accordance
with the provisions of California Code of Civil Procedure Sections 644 and 645.

 

(h)         The filing of a court action is not intended
to constitute a waiver of the right of the Borrowers or the Bank, including the
suing party, thereafter to require submittal of the Claim to arbitration.

 

(i)             By agreeing to binding arbitration, the
parties irrevocably and voluntarily waive any right they may have to a trial by
jury in respect of any Claim. Furthermore, without intending in any way to
limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the
parties irrevocably and voluntarily waive any right they may have to a trial by
jury in respect of such Claim. This provision is a material inducement for the
parties entering into this Agreement.

 

9.5                                 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.

 

9.6                                 Attorneys’ Fees. The Borrowers shall reimburse the Bank for
any reasonable costs and attorneys’ fees incurred by the Bank in connection
with the enforcement or preservation of any rights or remedies under this
Agreement and any other documents executed in connection with this Agreement,
and in connection with any amendment, waiver, “workout” or restructuring under
this Agreement. In the event of a lawsuit or arbitration proceeding, the
prevailing party is entitled to recover costs and reasonable attorneys’ fees
incurred in connection with the lawsuit or arbitration proceeding, as
determined by the court or arbitrator. In the event that any case is commenced
by or against any of the Borrowers under the Bankruptcy Code (Title 11, United
States Code) or any similar or successor statute, the Bank is entitled to
recover costs and reasonable attorneys’ fees incurred by the Bank related to
the preservation, protection, or enforcement of any rights of the Bank in such
a case. As used in this paragraph, “attorneys’ fees” includes the allocated
costs of the Bank’s in-house counsel.

 

9.7                                 Joint and Several Liability.

 

(a)          Each Borrower agrees that it is jointly and
severally liable to the Bank for the payment of all obligations arising under
this Agreement, and that such liability is independent of the obligations of
the other Borrower(s). The Bank may bring an action against any Borrower,
whether an action is brought against the other Borrower(s).

 

19

 

(b)         Each Borrower agrees that any release which
may be given by the Bank to the other Borrower(s) or any guarantor will not
release such Borrower from its obligations under this Agreement.

 

(c)          Each Borrower waives any right to assert
against the Bank any defense, setoff, counterclaim, or claims which such Borrower may have against the other Borrower(s) or any other party liable to
the Bank for the obligations of the Borrowers under this Agreement.

 

(d)         Each Borrower waives any defense by reason of
any other Borrower’s or any other person’s defense, disability, or release from
liability. The Bank can exercise its rights against each Borrower even if any
other Borrower or any other person no longer is liable because of a statute of
limitations or for other reasons.

 

(e)          Each Borrower agrees that it is solely
responsible for keeping itself informed as to the financial condition of the
other Borrower(s) and of all circumstances which bear upon the risk of
nonpayment. Each Borrower waives any right it may have to require the Bank to
disclose to such Borrower any information which the Bank may now or hereafter
acquire concerning the financial condition of the other Borrower(s).

 

(f)            Each Borrower waives all rights to notices of
default or nonperformance by any
other Borrower under this Agreement. Each Borrower further waives all rights to
notices of the existence or the creation of new indebtedness by any other
Borrower and all rights to any other notices to any party liable on any of the
credit extended under this Agreement.

 

(g)         The Borrowers represent and warrant to the
Bank that each will derive benefit, directly and indirectly, from the
collective administration and availability of credit under this Agreement. The
Borrowers agree that the Bank will not be required to inquire as to the
disposition by any Borrower of funds disbursed in accordance with the terms of
this Agreement.

 

(h)         Until all obligations of the Borrowers to the
Bank under this Agreement have
been paid in full and any commitments of the Bank or facilities provided by the
Bank under this Agreement have been terminated, each Borrower (a) waives any
right of subrogation, reimbursement, indemnification and contribution
(contractual, statutory or otherwise), including without limitation, any claim
or right of subrogation under the Bankruptcy Code (Title 11, United States
Code) or any successor statute, which such Borrower may now or hereafter have
against any other Borrower with respect to the indebtedness incurred under this
Agreement; (b) waives any right to enforce any remedy which the Bank now has or
may hereafter have against any other Borrower, and waives any benefit of, and
any right to participate in, any security now or hereafter held by the Bank.

 

(i)             Each Borrower waives any right to require the
Bank to proceed against any other Borrower or any other person; proceed against
or exhaust any security; or pursue any other remedy. Further, each Borrower
consents to the taking of, or failure to take, any action which might in any
manner or to any extent vary the risks of

 

20

 

the Borrower under this
Agreement or which, but for this provision, might operate as a discharge of the
Borrower.

 

9.8                                 One Agreement. This Agreement and any related security or
other agreements required by this Agreement, collectively:

 

(a)          represent the sum of the understandings and
agreements between the Bank and the Borrowers concerning this credit;

 

(b)         replace any prior oral or written agreements
between the Bank and the Borrowers concerning this credit; and

 

(c)          are intended by the Bank and the Borrowers as
the final, complete and exclusive statement of the terms agreed to by them.

 

In the event of any conflict
between this Agreement and any other agreements required by this Agreement,
this Agreement will prevail.

 

9.9                                 Indemnification. Each Borrower will indemnify and hold the
Bank harmless from any loss, liability, damages, judgments, and costs of any
kind relating to or arising directly or indirectly out of (a) this Agreement or
any document required hereunder, (b) any credit extended or committed by the
Bank to the Borrowers hereunder, (c) any claim, whether well-founded or
otherwise, that there has been a failure to comply with any law regulating the
Borrowers’ sales or leases to or performance of services for debtors obligated
upon the Borrowers’ accounts receivable and disclosures in connection
therewith, and (d) any litigation or proceeding related to or arising out of
this Agreement, any such document, any such credit, or any such claim. This
indemnity includes but is not limited to attorneys’ fees (including the
allocated cost of in-house counsel). This indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys, and assigns. This indemnity will survive repayment of
the Borrowers’ obligations to the Bank. All sums due to the Bank hereunder
shall be obligations of the Borrowers, due and payable immediately without
demand.

 

9.10                           Notices. Unless otherwise provided in this Agreement or in another agreement
between the Bank and the Borrowers, all notices required under this Agreement
shall be personally delivered or sent by first class mail, postage prepaid, or
by overnight courier, to the addresses on the signature page of this Agreement,
or sent by facsimile to the fax numbers listed on the signature page, or to
such other addresses as the Bank and the Borrowers may specify from time to
time in writing. Notices and other communications sent by (a) first class mail
shall be deemed delivered on the earlier of actual receipt or on the fourth
business day after deposit in the U.S. mail, postage prepaid, (b) overnight
courier shall be deemed delivered on the next business day, and (c) telecopy
shall be deemed delivered when transmitted.

 

9.11                           Headings. Article and paragraph headings are for reference only and shall
not affect the interpretation or meaning of any provisions of this Agreement.

 

9.12                           Counterparts. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of

 

21

 

which, when so executed, shall
be deemed an original but all such counterparts shall constitute but one and
the same agreement.

 

9.13                           Prior Agreement Superseded. This Agreement supersedes the Business Loan
Agreement entered into as of April 1, 1998, as amended, between the Bank
and Borrower 1, and any credit outstanding thereunder shall be deemed to be
outstanding under this Agreement.

 

This Agreement is executed as
of the date stated at the top of the first page.

 

 

	
  Bank of
  America N.A.

  	
  bebe stores,
  inc.

  
	
   

  
	
   

  
	
  By

  	
    /s/ Ronald J.
  Drobney

  	
   

  	
  By

  	
    /s/
  John E. Kyees

  	
   

  
	
  Name

  	
   Ronald J. Drobney

  	
   

  	
  Name

  	
   John
  E. Kyees

  	
   

  
	
  Title

  	
    Senior Vice President

  	
   

  	
  Title

  	
    CFO
  & CAO

  	
   

  
	
   

  
	
   

  
	
   

  	
  bebe management, inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  John E. Kyees

  	
   

  
	
   

  	
  Name

  	
   John
  E. Kyees

  	
   

  
	
   

  	
  Title

  	
    CFO
  & CAO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  bebe studio, inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  John E. Kyees

  	
   

  
	
   

  	
  Name

  	
   John
  E. Kyees

  	
   

  
	
   

  	
  Title

  	
    CFO
  & CAO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address where notices to

  	
  Address where notices to

  
	
  the Bank are
  to be sent:

  	
  the
  Borrowers are to be sent:

  
	
  315 Montgomery Street, 13th
  Floor

  	
  400 Valley Drive

  
	
  San Francisco, California

  	
  Brisbane, California 94005

  
															

 

22

 

EXHIBIT
“A”

 

OUTSTANDING
COMMERCIAL LETTERS OF CREDIT

 

	
  Letter of
  Credit Number

  	
   

  	
  Original
  Stated Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1125305

  	
   

  	
  $

  	
  336,640.00

  	
   

  
	
  1125312

  	
   

  	
  30,910.40

  	
   

  
	
  1125316

  	
   

  	
  61,404.00

  	
   

  
	
  1125319

  	
   

  	
  145,900.00

  	
   

  
	
  1125323

  	
   

  	
  596,294.10

  	
   

  
	
  1125324

  	
   

  	
  469,043.90 

  	
   

  
	
  1125328

  	
   

  	
  97,700.00

  	
   

  
	
  1125330

  	
   

  	
  56,360.00

  	
   

  
	
  1125331

  	
   

  	
  43,552.70

  	
   

  
	
  1125332

  	
   

  	
  491,363.80

  	
   

  
	
  1125333

  	
   

  	
  52,576.90

  	
   

  
	
  1125334

  	
   

  	
  374,380.00

  	
   

  
	
  1125335

  	
   

  	
  644,915.00 

  	
   

  
	
  1125337

  	
   

  	
  526,732.00

  	
   

  
					

 

23

 

FIRST AMENDMENT TO BUSINESS LOAN AGREEMENT

 

This First
Amendment to Business Loan Agreement (the “Amendment”) is made as of November
24, 2003, between Bank of America, N.A.(“Bank”), and Bebe Stores, Inc.
(“Borrower 1”), Bebe Management, Inc. (“Borrower 2”), and Bebe Studio, Inc.
(“Borrower 3”), (Borrower 1, Borrower 2, and Borrower 3 are sometimes referred
to collectively as the “Borrowers” and individually as the “Borrower”).

 

RECITALS

 

A.                                   Borrowers
and Bank entered into that certain Business Loan Agreement dated as of
March 28, 2003 (the “Agreement”).

 

B.                                     Borrowers
and Bank desire to amend the Agreement as herein provided.

 

AGREEMENT

 

1.                                       Definitions.  Capitalized terms used but not defined in
this Amendment shall have the meaning given to them in the Agreement.

 

2.                                       Amendments.

 

a.                                       Section 1.2
of the Agreement is amended in its entirety to read as follows:

 

“1.2         Availability Period.  The line of credit is available between the
date of this Agreement and March 1, 2006, or such earlier date as the
availability may terminate as provided in this Agreement (the “Expiration
Date”).”

 

b.                                      Section 7.6(e)
of the Agreement is amended in its entirety to read as follows:

 

“(e)  Additional debts for equipment purchases so
long as no event of default exists under this Agreement.”

 

c.                                       Section 7.7(d)
of the Agreement is amended in its entirety to read as follows:

 

“(d)  Purchase money security interests in
equipment acquired by Borrower.”

 

d.                                      Section 7.10
of the Agreement is amended in its entirety to read as follows:

 

“7.10                     Intentionally
Omitted.”

 

3.                                       Representations
and Warranties.  Each Borrower
hereby represents and warrants to Bank that: (i) no default specified in the
Agreement and no event which with

 

1

 

notice or lapse of time or both
would become such a default has occurred and is continuing and has not been
previously waived, (ii) the representations and warranties of each Borrower
pursuant to the Agreement are true on and as of the date hereof as if made on
and as of said date, (iii) the making and performance by each Borrower of this
Amendment have been duly authorized by all necessary action, and (iv) no
consent, approval, authorization, permit or license is required in connection
with the making or performance of the Agreement as amended hereby.

 

4.                                       Conditions.  This Amendment will be effective when the
Bank receives the following items, in form and content acceptable to the Bank:

 

a.                                       This
Amendment duly executed by all parties hereto.

 

b.                                      Payment
of all out-of-pocket expenses, including attorneys’ fees, incurred by the Bank
in connection with the preparation of this Amendment not to exceed $1000.00.
The Bank has elected not to charge the Borrowers an amendment fee for this
amendment.

 

5.                                       Effect
of Amendment.  Except as provided in
this Amendment, the Agreement shall remain in full force and effect and shall
be performed by the parties hereto according to its terms and provisions.

 

IN WITNESS
WHEREOF, this Amendment has been executed by the parties hereto as of the date
first above written.

 

	
  Bank of
  America N.A.

  	
  Bebe Stores,
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By 

  	
    /s/
  Ken Jones

  	
   

  	
  By

  	
    /s/
  Manny Mashouf

  	
   

  
	
  Name

  	
    Ken
  Jones

  	
   

  	
  Name

  	
    Manny
  Mashouf

  	
   

  
	
  Title

  	
    SVP

  	
   

  	
  Title

  	
    Chairman
  and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Bebe
  Management, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  Manny Mashouf

  	
   

  
	
   

  	
  Name

  	
    Manny
  Mashouf

  	
   

  
	
   

  	
  Title

  	
    Chairman
  and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Bebe Studio,
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  Manny Mashouf

  	
   

  
	
   

  	
  Name

  	
    Manny
  Mashouf

  	
   

  
	
   

  	
  Title

  	
    Chairman
  and CEO

  	
   

  
									

 

2

 

SECOND AMENDMENT TO
BUSINESS LOAN AGREEMENT

 

This Second
Amendment to Business Loan Agreement (the “Amendment”) is made as of September
15, 2004, by and between Bank of America, N.A. (“Bank”) on the one hand, and
Bebe Stores, Inc. (“Borrower 1”), Bebe Management, Inc. (“Borrower 2”), and
Bebe Studio, Inc. (“Borrower 3”) (Borrower 1, Borrower 2, and Borrower 3 are
sometimes referred to collectively as the “Borrowers” and individually as the
“Borrower”) on the other hand.

 

RECITALS

 

A.                                   Borrowers
and Bank entered into that certain Business Loan Agreement dated as of
March 28, 2003, as amended by that certain First Amendment to Business
Loan Agreement dated November 24, 2003 (the “Agreement”).

 

B.                                     Borrowers
and Bank desire to further amend the Agreement as herein provided.

 

AGREEMENT

 

1.                                       Definitions.  Capitalized terms used but not defined in
this Amendment shall have the meaning given to them in the Agreement.

 

2.                                       Amendments.

 

a.                                       Section 1.1(a)
of the Agreement is amended in its entirety to read as follows:

 

“(a)  During the availability period described
below, the Bank will provide a line of credit to the Borrowers.  The amount of the line of credit (the
“Commitment”) is Twenty-Five Million Dollars
($25,000,000).

 

b.                                      Section 1.1(c)
of the Agreement is amended in its entirety to read as follows:

 

“(c)  Intentionally Omitted.”

 

c.                                       Section 1.6(a)(iii)
of the Agreement is amended in its entirety to read as follows:

 

“(iii)  Intentionally Omitted.”

 

3.                                       Representations
and Warranties.  Each Borrower
hereby represents and warrants to Bank that: (i) no default specified in the
Agreement and no event which with notice or lapse of time or both would become
such a default has occurred and is continuing and has not been previously
waived, (ii) the representations and warranties of each Borrower pursuant to
the Agreement are true on and as of the date hereof as if made

 

1

 

on and as of said date, (iii)
the making and performance by each Borrower of this Amendment have been duly authorized
by all necessary action, and (iv) no consent, approval, authorization, permit
or license is required in connection with the making or performance of the
Agreement as amended hereby.

 

4.                                       Conditions.  This Amendment will be effective when the
Bank receives the following items, in form and content acceptable to the Bank:

 

a.                                       This
Amendment duly executed by all parties hereto.

 

b.                                      Payment
of all out-of-pocket expenses, including attorneys’ fees, incurred by the Bank
in connection with the preparation of this Amendment not to exceed
$1000.00.  The Bank has elected not to
charge the Borrowers an amendment fee for this amendment.

 

5.                                       Effect
of Amendment.  Except as provided in
this Amendment, the Agreement shall remain in full force and effect and shall be
performed by the parties hereto according to its terms and provisions.

 

 

[Signature page to follow.]

 

2

 

IN WITNESS
WHEREOF, this Amendment has been executed by the parties hereto as of the date
first above written.

 

	
  Bank of
  America N.A.

  	
  Bebe Stores,
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Kenneth
  E Jones

  	
   

  	
  By

  	
   /s/
  Walter Parks

  	
   

  
	
  Name

  	
  Kenneth E
  Jones

  	
   

  	
  Name

  	
  Walter Parks

  	
   

  
	
  Title

  	
  Senior Vice
  President

  	
   

  	
  Title

  	
   Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Bebe
  Management, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Walter
  Parks

  	
   

  
	
   

  	
  Name

  	
  Walter Parks

  	
   

  
	
   

  	
  Title

  	
   Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Bebe Studio,
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/
  Walter Parks

  	
   

  
	
   

  	
  Name

  	
  Walter Parks

  	
   

  
	
   

  	
  Title

  	
   Chief
  Financial Officer

  	
   

  
									

 

3

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