EL CAPITAN BUILDING

LEASE

BY AND BETWEEN

CONEXANT SYSTEMS, INC.

as Landlord

and

SPECIALTYSEMI, INC.,

as Tenant

March 12, 2002


Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.



TABLE OF CONTENTS

 
   
   
  PAGE
ARTICLE 1 DEFINITIONS 1

1.1

 

Definitions

 

1

ARTICLE 2

 

LEASED PREMISES, TERM AND POSSESSION

 

5

2.1

 

Demise Of Leased Premises

 

5

2.2

 

Right To Use Common Areas

 

5

2.3

 

Lease Commencement Date And Lease Term

 

6

2.4

 

Performance Of Improvement Work; Acceptance Of Possession

 

6

2.5

 

Surrender Of Possession

 

6

 

 

(a)

 

Removal Obligations

 

6

 

 

(b)

 

Failure to Surrender in Required Condition

 

6

ARTICLE 3

 

RENT

 

7

3.1

 

Expense Rent

 

7

 

 

(a)

 

Estimates

 

7

 

 

(b)

 

Quarterly Adjustments

 

7

 

 

(c)

 

Audit of Quarterly Statement

 

7

3.2

 

Water Charges

 

8

3.3

 

Electricity

 

8

3.4

 

Interest On Rent In Default

 

8

3.5

 

Payment Of Rent

 

8

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ARTICLE 4

 

USE OF LEASED PREMISES AND COMMON AREA

 

8

4.1

 

Permitted Use

 

8

 

 

(a)

 

Permitted Use of Leased Premises

 

8

 

 

(b)

 

Use of Common Areas

 

9

4.2

 

General Limitations On Use

 

9

4.3

 

Noise And Emissions

 

9

4.4

 

Trash Disposal

 

10

4.5

 

Parking

 

10

4.6

 

Signs

 

10

4.7

 

Compliance With Laws And Private Restrictions

 

10

4.8

 

Compliance With Insurance Requirements

 

11

4.9

 

Landlord's Right To Enter

 

11

4.10

 

Environmental Protection

 

11

4.11

 

Rules And Regulations

 

14

4.12

 

Reservations

 

14

ARTICLE 5

 

REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

 

14

5.1

 

Repair And Maintenance

 

14

5.2

 

Utilities

 

15

5.3

 

Security Measures

 

15

5.4

 

Energy And Resource Consumption

 

15

5.5

 

Limitation Of Landlord's Liability

 

15

5.6

 

Power Substation

 

16

ARTICLE 6

 

ALTERATIONS AND IMPROVEMENTS

 

16

6.1

 

By Tenant

 

16

6.2

 

Ownership Of Improvements

 

17

6.3

 

Alterations Required By Law

 

17

6.4

 

Liens

 

17

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ARTICLE 7

 

ASSIGNMENT AND SUBLETTING BY TENANT

 

17

7.1

 

By Tenant

 

17

7.2

 

Merger, Reorganization, or Sale of Assets

 

18

7.3

 

Landlord's Election

 

18

7.4

 

Conditions To Landlord's Consent

 

19

7.5

 

Assignment Consideration And Excess Rentals Defined

 

19

7.6

 

Payments

 

20

7.7

 

Effect Of Landlord's Consent

 

20

ARTICLE 8

 

LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY

 

20

8.1

 

Limitation On Landlord's Liability And Release

 

20

8.2

 

Tenant's Indemnification Of Landlord

 

21

ARTICLE 9

 

INSURANCE

 

21

9.1

 

Tenant's Insurance

 

21

9.2

 

Landlord's Insurance

 

22

9.3

 

Mutual Waiver Of Subrogation

 

23

ARTICLE 10

 

DAMAGE TO LEASED PREMISES

 

23

10.1

 

Landlord's Duty To Restore

 

23

10.2

 

Insurance Proceeds

 

23

10.3

 

Landlord's Right To Terminate

 

24

10.4

 

Tenant's Right To Terminate

 

24

10.5

 

Tenant's Waiver

 

24

ARTICLE 11

 

CONDEMNATION

 

24

11.1

 

Tenant's Right To Terminate

 

24

11.2

 

Landlord's Right To Terminate

 

24

11.3

 

Restoration

 

24

11.4

 

Temporary Taking

 

25

11.5

 

Division Of Condemnation Award

 

25

11.6

 

Taking Defined

 

25

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ARTICLE 12

 

DEFAULT AND REMEDIES

 

25

12.1

 

Events Of Tenant's Default

 

25

12.2

 

Landlord's Remedies

 

26

12.3

 

Landlord's Default And Tenant's Remedies

 

27

12.4

 

Limitation Of Tenant's Recourse

 

27

12.5

 

Tenant's Waiver

 

28

ARTICLE 13

 

GENERAL PROVISIONS

 

28

13.1

 

Taxes On Tenant's Property

 

28

13.2

 

Holding Over

 

28

13.3

 

Transfer By Landlord

 

28

13.4

 

Force Majeure

 

29

13.5

 

Notices

 

29

13.6

 

Attorneys' Fees

 

29

13.7

 

General Waivers

 

29

13.8

 

Miscellaneous

 

30

13.9

 

Quiet Enjoyment

 

30

13.10

 

Confidentiality

 

30

ARTICLE 14

 

CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT

 

31

14.1

 

Corporate Authority

 

31

14.2

 

Brokerage Commissions

 

31

14.3

 

Entire Agreement

 

31

14.4

 

Landlord's Representations

 

31

14.5

 

Subordination To Mortgages and Ground Leases

 

31

14.6

 

Tenant's Attornment Upon Foreclosure

 

32

14.7

 

Mortgagee Protection

 

32

14.8

 

Estoppel Certificate

 

32

14.9

 

Memorandum of Lease

 

32

ARTICLE 15

 

OPTIONS TO EXTEND

 

32

15.1

 

Extension Options

 

32

15.2

 

Terms of Extension

 

32

iv



LEASE

        THIS LEASE, dated March 12, 2002, is made by and between CONEXANT SYSTEMS, INC., a Delaware corporation ("Landlord"), and SPECIALTYSEMI, INC., a Delaware corporation ("Tenant"), to be effective and binding upon the parties as of the date the last of the designated signatories to this Lease shall have executed this Lease (the "Effective Date of this Lease").

RECITALS

        A.    Landlord, Tenant and Carlyle Capital Investors, L.L.C. ("Carlyle") are parties to that certain Contribution Agreement dated February 23, 2002 (the "Contribution Agreement"), pursuant to which Landlord and Carlyle agreed to form a joint venture, which joint venture entity is the Tenant hereunder, for the operation of a semiconductor wafer fabrication facility in the Leased Premises (as defined below).

        B.    In furtherance of the purposes of the Contribution Agreement, Landlord has agreed to lease to Tenant the Leased Premises for operation of a semiconductor wafer fabrication facility pursuant to the terms of this Lease.

        NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, Landlord and Tenant covenant and agree as follows:


ARTICLE 1

DEFINITIONS

1


2


3



Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.

4



ARTICLE 2

LEASED PREMISES, TERM AND POSSESSION

        2.1    Demise Of Leased Premises.    Landlord hereby leases to Tenant and Tenant hereby leases from Landlord for Tenant's own use for the Permitted Use and not for purposes of speculating in real estate, for the Lease Term and upon the terms and subject to the conditions of this Lease, that certain interior space described in Article 1 as the Leased Premises. Tenant's lease of the Leased Premises, together with the appurtenant right to use the Common Areas as described in Paragraphs 2.2 below, shall be conditioned upon and be subject to the continuing compliance by Tenant with (i) all the terms and conditions of this Lease, (ii) all Laws and Private Restrictions governing the use or occupancy of the Leased Premises and the Property, (iii) all Laws and Private Restrictions governing the operation of pollution control systems, waste collection and treatment systems, (iv) all easements and other matters now of public record respecting the use of the Leased Premises and Property, and (v) all reasonable rules and regulations from time to time established by Landlord under Paragraph 4.11 of this Lease. Notwithstanding any provision of this Lease to the contrary, Landlord hereby reserves to itself and its designees reasonable rights of access, use and occupancy of the Building roof, provided that Landlord and its designees do not unreasonably interfere with the conduct of Tenant's business at the Leased Premises and comply with any reasonable security measure established by Tenant. Tenant shall have a nonexclusive right of access and use or occupancy of the Building roof to the extent required in order to enable Tenant to perform Tenant's maintenance and repair obligations pursuant to this Lease.

        2.2    Right To Use Common Areas.    As an appurtenant right to Tenant's right to the use the Leased Premises, Tenant shall have the right to use the Common Areas in conjunction with its use of the Leased Premises solely for the purposes for which they were designated and intended and for no other purposes whatsoever. Tenant's right to so use the Common Areas shall terminate concurrently with any termination of this Lease. Tenant, in its use of the Common Areas, shall at all times keep the Common Areas in a safe condition free and clear of all materials, equipment, debris, trash (except within existing enclosed trash areas), inoperable vehicles, and other items which are not specifically permitted by Landlord to be stored or located thereon by Tenant. Landlord shall have no liability to Tenant, its agents, employees, contractors and invitees in connection with their use of the Common Areas (including, without limitation, the recreation facilities located within the Common Areas) and Tenant, its agents, employees, contractors and invitees assume all risk of injury in connection with their

5



use thereof, except for liability arising from the negligence or willful misconduct of Landlord, or Landlord's agents or employees.

        2.3    Lease Commencement Date And Lease Term.    The term of this Lease shall begin, and the Lease Commencement Date shall be deemed to have occurred, on March 12, 2002 (the "Lease Commencement Date"). The term of this Lease shall in all events end on the Lease Expiration Date (as set forth in Article 1). The Lease Term shall be that period of time commencing on the Lease Commencement Date and ending on the Lease Expiration Date (the "Lease Term").

        2.4    Performance Of Improvement Work; Acceptance Of Possession.    Landlord shall deliver and Tenant shall accept possession of the Leased Premises on the Lease Commencement Date in their then "as-is" condition, with all faults and defects. Landlord shall have no obligation to improve, alter or repair the Leased Premises prior to delivery to Tenant, or thereafter, unless specifically provided for herein. Notwithstanding the foregoing, Landlord hereby represents that there are no material defects in the Building or Leased Premises which would have a material adverse impact on Tenant's ability to operate a semiconductor wafer fabrication operation therein as operated by Landlord prior to the Lease Commencement Date.

        2.5    Surrender Of Possession.    

6



ARTICLE 3

RENT

        3.1    Expense Rent.    Commencing on the first day of the first month following the Lease Commencement Date (the "Rent Commencement Date") and continuing on the first day of each month thereafter throughout the Lease Term, to the extent not required by Landlord to be contracted for and paid directly by Tenant, Tenant shall pay to Landlord as rent an amount equal to Tenant's Pro Rata Share of all Expenses (as defined in Article 1) incurred by Landlord (the "Expense Rent"). Payment shall be made as follows:

7


        3.2    Water Charges.    Provided the Leased Premises have not been separately metered for water in accordance with Paragraph 5.2 hereof, Tenant may, either with its monthly payment of estimated Expense Rent or upon payment of any amount due pursuant to the Quarterly Statement described in Paragraph 3.1(b), charge to Landlord in the form of an offset of the Expense Rent due an amount equal to 17% of the cost to provide water to the entirety of the Property (which obligation has been assumed by Tenant pursuant to Paragraph 5.2 hereof). Concurrent with any such offset, Tenant shall provide Landlord with a copy of the actual water bill for the Property and any supporting calculations. If the Leased Premises have been separately metered for water, Tenant shall pay directly for service to the Leased Premises and shall have no offset rights hereunder.

        3.3    Electricity.    Tenant, at its election made in writing to Landlord prior to the Rent Commencement Date, may elect that the cost of electricity included in Expenses be billed to Tenant at the applicable tariff rate (the "Tariff Rate") filed with the California Public Utilities Commission ("CPUC"). In the event Tenant so elects to pay for electricity at the Tariff Rate, then notwithstanding anything to the contrary contained in this Lease, Tenant shall have no obligation pay for any charge, surcharge, fee or penalty assessed to Landlord by the CPUC on the basis that Landlord obtained electricity through direct access to electricity providers ("Direct Access"). In the event Tenant does not elect to pay for electricity at the Tariff Rate, the cost of electricity included in Expenses shall be the actual cost paid by Landlord, whether based on the Tariff Rate or the rate obtained through Direct Access, and Landlord and Tenant shall each be proportionately liable for any charge, surcharge, fee or penalty assessed to Landlord by the CPUC on the basis that Landlord obtained electricity through Direct Access as follows: Each party shall be responsible for a fraction of such charge, surcharge, fee or penalty, where the denominator of the fraction is the total number of months electricity for the Property was obtained through Direct Access and in the case of Landlord, the numerator is the number of months prior to the Rent Commencement Date that electricity was obtained through Direct Access and in the case of Tenant, the numerator is the number of months electricity was obtained through Direct Access after the Rent Commencement Date. Any such charge, surcharge, fee or penalty which is allocable to Tenant in accordance with the foregoing calculation shall be included as a costs of electricity in the definition of Expenses and Tenant shall pay its Pro Rata Share thereof in accordance with the terms of this Lease.

        3.4    Interest On Rent In Default.    If any Rent remains delinquent for a period in excess of ten (10) calendar days, then Tenant shall pay to Landlord interest on any Rent that is not so paid from said tenth day at the rate of the lesser of Comerica Prime Plus Two or the then maximum rate of interest not prohibited or made usurious by Law until paid.

        3.5    Payment Of Rent.    All Rent shall be paid in lawful money of the United States, without any abatement, reduction or offset for any reason whatsoever except as expressly set forth herein, to Landlord at such address as Landlord may designate from time to time. Failure of Landlord to notify Tenant in writing of a change of address shall waive all late charges and interest on Rent in default until such written notice is granted.


ARTICLE 4

USE OF LEASED PREMISES AND COMMON AREA

        4.1    Permitted Use.    

8


        4.2    General Limitations On Use.    Tenant shall not do or permit anything to be done in or about the Leased Premises, the Building, the Common Areas or the Property which does or could (i) jeopardize the structural integrity of the Building or (ii) cause material damage to any part of the Leased Premises, or damage to the Building, the Common Areas or the Property. Tenant shall not operate any equipment within the Leased Premises or in any other portion of the Building which does or could (i) injure, vibrate or shake the Building, (ii) damage, overload or impair the efficient operation of any electrical, plumbing, heating, ventilating or air conditioning systems, pollution control systems, waste collection or treatment systems within or servicing the Leased Premises or the Building, or (iii) damage or impair the efficient operation of the sprinkler system (if any) within or servicing the Building without Landlord's prior written approval. Tenant shall not install any equipment or antennas on or make any penetrations of the exterior walls or roof of the Building without Landlord's prior written approval, which approval shall not be unreasonably withheld. Tenant shall not affix any equipment to or make any penetrations or cuts in the floor, ceiling, walls or roof of the Leased Premises or place any loads upon the floors, walls, ceiling or roof systems which could endanger the structural integrity of the Building or damage its floors, foundations or supporting structural components, without in each case obtaining Landlord's prior written approval, which approval shall not be unreasonably withheld. Tenant shall not commit nor permit to be committed any waste in or about the Leased Premises, the Building, the Common Areas or the Property.

        4.3    Noise And Emissions.    All noise generated by Tenant in its use of the Leased Premises shall be confined or muffled so that it does not unreasonably interfere with the businesses of or unreasonably annoy the occupants and/or users of the Building or adjacent properties given the nature of Tenant's operations in the Leased Premises and Tenant shall operate the Leased Premises in compliance with applicable Laws. All dust, fumes, odors and other emissions generated by Tenant's use of the Leased Premises shall be sufficiently dissipated in accordance with sound environmental practice

9



and exhausted from the Leased Premises in compliance with applicable Laws and in such a manner so as not to interfere with the businesses of or annoy the occupants and/or users of the Building or adjacent properties, or cause any damage to the Leased Premises, the Building, the Common Areas or the Property or any component part thereof or the property of adjacent property owners. Landlord agrees that Landlord shall not object to noise and emissions from the Leased Premises to the extent such noise and emissions are the same level as existed as of the Effective Date of this Lease.

        4.4    Trash Disposal.    Tenant shall provide trash bins or other adequate garbage disposal facilities within the trash enclosure areas provided or permitted by Landlord outside the Leased Premises sufficient for the interim disposal of all of Tenant's trash, garbage and waste. All such trash, garbage and waste temporarily stored in such areas shall be stored in such a manner so that it is not visible from outside of such areas, and Tenant shall cause such trash, garbage and waste to be regularly removed from the Property. Landlord hereby represents that that the waste storage area as it exists as of the Effective Date of this Lease is sufficient for the operations existing therein as such operations have been conducted by Landlord as of the Effective Date of this Lease. Tenant shall keep the Leased Premises and the Common Areas in a clean, safe and neat condition free and clear of all of Tenant's trash, garbage, waste and/or boxes, pallets and containers containing same at all times.

        4.5    Parking.    Landlord shall provide Tenant with the right to use 800 non-exclusive parking spaces on the Property. Tenant shall not, at any time, park or permit to be parked any inoperative vehicles in the Common Areas or on any portion of the Property. Tenant agrees to assume responsibility for compliance by its employees and invitees with the parking provisions contained herein and any reasonable rules and regulations established by Landlord for parking on the Property in accordance with Paragraph 4.11 of this Lease. Landlord reserves the right to grant easements and access rights to others for use of the parking areas on the Property, provided that such grants do not materially interfere with Tenant's use of the parking areas.

        4.6    Signs.    Tenant shall have the right to install business identification signage on the exterior of the Building and to place monument signs on Jamboree Road, subject to Landlord's prior written consent (which shall not be unreasonably withheld, conditioned or delayed), provided such signage complies with all Laws. Landlord agrees, upon request by Tenant, to remove its existing business identification signage on the Building and on Jamboree Road and restore the surface thereof at Landlord's sole cost and expense. Any sign, once approved by Landlord and the City of Newport Beach (if necessary to comply with Law), shall be installed at Tenant's sole cost and expense and only in strict compliance with Landlord's approval, using a person chosen by Tenant and approved by Landlord to install same, such approval not to be unreasonably withheld, conditioned or delayed. Landlord may remove any signs, advertisements, banners, placards or pictures so placed by Tenant on or within the Leased Premises, the exterior of the Building, the Common Areas or the Property and not approved in writing by Landlord and charge to Tenant the reasonable cost of such removal, together with any reasonable costs incurred by Landlord to repair any damage caused thereby, including any cost incurred to restore the surface (upon which such sign was so affixed) to its original condition. Tenant shall remove all of Tenant's signs, repair any damage caused thereby, and restore the surface upon which the sign was affixed substantially to its original condition, all to Landlord's reasonable satisfaction, upon the termination of this Lease.

        4.7    Compliance With Laws And Private Restrictions.    Subject to Paragraph 4.10 hereof, Tenant shall abide by and shall promptly observe and comply with, at its sole cost and expense, all Laws and Private Restrictions respecting the use and occupancy of the Leased Premises, the Building, the Common Areas or the Property including, without limitation, all Laws governing the use and/or disposal of Hazardous Materials, and shall defend with competent counsel, indemnify and hold Landlord harmless from any claims, damages, liability, fines, penalties or costs resulting from Tenant's use of the Leased Premises or Tenant's failure to so abide, observe, or comply. Tenant's obligations hereunder shall survive the expiration or sooner termination of this Lease. Landlord shall require itself

10



and other tenants of the Property to comply with all Laws and Private Restrictions, subject to the terms of this Lease. Tenant shall immediately notify Landlord and provide copies of any governmental or third party communications, requests or inspections received by Tenant related in any manner to a release, condition or claim regarding Hazardous Materials at the Leased Premises, Building, and/or Property. Tenant shall promptly provide Landlord with written notice of any release or imminent release of Hazardous Materials caused or permitted by Tenant at the Property or by any person at the Leased Premises as soon as Tenant becomes aware of such release or imminent release.

        4.8    Compliance With Insurance Requirements.    With respect to any insurance policies required or permitted to be carried by Landlord in accordance with the provisions of this Lease, Tenant shall not conduct any activities nor keep, store or use any item or thing within the Leased Premises, the Building, the Common Areas or the Property which (i) is prohibited under the terms of any such policies (provided such prohibitions are made known to Tenant), (ii) would result in the termination of the coverage afforded under any of such policies, (iii) would give to the insurance carrier the right to cancel any of such policies, or (iv) would cause an increase in the rates (over standard rates) charged for the coverage afforded under any of such policies (unless such increases are paid by Tenant). Tenant shall comply with all reasonable requirements of any insurance company, insurance underwriter, or Board of Fire Underwriters which are necessary to maintain, at standard rates, the insurance coverages carried by either Landlord or Tenant pursuant to this Lease. Landlord shall provide Tenant with a copy of all insurance policies related to the Leased Premises, the Building, the Common Areas and the Property and Tenant shall be deemed to have knowledge of all of the terms and conditions of such policies.

        4.9    Landlord's Right To Enter.    Landlord and its agents and third party designees retain the right to enter the Leased Premises during normal business hours but shall give Tenant reasonable notice (except in the case of emergency, access to the Identified Groundwater Treatment Systems and for access to the testers on the third floor of the Building, when no notice shall be required, provided that any such access to the testers on the third floor of the Building shall not materially and unreasonably interfere with Tenant's use of the Leased Premises) for the purpose of (i) inspecting the same; (ii) showing the Leased Premises to prospective purchasers, mortgagees or tenants, occupants, and/or licensees; (iii) making necessary alterations, additions or repairs (provided that any such alterations, additions or repairs shall be coordinated in advance with Tenant); (iv) working with the testers on the third floor of the Building, and (v) performing any of Tenant's obligations when Tenant has failed to do so, provided that Landlord and its agents and third party designees shall abide by Tenant's reasonable security measures and provided that access by Landlord and its agents and third party designees pursuant to this Paragraph 4.9 shall not materially and unreasonably interfere with Tenant's use of the Leased Premises. Landlord retains the right to enter the Leased Premises during normal business hours (or as otherwise agreed), subject to Tenant's reasonable security measures, for purposes of supplying any maintenance or services agreed to be supplied by Landlord. Landlord and its agents retain the right to enter the Common Areas at all times for any and all purposes, including, but not limited to (i) conducting Landlord's Environmental Response Activities, (ii) inspecting the exterior of the Building and the Common Areas; (iii) posting notices of nonresponsibility (and for such purposes Tenant shall provide Landlord at least fifteen (15) days' prior written notice of any work to be performed on the Leased Premises); and (iv) supplying any services to be provided by Landlord. Any entry into the Leased Premises or the Common Areas obtained by Landlord in accordance with this paragraph shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Leased Premises, or an eviction, actual or constructive of, Tenant from the Leased Premises or any portion thereof, nor relieve Tenant of its obligations hereunder, nor constitute a breach of contract.

        4.10    Environmental Protection.    Tenant's obligations under this Paragraph 4.10 shall survive the expiration or termination of this Lease.

11




Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.

12



Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.

13


        4.11    Rules And Regulations.    Landlord shall have the right from time to time to establish reasonable rules and regulations and/or amendments or additions thereto respecting the use of the Common Areas for the care and orderly management of the Property. Upon delivery to Tenant of a copy of such rules and regulations or any amendments or additions thereto, Tenant shall comply with such rules and regulations. A material violation by Tenant of any of such rules and regulations shall constitute a default by Tenant under this Lease subject to Paragraph 12.1(b) hereof. If there is a conflict between the rules and regulations and any of the provisions of this Lease, the provisions of this Lease shall prevail. Landlord shall not be responsible or liable to Tenant for the violation of such rules and regulations by any other tenants, occupants, and/or licensees of the Property. Landlord acknowledges and agrees that existing uses of the Property as of the Effective Date of this Lease shall not be barred by such rules and regulations.

        4.12    Reservations.    Landlord reserves the right from time to time to grant, without the consent or joinder of Tenant and without cost to Tenant, such easements, rights of way and dedications that Landlord deems necessary, and to cause the recordation of parcel maps and Private Restrictions, or seek additional entitlements or modify parcel maps, so long as such Private Restrictions, easements, rights of way and dedications do not unreasonably interfere with the use of the Leased Premises by Tenant. Tenant agrees to execute any documents reasonably requested by Landlord to effectuate any such easement rights, dedications, maps or restrictions.


ARTICLE 5

REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

        5.1    Repair And Maintenance.    


Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.

14


        5.2    Utilities.    Landlord shall arrange for the supply of gas and electricity to the Leased Premises and Tenant shall reimburse Landlord for the cost thereof pursuant to Paragraph 3.1. Tenant shall arrange for and provide water service to the entirety of the Property, shall obtain such service in Tenant's name and shall pay the monthly charges therefor, subject to Tenant's right of offset in Paragraph 3.2 hereof. Tenant shall arrange directly for any other utility services to be provided to the Building. Tenant shall be responsible for determining if the local supplier of water, gas and electricity can supply the needs of Tenant and whether or not the existing water, gas and electrical distribution systems within the Building and the Leased Premises are adequate for Tenant's needs. Tenant shall be responsible for determining if the existing sanitary and storm sewer systems now servicing the Leased Premises and the Property are adequate for Tenant's needs. Subject to Paragraph 3.3 hereof, Tenant shall pay all charges and special charges for water, gas, electricity and storm and sanitary sewer services, and other waste discharge services and permits as so supplied to the Leased Premises, irrespective of whether or not the services are maintained in Landlord's or Tenant's name, provided that Tenant shall be required to pay only for the actual cost of such services. Either party hereto, at its sole cost and expense, hereto may cause the Leased Premises or the Building to be separately metered for gas, electricity and/or water, in which case Tenant shall arrange for any such separately metered service to be put in Tenant's name and shall pay the cost for such service directly to the utility provider, in which case Expenses shall not include the cost of any such service paid directly by Tenant.

        5.3    Security Measures.    Pursuant to that certain Transition Services Agreement between Landlord and Tenant, dated concurrently herewith (the "Transition Services Agreement"), Landlord shall implement security measures for the Building and the Property, as set forth therein. Tenant shall cooperate with, and cause its employees and representatives to cooperate and comply with, such security measures.

        5.4    Energy And Resource Consumption.    Landlord shall comply with all requirements of all Laws regarding energy or other resource consumption within the Property. Tenant shall not be entitled to terminate this Lease or to any reduction in or abatement of rent by reason of such compliance. Tenant agrees at all times to cooperate fully with Landlord and to abide by all reasonable rules established by Landlord (i) in order to maximize the efficient operation of the electrical, heating, ventilating and air conditioning systems and all other energy or other resource consumption systems with the Property and/or (ii) in order to comply with the requirements of utility suppliers and governmental agencies regulating the consumption of energy and/or other resources.

        5.5    Limitation Of Landlord's Liability.    Landlord shall not be liable to Tenant for injury to Tenant, its employees, agents, invitees or contractors, damage to Tenant's property or loss of Tenant's business or profits, nor shall Tenant be entitled to terminate this Lease or to any reduction in or abatement of rent by reason of (i) Landlord's failure to perform any maintenance or repairs to the Leased Premises, the Building, the Common Areas or the Property until Tenant shall have first notified Landlord, in writing, of the need for such maintenance or repairs, and then only after Landlord shall have had a reasonable period of time following its receipt of such notice within which to perform such maintenance or repairs, and then only to the extent of the actual cost incurred by Tenant for performance thereof, or (ii) any failure, interruption, rationing or other curtailment in the supply of water, electric current, gas or other utility service to the Leased Premises, the Building, the Common Areas or the Property from whatever cause (other than Landlord's negligence or willful misconduct), or (iii) the unauthorized intrusion or entry into the Leased Premises by third parties (other than Landlord).

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        5.6    Power Substation.    In addition to Tenant's maintenance and repair obligations set forth in Paragraph 5.1(a) above, Tenant shall, at all times during the Lease Term and at its sole cost and expense, maintain the 66 KV power substation on the Property serving the Building (the "Substation") in its existing condition and repair (as of the Effective Date of this Lease). Tenant shall schedule maintenance of the Substation (which requires a complete power shutdown) with Landlord at a mutually agreeable time and shall cause such maintenance to be performed by vendors reasonably approved by Landlord.


ARTICLE 6

ALTERATIONS AND IMPROVEMENTS

        6.1    By Tenant.    

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        6.2    Ownership Of Improvements.    All modifications, alterations and improvements made or added to the Leased Premises by Tenant other than Tenant's inventory, equipment, movable furniture, wall decorations and trade fixtures or any of the Contributed Assets ("Real Property Improvements") shall be deemed part of the Property owned by Landlord. Tenant hereby covenants and agrees not to grant a security interest to any party other than Landlord in any Real Property Improvements made or added to the Leased Premises by Tenant, except that Tenant may grant a security interest in Tenant's inventory, equipment, movable furniture, wall decorations and trade fixtures or any of the Contributed Assets, provided that in no event shall Tenant be entitled to cause a lien, mortgage or other encumbrance to be placed on the Property. Any Real Property Improvements, once completed, shall not be altered or removed from the Leased Premises during the Lease Term without Landlord's written approval first obtained in accordance with the provisions of Paragraph 6.1 above. At the expiration or sooner termination of this Lease, all Real Property Improvements shall automatically become the property of Landlord and shall be surrendered to Landlord as part of the Leased Premises as required pursuant to Article 2, unless Landlord shall require Tenant to remove any of such Real Property Improvements in accordance with the provisions of Article 2 and Paragraph 4.10, in which case Tenant shall so remove same. Landlord shall have no obligations to reimburse Tenant for all or any portion of the cost or value of any such Real Property Improvements so surrendered to Landlord. All Real Property Improvements which are installed or constructed on or attached to the Leased Premises by Landlord and/or at Landlord's expense after the Lease Commencement Date shall be deemed real property and a part of the Leased Premises and shall be property of Landlord.

        6.3    Alterations Required By Law.    Tenant shall make all modifications, alterations and improvements to the Leased Premises, at its sole cost, that are required by any Law because of (i) Tenant's use or occupancy of the Leased Premises, the Building, the Common Areas or the Property, (ii) Tenant's application for any permit or governmental approval, or (iii) Tenant's making of any modifications, alterations or improvements to or within the Leased Premises.

        6.4    Liens.    Tenant shall keep the Property and every part thereof free from any lien, and shall pay when due all bills arising out of any work performed, materials furnished, or obligations incurred by Tenant, its agents, employees or contractors relating to the Property. If any such claim of lien is recorded against the Property or any part thereof, Tenant shall bond against, discharge or otherwise cause such lien to be entirely released within ten (10) days after Tenant shall have actual notice that the same has been recorded. Tenant's failure to do so shall be a material default under the terms of this Lease.


ARTICLE 7

ASSIGNMENT AND SUBLETTING BY TENANT

        7.1    By Tenant.    Tenant shall not sublet the Leased Premises or any portion thereof or assign its interest in this Lease, whether voluntarily or by operation of Law, without Landlord's prior written consent which shall not be unreasonably withheld. Any attempted subletting or assignment without Landlord's prior written consent, at Landlord's election, shall constitute a default by Tenant under the terms of this Lease. The acceptance of rent by Landlord from any person or entity other than Tenant, or the acceptance of rent by Landlord from Tenant with knowledge of a violation of the provisions of this paragraph, shall not be deemed to be a waiver by Landlord of any provision of this Article or this Lease or to be a consent to any subletting by Tenant or any assignment of Tenant's interest in this Lease. If Tenant assigns this Lease (whether or not Landlord's consent is required pursuant to the terms of this Article 7), Tenant shall simultaneously assign to the same assignee that certain lease of even date herewith for the building on the Property known as "Half Dome."

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        7.2    Merger, Reorganization, or Sale of Assets.    

        7.3    Landlord's Election.    If Tenant shall desire to assign its interest under the Lease (except if pursuant to Paragraph 7.2(b) hereof) or to sublet the Leased Premises, Tenant must first notify Landlord, in writing, of its intent to so assign or sublet, at least thirty (30) days in advance of taking any action with respect thereto. Once Tenant (or Landlord or both pursuant to the joint marketing election described below) has identified a potential assignee or sublessee, Tenant shall notify Landlord, in writing, of its intent to so assign or sublet, at least thirty (30) days in advance of the date it intends to so assign its interest in this Lease or sublet the Leased Premises but not sooner than one hundred eighty days in advance of such date, specifying in detail the terms of such proposed assignment or subletting, including the name of the proposed assignee or sublessee, the proposed assignee's or sublessee's intended use of the Leased Premises, current financial statements (including a balance sheet, income statement and statement of cash flow, all prepared in accordance with generally accepted accounting principles) of such proposed assignee or sublessee, the form of documents to be used in effectuating such assignment or subletting and such other information as Landlord may reasonably request. Landlord shall have a period of ten (10) business days following receipt of such notice and the required information within which to do one of the following: (i) consent to such requested assignment

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or subletting subject to Tenant's compliance with the conditions set forth in Paragraph 7.4 below, or (ii) refuse to so consent to such requested assignment or subletting, provided that such consent shall not be unreasonably refused. During such ten (10) business day period, Tenant covenants and agrees to supply to Landlord, upon request, all necessary or relevant information which Landlord may reasonably request respecting such proposed assignment or subletting and/or the proposed assignee or sublessee. In the event Tenant desires to sublease all or a portion of the Leased Premises, Landlord shall have the right to elect to jointly market with Tenant the applicable portion (including all) of the Leased Premises for subleasing and/or direct leasing, such joint marketing election to be made, if at all, in writing and delivered to Tenant during the thirty (30) day period described in the first sentence of this Paragraph 7.3.

        7.4    Conditions To Landlord's Consent.    If Landlord elects to consent, or shall have been ordered to so consent by a court of competent jurisdiction, to such requested assignment or subletting, such consent shall be expressly conditioned upon the occurrence of each of the conditions below set forth, and any purported assignment or subletting made or ordered prior to the full and complete satisfaction of each of the following conditions shall be void and, at the election of Landlord, which election may be exercised at any time following such a purported assignment or subletting but prior to the satisfaction of each of the stated conditions, shall constitute a material default by Tenant under this Lease until cured by satisfying in full each such condition by the assignee or sublessee. The conditions are as follows:

        7.5    Assignment Consideration And Excess Rentals Defined.    For purposes of this Article, including any amendment to this Article by way of addendum or other writing, the term "assignment consideration" shall mean all consideration to be paid by the assignee to Tenant or to any other party on Tenant's behalf or for Tenant's benefit as consideration for such assignment, without deduction for any commissions paid by Tenant or any other costs or expenses (including, without limitation, tenant improvements, capital improvements, building upgrades, permit fees, attorneys' fees, and other consultants' fees) incurred by Tenant in connection with such assignment, and the term "excess rentals" shall mean all consideration to be paid by the sublessee to Tenant or to any other party on Tenant's

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behalf or for Tenant's benefit for the sublease of all or any portion of the Leased Premises in excess of the Rent due to Landlord under the terms of this Lease for the portion so subleased for the same period, without deduction for any commissions paid by Tenant or any other costs or expenses (including, without limitation, tenant improvements, capital improvements, building upgrades, permit fees, attorneys' fees, and other consultants' fees) incurred by Tenant in connection with such sublease. Tenant agrees that the portion of any assignment consideration and/or excess rentals arising from any assignment or subletting by Tenant which is to be paid to Landlord pursuant to this Article now is and shall then be the property of Landlord and not the property of Tenant.

        7.6    Payments.    All payments required by this Article to be made to Landlord shall be made in cash in full as and when they become due. At the time Tenant, Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an itemized statement in reasonable detail showing the method by which the amount due Landlord was calculated and certified by the party making such payment as true and correct.

        7.7    Effect Of Landlord's Consent.    Except as set forth in Paragraph 7.2(b), no subletting or assignment, even with the consent of Landlord, shall relieve Tenant of its personal and primary obligation to pay rent and to perform all of the other obligations to be performed by Tenant hereunder. Consent by Landlord to one or more assignments of Tenant's interest in this Lease or to one or more sublettings of the Leased Premises shall not be deemed to be a consent to any subsequent assignment or subletting. No subtenant shall have any right to assign its sublease or to further sublet any portion of the sublet premises or to permit any portion of the sublet premises to be used or occupied by any other party. If Landlord shall have been ordered by a court of competent jurisdiction to consent to a requested assignment or subletting, or such an assignment or subletting shall have been ordered by a court of competent jurisdiction over the objection of Landlord, such assignment or subletting shall not be binding between the assignee (or sublessee) and Landlord until such time as all conditions set forth in Paragraph 7.4 above have been fully satisfied (to the extent not then satisfied) by the assignee or sublessee, including, without limitation, the payment to Landlord of all agreed assignment considerations and/or excess rentals then due Landlord.


ARTICLE 8

LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY

        8.1    Limitation On Landlord's Liability And Release.    Landlord shall not be liable to Tenant for, and Tenant hereby releases and waives all claims and rights of recovery against Landlord and its partners, principals, members, officers, agents, employees, lenders, attorneys, consultants and contractors (collectively, the "Landlord Parties") from, any and all liability, loss, penalties or expenses, whether in contract, tort or on any other basis, for any injury to or any damage sustained by Tenant, Tenant's agents, employees, contractors or invitees, any damage to Tenant's property, or any loss to Tenant's business, loss of Tenant's profits or other financial loss of Tenant resulting from or attributable to the condition of, the management of, the repair or maintenance of, the protection of, the supply of services or utilities to, the damage in or destruction of the Leased Premises, the Building, the Property or the Common Areas, including without limitation (i) the failure, interruption, rationing or other curtailment or cessation in the supply of electricity, water, gas or other utility service to the Property, the Building or the Leased Premises; (ii) the vandalism or forcible entry into the Building or the Leased Premises; (iii) the penetration of water into or onto any portion of the Leased Premises; (iv) the failure to provide adequate lighting in or about the Property, the Building or the Leased Premises, (v) the existence of any design or construction defects within the Property, the Building or the Leased Premises; (vi) the failure of any mechanical systems to function properly (such as the HVAC systems); (vii) the failure of any pollution control system, waste collection or the Identified Groundwater Treatment System; (viii) the blockage of access to any portion of the Property, the

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Building or the Leased Premises, except that Tenant does not so release Landlord from any such liability described in (i) through (viii) above to the extent such damage was proximately caused by Landlord's or the Landlord Parties' negligence or willful misconduct, provided that nothing in this Lease shall operate to terminate or limit any rights of recovery Tenant possesses under the Contribution Agreement or any agreement listed in the Recitals thereto.

        8.2    Tenant's Indemnification Of Landlord.    Except for claims related to Hazardous Materials, which are governed by Paragraph 4.10(e) hereof, Tenant shall defend with competent counsel satisfactory to Landlord any claims made or legal actions filed or threatened against Landlord with respect to the violation of any Law, or the death, bodily injury, personal injury, property damage, or interference with contractual or property rights suffered by any third party occurring within the Leased Premises or resulting from Tenant's use or occupancy of the Leased Premises, the Building or the Common Areas, or resulting from Tenant's activities in or about the Leased Premises, the Building, the Common Areas or the Property, and Tenant shall indemnify, defend and hold Landlord and the Landlord Parties harmless from any loss, liability, penalties, or expense whatsoever (including any loss attributable to vacant space which otherwise would have been leased, but for such activities) resulting therefrom, except to the extent proximately caused by the negligence or willful misconduct of Landlord or Landlord Parties. This indemnity agreement shall survive the expiration or sooner termination of this Lease.


ARTICLE 9

INSURANCE

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

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        9.2    Landlord's Insurance.    With respect to insurance maintained by Landlord:

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        9.3    Mutual Waiver Of Subrogation.    Landlord hereby releases Tenant, and Tenant hereby releases Landlord and its respective partners, principals, members, officers, agents, employees and servants, from any and all liability for loss, damage or injury to the property of the other in or about the Leased Premises or the Property which is caused by or results from a peril or event or happening which is covered by insurance actually carried and in force at the time of the loss by the party sustaining such loss; provided, however, that such waiver shall be effective only to the extent permitted by the insurance covering such loss and to the extent such insurance is not prejudiced thereby.


ARTICLE 10

DAMAGE TO LEASED PREMISES

        10.1    Landlord's Duty To Restore.    If the Leased Premises, the Building or the Common Areas are damaged by any peril after the Effective Date of this Lease, Landlord shall restore the same, as and when required by this paragraph, unless this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon the issuance of all necessary governmental permits, Landlord shall commence and diligently prosecute to completion the restoration of the Leased Premises, the Building or the Common Areas, as the case may be, to the extent then allowed by Law, to substantially the same condition in which it existed as of the Lease Commencement Date. Landlord shall have no obligation to restore any alterations, modifications or improvements made by Tenant to the Leased Premises or any of Tenant's personal property, inventory or trade fixtures.

        10.2    Insurance Proceeds.    All insurance proceeds available from the fire and property damage insurance carried by Landlord shall be paid to and become the property of Landlord. If this Lease is terminated pursuant to either Paragraph 10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant which cover loss of property that is Landlord's property or would become Landlord's property on termination of this Lease shall be paid to and become the property of Landlord, and the remainder of such proceeds shall be paid to and become the property of Tenant. If this Lease is not terminated pursuant to either Paragraph 10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant which cover loss to property that is Landlord's property shall be paid to and become the property of Landlord, and all proceeds available from such insurance which cover loss to property which would only become the property of Landlord upon the termination of this Lease shall be paid to and remain the property of Tenant. The determination of Landlord's property and Tenant's property shall be made pursuant to Paragraph 6.2.

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        10.3    Landlord's Right To Terminate.    Landlord shall have the option to terminate this Lease in the event any of the following occurs, which option may be exercised only by delivery to Tenant of a written notice of election to terminate within thirty days after the date of such damage or destruction:

        10.4    Tenant's Right To Terminate.    If the Leased Premises, the Building, or the Common Areas are damaged by any peril and Landlord does not elect to terminate this Lease or is not entitled to terminate this Lease pursuant to this Article, then Tenant shall have the option to terminate this Lease in the event the Building is damaged by any peril and, because of the Laws then in force, the Building cannot be restored to use as used prior to such damage, or after ninety (90) days notice from Tenant to Landlord, Landlord is not diligently pursuing restoration of the Building in accordance with this Article 10.

        10.5    Tenant's Waiver.    Landlord and Tenant agree that the provisions of Paragraph 10.4 above, captioned "Tenant's Right To Terminate", are intended to supersede and replace the provisions contained in California Civil Code, Section 1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly, Tenant hereby waives the provisions of such Civil Code Sections and the provisions of any successor Civil Code Sections or similar Laws hereinafter enacted.


ARTICLE 11

CONDEMNATION

        11.1    Tenant's Right To Terminate.    Except as otherwise provided in Paragraph 11.4 below regarding temporary takings, Tenant shall have the option to terminate this Lease if, as a result of any taking, (i) all of the Leased Premises is taken or (ii) because of the Laws then in force, the Leased Premises may not be used for the same use being made before such taking, whether or not restored as required by Paragraph 11.3 below. Tenant must exercise such option within a reasonable period of time, to be effective on the later to occur of (a) the date that possession of that portion of the Leased Premises that is condemned is taken by the condemnor or (b) the date Tenant vacated the Leased Premises.

        11.2    Landlord's Right To Terminate.    Except as otherwise provided in Paragraph 11.4 below regarding temporary takings, Landlord shall have the option to terminate this Lease if, as a result of any taking, (i) all of the Leased Premises is taken or (ii) because of the Laws then in force, the Leased Premises may not be used for the same use being made before such taking, whether or not restored as required by Paragraph 11.3 below. Any such option to terminate by Landlord must be exercised within a reasonable period of time, to be effective as of the date possession is taken by the condemnor.

        11.3    Restoration.    If any part of the Leased Premises or the Building is taken and this Lease is not terminated, then Landlord shall, to the extent not prohibited by Laws then in force, repair any damage occasioned thereby to the remainder thereof to a condition reasonably suitable for Tenant's continued operations and otherwise, to the extent practicable, in the manner and to the extent provided in Paragraph 10.1.

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        11.4    Temporary Taking.    If less than a substantial portion of the Leased Premises is temporarily taken for a period of one year or less and such period does not extend beyond the Lease Expiration Date, this Lease shall remain in effect. If any portion of the Leased Premises is temporarily taken for a period which exceeds one year or which extends beyond the Lease Expiration Date, then the rights of Landlord and Tenant shall be determined in accordance with Paragraphs 11.1 and 11.2 above.

        11.5    Division Of Condemnation Award.    Any award made for any taking of the Property, the Building, the Common Areas or the Leased Premises, or any portion thereof, shall belong to and be paid to Landlord, and Tenant hereby assigns to Landlord all of its right, title and interest in any such award; provided, however, that Tenant shall be entitled to receive any portion of the award that is made specifically (i) for the taking of the Contributed Assets, and personal property, inventory or trade fixtures belonging to Tenant, (ii) for the interruption of Tenant's business or its moving costs, or (iii) for the value of any leasehold improvements installed and paid for by Tenant. The rights of Landlord and Tenant regarding any condemnation shall be determined as provided in this Article, and each party hereby waives the provisions of Section 1265.130 of the California Code of Civil Procedure, and the provisions of any similar law hereinafter enacted, allowing either party to petition the Supreme Court to terminate this Lease and/or otherwise allocate condemnation awards between Landlord and Tenant in the event of a taking of the Leased Premises.

        11.6    Taking Defined.    The term "taking" or "taken" as used in this Article 11 shall mean any transfer or conveyance of all or any portion of the Property to a public or quasi-public agency or other entity having the power of eminent domain pursuant to or as a result of the exercise of such power by such an agency, including any inverse condemnation and/or any sale or transfer by Landlord of all or any portion of the Property to such an agency under threat of condemnation or the exercise of such power.


ARTICLE 12

DEFAULT AND REMEDIES

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

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        12.2    Landlord's Remedies.    In the event of any default by Tenant, and without limiting Landlord's right to indemnification as provided in Article 8.2, Landlord shall have the following remedies, in addition to all other rights and remedies provided by law or otherwise provided in this Lease, to which Landlord may resort cumulatively, or in the alternative:

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        12.3    Landlord's Default And Tenant's Remedies.    In the event Landlord fails to perform its obligations under this Lease, Landlord shall nevertheless not be in default under the terms of this Lease until such time as Tenant shall have first given Landlord written notice specifying the nature of such failure to perform its obligations, and then only after Landlord shall have had thirty (30) days following its receipt of such notice within which to perform such obligations; provided that, if longer than thirty (30) days is reasonably required in order to perform such obligations, Landlord shall have such longer period so long as Landlord is diligently pursuing such performance, up to a maximum of one hundred eighty (180) days. In the event of Landlord's default as above set forth, then, and only then, Tenant may then proceed in equity or at law to seek a termination of this Lease or to compel Landlord to perform its obligations and/or to recover damages proximately caused by such failure to perform (except as and to the extent Tenant has waived its right to damages as provided in this Lease).

        12.4    Limitation Of Tenant's Recourse.    Tenant's sole recourse against Landlord for a breach of this Lease shall be to Landlord's interest in the Building and the Common Areas. If Landlord is a corporation, trust, partnership, joint venture, limited liability company, unincorporated association, or other form of business entity, Tenant agrees that (i) the obligations of Landlord under this Lease shall not constitute personal obligations of the officers, directors, trustees, partners, joint venturers, members, owners, stockholders, or other principals of such business entity, and (ii) Tenant shall have recourse only to the interest of such corporation, trust, partnership, joint venture, limited liability company, unincorporated association, or other form of business entity in the Building and the Common Areas for the satisfaction of such obligations and not against the assets of such officers, directors, trustees, partners, joint venturers, members, owners, stockholders or principals. Additionally, if Landlord is a partnership or limited liability company, then Tenant covenants and agrees:

Tenant further agrees that each of the foregoing covenants and agreements shall be enforceable by Landlord and by any partner or member of Landlord and shall be applicable to any actual or alleged misrepresentation or nondisclosure made regarding this Lease or the Leased Premises or any actual or

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alleged failure, default or breach of any covenant or agreement either expressly or implicitly contained in this Lease or imposed by statute or at common law.

        12.5    Tenant's Waiver.    Landlord and Tenant agree that the provisions of Paragraph 12.3 above are intended to supersede and replace the provisions of California Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant hereby waives the provisions of California Civil Code Sections 1932(1), 1941 and 1942 and/or any similar or successor law regarding Tenant's right to terminate this Lease or to make repairs and deduct the expenses of such repairs from the Rent due under this Lease.


ARTICLE 13

GENERAL PROVISIONS

        13.1    Taxes On Tenant's Property.    Tenant shall pay before delinquency any and all taxes, assessments, license fees, use fees, permit fees and public charges of whatever nature or description levied, assessed or imposed against Tenant's personal property located at the Property, any improvements or alterations Tenant makes to the Leased Premises, and Tenant's interest in this Lease (collectively, "Tenant's Interest"). Upon demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments. If any such taxes, assessments, fees or public charges are levied against Landlord, Landlord's property, the Building or the Property, or if the assessed value of the Building or the Property is increased by the inclusion therein of a value placed upon Tenant's Interest, regardless of the validity thereof, Landlord shall have the right to require Tenant to pay such taxes, and if not paid and satisfactory evidence of payment delivered to Landlord at least ten days prior to delinquency, then Landlord shall have the right to pay such taxes on Tenant's behalf and to invoice Tenant for the same, in either case whether before or after the expiration or earlier termination of the Lease Term. Tenant shall, within the earlier to occur of (a) thirty (30) days of the date it receives an invoice from Landlord setting forth the amount of such taxes, assessments, fees, or public charge so levied, or (b) the due date of such invoice, pay to Landlord, as Additional Rent, the amount set forth in such invoice. Failure by Tenant to pay the amount so invoiced within such time period shall be conclusively deemed a default by Tenant under this Lease. Tenant shall have the right to bring suit in any court of competent jurisdiction to recover from the taxing authority the amount of any such taxes, assessments, fees or public charges so paid. Notwithstanding the foregoing, Tenant shall have the right before any delinquency occurs to contest or object to the amount or validity of any of the taxes or impositions referred to in this Paragraph 13.1 by appropriate legal proceedings, provided that such right shall in no way be construed in any way as relieving, modifying, or extending Tenant's covenant to pay such taxes and impositions at the time and manner required by this Paragraph 13.1. Landlord shall not be required to join in any such proceedings and Landlord shall not be subjected to any liability for the payment of any costs or expenses in connection with such proceedings brought by Tenant, and Tenant covenants to indemnify and save Landlord harmless from any such costs and expenses.

        13.2    Holding Over.    This Lease shall terminate without further notice on the Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant after expiration of the Lease Term shall neither constitute a renewal nor extension of this Lease nor give Tenant any rights in or to the Leased Premises except as expressly provided in this Paragraph. Any such holding over to which Landlord has consented shall be construed to be a tenancy from month to month, on the same terms and conditions herein specified insofar as applicable, except that the Expense Rent shall be increased to an amount equal to one hundred fifty percent (150%) of the fair market rent for the Leased Premises.

        13.3    Transfer By Landlord.    Landlord and its successors in interest shall have the right to transfer their interest in the Building, the Property, or any portion thereof at any time and to any person or entity. In the event of any such transfer, the Landlord originally named herein (and in the case of any subsequent transfer, the transferor), from the date of such transfer shall be automatically relieved, without any further act by any person or entity, of all liability for the performance of the

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obligations of the Landlord hereunder which may accrue after the date of such transfer provided such transferee assumes responsibility to cure continuing defaults of Landlord hereunder. Tenant shall attorn to any such transferee. After the date of any such transfer, the term "Landlord" as used herein shall mean the transferee of such interest in the Building or the Property.

        13.4    Force Majeure.    The obligations of each of the parties under this Lease (other than the obligations to pay money) shall be temporarily excused if such party, for reasons beyond the party's reasonable control, is prevented or delayed in performing such obligations by reason of any strikes, lockouts or labor disputes; government restrictions, regulations, controls, action or inaction; civil commotion; or extraordinary weather, fire or other acts of God.

        13.5    Notices.    Any notice required or permitted to be given under this Lease shall be in writing and (i) personally delivered, (ii) sent by United States mail, registered or certified mail, postage prepaid, return receipt requested, (iii) sent by Federal Express or similar nationally recognized overnight courier service, or (iv) transmitted by facsimile with a hard copy sent within one (1) business day by any of the foregoing means, and in all cases addressed as follows, and such notice shall be deemed to have been given upon the date of actual receipt or delivery (or refusal to accept delivery) at the address specified below (or such other addresses as may be specified by notice in the foregoing manner) as indicated on the return receipt or air bill:

If to Landlord: Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California
Attention: General Counsel
Facsimile: (949) 483-6388

With a copy to:

 

Cooley Godward LLP
4401 Eastgate Mall
San Diego, California 92121
Attention: Carl Sanchez, Esq.
Facsimile: (858) 550-6420

If to Tenant:

 

101 S. Tryon Street, 25th Floor
Charlotte, N.C., 28280
Attention: Claudius E. Watts, IV
Facsimile: (704) 632-0299

Any notice given in accordance with the foregoing shall be deemed received upon actual receipt or refusal to accept delivery.

        13.6    Attorneys' Fees.    In the event any party shall bring any action, arbitration proceeding or legal proceeding alleging a breach of any provision of this Lease, to recover Rent, to terminate this Lease, or to enforce, protect, determine or establish any term or covenant of this Lease or rights or duties hereunder of either party, the prevailing party shall be entitled to recover from the non-prevailing party as a part of such action or proceeding, or in a separate action for that purpose brought within one year from the determination of such proceeding, reasonable attorneys' fees, expert witness fees, court costs and other reasonable expenses incurred by the prevailing party.

        13.7    General Waivers.    One party's consent to or approval of any act by the other party requiring the first party's consent or approval shall not be deemed to waive or render unnecessary the first party's consent to or approval of any subsequent similar act by the other party. No waiver of any provision hereof, or any waiver of any breach of any provision hereof, shall be effective unless in writing and signed by the waiving party. The receipt by Landlord of any Rent or payment with or without knowledge of the breach of any other provision hereof shall not be deemed a waiver of any

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such breach. No waiver of any provision of this Lease shall be deemed a continuing waiver unless such waiver specifically states so in writing and is signed by both Landlord and Tenant. No delay or omission in the exercise of any right or remedy accruing to either party upon any breach by the other party under this Lease shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by either party of any breach of any provision of this Lease shall not be deemed to be a waiver of any subsequent breach of the same or any other provisions herein contained.

        13.8    Miscellaneous.    Should any provisions of this Lease prove to be invalid or illegal, such invalidity or illegality shall in no way affect, impair or invalidate any other provisions hereof, and such remaining provisions shall remain in full force and effect. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. Any copy of this Lease which is executed by the parties shall be deemed an original for all purposes. This Lease shall, subject to the provisions regarding assignment, apply to and bind the respective heirs, successors, executors, administrators and assigns of Landlord and Tenant. The term "party" shall mean Landlord or Tenant as the context implies. If Tenant consists of more than one person or entity, then all members of Tenant shall be jointly and severally liable hereunder. Notwithstanding any inconsistent language contained in any other document, this Lease is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant. This Lease shall be construed and enforced in accordance with the Laws of the State in which the Leased Premises are located. The captions in this Lease are for convenience only and shall not be construed in the construction or interpretation of any provision hereof. When the context of this Lease requires, the neuter gender includes the masculine, the feminine, a partnership, corporation, limited liability company, joint venture, or other form of business entity, and the singular includes the plural. The terms "must," "shall," "will," and "agree" are mandatory. The term "may" is permissive. The term "governmental agency" or "governmental authority" or similar terms shall include, without limitation, all federal, state, city, local and other governmental and quasi-governmental agencies, authorities, bodies, boards, etc., and any party or parties having enforcement rights under any Private Restrictions. When a party is required to do something by this Lease, it shall do so at its sole cost and expense without right of reimbursement from the other party unless specific provision is made therefor. Landlord and Tenant shall both be deemed to have drafted this Lease, and the rule of construction that a document is to be construed against the drafting party shall not be employed in the construction or interpretation of this Lease. Where Tenant is obligated not to perform any act or is not permitted to perform any act, Tenant is also obligated to restrain any others reasonably within its control, including agents, invitees, contractors, subcontractors and employees, from performing such act. Landlord shall not become or be deemed a partner or a joint venturer with Tenant by reason of any of the provisions of this Lease. This Lease may be executed in one or more counterparts. All executed counterparts and each of them shall be deemed to be one and the same instrument.

        13.9    Quiet Enjoyment.    Landlord covenants and agrees that Tenant, upon paying the Rent and all other charges hereunder provided for and observing and keeping all covenants, agreements and conditions of this Lease on its part to be observed and kept, shall quietly have and enjoy the Leased Premises during the term of this Lease without hindrance or molestation by anyone claiming by or through Landlord, subject, however, to the exceptions and conditions of this Lease.

        13.10    Confidentiality.    Landlord and Tenant acknowledge that any nonpublic information disclosed or provided by one party to another party in connection with this Lease will be subject to the Confidentiality Agreement between Landlord and Tenant dated February 23, 2002. The terms and conditions of this Lease, as well as any information Landlord obtains with respect to Environmental Conditions on the Property and utility consumption, will be considered to be the Confidential Information (as defined in the Confidentiality Agreement) of both parties.

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ARTICLE 14

CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT

        14.1    Corporate Authority.    Tenant represents and warrants that Tenant is validly formed and duly authorized and existing, that Tenant is qualified to do business in the State in which the Leased Premises are located, that Tenant has the full right and legal authority to enter into this Lease and that the person executing this Lease on behalf of Tenant is authorized to execute and deliver this Lease on behalf of Tenant in accordance with its terms. Landlord represents and warrants that Landlord is validly formed and duly authorized and existing, that Landlord is qualified to do business in the State in which the Leased Premises are located, that Landlord has the full right and legal authority to enter into this Lease, and that the person executing this Lease on behalf of Landlord is duly authorized to execute and deliver this Lease on behalf of Landlord in accordance with its terms.

        14.2    Brokerage Commissions.    Tenant and Landlord each represent, warrant and agree that they have not had any dealings with any real estate broker(s), leasing agent(s), finder(s) or salesmen with respect to the lease by it of the Leased Premises pursuant to this Lease. Tenant will assume all obligations and responsibility with respect to the payment of any broker that Tenant retained. Each of Landlord and Tenant will indemnify, defend with competent counsel, and hold the other harmless from any liability for the payment of any real estate brokerage commissions, leasing commissions or finder's fees claimed by any other real estate broker(s), leasing agent(s), finder(s), or salesmen due to the other party's breach of the representations, warranties and covenants made by such party in this Paragraph 14.2.

        14.3    Entire Agreement.    This Lease, the Exhibits (as described in Article 1), which Exhibits are by this reference incorporated herein, the Contribution Agreement and the agreements listed in the recitals thereto, constitute the entire agreement between the parties, and there are no other agreements, understandings or representations between the parties relating to the lease by Landlord of the Leased Premises to Tenant, except as expressed herein. No subsequent changes, modifications or additions to this Lease shall be binding upon the parties unless in writing and signed by both Landlord and Tenant.

        14.4    Landlord's Representations.    Tenant acknowledges that neither Landlord nor any of its agents made any representations or warranties respecting the Property, the Building or the Leased Premises, upon which Tenant relied in entering into the Lease, which are not expressly set forth in this Lease or any other agreement between the parties. Tenant further acknowledges that, except as set forth in this Lease or any other agreement between the parties, neither Landlord nor any of its agents made any representations as to (i) whether the Leased Premises may be used for Tenant's intended use under existing Law, or (ii) the suitability of the Leased Premises for the conduct of Tenant's business, or (iii) the exact square footage of the Leased Premises, and that Tenant relies solely upon its own investigations with respect to such matters. Tenant expressly waives any and all claims for damage by reason of any statement, representation, warranty, promise or other agreement of Landlord or Landlord's agent(s), if any, not contained in this Lease or in any Exhibit attached hereto.

        14.5    Subordination To Mortgages and Ground Leases.    This Lease is subject to and subordinate to all ground leases, mortgages and deeds of trust which affect the Building or the Property and which are of public record as of the Effective Date of this Lease, and to all renewals, modifications, consolidations, replacements and extensions thereof. However, if the lessor under any such ground lease or any lender holding any such mortgage or deed of trust shall advise Landlord that it desires or requires this Lease to be made prior and superior thereto, then, upon written request of Landlord to Tenant, Tenant shall promptly execute, acknowledge and deliver any and all customary or reasonable documents or instruments which Landlord and such lessor or lender deems necessary or desirable to make this Lease prior thereto. Tenant hereby consents to Landlord's ground leasing the land underlying the Building or the Property and/or encumbering the Building or the Property as security for future

31



loans on such terms as Landlord shall desire, all of which future ground leases, mortgages or deeds of trust shall be subject to and subordinate to this Lease. However, if any lessor under any such future ground lease or any lender holding such future mortgage or deed of trust shall desire or require that this Lease be made subject to and subordinate to such future ground lease, mortgage or deed of trust, then Tenant agrees, within ten days after Landlord's written request therefor, to execute, acknowledge and deliver to Landlord any and all documents or instruments requested by Landlord or by such lessor or lender as may be necessary or proper to assure the subordination of this Lease to such future ground lease, mortgage or deed of trust, but only if such lessor or lender agrees not to disturb Tenant's quiet possession of the Leased Premises so long as Tenant is not in default under this Lease. If Landlord assigns the Lease as security for a loan, Tenant agrees to execute such documents as are reasonably requested by the lender and to provide reasonable provisions in the Lease protecting such lender's security interest which are customarily required by institutional lenders making loans secured by a deed of trust.

        14.6    Tenant's Attornment Upon Foreclosure.    Tenant shall, upon request, attorn (i) to any purchaser of the Building or the Property at any foreclosure sale or private sale conducted pursuant to any security instruments encumbering the Building or the Property, (ii) to any grantee or transferee designated in any deed given in lieu of foreclosure of any security interest encumbering the Building or the Property, or (iii) any other lessor under an underlying ground lease of the land underlying the Building or the Property, should such ground lease be terminated; provided that such purchaser, grantee or lessor recognizes Tenant's rights under this Lease.

        14.7    Mortgagee Protection.    In the event of any default on the part of Landlord, Tenant will give notice by registered mail to any Lender or lessor under any underlying ground lease who shall have requested, in writing, to Tenant that it be provided with such notice, and Tenant shall offer such Lender or lessor a reasonable opportunity to cure the default.

        14.8    Estoppel Certificate.    Tenant or Landlord will, following any request by the other party, promptly execute and deliver to such other party an estoppel certificate substantially in form attached as Exhibit C.

        14.9    Memorandum of Lease.    Upon request of either Landlord or Tenant, the parties to this Lease agree to execute and deliver a duly acknowledged Memorandum of Lease in sufficient form for recording with the County Recorder for Orange County, California.


ARTICLE 15

OPTIONS TO EXTEND

        15.1    Extension Options.    So long as Specialtysemi, Inc. or an Affiliate or assignee under Paragraph 7.2(b) or an assignee specifically approved by Landlord in accordance with Paragraph 7.4(g) is the Tenant hereunder, and subject to the conditions set forth below, Tenant shall have two options to extend the term of this Lease with respect to the entirety of the Leased Premises, the first for a period of five (5) years from the expiration of the last year of the Lease Term (the "First Extension Period"), and the second (the "Second Extension Period") for a period of five (5) years from the expiration of the First Extension Period, subject to the following conditions:

        15.2    Terms of Extension.    In the event the applicable option is exercised in a timely fashion, the Lease shall be extended for the term of the applicable extension period upon all of the terms and conditions of this Lease.

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        IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the respective dates below set forth with the intent to be legally bound thereby as of the Effective Date of this Lease first above set forth.

   LANDLORD:

 

 

 

CONEXANT SYSTEMS, INC., a Delaware corporation

Dated:

March 12, 2002

 

By:

/s/  DWIGHT DECKER      
   Title:Chief Executive Officer

 

 

 

TENANT:

 

 

 

SPECIALTYSEMI, INC., a Delaware corporation

Dated:

March 12, 2002

 

By:

/s/  CLAUDIUS E. WATTS IV      
   Title:President

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EXHIBIT A

SITE PLAN

[...***...]


Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.



EXHIBIT B

FLOOR PLANS

[...***...]


Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.



EXHIBIT C

FORM OF ESTOPPEL CERTIFICATE

[...***...]


Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.



EXHIBIT D

SITE PLAN SHOWING IDENTIFIED GROUNDWATER TREATMENT SYSTEMS

[...***...]


Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.

Source: OneCLE Business Contracts.