EXHIBIT 10.79

 

LEASE AGREEMENT

 

BETWEEN

 

POINTE CAMINO WINDELL LLC

 

(“LANDLORD”)

 

AND

 

PATH 1 NETWORK TECHNOLOGIES INC.

 

(“TENANT”)

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LEASE AGREEMENT

 

TABLE OF CONTENTS

 

     Page

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1.    TERMS AND DEFINITIONS

   1

2.    PREMISES AND COMMON AREAS

   2

3.    TERM

   3

4.    POSSESSION

   3

5.    MONTHLY BASIC RENT

   3

6.    OPERATING EXPENSES

   4

7.    SECURITY DEPOSIT

   6

8.    USE

   7

9.    NOTICES

   8

10.  BROKERS

   8

11.  HOLDING OVER

   8

12.  TAXES ON TENANT’S PROPERTY

   8

13.  CONDITION OF PREMISES

   9

14.  ALTERATIONS

   9

15.  REPAIRS

   10

16.  LIENS

   10

17.  ENTRY BY LANDLORD

   11

18.  UTILITIES AND SERVICES

   11

19.  BANKRUPTCY

   11

20.  INDEMNIFICATION AND EXCULPATION OF LANDLORD

   12

21.  DAMAGE TO TENANT’S PROPERTY

   12

22.  TENANT’S INSURANCE

   12

23.  DAMAGE OR DESTRUCTION

   14

24.  EMINENT DOMAIN

   15

25.  DEFAULTS AND REMEDIES

   16

26.  ASSIGNMENT AND SUBLETTING

   18

27.  SUBORDINATION

   21

28.  ESTOPPEL CERTIFICATE

   21

29.  HAZARDOUS MATERIALS

   22

30.  RULES AND REGULATIONS

   25

31.  CONFLICT OF LAWS

   25

32.  SUCCESSORS AND ASSIGNS

   26

 

-i-

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33.    SURRENDER OF PREMISES    26 34.    ATTORNEYS’ FEES    26 35.   
PERFORMANCE BY TENANT    26 36.    MORTGAGEE PROTECTION    26 37.    DEFINITION
OF LANDLORD    26 38.    WAIVER    26 39.    IDENTIFICATION OF TENANT    27 40.
   PARKING    27 41.    FORCE MAJEURE    27 42.    TERMS, HEADINGS AND
CONSTRUCTION    27 43.    TIME    28 44.    PRIOR AGREEMENT; AMENDMENTS    28
45.    SEVERABILITY    28 46.    RECORDING    28 47.    LIMITATION ON LIABILITY
AND TIME    28 48.    TRAFFIC IMPACT    28 49.    MODIFICATION FOR LENDER OR
GOVERNMENT    28 50.    TENANT’S SIGNS    29 51.    NO LIGHT, AIR OR VIEW
EASEMENT    29 52.    TENANT AS CORPORATION, PARTNERSHIP, OR LIMITED LIABILITY
COMPANY    29 53.    INTENTIONALLY DELETED    30 54.    COUNTERPARTS    30 55.
   NO OFFER    30 56.    JOINT AND SEVERAL LIABILITY    30

 

EXHIBITS:

 

A-1    Outline of Floor Plan of Premises A-2    Site Plan B    Intentionally
Deleted C    Intentionally Deleted D    Standards for Utilities and Services E
   Sample Form of Tenant Estoppel Certificate F    Rules and Regulations G   
Traffic and Parking Rules and Regulations

 

-ii-

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RIDERS:

1. Right of First Notice to Lease Additional Space

2. Option to Extend Term

 

-iii-

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LEASE AGREEMENT

 

THIS LEASE AGREEMENT (“Lease”) is made as of January 26, 2005, between POINTE
CAMINO WINDELL LLC, a California limited liability company (“Landlord”), and
PATH 1 NETWORK TECHNOLOGIES INC., a Delaware corporation (“Tenant”), for the
space outlined on attached Exhibit A (the “Premises”) and contained within
Suite(s) 140 on the first floor(s) of a building located at 6215 Ferris Square,
San Diego, California 92121 (the “Building”). The Building is part of the
Building site, which includes the parking areas and other improvements depicted
on attached Exhibit A-2 (collectively, the “Project”).

 

1. TERMS AND DEFINITIONS. For the purposes of this Lease, the following terms
shall have the following definitions:

 

(a) Addresses:

 

Landlord’s Address: 3525 Hyland Avenue, Costa Mesa, CA 92626 Attn: Michael S.
Martin, michael.martin@windell-investments.com.

 

Tenant’s address shall be the Premises and all notices hereunder shall be
delivered to the Premises, Attn: John Zavoli, john.zavoli@path1.com.

 

(b) Approximate Rentable Square Feet: 15,987 rentable square feet (“Rentable
Square Foot/Feet”). The Square Feet set forth in this Subparagraph 1(b) shall be
conclusive for all purposes, and shall not be subject to remeasurement (whether
or not the actual square feet of the Building is greater or less than the Square
Feet set forth herein).

 

(c) Broker(s): None for Landlord; Staubach Company-San Diego, Inc. for Tenant.

 

(d) Commencement Date: May 1, 2005.

 

(e) Exhibits and Riders: “A” through “G” and Riders 1 & 2, inclusive, all of
which are attached to this Lease and are incorporated herein by this reference.
Defined or initially capitalized terms in the attached documents have the same
meaning as in this Lease unless otherwise expressly provided in those documents.

 

(f) Monthly Basic Rent :

 

Months

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Rent Per Rentable

Square Foot

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   Monthly Basic Rent

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Months 1-12

   $ .95 NNN    $ 15,187.65

 

$15,187.65 shall be payable concurrently with Tenant signing this Lease.

 

(g) Parking: Not more than four (4) vehicle parking spaces per one thousand
square feet of Rentable Square Feet of the Premises.

 

(h) Security Deposit: $15,187.65 shall be payable concurrently with Tenant
signing this Lease.

 

(i) Intentionally Omitted.

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -1-

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(j) Intentionally Omitted.

 

(k) Tenant’s Percentage: 11.17%, based on the Rentable Square Feet contained in
the Premises set forth in Subparagraph 1(b) and the Rentable Square Feet
contained in the Project of 143,125 (“Project Rentable Square Feet”), and
33.23%, based on the Rentable Square Feet contained in the Premises set forth in
Subparagraph 1(b) and the Rentable Square Feet contained in the Building of
48,103 (“Building Rentable Square Feet”) only as it relates to Operating
Expenses which are directly incurred in the operation of the Building, including
but not limited to elevator service and maintenance, interior plants, and
janitorial service.

 

(l) Term: Twelve (12) calendar months (plus the applicable fraction of a month
if the actual Commencement Date is other than the first day of a calendar
month).

 

(m) Use: General office use for a technology software and hardware company.

 

2. PREMISES AND COMMON AREAS.

 

(a) Subject to all the provisions of this Lease, Landlord leases to Tenant and
Tenant leases from Landlord the Premises, which Premises are improved or to be
improved by Landlord with the Work described in the Premises Preparation
Agreement attached as Exhibit B hereto, those Premises being agreed to have the
Approximate Rentable Square Feet designated in Subparagraph 1(b).

 

(b) Tenant shall have the nonexclusive right to use, in common with other
present and future tenants in the Building, the following areas (“Common Areas”)
appurtenant to the Premises, subject to the Rules and Regulations referred to in
Paragraph 30 and to other reasonable rules and regulations which Landlord may
deem advisable for the Common Areas (including without limitation the hours
during which they are open for use):

 

(i) The Building’s common entrances, lobbies, rest rooms not within a suite,
stairways and accessways, loading docks, ramps, drives and platforms and any
passageways and serviceways thereto, and the common pipes, conduits, wires and
appurtenant equipment serving the Premises;

 

(ii) Loading and unloading areas, trash areas, parking areas, and similar areas
and facilities appurtenant to the Building;

 

(iii) The roadways, sidewalks, walkways, parkways, driveways and landscaped
areas and similar areas and facilities within the Project which are made
available for the use or benefit of all Project tenants and their invitees and
other visitors; and

 

(iv) The parking areas, including driveways and alleys and other improvements,
as depicted on attached Exhibit A-2.

 

(c) Landlord reserves the right from time to time without unreasonable
interference with Tenant’s use:

 

(i) To install, use, maintain, repair and replace pipes, ducts, conduits, wires
and appurtenant meters and equipment for service to other parts of the Building
above the ceiling surfaces, below the floor surfaces, within the walls and in
the central core areas, and to relocate any pipes, ducts, conduits, wires and
appurtenant meters and equipment included in the Premises which are located in
the Premises or located elsewhere outside the Premises, and to expand the
Building and the Project;

 

(ii) To make changes to the Common Areas, including, without limitation, changes
in the location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas and walkways;

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -2-

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(iii) To temporarily close or designate for other uses any of the Common Areas
for purposes of improvement, maintenance or repair, so long as reasonable access
to the Premises remains available;

 

(iv) To designate other land outside the boundaries of the Building to be a part
of the Common Areas;

 

(v) To add additional buildings and improvements to the Common Areas or the
Project;

 

(vi) To use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Building or the Project, or any portion thereof;
and

 

(vii) To do and perform such other acts and make such other changes in, to or
with respect to the Common Areas as Landlord may deem to be appropriate.

 

The preceding reservation of rights to use the Common Areas shall not impose on
Landlord any obligation to maintain or repair the Common Areas or any other
portion of the Premises except as expressly set forth in this Lease.

 

3. TERM. The Term shall be for the period designated in Subparagraph 1(l),
beginning on the Commencement Date under Subparagraph 1(d) and ending on the
expiration of that period, unless the Lease shall be terminated sooner as
hereinafter provided.

 

4. POSSESSION. If Landlord is unable to tender possession of the Premises to
Tenant on the Commencement Date, this Lease shall not be void or voidable, nor
shall Landlord be liable to Tenant for any loss or damage resulting therefrom
except to the extent caused by the gross negligence or willful misconduct of
Landlord. However, if commencement of the Term is delayed beyond the
Commencement Date, Tenant shall not be liable for any rent until Landlord
tenders possession of the Premises to Tenant with the Work (as defined in
Exhibit “B” (Premises Preparation Agreement)) substantially completed, and the
expiration date of the Term may be correspondingly extended at Landlord’s
reasonable discretion by written notice to Tenant. If the Term has not commenced
within 60 days after the Commencement Date, either Landlord or Tenant may
terminate this Lease by delivering written notice thereof to the other within
fifteen (15) days after the end of that 60-day period, without prejudice to any
rights either party may have against the other. However, to the extent
Landlord’s inability to tender possession of the Premises to Tenant on or before
the Commencement Date is caused by Tenant’s negligence or breach of this Lease,
or by other delays (including without limitation those listed in) Subparagraphs
3(a) through 3(e) of the Premises Preparation Agreement caused by Tenant or its
agents or contractors (collectively, “Tenant Delays”), the commencement of the
Term for all purposes under this Lease shall be accelerated by the number of
days of those Tenant Delays.

 

5. MONTHLY BASIC RENT.

 

(a) Tenant agrees to pay Landlord as Monthly Basic Rent for the Premises the
Monthly Basic Rent designated in Subparagraph 1(f) in advance on the first day
of each calendar month during the Term. If the Term commences or ends on a day
other than the first day of a calendar month, then the rent for such period
shall be prorated in the proportion that the number of days this Lease is in
effect during such period bears to thirty (30). In addition to the Monthly Basic
Rent, Tenant agrees to pay as additional rental the amount of rental adjustments
and other charges required by this Lease. In no event shall Monthly Basic Rent
ever be less than the initial Monthly Basic Rent. All rental shall be paid to
Landlord, without prior demand and without any deduction or offset, in lawful
money of the United States of America, at the address of Landlord designated in
Subparagraph 1(a) or to such other person or at such other place as Landlord may
from time to time designate in writing.

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -3-

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(b) Rent and all other payments required to be made by Tenant to Landlord under
this Lease shall be deemed to be and treated as rent and payable and recoverable
as “rent”, and Landlord shall have the same rights against Tenant for default in
any such payment as in the case of nonpayment of Monthly Basic Rent.

 

(c) If Tenant fails to pay any installment of rent within ten (10) days
following the date due (which ten days is not intended to be a grace period) or
if Tenant fails to make any other payment for which Tenant is obligated under
this Lease when due, then Tenant shall pay to Landlord as additional rent a late
charge equal to six percent (6%) of the amount due to compensate Landlord for
the extra costs incurred as a result of such late payment. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
that Landlord will incur by reason of late payment by Tenant. Acceptance of any
late charge shall not constitute a waiver of the Tenant’s default with respect
to the overdue amount, or prevent Landlord from exercising any other rights and
remedies available to Landlord.

 

(d) If the amount of rent or any other payment due under this Lease now or in
the future violates the terms of any governmental restrictions on such rent or
payment, then the rent or payment due during the period of such restrictions
shall be the maximum amount allowable under those restrictions. Upon termination
of the restrictions, Landlord shall, to the extent it is legally permitted,
recover from Tenant the difference between the amounts received during the
period of the restrictions and the amounts Landlord would have received had
there been no restrictions.

 

6. OPERATING EXPENSES.

 

(a) For purposes of this Lease, the following terms are defined as follows:

 

(i) “Tenant’s Percentage” shall have the meaning set forth in Subparagraph 1(k).

 

(ii) “HVAC Costs” means all costs incurred in the operation, repair and
maintenance and replacement of the systems for heating, ventilating and air
conditioning the buildings in the Project including, without limitation,
supplies, materials, equipment, tools, and contracted services.

 

(iii) “Taxes and Assessments” shall mean: (1) Real property taxes and fees and
expenses incurred in contesting the amount or validity of any real property tax;
(2) Any assessment, fee, tax, levy, charge, penalty or similar imposition
imposed by any authority, improvement district or special assessment district
upon or in respect of the Premises, Building, Project, or Common Areas, or any
portion thereof, including any such charges imposed for the use or occupancy of
the Building, Project, or Premises, or upon this transaction or any document to
which Tenant is a party; (3) Any new or increased assessment, tax, fee, levy or
charge in substitution, partially or totally, of any assessment, tax, fee, levy
or charge previously included under Subparagraphs 6(a)(iii)(1) and (2),
including, without limitation, increases due to tax rate increases or
reassessment of the Premises, Building, Common Areas, or Project, or any portion
thereof, for any reason; (4) Any assessment Landlord must pay as owner of the
Building, Project, or Common Areas pursuant to any present or future covenants,
conditions or restrictions, easement agreements, tenancy in common agreements or
similar restrictions affecting the Building, Premises, Project, or Common Areas,
or any portion thereof; (5) Any tax or fee on personal property used in
connection with the Building, Project, or Common Areas; and (6) All payroll
taxes on salaries of personnel to the extent used in the direct management,
maintenance or operation of the Building, Project, or Common Areas.

 

(iv) “Insurance Costs” means all costs of premiums for insurance that Landlord
procures under this Lease or for or in connection with the Project, including,
without limitation, any insurance which any beneficiary or mortgagee with a lien
affecting the Premises deems necessary or requires in connection with the
ownership or operation of the Building, Common Areas, or Project.

 

(v) “Capital Costs” means all costs incurred to make any structural and
non-structural capital improvements repairs or replacements to the Building,
Project, or Common Areas, or any portion thereof, including, without limitation,
structural additions or repairs, which: (1) are now or may hereafter be

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -4-

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required by any statute, ordinance or regulation of any governmental or
enforcement agency; or (2) are needed to operate and maintain the Building,
Project, or Common Areas, or any portion thereof, at the same quality levels as
prior to the improvement or repair or to provide substantially the same level of
services to tenants of the Project as are provided to tenants of comparable
buildings.

 

(b) “Operating Expenses” shall consist of all direct costs of ownership,
operation, repair or maintenance (including necessary supplies, material, tools
and equipment) of the Building, Project, or Common Areas, including any
expansions of the Building, Project, or Common Areas by Landlord, or any portion
thereof, and all indirect costs that are reasonably attributable to the
operation, repair and maintenance of the Building, Project, and Common Areas, or
any portion thereof, for any calendar year (and if the Project is less than
ninety-five percent (95%) occupied, then the Operating Expenses will be
calculated assuming the in ninety-five percent (95%) occupied for a full
calendar year), including costs for the following by way of illustration, but
not limitation:

 

HVAC Costs; Taxes and Assessments; Insurance Costs; Capital Costs; costs
connected with providing electrical, telephone, cable and other electronic data
transmission services (including, without limitation, any costs (whether or not
Capital Costs) arising from the maintenance, repair and/or replacement of all or
any component of electrical, plumbing, mechanical, lighting, HVAC or other
building systems, and/or the maintenance, repair and/or replacement of lighting
fixtures, light bulbs, air filtration or distribution devices (provided that
Landlord shall have no obligation to provide any utilities), window panes,
window coating and/or other energy-saving measures); janitorial service and
window cleaning; waste disposal; parking facilities; Common Areas signage;
landscaping and gardening; security; and accounting, legal, administrative and
consulting fees.

 

Operating Expenses shall also include costs incurred in the management of the
Building, Project, and Common Areas (including, without limitation, wages and
salaries and related benefits for personnel to the extent used in the
management, operation and maintenance of the Building, Project, or Common Areas,
and Project management office rental and supplies) and a management fee equal
five percent (5%) of all sources of Landlord’s gross revenue generated at the
Project for the calendar year, including, without limitation, Monthly Basic Rent
and Operating Expenses. For purposes of this Subparagraph 6(b), if the Project
is less than ninety-five percent (95%) occupied, Operating Expenses shall be
deemed to have been paid for ninety-five percent (95%) of the Rentable Square
Feet in the Project for a full calendar year.

 

(c) Except only for (i) any interest, points and fees on debts or amortization
on any mortgage or mortgages or other debt instrument evidencing indebtedness of
Landlord and (ii) costs arising from the payment of any claims against Landlord
(for which Tenant is not responsible) secured by judgments or liens against the
Premises, this Lease is and shall be construed as a “triple net” lease
arrangement, the Monthly Basic Rent shall be completely net to the Landlord, and
Tenant shall be directly responsible for and pay Tenant’s Percentage of all
Operating Expenses as set forth in clauses (i) through (v), below:

 

(i) Beginning with the Commencement Date and on or before the expiration of each
one (1) year period thereafter (each, a “Lease Year”), Landlord shall deliver to
Tenant an estimate of Tenant’s Percentage of annual Operating Expenses payable
in twelve (12) equal monthly installments on the first day of every month as
additional rent together with Tenant’s payment of Monthly Basic Rent. Landlord
may from time to time during the Lease Year revise Landlord’s estimate of annual
Operating Expenses and Tenant’s monthly estimated payments. If after the first
Lease Year Landlord has not furnished Tenant with a written estimate for any
Lease Year, Tenant shall continue to pay monthly installments of Tenant’s
Percentage of Operating Expenses at the rate established for the immediately
preceding Lease Year (if applicable), provided that, when a written estimate of
Operating Expenses for the current Lease Year is delivered to Tenant, Tenant
shall, on or before the next monthly payment date, pay all accrued and unpaid
monthly estimates based on the new estimate.

 

(ii) On or before May 1 of each Lease Year after the first Lease Year (or as
soon thereafter as is practical) Landlord shall deliver to Tenant a statement
(the “Statement”) setting out Tenant’s Percentage of actual Operating Expenses
for the immediately preceding Lease Year. If Tenant’s Percentage of

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -5-

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actual Operating Expenses for the previous Lease Year differs from the total
estimated monthly payments of Tenant’s Percentage of Operating Expenses made by
Tenant for such Lease Year, Tenant shall pay the amount of the deficiency within
ten (10) days of receipt of the Statement or Landlord shall credit the
difference, as the case may be; in the case of a credit due, Landlord shall
credit against Tenant’s next ensuing installment(s) of Monthly Basic Rent an
amount equal to the difference until the credit is exhausted. If a credit is due
from Landlord on the last day of the Term, Landlord shall credit against any
payments due from Tenant under this Lease an amount equal to the credit or, if
no payments are due, or may become due from Tenant, Landlord shall pay Tenant
the amount of the credit. The obligations of Tenant and Landlord to make
payments required under this Paragraph 6 shall survive the termination of this
Lease.

 

(iii) If any dispute arises as to the accuracy of Operating Expenses as set
forth in the Statement, Tenant shall nevertheless make the payment in accordance
with any notice given by Landlord, but Tenant shall have the right, after
reasonable notice and at reasonable times, to inspect Landlord’s accounting
records at Landlord’s accounting office and, if after such inspection, Tenant
still disputes the amount of Operating Expenses owed, Landlord shall immediately
refer the matter for prompt certification by mutually agreed to 3rd party
certified public accountants, who shall be deemed to be acting as experts and
not arbitrators, which certification shall be conclusive and binding on both
parties. Any adjustment required to any previous payment made by Tenant or
Landlord by reason of any such decision shall be made within ten (10) days of
such certification. Tenant agrees to pay the cost of such certification unless
it is determined that Landlord’s original Statement overstated Operating
Expenses by more than five percent (5%).

 

(iv) Operating Expenses due from Tenant in any Lease Year which has less than
365 days because the Term expires on other than the last day of that Lease Year
shall be prorated on a per-day basis.

 

(v) Without limiting the foregoing, including Landlord’s right to adjust the
estimate of Operating Expenses from time to time, should Landlord incur any
Capital Costs, Landlord may elect, in Landlord’s sole and absolute discretion,
to require payment of Tenant’s percentage of such Capital Costs within thirty
(30) business days following demand therefor together with such supporting
documentation as Tenant may reasonably require.

 

(d) Notwithstanding anything to the contrary contained immediately above, as to
each specific category of expense which one or more tenants of the Project
either pays directly to third parties or actually reimburses Landlord (for
example, separately metered utilities, property taxes directly reimbursed to
Landlord, etc.) then each such expense which is actually paid or reimbursed
shall not be included in “Operating Expenses” for purposes of this Paragraph 6.
Tenant’s Percentage for each such category of expense shall be adjusted by
excluding from the denominator thereof the Rentable Square Feet of all such
tenants paying such category of expense directly to third parties or actually
reimbursing same directly to Landlord. Moreover, if Tenant directly pays a third
party or actually reimburses Landlord for any such category of expense, each
such category of expenses which is paid or actually reimbursed by Tenant shall
be excluded from the determination of Operating Expenses for Tenant to the
extent such expense (after deduction of that portion paid or directly reimbursed
by Tenant) was incurred with respect to space in the Project actually leased to
other tenants.

 

7. SECURITY DEPOSIT. The Security Deposit designated in Subparagraph 1(h) shall
be held by Landlord as security for the faithful performance by Tenant of all of
Tenant’s obligations under this Lease. If Tenant breaches any obligation under
this Lease, including, without limitation, under provisions relating to the
payment of rent, Landlord may (but shall not be required to) use, apply or
retain all or any part of the Security Deposit for the payment of any rent or
any other sum in default, or for the payment of any other amount which Landlord
may spend or become obligated to spend by reason of Tenant’s default or to help
to compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant’s default. If any portion of the Security Deposit is so used or
applied, Tenant shall, upon demand, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount. Tenant’s
failure to do so shall be a material breach of this Lease. Landlord shall not be
required to keep the Security Deposit separate from its general funds, and
Tenant shall not be entitled to interest on the Security Deposit. If Tenant
shall fully and faithfully perform all of its

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -6-

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obligations under this Lease, the Security Deposit or any balance thereof shall
be returned to Tenant (or, at Landlord’s option, to the last permitted assignee
of Tenant’s interests under this Lease) at the expiration of the Term, provided
that Landlord may retain the Security Deposit until such time as any amount due
from Tenant in accordance with Paragraph 6 has been determined and paid in full.
If Landlord sells its interest in the Premises during the Term Landlord shall
transfer to the purchaser of the Premises the then unappropriated portion of the
Security Deposit, Landlord shall be discharged from any further liability with
respect to the Security Deposit.

 

8. USE.

 

(a) Tenant shall use the Premises only for the use set forth in Subparagraph
1(m), and shall not use or permit the Premises to be used for any other purpose
without Landlord’s prior written consent, which may be withheld in Landlord’s
sole and absolute discretion. Nothing contained herein shall be deemed to give
Tenant any exclusive right to such use in the Building or Project or shall be
deemed to be a warranty by Landlord that the Premises are suitable for a
particular use. Tenant shall not use or occupy the Premises in violation of any
present or future applicable law, and shall, upon written notice from Landlord,
discontinue any use of the Premises which is declared by any applicable
governmental authority to be a violation of law. Tenant shall comply with any
direction of any such governmental authority which shall, by reason of the
nature of Tenant’s use or occupancy of the Premises, impose any duty upon Tenant
or Landlord with respect to the Premises or with respect to the use or
occupation thereof. Notwithstanding any circumstantial factors judicially
developed as a means of allocating the obligation to make alterations to the
Premises in order to comply with present or future laws, it is the intention of
the parties that such obligations with respect to the Premises are those of the
Tenant and are accordingly reflected in rental payments and other consideration
under this Lease. Tenant shall comply with all rules, orders, regulations and
requirements of such generally recognized fire rating organization(s) as
Landlord may specify from time to time. Tenant shall promptly, upon demand,
reimburse Landlord for any additional insurance premium charged by reason of
Tenant’s failure to comply with the provisions of this Paragraph 8. Tenant shall
take all steps required to ensure that neither Tenant nor its contractors or
invitees (i) violate any governmental regulations, ordinances, or laws
applicable to the Premises, (ii) do or permit anything to be done in or about
the Premises which will in any way obstruct or interfere with the rights of
other tenants or occupants of the Building or Project, or injure or annoy them,
(iii) use or allow the Premises to be used for any improper, immoral, unlawful
or objectionable purpose, or (iv) cause, maintain or permit any nuisance in, on
or about the Premises. Tenant shall comply with all present and future
covenants, conditions, and restrictions or other restrictive covenants and
obligations, which affect the use and operation of the Premises, the Building,
the Common Areas or the Project, or any portion thereof. Tenant shall not commit
or suffer to be committed any waste in or upon the Premises and shall keep the
Premises in first-class repair and appearance. Tenant shall not place a load
upon the Premises exceeding the average pounds of live load per square foot of
floor area specified for the Building by Landlord’s architect, with partitions
to be considered a part of the live load. Landlord reserves the right to
prescribe the weight and position of all files, safes and heavy equipment which
Tenant desires to place in the Premises so as to properly distribute the weight
thereof. Further, Tenant’s business machines and mechanical equipment which
cause vibration or noise that may be transmitted to the Building structure or to
any other space in the Building or Project shall be so installed, maintained and
used by Tenant as to eliminate such vibration or noise. Tenant shall be
responsible for all structural engineering required to determine structural load
in the Premises.

 

(b) Landlord and Tenant acknowledge that the Americans With Disabilities Act of
1990 (42 U.S.C. Section 12101 et seq.) and regulations and guidelines
promulgated thereunder, as all of the same may be amended and supplemented from
time to time (collectively, “ADA”) establish requirements for business
operations, accessibility and barrier removal, and that such requirements may or
may not apply to the Premises, the Building and the Project depending on, among
other things: (1) whether Tenant’s business is deemed a “public accommodation”
or “commercial facility”, (2) whether such requirements are “readily
achievable”, and (3) whether a given alteration affects a “primary function
area” or triggers “path of travel” requirements. The parties hereby agree that:
(a) Landlord shall be responsible for ADA Title III compliance in the Common
Areas, except as provided below, (b) Tenant shall be responsible for ADA Title
III compliance in the Premises, including any tenant improvements or other work
to be performed in the Premises under or in connection with this Lease, (c)
Landlord may perform or require that Tenant perform, and Tenant shall be
responsible for the cost of, ADA Title III “path of

 

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travel” requirements triggered by Tenant Alterations in the Premises, and (d)
Landlord may perform, or require Tenant to perform, and Tenant shall be
responsible for the cost of, ADA Title III compliance in the Common Areas
necessitated by the Building being deemed to be a “public accommodation” instead
of “commercial facility” as a result of Tenant’s use of the Premises. Tenant
shall be solely responsible for requirements under Title I of the ADA relating
to Tenant’s employees.

 

9. NOTICES. Any notice, consent, or approval required or permitted to be given
under this Lease must be in writing and may be given by personal delivery or by
mail, and shall be deemed sufficiently given when actually received by the
intended party, whether personally delivered or mailed by registered or
certified mail, if to Tenant at the address designated in Subparagraph 1(a)
until the commencement of the Term only, and thereafter at the Premises, and if
to Landlord at the addresses designated in Subparagraph 1(a). Either party may
specify a different address for notice purposes by written notice to the other,.

 

10. BROKERS. Tenant warrants that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Lease, except the
Broker(s) (named in Subparagraph 1(c)). Tenant agrees to indemnify and defend
Landlord from any cost, expense or liability for any compensation, fee,
commission or charge claimed by any other party claiming by, through or on
behalf of Tenant with respect to this Lease. Landlord, at Landlord’s expense
will compensate Broker pursuant to a commission agreement with Broker.

 

11. HOLDING OVER. Tenant shall vacate the Premises upon the expiration or
earlier termination of this Lease. Tenant shall reimburse Landlord for and
indemnify Landlord against all damages and liability which Landlord incurs from
Tenant’s delay in vacating the Premises, including, without limitation, claims
by and liability to any succeeding tenant founded on such delay and any
attorneys’ fees and costs. If Tenant does not vacate the Premises upon the
expiration or earlier termination of the Lease and Landlord thereafter accepts
rent from Tenant, Tenant’s occupancy of the Premises shall be a “month-to-month”
tenancy, subject to all of the terms of this Lease applicable to a
month-to-month tenancy, except that the Monthly Basic Rent then in effect shall
be increased by one hundred percent (100%).

 

12. TAXES ON TENANT’S PROPERTY.

 

(a) Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes levied against any personal property or trade fixtures
placed by Tenant in or about the Premises. If any such taxes on Tenant’s
personal property or trade fixtures are levied against Landlord or Landlord’s
property or if the assessed value of the Premises is increased by the inclusion
therein of a value placed upon such personal property or trade fixtures of
Tenant and if Landlord, after written notice to Tenant, pays the taxes based
upon such increased assessment, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall, upon demand, repay to Landlord the taxes so levied
against Landlord, or the portion of such taxes resulting from such increase in
the assessment.

 

(b) If the tenant improvements in the Premises, whether installed by Landlord or
Tenant, or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the valuation at which tenant improvements
conforming to Landlord’s standards for other space in the Building are assessed,
then the real property taxes and assessments levied against the Building by
reason of such higher assessed valuation shall be deemed to be taxes levied
against personal property of Tenant and shall be governed by the provisions of
Subparagraph 12(a). If the records of the County Assessor are not available or
sufficiently detailed to serve as a basis for determining whether the tenant
improvements are subject to a higher valuation than improvements conforming to
Landlord’s Building standards, the actual cost of construction shall be used.

 

(c) Any assessment, tax, fee, levy or charge allocable to or measured by the
area of the Premises or by any payments to be made by Tenant under this Lease,
including, without limitation, any gross income tax or excise tax levied by any
governmental agency or political subdivision thereof with respect to the receipt
of rent or other payments under a lease, or upon or with respect to the
possession, leasing, operating, management,

 

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maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or
any portion thereof, shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of Subparagraph
12(a).

 

13. CONDITION OF PREMISES. Except as expressly set forth in this Lease,
Landlord’s lease of the Premises to Tenant shall be on an “AS IS” basis without
representations or warranties express or implied, and Tenant’s taking of
possession of the Premises shall conclusively establish that the Premises and
the Building were in satisfactory condition at the time of that possession
(excluding latent defects and those items normally associated with a “punch
list”). Tenant accepts that from time to time there may be construction and
improvement work by Landlord on other space in the Building and to the Common
Areas and other portions of the Project, and that such work may cause
intermittent noise, vibrations, or other temporary inconveniences; provided,
however, Landlord will take steps reasonably necessary and feasible to minimize
inconveniences to Tenant and Tenant’s employees and visitors.

 

14. ALTERATIONS.

 

(a) Tenant shall make no alterations, additions, repairs or improvements to the
Premises (collectively, “Alteration(s)”) except as expressly permitted by this
Paragraph 14. Tenant shall have no right to make any Alterations to the
structural portions of the Building, which shall include the foundation,
floor/ceiling slabs, roof, curtain walls, exterior glass and mullions, columns,
beams, shafts, stairs, stairwells, escalators, plazas, artwork, sculptures,
washrooms, mechanical, electrical and telephone closets and all Common Areas and
public areas and the mechanical, electrical, life safety, plumbing, sprinkler
systems and HVAC systems (collectively, “Building Structure and Systems”).
Landlord’s consent to any other Alteration (i.e., other than to an Alteration to
any portion or component of the Building Structure and Systems or that, in
Landlord’s sole and absolute discretion, could adversely affect any portion of
the Building Structure and Systems) shall not be unreasonably withheld.
Notwithstanding the other provisions of this Paragraph 14, Tenant may install
normal office decorations (e.g., paintings) in the Premises without obtaining
Landlord’s consent.

 

(b) Landlord may condition its consent to any type of Alteration on such
requirements as Landlord may deem necessary in its subjective, good faith
discretion, including without limitation: (i) the manner in which the work is to
be done, (ii) the right of approval over the entity which shall perform, or
contract to perform, the work (which approval may be withheld if, among other
things, that entity is not properly licensed under all applicable laws or if
Landlord deems the insurance carried by that entity to be inadequate), (iii) the
times during which the work is to be accomplished, (iv) the issuance at Tenant’s
sole cost of a performance or labor and material payment bond ensuring lien-free
completion of the proposed Alterations, (v) delivery to Landlord of preliminary
and final sets of plans for the proposed Alterations, or (vi) modification of
the proposed Alterations to conform to Landlord’s subjective opinion about the
appearance of the proposed Alterations. Tenant shall give Landlord at least ten
(10) business days prior written notice of the expected commencement date of any
work related to the Premises. Tenant shall be responsible for obtaining all
permits required by law for all work done by Tenant under this Lease and Tenant
warrants that such work shall comply with all applicable governmental laws,
codes, or ordinances, including, without limitation, the ADA.

 

(c) Upon the expiration or earlier termination of this Lease, all or any part of
the Alterations to or in connection with the Premises shall become the property
of Landlord and remain and be surrendered with the Premises. All articles of
personal property and all business and trade fixtures, machinery and equipment,
furniture and movable partitions owned by Tenant (“Tenant’s Effects”) shall be
and remain the property of Tenant and may be removed by Tenant at any time
during the Term when Tenant is not in default under this Lease. If Tenant fails
to remove all of Tenant’s Effects from the Premises upon termination of this
Lease, Landlord may, at its option, remove Tenant’s Effects and store Tenant’s
Effects without liability to Tenant for loss of Tenant’s Effects. Tenant agrees
to pay Landlord upon demand any and all expenses incurred by Landlord in
removing Tenant’s Effects, including court costs, attorneys’ fees and storage
charges on Tenant’s Effects, for any length of time that Tenant’s Effects shall
be in Landlord’s possession. Landlord may, at its option, without notice, sell
Tenant’s Effects, or any of the same, at a private sale and without legal
process, for such price as Landlord may obtain, and apply the

 

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proceeds of such sale to any amounts due under this Lease from Tenant to
Landlord and to the expenses incident to the removal and sale of Tenant’s
Effects. Tenant waives the provisions of California Civil Code sections
1980-1991.

 

15. REPAIRS.

 

(a) Tenant shall keep, maintain and preserve the Premises in first-class
condition and repair, and shall, when and if needed, at Tenant’s sole cost and
expense, make all repairs to the Premises and every part thereof, including,
without limitation, the interior surfaces of the ceilings, walls and floors, all
doors, all interior windows, all non-standard plumbing, pipes, electrical
wiring, light fixtures and bulbs, switches, furnishings, signs and special items
and equipment installed by or at the expense of Tenant. Landlord shall have no
obligation to alter, remodel, improve, repair, decorate or paint the Premises or
any part thereof. Tenant and Landlord affirm that Landlord has made no
representations to Tenant respecting the condition of the Premises, the
Building, the Common Areas, or the Project except as specifically set forth in
this Lease.

 

(b) Anything contained in Paragraph 15(a) to the contrary notwithstanding,
Landlord shall repair and maintain the structural portions of the Building and
the Building standard plumbing, heating, ventilating, air conditioning and
electrical systems, unless such maintenance and repairs are required in part or
in whole by the act, neglect or omission of Tenant, its agents, servants,
employees or invitees, in which case Tenant shall pay to Landlord, as additional
rent, the reasonable cost of such maintenance and repairs. Landlord shall not be
liable for any failure to make any such repairs or to perform any maintenance
unless such failure shall persist for an unreasonable time after written notice
of the need of such repairs or maintenance is given to Landlord by Tenant.
Except as provided in Paragraph 23, there shall be no abatement of rent and no
liability of Landlord by reason of any injury to or interference with Tenant’s
business arising from the making of any repairs, alterations or improvements in
or to any portion of the Building, the Premises, the Common Areas, or the
Project or in or to fixtures, appurtenances and equipment therein. Tenant waives
the right to make repairs at Landlord’s expense under any law, statute or
ordinance now or hereafter in effect. No provision of this Lease shall be
construed as obligating Landlord to perform any repairs, alterations or
decorations except as otherwise expressly provided under this Lease.

 

(c) As between Landlord and Tenant, Landlord is recognized as the owner of
telephone, cable, and any fiber optic wiring serving the Premises (collectively,
the “Building Cable”) whether installed as of or following the Commencement
Date, except as is specially installed by Tenant for development, demonstration,
or testing of Tenant’s products.. Tenant shall be responsible for the
maintenance of all Building Cable. Tenant’s access to the Common Areas for the
purposes of installing and maintaining the Building Cable is conditioned upon
Landlord’s approval of Tenant’s service contract and appropriate insurance
policies being obtained by the entity installing the Building Cable. Landlord
shall not be responsible and shall have no liability for interruption in or
failures of telephone or electronic data transmission services. Tenant shall
abide by all reasonable, written and nondiscriminatory rules and regulations
hereafter promulgated by Landlord regarding access to the Building Cable. Tenant
shall indemnify, defend and hold Landlord harmless from and against any and all
claims, losses, liabilities, costs and expenses, including, without limitation,
actual attorneys’ fees, incurred by Landlord and related to Tenant’s access to
or work performed in connection with the Building Cable.

 

(d) Landlord shall keep in effect, as part of Operating Expenses, the following
maintenance and service contracts: (i) landscaping, (ii) heating, ventilation
and air conditioning equipment, (iii) boiler, fired or unfired pressure vessels,
(iv) fire sprinkler and/or standpipe and hose or other automatic fire
extinguishing systems, including fire alarm and/or smoke detection systems, (v)
roof covering and drain maintenance, (vii) asphalt and parking lot maintenance,
and (viii) janitorial service for the Project and the Premises.

 

16. LIENS. Tenant shall not permit any mechanics’, materialmens’ or other liens
to be filed against any portion of the Building or the Project or against
Tenant’s leasehold interest in the Premises. Landlord shall have the right at
all reasonable times to post and keep posted on the Premises any notices which
it deems necessary for protection from such liens. If any such liens are filed,
Landlord may, without waiving its rights and remedies based on such breach of
Tenant and without releasing Tenant from any of its obligations, cause such
liens to be released by

 

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any means it shall deem proper, including payments in satisfaction of the claim
giving rise to such lien. Tenant shall pay to Landlord at once, upon notice by
Landlord, any sum paid by Landlord to remove such liens, together with interest
on that sum at (a) the maximum rate permitted by then-existing usury law, if
applicable, or (b) if the then-existing usury law is not applicable, one and
one-half percent (1 1/2%) per month (“Lease Interest Rate”) from the date of
Landlord’s payment.

 

17. ENTRY BY LANDLORD. Landlord reserves and shall at all times have the right
to enter the Premises to inspect the same, to supply janitor service and any
other service to be provided by Landlord to Tenant under this Lease, to show the
Premises to prospective purchasers or tenants, to post notices of
non-responsibility, to alter, improve or repair the Premises or any other
portion of the Building, without any such act being deemed an eviction of Tenant
and without abatement of rent. Landlord shall have the right, but not the
obligation, to enter upon the Premises and into the Building for the purpose of
performing any obligation on Tenant’s part to be performed following a Tenant
default pursuant to Paragraph 25, below, and Tenant shall pay all costs incurred
by Landlord at the Lease Interest Rate. Landlord may, in order to carry out all
such purposes, erect scaffolding and other necessary structures where reasonably
required by the character of the work to be performed. Tenant waives any claim
for damages for any injury or inconvenience to or interference with Tenant’s
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss in, upon and about the Premises resulting from any entry permitted
under this paragraph. Landlord shall at all times have and retain a key with
which to unlock all doors in the Premises, excluding Tenant’s vaults and safes.
Landlord shall have the right to use any and all means which Landlord may deem
proper to open any door in an emergency in order to obtain entry to or within
the Premises. Any entry to the Premises obtained by Landlord by any means shall
not be deemed to be a forcible or unlawful entry into the Premises, or an
eviction of Tenant from the Premises or any portion thereof, and any damages
caused on account thereof shall be paid by Tenant if that entry was caused by
the acts or omissions of Tenant, its agents or contractors.

 

18. UTILITIES AND SERVICES. Tenant represents that it is familiar with the
standards for all utilities servicing the Premises, including, without
limitation, the capacity of the feeders to the Building and the risers and
wiring installations and standards set forth in attached Exhibit D. Tenant shall
contract directly with all utility companies and similar providers for utilities
and services to the Premises and pay directly for all such services (which shall
include, without limitation, all water, sewer, electrical, cable and other
electronic data transmission services), and Landlord shall have no obligation to
provide any such services. Notwithstanding the foregoing, any installation of
utility lines, including, without limitation, Building Cable whether or not
through any existing conduits or risers, and any trenching over the Premises to
install wiring or cable, whether or not over existing utility easements, shall
be considered an alteration to the Building Structure and Systems. Unless
directly caused by the gross active negligence or the intentional misconduct of
Landlord, the interruption of any utilities or services to the Building shall
not result in any liability of Landlord, Tenant shall not be entitled to any
abatement or reduction of rent by reason of such failure (whether such failure
affects HVAC services or otherwise), no eviction of Tenant shall result from
such failure, and Tenant shall not be relieved from the performance of any
covenant or agreement in this Lease because of such failure. Any such
interruption shall include, without limitation, failure of services caused by
(i) accident, breakage or repairs; (ii) strikes, lockouts or other labor
disturbance or labor dispute of any character; (iii) governmental regulation,
moratorium or other governmental action; (iv) inability despite the exercise of
reasonable diligence to obtain electricity, water or fuel; or (v) any other
cause beyond Landlord’s reasonable control.

 

19. BANKRUPTCY. If Tenant shall file a petition in bankruptcy under any
provision of the Bankruptcy Code as then in effect, or if Tenant shall be
adjudicated a bankrupt in involuntary bankruptcy proceedings and such
adjudication shall not have been vacated within thirty (30) days from the date
thereof, or if a receiver or trustee of Tenant’s property shall be appointed and
the order appointing such receiver or trustee shall not be set aside or vacated
within thirty (30) days after the entry thereof, or if Tenant shall assign
Tenant’s estate or effects for the benefit of creditors (collectively, “Acts of
Insolvency”), then in any such event Landlord may terminate this Lease, if
Landlord so elects, with or without notice of such election and with or without
entry or action by Landlord. In such case, notwithstanding any other provisions
of this Lease, Landlord, in addition to any and all rights and remedies allowed
by law or equity, shall, upon such termination, be entitled to recover damages
in the amount provided in Subparagraph 25(b), and neither Tenant nor any person
claiming through or under Tenant or by virtue of

 

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any statute or order of any court shall be entitled to possession of the
Premises but shall immediately surrender the Premises to Landlord. Nothing
contained herein shall limit or prejudice the right of Landlord to recover, by
reason of any such termination, damages equal to the maximum allowed by any
statute or rule of law in effect at the time when, and governing the proceedings
in which, such damages are to be proved, whether or not such damages are
greater, equal to or less than the amount of damages otherwise recoverable under
the provisions of this Paragraph 19.

 

20. INDEMNIFICATION AND EXCULPATION OF LANDLORD.

 

(a) Tenant shall indemnify, defend and hold Landlord and its officers,
directors, shareholders, agents, employees, and contractors (the “Landlord
Parties” or, individually, a “Landlord Party”) harmless from all third party
damages, costs and expenses (including attorneys’ fees), judgments, loss,
damage, injury, liability, claims and losses (collectively, “Claims”) arising
from Tenant’s use of the Premises or the conduct of its business or from any
activity, work or thing done, permitted or suffered by Tenant in or about the
Premises, the Building, the Common Areas, any portion thereof, or any other part
of the Project. Tenant shall further indemnify, defend and hold the Landlord
Parties harmless from all third party Claims arising from any breach or default
in the performance of any obligation to be performed by Tenant under this Lease,
or arising from any act, neglect, fault or omission of Tenant or of its agents,
employees, or contractors, and from and against all third party Claims incurred
in, or arising out of, such claim or any action or proceeding brought thereon.
In case any action or proceeding shall be brought against the Landlord Parties
or any of them by reason of any such Claim, Tenant, upon notice from Landlord,
shall defend the same at Tenant’s expense by counsel approved in writing by
Landlord. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property or injury to persons in, upon the
Premises from any cause whatsoever except that which is caused by the gross
active negligence or willful misconduct of the Landlord Parties or any of them
or Landlord’s breach of this Lease. Tenant hereby waives all its Claims in
respect thereof against Landlord.

 

(b) Neither Landlord nor any Landlord Party shall be liable to Tenant or its
partners, directors, officers, contractors, agents, employees, invitees,
sublessees or licensees for any loss, injury or damage to Tenant or to any other
person, or to its or their property, except to the extent such injury, damage or
loss is caused by the gross active negligence or willful misconduct of Landlord
or a Landlord Party in the operation or maintenance of the Premises or the
Building. Further, neither Landlord nor any Landlord Party shall be liable (i)
for any such damage caused by other tenants or persons in or about the Building;
or (ii) for punitive damages arising out of any loss of the use of the Premises
or any equipment or facilities therein by Tenant or any person claiming through
or under Tenant.

 

21. DAMAGE TO TENANT’S PROPERTY. Subject to the provisions of Paragraph 20,
neither Landlord nor any Landlord Party shall be liable for (i) any damage to
any property entrusted to employees of the Building, (ii) loss or damage to any
property by theft or otherwise, or (iii) any injury or damage to persons or
property resulting from fire, explosion, falling plaster or other improvements,
steam, gas, electricity, water or rain which may leak from any part of the
Building or from any latent defect in the Premises or in the Building or any
portion thereof, including, without limitation, from the pipes, appliances or
plumbing work in the Building or from the roof, street or subsurface or from any
other place or resulting from dampness or any other cause whatsoever. Except as
expressly provided otherwise in this Lease, neither Landlord nor any Landlord
Party shall be liable for interference with light or other property rights.
Tenant shall give prompt notice to Landlord in case of fire or accidents in the
Premises or in the Building or of defects in the Premises or the Building or in
any fixtures or equipment.

 

22. TENANT’S INSURANCE.

 

(a) Tenant shall, during the Term and any other period of occupancy, at its sole
cost and expense, keep in full force the following insurance:

 

(i) Standard form property insurance insuring against all-risk perils
(“All-Risk”) and sprinkler leakage. This insurance policy shall be upon all
property owned by Tenant, for which Tenant is legally liable or that was
installed at Tenant’s expense, and which is located in the Building including,
without

 

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limitation, furniture, fittings, installations, fixtures (other than tenant
improvements installed by Landlord), and any other personal property, in an
amount not less than the full replacement cost thereof. If there is a dispute as
to the amount which comprises full replacement cost, the decision of Landlord or
any mortgagees of Landlord shall be conclusive. This insurance policy shall also
cover direct or indirect loss of Tenant’s earnings attributable to Tenant’s
inability to use fully or obtain access to the Premises or Building in an amount
which will properly reimburse Tenant. Such policy shall name Landlord and any
mortgagees of Landlord as insured parties, as their respective interests may
appear.

 

(ii) Commercial General Liability Insurance insuring Tenant against any
liability arising out of the lease, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be in the
amount of $2,000,000 Combined Single Limit for injury to, or death of one or
more persons in an occurrence, and for damage to tangible property in an
occurrence. The policy shall insure the hazards of the Premises and Tenant’s
operations thereon, independent contractors, and contractual liability (covering
the indemnity contained in Paragraph 20), and shall (1) name Landlord and
Landlord’s lender(s) and mortgagee(s) as additional insureds, (2) contain a
cross-liability provision, and (3) contain a provision that the insurance
provided Landlord under this Subparagraph 22(a)(ii) shall be primary and
non-contributing with any other insurance available to Landlord.

 

(iii) Workers’ Compensation and Employer’s Liability insurance as required by
state law.

 

(iv) Business interruption insurance coverage for all Basic Monthly Rent and
Operating Expenses for a period of at least twelve (12) months.

 

(v) Any other form or forms of insurance which Tenant or Landlord or any
mortgagees of Landlord may reasonably require from time to time in form, in
amounts, and for insurance risks against which a prudent tenant would protect
itself.

 

(b) All policies to be procured by Tenant shall be written in a form
satisfactory to Landlord and shall be maintained with insurance companies
holding a General Policyholders Rating of “A” and a Financial Rating of “X” or
better, as set forth in the most current issue of Best’s Insurance Guide. Within
ten (10) days after the execution of this Lease and before occupying the
Premises, Tenant shall deliver to Landlord copies of policies or certificates
evidencing the existence of the amounts and forms of coverage satisfactory to
Landlord. No such policy shall be cancelable or reducible in coverage without at
least thirty (30) days prior written notice to Landlord. Tenant shall, at least
ten (10) days before the expiration of such policies, furnish Landlord with
renewals or “binders” thereof, or Landlord may order such insurance and charge
the cost thereof to Tenant as additional rent. If Landlord obtains any insurance
that is the responsibility of Tenant under this Paragraph 22, Landlord shall
deliver to Tenant a written statement setting forth the cost of any such
insurance and showing in reasonable detail the manner in which it has been
computed, and Tenant shall reimburse Landlord such amount at the Lease Interest
Rate until paid.

 

(c) During the Term, Landlord shall insure the Building (excluding any property
which Tenant is obligated to insure under Subparagraphs 22(a)) against damage
with All-Risk insurance and public liability insurance, all in such amounts and
with such deductibles as Landlord considers appropriate. Landlord may, but shall
not be obligated to, obtain and carry earthquake insurance, flood insurance,
rental interruption insurance, or any other form or forms of insurance as it or
Landlord’s mortgagees may determine advisable. Tenant acknowledges that Tenant’s
insurance shall in any event provide primary coverage.

 

(d) Tenant will not keep, use, sell or offer for sale in or upon the Premises
any article which may be prohibited by any insurance policy periodically in
force covering the Building. If Tenant’s use of the Premises, whether or not
Landlord has consented to the same, results in any increase in premiums for the
insurance periodically carried by Landlord with respect to the Building, Tenant
shall pay any such increase in premiums as additional rent within ten (10) days
after being billed therefor by Landlord. In determining whether increased
premiums are a result of Tenant’s use of the Premises, a schedule issued by the
organization computing the

 

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insurance rate on the Building or the Tenant Improvements showing the various
components of such rate shall be conclusive evidence of the several items and
charges which make up such rate. Tenant shall promptly comply with all
reasonable requirements of the insurance authority or any present or future
insurer relating to the Premises.

 

(e) If any of Landlord’s insurance policies shall be canceled or cancellation
shall be threatened or the premium or coverage thereunder changed or threatened
to be changed in any way because of the use of the Premises or any part thereof
by Tenant or any assignee or subtenant of Tenant or by anyone Tenant permits on
the Premises and, if Tenant fails to remedy the condition giving rise to such
threatened or actual cancellation, or threatened or actual change in coverage or
premiums, then, within forty-eight (48) hours after notice thereof, Landlord
may, at its option, either terminate this Lease or enter upon the Premises and
attempt to remedy such condition, and Tenant shall promptly pay the cost thereof
to Landlord as additional rent. Landlord shall not be liable for any damage or
injury caused to any property of Tenant or of others located on the Premises
resulting from such entry. If Landlord is unable or elects not to remedy such
condition, then Landlord shall have all of the remedies for a Tenant default
provided for in this Lease.

 

(f) All policies of insurance required hereunder shall include a clause or
endorsement denying the insurer any rights of subrogation against the other
party to the extent rights have been waived by the insured before the occurrence
of injury or loss. Landlord and Tenant waive any rights of recovery against the
other for injury or loss due to hazards covered by policies of insurance
containing such a waiver of subrogation clause or endorsement to the extent of
the injury or loss covered thereby.

 

23. DAMAGE OR DESTRUCTION.

 

(a) If the Project, Building, or the Premises is damaged by fire or other
perils, Landlord shall:

 

(i) In the event of total destruction, at Landlord’s option, (x) as soon as
reasonably possible after receipt of all insurance proceeds, approval by local
authorities of any and all required final building plans and specifications and
issuance of all required building permits and licenses, commence repair,
reconstruction and restoration of the Project, Building, or the Premises and
prosecute the same diligently to completion, in which event this Lease shall
remain in full force, or (y) within the later of (a) the date of final insurance
adjustment or (b) ninety (90) days after such damage, elect not to so repair,
reconstruct or restore the Project, Building, or the Premises, in which latter
event this Lease shall be deemed to have terminated as of the date of such total
destruction. In either event, Landlord shall give Tenant written notice of its
intention within ninety (90) days after the date of total destruction.

 

(ii) In the event of a partial destruction of the Project or Building to an
extent not exceeding twenty-five percent (25%) of the full insurable value of
the Project or Building or the Premises, and if the damage thereto is such that
the Project, Building, or the Premises may be repaired, reconstructed or
restored within a period of ninety (90) days from the date of such casualty, and
if Landlord has received insurance proceeds sufficient to cover the cost of such
repairs, then Landlord shall commence and proceed diligently with the work of
repair, reconstruction and restoration of the Building or Premises and this
Lease shall continue in full force (it being understood and agreed that Landlord
shall not be required to repair, reconstruct, or restore the other portions of
the Project unless Tenant’s use of or access to the Premises will be materially
affected by Landlord’s election to not repair, reconstruct or restore the
damaged portion of the Project). If (i) such work of repair, reconstruction and
restoration shall require a period longer than ninety (90) days after the date
of the casualty or exceeds twenty-five percent (25%) of the full insurable value
of the Building, (ii) such partial destruction is not insured, or (iii)
insurance proceeds will not be sufficient to cover the entire cost of such
repairs, then Landlord either may elect to so repair, reconstruct or restore and
the Lease shall continue in full force or Landlord may elect not to repair,
reconstruct or restore and the Lease shall be deemed to have terminated as of
the date of such partial destruction. Under any of the conditions of this
Subparagraph 23(a)(ii), Landlord shall give written notice to Tenant of its
intention within the later of (a) the date of final insurance adjustment or (b)
ninety (90) days after the date of partial destruction of the Project, Building,
or Premises.

 

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(b) Except as provided otherwise in this Lease, upon any termination of this
Lease under any of the provisions of this Paragraph 23, the parties shall be
released without further obligation to the other from the date possession of the
Premises is surrendered to Landlord except for items which have previously
accrued and are then unpaid.

 

(c) In the event of repair, reconstruction or restoration by Landlord as
provided in this Paragraph 23, the rent payable under this Lease shall be abated
proportionately to the degree to which Tenant’s use of the Premises is impaired
during the period of such repair, reconstruction or restoration only to the
extent Landlord receives proceeds from any rent abatement insurance that may be
carried by Landlord or business interruption insurance carried by Tenant;
provided that there shall be no abatement of rent if such damage is the result
of the negligence or intentional wrongdoing of Tenant or its agents, employees,
contractors or invitees. Tenant shall not be entitled to any compensation or
damages for (i) loss in the use of the whole or any part of the Premises or (ii)
any inconvenience or annoyance occasioned by such damage, repair, reconstruction
or restoration.

 

(d) Tenant shall not be released from any of its obligations under this Lease
except to the extent and upon the conditions expressly stated in this Paragraph
23. Notwithstanding anything to the contrary contained in this Paragraph 23, if
Landlord is delayed or prevented from repairing or restoring the damaged
Premises more than one (1) year after the occurrence of such damage or
destruction by reason of acts of God, war, governmental restrictions, inability
to procure the necessary labor or materials, or other cause beyond the control
of Landlord, Landlord, at its option, may terminate this Lease, whereupon
Landlord shall be relieved of its obligation to make such repairs or restoration
and Tenant shall be released from its obligations under this Lease as of the end
of the one-year period.

 

(e) If Landlord is obligated to or elects to repair or restore as herein
provided, Landlord shall be obligated to make repair or restoration only of
those portions of the Building or the Premises which were originally provided at
Landlord’s expense, and the repair and restoration of items not provided at
Landlord’s expense shall be the obligation of Tenant as of the date of such
casualty.

 

(f) Notwithstanding anything to the contrary contained in this Paragraph 23,
Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises when the damage resulting from any casualty covered under
this Paragraph 23 occurs during the last twelve (12) months of the Term. In the
event Landlord elects not to repair any such damage or destruction occurring
during the last twelve (12) months of the Term, then this Lease and the parties’
respective obligations hereunder (other than those that by their nature survive
Lease termination) shall terminate.

 

(g) The provisions of Civil Code Section 1932, Subsection 2, and Section 1933,
Subsection 4, which permit termination of a lease upon destruction of the leased
premises, are hereby waived by Tenant, and the provisions of this Lease shall
govern in case of such destruction. Except as provided otherwise in this Lease,
Tenant shall not be released from any of its obligations under this Lease, the
rent and other expenses payable by Tenant under this Lease shall not abate, and
Landlord shall have no liability to Tenant for any damage or destruction to the
Premises or the Building or any inconvenience or injury to Tenant by reason of
any maintenance, repairs, alterations, decoration, additions or improvements to
the Premises, Building, or Project.

 

24. EMINENT DOMAIN.

 

(a) If all of the Project, Building, or Premises, or such part thereof as shall
materially and adversely interfere with Tenant’s use and occupancy thereof,
shall be taken for any public or quasi-public purpose by any lawful power or
authority by exercise of the right of appropriation, condemnation or eminent
domain, or sold to prevent such taking, either party shall have the right to
terminate this Lease effective as of the date possession is required to be
surrendered to such authority. In addition, if such part of the Project as
shall, in Landlord’s sole discretion, materially affect the continuing viability
of the Project as an industrial project shall be taken for any public or
quasi-public purpose by any lawful power or authority by exercise of the right
of appropriation, condemnation or eminent domain, or sold to prevent such
taking, the Landlord shall have the right to terminate this

 

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Lease effective as of the date possession is required to be surrendered to such
authority. Tenant shall not assert any claim against Landlord or the taking
authority for any compensation because of such taking, and Landlord shall be
entitled to receive the entire amount of any award without deduction for any
estate or interest of Tenant. If the amount of property or the type of estate
taken does not substantially interfere with the conduct of Tenant’s business,
Landlord shall be entitled to the entire amount of the award without deduction
for any estate or interest of Tenant, Landlord shall restore the Premises to
substantially their same condition before the partial taking to the extent
Landlord receives condemnation proceeds (with any deficiency to be paid by
Tenant as a condition to Landlord’s obligation to restore). Notwithstanding the
foregoing, Tenant shall have the right to proceed against the condemning
authority for any damages, including rent paid to Landlord, during the time
Tenant is deprived of the use of the Premises on account of such taking and
restoration, and nothing contained in this Paragraph shall be deemed to give
Landlord any interest in any award made to Tenant for the taking of personal
property and fixtures belonging to Tenant. Rent during any such taking and
restoration shall abate only to the proportionate extent of Tenant’s inability
to use the Premises and only to the extent Landlord receives proceeds from any
rent abatement insurance that may be carried by Landlord or business
interruption insurance carried by Tenant.

 

(b) In the event of taking of the Premises or any part thereof for temporary
use, (i) this Lease shall be and remain unaffected thereby and rent shall not
abate except to the proportionate extent of Tenant’s inability to use the
Premises and only to the extent Landlord receives proceeds from any rent
abatement insurance that may be carried by Landlord or business interruption
insurance carried by Tenant, and (ii) Tenant shall be entitled to receive for
itself such portion or portions of any award made for such use with respect to
the period of the taking which is within the Term, provided that if such taking
shall remain in force at the expiration or earlier termination of this Lease,
Tenant shall then pay to Landlord a sum equal to the reasonable cost of
performing Tenant’s obligations under Subparagraph 14(c) with respect to
surrender of the Premises and upon such payment shall be excused from such
obligations. For purpose of this Subparagraph 24(b), a temporary taking shall be
defined as a taking for a period of 270 days or less. Tenant expressly waives
the benefits of any statute now or hereafter in effect which would permit Tenant
to terminate or seek termination of this Lease in the event of condemnation,
including, without limitation, California Code of Civil Procedure sections
1265.110, 1265.120, and 1265.130.

 

25. DEFAULTS AND REMEDIES.

 

(a) The occurrence of any one or more of the following events shall constitute a
default hereunder by Tenant:

 

(i) Abandonment of the Premises by Tenant. Notwithstanding the provisions of
Civil Code Section 1951.3, “abandonment” means any absence by Tenant from the
Premises for three (3) days or longer while in default of any provision of this
Lease.

 

(ii) The failure by Tenant to make any payment of rent or additional rent or any
other payment required to be made by Tenant under this Lease, as and when due,
provided that Tenant may cure such default by making such payment to Landlord
within three (3) days after written notice thereof from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under Code of Civil Procedure Section 1161 regarding
unlawful detainer actions.

 

(iii) The failure by Tenant to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in Subparagraphs 25(a)(i) or (ii), provided that Tenant
may cure such default by curing such failure within ten (10) days after written
notice thereof from Landlord to Tenant. Any such notice shall be in lieu of, and
not in addition to, any notice required under Code of Civil Procedure Section
1161 regarding unlawful detainer actions. If the nature of Tenant’s default is
such that it is reasonably capable of being cured but more than ten (10) days
are required for its cure, then Tenant shall be deemed to have cured such
default if Tenant shall commence such cure within the ten (10) day period and
thereafter diligently prosecutes such cure to completion, provided further that
such completion shall occur not later than sixty (60) days from the date of such
notice from Landlord.

 

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(iv) (1) Acts of Insolvency; or (2) the attachment, execution or other judicial
seizure of substantially all of Tenant’s assets located at the Premises or of
Tenant’s interest in this Lease, provided that such default shall be deemed to
be cured where such seizure is discharged within thirty (30) days.

 

(v) The death, incapacity or Act of Insolvency of any Guarantor (as defined in
Paragraph 56 below) or the termination, cancellation or anticipatory breach or
repudiation in whole or in part of any Guaranty (as also defined in Paragraph
56, below).

 

(vi) The discovery by Landlord that any financial statement given to Landlord by
Tenant, or its successor in interest, or by any Transferee (defined below) or
sublessee pursuant to a Transfer or sublease, or by any Guarantor, is materially
false.

 

(vii) Any breach or repudiation by any Guarantor of the provisions of, or
obligations of such Guarantor under, any guaranty of this Lease.

 

(b) If any such default by Tenant occurs, in addition to any other remedies now
or later available to Landlord at law or in equity, Landlord can terminate
Tenant’s right to possession of the Premises and terminate this Lease and all
rights of Tenant under this Lease. No act by Landlord other than giving notice
thereof to Tenant shall terminate this Lease. Upon termination, Landlord may
recover from Tenant (net of any mitigation of damages which Landlord makes or
reasonable could have made):

 

(i) the worth at the time of award of any unpaid rent which had been earned at
the time of such termination; plus

 

(ii) the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided; plus

 

(iii) the worth at the time of award of the amount by which the unpaid rent for
the balance of the Term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided; plus

 

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

 

As used in Subparagraphs 25(b)(i) and (ii), the “worth at the time of award” is
computed by allowing interest at the Lease Interest Rate. As used in
Subparagraph 25(b)(iii), the “worth at the time of award” is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).

 

(c) If any such default by Tenant occurs, Landlord may utilize the remedy
described in California Civil Code Section 1951.4 (which says landlord may
continue the lease in effect after a tenant’s breach and abandonment and recover
rent (subject to mitigation) as it becomes due, if tenant has the right to
sublet or assign subject to reasonable limitations).

 

(d) If an abandonment of the Premises by Tenant occurs or if Landlord elects to
reenter as provided above or shall take possession of the Premises pursuant to
legal proceeding or pursuant to any notice provided by law, then if Landlord
does not elect to terminate this Lease as provided above, Landlord may from time
to time, without terminating this Lease, either recover all rent (subject to
mitigation) as it becomes due or relet the Premises or any part thereof for the
Term on terms and conditions as Landlord in its sole discretion may deem
advisable with the right to make alterations and repairs to the Premises.

 

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If Landlord elects to so relet, then rentals received by Landlord from that
reletting shall be applied: first, to the payment of any indebtedness other than
rent due under this Lease from Tenant to Landlord; second, to the payment of any
cost of such reletting; third, to the payment of the cost of any alterations and
repairs to the Premises; fourth, to the payment of rent due and unpaid under
this Lease; and the residue, if any, shall be held by Landlord and applied to
payment of future rent as the same may become due and payable under this Lease.
Should that portion of such rentals received from such reletting during any
month, which is applied to the payment of rent under this Lease, be less than
the rent payable during that month by Tenant under this Lease, then Tenant shall
pay such deficiency to Landlord immediately upon demand therefor by Landlord.
Such deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.

 

(e) All rights, options and remedies of Landlord contained in this Lease shall
be construed and held to be cumulative, and no one of them shall be exclusive of
the other, and Landlord shall have the right to pursue any one or all of such
remedies or any other remedy or relief which may be provided by law, whether or
not stated in this Lease. Without limitation, Tenant acknowledges that Tenant’s
failure to timely comply with the requirements of Paragraphs 27, 28, 50 and 51
may result in a lender refusing to loan Landlord funds or a buyer refusing to
purchase the Building on favorable terms (or at all), causing Landlord
substantial monetary damages. No waiver of any default of Tenant under this
Lease shall be implied from any acceptance by Landlord of any rent or other
payments due under this Lease (whether that acceptance occurs before or after
(i) a default has occurred or (ii) a three-day or other notice of default has
been given) or from any omission by Landlord to take any action on account of
such default if such default persists or is repeated, and no express waiver
shall affect defaults other than as specified in the waiver. The consent or
approval of Landlord to or of any act by Tenant requiring Landlord’s consent or
approval shall not be deemed to waive or render unnecessary Landlord’s consent
or approval to or of any subsequent similar acts by Tenant.

 

(f) Landlord shall be in default in the performance of any obligation required
to be performed by Landlord under the Lease if Landlord has failed to perform
such obligation within thirty (30) days after actual receipt of written notice
from Tenant specifying in detail Landlord’s failure to perform; provided,
however, that if the nature of Landlord’s obligation is such that more than
thirty (30) days are required for Landlord’s performance, Landlord shall not be
deemed in default if Landlord commences such performance within such thirty (30)
day period and thereafter diligently pursues the same to completion. Upon any
such default by Landlord, Tenant may exercise any of its rights provided at law
for a default by a landlord under a commercial lease; provided, however, in no
event shall Tenant have the right to terminate this Lease as a result of
Landlord’s default, and Tenant’s remedies shall be limited to damages and/or
injunctive relief.

 

(g) Landlord and Tenant waive all rights to a jury trial and agree that any
action or proceeding arising out of this Lease shall be heard by a court sitting
without a jury.

 

LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF
ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTIONS
OF THE UNITED STATES AND THE STATE OF CALIFORNIA. EACH PARTY EXPRESSLY AND
KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY
MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR
OCCUPANCY OF THE PREMISES, OR ANY CLAIM FOR INJURY OR DAMAGE.

 

26. ASSIGNMENT AND SUBLETTING.

 

(a) Tenant shall not assign, encumber, or otherwise transfer (collectively,
“Transfer”) all or any part of its interest in this Lease or in the Premises or
sublease all or any part of the Premises, or allow any other person or entity to
occupy or use all or any part of the Premises, without obtaining Landlord’s
prior written consent as set forth below. Any Transfer or sublease without
Landlord’s prior written consent shall be voidable at Landlord’s election and
shall constitute a default.

 

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Initials                           -18-

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(b) Tenant shall have the right to sublease or assign any portion of the
Premises to any Tenant related entity, subsidiary or successor of Tenant.
(“Affiliate”) without Landlord’s consent, but by providing notice to Landlord;
subparagraphs (d), (e), and (f) of this Paragraph 26 are subject to this
sentence. For non-affiliated companies, Landlord shall not unreasonably withhold
or delay the approval of any proposed sublease or assignment.

 

(c) If Tenant is a partnership or a limited liability company, a withdrawal or
change, in one or more transactions, of partners or members owning in the
aggregate a fifty percent (50%) or more interest in the profits of the
partnership or limited liability company, or any transaction or event which
results in a change in control of the partnership or limited liability company,
or if Tenant is a corporation, any change or transfer in the aggregate of fifty
percent (50%) or more of its voting stock or beneficial interest, whether in one
or more transactions, shall constitute a Transfer and shall be subject to these
provisions. If Tenant is a corporation, partnership, or limited liability
company a sale, subparagraphs (d), (e), and (f) of this Paragraph 26 are subject
to this sentence or other transfer of fifty percent (50%) or more of its assets
in the aggregate, in one or more transactions, shall also be a Transfer under
this Lease and in addition shall be void as to Landlord without Landlord’s prior
written consent. No consent to a Transfer or sublease shall constitute a future
waiver of the provisions of this Paragraph 26.

 

(d) Tenant shall notify Landlord in writing of Tenant’s intent to Transfer or
sublease all or part of this Lease or the Premises, the name of the proposed
assignee or sublessee, information concerning the financial responsibility of
the proposed assignee or sublessee and all the terms of the proposed Transfer or
subletting; within 15 days after receipt of all such information and all
additional information requested by Landlord concerning the proposed Transfer or
sublease, Landlord shall elect by notice to Tenant (“Landlord’s Election”) to do
one of the following: (a) consent to such proposed Transfer or sublease; (b)
refuse such consent, which refusal shall be on reasonable grounds.

 

As conditions to granting its consent to any Transfer or sublease, Landlord may
require:

 

(i) delivery to and approval by Landlord of a true copy of the fully executed
instrument of Transfer or sublease, and the delivery to Landlord of an agreement
executed by the transferee or sublessee in form and substance satisfactory to
Landlord and expressly enforceable by Landlord, whereby the transferee or
sublessee assumes and agrees to be bound by all of the terms and provisions of
this Lease and to perform all of the obligations of Tenant under this Lease;

 

(ii) that any sublease provide that it is subject and subordinate to this Lease
and to all mortgages, that Landlord may enforce the provisions of the sublease,
including collection of rent, and that in the event of termination of this Lease
for any reason, including without limitation a voluntary surrender by Tenant, or
in the event of any reentry or repossession of the Premises by Landlord,
Landlord may, at its option, either (x) terminate the sublease or (y) take over
all of the right, title and interest of Tenant, as sublessor, under such
sublease, in which latter case such sublessee shall attorn to Landlord, but that
nevertheless Landlord shall not (1) be liable for any previous act or omission
of Tenant under such sublease, (2) be subject to any defense or offset
previously accrued in favor of the sublessee against Tenant, or (3) be bound by
any previous modification of any sublease made without Landlord’s written
consent, or by any previous prepayment by sublessee of any rent or other
payments.

 

(e) Landlord shall have the right to approve or disapprove any proposed assignee
or subtenant. In exercising such right of approval or disapproval, Landlord
shall be entitled to take into account any fact or factor which Landlord
reasonably deems relevant to such decision, including but not necessarily
limited to the following, all of which are agreed to be reasonable factors for
Landlord’s consideration:

 

(i) The financial strength of the proposed assignee or subtenant, including the
adequacy of its working capital to pay all expenses anticipated in connection
with any proposed remodeling of the Premises.

 

 

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(ii) The proposed use of the Premises by such proposed assignee or subtenant and
the compatibility of such proposed use within the quality and nature of the
other uses in the Project.

 

(iii) Any violation which the proposed use by such proposed assignee or
subtenant would cause of any other rights granted by Landlord to other tenants
of the Project.

 

(iv) Any adverse impact of the proposed use of the Premises by such proposed
assignee or subtenant upon the parking or other services provided for Project
tenants generally.

 

(v) Whether there then exists any default by Tenant pursuant to this Lease or
any non-payment or non-performance by Tenant under this Lease which, with the
passage of time or the giving of notice, would constitute a default under this
Lease.

 

(vi) The business reputation, character, history and nature of the business of
the proposed assignee or subtenant.

 

(vii) Whether the proposed assignee or subtenant is a tenant or existing
subtenant, or is an affiliate of or associated with any tenant or existing
subtenant of the Project or is a person with whom Landlord has negotiated for
space in the Project during the twelve (12) month period ending with the date
Landlord receives notice of such proposed assignment or subletting.

 

(viii) Whether the proposed assignee or subtenant is a governmental entity or
agency.

 

Moreover, Landlord shall be entitled to be reasonably satisfied that each and
every covenant, condition or obligation imposed upon Tenant by this Lease and
each and every right, remedy or benefit afforded Landlord by this Lease is not
impaired or diminished by such assignment or subletting. Landlord and Tenant
acknowledge that the express standards and provisions set forth in this Lease
dealing with assignment and subletting, including those set forth in this
subparagraph (e) have been freely negotiated and are reasonable at the date
hereof taking into account Tenant’s proposed use of the Premises and the nature
and quality of the Building and Project. No withholding of consent by Landlord
for any reasonable reason deemed sufficient by Landlord shall give rise to any
claim by Tenant or any proposed assignee or subtenant or entitle Tenant to
terminate this Lease, to recover contract damages or to any abatement of rent.
In this connection, Tenant hereby expressly waives its rights under California
Civil Code Section 1995.310.

 

(f) Whether or not Landlord shall consent to a Transfer or sublease under the
provisions of this Paragraph 26, (i) Tenant shall pay Landlord’s reasonable
processing fees and reasonable attorneys’ fees incurred in determining whether
or not to so consent, and (ii) Tenant shall not be relieved of any
responsibility under this Lease without Landlord’s express written release,
which Landlord may grant or withhold in its sole, subjective discretion. If
Landlord shall consent to any Transfer, Tenant shall pay to Landlord, as
additional rent, one hundred percent (100%) of all net sums or other
consideration payable to and for the benefit of Tenant by the transferee on
account of the Transfer, as and when such sums and other consideration are due
and payable to or for the benefit of Tenant (or, if Landlord so requires, and
without any release of Tenant’s liability for the same, Tenant shall instruct
the transferee to pay such sums and other consideration directly to Landlord).
If in connection with any proposed sublease Tenant receives net sums or other
consideration, either initially or over the term of the sublease, in excess of
the rent called for under this Lease or, in case of the sublease of a portion of
the Premises, in excess of such rent fairly allocable to such portion, after
appropriate adjustments to assure that all other payments called for under this
Lease are taken into account, Tenant shall pay to Landlord as additional rent
one hundred percent (100%) of the net sums or other consideration received by
Tenant promptly after its receipt. As used in this paragraph, “net sums or other
consideration” shall include without limitation the then fair value of any
non-cash consideration and shall be

 

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calculated after first deducting reasonable costs incurred by Tenant in
connection with the Transfer or sublease, including without limitation
commissions payable to a brokers, space modification costs in connection with
the Transfer or sublease, reasonable legal costs, free rent concessions to the
transferee or sublessee, and lease take-over costs. Landlord’s waiver of or
consent to any Transfer or subletting shall not relieve Tenant or any transferee
or sublessee from any obligation under this Lease whether or not accrued.

 

27. SUBORDINATION. Unless Landlord or any beneficiary or mortgagee with a lien
on the Building or any ground lessor with respect to the Building elects
otherwise as provided below in this Paragraph 27, this Lease shall be subject
and subordinate at all times to the following without the necessity of any
additional document being executed by Tenant for the purpose of effecting a
subordination:

 

(a) the lien and provisions of any mortgage, deed of trust, or declaration of
covenants, conditions and restrictions which may now exist or hereafter be
executed by which the Building, Project, any ground lease, or Landlord’s
interest or estate in any of those items, is encumbered; and

 

(b) all ground leases which may now exist or hereafter be executed affecting the
Building.

 

Landlord, any such beneficiary or mortgagee, or any such ground lessor, shall at
any time have the right to elect to subordinate or cause to be subordinated to
this Lease any such liens and provisions or ground lease. Any election under
this Paragraph 27 may be made by giving notice thereof to Tenant at least sixty
(60) days before the election is to become effective. If any ground lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall, at the
election of any successor-in-interest to Landlord and regardless of any
subordination, attorn to and become the Tenant of the successor-in-interest to
Landlord. Tenant waives any right to declare this Lease terminated or otherwise
ineffectual because of any such foreclosure, conveyance or ground lease
termination. Tenant shall execute and deliver, upon demand by Landlord and in
the form and content requested by Landlord, any additional documents evidencing
the priority or subordination of this Lease and Tenant’s obligation to attorn to
and become the Tenant of any successor-in-interest to Landlord as provided for
under this Paragraph 27. Tenant’s failure to sign and return any such documents
within ten (10) days of request shall constitute a material default by Tenant
under this Lease and Landlord may, at Landlord’s option, terminate the Lease
provided written notice of such termination (which shall be in lieu of and not
in addition to the notice and cure period otherwise provided for under
Subparagraph 25(a)(iii)) is received by Tenant prior to Landlord’s receipt of
such documents. Tenant hereby irrevocably appoints Landlord as attorney-in-fact
of Tenant to execute, deliver and record any such document in the name and on
behalf of Tenant.

 

28. ESTOPPEL CERTIFICATE.

 

(a) Within ten (10) days following any written request which Landlord may make
from time to time, Tenant shall execute and deliver to Landlord a “Tenant
Estoppel Certificate”, in a form substantially similar to the form of attached
Exhibit E (provided that if the statements in paragraphs 11 and 12 thereof are
not true, Tenant shall revise them in such a way as to make them true) or in any
other form reasonably required by Landlord. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph 28 may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser of the Building or
any interest therein.

 

(b) Tenant’s failure to deliver such Tenant Estoppel Certificate within such
time shall be conclusive upon Tenant (i) that this Lease is in full force,
without modification except as may be represented by Landlord, (ii) that there
are no uncured defaults in Landlord’s performance, and (iii) that not more than
one (1) month’s rental has been paid in advance. Tenant’s failure to deliver the
Tenant Estoppel Certificate to Landlord within ten (10) days of receipt shall
constitute a material default under this Lease and Landlord may, at Landlord’s
option, terminate the Lease, provided written notice of such termination (which
shall be in lieu of and not in addition to the notice and cure period otherwise
provided for under Subparagraph 25(a)(iii)) is received by Tenant prior to
Landlord’s receipt of the Tenant Estoppel Certificate.

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -21-

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29. HAZARDOUS MATERIALS.

 

(a) As used in this Lease, the following words or phrases shall have the
following meanings:

 

(i) “Agents” means Tenant’s partners, officers, directors, shareholders,
employees, agents, contractors entering upon the Project at the request or
invitation of Tenant.

 

(ii) “Claims” means claims, liabilities, losses, actions, environmental suits,
causes of action, legal or administrative proceedings, damages, fines,
penalties, loss of rents, liens, judgments, costs and expenses (including,
without limitation, attorneys’ fees and costs of defense, and consultants’,
engineers’ and other professionals’ fees and costs).

 

(iii) “Hazardous” means: (a) hazardous; (b) toxic; (c) reactive; (d) corrosive;
(e) ignitable; (f) carcinogenic; (g) reproductive toxic; (h) any other attribute
of a Substance now or in the future referred to in, or regulated by, any
Hazardous Materials Laws; and (i) potentially injurious to health, safety or
welfare, the environment, the Premises, the Building, the Project, or any
portion thereof.

 

(iv) “Hazardous Materials” means any: (a) Substance which is Hazardous,
regardless of whether that Substance is Hazardous by itself or in combination
with any other Substance; (b) Substance which is regulated by any Hazardous
Material Laws; (c) asbestos and asbestos-containing materials; (d) urea
formaldehyde; (e) radioactive substance; (f) flammable explosives; (g)
petroleum, including crude oil or any fraction thereof; (h) polychlorinated
biphenyls; and (i) “hazardous substances,” “hazardous substances,” “hazardous
materials” or “hazardous wastes” under any Hazardous Materials Laws.

 

(v) “Hazardous Materials Laws” means: (a) any existing or future federal, state
or local law, ordinance, regulation or code which protects health, safety or
welfare, or the environment; (b) any existing or future administrative or legal
decision interpreting any such law, ordinance, regulation or code; and (c) any
common law theory which may result in Claims against Landlord, the Premises or
any portion thereof.

 

(vi) “Permits” means any permit, authorization, license or approval required by
any applicable governmental agency.

 

(vii) “Premises” for purposes of this Paragraph 29 only, shall mean the
Premises, the air about the Premises and the soil, surface water and ground
water under the surface of the Project.

 

(viii) “Substance” means any substance, material, product, chemical, waste,
contaminant or pollutant.

 

(ix) “Use” means use, generate, manufacture, produce, store, release or
discharge.

 

(b) (i) Without limiting the generality of Paragraph 8 of this Lease, and except
as provided in Paragraphs 29(b)(ii) and 29(b)(iii), Tenant covenants and agrees
that Tenant and its Agents shall not bring into, maintain upon, engage in any
activity involving the Use of, or Use in or about the Project, or transport to
or from the Project, any Hazardous Materials. Notwithstanding the provisions of
Paragraphs 29(b)(ii) or 29(b)(iii), in no event shall Tenant or its Agents
release or dispose of any Hazardous Materials in, on, under or about the
Project.

 

(ii) Notwithstanding the provisions of Paragraph 29(b)(i), if Tenant or its
Agents proposes to Use any Hazardous Materials, or to install or operate any
equipment which will or may Use Hazardous Materials (“Equipment”), then Tenant
shall first obtain Landlord’s prior written consent, which consent may be given
or withheld by Landlord in its subjective, good faith judgment, within thirty
(30) days of Landlord’s receipt of the last of documents or information
requested by Landlord as set forth in this Paragraph. Tenant’s failure to
receive Landlord’s consent within such thirty (30) day period shall be
conclusively deemed Landlord’s withholding of

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -22-

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consent. Tenant’s request for Landlord’s consent shall include the following
documents or information: (a) a Hazardous Materials list pursuant to Paragraph
29(c) regarding the Hazardous Materials Tenant proposes to Use or Equipment
Tenant proposes to install and operate; (b) reasonably satisfactory evidence
that Tenant has obtained all necessary Permits to Use those Hazardous Materials
or to install and operate the proposed Equipment; (c) reasonably satisfactory
evidence that Tenant’s Use of the Hazardous Materials or installation and
operation of the Equipment shall comply with all applicable Hazardous Materials
Laws, Tenant’s permitted use under this Lease and all restrictive covenants
encumbering the Project; (d) reasonably satisfactory evidence of Tenant’s
financial capability and responsibility for potential Claims associated with the
Use of the Hazardous Materials or installation and operation of the Equipment;
and (e) such other documents or information as Landlord may reasonably request.
Landlord may, at its option, condition its consent upon any terms that Landlord,
in its subjective, good faith judgment, deems necessary to protect itself, the
public and the Project against potential problems, Claims arising out of
Tenant’s Use of Hazardous Materials or installation and operation of Equipment
including, without limitation, (i) changes in the insurance provisions of the
Lease, (ii) installation of equipment, fixtures or personal property or
alteration of the Premises (all at Tenant’s sole cost) to minimize the
likelihood of a violation of Hazardous Materials Laws as a result of Tenant’s
Use of the Hazardous Materials or installation and operation of Equipment, or
(iii) increasing the amount of the security deposit. Neither Landlord’s consent
nor Tenant’s obtaining any Permits shall relieve Tenant of any of its
obligations pursuant to this Paragraph 29. Landlord’s granting of consent to one
request to Use Hazardous Materials or install and operate Equipment shall not be
deemed Landlord’s consent to any other such request. If Landlord grants its
consent to Tenant’s request, no subtenant, assignee or successor of Tenant shall
have the right to Use those Hazardous Materials or install or operate that
Equipment without again complying with the provisions of this Paragraph
29(b)(ii).

 

(iii) Notwithstanding the provisions of Paragraphs 29(b)(i) and 29(b)(ii),
Tenant may Use any Substance typically found or used in applications of the type
permitted by this Lease so long as: (a) any such Substance is typically found
only in such quantity as is reasonably necessary for Tenant’s permitted use
under Paragraph 8 of this Lease; (b) any such Substance and all equipment
necessary in connection with the Substance are Used strictly in accordance with
the manufacturers’ instructions therefor; (c) no such Substance is released or
disposed of in or about the Project; (d) any such Substance and all equipment
necessary in connection with the Substance are removed from the Project and
transported for Use or disposal by Tenant in compliance with any applicable
Hazardous Materials Laws upon the expiration or earlier termination of this
Lease; and (e) Tenant and its Agents comply with all applicable Hazardous
Materials Laws.

 

(iv) Tenant shall not use or install in or about the Premises any asbestos or
asbestos-containing materials.

 

(c) Tenant shall deliver to Landlord, within thirty (30) days after Tenant’s
receipt of Landlord’s written request, a written list identifying any Hazardous
Materials that Tenant or its Agents then Uses or has Used within the last twelve
(12) month period in the Project. Each such list shall state: (i) the use or
purpose of each such Hazardous Material; (ii) the approximate quantity of each
such Hazardous Material Used by Tenant; (iii) such other information as Landlord
may reasonably require; and (iv) Tenant’s written certification that neither
Tenant nor its Agents have released, discharged or disposed of any Hazardous
Materials in or about the Project, or transported any Hazardous Materials to or
from the Project, in violation of any applicable Hazardous Materials Laws.
Landlord shall not request Tenant to deliver a Hazardous Materials list more
often than once during each twelve (12) month period, unless Landlord reasonably
believes that Tenant or its Agents have violated the provisions of this
Paragraph 29 (in which case (a) Landlord may request such lists as often as
Landlord determines is necessary until such violation is cured, and (b) Tenant
shall provide such lists within ten (10) days of each of Landlord’s requests, or
if an emergency exists, such lists shall be immediately provided).

 

(d) Tenant shall furnish to Landlord copies of all notices, claims, reports,
complaints, warnings, asserted violations, documents or other communications
received or delivered by Tenant, as soon as possible and in any event within
five (5) days of such receipt or delivery, with respect to any actual or alleged
Use, disposal or transportation of Hazardous Materials in or about the Premises,
the Building or the Project. Whether or not Tenant receives any such notice,
claim, report, complaint, warning, asserted violation, document or
communication, Tenant

 

 

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Initials        Tenant’s    
Initials                           -23-

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shall immediately notify Landlord, orally and in writing, if Tenant or any of
its Agents knows or has reasonable cause to believe that any Hazardous
Materials, or a condition involving or resulting from the same, is present, in
Use, has been disposed of, or transported to or from the Premises, the Building
or the Project other than as previously consented to by Landlord in strict
accordance with Paragraph 29(b).

 

(e) Tenant acknowledges that it, and not Landlord, is in possession and control
of the Premises for purposes of all reporting requirements under any Hazardous
Materials Laws. If Tenant or its Agents violate any provision of this Paragraph
29, then Tenant shall immediately notify Landlord in writing and shall be
obligated, at Tenant’s sole cost, to abate, remediate, clean-up or remove from
the Project, and dispose of, all in compliance with all applicable Hazardous
Materials Laws, all Hazardous Materials Used by Tenant or its Agents. Such work
shall include, but not be limited to, all testing and investigation required by
Landlord, Landlord’s lender or ground lessor, if any, and any governmental
authorities having jurisdiction, and preparation and implementation of any
remedial action plan required by any governmental authorities having
jurisdiction. All such work shall, in each instance, be conducted to the
satisfaction of Landlord and all governmental authorities having jurisdiction.
If at any time Landlord determines that Tenant is not complying with the
provisions of this Paragraph 29(e), then Landlord may, without prejudicing,
limiting, releasing or waiving Landlord’s rights under this Paragraph 29,
separately undertake such work, and Tenant shall reimburse all costs incurred by
Landlord upon demand.

 

(f) Landlord’s right of entry pursuant to Paragraph 17 shall include the right
to enter and inspect the Premises, and the right to inspect Tenant’s
environmental books and records, to verify Tenant’s compliance with, or
violations of, the provisions of this Paragraph 29. Furthermore, Landlord may
conduct such investigations and tests as Landlord or Landlord’s lender or ground
lessor may require. If Landlord determines that Tenant has violated the
provisions of this Paragraph 29, or if any applicable governmental agency
requires any such inspection, investigation or testing, then Tenant, in addition
to its other obligations set forth in this Paragraph 29, shall immediately
reimburse Landlord for all costs incurred therewith.

 

(g) (i) Tenant shall indemnify, protect, defend (with legal counsel acceptable
to Landlord in its subjective, good faith judgment) and hold harmless Landlord,
its partners and its and their respective successors, assigns, partners,
directors, officers, shareholders, employees, agents, lenders, ground lessors
and attorneys, and the Project, from and against any and all Claims incurred by
such indemnified persons, or any of them, in connection with, or as the result
of: (a) the presence, Use or disposal of any Hazardous Materials into or about
the Project, or the transportation of any Hazardous Materials to or from the
Project, by Tenant or its Agents; (b) any injury to or death of persons or
damage to or destruction of property resulting from the presence, Use or
disposal of any Hazardous Materials into or about the Project, or the
transportation of any Hazardous Materials to or from the Project, by Tenant or
its Agents; (c) any violation of any Hazardous Materials Laws caused by Tenant
or its Agents; and (d) any failure of Tenant or its Agents to observe the
provisions of this Paragraph 29. Payment shall not be a condition precedent to
enforcement of the foregoing indemnification provision. Tenant’s obligations
hereunder shall include, without limitation, and whether foreseeable or
unforeseeable, all costs of any required or necessary testing, investigation,
studies, reports, repair, clean-up, detoxification or decontamination of the
Project, and the preparation and implementation of any closure, removal,
remedial action or other required plans in connection therewith, and shall
survive the expiration or earlier termination of the term of this Lease. For
purposes of these indemnity provisions, any acts or omissions of Tenant, its
assignees, sublessees, Agents or others acting for or on behalf of Tenant
(regardless of whether they are negligent, intentional, willful, or unlawful)
shall be strictly attributable to Tenant.

 

(ii) If at any time after the initiation of any suit, action, investigation or
other proceeding which could create a right of indemnification under Paragraph
29(g)(i) Landlord determines that Tenant is not complying with the provisions of
Paragraph 29(g)(i), then Landlord may, without prejudicing, limiting, releasing
or waiving the right of indemnification provided herein, separately defend or
retain separate counsel to represent and control the defense as to Landlord’s
interest in such suit, action, investigation or other proceeding. Tenant shall
pay all costs of Landlord’s separate defense or counsel upon demand.

 

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -24-

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(iii) Tenant waives, releases and discharges Landlord, its partners and its and
their respective officers, directors, shareholders, partners, employees, agents,
representatives, attorneys, lenders, ground lessors, attorneys, successors and
assigns from any and all Claims of whatever kind (other than claims for
indemnity or contribution with regard to liability to third party persons or
governments), known or unknown, including any action under the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.), as amended (“CERCLA”) and the provisions of California Health & Safety
Code Section 25100 et seq., as amended, which Tenant has or may have, based upon
the Use, migration, disposal of or transportation to or from the Premises or the
Project of any Hazardous Materials (unless caused by Landlord’s gross negligence
or willful misconduct) or the environmental condition of the Premises or the
Project (including without limitation all facilities, improvements, structures
and equipment thereon and soil and groundwater thereunder). Tenant agrees,
represents and warrants that the matters released herein are not limited to
matters which are known, disclosed or foreseeable, and Tenant waives any and all
rights and benefits which it now has, or may have, conferred upon Tenant by
virtue of the provisions of Section 1542 of the California Civil Code, which
provides:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

Tenant agrees, represents and warrants that it is familiar with, has read,
understands, and has consulted legal counsel of its choosing with respect to
California Civil Code Section 1542 and Tenant realizes and acknowledges that
factual matters now unknown to it may have given, or may hereinafter give, rise
to Claims which are presently unknown, unanticipated and unsuspected.

 

(h) Upon any violation of the provisions of this Paragraph 29, Landlord shall be
entitled to exercise any or all remedies available to a landlord against a
defaulting tenant including, but not limited to, those set forth in Paragraph
25.

 

(i) By its signature to this Lease, Tenant confirms that: (i) Landlord has not
made any representation or warranty regarding the environmental condition of the
Premises, the Building or the Project; and (ii) Tenant has conducted its own
examination of the Premises, the Building and the Project with respect to
Hazardous Materials and accepts the same “AS IS”.

 

(j) No termination, cancellation or release agreement entered into by Landlord
and Tenant shall release Tenant from its obligations under this Paragraph 29
unless specifically agreed to by Landlord in writing at the time of such
agreement.

 

(k) Tenant’s covenants and obligations under this Paragraph 29 shall also apply
to any assignee or sublessee of Tenant, and to any such assignee’s or
sublessee’s partners, officers, directors, shareholders, employees, agents,
contractors and any other third parties entering upon the Project at the request
or invitation of such assignee or sublessee.

 

30. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the
“Rules and Regulations” attached hereto as Exhibit F, and all reasonable and
nondiscriminatory modifications thereof and additions thereto from time to time
put into effect by Landlord. Landlord shall not be responsible to Tenant for the
violation or nonperformance by any other tenant or occupant of the Building or
Project of any of the Rules and Regulations.

 

31. CONFLICT OF LAWS. This Lease shall be governed by and construed pursuant to
the laws of the State of California.

 

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -25-

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32. SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Lease, all of
the covenants, conditions and provisions of this Lease shall be binding upon and
shall inure to the benefit of the parties to this Lease and their respective
heirs, personal representatives, successors and assigns.

 

33. SURRENDER OF PREMISES. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation of this Lease, shall not work a merger, and
shall, at the option of Landlord, operate as an assignment to it of any or all
subleases or subtenancies. Upon the expiration or termination of this Lease,
Tenant shall peaceably surrender the Premises and all Tenant Improvements,
alterations and additions to the Premises, broom clean the Premises, leave the
Premises in good order, repair and condition (including the due completion by
that expiration or termination of all repairs which Tenant is responsible for
making under this Lease), reasonable wear and tear excepted, and comply with the
provisions of Paragraph 14(c). The delivery of keys to any employee of Landlord
or to Landlord’s agent or any employee thereof shall not be sufficient to
constitute a termination of this Lease or a surrender of the Premises.

 

34. ATTORNEYS’ FEES. If any legal proceeding arises in connection with this
Lease, in addition to any other remedy at law or in equity sought or obtained by
the prevailing party, the losing party shall pay the reasonable legal and other
fees and all costs of the prevailing party incurred in connection with those
proceedings.

 

35. PERFORMANCE BY TENANT. All covenants and agreements to be performed by
Tenant under any of the terms of this Lease shall be performed by Tenant at
Tenant’s sole cost and expense and without any abatement of rent. If Tenant
shall fail to pay any sum of money owed to any party other than Landlord, for
which it is liable under this Lease, or if Tenant shall fail to perform any
other act on its part to be performed under this Lease, Landlord may, without
waiving or releasing Tenant from Tenant’s obligations, but shall not be
obligated to, make any such payment or perform any such other act to be made or
performed by Tenant. All sums so paid by Landlord and all necessary incidental
costs incurred by Landlord together with interest thereon at the Lease Interest
Rate, from the date of such payment by Landlord, shall be payable to Landlord on
demand. Landlord shall have (in addition to any other right or remedy of
Landlord) all rights and remedies in the event of the nonpayment thereof by
Tenant as are set forth in Paragraph 25.

 

36. MORTGAGEE PROTECTION. In the event of any default on the part of Landlord,
Tenant will give notice by registered or certified mail to any beneficiary of a
deed of trust or mortgage covering the Premises whose address shall have been
furnished to Tenant, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure.

 

37. DEFINITION OF LANDLORD. The term “Landlord,” as used in this Lease, so far
as covenants or obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner or owners, at the time in question,
of the fee title of the Building or the lessees under any ground lease, if any.
In the event of any transfer, assignment or other conveyance or transfers of any
such title, Landlord (and in case of any subsequent transfers or conveyances,
the then-grantor) shall be automatically freed and relieved from and after the
date of such transfer, assignment or conveyance of all liability as respects the
performance of any covenants or obligations on the part of Landlord contained in
this Lease thereafter to be performed. The transferee of such title shall be
deemed to have assumed and agreed to observe and perform any and all obligations
of Landlord under this Lease during its ownership of the Premises. Landlord may
transfer its interest in the Premises without the consent of Tenant and such
transfer or subsequent transfer shall not be deemed a violation on Landlord’s
part of any of the terms and conditions of this Lease. With respect to any
indemnity by Tenant of Landlord under this Lease, “Landlord” shall include, and
the indemnity shall run to, Landlord and its respective partners, affiliates,
shareholders, directors, officers, agents, lenders, employees, partners,
successors and assigns.

 

38. WAIVER. The waiver by Landlord of any breach of any term, covenant or
condition contained in this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant or condition contained
in this Lease, nor shall any custom or practice to which the parties may have
adhered in the administration of the terms of this Lease be deemed a waiver of
or in any way affect the right of Landlord to insist

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -26-

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upon the performance by Tenant in strict accordance with the terms of this
Lease. The subsequent acceptance of rent under this Lease 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 acceptance by
Landlord of a lesser sum than the sum then due shall be deemed to be other than
on account of the earliest installment of such rent or other amount due, nor
shall any endorsement or statement on any check or any letter accompanying any
check be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord’s right to recover the balance of such
installment or other amount or pursue any other remedy available to Landlord.

 

39. IDENTIFICATION OF TENANT. If more than one person signs this Lease as
Tenant, the act of or notice from, or notice or refund to, or the signature of,
any one or more of them with respect to this Lease shall be binding upon Tenant.

 

40. PARKING. Unless Tenant is in default under this Lease, Tenant shall be
entitled to use the number of vehicle parking spaces designated in Subparagraph
1(g). Neither Tenant nor its employees or invitees shall use more parking spaces
than designated in Subparagraph 1(g). If Landlord determines in its sole
discretion that it is necessary for orderly and efficient parking, all or any
portion of any unreserved or unassigned parking spaces may be assigned to, made
available to or reserved by Landlord for other tenants or users of the Building.
If Landlord has not assigned specific spaces to Tenant, neither Tenant nor its
employees shall use any spaces which have been so specifically assigned by
Landlord to other tenants or for other uses such as visitor parking or which
have been designated by Landlord or governmental entities as being restricted to
certain uses.

 

(a) Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant’s employees, suppliers, shippers, contractors,
customers or invitees to be loaded, unloaded or parked in areas other than those
designated by Landlord for such activities.

 

(b) If Tenant permits or allows any of the prohibited activities described in
this Paragraph 40, then Landlord shall have the right, without notice, in
addition to such other rights and remedies that it may have, to remove, tow
away, or impound the vehicle involved and charge the cost to Tenant, which cost
shall be immediately payable upon demand by Landlord with interest thereon at
the Lease Interest Rate from the date Landlord incurs that cost.

 

(c) The use by Tenant, its employees and invitees, of the parking facilities of
the Building shall be on the additional terms and conditions set forth in
attached Exhibit G, and shall be subject to such other agreement between
Landlord and Tenant as may hereinafter be established.

 

41. FORCE MAJEURE. Landlord shall have no liability whatsoever to Tenant on
account of (a) the inability of Landlord to fulfill, or delay in fulfilling, any
of Landlord’s obligations under this Lease, the Premises Preparation Agreement,
or any other Lease attachment by reason of strike, other labor trouble,
governmental preemption or priorities or other controls in connection with a
national or other public emergency, or shortages of fuel, supplies or labor
resulting therefrom, governmental permitting, or any other cause, whether
similar or dissimilar to the above, beyond Landlord’s reasonable control; or (b)
any failure or defect in the supply, quantity or character of electricity or
water furnished to the Premises, by reason of any requirement, act or omission
of the public utility or others furnishing the Building with electricity or
water, or for any other reason, whether similar or dissimilar to the above,
beyond Landlord’s reasonable control. If this Lease or any Exhibit or Rider
specifies a time period for performance of an obligation of Landlord, that time
period shall be extended by the period of any delay in Landlord’s performance
caused by any of the events of force majeure described above.

 

42. TERMS, HEADINGS AND CONSTRUCTION. The title and paragraph headings are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part of this Lease. “Or” is not exclusive. Unless stated
otherwise, references to paragraphs and subparagraphs are to those in this
Lease. This Lease shall be strictly construed neither against Landlord nor
Tenant.

 

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Initials        Tenant’s    
Initials                           -27-

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43. TIME. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor, including
specifically and without limitation, Tenant’s obligation to make any payments,
give any notices and timely perform under the Work Letter Agreement.

 

44. PRIOR AGREEMENT; AMENDMENTS. This Lease contains all of the agreements of
the parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreements or understanding or letter or proposal pertaining
to any such matters shall be effective for any purpose. No provisions of this
Lease may be amended or added to, whether by conduct, oral or written
communication, or otherwise, except by an agreement in writing signed by the
parties hereto or their respective successors-in-interest. No other provision of
this Lease shall modify the effect of this paragraph.

 

45. SEVERABILITY. Any provision of this Lease which shall prove to be invalid,
void or illegal shall in no way affect, impair or invalidate any other provision
of this Lease, and such other provisions shall remain in full force.

 

46. RECORDING. Neither this Lease nor a short form memorandum of this Lease
shall be recorded.

 

47. LIMITATION ON LIABILITY AND TIME. In consideration of the benefits accruing
under this Lease, Tenant and all successors and assigns agree that, in the event
of any actual or alleged failure, breach or default under this Lease by
Landlord: (a) the sole and exclusive remedy shall be against the Landlord’s
interest in the Building; (b) no partner of Landlord shall be named as a party
in any suit or proceeding (except as may be necessary to secure jurisdiction of
the partnership, if applicable); (c) no partner of Landlord shall be required to
answer or otherwise plead to any service of process; (d) no judgment will be
taken against any partner of Landlord (if applicable); (e) no writ of execution
will ever be levied against the assets of any partner of Landlord; (f) the
obligations of Landlord under this Lease do not constitute personal obligations
of the individual partners, directors, officers or shareholders of Landlord, and
Tenant shall not seek recourse against the individual partners, directors,
officers or shareholders of Landlord or any of their personal assets for
satisfaction of any liability in respect to this Lease; and (g) any claim,
defense, or other right of Tenant arising in connection with this Lease or
negotiations before this Lease was signed shall be barred unless Tenant files an
action or interposes a defense based thereon within one hundred eighty (180)
days after the date of the alleged event on which Tenant is basing its claim,
defense or right. In the event of a breach or default by Landlord under this
Lease, in no event shall Tenant have the right to terminate this Lease as a
result of such breach or default, and Tenant’s remedies (subject to the
provisions of this Paragraph 47) shall be limited to damages and/or an
injunction.

 

48. TRAFFIC IMPACT. Tenant agrees that Tenant and its employees, invitees, and
contractors shall comply with the provisions of Exhibit G (Traffic and Parking
Rules and Regulations).

 

49. MODIFICATION FOR LENDER OR GOVERNMENT. If, in connection with obtaining
construction, interim or permanent financing or refinancing for the Building or
all or part of the Project, a lender shall request reasonable modifications in
this Lease as a condition to such financing, Tenant will not unreasonably
withhold, delay or defer its consent thereto, provided that such modifications
do not increase the obligations of Tenant under this Lease or materially
adversely affect the leasehold interest hereby created or Tenant’s rights under
this Lease. In addition, the parties agree to promptly sign all documents
reasonably required by any governmental agency from time to time in connection
with the Premises, provided that those documents do not materially adversely
affect the rights or obligations of the parties under this Lease.

 

50. FINANCIAL STATEMENTS. Notwithstanding that Tenant is currently a publicly
traded and listed company, and that Landlord shall use reasonable efforts to
obtain Tenant’s financial statements by way of publicly available information,
when reasonably requested by Landlord, Tenant shall, upon ten (10) days notice
from Landlord, provide Landlord with the most recent 10Q financial statement and
financial statements of the two (2) years prior to the current financial
statement year, all of which are or have been filed pursuant to the regulations
of the Securities and Exchange Commission. Tenant shall not be required to do or
perform any act that would violate any regulation promulgated by any
governmental or regulatory agency relating to such request for financial

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -28-

--------------------------------------------------------------------------------

statements from Landlord. Such statement(s) shall be safeguarded by Landlord and
shall be prepared in accordance with generally accepted accounting principles
and, if such is the normal practice of Tenant, shall be audited by an
independent certified public accountant. The above ten-day notice is the only
notice Landlord is required to give Tenant in connection with Tenant’s financial
statements and shall be in lieu of and not in addition to the notice and cure
period otherwise provided for under Subparagraph 25(a)(iii). Tenant’s failure to
comply with its obligations under this Paragraph 51 shall constitute a material
default under this Lease.

 

51. QUIET ENJOYMENT. Landlord covenants that upon Tenant paying the rent
required under this Lease and paying all other charges and performing all of the
covenants and provisions on Tenant’s part to be observed and performed under
this Lease, Tenant shall and may peaceably and quietly have, hold and enjoy the
Premises in accordance with this Lease.

 

52. TENANT’S SIGNS.

 

(a) Tenant may, at its sole cost and expense, place its signs displaying its
logo and graphics on the entrance doors to the Premises and in Landlord
designated locations in the hallways on floors wholly leased by Tenant. On
partial floors leased by Tenant, Tenant, at its sole cost and expense, may place
its signs on entrance doors to the Premises, provided the number, size, color,
style, material and location of such signs conform to Landlord’s graphics
program for the Building and Landlord shall place directional signs to the
Premises, at Tenant’s expense, at a location determined by Landlord.

 

(b) Unless specifically set forth to the contrary in this Lease, Tenant shall
not place any sign on the exterior of the Building, or within the Building if
such sign may be seen from outside of the Building or on any Building sign
monument or other device constructed for the placement of tenant signs.

 

(c) All Tenant signs installed by Landlord or Tenant shall comply with all
applicable requirements of all governmental authorities having jurisdiction and
shall be installed in a good and workmanlike manner. Such signs shall be
maintained and kept in good repair at Tenant’s sole cost and expense, and, on
expiration or earlier termination of the Term, removed at Tenant’s sole cost and
expense.

 

(d) Landlord acknowledges that Tenant currently has a previously installed,
governmentally permitted and Landlord approved sign on the parapet of the
Building. Tenant shall continue to have the right to keep the sign on the
Building during the term of this lease and any extension thereof. The sign right
is not exclusive to Tenant and Landlord reserves the right to offer other sign
rights to other tenants.

 

53. NO LIGHT, AIR OR VIEW EASEMENT. Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to the Project
shall in no way affect this Lease, abate any payment owed by Tenant under the
Lease, or otherwise impose any liability on Landlord.

 

54. TENANT AS CORPORATION, PARTNERSHIP, OR LIMITED LIABILITY COMPANY. If Tenant
executes this Lease as a corporation or limited liability company, then Tenant
and the persons executing this Lease on behalf of Tenant represent and warrant
that the individuals executing this Lease on Tenant’s behalf are duly authorized
to execute and deliver this Lease on its behalf. If tenant is a corporation,
Tenant further represents and warrants that this Lease has been authorized in
accordance with a duly adopted resolution of the board of directors of Tenant, a
copy of which is to be delivered to Landlord on execution of this Lease, and in
accordance with the bylaws of Tenant and that this Lease is binding upon Tenant
in accordance with its terms. If Tenant executes this Lease as a partnership,
(a) each general partner shall be jointly and severally liable for keeping,
observing and performing all the provisions of this Lease to be kept, observed
or performed by Tenant and (b) the term “Tenant” shall mean and include each
general partner jointly and severally and the act of or notice from, or notice
or refund to, or the signature of, any one or more of them with respect to this
Lease shall be binding on Tenant and each and all of the general partners of
Tenant with the same effect as if each of them had so acted or so given or
received such notice or refund or so signed. Dissolution of any partnership
which is a Tenant under this Lease shall be deemed to be an assignment jointly
to all of the partners, who shall thereafter be subject to the terms of this
Lease as if each such former partners had initially signed this Lease as
individuals.

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -29-

--------------------------------------------------------------------------------

55. INTENTIONALLY DELETED.

 

56. COUNTERPARTS. This Lease may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.

 

57. NO OFFER. The submission of this Lease and any ancillary documents to Tenant
shall not constitute an offer to Lease, and Landlord shall have no obligation of
any kind, express or implied, to lease the Premises to Tenant until Landlord has
approved, executed and returned to Tenant a fully signed copy of this Lease
together with any ancillary documents Landlord may require.

 

58. JOINT AND SEVERAL LIABILITY. This Lease and the obligations set forth herein
shall be the joint and several obligations of all persons, entities or parties
to this Lease and shall be binding upon them and their heirs, personal
representatives, and permitted successors and assigns, if any.

 

THEREFORE, the parties have executed this Lease as of the date first written
above.

 

LANDLORD:   TENANT: POINTE CAMINO WINDELL LLC   PATH 1 NETWORK TECHNOLOGIES INC.
a California limited liability company   a Delaware corporation By:  

 

--------------------------------------------------------------------------------

  By:  

 

--------------------------------------------------------------------------------

        Michael S. Martin           John Zavoli     Its:   President       Its:
  CEO & President

 

        Landlord’s    
Initials        Tenant’s    
Initials                           -30-

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LOGO [g7352473524_ex108135.jpg]

 

Exhibit A-1

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LOGO [g7352473524_ex108136.jpg]

 

 

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INTENTIONALLY DELETED

 

EXHIBIT B

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NOTICE OF LEASE TERM DATES

 

To:  

 

--------------------------------------------------------------------------------

       Date:                     , 2005    

 

--------------------------------------------------------------------------------

            

 

--------------------------------------------------------------------------------

        

 

Re: Lease dated                     , 2001, between
                            , a                                  (“Landlord”)
and                              (“Tenant”) (the “Lease”) concerning Suite(s)
     on floor(s)              located at                             ,
California (the “Premises”).

 

Tenant:

 

In accordance with Paragraph 3 of the Lease, we wish to confirm as follows:

 

1. That the Premises have been tendered herewith to Tenant as being
substantially complete in accordance with the Lease and that the construction of
the Premises is not deficient in any way except for punch list items.

 

2. That Tenant has been delivered possession of the Premises and acknowledges
that under the provisions of the Lease the Term commenced on
                             and will end on                             .

 

3. That in accordance with the Lease Monthly Basic Rent commenced to accrue on
                            .

 

4. Under Subparagraph 1(b) and 1(k) of the Lease, the exact number of Rentable
Square Feet within the Premises                      is square feet and Tenant’s
Percentage is                     .

 

5. Except as otherwise set forth in the Lease, rent is due and payable in
advance every month during the Term of the Lease. Your rent checks should be
made payable to                                               at
                                .

 

 

--------------------------------------------------------------------------------

  , a

 

--------------------------------------------------------------------------------

By:  

 

--------------------------------------------------------------------------------

    Its:  

 

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        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit C

-1-

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STANDARDS FOR UTILITIES AND SERVICES

 

The following standards for utilities and services are in effect. Landlord
reserves the right to adopt nondiscriminatory modifications and additions
hereto.

 

1. The air conditioning system achieves maximum cooling when the window
coverings are extended to the full width of the window opening. Landlord shall
not be responsible for room temperatures if Tenant does not keep all window
coverings in the Premises fully extended whenever the system is in operation.
Tenant agrees to cooperate fully at all times with Landlord, and to abide by all
reasonable regulations and requirements which Landlord may prescribe for the
proper functioning and protection of the air conditioning system. Tenant agrees
not to connect any apparatus, device, conduit or pipe to any Building system
without Landlord’s prior written approval. Tenant further agrees that neither
Tenant nor its servants, employees, agents, visitors, licensees or contractors
shall at any time enter, adjust, tamper with, touch or otherwise in any manner
affect the mechanical installations or facilities of the Building or the
Project. The cost of maintenance and service calls to adjust and regulate the
air conditioning system shall be charged to Tenant if the need for maintenance
work results from either Tenant’s adjustment of room thermostats or Tenant’s
failure to comply with its obligations under this Exhibit, including keeping
window coverings fully extended.

 

2. Tenant’s use of electric current shall never exceed the capacity of the
feeders to the Building, or the risers or wiring installation.

 

3. Tenant shall keep the meter and installation equipment in good working order
and repair at Tenant’s sole cost and expense, in default of which Landlord may
cause such meter and equipment to be replaced or repaired and collect the cost
thereof from Tenant. Tenant agrees to pay for water consumed, as shown on the
meter, as and when bills are rendered, and on default in making such payment,
Landlord may pay such charges and collect the charges from Tenant. Any such
costs or expenses incurred, or payments made by Landlord for any of the reasons
or purposes set forth in this Paragraph, shall be deemed to be additional rent
payable by Tenant and collectible by Landlord as such.

 

4. If Tenant generates trash in an amount that exceeds normal and customary
quantities for a tenants of similar size in similar office properties in the San
Diego area, then Tenant shall pay to Landlord the cost of removal of any of
Tenant’s refuse and rubbish to the extent that the amount of Tenant’s refuse and
rubbish exceeds that usually generated by other tenants in similar office
properties in the San Diego area..

 

5. Landlord reserves the right to stop service of the plumbing, ventilation, air
conditioning, telephone and electrical systems, when necessary, by reason of
accident or emergency, or for repairs, alterations or improvements, when in the
judgment of Landlord such actions are desirable or necessary to be made, until
the repairs, alterations or improvements shall have been completed, and Landlord
shall have no responsibility or liability for failure to supply plumbing,
ventilating, air conditioning, telephone or electric service, when prevented
from so doing by strike or accident or by any cause beyond Landlord’s reasonable
control, or by laws, rules, orders, ordinances, directions, regulations or by
reason of the requirements of any federal, state, county or municipal authority
or failure of gas, oil or other suitable fuel supply or inability by exercise of
reasonable diligence to obtain gas, oil or other suitable fuel supply. Any
obligations of Landlord to furnish any services pursuant to any of the
provisions of this Lease, or to perform any act or thing for the benefit of
Tenant, shall not be deemed breached if Landlord is unable to furnish or perform
the same by virtue of a strike or labor trouble or any other cause whatsoever
beyond Landlord’s control.

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit D

-1-

--------------------------------------------------------------------------------

SAMPLE FORM OF

 

TENANT ESTOPPEL CERTIFICATE

 

TO:                             , a California limited liability company
(“Landlord”) and                     , a                     .

 

The undersigned,                      (“Tenant”), hereby certify to
                     a                     , as follows:

 

1. Attached hereto is a true, correct and complete copy of that certain lease
dated             , 2001 between Landlord and Tenant (the “Lease”), which
demises premises located at Suite             ,                             ,
California (the “Premises”). The Lease is now in full force and has not been
amended, modified or supplemented, except as set forth in Paragraph 4 below.

 

2. The term of the Lease commenced on                 , 2005

 

3. The term of the Lease shall expire on                 , 2005 There are
             options to extend the Lease term for a total period of             
years, none of which has been exercised. There are no options to expand the
Premises.

 

4. The Lease has: (Initial one)

 

  (        ) not been amended, modified, supplemented, extended, renewed or
assigned.

 

  (        ) been amended, modified, supplemented, extended, renewed or assigned
by the following described agreements, copies of which are attached hereto:

 

________________________________________________

 

________________________________________________

 

5. Tenant has accepted and is now in possession of the Premises.

 

6. Tenant acknowledges that Landlord’s interest in the Lease will be assigned to
                                         and that no modification, adjustment,
revision or cancellation of the Lease or amendments thereto shall be effective
unless the prior written consent of                                  is
obtained.

 

7. The amount of fixed monthly rent is $                                .

 

8. The amount of security deposits (if any) is $                        . No
other security deposits have been made.

 

9. Tenant is paying the full lease rental, which has been paid in full as of the
date of this Certificate. No rent or other amount under the Lease has been paid
for more than thirty (30) days in advance of its due date.

 

10. All work required to be performed by Landlord under the Lease and the Work
Letter Agreement (as defined in the Lease) has been completed.

 

11. There are no defaults on the part of the Landlord or Tenant under the Lease.

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit E

-1-

--------------------------------------------------------------------------------

12. Tenant has no defense as to its obligations under the Lease and claims no
set-off or counterclaim against Landlord.

 

13. Tenant has no right to any concession (rental or otherwise) or similar
compensation in connection with renting the space it occupies except as provided
in the Lease.

 

All provisions of the Lease and the amendments thereto (if any) referred to
above are hereby ratified.

 

The foregoing certification is made with the knowledge that Landlord is about to
sell the Property to              or that
                                                          is about to fund a
loan to Landlord, which sale/loan Tenant understands is scheduled to close on
                                    , and that in either case the named party is
relying upon the representations herein made in proceeding with that execution.
Tenant shall take all steps reasonably necessary to keep the transaction and
party described in this Certificate confidential. If there is any change in the
information provided in this Certificate between now and the closing described
above, Tenant shall immediately inform you of that change.

 

This Certificate has been duly executed and delivered by the authorized officers
of the undersigned as of                 , 200   .

 

“TENANT”

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

By:  

 

--------------------------------------------------------------------------------

    Its:  

 

--------------------------------------------------------------------------------

 

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit E

-2-

--------------------------------------------------------------------------------

RULES AND REGULATIONS

 

1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name or
notice shall be installed or displayed on any part of the outside or inside of
the Building or the Project without the prior written consent of Landlord.
Landlord shall have the right to remove, at Tenant’s expense and without notice,
any sign installed or displayed in violation of this rule. All approved signs or
lettering on doors and walls shall comply with all then-applicable governmental
requirements and shall be printed, painted, affixed or inscribed at the expense
of Tenant by a person or company designated by Landlord.

 

2. Tenant shall not place anything against or near glass partitions or doors or
windows, other than the Building Standard window covering, which is visible from
outside the Premises.

 

3. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances,
escalators, or stairways of the Building or the Project. The halls, passages,
exits, entrances, escalators and stairways are not open to the general public,
but are open, subject to reasonable regulations, to Tenant’s business invitees.
Landlord shall in all cases retain the right to control and prevent access
thereto of all persons whose presence in the judgment of Landlord would be
prejudicial to the safety, character, reputation and interest of the Project and
its tenants; provided that nothing contained in these Rules and Regulations
shall be construed to prevent such access to persons with whom any tenant
normally deals in the ordinary course of its business, unless such persons are
engaged in illegal or unlawful activities. No tenant and no employee or invitee
of any tenant shall go upon the roof(s) of the Project.

 

4. The directory of the Building, if any, will be provided exclusively for the
display of the name and location of tenants only and Landlord reserves the right
to exclude any other names therefrom.

 

5. Landlord will furnish Tenant, free of charge, with two keys to each door lock
in the Premises. Landlord may make a reasonable charge for any additional keys.
Tenant shall not make or have made additional keys, and Tenant shall not alter
any lock or install any new additional lock or bolt on any door of the Premises.
Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys
to all doors which have been furnished to Tenant, and in the event of loss of
any keys so furnished, shall pay Landlord the cost of the key(s).

 

6. If Tenant requires telegraphic, telephonic, burglar alarm, satellite dishes,
antennae or similar services, it shall first obtain Landlord’s written approval
(which Landlord may give or withhold in its sole discretion), and shall comply
with Landlord’s instructions in their installation. Landlord hereby approves of
Tenant’s existing security system.

 

7. Tenant’s initial move in and subsequent deliveries of bulky items, such as
furniture, safes and similar items, shall, unless otherwise agreed in writing by
Landlord, be made during the hours of 6:00 p.m. to 6:00 a.m. or on Saturday or
Sunday. Deliveries during normal office hours shall be limited to normal office
supplies and other small items. No deliveries shall be made which impede or
interfere with other tenants or the operation of the Building.

 

8. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which is
allowed by law. Landlord shall have the right to prescribe the weight, size and
position of all equipment, materials, furniture or other property brought into
the Building. Heavy objects shall, if considered necessary by Landlord, stand on
such platforms as determined by Landlord to be necessary to properly distribute
the weight, which platforms shall be provided at Tenant’s expense. Business
machines and mechanical equipment belonging to Tenant, which cause noise or
vibration that may be transmitted to the structure of the building or to any
space therein to such a degree as to be objectionable to Landlord or to any
tenants in the Building, shall be placed and maintained by Tenant, at Tenant’s
expense, on vibration eliminators or other devises sufficient to eliminate noise
or vibration. The persons employed to move such equipment in or out of the
Building must be acceptable to Landlord. Landlord will not be responsible for
loss of, or damage to, any such equipment or other property from any cause, and
all damage done to the Building or Project by maintaining or moving such
equipment or other property shall be repaired at the expense of Tenant.

 

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit F

-1-

--------------------------------------------------------------------------------

9. Tenant shall not use or keep in the Premises any firearms, explosives,
kerosene, gasoline or inflammable or combustible fluid or material other than
those limited quantities necessary for the operation or maintenance of office
equipment. Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied or used
in a manner offensive or objectionable to Landlord or other occupants of the
Building by reason of noise, odors or vibrations, nor shall Tenant bring into or
keep in or about the Premises any birds or animals.

 

10. Tenant shall not use any method of heating or air conditioning other than
that supplied by Landlord.

 

11. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Building’s heating and air conditioning and to comply with any governmental
energy saving rules, laws or regulations of which Tenant has actual notice, and
shall refrain from attempting to adjust controls. Tenant shall keep corridor
doors closed, and shall keep all window coverings pulled down.

 

12. Landlord reserves the right, exercisable after thirty (30) days written
notice to Tenant and without liability to Tenant, to change the name and street
address of the Building.

 

13. Landlord shall not be liable for damages for any error with regard to the
admission to or exclusion from the Building of any person. Landlord reserves the
right to prevent access to the Building in case of invasion, mob, riot, public
excitement or other commotion by closing and locking the doors or by other
appropriate action.

 

14. With the exception of Building Services required to operated Tenant’s
business, Tenant shall close and lock the doors of its Premises and entirely
shut off all water faucets or other water apparatus, and all lights,
electricity, gas or air outlets before Tenant and its employees leave the
Premises. Tenant shall be responsible for any damage or injuries sustained by
other tenants or occupants of the Building or by Landlord for noncompliance with
this rule.

 

15. Tenant shall not obtain for use on the Premises ice, drinking water, food,
beverage, towel or other similar services or accept upon the Premises sandwich
or other food services, barbering or shoeshine service, or similar non-office
related or business vendors without Landlord’s prior written approval (which may
be withheld in Landlord’s subjective good faith discretion), and then only at
such hours and under such regulations as may be fixed by Landlord. Landlord
herby approves of Tenant’s existing vending machine.

 

16. The lavatories, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and no
inappropriate substance of any kind whatsoever shall be thrown therein. The
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by the tenant who, or whose employees or invitees, shall
have caused it.

 

17. Tenant shall not sell, or permit the sale at retail of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to the
general public in or on the Premises. Tenant shall not make any room-to-room
solicitation of business from other tenants in the Project. Tenant shall not use
the Premises for any business or activity other than that specifically provided
for in this Lease.

 

18. Tenant shall not install any radio or television antenna, loudspeaker,
satellite dishes or other devices on the roof(s) or exterior walls of the
Building or the Project. Tenant shall not interfere with radio or television
broadcasting or reception from or in the Project or elsewhere.

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit F

-2-

--------------------------------------------------------------------------------

19. Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises or any part of the
Premises, except in accordance with the provisions of the Lease pertaining to
alterations. Landlord reserves the right to direct electricians as to where and
how telephone and telegraph wires are to be introduced to the Premises. Tenant
shall not cut or bore holes in partitions, floors or ceilings for wires or any
other purpose. Tenant shall not affix any floor covering to the floor of the
Premises in any manner except as approved by Landlord. Tenant shall, at its sole
cost, repair any damage resulting from noncompliance with this rule.

 

20. Tenant shall not install, maintain or operate upon the Premises any vending
machines without the prior written consent of Landlord. Landlord herby approves
of Tenant’s existing vending machine.

 

21. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Project are prohibited, and Tenant shall cooperate
with Landlord to prevent such activities.

 

22. Landlord reserves the right to exclude or expel from the Project any person
who, in Landlord’s judgment, is intoxicated or under the influence of liquor or
drugs or who is in violation of any of these Rules and Regulations or any other
rules and regulations of the Building.

 

23. Tenant shall store all its trash and garbage within its Premises or in other
facilities provided by Landlord. Tenant shall not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
shall be made in accordance with directions issued from time to time by
Landlord.

 

24. The Premises shall not be used for the storage of merchandise held for sale
to the general public, or for lodging or for manufacturing of any kind except
minor assembly, research and development, and prototype production, nor shall
the Premises be used for any improper, immoral or objectionable purpose. No
cooking shall be done or permitted on the Premises without Landlord’s consent,
except the use by Tenant of Underwriters’ Laboratory approved equipment for
brewing coffee, tea, hot chocolate and similar beverages shall be permitted, and
the use of a microwave oven for employees use shall be permitted, provided that
such equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.

 

25. Tenant shall not use in any space of the Project any hand truck except those
equipped with rubber tires and side guards or such other material-handling
equipment as Landlord may approve. Tenant shall not bring any other vehicles of
any kind into the Building.

 

26. Without the written consent of Landlord, Tenant shall not use the name of
the Building or the Project in connection with or in promoting or advertising
the business of Tenant except as Tenant’s address.

 

27. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

 

28. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.

 

29. To the extent Landlord reasonably deems it necessary (i) to provide to third
parties access to portions of the Common Areas in order to comply with any
applicable law, Landlord may do so without breaching this Lease, and (ii) to
exercise exclusive control over any portions of the Common Areas for the mutual
benefit of the tenants in the Project, Landlord may do so subject to
nondiscriminatory additional Rules and Regulations.

 

30. Tenant’s requirements will be attended to only upon appropriate application
to Landlord’s asset management office for the Project by an authorized
individual. Employees of Landlord shall not perform any work or do anything
outside of their regular duties unless under special instructions from Landlord,
and no employee of Landlord will admit any person (Tenant or otherwise) to any
office without specific instructions from Landlord.

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit F

-3-

--------------------------------------------------------------------------------

31. Tenant shall abide by all restrictions Landlord places on smoking within the
Building. Notwithstanding the foregoing, Landlord shall not be required to
impose any restrictions on smoking within the Building for the benefit of
Tenant. No decision of Landlord to permit or prohibit smoking shall be construed
as a breach of this Lease by Landlord.

 

32. Tenant shall comply with all (a) crime prevention programs, (b) hazardous
materials disclosure and control programs, and (c) water conservation programs
which Landlord is required to participate in under (i) any restrictive covenants
which may now or hereafter exist or (ii) any other agreements which may now
exist or hereafter be executed which affect the use and operation of the
Premises or Project.

 

33. Tenant shall promptly provide Landlord with any information Landlord, any
mortgagee or beneficiary with a lien on the Building, any ground lessor with
respect to the Building, or any governmental agency may reasonably request.

 

34. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of Tenant or any
other tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against Tenant or any other tenant of the Project.

 

35. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of the Lease.

 

36. Landlord reserves the right to modify these Rules and Regulations and adopt
such other reasonable and non-discriminatory rules and regulations as, in its
judgment, may from time to time be needed for safety and security, for care and
cleanliness of the Project and for the preservation of good order in the
Project. Tenant agrees to abide by all the Rules and Regulations stated herein
and any additional rules and regulations which are adopted.

 

37. Tenant shall be responsible for the observance of all of the foregoing rules
by Tenant’s employees, agents, contractors, clients, customers, invitees, guests
and other users of the Premises.

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit F

-4-

--------------------------------------------------------------------------------

TRAFFIC AND PARKING RULES AND REGULATIONS

 

The following rules and regulations shall govern the use of the parking
facilities designated on Exhibit A-2 of the Lease in connection with the use of
the Premises.

 

1. Landlord assumes no responsibility for any damage to any vehicle parked in
the parking areas or for any goods left in any such vehicle. All such liability
is specifically assumed by the operator of any such vehicle as a condition of
parking.

 

2. Tenant shall not (a) park or permit its employees to park in any parking
areas designated by Landlord as areas for parking by visitors to the Project,
(b) park or permit its employees, guests, invitees or visitors to park in the
residential or commercial neighborhoods contiguous to the Project, (c) leave
vehicles in the parking areas overnight, or (d) park any vehicles in the parking
areas other than automobiles, motorcycles, motor driven or non-motor driven
bicycles or four wheeled trucks. No propane or natural gas powered vehicles
shall be allowed to park in the parking areas.

 

3. Parking cards, stickers, or any other devices or forms of identification
supplied by Landlord as a condition of use of the parking facilities shall
remain the property of Landlord. Such parking identification 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. Devices are not
transferable and any device in the possession of an unauthorized holder will be
void. Landlord reserves the right to (a) require that a reasonable security
deposit be paid to Landlord for each parking area or Building access card issued
to Tenant, and (b) change the location of Tenant’s reserved parking spaces, if
any, from time to time.

 

4. No overnight or extended term storage of vehicles shall be permitted.

 

5. Vehicles must be parked entirely within painted stall lines of a single
parking stall.

 

6. All directional signs and arrows must be observed.

 

7. The speed limit within all parking areas shall be five (5) miles per hour.

 

8. Parking is prohibited in any area other than those specifically designated
for parking.

 

9. All parkers are required to park and lock their own vehicles. All
responsibility for damage to vehicles is assumed by the parker.

 

10. Loss or theft of parking identification devices must be reported to
Landlord’s asset management office for the Project immediately, and a lost or
stolen report must be filed by the Tenant or user of such parking identification
device at the time. Landlord has the right to exclude any vehicle from the
parking facilities that does not have an identification device.

 

11. Any parking identification devices reported lost or stolen found on any
unauthorized vehicle will be confiscated and the illegal holder will be subject
to prosecution.

 

12. Washing, waxing, cleaning or servicing of any vehicle in any area not
specifically reserved for such purpose is prohibited.

 

13. The parking operators, managers or attendants are not authorized to make or
allow any exceptions to these rules and regulations.

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit G

-1-

--------------------------------------------------------------------------------

14. Tenant’s continued right to use any parking spaces in the parking facilities
is conditioned upon Tenant abiding by these rules and regulations and those
contained in this Lease. Further, if this Lease terminates for any reason
whatsoever, Tenant’s right to use the parking spaces in the parking facilities
shall terminate concurrently with the Lease.

 

15. Tenant agrees to sign a parking agreement with Landlord or Landlord’s
parking operator within five (5) days of request, which agreement shall
otherwise be consistent with this Lease and these rules and regulations.

 

16. Landlord reserves the right to refuse the sale of parking cards, stickers or
other parking identification devices to any tenant or person or their respective
agents or representatives who willfully refuse to comply with these rules and
regulations and all posted or unposted city, state or federal ordinances, laws
or agreements.

 

17. Tenant and its employees shall comply with any traffic management and/or
environmental regulation program now or hereafter in effect, whether imposed by
local, regional, state or federal governmental or quasi-governmental agencies
(collectively, “TDM Program”) which has been or may hereafter be applicable to
Tenant, the Building or the Project. Tenant acknowledges that such a TDM Program
may cause Tenant inconvenience, but nonetheless agrees to cooperate in the
formation of, and comply with the provisions of, any such TDM Program.
Additionally, Tenant shall (a) participate in any employee commute
transportation surveys reasonably required by Landlord, and (b) adhere to
measures that Landlord may enact in order to comply with existing and future
laws relating to traffic control or flow applicable to the Project. Any breach
by Tenant of any of its covenants in this Paragraph 17 may result in penalty
fees being assessed against Landlord; therefore, Tenant shall be liable to
Landlord for all such fees, plus interest thereon, assessed on account of any
such breach, and that breach shall also constitute a material default under this
Lease.

 

18. Landlord reserves the right to modify these rules and regulations or adopt
such other reasonable and nondiscriminatory rules and regulations for the
parking facilities as it deems necessary for the operation of the parking
facilities. Landlord may refuse to permit any person who violates these rules to
park in the parking facilities, and any violation of the rules shall subject the
vehicle to removal at such vehicle owner’s expense.

 

        Landlord’s    
Initials        Tenant’s    
Initials                          

Exhibit G

-2-

--------------------------------------------------------------------------------

Index of Lease Riders

 

1. Right of First Notice to Lease Additional Space

 

2. Option(s) to Extend Term

 

        Landlord’s    
Initials        Tenant’s    
Initials                            

--------------------------------------------------------------------------------

LEASE RIDER NO. 1

 

RIGHT OF FIRST NOTICE TO

LEASE ADDITIONAL SPACE

 

This Rider is attached to and made a part of that certain Lease (the “Lease”),
dated January 26, 2005, between POINTE CAMINO WINDELL LLC, a California limited
liability company (“Landlord”) and PATH 1 NETWORK TECHNOLOGIES INC., a Delaware
corporation, (“Tenant”) for the premises known as Suite(s) 140, 6215 Ferris
Square, San Diego, California (the “Premises”). Defined or initially capitalized
terms used in this Rider shall have the same meanings as in the Lease. The
provisions of this Rider shall supersede any inconsistent provisions of the
Lease to the extent of the inconsistency.

 

Provided Tenant is not then in default under the Lease, if Landlord decides to
lease any space in the Building, as defined in the Lease (the “Additional
Space”) to the general public, Landlord shall first give written notice to
Tenant of the material terms and conditions upon which Landlord is willing to
offer to lease the Additional Space to the general public (“Landlord’s Notice”).
Tenant shall have five (5) business days after Landlord’s Notice is given within
which to give written unconditional notice to Landlord that Tenant agrees to
lease all (and not less than all) of the Additional Space on all the terms and
conditions set forth in Landlord’s Notice (“Tenant’s Notice”). If Tenant duly
exercises its rights under this Rider, the Additional Space shall become part of
the Premises as of the date on which Tenant shall first have the right to occupy
all or any part of that Additional Space under the terms of Landlord’s Notice or
the Lease amendment resulting therefrom.

 

This Right of First Notice is a one-time right only. If Landlord fails to
receive Tenant’s Notice within the above five-day period, then all rights of
Tenant to lease the Additional Space under this Rider shall automatically
terminate, and Landlord shall thereafter have no further obligation to notify
Tenant of any proposal to lease the Additional Space. Landlord shall thereafter
have the unconditional right to lease all or any part of the Additional Space to
third parties on the same terms and conditions as contained in Landlord’s Notice
or on any other terms and conditions that Landlord thereafter negotiates,
without further obligation to Tenant.

 

If Tenant duly exercises this Right of First Notice within the above five-day
period, then Tenant shall enter into an amendment to the Lease (i) incorporating
the Additional Space into the Lease on the terms and conditions contained in
Landlord’s Notice and (ii) adjusting Tenant’s Percentage and rent accordingly.
All other terms and conditions of the Lease (except as specified in the
immediately preceding sentence, this Rider, Rider No(s). 2, Exhibit(s) “A”
through “G”, and Lease paragraphs (none)) shall remain the same and in full
effect. If Tenant fails to duly execute and return the Lease amendment to
Landlord within five (5) days after it is delivered to Tenant for signature,
this Right of First Notice and Tenant’s acceptance of Landlord’s Notice shall
automatically be void, any right accrued under this Right of First Notice shall
be of no effect, and Landlord shall thereafter be free to unconditionally lease
the Additional Space to one or more third parties as set forth above.

 

This Right of First Notice shall not apply to (a) offers from any third parties
to lease the Additional Space, (b) leases or transfers among entities or persons
related to Landlord (including, but not limited to, partners if Landlord is a
partnership, and shareholders if Landlord is a corporation), and (c) any
proposed sale or purchase of the Building, including, without limitation, a
proposed sale-and-leaseback of the Building. This Right of First Notice is
personal to Tenant. If Tenant Transfers any of Tenant’s interest in the Lease
before the permitted exercise of Tenant’s rights under this Right of First
Notice, those rights shall not be transferred to any transferee but shall
instead automatically lapse, and Landlord’s obligations under this Right of
First Notice shall automatically terminate. This Right of First Notice shall
automatically expire without notice on the expiration of the original or
extended Term or sooner termination of the Lease or upon any Transfer or
sublease by Tenant of all or any part of the Premises.

 

        Landlord’s    
Initials        Tenant’s    
Initials                            

--------------------------------------------------------------------------------

LEASE RIDER NO. 2

 

OPTION TO EXTEND TERM

 

This Rider is attached to and made a part of that certain Lease (the “Lease”),
dated January 26, 2005, between POINTE CAMINO WINDELL LLC, a California limited
liability company (“Landlord”) and PATH 1 NETWORK TECHNOLOGIES INC., a Delaware
corporation, (“Tenant”) for the premises known as Suite(s) 140, 6215 Ferris
Square, San Diego, California (the “Premises”). Defined or initially capitalized
terms used in this Rider shall have the same meanings as in the Lease. The
provisions of this Rider shall supersede any inconsistent provisions of the
Lease to the extent of the inconsistency.

 

Landlord grants to Tenant two options (each an “Option”) to extend the Term for
additional one (1) year(s) terms (each an “Extension”) on the same terms and
conditions as set forth in the Lease (i.e., the second option is available only
if the first option is exercised, and the time for exercise of the second option
would be at the end of the Term extended by the first one-year Extension),
except that the Monthly Basic Rent shall be adjusted on the first day of the
Extension (the “Adjustment Date”) to the “fair rental value” of the Premises on
the Adjustment Date as follows:

 

(a) At least one hundred eighty (180) days before the Adjustment Date, Landlord
and Tenant shall meet in an effort to negotiate, in good faith, the fair rental
value of the Premises as of the Adjustment Date. If Landlord and Tenant have not
agreed upon the fair rental value of the Premises at least one hundred (100)
days before the Adjustment Date, Landlord and Tenant shall attempt to agree in
good faith upon a single appraiser not later than seventy-five (75) days before
the Adjustment Date. If Landlord and Tenant are unable to agree upon a single
appraiser within this time period, then Landlord and Tenant shall each appoint
one (1) appraiser not later than sixty-five (65) days before the Adjustment
Date. Within ten (10) days thereafter, the two appointed appraisers shall
appoint a third appraiser. If either Landlord or Tenant fails to appoint its
appraiser within the prescribed time period, the single appraiser appointed
shall determine the fair rental value of the Premises. If both parties fail to
appoint appraisers within the prescribed time periods, then the first appraiser
thereafter selected by a party shall determine the fair rental value of the
Premises. Each party shall bear the cost of its own appraiser, and the parties
shall share equally the cost of a single or a third appraiser, if applicable.
Each appraiser shall have at least five (5) years experience in the appraisal of
Class A industrial buildings in San Diego County, California and shall be a
member of one or more professional organizations such as MAI or an equivalent.

 

(b) For purposes of such appraisal, “fair rental value” shall mean the price
that a ready and willing tenant would pay, as of the Adjustment Date, as monthly
rent to a ready and willing landlord of comparable, first-class industrial
buildings in the San Diego County area for space comparable to the Premises if
that property were exposed for lease on the open market for a reasonable period
of time with a lease comparable to the Lease and with tenant improvements
comparable to those in the Premises. If a single appraiser is chosen, then such
appraisal shall determine the fair rental value of the Premises. Otherwise, the
fair rental value of the Premises shall be the arithmetic average of the two of
the three appraisals which are closest in amount, and the third appraisal shall
be disregarded. In no event, however, shall the then-existing monthly rent ever
be reduced by reason of such computation, nor shall there be any rent concession
or additional tenant improvement allowance for the Extension term. Landlord and
Tenant shall instruct the appraiser(s) to complete their determination of the
fair rental value not later than thirty (30) days before the Adjustment Date. If
the fair rental value is not determined before the Adjustment Date, then Tenant
shall continue to pay to Landlord the monthly rent in effect immediately prior
to such Extension, until the fair rental value is determined. When the fair
rental value of the Premises is determined, Landlord shall deliver notice of
that amount to Tenant, and Tenant shall pay to Landlord, within ten (10) days
after receipt of such notice, the difference between the monthly rent actually
paid by Tenant to Landlord and the new monthly rent determined under this Rider.

 

The Option shall be exercised only by written unconditional notice received by
Landlord at least six (6) months before expiration of the Term. If Landlord does
not timely receive Tenant’s written unconditional notice of the exercise of the
Option, the Option under this Rider shall immediately lapse, and there shall be
no further right

 

        Landlord’s    
Initials        Tenant’s    
Initials                            

--------------------------------------------------------------------------------

to extend the Term or to the Extension. The Option shall be exercisable by
Tenant on the express condition for Landlord’s benefit that Tenant shall not be
in default either at the time of the exercise of the Option or at the
commencement of the Extension. If Tenant timely exercises the Option under this
Rider, “Term” shall mean, for all purposes under the Lease, the sum of (a) the
Term, as defined under Subparagraph 1(m) of the Lease, plus (b) the term of the
Extension for which the Option has been exercised.

 

The Option is personal to Tenant. In the event of any sublease or Transfer of
Tenant’s interest in the Lease before the permitted exercise of the Option, the
Option shall not be transferred to any transferee but shall instead
automatically lapse, and the Term shall be as provided for in Paragraph 3 of the
Lease.

 

        Landlord’s    
Initials        Tenant’s    
Initials                            

--------------------------------------------------------------------------------

LEASE RIDER NO. 3

 

SATELLITE CONDITIONS

 

This Rider is attached to and made a part of that certain Lease (the “Lease”),
dated January 26, 2005, between POINTE CAMINO WINDELL LLC, a California limited
liability company (“Landlord”) and PATH 1 NETWORK TECHNOLOGIES INC., a Delaware
corporation, (“Tenant”) for the premises known as Suite(s) 140, 6215 Ferris
Square, San Diego, California (the “Premises”). Defined or initially capitalized
terms used in this Rider shall have the same meanings as in the Lease. The
provisions of this Rider shall supersede any inconsistent provisions of the
Lease to the extent of the inconsistency.

 

1. Right to Install and Maintain Roof Equipment. To the extent space is
available in Landlord’s reasonable discretion, Tenant shall have the
non-exclusive right to install and maintain on the Building roof, microwave
dishes, antennas and related cable connections (collectively, the “Satellite
System”), at a location to be designated and limited by Landlord in Landlord’s
reasonable discretion as long as Satellite System is able to operate. Tenant
shall have the right to the reasonable use of the risers in the Building to the
extent available and designated by Landlord as long as there is no adverse
affect on the Building structure or building systems or any other tenants’
premises and subject to restrictions and conditions as may be imposed by
Landlord in Landlord’s reasonable discretion. Prior to such installation, Tenant
shall obtain (i) Landlord’s written approval, which may not be unreasonably
withheld, with respect to the size up to 150 Sq. Ft., weight, design, method of
installation, and any screening required by Landlord of all of the
above-described equipment, and (ii) all required governmental and other permits
and approvals for the Satellite System from appropriate sources. This
installation shall be performed in accordance with all requirements and criteria
imposed by Landlord in connection therewith in Landlord’s reasonable discretion,
including requirements intended to minimize the disturbance of other tenants of
the Building by noise generated by Tenant’s installation of its equipment (e.g.,
requirements restricting the times or days that Tenant may install the
equipment). Landlord may direct, but shall not be responsible for, the means and
methods of installation and no roof penetrations or penetrations between floors
shall be permitted. The Satellite System and all related equipment must be
located, installed, and operated so as to not (a) be visible from any location
on the ground or (b) interfere with the operation of any other communications or
other equipment now or hereafter located on the roof, in the Building, or in the
vicinity of the Building.

 

2. Responsibility. Tenant will be solely responsible, at Tenant’s sole expense,
for the installation, maintenance, repair and removal of the Satellite System
and related cables, conduits, and other equipment (and for obtaining all
required permits and approvals in connection therewith) and Tenant shall at all
times (a) maintain the Satellite System in good condition and repair and (b) be
responsible for the continuous compliance of the Satellite System and its
operation and installation with all laws, rules (including, without limitation,
any covenants, conditions, and restrictions affecting the Building), and
regulations from time to time applicable. If, in Landlord’s reasonable
discretion, the weight of the Satellite System and of such other material and
equipment which is now or hereafter located on the roof exceeds the weight
bearing capacity of the roof, or may otherwise cause the Building to be in
violation of any law or regulation, Tenant shall pay all costs incurred to make
all alterations which are needed to reinforce the roof and/or to otherwise
ensure that the Building will be in compliance with all such laws.

 

3. Access. Roof access by Tenant for any purpose shall be subject to all rules,
regulations, and restrictions reasonably imposed by Landlord from time to time.

 

4. No Representations/Operation. Tenant acknowledges that Landlord has made no
representation or warranty to Tenant regarding the extent to which transmission
or reception by the Satellite System will, or will not be interfered with by
helicopters, other equipment installations, other existing or future structures,
antennas, dishes, transmitters, receivers, or other activities on or in the
vicinity of the roof, Building, or any other condition or source of
interference, or that the condition, design, or weight bearing capacity of the
roof is adequate for the installation, use, or operation of a Satellite System.
Tenant’s installation and use rights under this Paragraph shall only apply with
respect to the use of the Satellite System in connection with Tenant’s
operations in the Premises (as opposed to, e.g., a lease or license of such
equipment by Tenant to any third party or any assignment, sublease, or other
transfer

 

        Landlord’s    
Initials        Tenant’s    
Initials                            

--------------------------------------------------------------------------------

of the Premises). Tenant, and not Landlord, shall be solely responsible for
ensuring the satisfactory operation of the Satellite System and that the
Satellite System will not interfere in any way with (a) the mechanical,
electrical, communication, transmission or other systems of the Building or any
other building located in the vicinity of the Building, (b) the use by other
tenants or occupants of the roof or the Building of any communication or
transmission systems or devices, or (c) the use and enjoyment of the Building by
the other tenants of the Building.

 

5. Removal. On or before the expiration or earlier termination of this Lease,
Tenant shall remove the Satellite System and related cables, conduits, and other
equipment and repair any damage to the Building caused by such removal. In the
event that Landlord enters into any master lease of the roof of the Building or
similar lease or license arrangement, Tenant shall execute any amendment to this
Lease and/or other documents reasonably required by Landlord in furtherance of
such master lease or similar arrangements so long as no such amendment or other
document materially impairs Tenant’s rights and interests under this Paragraph
or any other provision of this Lease.

 

        Landlord’s    
Initials        Tenant’s    
Initials