**EXHIBIT 10.19**

** **

**LEASEAGREEMENT**

ThisLease, made this    1st       day of        December                   , 2006 between   CROSSROADS ASSOCIATES AND CLOCKTOWERASSOCIATES                            ,hereinafter called Landlord, and     AVISTAR COMMUNICATIONS CORPORATION, aDelaware Corporation, hereinafter called Tenant.

**WITNESSETH:**

Landlordhereby leases to Tenant and Tenant hereby hires and takes from Landlord thosecertain premises (the “Premises”) outlined in red on Exhibit “A-1 and A-2”,attached hereto and incorporated herein by this reference thereto moreparticularly described as follows:

Approximately21,711 square feet of rentable space (which includes Tenant’s prorata share ofbuilding common areas) located on the tenth entire (10th) floor (approximately 17,702 square feet) and aportion of the first (1st)floor (approximately 4,009 square feet) of the “Building” located at 1875 SouthGrant Street, San Mateo, San Mateo County, California.  Tenant’s Suite Numbers in the Building on thetenth (10th) and first (1st) floors shall be 1000 and 130 respectively.

As used herein the Complex shallmean and include all of the land outlined in red and described in Exhibit “B”,attached hereto, and all of the buildings, improvements, fixtures and equipmentnow or hereafter situated on said land.

Saidletting and hiring is upon and subject to the terms, covenants and conditionshereinafter set forth and Tenant covenants as a material part of theconsideration for this Lease to perform and observe each and all of said terms,covenants and conditions.  This Lease ismade upon the conditions of such performance and observance.

1.**            **Tenant shall use thePremises only in conformance with applicable governmental laws, regulations,rules and ordinances for the purpose of            General Office, Storage,Distribution, Marketing  and otherlegally related uses           andfor no other purpose.  Tenant shall notdo or permit to be done in or about the Premises or the Complex nor bring orkeep or permit to be brought or kept in or about the Premises or the Complexanything which is prohibited by or will in any way increase the existing rateof (or otherwise affect) fire or any insurance covering the Complex or any partthereof, or any of its contents, or will cause a cancellation of any insurancecovering the Complex or any part thereof, or any of its contents.  Tenant shall not do or permit to be doneanything in, on or about the

----

 

Premises or the Complex which will in any way unreasonably obstruct orinterfere with the rights of other tenants or occupants of the Complex orinjure or unreasonably annoy them, or use or allow the Premises to be used forany improper, immoral, unlawful or unreasonably objectionable purpose, norshall Tenant cause, maintain or permit any nuisance in, on or about thePremises or the Complex.  No sale byauction shall be permitted on the Premises. Tenant shall not place any loads upon the floors, walls, or ceiling,which endanger the structure, or place any harmful fluids or other materials inthe drainage system of the building, or overload existing electrical or othermechanical systems.  No waste materialsor refuse shall be dumped upon or permitted to remain upon any part of thePremises or outside of the building in which the Premises are a part, except intrash containers placed inside exterior enclosures designated by Landlord forthat purpose or inside of the building proper where designated byLandlord.  No materials, supplies,equipment, finished products or semi-finished products, raw materials orarticles of any nature shall be stored upon or permitted to remain outside thePremises or on any portion of common area of the Complex.  No loudspeaker or other device, system orapparatus which can be heard outside the Premises shall be used in or at thePremises without the prior written consent of Landlord.  Tenant shall not commit or suffer to becommitted any waste in or upon the Premises. Tenant shall indemnify, defend and hold Landlord harmless against anyloss, expense, damage, attorney’s fees, or liability arising out of failure ofTenant to comply with any applicable law applicable to the use of the Premisesby Tenant.  Tenant shall comply with anycovenant, condition, or restriction (“CC&R’s”) affecting Tenant’sactivities within the Premises.  Theprovisions of this paragraph are for the benefit of Landlord only and shall notbe construed to be for the benefit of any tenant or occupant of the Complex.

 

2

----

 

2.**             TERM**

 

**A. **The term of this Lease shall be for a period of    Sixty   (60) months (unless sooner terminated as hereinafter provided) and,subject to Paragraph 2(B) and shall commence on the   1st     day of     April     , 2007  and end on the     31st    day of   March     , 2012.

**B.****                  **Possession of the Premises shall be tendered andthe term of this Lease shall commence on April 1, 2007.  Commencing upon the full execution ofthis Lease Agreement, Tenant shall haveaccess to the Premises prior to April 1, 2007 for the installation offurniture, telephone and computer related equipment and such access shall be subject to all the terms and conditions of theLease, excluding the payment of Basic Rent and Additional Rent.   It is hereby understood and agreedthat Tenant’s activities during this Early Access Period shall not interfere withor delay Landlord’s construction of the improvements described in Paragraph 8below.  Inthe event Tenant Improvements, as described below in Paragraph 8 herein, aresubstantially completed prior to April 1, 2007, Tenant is herein granted the right to occupy the Premises during theEarly Access Period with operating personnel subject to all the terms andconditions of the Lease.  During thisearly occupancy with operating personnel, Tenant will only be responsible forthe payment of Additional Rent prior to April 1, 2007.  Inthe event Tenant occupies the Premises early, as provided for herein,nevertheless the commencement date of the Lease shall remain April 1, 2007.

**C.****                                    OPTION TO EXTEND**

ProvidedTenant is in occupancy of at least eighty (80%) percent of the Premises and notin default on any of the terms, covenants or conditions of this Lease, andsubject to the terms and conditions set forth hereafter, Tenant is granted theoption to extend the term of Lease on the Premises to March 31, 2017 on the followingterms and conditions:

(a)                                  Onor before October 1, 2011, Tenant shall notify Landlord in writing of Tenant’sexercise of this option to extend the term of the Lease to March 31, 2017.

(b)                                 Theextended term of the Lease shall commence on April 1, 2012 and shall terminateon March 31, 2017.

(c)                                  The Basic Rent, as of the commencement date ofthe Extended Term of the Lease, shall be the then prevailing market rate forsimilar Class A office space in San Mateo and Foster City with annualadjustments at the rate of increase then being charged in the market forsimilar space.

3

----

 

(d)                                 Thethen current payment for Additional Rent described in Paragraph 4D of the Leaseshall continue to be paid and adjusted according to Paragraph 4D of this Lease.

(e)                                  This option to extend can be exercised only byAvistar Communications Corporation,  aDelaware Corporation, a parent, subsidiary or an affiliate, for its sole use ofthe Premises and may not be transferred or assigned to any sublessee or otherparty, nor may this option be exercised by Avistar CommunicationsCorporation,  a Delaware Corporation, forthe use of the Premises by any sublessee or party other than AvistarCommunications Corporation,  a DelawareCorporation, occupying the Premises as of the commencement date of any extendedTerm.

3.**             POSSESSION**  If Landlord, for any reason whatsoever (otherthan Landlord’s breach of this Lease), cannot deliver possession of saidPremises to Tenant at the scheduled commencement of said term, as hereinbeforespecified, this Lease shall not be void or voidable; nor obligation of Tenantshall be affected thereby; nor shall Landlord or Landlord’s agents be liable toTenant for any loss or damage resulting therefrom; but in that event thecommencement and termination dates of the Lease, and all other dates affectedthereby (including rent adjustment dates) shall be revised to conform to thedate of Landlord’s delivery of possession in the condition described inParagraph 8, as specified in Paragraph 2 (b), above.  The above, is, however, subject to theprovision that the period of delay of delivery of the Premises shall not exceed15 days from the scheduled commencement date herein (except those delayscaused by Acts of God, strikes, war, utilities, governmental bodies, weather,unavailable materials, and delays beyond Landlord’s control shall be excludedin calculating such period) in which instance Tenant, at its option, may, bywritten notice to Landlord, terminate this Lease whereupon any moniespreviously paid by Tenant to Landlord shall be reimbursed to Tenant upondemand.  In addition, for each day thatthe date the Premises are Ready For Occupancy is delayed beyond April 1, 2007for any reason (including force majeure events), the date the Tenant isotherwise obliged to commence payment of Basic Monthly Rent shall be delayed byone day for each day of such delay.

4.**             RENT**

A.  **Basic Rent**.  Tenant agrees to pay to Landlord at suchplace as Landlord may designate without deduction, offset, prior notice, ordemand on the first (1st) dayof each calendar month of the term of this Lease, and Landlord agrees to acceptas Basic Rent for the leased Premises the total sum of _Two Million TwoHundred Seventy One Thousand Two Hundred Twenty and 20/100_____Dollars($2,271,220.20) in lawful money of the United States of America, payable asfollows::
| $34,620.45 | shall be due and payable upon execution of this  Lease and represents payment of the Basic Rent for the first month of the  lease term from April 1, 2007 through April 30, 2007. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

4

----

 

The following amounts shall be due and payable on or before the firstday of each month of the lease term thereafter as indicated for the timeperiods described:

 
|                | ** ** | ** **                  | ** ** | ** **                 | ** ** | ** **           | ** ** |
|----------------|------------|-----------------------------|------------|----------------------------|------------|----------------------|------------|
| ** **     | ** ** | **Basic Rent - Suite 1000** | ** ** | **Basic Rent - Suite 130** | ** ** | **Total Basic Rent** | ** ** |
|                | ** ** | **17,702 RSF**              | ** ** | **4,009 RSF**              | ** ** | **21,711 RSF**       | ** ** |
| ** **     | ** ** | ** **                  | ** ** | ** **                 | ** ** | ** **           | ** ** |
| **4/1/07 to**  | ** ** | **$29,208.30**              | ** ** | **$5,412.15**              | ** ** | **$34,620.45**       | ** ** |
| **3/31/08**    | ** ** | **@ $1.65 NNN**             | ** ** | **@ $1.35 NNN**            | ** ** | ** **           | ** ** |
| ** **     | ** ** | ** **                  | ** ** | ** **                 | ** ** | ** **           | ** ** |
| **4/1/08 to**  | ** ** | **$30,624.46**              | ** ** | **$5,612.60**              | ** ** | **$36,237.06**       | ** ** |
| **3/31/09**    | ** ** | **@ $1.73 NNN**             | ** ** | **@ $1.40 NNN**            | ** ** | ** **           | ** ** |
| ** **     | ** ** | ** **                  | ** ** | ** **                 | ** ** | ** **           | ** ** |
| **4/1/09 to**  | ** ** | **$32,040.62**              | ** ** | **$5,813.05**              | ** ** | **$37,853.67**       | ** ** |
| **3/31/2010**  | ** ** | **@ $1.81 NNN**             | ** ** | **@ $1.45 NNN**            | ** ** | ** **           | ** ** |
| ** **     | ** ** | ** **                  | ** ** | ** **                 | ** ** | ** **           | ** ** |
| **4/1/2010to** | ** ** | **$33,456.78**              | ** ** | **$6,013.50**              | ** ** | **$39,470.28**       | ** ** |
| **3/31/2011**  | ** ** | **@ $1.89NNN**              | ** ** | **@ $1.50 NNN**            | ** ** | ** **           | ** ** |
| ** **     | ** ** | ** **                  | ** ** | ** **                 | ** ** | ** **           | ** ** |
| **4/1/2011to** | ** ** | **$34,872.94**              | ** ** | **$6,213.95**              | ** ** | **$41,086.89**       | ** ** |
| **3/31/2012**  | ** ** | **@ $1.97 NNN**             | ** ** | **@ $1.55 NNN**            | ** ** | ** **           | ** ** |

 

B.  **Time for Payment**.  In the event that the term of this Leasecommences on a date other than the first day of a calendar month, on the dateof commencement of the term hereof Tenant shall pay to Landlord as rent for theperiod from such date of commencement to the first day of the next succeedingcalendar month that proportion of the monthly rent hereunder which the numberof days between such date of commencement and the first day of the nextsucceeding calendar month bears to thirty (30). In the event that the term of this Lease for any reason ends on a dateother than the last day of a calendar month, on the first day of the lastcalendar month of the term hereof Tenant shall pay to Landlord as rent for theperiod from said first day of said last calendar month to and including thelast day of the term hereof that proportion of the monthly rent hereunder whichthe number of days between said first day of said last calendar month and thelast day of the term hereof bears to thirty (30).

C.  **Late charge**.  Notwithstanding any other provision of thisLease, if Tenant is in default in the payment of rent as set forth in thisParagraph 4 when due, or any part thereof, Tenant agrees to pay Landlord, inaddition to the delinquent rental due, a late charge for each rental payment indefault ten (10) days after written notice. Said late charge shall equal ten (10%) percent of each rental payment so in default.

5

----

 

D.  **Additional Rent**.  Beginning with the commencement date of theterm of this Lease, Tenant shall pay to Landlord in addition to the Basic Rentand as Additional Rent the following:

 

(1)           Tenant’s proportionate share of all utilities relating tothe Complex as set forth in Paragraph 11, and

 

(2)           Tenant’sproportionate share of all Taxes relating to the Complex as set forth inParagraph 12, and

(3)                                  Tenant’sproportionate share of all insurance premiums relating to the Complex, as setforth in Paragraph 15, and

(4)                                  Tenant’sproportionate share of expenses for the operation, management, maintenance and repairof the Building (including common areas of the Building) and Common Areas ofthe Complex in which the Premises are located as set forth in Paragraph 7, and

(5)                                  Allcharges, costs and expenses, which Tenant is required to pay hereunder,together with all interest and penalties, costs and expenses including attorney’sfees and legal expenses, that may accrue thereto in the event of Tenant’sfailure to pay such amounts, and all damages, reasonable costs and expenseswhich landlord may incur by reason of default of Tenant or failure on Tenant’spart to comply with the terms of this Lease. In the event of nonpayment by Tenant of Additional Rent, Landlord shallhave all the rights and remedies with respect thereto as Landlord has fornonpayment of rent.

Tenant shall pay to Landlordmonthly, in advance,  Tenant’s proratashare of an amount estimated by Landlord to be Landlord’s approximate averagemonthly expenditure for such Additional Rent items, which estimated amountshall be reconciled at the end of each calendar year as compared to Landlord’sactual expenditure for said Additional Rent items, with Tenant paying toLandlord, upon demand, any amount of actual expenses expended by Landlord inexcess of said estimated amount, or Landlord refunding to Tenant any amount ofestimated payments made by Tenant in excess of Landlord’s actual expendituresfor said Additional Rent items.

Tenant’spayment for such Additional Rent as of the commencement of the Term of thisLease shall be       Twenty Thousand Eight Hundred Forty Two and56/100     ($20,842.56) Dollars permonth ($0.96  x  21,711 s.f. =  $20,842.56).

Any payments required to be madeby Tenant for Additional Rent shall be made by check or instrument separatefrom that check or instrument used by Tenant to make any payments for BasicRent pursuant to paragraph 4 A.

Therespective obligations of Landlord and Tenant under this paragraph shallsurvive the expiration or other termination of the term of this Lease, and ifthe term hereof shall expire or shall otherwise terminate on a day other thanthe last day of a calendar year, the actual Additional Rent incurred for thecalendar year in which the term hereof expires or otherwise terminates shall bedetermined and settled on the basis of the statement of actual Additional Rentfor such calendar year and shall be prorated in the proportion which the numberof days in such calendar year preceding such expiration or termination bears to365.

E.  **Place of Payment of Rentand Additional Rent**.  AllBasic Rent hereunder and all payments hereunder for Additional Rent shall bepaid to Landlord at the office of Landlord at 1875 South Grant Street, Suite100, San Mateo, CA 94402, or to such other person or to such other place asLandlord may from time to time designate in writing.

6

----

 

F.  **Security Deposit**.Concurrently with Tenant’s execution of this Lease, Tenant shall deposit withLandlord the sum of        Fifty FiveThousand and 00/100_ ($55,000.00) Dollars (the “Security Deposit”).  Said sum shall be held by Landlord as aSecurity Deposit for the faithful performance by Tenant of all the terms,covenants, and conditions of this Lease to be kept and performed by Tenantduring the term hereof.  If Tenantdefaults with respect to any provisions of this Lease, including, but notlimited to, the provisions relating to the payment of rent and any of themonetary sums due herewith, Landlord may (but shall not be required to ) use,apply or retain all or any part of this Security Deposit for the payment of anyother amount which Landlord may spend by reason of Tenant’s default or tocompensate Landlord for any other loss or damage which Landlord may suffer byreason of Tenant’s default.  If anyportion of said Deposit is so used or applied, Tenant shall, within ten (10)days after written demand therefor, deposit cash with Landlord in the amountsufficient to restore the Security Deposit to its original amount.  Tenant’s failure to do so shall be a materialbreach of this Lease.  Landlord shall notbe required to keep this Security Deposit separate from its general funds, andTenant shall not be entitled to interest on such Deposit.  The Security Deposit or any balance thereofafter application by Landlord to Tenant’s default(s), shall be returned toTenant (or at Landlord’s option, to the last assignee of Tenant’s interesthereunder) at the expiration of the Lease term and after Tenant has vacated thePremises.  In the event of termination ofLandlord’s interest in this Lease, Landlord shall transfer said Deposit toLandlord’s successor in interest whereupon Tenant agrees to release Landlordfrom liability for the return of such Deposit or the accounting therefor.

 

5.**             RULES AND REGULATIONS AND COMMONAREA**  Subject to the terms andconditions of this Lease and such reasonable Rules and Regulations as Landlordmay from time to time prescribe, Tenant and Tenant’s employees, invitees andcustomers shall, in common with other occupants of the Complex in which thePremises are located, and their respective employees, invitees and customers,and others entitled to the use thereof, have the non-exclusive right to use theaccess roads, parking areas, and facilities provided and designated by Landlordfor the general use and convenience of the occupants of the Complex in whichthe Premises are located, which areas and facilities are referred to herein as “CommonArea”  This right shall terminate uponthe termination of this Lease.  Landlordreserves the right from time to time to make changes in the shape, size,location, amount and extent of Common Area. Landlord further reserves the right to promulgate such reasonable rulesand regulations relating to the use of the Common Area, and any part or partsthereof, as Landlord may deem appropriate for the best interests of theoccupants of the Complex.  The Rules andRegulations shall be binding upon Tenant upon delivery of a copy of them toTenant, and Tenant shall abide by them and cooperate in their observance.  Such Rules and Regulations may be reasonablyamended by Landlord from time to time, with or without advance notice, and allamendments shall be effective upon delivery of a copy to Tenant.  Landlord shall not be responsible to Tenantfor the non-performance by any other tenant or occupant of the Complex of anyof said Rules and Regulations.

Landlordshall operate, manage and maintain the Common Area.  The manner in which the Common Area shall bemaintained and the expenditures for such maintenance shall be consistent withcomparable buildings and at the discretion of Landlord.

7

----

 

6**              PARKING **Tenant shall have the right at nocharge to use with other tenants or occupants of the Complex 69undesignated parking spaces in the common parking areas of the Complex. Tenantagrees that Tenant, Tenant’s employees, agents, representatives and/or inviteesshall not use parking spaces in excess of said 69 spaces allocated toTenant hereunder.  Landlord shall havethe right, at Landlord’s sole discretion, to specifically designate thelocation of Tenant’s parking spaces within the common parking areas of the Complex(but in a non-discriminatory manner) in the event of a dispute among thetenants occupying the building and/or Complex referred to herein, in whichevent Tenant agrees that Tenant, Tenant’s employees, agents, representativesand/or invitees shall not use any parking spaces other than those parkingspaces specifically designated by Landlord for Tenant’s use.  Said parking spaces, if specificallydesignated by landlord to Tenant, may be relocated by Landlord at any time, andfrom time to time.  Landlord reserves theright, at Landlord’s sole discretion, to rescind any specific designation ofparking spaces, thereby returning Tenant’s parking spaces to the common parkingarea.  Landlord shall give Tenant writtennotice of any change in Tenant’s parking spaces.  Tenant shall not, at any time, park, orpermit to be parked, any trucks or vehicles adjacent to the loading areas so asto interfere in any way with the use of such areas, nor shall Tenant at anytime park, or permit the parking of Tenant’s trucks or other vehicles or thetrucks and vehicles of Tenant’s suppliers or others, in any portion of thecommon area not designated by Landlord for such use by Tenant.  Tenant shall not park not permit to beparked, any inoperative vehicles or equipment on any portion of the commonparking area or other common areas of the Complex.  Within 48 hours following notice to Tenant,Tenant agrees to ensure compliance by its employees with the parking provisioncontained herein.  If Tenant or itsemployees park in other than such designated parking areas and fails to curewithin 48 hours, then Landlord may charge Tenant, as an additional charge, andTenant agrees to pay, ten ($10.00) Dollars per day for each day or partial dayeach such vehicle is parked in any area other than that designated.  Tenant hereby authorizes Landlord at Tenant’ssole expense to tow away from the Complex any vehicle belonging to Tenant orTenant’s employees parked in violation of these provisions, or to attachviolation stickers or notices to such vehicles. Tenant shall use the parking areas for vehicle parking only, and shallnot use the parking areas for storage.

 

7.**             EXPENSES OF OPERATION, MANAGEMENTAND MAINTENANCE OF THE COMMON AREAS OF THE COMPLEX, PREMISES AND BUILDING INWHICH THE PREMISES ARE LOCATED **Landlordshall maintain the Common Areas, the Building and the Premises in condition andrepair comparable to similar buildings. As Additional Rent and in accordance with Paragraph 4 D of this Lease,Tenant shall pay to Landlord Tenant’s proportionate share (calculated on asquare footage or other equitable basis) of all expenses of operation,management, maintenance and repair of the Common Areas of the Complexincluding, but not limited to, license, permit and inspection fees; security; utilitycharges associated with exterior landscaping and lighting (including water andsewer charges); all charges incurred in the maintenance of landscaped areas,lakes, parking lots, sidewalks, driveways; maintenance, repair and replacementof all fixtures and electrical, mechanical and plumbing systems; structuralelements and exterior

8

----

 

surfaces of the buildings; salaries and employees benefits of personneland payroll taxes applicable thereto; supplies, materials, equipment and tools;the cost of capital expenditures which have the effect of reducing operatingexpenses, provided, however, that in the event Landlord makes such capitalimprovements, Landlord shall amortize its investment in said improvements(together with interest at the rate of eight (8%) percent per annum on theunamortized balance) as an operating expense in accordance with standardaccounting practices, provided, that such amortization is not a rate greaterthan the anticipated savings in the operating expenses and further provided thatany applicable reserve shall be applied before the charge is made.

 

                AsAdditional Rent and in accordance with paragraph 4D of this Lease, Tenant shallpay its proportionate share (calculated on a square footage or other equitablebasis) of the cost of operation (including common utilities), management,maintenance and repair of the Premises and the building (including common areassuch as lobbies, restrooms, janitor’s closets, hallways, elevators, mechanicaland telephone rooms, stairwells, entrances, spaces above the ceilings) in whichthe Premises are located.  Themaintenance items herein referred to include, but are not limited to,janitorization, electrical systems (such as outlets, lighting fixtures, lamps,bulbs, tubs, ballasts), heating and airconditioning controls (such as mixingboxes, thermostats, time clocks, supply and return grills), all interiorimprovements within the Premises including but not limited to: wall coverings,window coverings, acoustical ceilings, vinyl tile, carpeting, partitioning,doors (both interior and exterior, including closing mechanisms, latches,locks), and all other interior improvements of any nature whatsoever, allwindows, window frames, plate glass, glazing, truck doors, main plumbingsystems of the building (such as water and drain lines, sinks, toilets,faucets, drains, showers and water fountains), main electrical systems (such aspanels and conduits), heating and air conditioning systems (such ascompressors, fans, air handlers, ducts, boilers, heaters), store fronts, roofs,downspouts, building common area interiors (such as wall coverings, windowcoverings, floor coverings and partitioning), ceilings, building exteriordoors, skylights (if any), automatic fire extinguishing systems and elevators;license, permit, and inspection fees; security; salaries and employee benefitsof personnel and payroll taxes applicable thereto; supplies, materials,equipment and tools; the cost of capital expenditures which have the effect ofreducing operating expenses, provided, however, than in the event Landlordmakes such capital improvements, Landlord may amortize its investment in saidimprovements (together with interest at the rate of eight (8%) percent perannum on the unamortized balance) as an operating expense in accordance withstandard accounting practices, provided, that such amortization is not at arate greater than the anticipated savings in the operating expenses.  Tenant hereby waives all rights under, andbenefits of, subsection 1 of Section 1932 and Section 1941 and 1942 of theCalifornia Civil Code and under any similar law, statute or ordinance now orhereafter in effect.  Tenant agrees toprovide carpet shields under all rolling chairs or to otherwise be responsiblefor wear and tear of the carpet caused by such rolling chairs if such wear andtear exceeds that caused by normal foot traffic in surrounding areas.  Areas of excessive wear shall be replaced atTenant’s sole expense upon Lease termination.

9

----

 

“Additional Rent” as used hereinshall not include and notwithstanding anything to the contrary in this LeaseTenant shall have no obligation to pay, reimburse Landlord for, or otherwiseperform any of the following repairs, replacements, costs, or expenses(collectively “costs”):

 

A.                                    Landlord’s debt repayments; interest on charges;

 

B.                                      Costs and expenses directly or indirectly incurredby Landlord for the benefit of any other tenant; cost for the installation ofpartitioning or any other tenant improvements; and/or cost of attractingtenants;

C.                                      Depreciation

D.                                     Debtor ground lease payments, costs, fees or expenses, or any interest thereon;

E.                                       Executivesalaries and other wages, salaries, compensation, and labor burden for anyemployee not stationed on the Complex on a full-time basis or any fee, profitor compensation retained by Landlord or its affiliates for management andadministration of the Complex; other than a 3% management fee to an affiliateof Landlord.

F.                                       Costsoccasioned by the act, omission or violation of Law by Landlord, any otheroccupant of the Complex, or their respective agents, employees or contractors.

G.                                      Costsoccasioned by fire, acts of God, or other casualties or by the exercise of thepower of eminent domain.

H.                                     Leasepayments and costs for capital machinery and equipment, such as airconditioners, elevators, and the like and other costs relating to repairs,alterations, improvements, equipment and tools which could properly becapitalized under generally accepted accounting principles, except to theextent that (i) the foregoing reduces the expenses otherwise payable byTenant under the Lease and (ii) Tenant’s share of such Cost during anytwelve-month period of the Lease is does not exceed the amortized cost of theitem over its useful life, based on the interest rate described above.

I.                                          Costsreasonably recoverable from others and costs for which Tenant reimbursesLandlord directly or which Tenant pays directly to a third person.

J.                                         Coststo place the Premises in the delivery condition required by this Lease, coststo correct any construction defect in the Complex or to comply with anyCC&R’s, underwriter’s requirement or Law applicable to the Premises or theComplex as of the Commencement Date.

 

 

10

----

 

K.                                     Costs(i) arising from the disproportionate use of any utility or servicesupplied by Landlord to any other occupant of the Complex, or(ii) associated with utilities and services of a type not provided toTenant.

 

L.                                       Fees,commissions, attorneys’ fees, costs or other disbursements incurred inconnection with negotiations or disputes with any other occupant of the Complexand Costs arising from the violation by Landlord or any occupant of the Complex(other than Tenant) of the terms and conditions of any lease or otheragreement.

 

M.                                  Insurancepremiums for coverage not customarily paid by tenants of similar projects inthe vicinity of the Premises, increases in insurance Costs caused by theactivities of another occupant of the Complex, insurance deductibles exceeding$10,000, and co-insurance payments.

 

N.                                     Costsincurred with respect to any Hazardous Material, except as set forth inParagraph 43.

 

Landlordagrees to provide five-day janitorial service for the leased Premises and tomaintain the Complex in a first-class manner.

8.**             ACCEPTANCE AND SURRENDER OFPREMISES**  As of thecommencement date, the  building shall bewater tight, structurally sound and all of the electrical, mechanical, HVAC,plumbing, elevator and other systems serving the Premises shall be in goodcondition and repair (herein “good condition and repair”).  Except as expressly required of Landlord inthis Lease, by entry hereunder, Tenant accepts the Premises as being in goodand sanitary order, condition and repair and accepts the building andimprovements included in the Premises in their present condition and withoutrepresentation or warranty by Landlord as to the condition of such building oras to the use or occupancy which may be made thereof.  Any exceptions to the foregoing must be bywritten agreement executed by Landlord and Tenant.  Provided Landlord performs its obligationunder the first sentence of this Section, Tenant agrees on the last day of theLease term, or on the sooner termination of this Lease, to surrender the Premisespromptly and peaceably to Landlord in “good condition and repair” as definedabove, damage by Acts of God, fire, Hazardous Materials (other than Tenant’sHazardous Materials), repairs that are Landlord’s responsibility under thisLease, and normal wear and tear excepted, with all interior walls repaired, ifdamaged; the special air conditioning equipment serviced by a reputable andlicensed service firm and in good operating condition (provided the maintenanceof such equipment has been Tenant’s responsibility during the term of thisLease) together with all alterations, additions and improvements which may havebeen made in, to, or on the Premises (except movable trade fixtures installedat the expense of Tenant) except that Tenant shall ascertain from Landlord atthe time of Tenant’s request for Alterations whether Landlord desires to havethe  Premises or any part or partsthereof restored to their condition and configuration prior to Alteration andif Landlord shall so desire, then Tenant shall restore said Premises or suchpart or parts thereof before the end

11

----

 

of this Lease at Tenant’s sole cost and expense (damage by Acts of God,fire, Hazardous Materials (other than tenant’s Hazardous Materials), repairsthat are Landlord’s responsibility under this Lease and normal wear and tearexcepted).  Tenant, on or before the endof the term or sooner termination of this Lease, shall remove all of Tenant’spersonal property and trade fixtures from the Premises, and all property not soremoved on or before the end of the term or sooner termination of this Leaseshall be deemed abandoned by Tenant and title to same shall thereupon pass toLandlord without compensation to Tenant. Landlord may, upon termination of this Lease, remove all moveablefurniture and equipment so abandoned by Tenant, at Tenant’s sole cost, andrepair any damage caused by such removal at Tenant’s sole cost.  If the Premises are not surrendered at theend of the term or sooner termination of this Lease, then except to the extentarising out of the breach of this Lease, negligence or willful misconduct ofLandlord, its respective agents, employees, contractors or invitees, Tenantshall indemnify Landlord against loss or liability resulting from the delay byTenant in so surrendering the Premises including, without limitation, anyclaims made by any succeeding tenant founded on such delay.  Nothing contained herein shall be construedas an extension of the term hereof or as a consent of Landlord to any holdingover by Tenant.  The voluntary or othersurrender of this Lease or the Premises by Tenant or a mutual cancellation ofthis Lease shall not work as a merger and, at the option of Landlord, shalleither terminate all or any existing subleases or subtenancies or operate as anassignment to Landlord of all or any such subleases or subtenancies.

 

Except as expressly set forth inthis Lease,**TENANT AGREES TO LEASE THE PREMISES IN AN “ASIS” CONDITION**, and any other alteration or modifications to thePremises shall be made in accordance with Paragraphs 8 & 9 of the Lease andshall not delay the commencement of the Lease nor delay the payment of rent andall such modifications shall be at Tenant’s sole cost and expense.Notwithstanding anything in this Lease to the contrary, Tenant shall not be responsibleto pay for the repair of the building due to lack of compliance to anyapplicable law, as of the commencement date. Notwithstanding anythingherein to the contrary, Landlord at Landlord’s sole cost and expense agrees toperform the following Improvements as indicated below:

A.            ThePremises are configured with existing furniture, as shown on Exhibit C(Furniture Plan) attached hereto.  Alloffices, cubicles and conference rooms within the Premises are already wiredfor voice and data and said wiring terminates in the server room.  There are 3 cables in a drop to each office,cubicle and conference room, (2) CAT5 cables for data and (1) CAT3 cable splitfor two voice lines.  Tenant shall payfor any additional wiring or upgrades.

B.            Landlord shall provide the Premiseswith furniture in the configuration, as shown and detailed on the list attached hereto as Exhibit “C” (Furniture andEquipment Inventory List) and hereinafter referred to as “the Furniture.”  Tenant shall be allowed free use of the furnitureduring the term of the Lease.  Tenant agrees to repair any damage to thefurniture caused by Tenant during the Term of this Lease, normal wear and tearexcepted.  Any reconfiguration of thefurniture subsequent to the initial reconfiguration necessitated by Tenant’sinitial requested improvements or additional furniture required by Tenant shallbe at Tenant’s sole cost and expense.

12

----

Construction of thesupply/copy room (Item C below) and Quality Assurance Lab (Item D below), asshown on Exhibit D attached hereto, will necessitate the removal of theworkstations, as shown in red on Exhibit C (Furniture Plan), attachedhereto.  The workstations, removed fromthe Suite 1000 to accommodate construction of Tenant Improvements, shall bemade available for Tenant’s use in Suite 130 (see Exhibit F attachedhereto).  With respect to the furnitureplaced in Suite 130, Tenant shall be allowed free use of the furniture duringthe term of the Lease subject to the same conditions outlined above for thefurniture in Suite 1000.  Tenant will beresponsible for the cost of wiring Suite 130 with workstations using Landlord’sfurniture from Suite 1000 and whatever additional workstations that may berequired by Tenant.

C.                                      Constructionof a supply/copy room (approximately 16’ x 8’) adjacent to the reception area,as shown on Exhibit  D, attached hereto.

 

D.                                     Constructionof a Quality Assurance Lab, as shown on Exhibit D, attached hereto.  The Quality Assurance Lab to have anti-staticfloor covering.

 

E.                                       Theinstallation of a ceiling mounted 5 ton cooling HVAC unit for the QualityAssurance Lab.  In accordance with theprovisions of Paragraph 11 herein, the server room will be separately meteredto measure the amount of electricity being used by Tenant.

 

F.                                       Constructionof four offices and a demising wall to enclose an area in Suite 130, as shownon Exhibit E, attached hereto.  Theoffice side of the demising wall shall be carpeted with the existing carpet.The shipping and receiving side of the demising wall shall have VCT floorcovering.

 

G.                                      Patchand paint walls, as needed, throughout the Premises.

 

H.                                     Steamclean carpet throughout Suite 1000.

 

I.                                          Remodelingof the 10th floor elevator lobby, including the installation of new buildingstandard entry doors.

 

J.                                         Landlordto provide the initial building standard signs for Tenant on the first floorlobby touch screen directory for Suite 130 and Suite 1000, tenth floordirectory and door signage for Suite 130 and Suite 1000.  All subsequent requests for signs shall be atTenant’s sole cost and expense.  Inaddition, Tenant will be permitted to install their own customized signageidentification in the tenth floor elevator lobby at their own expense andsubject to Landlord’s reasonable approval.

 

K.                                     Thetwo (2) offices, as shown in green on Exhibit A attached hereto; shall bereconfigured as a conference room with a full height glass front, as shown onExhibit D, attached hereto.

13

----

 

The above itemsshall be made by Landlord at Landlord’s sole cost and expense, all prior to thecommencement date.  Prior to April 1,2007, Landlord shall provide Tenant with rent-free entry into the Premises fora period of not less than twenty (20) business days for the purpose ofinstalling cable, fixture, equipment and furniture.  Landlord shall provide tenant with reasonablenotice of dates such entry will be allowed in order to permit Tenant toschedule its work.  If the Premises arenot delivered by Landlord in the condition and with the Improvements describedin this Section 8 on or before April 1, 2007 or if Tenant is not so allowed thenumber of fixturing days described above prior to the date the Lease would haveotherwise commneced, then Tenant shall be allowed a day for day rent credit forthe number of days on and after April 1, 2007, until such requirements havebeen met.

 

9.**             ALTERATIONS AND ADDITIONS **Tenant shall not make, or sufferto be made, any alteration or addition to the Premises, or any part thereof,without the written consent of Landlord first hand and obtained by Tenant, butat the cost of Tenant, and any addition to, or alteration of, the Premises,except moveable furniture and trade fixtures, shall at once become a part ofthe Premises and belong to Landlord.  IfLandlord consents to the making of any alteration, addition, or improvement toor of the Premises by Tenant, the same shall be made by Landlord at Tenant’ssole cost and expense, except as provided in Paragraph 8 of this Lease.  Any modifications to the building or buildingsystems required by governmental code or otherwise as a result of Tenant’salterations, additions or improvements shall be made at  Tenant’s sole cost and expense, except asprovided in Paragraph 8 of this Lease. Tenant shall retain title to all moveable furniture and trade fixturesplaced in the Premises.  All heating,lighting, electrical, airconditioning, partitioning, drapery, carpeting andfloor installations made by Tenant, together with all property that has becomean integral part of the Premises, shall not be deemed trade fixtures.  Tenant agrees that it will not proceed tomake any alterations or additions, without having obtained consent fromLandlord to do so, and until five (5) days from the receipt of such consent, inorder that Landlord may post appropriate notices to avoid any liability to contractorsor material suppliers for payment for Tenant’s improvements.  Tenant will at all times permit such noticesto be posted and to remain posted until the completion of work.  Tenant shall, if required by Landlord, secureat Tenant’s own cost and expense, a completion and lien indemnity bond,satisfactory to Landlord, for such work. Tenant further covenants and agrees that any mechanic’s liens filedagainst the Premises or against the Complex for work claimed to have been donefor, or materials claimed to have been furnished to Tenant, will be dischargedby Tenant, by bond or otherwise, within ten (10) days after notice to Tenant ofthe filing thereof, at the cost and expense of Tenant.  Any exceptions to the foregoing must be madein writing and executed by both Landlord and Tenant.

10.**           DELETED**

11.**           UTILITIES OF THE BUILDING IN WHICHTHE PREMISES ARE LOCATED **AsAdditional Rent and in accordance with paragraph 4D of this Lease, Tenant shallpay its proportionate share (calculated on a square footage or other equitable

14

----

 

basis) of the cost of all utility charges such as water, gas,electricity, sewer service, waste pick-up and any other utilities, materials ofservices furnished directly to the building in which the Premises are located,including, without limitation, any temporary or permanent utility surcharge orother exactions whether or not hereinafter imposed.  Tenant shall pay the provider directly fortelephone, telex, and other electronic comminications services.

 

Exceptas herein expressly set forth, Landlord shall not be liable for and Tenantshall not be entitled to any abatement or reduction of rent by reason of anyinterruption or failure of utility services to the Premises when suchinterruption or failure is caused by accident, breakage, repair, strikes,lockouts or other labor disturbances or labor disputes of any nature, or by anyother cause, similar or dissimilar, beyond the reasonable control of Landlord.

Landlordshall furnish to the Premises:
| A.     |   | reasonable quantities of water, gas and electricity  suitable for the intended use of the Premises,                                                                                                   |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                  |
| B.     |   | heat and air conditioning required for the  comfortable use and occupation of the Premises for such purposes during the  hours of 8:00 a.m. and 6:00 p.m. Monday through Fridays (holidays excepted), |
|   |   |                                                                                                                                                                                                  |
| C.     |   | Trash and sewage disposal,                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                  |
| D.     |   | Life safety systems as required by applicable law 24  hours per day, 7 days per week, and                                                                                                             |
|   |   |                                                                                                                                                                                                  |
| E.     |   | TI communication riser access to Premises.                                                                                                                                                            |

 

Tenant agrees that at all timesit will cooperate fully with Landlord and abide by all reasonable regulationsand requirements that Landlord may prescribe for the proper functioning andprotection of the building heating, ventilating and airconditioning systems.  Whenever additiional heat generatingmachines, equipment, or any other devices (including exhaust fans) are used inthe Premises by Tenant which affect the temperature or otherwise maintained bythe airconditioning system, Landlord shall have the right to installsupplementary airconditioning units in the Premises and the costs thereof,including the cost of installation and the cost of operation and maintenancethereof, shall be paid by Tenant to Landlord upon demand by Landlord.  Tenant will not, without the written consentof Landlord, use any apparatus or device in the Premises (including, withoutlimitation), unusual electronic data processing machines or machines usingcurrent in excess of the voltage provided by existing plugs which willmaterially increase above building standard the amount of electricity, gas,water or airconditioning usually furnished or supplies to premises being usedas general office space, or connect with electric current (except throughexisting electrical outlets in the Premises), or with gas or water pipes anyapparatus or device for the purposes of using electric current, gas orwater.  If Tenant shall require water,gas or electric current in excess of that usually furnished or supplied topremises being used as general office space, Tenant shall first obtain thewritten consent of

15

----

 

Landlord, which consent shall not be unreasonably withheld and Landlordmay cause an electric current, gas, or water meter to be installed in thePremises in order to measure the amount of electric current, gas or waterconsumed for any such excess use.  Thecost of any such meter and of the installation, maintenance and repair thereof,all charges for such excess water, gas and electric current consumed (as shownby such meters and at the rates then charged by the furnishing public utility);and any additional expense incurred by Landlord in keeping account of electriccurrent, gas, or water so consumed shall be paid by Tenant, and Tenant agreesto pay Landlord therefor promptly upon demand by Landlord.

 

12.                                 **TAXES**

A.  As Additional Rent and in accordance withparagraph 4D of this Lease, Tenant shall pay to Landlord Tenant’s proportionateshare of all Real Property Taxes, which prorata share shall be allocated to theleased Premises by square footage or other equitable basis, as calculated byLandlord.  The term “Real Property Taxes”,as used herein, shall mean (i) all taxes, assessments, levies and other chargesof any kind or nature whatsoever, general and special, foreseen and unforeseen(including all installments of principal and interest required to pay anygeneral or special assessments for public improvements and any increasesresulting from reassessments caused by any change in ownership of the Complex)now or hereafter imposed by any government or quasi-governmental authority orspecial district having the direct or indirect power to tax or levyassessments, which are levied or assessed against, or with respect to thevalue, occupancy or use of, all or any portion of the Complex (as now constructedor as may at any time hereafter  beconstructed, altered, or otherwise changed) or Landlord’s interest therein; anyimprovements located within the Complex (regardless of ownership); thefixtures, equipment and other property of Landlord, real or personal, that arean integral part of and located in the Complex; or parking areas, publicutilities, or energy within the Complex; (ii) all charges, levies or feesimposed by reason of environmental regulation or other governmental control ofthe Complex; and (iii) all costs and fees (including attorney’s fees)reasonably incurred by Landlord in contesting any Real Property Tax and innegotiating with public authorities as to any Real Property Tax.  If at any time during the term of this Leasethe taxation or assessment of the Complex prevailing as of the commencementdate of this Lease shall be altered so that in lieu of or in addition to anyReal Property Tax described above there shall be levied, assessed or imposed(whether by reason of a change in the method of taxation or assessment,creation of a new tax or charge, or any other cause) an alternate or additionaltax or charge (i) on the value, use or occupancy of the Complex or Landlord’sinterest therein or (ii) on or measured by the gross receipts, income orrentals from the Complex, on Landlord’s business of leasing the Complex, orcomputed in any manner with respect to the operation of the Complex, then anysuch tax or charge, however designated, shall be included within the meaning ofthe term “Real Property Taxes” for purposes of this Lease.  If any Real Property Tax is based uponproperty or rents unrelated to the Complex, then only that part of such RealProperty Tax that is fairly allocable to the Complex shall be included withinthe meaning of the term “Real Property Taxes”. Notwithstanding the foregoing, the term “Real Property Taxes” shall notinclude (i) estate, inheritance, gift or franchise taxes of Landlord or thefederal or state net income tax imposed on Landlord’s income from all sources, (ii)assessments, all other

16

----

 

governmental levies, and any increases in the foregoing occasioned by orrelating to (a) any assets on the Complex owned by a party other than Landlord(or Landlord’s successor) or Tenant, (b) land and improvements not reserved forTenant’s exclusive or nonexclusive use.

 

B.**            Taxes on Tenant’sProperty**

(1) Tenant shall be liable forand shall pay ten days before delinquency, taxes levied against any personalproperty or trade fixtures placed by Tenant in or about the Premises.  If any such taxes on Tenant’s personalproperty or trade fixtures are levied against Landlord or Landlord’s propertyor if the assessed value of the Premises is increased by the inclusion thereinof a value placed upon such personal property or trade fixtures of Tenant andif Landlord, after written notice to Tenant, pays the taxes based on suchincreased assessment, which Landlord shall have the right to do so regardlessof the validity thereof, but only under proper protest if requested by Tenant,Tenant shall upon demand, as the case may be, repay to Landlord the taxes solevied against Landlord, or the proportion of such taxes resulting from suchincrease in the assessment; provided that in any such event Tenant shall havethe right, in the name of Landlord and with Landlord’s full cooperation, tobring suit in any court of competent jurisdiction to recover the amount of anysuch taxes so paid under protest, and any amount so recovered shall belong toTenant.

(2) If after the CommencementDate, Tenant’s Alterations (which shall not include the improvements describedin Paragraph 8) causes the value of improvements in the Premises to exceed theaverage value of improvements in the other tenant spaces in the Complex, thenthe Real Property Taxes and assessments levied against Landlord or the Complexby reason of such excess assessed valuation shall be deemed to be taxes leviedagainst personal property of Tenant and shall be governed by the provisions of12A(i), above.  If the records of theCounty Assessor are available and sufficiently detailed to serve as a basis fordetermining whether said Tenant improvements are assessed at a higher valuationthan standard office improvements in other space in the Complex, such recordsshall be binding on both the Landlord and the Tenant.  If the records of the County Assessor are notavailable or sufficiently detailed to serve as a basis for making saiddetermination, the actual cost of construction shall be used.

13.**           LIABILITY INSURANCE**Tenant, at Tenant’s expense, agrees to keep in force during the term of thisLease a policy of commercial general liability insurance with combined limitsin the amount of $1,000,000 per occurrence/2,000,000 aggregate for injuries toor death of persons and/or property damage occurring in, on or about thePremises or the Complex.  Certificates ofinsurance evidencing this coverage shall be furnished to Landlord, in the caseof the liability insurance shall name Landlord as additional insured, and shallinsure any liability of Landlord, contingent or otherwise, as respects acts oromissions of Tenant, its agents, employees or invitees or otherwise by anyconduct or transactions of any of said persons in or about or concerning thePremises, including any failure of Tenant to observe or perform any of itsobligations hereunder; shall be issued by an insurance company admitted totransact business in the State of California; and shall provide that theinsurance effected thereby shall not be canceled, except upon thirty (30) days’prior written notice to Landlord.

17

----

 

14.**           TENANT’SPERSONAL PROPERTY INSURANCE AND WORKER’S COMPENSATION INSURANCE**  Tenant shall maintain a policy or policies offire and property damage insurance on a “special form” basis with a sprinklerleakage endorsement insuring the personal property, inventory, trade fixturesand leasehold improvements within the leased Premises for the full replacementvalue thereof.  The proceeds from any ofsuch policies shall be Tenant’s sole property, and in Tenant’s discretion, usedfor the repair or replacement of such items so insured.

 

                Tenant shall alsomaintain a policy or policies of worker’s compensation insurance and any otheremployee benefit insurance sufficient to comply with all the laws.

 

15.**           PROPERTY INSURANCE**Landlordshall purchase and keep in force and, as Additional Rent and in accordance withParagraph 4D of this Lease, Tenant shall pay to Landlord Tenant’s proportionateshare (calculated on a square footage or other equitable basis) of the cost ofpolicy or policies of insurance covering loss or damage to the Premises andComplex in the amount of the full replacement value thereof, providingprotection against those perils included within the classification of “specialform” insurance and flood and/or earthquake insurance, if available, plus apolicy of rental income insurance in the amount of one hundred (100%) percentof twelve (12) months Basic Rent, plus sums paid as Additional Rent.  If such insurance costs are increased due toTenant’s use of Premises or the Complex for other than office uses, Tenantagrees to pay to Landlord the full cost of such increase.  Subject only to the terms of this Lease,Tenant shall have no interest in nor any right to the proceeds of any insuranceprocured by Landlord for the Complex.

 

                Notwithstandinganything to the contrary in this Lease, Landlord and Tenant do each herebyrespectively release the other, to the extent of insurance coverage of thereleasing party and to the extent the releasing party is required to carryinsurance under this Lease, from any liability for loss or damage caused byfire or any of the extended coverage casualties included (or to be included) inthe releasing party’s insurance policies, irrespective of the cause of suchfire or casualty.

 

16.**           INDEMNIFICATION **Landlord shall not be liable toTenant and Tenant hereby waives all claims against Landlord for any injury toor death of any person or damage to or destruction of property in or about thePremises or the Complex by or from any cause whatsoever, including, withoutlimitation, gas, fire, oil, electricity or leakage of any character from theroof, walls, basement or other portion of the Premises or the Complex butexcluding, however, the breach of this Lease or violation of law by Landlordand/or the negligence of Landlord, its agents, servants, employees, invitees,or contractors of which negligence Landlord has knowledge and reasonable timeto correct.  Except as to injury topersons or damage to property the principal cause of which is the breach ofthis Lease or violation of law by Landlord, or the willful misconduct ornegligence of Landlord,  Tenant shallhold Landlord harmless from and defend Landlord against any and all expenses,including reasonable attorney’s fees, in connection therewith, to the extentarising out of any injury to or death of any person or damage to or destructionof property occurring in, on or about the Premises, or any part thereof,  as a consequence of the negligence or willfulmisconduct of Tenant or its agents, employees, or contractors.

18

----

 

17.**           COMPLIANCE**  Tenant, as its sole cost and expense, shallpromptly comply with all laws, statutes, ordinances and governmental rules,regulations or requirements now or hereafter in effect; with the requirementsof any board of fire underwriters or other similar body now or hereafterconstituted; and with any direction or occupancy certificate issued pursuant tolaw by any public officer governing the conduct of its activities in thePremises; provided, however, that no such failure shall be deemed a breach ofthe provisions if Tenant, immediately upon notification, commences to remedy orrectify said failure.  The judgement ofany court of competent jurisdiction or the admission of Tenant in any actionagainst Tenant, whether Landlord be a party thereto or not, that Tenant hasviolated any such law, statute, ordinance or governmental rule, regulation,requirement, direction or provision, shall be conclusive of that fact asbetween Landlord and Tenant.  This paragraphshall not be interpreted as requiring Tenant to make structural changes,repairs to the Premises, or improvements, except to the extent such changes orimprovements are required as a result of Tenant’s use of the Premises for otherthan general office purposes.  Tenantshall, at its sole cost and expense, comply with any and all requirementspertaining to its use of the Premises for other than general office purposes,of any insurance organization or company, necessary for the maintenance ofreasonable fire and public liability insurance covering the Premises.

 

18.**           LIENS**   Tenant shall keep the Premises and theComplex free from any liens arising out of any work performed, materialsfurnished or obligation incurred by Tenant. In the event that Tenant shall not, within ten (10) days followingnotice to Tenant of the imposition of such lien, cause the same to be releasedof record, Landlord shall have, in addition to all other remedies providedherein and by law, the right, but no obligation, to cause the same to bereleased by such means as it shall deem proper, including payment of the claimgiving rise to such lien.  All sums paidby Landlord for such purpose, and all expenses incurred by it in connectiontherewith, shall be payable to Landlord by Tenant on demand with interest atthe prime rate of interest as quoted by the Bank of America.

19.**           ASSIGNMENT AND SUBLETTING**   Tenant shall not assign, transfer orhypothecate the leasehold estate under this Lease, or any interest therein, andshall not sublet the Premises, or any part thereof, or any right or privilegeappurtenant thereto, or suffer any other person or entity to occupy or use thePremises, or any portion thereof, without, in each case, the prior writtenconsent of Landlord which consent will not be unreasonably withheld.  Tenant shall, by 30 days’ written notice,advise Landlord of its intent to sublet the Premises or any portion thereof forany part of the term hereof.  As acondition for granting its consent to any subletting, Landlord may require thatTenant agrees to pay to Landlord, as additional rent, all rents or otherconsiderations received by Tenant from its subtenants in excess of the rentpayable by Tenant to Landlord hereunder and the costs incurred by Tenant toacquire, document, and perform under the transfer, including withoutlimitation, brokerage commission, fit up cost for the transferee, attorneys’fees, and the cost incurred by Tenant to provide any other services orequipment to the transferee.  Tenantshall, by 30 days’ written notice, advise Landlord of its intent to subletsubstantially all of the Premises for substantially all of the remaining termhereof which notice may be given prior to Tenant’s identification of aparticular transferee.  If Tenant intendsto assign the lease or sublet substantially all of the Premises for

19

----

 

substantially all of the remaining term, then upon receipt of saidnotice, Landlord may, in its sole discretion, elect to terminate this Lease asto the portion of the Premises described in Tenant’s notice on the datespecified in Tenant’s notice.   If Tenantintends to assign the Lease or sublet substantially all of the Premises andLandlord elects to terminate this Lease, this Lease shall be terminated on thedate specified in Tenant’s notice.  Inthe event Tenant is allowed to assign, transfer or sublet the whole or any partof the Premises, with the prior written consent of Landlord, no assignee,transferee or subtenant shall assign or transfer this Lease, either in whole orin part, or sublet the whole or any part of the premises, without also havingobtained the prior written consent of Landlord. A consent of Landlord to one assignment, transfer, hypothecation,subletting, occupation or use by any other person shall not release Tenant fromany of Tenant’s obligations hereunder to be deemed to be a consent to anysubsequent similar or dissimilar assignment, transfer, hypothecation,subletting, occupation or use by any other person.  Any such assignment, transfer, hypothecation,subletting, occupation or use without such consent shall be void and shallconstitute a breach of this Lease by Tenant and shall, at the option ofLandlord exercised by written notice to Tenant, terminate this Lease.  The leasehold estate under this Lease shallnot, nor. shall any interest therein, be assignable for any purpose byoperation of law without the written consent of Landlord.  As a condition to its consent, Landlord mayrequire Tenant to pay all its reasonable expenses in connection with theassignment up to a maximum of $500, and Landlord may require Tenant’s assigneeor transferee (or other assignees or transferees) to assume in writing all ofthe obligations under this Lease and for Tenant to remain liable to landlordunder the Lease.  Notwithstandinganything to the contrary in the Lease (A) Tenant may, without Landlord’s priorwritten consent and without any participation by Landlord in assignment andsubletting proceeds, sublet the Premises or assign the Lease to:  (i) a subsidiary, affiliate, division orcorporation controlling, controlled by or under common control with Tenant;(ii) a successor corporation related to Tenant by merger, consolidation,non-bankruptcy reorganization, or government action; or (iii) a purchaser ofsubstantially all of Tenant’s assets located in the Premises, (B) sale orissuance of Tenant’s capital stock through any public exchange, national marketor over-the counter or in consideration of contributions of capital to theTenant, shall not be deemed an assignment, subletting, or any other transfer ofthe Lease or the Premises, and (C) Landlord’s consent to any proposedassignment or subletting shall not be unreasonably withheld, conditioned, ordelayed and Landlord shall respond within thirty (30) days.

 

20.**           SUBORDINATION AND MORTGAGES**   In the event Landlord’s title or leaseholdinterest is now or hereafter encumbered by a deed of trust, upon the interestof Landlord in the land and buildings in which the demised Premises arelocated, to secure a loan from a lender (hereinafter referred to as “Lender”)to Landlord, Tenant shall, at the request of Landlord or Lender, execute inwriting an agreement subordinating its rights under this Lease to the lien ofsuch deed of trust, or, if so requested, agreeing that the lien of Lender’sdeed of trust shall be or remain subject and subordinate to the rights ofTenant under this Lease.  Tenant herebyirrevocably appoints Landlord the attorney in fact of Tenant to execute,deliver and record any such instrument or instruments for and in the name andon behalf of Tenant.  Notwithstanding anysuch subordination, Tenant’s possession under this Lease shall not be disturbedif Tenant is not in default and so long as Tenant shall pay all rent andobserve and perform all of the provisions set forth in this

20

----

 

Lease.  Tenant agrees to send toany mortgagees and/or deed of trust holders, by registered mail, a copy of anynotice of default served by Tenant upon the Landlord, provided that prior tosuch notice, Tenant has been notified, in writing (by way of notice ofassignment of rents or otherwise) of the addresses of such mortgages and/ordeed of trust holders.  Tenant furtheragrees that if Landlord shall have failed to cure such default within the timeprovided for in this Lease, any such mortgagees and/or deed of trust holdersshall have an additional thirty (30) days within which to cure such default, orif such default is not reasonably susceptible of cure within that time, thensuch additional time as may be reasonably necessary if within such (30) days,any mortgagee and/or deed of trust holder has commenced and is diligentlypursuing the remedies necessary to cure such default, (including but notlimited to commencement of foreclosure proceedings), in which event this Leaseshall not be terminated when such remedies are being diligently pursued.

 

21.   **        ENTRY BY LANDLORD**  Landlord reserves, and shall at all reasonable times have, the right toenter the Premises to inspect them; to perform any services to be provided byLandlord hereunder; to submit the Premises to prospective purchasers, mortgagersor tenants; to post notices of nonresponsibility; and to so long as the changedoes not interfere with the conduct of Tenant’s business, increase Tenant’scosts, or materially reduce Tenant’s rights, alter, improve or repair thePremises and any portion of the Complex, all without abatement of rent; and mayerect scaffolding and other necessary structures in or through the Premiseswhere reasonably required by the character of the work to be performed;provided, however, that the business of Tenant shall be interfered with to theleast extent that is reasonably practical. For each of the foregoing purposes, Landlord shall at all times have andretain a key with which to unlock all of the doors in an emergency in order toobtain entry to the Premises, and any entry to the Premises obtained byLandlord by any of said means, shall not under any circumstances be construedor deemed to be a forcible or unlawful entry into or a detainer of the Premisesor an eviction, actual or constructive, of Tenant from the Premises or anyportion thereof.  Landlord shall alsohave the right at any time to change the arrangement or location of entrancesor passageways, doors and doorways, and corridors, elevators, stairs, toilets orother public parts of the Complex, provided such change does not unreasonablyinterfere with the conduct of Tenant’s business and to change the name, numberor designation by which the Complex is commonly known, and none of theforegoing shall be deemed and actual or constructive eviction of Tenant, orshall entitle Tenant to any reduction of rent hereunder.

22.**           BANKRUPTCY AND DEFAULT**   The commencement by Tenant of a bankruptcyaction or liquidation action or reorganization action or insolvency action oran assignment of or by Tenant for the benefit of creditors, or any similaraction undertaken by Tenant, shall, at Landlord’s option, constitute a breachof this Lease by Tenant.  If the trusteeor receiver appointed to serve during a bankruptcy, liquidation,reorganization, insolvency or similar action elects to reject Tenant’sunexpired Lease, the trustee or receiver shall notify Landlord in writing ofits election within thirty (30) days after an order for relief in a liquidationaction or within thirty (30) days after the commencement of any action.

  Within thirty (30) days after court approval of the assumption of thisLease, the trustee or receiver shall cure (or provide adequate assurance to thereasonable satisfaction of

21

----

 

Landlord that the trustee or receiver shall cure) any and all previousdefaults under the unexpired Lease and shall compensate Landlord for all actualpecuniary loss and shall provide adequate assurance of future performance undersaid Lease to the reasonable satisfaction of Landlord.  Adequate assurance of future performance, asused herein, includes, but shall not be limited to: (i) assurance of source andpayment of rent, and other consideration due under this Lease; (ii) assurancethat the assumption or assignment of this Lease will not breach substantiallyany provision, such as radius, location, use, or exclusivity provision, in anyagreement relating to the above described Premises.

 

Nothingcontained in this section shall affect the existing right of Landlord to refuseto accept an assignment upon commencement of or in connection with abankruptcy, liquidation, reorganization or insolvency action or an assignmentof Tenant for the benefit of creditors or other similar act.  Nothing contained in this Lease shall beconstrued as giving or granting or creating an equity in the demised Premisesto Tenant.  In no event shall theleasehold estate under this Lease, or any interest therein, be assigned byvoluntary or involuntary bankruptcy proceeding without the prior written consentof Landlord.  In no event shall this Leaseor any rights or privileges hereunder be an asset of Tenant under anybankruptcy, insolvency or reorganization proceedings.

Thefailure to perform or honor any covenant, condition or representation madeunder this Lease shall constitute a default hereunder by Tenant upon expirationof the appropriate grace period hereinafter provided.  Tenant shall have a period of five (5) daysfrom the date of written notice from Landlord within which to cure any defaultin the payment of rental or adjustments thereto.  Tenant shall have a period of ten (10) daysfrom the date of written notice from Landlord within which to cure any otherdefault under this Lease; provided, however, that if the default cannotreasonably be cured within such 10 day period, Tenant shall have suchreasonable time is may reasonably be required to cure such default so long asTenant commences to cure the default within such 10 day period.  Upon an uncured default of this Lease byTenant, Landlord shall have the following rights and remedies in addition toany other rights or remedies available to Landlord at law or in equity:

               (a)   The rights and remedies provided for byCalifornia Civil Code Section 1951.2, including but not limited to, recovery ofthe worth at the time of award of the amount by which the unpaid rent for thebalance of the term after the time of award exceeds the amount of rental lossfor the same period that Tenant proves could be reasonably avoided, as computedpursuant to subsection (b) of said Section 1951.2.  Any proof by Tenant under subparagraphs (2)and (3) of Section 1951.2 of the California Civil Code of the amount of rentalloss that could be reasonably avoided shall be made in the followingmanner:  Landlord and Tenant shall eachselect a licensed real estate broker in the business of renting property of thesame type and use as the Premises and in the same geographic vicinity.  Such two real estate brokers shall select athird licensed real estate broker, and the three licensed real estate brokersso selected shall determine the amount of the rental loss that could bereasonably avoided from the balance of the term of this Lease after the time ofaward.  The decision of the majority ofsaid licensed real estate brokers shall be final and binding upon the partieshereto.

(b)   The rights and remedies provided byCalifornia Civil Code which allows Landlord to continue the Lease in effect andto enforce all of its rights and remedies under this Lease, including the rightto recover rent as it becomes due, for so long as Landlord does not terminateTenant’s right to possession; acts of maintenance or preservation, efforts

22

----

 

to relet the Premises, or the appointment of a receiver upon Landlord’sinitiative to protect its interest under this Lease shall not constitute atermination of Tenant’s right to possession.

 

(c)   The right to terminate this Lease by givingnotice to Tenant in accordance with applicable law.

(d)   The right and power, as attorney-in-fact forTenant, to enter the Premises and remove therefrom all persons and property, tostore such property in a public warehouse or elsewhere at the cost of and forthe account of Tenant and to sell such property and apply such proceedstherefrom pursuant to applicable California law.

23.  **         ABANDONMENT**  If Tenant shall abandon, vacate or surrender said Premises, or bedispossessed by the process of law, or otherwise, any personal propertybelonging to Tenant and left on the Premises shall be deemed to be abandoned,at the option of Landlord, except such property as may be mortgaged toLandlord.

24.**           DESTRUCTION ** In the event the Premises are destroyed inwhole or in part or the building in which the Premises are situated is damagedor destroyed to the extent of not less than 33 1/3% of the replacement costthereof from any cause, Landlord may, at its option:

(a)   Rebuild or restore the Premises to theircondition prior to the damage or destruction, or

(b)  Terminate this Lease.  If Landlord terminates this Lease andthereafter restores the damage, tenant shall have the right to reinstate theLease on its then existing terms for a minimum of a one year term.

IfLandlord does not give Tenant notice in writing within thirty (30) days fromthe destruction of the Premises of its election to either rebuild and restorethem, or to terminate this Lease, Landlord shall be deemed to have elected torebuild or restore them, in which event Landlord agrees, at its expense,promptly to rebuild or restore the Premises to their condition prior to thedamage or destruction.  Tenant shall beentitled to a reduction in rent from the date of the casualty and while suchrepair is being made in the proportion that the area of the Premises renderednot reasonably suitable for the conduct of Tenant’s business by such damagebears to the total area of the Premises. If the expected restoration time after the date of the casualty exceed180 days or if Landlord does not complete the rebuilding or restoration withinone hundred eighty (180) days following the date of destruction (such period oftime to be extended for delays caused by the fault or neglect of Tenant or fornot more than 30 days because of Acts of God, acts of public agencies, labordisputes, strikes, fires, freight embargoes, rainy or stormy weather, inabilityto obtain materials, supplies or fuels, acts of contractors or subcontractors,or delay of the contractors or subcontractors due to such causes or othercontingencies beyond the control of Landlord), then Tenant shall have the rightto terminate this Lease by giving fifteen (15) days prior written notice toLandlord.  Notwithstanding anythingherein to the contrary, Landlord’s obligation to rebuild or restore shall belimited to the building and interior improvements constructed by Landlord asthey existed as of the commencement date of the Lease and shall not includerestoration of Tenant’s trade fixtures, equipment, merchandise or anyimprovements, alterations or additions made by Tenant to the Premises.

 

23

----

 

Unlessthis Lease is terminated pursuant to the foregoing provisions, this Lease shallremain in full force and effect.  Tenanthereby expressly waives the provisions of Section 1932, Subdivision 2, andSection 1933, Subdivision 4 of the California Civil Code.

Inthe event the destruction of the Premises is caused by Tenant, Tenant shall paythe deductible portion of Landlord’s insurance proceeds up to a maximum of$10,000.

25.**           EMINENT DOMAIN**   If all or any part of the Premises shall betaken by any public or quasi-public authority under the power of eminent domainor conveyance in lieu thereof, this Lease shall terminate as to any portion ofthe Premises so taken or conveyed on the date when title vests in thecondemnor, and Landlord shall be entitled to any and all payment, income, rent,award or any interest therein whatsoever which may be paid or made inconnection with such taking or conveyance, and Tenant shall have no claimagainst Landlord or otherwise for the value of any unexpired term of this Lease.  Notwithstanding the foregoing paragraph, anycompensation specifically awarded Tenant for loss of business, Tenant’spersonal property, moving cost or loss of goodwill, shall be and remain theproperty of Tenant.

If(i) any action or proceeding is commenced for such taking of the Premises orany part thereof, or if Landlord is advised in writing by any entity or bodyhaving the right or power of condemnation of its intention to condemn thePremises or any portion thereof, or (ii)any of the foregoing events occur withrespect to the taking of any space in the Complex not leased hereby, or anysuch spaces so taken or conveyed in lieu of such taking and Landlord shalldecide to permanently discontinue the use and operation of the Complex, ordecide to demolish, alter or rebuild the Complex, then in any of such eventsLandlord shall have the right to terminate this Lease by giving Tenant writtennotice thereof within sixty (60) days of the date of receipt of said writtenadvice, or commencement of said action or proceeding, or taking conveyance,which termination shall take place, at the election of Tenant on the last dayof the calendar month next following the month in which such notice is given orthe date on which title to the Premises shall vest in the condemnor.

Inthe event of such a partial taking or conveyance of the Premises, if theportion of the Premises or any Tenant parking rights taken or conveyed is sosubstantial that the Tenant can no longer reasonably conduct its business,Tenant shall have the privilege of terminating this Lease within sixty (60)days from the date of such taking or conveyance, upon written notice toLandlord of its intention so to do, and upon giving of such notice this Leaseshall terminate on the last day of the calendar month next following the monthin which such notice is given, upon payment by Tenant of the rent from the dateof such taking or conveyance to the date of termination.

If aportion of the Premises be taken by condemnation or conveyance in lieu thereofand neither Landlord nor Tenant shall terminate this Lease as provided herein,this Lease shall continue in full force and effect as to the part of thePremises not so taken or conveyed, and the rent herein shall be apportioned asof the date of such taking or conveyance so that thereafter the rent to be paidby Tenant shall be in the ratio that the area of the portion of the Premisesnot so taken or conveyed bears to the total area of the Premises prior to suchtaking.

24

----

 

26.**           SALEOR CONVEYANCE BY LANDLORD**   Inthe event of a sale or conveyance of the Complex or any interest therein, byany owner of the reversion then constituting Landlord, the transferor shallthereby be released from any further liability upon any of the terms, covenantsor conditions (express or implied) herein contained in favor of Tenant whichare assumed by the transferee, and in such event, insofar as such transfer isconcerned, Tenant agrees to look solely to the responsibility of the successorin interest of such transferor in and to the Complex and this Lease.  This Lease shall not be affected by any suchsale or conveyance, and Tenant agrees to attorn to the successor in interest ofsuch transferor.

 

27.**           ATTORNMENTTO LENDER OR THIRD PARTY  **Inthe event the interest of Landlord in the land and buildings in which theleased Premises are located (whether such interest of Landlord is a fee titleinterest or a leasehold interest) is encumbered by deed of trust, and suchinterest is acquired by the lender or any third party through judicial foreclosureor by exercise of a power of sale at private trustee’s foreclosure sale, Tenanthereby agrees to attorn to the purchaser at any such foreclosure sale and torecognize such purchaser as the Landlord under this Lease.  In the event the lien of the deed of trustsecuring the loan from a Lender to Landlord is prior and paramount to thelease, this Lease shall nonetheless continue in full force and effect for theremainder of the unexpired term hereof, at the same rental herein reserved andupon all the other terms, conditions and covenants herein contained.

 

28.**           HOLDINGOVER**   Any holding over byTenant after expiration or other termination of the term of this Lease with thewritten consent of Landlord delivered to Tenant shall not constitute a renewalor extension of the Lease or give Tenant any rights in or to the leasedPremises except as expressly provided in this Lease.  Any holding over after the expiration orother termination of the term of this lease, with the consent of Landlord,shall be construed to be a tenancy from month to month, on the same terms andconditions herein specified insofar as applicable except that the monthly BasicRent shall be increased to an amount equal to one hundred fifty (150%) percentof the monthly Basic Rent required during the last month of the Lease term.

 

29.**           CERTIFICATEOF ESTOPPEL  **Tenant shall atany time upon not less than ten (10) days’ prior written notice from Landlordexecute, acknowledge and deliver to Landlord a statement in writing (i)certifying that this Lease is unmodified and in full force and effect (or, ifmodified, stating the nature of such modification and certifying that thisLease, as so modified, is in full force and effect) and the date to which therent and other charges are paid in advance, if any, and (ii) acknowledging thatthere are not, to Tenant’s knowledge, any uncured defaults on the part ofLandlord hereunder, or specifying such defaults, if any, are claimed.  Any such statement may be conclusively reliedupon by any prospective purchaser or encumbrancer of the Premises.  Tenant’s failure to deliver such statementwithin such time shall be conclusive upon Tenant that this Lease is in fullforce and effect, without modifications except as may be represented byLandlord; that there are no uncured defaults in Landlord’s performance, andthat no more that one month’s rent has been paid in advance.

 

25

----

 

30.**           CONSTRUCTIONCHANGES**   It is understoodthat the description of the Premises and the location of the ductwork, plumbingand other facilities therein are subject to such minor changes as Landlord orLandlord’s architect determines to be desirable in the course of constructionof the Premises, and no such changes, or any changes in plans for any otherportions of the Complex shall affect this Lease or entitle Tenant to anyreduction of rent hereunder or result in any liability of Landlord to Tenant solong as such change does not interfere with the conduct of Tenant’s business oradversely effect the Tenant’s rights and obligations.  Landlord does not guarantee the accuracy ofany drawings supplied to Tenant and verification of the accuracy of suchdrawings rests with Tenant.

 

31.**           RIGHTOF LANDLORD TO PERFORM**   Allterms, covenants and conditions of this Lease to be performed or observed byTenant shall be performed or observed by Tenant at Tenant’s sole cost andexpense and without any reduction of rent. If Tenant shall fail to pay any sum of money, or other rent, required tobe paid by it hereunder or shall fail to perform any other term or covenanthereunder on its part to be performed, and such failure shall continue withoutthe undertaking of a cure by Tenant of 10 (10) days after written notice thereof by Landlord, Landlord, withoutwaiving or releasing Tenant from any obligation of Tenant hereunder, may, butshall not be obligated to, make any such payment or perform any such other termor covenant on Tenant’s part to be performed. All sums so paid by Landlord and all necessary costs of such performanceby Landlord together with interest thereon at the rate of the prime rate ofinterest per annum as quoted by the Bank of America from the date of suchpayment of performance by Landlord, shall be paid (and Tenant covenants to makesuch payment) to Landlord or demand by Landlord, and Landlord shall have (inaddition to any other right or remedy of Landlord) the same rights and remediesin the event of non payment by Tenant as in the case of failure by Tenant inthe payment of rent hereunder.

 

32.**           ATTORNEYSFEES**

 

**     **          (A)          In the event that Landlord or Tenantshould bring suit for the possession of the Premises, for the recovery of anysum due under this Lease, or because of the breach of any provision of thisLease, or for any other relief hereunder, then all costs and expenses, includingreasonable attorney’s fees, incurred by the prevailing party therein shall bepaid by the other party, which obligation on the part of the other party shallbe deemed to have accrued on the date of the commencement of such action andshall be enforceable whether or not the action is prosecuted to judgement.

(B)           Should Landlord, through no fault ofLandlord, the other occupants of the Complex or their respective agents,employees, contractors or invitees be named as a defendant in any suit broughtagainst Tenant in connection with or arising out of Tenant’s occupancyhereunder, Tenant shall pay to Landlord its costs and expenses reasonablyincurred in such suit, including a reasonable attorney’s fee.

33.**           WAIVER**   The waiver by either party of the other party’sfailure to perform or observe any term, covenant or condition herein containedto be performed or observed by such waiving party shall not be deemed to be awaiver of such term, covenant or condition or of any subsequent failure of theparty failing to perform or observe the same or any other such term, covenantor condition therein contained, and no custom or practice which may

26

----

 

develop between the parties hereto during the term hereof shall bedeemed a waiver of, or in any way affect, the right of either party to insistupon performance and observance by the other party in strict accordance withthe terms hereof.

 

34.**           NOTICES**   All notices, demands, requests, advices ordesignations which may be or are required to be given by either party to theother hereunder shall be in writing.  Allnotices, demands, requests, advices or designations by Landlord to Tenant shallbe sufficiently given, made or delivered if personally served on Tenant  at the notice address set forth below Tenant’ssignature or at such other address as Tenant shall hereafter notify Landlord inwriting in accordance with this Section or if sent by United States certifiedor registered mail, postage prepaid, addressed to Tenant.  All notices, demands, requests, advices ordesignations by Tenant to Landlord shall be sent by United States certified orregistered mail, postage prepaid, addressed to Landlord at its offices at 1875South Grant Street, Suite 100, San Mateo, CA 94402.

 

                Each notice,request, demand advice or designation referred to in this paragraph shall bedeemed received on the date of the personal service or mailing thereof in themanner herein provided, as the case may be.

 

35.**           EXAMINATIONOF LEASE**   Submission of thisinstrument for examination or signature by Tenant does not constitute areservation of or option for a lease, and this instrument is not effective as alease or otherwise until its execution and delivery by both Landlord andTenant.  Landlord and Tenant mutuallyintend that neither shall have any binding contractual obligations to the otherwith respect to the matters referred to herein unless and until this instrumenthas been fully executed by both parties.

 

36.**           DEFAULTBY LANDLORD**  Landlord shallnot be in default unless Landlord fails to perform obligations required ofLandlord within a reasonable time, but in no event earlier than thirty (30)days after written notice by Tenant to Landlord and to the holder of any firstmortgage or deed of trust covering the Premises whose name and address shallhave heretofore been furnished to Tenant in writing, specifying whereinLandlord has failed to perform such obligations; provided, however, that if thenature of Landlord’s obligations is such than more than thirty (30) days arerequired for performance, then Landlord shall not be in default if Landlordcommences performance within such thirty (30) day period and thereafterdiligently prosecutes the same to completion. Notwithstanding the foregoing if Landlord’s failure to performany of its obligations under the Lease results in a condition which is causingor threatens to cause immediate damage to Tenant’s personnel or property, thenLandlord shall repair such condition as soon as possible after receiving noticefrom Tenant.

 

37.**           CORPORATEAUTHORITY**

 

If Tenant is a corporation (or apartnership) each individual executing this Lease on behalf of said corporation(or partnership) represents and warrants that he is duly authorized to executeand deliver this Lease on behalf of said corporation (or partnership) in accordancewith the by-laws of said corporation (or partnership in accordance with the

27

----

 

partnership agreement) and that this Lease is binding upon saidcorporation (or partnership) in accordance with its terms.

 

38.**           DELETED**

 

39.**           LIMITATION OF LIABILITY **In consideration of the benefitsaccruing hereunder, Tenant and all successors and assigns covenant and agreethat, in the event of any actual or alleged failure, breach or defaulthereunder by Landlord:

(i)            thesole and exclusive remedy shall be against Landlord and Landlord’s assets;

(ii)           nopartner of Landlord shall be sued or named as a party in any suit or action(except as may be necessary to secure jurisdiction of the partnership)

(iii)          noservice of process shall be made against any partner of Landlord (except as maybe necessary to secure jurisdiction of the partnership)

(iv)          nopartner of Landlord shall be required to answer or otherwise plead to anyservice of process;

(v)           nojudgement shall be taken against any partner of Landlord;

(vi)          anyjudgement taken against any partner of Landlord may be vacated and set aside atany time without hearing;

(vii)         nowrit of execution will ever be levied against the assets of any partner ofLandlord;

(viii)        thesecovenants and agreements are enforceable both by Landlord and also by anypartner of Landlord.

(ix)           Theterm, “Landlord”, as used in this section, shall mean only the owner or ownersfrom time to time of the fee title or the tenant’s interest under a groundlease of the land described in Exhibit “B”, and in the event of any transfer ofsuch title or interest, Landlord herein named (and in case of any subsequenttransfers the then grantor) shall be relieved from and after the date of suchtransfer of all liability as respects Landlord’s obligations thereafter to beperformed which are assumed by the transferee, provided that any funds in thehands of Landlord or the then grantor at the time of such transfer, in whichTenant has an interest, shall be delivered to the grantee.  Similarly, the obligations contained in thisLease to be performed by Landlord shall be binding on Landlord’s successors andassigns only during their respective period of ownership.  Tenant agrees that each of the foregoingcovenants and agreements shall be applicable to any covenant or agreementeither expressly contained in this Lease or imposed by statute or at commonlaw.

40.**           BROKERS**  Tenant warrants that it had dealing with onlyof the following real estate brokers or agents in connection with thenegotiation of this Lease    CBRichard Ellis and Cornish and Carey Commercial     and that it knows of no other realestate broker or agent who is entitled to a commission in connection with thisLease.  Landlord will pay allcompensation due to the Brokers with respect to this Lease.

28

----

 

41.**           SIGNS  **Except as expressly provided inthis Lease, no sign, placard, picture, advertisement, name or notice shall beinscribed, displayed, printed or affixed on or to any part of the outside ofthe Premises or any exterior windows of the Premises without the writtenconsent of Landlord first had and obtained and Landlord shall have the right toremove any such sign, placard, picture, advertisement, name or notice withoutnotice to and at the expense of Tenant. If Tenant is allowed to print or affix or in any way place a sign in,on, or about the Premises, then upon expiration or other sooner termination ofthis Lease, Tenant at Tenant’s sole cost and expense shall both remove suchsign and repair all damage in such manner as to restore all aspects of theappearance of the Premises to the condition prior to the placement of saidsign.

 

                Except as expresslyprovided in this Lease, all approved signs or lettering on outside doors shallbe printed, painted, affixed or inscribed at the expense of Tenant by a person approvedof by Landlord.  Tenant shall not placeanything or allow anything to be placed near the glass of any window, doorpartition or wall which may appear unsightly from outside the Premises.

 

42.**           FINANCIAL STATEMENTS**   In the event Tenant tenders to Landlord anyinformation on the financial stability, credit worthiness or ability of theTenant to pay the rent due and owing under the Lease, then Landlord shall beentitled to rely upon the information provided in determining whether or not toenter into this Lease Agreement with Tenant and Tenant hereby represents andwarrants to Landlord the following: (i) That all documents provided by Tenantto Landlord are true and correct copies of the original; and (ii) Tenant hasnot withheld any information from Landlord which is material to Tenant’s creditworthiness, financial condition or ability to pay the  rent; and (iii) all information supplied byTenant to Landlord is true, correct and accurate; and (iv) no part of theinformation supplied by Tenant to Landlord contains misleading or fraudulentstatements.

                A default underthis paragraph shall be a non-curable default on behalf of Tenant and Landlordshall be entitled to pursue any right or remedy available to Landlord under theterms of this Lease or available to Landlord under the laws of the State ofCalifornia.

 

43.**           HAZARDOUS MATERIALS**

                A.            As used herein, the term “HazardousMaterial” shall mean any substance or material which has been determined by anystate, federal or local governmental authority to be capable of posing a riskof injury to health, safety or property including all of those materials andsubstances designated or defined as “hazardous” or “toxic” by (i) theEnvironmental Protection Agency, the California Water Quality Control Board,the Department of Labor, the California Department of Industrial Relations, theDepartment of Transportation, the Department of Agriculture, the ConsumerProduct Safety Commission, the Department of Health and Human Services, theFood and Drug Agency or any other governmental agency now or hereafterauthorized to regulate materials and substances in the environment, or by (ii)the Comprehensive Environmental Response, Compensation and Liability Act of1980, 42 U.S.C. 9601 et seq., as amended; the Hazardous MaterialsTransportation Act, 49 U.S.C. 1801, et seq., as amended; the ResourceConservation and Recovery Act, 42 U.S.C. 6901, et seq., as amended; theHazardous Waste Control Law,

29

----

 

California Health & Safety Code 25100 et seq., as amended; Sections66680 through 66685 of Title 22 of the California Administration Code, Division4, Chapter 30, as amended; and in the regulations adopted and publicationspromulgated pursuant to said laws.

 

B.            Tenant shall not cause any HazardousMaterial to be improperly or illegally used, stored, discharged, released ordisposed of in, from, under or about the Premises or the Complex, or any otherland or improvements in the vicinity of the Premises or the Complex during theLease Term (“Tenant’s Hazardous Materials”).  Without limiting the generality of the foregoing, Tenant, at its solecost, shall comply with all laws relating to such Hazardous Materials.  If the presence of any Tenant’s HazardousMaterials on the Premises or the Complex results in contamination of thePremises or the Complex or any soil or about the Premises or the Complex,Tenant, as its expense shall promptly take all actions necessary to return thePremises or the Complex to the condition existing prior to the appearance ofsuch Hazardous Material.  The terminationof this Lease shall not terminate or reduce the liability or obligation ofTenant under this Section, or as may be required by law, to clean up, monitoror remove any Hazardous Materials from the Premises or the Complex.

Tenantshall defend, hold harmless and indemnify Landlord and its agents and employeeswith respect to all claims, damages and liabilities to the extent arising outof or in connection with any Tenant’s Hazardous Material used, stored,discharged, released or disposed of in, from, under or about the Premises orthe Complex, including, without limitation, any cost of monitoring or removal,any reduction in the fair market value or fair rental value of the Premises orthe Complex and any loss, claim or demand by any third person or entirelyrelating to bodily injury or damage to real or personal property.

Tenantshall not suffer any lien to be recorded against the premises or the Complex asa consequence of such Tenant’s Hazardous Material, including any so calledstate, federal or local “super fund” lien related to the “clean up” of aHazardous Material in or about the Premises, where said Hazardous Material isor was attributable to the activities of Tenant.

C.            In the event Hazardous Materials arediscovered in or about the Premises or the Complex, and Landlord hassubstantial reason to believe that they are Tenant’s Hazardous Materials, thenLandlord shall have the right to appoint a consultant, at Tenant’s expense, toconduct an investigation to determine whether Hazardous Materials are locatedin or about the Premises or the Complex and to determine the correctivemeasures, if any, required to remove such Hazardous Materials.  Tenant, at its expense, shall comply with allrecommendations of the consultant, as required by law with respect to Tenant’sHazardous Materials.  To the extent it isdetermined that Tenant was not responsible for the presence of the HazardousMaterials, then Landlord shall reimburse Tenant for any costs incurred byLandlord and paid by Tenant under the terms of this paragraph 45.C.

Tenantshall immediately notify Landlord of any inquiry, test, investigation orenforcement proceeding by or against Tenant or the Premises or the Complexconcerning a Hazardous Material.  Tenantacknowledges that Landlord, as the owner of the Property, at its election,shall have the right, at Tenant’s expense, to negotiate, defend, approve andappeal any action taken or order issued with regard to a Tenant’s HazardousMaterial by an applicable governmental authority.  Provided Tenant is not in default under theterms of

30

----

 

this Lease, Tenant shall likewise have the right to participate in anynegotiations, approvals or appeals of any actions taken or orders issued withregard to the Tenant’s Hazardous Material and Landlord shall not have the rightto bind Tenant in said actions or orders.

 

D.            It shall not be unreasonable forLandlord to withhold its consent to any proposed assignment or subletting if(i) the proposed assignee’s or subtenant’s anticipated use of the Premisesinvolves the storage, use or disposal of Hazardous Material; (ii) if theproposed assignee or subtenant has been required by any prior landlord, lenderor governmental authority to “clean up” Hazardous Material; (iii) if theproposed assignee or subtenant is subject to investigation or enforcement orderor proceeding by any governmental authority in connection with the use,disposal or storage of a Hazardous Material.

E.             Tenant shall surrender the Premisesto Landlord, upon the expiration or earlier termination of the Lease, free ofTenant’s Hazardous Materials.  If Tenantfails to so surrender the Premises, Tenant shall indemnify and hold Landlordharmless from all damages resulting from Tenant’s failure to surrender thePremises as required by this paragraph, including, without limitation, anyclaims or damages in connection with the condition of the Premises including,without limitation, damages occasioned by the inability to relet the Premisesor a reduction in the fair market and/or rental value of the Premises or theComplex by reason of the existence of any Hazardous Materials, which are orwere attributable to the activities of Tenant, in or around the Premises or theComplex.     Notwithstanding anyprovision to the contrary in this Lease, if any action is required to be takenby a governmental authority to clean-up, monitor or remove any Tenant’sHazardous Materials from the Premises or the Complex and such action is notcompleted prior to the expiration or earlier termination of the Lease, thenat  Landlord’s election (i) until thedate the clean-up, monitoring or removal procedure for Tenant’s HazardousMaterials is completed, Tenant shall reimburse Landlord for all rental lossattributable to such Tenant’s Hazardous Materials upon demand; or (ii) Tenantshall be deemed to have impermissibly held over and Landlord shall be entitledto all damages directly or indirectly incurred in connection with such holdingover, including without limitation damages occasioned by the inability to reletthe Premises or a reduction in the fair market and/or fair rental value of thePremises or the Complex by reason of the existence of the Hazardous Material.

F.             Upon the Lease Commencement Date,Tenant shall provide to Landlord a complete list of all chemicals, toxic wasteor Hazardous Materials employed by Tenant within the Premises.  Throughout the terms of the Lease, Tenantshall continue to update this list of chemicals, contaminants and HazardousMaterials.

44.**           MISCELLANEOUS AND GENERAL PROVISIONS**

                a.  Tenant shall not, without the written consentof Landlord, use the name of the building for any purpose other than as theaddress of the business conducted by Tenant in the Premises.

31

----

 

b.  This Lease shall in all respects be governedby and construed in accordance with the laws of the State of California.  If any provision of this Lease shall beinvalid, unenforceable or ineffective for any reason whatsoever, all otherprovisions hereof shall be and remain in full force and effect.

 

c.  The term “Premises” includes the space leasedhereby and any improvements now or hereafter installed therein or attachedthereto and the parking and other appurtenant rights granted to Tenant by thisLease.  The term “Landlord” or anypronoun used in place thereof includes the plural as well as the singular andthe successors and assigns of Landlord. The term “Tenant” or any pronoun used in place thereof includes theplural as well as the singular and individuals, firms, associations,partnerships and corporations, and each of their respective heirs, executors,administrators, successors and permitted assigns, according to the contexthereof, and the provisions of this Lease shall injure to the benefit of andbind such heirs, executors, administrators, successors and permitted assigns.

    The term “person” includes the plural aswell as the singular and individuals, firms, associations, partnerships andcorporations.  Words used in any genderinclude other genders.  If there be morethan one Tenant the obligations of Tenant hereunder are joint and several.  The paragraph headings of this Lease are forconvenience of reference only and shall have no effect upon the construction orinterpretation of any provision hereof.

d.  Time is of the essence of this Lease and ofeach and all of its provisions.

e.  At the expiration or earlier termination ofthis Lease, Tenant shall execute, acknowledge and deliver to Landlord, withinten (10) days after written demand from Landlord to Tenant, any quitclaim deedor other document required by any reputable title company, licensedto operate in the State of California, to remove the cloud or encumbrancecreated by this Lease from the real property of which Tenant’s Premises are apart.

f.  This instrument along with any exhibits andattachments hereto constitutes the entire agreement between Landlord and Tenantrelative to the Premises and this agreement and the exhibits and attachmentsmay be altered, amended or revoked only by an instrument in writing signed byboth Landlord and Tenant.  Landlord andTenant hereby agree that all prior or contemporaneous oral agreements betweenand among themselves and the agents or representatives relative to the leasingof the Premises are merged in or revoked by this agreement.

g.  Neither Landlord nor Tenant shall record thisLease or a short form memorandum hereof without the consent of the other.

h.  Tenant further agrees to execute anyamendments required by a lender to enable Landlord to obtain financing, so longas Tenant’s rights and obligations hereunder are not affected.

32

----

 

i.  Paragraph(s)   N/A       through    N/A      are/is added hereto andare/is included as a part of this Lease.

 

j.  Clauses, plats and riders, if any, signed byLandlord and Tenant and endorsed on or affixed to this Lease are a part hereof.

k.  Tenant covenants and agrees that nodiminution or shutting off of light, air or view by any structure which may behereafter erected (whether or not by Landlord) shall in any way affect thisLease, entitle Tenant to any reduction of rent hereunder or result in any liabilityof Landlord to Tenant.

l.  Whenever the Lease requires an approval,consent, designation, determination or judgment by either Landlord or Tenant,such approval, consent, designation, determination or judgment (including,without limiting the generality of the foregoing, those required in connectionwith assignment and subletting) shall not be unreasonably withheld or delayedand in exercising any right or remedy hereunder, each party shall at all timesact reasonably and in good faith.

m.  Any expenditure by a party permitted orrequired under the Lease, for which such party is entitled to demand and doesdemand reimbursement from the other party, shall be limited to the fair marketvalue of the goods and services involved, shall be reasonably incurred, andshall be substantiated by documentary evidence available for inspection andreview by the other party or its representative during normal business hoursnotice to Landlord at any time after occurrence of the event of interferingwith Tenant’s use.

IN WITNESS WHEREOF, Landlord andTenant have executed and delivered this Lease as of the day and year firstabove written.

 
| LANDLORD:              |   | TENANT:                |
|------------------------|--------|------------------------|
|                   |   |                   |
|                   |   |                   |
| CROSSROADS  ASSOCIATES |   | AVISTAR COMMUNICATIONS |
| CORPORATION,           |   |                   |
|                   |   | a Delaware Corporation |
|                   |   |                   |
|                   |   |                   |
| By                     |   | /s/Greg Osborn         |   | By |   | /s/ Robert J. Habig |   |   |
| Title                  |   | Partner                |   | Title | Chief Financial Officer |   |
|                        |        |                        |  |  |  |  |  |  |  |  |

 

33

----

 
|                        |   |   | Address for Notices  after the       |
|------------------------|--------|--------|--------------------------------------|
| Commencement  Date:    |   |   |                                 |
|                   |   |   |                                 |
| CLOCKTOWER  ASSOCIATES |   |   | 1875 South Grant  Street, Suite 1000 |
|                   |   |   | San Mateo, CA 94402                  |
|                   |   |   | Attn: Chief Financial  Officer       |
|                   |   |   |                                 |
| BY                     |   |   |                                 |   | Address for Notes  before the |
| Commencement  Date:    |   |   |                                 |
|                   |   |   |                                 |
| Title                  |   |   |                                 |   |   |
|                   |   |   |                                 |   |   |   |
|                   |   |   |                                 |   |   |   |
|                   |   |   |                                 |   | Attn: Chief Financial  Officer |   |
|                   |   |   |                                 |
|                        |        |        |                                      |  |  |  |  |  |  |

 

34

----