# LEASE AGREEMENT

BY AND BETWEEN

# MOFFETT OFFICE PARK
INVESTORS LLC,

a Delaware limited
liability company

AS LANDLORD

and

# ALLIANCE FIBER OPTIC
PRODUCTS, INC.,

a Delaware corporation

AS TENANT

DATED March 29,
2004



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# TABLE OF CONTENTS

|    |                                     | Page
|--- | ----------------------------------- | ----
|    |                                     |     
|    | Basic Lease Information             | iv  
|    |                                     |     
|1.  | Demise                              | 1   
|    |                                     |     
|2.  | Premises                            | 1   
|    |                                     |     
|3.  | Term                                | 2   
|    |                                     |     
|4.  | Rent                                | 2   
|    |                                     |     
|5.  | Utility Expenses                    | 9   
|    |                                     |     
|6.  | Late Charge                         | 10  
|    |                                     |     
|7.  | Letter of Credit                    | 10  
|    |                                     |     
|8.  | Possession                          | 13  
|    |                                     |     
|9.  | Use of Premises                     | 14  
|    |                                     |     
|10. | Acceptance of Premises              | 15  
|    |                                     |     
|11. | Surrender                           | 16  
|    |                                     |     
|12. | Alterations and Additions           | 16  
|    |                                     |     
|13. | Maintenance and Repairs of Premises | 19  
|    |                                     |     
|14. | Landlord's Insurance                | 20  
|    |                                     |     
|15. | Tenant's Insurance                  | 20  
|    |                                     |     
|16. | Indemnification                     | 21  
|    |                                     |     
|17. | Subrogation                         | 22  
|    |                                     |     
|18. | Signs                               | 22  
|    |                                     |     
|19. | Free From Liens                     | 23  
|    |                                     |     
|20. | Entry By Landlord                   | 23  
|    |                                     |     
|21. | Destruction and Damage              | 24  
|    |                                     |     
|22. | Condemnation                        | 25  

i

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|    |                                                  |   
|--- | ------------------------------------------------ | --
|23. | Assignment and Subletting                        | 26
|    |                                                  |   
|24. | Tenant's Default                                 | 29
|    |                                                  |   
|25. | Landlord's Remedies                              | 31
|    |                                                  |   
|26. | Landlord's Right to Perform Tenant's Obligations | 33
|    |                                                  |   
|27. | Attorney's Fees                                  | 33
|    |                                                  |   
|28. | Taxes                                            | 33
|    |                                                  |   
|29. | Effect of Conveyance                             | 33
|    |                                                  |   
|30. | Tenant's Estoppel Certificate                    | 34
|    |                                                  |   
|31. | Subordination                                    | 34
|    |                                                  |   
|32. | Environmental Covenants                          | 35
|    |                                                  |   
|33. | Notices                                          | 38
|    |                                                  |   
|34. | Waiver                                           | 39
|    |                                                  |   
|35. | Holding Over                                     | 39
|    |                                                  |   
|36. | Successors and Assigns                           | 39
|    |                                                  |   
|37. | Time                                             | 39
|    |                                                  |   
|38. | Brokers                                          | 40
|    |                                                  |   
|39. | Limitation of Liability                          | 40
|    |                                                  |   
|40. | Financial Statements                             | 40
|    |                                                  |   
|41. | Rules and Regulations                            | 41
|    |                                                  |   
|42. | Mortgagee Protection                             | 41
|    |                                                  |   
|43. | Entire Agreement                                 | 41
|    |                                                  |   
|44. | Interest                                         | 41
|    |                                                  |   
|45. | Construction                                     | 42
|    |                                                  |   
|46. | Representations and Warranties of Tenant         | 42
|    |                                                  |   
|47. | Security                                         | 42

ii

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|    |                         |   
|--- | ----------------------- | --
|48. | Jury Trial Waiver       | 43
|    |                         |   
|49. | Approvals               | 43
|    |                         |   
|50. | Reasonable Expenditures | 43
|    |                         |   
|51. | Landlord's Default      | 43

| | Exhibit |                                                       
| | ------- | ------------------------------------------------------
| |         |                                                       
| | A       | Diagram of the Premises                               
| |         |                                                       
| | B       | Tenant Improvement Work Letter                        
| |         |                                                       
| | B-1     | Initial Space Plan                                    
| |         |                                                       
| | B-2     | Final Plans and Specifications for Tenant Improvements
| |         |                                                       
| | C       | Commencement and Expiration Date Memorandum           
| |         |                                                       
| | D       | Rules and Regulations                                 
| |         |                                                       
| | E       | Form of Tenant Estoppel Certificate                   
| |         |                                                       
| | F       | Hazardous Materials Disclosure Certificate            

iii

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LEASE AGREEMENT

# BASIC LEASE INFORMATION

|                                      |                                                                                                                                                                                                                                                        
|------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Lease Date                            | March 29, 2004                                                                                                                                                                                                                                         
|Landlord:                             | MOFFETT OFFICE PARK INVESTORS LLC,a delaware limited liability company                                                                                                                                                                                 
|Landlord's Address:                   | c/o UBS Realty Investors LLC455 Market Street, Suite 1540
     San Francisco, California 94105Attention: Asset Manager, Moffett Park                                                                                                                   
|                                      | All notices sent to Landlord under this lease shall be sent to the above address, with copies to:CB Richard Ellis Real Estate Services, Inc.
160 West Santa Clara Street, 12th FloorSan Jose, California 95113Attention: Property Manager, Moffett Park
|Tenant:                               | ALLIANCE FIBER OPTIC PRODUCTS, INC.,a Delaware corporation                                                                                                                                                                                             
|Tenant's Contact Person:              | Andre Liu                                                                                                                                                                                                                                              
|Tenant's Address andTelephone Number: | Prior to Commencement Date:735 North Pastoria AvenueSunnyvale, California 94085
(408) 736-6900From and after Commencement Date:275 Gibraltar DriveSunnyvale, California 94089                                                                          
|Premises Square Footage:              | Approximately thirty-four thousand eight hundred (34,800)rentable square feet                                                                                                                                                                          
|Premises Address:                     | 275 Gibraltar DriveSunnyvale, California                                                                                                                                                                                                               
|Project:                              | 275 Gibraltar Drive, Sunnyvale, California, together with the
     land on which the Project is situated and all Common Areas                                                                                                                          

iv

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|                                          |                        
|----------------------------------------- | -----------------------
|Building (if not the same asthe Project): | Same as the Project    
|Tenant's Proportionate Shareof Project:   | 100%                   
|Tenant's Proportionate Shareof Building:  | 100%                   
|Length of Term:                           | Seventy-two (72) months
|Estimated CommencementDate:               | July 1, 2004           
|Estimated Expiration Date                 | June 30, 2010          

|Monthly Base Rate1 | Months | Sq. Ft. | Monthly BaseRate | Monthly BaseRent
|------------------ | ------ | ------- | ---------------- | ----------------
|                   | 1-12   | 34,800  | x $0.86          | = $29,928.002   
|                   | 13-24  | 34,800  | x $0.89          | = $30,972.00    
|                   | 25-36  | 34,800  | x $0.91          | = $31,668.00    
|                   | 37-48  | 34,800  | x $0.94          | = $32,712.00    
|                   | 49-60  | 34,800  | x $0.97          | = $33,756.00    
|                   | 61-72  | 34,800  | x $1.00          | =$34,800.00     

|                                                                    |                                                                                                                                                                                                                                                           
|------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                    | 1Subject to adjustment in accordance with Paragraph 1(c) of the Tenant
Improvements Work Letter attached to this Lease as Exhibit B.2Subject to waiver of Base Rent during the initial six (6) months of the Term
in accordance with Paragraph 4(a) below.
|Prepaid Base Rent:                                                  | Twenty-Nine Thousand Nine Hundred Twenty-Eight Dollars($29,928.00)                                                                                                                                                                                        
|Prepaid Additional Rent:                                            | Eleven Thousand Nine Hundred Fifty-Two Dollars($11,952.00)(viz.,$0.343 per square foot per month)                                                                                                                                                         
|Month to which Prepaid BaseRent and Additional Rent willbe Applied: | Seventh (7th) month of the Term                                                                                                                                                                                                                           

v

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|                               |                                                                                                                      
|------------------------------ | ---------------------------------------------------------------------------------------------------------------------
|Letter of Credit:              | Four Hundred Twenty Thousand Dollars ($420,000.00), subject
     to reduction in accordance with Paragraph 7(d) below
|Permitted Use:                 | General office, research and development, and laboratory uses
     for manufacturer of fiber optic components        
|Unreserved Parking Spaces:     | 100% of Project parking spaces                                                                                       
|Brokers:                       | CPS (Landlord's Broker)Cornish & Carey Commercial (Tenant's Broker)                                                  
|Tenant Improvements Allowance: | Six Hundred Ninety-Six Thousand Dollars ($696,000.00)                                                                
|Architect:                     | To be determined                                                                                                     

vi

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# LEASE AGREEMENT

THIS
LEASE AGREEMENT is made and entered into by and between Landlord and Tenant on the Lease
Date. The defined terms used in this Lease which are defined in the Basic Lease
Information attached to this Lease Agreement (Basic Lease Information)
shall have the meaning and definition given them in the Basic Lease Information. The Basic
Lease Information, the exhibits, the addendum or addenda described in the Basic Lease
Information, and this Lease Agreement are and shall be construed as a single instrument
and are referred to herein as the Lease.

# 1. DEMISE

In
consideration for the rents and all other charges and payments payable by Tenant, and for
the agreements, terms and conditions to be performed by Tenant in this Lease, LANDLORD
DOES HEREBY LEASE TO TENANT, AND TENANT DOES HEREBY HIRE AND TAKE FROM LANDLORD, the
Premises described below (the Premises), upon the agreements, terms and
conditions of this Lease for the Term hereinafter stated.

# 2. PREMISES

The
Premises demised by this Lease is located in that certain building (the
Building) specified in the Basic Lease Information, which Building is
located in that certain real estate development (the Project) specified
in the Basic Lease Information. The Premises has the address and contains the square
footage specified in the Basic Lease Information. The location and dimensions of the
Premises are depicted on Exhibit A, which is attached hereto and
incorporated herein by this reference; provided, however, that any statement of square
footage set forth in this Lease, or that may have been used in calculating any of the
economic terms hereof, is an approximation which Landlord and Tenant agree is reasonable
and, except as expressly set forth in Paragraph 4(d)(iii) below, no economic terms
based thereon shall be subject to revision whether or not the actual square footage is
more or less. Tenant shall have the non-exclusive right (in common with the other tenants,
Landlord and any other person granted use by Landlord) to use the Common Areas (as
hereinafter defined), except that, with respect to parking, Tenant shall have only a
license to use the number of non-exclusive and undesignated parking spaces set forth in
the Basic Lease Information in the Projects parking areas (the Parking
Areas); provided, however, that Landlord shall not be required to enforce
Tenants right to use such parking spaces; and provided, further, that the parking
spaces allocated to Tenant hereunder shall be reduced in the event any of the parking
spaces in the Parking Areas are taken or otherwise eliminated as a result of any
Condemnation (as hereinafter defined) or casualty event affecting such Parking Areas. No
easement for light or air is incorporated in the Premises. For purposes of this Lease, the
term Common Areas shall mean all areas and facilities outside the
Premises and within the exterior boundary line of the Project that are provided and
designated by Landlord for the non-exclusive use of Landlord, Tenant and other tenants of
the Project and their respective employees, guests and invitees.

The
Premises demised by this Lease shall include the Tenant Improvements (as that term is
defined in the Tenant Improvements Work Letter attached hereto as
Exhibit B) to be constructed by Landlord within the interior of
the Premises. Landlord shall construct the Tenant Improvements on the terms and conditions
set forth in Exhibit B. Landlord and Tenant agree to and shall
be bound by the terms and conditions of Exhibit B.

1

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Landlord
has the right, in its sole discretion, from time to time, following reasonable notice to
Tenant to: (a) make changes to the Common Areas, including, without limitation,
changes in the location, size, shape and number of driveways, entrances, parking spaces,
Parking Areas, ingress, egress, direction of driveways, entrances, corridors and walkways;
(b) close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (c) add additional buildings and
improvements to the Common Areas or remove existing buildings or improvements therefrom;
(d) use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project or any portion thereof; and (e) do and perform any other
acts or make any other changes in, to or with respect to the Common Areas and the Project
as Landlord may, in its sole discretion, deem to be appropriate. Notwithstanding the
foregoing, if Landlord makes any alterations to the Common Areas pursuant to its rights
under this Paragraph 2, Landlord agrees that such alterations shall not unreasonably
interfere with Tenants use of the Premises.

# 3. TERM

The
term of this Lease (the Term) shall be for the period of months
specified in the Basic Lease Information, commencing on the date (the
Commencement Date) that is the later to occur of the dates determined
in accordance with subparagraphs (a) and (b) below:

(a)    
          the date by which Landlord has Substantially Completed (as defined in
          Exhibit B)the Tenant Improvements; or

(b)    
          the earliest of the following dates:

(i)    
          July 1, 2004; or

(ii)    
          the date Tenant commences occupancy of the Premises.

In
the event the actual Commencement Date, as determined pursuant to the foregoing, is a date
other than the Estimated Commencement Date specified in the Basic Lease Information, then
Landlord and Tenant shall promptly execute a Commencement and Expiration Date Memorandum
in the form attached hereto as Exhibit C, wherein the parties
shall specify the Commencement Date, the date on which the Term expires (the
Expiration Date) and the date on which Tenant is to commence paying
Base Rent.

# 4. RENT

(a)    
          Base Rent. Tenant shall pay to Landlord, in advance on the
          first day of each month, without further notice or demand and, except as
          expressly set forth in this Lease, without offset, rebate, credit or deduction
          for any reason whatsoever, the monthly installments of rent specified in the
          Basic Lease Information (the Base Rent).

During
the initial six (6) months of the Term (the Free Base Rent
Period), Tenant shall have no obligation to pay Base Rent accruing hereunder
during the Free Base Rent Period; provided that Tenant shall be obligated to pay Base Rent
during such Free Base Rent Period for any period during which Tenant is in Default
hereunder.

2

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Upon
execution of this Lease, Tenant shall pay to Landlord the Prepaid Base Rent and first
monthly installment of estimated Additional Rent (as hereinafter defined) specified in the
Basic Lease Information to be applied toward Base Rent and Additional Rent for the month
of the Term specified in the Basic Lease Information.

(b)    
          Additional Rent. This Lease is intended to be a triple-net
          Lease with respect to Landlord; and subject to Paragraph 13(b) below, the
          Base Rent owing hereunder is (i) to be paid by Tenant absolutely net of all
          costs and expenses relating to Landlords ownership and operation of the
          Project and the Building, and (ii) not to be reduced, offset or diminished,
          directly or indirectly, by any cost, charge or expense payable hereunder by
          Tenant or by others in connection with the Premises, the Building and/or the
          Project or any part thereof. The provisions of this Paragraph 4(b) for the
          payment of Tenants Proportionate Share(s) of Expenses (as hereinafter
          defined) are intended to pass on to Tenant its share of all such costs and
          expenses. In addition to the Base Rent, Tenant shall pay to Landlord, in
          accordance with this Paragraph 4, Tenants Proportionate Share(s) of
          all costs and expenses paid or incurred by Landlord in connection with the
          ownership, operation, maintenance, management and repair of the Premises, the
          Building and/or the Project or any part thereof (collectively, the
          Expenses), including, without limitation, all the following
          items (the Additional Rent):

(i)    
          Taxes and Assessments. All real estate taxes and assessments, which shall
          include any form of tax, assessment, fee, license fee, business license fee,
          levy, penalty (if a result of Tenants delinquency), or tax (other than net
          income, estate, succession, inheritance, gift, transfer or franchise taxes),
          imposed by any authority having the direct or indirect power to tax, or by any
          city, county, state or federal government or any improvement or other district
          or division thereof, whether such tax is: (A) determined by the area of the
          Premises, the Building and/or the Project or any part thereof, or the Rent and
          other sums payable hereunder by Tenant or by other tenants, including, but not
          limited to, any gross income or excise tax levied by any of the foregoing
          authorities with respect to receipt of Rent and/or other sums due under this
          Lease; (B) upon any legal or equitable interest of Landlord in the
          Premises, the Building and/or the Project or any part thereof; (C) upon
          this transaction or any document to which Tenant is a party creating or
          transferring any interest in the Premises, the Building and/or the Project;
          (D) levied or assessed in lieu of, in substitution for, or in addition to,
          existing or additional taxes against the Premises, the Building and/or the
          Project, whether or not now customary or within the contemplation of the
          parties; or (E) surcharged against the Parking Areas. Tenant and Landlord
          acknowledge that Proposition 13 was adopted by the voters of the State of
          California in the June, 1978 election and that assessments, taxes, fees, levies
          and charges may be imposed by governmental agencies for such purposes as fire
          protection, street, sidewalk, road, utility construction and maintenance, refuse
          removal and for other governmental services which may formerly have been
          provided without charge to property owners or occupants. It is the intention of
          the parties that all new and increased assessments, taxes, fees, levies and
          charges due to any cause whatsoever are to be included within the definition of
          real property taxes for purposes of this Lease. Taxes and
          assessments shall also include legal and consultants fees, costs
          and disbursements incurred in connection with proceedings to contest, determine
          or reduce taxes (Landlord hereby agreeing to initiate such a tax appeal at such
          time, if ever, as Landlord believes that such an appeal is likely to be
          successful and is likely to result in a material reduction in the real estate
          taxes assessed against the Project); provided, however, that Tenants
          Proportionate Share of any refund, credit or rebate realized by Landlord and
          attributable to a period within the Term of this Lease shall be passed through
          to Tenant. Notwithstanding the foregoing, Taxes and assessments
          shall not include (1) any taxes on Landlords rental income, unless
          such tax or assessment expense is imposed in lieu of real property taxes, or
          (2) any taxes resulting from any change in ownership or
          transfer of all or any part of the Project to a subsidiary,
          affiliate, division or corporation controlling, controlled by or under common
          control with or otherwise related to Landlord, and Tenant shall not be required
          to pay any portion of any tax or assessment expense in excess of the amount
          which would be payable if such tax or assessment expense were paid in
          installments over the longest possible term (without the imposition of
          penalties).

3

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(ii)    
          Insurance. All insurance premiums for the Building and/or the Project or
          any part thereof, including premiums for all risk fire and extended
          coverage insurance, commercial general liability insurance, rent loss or
          abatement insurance, earthquake insurance, flood or surface water coverage, and
          other insurance as Landlord deems necessary in its sole discretion, and any
          deductibles paid under policies of any such insurance; provided, however, that
          with respect to any particular casualty event affecting the Project, Tenant
          shall not be required to reimburse to Landlord any insurance deductible amounts
          to the extent the same (A) are attributable to structural portions of the
          Project, or (B) exceed Three Hundred Thousand Dollars ($300,000.00). For
          purposes of clause (A) above, the portion of the deductible attributable to
          structural portions of the Project shall be determined by a fraction, the
          numerator of which shall be the hard construction costs properly attributable to
          such structural portions of the Project and the denominator of which shall be
          the total hard construction costs relating to such casualty. Additionally, any
          insurance deductibles reimbursable by Tenant hereunder shall be amortized over a
          period of seventy-two (72) months (i.e., the length of the Term), and
          only the portion of such amortized deductible as is allocable to the balance of
          the Term shall be included in Additional Rent. Notwithstanding the foregoing,
          earthquake insurance premiums paid by Landlord on an annual basis shall be
          included in Expenses hereunder only to the extent that the amount of such
          premiums do not exceed five (5) times the amount of the annual premiums
          then paid by Landlord for Casualty Insurance (as hereinafter defined) covering
          the Project.

(iii)    
          Utilities. The cost of all Utilities (as hereinafter defined) serving the
          Premises, the Building and the Project that are not separately metered to
          Tenant, any assessments or charges for Utilities or similar purposes included
          within any tax bill for the Building or the Project, including, without
          limitation, entitlement fees, allocation unit fees, and/or any similar fees or
          charges and any penalties (if a result of Tenants delinquency) related
          thereto, and any amounts, taxes, charges, surcharges, assessments or impositions
          levied, assessed or imposed upon the Premises, the Building or the Project or
          any part thereof, or upon Tenants use and occupancy thereof, as a result
          of any rationing of Utility services or restriction on Utility use affecting the
          Premises, the Building and/or the Project, as contemplated in Paragraph 5
          below (collectively, Utility Expenses).

(iv)    
          Common Area Expenses. All costs to operate, maintain, repair, replace,
          supervise, insure and administer the Common Areas, including supplies,
          materials, labor and equipment used in or related to the operation and
          maintenance of the Common Areas, including Parking Areas (including, without
          limitation, all costs of resurfacing and restriping Parking Areas), signs and
          directories on the Building and/or the Project, landscaping (including
          maintenance contracts and fees payable to landscaping consultants), amenities,
          sprinkler systems, sidewalks, walkways, driveways, curbs, lighting systems and
          security services, if any, provided by Landlord for the Common Areas, and any
          charges, assessments, costs or fees levied by any association or entity of which
          the Project or any part thereof is a member or to which the Project or any part
          thereof is subject.

4

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(v)    
          Parking Charges. Any parking charges or other costs levied, assessed or
          imposed by, or at the direction of, or resulting from statutes or regulations,
          or interpretations thereof, promulgated by any governmental authority or insurer
          in connection with the use or occupancy of the Building or the Project.

(vi)    
          Maintenance and Repair Costs. Except for costs which are the
          responsibility of Landlord pursuant to Paragraph 13(b) below, all costs to
          maintain, repair, and replace the Premises, the Building and/or the Project or
          any part thereof, including, without limitation, (A) all costs paid under
          maintenance, management and service agreements such as contracts for janitorial,
          security and refuse removal, (B) all costs to maintain, repair and replace
          the roof coverings of the Building or the Project or any part thereof, and
          (C) all costs to maintain, repair and replace the heating, ventilating, air
          conditioning, plumbing, gas, water, sewer, drainage, electrical, fire protection
          and life safety systems and other mechanical and electrical systems and
          equipment serving the Premises, the Buildings and/or the Project or any part
          thereof (collectively, the Systems).

(vii)    
          Life Safety Costs. All costs to install, maintain, repair and replace all
          life safety systems, including, without limitation, all fire alarm systems,
          serving the Premises, the Building and/or the Project or any part thereof
          (including all maintenance contracts and fees payable to life safety
          consultants) whether such systems are or shall be required by Landlords
          insurance carriers, Laws (as hereinafter defined) or otherwise.

(viii)    
          Management and Administration. All costs for management and
          administration of the Premises, the Building and/or the Project or any part
          thereof, including, without limitation, a property management fee equal to two
          and 65/100 percent (2.65%) of gross receipts, accounting, auditing, billing,
          postage, salaries and benefits for clerical and supervisory employees, whether
          located on the Project or off-site, payroll taxes and legal and accounting costs
          and fees for licenses and permits related to the ownership and operation of the
          Project.

Notwithstanding
anything in this Paragraph 4(b) to the contrary, with respect to all sums payable by
Tenant as Additional Rent under this Paragraph 4(b) for the repair or replacement of
any item or the construction of any new item in connection with the physical operation of
the Premises, the Building or the Project (i.e., HVAC, roof membrane or coverings
and Parking Areas) which is typically capitalized under industry standard commercial real
estate accounting practices, Tenant shall be required to pay only the pro rata share of
the cost of the item falling due within the Term (including any Renewal Term) based upon
the amortization of the same over the useful life of such item, as determined by such
industry standard commercial real estate accounting practices.

5

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(c)    
          Exclusions from Expenses. Notwithstanding anything to the
          contrary contained in Paragraph 4(b) above, Expenses and
          Additional Rent shall not include the following (the
          Expense Exclusions):

(i)    
          any capital repair or replacement of the structural portions of the Building and
          the Project, including, without limitation, the roof (specifically excluding the
          roof coverings), the foundation, the footings, the floor slab, and the load
          bearing walls and exterior walls of the Building (excluding any glass and any
          routine maintenance, including, without limitation, any painting, sealing,
          patching and waterproofing of such walls);

(ii)    
          principal, interest, points and other fees on any mortgage financing encumbering
          the Project;

(iii)    
          depreciation on any building in the Project (including the Building) and any
          expense reserves;

(iv)    
          fees, commissions, attorneys fees, allowances, tenant improvement
          allowances, marketing or other costs or other disbursements incurred in
          connection with negotiations or disputes with any other occupant (or potential
          occupant) of the Project or incurred in connection with the negotiation and
          execution of this Lease;

(v)    
          costs incurred to comply with laws relating to the removal and remediation of
          any Hazardous Material which was in existence on the Building or the Project
          prior to the date of this Lease;

(vi)    
          any expense for which Landlord receives reimbursement from insurance proceeds,
          condemnation awards, warranties, guaranties or other third parties (including
          tenants);

(vii)    
          costs of maintenance or repairs required as a result of the negligence or
          willful misconduct of Landlord or Landlords Agents;

(viii)    
          subject to the provisions of Paragraphs 21 and 22 below, any costs of
          maintenance or repairs resulting from a casualty or condemnation (other than
          insurance deductibles which shall be governed by Paragraph 4(b)(ii) above;

(ix)    
          costs of selling or financing any of Landlords interest in any component
          of the Project; and

(x)    
          costs incurred by Landlord, and penalties assessed against Landlord by any
          governmental body or agency, as a result of the violation by Landlord or
          Landlords Agents (as defined in Paragraph 8(b) below) of any Laws
          applicable to the Project (provided, however, that the cost of correcting
          portions of the Project that do not comply with Laws where such noncompliance
          was caused by a change in a Law after the Commencement Date, shall be paid by
          Tenant as Additional Rent to the extent that such costs would otherwise be
          included within the definition of Expenses hereunder).

6

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(d)    
          Payment of Additional Rent.

(i)    
          Upon commencement of this Lease, Landlord shall submit to Tenant an estimate of
          monthly Additional Rent for the period between the Commencement Date and the
          following December 31 and, subject to Paragraph 4(c) above, Tenant
          shall pay such estimated Additional Rent on a monthly basis, in advance, on the
          first day of each month. Tenant shall continue to make said monthly payments
          until notified by Landlord of a change therein. If at any time or times Landlord
          determines that the amounts payable under Paragraph 4(b) for the current
          year will vary from Landlords estimate given to Tenant, Landlord, by
          notice to Tenant, may revise the estimate for such year, and subsequent payments
          by Tenant for such year shall be based upon such revised estimate. By
          April 1 of each calendar year, Landlord shall endeavor to provide to Tenant
          a statement showing the actual Additional Rent due to Landlord for the prior
          calendar year, to be prorated during the first year from the Commencement Date.
          If the total of the monthly payments of Additional Rent that Tenant has made for
          the prior calendar year is less than the actual Additional Rent chargeable to
          Tenant for such prior calendar year, then Tenant shall pay the difference in a
          lump sum within ten (10) days after receipt of such statement from
          Landlord. Any overpayment by Tenant of Additional Rent for the prior calendar
          year shall be credited towards the Additional Rent next due. Any delay or
          failure by Landlord in delivering any statement pursuant to this
          Paragraph 4(d) shall not constitute a waiver of its right to receive
          Tenants payment of Expenses, nor shall it relieve Tenant of its
          obligations to pay Expenses pursuant to this Paragraph 4, except that
          Landlords right to amend any individual statement to increase any Expenses
          (other than Taxes and Assessments) payable by Tenant shall terminate on the date
          that is two (2) calendar years after the date of such statement.

(ii)    
          Landlords then-current annual operating and capital budgets for the
          Building and the Project or the pertinent part thereof shall be used for
          purposes of calculating Tenants monthly payment of estimated Additional
          Rent for the current year, subject to adjustment as provided above. Landlord
          shall make the final determination of Additional Rent for the year in which this
          Lease terminates as soon as possible after termination of such year. Even though
          the Term has expired and Tenant has vacated the Premises, Tenant shall remain
          liable for payment of any amount due to Landlord in excess of the estimated
          Additional Rent previously paid by Tenant, and, conversely, Landlord shall
          promptly return to Tenant any overpayment. Failure of Landlord to submit
          statements as called for herein shall not be deemed a waiver of Tenants
          obligation to pay Additional Rent as herein provided.

(iii)    
          With respect to Expenses which Landlord allocates to the Building, Tenants
          Proportionate Share shall be the percentage set forth in the
          Basic Lease Information as Tenants Proportionate Share of the Building, as
          adjusted by Landlord from time to time for changes in the physical size of the
          Premises or the Building, whether such changes in size are due to an addition to
          or a sale or conveyance of a portion of the Building or otherwise. With respect
          to Expenses which Landlord allocates to the Project as a whole or to only a
          portion of the Project, Tenants Proportionate Share
          shall be, with respect to Expenses which Landlord allocates to the Project as a
          whole, the percentage set forth in the Basic Lease Information as Tenants
          Proportionate Share of the Project and, with respect to Expenses which Landlord
          allocates to only a portion of the Project, a percentage calculated by Landlord
          from time to time in its sole discretion and furnished to Tenant in writing, in
          either case as adjusted by Landlord from time to time for changes in the
          physical size of the Premises or the Project, whether such changes in size are
          due to an addition to or a sale or conveyance of a portion of the Project or
          otherwise. Notwithstanding the foregoing, Landlord may equitably adjust
          Tenants Proportionate Share(s) for all or part of any item of expense or
          cost reimbursable by Tenant that relates to a repair, replacement, or service
          that benefits only the Premises or only a portion of the Building and/or the
          Project or that varies with the occupancy of the Building and/or the Project.
          Without limiting the generality of the foregoing, Tenant understands and agrees
          that Landlord shall have the right to adjust Tenants Proportionate
          Share(s) of any Utility Expenses based upon Tenants use of the Utilities
          or similar services as reasonably estimated and determined by Landlord based
          upon factors such as size of the Premises and intensity of use of such Utilities
          by Tenant such that Tenant shall pay the portion of such charges reasonably
          consistent with Tenants use of such Utilities and similar services. If
          Tenant disputes any such estimate or determination of Utility Expenses, then
          Tenant shall either pay the estimated amount or cause the Premises to be
          separately metered at Tenants sole expense.

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(e)    
          General Payment Terms. The Base Rent, Additional Rent and
          all other sums payable by Tenant to Landlord hereunder, including, without
          limitation, any late charges assessed pursuant to Paragraph 6 below and any
          interest assessed pursuant to Paragraph 44 below, are referred to as the
          Rent. All Rent shall be paid without deduction, offset or
          abatement in lawful money of the United States of America. Checks are to be made
          payable to Moffett Office Park Investors LLC and shall be
          mailed to: Moffett Park #317, Dept. 0394, P.O. Box 39000,
          Los Angeles, California 90084, or to such other person or place as Landlord
          may, from time to time, designate to Tenant in writing. The Rent for any
          fractional part of a calendar month at the commencement or termination of the
          Term shall be a prorated amount of the Rent for a full calendar month based upon
          a thirty (30) day month.

(f)    
          Statements Binding. Every statement given by Landlord
          pursuant to Paragraph 4(d) shall be conclusive and binding upon Tenant
          unless (i) within ninety (90) days after the receipt of such statement
          Tenant shall notify Landlord that it disputes the correctness thereof,
          specifying the particular respects in which the statement is claimed to be
          incorrect, and (ii) if such dispute shall not have been settled by
          agreement, Tenant shall submit the dispute to arbitration (pursuant to the
          procedures set forth in Paragraph 4(g) below) within ninety (90) days
          after receipt of the statement. Pending the determination of such dispute by
          agreement or arbitration as aforesaid, Tenant shall, within thirty (30)
          days after receipt of such statement, pay Additional Rent in accordance with
          Landlords statement and such payment shall be without prejudice to
          Tenants position. If the dispute shall be determined in Tenants
          favor, Landlord shall forthwith pay Tenant the amount of Tenants
          overpayment of Additional Rent resulting from compliance with Landlords
          statement.

(g)    
          Audit Rights. Provided that Tenant notifies Landlord in
          accordance with the terms of Paragraph 4(f) above that Tenant disputes a
          statement received from Landlord, Tenant or its CPA (as defined below) shall
          have the right, at Tenants sole cost and expense, provided that Tenant
          utilizes a Certified Public Accountant (the CPA), upon at least
          thirty (30) days prior notice to Landlord at any time during regular
          business hours to audit, to review and photocopy Landlords records
          pertaining to Expenses for the immediately previous calendar year only. Tenant
          shall retain a CPA who calculates its fees based upon hours actually worked (as
          opposed to any incentive, contingency or fee arrangement). Tenant shall complete
          the audit and present any disputed charges to Landlord, in writing, within six
          months of receipt of Landlords statement pursuant to Paragraph 4(d).
          If, following Landlords receipt of the audit and any disputed charges (the
          Report Date), Landlord disputes the findings contained
          therein, and Landlord and Tenant are not able to resolve their differences
          within thirty (30) days following the Report Date, the dispute shall be
          resolved by binding arbitration as follows: Landlord and Tenant shall each
          designate an independent certified public accountant, which shall in turn
          jointly select a third independent Certified Public Accountant (the
          Third CPA). The Third CPA, within thirty (30) days of
          selection, shall, at Tenants sole expense, audit the relevant records and
          certify the proper amount within. That certification shall be final and
          conclusive. If the Third CPA determines that the amount of Expenses billed to
          Tenant was incorrect, the appropriate party shall pay to the other party the
          deficiency or overpayment, as applicable, within thirty (30) days following
          delivery of the Third CPAs decision, without interest. Tenant agrees to
          keep all information thereby obtained by Tenant confidential and to obtain the
          agreement of its CPA and the Third CPA to keep all such information
          confidential. Tenant shall provide a copy of such CPA agreements to Landlord
          promptly upon request. Notwithstanding anything herein to the contrary, if such
          refund owing exceeds the aggregate amount properly payable by Tenant pursuant to
          the terms of this Lease by five percent (5%) or more, then Landlord shall pay at
          such time any reasonable out-of-pocket audit expenses. For purposes of
          determining whether the actual amount of Expenses paid by Tenant during a
          calendar year exceeds the amount properly payable by Tenant hereunder by more
          than five percent (5%), the parties shall take into account amounts improperly
          included by Landlord in the calculation of Expenses, but shall exclude any
          amount attributable to a disagreement over or an improper determination of an
          amortization period. By way of example only, the parties shall take into account
          an amount charged to Tenant but specifically excluded under the terms of this
          Lease, but shall disregard any excess amount improperly included within Expenses
          attributable to Landlords utilization of an incorrect amortization period
          for capital expenses.

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5.    
          UTILITY EXPENSES

(a)    
          Tenant shall pay the cost of all water, sewer use, sewer discharge fees and
          permit costs and sewer connection fees, gas, heat, electricity, refuse pick-up,
          janitorial service, telephone and all materials and services or other utilities
          (collectively, Utilities) billed or metered separately to the
          Premises and/or Tenant, together with all taxes, assessments, charges and
          penalties added to or included within such cost. Tenant acknowledges that the
          Premises, the Building and/or the Project may become subject to the rationing of
          Utility services or restrictions on Utility use as required by a public utility
          company, governmental agency or other similar entity having jurisdiction
          thereof. Tenant acknowledges and agrees that its tenancy and occupancy hereunder
          shall be subject to such rationing or restrictions as may be imposed upon
          Landlord, Tenant, the Premises, the Building and/or the Project, and Tenant
          shall in no event be excused or relieved from any covenant or obligation to be
          kept or performed by Tenant by reason of any such rationing or restrictions.
          Tenant agrees to comply with energy conservation programs required by any Laws.

(b)    
          Landlord shall not be liable for any loss, injury or damage to property caused
          by or resulting from any variation, interruption, or failure of Utilities due to
          any cause whatsoever, or from failure to make any repairs or perform any
          maintenance. No temporary interruption or failure of such services incident to
          the making of repairs, alterations, improvements, or due to accident, strike, or
          conditions or other events shall be deemed an eviction of Tenant or, subject to
          Paragraph ý5(c) below, relieve Tenant from any of its obligations
          hereunder. In no event shall Landlord be liable to Tenant for any damage to the
          Premises or for any loss, damage or injury to any property therein or thereon
          occasioned by bursting, rupture, leakage or overflow of any plumbing or other
          pipes (including, without limitation, water, steam, and/or refrigerant lines),
          sprinklers, tanks, drains, drinking fountains or washstands, or other similar
          cause in, above, upon or about the Premises, the Building, or the Project.

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(c)    
          Notwithstanding the terms of Paragraph ý5(b) above, but subject in
          each instance to Force Majeure Events (hereinafter defined), if any Utilities
          are interrupted for seven (7) consecutive business days through no fault or
          negligence of Tenant or Tenants Agents, and if such interruption results
          in a material interference with Tenants use of or access to the Premises,
          Tenant shall be entitled to an abatement of Base Rent commencing on the
          eighth (8th) day of the interruption and continuing until the service is
          restored, but only to the extent Landlord collects proceeds under its policy of
          rent-loss insurance and such proceeds are allocable to the Premises. During any
          interruption of Utilities, the parties shall use commercially reasonable efforts
          to restore the services as soon as possible.

As used herein, Force
Majeure Events means strikes, embargoes, governmental regulations, acts of God,
war, civil commotion or other strife, inability to obtain required materials or supplies,
and other events beyond the control of the party whose performance is affected thereby.

# 6. LATE CHARGE

Notwithstanding
any other provision of this Lease, Tenant hereby acknowledges that late payment to
Landlord of Rent, or other amounts due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be extremely difficult to
ascertain. If any Rent or other sums due from Tenant are not received by Landlord or by
Landlords designated agent within three (3) days after their due date, then
Tenant shall pay to Landlord a late charge equal to five percent (5%) of such overdue
amount, plus any costs and attorneys fees incurred by Landlord by reason of
Tenants failure to pay Rent and/or other charges when due hereunder; provided,
however, that Tenant shall be entitled to one notice of late payment and a five (5)
day cure period in each twelve (12) month period before any such late charge accrues.
Landlord and Tenant hereby agree that such late charges represent a fair and reasonable
estimate of the cost that Landlord will incur by reason of Tenants late payment and
shall not be construed as a penalty. Landlords acceptance of such late charges shall
not constitute a waiver of Tenants default with respect to such overdue amount or
estop Landlord from exercising any of the other rights and remedies granted under this
Lease.

INITIALS:

Landlord______            Tenant______

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7.    
          LETTER OF CREDIT

(a)    
          Upon execution of this Lease, Tenant shall deliver to Landlord, at Tenants
          sole cost and expense, the Letter of Credit described below in the amount of
          Four Hundred Twenty Thousand Dollars ($420,000.00) (the LC Face
          Amount) as security for Tenants performance of all of
          Tenants covenants and obligations under this Lease; provided, however,
          that neither the Letter of Credit nor any Letter of Credit Proceeds (as defined
          below) shall be deemed an advance rent deposit or an advance payment of any
          other kind, or a measure of Landlords damages upon Tenants breach of
          or default under this Lease. The Letter of Credit shall be maintained in effect
          from the date hereof through the date that is sixty (60) days after the
          Expiration Date (the LC TerminationDate). On the
          LC Termination Date, Landlord shall return to Tenant the Letter of Credit
          and any Letter of Credit Proceeds then held by Landlord (other than those Letter
          of Credit Proceeds Landlord is entitled to retain under the terms of this
          Paragraph 7(a)); provided, however, that in no event shall any such return
          be construed as an admission by Landlord that Tenant has performed all of its
          obligations hereunder. Landlord shall not be required to segregate the Letter of
          Credit Proceeds from its other funds and no interest shall accrue or be payable
          to Tenant with respect thereto. Landlord may (but shall not be required to) draw
          upon the Letter of Credit and use the proceeds thereof (the Letter of
          Credit Proceeds) or any portion thereof, to the extent reasonably
          required (i) to remedy Tenants Default for non-payment of Rent and to
          cure any other Default under this Lease, and in either case to compensate
          Landlord for any loss or damage Landlord incurs as a result of such Default,
          (ii) to repair damage to the Premises caused by Tenant, (iii) to clean
          the Premises upon termination of this Lease, and (iv) to reimburse Landlord
          for the payment of any amount which Landlord may for any purpose spend or be
          required to spend by reason of Tenants Default, it being understood that
          any use of the Letter of Credit Proceeds shall not constitute a bar or defense
          to any of Landlords remedies set forth in Paragraph 25 below.
          Landlord shall have the additional right to draw on the Letter of Credit in
          accordance with Paragraph 7(c) below. In any such event and upon written
          notice from Landlord to Tenant specifying the amount of the Letter of Credit
          Proceeds so utilized by Landlord and the particular purpose for which such
          amount was applied, Tenant shall immediately deliver to Landlord an amendment to
          the Letter of Credit or a replacement Letter of Credit in an amount equal to the
          full LC Face Amount (subject to any prior reductions in the LC Face
          Amount pursuant to Paragraph 7(d) below). Tenants failure to deliver
          such replacement Letter of Credit to Landlord within ten (10) days of
          Landlords notice shall constitute an immediate Default hereunder. In the
          event Landlord transfers its interest in this Lease, Landlord shall transfer the
          Letter of Credit and any Letter of Credit Proceeds then held by Landlord to
          Landlords successor in interest, and thereafter Landlord shall have no
          further liability to Tenant with respect to such Letter of Credit or Letter of
          Credit Proceeds.

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(b)    
          As used herein, Letter of Credit shall mean an unconditional and irrevocable
          standby letter of credit (herein referred to as the Letter of
          Credit) issued by the San Francisco office of UBS PaineWebber, or
          another major national bank insured by the Federal Deposit Insurance
          Corporation, with assets of not less than Fifty Billion Dollars
          ($50,000,000,000.00) and otherwise reasonably satisfactory to Landlord (the
          Bank), naming Landlord as beneficiary, in the amount of the
          LC Face Amount, and otherwise in form and substance reasonably satisfactory
          to Landlord. The Letter of Credit shall be for an initial one-year term, shall
          automatically renew for successive one-year periods (without the necessity of
          additional documentation or action on the part of any party), and shall provide:
          (i) that Landlord may make partial and multiple draws thereunder, up to the
          full LC Face Amount, (ii) that Landlord may draw upon the Letter of
          Credit up to the full amount thereof and the Bank will pay to Landlord the
          amount of each such draw upon receipt by the Bank of a sight draft signed by
          Landlord and accompanied by a written certification from Landlord to the Bank
          stating that Landlord is entitled to draw on the Letter of Credit, and
          (iii) that the beneficial interest under the Letter of Credit shall be
          freely transferable one or more times and, therefore, in the event of
          Landlords (or any successor Landlords) assignment or other transfer
          of its interest in this Lease, the Letter of Credit shall be freely transferable
          by Landlord (or any successor Landlord), without recourse and without the
          payment of any fee or consideration (except for a transfer fee assessed by the
          Bank in an amount not to exceed one quarter (1⁄4) of one percent (1%)
          of the then LC Face Amount), to the assignee or transferee of such interest
          and the Bank shall confirm the same to Landlord (or such successor) and such
          assignee or transferee. Any and all costs and fees associated with the set-up or
          general maintenance Letter of Credit shall be shared equally (50%-50%) by
          Landlord and Tenant.

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(c)    
          In the event that the Bank shall at any time notify Landlord that the Letter of
          Credit shall not be renewed beyond the next expiry date, then unless Tenant
          shall, not less than thirty (30) days prior to such expiry date, deliver to
          Landlord a replacement Letter of Credit in the full LC Face Amount and
          otherwise meeting the requirements set forth above, Landlord shall be entitled
          to draw on the Letter of Credit and shall hold the proceeds of such draw as
          Letter of Credit Proceeds pursuant to Paragraph 7(a) above. The Letter of
          Credit shall expressly provide that, to be effective, any notice on non-renewal
          given by the Bank must be provided by the Bank concurrently to Landlord,
          Landlords property manager and Landlords counsel (at the address of
          each such party specified in the Letter of Credit).

(d)    
          The LC Face Amount shall be subject to reduction as hereinafter provided in
          this Paragraph 7(d):

(i)    
          Tenant shall have the right to reduce the LC Face Amount to Thirty-Five
          Thousand One Hundred Forty-Eight Dollars ($35,148.00), provided that the
          following conditions precedent shall have been satisfied to Landlords
          reasonable satisfaction:

(A)    
          Tenant shall have earned Positive Net Income for two (2) consecutive
          calendar quarters (or, if Tenants fiscal year is other than the calendar
          year, two (2) consecutive fiscal quarters); and

(B)    
          Tenant is not then in Default (nor have there been more than two events of
          Default in the prior twelve months) at the time Tenant seeks the actual
          reduction in the LC Face Amount.

(ii)    
          Prior to any reduction in the LC Face Amount under this
          Paragraph 7(d), Tenant shall deliver financial statements to Landlord for
          the calendar year(s) in which the applicable quarters fall, which statements
          shall be audited by a certified public accountant from a nationally recognized
          accounting firm (the CPA), shall be certified by the CPA as
          having been prepared in accordance with generally accepted accounting principles
          consistently applied (GAAP), and shall otherwise be
          reasonably acceptable to Landlord.

(iii)    
          The right of Tenant to reduce the LC Face Amount as provided in this
          Paragraph 7(d) shall be personal to Alliance Fiber Optic Products, Inc. and
          any Tenant Affiliate (as hereinafter defined) and shall be available to Alliance
          Fiber Optic Products, Inc. and any Tenant Affiliate.

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(iv)    
          As used herein, the following terms shall have the meanings set forth below:

(A)    
          Net Income means the net income (as calculated in accordance
          with GAAP) earned by Tenant attributable to the applicable calendar or fiscal
          quarter (specifically excluding, however, with respect to revenues, any
          non-recurring revenues or other revenues not received in the ordinary course of
          Tenants business, such as proceeds under any policy of insurance
          maintained by Tenant, judgments rendered in favor of Tenant and other revenues
          or receipts of a non-recurring nature, and any positive accounting adjustments
          to Tenants net income), all as determined in accordance with GAAP; and

(B)    
          Positive Net Income means Net Income for the applicable
          period of One Dollar ($1.00) or more.

(e)    
          In the event that Landlord draws upon the Letter of Credit solely due to
          Tenants failure to renew the Letter of Credit at least thirty (30)
          days before its expiration, (i) such failure to renew shall not constitute
          a default hereunder, and (ii) Tenant shall at any time thereafter be
          entitled to provide Landlord with a replacement Letter of Credit that satisfies
          the requirements hereunder, at which time Landlord shall return any non-applied
          balance of the cash proceeds of the original Letter of Credit drawn by Landlord.

8.    
          POSSESSION

(a)    
          Tenants Right of Possession. Subject to
          Paragraph 8(b), Tenant shall be entitled to possession of the Premises upon
          commencement of the Term.

(b)    
          Delay in Delivering Possession. If for any reason
          whatsoever, Landlord cannot deliver possession of the Premises to Tenant on or
          before the Estimated Commencement Date, this Lease shall not be void or
          voidable, nor shall Landlord, or Landlords agents, advisors, employees,
          partners, shareholders, directors, invitees or independent contractors
          (collectively, Landlords Agents), be liable to Tenant
          for any loss or damage resulting therefrom. Notwithstanding the preceding
          sentence, if Landlord does not deliver possession of the Premises to Tenant by
          the Estimated Commencement Date (as such date may be extended by Force Majeure
          or Tenant Delay as defined in and pursuant to the Work Letter), then Tenant
          shall be entitled to one day of free Base Rent and Additional Rent for each day
          that the Premises is not available after such Estimated Commencement Date (as
          such date may be extended by Force Majeure or Tenant Delay) for a period of up
          to ninety (90) days; provided further that if Landlord does not deliver
          possession of the Premises to Tenant by the date that is ninety-one (91) days
          following the Estimated Commencement Date (as such date may be extended by Force
          Majeure or Tenant Delay), then Tenant shall be entitled to two days of free Base
          Rent and Additional Rent for each day that the Premises is not available after
          the ninety-first (91st) day following the Estimated Commencement Date (as such
          date may be extended by Force Majeure or Tenant Delay). Additionally, if
          Landlord does not deliver possession of the Premises to Tenant by
          December 1, 2004 (as such date may be extended by Force Majeure or Tenant
          Delay), then Tenant shall have the option to terminate this Lease by written
          notice to Landlord within ten (10) days thereafter unless Landlord delivers
          possession of the Premises to Tenant prior to such notice, and, upon any such
          termination, all deposits and prepayments shall be refunded. The aforesaid
          rights of free rent and termination shall be the sole remedies available to
          Tenant as a result of Landlords failure to deliver the Premises to Tenant
          on a timely basis as provided in this Paragraph 8(b). The Expiration Date
          shall be extended by the same number of days that the actual Commencement Date
          was delayed beyond the Estimated Commencement Date specified in the Basic Lease
          Information. Any free Base Rent and Additional Rent accruing under this Section
          8(b) shall be in addition to the Free Base Rent Period set forth in Section 4(a)
          above.

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9.    
          USE OF PREMISES

(a)    
          Permitted Use. The use of the Premises by Tenant and
          Tenants agents, advisors, employees, partners, shareholders, directors,
          invitees and independent contractors (collectively, Tenants
          Agents) shall be solely for the Permitted Use specified in the Basic
          Lease Information and for no other use. Tenant shall not permit any
          objectionable or unpleasant odor, smoke, dust, gas, noise or vibration to
          emanate from or near the Premises. The Premises shall not be used to create any
          nuisance or trespass, for any illegal purpose, for any purpose not permitted by
          Laws, for any purpose that would invalidate the insurance or increase the
          premiums for insurance on the Premises, the Building or the Project or for any
          purpose or in any manner that would interfere with other tenants use or
          occupancy of the Project. If any of Tenants office machines or equipment
          disturb any other tenant in the Building, then Tenant shall provide adequate
          insulation or take such other action as may be necessary to eliminate the noise
          or disturbance. Tenant agrees to pay to Landlord, as Additional Rent, any
          increases in premiums on policies resulting from Tenants Permitted Use or
          any other use or action by Tenant or Tenants Agents which increases
          Landlords premiums or requires additional coverage by Landlord to insure
          the Premises. Tenant agrees not to overload the floor(s) of the Building.

(b)    
          Compliance with Governmental Regulations and Private
          Restrictions. Tenant and Tenants Agents shall, at
          Tenants expense, faithfully observe and comply with (i) all
          municipal, state and federal laws, statutes, codes, rules, regulations,
          ordinances, requirements, and orders (collectively, Laws),
          now in force or which may hereafter be in force pertaining to the Premises or
          Tenants use of the Premises, the Building or the Project, including,
          without limitation, any Laws requiring installation of fire sprinkler systems,
          seismic reinforcement and related alterations, and removal of asbestos, whether
          substantial in cost or otherwise; provided, however, that Tenant shall not be
          required to make or, except as provided in Paragraph 4 above, pay for,
          alterations, additions or improvements to the Premises or the Building necessary
          to comply with Laws that are not related to Tenants specific use of the
          Premises unless the requirement for such changes is imposed as a result of any
          improvements or additions made or proposed to be made at Tenants request;
          (ii) all recorded covenants, conditions and restrictions affecting the
          Project (Private Restrictions) now in force or which may
          hereafter be in force; and (iii) any and all rules and regulations set
          forth in Exhibit D and any other rules and regulations
          now or hereafter promulgated by Landlord related to parking or the operation of
          the Premises, the Building and/or the Project (collectively, the Rules
          and Regulations). The judgment of any court of competent jurisdiction,
          or the admission of Tenant in any action or proceeding against Tenant, whether
          Landlord be a party thereto or not, that Tenant has violated any such Laws or
          Private Restrictions, shall be conclusive of that fact as between Landlord and
          Tenant.

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(c)    
          Compliance with Americans with Disabilities Act. Landlord
          and Tenant hereby agree and acknowledge that the Premises, the Building and/or
          the Project may be subject to, among other Laws, the requirements of the
          Americans with Disabilities Act, a federal law codified at 42 U.S.C.
          § 12101 et seq., including, but not limited to,
          Title III thereof, and all regulations and guidelines related thereto,
          together with any and all laws, rules, regulations, ordinances, codes and
          statutes now or hereafter enacted by local or state agencies having jurisdiction
          thereof, including all requirements of Title 24 of the State of California,
          as the same may be in effect on the date of this Lease and may be hereafter
          modified, amended or supplemented (collectively, the ADA). Any
          Tenant Improvements to be constructed hereunder shall be in compliance with the
          requirements of the ADA, and all costs incurred for purposes of compliance
          therewith shall be a part of and included in the costs of the Tenant
          Improvements, as set forth in Exhibit B. Subject to
          reimbursement pursuant to Paragraph 4 above, if any barrier removal work or
          other work is required to the Building, the Common Areas or the Project under
          the ADA, then such work shall be the responsibility of Landlord; provided,
          however, that if such work is required under the ADA as a result of
          Tenants particular use of the Premises or any work or Alteration (as
          hereinafter defined) made to the Premises by or on behalf of Tenant, then such
          work shall be performed by Landlord at the sole cost and expense of Tenant.
          Except as otherwise expressly provided in this provision or in
          Paragraph 9(b) above, Tenant shall be responsible at its sole cost and
          expense for fully and faithfully complying with all applicable requirements of
          the ADA, including, without limitation, not discriminating against any disabled
          persons in the operation of Tenants business in or about the Premises, and
          offering or otherwise providing auxiliary aids and services as, and when,
          required by the ADA. Within ten (10) days after receipt, Tenant shall
          advise Landlord in writing, and provide Landlord with copies of (as applicable),
          any written notices alleging violation of the ADA relating to any portion of the
          Premises, the Building or the Project; any claims made or threatened in writing
          regarding noncompliance with the ADA and relating to any portion of the
          Premises, the Building, or the Project; or any governmental or regulatory
          actions or investigations instituted or threatened regarding noncompliance with
          the ADA and relating to any portion of the Premises, the Building or the
          Project. Tenant shall and hereby agrees to protect, defend (with counsel
          acceptable to Landlord) and hold Landlord and Landlords Agents harmless
          and indemnify Landlord and Landlords Agents from and against all
          liabilities, damages, claims, losses, penalties, judgments, charges and expenses
          (including attorneys fees, costs of court and expenses necessary in the
          prosecution or defense of any litigation including the enforcement of this
          provision) arising from or in any way related to, directly or indirectly,
          Tenants or Tenants Agents violation or alleged violation of
          the ADA. Tenant agrees that the obligations of Tenant herein shall survive the
          expiration or earlier termination of this Lease.

10.    
          ACCEPTANCE OF PREMISES

(a)    
          By entry hereunder, Tenant accepts the Premises as suitable for Tenants
          intended use and as being in good and sanitary operating order, condition and
          repair, as is, and, except as expressly set forth in
          Paragraph ý10(b) below, without representation or warranty by
          Landlord as to the condition, use or occupancy which may be made thereof. Any
          exceptions to the foregoing must be by written agreement executed by Landlord
          and Tenant.

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(b)    
          Notwithstanding the provisions of Paragraph 10(a) above, Landlord shall
          cause the Systems (as defined in Paragraph 4(b)(vi) above) serving the
          Premises to be in good working order on the Commencement Date. Any claims by
          Tenant under the preceding sentence shall be made in writing not later than the
          twentieth (20th) day after the Commencement Date. In the event Tenant fails
          to deliver a written claim to Landlord on or before such twentieth (20th)
          day, then Landlord shall be conclusively deemed to have satisfied its
          obligations under this Paragraph 10(b). Landlords obligations under
          this Paragraph 10(b) shall specifically exclude any obligation to repair
          any damage caused to the mechanical, electrical and plumbing systems by Tenant
          or Tenants Agents.

11.    
          SURRENDER

Tenant
agrees that on the last day of the Term, or on the sooner termination of this Lease,
Tenant shall surrender the Premises to Landlord (a) in the same condition received
(damage by acts of God, fire, and any other casualty, normal wear and tear, condemnation,
and Alterations not required to be removed excepted) and (b) otherwise in accordance
with Paragraph 32(h). Normal wear and tear shall not include any damage or
deterioration to the floors of the Premises arising from the use of forklifts in, on or
about the Premises (including, without limitation, any marks or stains on any portion of
the floors), and any damage or deterioration that would have been prevented by proper
maintenance by Tenant, or Tenant otherwise performing all of its obligations under this
Lease. On or before the expiration or sooner termination of this Lease, (i) Tenant
shall remove all of Tenants Property (as hereinafter defined), and Tenants
signage from the Premises, the Building and the Project and repair any damage caused by
such removal, and (ii) Landlord may, subject to the provisions of
Paragraph 12(g) below, by notice to Tenant given not later than ninety (90) days
prior to the Expiration Date (except in the event of a termination of this Lease prior to
the scheduled Expiration Date, in which event no advance notice shall be required),
require Tenant at Tenants expense to remove any or all Alterations that Landlord has
not consented to or that Landlord has not informed Tenant may remain in the Premises
pursuant to Paragraph 12(g) below, and to repair any damage caused by such removal.
Any of Tenants Property not so removed by Tenant as required herein shall be deemed
abandoned and may be stored, removed, and disposed of by Landlord at Tenants
expense, and Tenant waives all claims against Landlord for any damages resulting from
Landlords retention and disposition of such property; provided, however, that Tenant
shall remain liable to Landlord for all costs incurred in storing and disposing of such
abandoned property of Tenant. All Tenant Improvements and Alterations except those which
Landlord requires Tenant to remove in accordance with the terms of this Lease shall remain
in the Premises as the property of Landlord. Tenant shall not be required to remove or pay
for the removal of the Tenant Improvements at the expiration or earlier termination of
this Lease. If the Premises are not surrendered at the end of the Term or sooner
termination of this Lease, and in accordance with the provisions of this Paragraph 11
and Paragraph 32(h) below, Tenant shall continue to be responsible for the payment of
Rent (as the same may be increased pursuant to Paragraph 35 below) until the Premises
are so surrendered in accordance with said Paragraphs, and Tenant shall indemnify, defend
and hold Landlord harmless from and against any and all loss or liability resulting from
delay by Tenant in so surrendering the Premises including, without limitation, any loss or
liability resulting from any claim against Landlord made by any succeeding tenant or
prospective tenant founded on or resulting from such delay and losses to Landlord due to
lost opportunities to lease any portion of the Premises to any such succeeding tenant or
prospective tenant, together with, in each case, actual attorneys fees and costs.

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12.    
          ALTERATIONS AND ADDITIONS

(a)    
          Tenant shall not make, or permit to be made, any alteration, addition or
          improvement (hereinafter referred to individually as an
          Alteration and collectively as the
          Alterations) to the Premises or any part thereof without the
          prior written consent of Landlord, which consent shall not be unreasonably
          withheld; provided, however, that Landlord shall have the right in its sole and
          absolute, but good faith, discretion to consent or to withhold its consent to
          any Alteration which negatively affects the structural portions of the Premises,
          the Building or the Project or the Systems serving the Premises, the Building
          and/or the Project or any portion thereof. Notwithstanding the foregoing, Tenant
          shall have the right to make Alterations to the Premises with prior written
          notice to, but without the consent of, Landlord, provided that such Alterations
          (i) do not affect the structural portions of the Premises, the Building or
          the Project or the Systems serving the Premises, the Building and/or the Project
          or any portion thereof, (ii) are generic office and R&D
          improvements (as determined by Landlord in good faith), (iii) consist of
          improvements and finishes that are similar to, and of equal or higher quality
          than, the improvements and finishes existing in the Premises as of the
          Commencement Date, (iv) do not cost in excess of Twenty-Five Thousand
          Dollars ($25,000.00) to construct and install on an individual basis or in the
          aggregate during a twelve (12) month period, and (v) are performed in
          full compliance with the terms of Paragraphs ý12(b) through
          ý12(g) below.

(b)    
          Any Alteration to the Premises shall be at Tenants sole cost and expense,
          in compliance with all applicable Laws and all requirements requested by
          Landlord, including, without limitation, the requirements of any insurer
          providing coverage for the Premises or the Project or any part thereof, and in
          accordance with plans and specifications approved in writing by Landlord, and
          shall be constructed and installed by a contractor approved in writing by
          Landlord. As a further condition to giving consent, Landlord may require Tenant
          to provide Landlord, at Tenants sole cost and expense, a payment and
          performance bond in form acceptable to Landlord, in a principal amount not less
          than one and one-half times the estimated costs of any Alterations that are
          reasonably expected to cost in excess of One Hundred Thousand Dollars
          ($100,000.00), to ensure Landlord against any liability for mechanics and
          materialmens liens and to ensure completion of work. Before Alterations
          may begin, valid building permits or other permits or licenses required must be
          furnished to Landlord, and, once the Alterations begin, Tenant will diligently
          and continuously pursue their completion. Landlord may monitor construction of
          the Alterations and Tenant shall reimburse Landlord for any actual and
          reasonable third party costs incurred by Landlord in reviewing plans and
          documents and in monitoring construction of any Alterations that require the
          consent of Landlord pursuant to Paragraph 12(a) above. Tenant shall
          maintain during the course of construction, at its sole cost and expense,
          builders risk insurance for the amount of the completed value of the
          Alterations on an all-risk non-reporting form covering all improvements under
          construction, including building materials, and other insurance in amounts and
          against such risks as Landlord shall reasonably require in connection with the
          Alterations. In addition to and without limitation on the generality of the
          foregoing, Tenant shall ensure that its contractor(s) procure and maintain in
          full force and effect during the course of construction a broad form
          commercial general liability and property damage policy of insurance naming
          Landlord, Landlords manager, UBS Realty Investors LLC
          (UBS), Tenant and Landlords lenders as additional
          insureds. The minimum limit of coverage of the aforesaid policy for any
          (i) general contractors shall be in the amount of not less than Three
          Million Dollars ($3,000,000.00) for injury or death of one or more persons in
          any one accident or occurrence, and (ii) any subcontractors shall be in the
          amount of not less than One Million Dollars ($1,000,000.00) for injury or death
          of one or more persons in any one accident or occurrence, and shall contain a
          severability of interest clause or a cross liability endorsement. Such insurance
          shall further insure Landlord and Tenant against liability for property damage
          of at least One Million Dollars ($1,000,000.00).

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(c)    
          All Alterations, including, but not limited to, heating, lighting, electrical,
          air conditioning, fixed partitioning, drapery, wall covering and paneling,
          built-in cabinet work and carpeting installations made by Tenant, together with
          all property that has become an integral part of the Premises or the Building,
          shall remain the property of Tenant during the Term, but upon expiration or
          earlier termination of this Lease shall at once be and become the property of
          Landlord, and shall not be deemed trade fixtures or Tenants Property. If
          reasonably required by Landlord (due to such Alterations failing to be generally
          consistent with first-class research and development space) at the time of
          Landlords consent, Tenant will deposit with Landlord, prior to the
          commencement of construction, an amount reasonably determined by Landlord
          necessary to secure the costs of demolishing such Alterations and/or the cost of
          returning the Premises and the Building to its condition prior to such
          Alterations.

(d)    
          Tenant may install private telephone systems and/or other related computer or
          telecommunications equipment or lines in the Premises without Landlords
          prior written consent, except that, if such installation requires the making of
          Alterations, then Tenant shall comply with the terms of this
          Paragraph ý12. If requested by Landlord, Tenant shall remove all
          telecommunications and computer equipment (and restore the Premises to the
          condition existing prior to installation) at the expiration or sooner
          termination of this Lease.

(e)    
          Notwithstanding anything herein to the contrary, before installing any equipment
          or lights which generate an undue amount of heat in the Premises, or if Tenant
          plans to use any high-power usage equipment in the Premises in excess of the
          existing electrical capacity of the Building in question or which, in
          Landlords good faith discretion, requires upgrades to the Building Systems
          or supplemental systems, Tenant shall obtain the written permission of Landlord,
          which permission shall not be unreasonably withheld. Landlord may refuse to
          grant such permission unless Tenant agrees to pay the costs to Landlord for
          installation of supplementary air conditioning capacity or electrical systems
          necessitated by such equipment.

(f)    
          Tenant agrees not to proceed to make any Alterations, notwithstanding consent
          from Landlord to do so, until Tenant notifies Landlord in writing at least
          fifteen (15) days prior to the date Tenant desires to commence construction
          or installation of such Alterations, in order that Landlord may post appropriate
          notices to avoid any liability to contractors or material suppliers for payment
          for Tenants improvements. Tenant will at all times permit such notices to
          be posted and to remain posted until the completion of work.

(g)    
          At the time of requesting Landlords consent to any Alterations, Tenant
          shall have the right to request that Landlord inform Tenant whether such
          Alterations may remain in the Premises following, or must be removed from the
          Premises prior to, the expiration or sooner termination of this Lease.

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13.    
          MAINTENANCE AND REPAIRS OF PREMISES

(a)    
          Maintenance by Tenant. Throughout the Term, Tenant shall,
          at its sole expense, (i) keep and maintain in good order and condition the
          Premises, and repair and replace every part thereof, including glass, windows,
          window frames, window casements, skylights, interior and exterior doors, door
          frames and door closers; interior lighting (including, without limitation, light
          bulbs and ballasts), all communications systems serving the Premises,
          Tenants signage, interior demising walls and partitions, equipment,
          interior painting and interior walls and floors, and the roll-up doors, ramps
          and dock equipment, including, without limitation, dock bumpers, dock plates,
          dock seals, dock levelers and dock lights located in or on the Premises
          (excepting only those portions of the Building or the Project to be maintained
          by Landlord, as provided in Paragraph 13(b) below), (ii) furnish all
          expendables, including light bulbs, paper goods and soaps, used in the Premises,
          and (iii) keep and maintain in good order and condition, repair and replace
          all of Tenants security systems in or about or serving the Premises.
          Tenant shall not do nor shall Tenant allow Tenants Agents to do anything
          to cause any damage, deterioration or unsightliness to the Premises, the
          Building or the Project.

(b)    
          Maintenance by Landlord. Subject to the provisions of
          Paragraphs 13(a), 21 and 22, and further subject to Tenants
          obligation under Paragraph 4 to reimburse Landlord, in the form of
          Additional Rent, for Tenants Proportionate Share(s) of the cost and
          expense of the following items, Landlord agrees to repair and maintain the
          following items: the roof coverings (provided that Tenant installs no additional
          air conditioning or other equipment on the roof that damages the roof coverings,
          in which event Tenant shall pay all costs resulting from the presence of such
          additional equipment); the Systems serving the Premises, the Building and the
          Project; and the Parking Areas, pavement, landscaping, sprinkler systems, down
          spouts, gutters, sidewalks, driveways, curbs, and lighting systems in the Common
          Areas. Subject to the provisions of Paragraphs 13(a), 21 and 22, Landlord,
          at its own cost and expense, agrees to repair and maintain the following items:
          the structural portions of the Premises, the Building and the Project including,
          without limitation, the roof (specifically excluding the roof coverings), the
          foundation, the footings, the floor slab, and the load bearing walls and
          exterior walls of the Building (excluding any glass and any routine maintenance,
          including, without limitation, any painting, sealing, patching and waterproofing
          of such walls). Notwithstanding anything in this Paragraph 13 to the
          contrary, Landlord shall have the right to either repair or to require Tenant to
          repair any damage to any portion of the Premises, the Building and/or the
          Project caused by or created due to any act, omission, negligence or willful
          misconduct of Tenant or Tenants Agents and to restore the Premises, the
          Building and/or the Project, as applicable, to the condition existing prior to
          the occurrence of such damage; provided, however, that in the event Landlord
          elects to perform such repair and restoration work, Tenant shall reimburse
          Landlord upon demand for all costs and expenses incurred by Landlord in
          connection therewith. Landlords obligation hereunder to repair and
          maintain is subject to the condition precedent that Landlord shall have actual
          knowledge (or, in the exercise of reasonable care, should have had actual
          knowledge) of the need for such repairs and maintenance and a reasonable time to
          perform such repair and maintenance. Tenant shall promptly report in writing to
          Landlord any defective condition actually known to it which Landlord is required
          to repair, and failure to so report such defects shall make Tenant responsible
          to Landlord for any damage which could have reasonably been avoided had Tenant
          promptly reported such defective condition as required herein.

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(c)    
          Tenants Waiver of Rights. Tenant hereby expressly
          waives all rights to make repairs at the expense of Landlord or to terminate
          this Lease, as provided for in California Civil Code Sections 1941 and
          1942, and 1932(1), respectively, and any similar or successor statute or law in
          effect or any amendment thereof during the Term.

14.    
          LANDLORDS INSURANCE

Landlord
shall purchase and keep in force fire, extended coverage and all risk
insurance (collectively, Casualty Insurance) covering the Building and
the Project for the full replacement cost thereof (excluding the land, foundations,
footings and other elements that are not customarily covered by full replacement
cost insurance). Tenant shall, at its sole cost and expense, comply with any and all
reasonable requirements pertaining to the Premises, the Building and the Project of any
insurer necessary for the maintenance of reasonable fire and commercial general liability
insurance, covering the Building and the Project. Landlord, at Tenants cost, may
maintain Loss of Rents insurance, insuring that the Rent will be paid in a
timely manner to Landlord for a period of at least twelve (12) months if the
Premises, the Building or the Project or any portion thereof are destroyed or rendered
unusable or inaccessible by any cause insured against under this Lease. In the event
Landlord carries earthquake insurance on the Building or the Project, such coverage shall
be maintained under policies of insurance which are consistent in scope and coverage with
the policies of earthquake insurance maintained by Landlord on other buildings owned by
Landlord from time to time in the greater San Francisco Bay Area/Silicon Valley.

15.    
          TENANTS INSURANCE

(a)    
          Commercial General Liability Insurance. Tenant shall, at
          Tenants expense, secure and keep in force a broad form
          commercial general liability insurance and property damage policy covering the
          Premises, insuring Tenant, and naming Landlord, Landlords investment
          advisors and agents from time to time, including, without limitation, UBS and
          Landlords lenders (collectively, Landlord Parties) as
          additional insureds, against any liability arising out of the ownership, use,
          occupancy or maintenance of the Premises. The minimum limit of coverage of such
          policy shall be in the amount of not less than Three Million Dollars
          ($3,000,000.00) for injury or death of one person in any one accident or
          occurrence and in the amount of not less than Three Million Dollars
          ($3,000,000.00) for injury or death of more than one person in any one accident
          or occurrence, shall include an extended liability endorsement providing
          contractual liability coverage (which shall include broad form contractual
          coverage including, to the extent available, coverage for Tenants
          indemnification obligations in this Lease), and shall contain a severability of
          interest clause or a cross liability endorsement. Such insurance shall further
          insure Landlord and Tenant against liability for property damage of at least
          Three Million Dollars ($3,000,000.00). Landlord may from time to time require
          reasonable increases in any such limits if Landlord believes that additional
          coverage is necessary or desirable. The limit of any insurance shall not limit
          the liability of Tenant hereunder. No policy maintained by Tenant under this
          Paragraph 15(a) shall contain a deductible greater than Five Thousand
          Dollars ($5,000.00). No policy shall be cancelable or subject to reduction of
          coverage without thirty (30) days prior written notice to Landlord.
          Such policies of insurance shall be issued as primary policies and not
          contributing with or in excess of coverage that Landlord may carry, by an
          insurance company authorized to do business in the State of California for the
          issuance of such type of insurance coverage and rated A:IX or better in
          Bests Key Rating Guide.

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(b)    
          Personal Property Insurance. Tenant shall maintain in full
          force and effect on all of its personal property, furniture, furnishings, trade
          or business fixtures and equipment (collectively, Tenants
          Property) on the Premises and on the Approved Furnishings (as defined
          in the Tenant Improvements Work Letter attached hereto as
          Exhibit B), a policy or policies of fire and extended
          coverage insurance with standard coverage endorsement to the extent of the full
          replacement cost thereof. No such policy shall contain a deductible greater than
          Five Thousand Dollars ($5,000.00). During the term of this Lease the proceeds
          from any such policy or policies of insurance shall be used for the repair or
          replacement of the fixtures and equipment so insured. Landlord shall have no
          interest in the insurance upon Tenants equipment and fixtures and will
          sign all documents reasonably necessary in connection with the settlement of any
          claim or loss by Tenant. Landlord will not carry insurance on Tenants
          possessions.

(c)    
          Workers Compensation Insurance; Employers Liability
          Insurance. Tenant shall, at Tenants expense, maintain in
          full force and effect workers compensation insurance with not less than
          the minimum limits required by law, and employers liability insurance with
          a minimum limit of coverage of One Million Dollars ($1,000,000.00).

(d)    
          Evidence of Coverage. Tenant shall deliver to Landlord
          certificates of insurance and true and complete copies of any and all
          endorsements required herein for all insurance required to be maintained by
          Tenant hereunder at the time of execution of this Lease by Tenant. Tenant shall,
          at least thirty (30) days prior to expiration of each policy, furnish
          Landlord with certificates of renewal or binders thereof. Each
          certificate shall expressly provide that such policies shall not be cancelable
          or otherwise subject to modification except after thirty (30) days
          prior written notice to Landlord and the other parties named as additional
          insureds as required in this Lease (except for cancellation for nonpayment of
          premium, in which event cancellation shall not take effect until at least
          ten (10) days notice has been given to Landlord).

16.    
          INDEMNIFICATION

(a)    
          Of Landlord. Tenant shall indemnify and hold harmless
          Landlord and Landlords Agents against and from any and all claims,
          liabilities, judgments, costs, demands, causes of action and expenses
          (including, without limitation, reasonable attorneys fees) arising from
          (i) the use of the Premises, the Building or the Project by Tenant or
          Tenants Agents, or from any activity done, permitted by Tenant or
          Tenants Agents in or about the Premises, the Building or the Project
          (including, without limitation, any actions taken by Tenant pursuant to
          Paragraph 51 below), and (ii) any act, neglect, fault, willful
          misconduct or omission of Tenant or Tenants Agents, or from any breach or
          default in the terms of this Lease by Tenant or Tenants Agents, and
          (iii) any action or proceeding brought on account of any matter in
          items (i) or (ii). If any action or proceeding is brought against Landlord
          by reason of any such claim, upon notice from Landlord, Tenant shall defend the
          same at Tenants expense by counsel reasonably satisfactory to Landlord. As
          a material part of the consideration to Landlord, Tenant hereby releases
          Landlord and Landlords Agents from responsibility for, waives its entire
          claim of recovery for and assumes all risk of (A) damage to property or
          injury to persons in or about the Premises, the Building or the Project from any
          cause whatsoever (except that which is caused by the gross negligence or willful
          misconduct of Landlord or Landlords Agents or by the failure of Landlord
          to observe any of the terms and conditions of this Lease, if such failure has
          persisted for an unreasonable period of time after written notice of such
          failure), or (B) loss resulting from business interruption or loss of
          income at the Premises. The obligations of Tenant under this
          Paragraph 16(a) shall survive any termination of this Lease.

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(b)    
          Of Tenant. Landlord shall not be released or indemnified
          from, and shall indemnify and hold harmless Tenant against and from any and all
          claims, liabilities, judgments, costs, demands, causes of action and expenses
          (including, without limitation, reasonable attorneys fees) arising from
          the gross negligence or willful misconduct of Landlord or Landlords
          Agents, or by the breach of this Lease by Landlord, if such breach has persisted
          for an unreasonable period of time after written notice of the same. If any
          action or proceeding is brought against Tenant by reason of any such claim, upon
          notice from Tenant, Landlord shall defend the same at Landlords expense by
          counsel reasonably satisfactory to Tenant. The obligations of Landlord under
          this Paragraph ý16(b) shall survive any termination of this Lease.

(c)    
          No Impairment of Insurance. The foregoing indemnity shall
          not relieve any insurance carrier of its obligations under any policies required
          to be carried by either party pursuant to this Lease, to the extent that such
          policies cover the peril or occurrence that results in the claim that is subject
          to the foregoing indemnity.

17.    
          SUBROGATION

Notwithstanding
anything in this Lease to the contrary, Landlord and Tenant hereby mutually waive any
claim against the other and its Agents for any loss or damage to any of their property
located on or about the Premises, the Building or the Project that is caused by or results
from perils covered by property insurance carried by the respective parties, or required
to be carried under this Lease, whether or not due to the negligence or willful misconduct
of the other party or its Agents. Because the foregoing waivers will preclude the
assignment of any claim by way of subrogation to an insurance company or any other person,
each party now agrees to immediately give to its insurer written notice of the terms of
these mutual waivers and shall have their insurance policies endorsed to prevent the
invalidation of the insurance coverage because of these waivers. Nothing in this
Paragraph 17 shall relieve a party of liability to the other for failure to carry
insurance required by this Lease.

# 18. SIGNS

Tenant
shall not place or permit to be placed in, upon, or about the Premises, the Building or
the Project any exterior lights, decorations, balloons, flags, pennants, banners,
advertisements or notices, or erect or install any signs, windows or door lettering,
placards, decorations, or advertising media of any type which can be viewed from the
exterior the Premises (collectively Signs) without obtaining
Landlords prior written consent or without complying with all applicable Laws, and
will not conduct, or permit to be conducted, any sale by auction on the Premises or
otherwise on the Project. Notwithstanding the foregoing, Tenant shall have the right to
place an identification sign on the Building and to install a monument sign in front of
the Building, subject to applicable Laws and Landlords approval of the locations of
such signs. Tenant shall remove any Sign (including, without limitation, the signs
referred to in the preceding sentence), advertisement or notice placed on the Premises,
the Building or the Project by Tenant upon the expiration of the Term or sooner
termination of this Lease, and Tenant shall repair any damage or injury to the Premises,
the Building or the Project caused thereby, all at Tenants expense. If any Signs are
not removed, or necessary repairs not made, Landlord shall have the right to remove the
Signs and repair any damage or injury to the Premises, the Building or the Project at
Tenants sole cost and expense.

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# 19. FREE FROM LIENS

Tenant
shall keep the Premises, the Building and the Project free from any liens arising out of
any work performed, material furnished or obligations incurred by or for Tenant. In the
event that Tenant shall not, within ten (10) days following the imposition of any
such lien, cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have in addition to all other remedies provided herein and by law the right
but not the obligation to cause same to be released by such means as it shall deem proper,
including payment of the claim giving rise to such lien. All such sums paid by Landlord
and all expenses incurred by it in connection therewith (including, without limitation,
attorneys fees) shall be payable to Landlord by Tenant upon demand. Landlord shall
have the right at all times to post and keep posted on the Premises any notices permitted
or required by law or that Landlord shall deem proper for the protection of Landlord, the
Premises, the Building and the Project, from mechanics and materialmens liens.
Tenant shall give to Landlord at least five (5) business days prior written
notice of commencement of any repair or construction on the Premises.

# 20. ENTRY BY LANDLORD

Tenant
shall permit Landlord and Landlords Agents to enter into and upon the Premises at
all reasonable times, following at least twenty-four (24) hours prior notice, which
may be telephonic, (except in the case of an emergency or scheduled services, for which no
notice shall be required), and subject to Tenants reasonable security arrangements,
for the purpose of inspecting the same or showing the Premises to prospective purchasers,
lenders or, during the last two hundred seventy (270) days of the Term, tenants or to
alter, improve, maintain and repair the Premises or the Building as required or permitted
by Landlord under the terms hereof, or for any other business purpose, without any rebate
of Rent and without any liability to Tenant for any loss of occupation or quiet enjoyment
of the Premises thereby occasioned (except for actual damages resulting from the sole
active gross negligence or willful misconduct of Landlord); and Tenant shall permit
Landlord to post notices of non-responsibility and ordinary for sale or,
during the last two hundred seventy (270) days of the Term, for lease
signs. No such entry shall be construed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an eviction of Tenant from the Premises. Landlord may
temporarily close entrances, doors, corridors, elevators or other facilities without
liability to Tenant by reason of such closure in the case of an emergency and when
Landlord otherwise deems such closure necessary.

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21.    
          DESTRUCTION AND DAMAGE

(a)    
          If the Premises are damaged by fire or other perils covered by extended coverage
          insurance, Landlord shall, at Landlords option:

(i)    
          In the event of total destruction (which shall mean destruction or damage in
          excess of thirty-three percent (33%) of the full insurable value thereof) of the
          Premises, elect either to commence promptly to repair and restore the Premises
          and prosecute the same diligently to completion, in which event this Lease shall
          remain in full force and effect; or not to repair or restore the Premises, in
          which event this Lease shall terminate. Landlord shall give Tenant written
          notice of its intention within forty-five (45) days after the date (the
          Casualty Discovery Date) Landlord obtains actual knowledge of
          such destruction. If Landlord elects not to restore the Premises, this Lease
          shall be deemed to have terminated as of the date of such total destruction.

(ii)    
          In the event of a partial destruction (which shall mean destruction or damage to
          an extent not exceeding thirty-three percent (33%) of the full insurable value
          thereof) of the Premises for which Landlord will receive insurance proceeds
          sufficient to cover the cost to repair and restore such partial destruction and,
          if the damage thereto is such that the Premises may be substantially repaired or
          restored to its condition existing immediately prior to such damage or
          destruction within one hundred eighty (180) days from the Casualty Discovery
          Date, Landlord shall commence and proceed diligently with the work of repair and
          restoration, in which event this Lease shall continue in full force and effect.
          If such repair and restoration requires longer than one hundred eighty (180)
          days or if the insurance proceeds therefor (plus any amounts Tenant may elect or
          is obligated to contribute) are not sufficient to cover the cost of such repair
          and restoration, Landlord may elect either to so repair and restore, in which
          event this Lease shall continue in full force and effect, or not to repair or
          restore, in which event this Lease shall terminate. In either case, Landlord
          shall give written notice to Tenant of its intention within forty-five (45) days
          after the Casualty Discovery Date. If Landlord elects not to restore the
          Premises, this Lease shall be deemed to have terminated as of the date of such
          partial destruction.

(iii)    
          Notwithstanding anything to the contrary contained in this Paragraph, in the
          event of damage to the Premises occurring during the last twelve (12)
          months of the Term, either Landlord or, if such damage to the Premises
          materially impairs Tenants ability to continue its business operations
          therein, then Tenant may elect to terminate this Lease by written notice of such
          election given to the other party within thirty (30) days after the
          Casualty Discovery Date.

(b)    
          If the Premises are damaged by any peril not covered by extended coverage
          insurance, and the cost to repair such damage exceeds any amount Tenant may
          agree to contribute, Landlord may elect either to commence promptly to repair
          and restore the Premises and prosecute the same diligently to completion, in
          which event this Lease shall remain in full force and effect; or not to repair
          or restore the Premises, in which event this Lease shall terminate. Landlord
          shall give Tenant written notice of its intention within sixty (60) days
          after the Casualty Discovery Date. If Landlord elects not to restore the
          Premises, this Lease shall be deemed to have terminated as of the date on which
          Tenant surrenders possession of the Premises to Landlord, except that if the
          damage to the Premises materially impairs Tenants ability to continue its
          business operations in the Premises, then this Lease shall be deemed to have
          terminated as of the date such damage occurred.

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(c)    
          In the event of repair and restoration as herein provided, the monthly
          installments of Base Rent and Additional Rent shall be abated proportionately in
          the ratio which Tenants use of the Premises is impaired during the period
          of such repair or restoration; provided, however, that if such damage or
          destruction resulted from the acts or inaction of Tenant or Tenants
          Agents, then such abatement shall be limited to the extent of rental abatement
          insurance proceeds received by Landlord. Except as expressly provided in the
          immediately preceding sentence with respect to abatement of Base Rent, Tenant
          shall have no claim against Landlord for, and hereby releases Landlord and
          Landlords Agents from responsibility for and waives its entire claim of
          recovery for any cost, loss or expense suffered or incurred by Tenant as a
          result of any damage to or destruction of the Premises, the Building or the
          Project or the repair or restoration thereof, including, without limitation, any
          cost, loss or expense resulting from any loss of use of the whole or any part of
          the Premises, the Building or the Project and/or any inconvenience or annoyance
          occasioned by such damage, repair or restoration.

(d)    
          If the Premises is damaged or destroyed to the extent that the Premises cannot
          be substantially repaired or restored by Landlord within two hundred ten (210)
          days after the Casualty Discovery Date, Tenant may terminate this Lease
          immediately upon notice thereof to Landlord, which shall be given, if at all,
          not later than fifteen (15) days after Landlord notifies Tenant of
          Landlords estimate of the period of time required to repair such damage or
          destruction.

(e)    
          If Landlord is obligated to or elects to repair or restore as herein provided,
          Landlord shall repair or restore only the initial tenant improvements, if any,
          constructed by Landlord in the Premises pursuant to the terms of this Lease,
          substantially to their condition existing immediately prior to the occurrence of
          the damage or destruction; and Tenant may promptly repair and restore, at
          Tenants expense, Tenants Alterations which were not constructed by
          Landlord.

(f)    
          Tenant hereby waives the provisions of California Civil Code
          Section 1932(2) and Section 1933(4) which permit termination of a
          lease upon destruction of the leased premises, and the provisions of any similar
          law now or hereinafter in effect, and the provisions of this Paragraph 21
          shall govern exclusively in case of such destruction.

22.    
          CONDEMNATION

(a)    
          If thirty-three percent (33%) or more of either the Premises, the Building or
          the Project or the Parking Areas is taken for any public or quasi-public purpose
          by any lawful governmental power or authority, by exercise of the right of
          appropriation, inverse condemnation, condemnation or eminent domain, or sold to
          prevent such taking (each such event being referred to as a
          Condemnation), Landlord may, at its option, terminate this
          Lease as of the date title vests in the condemning party. If thirty-three
          percent (33%) or more of the Premises is taken and if the Premises remaining
          after such Condemnation and any repairs by Landlord would be untenantable for
          the conduct of Tenants business operations, Tenant shall have the right to
          terminate this Lease as of the date title vests in the condemning party. If
          either party elects to terminate this Lease as provided herein, such election
          shall be made by written notice to the other party given within thirty (30)
          days after the nature and extent of such Condemnation have been finally
          determined. If neither Landlord nor Tenant elects to terminate this Lease to the
          extent permitted above, Landlord shall promptly proceed to restore the Premises,
          to the extent of any Condemnation award received by Landlord, to substantially
          the same condition as existed prior to such Condemnation, allowing for the
          reasonable effects of such Condemnation, and a proportionate abatement shall be
          made to the Base Rent and Additional Rent corresponding to the time during
          which, and to the portion of the floor area of the Premises (adjusted for any
          increase thereto resulting from any reconstruction) of which, Tenant is deprived
          on account of such Condemnation and restoration, as reasonably determined by
          Landlord. Except as expressly provided in the immediately preceding sentence
          with respect to abatement of Base Rent and Additional Rent, Tenant shall have no
          claim against Landlord for, and hereby releases Landlord and Landlords
          Agents from responsibility for and waives its entire claim of recovery for any
          cost, loss or expense suffered or incurred by Tenant as a result of any
          Condemnation or the repair or restoration of the Premises, the Building or the
          Project or the Parking Areas following such Condemnation, including, without
          limitation, any cost, loss or expense resulting from any loss of use of the
          whole or any part of the Premises, the Building, the Project or the Parking
          Areas and/or any inconvenience or annoyance occasioned by such Condemnation,
          repair or restoration. The provisions of California Code of Civil Procedure
          Section 1265.130, which allows either party to petition the Superior Court
          to terminate this Lease in the event of a partial taking of the Premises, the
          Building or the Project or the Parking Areas, and any other applicable law now
          or hereafter enacted, are hereby waived by Tenant.

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(b)    
          Landlord shall be entitled to any and all compensation, damages, income, rent,
          awards, or any interest therein whatsoever which may be paid or made in
          connection with any Condemnation, and Tenant shall have no claim against
          Landlord for the value of any unexpired term of this Lease or otherwise;
          provided, however, that Tenant shall be entitled to receive any award separately
          allocated by the condemning authority to Tenant for Tenants relocation
          expenses, loss of goodwill or the value of Tenants Property or the
          unamortized value of any Alterations, provided that such award does not reduce
          any award otherwise allocable or payable to Landlord.

23.    
          ASSIGNMENT AND SUBLETTING

(a)    
          Tenant shall not voluntarily or by operation of law, (i) mortgage, pledge,
          hypothecate or encumber this Lease or any interest herein, (ii) assign or
          transfer this Lease or any interest herein, sublease the Premises or any part
          thereof, or any right or privilege appurtenant thereto, or allow any other
          person (the employees and invitees of Tenant excepted) to occupy or use the
          Premises, or any portion thereof, without first obtaining the written consent of
          Landlord, which consent shall not be unreasonably withheld; provided, however,
          that if Tenant is in default under this Lease, Landlord may condition such
          consent on the curing of such default. Any Sale Transaction (as hereinafter
          defined) shall be deemed to be an assignment under this Lease. When Tenant
          requests Landlords consent to such assignment or subletting, it shall
          notify Landlord in writing of the name and address of the proposed assignee or
          subtenant and the nature and character of the business of the proposed assignee
          or subtenant and shall provide (1) a fully completed Hazardous Materials
          Disclosure Certificate for such assignee or subtenant in the form of
          Exhibit F hereto, and (2) current and prior
          financial statements for the proposed assignee or subtenant, which financial
          statements shall be audited to the extent available and shall in any event be
          prepared in accordance with generally accepted accounting principles. Tenant
          shall also provide Landlord with a copy of the proposed sublease or assignment
          agreement, including all material terms and conditions thereof. Landlord shall
          have the option, to be exercised within thirty (30) days of receipt of the
          foregoing, to (w) terminate this Lease with respect to the entire Premises
          as of the commencement date stated in a proposed assignment, or in the case of a
          proposed sublease which when aggregated with any other subleases of the Premises
          comprises more than ninety percent (90%) of the Premises for substantially the
          remainder of the Term, terminate this Lease as of the commencement date stated
          in the proposed sublease, (x) consent to the proposed assignment or
          sublease, or (y) refuse its consent to the proposed assignment or sublease,
          provided that such consent shall not be unreasonably withheld; provided,
          however, that if Tenant is in default under this Lease, Landlord may condition
          such consent on the curing of such default. In the event Landlord elects to
          terminate this Lease or a portion thereof as provided in the foregoing
          clause (w), then Landlord shall have the additional right to negotiate
          directly with Tenants proposed assignee or subtenant and to enter into a
          direct lease or occupancy agreement with such party on such terms as shall be
          acceptable to Landlord in its sole and absolute discretion, and Tenant hereby
          waives any claims against Landlord related thereto, including, without
          limitation, any claims for any compensation or profit related to such lease or
          occupancy agreement. For purposes of this Lease, the following terms shall have
          the meanings set forth below:

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(i)    
          Capital Stock means, with respect to any Person, any and all
          shares, interests, participations, rights in, or other equivalents (however
          designated and whether voting or non-voting) of, such Persons capital
          stock and any and all rights, warrants or options exchangeable for or
          convertible into such capital stock (but excluding any debt security whether or
          not it is exchangeable for or convertible into such capital stock).

(ii)    
          Person means any individual, firm, corporation, partnership,
          limited liability company, trust, incorporated or unincorporated association,
          joint venture, joint stock company, governmental body or other entity of any
          kind.

(iii)    
          Sale Transaction shall mean: (A) (1) the merger or
          consolidation of Tenant into or with one or more Persons, (2) the merger or
          consolidation of one or more Persons into or with Tenant or (3) a tender
          offer or other business combination, if, in the case of clause (1),
          (2) or (3) the stockholders of Tenant prior to such merger or
          consolidation do not retain at least a majority of the voting power of the
          surviving Person; or (B) the voluntary sale, conveyance, exchange or
          transfer to another Person, in one transaction or a series of transactions, of
          (1) the voting Capital Stock of Tenant if, after such sale, conveyance,
          exchange or transfer, the stockholders of Tenant prior to such sale, conveyance,
          exchange or transfer do not retain at least a majority of the voting power of
          Tenant or (2) all or substantially all of the assets of Tenant.

(b)    
          Notwithstanding anything to the contrary contained in Paragraph 23(a)
          above, Tenant may, with notice to but without Landlords prior written
          consent, and without payment of any amount to Landlord by reason thereof, sublet
          the Premises or assign this Lease to a Tenant Affiliate.
          Paragraphs 23(a)(w) and 23(d) shall not apply to any assignment or sublease
          to a Tenant Affiliate. As used herein, Tenant Affiliate means
          (i) an entity controlling, controlled by or under common control with
          Tenant, (ii) a successor corporation related to Tenant by merger,
          consolidation, nonbankruptcy reorganization, or government action, or
          (iii) a purchaser of substantially all of Tenants assets located in
          the Premises; and a party shall be deemed to control another party
          for purposes of the definition contained in the aforesaid clause (i) only
          if the first party owns more than fifty percent (50%) of the stock or other
          beneficial interests of the second party. Notwithstanding anything to the
          contrary contained in Paragraph 23(a) above, neither a sale or transfer of
          Tenants Capital Stock, including, without limitation, a transfer in
          connection with the merger, consolidation or nonbankruptcy reorganization of
          Tenant and any sale through any private or public offering, nor the pledge of or
          grant of a security interest in any of the Tenants Capital Stock shall be
          deemed an assignment, subletting or other transfer of this Lease or the
          Premises.

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(c)    
          Without otherwise limiting the criteria upon which Landlord may withhold its
          consent under Paragraph 23(a) above, Landlord shall be entitled to consider
          all reasonable criteria including, but not limited to, the following:
          (i) whether or not the proposed subtenant or assignee is engaged in a
          business which, and the use of the Premises will be in an manner which, is in
          keeping with the then character and nature of all other tenancies in the
          Project; (ii) whether the use to be made of the Premises by the proposed
          subtenant or assignee will conflict with any so-called exclusive use
          then in favor of any other tenant of the Building or the Project, and whether
          such use would be prohibited by any other portion of this Lease, including, but
          not limited to, any rules and regulations then in effect, or under applicable
          Laws, and whether such use imposes a greater load upon the Premises, the
          Building and the Project services then imposed by Tenant; (iii) the
          business reputation of the proposed individuals who will be managing and
          operating the business operations of the assignee or subtenant, and the
          long-term financial and competitive business prospects of the proposed assignee
          or subtenant; and (iv) the creditworthiness and financial stability of the
          proposed assignee or subtenant in light of the responsibilities involved. In any
          event, Landlord may withhold its consent to any assignment or sublease, if
          (A) the actual use proposed to be conducted in the Premises or portion
          thereof conflicts with the provisions of Paragraph 9(a) or (b) above or
          with any other lease which restricts the use to which any space in the Building
          or the Project may be put, or (B) the proposed assignment or sublease
          requires alterations, improvements or additions to the Premises or portions
          thereof, except as approved by Landlord pursuant to Paragraph 12 above.

(d)    
          If Landlord approves an assignment or subletting as herein provided, Tenant
          shall pay to Landlord, as Additional Rent, fifty percent (50%) of the
          difference, if any, between (i) the Base Rent plus Additional Rent
          allocable to that part of the Premises affected by such assignment or sublease
          pursuant to the provisions of this Lease, and (ii) the rent and any
          additional rent payable by the assignee or sublessee to Tenant, less reasonable
          advertising costs and reasonable and customary market-based leasing commissions,
          if any, incurred by Tenant in connection with such assignment or sublease. The
          assignment or sublease agreement, as the case may be, after approval by
          Landlord, shall not be amended without Landlords prior written consent,
          and shall contain a provision directing the assignee or subtenant to pay the
          rent and other sums due thereunder directly to Landlord upon receiving written
          notice from Landlord that Tenant is in Default under this Lease with respect to
          the payment of Rent. In the event that, notwithstanding the giving of such
          notice, Tenant collects any rent or other sums from the assignee or subtenant,
          then Tenant shall hold such sums in trust for the benefit of Landlord and shall
          immediately forward the same to Landlord. Landlords collection of such
          rent and other sums shall not constitute an acceptance by Landlord of attornment
          by such assignee or subtenant. A consent to one assignment, subletting,
          occupation or use shall not be deemed to be a consent to any other or subsequent
          assignment, subletting, occupation or use, and consent to any assignment or
          subletting shall in no way relieve Tenant of any liability under this Lease. Any
          assignment or subletting without Landlords consent shall be void, and
          shall, at the option of Landlord, constitute a Default under this Lease.

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(e)    
          Notwithstanding any assignment or subletting, Tenant and any guarantor or surety
          of Tenants obligations under this Lease shall at all times remain fully
          responsible and liable for the payment of the Rent and for compliance with all
          of Tenants other obligations under this Lease (regardless of whether
          Landlords approval has been obtained for any such assignment or
          subletting).

(f)    
          Tenant shall reimburse Landlord for its actual third-party costs (including,
          without limitation, the fees of Landlords counsel), incurred in connection
          with Landlords review and processing of documents regarding any proposed
          assignment or sublease which, in connection with the first assignment or
          sublease shall not exceed One Thousand Five Hundred Dollars ($1,500.00), and in
          connection with any assignment or sublease thereafter shall not exceed Five
          Thousand Dollars ($5,000.00).

(g)    
          Notwithstanding anything in this Lease to the contrary, in the event Landlord
          consents to an assignment or subletting by Tenant in accordance with the terms
          of this Paragraph 23, Tenants assignee or subtenant shall have no
          right to further assign this Lease or any interest therein or thereunder or to
          further sublease all or any portion of the Premises without Landlords
          prior written consent.

(h)    
          Tenant acknowledges and agrees that the restrictions, conditions and limitations
          imposed by this Paragraph 23 on Tenants ability to assign or transfer
          this Lease or any interest herein, to sublet the Premises or any part thereof,
          to transfer or assign any right or privilege appurtenant to the Premises, or to
          allow any other person to occupy or use the Premises or any portion thereof,
          are, for the purposes of California Civil Code Section 1951.4, as amended
          from time to time, and for all other purposes, reasonable at the time that this
          Lease was entered into, and shall be deemed to be reasonable at the time that
          Tenant seeks to assign or transfer this Lease or any interest herein, to sublet
          the Premises or any part thereof, to transfer or assign any right or privilege
          appurtenant to the Premises, or to allow any other person to occupy or use the
          Premises or any portion thereof.

24.    
          TENANTS DEFAULT

The
occurrence of any one of the following events shall constitute an event of default on the
part of Tenant (Default):

(a)    
          The abandonment of the Premises;

(b)    
          Failure to pay any installment of Rent or any other monies due and payable
          hereunder, said failure continuing for a period of three (3) days after the
          same is due; provided, however, that Tenant shall be entitled to one notice of
          late payment and a five (5) day cure period in each twelve (12) month
          period;

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(c)    
          A general assignment by Tenant or any guarantor or surety of Tenants
          obligations hereunder (collectively, Guarantor) for the
          benefit of creditors;

(d)    
          The filing of a voluntary petition in bankruptcy by Tenant or any Guarantor, the
          filing by Tenant or any Guarantor of a voluntary petition for an arrangement,
          the filing by or against Tenant or any Guarantor of a petition, voluntary or
          involuntary, for reorganization, or the filing of an involuntary petition by the
          creditors of Tenant or any Guarantor, said involuntary petition remaining
          undischarged for a period of sixty (60) days;

(e)    
          Receivership, attachment, or other judicial seizure of substantially all of
          Tenants assets on the Premises, such attachment or other seizure remaining
          undismissed or undischarged for a period of sixty (60) days after the levy
          thereof;

(f)    
          The failure by Tenant to maintain its legal existence, if Tenant is a
          corporation, partnership, limited liability company, trust or other legal
          entity;

(g)    
          Failure of Tenant to execute and deliver to Landlord any estoppel certificate,
          subordination agreement, or lease amendment within the time periods and in the
          manner required by Paragraphs 30 or 31 or 42;

(h)    
          An assignment or sublease, or attempted assignment or sublease, of this Lease or
          the Premises by Tenant contrary to the provision of Paragraph 23, unless
          such assignment or sublease is expressly conditioned upon Tenant having received
          Landlords consent thereto;

(i)    
          Failure of Tenant to restore the Letter of Credit to the amount and within the
          time period provided in Paragraph 7 above;

(j)    
          Failure in the performance of any of Tenants covenants, agreements or
          obligations hereunder (except those failures specified as events of Default in
          any other subparagraphs of this Paragraph 24, which shall be governed by
          such other Paragraphs), which failure continues for thirty (30) days after
          written notice thereof from Landlord to Tenant, provided that, if Tenant has
          exercised reasonable diligence to cure such failure and such failure cannot be
          cured within such thirty (30) day period despite reasonable diligence,
          Tenant shall not be in default under this subparagraph so long as Tenant
          thereafter diligently and continuously prosecutes the cure to completion and
          actually completes such cure within one hundred twenty (120) days after the
          giving of the aforesaid written notice;

(k)    
          Chronic delinquency by Tenant in the payment of Rent, or any other periodic
          payments required to be paid by Tenant under this Lease. Chronic
          delinquency shall mean failure by Tenant to pay Rent, or any other
          payments required to be paid by Tenant under this Lease within five (5)
          days after written notice thereof for any three (3) months (consecutive or
          nonconsecutive) during any period of twelve (12) months. In the event of a
          Chronic delinquency, in addition to Landlords other remedies for Default
          provided in this Lease, at Landlords option, Landlord shall have the right
          to require that Rent be paid by Tenant quarterly, in advance;

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(l)    
          Any insurance required to be maintained by Tenant pursuant to this Lease shall
          be canceled or terminated or shall expire or be reduced or materially changed,
          except as permitted in this Lease; and

(m)    
          Any failure by Tenant to discharge or bond over any lien or encumbrance placed
          on the Project or any part thereof in violation of this Lease within
          twenty (20) days after the date Tenant has knowledge of such lien or
          encumbrance.

25.    
          LANDLORDS REMEDIES

(a)    
          Termination. In the event of any Default by Tenant, then in
          addition to any other remedies available to Landlord at law or in equity and
          under this Lease, Landlord shall have the immediate option to terminate this
          Lease and all rights of Tenant hereunder by giving written notice of such
          intention to terminate. In the event that Landlord shall elect to so terminate
          this Lease then Landlord may recover from Tenant:

(i)    
          the worth at the time of award of any unpaid Rent and any other sums due and
          payable which have been earned at the time of such termination; plus

(ii)    
          the worth at the time of award of the amount by which the unpaid Rent and any
          other sums due and payable which would have been earned after termination until
          the time of award exceeds the amount of such rental loss Tenant proves could
          have been reasonably avoided; plus

(iii)    
          the worth at the time of award of the amount by which the unpaid Rent and any
          other sums due and payable for the balance of the term of this Lease after the
          time of award exceeds the amount of such rental loss that Tenant proves could be
          reasonably avoided; plus

(iv)    
          any other amount necessary to compensate Landlord for all the detriment
          proximately caused by Tenants failure to perform its obligations under
          this Lease or which in the ordinary course would be likely to result therefrom,
          including, without limitation, (A) any costs or expenses incurred by
          Landlord (1) in retaking possession of the Premises; (2) in
          maintaining, repairing, preserving, restoring, replacing, cleaning or
          rehabilitating the Premises or any affected portions of the Building or the
          Project, including such actions undertaken in connection with the reletting or
          attempted reletting of the Premises to a new tenant or tenants; or (3) for
          leasing commissions, advertising costs and other expenses of reletting the
          Premises; (B) any unearned brokerage commissions paid in connection with
          this Lease; plus

(v)    
          such reasonable attorneys fees incurred by Landlord as a result of a
          Default, and costs in the event suit is filed by Landlord to enforce such
          remedy; and plus

(vi)    
          at Landlords election, such other amounts in addition to or in lieu of the
          foregoing as may be permitted from time to time by applicable law.

As used in subparagraphs (i) and
(ii) above, the worth at the time of award is computed by allowing
interest at an annual rate equal to twelve percent (12%) per annum or the maximum rate
permitted by law, whichever is less. As used in subparagraph (iii) above, the
worth at the time of award is computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of award,
plus one percent (1%). Tenant waives redemption or relief from forfeiture under California
Code of Civil Procedure Sections 1174 and 1179, or under any other pertinent present
or future Law, in the event Tenant is evicted or Landlord takes possession of the Premises
by reason of any Default of Tenant hereunder.

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(b)    
          Continuation of Lease. In the event of any Default by
          Tenant, then in addition to any other remedies available to Landlord at law or
          in equity and under this Lease, Landlord shall have the remedy described in
          California Civil Code Section 1951.4 (Landlord may continue this Lease in
          effect after Tenants Default and abandonment and recover Rent as it
          becomes due, provided that Tenant has the right to sublet or assign, subject
          only to reasonable limitations). In addition, Landlord shall not be liable in
          any way whatsoever for its failure or refusal to relet the Premises. For
          purposes of this Paragraph 25(b), the following acts by Landlord will not
          constitute the termination of Tenants right to possession of the Premises:

(i)    
          Acts of maintenance or preservation or efforts to relet the Premises, including,
          but not limited to, alterations, remodeling, redecorating, repairs, replacements
          and/or painting as Landlord shall consider advisable for the purpose of
          reletting the Premises or any part thereof; or

(ii)    
          The appointment of a receiver upon the initiative of Landlord to protect
          Landlords interest under this Lease or in the Premises.

(c)    
          Re-entry. In the event of any Default by Tenant, Landlord
          shall also have the right, upon terminating this Lease, in compliance with
          applicable law, to re-enter the Premises and remove all persons and property
          from the Premises; such property may be removed and stored in a public warehouse
          or elsewhere at the cost of and for the account of Tenant.

(d)    
          Termination. No re-entry or taking of possession of the
          Premises by Landlord pursuant to this Paragraph 25 shall be construed as an
          election to terminate this Lease unless a written notice of such intention is
          given to Tenant or unless the termination thereof is decreed by a court of
          competent jurisdiction. Notwithstanding any reletting without termination by
          Landlord because of any Default by Tenant, Landlord may at any time after such
          reletting elect to terminate this Lease for any such Default.

(e)    
          Cumulative Remedies. The remedies herein provided are not
          exclusive and Landlord shall have any and all other remedies provided herein or
          by law or in equity.

(f)    
          No Surrender. No act or conduct of Landlord, whether
          consisting of the acceptance of the keys to the Premises, or otherwise, shall be
          deemed to be or constitute an acceptance of the surrender of the Premises by
          Tenant prior to the expiration of the Term, and such acceptance by Landlord of
          surrender by Tenant shall only flow from and must be evidenced by a written
          acknowledgment of acceptance of surrender signed by Landlord. The surrender of
          this Lease by Tenant, voluntarily or otherwise, shall not work a merger unless
          Landlord elects in writing that such merger take place, but shall operate as an
          assignment to Landlord of any and all existing subleases, or Landlord may, at
          its option, elect in writing to treat such surrender as a merger terminating
          Tenants estate under this Lease, and thereupon Landlord may terminate any
          or all such subleases by notifying the sublessee of its election so to do within
          five (5) days after such surrender.

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26.    
          LANDLORDS RIGHT TO PERFORM TENANTS OBLIGATIONS

(a)    
          Without limiting the rights and remedies of Landlord contained in
          Paragraph 25 above, if Tenant shall be in Default in the performance of any
          of the terms, provisions, covenants or conditions to be performed or complied
          with by Tenant pursuant to this Lease, then Landlord may at Landlords
          option, without any obligation to do so, and without notice to Tenant perform
          any such term, provision, covenant, or condition, or make any such payment and
          Landlord by reason of so doing shall not be liable or responsible for any loss
          or damage thereby sustained by Tenant or anyone holding under or through Tenant
          or any of Tenants Agents.

(b)    
          Without limiting the rights of Landlord under Paragraph 26(a) above,
          Landlord shall have the right at Landlords option, without any obligation
          to do so, to perform any of Tenants covenants or obligations under this
          Lease without notice to Tenant in the case of an emergency, as determined by
          Landlord in its sole and absolute judgment, or if Landlord otherwise determines
          in its sole discretion that such performance is necessary or desirable for the
          preservation of the rights and interests or safety of other tenants of the
          Building or the Project.

(c)    
          If Landlord performs any of Tenants obligations hereunder in accordance
          with this Paragraph 26, the full amount of the cost and expense incurred or
          the payment so made or the amount of the loss so sustained shall immediately be
          owing by Tenant to Landlord, and Tenant shall promptly pay to Landlord upon
          demand, as Additional Rent, the full amount thereof with interest thereon from
          the date of payment by Landlord at the lower of (i) ten percent (10%) per
          annum, or (ii) the highest rate permitted by applicable law.

27.    
          ATTORNEYS FEES

If
either party hereto fails to perform any of its obligations under this Lease or if any
dispute arises between the parties hereto concerning the meaning or interpretation of any
provision of this Lease, then the defaulting party or the party not prevailing in such
dispute, as the case may be, shall pay any and all costs and expenses incurred by the
other party on account of such default and/or in enforcing or establishing its rights
hereunder, including, without limitation, court costs and reasonable attorneys fees
and disbursements. Any such attorneys fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Lease shall be recoverable
separately from and in addition to any other amount included in such judgment, and such
attorneys fees obligation is intended to be severable from the other provisions of
this Lease and to survive and not be merged into any such judgment.

# 28. TAXES

Tenant
shall be liable for and shall pay, prior to delinquency, all taxes levied against
Tenants Property. If any Alteration installed by Tenant or any of Tenants
Property is assessed and taxed with the Project or the Building, Tenant shall pay such
taxes to Landlord within ten (10) days after delivery to Tenant of a statement
therefor.

# 29. EFFECT OF CONVEYANCE

The
term Landlord as used in this Lease means, from time to time, the then
current owner of the Building or the Project containing the Premises, so that, in the
event of any sale of the Building or the Project, Landlord shall be and hereby is entirely
freed and relieved of all covenants and obligations of Landlord hereunder to the extent
the purchaser assumes in writing all of Landlords obligations under this Lease, and
it shall be deemed and construed, without further agreement between the parties and the
purchaser at any such sale, that the purchaser of the Building or the Project has assumed
and agreed to carry out any and all covenants and obligations of Landlord hereunder.

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# 30. TENANTS
ESTOPPEL CERTIFICATE

From
time to time, upon written request of Landlord, Tenant shall execute, acknowledge and
deliver to Landlord or its designee, an Estoppel Certificate in substantially the form
attached hereto as Exhibit E and with any other statements
reasonably requested by Landlord or its designee. Any such Estoppel Certificate delivered
pursuant to this Paragraph 30 may be relied upon by a prospective purchaser of
Landlords interest or a mortgagee of Landlords interest or assignee of any
mortgage upon Landlords interest in the Premises. If Tenant shall fail to provide
such certificate within ten (10) business days of receipt by Tenant of a written
request by Landlord as herein provided, such failure shall, at Landlords election,
constitute a Default under this Lease, and Tenant shall be deemed to have given such
certificate as above provided without modification and shall be deemed to have admitted
the accuracy of any information supplied by Landlord to a prospective purchaser or
mortgagee.

# 31. SUBORDINATION

This
Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate to all
ground leases, overriding leases and underlying leases affecting the Building or the
Project now or hereafter existing and each of the terms, covenants and conditions thereto
(the Superior Lease(s)), and to all mortgages which may now or
hereafter affect the Building, the Project or any of such leases and each of the terms,
covenants and conditions thereto (the Superior Mortgage(s)), whether or
not such mortgages shall also cover other lands, buildings or leases, to each and every
advance made or hereafter to be made under such mortgages, and to all renewals,
modifications, replacements and extensions of such leases and such mortgages and spreaders
and consolidations of such mortgages. This Paragraph shall be self-operative and no
further instrument of subordination shall be required. Tenant shall promptly execute,
acknowledge and deliver any reasonable instrument that Landlord, the lessor under any such
lease or the holder of any such mortgage or any of their respective successors in interest
may reasonably request to evidence such subordination within ten (10) business days
after request therefor. Without limiting the foregoing, Tenants failure to execute,
acknowledge and deliver such instrument within the aforesaid time period shall constitute
a Default hereunder. As used herein the lessor of a Superior Lease or its successor in
interest is herein called Superior Lessor; and the holder of a Superior
Mortgage is herein called Superior Mortgagee.

If
any Superior Lessor or Superior Mortgagee shall succeed to the rights of Landlord under
this Lease, whether through possession or foreclosure action or delivery of a new lease or
deed (such party so succeeding to Landlords rights herein called Successor
Landlord), then Tenant shall attorn to and recognize such Successor Landlord as
Tenants landlord under this Lease (without the need for further agreement) and shall
promptly execute and deliver any reasonable instrument that such Successor Landlord may
reasonably request to evidence such attornment. This Lease shall continue in full force
and effect as a direct lease between the Successor Landlord and Tenant upon all of the
terms, conditions and covenants as are set forth in this Lease, except that the Successor
Landlord shall not (a) be liable for any previous act or omission of Landlord under
this Lease, except to the extent such act or omission shall constitute a continuing
Landlord default hereunder; (b) be subject to any offset, not expressly provided for
in this Lease; or (c) be bound by any previous modification of this Lease or by any
previous prepayment of more than one months Base Rent, unless such modification or
prepayment shall have been expressly approved in writing by the Successor Landlord (or its
predecessor in interest).

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Notwithstanding
anything to the contrary in this Lease, this Lease shall not be subject or subordinate to
any ground or underlying lease or to any lien, mortgage, deed of trust, or security
interest now or hereafter affecting the Premises, nor shall Tenant be required to execute
any documents subordinating this Lease, unless the ground lessor, lender, or other holder
of the interest to which this Lease shall be subordinated contemporaneously executes a
recognition and nondisturbance agreement which (i) provides that this Lease shall not
be terminated so long as Tenant is not in default under this Lease and
(ii) recognizes all of Tenants rights hereunder. Landlord represents and
warrants that, as of the date of this Lease, there are no Superior Leases or Superior
Mortgages or deeds of trust encumbering Landlords title to the Premises or the
Project.

32.    
          ENVIRONMENTAL COVENANTS

(a)    
          Prior to executing this Lease, Tenant has completed, executed and delivered to
          Landlord a Hazardous Materials Disclosure Certificate (Initial
          Disclosure Certificate), a fully completed copy of which is attached
          hereto as Exhibit F and incorporated herein by this
          reference. By execution of this Lease, Landlord shall be deemed to have approved
          the Initial Disclosure Certificate and the materials indicated thereon shall be
          deemed necessary for the ordinary performance of Tenants
          business for purposes of Paragraph 32(d) below. Tenant covenants,
          represents and warrants to Landlord that the information on the Initial
          Disclosure Certificate is true and correct and accurately describes the
          Hazardous Materials which will be manufactured, treated, used or stored on or
          about the Premises by Tenant or Tenants Agents. Tenant shall, on each
          anniversary of the Commencement Date and at such other times as Tenant desires
          to manufacture, treat, use or store on or about the Premises new or additional
          Hazardous Materials which were not listed on the Initial Disclosure Certificate,
          complete, execute and deliver to Landlord an updated Disclosure Certificate
          (each, an Updated Disclosure Certificate) describing
          Tenants then current and proposed future uses of Hazardous Materials on or
          about the Premises, which Updated Disclosure Certificates shall be in the same
          format as that which is set forth in Exhibit F or in
          such updated format as Landlord may require from time to time. Tenant shall
          deliver an Updated Disclosure Certificate to Landlord not less than
          thirty (30) days prior to the date Tenant intends to commence the
          manufacture, treatment, use or storage of new or additional Hazardous Materials
          on or about the Premises, and Landlord shall have the right to approve or
          disapprove such new or additional Hazardous Materials in its reasonable
          discretion. Tenant shall make no use of Hazardous Materials on or about the
          Premises except as described in the Initial Disclosure Certificate or as
          otherwise approved by Landlord in writing in accordance with this
          Paragraph 32(a).

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(b)    
          As used in this Lease, the term Hazardous Materials shall
          mean and include any substance that is or contains: (i) any hazardous
          substance as now or hereafter defined in § 101(14) of the
          Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
          as amended (CERCLA) (42 U.S.C. § 9601
          et seq.) or any regulations promulgated under CERCLA; (ii) any
          hazardous waste as now or hereafter defined in the Resource
          Conservation and Recovery Act, as amended (RCRA)
          (42 U.S.C. § 6901 et seq.) or any regulations
          promulgated under RCRA; (iii) any substance now or hereafter regulated by
          the Toxic Substances Control Act, as amended (TSCA)
          (15 U.S.C. § 2601 et seq.) or any regulations
          promulgated under TSCA; (iv) petroleum, petroleum by-products, gasoline,
          diesel fuel, or other petroleum hydrocarbons; (v) asbestos and
          asbestos-containing material, in any form, whether friable or non-friable;
          (vi) polychlorinated biphenyls; (vii) lead and lead-containing
          materials; or (viii) any additional substance, material or waste
          (A) the presence of which on or about the Premises (1) requires
          reporting, investigation or remediation under any Environmental Laws (as
          hereinafter defined), (2) causes or threatens to cause a nuisance on the
          Premises or any adjacent area or property or poses or threatens to pose a hazard
          to the health or safety of persons on the Premises or any adjacent area or
          property, or (3) which, if it emanated or migrated from the Premises, could
          constitute a trespass, or (B) which is now or is hereafter classified or
          considered to be hazardous or toxic under any Environmental Laws.

(c)    
          As used in this Lease, the term Environmental Laws shall mean
          and include: (i) CERCLA, RCRA and TSCA; and (ii) any other federal,
          state or local laws, ordinances, statutes, codes, rules, regulations, orders or
          decrees now or hereinafter in effect relating to (A) pollution,
          (B) the protection or regulation of human health, natural resources or the
          environment, (C) the treatment, storage or disposal of Hazardous Materials,
          or (D) the emission, discharge, release or threatened release of Hazardous
          Materials into the environment.

(d)    
          Tenant agrees that during its use and occupancy of the Premises it will:
          (i) not (A) permit Hazardous Materials to be present on or about the
          Premises except in a manner and quantity necessary for the ordinary performance
          of Tenants business or (B) release, discharge or dispose of any
          Hazardous Materials on, in, at, under, or emanating from, the Premises, the
          Building or the Project (except for de minimis amounts of products
          containing small quantities of Hazardous Materials which products are of a type
          customarily found in offices and in full compliance with any Environmental
          Laws); (ii) comply with all Environmental Laws relating to the Premises and
          the use of Hazardous Materials on or about the Premises and not engage in or
          permit others to engage in any activity at the Premises in violation of any
          Environmental Laws; and (iii) immediately notify Landlord of (A) any
          inquiry, test, investigation or enforcement proceeding by any governmental
          agency or authority against Tenant, Landlord or the Premises, the Building or
          the Project relating to any Hazardous Materials or under any Environmental Laws
          of which Tenant receives notice or (B) the occurrence of any event or
          existence of any condition that would cause a breach of any of the covenants set
          forth in this Paragraph 32.

(e)    
          If Tenants use of Hazardous Materials on or about the Premises results in
          a release, discharge or disposal of Hazardous Materials on, in, at, under, or
          emanating from, the Premises, the Building or the Project, Tenant agrees to
          investigate, clean up, remove or remediate such Hazardous Materials in full
          compliance with: (i) the requirements of (A) all Environmental Laws
          and (B) any governmental agency or authority responsible for the
          enforcement of any Environmental Laws; and (ii) any additional requirements
          of Landlord that are reasonably necessary to protect the value of the Premises,
          the Building or the Project.

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(f)    
          Upon twenty-four (24) hours prior notice, which may be telephonic, and
          subject to Tenants reasonable security requirements (except in the case of
          an emergency in which case no notice shall be required) Landlord may inspect the
          Premises and surrounding areas for the purpose of determining whether there
          exists on or about the Premises any Hazardous Material or other condition or
          activity that is in violation of the requirements of this Lease or of any
          Environmental Laws. Such inspections may include, but are not limited to,
          entering the Premises or adjacent property with drill rigs or other machinery
          for the purpose of obtaining laboratory samples. Landlord shall not be limited
          in the number of such inspections during the Term of this Lease. In the event
          (i) such inspections reveal the presence of any such Hazardous Material or
          other condition or activity caused by Tenant or Tenants Agents in
          violation of the requirements of this Lease or of any Environmental Laws, or
          (ii) Tenant or its Agents contribute or knowingly consent to the presence
          of any Hazardous Materials in, on, under, through or about the Premises, the
          Building or the Project in violation of the requirements of this Lease or any
          Environmental Laws or exacerbate the condition of or the conditions caused by
          any Hazardous Materials in, on, under, through or about the Premises, the
          Building or the Project, of which condition Tenant had prior written notice,
          Tenant shall reimburse Landlord for the cost of such inspections within
          ten (10) days of receipt of a written statement therefor. Tenant will
          supply to Landlord such historical and operational information regarding the
          Premises and surrounding areas as may be reasonably requested to facilitate any
          such inspection and will make available for meetings appropriate personnel
          having knowledge of such matters. Landlord will have an opportunity to perform
          such an inspection prior to Tenants vacation of the Premises. The right
          granted to Landlord herein to perform inspections shall not create a duty on
          Landlords part to inspect the Premises, or liability on the part of
          Landlord for Tenants use, storage, treatment or disposal of Hazardous
          Materials, it being understood that Tenant shall be solely responsible for all
          liability in connection therewith. In connection with Landlords exercise
          of right under this Paragraph, Landlord shall use commercially reasonably
          efforts to minimize any disruption to Tenants use of the Premises and
          conduct of business.

(g)    
          Landlord shall have the right, but not the obligation, prior or subsequent to a
          Default, without in any way limiting Landlords other rights and remedies
          under this Lease, to enter upon the Premises, or to take such other actions as
          it deems necessary or advisable, to investigate, clean up, remove or remediate
          any Hazardous Materials or contamination by Hazardous Materials present on, in,
          at, under, or emanating from, the Premises, the Building or the Project in
          violation of Tenants obligations under this Lease or under any
          Environmental Laws. Notwithstanding any other provision of this Lease, Landlord
          shall also have the right, at its election, in its own name or as Tenants
          agent, to negotiate, defend, approve and appeal, at Tenants expense, any
          action taken or order issued by any governmental agency or authority with regard
          to any such Hazardous Materials or contamination by Hazardous Materials
          referenced in the preceding sentence. All costs and expenses paid or incurred by
          Landlord in the exercise of the rights set forth in this Paragraph 32 shall
          be payable by Tenant upon demand.

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(h)    
          Tenant shall surrender the Premises to Landlord upon the expiration or earlier
          termination of this Lease free of debris, waste or Hazardous Materials placed
          on, about or near the Premises by Tenant or Tenants Agents, and in a
          condition which complies with all Environmental Laws and any additional
          requirements of Landlord that are reasonably necessary to protect the value of
          the Premises, the Building or the Project, including, without limitation, the
          obtaining of any closure permits or other governmental permits or approvals
          related to Tenants use of Hazardous Materials in or about the Premises.
          Tenants obligations and liabilities pursuant to the provisions of this
          Paragraph 32 shall survive the expiration or earlier termination of this
          Lease. If it is determined by Landlord that the condition of all or any portion
          of the Premises, the Building, and/or the Project is not in compliance with the
          provisions of this Lease with respect to Hazardous Materials, including, without
          limitation, all Environmental Laws, at the expiration or earlier termination of
          this Lease, then at Landlords sole option, Landlord may require Tenant to
          hold over possession of the Premises until Tenant can surrender the Premises to
          Landlord in the condition in which the Premises existed as of the Commencement
          Date and prior to the appearance of such Hazardous Materials except for normal
          wear and tear, including, without limitation, the conduct or performance of any
          closures as required by any Environmental Laws. The burden of proof hereunder
          shall be upon Tenant. For purposes hereof, the term normal wear and
          tear shall not include any deterioration in the condition or
          diminution of the value of any portion of the Premises, the Building, and/or the
          Project in any manner whatsoever related to directly, or indirectly, Hazardous
          Materials. Any such holdover by Tenant will be with Landlords consent,
          will not be terminable by Tenant in any event or circumstance and will otherwise
          be subject to the provisions of Paragraph 35 of this Lease.

(i)    
          Tenant agrees to indemnify and hold harmless Landlord from and against any and
          all claims, losses (including, without limitation, loss in value of the
          Premises, the Building or the Project, liabilities and expenses (including
          attorneys fees)) sustained by Landlord attributable to (i) any
          Hazardous Materials placed on or about the Premises, the Building or the Project
          by Tenant or Tenants Agents, or (ii) Tenants breach of any
          provision of this Paragraph 32.

(j)    
          Notwithstanding anything in this Lease to the contrary, Tenant shall not be
          responsible for the clean-up, monitoring or remediation of, and shall not be
          required to indemnify Landlord against any claims, losses, liabilities or
          expenses resulting from, any Hazardous Materials placed on or about the Premises
          by parties other than Tenant or Tenants Agents, except to the extent that
          the contamination caused by such Hazardous Materials has been knowingly or
          negligently exacerbated by Tenant or Tenants Agents or by Tenants
          failure to perform its obligations under this Paragraph.

(k)    
          The provisions of this Paragraph 32 shall survive the expiration or earlier
          termination of this Lease.

33.    
          NOTICES

All
notices and demands which are required or may be permitted to be given to either party by
the other hereunder shall be in writing and shall be sent by United States mail, postage
prepaid, certified, or by personal delivery or overnight courier, addressed to the
addressee at Tenants Address or Landlords Address as specified in the Basic
Lease Information, or to such other place as either party may from time to time designate
in a notice to the other party given as provided herein. Copies of all notices and demands
given to Landlord shall additionally be sent to Landlords property manager at the
address specified in the Basic Lease Information or at such other address as Landlord may
specify in writing from time to time. Notice shall be deemed given upon actual receipt (or
attempted delivery if delivery is refused), if personally delivered, or one (1)
business day following deposit with a reputable overnight courier that provides a receipt,
or on the third (3rd) day following deposit in the United States mail in the manner
described above.

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# 34. WAIVER

The
waiver of any breach of any term, covenant or condition of this Lease shall not be deemed
to be a waiver of such term, covenant or condition or of any subsequent breach of the same
or any other term, covenant or condition herein contained. The subsequent acceptance of
Rent by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant,
other than the failure of Tenant to pay the particular rental so accepted, regardless of
Landlords knowledge of such preceding breach at the time of acceptance of such Rent.
No delay or omission in the exercise of any right or remedy of Landlord in regard to any
Default by Tenant shall impair such a right or remedy or be construed as a waiver. Any
waiver by Landlord of any Default must be in writing and shall not be a waiver of any
other Default concerning the same or any other provisions of this Lease.

# 35. HOLDING OVER

Any
holding over after the expiration of the Term, without the express written consent of
Landlord, shall constitute a Default and, without limiting Landlords remedies
provided in this Lease, such holding over shall be construed to be a tenancy at
sufferance, at a rental rate equal to one hundred fifty percent (150%) of the Base Rent
last due in this Lease, plus Additional Rent, and shall otherwise be on the terms and
conditions herein specified, so far as applicable; provided, however, that in no event
shall any renewal or expansion option or other similar right or option contained in this
Lease be deemed applicable to any such tenancy at sufferance. If the Premises are not
surrendered at the end of the Term or sooner termination of this Lease, and in accordance
with the provisions of Paragraphs 11 and 32(h), Tenant shall indemnify, defend and
hold Landlord harmless from and against any and all loss or liability resulting from delay
by Tenant in so surrendering the Premises including, without limitation, any loss or
liability resulting from any claim against Landlord made by any succeeding tenant or
prospective tenant founded on or resulting from such delay and losses to Landlord due to
lost opportunities to lease any portion of the Premises to any such succeeding tenant or
prospective tenant, together with, in each case, actual attorneys fees and costs.

# 36. SUCCESSORS AND
ASSIGNS

The
terms, covenants and conditions of this Lease shall, subject to the provisions as to
assignment, apply to and bind the heirs, successors, executors, administrators and assigns
of all of the parties hereto. If Tenant shall consist of more than one entity or person,
the obligations of Tenant under this Lease shall be joint and several.

# 37. TIME

Time
is of the essence of this Lease and each and every term, condition and provision herein.

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# 38. BROKERS

Landlord
and Tenant each represents and warrants to the other that neither it nor its officers or
agents nor anyone acting on its behalf has dealt with any real estate broker except the
Brokers specified in the Basic Lease Information in the negotiating or making of this
Lease, and each party agrees to indemnify and hold harmless the other from any claim or
claims, and costs and expenses, including attorneys fees, incurred by the
indemnified party in conjunction with any such claim or claims of any other broker or
brokers to a commission in connection with this Lease as a result of the actions of the
indemnifying party. Provided that this Lease is fully executed by the parties hereto, then
Landlord shall pay a commission to Landlords Broker pursuant to a separate written
agreement between Landlord and Landlords Broker, and Landlords Broker shall be
responsible for any portion of such commission payable to Tenants Broker.

# 39. LIMITATION OF
LIABILITY

Tenant
agrees that, in the event of any default or breach by Landlord under this Lease or arising
in connection herewith or with Landlords operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Project or the Premises,
Tenants remedies shall be limited solely and exclusively to an amount which is equal
to the interest in the Buildings of the then current Landlord, including, without
limitation, any sales, condemnation or insurance proceeds received by Landlord or the
Landlord Parties in connection with the Project, any Building or the Premises.
For purposes of this Lease, Landlord Parties shall mean, collectively
Landlord, its partners, shareholders, officers, directors, employees, investment advisors,
or any successor in interest of any of them. Neither Landlord, nor any of the Landlord
Parties shall have any personal liability therefor, and Tenant hereby expressly waives and
releases such personal liability on behalf of itself and all persons claiming by, through
or under Tenant. The limitations of liability contained in this Paragraph 39 shall
inure to the benefit of Landlords and the Landlord Parties present and future
partners, beneficiaries, officers, directors, trustees, shareholders, agents and
employees, and their respective partners, heirs, successors and assigns. Under no
circumstances shall any present or future partner of Landlord (if Landlord is a
partnership), future member in Landlord (if Landlord is a limited liability company) or
trustee or beneficiary (if Landlord or any partner or member of Landlord is a trust), have
any liability for the performance of Landlords obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord Parties
shall be liable under any circumstances for injury or damage to, or interference with
Tenants business, including, but not limited to, loss or profits, loss of rents or
other revenues, loss of business opportunity, loss of goodwill or loss of use, in each
case, however occurring. The provisions of this Paragraph shall apply only to Landlord and
the parties herein described, and shall not be for the benefit of any insurer nor any
other third party.

# 40. FINANCIAL STATEMENTS

Within
ten (10) days after Landlords request, Tenant shall deliver to Landlord the
then current financial statements of Tenant (including interim periods following the end
of the last fiscal year for which annual statements are available), prepared or compiled
by a certified public accountant, including a balance sheet and profit and loss statement
for the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied.

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# 41. RULES AND REGULATIONS

Tenant
agrees to comply with such reasonable rules and regulations as Landlord may adopt from
time to time for the orderly and proper operation of the Building and the Project. Such
rules may include but shall not be limited to the regulation of the removal, storage and
disposal of Tenants refuse and other rubbish at the sole cost and expense of Tenant.
The then current rules and regulations shall be binding upon Tenant upon delivery of a
copy of them to Tenant. Landlord shall not be responsible to Tenant for the failure of any
other person to observe and abide by any of said rules and regulations. Landlords
current rules and regulations are attached to this Lease as
Exhibit D.

42.    
          MORTGAGEE PROTECTION

(a)    
          Modifications for Lender. If, in connection with obtaining
          financing for the Project or any portion thereof, Landlords lender shall
          request reasonable modifications to this Lease as a condition to such financing,
          Tenant shall not unreasonably withhold, delay or defer its consent to such
          modifications, provided that such modifications do not adversely affect
          Tenants rights or increase Tenants obligations under this Lease.

(b)    
          Rights to Cure. Tenant agrees to give to any trust deed or
          mortgage holder (Holder), by registered mail, at the same
          time as it is given to Landlord, a copy of any notice of default given to
          Landlord, provided that, prior to such notice, Tenant has been notified in
          writing (by way of notice of assignment of rents and leases, or otherwise) of
          the address of such Holder. Tenant further agrees that if Landlord shall have
          failed to cure such default within the time provided for in this Lease, then the
          Holder shall have an additional twenty (20) days after expiration of such
          period, or after receipt of such notice from Tenant (if such notice to the
          Holder is required by this Paragraph 42(b)), whichever shall last occur
          within which to cure such default or if such default cannot be cured within that
          time, then such additional time as may be necessary if within such
          twenty (20) days, any Holder has commenced and is diligently pursuing the
          remedies necessary to cure such default (including, but not limited to,
          commencement of foreclosure proceedings, if necessary to effect such cure, but
          in no event to exceed one hundred twenty (120) days after Tenants first
          written notice to Landlord), in which event this Lease shall not be terminated.

43.    
          ENTIRE AGREEMENT

This
Lease, including the Exhibits and any Addenda attached hereto, which are hereby
incorporated herein by this reference, contains the entire agreement of the parties
hereto, and no representations, inducements, promises or agreements, oral or otherwise,
between the parties, not embodied herein or therein, shall be of any force and effect.

# 44. INTEREST

Any
installment of Rent and any other sum due from Tenant under this Lease (including any
exhibits and amendments hereto) which is not received by Landlord within ten (10)
days from when the same is due shall bear interest from the date such payment was
originally due under this Lease until paid at an annual rate equal to the maximum rate of
interest permitted by law. Payment of such interest shall not excuse or cure any Default
by Tenant. In addition, Tenant shall pay all costs and attorneys fees incurred by
Landlord in collection of such amounts.

41

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# 45. CONSTRUCTION

This
Lease shall be construed and interpreted in accordance with the laws of the State of
California. The parties acknowledge and agree that no rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall be employed in
the interpretation of this Lease, including the Exhibits and any Addenda attached hereto.
All captions in this Lease are for reference only and shall not be used in the
interpretation of this Lease. Whenever required by the context of this Lease, the singular
shall include the plural, the masculine shall include the feminine, and vice versa. If any
provision of this Lease shall be determined to be illegal or unenforceable, such
determination shall not affect any other provision of this Lease and all such other
provisions shall remain in full force and effect.

# 46. REPRESENTATIONS AND
WARRANTIES OF TENANT

Tenant
hereby makes the following representations and warranties as of the date of this Lease,
each of which is material and being relied upon by Landlord, is true in all respects as of
the date of this Lease, and shall survive the expiration or termination of this Lease.

(a)    
          If Tenant is an entity, Tenant is duly organized, validly existing and in good
          standing under the laws of the state of its organization and the persons
          executing this Lease on behalf of Tenant have the full right and authority to
          execute this Lease on behalf of Tenant and to bind Tenant without the consent or
          approval of any other person or entity. Tenant has full power, capacity,
          authority and legal right to execute and deliver this Lease and to perform all
          of its obligations hereunder. This Lease is a legal, valid and binding
          obligation of Tenant, enforceable in accordance with its terms.

(b)    
          Tenant has not (i) made a general assignment for the benefit of creditors,
          (ii) filed any voluntary petition in bankruptcy or suffered the filing of
          an involuntary petition by any creditors, (iii) suffered the appointment of
          a receiver to take possession of all or substantially all of its assets,
          (iv) suffered the attachment or other judicial seizure of all or
          substantially all of its assets, (v) admitted in writing its inability to
          pay its debts as they come due, or (vi) made an offer of settlement,
          extension or composition to its creditors generally.

47.    
          SECURITY

(a)    
          Tenant acknowledges and agrees that, while Landlord may engage security
          personnel to patrol the Building or the Project, Landlord is not providing any
          security services with respect to the Premises, the Building or the Project and
          that Landlord shall not be liable to Tenant for, and Tenant waives any claim
          against Landlord with respect to, any loss by theft or any other damage suffered
          or incurred by Tenant in connection with any unauthorized entry into the
          Premises or any other breach of security with respect to the Premises, the
          Building or the Project.

42

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(b)    
          Tenant hereby agrees to the exercise by Landlord and Landlords Agents,
          within their sole discretion, of such security measures as, but not limited to,
          the evacuation of the Premises, the Building or the Project for cause, suspected
          cause or for drill purposes, the denial of any access to the Premises, the
          Building or the Project and other similarly related actions that it deems
          necessary to prevent any threat of property damage or bodily injury. The
          exercise of such security measures by Landlord and Landlords Agents, and
          the resulting interruption of service and cessation of Tenants business,
          if any, shall not be deemed an eviction or disturbance of Tenants use and
          possession of the Premises, or any part thereof, or render Landlord or
          Landlords Agents liable to Tenant for any resulting damages or relieve
          Tenant from Tenants obligations under this Lease.

48.    
          JURY TRIAL WAIVER

Landlord
and Tenant hereby waive their respective rights to trial by jury with respect to any
action or proceeding (a) brought by Landlord, Tenant or any other party, relating to
(i) this Lease and/or any understandings or prior dealings between the parties
hereto, or (ii) the Premises, the Building or the Project or any part thereof, or
(b) to which Landlord is a party. Landlord and Tenant each hereby agrees that this
Lease constitutes a written consent to waiver of trial by jury pursuant to the provisions
of California Code of Civil Procedure Section 631, and Landlord and Tenant do each
hereby authorize and empower the other to file this Lease with the clerk or judge of any
court of competent jurisdiction as a statutory written consent to waiver of trial by jury.

# 49. APPROVALS

Whenever
this Lease requires an approval, consent, designation, determination, selection or
judgment by either Landlord or Tenant, except as otherwise specifically set forth in this
Lease, such approval, consent, designation, determination, selection or judgment and any
conditions imposed thereby shall be reasonable and shall not be unreasonably withheld or
delayed and, in exercising any right or remedy hereunder, each party shall at all times
act reasonably and in good faith.

# 50. REASONABLE
EXPENDITURES

Any
expenditure by a party permitted or required under this Lease, for which such party is
entitled to demand and does demand reimbursement from the other party, shall be reasonably
incurred, and shall be substantiated by documentary evidence available for inspection and
review by the other party or its representative during normal business hours. The terms of
this Paragraph ý50 shall not apply to the payment of Additional Rent by
Tenant, which shall be governed solely by the terms of Paragraph 4(b) aboveý.

# 51. LANDLORDS
DEFAULT

In
the event that Landlord fails to perform a material obligation of Landlord under this
Lease, Tenant shall provide written notice of such failure to Landlord. Landlord shall
have thirty (30) days after receipt of such notice to cure such failure (or, if
Landlord can not reasonably cure such failure within such thirty (30) day period,
such additional time as Landlord reasonably requires to cure the same). If Landlord fails
to commence to cure such failure within thirty (30) days and thereafter diligently
prosecute such cure to completion, and if such failure on the part of Landlord results in
a material interference with Tenants ability to conduct its business operations in
the Premises, then Tenant shall have the right to take such actions as may be reasonably
required to cure such failure. Landlord shall reimburse Tenant for the reasonable costs
incurred by Tenant in effectuating a cure in accordance with this Paragraph 51.

43

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Landlord
and Tenant have executed and delivered this Lease as of the Lease Date specified in the
Basic Lease Information.

| |           |                                               
| | --------- | ----------------------------------------------
| | LANDLORD: | Moffett Office Park Investors llc,            
| |           | a Delaware limited liability company          
| |           |                                               
| |           | By:      UBS Realty Investors LLC,            
| |           | a Massachusetts limited liability company,    
| |           | its Manager                                   
| |           |                                               
| |           | By: ________________________________________  
| |           |                                               
| |           | Name: ______________________________________  
| |           |                                               
| |           | Title: _______________________________________
| |           |                                               
| |           |                                               

| |         |                                                  
| | ------- | -------------------------------------------------
| | TENANT: | Alliance Fiber Optic Products, Inc.,             
| |         | a Delaware corporation                           
| |         |                                                  
| |         |                                                  
| |         | By: ___________________________________________  
| |         |                                                  
| |         | Name: _________________________________________  
| |         |                                                  
| |         | Title: __________________________________________
| |         |                                                  
| |         | By: ___________________________________________  
| |         |                                                  
| |         | Name: ________________________________________   
| |         |                                                  
| |         | Title: ________________________________________  
| |         |                                                  
| |         |                                                  

| | *In
conformance with California Corporations Code §313, this document is to be signed by
(i) the chairman of the board, the president or any vice president, and
(ii) the secretary, any assistant secretary, the chief financial officer or any
assistant treasurer of the Tenant.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

44

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EXHIBIT A

# DIAGRAM OF THE PREMISES

A-1

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EXHIBIT B

# TENANT IMPROVEMENTS
WORK LETTER

1.(a)    
          Landlord agrees to construct certain Tenant Improvements (defined below) in the
          Premises pursuant to this Exhibit B, and to provide
          Tenant with a Tenant Improvements allowance (the Tenant Improvements
          Allowance) for the planning and construction of the Tenant
          Improvements, which Tenant Improvements Allowance shall be Six Hundred
          Ninety-Six Thousand Dollars ($696,000.00).

(b)    
          The Tenant Improvements Allowance shall be paid and the Tenant Improvements
          shall be completed as set out in this Work Letter.

(c)    
          If the actual cost of planning and constructing the Tenant Improvements (as
          defined below, the Tenant Improvements Cost) depicted on the
          Final Plans (defined below) shall be less than the Tenant Improvements
          Allowance, the Tenant Improvements Allowance shall be reduced to an amount equal
          to said actual cost, and the monthly Base Rent payable by Tenant under this
          Lease shall be adjusted as hereinafter provided. For every One Dollar ($1.00)
          per rentable square foot of the Tenant Improvements Allowance that is not used,
          the monthly Base Rent shall be reduced by one cent ($0.01) per square foot per
          month, or a corresponding fraction thereof. By way of example, if the actual
          Tenant Improvements Allowance disbursed by Landlord is $626,400.00
          (viz., $18.00 per square foot), then the Base Rent shall be reduced
          by two cents ($0.02) per square foot per month or twenty-four cents ($0.24) per
          square foot on an annual basis. If the actual Tenant Improvements Allowance
          disbursed by Landlord is $609,000.00 (viz., $17.50 per square foot),
          then the Base Rent shall be reduced by two and one-half cents ($0.025) per
          square foot per month or thirty cents ($0.30) per square foot on an annual
          basis. Notwithstanding anything herein to the contrary, in no event shall the
          Base Rent be reduced under this Paragraph 1(c) by more than five cents
          ($0.05) per square foot per month or sixty cents ($0.60) per square foot per
          year. In the event the actual Tenant Improvements Allowance disbursed by
          Landlord is $522,000.00 (viz., $15.00 per square foot) or less, then Tenant
          shall be entitled to a reduction in Base Rent equal to five cents ($0.05) per
          square foot per month or sixty cents ($0.60) per square foot per year.

(d)    
          The Tenant Improvements Allowance shall be applied solely to the cost of
          Tenants leasehold improvements (as defined below, the Tenant
          Improvements) as specified in the Final Plans and for Tenants
          furniture, furnishings, security systems and cabling that is reasonably approved
          by Landlord in writing. In determining whether or not to approve the use of the
          Tenant Improvements Allowance to pay for such furniture, furnishings and
          cabling, Landlord shall have the right in its good faith reasonable discretion
          to consider whether such items are generic and will be useable by a successor
          tenant of the Premises. The items approved by Landlord pursuant to this
          Paragraph 1(d) shall be herein referred to as the Approved
          Furnishings. The Approved Furnishings shall be and remain the property
          of Landlord at all times, shall be maintained by Tenant throughout the Term,
          shall not be considered Tenants Property and shall be surrendered by
          Tenant to Landlord in good condition and repair, reasonable wear and tear
          excepted, upon the Expiration Date or sooner termination of this Lease.

B-1

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2.    
          (a) Tenant Improvements shall include only those improvements
          within the interior portions of the Premises which are depicted on the Final
          Plans. Tenant Improvements shall specifically not include any
          alterations installed or constructed by Tenant, or any of Tenants personal
          property, or the purchase of supplies, equipment, furniture or other items of
          personal property of Tenant, excluding only the Approved Furnishings and except
          as may be specifically provided below.

(b)    
          The Tenant Improvements may include:

(i)    
          partitioning, doors, floor covering, finishes, ceilings, wall coverings and
          painting, millwork and similar items;

(ii)    
          electrical wiring, lighting fixtures, outlets and switches, and other electrical
          work;

(iii)    
          duct work, terminal boxes, diffusers and accessories required for the completion
          of the heating, ventilation and air conditioning systems serving the Premises,
          including the cost of meter and key control for after-hours air conditioning;

(iv)    
          additional Tenant requirements, including, but not limited to, odor control,
          special heating, ventilation and air conditioning, noise or vibration control,
          security systems, alarm and access cards or other special systems;

(v)    
          fire and life safety control systems such as fire walls, sprinklers, halon, fire
          alarms, including piping, wiring and accessories installed within the Building
          and serving the Premises; and

(vi)    
          plumbing, fixtures, pipes and accessories to be installed within the Building
          and serving the Premises.

(c)    
          Without limiting the terms of Paragraph 2(b) above, the Tenant Improvements
          shall include a clean room, the construction of which shall include demountable
          walls and ceilings.

(d)    
          The Tenant Improvements Cost shall include all fees, costs and expenses
          associated with the design, preparation, approval and construction of the Tenant
          Improvements, including, but not limited to, the following:

(i)    
          all costs of preliminary and final architectural and engineering plans and
          specifications for the Tenant Improvements, and engineering costs associated
          with completion of the State of California energy utilization calculations under
          Title 24 legislation;

(ii)    
          all costs of obtaining building permits and other necessary authorizations and
          approvals from governmental authorities, including inspection fees;

(iii)    
          all costs of interior design and finish schedule plans and specifications,
          including as-built drawings;

B-2

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(iv)    
          all direct and indirect costs of procuring, constructing and installing the
          Tenant Improvements in the Premises, including, but not limited to, the
          construction contractors fee for overhead and profit and the cost of all
          on-site supervisory and administrative staff, office, equipment, and temporary
          services in connection with the Tenant Improvements, and all labor (including
          overtime and security), supplies and materials for the Tenant Improvements;

(v)    
          all fees and charges payable to the architect, general contractor,
          subcontractors, and engineering firm if they are required by Tenant and/or any
          governmental authorities to redesign any portion of the Tenant Improvements
          following Tenants approval of the Final Plans;

(vi)    
          all competitive and reasonable construction supervision, development, and
          project management fees payable by Landlord to Landlords property
          management company or any other individual or entity;

(vii)    
          utility connection fees, if any; and

(viii)    applicable sales and use taxes, if any.

(e)    
          In no event shall the Tenant Improvements Cost include any costs of procuring,
          constructing or installing in the Premises any of Tenants personal
          property, except for the Approved Furnishings. In addition, the cost of the
          Tenant Improvements to be provided at Landlords sole expense shall include
          (and Tenant shall have no responsibility for and the Tenant Improvements
          Allowance shall not be used for) the following: (a) costs incurred to
          remove Hazardous Materials from the Premises or the surrounding area;
          (b) attorneys fees incurred in connection with negotiation of
          construction contracts, and attorneys fees, experts fees and other
          costs in connection with disputes with third parties; (c) interest and
          other costs of financing construction costs; (d) costs recovered by
          Landlord upon account of warranties and insurance; (e) penalties and late
          charges attributable to Landlords failure to pay construction costs,
          except to the extent that such failure is attributable to a Tenant Delay or a
          default by Tenant under this Lease; (f) costs for improvements (other than
          minor field changes) which are not shown on or described in the Final Plans
          unless otherwise approved by Tenant; (g) costs to bring the Premises into
          compliance with Environmental Laws, underwriters requirements, covenants,
          conditions and restrictions, and Laws relating to structure and or life safety
          systems; (h) wages, labor and overhead for overtime and premium time unless
          necessary due to Tenant Delay or otherwise requested by Tenant; and
          (i) general overhead costs incurred by Landlord or any construction
          management, profit and overhead charges payable to Landlord or any Landlord
          affiliates.

3.    
          (a)Landlord shall solicit bids from no less than three (3) general
          contractors for their fees in connection with the construction of the Tenant
          Improvements. If Tenant so desires, Tenant may also select a general
          contractor, reasonably acceptable to Landlord, to bid on its fee.All such
          bids will be opened and reviewed together with Tenant, following which
          Landlord shall, with input from Tenant, select the general
          contractor to construct the Tenant Improvements (the General
          Contractor), subject to the approval of Tenant, which approval
          shall not be unreasonably withheld, conditioned or delayed and shall be
          delivered within two (2) business days of Landlords selection.
          Notwithstanding Tenants right to approve the General Contractor,
          the General Contractor is the contractor of Landlord only, and Tenant shall have
          no liability to the General Contractor under the construction contract.

B-3

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(b) The
General Contractor shall solicit bids from a reasonable number of subcontractors and
equipment vendors (and shall endeavor to obtain at least three (3) bids for subcontractors
representing major trades) for the various elements of the Tenant Improvements. Landlord
shall, following a request from Tenant, instruct the General Contractor to also solicit
bids from any of Tenants preferred equipment vendors or subcontractors. All such
bids will be opened and reviewed together with Tenant. Landlord and/or the General
Contractor shall, with input form Tenant, select each the subcontractors and equipment
vendors, subject to the approval of Tenant, which approval shall not be unreasonably
withheld, conditioned or delayed and shall be delivered within two (2) business days of
such selection. Notwithstanding Tenants right to approve the subcontractors and
equipment vendors, such parties shall be under contract with the General Contractor only,
and Tenant shall have no liability to such subcontractors and equipment vendors.

(c) The
Tenant Improvements shall be constructed and completed by Landlords contractor in
compliance with all applicable statutes and regulations, in accordance with the Final
Plans and at the sole cost and expense of Tenant, subject to the Tenant Improvements
Allowance and otherwise as set forth in the Lease and this Work Letter. All mechanical,
structural, electrical, security, plumbing and fire sprinkler engineering work required
for completion of the Tenant Improvements shall be done by Landlords engineers at
Tenants expense, subject to the Tenant Improvements Allowance.

4.    
          (a) Landlord and Tenant have generally approved the initial space plan for the
          Premises attached hereto as Exhibit B-1 (the
          Initial Space Plan). Landlord shall retain an architect (the
          Architect) for the preparation of preliminary and final
          working architectural and engineering plans, drawings, and specifications for
          the Tenant Improvements (the Final Plans), which plans shall
          be generally consistent with the Initial Space Plan. The Final Plans shall
          include the construction and mechanical (sprinkler, air conditioning, heating,
          electric and plumbing) drawings for all mechanical elements of the Tenant
          Improvements. Landlord reserves the right to substitute for the Architect
          another architect of its selection with Tenants prior written approval and
          no additional cost whatsoever to Tenant. Landlord and Tenant shall
          provide input and cooperate diligently with the Architect and shall furnish
          within two (2) business days after request therefor, all information
          required by the Architect for completion of the Final Plans. Additionally,
          Tenant shall provide (in writing, if requested by Landlord) not later than
          two (2) business days after request therefor, any approval or disapproval
          which Tenant is permitted to give under this Work Letter. The Final Plans shall
          be subject to Landlords approval, which approval shall not be unreasonably
          withheld. Landlord shall not be deemed to have acted unreasonably if it
          withholds its approval of any plans, specifications, drawings or other details,
          or of any Change Order, or requires changes therein, because, in Landlords
          reasonable opinion, the work or the Tenant Improvements described therein falls
          within any of the categories set out below.

B-4

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(b)    
          In addition to any other items reasonably required by Landlord, Landlord may
          require revisions to the Final Plans based on whether they or the Tenant
          Improvements, as applicable: (i) are visible from outside the Premises,
          (ii) could or would increase Expenses, (iii) do not comply with
          applicable statutes or regulations, (iv) in Landlords judgment, are
          not consistent with the quality and character of the Project, (v) are
          likely to adversely affect Building Systems, the structure of the Building or
          the safety of the Building and/or its occupants, (vi) might impair
          Landlords ability to furnish services to Tenant or other tenants in the
          Building or the Project, (vii) would increase the cost of operating the
          Building or the Project, (viii) would violate any Laws, (ix) contain
          or use Hazardous Materials, (x) would adversely affect the appearance of
          the Building or the Project or the marketability of the Premises to subsequent
          tenants, (xi) might adversely affect another tenants premises or such
          other tenants use and enjoyment of such premises, (xii) are
          prohibited by any ground lease affecting the Building and/or the Project, or any
          private restrictions or any mortgage, trust deed or other instrument encumbering
          the Building and/or the Project, (xiii) are likely to be substantially
          delayed because of availability or shortage of labor or materials necessary to
          perform such work or the difficulties or unusual nature of such work,
          (xiv) are not, at a minimum, in accordance with Landlords building
          standards, or (xv) would increase the Tenant Improvements Cost by more than
          ten percent (10%) from the cost originally estimated and anticipated by the
          parties. The foregoing reasons, however, shall not be the only reasons for which
          Landlord may withhold its approval, whether or not such other reasons are
          similar or dissimilar to the foregoing.

(c)    
          Landlord shall, as soon as reasonably practicable following the full execution
          of this Lease, submit for Tenants approval the Final Plans and an itemized
          budget (the Budget) for the Tenant Improvements Cost
          taking into account the General Contractors fee and the
          subcontractor and equipment vendor bids approved by Tenant pursuant to
          Paragraph 3 above, and a list and description of any long lead time
          items included as part of the Tenant Improvements and any alternatives
          which will avoid such delay. Tenant shall approve the Final Plans and
          Budget or disapprove the same and deliver to Landlord the specific written
          changes to such Final Plans and/or Budget that are necessary, in
          Tenants reasonable opinion, to conform such Final Plans or to reduce
          costs, within two (2) business days of their receipt.

(d)    
          If Tenant fails to either approve or disapprove the Final Plans or the
          Budget within two (2) business days of receipt thereof, such item shall
          be conclusively deemed approved. If the Final Plans or the Budget are
          disapproved, Landlord and Tenant shall promptly meet and attempt to agree upon
          the revisions, if any, to be made. Landlord shall not unreasonably refuse to
          satisfy any reasonable objections of Tenant to the Final Plans or Budget
          and Tenant shall not unreasonably withhold its approval. The review and
          revision of the Final Plans and Budget shall continue until approved by
          Landlord and Tenant. The approved Final Plans shall be initialed by Landlord and
          Tenant and attached to the Lease as Exhibit B-2.

(e)    
          When the Final Plans have been approved by Landlord and Tenant, Landlord shall
          submit them to all government authorities having approval rights over the Tenant
          Improvements and shall apply for all governmental approvals and building
          permits. Upon receipt of such approvals and permits, and subject to the
          provisions of this Work Letter, Landlord shall thereafter commence and proceed
          to complete construction of the Tenant Improvements in accordance with all Laws,
          underwriters requirements and covenants, conditions and restrictions, and
          in accordance with the Final Plans.

B-5

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(f)    
          Tenant assumes full and complete responsibility to ensure that the Tenant
          Improvements are adequate to fully meet the needs and requirements of
          Tenants business operations within the Premises and Tenants use of
          the Premises. Neither the approval by Landlord of the Final Plans or of any
          other plans, specifications, drawings or other items associated with the Tenant
          Improvements nor Landlords performance, supervision or monitoring of the
          Tenant Improvements, shall constitute any warranty or covenant by Landlord to
          Tenant as to the adequacy of the design for Tenants intended use of the
          Premises.

5.    
          (a) The Tenant Improvements Allowance shall be Landlords maximum
          contribution to the Tenant Improvements Cost, and Tenant shall pay all of the
          Tenant Improvements Cost in excess of the Tenant Improvements Allowance, except
          as set forth in Paragraph 2(e) of this Work Letter, and only to the extent
          such excess cost has been approved in writing by Tenant in advance of its
          incurrence (other than excess costs due to minor field changes or Tenant Delay).

(b)    
          If the Tenant Improvements Cost exceeds the Tenant Improvements Allowance plus
          any amounts for which Landlord is responsible pursuant to Paragraph 2(e) of
          this Work Letter, then Tenant shall pay to Landlord, in cash, the difference
          between the Tenant Improvements Cost and the Tenant Improvements Allowance
          (Excess Tenant Improvements Cost), promptly upon receipt of
          Landlords invoice therefor. If construction of the Tenant Improvements
          will result in an Excess Tenant Improvements Cost, Landlord shall not be
          obligated to commence or continue construction of the Tenant Improvements if
          payment of the Excess Tenant Improvements Cost by Tenant is not received within
          ten (10) days after delivery by Landlord to Tenant of a statement therefor;
          provided, however, that Landlord may, at its option, commence or continue
          construction of the Tenant Improvements, in which event Tenant shall pay the
          Excess Tenant Improvements Cost within ten (10) days after delivery by
          Landlord to Tenant of the statement therefor. If Landlord so elects to commence
          construction of the Tenant Improvements or has already commenced construction of
          the Tenant Improvements when there occurs an Excess Tenant Improvements Cost,
          then Landlord shall be entitled to suspend or terminate construction of the
          Tenant Improvements if payment by Tenant to Landlord of the Excess Tenant
          Improvements Cost has not been received within ten (10) days after delivery
          by Landlord to Tenant of a statement therefor.

6.    
          The Final Plans shall comply with all applicable Laws.

7.    
          (a) Upon no less than five (5) business days prior written notice to
          Landlord, and if (i) Tenant has provided Landlord with evidence of
          insurance in accordance with the Lease, and (ii) such early entry will not
          interfere with other tenants or invitees at the Project or with completion of
          the Tenant Improvements, Landlord shall permit Tenant and Tenants agents
          and contractors to enter the Premises prior to the Commencement Date solely for
          the purpose of doing such other work as may be required by Tenant to make the
          Premises ready for Tenants use and occupancy including, without
          limitation, installing its equipment, data, telecommunications systems and
          trade-fixtures (Fit-up Work). Any such entry into and
          occupancy of the Premises by Tenant shall be during normal business hours and
          under all of the terms, covenants, conditions and provisions of the Lease except
          the covenant to pay Base Rent and Additional Rent, and Landlord shall not be
          liable in any way for any injury, loss or damage related to such early entry.

B-6

---

(b)    
          If Tenant enters the Premises prior to completion of the Tenant Improvements,
          Tenant shall take commercially reasonable precautions to protect against such
          loss, damage or injury during construction of the Tenant Improvements, and shall
          not interfere with the conduct of the Tenant Improvements work. Landlord shall
          have no responsibility or liability for any loss or damage to the Fit-up Work.

8.    
          When the Final Plans have been approved, there shall be no changes by either
          party without the other partys prior written approval, except for
          necessary on-site installation variations or minor changes necessary to comply
          with building codes and other government regulations. If, prior to the
          Commencement Date, Tenant desires improvements or changes (individually or
          collectively, Change Orders) to the Final Plans, Tenant shall
          request that Landlord direct the Architect to revise the Final Plans to
          incorporate such Change Order(s). All Change Orders shall specify any change in
          the Budget as a consequence of the change order. If the non-requesting party
          does not approve a requested change to the Final Plans, or if revisions are
          required, such party shall so notify the other party. Tenant shall pay all
          preparation costs for revisions of the Final Plans and the cost of all Change
          Orders, subject to the Tenant Improvements Allowance.

9.    
          The terms Substantial Completion or Substantially
          Complete shall mean the earlier of (i) the date the Tenant
          Improvements are approved by the appropriate governmental agency as being in
          accordance with its building code and the building permit issued for such
          improvements, as evidenced by the issuance of a final building inspection
          approval, temporary certificate of occupancy or other appropriate document
          permitting occupancy of the Premises by Tenant; and (ii) the date the
          Architect or the General Contractor has certified in writing to Tenant that the
          Tenant Improvements have been substantially completed in accordance with the
          plans and specifications therefor; provided, however, that Substantial
          Completion shall not be deemed to occur prior to Landlords delivery of
          possession. Any punch-list items (minor or insubstantial details of
          construction, mechanical adjustment or decoration) which remain to be performed,
          the non-performance of which does not materially interfere with Tenants
          use of the Premises and of which Tenant gives Landlord notice within
          five (5) business days after the Commencement Date specifying with
          reasonable particularity, shall be installed or repaired by Landlord within
          thirty (30) business days of receipt of such notice. If Substantial
          Completion has not occurred by the date which is one hundred eighty (180) days
          following the Estimated Commencement Date (as such date may be extended by Force
          Majeure or any delays due to Landlords failure to timely perform its
          obligations hereunder), then Landlord shall have the option to terminate this
          Lease by written notice to Tenant, and upon such termination all deposits and
          prepayments shall be refunded.

10.    
          If Substantial Completion of the Tenant Improvements shall be delayed due to any
          act or omission of Tenant or Tenants agents, employees, or contractors
          including, but not limited to, (i) any delays due to Change Orders,
          (ii) delays in submitting information requested by Landlord, the Architect
          or Landlords contractor or in approving the Final Plans, the Budget, or
          the statement or in giving any authorizations or approvals, (iii) any
          delays due to requests by Tenant for any materials or finishes which are not
          readily available, and/or delays in delivery of any materials specified by
          Tenant through Change Orders, (iv) any delays due to the disapproval by
          Tenant of the Budget or of the Final Plans (if such otherwise conform in all
          material respects to the Initial Space Plan), or (v) Tenants or its
          agents interference with the progress of the Tenant Improvements during
          any time that Tenant has access to the Premises (collectively Tenant
          Delay), then the Premises shall be deemed Substantially Complete and
          the Commencement Date shall be deemed to occur in accordance with the Final
          Plans on the date when they would have been ready but for such delay, as
          determined by Landlord.

B-7

---

11.    
          Landlord shall have no liability to Tenant if construction of the Tenant
          Improvements is delayed or prevented due to any cause beyond Landlords
          reasonable control, except as may be provided in Paragraph 8(b) of the
          Lease. Tenant shall cooperate with all reasonable directives of Landlord and
          Landlords contractor in order to minimize any disruption or delay in
          completion of the Tenant Improvements.

12.    
          Defined terms used but not defined herein shall have the same meaning as in the
          Lease.

13.    
          Notices given hereunder shall be given in accordance with the Lease.

B-8

---

EXHIBIT B-1

# INITIAL SPACE PLAN

# [To come]

B-1-1

---

EXHIBIT B-2

# FINAL PLANS AND
SPECIFICATIONS FOR TENANT IMPROVEMENTS

# [To come]

B-2-1

---

EXHIBIT C

# COMMENCEMENT AND
EXPIRATION DATE MEMORANDUM

|            |                                                      
|----------- | -----------------------------------------------------
|LANDLORD:   | MOFFETT OFFICE PARK INVESTORS LLC                    
|            |                                                      
|TENANT:     | ALLIANCE FIBER OPTIC PRODUCTS, INC.                  
|            |                                                      
|LEASE DATE: | March 29,2004                                        
|            |                                                      
|PREMISES:   | Located at 275 Gibraltar Drive, Sunnyvale, California
|            |                                                      

Tenant
hereby accepts the Premises as being in the condition required under the Lease, with all
Tenant Improvements completed (except for minor punchlist items which Landlord agrees to
complete).

The
Commencement Date of the Lease is hereby established as __________, 200__ and the
Expiration Date is __________, _____.

| |         |                                                  
| | ------- | -------------------------------------------------
| | TENANT: | Alliance Fiber Optic Products, Inc.,             
| |         | a Delaware corporation                           
| |         |                                                  
| |         |                                                  
| |         | By: ___________________________________________  
| |         |                                                  
| |         | Name: _________________________________________  
| |         |                                                  
| |         | Title: __________________________________________
| |         |                                                  
| |         | By: ___________________________________________  
| |         |                                                  
| |         | Name: ________________________________________   
| |         |                                                  
| |         | Title: ________________________________________  
| |         |                                                  
| |         |                                                  

| | *In
conformance with California Corporations Code §313, this document is to be signed by
(i) the chairman of the board, the president or any vice president, and
(ii) the secretary, any assistant secretary, the chief financial officer or any
assistant treasurer of the Tenant.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Approved and Agreed:

LANDLORD:

MOFFETT OFFICE PARK
INVESTORS LLC,a Delaware limited liability company

By: UBS Realty Investors LLC,

a
Massachusetts limited liability company,

its
Manager

By: ___________________________________________________

Name: _________________________________________________

Title: ________________________________________________

C-2

---

EXHIBIT D

# RULES AND REGULATIONS

This
exhibit, entitled Rules and Regulations, is and shall constitute
Exhibit D to the Lease Agreement, dated as of the Lease Date, by
and between Landlord and Tenant for the Premises. The terms and conditions of this
Exhibit D are hereby incorporated into and are made a part of
the Lease. Capitalized terms used, but not otherwise defined, in this
Exhibit D have the meanings ascribed to such terms in the Lease.

1.    
          Tenant shall not use any method of heating or air conditioning other than that
          supplied by Landlord without the consent of Landlord.

2.    
          All window coverings installed by Tenant and visible from the outside of the
          building require the prior written approval of Landlord.

3.    
          Tenant shall not use, keep or permit to be used or kept any foul or noxious gas
          or substance or any flammable or combustible materials on or around the
          Premises, except to the extent that Tenant is permitted to use the same under
          the terms of Paragraph 32 of the Lease.

4.    
          Tenant shall not alter any lock or install any new locks or bolts on any door at
          the Premises without the prior consent of Landlord.

5.    
          Tenant shall not make any duplicate keys without the prior consent of Landlord.

6.    
          Tenant shall park motor vehicles in Parking Areas designated by Landlord except
          for loading and unloading. During those periods of loading and unloading, Tenant
          shall not unreasonably interfere with traffic flow around the Building or the
          Project and loading and unloading areas of other tenants. Tenant shall not park
          motor vehicles in designated Parking Areas after the conclusion of normal daily
          business activity.

7.    
          Tenant shall not disturb, solicit or canvas any tenant or other occupant of the
          Building or the Project and shall cooperate to prevent same.

8.    
          No person shall go on the roof without Landlords permission which shall
          not be unreasonably withheld.

9.    
          Business machines and mechanical equipment belonging to Tenant which cause noise
          or vibration that may be transmitted to the structure of the Building, to such a
          degree as to be objectionable to Landlord or other tenants, shall be placed and
          maintained by Tenant, at Tenants expense, on vibration eliminators or in
          noise-dampening housing or other devices sufficient to eliminate noise or
          vibration.

10.    
          All goods, including material used to store goods, delivered to the Premises of
          Tenant shall be immediately moved into the Premises and shall not be left in
          parking or receiving areas overnight.

D-1

---

11.    
          Tractor trailers which must be unhooked or parked with dolly wheels beyond the
          concrete loading areas must use steel plates or wood blocks under the dolly
          wheels to prevent damage to the asphalt paving surfaces. No parking or storing
          of such trailers will be permitted in the Parking Areas or on streets adjacent
          thereto.

12.    
          Forklifts which operate on asphalt paving areas shall not have solid rubber
          tires and shall only use tires that do not damage the asphalt.

13.    
          Tenant is responsible for the storage and removal of all trash and refuse. All
          such trash and refuse shall be contained in suitable receptacles stored behind
          screened enclosures at locations approved by Landlord.

14.    
          Tenant shall not store or permit the storage or placement of goods or
          merchandise in or around the common areas surrounding the Premises. No displays
          or sales of merchandise shall be allowed in the parking lots or other common
          areas.

15.    
          Tenant shall not permit any animals, including, but not limited to, any
          household pets, to be brought or kept in or about the Premises, the Building,
          the Project or any of the common areas.

D-2

---

EXHIBIT E

# FORM OF TENANT
ESTOPPEL CERTIFICATE

____________________
(herein Tenant) hereby certifies to ____________________ and its
successors and assigns that Tenant leases from ____________________
(Landlord) approximately _____ square feet of space (the
Premises) in __________ pursuant to that certain Lease Agreement dated
March 29, 2004 by and between Landlord and Tenant, as amended by
_________________________ (collectively, the Lease), a true and correct
copy of which is attached hereto as Exhibit A. Tenant hereby
certifies to ____________________, that as of the date hereof:

1.    
          The Lease is in full force and effect and has not been modified, supplemented or
          amended, except as set forth in the introductory paragraph hereof.

2.    
          Tenant is in actual occupancy of the Premises under the Lease and Tenant has
          accepted the same. Landlord has performed all obligations under the Lease to be
          performed by Landlord, including, without limitation, completion of all tenant
          work required under the Lease and the making of any required payments or
          contributions therefor. Tenant is not entitled to any further payment or credit
          for tenant work.

3.    
          The initial term of the lease commenced __________, _____ and shall expire
          __________, _____. Tenant has the following rights to renew or extend the term
          of the Lease or to expand the Premises:

_________________

4.    
          Tenant has not paid any rentals or other payments more than one (1) month
          in advance except as follows:

_________________

5.    
          Base Rent payable under the Lease is _______________ Dollars ($__________). Base
          Rent and additional Rent have been paid through __________, _____. There
          currently exists no claims, defenses, rights of set-off or abatement to or
          against the obligations of Tenant to pay Base Rent or Additional Rent or
          relating to any other term, covenant or condition under the Lease.

6.    
          There are no concessions, bonuses, free months rent, rebates or other
          matters affecting the rentals except as follows:
          ___________________________________.

7.    
          No security or other deposit has been paid with respect to the Lease except as
          follows:

_________________

8.    
          Landlord is not currently in default under the Lease and there are no events or
          conditions existing which, with or without notice or the lapse of time, or both,
          could constitute a default of Landlord under the Lease or entitle Tenant to
          offsets or defenses against the prompt payment of rent except as follows:
          ___________________________________. Tenant is not in default under any of the
          terms and conditions of the lease nor is there now any fact or condition which,
          with notice or lapse of time or both, will become such a default.

E-1

---

9.    
          Tenant has not assigned, transferred, mortgaged or otherwise encumbered its
          interest under the lease, nor subleased any of the Premises nor permitted any
          person or entity to use the Premises except as follows:

_________________

10.    
          Tenant has no rights of first refusal or options to purchase the property of
          which the Premises is a part.

11.    
          The Lease represents the entire agreement between the parties with respect to
          Tenants right to use and occupy the Premises.

Tenant
acknowledges that the parties to whom this certificate is addressed will be relying upon
the accuracy of this certificate in connection with their acquisition and/or financing of
the Premises.

IN
WITNESS WHEREOF, Tenant has caused this certificate to be executed this _____ day of
__________, _____.

| |         |                                                  
| | ------- | -------------------------------------------------
| | TENANT: | Alliance Fiber Optic Products, Inc.,             
| |         | a Delaware corporation                           
| |         |                                                  
| |         |                                                  
| |         | By: ___________________________________________  
| |         |                                                  
| |         | Name: _________________________________________  
| |         |                                                  
| |         | Title: __________________________________________
| |         |                                                  
| |         | By: ___________________________________________  
| |         |                                                  
| |         | Name: ________________________________________   
| |         |                                                  
| |         | Title: ________________________________________  
| |         |                                                  
| |         |                                                  

| | *In
conformance with California Corporations Code §313, this document is to be signed by
(i) the chairman of the board, the president or any vice president, and
(ii) the secretary, any assistant secretary, the chief financial officer or any
assistant treasurer of the Tenant.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

E-2

---

EXHIBIT F

# HAZARDOUS MATERIALS
DISCLOSURE CERTIFICATE

Your
cooperation in this matter is appreciated. Initially, the information provided by you in
this Hazardous Materials Disclosure Certificate is necessary for Landlord to evaluate your
proposed uses of the premises (the Premises) and to determine whether
to enter into a lease agreement with you as tenant. If a lease agreement is signed by you
and Landlord (the Lease Agreement), on an annual basis in accordance
with the provisions of Paragraph 32 of the Lease Agreement, you are to provide an
update to the information initially provided by you in this certificate. Any questions
regarding this certificate should be directed to, and when completed, the certificate
should be delivered to:

Name
of (Prospective) Tenant:
______________________________________________________________________

Mailing
Address:
___________________________________________________________________________________

---

Contact
Person, Title and Telephone Number(s):
_____________________________________________________

Contact
Person for Hazardous Waste Materials Management and Manifests and Telephone Number(s):
_____

---

Address
of (Prospective) Premises:
_________________________________________________________________

Length
of (Prospective) initial Term:
______________________________________________________________

---

1.    
          GENERAL INFORMATION:

| | Describe
the proposed operations to take place in, on, or about the Premises, including, without
limitation, principal products processed, manufactured or assembled, and services and
activities to be provided or otherwise conducted. Existing tenants should describe any
proposed changes to on-going operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-1

---

---

---

2.    
          USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS

| |  |  |  | 2.1 |  | Will any Hazardous Materials (as hereinafter defined) be used, generated, treated, stored
or disposed of in, on or about the Premises? Existing tenants should describe any
Hazardous Materials which continue to be used, generated, treated, stored or disposed of
in, on or about the Premises.
| |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
Yes is marked, please explain: ______________________________________________________

---

---

| |  |  |  | 2.2 |  | If Yes is marked in Section 2.1, attach a list of any Hazardous Materials to be used,
generated, treated, stored or disposed of in, on or about the Premises, including the
applicable hazard class and an estimate of the quantities of such Hazardous Materials to
be present on or about the Premises at any given time; estimated annual throughput; the
proposed location(s) and method of storage (excluding nominal amounts of ordinary
household cleaners and janitorial supplies which are not regulated by any Environmental
Laws, as hereinafter defined); and the proposed location(s) and method(s) of treatment or
disposal for each Hazardous Material, including the estimated frequency, and the proposed
contractors or subcontractors. Existing tenants should attach a list setting forth the
information requested above and such list should include actual data from on-going
operations and the identification of any variations in such information from the prior
years certificate.
| |  |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3.    
          STORAGE TANKS AND SUMPS

| |  |  |  | 3.1 |  | Is any above or below ground storage or treatment of gasoline, diesel, petroleum, or other
Hazardous Materials in tanks or sumps proposed in, on or about the Premises? Existing
tenants should describe any such actual or proposed activities.
| |  |  |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
yes, please explain: ________________________________________________________________

F-2

---

---

---

4.    
          WASTE MANAGEMENT

| |  |  |  | 4.2 |  | Has your company filed a biennial or quarterly reports as a hazardous waste generator?
Existing tenants should describe any new reports filed.
| |  |  |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

If
yes, attach a copy of the most recent report filed.

5.    
          WASTEWATER TREATMENT AND DISCHARGE

| | _____
surface water? _____ no wastewater or other wastes discharged. Existing tenants should
indicate any actual discharges. If so, describe the nature of any proposed or actual
discharge(s).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

---

| | If
yes, describe the type of treatment proposed to be conducted. Existing tenants should
describe the actual treatment conducted.
| | ---------------------------------------------------------------------------------------------------------------------------------

F-3

---

---

---

6.    
          AIR DISCHARGES

| |  |  |  | 6.1 |  | Do you plan for any air filtration systems or stacks to be used in your companys
operations in, on or about the Premises that will discharge into the air; and will such
air emissions be monitored? Existing tenants should indicate whether or not there are any
such air filtration systems or stacks in use in, on or about the Premises which discharge
into the air and whether such air emissions are being monitored.
| |  |  |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
yes, please describe: _______________________________________________________________

---

---

| |  |  |  | 6.2 |  | Do you propose to operate any of the following types of equipment, or any other equipment
requiring an air emissions permit? Existing tenants should specify any such equipment
being operated in, on or about the Premises.
| |  |  |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
yes, please describe: _______________________________________________________________

---

---

| |  |  |  | 6.3 |  | Please describe (and submit copies of with this Hazardous Materials Disclosure
Certificate) any reports you have filed in the past [thirty-six] months with any
governmental or quasi-governmental agencies or authorities related to air discharges or
clean air requirements and any such reports which have been issued during such period by
any such agencies or authorities with respect to you or your business operations.
| |  |  |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-4

---

7.    
          HAZARDOUS MATERIALS DISCLOSURES

| |  |  |  | 7.1 |  | Has your company prepared or will it be required to prepare a Hazardous Materials
management plan (Management Plan) or Hazardous Materials Business Plan
and Inventory (Business Plan) pursuant to Fire Department or other
governmental or regulatory agencies requirements? Existing tenants should indicate
whether or not a Management Plan is required and has been prepared.
| |  |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
yes, attach a copy of the Management Plan or Business Plan. Existing tenants should attach
a copy of any required updates to the Management Plan or Business Plan.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | 7.2 |  | Are any of the Hazardous Materials, and in particular chemicals, proposed to be used in
your operations in, on or about the Premises listed or regulated under Proposition 65?
Existing tenants should indicate whether or not there are any new Hazardous Materials
being so used which are listed or regulated under Proposition 65.
| |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
yes, please explain: ________________________________________________________________

---

---

8.    
          ENFORCEMENT ACTIONS AND COMPLAINTS

| |  |  |  | 8.1 |  | With respect to Hazardous Materials or Environmental Laws, has your company ever been
subject to any agency enforcement actions, administrative orders, or consent decrees or
has your company received requests for information, notice or demand letters, or any other
inquiries regarding its operations? Existing tenants should indicate whether or not any
such actions, orders or decrees have been, or are in the process of being, undertaken or
if any such requests have been received.
| |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-5

---

| | If
yes, describe the actions, orders or decrees and any continuing compliance obligations
imposed as a result of these actions, orders or decrees and also describe any requests,
notices or demands, and attach a copy of all such documents. Existing tenants should
describe and attach a copy of any new actions, orders, decrees, requests, notices or
demands not already delivered to Landlord pursuant to the provisions of Paragraph 32
of the Lease Agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

---

---

| |  |  |  | 8.2 |  | Have there ever been, or are there now pending, any lawsuits against your company
regarding any environmental or health and safety concerns?
| |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------

| | If
yes, describe any such lawsuits and attach copies of the complaint(s), cross-complaint(s),
pleadings and other documents related thereto as requested by Landlord. Existing tenants
should describe and attach a copy of any new complaint(s), cross-complaint(s), pleadings
and other related documents not already delivered to Landlord pursuant to the provisions
of Paragraph 32 of the Lease Agreement.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

---

---

| |  |  |  | 8.3 |  | Have there been any problems or complaints from adjacent tenants, owners or other
neighbors at your companys current facility with regard to environmental or health
and safety concerns? Existing tenants should indicate whether or not there have been any
such problems or complaints from adjacent tenants, owners or other neighbors at, about or
near the Premises and the current status of any such problems or complaints.
| |  |  |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
yes, please describe. Existing tenants should describe any such problems or complaints not
already disclosed to Landlord under the provisions of the signed Lease Agreement and the
current status of any such problems or complaints.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

---

---

9.    
          PERMITS AND LICENSES

| |  |  |  | 9.1 |  | Attach copies of all permits and licenses issued to your company with respect to its
proposed operations in, on or about the Premises, including, without limitation, any
Hazardous Materials permits, wastewater discharge permits, air emissions permits, and use
permits or approvals. Existing tenants should attach copies of any new permits and
licenses as well as any renewals of permits or licenses previously issued.
| |  |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-6

---

As
used herein, Hazardous Materials shall mean and include any substance
that is or contains (a) any hazardous substance as now or hereafter
defined in § 101(14) of the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended (CERCLA) (42 U.S.C.
§ 9601 et seq.) or any regulations promulgated under CERCLA;
(b) any hazardous waste as now or hereafter defined in the Resource
Conservation and Recovery Act, as amended (RCRA) (42 U.S.C.
§ 6901 et seq.) or any regulations promulgated under RCRA;
(c) any substance now or hereafter regulated by the Toxic Substances Control Act, as
amended (TSCA) (15 U.S.C. § 2601 et seq.) or
any regulations promulgated under TSCA; (d) petroleum, petroleum by-products,
gasoline, diesel fuel, or other petroleum hydrocarbons; (e) asbestos and
asbestos-containing material, in any form, whether friable or non-friable;
(f) polychlorinated biphenyls; (g) lead and lead-containing materials; or
(h) any additional substance, material or waste (i) the presence of which on or
about the Premises (A) requires reporting, investigation or remediation under any
Environmental Laws (as hereinafter defined), (B) causes or threatens to cause a
nuisance on the Premises or any adjacent property or poses or threatens to pose a hazard
to the health or safety of persons on the Premises or any adjacent property, or
(C) which, if it emanated or migrated from the Premises, could constitute a trespass,
or (ii) which is now or is hereafter classified or considered to be hazardous or
toxic under any Environmental Laws; and Environmental Laws shall mean
and include (a) CERCLA, RCRA and TSCA; and (b) any other federal, state or local
laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or
hereinafter in effect relating to (i) pollution, (ii) the protection or
regulation of human health, natural resources or the environment, (iii) the
treatment, storage or disposal of Hazardous Materials, or (iv) the emission,
discharge, release or threatened release of Hazardous Materials into the environment.

F-7

---

The
undersigned hereby acknowledges and agrees that this Hazardous Materials Disclosure
Certificate is being delivered to Landlord in connection with the evaluation of a Lease
Agreement and, if such Lease Agreement is executed, will be attached thereto as an
exhibit. The undersigned further acknowledges and agrees that if such Lease Agreement is
executed, this Hazardous Materials Disclosure Certificate will be updated from time to
time in accordance with Paragraph 32 of the Lease Agreement. The undersigned further
acknowledges and agrees that Landlord and its partners, lenders and representatives may,
and will, rely upon the statements, representations, warranties, and certifications made
herein and the truthfulness thereof in entering into the Lease Agreement and the
continuance thereof throughout the term, and any renewals thereof, of the Lease Agreement.
I [print name] _______________, acting with full authority to bind the (proposed) Tenant
and on behalf of the (proposed) Tenant, certify, represent and warrant that the
information contained in this certificate is true and correct.

(PROSPECTIVE)    
          TENANT:

ALLIANCE FIBER OPTIC
PRODUCTS, INC.,a Delaware corporation

By:
__________________________________________________________

Title:
_______________________________________________________

Date:
________________________________________________________

By:
__________________________________________________________

Title:
_______________________________________________________

Date:
________________________________________________________

*In conformance with California
Corporations Code §313, this document is to be signed by (i) the chairman of the
board, the president or any vice president, and (ii) the secretary, any
assistant secretary, the chief financial officer or any assistant treasurer of the Tenant.

F-8

---