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Exhibit 10.26  


        [California Net Lease] 


 
 

LEASE AGREEMENT    
    


        THIS LEASE AGREEMENT is made this 7th day of February 2006, between ProLogis, a Maryland real estate investment
trust ("Landlord"), and the Tenant named below. 



	Tenant:	 	Ikanos Communications, a California corporation
	

Tenant's Representative, Address, and Telephone:	
 	
Dan Atler

Ikanos Communications

47669 Fremont Blvd.

Fremont, CA, 94538
	

Premises:	
 	

That portion of the Building, containing approximately 36,300 rentable square feet, as determined by Landlord, as shown on Exhibit A.
	

Project:	
 	
Bayside Corporate Center (based upon 311,277 rentable square feet in the Project)    
	

Building:	
 	
Building 5 (sba00805), 47661 Fremont Blvd, Fremont, CA 94538 (based upon 36,300 rentable square feet in the Building)
	

Tenant's Proportionate Share of Project:	
 	
11.66%
	

Tenant's Proportionate Share of Building:	
 	
100%
	

Lease Term:	
 	

Beginning on the Commencement Date and ending on the last day of the 62nd full calendar month thereafter, subject to the provisions of Addendum 3 and Addendum 4, and subject further to any
termination rights as granted under this Lease with respect to an event of casualty or condemnation.
	

Commencement Date:	
 	

February 6, 2006
	

Initial Monthly Base Rent:	
 	
See Addendum 1
 
	

Initial Estimated Monthly	
 	

 	
 	

 	
 	
 	

 	
 	

 
	Operating Expense Payments:
 (estimates only and subject to	 	1.	 	Common Area Charges:	 	$	2,062.50	 	 
	adjustment to actual costs and expenses according to the provisions of this Lease)	 	2.	 	Taxes:	 	$	5,334.67	 	 
	
 	
 	

3.	
 	

Insurance:	
 	
$	
249.00	
 	

 
	

 	
 	

4.	
 	

Other:	
 	
$	
67.58	
 	

 
	

Initial Estimated Monthly Operating Expense Payments:	
 	

 	
 	

 	
 	
$	
7,713.75	
 	

 
	

Initial Monthly Base Rent and Operating Expense Payments:	
 	

 	
 	

 	
 	
$	
26,226.75	
 	

 
	

Security Deposit:	
 	
Letter of Credit in the amount of $35,301.75
	

Broker:	
 	
Brad Werner—CB Richard Ellis
	

Addenda:	
 	
1. Base Rent Adjustments 2. Construction (Allowance) 3. Renewal Option (Baseball Arbitration) 4. Cancellation Option 5. Misc. Provisions 6. Move Out Conditions 7. Letter of Credit for Security
Deposit
	

Exhibits:	
 	
A. Site Plan; B. Sign Criteria; C. Floor Plan





        1.    Granting Clause.    In consideration of the obligation of Tenant to pay
rent as herein provided and in consideration of the other terms, covenants, and conditions hereof, Landlord leases to Tenant, 







 



and
Tenant takes from Landlord, the Premises, to have and to hold for the Lease Term, subject to the terms, covenants and conditions of this Lease. 



        2.    Acceptance of Premises.    Tenant shall accept the Premises in its condition as of the Commencement Date,
subject to all applicable laws, ordinances, regulations, covenants and restrictions. Except as otherwise set forth in this Lease, Landlord has made no
representation or warranty as to the suitability of the Premises for the conduct of Tenant's business, and Tenant waives any implied warranty that the Premises are suitable for Tenant's intended
purposes. Except as provided in this paragraph and Paragraph 10 and as otherwise expressly set forth herein, in no event shall Landlord have any
obligation
for any defects in the Premises or any limitation on its use. The taking of possession of the Premises shall be conclusive evidence that Tenant accepts the Premises and that the Premises were in good
condition at the time possession was taken except for items that are Landlord's responsibility (or for which Landlord has provided a representation or warranty) under this
paragraph and/or Paragraph 10 as well as any punchlist items agreed to in writing by Landlord and Tenant; provided,
however, that Tenant's acceptance of the Premises shall not be deemed a waiver of Landlord's delivery condition obligations hereunder. Landlord acknowledges and covenants that
as of the Commencement Date (i) the Building's HVAC, electrical, plumbing and other mechanical systems are in good working order and Landlord warrants such systems for a period of six
(6) months from the Commencement Date, and (ii) the Premises are in compliance with applicable Legal Requirements.


        3.    Use.    The Premises shall be used only for the purpose of light manufacturing and
assembly, receiving, storing, shipping and selling (but limited to wholesale sales) products, materials and merchandise made and/or distributed by
Tenant, for general office use by Tenant, and for such other lawful purposes as may be incidental thereto. Tenant shall not conduct or give notice of
any auction, liquidation, or going out of business sale on the Premises. Tenant will use the Premises in a careful, safe and proper manner and will not commit waste, overload the floor or structure of
the Premises or subject the Premises to use that would damage the Premises. Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise, or vibrations to emanate from the
Premises, or take any other action that would constitute a nuisance or would disturb, unreasonably interfere with, or endanger Landlord or any tenants of the Project. Outside storage, including
without limitation, storage of non-operable trucks and other non-operable vehicles, is prohibited without Landlord's prior written consent. Subject to
Landlord's representation and warranty in Paragraph 2 hereof, Tenant, at its sole expense, shall use and occupy the Premises in compliance with all laws  with respect to Tenant's particular use of
the Premises, including, without limitation, the Americans With Disabilities Act, orders, judgments,
ordinances, regulations, codes, directives, permits, licenses, covenants and restrictions (including, without limitation, any covenants, conditions, and restrictions affecting
the Project) now or hereafter applicable to such use of the Premises (collectively, "Legal Requirements"). Tenant shall, at its
expense, make any alterations or modifications, within or without the Premises, that are required by Legal Requirements related to Tenant's particular
use of the Premises. Tenant will not use or permit the Premises to be used for any purpose or in any manner that would void Tenant's or Landlord's insurance, increase the insurance risk. If any
increase in the cost of any insurance on the Premises or the Project is caused by Tenant's use or occupation of the Premises beyond that cost that would normally be incurred
with respect to a tenant engaging in the uses permitted herein, or because Tenant vacates the Premises, then Tenant shall pay the amount of such increase to Landlord.  Landlord and Tenant agree that
Tenant shall have the right to occupy the Premises upon full execution of this Lease by both parties hereto and delivery by Tenant to Landlord of
the insurance certificates required hereunder for the purpose of Tenant's preparation of the Premises for occupancy (including without limitation, commencement of any tenant improvements permitted by
Landlord or this Lease). Any such occupation of the Premises by Tenant occurring prior to the Commencement Date shall be subject
to the terms and conditions of this Lease, other than any obligation of Tenant to pay Base Rent or Operating Expenses as defined below.


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        Notwithstanding anything contained herein to the contrary, Tenant's obligations hereunder shall relate only to legally required changes to the interior of the
Premises after Tenant's occupancy of the
Premises that relate solely to the specific manner of use of the Premises by Tenant; and Landlord shall make all other additions to or modifications of the Project required from time to time by Legal
Requirements. The cost of such additions or modifications made by Landlord may be included in Operating Expenses pursuant to Paragraph 6 of this Lease to the extent permitted thereunder, except
for those additions or modifications which are Landlord's sole responsibility pursuant to Paragraph 10 of this Lease or due to violations of law by Landlord in existence as of the Commencement
Date.


        4.    Base Rent.    Tenant shall pay Base Rent in the amount set forth above. The  first month's Base Rent, the Security Deposit,
and the first monthly installment of estimated Operating Expenses (as hereafter defined) shall be due and
payable on the date hereof, and, except as otherwise set forth in this Lease, Tenant promises to pay to Landlord in advance, without demand, deduction
or set-off, monthly installments of Base Rent on or before the first day of each calendar month succeeding the Commencement Date. Payments of Base Rent for any fractional calendar month
shall be prorated. All payments required to be made by Tenant to Landlord hereunder (or to such other party as Landlord may from time to time specify in writing) shall be made by check or Electronic
Fund Transfer ("EFT") of immediately available federal funds before 11:00 a.m., Eastern Time, at such place, within the continental United States, as Landlord may from time to time designate to
Tenant in writing. Except as otherwise set forth herein, the obligation of Tenant to pay Base Rent and other sums to Landlord and the obligations of
Landlord under this Lease are independent obligations. Tenant shall have no right at any time to abate, reduce, or set-off any rent due hereunder except as may be expressly provided in
this Lease. If Tenant is delinquent in any monthly installment of Base Rent or of estimated Operating Expenses for more than 5 days, Tenant shall pay to Landlord on demand a late charge equal
to 5 percent of such delinquent sum. Tenant shall not be obligated to pay the late charge until Landlord has given Tenant 5 days written notice
of the delinquent payment (which may be given at any time during the delinquency); provided, however, that Landlord shall not be required to give such notices more than twice in any calendar year or 4
times over the term of the Lease. The provision for such late charge shall be in addition to all of Landlord's other rights and remedies hereunder or at law and shall not be construed as a penalty. 



        5.    Security Deposit.    The Security Deposit shall be held by Landlord as security for the performance of Tenant's
obligations under this Lease. The Security Deposit is not an advance rental deposit or a measure of Landlord's damages in case of Tenant's default. Upon each occurrence of an Event of Default
(hereinafter defined), Landlord may use all or part of the Security Deposit to pay delinquent payments due under this Lease, and the cost of any damage, injury, expense or liability caused by such
Event of Default, without prejudice to any other remedy provided herein or provided by law. Tenant shall pay Landlord no later than ten (10) days following
Landlord's demand the amount that will restore the Security Deposit to its original amount. Landlord's obligation respecting the Security Deposit is that of a debtor, not a
trustee; no interest shall accrue thereon. The Security Deposit shall be the property of Landlord, but shall be paid to Tenant when Tenant's obligations under this Lease have been completely
fulfilled. Landlord shall be released from any obligation with respect to the Security Deposit upon transfer of this Lease, the Security Deposit (and
the Premises to a person or entity assuming Landlord's obligations under this Paragraph 5. 


        6.    Operating Expense Payments.    During each month of the Lease Term, on the same date that Base Rent is due,
Tenant shall pay Landlord an amount equal to 1/12 of the annual cost, as reasonably estimated by Landlord from time to time, of Tenant's Proportionate Share (hereinafter defined) of
Operating Expenses for the Project. Payments thereof for any fractional calendar month shall be prorated. The term "Operating Expenses" means all reasonable costs and expenses actually incurred by
Landlord with respect to the ownership, maintenance, and operation of the Project including, but not limited to costs of: Taxes (hereinafter defined) and fees payable to tax consultants and attorneys
for consultation and contesting taxes; insurance; utilities; maintenance, repair and replacement of all 


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portions
of the Project, including without limitation, paving and parking areas, roads, roofs (including the roof membrane), alleys, and driveways, mowing, landscaping, exterior painting, utility
lines, heating, ventilation and air conditioning systems, lighting, electrical systems and other mechanical and building systems; amounts paid to contractors and subcontractors for work or services
performed in connection with any of the foregoing; charges or assessments of any association to which the Project is subject; property management fees payable to a property manager, including any
affiliate of Landlord, not to exceed 3% of gross receipts; security services, if any; trash collection, sweeping and removal; and additions or
alterations made by Landlord to the Project or the Building in order to comply with Legal Requirements enacted after the Commencement Date of this Lease
(other than those expressly required herein to be made by Tenant) provided that the cost of additions or alterations that may be capitalized for federal
income tax purposes in accordance with Generally Accepted Accounting Principles shall be amortized on a straight line basis over a period equal to the
lesser of the useful life thereof for federal income tax purposes. Operating Expenses do not include costs, expenses, depreciation or amortization for capital repairs and capital replacements required
to be made by Landlord under Paragraph 10 of this Lease, debt service under mortgages or ground rent under ground leases, or condemnation in excess of Landlord's deductible as set forth in
Paragraph 15 of this Lease, leasing commissions, or the costs of renovating space for tenants. Further, Operating Expenses shall not mean or include, and Tenant shall in
no event have any obligation to perform or to pay directly, or to reimburse Landlord for, all or any portion of the following: (i) costs incurred in connection with the construction or
remodeling of the Project or any other improvements now or hereafter located thereon, or correction of defects in design or construction or compliance with any covenant, condition, restriction,
underwriter's requirement or law applicable to the Premises or the Project on the Commencement Date; (ii) interest, principal, or other payments on account of any indebtedness that is secured
by any encumbrance on any part of the Project, or rental or other payments under any ground lease, or any payments in the nature of returns on or of equity of any kind; (iii) costs of selling,
syndicating, financing, mortgaging or hypothecating any part of or interest in the Project; (iv) taxes on the income of Landlord or Landlord's franchise taxes, inheritance, gift, transfer,
estate or state taxes (unless any of said taxes are hereafter instituted by applicable taxing authorities in substitution for ad valorem real property taxes); (v) depreciation, reserves of any
kind, including replacement reserves and reserves for bad debt or lost rent, or any other charge not involving the payment of money to third parties; (vi) Landlord's overhead costs, including
equipment, supplies, accounting and legal fees, rent and other occupancy costs or any other costs associated with the operation or internal organization and function of Landlord as a business entity
(but this provision does not prevent the payment of a management fee to Landlord as provided in this Paragraph 6); (vii) fees or other costs for professional services provided by space
planners, architects, engineers, and other similar professional consultants, real estate commissions, and marketing and advertising expenses; (viii) costs of defending or prosecuting litigation
with any party, unless a favorable judgment would reduce or avoid an increase in Operating Expenses, or unless the litigation is to enforce compliance with Rules and Regulations of the Project, or
other standards or requirements for the general benefit of the tenants in the Project; (ix) costs incurred as a result of Landlord's violation of any lease, contract, law or ordinance,
including fines and penalties; (x) late charges, interest or penalties of any kind for late or other improper payment of any public or private
obligation, including ad valorem taxes; (xi) costs of removing Hazardous Materials or of correcting any other conditions in order to comply with any environmental law or ordinance (but this
exclusion shall not constitute a release by Landlord of Tenant for any such costs for which Tenant is liable pursuant to Paragraph 30 of this Lease); (xii) costs for which Landlord is
reimbursed from any other source; (xiii) costs related to any building or land not included in the Project, including any allocation of costs incurred on a shared basis, such as centralized
accounting costs, unless the allocation is made on a reasonable and consistent basis that fairly reflects the share of costs actually attributable to the Project; (xiv) the part of any costs or
other sum paid to any affiliate of Landlord that may exceed the fair market price or cost generally payable for substantially similar goods or services in the area of the Project;
(xv) insurance deductibles, except to the extent arising from damage or injury caused by Tenant; (xvi) costs occasioned by the act, omission or
violation  


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 of any law by Landlord, any other occupant of the Project, or their respective agents, employees or contractors; (xvii) costs occasioned by casualties or by the exercise of the power of eminent
domain; (xviii) costs of structural repairs to the Project; (xiv) costs which could properly be capitalized under generally accepted accounting principles, except to the extent amortized
in the manner provided herein; and (xx) costs of capital improvements made for tenants other than Tenant.


        Landlord shall provide Tenant within 90 days following the final day of the calendar year Landlord's itemized year-end common area maintenance
reconciliation reports which reference and include all applicable Operating Expenses for such year. Upon Tenant's written request (which request must be made within 60 days following Tenant's
receipt of Landlord's reconciliation report as described in the preceding sentence), Landlord shall provide photocopies of invoices of major expenditures, as well as other standard Landlord reports to
substantiate such costs, for the expenses as provided in such reconciliation reports. If Tenant's total payments of Operating Expenses for any year are less than Tenant's
Proportionate Share of actual Operating Expenses for such year, then Tenant shall pay the difference to Landlord within 30 days after demand, and if more, then Landlord shall retain such excess
and credit it against Tenant's next payments. For purposes of calculating Tenant's Proportionate Share of Operating Expenses, a year shall mean a calendar year except the first year, which shall begin
on the Commencement Date, and the last year, which shall end on the expiration of this Lease. With respect to Operating Expenses which Landlord allocates to the entire Project, Tenant's "Proportionate
Share" shall be the percentage set forth on the first page of this Lease as Tenant's Proportionate Share of the Project as reasonably adjusted by Landlord in the future for changes in the physical
size of the Premises or the Project; and, with respect to Operating Expenses which Landlord allocates only to the Building, Tenant's "Proportionate Share" shall be the percentage set forth on the
first page of this Lease as Tenant's Proportionate Share of the Building as reasonably adjusted by Landlord in the future for changes in the physical size of the Premises or the Building. Landlord may
equitably increase Tenant's Proportionate Share for 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 Project or Building that includes the Premises or that varies with occupancy or use. The estimated Operating Expenses for the Premises set forth on the first page of this Lease are only
estimates, and Landlord makes no guaranty or warranty that such estimates will be accurate. 


        7.    Utilities.    Tenant shall pay for all water, gas, electricity, heat, light, power, telephone, sewer, sprinkler
services, refuse and trash collection, and other utilities and services used on the Premises, all maintenance charges for utilities, and any storm sewer charges or other similar charges for utilities
imposed by any governmental entity or utility provider, together with any taxes, penalties, surcharges or the like pertaining to Tenant's use of the Premises.  All utilities shall be separately metered or charged directly to Tenant by the provider,  except for water and sewer which shall be jointly metered. Tenant shall pay its share of all
charges for jointly metered utilities based upon
consumption, as reasonably determined by Landlord. No interruption or failure of utilities shall result in the termination of this Lease or the abatement of rent. Tenant agrees to limit use of water
and sewer for normal restroom use. 


        Notwithstanding anything to the contrary contained in Paragraph 7 of this Lease, if an interruption or cessation of utilities results from a cause within
the Landlord's reasonable control and the Premises are not usable by Tenant for the conduct of Tenant's business as a result thereof, Base Rent and applicable Operating Expenses not actually incurred
by Tenant shall be abated for the period which commences five (5) business days after the date Tenant gives to Landlord notice of such interruption until such utilities are
restored.


        8.    Taxes.    Landlord shall pay all taxes, assessments and governmental charges (collectively referred to as
"Taxes") that accrue against the Project during the Lease Term, which shall be included as part of the Operating Expenses charged to Tenant. Landlord may contest by appropriate legal proceedings the
amount, validity, or application of any Taxes or liens thereof. All capital levies or other taxes assessed or imposed on Landlord upon the rents payable to Landlord under this Lease and any franchise
tax, any excise, transaction, sales or privilege tax, assessment, levy or charge measured by or 


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based,
in whole or in part, upon such rents from the Premises and/or the Project or any portion thereof shall be paid by Tenant to Landlord monthly in estimated installments or upon demand, at the
option of Landlord, as additional rent; provided, however, in no event shall Tenant be liable for any net income taxes imposed on Landlord unless such net income taxes are in substitution for any
Taxes payable hereunder or any inheritance or estate taxes of Landlord. If any such tax or excise is levied or assessed directly against Tenant, then
Tenant shall be responsible for and shall pay the same at such times and in such manner as the taxing authority shall require. Tenant shall be liable for all taxes levied or assessed against any
personal property or fixtures placed in the Premises, whether levied or assessed against Landlord or Tenant. 


        9.    Insurance.    Landlord shall maintain all risk property insurance covering the full replacement cost of the
Building. Landlord may, but is not obligated to, maintain such other insurance and additional coverages as it may deem necessary, including, but not limited to, commercial liability insurance and rent
loss insurance. All such insurance shall be included as part of the Operating Expenses charged to Tenant. The Project or Building may be included in a blanket policy (in which case the cost of such
insurance allocable to the Project or Building will be determined by Landlord based upon the insurer's cost calculations). Tenant shall also reimburse Landlord for any increased premiums or additional
insurance which Landlord reasonably deems necessary as a result of Tenant's use of the Premises in a manner different than the permitted use hereunder. 



        Tenant,
at its expense, shall maintain during the Lease Term: all risk property insurance covering the full replacement cost of all property and improvements installed or placed in the
Premises by Tenant at Tenant's expense; worker's compensation insurance with no less than the minimum limits required by law; employer's liability insurance with such limits as required by law; and
commercial liability insurance, with a minimum limit of $1,000,000 per occurrence and a minimum umbrella limit of $1,000,000, for a total minimum combined general liability and umbrella limit of
$2,000,000 (together with such additional umbrella coverage as Landlord may reasonably require) for property damage, personal injuries, or deaths of persons occurring in or about the Premises. The
commercial liability policies shall name Landlord as an additional insured, insure on an occurrence and not a claims-made basis, be issued by insurance companies which are reasonably
acceptable to Landlord, not be cancelable unless 30 days' prior written notice shall have been given to Landlord, contain a hostile fire endorsement and a contractual liability endorsement
and, except as provided in the waiver of subrogation language below, provide primary coverage to Landlord (any policy issued to Landlord providing
duplicate or similar coverage shall be deemed excess over Tenant's policies). Such policies or certificates thereof shall be delivered to Landlord by Tenant upon commencement of the Lease Term and
upon each renewal of said insurance. 


        The
all risk property insurance obtained by Landlord and Tenant shall include a waiver of subrogation by the insurers and all rights based upon an assignment from its insured, against
Landlord or Tenant, their officers, directors, employees, managers, agents, invitees and contractors, in connection with any loss or damage thereby insured against.  Notwithstanding anything to the contrary in this Lease,
neither party hereto nor its officers, directors, employees, managers, agents, invitees or
contractors shall be liable to the other for loss or damage caused by any risk coverable by all risk property insurance, and each party waives any claims against the other party, and its officers,
directors, employees, managers, agents, invitees and contractors for such loss or damage regardless of the negligence or willful misconduct of the party so
released. The failure of a party to insure its property shall not void this waiver. Landlord and its agents, employees and contractors shall not be liable for, and Tenant
hereby waives all claims against such parties for, business interruption and business interruption losses occasioned thereby  (such as lost profits and the like) sustained by Tenant or any person claiming through Tenant resulting from any accident or occurrence in or upon the
Premises or the Project from any cause whatsoever, including without limitation, damage caused in whole or in part, directly or indirectly, by the negligence of Landlord or its agents, employees or
contractors. 


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        10.    Landlord's Repairs.    Landlord shall maintain, at its expense, the structural soundness of the roof,
foundation, exterior walls and interior load bearing walls of the Building, and all underground and subsurface utility
piping in good repair, reasonable wear and tear and damages caused by Tenant, its agents and contractors not covered by the waiver of subrogation
contained herein excluded. The term "walls" as used in this Paragraph 10 shall not include windows, glass or plate glass, doors or overhead doors, special store fronts,
dock bumpers, dock plates or levelers, or office entries. Tenant shall promptly give Landlord written notice of any repair required by Landlord pursuant to this Paragraph 10, after which
Landlord shall have a reasonable opportunity to repair. 


        In the event of an emergency, Tenant shall have the right to make such temporary, emergency repairs (and only such temporary, emergency repairs) to the roof,
foundation, exterior walls and interior load bearing walls of the Building as may be reasonably necessary to prevent material damage to Tenant's property at the Premises and/or personal injury to
Tenant's employees at the Premises (provided Tenant first attempts to notify Landlord telephonically of such emergency and notifies Landlord of such circumstances in writing as soon as practicable
thereafter). In such event, Landlord shall reimburse Tenant for the reasonable, out-of-pocket costs actually incurred by Tenant in making such repairs, up to but not to exceed
$25,000. If Landlord fails to reimburse Tenant for the reasonable, out-of-pocket costs incurred by Tenant in making such repairs with respect to such emergency, within
30 days after demand therefor, accompanied by supporting evidence of the costs incurred by Tenant, then Tenant may bring an action for damages against Landlord to recover such costs, together
with interest thereof at the rate provided for in Paragraph 37(j) of the Lease, and reasonable attorney's fees incurred by Tenant in bringing such action for damages. In no event, however,
shall Tenant have a right to terminate the Lease.


        Landlord,
at Tenant's expense as provided in Paragraph 6, shall maintain in good repair and condition the roof membrane, the parking areas and other common areas of the Building
and the Project, including, but not limited to driveways, alleys, landscape and grounds surrounding the Premises. 


        11.    Tenant's Repairs.    Subject to Landlord's obligation in Paragraph 10 and subject to Paragraphs 9 and
15, Tenant, at its expense, shall repair, replace and maintain in good condition all portions of the Premises and all areas, improvements and systems exclusively serving the Premises including,
without limitation, dock and loading areas, truck doors, plumbing, water and sewer lines up to points of common connection, fire sprinklers and fire protection systems, entries, doors, ceilings,
windows, interior walls, and the interior side of demising walls, and heating, ventilation and air conditioning systems. Such repair and replacements include capital expenditures and repairs whose
benefit may extend beyond the Term, and such capital expenditures and repairs shall be amortized in accordance with the Formula (defined hereafter) over the remainder of the
Lease Term, without regard to any extension or renewal option not then exercised. The "Formula" shall mean that number, the numerator of which shall be the number of months of the Lease Term remaining
after the replacement of any such capital expenditures, and the denominator of which shall be the maximum amortization period (in months) allowable for determining depreciation of such capital
expenditures for federal income tax purposes. Landlord shall pay for such capital expenditures and repairs and Tenant shall reimburse Landlord for its amortized share of same (determined as
hereinabove set forth) in equal monthly installments in the same manner as the payment by Tenant to Landlord of the Operating Expenses. Heating, ventilation and air
conditioning systems and other mechanical and building systems serving the Premises shall be maintained at Tenant's expense pursuant to maintenance service contracts entered into by Tenant or,  if not done so by
Tenant, by Landlord. The scope of services and contractors under such maintenance contracts shall be reasonably approved by Landlord.
If Tenant fails to perform any repair or replacement for which it is responsible, Landlord may perform such work and be reimbursed by Tenant within 10 days after demand therefor. Subject to
Paragraphs 9 and 15, Tenant shall bear the full cost of any repair or replacement to any part of the Building or Project that results 


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from
damage caused by Tenant, its agents, contractors, or invitees and any repair that benefits only the Premises. 


        12.    Tenant-Made Alterations and Trade Fixtures.    Any alterations, additions, or improvements made by
or on behalf of Tenant to the Premises ("Tenant-Made Alterations") in excess of $10,000 shall be subject to Landlord's prior written
consent, which consent shall not be unreasonably withheld or delayed, provided that such alteration does not materially affect the structure or the roof of the Building, modify
the exterior of the Building, or modify the utility systems of the Project, in which case such alteration (regardless of cost) shall be subject to Landlord's written consent, which such consent shall
be either approved or rejected by Landlord in Landlord's sole discretion. Tenant shall cause, at its expense, all Tenant-Made Alterations to comply with insurance
requirements and with Legal Requirements and shall construct at its expense any alteration or modification required by Legal Requirements as a result of any Tenant-Made Alterations. All
Tenant-Made Alterations shall be constructed in a good and workmanlike manner by contractors reasonably acceptable to Landlord and only good grades of materials shall be used. All plans
and specifications for any Tenant-Made Alterations shall be submitted to Landlord for its approval. Landlord may monitor construction of the Tenant-Made Alterations. Tenant
shall reimburse Landlord for its reasonable third-party, out-of-pocket costs in reviewing plans and specifications and in
monitoring construction. Landlord's right to review plans and specifications and to monitor construction shall be solely for its own benefit, and Landlord shall have no duty to see that such plans and
specifications or construction comply with applicable laws, codes, rules and regulations. Tenant shall provide Landlord with the identities and mailing addresses of all persons performing work or
supplying materials, prior to beginning such construction, and Landlord may post on and about the
Premises notices of non-responsibility pursuant to applicable law. Tenant shall furnish security or make other arrangements satisfactory to Landlord to assure payment for the completion of
all work free and clear of liens and shall provide certificates of insurance for worker's compensation and other coverage in amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during construction. Upon completion of any Tenant-Made Alterations, Tenant shall deliver to Landlord sworn statements
setting forth the names of all contractors and subcontractors who did work on the Tenant-Made Alterations and final lien waivers from all such contractors and subcontractors. Upon
surrender of the Premises, all Tenant-Made Alterations and any leasehold improvements constructed by Landlord or Tenant shall remain on the Premises as Landlord's property, except to the
extent Landlord requires removal at Tenant's expense of any such items or Landlord and Tenant have otherwise agreed in writing in connection with Landlord's consent to any Tenant-Made
Alterations. At Tenant's request, Landlord shall provide Tenant, at the time of Tenant's request for approval of Tenant-Made Alterations, a list of which Tenant-Made
Alterations Landlord will require Tenant to remove upon surrender of the Premises. Tenant shall repair any damage caused by such removal. 



        Tenant,
at its own cost and expense and without Landlord's prior approval, may erect such shelves, bins, machinery and trade fixtures (collectively "Trade Fixtures") in the ordinary
course of its business provided that such items do not alter the basic character of the Premises, do not overload or damage the Premises, and may be removed without injury to the Premises, and the
construction, erection, and installation thereof complies with all Legal Requirements and with Landlord's requirements set forth above. Tenant shall remove its Trade Fixtures and shall repair any
damage caused by such removal. 


        13.    Signs.    Tenant shall not make any changes to the exterior of the Premises, install any exterior lights,
decorations, balloons, flags, pennants, banners, or painting, 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 of the Premises, without Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed. Upon surrender or
vacation of the Premises, Tenant shall have removed all signs and repair, paint, and/or replace the building facia surface to which its signs are attached. Tenant shall obtain all applicable
governmental permits and approvals for sign and exterior 


8







 



treatments.
All signs, decorations, advertising media, blinds, draperies and other window treatment or bars or other security installations visible from outside the Premises shall be subject to
Landlord's approval and conform in all respects to Landlord's requirements. Tenant may, at its sole cost and expense, place its name on the two (2) existing monument
signs as more fully described on Exhibit A, subject to Landlord's prior approval of Tenant's plans and specifications related to such signage and subject to Landlord's standard sign
specifications for the Project.


        14.    Parking.    Tenant shall be entitled to park in those areas as designated on
Exhibit A and shall be entitled to park in common with other tenants of the Project in those areas designated for nonreserved parking. Landlord may allocate parking
spaces among Tenant and other tenants in the Project if Landlord determines that such parking facilities are becoming crowded. Landlord shall not be
responsible for enforcing Tenant's parking rights against any third parties, but shall reasonably cooperate with Tenant in carrying out such
enforcement. 


        15.    Restoration.    If at any time during the Lease Term the Premises are damaged by a fire or other casualty,
Landlord shall notify Tenant within 45 days after such damage as to the amount of time Landlord reasonably estimates it will take to restore the
Premises. If the restoration time is estimated to exceed 6 months, (or actually does exceed 6 months, subject to Force Majeure events and Tenant caused
delays), Tenant may elect to terminate this Lease upon notice to Landlord given no later than 30 days after Landlord's
notice. If Tenant does not elect to terminate this Lease as permitted hereunder, then, Landlord shall
promptly restore the Premises excluding Tenant's Tenant-Made Alterations, Trade Fixtures and/or personal property, subject to delays arising
from Force Majeure events. Tenant at Tenant's expense shall promptly perform, subject to delays arising from the collection of insurance proceeds, or from Force Majeure events, all repairs or
restoration to Tenant's Tenant-Made Alterations, which Landlord requires to remain as Landlord's property upon surrender of the Premises
pursuant to the terms of Paragraph 12 with this Lease. Notwithstanding the foregoing, either party may terminate this Lease if the Premises are damaged during the last year of the Lease Term
and Landlord reasonably estimates that it will take more than one month to repair such damage. Base Rent and Operating Expenses shall be abated for the period of repair and restoration in the
proportion which the area of the Premises, if any, which is not usable by Tenant bears to the total area of the Premises. Such abatement shall be the sole remedy of Tenant, and except as provided
herein, Tenant waives any right to terminate the Lease by reason of damage or casualty loss. 


        16.    Condemnation.    If any part of the Premises or the Project should be taken for any public or quasi-public use
under governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof (a "Taking" or "Taken"), and the Taking would prevent or materially interfere
with Tenant's use of the Premises or in Landlord's judgment would materially interfere with or impair its ownership or operation of the Project, then upon written notice by Landlord  or Tenant to the other this Lease shall terminate and Base Rent and Operating Expenses shall be apportioned as of said date. If part of the Premises
shall be Taken, and this Lease is not terminated as provided above, the Base Rent and Operating Expenses payable hereunder during the unexpired Lease Term shall be reduced to such extent as may be
fair and reasonable under the circumstances. In the event of any such Taking, Landlord shall be entitled to receive the entire price or award from any such Taking without any payment to Tenant. Tenant
shall have the right, to the extent that same shall not diminish Landlord's award, to make a separate claim against the condemning authority (but not Landlord) for such compensation as may be
separately awarded or recoverable by Tenant. 


        17.    Assignment and Subletting.    Without Landlord's prior written consent, which Landlord shall not unreasonably
withhold, condition, or delay, Tenant shall not assign this Lease or sublease the Premises or any part
thereof or mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license within the Premises and any attempt to do any of the foregoing shall be void and of no effect.  In the event that Landlord
fails to provide its consent of such assignment or sublet within 15 days following Tenant's request thereof, then Landlord's consent shall be
deemed denied for  


9







 



 purposes hereunder. For purposes of this paragraph, a transfer of 50% or more of the ownership interests controlling Tenant shall be deemed an assignment of this Lease unless
such ownership interests are publicly traded. Notwithstanding the above, Tenant may assign or sublet the Premises, or any part thereof, to any entity controlling Tenant, controlled by Tenant or under
common control with Tenant (a "Tenant Affiliate"), without the prior written consent of Landlord. Tenant shall reimburse Landlord for all of Landlord's reasonable out-of-pocket
expenses in connection with any assignment or sublease, not to exceed $2,000 per event of assignment or subletting. Upon Landlord's receipt of Tenant's
written notice of a desire to assign or sublet substantially all of the Premises for substantially all of the remaining Lease Term (excluding any transfer permitted to be done without Landlord's
consent in this Paragraph 17, and further excluding any transfer of ownership interests as set forth above which is deemed to be an assignment hereunder), Landlord may, by giving written notice
to Tenant within 30 days after receipt of Tenant's notice, terminate this Lease with respect to the space described in Tenant's notice, as of the date specified in Tenant's notice for the
commencement of the proposed assignment or sublease. If Landlord so terminates the Lease, Landlord may enter into a lease directly with the proposed sublessee or assignee. Tenant may withdraw its
notice to sublease or assign by notifying Landlord within 10 days after Landlord has given Tenant notice of such termination, in which case the Lease shall not terminate but shall continue. 



        Notwithstanding
anything contained herein to the contrary, provided no Event of Default has occurred and is continuing under this Lease beyond any applicable cure period, upon
10 days prior written notice to Landlord, Tenant may, without Landlord's prior written consent, assign this Lease to an entity into which or with
which Tenant is merged or consolidated or to an entity to which substantially all of Tenant's assets are transferred, provided (x) such merger, consolidation, or
transfer of assets is for a good business purpose and not principally for the purpose of transferring Tenant's leasehold estate, and (y) the assignee or successor entity has a net worth at
least equal to the net worth of Tenant immediately prior to such merger, consolidation, or transfer (collectively, a "Permitted Transfer"). 



        It
shall be reasonable for the Landlord to withhold its consent to any assignment or sublease in any of the following instances: (i) an Event of Default has occurred and is
continuing beyond any applicable cure period that would not be cured upon the proposed sublease or assignment; (ii) the assignee or sublessee
does not have a net worth calculated according to generally accepted accounting principles at least equal to the greater of the net worth of Tenant immediately prior to such assignment or sublease or
the net worth of the Tenant at the time it executed the Lease; (iii) the intended use of the Premises by the assignee or sublessee is not a permitted use
hereunder; (iv) the intended use of the Premises by the assignee or sublessee would materially increase the pedestrian or vehicular traffic to the Premises or the
Project; (v) occupancy of the Premises by the assignee or sublessee would, in Landlord's opinion, violate an agreement binding upon Landlord or the Project with regard to the identity of
tenants, usage in the Project, or similar matters; (vi) the identity or business reputation of the assignee or sublessee will, in the good faith judgment of Landlord, tend to damage the
goodwill or reputation of the Project;
(vii) the assignment or sublet is to another tenant in the Project and is at rates which are below those charged by Landlord for comparable space in the Project; (viii) in the case of a
sublease, the subtenant has not acknowledged that the sublease is subject to all of the terms and conditions of the Lease; or (ix) the proposed
assignee or sublessee is a governmental agency. Tenant and Landlord acknowledge that each of the foregoing criteria are reasonable as of the date of execution of this Lease. The foregoing criteria
shall not exclude any other reasonable basis for Landlord to refuse its consent to such assignment or sublease. Any approved assignment or sublease shall be expressly subject to the terms and
conditions of this Lease. Tenant shall provide to Landlord all information concerning the assignee or sublessee as Landlord may request. 


        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 


10







 



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 assignments or sublettings). In the event that
the rent due and payable by a sublessee or assignee (or a combination of the rental payable under such sublease or assignment plus any bonus received in lieu of
rent therefor or incident thereto) exceeds the rental payable under this Lease, except as the same relates to an Tenant Affiliate or a Permitted
Transfer or any transfer of ownership of interests as set forth above which is deemed to be an assignment hereunder, then Tenant shall be bound and obligated to pay Landlord as
additional rent hereunder 50% of all such excess rental actually received by Tenant within
10 days following receipt thereof by Tenant, after deducting reasonable tenant improvements and marketing costs, reasonable brokerage fees, and reasonable attorney's
fees. 


        If
this Lease be assigned or if the Premises be subleased (whether in whole or in part) or in the event of the mortgage, pledge, or hypothecation of Tenant's leasehold interest or grant
of any concession or license within the Premises or if the Premises be occupied in whole or in part by anyone other than Tenant, then upon a default by Tenant hereunder beyond
any applicable cure period, Landlord may collect rent from the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold interest was hypothecated, concessionee or
licensee or other occupant and, except to the extent set forth in the preceding paragraph, apply the amount collected to the next rent payable hereunder; and all such rentals collected by Tenant shall
be held in trust for Landlord and immediately forwarded to Landlord. No such transaction or collection of rent or application thereof by Landlord, however, shall be deemed a waiver of these provisions
or a release of Tenant from the further performance by Tenant of its covenants, duties, or obligations hereunder. 


        18.    Indemnification.    Except for the negligence or willful misconduct of or breach of this Lease by Landlord, its
agents, employees or contractors, and to the extent permitted by law, Tenant agrees to indemnify, defend and hold harmless Landlord, and Landlord's agents, employees and contractors, from and against
any and all losses, liabilities, damages, costs and expenses (including attorneys' fees) resulting from claims by third parties for injuries to any person and damage to or theft or misappropriation or
loss of property occurring in or about the Project and arising from the use and occupancy of the Premises or from any activity, work, or thing done, permitted or suffered by Tenant in
or about the Premises or due to any other act or omission of Tenant, its subtenants, assignees, invitees, employees, contractors and agents. The furnishing of insurance required hereunder shall not be
deemed to limit Tenant's obligations under this Paragraph 18. 


        19.    Inspection and Access.    Landlord and its agents, representatives, and contractors may enter the Premises at
any reasonable time to inspect the Premises and to make such repairs as may be required or permitted pursuant to this Lease and for any other business purpose upon
24 hour advance notice (except in case of emergency, where no such notice shall be required). In any entry of the Premises, Landlord and Landlord's representatives shall not unreasonably or
materially interfere with Tenant's operations in the Premises and shall abide by Tenant's reasonable security and health and safety requirements. Landlord and Landlord's
representatives may enter the Premises during business hours for the purpose of showing the Premises to prospective purchasers and, during the last six (6) months of the Lease Term, to
prospective tenants. Landlord may erect a suitable sign on the Premises stating the Premises are available to let during the last six (6) months of the Lease Term or at any time during the
Lease Term that the Project is available for sale. Landlord may grant easements, make public dedications, designate common areas and create restrictions on or about the Premises, provided that no such
easement, dedication, designation or restriction materially interferes with Tenant's use or occupancy of the Premises or materially increased Tenant's obligations or decreases Tenant's rights
hereunder. At Landlord's request, Tenant shall execute such instruments as may be necessary for such easements, dedications or restrictions. 


        20.    Quiet Enjoyment.    If Tenant shall perform all of the covenants and agreements herein required to be performed
by Tenant within applicable notice and cure periods, Tenant shall, subject to 


11







 



the
terms of this Lease, at all times during the Lease Term, have peaceful and quiet enjoyment of the Premises against any person claiming by, through or under Landlord. 


        21.    Surrender.    Upon termination of the Lease Term or earlier termination of Tenant's right of possession, Tenant
shall surrender the Premises to Landlord in the same condition as received, broom clean, ordinary wear and tear and casualty loss and condemnation covered by Paragraphs 15 and
16, and Hazardous Materials that are not Tenant Contamination excepted. Any Trade Fixtures, Tenant-Made Alterations and property not so
removed by Tenant as permitted or 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. All obligations of Tenant hereunder not fully performed as of the termination of the Lease Term shall survive the
termination of the Lease Term, including without limitation, indemnity obligations, payment obligations with respect to Operating Expenses and obligations concerning the condition and repair of the
Premises. 


        22.    Holding Over.    If Tenant retains possession of the Premises after the termination of the Lease Term, unless
otherwise agreed in writing, such possession shall be subject to immediate termination by Landlord at any time, and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during such holdover period, except that Tenant shall pay Landlord from time to time, upon demand, as Base Rent for the holdover
period, an amount equal to 150% of the Base Rent in effect on the termination date, computed on a monthly basis for each month or part thereof during
such holding over. All other payments shall continue under the terms of this Lease. In addition, Tenant shall be liable for all damages incurred by Landlord as a result of such holding over. No
holding over by Tenant, whether with or without consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided, and this Paragraph 22 shall not be construed as
consent for Tenant to retain possession of the Premises. 


        23.    Events of Default.    Each of the following events shall be an event of default ("Event of Default") by Tenant
under this Lease: 



          (i)  Tenant
shall fail to pay any installment of Base Rent or any other payment required herein when due, and such failure shall continue for a period of 5 days  after written notice from Landlord to Tenant that such payment was due;
provided, however, that Landlord shall not be obligated to provide written notice of such failure more
than 2 times in any consecutive 12-month period, and the failure of Tenant to pay any third or subsequent installment of Base Rent or any other payment required herein when due in any
consecutive 12-month period shall constitute an Event of Default by Tenant under this Lease without the requirement of notice or opportunity to cure, and provided, further however, that
any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 and 1161(a) as amended. 


         (ii)  Tenant
or any guarantor or surety of Tenant's obligations hereunder shall (A) make a general assignment for the benefit of creditors; (B) commence any
case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or of any substantial part of its
property (collectively a "proceeding for relief"); (C) become the subject of any proceeding for relief which is not dismissed within 60 days of its filing or entry; or (D) die or
suffer a legal disability (if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise fail to maintain its legal existence (if Tenant, guarantor or surety is a corporation,
partnership or other entity). 



12







 




        (iii)  Any
insurance required to be maintained by Tenant pursuant to this Lease shall be cancelled or terminated or shall expire or shall be reduced or materially  and adversely changed, except, in each case, as
permitted in this Lease. 


        (iv)  Tenant
shall not occupy or shall vacate the Premises or shall fail to continuously operate its business at the Premises for the permitted use set forth herein, whether
or not Tenant is in monetary or other
default under this Lease. Tenant's vacating of the Premises shall not constitute an Event of Default if, prior to vacating the Premises, Tenant has made arrangements reasonably
acceptable to Landlord to (a) insure that Tenant's insurance for the Premises will not be voided or cancelled with respect to the Premises as a result of such vacancy, (b) insure that
the Premises are secured and not subject to vandalism, and (c) insure that the Premises will be properly maintained after such vacation. Tenant shall inspect the Premises at least once each
month and report monthly in writing to Landlord on the condition of the Premises.


         (v)  Tenant
shall attempt or there shall occur any assignment, subleasing or other transfer of Tenant's interest in or with respect to this Lease except as otherwise
permitted in this Lease. 


        (vi)  Tenant
shall fail to discharge any lien placed upon the Premises in violation of this Lease within 30 days after any such lien or encumbrance is filed against
the Premises. 


       (vii)  Tenant
shall fail to comply with any provision of this Lease other than those specifically referred to in this Paragraph 23, and except as otherwise expressly
provided herein, such default shall continue for more than 30 days after Landlord shall have given Tenant written notice of such default; provided, however, that in the
event that such default cannot reasonably be cured within such 30 day period, Tenant shall not be in default hereunder so long as Tenant commences to cure such default within such thirty day
period and diligently prosecutes it to completion, and subject to Paragraph 33 hereof, completes such cure within 90 days. 




        24.    Landlord's Remedies.    Upon each occurrence of an Event of Default and so long as such Event of Default shall
be continuing, Landlord may at any time thereafter at its election: terminate this Lease or Tenant's right of possession, (but Tenant shall remain liable as hereinafter provided) and/or pursue any
other remedies at law or in equity. Upon the termination of this Lease or termination of Tenant's right of possession, it shall be lawful for Landlord, without formal demand or notice of any kind, to
re-enter the Premises by summary dispossession proceedings or any other action or proceeding authorized by law and to remove Tenant and all persons and property therefrom. If Landlord
re-enters the Premises, Landlord shall have the right to keep in place and use, or remove and store, all of the furniture, fixtures and equipment at the Premises. 


        Except
as otherwise provided in the next paragraph, if Tenant breaches this Lease and abandons the Premises prior to the end of the term hereof, or if Tenant's right to possession is
terminated by Landlord because of an Event of Default by Tenant under this Lease, this Lease shall terminate. Upon such termination, Landlord may recover from Tenant the following, as provided in
Section 1951.2 of the Civil Code of California: (i) the worth at the time of award of the unpaid Base Rent and other charges under this Lease that had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the reasonable value of the unpaid Base Rent and other charges under this Lease which would have been earned after
termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; (iii) the worth at the time of the award by which the
reasonable value of the unpaid Base Rent and other charges under this Lease 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 have been reasonably avoided; and (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 that in the ordinary course of things would be likely to result therefrom. As used herein, the following terms are defined: (a) the "worth at the time of award" of the amounts referred
to in Sections (i) and (ii) is computed by allowing interest at the lesser of 12 percent 


13







 



per
annum or the maximum lawful rate. The "worth at the time of award" of the amount referred to in Section (iii) 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; (b) the "time of award" as used in clauses (i), (ii), and (iii) above is the date on which judgment is entered by a
court of competent jurisdiction; (c) The "reasonable value" of the amount referred to in clause (ii) above is computed by determining the mathematical product of (1) the
"reasonable annual rental value" (as defined herein) and (2) the number of years, including fractional parts thereof, between the date of termination and the time of award. The "reasonable
value" of the amount referred to in clause (iii) is computed by determining the mathematical product of (1) the annual Base Rent and other charges under this Lease and (2) the
number of years including fractional parts thereof remaining in the balance of the term of this Lease after the time of award. 


        Even
though Tenant has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant's right to possession, and
Landlord may enforce all its rights and remedies under this Lease, including the right to recover rent as it becomes due. This remedy is intended to be the remedy described in California Civil Code
Section 1951.4 and the following provision from such Civil Code Section is hereby repeated: "The Lessor has the remedy described in California Civil Code Section 1951.4 (lessor may
continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations)." Any such payments
due Landlord shall be made upon demand therefor from time to time and Tenant agrees that Landlord may file suit to recover any sums falling due from time to time. Notwithstanding any such reletting
without termination, Landlord may at any time thereafter elect in writing to terminate this Lease for such previous breach. 


        Exercise
by Landlord of any one or more remedies hereunder granted or otherwise available shall not be deemed to be an acceptance of surrender of the Premises and/or a termination of
this Lease by Landlord, whether by agreement or by operation of law, it being understood that such surrender and/or termination can be effected only by the written agreement of Landlord and Tenant.
Any law, usage, or
custom to the contrary notwithstanding, Landlord shall have the right at all times to enforce the provisions of this Lease in strict accordance with the terms hereof; and the failure of Landlord at
any time to enforce its rights under this Lease strictly in accordance with same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions, and
covenants of this Lease or as having modified the same. Tenant and Landlord further agree that forbearance or waiver by Landlord to enforce its rights pursuant to this Lease or at law or in equity,
shall not be a waiver of Landlord's right to enforce one or more of its rights in connection with any subsequent default. A receipt by Landlord of rent or other payment with knowledge of the breach of
any covenant hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by
Landlord. The terms "enter," "re-enter," "entry" or "re-entry," as used in this Lease, are not restricted to their technical legal meanings. Any reletting of the Premises shall
be on such terms and conditions as Landlord in its sole discretion may determine (including without limitation a term different than the remaining Lease Term, rental concessions, alterations and
repair of the Premises, lease of less than the entire Premises to any tenant and leasing any or all other portions of the Project before reletting the Premises). Landlord shall not be liable, nor
shall Tenant's obligations hereunder be diminished because of, Landlord's failure to relet the Premises or collect rent due in respect of such reletting, provided that Landlord
has made commercially reasonable efforts to relet the Premises and otherwise mitigate its damages; provided, however, (a) Landlord shall not be obligated to accept any tenant proposed by
Tenant, (b) Landlord shall have the right to lease any other space controlled by Landlord first, and (c) any proposed tenant shall meet all of Landlord's leasing
criteria. 


14









   
        25.    Tenant's Remedies/Limitation of Liability.    Landlord shall not be in default hereunder unless Landlord
fails
to perform any of its obligations hereunder within 30 days after written notice from Tenant specifying such failure (unless such performance will, due to the nature of the obligation, require a
period of time in excess of 30 days, then after such period of time as is reasonably necessary so long a Landlord is continuously and diligently pursuing a
cure). If such default by Landlord shall occur, Tenant may pursue any legal or equitable remedy for which it is entitled. All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise expressly provided in this Lease, Tenant may not terminate this Lease for breach of Landlord's obligations hereunder. All
obligations of Landlord under this Lease will be binding upon Landlord only during the period of its ownership of the Premises and not thereafter so long as any successor to
Landlord has assumed Landlord's obligations in writing. The term "Landlord" in this Lease shall mean only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall thereupon be released and discharged from all obligations of Landlord thereafter accruing, but such obligations shall be
binding during the Lease Term upon each new owner for the duration of such owner's ownership. Any liability of Landlord under this Lease shall be limited solely to its interest in the Project, and in
no event shall any personal liability be asserted against Landlord in connection with this Lease nor shall any recourse be had to any other property or assets of Landlord.  Landlord's interest in the Project shall be deemed to
include: (i) the rents or other income from the Project received by Landlord after Tenant obtains a final judgment
against Landlord, (ii) the net proceeds received by Landlord from the sale or other disposition of all or any part of Landlord's right, title and interest in the Project after Tenant obtains a
final judgment against Landlord, (iii) the net proceeds received by Landlord from any condemnation or conveyance in lieu of condemnation of all or any portion of the Project after Tenant
obtains a final judgment against Landlord, and (iv) the net proceeds of insurance received by Landlord from any casualty loss of all or any portion of the Project after Tenant obtains a final
judgment against Landlord.


        26.    Waiver of Jury Trial.    TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. 


        27.    Subordination.    This Lease and Tenant's interest and rights hereunder are and shall be subject and
subordinate at all times to the lien of any mortgage, now existing or hereafter created on or against the Project or the Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the necessity of any further instrument or act on the part of Tenant. Tenant agrees, at the election of the holder of any such
mortgage, to attorn to any such holder. Tenant agrees upon demand to execute, acknowledge and deliver such instruments, confirming such subordination and such instruments of attornment as shall be
requested by any such holder. Notwithstanding the foregoing, any such holder may at any time subordinate its mortgage to this Lease, without Tenant's consent, by notice in writing to Tenant, and
thereupon this Lease shall be deemed prior to such mortgage without regard to their respective dates of execution, delivery or recording and in that event such holder shall have the same rights with
respect to this Lease as though this Lease had been executed prior to the execution, delivery and recording of such mortgage and had been assigned to such holder. The term "mortgage" whenever used in
this Lease shall be deemed to include deeds of trust, security assignments and any other encumbrances, and any reference to the "holder" of a mortgage shall be deemed to include the beneficiary under
a deed of trust. 


15







 



        Notwithstanding anything contained herein to the contrary, Tenant shall not be obligated to subordinate the Lease or its interest therein to any mortgage, deed of
trust or ground lease on the Project unless concurrently with such subordination the holder of such mortgage or deed of trust or the ground lessor under such ground lease agrees not to disturb
Tenant's possession of the Premises under the terms of the Lease in the event such holder or ground lessor acquires title to the Premises through foreclosure, deed in lieu of foreclosure or otherwise.
Tenant shall be solely responsible for any fees or expenses charged by the holder of such mortgage or deed of trust in connection with the granting of such non-disturbance
agreement


        28.    Mechanic's Liens.    Tenant has no express or implied authority to create or place any lien or encumbrance of
any kind upon, or in any manner to bind the interest of Landlord or Tenant in, the Premises or to charge the rentals payable hereunder for any claim in favor of any person dealing with Tenant,
including those who may furnish materials or perform labor for any construction or repairs. Tenant covenants and agrees that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any work performed on the Premises and that it will save and hold Landlord harmless from all loss, cost or expense based on or
arising out of asserted claims or liens against the leasehold estate or against the interest of Landlord in the Premises or under this Lease. Tenant shall give Landlord immediate written notice of the
placing of any lien or encumbrance against the Premises and cause such lien or encumbrance to be discharged within 30 days of the filing or recording thereof; provided, however, Tenant may
contest such liens or encumbrances as long as such contest prevents foreclosure of the lien or encumbrance and Tenant causes such lien or encumbrance to be bonded or insured over in a manner
satisfactory to Landlord within such 30 day period. 



        29.    Estoppel Certificates.    Tenant agrees, from time to time, within 10 days after request of Landlord, to
execute and deliver to Landlord, or Landlord's designee, any estoppel certificate requested by Landlord, stating that this Lease is in full force and effect, the date to which rent has been paid, that
Landlord is not in default hereunder (or specifying in detail the nature of Landlord's default), the termination date of this Lease and such other matters pertaining to this Lease as may be  reasonably
requested by Landlord. Tenant's obligation to furnish each estoppel certificate in a timely fashion is a material inducement for Landlord's
execution of this Lease. No cure or grace period provided in this Lease shall apply to Tenant's obligations to timely deliver an estoppel certificate. 


        30.    Environmental Requirements.    Except for Hazardous Material contained in products used by Tenant in de minimis
quantities for (i) ordinary cleaning and office purposes or (ii) Tenant's normal business operations in connection with
its lab operations, Tenant shall not permit or cause any party to bring any Hazardous Material upon the Premises or transport, store, use, generate, manufacture or release any
Hazardous Material in or about the Premises without Landlord's prior written consent which shall not be unreasonably withheld or delayed. Tenant, at its
sole cost and expense, shall operate its business in the Premises in strict compliance with all Environmental Requirements and shall remediate in a manner satisfactory to  Environmental Requirements any
Hazardous Materials released on or from the Project by Tenant, its agents, employees, contractors, subtenants or invitees  ("Tenant Contamination"). Tenant shall complete and certify to disclosure
statements as requested by Landlord from time to time relating to Tenant's
transportation, storage, use, generation, manufacture or release of Hazardous Materials on the Premises. The term "Environmental Requirements" means all applicable present and future statutes,
regulations, ordinances, rules, codes, judgments, orders or other similar enactments of any governmental authority or agency regulating or relating to health, safety, or environmental conditions on,
under, or about the Premises or the environment, including without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and
Recovery Act; and all state and local counterparts thereto, and any regulations or policies having the force of law promulgated or issued thereunder.
The term "Hazardous Materials" means and includes any substance, material, waste, pollutant, or contaminant listed or 


16







 



defined
as hazardous or toxic, under any Environmental Requirements, asbestos and petroleum, including crude oil or any fraction thereof, natural gas liquids, liquified natural gas, or synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas). As defined in Environmental Requirements, Tenant is and shall be deemed to be the "operator" of Tenant's "facility" that Tenant
operates in or about the Premises during the Lease Term and the "owner" of all Hazardous Materials brought on the Premises by Tenant, its agents, employees, contractors or invitees, and the wastes,
by-products, or residues generated, resulting, or produced therefrom. 


        Tenant
shall indemnify, defend, and hold Landlord harmless from and against any and all losses (including, without limitation, diminution in value of the Premises or the Project and loss
of rental income from the Project), claims, demands, actions, suits, damages (including, without limitation, punitive damages), expenses (including, without limitation, remediation, removal, repair,
corrective action, or cleanup expenses), and costs (including, without limitation, actual attorneys' fees, consultant fees or expert fees and including, without limitation, removal or management of
any asbestos brought into the property by Tenant, its agents, employees, contractors, subtenants, assignees or invitees or disturbed by Tenant, its agents, employees,
contractors, subtenants, assignees, or invitees in breach of the requirements of this Paragraph 30, regardless of whether such removal or management is required by law)
which are brought or recoverable against, or suffered or incurred by Landlord as a result of any release of Hazardous Materials for which Tenant is obligated to remediate as provided above or any
other breach of the requirements under this Paragraph 30 by Tenant, its agents, employees, contractors,
subtenants, assignees or invitees, regardless of whether Tenant had knowledge of such noncompliance. The obligations of Tenant under this Paragraph 30 shall survive any termination of this
Lease. 


        Landlord
shall have access to, and a right to perform inspections and tests of, the Premises to determine Tenant's compliance with Environmental Requirements, its obligations under this
Paragraph 30, or the environmental condition of the Premises. Access shall be granted to Landlord upon Landlord's prior notice to Tenant and at such times so as to minimize, so far as may be
reasonable under the circumstances, any disturbance to Tenant's operations. Such inspections and tests shall be conducted at Landlord's expense, unless such inspections or tests reveal that Tenant has
not complied with any Environmental Requirement, in which case Tenant shall reimburse Landlord for the reasonable cost of such inspection and tests. Landlord's receipt of or satisfaction with any
environmental assessment in no way waives any rights that Landlord holds against Tenant. 


        Notwithstanding anything to the contrary in this Paragraph 30, Tenant shall have no liability of any kind to Landlord as to Hazardous Materials on the
Premises prior to Tenant's occupancy of the Premises or caused or permitted by (i) Landlord, its agents, employees, contractors or invitees; or (ii) any other tenants in the Project or
their agents, employees, contractors, subtenants, assignees or invitees; or (iii) any other person or entity located outside of the Premises or the Project. Landlord represents and warrants
that Landlord, to Landlord's knowledge and without further inquiry, is unaware of any environmental conditions affecting the Premises.


        31.    Rules and Regulations.    Tenant shall, at all times during the Lease Term and any extension thereof, comply
with all reasonable rules and regulations at any time or from time to time established by Landlord covering use of the Premises and the Project. The current rules and regulations are attached hereto.
In the event of any conflict between said rules and regulations and other provisions of this Lease, the other terms and provisions of this Lease shall control. Landlord shall not have any liability or
obligation for the breach of any rules or regulations by other tenants in the Project. 


        32.    Security Service.    Tenant acknowledges and agrees that, while Landlord may patrol the Project, Landlord is
not providing any security services with respect to the Premises 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. 


17







 



        33.    Force Majeure.    Except for monetary obligations, neither
Landlord not Tenant shall be held responsible for delays in the performance of its obligations hereunder when caused by strikes, lockouts, labor
disputes, acts of God, inability to obtain labor or materials or reasonable substitutes therefor, governmental restrictions, governmental regulations, governmental controls, delay in issuance of
permits, enemy or hostile governmental action, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Landlord or Tenant, as the case may
be ("Force Majeure"). 


        34.    Entire Agreement.    This Lease constitutes the complete agreement of Landlord and Tenant with respect to the
subject matter hereof. No representations, inducements, promises or agreements, oral or written, have been made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant, which are not
contained herein, and any prior agreements, promises, negotiations, or representations are superseded by this Lease. This Lease may not be amended except by an instrument in writing signed by both
parties hereto. 


        35.    Severability.    If any clause or provision of this Lease is illegal, invalid or unenforceable under present or
future laws, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there be added, as a part of this Lease, a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable. 


        36.    Brokers.    Each party represents and warrants  to the other that it has dealt
with no broker, agent or other person in connection with this transaction and that no broker, agent or other person
brought about this transaction, other than the broker, if any, set forth on the first page of this Lease, and each party agrees to indemnify and hold  the other harmless from and against any claims by any other broker, agent or other person claiming a commission or other form of compensation by virtue
of having dealt with the indemnifying party with regard to this leasing transaction. Landlord hereby acknowledges and agrees
that the broker referenced on Page One of this Lease shall be entitled to a leasing commission from Landlord by virtue of this Lease, which leasing commission shall be deemed earned and shall be paid
by Landlord to said broker in accordance with, and subject to the terms of, a separate written agreement.


        37.    Miscellaneous.    (a)    Any payments or charges due from Tenant to Landlord hereunder shall be
considered rent for all purposes of this Lease. 


        (b)   If
and when included within the term "Tenant," as used in this instrument, there is more than one person, firm or corporation, each shall be jointly and severally liable
for the obligations of Tenant. 


        (c)   All
notices required or permitted to be given under this Lease shall be in writing and shall be sent by registered or certified mail, return receipt requested, or by a
reputable national overnight courier service, postage prepaid, or by hand delivery addressed to the parties at their addresses below, and with a copy sent to Landlord at 14100
East 35th Place, Aurora, Colorado 80011. Either party may by notice given aforesaid change its address for all subsequent notices. Except where otherwise expressly provided to
the contrary, notice shall be deemed given upon delivery. 


        (d)   Except
as otherwise expressly provided in this Lease or as otherwise required by law, Landlord retains the absolute right to withhold any consent or approval. Whenever
the Lease requires an approval, consent, determination, selection or judgment by either Landord or Tenant, unless another standard is expressly set forth, such approval, consent, 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. 


        (e)   At
Landlord's request from time to time Tenant shall furnish Landlord with true and complete copies of its most recent annual and quarterly financial statements prepared
by Tenant or Tenant's 


18







 



accountants
and any other financial information or summaries that Tenant typically provides to its lenders or shareholders. Landlord hereby agrees to keep such financial information confidential
pursuant to the terms of a separate confidentiality agreement between Landlord and Tenant. 



        (f)    Neither
this Lease nor a memorandum of lease shall be filed by or on behalf of Tenant in any public record. Landlord may prepare and file, and upon request by Landlord
Tenant will execute, a memorandum of lease. 


        (g)   The
normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this
Lease or any exhibits or amendments hereto. 


        (h)   The
submission by Landlord to Tenant of this Lease shall have no binding force or effect, shall not constitute an option for the leasing of the Premises, nor confer any
right or impose any obligations upon either party until execution of this Lease by both parties. 


        (i)    Words
of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural,
unless the context otherwise requires. The captions inserted in this Lease are for convenience only and in no way define, limit or otherwise describe the scope or intent of this Lease, or any
provision hereof, or in any way affect the interpretation of this Lease. 



        (j)    Any
amount not paid by Tenant within 5 days after its due date in accordance with the terms of this Lease shall bear interest from such due date until paid in
full at the lesser of the highest rate permitted by applicable law or 15 percent per year. It is expressly the intent of Landlord and Tenant at all times to comply with applicable law governing
the maximum rate or amount of any interest payable on or in connection with this Lease. If applicable law is ever judicially interpreted so as to render usurious any interest called for under this
Lease, or contracted for, charged, taken, reserved, or received with respect to this Lease, then it is Landlord's and Tenant's express intent that all excess amounts theretofore collected by Landlord
be credited on the applicable obligation (or, if the obligation has been or would thereby be paid in full, refunded to Tenant), and the provisions of this Lease immediately shall be deemed reformed
and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder. 


        (k)   Construction
and interpretation of this Lease shall be governed by the laws of the state in which the Project is located, excluding any principles of conflicts of laws. 


        (l)    Time
is of the essence as to the performance of Tenant's obligations under this Lease. 



        (m)  All
exhibits and addenda attached hereto are hereby incorporated into this Lease and made a part hereof. In the event of any conflict between such exhibits or addenda
and the terms of this Lease, such exhibits or addenda shall control. 


        (n)   In
the event either party hereto initiates litigation to enforce the terms and provisions of this Lease, the non-prevailing party in such action shall
reimburse the prevailing party for its reasonable attorney's fees, filing fees, and court costs. 


        38.    Landlord's Lien/Security Interest.    Intentionally deleted. 



        39.    Limitation of Liability of Trustees, Shareholders, and Officers of ProLogis.    Any obligation or liability
whatsoever of ProLogis, a Maryland real estate investment trust, which may arise at any time under this Lease or any obligation or liability which may be incurred by it pursuant to any other
instrument, transaction, or undertaking contemplated hereby shall not be personally binding upon, nor shall resort for the enforcement thereof be had to the property of, its trustees, directors,
shareholders, 


19







 



officers,
employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort, or otherwise. 


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



	TENANT:	 	LANDLORD:
	

Ikanos Communications, a California corporation	
 	

ProLogis, a Maryland real estate investment trust
	

By:	

/s/  DAN ATLER      
	
 	

By:	

/s/  W. SCOTT LAMSON      

	Name:	Dan Atler	 	Name:	W. Scott Lamson
	Title:	Chief Financial Officer	 	Title:	Senior Vice President
	

Address:
	
47669 Fremont Blvd.

Fremont, CA 94538	
 	
47775 Fremont Blvd.

Fremont, CA 94538




20








   Rules and Regulations  


	1.
	The
sidewalk, entries, and driveways of the Project shall not be obstructed by Tenant, or its agents, or used by them for any purpose other than ingress and egress to and from the
Premises.



	2.
	Tenant
shall not place any objects, including antennas, outdoor furniture, etc., in the parking areas, landscaped areas or other areas outside of its Premises, or on the roof of the
Project.



	3.
	Except
for seeing-eye dogs, no animals shall be allowed in the offices, halls, or corridors in the Project.



	4.
	Tenant
shall not disturb the occupants of the Project or adjoining buildings by the use of any radio or musical instrument or by the making of loud or improper noises.



	5.
	If
Tenant desires telegraphic, telephonic or other electric connections in the Premises, Landlord or its agent will direct the electrician as to where and how the wires may be
introduced; and, without such direction, no boring or cutting of wires will be permitted. Any such installation or connection shall be made at Tenant's expense.



	6.
	Tenant
shall not install or operate any steam or gas engine or boiler, or other mechanical apparatus in the Premises, except as specifically approved in the Lease. The use of oil, gas
or inflammable liquids for heating, lighting or any other purpose is expressly prohibited. Explosives or other articles deemed extra hazardous shall not be brought into the Project.



	7.
	Parking
any type of recreational vehicles is specifically prohibited on or about the Project. Except for the overnight parking of operative vehicles, no vehicle of any type shall be
stored in the parking areas at any time. In the event that a vehicle is disabled, it shall be removed within 48 hours. There shall be no "For Sale" or other advertising signs on or about any
parked vehicle. All vehicles shall be parked in the designated parking areas in conformity with all signs and other markings. All parking will be open parking, and no reserved parking, numbering or
lettering of individual spaces will be permitted except as specified by Landlord.



	8.
	Tenant
shall maintain the Premises free from rodents, insects and other pests.



	9.
	Landlord
reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs or who shall in
any manner do any act in violation of the Rules and Regulations of the Project.



	10.
	Tenant
shall not cause any unnecessary labor by reason of Tenant's carelessness or indifference in the preservation of good order and cleanliness. Landlord shall not be responsible to
Tenant for any loss of property on the Premises, however occurring, or for any damage done to the effects of Tenant by the janitors or any other employee or person.



	11.
	Tenant
shall give Landlord prompt notice of any defects in the water, lawn sprinkler, sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any other service
equipment affecting the Premises.



	12.
	Tenant
shall not permit storage outside the Premises, including without limitation, outside storage of trucks and other vehicles, or dumping of waste or refuse or permit any harmful
materials to be placed in any drainage system or sanitary system in or about the Premises.



	13.
	All
moveable trash receptacles provided by the trash disposal firm for the Premises must be kept in the trash enclosure areas, if any, provided for that purpose.



	14.
	No
auction, public or private, will be permitted on the Premises or the Project.



	15.
	No
awnings shall be placed over the windows in the Premises except with the prior written consent of Landlord. 


21







 
	16.
	The
Premises shall not be used for lodging, sleeping or cooking or for any immoral or illegal purposes or for any purpose other than that specified in the Lease. No gaming devices
shall be operated in the Premises.



	17.
	Tenant
shall ascertain from Landlord the maximum amount of electrical current which can safely be used in the Premises, taking into account the capacity of the electrical wiring in
the Project and the Premises and the needs of other tenants, and shall not use more than such safe capacity. Landlord's consent to the installation of electric equipment shall not relieve Tenant from
the obligation not to use more electricity than such safe capacity.



	18.
	Tenant
assumes full responsibility for protecting the Premises from theft, robbery and pilferage.



	19.
	Tenant
shall not install or operate on the Premises any machinery or mechanical devices of a nature not directly related to Tenant's ordinary use of the Premises and shall keep all
such machinery free of vibration, noise and air waves which may be transmitted beyond the Premises. 


22








  



 
 

ADDENDUM 1    
    
    BASE RENT ADJUSTMENTS    
    
    ATTACHED TO AND A PART OF THE LEASE AGREEMENT
  DATED 2/7/06, BETWEEN    
    
    ProLogis, a Maryland real estate investment trust

and
  Ikanos Communications, a California corporation    
    


        Base Rent shall equal the following amounts for the respective periods set forth below: 



	Period
 
	 	Monthly Base Rent
	 
	February 6th, 2006 to June 30, 2006	 	$	00.00	*
	July 1st, 2006 to January 31st, 2007	 	$	18,513.00	 
	February 1st, 2007 to January 31st, 2008	 	$	22,143.00	 
	February 1st, 2008 to January 31st, 2009	 	$	23,958.00	 
	February 1st, 2009 to January 31st, 2010	 	$	25,773.00	 
	February 1st, 2010 to March 31st, 2011	 	$	27,588.00	 







	*
	Operating
expenses will be abated during period of free rent (February 6, 2006-June 30, 2006) for 47661 Fremont Blvd. only. 


23







 
 
 

ADDENDUM 2    
    
    CONSTRUCTION
  (ALLOWANCE)    
    
    ATTACHED TO AND A PART OF THE LEASE AGREEMENT
  DATED 2/7/06, BETWEEN    
    
    ProLogis, a Maryland real estate investment
trust
  and
  Ikanos Communications, a California corporation    
    


	a.
	Initial Tenant Improvements; Allowance.    The leasehold improvements to be constructed by Tenant (the  "Initial Tenant
Improvements)", at Tenant's sole cost and expense (except for the hereinbelow described  "Allowance", are generally described in the preliminary plans and specifications (the
"Preliminary
Plans") identified on Attachment 1 to this Addendum and shall be constructed in accordance with the Final Plans to be submitted by Tenant and reviewed and approved by Landlord
in accordance with the provisions of Paragraph (b) of this Addendum. 



Landlord
shall pay for the Initial Improvements up to a maximum amount of $170,000.00, and in no event shall Landlord have any obligation to pay for any costs of the Initial Improvements in excess of
such amount. If the cost of the Initial Improvements exceeds such amount, such overage shall be borne by Tenant, and repaid to Landlord, in equal monthly installments over the Lease Term; provided
that Landlord increases the monthly base rent by $0.01 per square foot for every dollar expended by Tenant. In no event shall the excess overage exceed $74,010.00. 



Landlord's
payment of the Allowance, or such portion thereof as Tenant may be entitled to, shall be made within thirty (30) days of invoice. If Landlord claims any credits against the Allowance
for any costs paid directly by Landlord to third parties, Landlord shall provide Tenant with evidence of payment of such costs. 



	b.
	Preparation and Review of Plans for Initial Tenant Improvements.    The Preliminary Plans identified on Attachment 1 to this
Addendum 2 have been approved by Landlord and signed by Landlord and Tenant for identification. However, such Preliminary Plans shall not be used by Tenant for the purposes of constructing or
installing the Initial Tenant Improvements. Tenant, using licensed architectural and engineering firms selected by Tenant and approved by Landlord (which approval shall not be unreasonably withheld or
delayed), shall prepare or cause to be prepared and submitted, concurrently, and in each case by receipted courier or delivery service, to (i) Landlord's construction representative,
(i) Lisa Hooton/Brian Erlanson, 47775 Fremont Boulevard, Fremont, California, 94538, and (ii) Landlord's offices at 14100 East 35th Place, Aurora, Colorado 80011, for Landlord's review,
complete and final architectural and engineering drawings and specifications (hereinafter collectively referred to as the "Final Plans"), consistent
with the description of the Initial Tenant Improvements set forth on the Preliminary Plans. Subject to the provisions of Paragraph (c) of this Addendum 2, Landlord agrees that Tenant may
commence construction of the Initial Tenant Improvements prior to finalization of the Final Plans and Landlord agrees that it shall cooperate with Tenant to review and approve portions of the Final
Plans for different stages or elements of the work, or proposed Final Plans submitted at less than 100% completion, so that construction can proceed on a "fast track" basis. The approval process for
all such portions of the Final Plans shall be substantially as set forth below, but any objection by Landlord to Final Plans submitted to Landlord may not be inconsistent with previously approved
portions of the Final Plans. However, in no event shall any portion of the Initial Tenant Improvements be constructed or installed unless and until Landlord has approved (or id deemed to have
approved) Final Plans at 100% completion for such portion of the work. 


24







 

Each
set of proposed Final Plans furnished by Tenant shall include at least two (2) sets of prints. The Final Plans shall be compatible with the design, construction, and equipment of the
building, and shall be capable of logical measurement and construction. Unless Landlord shall otherwise agree in writing, the Final Plans shall be signed/stamped by Tenant's architect or engineer, as
applicable, and shall include (to the extent relevant or applicable to the portion of the work for which Tenant is seeking Final Plan approval) each and all of the following: (i) a Partition
(Floor) Plan, @ 1/8" = 1'-0" minimum scale, including partition types, partition construction sections and details, and door/frame/hardware schedules; (ii) a
Reflected Ceiling Plan, @ 1/8" = 1'-0" minimum scale, including ceiling construction and specifications for ceiling lighting fixtures; (iii) a
Telephone/Electrical/Communications Plan, @ 1/8" = 1'-0" minimum scale, including a complete schedule, cross-referenced to said plan, of Tenant's
telephone/electrical/communications equipment and providing said equipment's electrical power specifications, requirements and heat output: (iv) a Final Plan, including all finish
specifications and U.L. and/or County "approval numbers' where required; (v) Elevations, @ 1/2" = 1'0" minimum scale, interior, of all walls, with detail/section cross-
references where appropriate; exterior, of Tenant's portion of the permitted Building-front wall, clearly indicating the appearance of Tenant's space, including its signage, at/through Tenant's
permitted Building window wall (if any); (vi) details and sections, scale as required, for all partition types, structural elements and connections, and custom installations where they occur
(HVAC, lighting, etc); (vii) details and sections, scale as required, for all signage and graphics; (viii) a Structural Engineering plan, locating and detailing any modifications to the
Building required to attach and/or support the Initial Tenant Improvements or Tenant's trade fixtures or equipment (this plan must be signed/stamped by a structural engineer licensed in the State in
which the Premises are situated); (ix) Electrical Engineering Plans, for both electrical power and for lighting, including but not limited to: circulating diagrams; panel schedules; electrical
equipment and lighting fixture schedules and sections; and electrical equipment and lighting fixture electrical load tabulations (these plans and calculations must be signed/stamped by an electrical
engineer licensed in the State in which the Premises are situated); (x) Mechanical Engineering Plans, for both plumbing and for HVAC, including but not limited to: plumbing water and waste line
plans; HVAC supply, return and exhaust plans; and HVAC tabulations for electrical equipment and lighting heat loads, cooling loads and air supply (these plans and calculations must be signed/stamped
by a mechanical engineer licenses in the State in which the Premises are situated); (xi) a Fire Protection Plan, locating and detailing any fire protection/fire suppression system as may be
required by code or other regulations governing Tenant's operations in the Premises (this plan must be signed/stamped by a fire protection engineer licensed in the State in with the Premises are
situated); and (xii) any other or additional plans as may be related to Tenant's specific use of the Premises, such as plans for rooms enclosures, equipment or devices related to Tenant's
permitted storage or use of Hazardous materials at the Premises (if any), or as may be required by local city ordinance or building code. 


Tenant
shall submit all Final Plans (or portions thereof) concurrently to Landlord's construction representative and offices, as designated above, for Landlord's review and approval. Landlord shall
have five (5) business days after Landlord's receipt of the proposed Final Plans (or each such portion thereof) to review the same and notify Tenant in writing of any comments or required
changes, or to otherwise give its approval or disapproval of such proposed Final Plans (or the portion thereof submitted to Landlord). If Landlord fails to give written comments to or disapprove the
Final Plans (or the portion thereof submitted to Landlord) within such five (5) business day period, then Landlord shall be deemed to have approved the Final Plans (or portion thereof) as
submitted. Tenant shall have five (5) business days following its receipt for Landlord's comments and objections to redraw the proposed Final Plans (or portion thereof submitted to Landlord) in
compliance with Landlord's request and to resubmit the same for Landlord's final review and approval or comment within three (3) business days of Landlord's 



25







 




receipt
of such revised plans. Such process shall be repeated as necessary until final approval or deemed approval by Landlord of the proposed Final Plans (or each portion thereof), at 100%
completion, has been obtained. Landlord may at any time by written notice given in accordance with the notice provisions of the Lease change the name and/or address of the designated Landlord's
construction representative to receive plans delivered by Tenant to Landlord. 


In
the event that Tenant disagrees with any of the changes to the proposed Final Plans (or portion thereof) required by Landlord, then Landlord and Tenant shall consult with respect thereto and each
party shall use all reasonable efforts to promptly resolve any disputed elements of such proposed Final Plans (or portion thereof). Landlord and Tenant agree that if after consultation with each other
and their respective architects they are unable to resolve any disputed items within three (3) business days of Landlord's written objection, then within three (3) business days
thereafter (i) Landlord's architect shall select an architect who is unaffiliated with Landlord or Tenant to resolve the dispute (the "Arbitrator")., and (ii) each party shall state to
the Arbitrator its final position in writing as respects the disputed matter(s) The Arbitrator shall decide on each disputed matter within three (3) business days of submission of such matter,
based solely on such written submissions and the consistency of the parties' submissions with the Preliminary Plans or previously approved portion of the Final Plans, as applicable, the Tenant's
permitted use of the Premises and the general nature and design of the Project and adjacent properties. The parties consent to the jurisdiction of any appropriate court to enforce and enter judgments
upon the decision of the Arbitrator. The losing party shall pay the cost of the Arbitrator, but each party shall otherwise bear its own costs and expenses in connection with the dispute. 


For
purposes here, "business days" shall be all calendar days except Saturdays, Sundays and holidays observed by national banks in Alameda County, California. 


Notwithstanding
the preceding provisions of this Paragraph (b), under no circumstances whatsoever shall (i) any combustible materials be utilized above finished ceiling or in any
concealed space, (ii) any structural load, temporary or permanent, be exerted on any part of the Building without the prior written approval of Landlord, or (iii) any holes be cut or
drilled in any part of the roof or other portion of the Building shell without the prior written approval of Landlord. 



In
the event that Tenant proposes any changes to the Final Plans (or any portion thereof) after the same have been approved by Landlord, Landlord shall not unreasonably withhold its consent to any
such changes, provided the changes do not, in Landlord's reasonable opinion, adversely affect the Building structure, systems, or equipment, or the external appearance of the Premises. 


As
soon as the Final Plans (or a portion thereof sufficient to permit commencement of construction or installation of the Initial Tenant Improvements, if Tenant elects to proceed with a "fast track"
construction) are mutually agreed upon, Tenant shall use diligent efforts to obtain all required permits authorizations, and licenses from appropriate governmental authorities for construction of the
Initial Tenant Improvements (or such portion thereof, as applicable). Tenant shall be solely responsible for obtaining any business or other license or permit required for the conduct of its business
at the Premises. 



	c.
	Construction of the Initial Tenant Improvements.    Construction or installation of the Initial Tenant Improvements shall be
performed by a licensed general contractor or contractors selected by Tenant and approved by Landlord, such approval not to be unreasonably withheld or delayed (the "Tenant's
Contractor", whether one or more), pursuant to a written construction contract negotiated and entered into by and between the Tenant's Contractor and Tenant and approved by
Landlord (such approval not to be unreasonably withheld or delayed). Each such contract shall (i) obligate Tenant's Contractor to work in harmony with the employees, contractors and suppliers
of Landlord involved in the construction work being performed by Landlord pursuant to Addendum 2 to the Lease, and to comply with all rules and regulations of Landlord of general 


26







 

applicability
relating to construction activities in the Project, (ii) name Landlord as an additional indemnitee under the provisions of the contract whereby the Tenant's Contractor holds
Tenant harmless form and against any and all claims, damages, losses, liabilities and expenses arising out of or resulting form the performance of such work, (iii) name Landlord as an
additional beneficiary of (and a party entitled to enforce) all of the warranties for the Tenant's Contractor with respect to the work performed thereunder and the obligation of the Tenant's
Contractor to replace defective materials and correct defective ownership for a period of not less than one (1) year following substantial completion of the work under such contract,
(iv) evidence the agreement of the Tenant's Contractor that the provisions of the Lease shall control over the provisions of the Contract with respect to distribution or use of insurance
proceed, in the event of a casualty during construction, and (v) evidence with waiver and release by the Tenant's Contractor of any lien or right to assert a lien on all or any portion of the
fee estate of Landlord in and to the Project as a result for the work performed or to be performed hereunder (and obligating the Tenant's Contractor to include a substantially similar release and
waiver provision in all subcontracts and purchase orders entered under or pursuant to the contract). 




Tenant
acknowledges and understands that all roof penetrations involved in eh construction of the Initial Tenant Improvements must be performed by the Building shell roofing contractor. All costs,
fees
and expenses incurred with such contractor in performing such work shall be a cost for the Initial Tenant Improvements, payable in accordance with the provisions of this Addendum. Tenant or Tenant's
Contractor shall be responsible for all water, gas, electricity, sewer or other utilities used or consumed at the Premises during the construction of the Initial Tenant Improvements. 



Tenant
specifically agrees to carry, or cause the Tenant's Contractor to carry, during all such items as the Tenant's work is being performed, (a) builder's risk completed value insurance on
the Initial Tenant Improvements, in an amount not less than Four Million Dollars ($4,000,000.00), (b)a policy of insurance covering commercial general liability, in an amount not less than One Million
Dollars ($1,000,000.00), combined single limit for bodily injury and property damage per occurrence (and combined single limit coverage of $2,000,000.00 in the aggregate), and automobile liability
coverage (including owned, non-owned and hired vehicles) in an amount not less than One Million Dollars ($1,000,000.00) combined single limit (each person, each accident), and endorsed to
show Landlord as an additional insured, and (c) workers' compensation insurance as required by law, endorsed to show a waiver of subrogation by the insurer to any claim the Tenant's Contractor
may have against Landlord. Tenant shall not commence construction of the Initial Tenant Improvements (or any portion thereof) until Landlord has issued to Tenant a written authorization to proceed
with construction, which Landlord agrees to issue to Tenant within one (1) business day after Tenant has delivered to Landlord's construction representative (i) certificates for the
insurance policies described above, (ii) copies of all permits required for construction of the Initial Tenant Improvements (or applicable portion thereof, if Tenant elects to proceed with a
"fast track" construction) and a copy of the permitted Final Plans (or applicable portion thereof) as approved by the appropriate governmental agency, (iii) a copy of each signed construction
contract for the Initial Tenant Improvements (a copy of each subsequently signed contract shall be forwarded to Landlord's construction representative without request or demand, promptly after
execution thereof and prior to the performance of any work thereunder), and (iv) list of names, addresses and phone numbers of all subcontractors, contractors and suppliers involved in
performing the Initial Tenant Improvements. All of the construction shall be the responsibility of and supervised by Tenant. 



	d.
	Requirements for Tenant's Work.    All of Tenant's construction with respect to the Premises shall be performed in substantial
compliance with this Addendum and the Final Plans therefor previously approved in writing by Landlord (and any changes thereto approved by Landlord as herein provided), and in a good and workmanlike
manner, utilizing only new materials. All such work 


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shall
be performed by Tenant in strict compliance with all applicable building codes, regulations and all other legal requirements. All materials utilized in the construction of Tenant's work must be
confined to within the Premises. All trash and construction debris not located wholly within the Premises must be removed each day form the Project at the sole cost and expense of Tenant. Landlord
shall have the right at all times to monitor the work for compliance with the requirements of this Addendum. If Landlord determines that any such requirements are not being strictly complied with,
Landlord may immediately require the cessation of all work being performed in or around the Premises or the Project until such time as Landlord is satisfied that the applicable requirements will be
observed. Any approval given by Landlord with respect to Tenant's construction of the Preliminary plans or Final Plans therefor, and/or any monitoring of Tenant's work by Landlord, shall not make
Landlord liable or responsible in any way for the condition, quality or function of such matters or constitute any undertaking, warranty or representation by Landlord with respect to any of such
matters. So long as Landlord reviews and responds to the plan submissions to Landlord as provided in this Addendum, no delays in plan approval, and no delays in construction of the Initial Tenant
Improvements, shall delay the Commencement Date of this Lease. 



	e.
	No Liens; Indemnification.    Tenant shall have no authority to place any lien upon the Premises or the Project or any portion
thereof or interest therein, nor shall Tenant have any authority in any way to bind Landlord, and any attempt to do so shall be void and of no effect. If, because of any actual or alleged act or
omission of Tenant, or Tenant's Contractor, or any subcontractors or materialmen, any lien, affidavit, charge or other for the payment of money shall be filed against Landlord, the Premises, the
Project, or any portion thereof, or interest herein, whether or not such lien, affidavit, charge or order is valid or enforceable, Tenant shall, at its sole cost and expense, cause the same to be
discharged of record by payment, bonding or otherwise no later than fifteen (15) days after notice to Tenant of the filing hereof, but in any event prior to the foreclosure thereof. 



With
respect to the contract for labor or materials for construction of the Initial Tenant Improvements, Tenant acts as principal and not as the agent of Landlord. Landlord expressly disclaims
liability of the cost of labor preformed for or supplies or materials furnished to Tenant. Landlord may post one or more "notices of non-responsibility" for Tenant's work on the Project.
No contractor of Tenant is intended to be a third-party beneficiary with respect to the costs for construction of the Initial Tenant Improvements. Tenant agrees to indemnify, defend and hold Landlord,
the Premises and the Project, harmless form all claims (including all costs and expenses of defending against such claims) arising or alleged to arise from any act or omission of Tenant or Tenant's
agents, employees, contractor, subcontractors, suppliers, materialmen, architects, designers, surveyors, engineers, consultants, laborers, or invitees, or arising from any bodily injury or property
damage occurring or alleged to have occurred incident to any of the work to be performed by Tenant or its contractors or subcontractors with respect to the Premises. 


Default
by Tenant under this Addendum 2 shall constitute a default by Tenant under the Lease for all purposes. 



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   ADDENDUM 3  


 RENEWAL OPTION

(BASEBALL ARBITRATION)  


 ATTACHED TO AND A PART OF THE LEASE AGREEMENT

DATED 2/7/06, BETWEEN  


 ProLogis, a Maryland real estate investment trust

and

Ikanos Communications, a California corporation  


        (a)   Provided
that as of the time of the giving of the Extension Notice and the Commencement Date of the Extension Term, (x) Tenant is the Tenant originally named
herein (or a Tenant Affiliate or a party to a Permitted Transfer), (y) Tenant (or a Tenant Affiliate or a party to a Permitted Transfer) actually occupies all of the Premises initially demised
under this Lease and any space added to the Premises, and (z) no Event of Default exists or would exist but for the passage of time or the giving of notice, or both; then Tenant shall have the
right to extend the Lease Term for an additional term of 3 years (such additional term is hereinafter called the "Extension Term") commencing on the day
following the expiration of the Lease Term (hereinafter referred to as the "Commencement Date of the Extension Term"). Tenant shall give Landlord notice
(hereinafter called the "Extension Notice") of its election to extend the term of the Lease Term at least 9 months prior to the scheduled expiration
date of the Lease Term. 


        (b)   The
Base Rent payable by Tenant to Landlord during the Extension Term shall be the greater of: 



          (i)  the
Base Rent in effect on the expiration of the Lease Term (if the Base Rent is stated as an annual or other periodic rate, adjusted for the length of the Lease Term),
and 


         (ii)  95% of the Fair Market Rent, as defined and determined pursuant to Paragraphs (c), (d), and (e) below. 




        (c)   The
term "Fair Market Rent" shall mean the Base Rent, expressed as an annual rent per square foot of floor area, which Landlord would have received from leasing the
Premises for the Extension Term to an unaffiliated person which is not then a tenant in the Project, assuming that such space were to be delivered in "as-is" condition, and taking into
account the rental which such other tenant would most likely have paid for such premises, including market escalations but excluding improvements installed in the Premises at
the sole cost and expense of Tenant, provided that Fair Market Rent shall not in any event be less than the Base Rent for the Premises as of the expiration of the Lease Term.
Fair Market Rent shall not be reduced by reason of any costs or expenses saved by Landlord by reason of Landlord's not having to find a new tenant for the Premises (including without limitation
brokerage commissions, cost of improvements necessary to prepare the space for such tenant's occupancy, rent concession, or lost rental income during any vacancy period). Fair Market Rent means only
the rent component defined as Base Rent in the Lease and does not include reimbursements and payments by Tenant to Landlord with respect to Operating
Expenses and other items payable or reimbursable by Tenant under the Lease. In addition to its obligation to pay Base Rent (as determined herein), Tenant shall continue to pay
and reimburse Landlord as set forth in the Lease with respect to such operating expenses and other items with respect to the Premises during the Extension Term. The arbitration process described below
shall be limited to the determination of the Base Rent and shall not affect or otherwise reduce or modify the Tenant's obligation to pay or reimburse Landlord for such operating expenses and other
reimbursable items. 


        (d)   Landlord
shall notify Tenant of its determination of the Fair Market Rent (which shall be made in Landlord's sole discretion and shall in any event be not less than the
Base Rent in effect as of 


29







 



the
expiration of the Lease Term) for the Extension Term, and Tenant shall advise Landlord of any objection within 10 days of receipt of Landlord's notice. Failure to respond within the
10-day period shall constitute Tenant's acceptance of such Fair Market Rent. If Tenant objects, Landlord and Tenant shall commence negotiations to attempt to agree upon the Fair Market
Rent within 30 days of Landlord's receipt of Tenant's notice. If the parties cannot agree, each acting in good faith but without any obligation to agree, then the Lease Term shall not be
extended and shall terminate on its scheduled termination date and Tenant shall have no further right hereunder or any remedy by reason of the parties' failure to agree unless Tenant or Landlord
invokes the arbitration procedure provided below to determine the Fair Market Rent. 



        (e)   Arbitration
to determine the Fair Market Rent shall be in accordance with the Real Estate Valuation Arbitration Rules of the American Arbitration Association. Unless
otherwise required by state law, arbitration shall be conducted in the metropolitan area where the Project is located by a single arbitrator unaffiliated with either party. Either party may elect to
arbitrate by sending written notice to the other party and the Regional Office of the American Arbitration Association within 5 days after the 30-day negotiating period provided in
Paragraph (d), invoking the binding arbitration provisions of this paragraph. Landlord and Tenant shall each submit to the arbitrator their respective proposal of Fair Market Rent. The
arbitrator must choose between the Landlord's proposal and the Tenant's proposal and may not compromise between the two or select some other amount. Notwithstanding any other provision herein, the
Fair Market Rent determined by the arbitrator shall not be less than, and the arbitrator shall have no authority to determine a Fair Market Rent less than, the Base Rent in effect as of the scheduled
expiration of the Lease Term. The cost of the arbitration shall be paid by Landlord if the Fair Market Rent is that proposed by Landlord and by Tenant if the Fair Market Rent is that proposed by
Tenant; and shall be borne equally otherwise. If the arbitrator has not determined the Fair Market Rent as of the end of the Lease Term, Tenant shall pay 105 percent of the Base Rent in effect
under the Lease as of the end of the Lease Term until the Fair Market Rent is determined as provided herein. Upon such determination, Landlord and Tenant shall make the appropriate adjustments to the
payments between them. 


        (f)    The
parties consent to the jurisdiction of any appropriate court to enforce the arbitration provisions of this Addendum and to enter judgment upon the decision of the
arbitrator. 


        (g)   Except
for the Base Rent as determined above, Tenant's occupancy of the Premises during the Extension Term shall be on the same terms and conditions as are in effect
immediately prior to the expiration of the initial Lease Term; provided, however, Tenant shall have no further right to extend the Lease Term pursuant to this addendum or to any allowances, credits or
abatements or options to expand, contract, renew or extend the Lease. 


        (h)   If
Tenant does not send the Extension Notice within the period set forth in Paragraph (a), Tenant's right to extend the Lease Term shall automatically terminate.
Time is of the essence as to the giving of the Extension Notice and the notice of Tenant's objection under Paragraph (d). 



        (i)    Landlord
shall have no obligation to refurbish or otherwise improve the Premises for the Extension Term. The Premises shall be tendered on the Commencement Date of the
Extension Term in "as-is" condition. 


        (j)    If
the Lease is extended for the Extension Term, then Landlord shall prepare and Tenant shall execute an amendment to the Lease confirming the extension of the Lease
Term and the other provisions applicable thereto. 


        (k)   If
Tenant exercises its right to extend the term of the Lease for the Extension Term pursuant to this Addendum, the term "Lease Term" as used in the Lease, shall be
construed to include, when practicable, the Extension Term except as provided in (g) above. 


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ADDENDUM 4  


 CANCELLATION OPTION  


 ATTACHED TO AND A PART OF THE LEASE AGREEMENT

DATED 2/7/06, BETWEEN  


 ProLogis, a Maryland real estate investment trust

and

Ikanos Communications, a California corporation  


        Provided no Event of Default shall then exist and no condition shall then exist which with the passage of time or giving of notice, or both, would constitute an
Event of Default, Tenant shall have the right with no less than nine (9) months prior written notice (the "Termination
Notice") to elect to terminate this Lease effective on the last day of the 38th full
calendar month of the Lease Term. 


        If
Tenant elects to terminate this Lease pursuant to the immediately preceding sentence, the effectiveness of such termination shall be conditioned upon Tenant paying to Landlord  $327,603.00
contemporaneously with Tenant's delivery of the Termination Notice to Landlord. Such amount is consideration for Tenant's option to
terminate and shall not be applied to rent or any other obligation of Tenant. Landlord and Tenant shall be relieved of all obligations accruing under this Lease after the effective date of such
termination but not any obligations accruing under the Lease prior to the effective date of such termination. 


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ADDENDUM 5    
    
    MISCELLANEOUS PROVISIONS    
    
    ATTACHED TO AND A PART OF THE LEASE AGREEMENT
  DATED 2/7/06, BETWEEN    
    
    ProLogis, a Maryland real estate investment trust

and
  Ikanos Communications, a California corporation    
    



        Refund of Past Termination Fee:    Upon full execution of the Lease Agreement, Landlord agrees to refund the amount of
$150,000.00 to Tenant. Said refund represents the termination fee paid by Tenant and received by Landlord on September 30th, 2005. 


32







 
 
 

ADDENDUM 6    
    
    LETTER OF CREDIT FOR SECURITY DEPOSIT    
    
    ATTACHED TO AND A PART OF THE LEASE AGREEMENT
  DATED 2/7/2006 BETWEEN    
    
    ProLogis, a Maryland real estate investment
trust
  and
  Ikanos Communications, a California corporation    




        The Security Deposit may be in the form of an unconditional, irrevocable letter of credit from a bank reasonably acceptable to Landlord. The letter of credit
shall either provide that it does not expire until the 61st day following the end of the Lease Term or, if it is for less than the full term of the Lease, shall be renewed by Tenant at
least 60 days prior to its expiration during the term of the Lease. The letter of credit shall provide that it may be drawn down upon by Landlord upon Tenant's default of the Lease beyond
applicable notice and cure periods and only to the extent required to cure such default. If Landlord sells or conveys the Premises, Tenant shall, at Landlord's request, cooperate in having the letter
of credit transferred to the purchaser. If the letter of credit is ever drawn upon by Landlord pursuant to the terms of the Lease and this Addendum, Tenant shall within ten (10) days thereafter
cause the letter of credit to be restored to its original amount. 


        Notwithstanding
anything contained herein to the contrary, in the event Tenant fails to renew the letter of credit in accordance with the terms and conditions as set forth in this
Addendum, or in the event that Tenant shall commence any proceeding for relief, as defined in Paragraph 23(ii) of the Lease, an immediate Event of Default shall be deemed to have
occurred, without the requirement of notice or opportunity to cure, in which case Landlord may immediately draw down on the letter of credit. 


33











QuickLinks


LEASE AGREEMENT


ADDENDUM 1 BASE RENT ADJUSTMENTS ATTACHED TO AND A PART OF THE LEASE AGREEMENT DATED 2/7/06, BETWEEN ProLogis, a Maryland real estate investment trust and Ikanos Communications, a California
corporation

ADDENDUM 2 CONSTRUCTION (ALLOWANCE) ATTACHED TO AND A PART OF THE LEASE AGREEMENT DATED 2/7/06, BETWEEN ProLogis, a Maryland real estate investment trust and Ikanos Communications, a California
corporation



ADDENDUM 5 MISCELLANEOUS PROVISIONS ATTACHED TO AND A PART OF THE LEASE AGREEMENT DATED 2/7/06, BETWEEN ProLogis, a Maryland real estate investment trust and Ikanos Communications, a California
corporation

ADDENDUM 6 LETTER OF CREDIT FOR SECURITY DEPOSIT ATTACHED TO AND A PART OF THE LEASE AGREEMENT DATED 2/7/2006 BETWEEN ProLogis, a Maryland real estate investment trust and Ikanos Communications, a California
corporation