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to Lessor of rent or any other payment due Lessor will cause Lessor to incur costs notcontemplated by this Lease, the exact amount of such costs being extremely difficult andimpracticable to fix. Such costs include, without limitation, processing and accounting charges,and late charges that may be imposed on Lessor by the terms of any encumbrance and note secured byany encumbrance covering the Premises. Therefore, if any installment of rent or other payment duefrom Lessee is not received by Lessor on the date it is due and payable, Lessee shall pay toLessor an additional sum of ten percent (10%) of the overdue amount as a late charge. The partiesagree that this late charge represents a fair and reasonable estimate of the costs that Lessorwill incur by reason of late payment by Lessee. Acceptance of any late charge shall not constitutea waiver of Lessee’s default with respect to the overdue amount, nor prevent Lessor fromexercising any of the other rights and remedies available to Lessor. Notwithstanding theforegoing, Lessor shall give Lessee notice of non-payment of any rent or other payments requiredof Lessee under this Lease and five (5) business days after delivery of such notice to cure suchnon-payment once in each calendar year before assessing the late charge in such calendar yearpursuant to this Paragraph 3.     If, for any reason whatsoever, Lessor cannot deliver possession of the Premises on thecommencement date set forth in Paragraph 2 above, this Lease shall not be void or voidable, norshall Lessor be liable to Lessee for any loss or damage resulting therefrom; but in such event,Lessee shall not be obligated to pay rent until possession of the Premises is tendered to Lesseeand the commencement and termination dates of this Lease shall be revised to conform to the date ofLessor’s delivery of possession. Notwithstanding anything to the contrary in this Lease: (1) if theCommencement Date has not occurred for any reason whatsoever, other than a Lessee Delay (as suchterm is defined in the Work Letter) on or before June 30, 2006, then, the date Lessee is otherwiseobliged to commence payment of rent shall be delayed by one day for each day that the CommencementDate is delayed beyond June 30, 2006, and (2) if the Commencement Date has not occurred for anyreason whatsoever, other than a Lessee Delay (as such term is defined in the Work Letter) on orbefore July 31, 2006, in addition to Lessee’s other rights or remedies, Lessee may, at any timethereafter, terminate the Lease by written notice to Lessor, whereupon any security deposit and anyadvance payment of rent previously paid by Lessee to Lessor shall be promptly reimbursed to Lessee.Upon mutual execution and delivery of this Lease, Lessor shall provide Lessee with early access tothe Premises for the purpose of installing Lessee’s furniture, fixtures and equipment provided suchaccess does not interfere with Lessor’s construction of the Lessee Improvements. In the event thatLessor shall permit Lessee to occupy the Premises prior to the commencement date of the term, suchoccupancy shall be subject to all of the provisions of this Lease, excluding the obligation to payrent.A. All taxes, insurance premiums, reimbursable expenses and utilities, late charges, costsand expenses which Lessee is required to pay hereunder, together with all interest andpenalties that may accrue thereon in the event of Lessee’s failure to pay such amounts,and all reasonable damages, costs, and attorney’s fees and expenses which Lessor may incurby reason of any default of Lessee or failure on Lessee’s part to comply with the terms ofthis Lease, shall be deemed to be additional rent (hereinafter, “Additional Rent”), and,in the event of non-payment by Lessee, Lessor shall have all of the rights and remedieswith respect thereto as Lessor has for the non-payment of monthly installment of rent.
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4. Option to Extend Term.A. Lessee shall have the option to extend the term on all the provisions contained in thisLease for one (1) two (2)-year period (“extended term”) at an adjusted rental calculated asprovided in Subparagraph B below on the condition that: (a) Lessee has given to Lessor written notice of exercise of that option (“optionnotice”) at least nine (9) but no more than twelve (12) months before expiration of theinitial term or extended term(s), as the case may be.  (b) Lessee is not in default in the performance of any of the terms and conditionsof the Lease on the date of giving the option notice, and Lessee is not in default onthe date that the extended term is to commence.B. The rent during the Extended Term shall be 95% of the fair market monthly rent (“FairMarket Rent”) for the Premises as of the commencement date of the Extended Term, asdetermined by the agreement of the parties or, if the parties cannot agree within sixty (60)days prior to the commencement of such Extended Term, then by determination by commercialreal estate brokers as set forth in Exhibit C to this Lease . In determining theFair Market Rent, the parties (and in the absence of their agreement, the brokers) shalldetermine the Fair Market Rent by taking into consideration the rents being charged at thetime such determination is to be made for similar space in similar properties in the LosGatos area pursuant to leases with terms and provisions substantially similar to thosecontained in this Lease. All other terms and conditions contained in the Lease, as the samemay be amended from time to time by the parties in accordance with the provisions of theLease, shall remain in full force and effect and shall apply during the Extended Term.C. The option to extend shall be personal to Lessee, and shall not be transferable orassignable to any other person or entity other than a any transferee under an “exemptsublet”, as such term is defined in Article 21.F of this Lease. If Lessee has exercised itsoption to extend, the phrase “Lease term” as used in this Lease shall mean the initial termof the Lease and the extended term(s).5. Security Deposit. Upon Lessee’s execution of this Lease, Lessee shall deposit withLessor a Security Deposit in the sum of Forty-One Thousand Six Hundred Thirteen and 00/100 Dollars($41,613.00) and, on or before the Commencement Date, Lessee shall deposit an additional Eighty-ThreeThousand Two Hundred Twenty-Six and 00/100 Dollars ($83,226.00) (for a total Security Depositof One Hundred Twenty-Four Thousand Eight Hundred Thirty-Nine and 00/100 Dollars ($124,839.00)) tosecure the full and faithful performance by Lessee of each term, covenant, and condition of thisLease. If Lessee shall at any time fail to make any payment or fail to keep or perform any term,covenant, or condition on its part to be made or performed or kept under this Lease, Lessor may,but shall not be obligated to and without waiving or releasing Lessee from any obligation underthis Lease, use, apply, or retain the whole or any part of said Security Deposit (a) to the extentof any sum due to Lessor; or (b) to compensate Lessor for any loss, damage, attorneys’ fees orexpense sustained by Lessor due to Lessee’s default. In such event, Lessee shall, within five (5)days of written demand by Lessor, remit to Lessor sufficient funds to restore the Security
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Deposit to its original sum. No interest shall accrue on the Security Deposit. Should Lesseecomply with all the terms, covenants, and conditions of this Lease and, at the end of the term ofthis Lease, leave the Premises in the condition required by this Lease, then said Security Depositor any balance thereof, less any sums owing to Lessor, shall be returned to Lessee within fifteen(15) days after the termination of this Lease and vacancy of the Premises by Lessee. Lessor canmaintain the Security Deposit separate and apart from Lessor’s general funds, or can co-mingle theSecurity Deposit with the Lessor’s general and other funds.     In the event that Lessee is not in default of the Lease, $41,613.00 of said deposit shall beapplied to the Monthly Rent for the 23rd full calendar month following withCommencement Date and $41,613.00 shall be applied to Monthly Rent for the 24th fullcalendar month following the Commencement Date.6. Use of the Premises. The Premises shall be used exclusively for the purpose of generaloffice, administration, light manufacturing and assembly, testing, marketing, engineering,shipping and receiving and any other legal uses directly related to Lessee’s business and for noother purpose without Lessor’s prior written consent.     Lessee shall not use or permit the Premises, or any part thereof, to be used for any purposeor purposes other than the purpose for which the Premises are hereby leased; and no use shall bemade or permitted to be made of the Premises, nor acts done, which will increase the existing rateof insurance upon the building in which the Premises are located, or cause a cancellation of anyinsurance policy covering said building, or any part thereof, nor shall Lessee sell or permit tobe kept, used, or sold, in or about the Premises, any article which may be prohibited by thestandard form of fire insurance policies. Lessee shall not commit or suffer to be committed anywaste upon the Premises or any public or private nuisance or other act or thing which may disturbthe quiet enjoyment of any other tenant in the building in which the premises are located; nor,without limiting the generality of the foregoing, shall Lessee allow the Premises to be used forany improper, immoral, unlawful, or objectionable purpose.     Lessee shall not place any harmful liquids in the drainage system of the Premises or of thebuilding of which the Premises form a part. No waste materials or refuse shall be dumped upon orpermitted to remain upon any part of the Premises outside of the building proper except in trashcontainers placed inside exterior enclosures designated for that purpose by Lessor, or inside thebuilding proper where designated by Lessor. No materials, supplies, equipment, finished orsemifinished products, raw materials, or articles of any nature shall be stored upon or permittedto remain on any portion of the Premises outside of the building proper. Lessee shall comply withall the covenants, conditions, and/or restrictions (“C.C. & R.’s”) affecting the Premises.     Lessor represents and warrants to Lessee that to the best of its knowledge there are no Toxicor Hazardous materials present on, at or under the Premises, which shall be deemed to includeunderlying land and groundwater, at the time of Lessee’s occupancy and that, prior to theCommencement Date, Lessor has obtained any closure certificates for the Premises from theapplicable governmental authorities with respect to prior occupants of the Premises. Lessor shallindemnify, defend and hold harmless Lessee, its partners, directors, officers, employees, lenders,and successors against all claims, obligations, liabilities, demands, damages, judgments, andcosts,
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including reasonable attorneys’ fees arising from or in connection with any prior Toxic orHazardous materials that existed prior to Lessee’s occupancy of the Premises.     Lessee in turn represents to Lessor that it does not now and will not in the future permitthe use or storage on the Premises of Toxic or Hazardous materials, excluding, however basicjanitorial, maintenance and office supplies, and materials commonly used in connection withLessee’s business as described in paragraph 6 hereof, including, without limitation, solder andsmall quantities of solvents. For purposes of this paragraph 6 “Toxic or Hazardous Materials”shall mean any product, substance, chemical, material or waste whose presence, nature, qualityand/or intensity or existence, use, manufacture, disposal, transportation, spill, release oreffect, either by itself or in combination with other materials expected to be on the leasedpremises, is either (i) potentially injurious to the public health, safety or welfare, theenvironment, or the leased premises; (ii) regulated or monitored by any governmental authority; or(iii) a basis for potential liability of Lessee and Lessor to any governmental agency or thirdparty under any applicable statute or common law theory. “Toxic or Hazardous Materials” shallinclude, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products orby-products thereof.     Lessee hereunder shall be responsible for and indemnify, and hold Lessor and its partners,directors, officers, employees, lenders, successors and assigns harmless from all claims,obligations, liabilities, demands, damages, judgments and costs, including reasonable attorneys’fees arising at any time during or in connection with Lessee’s causing or permitting any materialsreferred to under any governmental provisions or regulatory scheme as “hazardous” or “toxic” orwhich contain petroleum, gasoline, or other petroleum product, to be brought upon, stored,manufactured, generated, handled, disposed, or used on, under or about the Premises in violationof the provisions of this Article 6 and applicable environmental laws. Lessee’s and Lessor’sobligations hereunder shall survive the termination of this Lease.     If, at any time during the term of this Lease, Lessor suspects that toxic waste, spillage, orother contaminants may be present on the Premises, Lessor may order a soils report, or itsequivalent, at Lessor’s expense. Lessee shall pay the reasonable costs of such report withinfifteen (15) days from the date of the invoice by Lessor if it is determined that Lessee orLessee’s agents, employees, contractors or invitees released or caused Toxic or Hazardous materialson or about the Premises in violation of the provisions of this Article 6 and applicableenvironmental laws. If any such toxic waste, spillage, or other contaminants are found upon thePremises which were released by Lessee or Lessee’s agents, employees or invitees in violation ofthe provisions of this Article 6 and applicable environmental laws, Lessee shall deposit withLessor, within fifteen (15) days of notice from Lessor to Lessee to do so, the amount necessary toremove the substances and remedy the problem in accordance with applicable law.     Lessee shall abide by all laws, ordinances, and statutes, as they now exist or may hereafterbe enacted by legislative bodies having jurisdiction thereof, relating to its use and occupancy ofthe Premises. Notwithstanding anything to the contrary in this Lease, if, during the term of thisLease, any alteration, addition, or change of any sort through all or any portion of the Premisesor of the building of which the Premises form a part, is required by law, regulation, ordinance,or order of any public agency (“Laws”), then, if such legal requirement is not imposed because ofLessee’s specific use of the Premises (other than for general office use) and is not “triggered”by Lessee’s
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alterations or Lessee’s application for a building permit or any other governmental approval (inwhich instance Lessee shall be responsible for 100% of the cost of such improvement)(other thanthe Lessee Improvements), Lessor shall be responsible for constructing such improvement, andLessee shall be responsible for its proportional share of the cost for said improvement, amortizedover the useful life of such improvement that coincides with the remaining Lease term includingany extensions. Lessor represents and warrants that as of the date hereof it has not received anynotice that the Premises or the building of which the Premises form a part is currently inviolation of any Laws or that any improvements are required by Laws.7. Improvements: Lessor shall provide Lessee with an allowance of $18.55 per square foot ofthe Premises for the construction of the Lessee Improvements (as such term is defined in the WorkLetter attached hereto as Exhibit B) Upon Lessee’s request, Lessor agrees that it willprovide an additional allowance of up to $5 per square foot of the Premises to be amortized overthe term of the Lease at a rate of 8% per year. However, Lessor and Lessee shall make best effortsto construct the Lessee Improvements within the $18.55 per square foot allowance.8. Taxes and Assessments.A. Lessee shall pay before delinquency any and all taxes, assessments, license fees, andpublic charges levied, assessed, or imposed upon or against Lessee’s fixtures, equipment,furnishings, furniture, appliances, and personal property installed or located on or withinthe Premises. Lessee shall cause said fixtures, equipment, furnishings, furniture,appliances, and personal property to be assessed and billed separately from the realproperty of Lessor. If any of Lessee’s said personal property shall be assessed withLessor’s real property, Lessee shall pay to Lessor the taxes attributable to Lessee withinten (10) business days after receipt of a written statement from Lessor setting forth thetaxes applicable to Lessee’s property.B. All property taxes or assessments levied or assessed by or hereafter levied or assessedby any governmental authority against the Premises or any portion of such taxes orassessments which becomes due or accrued during the term of this Lease shall be paid byLessor; provided, however, that Lessee shall not be required to pay any portion of any taxor assessment expense or any increase therein (a) levied on Lessor’s rental income, unlesssuch tax or assessment is imposed in lieu of real property taxes; (b) in excess of theamount which would be payable if such tax or assessment expense were paid in installmentsover the longest permitted term; or (c) attributable to Lessor’s net income, inheritance,gift, transfer, estate or state taxes. Lessee shall pay to Lessor Lessee’s proportionateshare of such taxes or assessments within fifteen (15) days of receipt of Lessor’s invoicedemanding such payment. Lessee’s liability hereunder shall be prorated to reflect thecommencement and termination dates of this Lease.9. Insurance.A. Indemnity. Lessee agrees to indemnify, defend and save Lessor against and hold
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Lessor harmless from any and all demands, claims, causes of action, judgments, obligations, orliabilities, and all reasonable expenses incurred in investigating or resisting the same(including reasonable attorneys’ fees) on account of, or arising out of Lessee’s use, or occupancyof the Premises. This Lease is made on the express condition that Lessor shall not be liable for,or suffer loss by reason of, injury to person or property, from whatever cause, in any wayconnected with the condition, use, or occupancy of the Premises, specifically including, withoutlimitation, any liability for injury to the person or property of Lessee, its agents, officers,employees, licensees, and invitees, except to the extent such loss, injury or damage was caused byLessor’s negligence or willful misconduct.B. Liability Insurance. Lessee shall, at its expense, obtain and keep in force during theterm of this Lease a policy of Commercial General Liability insurance insuring Lessee, withcross-liability endorsements, against any liability arising out of the condition, use, or occupancyof the Premises and all areas appurtenant thereto, including parking areas and property insuranceto cover Lessee’s persona] property, equipment, inventory, fixtures and tenant improvements on thePremises. Lessor shall be named as an additional insured on the CGL policy. Such insurance shall bein an amount satisfactory to Lessor of not less than one million dollars ($1,000,000) for eachoccurrence for bodily injury and physical damage to the property and two million dollars($2,000,000) general aggregate limit. The insurance shall be with companies approved by Lessor,which approval Lessor agrees not to withhold unreasonably. Prior to possession, Lessee shalldeliver to Lessor a certificate of insurance and endorsement evidencing the existence of the policywhich (1) as to the CGL policy names Lessor as an additional insured, (2) shall not be canceled oraltered without thirty (30) days’ prior written notice to Lessor, (3) insures performance of theindemnity set forth in Section A of Paragraph 9, and (4) coverage is primary and any coverage byLessor is in excess thereto.C. Property Insurance. Lessor shall obtain and keep in force during the term of this Leasea policy or policies of insurance covering (a) loss or damage to the Premises (which may includeearthquake and/or flood insurance), in the amount of the full replacement value thereof, and (b)Lessor’s liability insurance. Lessee shall pay to Lessor its pro-rata share of the cost of thepremium of said insurance within fifteen (15) days of Lessee’s receipt of Lessor’s invoicedemanding such payment. Lessee acknowledges that such insurance procured by Lessor, including,without limitation, any earthquake insurance, shall contain a deductible (not to exceed $10,000.00per occurrence) which reduces Lessee’s cost for such insurance, and, in the event of loss ordamage, Lessee shall be required to pay to Lessor Lessee’s pro-rata share of the amount of suchdeductible.D. Notwithstanding anything in this Lease to the contrary, Lessor and Lessee hereby releases eachother and their respective agents, employees, successors, assignees and sublessees from allliability for injury to any person or damage to any property that is caused by or results from arisk which is actually insured against, which is required to be insured against under this Lease,or which would normally be covered by “all risk” property insurance, without regard to thenegligence or misconduct of the person or entity so released. All of Lessor’s and Lessee’s repairand indemnity obligations under this Lease
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shall be subject to the waiver and release contained in this paragraph. Each party shallcause each insurance policy it obtains to provide that the insurer thereunder waives allrecovery by way of subrogation as required herein in connection with any injury or damagecovered by such policy.10. Reimbursable Expenses and Utilities. Commencing on the Commencement Date and thereafterduring the term of this Lease, Lessee shall pay its pro-rata share based on square footage of allwater, gas, light, power, electricity, telephone, HVAC maintenance and repairs, trash removal,landscaping, sewer charges, and all other services, including normal and customary propertymanagement fees, supplied to or consumed on the Premises; provided, however, that Lessee shall inno event have any obligation to perform or to pay directly, or to reimburse Lessor for, all or anyportion of the following repairs, maintenance, improvements, replacements, premiums, claims,losses, fees, charges, costs and expenses (collectively, “Costs”): (a) Costs occasioned by the act,omission or violation of any law by Lessor, or Lessor’s agents, employees or contractors; (b) Coststo correct any construction defect in the Premises or to comply with any covenant, condition,restriction, underwriter’s requirement or law applicable to the Premises on the Commencement Date;(c) [intentionally omitted]; (d) interest, charges and fees incurred on debt; (f) expense reserves;(g) [intentionally omitted]; (h) Costs which could properly be capitalized under generally acceptedaccounting principles, except as provided in Paragraph 11.A. of this Lease; and (i) wages,compensation, and labor burden for any employee not stationed on the Project on a full-time basis(other than Lessor’s maintenance employee, who works on other properties in Lessor’s portfolio, andwho is charged on an hourly basis to the applicable property) or any fee, profit or compensationretained by Lessor or its affiliates for management and administration of the Project in excess ofthree percent (3%) of Monthly Rent. In the event that any such services are billed directly toLessor, then Lessee shall pay Lessor for such expenses within ten (10) days of Lessee’s receipt ofLessor’s invoice demanding payment.11. Repairs and Maintenance. A. Subject to provisions of paragraph 15 of this Lease, Lessor shall keep andmaintain in good order, condition and repair the structural elements of the Premisesincluding the roof, roof membrane, paving, floor slab, foundation, exterior walls,landscaping, and irrigation. Lessor shall make such repairs, replacements, alterationsor improvements as Lessor deems reasonably necessary with respect to such structuralelements and Lessee shall pay to Lessor, within ten (10) business days of Lessor’sinvoice to Lessee therefor, Lessee’s pro-rata share of such repairs, replacements,alterations or improvements. In the event that the cost of any replacement orimprovement exceeds $25,000 per occurrence, the amount in excess of $25,000 shall beamortized, on a straight line basis, over the useful life of such replacements orimprovements as reasonably determined by Lessor using manufacturers’ guidelines. Lesseeshall be obligated to pay its pro-rata share of such excess on a monthly basis, asAdditional Rent, for as long as the useful life coincides with the lease term.Notwithstanding the foregoing, but subject to the provisions of Paragraph 9.D of thisLease, if the reason for any repair, replacement, alteration or improvement is causedby Lessee or arises because of a breach of Lessee’s obligations under this Lease, thenLessee shall pay 100% of the
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   costs or expense to remedy the same. B. Except as expressly provided in Subparagraph A above, Lessee shall, at itssole cost, keep and maintain the entire Premises and every part thereof, including,without limitation, the windows, window frames, plate glass, glazing, truck doors,doors, all door hardware, interior of the Premises, interior walls and partitions, andelectrical, plumbing, and lighting, systems in good and sanitary order, condition, andrepair. Lessor shall maintain a service contract for the maintenance of all heating,air conditioning, and ventilation equipment with a licensed and insuranced contractor.Lessee shall reimburse Lessor pursuant to Paragraph 10 above for the cost of saidmaintenance contract.     Should Lessee fail to maintain the Premises or make repairs required of Lesseehereunder forthwith upon notice from Lessor, Lessor, in addition to all otherremedies available hereunder or by law, and without waiving any alternativeremedies, may make the same, and in that event, Lessee shall reimburse Lessor asadditional rent for the cost of such maintenance or repairs on the later of: (a) thenext date upon which rent becomes due; or (b) within ten (10) business daysfollowing receipt of Lessor’s invoice.     Lessee hereby expressly waives the provision of Subsection 1 of Section 1932,and Sections 1941 and 1942 of the Civil Code of California and all rights to makerepairs at the expense of Lessor, as provided in Section 1942 of said Civil Code.12. Alterations and Additions. Lessee shall not make, or suffer to be made, anyalterations, improvements, or additions in, on, or about, or to the Premises or any part thereof,without prior written consent of Lessor, which consent Lessor shall not unreasonably withhold, andwithout a valid building permit issued by the appropriate governmental authority. Lessor retains,at his sole option, the right to retain a General Contractor of his own choosing to perform allrepairs, alterations, improvements, or additions in, on, about, or to said Premises or any partthereof that Lessor is required to perform under this Lease. As a condition to giving such consent,Lessor may require that Lessee agree to remove any such alterations, improvements, or additions atthe termination of this Lease, and to restore the Premises to their prior condition; provided,however, that Lessor shall have no right to require Lessee to remove any alterations unless itnotifies Lessee at the time it consents to such alteration that it shall require such alteration tobe removed. Notwithstanding anything to the contrary in this Section 12, Lessee may constructnon-structural alterations, additions and improvements (“Alterations”) in the Premises withoutLessor’s prior approval, but on not less than five (5) business days prior written notice toLessor, if the cost of any such project does not exceed Twenty-Five Thousand Dollars ($25,000);provided, however, that in no event shall Lessee perform any Alterations on the roof of thebuilding without first obtaining Lessor’s consent, and, as a condition to granting such consent,Lessor may require Lessee to take such steps as are reasonably necessary to prevent any warrantyapplicable to the roof from being voided, including, without limitation, requiring that Lessor’sdesignated contractor perform or supervise any work that pertains to the roof. Any alteration,addition, or improvement to the Premises, shall become the property of Lessor upon
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installation, and shall remain upon and be surrendered with the Premises at the termination ofthis Lease. Alterations and additions which are not to be deemed as trade fixtures includeheating, lighting, electrical systems, air conditioning (other than supplemental HVAC unitsinstalled by Lessee), partitioning, electrical signs, carpeting, or any other installation whichhas become an integral part of the Premises. In the event that Lessor consents to Lessee’s makingany alterations, improvements, or additions, Lessee shall be responsible for the timely posting ofnotices of non-responsibility on Lessor’s behalf, which shall remain posted until completion ofthe alterations, additions, or improvements. Lessee’s failure to post notices ofnon-responsibility as required hereunder shall be a breach of this Lease.     Notwithstanding anything to the contrary in this Lease, if, during the term of this Lease,any alteration, addition, or change of any sort through all or any portion of the Premises or ofthe building of which the Premises form a part, is required by any Laws, then, if such legalrequirement is not imposed because of Lessee’s specific use of the Premises (other than forgeneral office use) and is not “triggered” by Lessee’s alterations or Lessee’s application for abuilding permit or any other governmental approval (in which instance Lessee shall be responsiblefor 100% of the cost of such improvement)(other than the Lessee Improvements), Lessor shall beresponsible for constructing such improvement, and Lessee shall be responsible for itsproportional share of the cost for said improvement, amortized over the useful life of suchimprovement that coincides with the remaining Lease term including any extensions. Lessorrepresents and warrants that as of the date hereof it has not received any notice that thePremises or the building of which the Premises form a part is currently in violation of any Lawsor that any improvements are required by Laws.13. Acceptance of the Premises and Covenant to Surrender. By entry and taking possession ofthe Premises pursuant to this Lease, Lessee accepts the Premises as being in good and sanitaryorder, condition, and repair, and accepts the Premises in their condition existing as of date ofsuch entry, and Lessee further accepts any tenant improvements to be constructed by Lessor, if any,as being completed in accordance with the plans and specifications for such improvements subject tothe completion of any “‘Punch List Items” (as defined in the Work Letter attached hereto). Lessorrepresents that as of the Lease Commencement, the roof, walls and structural components of thebuilding, HVAC system, electrical, plumbing and lighting shall be in good working order. Lessorshall assign to Lessee any and all existing warranties for the building.     Lessee agrees on the last day of the term hereof, or on sooner termination of this Lease, tosurrender the Premises, together with all alterations, additions, and improvements which may havebeen made in, to, or on the Premises by Lessor or Lessee, unto Lessor in good and sanitary order,condition, and repair, excepting for such wear and tear as would be normal for the period of theLessee’s occupancy and damage by Casualty or Condemnation. Lessee, on or before the end of theterm or sooner termination of this Lease, shall remove all its personal property, trade fixtures,equipment, and data and phone cabling from the Premises, and all property not so removed shall bedeemed abandoned by Lessee. Lessee further agrees that at the end of the term or soonertermination of this Lease, Lessee shall restore the Premises to its original condition (exceptingany restoration requirements waived in Section 12 of this Lease), normal wear and tear excepted.In no
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event shall Lessee be required to remove the Lessee Improvements and restore the Premises to itscondition existing prior to the installation of the Lessee Improvements.     If the Premises are not surrendered at the end of the term or sooner termination of thisLease, Lessee shall indemnify Lessor against loss or liability resulting from delay by Lessee inso surrendering the Premises, including, without limitation, any claims made by any succeedingtenant founded on such delay.14. Default.A. Events of Default. The occurrence of any of the following shall constitute a defaultof this Lease by Lessee:(i) Any failure by Lessee to pay any Rent or any other charge required to be paidunder this Lease, or any part thereof, within five (5) days after such payment isdue; or(ii) Any failure by Lessee to observe or perform any other provision, covenant orcondition of this Lease to be observed or performed by Lessee where such failurecontinues for thirty (30) days after written notice thereof from Lessor to Lessee;provided 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 or anysimilar or successor law; and provided further that if the nature of such defaultis such that the same cannot reasonably be cured within a thirty (30) day period,Lessee shall not be deemed to be in default if it diligently commences such curewithin such period and thereafter diligently proceeds to rectify and cure saiddefault as soon as possible; or(iii) Abandonment of the Premises by Lessee. Abandonment is herein defined toinclude, but is not limited to, any absence by Lessee from the Premises for three(3) business days or longer while in default of any provision of this Lease.B. Remedies Upon Default. Upon the occurrence of any event of default by Lessee, Lessorshall have, in addition to any other remedies available to Lessor at law or in equity, theoption to pursue any one or more of the following remedies, each and all of which shall becumulative and nonexclusive, without any notice or demand whatsoever.(i) Terminate this Lease, in which event Lessee shall immediately surrender thePremises to Lessor, and if Lessee fails to do so, Lessor may, without prejudice toany other remedy which it may have for possession or arrearages in rent, enter uponand take possession of the Premises and expel or remove Lessee and any other personwho may be occupying the Premises or any part thereof, without being liable forprosecution or any claim or damages therefor; and Lessor may recover from Lesseethe following:(1) The worth at the time of award of any unpaid rent which has been earnedat the time of such termination; plus
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(2) The worth at the time of award of the amount by which the unpaid rent which wouldhave been earned after termination until the time of award exceeds the amount of suchrental loss that Lessee proves could have been reasonably avoided; plus(3) The worth at the time of award of the amount by which the unpaid rent for thebalance of the Lease Term after the time of award exceeds the amount of such rentalloss that Lessee proves could have been reasonably avoided; plus(4) Any other amount necessary to compensate Lessor for all the detriment proximatelycaused by Lessee’s failure to perform its obligations under this Lease or which inthe ordinary course of things would be likely to result therefrom, specificallyincluding but not limited to, brokerage commissions and advertising expensesincurred, expenses of remodeling the Premises or any portion thereof for a newlessee, whether for the same or a different use, and any special concessions made toobtain a new lessee; and(5) At Lessor’s election, such other amounts in addition to or in lieu of theforegoing as may be permitted from time to time by applicable law.The term “rent” as used in this Section 14 B. shall be deemed to be and to mean those sums asdescribed in Section 3.A. above to be paid by Lessee. As used in Paragraphs 14 B.(i)(l) and(2), above, the “worth at the time of award” shall be computed by allowing interest at therate of six percent (6%) per annum, but in no case greater than the maximum amount of suchinterest permitted by law. As used in Paragraph 14.B.(i)(3) above, the “worth at the time ofaward” shall be computed by discounting such amount at the discount rate of the FederalReserve Bank of San Francisco at the time of award plus one percent (1%).(ii) Lessor shall have the remedy described in California Civil Code Section 1951.4 (lessormay continue lease in effect after lessee’s breach and abandonment and recover rent as itbecomes due, if lessee has the right to sublet or assign, subject only to reasonablelimitations). Accordingly, if Lessor does not elect to terminate this Lease on account ofany default by Lessee, Lessor may, from time to time, without terminating this Lease,enforce all of its rights and remedies under this Lease, including the right to recover allrent as it becomes due.(iii) Waiver of Default. No waiver by Lessor or Lessee of any violation or breach ofany of the terms, provisions and covenants herein contained shall be deemed or construed toconstitute a waiver of any other or later violation or breach of the same or any other of theterms, provisions, and covenants herein contained. Forbearance by Lessor in enforcement ofone or more of the remedies herein provided upon an event of default shall not be deemed orconstrued to constitute a waiver of such default. The acceptance of any Rent hereunder byLessor following the occurrence of any default, whether or not known to Lessor,
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shall not be deemed a waiver of any such default, except only a default in thepayment of the Rent so accepted.(iv) Efforts to Relet. For the purposes of this Section 14, Lessee’s rightto possession shall not be deemed to have been terminated by efforts of Lessor torelet the Premises, by its acts of maintenance or preservation with respect to thePremises, or by appointment of a receiver to protect Lessor’s interests hereunder.The foregoing enumeration is not exhaustive, but merely illustrative of acts whichmay be performed by Lessor without terminating Lessee’s right to possession.(v) Application of Funds. If Lessor elects to relet the Premises asprovided in this Paragraph, rent that Lessor receives from reletting shall beapplied to the payment of: (1.) any indebtedness from Lessee to Lessor other thanrent due from Lessee; (2.) all costs, including for maintenance, incurred by Lessorin reletting; (3.) rent due and unpaid under this Lease. After deducting thepayments referred to in this Paragraph, any sum remaining from the rent Lessorreceives from reletting shall be held by Lessor and applied in payment of futurerent as rent becomes due under this Lease. In no event shall Lessee be entitled toany excess rent received by Lessor. If, on the date rent is due under this Lease,the rent received from reletting is less than the rent due on that date, Lesseeshall pay to Lessor, in addition to the remaining rent due, all costs, includingfor maintenance, Lessor incurred in reletting that remain after applying the rentreceived from the reletting, as provided in this Paragraph.(vi) Lessor’s Right to Cure Default. Lessor, at any time after Lesseecommits a default, can cure the default at Lessee’s cost. If Lessor at any time, byreason of Lessee’s default, pays any sum or does any act that requires the paymentof any sum, the sum paid by Lessor shall be due immediately from Lessee to Lessor atthe time the sum is paid, and if paid at a later date shall bear interest at themaximum rate an individual is permitted by law to charge from the date the sum ispaid by Lessor until Lessor is reimbursed by Lessee. The sum, together with intereston it, shall be additional rent.     Rent not paid when due shall bear interest at the maximum rate an individual ispermitted by law to charge from the date due until paid.15. Destruction. In the event the Premises are destroyed in whole or in part from anycause, Lessor may, at its option, (1.) rebuild or restore the Premises to their condition prior tothe damage or destruction or (2.) terminate the Lease.     If Lessor does not give Lessee notice in writing within thirty (30) days after the date onwhich occurred the destruction of the Premises of its election either to rebuild and restore thePremises, or to terminate this Lease, Lessor shall be deemed to have elected to rebuild or restorethem, in which event Lessor agrees, at its expense, promptly to rebuild or restore the Premises toits condition prior to the damage or destruction. If Lessor does not complete the rebuilding or
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restoration within one hundred eighty (180) days following the date of destruction (such period oftime to be extended for delays caused by the fault or neglect of Lessee of because of acts of God,acts of public agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormyweather, inability to obtain materials, supplies or fuels, acts of contractors or subcontractors,or delay of the contractors or subcontractors due to such causes or other contingencies beyondcontrol of Lessor), then Lessee shall have the right to terminate this Lease by giving fifteen(15) days prior written notice to Lessor. Lessor’s obligation to rebuild or restore shall notinclude restoration of Lessee’s trade fixtures, equipment, merchandise, or any improvements,alterations, or additions made by Lessee to the Premises.     Unless this Lease is terminated pursuant to the foregoing provisions, this Lease shall remainin full force and effect. Lessee hereby expressly waives the provisions of Section 1932,Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code.     Notwithstanding anything to the contrary in this Article 15: (i) if the Premises are damagedby any peril and Lessor does not terminate the Lease, then Lessee shall have the option toterminate the Lease if the Premises cannot be, or are not in fact, fully restored by Lessor totheir prior condition for any reason whatsoever within one hundred eighty (180) days after thedamage, and (ii) if the Premises are damaged by any peril during the last twelve (12) months ofthe Lease term, Lessee shall have the option to terminate this Lease by giving written notice toLessor within thirty (30) days after the date of the damage estimate, and this Lease shallterminate as of the date specified by Lessee in its termination notice, which date shall not bebefore the date of such notice or more than ninety (90) days after the date of such notice. Duringany period of time following a casualty where all or any portion of the Premises is not suitablefor Lessee’s use, as reasonably determined by Lessee, than all rent due under this Lease shall beequitably abated during such period based on the extent to which Lessee’s use and enjoyment of thePremises is diminished.16. Condemnation. If any part of the Premises shall be taken for any public or quasi-publicuse, under any statute of by right of eminent domain, or private purchase in lieu thereof, and apart thereof remains, which is susceptible of occupation hereunder, this Lease shall, as to thepart so taken, terminate as of the date title shall vest in the condemnor or purchaser, and therent payable hereunder shall be adjusted so that the Lessee shall be required to pay for theremainder of the term only such portion of such rent as the value of the part remaining aftertaking such bears to the value of the entire Premises prior to such taking. Lessor shall have theoption to terminate this Lease in the event that such taking causes a reduction in rent payablehereunder by fifty percent (50%) or more. If all of the Premises or such part thereof be taken sothat there does not remain a portion susceptible for occupation hereunder, as reasonably necessaryfor Lessee’s conduct of its business as contemplated in this Lease, this Lease shall thereuponterminate. If a part of all of the Premises be taken, all compensation awarded upon such takingshall go to the Lessor, and the Lessee shall have no claim thereto, and the Lessee herebyirrevocably assigns and transfers to the Lessor any right to compensation or damages to which theLessee may become entitled during the term hereof by reason of the purchase or condemnation of allor a part of the Premises, except that Lessee shall have the right to recover its share of any awardor consideration for (1.) moving expenses; (2.) loss or damage to Lessee’s trade fixtures,furnishings, equipment, and other personal property; and (3.) business goodwill.
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17. Free from Liens. Lessee shall (1.) pay for all labor and services performed ormaterials used by or furnished to Lessee at Lessee’s request, or any contractor employed by Lesseewith respect to the Premises, and (2.) indemnify, defend, and hold Lessor and the Premises harmlessand free from any liens, claims, demands, encumbrances, or judgments created or suffered by reasonof any labor or services performed or materials used by or furnished to Lessee or any contractoremployed by Lessee with respect to the Premises, and (3.) give notice to Lessor in writing five (5)days prior to employing any laborer or contractor to perform services related, or receivingmaterials for use upon the Premises, and (4.) shall post, on behalf of Lessor, a notice ofnon-responsibility in accordance with the statutory requirements of the California Civil Code,Section 3094, or any amendment thereof. In the event an improvement bond with a public agency inconnection with the above is required to be posted, Lessee agrees to include Lessor as anadditional obligee.18. Compliance with Laws. Subject to the last grammatical paragraph in Section 12 of thisLease, Lessee shall, at its own cost, comply with and observe all requirements of all municipal,county, state, and federal authority now in force, or which may hereafter be in force, pertainingto the use and occupancy of the Premises.19. Subordination. Lessee agrees that this Lease shall, at the option of Lessor, besubjected and subordinated to any mortgage, deed of trust, or other instrument of security, whichhas been or shall be placed on the land and building, or land or building of which the Premisesform a part, and this subordination is hereby made effective without any further act of Lessee orLessor. The Lessee shall, at any time hereinafter, on demand, execute any commercially reasonableinstruments, releases, or other documents that may be required by any mortgagee, mortgagor,trustor, or beneficiary under any deed of trust, for the purpose of subjecting or subordinatingthis Lease to the lien of any such mortgage, deed of trust, or other instrument of security. IfLessee fails to execute and deliver any such documents or instruments within ten (10) days afterLessor’s request, then Lessee shall be in default under this Lease. Lessor shall use commerciallyreasonable efforts to obtain, as soon as possible following the mutual execution and delivery ofthis Lease, from any lenders or ground lessors of the Premises a written agreement in formreasonably satisfactory to Lessee providing for recognition of Lessee’s interests under the Leasein the event of a foreclosure of the lender’s security interest or termination of the ground lease.The failure of Lessor to obtain from any such lenders or ground lessors such a non-disturbanceagreement shall not constitute a default hereunder by Lessor, it being understood that Lessor’ssole obligation is to use commercially reasonable efforts to obtain the execution and delivery ofsuch a non- disturbance agreement.20. Abandonment. Lessee shall not abandon the Premises at any time during the term; and ifLessee shall abandon, or surrender said Premises, or be dispossessed by process of law, orotherwise, any personal property belonging to Lessee and left on the Premises shall be deemed to beabandoned, at the option of Lessor, except such property as may be mortgaged to Lessor; provided,however, that Lessee shall not be deemed to have abandoned or vacated the Premises so long asLessee continues to pay all rents as and when due, and otherwise performs pursuant to the terms andconditions of this Lease.21. Assignment and Subletting.
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A. Definitions. For purposes of this Paragraph 21, the following terms shall bedefined as follows: (i) Sublet. The term “Sublet” shall mean any transfer, sublet, assignment, licenseor concession agreement, change of ownership, mortgage, or hypothecation of thisLease or the Lessee’s interest in the Lease or in and to all or a portion of thePremises.  (ii) Subrent. The term “Subrent” shall mean any consideration of any kindreceived, or to be received, by Lessee from a Sublessee if such sums are relatedto Lessee’s interest in this Lease or in the Premises, including, but notlimited to, bonus money and payments (in excess of book value) for Lessee’sassets including its trade fixtures, and equipment and other personal property.  (iii) Sublessee. The term “Sublessee” shall mean the person or entity with whom aSublet agreement is proposed to be or is made.B. Lessor’s Consent. Lessee shall not enter into a Sublet without Lessor’s priorwritten consent, which consent shall not be unreasonably withheld. Any attempted orpurported Sublet without Lessor’s prior written consent shall be void and confer no rightsupon any third person. In determining whether or not to consent to a proposed Sublet, Lessormay consider the following factors, among others, all of which shall be deemed reasonable;(i) whether the proposed Sublessee has the financial wherewithal to pay the rent asestablished in the sublease as reasonably determined by Lessor at the time Lessor’s Consentis requested; (ii) whether the proposed use of the Premises by the proposed Sublessee isconsistent with the permitted use for the Premises set forth in Paragraph 6 of this Lease;(iii) whether the experience and business reputation of the proposed Sublessee is equal toor greater than that of Lessee; (iv) whether the rent payable by the Sublessee under theproposed Sublet is set below the current fair market sublease rent for the subleasedPremises as a subterfuge to avoid paying to Lessor its share of the profit on suchtransaction; and (v) whether Lessor’s consent will result in a breach of any other lease oragreement to which Lessor is a party affecting the Building. Each Sublessee shall agree inwriting, for the benefit of Lessor, to assume, to be bound by, and to perform the terms andconditions and covenants of this Lease to be performed by Lessee. Notwithstanding anythingcontained herein, Lessee shall not be released from liability for the performance of eachterm, condition and covenant of this Lease by reason of Lessor’s consent to a Sublet unlessLessor specifically grants such release in writing. Consent by Lessor to any Sublet shallnot be deemed a consent to any subsequent Sublet. Lessee shall reimburse Lessor for allreasonable costs and attorneys’ fees incurred by Lessor in connection with the evaluation,processing and/or documentation of any requested Sublet, whether or not Lessor’s consent isgranted, in an amount not to exceed One Thousand Dollars ($1,000.00) per request. Lessor’sreasonable costs shall include the cost of any review or investigation by Lessor of anyhazardous or toxic materials which may be used, stored, or disposed of at the Premises bythe Sublessee, including fees paid to consultants hired to perform such review orinvestigation.
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C. Information to be Furnished. If Lessee desires at any time to Sublet the Premisesor any portion thereof, it shall first notify Lessor of its desire to do so and shall submitin writing to Lessor: (i) the name and legal composition of the proposed Sublessee, (ii) thenature of the proposed Sublessee’s business to be carried on in the Premises; (iii) theterms and provisions of the proposed Sublet and a copy of the proposed Sublet formcontaining a description of the subject premises; (iv) a statement of all consideration tobe paid by the Sublessee in connection with the Sublet; (v) a current financial statement ofLessee; and (vi) such financial information, including financial statements, as Lessor mayreasonably request concerning the proposed Sublessee, provided that, if requested by Lessee,Lessor shall execute a commercially reasonable form of non-disclosure agreement with respectto such statements.D. Lessor’s Alternatives. At any time within fifteen (15) days after the Lessor’sreceipt of the information specified in Paragraph 21.C, Lessor may, by written notice toLessee, elect: (i) to consent to the Sublet by Lessee; (ii) to reasonably refuse its consentto the Sublet, or (iii) elect to terminate this Lease, or in the case of a partial Sublet,terminate this Lease as to the portion of the Premises proposed to be Sublet. If Lessorconsents to the Sublet, Lessee may thereafter enter into a valid Sublet of the Premises orportion thereof, upon the terms and conditions and with the proposed Sublessee set forth inthe information furnished by Lessee to Lessor pursuant to Paragraph 21.B., subject, however,at Lessor’s election, to the condition that fifty percent (50%) of any excess of the Subrentover the Rent required to be paid by Lessee under this Lease shall be paid to Lessor butonly if any such excess remains after Lessee has first deducted its attorneys’ feesassociated with the Sublet, the costs of any improvements or improvement allowance relatingto the Sublet, and any broker commissions associated with the Sublet.E. [Intentionally Omitted.]F. Exempt Sublets. Notwithstanding the above, Lessor’s prior written consent shallnot be required for an assignment of this Lease to an entity which controls, is controlledby or under common control with, Lessee, to a corporation into which Lessee merges orconsolidates, to a successor entity related to Lessee by non-bankruptcy reorganization, orgovernment action, or to a purchaser of substantially all of Lessee’s assets located in thePremises provided that (i) Lessee gives Lessor prior written notice of the name any suchassignee, (ii) at the time of such assignment, the assignee has net worth that is equal toor greater than the net worth of Lessee immediately prior to such assignment; and (iii) theassignee assumes, in writing, for the benefit of Lessor, all of Lessee’s obligations underthe Lease. In addition, and notwithstanding anything to the contrary in this Paragraph 21,neither (i) the sale, transfer or public offering of Lessee’s capital stock, (ii) theinstitutional, venture or other private financing by Lessee to raise additional capital, nor(iii) any change of control of Lessee resulting from (i) or (ii) shall be deemed anassignment of the Lease or a subletting of the Premises, and Lessor’s consent shall not berequired for any of the foregoing transactions.22. Parking Charges. Lessee agrees to pay upon demand, based on its percent of occupancy ofthe entire Premises, its pro-rata share of any parking charges, surcharges, or any other cost
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hereafter levied or assessed by local, state, or federal governmental agencies in connection withthe use of the parking facilities serving the Premises, including, without limitation, parkingsurcharge imposed by or under the authority of the Federal Environmental Protection Agency.Notwithstanding the foregoing, Lessee shall not be charged for the use of parking provided underthis Lease unless the applicable local, state or federal governmental agency imposes on tax, fee,levy, or other charge on parking at similar buildings in Los Gatos.23. Insolvency or Bankruptcy. Either (1.) the appointment of a receiver to take possessionof all or substantially all of the assets of Lessee, or (2.) a general assignment by Lessee for thebenefit of creditors, or (3.) any action taken or suffered by Lessee under any insolvency orbankruptcy act shall constitute a breach of this Lease by Lessee. Upon the happening of any suchevent, this Lease shall terminate ten (10) days after written notice of termination from Lessor toLessee. This section is to be applied consistent with the applicable state and federal law ineffect at the time such event occurs.24. Lessor Loan or Sale. Lessee agrees promptly following request by Lessor to (1.) executeand deliver to Lessor any commercially reasonable documents, including estoppel certificatespresented to Lessee by Lessor, (a.) certifying that this Lease is unmodified and in full force andeffect, or, if modified, stating the nature of such modification and certifying that this Lease, asso modified, is in full force and effect and the date to which the rent and other charges are paidin advance, if any, and (b.) acknowledging that there are not, to Lessee’s knowledge, any uncureddefaults on the part of Lessor hereunder, and (c.) evidencing the status of the Lease as may berequired either by a lender making a loan to Lessor, to be secured by deed of trust or mortgagecovering the Premises, or a purchaser of the Premises from Lessor, and (2.) to deliver to Lessorthe current financial statements of Lessee, including a balance sheet and profit and lossstatement, for the current fiscal year and the two immediately prior fiscal years, if available.Lessee’s failure to deliver an estoppel certificate within ten (10) days following such requestshall constitute a default under this Lease and shall be conclusive upon Lessee that this Lease isin full force and effect and has not been modified except as may be represented by Lessor.25. Surrender of Lease. The voluntary or other surrender of this Lease by Lessee, or amutual cancellation thereof, shall not work a merger nor relieve Lessee of any of Lessee’sobligations under this Lease, and shall, at the option of Lessor, terminate all or any existingSubleases or Subtenancies, or may, at the option of Lessor, operate as an assignment to Lessor ofany or all such Subleases or Subtenancies.26. Attorneys’ Fees. If, for any reason, any suit be initiated to enforce any provision ofthis Lease, the prevailing party shall be entitled to legal costs, expert witness expenses, andreasonable attorneys’ fees, as fixed by the court.27. Notices. All notices to be given to Lessee may be given in writing, personally, or bydepositing the same in the United States mail, postage prepaid, and addressed to Lessee at the saidPremises, whether or not Lessee has departed from, abandoned, or vacated the Premises. Any noticeor document required or permitted by this Lease to be given Lessor shall be addressed to Lessor atthe address set forth below, or at such other address as it may have theretofore specified bynotice delivered in accordance herewith:
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   LESSOR: Los Gatos Business Park  900 Welch Road, Suite 10  Palo Alto, California 94304   LESSEE: StrataLight Communications, Inc.  151 Albright Way  Los Gatos, California 95032   With a copy to: Pillsbury Winthrop Shaw Pittman LLP  Attn: Stanley F. Pierson  2475 Hanover Street  Palo Alto, CA 9430428. Transfer of Security. If any security be given by Lessee to Lessor to secure thefaithful performance of all or any of the covenants of this Lease on the part of Lessee, Lessorshall transfer and/or deliver the security, as such, to the purchaser of the reversion, in theevent that the reversion be sold, and thereupon Lessor shall be discharged from any furtherliability in reference thereto, upon the assumption by such transferee of lessor’s obligationsunder this Lease.29. Waiver. The waiver by Lessor or Lessee of any breach of any term, covenant, orcondition, herein contained shall not be deemed to be a waiver of such term, covenant, orcondition, or any subsequent breach of the same or any other term, covenant, or condition hereincontained. The subsequent acceptance of rent hereunder by lessor shall not be deemed to be a waiverof any preceding breach by Lessee of any term, covenant, or condition of this Lease, other than thefailure of Lessee to pay the particular rental so accepted, regardless of Lessor’s knowledge ofsuch preceding breach at the time of acceptance of such rent.30. Holding Over. Lessee shall have the right to negotiate with Lessor in order to allowLessee to holdover in the Premises with Lessor’s consent at a rental rate equal to the greater offair market rent for the Premises (as reasonably determined by Lessor in good faith) or the baserent then in effect under this Lease during the last month of this Lease prior to the commencementof such a holdover period. Any holding over after the expiration of the term or any extensionthereof, without the consent of lessor, shall be construed to be a tenancy at sufferance, at arental of one and one- half (1 1/2) times the previous month’s rental rate per month, and shallotherwise be on the terms and conditions herein specified, so far as applicable.31. Covenants. Conditions, and Restrictions. Attached hereto, marked Exhibit “C” and bythis reference incorporated as if set out in full, are Covenants, Conditions, and Restrictionspertaining to Los Gatos Business Park. As a condition to this Lease, Lessee agrees to abide by allof said Covenants, Conditions, and Restrictions. Moreover, such reasonable rules and regulations asmay be hereafter adopted by Lessor for the safety, care, and cleanliness of the Premises and thepreservation of good order thereon, are hereby expressly made a part hereof, and Lessee agrees toobey all such rules and regulations.32. Limitation on Lessor’s Liability. If Lessor is in default of this Lease, and, as aconsequence,
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Lessee recovers a money judgment against Lessor, the judgment shall be satisfied only out of theproceeds of sale received on execution of the judgment and levy against the right, title, andinterest of Lessor in the Premises, or in the building, other improvements, and land of which thePremises are part, and out of rent or other income from such real property receivable by Lessor orout of the consideration received by Lessor from the sale or other disposition of all or any partof Lessor’s right, title, and interest in the Premises or in the building, other improvements, andland of which the Premises are part. Neither Lessor nor any of the partners comprising thepartnership designated as Lessor shall be personally liable for any deficiency.33. Expansion. Lessee shall notify Lessor from time to time of its possible interest formore space within Los Gatos Business Park. Lessor shall have five (5) business days to respond toLessee with the current availability of space or any potential availability that Lessor has actualknowledge of. This shall not be a default provision of the Lease.34. Right to Terminate. Lessee shall have the right to terminate this Lease at the end ofthe 3rd Rent Year by providing Lessor with six (6) months prior written notice of itsintent to terminate, which notice may be given such that the termination date would be the last dayof the 3rd Rent Year (the “Termination Notice”). The Termination Notice shall specifyLessee’s desired termination date, which date shall not be earlier than six (6) months after thedate of the Termination Notice (the “Termination Date”) Should Lessee exercise its right toterminate, Lessee shall pay to Lessor an amount equal to six (6) months of Monthly Rent andAdditional Rent next coming due after the Termination Date, along with the unamortized portion ofthe Lessor’s Allowance (as such term is defined in the Work Letter) and the leasing commissionspaid with respect to the initial term of this Lease (the “Termination Fee”). Within five (5)business days after Lessee’s written request, Lessor shall provide Lessee with the amount of theTermination Fee based on the Termination Date. Notwithstanding the foregoing, Lessor shall rebateto Lessee all or a portion of the Termination Fee in the event Lessor realizes a gain aboveLessee’s remaining Rent obligation under the Lease according to the following formula: Lessee’sentire remaining Rent obligation under the Lease for the period of time from and after theTermination Date to and including the Expiration Date (such period the “Remaining Period”) shall becalculated, and in the event Lessor leases the Premises to a third party for all or any portion ofthe Remaining Term, then the new rental due to Lessor shall be computed for the applicable portionof the Remaining Period. In the event the third party’s rent through the same period is in excessof Lessee’s Rent obligation through such period, then Lessee shall receive the excess rent as arebate up to the amount of the termination fee. Lessor shall promptly remit the rebate amount toLessee following the commencement date of the new lease.35. Signage. Lessee, at Lessee’s sole cost, shall have the right to building and monumentsignage per Los Gatos Business Park standards and Town regulations.36. Miscellaneous. A. Time is of the essence of this Lease, and of each and all of its provisions.  B. The term “building” shall mean the building in which the Premises are situated.  C. If the building is leased to more than one tenant, then each such tenant, its agents,
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   officers, employees, and invitees, shall have the non-exclusive right (inconjunction with the use of the part of the building leased to such tenant) to makereasonable use of any driveways, sidewalks, and parking areas located on the parcelof land on which the building is situated, except such parking areas as may fromtime to time be leased for exclusive use by other tenant(s). D. Lessee’s such reasonable use of parking areas shall not exceed that percent ofthe total parking areas which is equal to the ratio which floor space of the Premisesbears to floor space of the building.  E. The term “assign” shall include the term “transfer.”  F. The invalidity or unenforceability of any provision of this Lease shall notaffect the validity or enforceability of the remainder of this Lease.  G. All parties hereto have equally participated in the preparation of this Lease.  H. The headings and titles to the Paragraphs of this Lease are not a part of thisLease and shall have no effect upon the construction or interpretation of any partthereof.  I. Lessor has made no representation(s) whatsoever to Lessee (express or implied)except as may be expressly stated in writing in this Lease instrument.  J. This instrument contains all of the agreements and conditions made between theparties hereto, and may not be modified orally or in any other manner than byagreement in writing, signed by all of the parties hereto or their respectivesuccessors in interest.  K. It is understood and agreed that the remedies herein given to Lessor shall becumulative, and the exercise of any one remedy by Lessor shall not be to the exclusionof any other remedy.  L. The covenants and conditions herein contained shall, subject to the provisionsas to assignment, apply to and bind the heirs, successors, executors, andadministrators, and assigns of all the parties hereto; and all of the parties heretoshall jointly and severally be liable hereunder.  M. This Lease has been negotiated by the parties hereto and the language hereofshall not be construed for or against either party.  N. All exhibits to which reference is made are deemed incorporated into thisLease, whether covenants or conditions, on the part of Lessee shall be deemed to beboth covenants and conditions.  * ** **[Remainder of Page Intentionally Blank. Signatures on Following Page.]*
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     IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease on the date firstabove-written.   LESSOR: LESSEE:Los Gatos Business Park StrataLight Communications, Inc.   BY: /s/ Carolee White BY: /s/ Illegible   Carolee White, Trustee  General Partner     DATE: 3/15/04 DATE: 3/14/06
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