(AIR LOGO)
    
    Exhibit 10.1
 STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE  GROSS
 Basic Provisions (Basic Provisions).
 Parties: (Lease), (Lessor) (Lessee), Parties, Party
 Premises: (Premises) (Building) Project.
 Parking:
 Building Power:
 Term: (Original Term) X (Commencement Date) X (Expiration Date).
 Early Possession: (Early Possession Date).
 Base Rent (Base Rent)
 þ
 Lessees Share of Common Area Operating Expenses: (Lessees Share).
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 ©1998  AIR COMMERCIAL REAL ESTATE ASSOCIATION
    
    FORM MTG-7-06/07E




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Base Rent and Other Monies Paid Upon Execution:
 Base Rent:
 Common Area Operating Expenses
 Security Deposit (Security Deposit).
 Other
 Total Due Upon Execution of this Lease
 Agreed Use
 Insuring Party Insuring Party.
 Real Estate Brokers
 Representation Brokers
 þ Lessors Broker
 þ Lessees Broker
 o   Dual Agency
 Payment to Brokers (or if there is no such agreement, the sum of 
or  % of the total Base Rent for the brokerage services rendered by the Brokers)
 Guarantor.  Guarantor
 Attachments.
 þ
 þ
 o
 o
 o     a current set of the Rules and Regulations-adopted by-the owners association;
 o     a Work Letter
 þ
 Premises.
 Letting. NOTE: Lessee is advised
to verify the actual size prior to executing this Lease.
 Condition. Unit Start Date HVAC
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6 30
 Compliance. (Applicable Requirements). NOTE: Lessee is responsible for determining whether or not the Applicable
Requirements, and especially the zoning are appropriate for Lessees intended use, and
acknowledges that past uses of the Premises may no longer be allowed. (Capital Expenditure),
 immediately and at least 90 days thereafter. Such
termination date shall, however, in-no event be earlier-than the last
day-that Lessee could legally utilize the-Premises without commencing such Capital
Expenditure
  unexpected
 Acknowledgements
 Lessee as Prior Owner/Occupant
 Vehicle Parking
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Permitted Size Vehicles 
    Common Areas Definition Common Areas
 Common Areas  Lessees Rights
 Common Areas  Rules and Regulations. (Rules and Regulations) best
 Common Areas Changes sole
        3.
    
    Term.
 Term.
 Early Possession.
 Delay In Possession. as agreed or change
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60 10 60 10
 Lessee Compliance.
 4.
    
    Rent.
 Rent Defined. (Rent).
 Common Area Operating Expenses.
 Common Area Operating Expenses
      trash disposal, and the cost of any
environmental inspections
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Payment.
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and
 Security Deposit. If the Base Rent increases during the term of
this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor
so that the total amount of the Security Deposit shall
at all times bear the same proportion to the increased Base Rent as the initial Security Deposit
bore to the initial Base Rent. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to accommodate a sublessee
or assignee, Lessor shall have the right to
increase the Security Deposit to the extent necessary, in Lessors reasonable judgment, to account
for any increased wear and tear that the Premises
may suffer as a-result thereof. If a change in control of Lessee occurs during this Lease and
following such change the financial condition of Lessee is,
in Lessors reasonable judgment, significantly reduced, Lessee shall deposit such additional
monies with Lessor as shall be sufficient to cause the
Security Deposit to be at a commercially reasonable level based on such change in financial
condition. 90
 Use.
 Use.
 Hazardous Substances.
 Reportable Uses Require Consent Hazardous Substance Reportable Use
 Duty to Inform Lessor.
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Lessee Remediation
 Lessee Indemnification
 Lessor Indemnification
 Investigations and Remediations
 Lessor Termination Option
 Lessees Compliance with Applicable Requirements , and the recommendations of Lessors engineers and/or
Consultants which relate in any manner to such
Requirements 10 immediately
 Inspection; Compliance Lender
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MSDS
 Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
 Lessees Obligations.
 In General.
 Service Contracts.
 Failure to Perform. 115%
 Replacement.
 Lessors Obligations.
 Utility Installations; Trade Fixtures; Alterations
 Definitions. Utility Installations Trade Fixtures Alterations Lessee Owned Alterations and/or Utility Installations
 Consent. a sum equal to 3 months Base Rent a sum equal to one months Base Rent
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one months Base Rent,
 Liens; Bonds.
 Ownership; Removal; Surrender; and Restoration.
 Ownership.
 Removal.
 Surrender; Restoration completely even if such removal would require Lessee to perform or pay
for work that exceeds statutory requirements
 Insurance; Indemnity.
 Payment of Premium Increases
 Insurance Cost Increase Required Insurance Base Premium
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    INITIALS©1998  AIR COMMERCIAL REAL ESTATE ASSOCIATION
    
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Liability Insurance
 Carried by Lessee insured contract
 Carried by Lessor
 Property Insurance  Building, Improvements and Rental Value
 Building and Improvements
 Rental Value Rental Value
insurance
 Adjacent Premises
 Lessees Improvements
 Lessees Property; Business Interruption Insurance
 Property Damage
 Business Interruption
 No Representation of Adequate Coverage
 Insurance Policies 10
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    INITIALS©1998  AIR COMMERCIAL REAL ESTATE ASSOCIATION
    
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Waiver of Subrogation
 Indemnity the-use and/or occupancy of-the
Premises-by-Lessee
 Exemption of Lessor and its Agents from Liability
 Failure to Provide Insurance
 Damage or Destruction
 Definitions
 Premises Partial Damage
 Premises Total Destruction
 Insured Loss
 Replacement Cost
 Hazardous Substance Condition
 Partial Damage  Insured Loss
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Partial Damage  Uninsured Loss.
 Total Destruction.
 Damage Near End of Term.
 Abatement of Rent; Lessees Remedies.
 Abatement.
 Remedies.
 Termination; Advance Payments.
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Real Property Taxes.
 Definitions.
 Real Property Taxes. Real Property Taxes
 Base Real Property Taxes. Base Real Property Taxes
 Payment of Taxes.
 Additional Improvements.
 Joint Assessment.
 Personal Property Taxes.
 Utilities and Services. or that Lessee is generating such a large volume of trash as
to require an increase in the size of the trash receptacle and/or on increase in-the number of
times per month-that it is emptied, then Lessor may increase Lessees Base Rent by an
amount equal to such increased costs.
 Assignment and Subletting.
 12.1 Lessors Consent Required
 assign or assignment
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The involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition,
financing, transfer, leveraged buy out or otherwise), whether or not a formal assignment
or-hypothecation of this Lease or Lessees assets occurs,
which results or will result in a reduction of the Net Worth of Lessee by an amount greater
than 25% of such Net Worth as it was represented at the
time of the execution of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever-was or is greater,
shall be considered an assignment of this Lease to which Lessor
may with hold its consent. Net Worth of Lesseeshall-mean the net worth-of-Lessee
(excluding-any-guarantors) established under generally accepted
accounting principles
 , or
a noncurable Breach without the necessity of any notice and grace period. If Lessor elects
to-treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days-written
notice, increase the monthly Base Rent to 110% of the Base
Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by
Lessee-shall be subject to similar adjustment to 110% of the price previously in effect,
and-(ii) all fixed and non-fixed rental adjustments scheduled
during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted
rent.
 /or
   Terms and Conditions Applicable to Assignment and Subletting
       (g) Lessors consent to any assignment or subletting shall not transfer to the
assignee or sublessee any Option granted to the original Lessee by this Lease unless such
transfer-is-specifically consented to by Lessor in writing. (See Paragraph 30.2)
 Additional Terms and Conditions Applicable to Subletting
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Default; Breach; Remedies.
 Default; Breach. Default
  a third-party, 3
 3
 10
  debtor
 (g) The discovery that any financial statement of Lessee or of-any Guarantor given to
Lessor was materially false.
  Remedies
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Inducement Recapture Any agreement for free or abated rent or other charges, or for
the giving or paying by Lesser to or for Lessee of any cash or other bonus, inducement or consideration for Lessees entering into this
Leas, all of which concessions are hereinafter referred to as Inducement Provisions, shall be deemed conditioned upon Lessees full and faithful
performance a of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement provision shall
automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding
any subsequent cure of said Broach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this
paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance
 Late Charges 10 7
 Interest Interest
 Breach by Lessor
 Notice of Breach
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Performance by Lessee on Behalf of Lessor
 Condemnation Condemnation
 Brokerage Fees
 15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10
above, and unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
or anyone affliated with Lessee acquires from Lessor any rights to the Premises or other premises
owned by Lessor and located within the Project, (c) if Lessee remains in possession of the Promises,
with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is
increased, whether by agreement or operation of an escalation clause herein, then;
Lessor shall pay Brokers a fee in accordance with the schedule of the Brokers in effect at the
time of the execution of this Lease.
 15.2 Assumption of Obligations. Any buyer or transferee of Lessors interest in this Lease
shall be deemed to have assumed Lessors obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs
1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees
pertaining to this Lease when duo, then such amounts shall accrue interest. In addition, if Lessor
fails to pay any amounts to Lessees Broker when due, Lessees Broker may send written notice to
Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days after
said notice, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In
addition, Lessees Broker shall be deemed to be a third party beneficiary of any commission
agreement entered into by and/or between Lessor and Lessors Broker for the limited purpose of
collecting any brokerage fee owed.
 Representations and Indemnities of Broker Relationships
 Estoppel Certificates
 Responding Party 10 Requesting Party Estoppel Certificate
 10
 if
 Definition of Lessor Lessor
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Severability.
 Days. days
 Limitation on Liability.
 Time of Essence
 No Prior or Other Agreements; Broker Disclaimer
 Notices.
 Notice Requirements regular, U.S.
Postal Service Express Mail or by facsimile transmission with receipt
acknowledgment,
 Date of Notice. 72 hours after the same is addressed as required herein and mailed
with postage prepaid Notices transmitted by facsimile transmission or similar means shall be deemed
delivered upon telephone confirmation of receipt (confirmation report from fax machine is
sufficient), provided a copy is also delivered via delivery or mail.
 Waivers.
    Disclosures Regarding The Nature of a Real Estate Agency Relationship
  Lessors Agent . To the Lessor : To the Lessee and the Lessor :
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Lessees Agent . To the Lessee To the Lessee and the Lessor :
 Agent Representing Both Lessor and Lessee .
   No Right To Holdover.
 Cumulative Remedies.
 Covenants and Conditions; Construction of Agreement
 Binding Effect; Choice of Law
 Subordination; Attornment; Non-Disturbance.
 Subordination. Security Device) Lender
 Attornment.
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Non-Disturbance. Non-Disturbance Agreement)
 Self-Executing.
 Attorneys Fees. Prevailing Party
 Lessors Access; Showing Premises; Repairs.
 Auctions.
 Signs.
 Termination; Merger.
 Consents
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Guarantor.
 Execution.
 Default.
 Quiet Possession.
 Options.
 Definition. Option
 39.2
Options Personal To Original Lessee. Any Option granted-to-Lessee in this Lease is
personal to the original-Lessee, and cannot
be assigned or exercised by anyone-other than said original Lessee and only while the original
Lessee-is in full-possession of the Premises-and, if
requested by Lessor, with Lessee certifying that Lessee has no
intention of thereafter assigning or subletting.
 Multiple Options.
 Effect of Default on Options.
    Security Measures.
 Reservations.
 Performance Under Protest.
 Authority.; Multiple Parties; Execution.
    Conflict.
 Offer.
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Amendments.
 Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY
IN ANY ACTION OR
PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT .
 Mediation and Arbitration of Disputes o o
 Americans with Disabilities Act.
 LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION
CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT
THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS
LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE
WITH RESPECT TO THE PREMISES.
 ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF
THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
 2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS
SUBSTANCES, THE ZONING OF
THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS,
COMPLIANCE WITH THE
AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEES INTENDED USE.
 WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF
THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES
ARE LOCATED.
  Executed at:
    
    
    
    Executed:On:
    
    
    
    
    
    On:By LESSOR:
    
    
    
    By LESSEE:Lionshead Investments, LLC
    
    Xenonics Holdings, Inc.A California Limited Liability Company
    
    A Nevada CorporationBy:
    
    
    
    
    
    By:
    
    /s/ Chuck HunterName Printed:
    
    Russell Wallis
    
    
    
    Name Printed:
    
    Chuck HunterTitle:
    
    Manager
    
    
    
    Title:
    
    CEOBy:
    
    
    
    
    
    By:
    
    /s/ Richard KayName Printed:
    
    Don Eklund
    
    
    
    Name Printed:
    
    Richard KayTitle:
    
    Manager
    
    
    
    Title:
    
    CFOAddress:
    
    3874 Catamarca Drive
    
    
    
    Address:
    
    2236 Rutherford Rd., Suite 123San Diego, CA 92124
    
    
    
    
    
    Carlsbad, CA 92008Telephone:
    
    (858) 277-1232
    
    
    
    Telephone:
    
    (760) 448-9700Facsimile:
    
    (858) 951-0205
    
    
    
    Facsimile:
    
    (760) 929-7570Federal ID No.
    
    
    
    
    
    Federal ID No.
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BROKER:
    
    
    
    
    
    BROKER:Colliers International
    
    
    
    CBRE CommercialAtt:
    
    Chuck McNary & Erik McNary
    
    
    
    Att:
    
    Tina FodorTitle:
    
    Senior Vice President/Associate
    
    
    
    Title:
    
    AssociateAddress:
    
    5930 Priestly Drive
    
    
    
    Address:
    
    5780 Fleet Street, Suite 300Carlsbad, CA 92008
    
    
    
    
    
    Carlsbad, CA 92008Telephone:
    
    (760) 930-7904
    
    
    
    Telephone:
    
    (760) 438-8500Facsimile:
    
    (760) 438-8925
    
    
    
    Facsimile:
    
    (760) 438-8592Federal ID No.
    
    
    
    
    
    Federal ID No.
 NOTICE: These forms are often modified to meet changing requirements of law and industry needs.
Always write or call to make sure you are utilizing the most current form: AIR Commercial Real
Estate Association, 800 W 6th Street, Suite 800, Los Angeles, CA 90017. Telephone No. (213)
687-8777. Fax No.: (213) 687-8616.
 (c)Copyright 1998 By AIR Commercial Real Estate Association.
All rights reserved.
No part of these works may be reproduced in any form without
permission in writing.
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RENT ADJUSTMENT (S)
STANDARD LEASE ADDENDUM
 Dated
    
    October 27, 2008By and Between (Lessor)
    
    Lionshead Investments, LLC a California limited liability company(Lessee)
    
    Xenonics Holdings, Inc., a Nevada corporationAddress of Premises:
    
    3186 Lionshead Avenue,
Suite 100 Carlsbad, CA 92101
  A. RENT ADJUSTMENTS
 
 o      I. Cost of Living Adjustment(s) (COLA)
 a. On (Fill in COLA Dates):
 
 the Base Rent shall be adjusted by the change, if any, from the Base Month specified below, in the
Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for (select
one): o CPI W (Urban Wage Earners and Clerical Workers) or o CPI U (All Urban Consumers). for (Fill
in Urban Area):
 
 .
All Items
  (1982 1984 = 100), herein referred to as CPI.
 b. The monthly rent payable in accordance with paragraph A.I.a . of this
Addendum shall be calculated as follows: the Base Rent set forth in paragraph 1.5
of the attached Lease, shall be multiplied by a fraction the numerator of which
shall be the CPI of the calendar month 2 months prior to the month(s) specified in
paragraph A.I.a. above during which the adjustment is to take effect, and the
denominator of which shall be the CPI of the calendar month which is 2 months prior
to (select one): the o first month of the term of this Lease as set forth in
paragraph 1.3 (Base Month) or o (Fill in Other Base
Month):  . The sum so calculated shall constitute the new
monthly rent hereunder, but in no event, shall any such new monthly rent be less
than the rent payable for the month immediately preceding the rent adjustment.
 c. In the event the compilation and/or publication of the CPI shall be
transferred to any other governmental department or bureau or agency or shall be
discontinued, then the index most nearly the same as the CPI shall be used to make
such calculation. In the event that the Parties cannot agree on such alternative
index, then the matter shall be submitted for decision to the American Arbitration
Association in accordance with the then rules of
said Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.
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o      II. Market Rental Value Adjustment(s) (MRV)
 a. On (Fill in MRV Adjustment Date)(s):
 
 the Base Rent shall be adjusted to the Market Rental Value of the property as follows:-
 (1)
Four months prior to each Market Rental Value Adjustment Date
described above, the
Parties shall attempt to agree upon what the new MRV will be on the adjustment date. If agreement
cannot be reached within thirty days, then:
 (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker
to establish the new MRV within the next 30 days. Any associated costs will be split
equally between the Parties, or
 (b) Both Lessor and Lessee shall each immediately make a reasonable determination of the
MRV and submit such determination, in writing, to arbitration in accordance with the
following provisions:
 (i)
Within 15 days thereafter, Lessor and Lessee shall each select
an o appraiser or
o broker
(Consultant check one) of their choice to act as an arbitrator. The two arbitrators so
appointed shall immediately select a third mutually acceptable Consultant to act as a third
arbitrator.
 (ii) The 3 arbitrators shall within 30 days of the appointment of the third arbitrator reach a
decision as to what the actual MRV for the Promises is, and whether Lessors or Lessees submitted
MRV is the closest thereto. The decision of a majority of the arbitrators shall be binding on the
Parties. The submitted MRV which is determined to be the closest to the actual MRV shall thereafter
be used by the Parties.
 (iii) if either of the Parties fails to appoint an arbitrator within the specified 15 days, the
arbitrator timely appointed by one of them shall reach a decision on his or her own, and said
decision shall be binding on the Parties.
 (iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is not
selected, i.e., the one that is NOT the closest to the actual MRV.
 2) Notwithstanding the foregoing, the new MRV shall not be less than the rent payable
for the month immediately preceding the rent adjustment.
 b. Upon the establishment of each New Market Rental Value:
 (1) the new MRV will become the new Base Rent for the purpose of calculating any
further Adjustments, and -
 (2) the first month of each Market Rental Value term shall become the new Base Month
for the purpose of calculating any further Adjustments.
 þ III. Fixed Rental Adjustment(s) (FRA)
  On (Fill in FRA Adjustment Date(s)):
    
    The New Base Rent shall be:1st anvsy of Commencement Date
    
    $
    17,385.002nd  
    
    $
    17,993.003rd  
    
    $
    18,623.004th  
    
    $
    19,275.005th  
    
    $
    19,950.00
 NOTICE:
  C. BROKERS FEE:
 The Brokers shall be paid a Brokerage Fee for each adjustment specified above in
accordance with paragraph 15 of the Lease.
 NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most current
form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800,
Los Angeles, CA 90017.
Telephone No. (213) 687-8777. Fax No.: (213) 687-8616.
 [Illegible][Illegible]INITIALS
    
    Initials© 2000  AIR COMMERCIAL REAL ESTATE ASSOCIATION
    
    FORM RA-3-8/00E
 PAGE 2 OF 2




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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
MULT-TENANT LEASE-GROSS
  Base Rent Abatement
 [Illegible]   [Illegible]




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OPTION(S) TO EXTEND
STANDARD LEASE ADDENDUM
 Dated
    
    October 27, 2008By and Between (Lessor)
    
    Lionshead Investments, LLC a California limited liability companyBy and Between (Lessee)
    
    Xenonics Holdings, Inc., a Nevada corporationAddress of Premises:
    
    3186 Lionshead Avenue,
Suite 100 Carlsbad, CA 92101
  A. OPTION(S) TO EXTEND:
     (iv) This
Option is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is in full possession of
the Premises and without the intention of thereafter assigning or subletting.
  o
I. Cost of Living Adjustment(s) (COLA)
 a.
On (Fill in COLA Dates):
the Base Rent shall be adjusted by the change, if any,
from the Base Month specified below, in the Consumer Price Index of
the Bureau of Labor Statistics
of the U.S. Department of Labor for (select one): o CPI W (Urban Wage Earners and Clerical Workers)
or o CPI U (All Urban Consumers), for (Fill in Urban Area):
 All
Items (1982 1984 - 100), herein referred to as CPI.
 b. The monthly rent payable in accordance with paragraph A.I.a. of this Addendum shall be
calculated as follows: the Base Rent set forth in paragraph 1.5 of the attached Lease, shall be
multiplied by a fraction the numerator of which shall be the CPI of the calendar month 2 months
prior to the month(s) specified in paragraph A.I.a. above during which the adjustment is to take
effect, and the denominator of which shall be the CPI of the
 [Illegible][Illegible]INITIALS
    
    INITIALS©2000  AIR COMMERCIAL REAL ESTATE ASSOCIATION
    
    FORM OE-3-8/00E
 PAGE 1 OF 3




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calendar month which is 2 months prior to (select one): o the first month of the term of this
Lease as set forth in paragraph 1.3 (Base Month) or o (Fill in Other Base Month):
 
 The sum so calculated shall constitute the new monthly rent hereunder, but in no event, shall any
such new monthly rent be less than the rent payable for the month immediately proceding the rent
adjustment.
 c. In the event the compilation and/or publication of the CPI shall be transferred to any other
governmental department or bureau or agency or
shall be discontinued, then the index most nearly the same as the CPI shall be used to make such
calculation. In the event that the Parties cannot agree on such alternative index, then the
matter shall be submitted for decision to the American Arbitration Association in accordance with
the then rules of said Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said-Arbitration shall be paid equally by the Parties.
 þ II. Market Rental Value Adjustment(s) (MRV)
     þ Consultant
     Upon the establishment of each New Market
Rental Value:
 1) the new MRV will become the-new Base Rent for the purpose of calculating any further
Adjustments, and
 2) the first-month of each Market Rental Value term shall become the new Base Month for the
purpose of calculating any further
Adjustments.
 o III. Fixed Rental Adjustment(s) (FRA)
  On (Fill in FRA Adjustment Date(s)):
    
    The New Base Rent shall be:
 B. NOTICE:
  [Illegible][Illegible]INITIALS
    
    INITIALS©2000  AIR COMMERCIAL REAL ESTATE ASSOCIATION
    
    FORM OE-3-8/00E
 PAGE 2 OF
3




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C. BROKERS FEE:
 The
Brokers shall be paid a Brokerage Fee for each adjustment specified above in accordance with
paragraph 15 of the Lease.
 NOTICE: These forms are often modified to meet changing requirements of law and industry needs.
Always write or call to make sure you are utilizing the most current form: AIR Commercial Real
Estate Association, 800 W 6th Street, Suite 800, Los Angeles, CA 90017. Telephone No. (213)
687-8777. Fax No.: (213) 687-8616.
 [Illegible][Illegible]INITIALS
    
    INITIALS©2000  AIR COMMERCIAL REAL ESTATE ASSOCIATION
    
    FORM OE-3-8/00E
 PAGE 3 OF 3




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3186 LIONSHEAD, SUITE 100, CARLSBAD, CA
 
 [Illegible][Illegible]Initials
    
    Initials
 Exhibit A




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EXHIBIT B
     
    
    All walls per plan shall be insulated with R-11 and finished with level 3 textured
finish. Lessee may select paint colors, one base color and one accent color.
    
    Existing exterior concrete walls in office area to be furred where necessary and drywalled. Finish shall be same as all other office area walls.
    
    The 4 restrooms per plan shall be finished with Kohler fixtures, sheet vinyl flooring
and FRP wainscot. Insta-Hot electric hot water heater shall be provided.
    
    All office area shall be 9 foot dropped ceiling with 2 x 4 Second Look white tiles
with 2 x 4 lights with prismatic lenses.
    
    Doors to be clear finish birch in metal frames as shown on the plan. Door hardware
shall be lever type Falcon or equal.
    
    Windows (sidelights) will be installed in six locations.
    
    Cabinets in Break Rooms (8) and Coffee Bar (4) shall be plastic laminate with
stainless steel sink. Lessee may select color/finish from standard Formica colors.
    
    Lessee shall select new flooring and base. All flooring shall be glue down commercial
grade carpet with top set vinyl base. Lessor will pay the cost of the standard flooring as
indicated on the sample board at the property, Lessee to pay for upgrades, if any.
    
    Fire Protection per code.
    
    Lessor shall design and install a new air conditioning system using multiple split
system units. Design shall be based on standard office loads.
    
    Interior of all exterior windows shall be washed and cleaned.
  
    
    All walls per plan shall be insulated with R-11 and finished with level 3 textured
finish. Lessee may select paint color.
    
    All production area shall be 10 foot dropped ceiling with 2 x 4 Second Look white tiles
with 2 x 4 lights with prismatic lenses.
    
    Double doors to Warehouse to be paint grade hardboard doors in metal frames as shown
on the plan. Door hardware shall be lever type Falcon or equal. [Illegible]
  [Illegible]




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
    
    All flooring shall be glue down VCT tiles with top set vinyl base. Lessee shall select
color.
    
    Fire Protection per code for light manufacturing.
    
    Lessor shall design and install a new air conditioning system using multiple split
system units. Design shall be based on standard office loads.
    
    Lessor will provide ten (10) 110 volt 20 amp dedicated circuits for production tools.
  
    
    Demising Partition shall be fired taped and painted to match concrete walls.
    
    All concrete walls shall be painted
    
    Lighting in the hi-bay shall be 400 watt MH with prismatic lenses.
    
    Existing exterior & roll-up doors shall remain unchanged.
    
    Concrete floor shall as-is.
  
    
    Data/Telco Wiring  Lessee shall be responsible for the design and construction.
    
    Compressed Air Piping  Lessee shall be responsible for the design and Lessor shall
construct the improvements.
    
    Monument Sign  Lessor shall construct the monument sign in accordance with the
project CC&Rs and City Code.
    
    The Lessee is solely responsible for delegating the funds and there will be no other
funds available to Lessee if they exceed the $20,000.00 allowance.
  
    
    Appliances at Break Room and Coffee Bar
    
    Tenant shall be responsible for any and all signage in accordance with local codes
and the CCRs.
    
    Tenant shall be responsible for all phone, data and security systems if any.
    
    Air compressor
    
    Window Coverings [Illegible]
  [Illegible]




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