Document:

Exhibit 10.82

 

LEASE AGREEMENT

BETWEEN

PROLOGIS LIMITED PARTNERSHIP I

AND

OCCAM NETWORKS, INC.

 

 

[California Net
Lease]

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT is
made this 14th day of March, 2008, between ProLogis Limited Partnership I, a
Delaware limited partnership (“Landlord”), and the Tenant named below.

 

	
  Tenant:

  	
  Occam Networks, Inc.,
  a Delaware corporation

  
	
   

  	
   

  
	
  Tenant’s Representative: 

  	
  Robert Howard-Anderson

  
	
  Address, and Telephone:

  	
  6868 Cortona Drive

  
	
   

  	
  Santa Barbara, CA  93117

  
	
   

  	
   

  
	
  Premises:

  	
  That portion of the
  Building, containing approximately 36,000 rentable square feet, as
  determined by Landlord, commonly known as 3185 Laurelview Court, Fremont,
  California 94538, as shown on Exhibit A.

  
	
   

  	
   

  
	
  Project:

  	
  Gateway Corporate
  Center

  
	
   

  	
   

  
	
  Building:

  	
  Building 3 (sba00403)

  
	
   

  	
  3185 Laurelview Court

  
	
   

  	
  Fremont, CA  94538  

  
	
   

  	
   

  
	
  Tenant’s Proportionate Share
  of Project:

  	
  

  7.630%

  
	
   

  	
   

  
	
  Tenant’s Proportionate Share of
  Building:

  	
  

  100.000%

  
	
   

  	
   

  
	
  Lease Term:

  	
  Beginning on the
  Commencement Date and ending on the last day of the 86th full calendar
  month thereafter, subject to the provisions of Addendum 4, and subject
  further to any termination rights as granted under this Lease with respect to
  an event of casualty or condemnation.

  
	
   

  	
   

  
	
  Commencement Date:

  	
  June 1, 2008

  
	
   

  	
   

  
	
  Initial Monthly Base Rent:

  	
  See Addendum 1

  
	
   

  	
   

  
	
  Initial Estimated Monthly
  Operating Expense Payments:

   (estimates only and subject to adjustment to
  actual costs and expenses according to the provisions of this Lease)

  	
  1.  Common Area Charges:                                                                           $2,776.62

   

  2.  Taxes:                                                                                                                                                                       $5,329.21

   

  3.  Insurance:                                                                                                                                                          $535.00

  
	
   

  	
   

  
	
  Initial Estimated Monthly
  Operating Expense Payments:

  	
   

  $8,640.83

  
	
   

  	
   

  
	
  Initial Monthly Base Rent and
  Operating Expense Payments:

  	
   

  $8,640.83

  
	
   

  	
   

  
	
  Security Deposit:

  	
  Letter of Credit
  in the amount of $300,000.00 in the form attached hereto in Addendum 5

  
	
   

  	
   

  
	
  Broker:

  	
  Colliers Parrish –
  Terry Bell, Joe Elliot, & George Quinn

  
	
   

  	
   

  
	
  Addenda:

  	
  1. Base Rent
  Adjustments  2. HVAC Maintenance
  Contract  3. Move Out Conditions  4. Renewal Option (Baseball Arbitration)  5. Letter of Credit for Security
  Deposit  6. Early Access for
  Fixturizaion  7. Storage and Use of
  Permitted Hazardous Materials

  
	
   

  	
   

  
	
  Exhibits:

  	
  A. Site Plan  B. Floor Plan  B-1. Demo Plan  B-2. Conceptual Floor Plan  C. Sign Criteria  D. Form of Letter of Credit

  

 

1.                                       Granting Clause. 
In consideration of the obligation of Tenant to pay rent as herein
provided and in consideration of the other terms, covenants, and conditions
hereof, Landlord leases to Tenant, and Tenant takes from Landlord, the
Premises, to have and to hold for the Lease Term, subject to the terms,
covenants and conditions of this Lease.

 

2.                                       Acceptance of Premises. 
Tenant shall accept the Premises in its condition as of the Commencement
Date, subject to all applicable laws, ordinances, regulations, covenants and
restrictions.  Landlord has made no
representation or warranty as to the suitability of the Premises for the
conduct of Tenant’s business, and Tenant waives any implied warranty that the
Premises are suitable for Tenant’s intended purposes.  Except as provided in Paragraph 10, and as
otherwise expressly set forth herein, in no event shall Landlord have any
obligation 

 

1

 

for any defects in the
Premises or any limitation on its use. 
The taking of possession of the Premises shall be conclusive evidence
that Tenant accepts the Premises and that the Premises were in good condition
at the time possession was taken except for items that are Landlord’s
responsibility (or for which Landlord has provided a representation or
warranty) under this paragraph and/or Paragraph 10, as well as any punchlist
items agreed to in writing by Landlord and Tenant; provided, however, that
Tenant’s acceptance of the Premises shall not be deemed a waiver of Landlord’s
delivery condition obligations hereunder. 
Landlord shall deliver the Premises and related parking areas in good
working order as of the Commencement Date. 
Landlord hereby represents that as of the date hereof Landlord has not
received any notice of non-compliance of any Legal Requirements.

 

3.                                       Use. 
The Premises shall be used only for the purpose of general office,
administration, research and development, light manufacturing, assembly,
receiving, storing, shipping and selling (but limited to wholesale sales)
products, materials and merchandise made and/or distributed by Tenant and for
such other lawful purposes as may be incidental thereto.  Tenant shall not conduct or give notice of
any auction, liquidation, or going out of business sale on the Premises.  Tenant will use the Premises in a careful,
safe and proper manner and will not commit waste, overload the floor or
structure of the Premises or subject the Premises to use that would damage the
Premises.  Tenant shall not permit any
objectionable or unpleasant odors, smoke, dust, gas, noise, or vibrations to
emanate from the Premises, or take any other action that would constitute a
nuisance or would disturb, unreasonably interfere with, or endanger Landlord or
any tenants of the Project.  Outside
storage, including without limitation, storage of trucks and other vehicles, is
prohibited without Landlord’s prior written consent.  Notwithstanding the
foregoing to the contrary, Tenant shall have the right to park operable
vehicles overnight at the truck loading docks and parking areas for the
Premises.  This provision also shall
supersede the terms of Paragraphs 7 and 12 of the Rules and Regulations
attached to the Lease to the extent of any conflict with such rule.  Subject to Landlord’s representation and warranty in
Paragraph 2 hereof, Tenant, at its sole expense, shall use and occupy the
Premises in compliance with all laws, including, without limitation, the
Americans With Disabilities Act, orders, judgments, ordinances, regulations,
codes, directives, permits, licenses, covenants and restrictions now or
hereafter applicable to the Premises (collectively, “Legal Requirements”).  The Premises shall not be used as a place of
public accommodation under the Americans With Disabilities Act or similar state
statutes or local ordinances or any regulations promulgated thereunder, all as
may be amended from time to time.  Tenant
shall, at its expense, make any alterations or modifications, within or without
the Premises, that are required by Legal Requirements related to Tenant’s
particular use of the Premises.  Tenant
will not use or permit the Premises to be used for any purpose or in any manner
that would void Tenant’s or Landlord’s insurance or increase the insurance
risk.  If any increase in the cost of any
insurance on the Premises or the Project is caused by Tenant’s use or
occupation of the Premises beyond that cost that would normally be incurred
with respect to a tenant engaging in the uses permitted herein, or because
Tenant vacates the Premises, then Tenant shall pay the amount of such increase
to Landlord.  Any occupation of the
Premises by Tenant prior to the Commencement Date shall be subject to the terms
and conditions of this Lease, other than any obligation of Tenant to pay Base
Rent or Operating Expenses as defined below.

 

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

 

Landlord shall make such
modifications as may be required by order or directive of applicable
governmental authority in order to bring the Building or the Premises into
compliance with applicable laws as of the Commencement Date without cost or
expense to Tenant and without including such cost or expense as an Operating
Expense.  Any modifications made by
Landlord that are required by applicable laws or regulations that become
effective after the Commencement Date or that are required as a result of
Tenant’s specific use of the Premises shall be chargeable to Tenant in
accordance with the provisions of this Lease.

 

4.                                       Base Rent. 
Tenant shall pay Base Rent in the amount set forth above.  The third month’s Base Rent, the Security
Deposit, and the first monthly installment of estimated Operating Expenses (as
hereafter defined) shall be due and payable on the date hereof, and Tenant
promises to pay to Landlord in advance, without demand, deduction or set-off,
monthly installments of Base Rent on or before the first day of each calendar
month succeeding the Commencement Date. 
Payments of Base Rent for any fractional calendar month shall be
prorated.  All payments required to be
made by Tenant to Landlord hereunder (or to such other party as Landlord may
from time to time specify in writing) shall be made to such place, within the
continental United States, as Landlord may from time to time designate to
Tenant in writing.  Except as otherwise
specifically set forth herein, the obligation of Tenant to pay Base Rent and
other sums to Landlord and the obligations of Landlord under this Lease are
independent obligations.  Tenant shall
have no right at any time to abate, reduce, or set-off any rent due hereunder
except as may be expressly provided in this Lease.  If Tenant is delinquent in any monthly installment
of Base Rent or of estimated Operating Expenses for more than 5 days and after
notice as provided below, Tenant shall pay to Landlord on demand a late charge
equal to 5 percent of such delinquent sum. 
Tenant shall not be obligated to pay the late charge until Landlord has
given Tenant 5 days written notice of the delinquent payment (which may be
given at any time during the delinquency); provided, however, that such notice
shall not be required more than once in any 12-month period or twice over the
Lease Term.  The provision for such late
charge shall be in addition to all of Landlord’s other rights and remedies
hereunder or at law and shall not be construed as a penalty.

 

5.                                       Security Deposit. 
The Security Deposit shall be held by Landlord as security for the
performance of Tenant’s obligations under this Lease.  The Security Deposit is not an advance rental
deposit or a measure of Landlord’s damages in case of Tenant’s default.  Upon each occurrence of an Event of Default
(hereinafter defined), Landlord may use all or part of the Security Deposit to
pay delinquent payments due under this Lease, and the cost of any damage,
injury, expense or liability caused by such Event of Default, without prejudice
to any other remedy 

 

2

 

provided herein or
provided by law.  Tenant shall pay
Landlord no later than ten (10) days following Landlord’s demand the
amount that will restore the Security Deposit to its original amount.  Landlord’s obligation respecting the Security
Deposit is that of a debtor, not a trustee; no interest shall accrue
thereon.  The Security Deposit shall be
the property of Landlord, but shall be paid to Tenant when Tenant’s obligations
under this Lease have been completely fulfilled.  Landlord shall be released from any
obligation with respect to the Security Deposit upon transfer of this Lease,
the Security Deposit (or so much thereof as remains) and the Premises to a
person or entity assuming Landlord’s obligations under this Paragraph 5.

 

6.                                       Operating Expense Payments. 
During each month of the Lease Term, on the same date that Base Rent is
due, Tenant shall pay Landlord an amount equal to 1/12 of the annual cost, as
estimated by Landlord from time to time, of Tenant’s Proportionate Share
(hereinafter defined) of Operating Expenses for the Project.  Payments thereof for any fractional calendar
month shall be prorated.  The term “Operating
Expenses” means all costs and expenses incurred by Landlord with respect to the
ownership, maintenance, and operation of the Project including, but not limited
to costs of: Taxes (hereinafter defined) and fees payable to tax consultants
and attorneys for consultation and contesting taxes; insurance; utilities;
maintenance, repair and replacement of all portions of the Project, including
without limitation, paving and parking areas, roads, roofs (including the roof
membrane), alleys, and driveways, mowing, landscaping, exterior painting,
utility lines, heating, ventilation and air conditioning systems, lighting,
electrical systems and other mechanical and building systems; amounts paid to
contractors and subcontractors for work or services performed in connection
with any of the foregoing; charges or assessments of any association to which
the Project is subject; property management fees payable to a property manager,
including any affiliate of Landlord, not to exceed 3% of gross receipts;
security services, if any; trash collection, sweeping and removal; and
additions or alterations made by Landlord to the Project or the Building in
order to comply with Legal Requirements enacted after the Commencement Date of
this Lease (other than those expressly required herein to be made by Tenant),
provided that the cost of additions or alterations that may be capitalized for
federal income tax purposes in accordance with generally accepted accounting
principles (including, without limitation all capital repairs and replacements
herein) shall be amortized on a straight line basis over a period equal to the
useful life thereof in accordance with generally accepted accounting
principles.  Operating Expenses do not
include costs, expenses, depreciation or amortization for capital repairs and
capital replacements required to be made by Landlord under Paragraph 10 of this
Lease, debt service under mortgages or ground rent under ground leases, or
costs of restoration following any casualty or condemnation, leasing
commissions, or the costs of renovating space for tenants.  Further, Operating Expenses shall not mean or
include: (i) costs incurred in connection with the construction or
remodeling of the Project or any other improvements now or hereafter located
thereon, or correction of defects in design or construction; (ii) interest,
principal, or other payments on account of any indebtedness that is secured by
any encumbrance on any part of the Project, or rental or other payments under
any ground lease, or any payments in the nature of returns on or of equity of
any kind; (iii) costs of selling, syndicating, financing, mortgaging or
hypothecating any part of or interest in the Project; (iv) taxes on the
income of Landlord or Landlord’s franchise taxes, inheritance, gift, transfer
estate or state taxes (unless any of said taxes are hereafter instituted by
applicable taxing authorities in substitution for ad valorem real property
taxes); (v) depreciation, reserves of any kind, including replacement
reserves and reserves for bad debt or lost rent, or any other charge not
involving the payment of money to third parties; (vi) Landlord’s overhead
costs, including equipment, supplies, accounting and legal fees, rent and other
occupancy costs or any other costs associated with the operation or internal
organization and function of Landlord as a business entity (but this provision
does not prevent the payment of a management fee to Landlord as provided in
this Paragraph 6); (vii) fees or other costs for professional services
provided by space planners, architects, engineers, and other similar
professional consultants, real estate commissions, and marketing and
advertising expenses; (viii) costs of defending or prosecuting litigation
with any party, unless a favorable judgment would reduce or avoid an increase
in Operating Expenses; (ix) costs incurred as a result of Landlord’s
violation of any lease, contract, law or ordinance, including fines and
penalties; (x) late charges, interest or penalties of any kind for late or
other improper payment of any public or private obligation, including ad
valorem taxes; (xi) costs relating to the presence of Hazardous Materials
or of correcting any other conditions in order to comply with any environmental
law or ordinance (but this exclusion shall not constitute a release by Landlord
of Tenant for any such costs for which Tenant is liable pursuant to Paragraph
30 of this Lease); (xii) costs for which Landlord is reimbursed from any
other source; (xiii) costs related to any building or land not included in
the Project, including any allocation of costs incurred on a shared basis, such
as centralized accounting costs, unless the allocation is made on a reasonable
and consistent basis that fairly reflects the share of costs actually
attributable to the Project; (xiv) the part of any costs or other sum paid
to any affiliate of Landlord that may exceed the fair market price or cost
generally payable for substantially similar goods or services in the area of
the Project; (xv) increases in insurance costs caused by the activities of
any other occupant of the Project, insurance deductibles in excess of $10,000 and
co-insurance payments; (xvi) costs occasioned by the act, omission or violation
of any law by Landlord, any other occupant of the Project, or their respective
agents, employees or contractors; (xvii) costs occasioned by casualties or by
the exercise of the power of eminent domain; (xviii) costs of structural
repairs to the Project; (xiv) costs which could properly be capitalized under
generally accepted accounting principles, except to the extent amortized in the
manner provided herein; (xx) costs of capital improvements made for
tenants other than Tenant; or (xxi) costs incurred as a result of any
violation of Legal Requirements by other tenants within the Project.

 

Landlord shall deliver to Tenant within 90 days
following the final day of the calendar year the Operating Expense
Reconciliation Invoice (“Invoice”) and an Operating Expense Summary Report
listing the Operating Expenses for the prior year of the Lease Term (“Report”).  In the event Tenant has a reasonable belief
that the Invoice and Report contain an error to the detriment of Tenant,
Tenant, at its sole cost and expense, shall have the right, during reasonable
business hours and not more than once per year, to examine in the Landlord’s
local market office property invoices evidencing such costs and expenses as
provided for in the Invoice and Report which Tenant believes to be in
error.  Landlord agrees to make the
property invoices, a copier and conference room available to Tenant for a
period not to exceed one week to examine the property invoices. In the event
Tenant desires to exercise the foregoing right, Tenant shall deliver written
notice of Tenant’s intent to review the property invoices, and shall identify
the item(s) contained in the Invoice and Report believed to be in error,
no later than ninety (90) days following Tenant’s receipt of the Invoice and
Report.  Time is of the essence with
regards to the 

 

3

 

delivery of such notice.  Upon Landlord’s receipt of Tenant’s notice,
Landlord and Tenant shall work in good faith to schedule a time and date for
such property invoice examination which shall be acceptable to both
parties.  In the event that Tenant
accurately determines that the Invoice and Report contain an error to the
detriment of Tenant, Landlord shall immediately provide a revised Invoice and
Report to Tenant.  If Tenant has already
paid the Invoice, Landlord will provide a credit against Tenant’s obligations
to pay Base Rent the amount overpaid by Tenant. 
Tenant shall keep any information gained from such examination
confidential and shall not disclose it to any other party, except as required
by law.  If requested by Landlord, Tenant
shall be required to sign a confidentiality agreement as a condition of
Landlord making Landlord’s invoices available for inspection.  If Tenant’s total payments of Operating
Expenses for any year are less than Tenant’s Proportionate Share of actual
Operating Expenses for such year, then Tenant shall pay the difference to
Landlord within 30 days after demand, and if more, then Landlord shall retain
such excess and credit it against Tenant’s next payments and shall refund such
amounts promptly upon the termination of this Lease.  For purposes of calculating Tenant’s
Proportionate Share of Operating Expenses, a year shall mean a calendar year
except the first year, which shall begin on the Commencement Date, and the last
year, which shall end on the expiration of this Lease.  With respect to Operating Expenses which
Landlord reasonably allocates to the entire Project, Tenant’s “Proportionate
Share” shall be the percentage set forth on the first page of this Lease
as Tenant’s Proportionate Share of the Project as reasonably adjusted by
Landlord in the future for changes in the physical size of the Premises or the
Project; and, with respect to Operating Expenses which Landlord reasonably
allocates only to the Building, Tenant’s “Proportionate Share” shall be the
percentage set forth on the first page of this Lease as Tenant’s
Proportionate Share of the Building as reasonably adjusted by Landlord in the
future for changes in the physical size of the Premises or the Building.  Landlord may equitably increase Tenant’s
Proportionate Share for any item of expense or cost reimbursable by Tenant that
relates to a repair, replacement, or service that benefits only the Premises or
only a portion of the Project or Building that includes the Premises or that
varies with occupancy or use.  The
estimated Operating Expenses for the Premises set forth on the first page of
this Lease are only estimates, and Landlord makes no guaranty or warranty that
such estimates will be accurate.

 

7.                                       Utilities. 
Tenant shall pay for all water, gas, electricity, heat, light, power,
telephone, sewer, sprinkler services, refuse and trash collection, and other
utilities and services used on the Premises, all maintenance charges for
utilities, and any storm sewer charges or other similar charges for utilities
imposed by any governmental entity or utility provider, together with any
taxes, penalties, surcharges or the like pertaining to Tenant’s use of the
Premises.  Landlord may cause at Tenant’s
expense any utilities to be separately metered or charged directly to Tenant by
the provider in the event that Tenant’s usage of such utilities is determined
by Landlord, in Landlord’s reasonable and non-discriminatory opinion, to be
excessive.  Tenant shall pay its share of
all charges for jointly metered utilities based upon consumption, as reasonably
determined by Landlord.  No interruption
or failure of utilities shall result in the termination of this Lease or the
abatement of rent.  Tenant agrees to
limit use of water and sewer for normal restroom and kitchen uses.

 

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

 

8.                                       Taxes. 
Landlord shall pay all taxes, assessments and governmental charges
(collectively referred to as “Taxes”) that accrue against the Project during
the Lease Term, which shall be included as part of the Operating Expenses
charged to Tenant.  Landlord may contest
by appropriate legal proceedings the amount, validity, or application of any
Taxes or liens thereof.  All capital
levies or other taxes assessed or imposed on Landlord upon the rents payable to
Landlord under this Lease and any franchise tax, any excise, transaction, sales
or privilege tax, assessment, levy or charge measured by or based, in whole or
in part, upon such rents from the Premises and/or the Project or any portion
thereof shall be paid by Tenant to Landlord monthly in estimated installments
or upon demand, at the option of Landlord, as additional rent; provided,
however, in no event shall Tenant be liable for any net income, inheritance or
estate taxes imposed on Landlord unless such net income taxes are in
substitution for any Taxes payable hereunder. 
If any such tax or excise is levied or assessed directly against Tenant,
then Tenant shall be responsible for and shall pay the same at such times and
in such manner as the taxing authority shall require.  Tenant shall be liable for all taxes levied
or assessed against any personal property or fixtures placed in the Premises,
whether levied or assessed against Landlord or Tenant.

 

Notwithstanding anything
contained herein to the contrary, in the event that Landlord pays any special
assessment or similar charge in a lump sum payment when otherwise Landlord, at
its election, could have paid such assessment or charge in installments as
deemed appropriate by the appropriate governmental authority, Tenant’s
Proportionate Share of such special assessments shall be determined as if
Landlord had elected to pay such assessment in installments, and Tenant shall
be responsible for only those installments or parts of installments which would
be attributable to the Lease Term or any extensions thereof.  All parties hereby agree that in no event
shall this provision apply to Landlord’s real property taxes.

 

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

 

4

 

Tenant, at its expense,
shall maintain during the Lease Term: all risk property insurance covering the
full replacement cost of all property and improvements installed or placed in
the Premises by Tenant at Tenant’s expense, including, without limitation,
Tenant’s Trade Fixtures (as hereinafter defined in Paragraph 12 of this Lease)
required to be removed upon surrender of the Premises; worker’s compensation
insurance with no less than the minimum limits required by law; employer’s
liability insurance with such limits as required by law; and commercial
liability insurance, with a minimum limit of $1,000,000 per occurrence and a
minimum umbrella limit of $1,000,000, for a total minimum combined general
liability and umbrella limit of $2,000,000 (together with such additional
umbrella coverage as Landlord may reasonably require) for property damage,
personal injuries, or deaths of persons occurring in or about the
Premises.  The commercial liability
policies shall name Landlord as an additional insured, insure on an occurrence
and not a claims-made basis, be issued by insurance companies which are
reasonably acceptable to Landlord, not be cancelable unless 30 days’ prior
written notice shall have been given to Landlord, contain a hostile fire
endorsement and a contractual liability endorsement and provide primary
coverage to Landlord (any policy issued to Landlord providing duplicate or
similar coverage shall be deemed excess over Tenant’s policies).  Such policies or certificates thereof shall
be delivered to Landlord by Tenant upon commencement of the Lease Term and upon
each renewal of said insurance.

 

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

 

10.                                 Landlord’s Repairs. 
Landlord shall maintain, at its expense, the structural soundness of the
roof, foundation, and exterior walls of the Building in good repair, reasonable
wear and tear and uninsured losses and damages caused by Tenant, its agents and
contractors excluded.  The term “walls”
as used in this Paragraph 10 shall not include windows, glass or plate glass,
doors or overhead doors, special store fronts, dock bumpers, dock plates or
levelers, or office entries.  Tenant
shall promptly give Landlord written notice of any repair required by Landlord
pursuant to this Paragraph 10, after which Landlord shall have a
reasonable opportunity to repair.

 

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

 

11.                                 Tenant’s Repairs. 
Landlord, at Tenant’s expense as provided in Paragraph 6, shall maintain
in good repair and condition the roof membrane, interior load-bearing walls,
underground and subsurface utility piping, parking areas and other common areas
of the Building and the Project, including, but not limited to driveways,
alleys, landscape and grounds surrounding the Premises.  Subject to Landlord’s obligation in
Paragraphs 2 and 10 and subject to Paragraphs 9 and 15, Tenant, at its expense,
shall repair, replace and maintain in good condition all portions of the
Premises and all areas, improvements and systems exclusively serving the
Premises including, without limitation, dock and loading areas, truck doors,
plumbing, water and sewer lines up to points of common connection, fire
sprinklers and fire protection systems, entries, doors, ceilings, windows,
interior walls, and the interior side of demising walls, and heating,
ventilation and air conditioning systems. 
Such repair and replacements include capital expenditures and repairs
whose benefit may extend beyond the Term, and such capital expenditures and
repairs shall be amortized in accordance with the Formula (defined hereafter)
over the remainder of the Lease Term, without regard to any extension or
renewal option not then exercised.  The “Formula”
shall mean that number, the numerator of which shall be the number of months of
the Lease Term remaining after the replacement of any such capital
expenditures, and the denominator of which shall be the maximum amortization
period (in months) allowable for determining depreciation of such capital
expenditures under generally accepted accounting principles.  Landlord shall pay for such capital
expenditures and repairs and Tenant shall reimburse Landlord for its amortized
share of same (determined as hereinabove set forth) in equal monthly
installments in the same manner as the payment by Tenant to Landlord of the
Operating Expenses.  In the event Tenant
extends the Lease Term either by way of an option or negotiated extension, such
reimbursement by Tenant shall continue as provided above until such
amortization period has expired. 
Heating, ventilation and air conditioning systems and other mechanical
and building systems serving the Premises shall be maintained at Tenant’s
expense pursuant to maintenance service contracts entered into by Tenant or, if
not done by Tenant, by Landlord.  The
scope of services and contractors under such maintenance contracts shall be
reasonably approved by Landlord.  If
Tenant fails to perform any repair or replacement for which it is responsible
within applicable notice and cure periods, Landlord may perform such work and
be reimbursed by Tenant within 10 days after demand therefor.  Subject to Paragraphs 9 and 15, Tenant shall 

 

5

 

bear the full cost of any
repair or replacement to any part of the Building or Project that results from
damage caused by Tenant, its agents, contractors, or invitees and any repair
that benefits only the Premises.

 

Landlord agrees to
enforce all contractor’s or subcontractor’s guarantees or warranties, if any,
which relate to any construction work concerning which Tenant shall have the
obligation to make repairs to Tenant’s benefit.

 

12.                                 Tenant-Made Alterations and Trade
Fixtures.  Any
alterations, additions, or improvements made by
or on behalf of Tenant to the Premises (“Tenant-Made Alterations”),
which are interior, non-structural Tenant-Made Alterations, the cost of which
exceeds $10,000 in each instance, shall be subject to Landlord’s prior written
consent, not to be unreasonably withheld, delayed or conditioned provided that such alteration does not
materially affect the structure or the roof of the Building, modify the
exterior of the Building, or modify the utility or mechanical systems of the
Project.  Tenant
shall have the right to perform interior, non-structural Tenant-Made
Alterations, the cost of which does not exceed $10,000 in each instance,
without obtaining Landlord’s prior written consent, by providing a written
notice of such Tenant-Made Alterations to Landlord containing sufficient and complete information
regarding such Tenant-Made Alterations, provided that such alteration does not
materially affect the structure or the roof of the Building, or modify the
exterior of the Building, or modify the utility or mechanical systems of the
Building.  Tenant shall cause, at its expense, all
Tenant-Made Alterations to comply with insurance requirements and with Legal
Requirements and shall construct at its expense any alteration or modification
required by Legal Requirements as a result of any Tenant-Made Alterations.  All Tenant-Made Alterations shall be
constructed in a good and workmanlike manner by contractors reasonably
acceptable to Landlord and only materials of equal or superior quality to those
currently in the Premises shall be used. 
All plans and specifications for any Tenant-Made Alterations shall be
submitted to Landlord for its approval. 
Landlord may monitor construction of the Tenant-Made Alterations.  Tenant shall reimburse Landlord for its
reasonable, third-party, out-of-pocket costs in reviewing plans and
specifications and in monitoring construction except with respect to the
Initial Tenant-Made Alterations. 
Landlord’s right to review plans and specifications and to monitor
construction shall be solely for its own benefit, and Landlord shall have no
duty to see that such plans and specifications or construction comply with
applicable laws, codes, rules and regulations.  Tenant shall provide Landlord with the
identities and mailing addresses of all persons performing work or supplying
materials, prior to beginning such construction, and Landlord may post on and
about the Premises notices of non-responsibility pursuant to applicable
law.  Tenant shall make other
arrangements satisfactory to Landlord to assure payment for the completion of
all work free and clear of liens and shall provide certificates of insurance
for worker’s compensation and other coverage in amounts and from an insurance
company satisfactory to Landlord protecting Landlord against liability for
personal injury or property damage during construction.  Upon completion of any Tenant-Made
Alterations, Tenant shall deliver to Landlord sworn statements setting forth
the names of all contractors and subcontractors who did work on the Tenant-Made
Alterations and final lien waivers from all such contractors and
subcontractors.  Upon surrender of the
Premises, all Tenant-Made Alterations and any leasehold improvements
constructed by Landlord or Tenant shall remain on the Premises as Landlord’s
property, except to the extent Landlord requires removal at Tenant’s expense of
any such items or Landlord and Tenant have otherwise agreed in writing in
connection with Landlord’s consent to any Tenant-Made Alterations.  Upon Tenant’s request, Landlord shall provide
Tenant, at the time of Tenant’s request for approval of Tenant-Made
Alterations, a list of which Tenant-Made Alterations Landlord will require
Tenant to remove upon surrender of the Premises.  Tenant shall repair any damage caused by such
removal.

 

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

 

Notwithstanding
anything contained herein to the contrary, Landlord shall contribute up to a
maximum amount of $900,000 (the “TI Allowance”), toward the Initial
Tenant-Made Alterations (as hereinafter defined) to the Premises, which such
payment shall be made by Landlord to Tenant within 30 days following (i) completion
of the Initial Tenant-Made Alterations, (ii) Landlord’s receipt of Tenant’s
invoice substantiating the costs related thereto, (iii) Landlord’s receipt
of final lien waivers from all contractors and subcontractors who did work on
the Initial Tenant-Made Alterations, and (iv) Landlord’s receipt of a copy
of the final permit approved by the applicable governing authority to the
extent required for such Initial Tenant-Made Alterations.  Landlord shall be under no obligation to pay
for any Initial Tenant-Made Alterations to the Premises in excess of the TI
Allowance.  Further, such TI Allowance
shall only be available for Tenant’s use through December 31, 2008,
and Tenant hereby waives any and all rights to any unused portion of the TI
Allowance remaining as of January 1, 2009.

 

For purposes of
this Lease, the “Initial Tenant-Made Alterations” shall be deemed to mean the
following and shall be performed in accordance with the provisions governing
Tenant-Made Alterations as set forth above, and therefore, shall be subject to
Landlord’s prior written approval of the plans, specifications, finishes, and
contractors related thereto:

 

1.               Demolition of
existing floor plan as shown in Exhibit B-1.

 

2.               Design and
build-out of conceptual floor plan as shown in Exhibit B-1.

 

Notwithstanding anything
to the contrary above, Initial Tenant-Made Alterations shall not be subject to
restoration upon expiration or early termination of the Lease.

 

6

 

13.                                 Signs. 
Tenant shall not make any changes to the exterior of the Premises,
install any exterior lights, decorations, balloons, flags, pennants, banners,
or painting, or erect or install any signs, windows or door lettering,
placards, decorations, or advertising media of any type which can be viewed
from the exterior of the Premises, without Landlord’s prior written consent,
which consent shall not be unreasonably withheld or delayed.  Upon surrender or vacation of the Premises,
Tenant shall have removed all signs and repair, paint, and/or replace the
building facia surface to which its signs are attached.  Tenant shall obtain all applicable
governmental permits and approvals for sign and exterior treatments.  All signs, decorations, advertising media,
blinds, draperies and other window treatment or bars or other security
installations visible from outside the Premises shall be subject to Landlord’s
approval and conform in all respects to Landlord’s requirements.  Landlord’s sign criteria are as set forth in Exhibit C
attached hereto.

 

14.                                 Parking. 
Tenant shall be entitled to park in common with other tenants of the
Project in those areas designated for nonreserved parking in not less than its
pro rata share of the total parking spaces for the Project.  In addition Tenant shall have the right, at
Tenant’s sole cost, to identify two parking spaces at the entrance of the
Premises as “Visitor” parking spaces. 
Landlord may allocate parking spaces among Tenant and other tenants in
the Project if Landlord determines that such parking facilities are becoming
crowded.  Landlord shall not be
responsible for enforcing Tenant’s parking rights against any third parties,
but upon Tenants request, shall request that other tenants that are using more
than their pro rata share of spaces refrain from doing so.

 

15.                                 Restoration. 
If at any time during the Lease Term the Premises are damaged by a fire
or other casualty, Landlord shall notify Tenant within 45 days after such
damage as to the amount of time Landlord reasonably estimates it will take to
restore the Premises.  If the restoration
time is estimated to exceed 6 months, either Landlord or Tenant may elect to
terminate this Lease upon notice to the other party given no later than 30 days
after Landlord’s notice.  If neither
party elects to terminate this Lease or if Landlord estimates that restoration
will take 6 months or less, then, subject to receipt of sufficient insurance
proceeds, Landlord shall promptly restore the Premises including Initial
Tenant-Made Alterations, but excluding Trade Fixtures or Tenant’s personal
property, subject to delays arising from the collection of insurance proceeds
or from Force Majeure events.  Tenant at
Tenant’s expense shall promptly perform, subject to delays arising from the
collection of insurance proceeds, or from Force Majeure events, all repairs or
restoration not required to be done by Landlord and shall promptly re-enter the
Premises and commence doing business in accordance with this Lease.  Notwithstanding the foregoing, either party
may terminate this Lease if the Premises are damaged during the last year of
the Lease Term and Landlord reasonably estimates that it will take more than
one month to repair such damage.  Base
Rent and Operating Expenses shall be abated for the period of repair and
restoration in the proportion which the area of the Premises, if any, which is
not usable by Tenant bears to the total area of the Premises.  Such abatement shall be the sole remedy of
Tenant, and except as provided herein, Tenant waives any right to terminate the
Lease by reason of damage or casualty loss.

 

Notwithstanding the terms
and conditions of this Paragraph 15, if the Premises are not restored by Landlord
within the later of 6 months of the date of casualty (subject to Force Majeure
and Tenant-caused delays) or the date Landlord estimated completion of the
restoration as described above (subject to Force Majeure and Tenant-caused
delays), Tenant may terminate the Lease upon thirty (30) days written notice to
Landlord; provided, however, if Landlord completes the restoration in said
thirty (30) day notice period, Tenant’s notice of termination shall be null and
void and this Lease shall continue in full force and effect.

 

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

 

17.                                 Assignment and Subletting. 
Without Landlord’s prior written consent, which Landlord shall not
unreasonably withhold, condition or delay, Tenant shall not assign this Lease
or sublease the Premises or any part thereof or mortgage, pledge, or
hypothecate its leasehold interest or grant any concession or license within
the Premises and any attempt to do any of the foregoing shall be void and of no
effect.  For purposes of this paragraph,
a transfer of 50% or more of the ownership interests controlling Tenant in one
or more related transactions (excluding public offering) shall be deemed an
assignment of this Lease unless such ownership interests are publicly traded or
become publicly traded.  Notwithstanding
the above, Tenant may assign or sublet the Premises, or any part thereof, to
any entity controlling Tenant, controlled by Tenant or under common control
with Tenant (a “Tenant Affiliate”), without the prior written consent of
Landlord.  Tenant shall reimburse
Landlord for all of Landlord’s reasonable third party out-of-pocket expenses in
connection with any assignment or sublease, not to exceed $500 per event of
assignment or subletting.  Upon Landlord’s
receipt of Tenant’s written notice of a desire to assign or sublet the
Premises, or any part thereof (other than to a Tenant Affiliate or pursuant to
a Permitted Transfer), Landlord may, by giving written notice to Tenant within
10 days after receipt of Tenant’s notice, (i) consent to such proposed
assignment or sublease, (ii) refuse such consent, or (iii) terminate
this Lease with respect to the space described in Tenant’s notice, as of the
date specified in Tenant’s notice for the commencement of the proposed
assignment or 

 

7

 

sublease  provided
the sublease is for at least 75% of the Premises and for at least 90% of the
remaining term of the Lease.  If
Landlord so terminates the Lease, Landlord may enter into a lease directly with
the proposed sublessee or assignee. 
Tenant may withdraw its notice to sublease or assign by notifying
Landlord within 10 days after Landlord has given Tenant notice of such
termination, in which case the Lease shall not terminate but shall continue.

 

Notwithstanding anything contained herein to the
contrary, provided no Event of Default has occurred and is continuing under
this Lease beyond any applicable notice and cure period, upon 10 days prior written
notice to Landlord, Tenant may, without Landlord’s prior written consent and
without being subject to any of the terms of this Section 17, transfer 50%
or more of its ownership interests or assign this Lease to an entity into which
Tenant is merged or consolidated or to an entity to which substantially all of
Tenant’s assets are transferred (collectively, a “Permitted Transfer”),
provided (x) such merger, consolidation, or transfer of assets is for a
good business purpose and not principally for the purpose of transferring
Tenant’s leasehold estate, and (y) the assignee or successor entity has a
net worth at least equal to the net worth of Tenant immediately prior to such
merger, consolidation, or transfer.

 

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

 

Notwithstanding any
assignment or subletting, Tenant and any guarantor or surety of Tenant’s
obligations under this Lease shall at all times remain fully responsible and
liable for the payment of the rent and for compliance with all of Tenant’s
other obligations under this Lease (regardless of whether Landlord’s approval
has been obtained for any such assignments or sublettings).  In the event that the rent due and payable by
a sublessee or assignee (or a combination of the rental payable under such
sublease or assignment plus any bonus received in lieu of rent therefor or
incident thereto) exceeds the rental payable under this Lease, except as the
same relates to a Tenant Affiliate or an entity described in the second
paragraph of this Section 17, regardless of its net worth or any transfer
of ownership interests as set forth above which is deemed to be an assignment
hereunder, then Tenant shall be bound and obligated to pay Landlord as
additional rent hereunder Fifty percent (50%) of such excess rental and other
excess consideration within 10 days following receipt thereof by Tenant, after
first deducting therefrom Tenant’s reasonable broker commissions, and tenant improvement costs to effectuate
such transfer.

 

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

 

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

 

19.                                 Inspection and Access. 
Landlord and its agents, representatives, and contractors may enter the
Premises at any reasonable time to inspect the Premises and to make such
repairs as may be required or permitted pursuant to this Lease upon 24 hour
advance notice (except in case of emergency, where no such notice shall be
required).  In any entry of the Premises,
Landlord and Landlord’s representatives shall not unreasonably or materially
interfere with Tenant’s operations in the Premises and shall abide by Tenant’s
reasonable security and health and safety requirements.  Landlord and Landlord’s representatives may
enter the Premises during business hours for the purpose of showing the
Premises to prospective purchasers and, during the last year of the Lease Term,

 

8

 

to prospective
tenants.  Landlord may erect a suitable
sign on the Premises stating the Premises are available to let during the last
six (6) months of the Lease Term or that the Project is available for
sale.  Landlord may grant easements, make
public dedications, designate common areas and create restrictions on or about
the Premises, provided that no such easement, dedication, designation or
restriction materially interferes with Tenant’s use or occupancy of the
Premises or materially increases Tenant’s obligations or decreases Tenant’s
rights hereunder.  At Landlord’s request,
Tenant shall execute such instruments as may be necessary for such easements,
dedications or restrictions.

 

20.                                 Quiet Enjoyment. 
If Tenant shall perform all of the covenants and agreements herein
required to be performed by Tenant within applicable notice and cure periods,
Tenant shall, subject to the terms of this Lease, at all times during the Lease
Term, have peaceful and quiet enjoyment of the Premises against any person
claiming by, through or under Landlord.

 

21.                                 Surrender. 
Upon termination of the Lease Term or earlier termination of Tenant’s
right of possession, Tenant shall surrender the Premises to Landlord in the
same condition as received, broom clean, ordinary wear and tear and casualty
loss and condemnation covered by Paragraphs 15 and 16 and Hazardous
Materials which Tenant is not obligated to remediate pursuant to Paragraph 30
of this Lease excepted.  Any Trade
Fixtures, Tenant-Made Alterations and property not so removed by Tenant as
permitted or required herein may be stored, removed, and disposed of by
Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for
any damages resulting from Landlord’s retention and disposition of such
property to the extent Landlord complies with applicable laws in connection
therewith.  All obligations of Tenant
hereunder not fully performed as of the termination of the Lease Term shall
survive the termination of the Lease Term, including without limitation,
indemnity obligations, payment obligations with respect to Operating Expenses
and obligations concerning the condition and repair of the Premises.

 

22.                                 Holding Over. 
If Tenant retains possession of the Premises after the termination of the
Lease Term, unless otherwise agreed in writing, such possession shall be
subject to immediate termination by Landlord at any time, and all of the other
terms and provisions of this Lease (excluding any expansion or renewal option
or other similar right or option) shall be applicable during such holdover
period, except that Tenant shall pay Landlord from time to time, upon demand,
as Base Rent for the holdover period, an amount equal to 150% the Base Rent in
effect on the termination date, computed on a monthly basis for each month or
part thereof during such holding over. 
All other payments shall continue under the terms of this Lease.  In addition, Tenant shall be liable for all
damages incurred by Landlord as a result of such holding over.  No holding over by Tenant, whether with or
without consent of Landlord, shall operate to extend this Lease except as
otherwise expressly provided, and this Paragraph 22 shall not be construed as
consent for Tenant to retain possession of the Premises.  For
purposes of this Paragraph 22, “possession of the Premises” shall continue
until, among other things, Tenant has delivered all keys to the Premises to
Landlord, Landlord has complete and total dominion and control over the
Premises, and Tenant has completely fulfilled all obligations required of it
upon termination of the Lease as set forth in this Lease, including, without
limitation, those concerning the condition and repair of the Premises.

 

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

 

(i)                                     Tenant shall fail to pay any installment
of Base Rent or any other payment required herein when due, and such failure
shall continue for a period of 5 days after written notice from Landlord to
Tenant that such payment was due; provided, however, that Landlord shall not be
obligated to provide written notice of such failure more than 1 time in any
consecutive 12 month period, and the failure of Tenant to pay any second or
subsequent installment of Base Rent or any other payment required herein when
due in any consecutive 12 month period shall constitute an Event of Default by
Tenant under this Lease without the requirement of notice or opportunity to
cure.

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

Except as otherwise
provided in the next paragraph, if Tenant breaches this Lease and abandons the
Premises prior to the end of the term hereof, or if Tenant’s right to
possession is terminated by Landlord because of an Event of Default by Tenant
under this Lease, this Lease shall terminate. 
Upon such termination, Landlord may recover from Tenant the following,
as provided in Section 1951.2 of the Civil Code of California: (i) the
worth at the time of award of the unpaid Base Rent and other charges under this
Lease that had been earned at the time of termination; (ii) the worth at
the time of award of the amount by which the reasonable value of the unpaid
Base Rent and other charges under this Lease which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; (iii) the worth at the
time of the award by which the reasonable value of the unpaid Base Rent and
other charges under this Lease for the balance of the term of this Lease after
the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; and (iv) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant’s
failure to perform its obligations under this Lease or that in the ordinary
course of things would be likely to result therefrom.  As used herein, the following terms are
defined: (a) the “worth at the time of award” of the amounts referred to
in Sections (i) and (ii) is computed by allowing interest at the
lesser of 18 percent per annum or the maximum lawful rate.  The “worth at the time of award” of the
amount referred to in Section (iii) is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent; (b) the “time of award” as used in clauses
(i), (ii), and (iii) above is the date on which judgment is entered by a
court of competent jurisdiction; (c) The “reasonable value” of the amount
referred to in clause (ii) above is computed by determining the
mathematical product of (1) the “reasonable annual rental value” (as
defined herein) and (2) the number of years, including fractional parts
thereof, between the date of termination and the time of award.  The “reasonable value” of the amount referred
to in clause (iii) is computed by determining the mathematical product of (1) the
annual Base Rent and other charges under this Lease and (2) the number of
years including fractional parts thereof remaining in the balance of the term
of this Lease after the time of award.

 

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

 

Exercise by Landlord of
any one or more remedies hereunder granted or otherwise available shall not be
deemed to be an acceptance of surrender of the Premises and/or a termination of
this Lease by Landlord, whether by agreement or by operation of law, it being
understood that such surrender and/or termination can be effected only by the
written agreement of Landlord and Tenant. 
Any law, usage, or custom to the contrary notwithstanding, Landlord
shall have the right at all times to enforce the provisions of this Lease in
strict accordance with the terms hereof; and the failure of Landlord at any
time to enforce its rights under this Lease strictly in accordance with same
shall not be construed as having created a custom in any way or manner contrary
to the specific terms, provisions, and covenants of this Lease or as having
modified the same.  Tenant and Landlord
further agree that forbearance or waiver by Landlord to enforce its rights
pursuant to this Lease or at law or in equity, shall not be a waiver of Landlord’s
right to enforce one or more of its rights in connection with any subsequent
default.  A receipt by Landlord of rent
or other payment with knowledge of the breach of any covenant hereof shall not
be deemed a waiver of such breach, and no waiver by Landlord of any provision
of this Lease shall be deemed to have been made unless expressed in writing and
signed by Landlord.  To the greatest
extent permitted by law, Tenant waives all right of redemption in case Tenant
shall be dispossessed by a judgment or by warrant of any court or judge.  The terms “enter,” “re-enter,” “entry” or “re-entry,”
as used in this Lease, are not restricted to their technical legal
meanings.  Any reletting of the Premises
shall be on such terms and conditions as Landlord in its sole 

 

10

 

discretion may determine
(including without limitation a term different than the remaining Lease Term,
rental concessions, alterations and repair of the Premises, lease of less than
the entire Premises to any tenant and leasing any or all other portions of the
Project before reletting the Premises). 
Landlord shall not be liable, nor shall Tenant’s obligations hereunder
be diminished because of, Landlord’s failure to relet the Premises or collect
rent due in respect of such reletting; provided that Landlord has made
commercially reasonable efforts to relet the Premises and otherwise mitigate
its damage; provided, however, (a) Landlord shall not be obligated to
accept any tenant proposed by Tenant, (b) Landlord shall have the right to
lease any other space controlled by Landlord first, and (c) any proposed
tenant shall meet all of Landlord’s leasing criteria.

 

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

 

26.                                 Waiver of Jury Trial. 
Intentionally deleted.

 

27.                                 Subordination. 
This Lease and Tenant’s interest and rights hereunder are and shall be
subject and subordinate at all times to the lien of any mortgage, now existing
or hereafter created on or against the Project or the Premises, and all
amendments, restatements, renewals, modifications, consolidations, refinancing,
assignments and extensions thereof, without the necessity of any further
instrument or act on the part of Tenant. 
Tenant agrees, at the election of the holder of any such mortgage, to
attorn to any such holder.  Tenant agrees
upon demand to execute, acknowledge and deliver such instruments, confirming
such subordination and such instruments of attornment as shall be reasonably
requested by any such holder. 
Notwithstanding the foregoing, any such holder may at any time
subordinate its mortgage to this Lease, without Tenant’s consent, by notice in
writing to Tenant, and thereupon this Lease shall be deemed prior to such
mortgage without regard to their respective dates of execution, delivery or
recording and in that event such holder shall have the same rights with respect
to this Lease as though this Lease had been executed prior to the execution,
delivery and recording of such mortgage and had been assigned to such
holder.  The term “mortgage” whenever
used in this Lease shall be deemed to include deeds of trust, security
assignments and any other encumbrances, and any reference to the “holder” of a
mortgage shall be deemed to include the beneficiary under a deed of trust.  Tenant shall not be obligated to subordinate
this Lease or its interest therein to any future mortgage, deed of trust or
ground lease on the Project unless concurrently with such subordination the
holder of such mortgage or deed of trust or the ground lessor under such ground
lease agrees not to disturb Tenant’s possession of the Premises under the terms
of the Lease in the event such holder or ground lessor acquires title to the
Premises through foreclosure, deed in lieu of foreclosure or otherwise.

 

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

 

29.                                 Estoppel Certificates. 
Tenant agrees, from time to time, within 10 days after request of
Landlord, to execute and deliver to Landlord, or Landlord’s designee, any
estoppel certificate requested by Landlord, stating that this Lease is in full
force and effect, the date to which rent has been paid, that Landlord is not in
default hereunder (or specifying in detail the nature of Landlord’s default),
the termination date of this Lease and such other matters pertaining to this
Lease as may be reasonably requested by Landlord.  Tenant’s obligation to furnish each estoppel
certificate in a timely fashion is a material inducement for Landlord’s
execution of this Lease.  No cure or
grace period provided in this Lease shall apply to Tenant’s obligations to
timely deliver an estoppel certificate. 
Notwithstanding the foregoing, Tenant shall not be in default hereunder
unless Tenant fails to timely deliver an estoppel certificate to Landlord
within 3 days following Landlord’s notice of such failure.

 

11

 

30.          Environmental Requirements.  Except for Hazardous Materials contained in
products used by Tenant in de minimis quantities for ordinary cleaning and
office purposes, Tenant shall not permit or cause any party to bring any
Hazardous Material upon the Premises or transport, store, use, generate,
manufacture or release any Hazardous Material in or about the Premises without
Landlord’s prior written consent. 
Tenant, at its sole cost and expense, shall operate its business in the
Premises in strict compliance with all Environmental Requirements and shall
remediate in a manner satisfactory to Landlord, acting in a reasonable manner,
any Hazardous Materials released on or from the Project by Tenant, its agents,
employees, contractors, subtenants or invitees. 
Tenant shall complete and certify to disclosure statements as requested
by Landlord from time to time relating to Tenant’s transportation, storage,
use, generation, manufacture or release of Hazardous Materials on the
Premises.  The term “Environmental Requirements”
means all applicable present and future statutes, regulations, ordinances,
rules, codes, judgments, orders or other similar enactments of any governmental
authority or agency regulating or relating to health, safety, or environmental
conditions on, under, or about the Premises or the environment, including
without limitation, the following:  the
Comprehensive Environmental Response, Compensation and Liability Act; the
Resource Conservation and Recovery Act; and all state and local counterparts thereto,
and any regulations or policies having the force of law promulgated or issued
thereunder.  The term “Hazardous
Materials” means and includes any substance, material, waste, pollutant, or
contaminant listed or defined as hazardous or toxic, under any Environmental
Requirements, asbestos and petroleum, including crude oil or any fraction
thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable
for fuel (or mixtures of natural gas and such synthetic gas).  As defined in Environmental Requirements,
Tenant is and shall be deemed to be the “operator” of the “facility” that
Tenant operates in or about the Premises during the Lease Term and the “owner”
of all Hazardous Materials brought on the Premises by Tenant, its agents,
employees, contractors or invitees, and the wastes, by-products, or residues
generated, resulting, or produced therefrom.

 

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

 

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

 

Notwithstanding anything to the contrary in this
Paragraph 30, Tenant shall have no liability of any kind to Landlord as to
Hazardous Materials on the Premises prior to Tenant’s occupancy of the Premises
or caused or permitted by (i) Landlord, its agents, employees, contractors
or invitees; or (ii) any other tenants in the Project or their agents,
employees, contractors, subtenants, assignees or invitees; or (iii) any other
person or entity located outside of the Premises or the Project.

 

Landlord represents and warrants that Landlord, to its
knowledge without further inquiry, is unaware of any environmental conditions
affecting the Premises.

 

31.          Rules and Regulations.
 Tenant shall, at all times during the
Lease Term and any extension thereof, comply with all reasonable rules and
regulations at any time or from time to time established by Landlord covering
use of the Premises and the Project, provided, that such rules and
regulations are applied uniformly and non-discriminatorily, do not unreasonably
interfere with Tenant’s use of the Premises or Tenant’s parking rights
hereunder, and do not materially increase the obligations or decrease the
rights of Tenant under this Lease.  The
current rules and regulations are attached hereto.  In the event of any conflict between said rules and
regulations and other provisions of this Lease, the other terms and provisions
of this Lease shall control.  Landlord
shall not have any liability or obligation for the breach of any rules or
regulations by other tenants in the Project, but shall uniformly enforce such rules and
regulations throughout the Project.

 

32.          Security Service.  Tenant acknowledges and agrees that, while
Landlord may patrol the Project, Landlord is not providing any security
services with respect to the Premises and that Landlord shall not be liable to
Tenant for, and Tenant waives any claim against Landlord with respect to, any
loss by theft or any other damage suffered or incurred by Tenant in connection
with any unauthorized entry into the Premises or any other breach of security
with respect to the Premises except as the same may result from the willful
misconduct of Landlord.

 

33.          Force Majeure.  Except for monetary obligations, neither
party shall be held responsible for delays in the performance of its
obligations hereunder when caused by strikes, lockouts, labor disputes, acts of
God, inability to obtain labor or materials or reasonable substitutes therefor,
governmental restrictions, governmental

 

12

 

regulations, governmental
controls, delay in issuance of permits, enemy or hostile governmental action,
civil commotion, fire or other casualty, and other causes beyond the reasonable
control of Landlord or Tenant, as the case may be (“Force Majeure”).

 

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

 

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

 

36.          Brokers.  Each party represents and warrants to the
other that it has dealt with no broker, agent or other person in connection
with this transaction and that no broker, agent or other person brought about
this transaction, other than the broker, if any, set forth on the first page of
this Lease, and each party agrees to indemnify and hold the other harmless from
and against any claims by any other broker, agent or other person claiming a
commission or other form of compensation by virtue of having dealt with the
indemnifying party with regard to this leasing transaction.

 

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

 

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

 

(c)           All notices required or permitted to
be given under this Lease shall be in writing and shall be sent by registered
or certified mail, return receipt requested, or by a reputable national
overnight courier service, postage prepaid, or by hand delivery addressed to
the parties at their addresses below, and with a copy sent to Landlord at 4545 Airport Way, Denver, Colorado  80239. 
Either party may by notice given aforesaid change its address for all
subsequent notices.  Except where
otherwise expressly provided to the contrary, notice shall be deemed given upon
delivery.

 

(d)           Except as otherwise expressly
provided in this Lease or as otherwise required by law, Landlord’s right to
withhold any consent or approval shall not be unreasonably withheld or delayed.

 

(e)           At Landlord’s request from time to
time Tenant shall furnish Landlord with true and complete copies of its most
recent annual and quarterly financial statements prepared by Tenant or Tenant’s
accountants and any other financial information or summaries that Tenant
typically provides to its lenders or shareholders.  Landlord hereby agrees to keep such financial
information confidential in accordance with, and subject to the terms of, a
separate written confidentiality agreement between Landlord and Tenant.

 

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

 

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

 

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

 

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

 

(j)            Any amount not paid by Tenant within
5 days after notice from Landlord to Tenant that such payment was due its due
date in accordance with the terms of this Lease shall bear interest from such
due date until paid in full at the lesser of the highest rate permitted by applicable
law or 12 percent per year; provided, however, that Landlord shall not be
obligated to provide written notice of such failure more than once in any
consecutive 12-month period or twice over the Lease Term.  It is expressly the intent of Landlord and
Tenant at all times to comply with applicable law governing the maximum rate or
amount of any interest payable on or in connection with this Lease.  If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord’s and
Tenant’s express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Occam Networks, Inc., a Delaware corporation

  	
   

  	
  PROLOGIS LIMITED PARTNERSHIP I, a

  
	
   

  	
   

  	
  Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ProLogis, a Maryland real estate

  
	
   

  	
   

  	
   

  	
  investment trust, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert Howard-Anderson

  	
   

  	
  By:

  	
  /s/ W. Scott Lanson

  
	
  Name:

  	
  Robert Howard-Anderson

  	
   

  	
  Name:

  	
  W. Scott Lamson

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
  Prior to the Commencement Date Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  6868 Cortona Drive

  	
   

  	
  47775 Fremont Blvd.

  
	
  Santa Barbara, CA 93117

  	
   

  	
  Fremont, CA 94538

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
   

  	
   

  	
   

  
						

 

 

After the Commencement Date Address:

 

	
  3185 Laurelview Drive

  	
   

  	
   

  
	
  Fremont, CA 
  94538

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
   

  	
   

  	
   

  
				

 

15

 

Rules and
Regulations

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

ADDENDUM 1

 

BASE RENT ADJUSTMENTS

 

ATTACHED TO AND A PART OF THE LEASE AGREEMENT

DATED MARCH 14, 2008, BETWEEN

 

ProLogis Limited Partnership I, a Delaware limited
partnership

and

Occam Networks, Inc., a Delaware corporation

 

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

 

	
  Period

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 1,
  2008

  	
  to

  	
   July 31,
  2008

  	
   

  	
  $

  	
  0.00

  	
  *

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August 1,
  2008

  	
  to

  	
   July 31,
  2009

  	
   

  	
  $

  	
  32,040.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August 1,
  2009 

  	
  to

  	
   July 31,
  2010

  	
   

  	
  $

  	
  33,001.20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August 1,
  2010

  	
  to

  	
   July 31,
  2011

  	
   

  	
  $

  	
  33,991.24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August 1,
  2011

  	
  to

  	
   July 31,
  2012

  	
   

  	
  $

  	
  35,010.97

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August 1,
  2012

  	
  to

  	
   July 31,
  2013

  	
   

  	
  $

  	
  36,061.30

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August 1,
  2013

  	
  to

  	
   July 31,
  2014

  	
   

  	
  $

  	
  37,143.14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  August 1,
  2014

  	
  to

  	
   July 31,
  2015

  	
   

  	
  $

  	
  38,257.44

  	
   

  

 

*Tenant
shall be responsible for Operating Expenses during period of free rent.

 

17

 

ADDENDUM 2

 

HVAC
MAINTENANCE CONTRACT

 

ATTACHED TO AND A PART OF
THE LEASE AGREEMENT

DATED MARCH 14, 2008, BETWEEN

 

ProLogis Limited Partnership I, a Delaware limited
partnership

and

Occam Networks, Inc., a Delaware corporation

 

Paragraph 11, captioned “TENANT
REPAIRS,” is revised to include the following:

 

Tenant agrees to enter
into and maintain through the term of the Lease, a regularly scheduled
preventative maintenance/service contract for servicing all hot water, heating
and air conditioning systems and equipment within  the 
Premises.  Landlord requires a
qualified HVAC contractor perform this work. 
A certificate must be provided to the Landlord upon occupancy of the
leased Premises.

 

The service
contract must become effective within thirty (30) days of occupancy, and
service visits should be performed on a quarterly basis.  Landlord suggests that Tenant send the
following list to a qualified HVAC contractor to be assured that these items
are included in the maintenance contract:

 

1.                                      Adjust belt tension;

2.                                      Lubricate all moving parts, as necessary;

3.                                      Inspect and adjust all temperature and
safety controls;

4.                                      Check refrigeration system for leaks and
operation;

5.                                      Check refrigeration system for moisture;

6.                                      Inspect compressor oil level and crank
case heaters;

7.                                      Check head pressure, suction pressure and
oil pressure;

8.                                      Inspect air filters and replace when necessary;

9.                                      Check space conditions;

10.                               Check condensate drains and drain pans
and clean, if necessary;

11.                               Inspect and adjust all valves;

12.                               Check and adjust dampers;

13.                               Run machine through complete cycle.

 

18

 

ADDENDUM 3

 

MOVE-OUT CONDITIONS

 

ATTACHED TO AND A PART OF
THE LEASE AGREEMENT

DATED MARCH 14, 2008, BETWEEN

 

ProLogis Limited Partnership I, a Delaware limited
partnership

and

Occam Networks, Inc., a Delaware corporation

 

Per Paragraph 21, Tenant
is obligated to check and address prior to move-out of the Premises the
following items. Landlord expects to receive the Premises in a well maintained
condition, with normal wear and tear of certain areas acceptable.  The following list is designed to assist Tenant
in the move-out procedures but is not intended to be all inclusive.

 

1.             All lighting is to be placed into good
working order. This includes replacement of bulbs, ballasts, and lenses as
needed.

 

2.             All truck doors and dock levelers should
be serviced and placed in good operating order. 
This would include the necessary replacement of any dented truck door
panels and adjustment of door tension to insure proper operation.  All door panels which are replaced need to be
painted to match the Building standard.

 

3.             All structural steel columns in the
warehouse and office should be inspected for damage.  Repairs of this nature should be pre-approved
by the Landlord prior to implementation.

 

4.             Heating/air-conditioning systems should
be placed in good working order, including the necessary replacement of any
parts to return the unit to a well maintained condition.  This includes warehouse heaters and exhaust
fans. Upon move-out, Landlord will have an exit inspection performed by a
certified mechanical contractor to determine the condition.  Replacement of parts and/or equipment shall
be considered a capital expenditure and shall be subject to the terms of Section 11.

 

5.             All holes in the sheet rock walls should
be repaired prior to move-out.

 

6.             The carpets and vinyl tiles should be in
a clean condition and should not have any holes or chips in them.  Landlord will accept normal wear on these
items provided they appear to be in a maintained condition.

 

7.             Facilities should be returned in a clean
condition which would include cleaning of the coffee bar, restroom areas,
windows, and other portions of the space.

 

8.             The warehouse should be in broom clean
condition with all inventory and racking removed.  There should be no protrusion of anchors from
the warehouse floor and all holes should be appropriately patched.  If machinery/equipment is removed, the
electrical lines should be properly terminated at the nearest junction box.

 

9.             All exterior windows with cracks or
breakage should be replaced.

 

10.          The Tenant shall provide keys for all
locks on the Premises, including front doors, rear doors, and interior doors.

 

11.          Items that have been added by the Tenant
and affixed to the Building will remain the property of Landlord, unless agreed
otherwise.  This would include but is not
limited to mini-blinds, air conditioners, electrical, water heaters, cabinets,
flooring, etc.  Please note that if
modifications have been made to the space, such as the addition of office
areas, subject to Paragraph 12 of the Lease, Landlord retains the right to have
the Tenant remove these at Tenant’s expense.

 

12.          All electrical systems should be left in
a safe condition that conforms to code. Bare wires and dangerous installations
should be corrected prior to move-out.

 

13.          All plumbing fixtures should be in good
working order, including the water heater. Faucets and toilets should not leak.

 

14.          All dock bumpers must be left in place
and well secured.

 

19

 

ADDENDUM 4

 

RENEWAL OPTION

(BASEBALL ARBITRATION)

 

ATTACHED TO AND A PART OF
THE LEASE AGREEMENT

DATED MARCH 14, 2008, BETWEEN

 

ProLogis Limited Partnership I, a Delaware limited
partnership

and

Occam Networks, Inc., a Delaware corporation

 

(a)           Provided that as of the time of the
giving of the Extension Notice and the Commencement Date of the Extension Term,
(x) Tenant is the Tenant originally named herein (or a Tenant Affiliate or
a transferee pursuant to a Permitted Transfer), (y)  Tenant (or a Tenant
Affiliate or a transferee pursuant to a Permitted Transfer) actually occupies
substantially all of the Premises initially demised under this Lease and any
space added to the Premises, and (z) no Event of Default exists, or would
exist but for the passage of time or the giving of notice, or both; then Tenant
shall have the right to extend the Lease Term for an additional term of 5
years (such additional term is hereinafter called the “Extension Term”)
commencing on the day following the expiration of the Lease Term (hereinafter
referred to as the “Commencement Date of the Extension Term”).  Tenant must give Landlord notice (hereinafter
called the “Extension Notice”) of its election to extend the term of the
Lease Term at least 9 months, but not more than 12 months, prior to the
scheduled expiration date of the Lease Term.

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

Fair Market Rent is determined
as provided herein.  Upon such
determination, Landlord and Tenant shall make the appropriate adjustments to
the payments between them.

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

ADDENDUM 5

 

LETTER OF CREDIT FOR
SECURITY DEPOSIT

 

ATTACHED TO AND A PART OF THE LEASE AGREEMENT

DATED MARCH 14, 2008, BETWEEN

 

ProLogis Limited Partnership I, a Delaware limited
partnership

and

Occam Networks, Inc., a Delaware corporation

 

The Security Deposit shall be in the
form of an unconditional, irrevocable letter of credit from a bank reasonably
acceptable to Landlord in the form attached here as Exhibit D (“Letter of
Credit”).  The Letter of Credit shall
either provide that it does not expire until the 61st day following
the end of the Lease Term or, if it is for less than the full term of the
Lease, shall be renewed by Tenant at least 60 days prior to its expiration
during the term of the Lease.  Subject to
the provisions of this Addendum 5, the Letter of Credit shall provide that it
may be drawn down upon by Landlord at any time Landlord delivers its site draft
to the bank.  If Landlord sells or
conveys the Premises, Tenant shall, at Landlord’s request, cooperate in having
the Letter of Credit transferred to the purchaser.  If the Letter of Credit is ever drawn upon by
Landlord pursuant to the terms of the Lease and this Addendum, Tenant shall
within ten (10) days thereafter cause the letter of credit to be restored
to its original amount.

 

Notwithstanding anything
contained herein to the contrary, in the event Tenant fails to renew the Letter
of Credit in accordance with the terms and conditions as set forth in this
Addendum, or in the event that Tenant shall commence any proceeding for relief,
as defined in Paragraph 23(ii) of the Lease, an immediate Event of Default
shall be deemed to have occurred, without the requirement of notice or
opportunity to cure, in which case Landlord may immediately draw down on the
Letter of Credit.  Notwithstanding the
foregoing, Landlord shall only draw on the Letter of Credit following an Event
of Default and only to the extent required to cure the Event of Default.  In the event that Landlord draws upon the
Letter of Credit solely due to Tenant’s failure to renew the Letter of Credit
at least thirty (30) days before its expiration (i) such failure to renew
shall not constitute a default hereunder and (ii) Tenant shall at any time
thereafter be entitled to provide Landlord with a replacement Letter of Credit
that satisfies the requirements hereunder, at which time Landlord shall return
the cash proceeds of the original Letter of Credit drawn by Landlord.

 

Provided
no Event of Default has occurred more than twice during the Lease Term, Tenant
shall have the right to reduce the Letter of Credit in accordance with the
following schedule:

 

	
  Lease Term

  	
   

  	
  Amount of Letter of Credit

  	
   

  
	
  Lease Execution – July 31, 2011

  	
   

  	
  $

  	
  300,000

  	
   

  
	
  August 1, 2011 – July 21, 2012

  	
   

  	
  $

  	
  200,000

  	
   

  
	
  August 1, 2012 – July 21, 2013

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  August 1, 2013 – July 21, 2015

  	
   

  	
  $

  	
  45,000

  	
   

  

 

After
the 62nd month of the Lease Term and for the remainder of the Lease
Term and 61 days following the end of the Lease Term, assuming all reductions
set forth in the immediately preceding paragraph have been taken, the Security
Deposit shall remain in the form of a Letter of Credit in the amount of
$45,000.00.

 

22

 

ADDENDUM 6

 

EARLY ACCESS FOR

FIXTURIZATION BY TENANT

 

ATTACHED TO AND A PART OF
THE LEASE AGREEMENT

DATED MARCH 14, 2008, BETWEEN

 

ProLogis Limited Partnership I, a Delaware limited
partnership

and

Occam Networks, Inc., a Delaware corporation

 

Landlord shall
allow Tenant access to the premises upon full execution of the Lease Agreement
for purposes of commencing the Tenant-Made Alterations, installing Tenant’s
Trade Fixtures and otherwise making the Premises ready for occupancy such that
Tenant can commence business operations on the Commencement Date.  Notwithstanding anything to the contrary in
this Lease, no Base Rent or Operating Expenses shall be due in connection with
such early occupancy.  Prior to delivery
of the Premises, Tenant must provide Landlord with a compliant Certificate of
Insurance required under the terms of the Lease Agreement.  Furthermore, such occupancy or work in the
Premises shall be in accordance with the provisions governing Tenant-Made Alterations
and Trade Fixtures in the Lease, and shall be subject to Tenant providing to
Landlord satisfactory evidence of insurance for personal injury and property
damage related to such installations and satisfactory payment arrangements with
respect to installations permitted hereunder.

 

23

 

ADDENDUM 7

 

STORAGE AND USE OF PERMITTED HAZARDOUS MATERIALS

 

ATTACHED TO AND A PART OF
THE LEASE AGREEMENT

DATED MARCH 14, 2008, BETWEEN

 

ProLogis Limited Partnership I, a Delaware limited
partnership

and

Occam Networks, Inc., a Delaware corporation

 

1.            Permitted Hazardous Materials and Use.  Tenant has
requested Landlord’s consent to use the Hazardous Materials listed below in its
business at the Premises (“Permitted Hazardous Materials”).  Subject to the conditions set forth herein,
Landlord hereby consents to the Use (hereinafter defined) of the Permitted
Hazardous Materials.  Any Permitted
Hazardous Materials on the Premises will be generated, used, received, maintained,
treated, stored, or disposed in a manner consistent with good engineering
practice and in compliance with all Environmental Requirements.

 

Permitted Hazardous
Materials (quantities not to exceed a maximum of one (1) gallon):

 

1.     Isoproyl Alcohol

2.     Denatured Alcohol

3.     2-Propanol

4.     Methel Ethel Ketone

5.     Paint Thinner

6.     Lacquer Thinner

7.     Meller-Stephenson MS-260

8.     Meller-Stephenson MS-730M

9.     Meller-Stephenson MS-381

10.  Meller-Stephenson MS-381M

11.  No clean flux Kester 979

12.  No clean flux Kester 959T

13.  No clean flux Alpha NR205

14.  3M HFE-7100DL

15.  3-in-1 oil

16.  No. 10 Velocity Spindle Oil

17.  Mapp gas and tourch

18.  Loctite 712

19.  Loctite 7387

20.  Loctite 382

21.  Loctite 7452

22.  Eyesaline concentrate eye wash

 

The storage, uses or
processes involving the Permitted Hazardous Materials (“Use”) are described
below.

 

Use (if limited to
receiving and storage, so specify):

 

1.  Used in bench test procedures and well as
equipment cleaning and maintenance.

 

2.            No Current Investigation.  Tenant
represents and warrants that it is not currently subject to an inquiry,
regulatory investigation, enforcement order, or any other proceeding regarding
the generation, use, treatment, storage, or disposal of a Hazardous Material.

 

3.            Notice and Reporting.  Tenant
immediately shall notify Landlord in writing of any spill, release, discharge,
or disposal of any Hazardous Material in, on or under the Premises or the
Project.  All reporting obligations
imposed by Environmental Requirements are strictly the responsibility of
Tenant.  Tenant shall supply to Landlord
within 5 business days after Tenant first receives or sends the same, copies of
all claims, reports, complaints, notices, warnings or asserted violations
relating in any way to Tenant’s use of the Premises.

 

4.            Indemnification.  Tenant’s indemnity obligation
under the Lease with respect to Hazardous Materials shall include
indemnification for the liabilities, expenses and other losses described
therein as a result of the Use of the Hazardous Materials or the breach of
Tenant’s obligations or representations set forth above.  It is the intent of this provision that
Tenant be strictly liable to Landlord as a result of the Use of Hazardous
Materials without regard to the fault or negligence of Tenant, Landlord or any
third party.

 

5.            Disposal Upon Lease Termination. 
At the expiration or earlier termination of the Lease, Tenant, at its
sole cost and expense, shall:  (i) remove
and dispose off-site any drums, containers, receptacles, structures, or tanks
storing or containing Hazardous Materials (or which have stored or contained
Hazardous Materials) and the contents thereof; (ii) remove, empty, and
purge all underground and above ground storage tank systems, including
connected piping, of all vapors, liquids, sludges and residues; and (iii) restore
the Premises to its original condition. 
Such activities shall be performed in compliance with all Environmental
Requirements and to the satisfaction of 

 

24

 

Landlord.  Landlord’s satisfaction with such activities
or the condition of the Premises does not waive, or release Tenant from, any
obligations hereunder.

 

25

 

EXHIBIT A

 

SITE PLAN

 

GATEWAY CORPORATE CENTER

 

 

26

 

EXHIBIT B

 

FLOOR PLAN

 

3185 Laurelview Court, Fremont CA 
94538

Approximately 36,000 square feet

 

 

27

 

EXHIBIT B-1

 

INITIAL TENANT-MADE ALTERATIONS

 

DEMO PLAN

 

 

 

28

 

EXHIBIT B-2

 

INITIAL TENANT-MADE ALTERATIONS

 

CONCEPTUAL FLOOR PLAN

 

 

29

 

EXHIBIT C

 

SIGN CRITERIA

 

GATEWAY CORPORATE CENTER

 

WINDOW IDENTIFICATION SIGNS:

 

Each Tenant will be
allowed one window sign placed either to the left or the right of the entrance
door, whichever provides the best visibility.

 

Company names, logos or
symbols will be allowed in this area-color and size to be determined by the
Tenant.  All other copy in this area except
for logos or symbols will be white vinyl pressure sensitive letters.

 

Copy must start at 5’
from grade, working down to no more than 3 1/2’ from grade.  Sign layout including copy, sizes and color
must be approved by the building management. 
Management reserves the right to deny any copy or color it considers
unsuitable.

 

One security decal only
may be applied to the front door glass in the lower corner if the Tenant so
desires.  All exterior alarm bells are to
be mounted to the rear of the building only.

 

DIRECTORY SIGN IDENTIFICATION:

 

A monument directory sign
has been provided for each building.  If
only one Tenant occupies an entire building, that Tenant shall be allowed to
utilize the entire directory  sign area
for their pressure sensitive, matte, Pearl Gray vinyl letters with a letter
height suitable for the area allowed, and logo if so desired, also in Pearl
Gray.  Address
numbers must be utilized in layout.  Both
sides of the directory sign shall be utilized in the same manner, must be
lettered identically.  Tenant can use any
font.  The address font is Futora.

 

If two or more Tenants
occupy a building, signs shall be shared equally by the number of tenants
within the building, utilizing pressure sensitive, matte, Pearl Gray vinyl
letters with a letter height suitable for the area allowed.  A logo will be allowed if so desired ( to be
consistent with window  identification
sign) of the company name also in Pearl Gray. 
A thin line will divide the areas between tenants

 

If three (3) or more
tenants occupy the building, the sign shall be shared equally by number of
tenants.  Signs shall consist of 4”
Futura Bold Pearl Grey, pressure sensitive vinyl lettering.  Directory signs shall list the street number
and the company names only, no slogans or symbols allowed.

 

REAR LOADING SIGNS:

 

Each Tenant will be
allowed to identify its rear door for shipping and receiving purposes.  The company name shall be placed on a

36” x 24” aluminum panel adjacent to the rear doors.

 

Copy shall consist of 3”
dark gray vinyl capital letters only in Futura Bold style.  Company names and logos only are allowed.

 

Management reserves the right to
deny any copy it considers unsuitable. 
Layout is to be approved by building management.  The cost of all lettering and logos will be
the responsibility of the Tenant.  No
other signs are allowed in the windows or doors.

 

30

 

EXHIBIT D

 

FORM OF LETTER OF
CREDIT

 

[LETTERHEAD
OF LETTER OF CREDIT BANK]

 

                                     ,        

 

[Name of Landlord                ]

 

 

Attention:

 

Re:          Irrevocable Transferable Letter of Credit

 No.                                

 

Beneficiary:

 

By order of our client,                         
(the “Applicant”), we hereby establish this Irrevocable Transferable
Letter of Credit No.              
in your favor for an amount up to but not exceeding the aggregate sum of
                                      
and No/100 Dollars
($                  )
(as reduced from time to time in accordance with the terms hereof, the “Letter
of Credit Amount”), effective immediately, and expiring on the close of
business at our office at the address set forth above one year from the date
hereof unless renewed as hereinafter provided.

 

Funds under this Letter of Credit are available to you
on or prior to the expiry date against presentation by you of your (i) sight
drafts drawn on us in the form of Annex 1 hereto, indicating this Letter of
Credit number and (ii) request in the form of Annex 2 hereto (such sight
draft and request, together referred to as a “Drawing Request”), sight
draft(s), completed and signed by one of your officers.  Presentation of your Drawing Requests may be
made by you to us at the address set forth above or may be made by facsimile
transmission, to the following facsimile number                .You
may present to us one or more Drawing Requests from time to time prior to the
expiry date in an aggregate amount not to exceed the Letter of Credit Amount
then in effect (it being understood that the honoring by us of each Drawing
Request shall reduce the Letter of Credit Amount then in effect).

 

This Letter of Credit
will be automatically renewed for a one-year period upon the expiration date
set forth above and upon each anniversary of such date, unless at least sixty
(60) days prior to such expiration date, or prior to any anniversary of such
date, we notify both you and the Applicant in writing by certified mail that we
elect not to so renew the Letter of Credit. 
In the event that we elect not to renew the Letter of Credit, if a
replacement letter of credit is not provided pursuant to the Lease, you may
immediately draw down on the full amount of the Letter of Credit by
presentation of your Drawing Request. 
Further, in the event that the Applicant commences any proceeding for
relief as defined in the Lease Agreement, you may immediately draw down on the
full amount of the Letter of Credit by presentation of your Drawing Request.

 

This Letter of Credit
sets forth in full the terms of our undertaking and such undertaking shall not
in any way be modified, amended or amplified by reference to any document or
instrument referred to herein or in which this Letter of Credit is referred to
or to which this Letter of Credit relates, and no such reference shall be
deemed to incorporate herein by reference any document or instrument.

 

All
bank charges and commissions incurred in this transaction are for the Applicant’s
account.

 

This Letter of Credit is
transferable by you and your successors and assigns any number of times in its
entirety and not in part, but only by delivery to us of a Notice of Assignment
in the form of Annex 3 hereto.

 

We hereby agree with the
drawers, endorsers, and bona fide holders of drafts drawn under and in
compliance with the terms of this Letter of Credit that such drafts will be
duly honored upon presentation to the drawee from our own funds and not the
funds of the Applicant and shall be available to such drawers, endorsers, and
bona fide holders, as the case may be, on or before noon, New York time, on the
Business Day (defined below) next following the date on which such drafts are
received by us.  “Business Day” shall
mean any day which is not a Saturday, Sunday or day on which we are required or
authorized by law to be closed in New York, New York.

 

To the extent not
inconsistent with the express terms hereof, this Letter of Credit shall be
governed by, and construed in accordance with, the terms of the Uniform Customs
and Practice for Commercial Documentary Credits (1993 Revision), I.C.C.
Publication No. 500 (the “UCP 500”) and as to matters not governed
by the UCP 500, this Letter of Credit shall be governed by and construed in
accordance with the laws of the State of New York`.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF LETTER OF
  CREDIT BANK]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

31

 

ANNEX 1

 

 

SIGHT DRAFT

 

                                ,        

 

For value received, at
sight pay to the order of [         NAME
OF LANDLORD            ], the sum of [Amount
in words] [Amount in Figures] United States Dollars drawn under [Name of Letter
of Credit Bank] Irrevocable Transferable Letter of Credit No.                 dated
                              ,
            .

 

 

	
   

  	
   

  	
  [NAME OF
  LANDLORD]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

32

 

ANNEX 2

 

DRAWING REQUEST

 

 

                                ,        

 

[NAME AND ADDRESS OF
LETTER

OF CREDIT BANK]

 

Re:  Irrevocable Transferable Letter of Credit No.         
(the “Letter of Credit”)

 

The undersigned (the “Beneficiary”),
hereby certifies to [Name of Letter of Credit Bank] (the “Issuer”) that:

 

(a)           The Beneficiary is making a request for payment in
lawful currency of the United States of America under Irrevocable Transferable
Letter of Credit No.                 (the
“Letter of Credit”) in the amount of $        .

 

(b)           The Letter of Credit Amount (as defined in the Letter
of Credit) as of the date hereof and prior to payment of the amount demanded in
this Drawing Request is $        .  The amount requested by this Drawing Request
does not exceed the Letter of Credit Amount.

 

(c)           Demand is made for payment
under the Letter of Credit as a result of the occurrence and continuation of an
Event of Default (as defined in the Lease Agreement) or as a result of
non-renewal of the Letter of Credit or as a result of the Applicant commencing
a proceeding of relief (as defined in the Lease Agreement) and the Beneficiary
is entitled under the Lease Agreement to draw upon the Letter of Credit in the
requested amount.

 

Please wire transfer the
proceeds of the drawing to the following account of the Beneficiary at the
financial institution indicated below:

 

 

 

Unless otherwise defined,
all capitalized terms used herein have the meanings provided in, or by
reference in, the Letter of Credit.

 

IN WITNESS WHEREOF, the undersigned has duly executed
and delivered this Drawing Request as of this

 

                    
day of
                              ,
            .

 

	
   

  	
   

  	
  [NAME OF
  LANDLORD]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

33

 

ANNEX 3

 

NOTICE OF ASSIGNMENT

 

                                           ,        

 

[NAME AND ADDRESS OF

LETTER OF CREDIT BANK]

 

Re:  Irrevocable Transferable Letter of Credit No.

 

The undersigned (the “Beneficiary”),
hereby notifies [Name of Letter of Credit Bank] (the “Issuer”) that it
has irrevocably assigned the above-referenced Letter of Credit to         
(the “Assignee”) with an address at
                                
effective as of the date the Issuer receives this Notice of Assignment.  The Assignee acknowledges and agrees that the
Letter of Credit Amount may have been reduced pursuant to the terms thereof,
and that the Assignee is bound by any such reduction.

 

IN WITNESS WHEREOF, the
undersigned has duly executed and delivered this Notice of Assignment as of
this        day of
                              ,
            .

 

	
   

  	
  [NAME OF
  LANDLORD ]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Assignee]

  	
   

  	
   

  
				

 

34Exhibit 10.1

 

SECOND
AMENDMENT TO

THE CRA
INTERNATIONAL, INC. 2006 EQUITY INCENTIVE PLAN

 

THIS SECOND AMENDMENT to the CRA International, Inc.
2006 Equity Incentive Plan (“Second Amendment”), dated the 12 day of March,
2008 is adopted by CRA International, Inc., a Massachusetts corporation
(the “Company”). All capitalized terms used in this Second Amendment that are
not defined herein shall have the meanings ascribed to them in the Plan (as
defined below).

 

RECITALS:

 

A. The CRA International, Inc. 2006 Equity
Incentive Plan, as amended (the “Plan”) was adopted by the Board of Directors
of the Company in March 2006 and approved by the shareholders of the
Company at the Company’s 2006 Annual Meeting of Shareholders on April 21,
2006.  The Plan was amended pursuant to a
First Amendment to 2006 Equity Incentive Plan, dated April 19, 2007.

 

B. Pursuant to Section 14.12 of the Plan, the
Plan Administrator has the authority to amend the Plan in order to
foster and promote achievement of the purposes of the Plan or to comply with or
take account of provisions of laws in other countries in which the Company,
parent or subsidiary of the Company operates or has employees or contracts with
independent contractors, or to obtain favorable tax, exchange control or
regulatory (including legal) treatment for the Company, or any parent or
subsidiary of the Company or any person to whom an Award has been or may be
granted.  The Board of Directors of the Company, acting
as Plan Administrator, desires to and does hereby amend the Plan, as
hereinafter set forth, to authorize the grant of Awards that qualify for
preferential personal income tax and social security tax treatment under French
law.

 

NOW, THEREFORE, the Plan is hereby amended by adding a
new Section 15, also referred to as the French Sub-plan as follows:

 

Section 15

 

French Sub-plan; For Individuals Who
are French Resident Taxpayers and/or Subject to the French Social Security
Scheme in France

 

All Awards granted under this Section 15 (also
referred to as the “French Sub-plan”)  to
an employee who is a French resident taxpayer and/or subject to the French
social security scheme in France shall comply with the terms of this French
Sub-plan. The purpose of the French Sub-plan is to grant Awards that qualify
for favorable income tax and social security tax treatment under French
law.  In the event any other provision of
the Plan conflicts with a provision of this Section 15, the provision in Section 15
shall control with respect to any Award granted under Section 15.  No other Award granted under the Plan shall
be subject to the provisions of this Section 15.

 

15.1 Definitions. The following terms shall have the
following meanings for purposes of this French Sub-plan:

 

(a) “French
Award” means, individually or collectively, a grant of Common Stock
under this Section 15 to employees who are French resident taxpayers
and/or subject to the French social security scheme in France.

 

 

 

(b) “Disability”
means a physical or mental condition corresponding to the
classification in the second or third categories laid down in Article L.
341-4 of the French Code de la Sécurité Sociale.

 

(c) “Holding
Period” means a 2-year period following the applicable vesting date,
during which the employee  may not sell or loan his vested French Award in order
to qualify for preferential income tax and social security treatment under
French law.

 

15.2 Eligibility. A French Award under the French Sub-plan
may be granted only to an employee who is a French resident taxpayer and/or
subject to the French social security scheme in France.

 

15.3 Limitation on Grants Under the
French Sub-plan. French  Awards may not be granted to an employee
who holds more than 10% of the Company’s outstanding shares at the date of
grant or an employee who would hold more than 10% of the Company’s outstanding
shares following the Award grant.

 

15.4 Vesting Periods. Except in the case of the death or
Disability of the employee, each French Award granted under the French Sub-plan
shall vest in accordance with the following schedule:

 

	
  Completed years of employment

  from date of grant

  	
   

  	
  Cumulative

  vesting percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  0%

  	
   

  
	
  2

  	
   

  	
  50%

  	
   

  
	
  3

  	
   

  	
  75%

  	
   

  
	
  4 or more

  	
   

  	
  100%

  	
   

  

 

A participant shall be 100% vested in his or her
French Award in the event his or her employment is terminated by reason of death
or Disability. In the event of death or Disability, the Holding Period
described in Section 15.5 will not apply but the black out restrictions on
sale described in Section 15.6 will continue to apply.

 

15.5 Holding Period. French Awards granted under the French Sub-plan
shall include a Holding Period of two (2) years following each vesting
date of the French Award in order to qualify for special tax and social
security considerations under French law.

 

15.6 Restrictions on Sale - Black Out Periods. Following the expiration of the Holding
Period described in Section 15.5, French Awards may not be sold:

 

(a) during the then existing black out periods
established by the Company which shall be made applicable to all French Awards;

 

(b) during the ten stock exchange trading days
preceding and following the date on which the Company’s consolidated accounts
are made public, or failing that, the annual accounts are published;

 

(c) between (i) the date on which the
Company’s management bodies have knowledge of information which, if made
public, could have a significant impact on the share price of the Common Stock;
and (ii) ten stock exchange trading days following the date on which this
information is published; and

 

(d) if the participant has non public material
information about the Company and such sale would violate any applicable
securities laws of the United States of America or France.

 

 

 

15.7 Restriction on Sale for officers
and directors. At the time of the grant of French Awards, the Plan
Administrator shall if any of the participants is an officer or director of the
Company either decide that such officer or director cannot sell the shares of
Common Stock received after Vesting Periods before the end of his or her
functions, or determine the number of shares of Common Stock received after
Vesting Periods that such officer or director shall keep up to the end of his
or her functions.

 

15.8 Restrictions on Transfer. Save for
exceptions listed in Section 15.4 above, French Awards may not be transferred, assigned,
pledged or hypothecated in any manner whatsoever during the Vesting Period.

 

15.9 Other Compliance with French Tax
and Social Security Law.  French Awards granted under the French Sub-plan
must also comply with any other requirements set forth by the French tax and
social security law as interpreted and supplemented by the French tax and
social security guidelines in effect at the date of grant of such Awards.

 

IN WITNESS WHEREOF, this Second Amendment is hereby
executed as of the day and year first above written.

 

 

	
   

  	
   

  	
  CRA INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ James C. Burrows

  
	
   

  	
   

  	
  JAMES
  C. BURROWS

  
	
   

  	
   

  	
  CEO
  AND PRESIDENT

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