Lease Agreement between Water Tower Campbell, LLC and Netrix Corporation (dba Nx Networks, Inc.) for 307 Orchard City Drive, Campbell, CA

Summary

This lease agreement, dated May 18, 2000, is between Water Tower Campbell, LLC (landlord) and Netrix Corporation, doing business as Nx Networks, Inc. (tenant). The landlord leases office space at 307 Orchard City Drive, Campbell, California, to the tenant for a term of seven years starting June 1, 2000, and ending May 31, 2007. The agreement outlines the rent schedule, delivery dates for the premises, and conditions for occupancy and holdover. The tenant is required to pay increasing annual rent in monthly installments and abide by the terms set forth in the lease.

EX-10.1 2 0002.txt LEASE AGREEMENT, DATED MAY 18, 2000 LEASE AGREEMENT Between WATER TOWER CAMPBELL, LLC ------------------------- A CALIFORNIA LIMITED LIABILITY COMPANY -------------------------------------- As Landlord And Netrix Corporation a Delaware Corporation doing business as Nx Networks, Inc. As Tenant Dated as of May 18, 2000 PROPERTY: 307 Orchard City Drive Campbell, California 95008 THIS AGREEMENT made this 18th day of May, 2000. BETWEEN: WATER TOWER CAMPBELL, LLC A California limited liability company, and having a local office at 1690 Dell Avenue in the City of Campbell, California (hereinafter called the "Landlord") OF THE FIRST PART, --- and --- Netrix Corporation,, A Delaware corporation doing business as Nx Networks, Inc.having an office at 13595 Dallas Technology Drive, Suite 100 in the City of Herndon, Virginia 20171 (hereinafter called the "Tenant") OF THE SECOND PART, In consideration of the rents, covenants and agreements hereinafter contained, the Landlord and Tenant hereby agree as follows: 1. LEASED PREMISES LEASED PREMISES The Landlord does demise and lease to the Tenant the premises (the "Leased Premises") located in a building (the "Building") having a municipal address of 307 Orchard City Drive, in the city of Campbell, and known as Suites 350 and 309, Water Tower II (the Leased Premises, the Building, together with the lands described in Schedule "A" attached hereto and present and future improvements, additions and changes thereto being herein called the "Property"). The Leased Premises are located on the Third floor and the approximate location is outlined in heavy black and cross hatched on the plan or plans marked Schedule(s) "B1" attached hereto. The parties agree that the Rentable Area of the Leased Premises is eight thousand five hundred thirty-six (8,536) square feet and has been measured in accordance with the provisions of Schedule "B" attached hereto. 2. TERM TERM (a) TO HAVE AND TO HOLD the Leased Premises for and during the term of seven (7) years and 0 days (the "Term") to be computed from the 1st day of June 2000, and to be fully complete and ended on the 31st day of May 2007, unless otherwise terminated. Suite 350 shall be delivered to Tenant June 1, 2000 and Suite 309 shall be delivered to Tenant July 1, 2000. DELAY (b) If the Leased Premises or any part thereof are not IN OCCUPANCY ready for occupancy on the date of commencement of the Term, no part of the "Rent" (as hereinafter defined) or only a proportionate part thereof, in the event that the Tenant shall occupy a part of the Leased Premises, shall be payable for the period prior to the date when the entire Leased Premises are ready for occupancy and the full Rent shall accrue only after such last mentioned date. The Tenant agrees to accept any such abatement of Rent in full settlement of all claims which the Tenant might otherwise have by reason of the Leased Premises not being ready for occupancy on the date of commencement of the Term, provided that when the Landlord has completed construction of such part of the Leased Premises as it is obliged hereunder to construct, the Tenant shall not be entitled to any abatement of Rent for any delay in occupancy due to the Tenant's failure or delay to provide plans or to complete any special installations or other work required for its purposes or due to any other reason, nor shall the Tenant be entitled to any abatement of Rent for any delay in occupancy if the Landlord has been unable to complete construction of the Leased Premises by reason of such failure or delay by the Tenant. A certificate of the Landlord as to the date the Leased Premises were ready for occupancy and such construction as the Landlord is obliged to complete is substantially completed, or as to the date upon which the same would have been ready for occupancy and completed respectively but for the failure or delay of the Tenant, shall be conclusive and binding on the Tenant and Rent in full shall accrue and become payable from the date set out in the said certificate. Notwithstanding any delay in occupancy, the expiry date of this Lease shall remain unchanged. 2 OVER-HOLDING (c) If at the expiration of the Term or sooner termination hereof, the Tenant shall remain in possession without any further written agreement or in circumstances where a tenancy would thereby be created by implication of law or otherwise, a tenancy from year to year shall not be created by implication of law or otherwise, but the Tenant shall be deemed to be a monthly tenant only, at double "Basic Rent" (as hereinafter defined) payable monthly in advance plus "Additional Rent" (as hereinafter defined) and otherwise upon and subject to the same terms and conditions as herein contained, excepting provisions for renewal (if any) and leasehold improvement allowance (if any), contained herein, and nothing, including the acceptance of any Rent by the Landlord, for periods other than monthly periods, shall extend this Lease to the contrary except an agreement in writing between the Landlord and the Tenant and the Tenant hereby authorizes the Landlord to apply any moneys received from the Tenant in payment of such monthly Rent. Notwithstanding the foregoing, in the event that the Tenant shall hold over after the expiration of the Term and the Landlord shall desire to regain possession of the Leased Premises promptly at the expiration of the Term, then the Landlord, at its sole option, may forthwith re-enter and take possession of the Leased premises without process, or by any legal process in force, Tenant hereby expressly waiving any and all notices to cure or vacate or to quit the Leased Premises provided by current or future law (except for those notices specifically outlined in this Lease). 3. RENT FIRST MONTHLY (a) (i) The Tenant shall without demand, deduction or right BASIC RENT of offset pay to the Landlord (herein called "Basic Rent"), the sum of Thirty-Seven Thousand Five Hundred Fifty-Two and 56/100 Dollars ($37,552.56) of lawful money of the jurisdiction in which the Leased Premises are located upon execution of the lease, for Suite 350 for the month of June, 2000. BASIC RENT (ii) Commencing on the 1st day of July, 2000 and continuing until the 31st day of May, 2001, the Basic Rent shall be increased to Five Hundred Sixty-Five Thousand Four Hundred Twenty-Four and 64/100 dollars ($565,424.64) per annum of lawful money of the jurisdiction in which the Leased Premises are located payable in equal monthly installments of Forty-Seven Thousand One Hundred Eighteen and 72/100 dollars ($47,118.72) each in advance on the first day of each month during the Term, the first payment to be made on the 1st day of July, 2000. INCREASE IN (iii) Commencing on the 1st day of June, 2001 and BASIC RENT continuing until the 31st day of May, 2002, the Basic Rent shall be increased to Five Hundred Ninety-Three Thousand Six Hundred Ninety-Five and 87/100 dollars ($593,695.87) per annum of lawful money of the jurisdiction in which the Leased Premises are located payable in equal monthly installments of Forty - Nine Thousand Four Hundred Seventy-Four and 66/100 dollars ($49,474.66) each in advance on the first day of each month during the Term, the first payment to be made on the 1st day of June, 2001. INCREASE IN (iv) Commencing on the 1st day of June, 2002 and BASIC RENT continuing until the 31st day of May, 2003, the Basic Rent shall be increased to Six Hundred Twenty-Three Thousand Three Hundred Eighty and 64/100 dollars ($623,380.64) per annum of lawful money of the jurisdiction in which the Leased Premises are located payable in equal monthly installments of Fifty - One Thousand Nine Hundred Forty-Eight and 39/100 dollars ($51,948.39) each in advance on the first day of each month during the Term, the first payment to be made on the 1st day of June, 2002. INCREASE IN (v) Commencing on the 1st day of June, 2003 and BASIC RENT continuing until the 31st day of May, 2004, the Basic Rent shall be increased to Six undred Fifty-Four Thousand Five Hundred Forty-Nine and 70/100 dollars ($654,549.70) per annum of lawful money of the jurisdiction in which the Leased Premises are located payable in equal monthly installments of Fifty - Four housand Five Hundred Forty-Five and 81/100 dollars ($54,545.81) each in advance on the first day of each month during the Term, the first payment to be made on the 1st day of June, 2003. INCREASE IN (vi) Commencing on the 1st day of June, 2004 and BASIC RENT continuing until the 31st day of May, 2005, the Basic Rent shall be increased to Six Hundred Eighty-Seven Thousand Two Hundred Seventy-Seven and 18/100 dollars ($687,277.18) per annum of lawful money of the jurisdiction in which the Leased Premises are located payable in equal monthly installments of Fifty-Seven Thousand Two Hundred Seventy-Three and 10/100 dollars ($57,273.10) each in advance on the first day of each month during the Term, the first payment to be made on the 1st day of June, 2004. INCREASE IN (vii) Commencing on the 1st day of June, 2005 and BASIC RENT continuing until the 31st day of May, 2006, the Basic Rent shall be increased to Seven Hundred Twenty-One Thousand Six Hundred Forty-One and 04/100 dollars ($721,641.04) per annum of lawful money of the jurisdiction in which the Leased Premises are located payable in equal monthly installments of Sixty Thousand One Hundred Thirty-Six and 75/100 dollars ($60,136.75) each in advance on the first day of each month during the Term, the first payment to be made on the 1st day of June, 2005. 3 INCREASE IN (viii) Commencing on the 1st day of June, 2006 and BASIC RENT continuing until the 31st day of May, 2007, the Basic Rent shall be increased to Seven Hundred Fifty-Seven Thousand Seven Hundred Twenty-Three and 10/100 dollars ($757,723.10) per annum of lawful money of the jurisdiction in which the Leased Premises are located payable in equal monthly installments of Sixty - Three Thousand One Hundred Forty-Three and 58/100 dollars ($63,143.58) each in advance on the first day of each month during the Term, the first payment to be made on the 1st day of June, 2006. ADDITIONAL (b) The Tenant shall, without deduction or right of RENT offset pay to the Landlord yearly and every year during the Term as additional rental (herein called "Additional Rent") (i) the amounts of any Taxes payable by the Tenant to the Landlord pursuant to the provisions of Schedule "C" attached hereto; and (ii) the amounts required to be paid to the Landlord pursuant to the provisions of Schedule "D" attached hereto. PAYMENT - (c) Additional Rent shall be paid and adjusted with ADDITIONAL RENT reference to a fiscal period of twelve (12) calendar months ("Fiscal Period"), which shall be a calendar year unless the Landlord shall from time to time have selected a Fiscal Period which is not a calendar year by written notice to the Tenant. The Landlord shall advise the Tenant in writing of its estimate of the Additional Rent to be payable by the Tenant during the Fiscal Period (or broken portion of the Fiscal Period, as the case may be, if applicable at the commencement or end of the term or because of a change in Fiscal Period) which commenced upon the commencement date of the Term and for each succeeding Fiscal Period or broken portion thereof which commences during the Term. Such estimate shall in every case be a reasonable estimate and, if requested by the Tenant, shall be accompanied by reasonable particulars of the manner in which it was calculated. The Additional Rent payable by the Tenant shall be paid in equal monthly installments in advance at the same time as payment of Basic Rent is due hereunder based on the Landlord's estimate as aforesaid. From time to time, the Landlord may re-estimate, on a reasonable basis, the amount of Additional Rent for any Fiscal Period or broken portion thereof, in which case the Landlord shall advise the Tenant in writing of such re-estimate and fix new equal monthly installments for the remaining balance of such Fiscal Period or broken portion thereof. After the end of each such Fiscal Period or broken portion thereof the Landlord shall provide the Tenant with a statement of the actual Additional Rent payable in respect of such Fiscal Period or broken portion thereof and a calculation of the amounts by which the Additional Rent payable by the Tenant exceeds or is less than (as the case may be) the aggregate installments paid by the Tenant on account of Additional Rent for such Fiscal Period. Within thirty (30) days after the submission of such statement either the Tenant shall pay to the Landlord any amount by which the amount found payable by the Tenant with respect to such Fiscal Period or broken portion thereof exceeds the aggregate of the monthly payments made by it on account thereof during such Fiscal Period or broken portion thereof, or the Landlord shall pay to the Tenant any amount by which the amount found payable as aforesaid is less than the aggregate of such monthly payments. RECOVERY OF RENT (d) In this Lease "Rent" means all amounts required to be paid by the Tenant pursuant to this Lease including without limitation Basic Rent and Additional Rent. ACCRUAL OF RENT (e) Basic Rent and Additional Rent shall be considered as accruing from day to day, and for an irregular period of less than one year or less than one calendar month shall be apportioned and adjusted by the Landlord for the Fiscal Periods of the Landlord in which the tenancy created hereby commences and expires. Where the calculation of Additional Rent for a period cannot be made until after the termination of this Lease, the obligation of the Tenant to pay Additional Rent shall survive the termination hereof and Additional Rent for such period shall be payable by the Tenant upon demand by the Landlord. If the Term commences or expires on any day other than the first or the last day of a month, Basic Rent and Additional Rent for such fraction of a month shall be apportioned and adjusted as aforesaid and paid by the Tenant on the commencement date of the Term. LIMITATIONS (f) The information set out in statements, documents or other writings setting out the amount of Additional Rent submitted to the Tenant under or pursuant to this Lease shall be binding on the Tenant and deemed to be accepted by it and shall not be subject to amendment for any reason unless the Tenant gives written notice (the "Dispute Notice") to the Landlord within sixty (60) days of the Landlord's submission of such statement, document, or writing identifying the statement, document, or writing. The Dispute Notice shall set out in reasonable detail the reason why such statement, document or writing is in error or otherwise should not be binding on the Tenant. If the Tenant disputes the amount of the Additional Rent as aforesaid, and if such dispute is not resolved within thirty (30) days after the 4 Tenant delivers the Dispute Notice to the Landlord, then the Landlord shall cause an audited statement of Additional Rent to be prepared by an independent nationally recognized firm of chartered accountants. The statement of Additional Rent as prepared by such accountants shall be final and binding upon the parties hereto and within fifteen (15) days after delivery of such statement of Additional Rent to the parties by the accountants the Landlord and Tenant shall readjust Additional Rent as contemplated by section 3(c). The cost of preparation of such audited statement shall be paid by the Tenant as Rent unless the amount of Additional Rent payable by the Tenant as set forth in such audited financial statement is at least 4% less than the amount of Additional Rent demanded by the Landlord in accordance with the statement delivered to the Tenant pursuant to section 3(c). 4. SECURITY DEPOSIT SECURITY DEPOSIT The Tenant shall pay to the Landlord on execution of this Lease by the Tenant the sum of One Hundred Twenty-Six Thousand Two Hundred Eighty-Seven and 18/100 Dollars ($126,287.18) as a deposit to the Landlord to stand as security for the payment by the Tenant of any and all present and future debts and liabilities of the Tenant to the Landlord and for the performance by the Tenant of all of its obligations arising under or in connection with this Lease (the "Debts, Liabilities and Obligations"). The Landlord shall not be required to keep the deposit separate from its general funds. In the event of the Landlord disposing of its interest in this Lease, the Landlord shall credit the deposit to its successor and thereupon shall have no liability to the Tenant to repay the security deposit to the Tenant. Subject to the foregoing and to the Tenant not being in default under this Lease, the Landlord shall repay the security deposit to the Tenant without interest at the end of the Term or sooner termination of the Lease provided that all Debts, Liabilities and Obligations of the Tenant to the Landlord are paid and performed in full, failing which the Landlord may on notice to the Tenant elect to retain the security deposit and to apply it in reduction of the Debts, Liabilities and Obligations and the Tenant shall remain fully liable to the Landlord for payment and performance of the remaining Debts, Liabilities and Obligations. 5. GENERAL COVENANTS LANDLORD'S (a) The Landlord covenants with the Tenant: COVENANT (i) for quiet enjoyment; and (ii) to observe and perform all the covenants and obligations of the Landlord herein. TENANT'S COVENANT (b) The Tenant covenants with the Landlord: (i) to pay Rent; and (ii) to observe and perform all the covenants and obligations of the Tenant herein. 6. USE AND OCCUPANCY USE The Tenant covenants with the Landlord: (a) not to use the Leased Premises for any purpose other than an office for the conduct of the Tenant's business which is general office and such use shall be consistent with the character of the Property and compatible with the other uses of the Property; WASTE, NUISANCE, (b) not to commit, or permit, any waste, injury or damage to ETC. the Property including the Leasehold Improvements and any trade fixtures therein, any loading of the floors thereof in excess of the maximum degree of loading as determined by the Landlord acting reasonably, any nuisance therein or any use or manner of use causing annoyance to other tenants and occupants of the Property or to the Landlord; INSURANCE RISKS (c) not to do, omit or permit to be done or omitted to be done upon the Property anything which would cause to be increased the Landlord's cost of insurance or the costs of insurance of another tenant of the Property against perils as to which the Landlord or such other tenant has insured or which shall cause any policy of insurance on the Property to be subject to cancellation; COMPLIANCE WITH (d) to comply at its own expense with all governmental laws, LAW regulations and requirements (1) related to Tenant's specific manner of use of the Premises, Tenant's change in use of the Premises, Tenant's alterations, 5 additions, or improvements to the Premises, Tenant's application for governmental approvals, licenses or permits or Tenant's negligence of willful misconduct or (2) pertaining to the condition of the Leasehold Improvements, trade fixtures, furniture and equipment installed by or on behalf of the Tenant in the Premises and the making by the Tenant of any repairs, changes or improvements therein. The foregoing shall not be a limitation to any Operating Expenses Tenant is responsible for pursuant to Schedule "D". ENVIRONMENTAL (e) (i) to conduct and maintain its business and operations COMPLIANCE at the Leased Premises so as to comply in all respects with common law and with all present and future applicable federal, provincial/ state, local, municipal, governmental or quasi-governmental laws, by-laws, rules, regulations, licenses, orders, guidelines, directives, permits, decisions or requirements concerning occupational or public health and safety or the environment and any order, injunction, judgment, declaration, notice or demand issued thereunder, ("Environmental Laws"), in each case to the extent applicable to Tenant's business and operations at the Leased Premises; (ii) not to permit or suffer any substance which is hazardous or is prohibited, restricted, regulated or controlled under any Environmental Law to be present at, on or in the Leased Premises, excluding normal office supplies in customary quantities, unless it has received the prior written consent of the Landlord which consent may be arbitrarily withheld; RULES AND (f) to observe and perform, and to cause its employees, REGULATIONS invitees and others over whom the Tenant can reasonably be expected to exercise control to observe and perform, the Rules and Regulations contained in Schedule "E" hereto, and such further and other reasonable rules and regulations and amendments and additions therein as may hereafter be made by the Landlord and notified in writing to the Tenant, except that no change or addition may be made that is inconsistent with this Lease unless as may be required by governmental regulation or unless the Tenant consents thereto. The imposition of such Rules and Regulations shall not create or imply any obligation of the Landlord to enforce them or create any liability of the Landlord for their non-enforcement or otherwise. 6A. LANDLORD REPRESENTATION OF COMPLIANCE Landlord represents to Tenant that, to the actual knowledge of Scott Trobbe and Jim Mair (and without any duty of investigation or inquiry), the Leased Premises comply with all applicable building codes and other laws and regulations in effect at the time the applicable improvements comprising the Leased Premises were constructed. Landlord further represents to Tenant that, to the actual knowledge of Scott Trobbe and Jim Mair (and without any duty of investigation or inquiry), Landlord has received no written notice from any governmental agency that the Leased Premises are in violation of any applicable building codes or other laws in effect as of the date of this Lease. 6 7. ASSIGNMENT AND SUB-LETTING NO ASSIGNMENT (a) The Tenant covenants that it will not assign this Lease AND SUB-LETTING or sublet all or any part of the Leased Premises or mortgage or encumber this Lease or the Leased Premises or any part thereof, or suffer or permit the occupation of all or any part thereof by others (each of which is a "Transfer") without the prior written consent of the Landlord, which consent the Landlord covenants not to withhold unreasonably (i) as to any assignee, subtenant or occupant (the "Transferee") who is in a satisfactory financial condition, agrees to use the Leased Premises for those purposes permitted hereunder, and (ii) as to any portion of the Leased Premises which, in the Landlord's reasonable judgment, is a proper and rational division of the Leased Premises, subject to the Landlord's right of termination arising under this paragraph. This prohibition against a Transfer shall not be construed to include a prohibition against any Transfer by operation of law. As used herein "Transfer" shall not include any assignment by Tenant to a subsidiary of the Tenant so long as Sections 7(d) and 7(e) hereof are complied with by the Tenant, and provided said subsidiary has a net worth of at least Ten Million Dollars ($10,000,000.00). ASSIGNMENT OR (b) The Tenant shall not effect a Transfer unless: SUB-LETTING PROCEDURES (i) it shall have received or procured a bona fide written offer to take an assignment or sublease which is not inconsistent with the Lease, and the acceptance of which would not breach any provision of this Lease if this paragraph is complied with and which the Tenant has determined to accept subject to this paragraph being complied with, and (ii) it shall have first requested and obtained the consent in writing of the Landlord thereto pursuant to Section 7(a). Any request for consent shall be in writing and accompanied by a copy of the offer certified by the Tenant to be true and complete, and the Tenant shall furnish to the Landlord 6 all information available to the Tenant and reasonably requested by the Landlord as to the responsibility, financial standing and business of the proposed Transferee. Notwithstanding the provisions of sub-paragraph (a), within twenty (20) days after the receipt by the Landlord of such request for consent and of all information which the Landlord shall have requested hereunder, the Landlord shall have the right upon written notice of termination submitted to the Tenant, if the request is to assign this Lease or sublet the whole of the Leased Premises, to cancel and terminate this Lease, or if the request is to sublet a part of the Leased Premises only, to cancel and terminate this Lease with respect to such part, in each case as of a termination date to be stipulated in the notice of termination which shall be not less than sixty (60) days or more than ninety (90) days following the giving of such notice. In such event the Tenant shall surrender the whole or part, as the case may be, of the Leased Premises in accordance with such notice of termination and Basic Rent and Additional Rent shall be apportioned and paid to the date of surrender and, if a part only of the Leased Premises is surrendered, Basic Rent and Additional Rent shall after the date of surrender abate proportionately. If such consent shall be given the Tenant shall effect the Transfer only upon the terms set out in the offer submitted to the Landlord as aforesaid and not otherwise. Any consent shall be given without prejudice to the Landlord's rights under the Lease and shall be limited to the particular Transfer in respect of which it was given and shall not be deemed to be an authorization for or consent to any further or other Transfer. EXCESS TRANSFER (c) In the event the Landlord consents to any Transfer, RENT the Tenant shall p ay to the Landlord, as and when amounts on account are due or paid by the Transferee to the Tenant, 50 of all excess Transfer rents (hereinafter called the "Excess Transfer Rent"), if any, as Rent. The Excess Transfer Rent shall be determined in accordance with the following: It shall be a condition to Landlord's consent to any subleasing, assignment or other transfer of part or all of Tenant's interest in the Premises (hereinafter referred to as a "Transfer") that upon Landlord's consent to any Transfer, Tenant shall pay and continue to pay as Additional Rent over the term of the sublease or assignment to Landlord fifty percent (505%) of all consideration of any kind whatsoever (including, but not by way of limitation, a premium rental for a sublease or lump sum payment for an assignment, and/or the value of any stock warrants or stock options given as consideration for an assignment or subletting, and/or any consideration or money paid in consideration of or for any leasehold improvements constructed or installed by or for Tenant at Tenant's cost, or any portion of such leasehold improvements constructed by or for Tenant, and/or consideration or other money paid (in excess of the fair market value thereof) for Tenant's fixtures, trade fixtures, equipment and/or personal property used in connection with the Premises) in excess of the rental and other charges due Landlord under this Lease (prorated in the event of a sublease of less than the entire Premises), paid to or on account of Tenant, after Tenant's deduction therefrom of all reasonable brokerage commissions and reasonable attorney's fees to effect such assignment or subletting. The Tenant agrees to promptly furnish such information with regard to the Excess Transfer Rent as the Landlord may reasonably request from time to time. ASSUMPTION OF (d) No Transfer shall be effective unless the Transferee OBLIGATIONS shall execute an agreement on the Landlord's form, assuming all the obligations of the Tenant hereunder, and shall have paid to the Landlord its reasonable fee for processing the Transfer. TENANT'S (e) The Tenant agrees that any consent to a Transfer shall CONTINUING not thereby release the Tenant of its obligations hereunder. OBLIGATIONS CHANGE OF CONTROL (f) If the Tenant or occupant of the Leased Premises at any time is a corporation, it is acknowledged and agreed that the transfer of the majority of the issued apital stock of the corporation or the transfer or issuance of any capital stock of the corporation sufficient to transfer effective voting control of the corporation to others than the shareholder or shareholders having effective voting control of the corporation immediately prior to such transfer or issuance, shall be deemed for all purposes of this paragraph 7 to be a Transfer and, accordingly, a violation of this paragraph 7 respecting assignment of this Lease unless the prior written consent of the Landlord is first obtained, and the Landlord shall have all of the same rights in respect thereof as though any such transfer or issuing of shares or proposed transferring or issuing of shares were a Transfer. The Landlord shall have access at all times to the corporate books and records of the Tenant, and the Tenant shall make the same available to the Landlord or its representatives upon request, for inspection and copying at all times in order to ascertain whether or not there has at any time during the Term of this Lease been a transfer or issuing of shares sufficient to constitute a change in the effective voting control of the Tenant. This subparagraph 7 (f) shall not apply to the Tenant if and for so long as the Tenant is a corporation whose shares are listed and traded on any recognized stock exchange in Canada or the United States, and shall not apply to a corporation that controls the Tenant if such controlling corporation itself is a corporation with a net worth of at least Fifty Million Dollars ($50,000,000.00). Tenant agrees that any 7 consent of transfer or change of control does not release Tenant from its obligations hereunder. (g) Notwithstanding anything in this Lease to the contrary, the Tenant shall not be permitted without the written consent of the Landlord pursuant to this Section 7 to effect a Transfer to tenants currently occupying space in the Property. Landlord consents to a sublease to the current tenant, Nick Talesfore, dba Talesfore Design, pursuant to Section 7 (a), provided that Tenant complies with the remaining provisions of this Section 7 with respect to such transfer. 8. REPAIR & DAMAGE LANDLORD'S (a) The Landlord covenants with the Tenant to keep in a REPAIRS TO good and reasonable state of repair and decoration: BUILDING & PROPERTY (i) those portions of the Property consisting of the entrance, lobbies, stairways, corridors, landscaped areas, parking areas, and other facilities from time to time provided for use in common by the Tenant and other tenants of the Building or Property, and the exterior portions (including foundations and roofs) of all buildings and structures from time to time forming part of the Property and affecting its general appearance; and (ii) the Building (other than the Leased Premises and premises of other tenants) including the systems for interior climate control, the elevators and escalators (if any), entrance lobbies, stairways, corridors and washrooms from time to time provided for use in common by the Tenant and other tenants of Building or Property and the systems provided for use in common by the Tenant and other tenants of the Building or Property and the systems provided for bringing utilities to the Leased Premises. LANDLORD'S (b) The Landlord covenants with the Tenant to repair, so REPAIRS TO THE far as reasonably feasible, and as expeditiously as LEASED PREMISES reasonably feasible, defects in standard demising walls or in structural elements, exterior walls of the Building, suspended ceiling, electrical and mechanical installations standard to the Building installed by the Landlord in the Leased Premises (if and to the extent that such defects are sufficient to impair the Tenant's use of the Leased Premises while using them in a manner consistent with this Lease) and "Insured Damage" (as herein defined). The Landlord shall in no event be required to make repairs to Leasehold Improvements made by the Tenant, or by the Landlord on behalf of the Tenant or another tenant or to make repairs to wear and tear within the Leased Premises. Tenant's Repairs (c) The Tenant covenants with the Landlord to repair, maintain and keep at the Tenant's own cost, except insofar as the obligation to repair rests upon the Landlord pursuant to this paragraph, the Leased Premises, including Leasehold Improvements in good and substantial repair, reasonable wear and tear excepted, provided that this obligation shall not extend to structural elements or to exterior glass or to repairs which the Landlord would be required to make under this paragraph but for the exclusion therefrom of defects not sufficient to impair the Tenant's use of the Leased Premises while using them in a manner consistent with this Lease. The Landlord may enter the Leased Premises at all reasonable times and view the condition thereof and the Tenant covenants with the Landlord to repair, maintain and keep the Leased Premises in good and substantial repair according to notice in writing, reasonable wear and tear excepted. If the Tenant shall fail to repair as aforesaid after reasonable notice to do so, the Landlord may effect the repairs and the Tenant shall pay the reasonable cost thereof to the Landlord on demand. The Tenant covenants with the Landlord that the Tenant will at the expiration of the Term or sooner termination thereof peaceably surrender the Leased Premises and appurtenances in good and substantial repair and condition, reasonable wear and tear excepted. Indemnification (d) If any part of the Property becomes out of repair, damaged or destroyed through the negligence of, or misuse by, the Tenant or its employees, agents, invitees or others under its control, the Tenant shall pay the Landlord on demand the expense of repairs or replacements, including the Landlord's reasonable administration charge thereof, necessitated by such negligence or misuse. DAMAGE AND (e) It is agreed between the Landlord and the Tenant DESTRUCTION that: (i) in the event of damage to the Property or to any part thereof, if in the reasonable opinion of the Landlord the damage is such that the Leased Premises or any substantial part thereof is rendered not reasonably capable of use and occupancy by the Tenant for the purposes of its business for any period of time in excess of ten (10) days, then (1) unless the damage was caused by the fault or negligence of the Tenant or its employees, agents, invitees or others under its control, from the date of occurrence of the damage and until the Leased Premises are again reasonably capable for use and occupancy as aforesaid, the Rent payable pursuant to this Lease shall abate from time to time in proportion to the part or parts of 8 the Leased Premises not reasonably capable of such use and occupancy, and (2) unless this Lease is terminated as hereinafter provided, the Landlord or the Tenant as the case may be (according to the nature of the damage and their respective obligations to repair as provided in sub-paragraphs (a), (b) and (c) of this paragraph) shall repair such damage with all reasonable diligence, but to the extent that any part of the Leased Premises is not reasonably capable of such use and occupancy by reason of damage which the Tenant is obligated to repair hereunder, any abatement of Rent to which the Tenant would otherwise be entitled hereunder shall not extend later than the time by which, in the reasonable opinion of the Landlord, repairs by the Tenant ought to have been completed with reasonable diligence; (ii) if the damage is such that the Leased Premises are rendered untenantable, in whole or in part, and if, in the opinion of the Landlord, the damage cannot be repaired with reasonable diligence within one hundred and eighty (180) days from the happening of the damage, then the Landlord may, within thirty (30) days after the date of the damage, terminate this Lease by notice to the Tenant. Upon the Landlord giving such notice, this Lease shall be terminated as of the date of the damage and the Rent and all other payments for which the Tenant is liable under the terms of this Lease shall be apportioned and paid in full to the date of the damage. If the Leased Premises are not repaired within 180 days after the date of damage, the Tenant may, within 30 days after such 180th day, terminate this Lease by notice to the Landlord. Upon the Tenant giving such notice, this Lease shall be terminated as of the date of damage and the Rent and all other payments for which the Tenant is liable under the terms of this Lease shall be apportioned and paid in full to the date of damage; (iii) the Landlord shall not be required to use plans and specifications and working drawings used in the original construction of the Building and nothing in this Section requires the Landlord to rebuild the Building in the condition and state that existed before the damage, but the Building, as rebuilt, will have reasonably similar facilities and services to those in the Building prior to the damage; and (iv) if premises whether of the Tenant or other tenants of the Property comprising in the aggregate half or more of the total number of square feet of rentable office area in the Property or half or more of the total number of square feet of rentable office area in the Building (as determined by the Landlord) or portions of the Property which affect access or services essential thereto, are substantially damaged or destroyed by any cause and if in the reasonable opinion of the Landlord the damage cannot reasonably be repaired within one hundred and eighty (180) days after the occurrence thereof, then the Landlord may, by written notice to the Tenant given within thirty (30) days after the occurrence of such damage or destruction, terminate this Lease, in which event neither the Landlord nor the Tenant shall be bound to repair as provided in sub-paragraphs (a) (b) and (c) of this paragraph, and the Tenant shall instead deliver up possession of the Leased Premises to the Landlord with reasonable expedition but in any event within sixty (60) days after delivery of such notice of termination, and Rent shall be apportioned and paid to the date upon which possession is so delivered up (but subject to any abatement to which the Tenant may be entitled under sub-paragraph (e) (i) of this paragraph). 9. INSURANCE AND LIABILITY LANDLORD'S (a) The Landlord shall take out and keep in force during INSURANCE the Term insurance with respect to the Property except for the "Leasehold Improvements" (as hereinafter defined) in the Leased Premises. The insurance to be maintained by the Landlord shall be in respect of perils and in amounts and on terms and conditions which from time to time are insurable at a reasonable premium and which are normally insured by reasonable prudent owners of properties similar to the Property, all as from time to time determined at reasonable intervals by insurance advisors selected by the Landlord, and whose opinion shall be conclusive. Unless and until the insurance advisors shall state that any such perils are not customarily insured against by owners of properties similar to the Property, the perils to be insured against by the Landlord shall include, without limitation, public liability, boilers and machinery, fire and extended perils and may include at the option of the Landlord losses suffered by the Landlord in its capacity as Landlord through business interruption. The insurance to be maintained by the Landlord shall contain a waiver by the insurer of any rights of subrogation or indemnity or any other claim over which the insurer might otherwise be entitled against the Tenant or the agents or employees of the Tenant. TENANT'S (b) The Tenant shall take out and keep in force during the INSURANCE Term: (i) comprehensive general public liability insurance all on an occurrence basis with respect to the business carried on in or from the Leased Premises and the Tenant's use and occupancy of the 9 Leased Premises and of any other part of the Property, with coverage for any one occurrence or claim of not less than Five Million Dollars ($5,000,000) or such other amount as the Landlord may reasonably require upon not less than one (1) month notice at any time during the Term, which insurance shall include the Landlord as a named insured and shall contain a cross liability clause protecting the Landlord in respect of claims by the Tenant as if the Landlord were separately insured; and, (ii) insurance against such other perils and in such amounts as the Landlord may from time to time reasonably require upon not less than ninety (90) days' written notice, such requirement to be made on the basis that the required insurance is customary at the time for similarly situated tenants of properties similar to the Property. All insurance required to be maintained by the Tenant shall be on terms and with insurers satisfactory to the Landlord. Each policy shall contain: (A) a waiver by the insurer of any rights of subrogation or indemnity or any other claim over to which the insurer might otherwise be entitled against the Landlord or the agents or employees of the Landlord, (B) a cross liability clause and (C) an undertaking by the insurer that no material change adverse to the Landlord or the Tenant will be made, and the policy will not lapse or be canceled, except after not less than thirty (30) days' written notice to the Landlord of the intended change, lapse or cancellation. The Tenant shall furnish to the Landlord, if and whenever requested by it, certificates or other evidences acceptable to the Landlord as to the insurance from time to time effected by the Tenant and its renewal or continuation in force, together with evidence as to the method of determination of full replacement cost of the Tenant's Leasehold Improvements, trade fixtures, furniture and equipment, and if the Landlord reasonably concludes that the full replacement cost has been underestimated, the Tenant shall forthwith arrange for any consequent increase in coverage required under sub-paragraph (b). If the Tenant shall fail to take out, renew and keep in force such insurance, or if the evidences submitted to the Landlord are unacceptable to the Landlord (or no such evidences are submitted within a reasonable period after request therefor by the Landlord), then the Landlord may give to the Tenant written notice requiring compliance with this sub-paragraph and specifying the respects in which the Tenant is not then in compliance with this sub-paragraph. If the Tenant does not within forty-eight (48) hours provide appropriate evidence of compliance with this sub-paragraph, the Landlord may (but shall not be obligated to) obtain some or all of the additional coverage or other insurance which the Tenant shall have failed to obtain, without prejudice to any other rights of the Landlord under this Lease or otherwise, and the Tenant shall pay all premiums and other reasonable expenses incurred by the Landlord to the Landlord on demand. LIMITATION OF (c) The Tenant agrees that the Landlord shall not be LANDLORD'S liable for any bodily injury or death of, or loss or damage LIABILITY to any property belonging to, the Tenant or its employees, invitees or licensees or any other person in, on or about the Property unless resulting from the actual willful misconduct or gross negligence of the Landlord or its own employees; provided however, under no circumstances shall Landlord be liable for any claims of lost profits, loss of income or lost business. In no event shall the Landlord be liable for any damage, including indirect, special or consequential damages, which is caused by steam, water, rain or snow or other thing which may leak into, issue or flow from any part of the Property or from the pipes or plumbing works, including the sprinkler system (if any) therein or from any other place or for any damage caused by or attributable to the condition or arrangement of any electric or other wiring or of sprinkler heads (if any) or for any such damage caused by anything done or omitted by any other tenant, except to the extent the same arise from the actual willful misconduct or gross negligence of the Landlord or its employees. In the event Tenant has any claim against Landlord under this Lease, such claim shall only be against Landlord's interest in the Property and Landlord's members shall have no liability hereunder. INDEMNITY OF (d) Except with respect to claims or liabilities in respect LANDLORD of any damage which is Insured Damage to the extent of the cost of repairing such Insured Damage, the Tenant agrees to indemnify and save harmless the Landlord in respect of: (i) all claims for bodily injury or death, property damage or other loss or damage arising from the conduct of any work or any act or omission of the Tenant or any assignee, sub-tenant, agent, employee, contractor, invitee or licensee of the Tenant, and in respect of all costs, expenses and liabilities incurred by the Landlord in connection with or arising out of all such claims, including the expenses of any action or proceeding pertaining thereto; and (ii) any loss, cost, (including, without limitation, lawyers' fees and disbursements), expense or damage suffered by the Landlord arising from any breach by the Tenant of any of its covenants and obligations under this Lease. 10 DEFINITION OF "INSURED DAMAGE" e) For purposes of this Lease, "Insured Damage" means that part of any damage occurring to the Property of which the entire cost of repair (or the entire cost of repair other than deductible amount properly collectable by the Landlord as part of the Additional Rent) is actually recovered by the Landlord under a policy or policies of insurance from time to time effected by the Landlord pursuant to sub-paragraph (a) Where an applicable policy of insurance contains an exclusion for damages recoverable from a third party, claims as to which the exclusion applies shall be considered to constitute Insured Damage only if the Landlord successfully recovers from the third party. 10. EVENTS OF DEFAULT AND REMEDIES EVENTS OF DEFAULT (a) In the event of the happening of any one of the AND REMEDIES following events: (i) the Tenant shall have failed to pay an installment of Rent or any other amount payable hereunder when due, and such failure shall be continuing for a period of more than ten (10) days after the date such installment or amount was due; (ii) there shall be a default of or with any condition, covenant, agreement or other obligation on the part of the Tenant to be kept, observed or performed hereunder (other than the obligation to pay Rent or any other amount of money) and such default shall be continuing for a period of more than fifteen (15) days after written notice by the Landlord to the Tenant specifying the default and requiring that it be cured; (iii) if any policy of insurance upon the Property or any part thereof from time to time effected by the Landlord shall be canceled or about to be canceled by the insurer by reason of the use or occupation of the Leased Premises by the Tenant or any assignee, sub-tenant or licensee of the Tenant or anyone permitted by the Tenant to be upon the Leased Premises and the Tenant after receipt of notice in writing from the Landlord shall have failed to take such immediate steps in respect of such use or occupation as shall enable the Landlord to reinstate or avoid cancellation (as the case may be) of such policy of insurance; (iv) the Leased Premises shall, without the prior written consent of the Landlord, be used by any other persons than the Tenant or a permitted Transferee or for any purpose other than that for which they were leased or occupied or by any persons whose occupancy is prohibited by this Lease; (v) the Leased Premises shall be vacated or abandoned, or remain unoccupied without the prior written consent of the Landlord for fifteen (15) consecutive days or more while capable of being occupied; (vi) the balance of the Term of this Lease or any of the goods and chattels of the Tenant located in the Leased Premises, shall at any time be seized in execution or attachment; or (vii) the Tenant shall make any assignment for the benefit of creditors or become bankrupt or insolvent or take the benefit of any statute for bankrupt or insolvent debtors or, if a corporation, shall take any steps or suffer any order to be made for its winding-up or other termination of its corporate existence; or a trustee, receiver or receiver-manager or agent or other like person shall be appointed of any of the assets of the Tenant; then the Landlord shall have the following rights and remedies all of which are cumulative and not alternative and not to the exclusion of any other or additional rights and remedies in law or equity available to the Landlord by statute or otherwise: (A) to remedy or attempt to remedy any default of the Tenant, and in so doing to make any payments due or alleged to be due by the Tenant to third parties and to enter upon the Leased Premises to do any work or other things therein, and in such event all reasonable expenses of the Landlord in remedying or attempting to remedy such default shall be payable by the Tenant to the Landlord on demand; (B) with respect to unpaid overdue Rent, to the payment by the Tenant of the Rent and of interest (which said interest shall be deemed included herein in the term "Rent") thereon at a rate equal to the lesser of three percent (3%) above the prime commercial loan rate charged to borrowers having the highest credit rating from time to time by the Landlord's principal bank from the date upon which the same was due until actual payment thereof and the maximum amount allowed under the laws of the jurisdiction in which the Building is located; 11 (C) to terminate this Lease forthwith by leaving upon the Leased Premises or by affixing to an entrance door to the Leased Premises notice terminating the Lease and to immediately thereafter cease to furnish any services hereunder and enter into and upon the Leased Premises or any part thereof in the name of the whole and the same to have again, re-possess and enjoy as of its former estate, anything in this Lease contained to the contrary notwithstanding. The Tenant hereby expressly waives any and all notices (other than those notices specifically outlined in this Lease) to cure or vacate or to quit the Leased Premises provided by current or future law; (D) to enter the Leased Premises as agent of the Tenant and as such agent to re-let them and to receive the rent therefor and as the agent of the Tenant to take possession of any furniture or other property thereon and upon giving ten (10) days' written notice to the Tenant to store the same at the expense and risk of the Tenant or to sell or otherwise dispose of the same at public or private sale without further notice and to apply the proceeds thereof and any rent derived from re-letting the Leased Premises upon account of the Rent due and to become due under this Lease and the Tenant shall be liable to the Landlord for the deficiency if any; and (E) in the event of any breach by the Tenant of any of the covenants or provisions of this Lease, the Landlord shall have the right of injunction and the right to invoke any remedy allowed at law or in equity, and mention in this Lease of any particular remedy shall not preclude the Landlord from any other remedy at law or in equity. Tenant hereby expressly waives any and all rights of redemption or to any notice to quit granted by or under any present or future laws in the event of this Lease being terminated and/or Landlord obtaining possession of the Leased Premises pursuant to the provisions of this section. PAYMENT OF RENT, (b) Upon the giving by the Landlord of a notice in ETC.ON writing terminating this Lease under paragraph 10 TERMINATION (a)(C), above, this Lease and the Term shall terminate, the Tenant shall remain liable for and shall pay on demand by the Landlord (i) the full amount of all Rent which would have accrued until the date on which this Lease would have expired had such such termination not occurred, and any and all damages and expenses incurred by the Landlord in re-entering and repossessing the Leased Premises in making good any default of the Tenant, in making any alterations to the Leased Premises, and any and all expenses which the Landlord may incur during the occupancy of any new tenant, less (ii) the net proceeds of any re-letting of the Leased Premises which has occurred at the time of the aforesaid demand by the Landlord to the Tenant. The Tenant agrees to pay to the Landlord the difference between items (i) and (ii) above for the period through and including the date on which this Lease would have expired if it had not been terminated. The Landlord shall be entitled to any excess with no credit to the Tenant. The Landlord may, in its sole discretion, make demand on the Tenant as aforesaid on any one or more occasions, and any suit brought by the Landlord to enforce collection of such difference for any one month shall not prejudice the Landlord's right to enforce the collection of any difference for any subsequent month or months. In addition to the foregoing, and without regard to whether this Lease has been terminated, Tenant shall pay to the Landlord all costs incurred by the Landlord, including reasonable attorneys' fees, with respect to any lawsuit or action instituted or taken by the Landlord to enforce the provisions of this Lease. The Tenant's liability shall survive the institution of summary proceedings and the issuance of any warrant hereunder. If the Landlord determines that it is impracticable or extremely difficult to fix the actual damages, then, as an alternative to the remedy set forth in the preceding paragraph, the Tenant will pay to the Landlord on demand, liquidated and agreed final damages for the Tenant's default calculated in accordance with this paragraph. Liquidated damages hereunder shall be an amount equal to the present value at a rate of six percent (6%) per annum of the excess, if any, of (i) all Rent payable under this Lease from the date of such demand for what would be the then unexpired Term of this Lease in the absence of such termination over (ii) the then fair market rental value of the Leased Premises (as determined by the Landlord). If any law shall limit the amount agreed upon, the Landlord shall be entitled to the maximum amount allowable under such law. Nothing herein shall be construed to affect or prejudice the Landlord's right to prove, and claim in full, unpaid rent accrued prior to termination of this Lease. Upon termination of this Lease and the Term, the Tenant shall immediately deliver up possession of the Leased Premises to the Landlord, and the Landlord may forthwith re-enter and take possession of them. (c) The Tenant shall pay to the Landlord on demand all costs and expenses, including lawyers' fees, incurred by the Landlord in enforcing any of the obligations of the Tenant under this Lease. 12 ADDITIONAL PROVISIONS COMMON AREAS 11. The Tenant acknowledges and agrees that the common areas of the Property shall at all times be subject to the exclusive management and control of the Landlord. Without limiting the generality of the foregoing, the Tenant specifically acknowledges and agrees that the Landlord may temporarily close or restrict the use of all or any part of the common areas of the Property in an emergency, or for security or crowd control purposes, to facilitate tenants moving in or out of the building, or for the purpose of making repairs, alterations or renovations. The Landlord agrees not to permanently alter such common areas in any manner which would deny reasonable access to the Leased Premises. In the event of any such temporary closure or restriction of use or if changes are made to such common areas by the Landlord, the Landlord shall not be subject to any liability nor shall the Tenant be entitled to any compensation or any diminution or abatement of Rent and such closures, restriction and changes shall not be deemed to be a constructive or actual eviction or a breach of the Landlord's covenant for quiet enjoyment. 12. [Intentionally omitted] SUBORDINATION AND 13. This Lease and all rights of the Tenant hereunder are ATTORNMENT subject and subordinate to all underlying leases and charges, or mortgages now or hereafter existing (including charges, and mortgages by way of debenture, note, bond, deeds of trust and mortgage and all instruments supplemental thereto) which may now or hereafter affect the Property or any part thereof and to all renewals, modifications, consolidations, replacements and extensions thereof provided the lessor, chargee, mortgagee or trustee agrees to accept this Lease if not in default; and in recognition of the foregoing the Tenant agrees that it will, whenever requested, attorn to such lessor, chargee, mortgagee as a tenant upon all the terms of this Lease. The Tenant agrees to execute promptly whenever requested by the Landlord or by the holder of any such lease, charge, or mortgage an instrument of subordination or attornment as may be required of it. CERTIFICATES 14. The Tenant agrees that it shall promptly whenever requested by the Landlord from time to time execute and deliver to the Landlord, and if required by the Landlord, to any lessor, chargee, or mortgagee (including any trustee) or other person designated by the Landlord, an acknowledgment in writing as to the then status of this Lease, including as to whether it is in full force and effect, is modified or unmodified, confirming the Rent payable hereunder and the state of the accounts between Landlord and the Tenant, the existence or non-existence of defaults, and any other matters pertaining to this Lease as to which the Landlord shall request an acknowledgment. INSPECTION OF AND 15. The Landlord shall be permitted at any time and from ACCESS TO THE time to time to enter and to have its authorized agents, LEASED PREMISES employees and contractors enter the Leased Premises for the purposes of inspection, window cleaning, maintenance, providing janitor service, making repairs, alterations or improvements to the Leased Premises or the Property, or to have access to utilities and services (including all ducts and access panels (if any), which the Tenant agrees not to obstruct) and the Tenant shall provide free and unhampered access for the purpose, and shall not be entitled to compensation or any diminution or abatement of Rent for any inconvenience, nuisance or discomfort caused thereby. The Landlord and its authorized agents and employees shall be permitted entry to the Leased Premises for the purpose of exhibiting them to prospective tenants. The Landlord in exercising its rights under this paragraph shall do so to the extent reasonably necessary so as to minimize interference with the Tenant's use and enjoyment of the Leased Premises provided that in an emergency the Landlord or persons authorized by it may enter the Leased Premises without regard to minimizing interference. DELAY 16. Except as herein otherwise expressly provided, if and whenever and to the extent that either the Landlord or the Tenant shall be prevented, delayed or restricted in the fulfillment of any obligation hereunder in respect of the supply or provision of any service or utility, the making of any repair, the doing of any work or any other thing (other than the payment of moneys required to be paid by the Tenant to the Landlord hereunder) by reason of: (a) strikes or work stoppages; (b) being unable to obtain any material, service, utility or labor required to fulfill such obligation; (c) any statute, law or regulation of, or inability to obtain any permission from any government authority having lawful jurisdiction preventing, delaying or restricting such fulfillment; -or- (d) other unavoidable occurrence, 13 the time for fulfillment of such obligation shall be extended during the period in which such circumstance operates to prevent, delay or restrict the fulfillment thereof, and the other party to this Lease shall not be entitled to compensation for any inconvenience, nuisance or discomfort thereby occasioned; provided that nevertheless the Landlord will use its best efforts to maintain services essential to the use and enjoyment of the Leased Premises and provided further that if the Landlord shall be prevented, delayed or restricted in the fulfillment of any such obligation hereunder by reason of any of the circumstances set out in sub-paragraph (c) of this paragraph 15 and to fulfill such obligation could not, in the reasonable opinion of the Landlord, be completed without substantial additions to or renovations of the Property, the Landlord may on sixty (60) days' written notice to the Tenant terminate this Lease. WAIVER 17. If either the Landlord or the Tenant shall overlook, excuse, condone or suffer any default, breach, non-observance, improper compliance or non-compliance by the other of any obligation hereunder, this shall not operate as a waiver of such obligation in respect of any continuing or subsequent default, breach, or non-observance, and no such waiver shall be implied but shall only be effective if expressed in writing. SALE, DEMOLITION 18. (a) The term "Landlord" as used in this Lease, AND RENOVATION means only the owner for the time being of the Property, so that in the event of any sale or sales or transfer or transfers of the Property, or the making of any lease or leases thereof, or the sale or sales or the transfer or transfers or the assignment or assignments of any such lease or leases, previous landlords shall be and hereby are relieved of all covenants and obligations of Landlord hereunder. It shall be deemed and construed without further agreement between the parties, or their successors in interest, or between the parties and the transferee or acquirer, at any such sale, transfer or assignment, or lessee on the making of any such lease, that the transferee, acquirer or lessee has assumed and agreed to carry out any and all of the covenants and obligations of Landlord hereunder to Landlord's exoneration, and Tenant shall thereafter be bound to and shall attorn to such transferee, acquirer or lessee, as the case may be, as Landlord under this Lease; (b) Notwithstanding anything contained in this Lease to the contrary, in the event the Landlord intends to demolish or to renovate substantially all the Building, then the Landlord, upon giving the Tenant one hundred and eighty (180) days' written notice, shall have the right to terminate this Lease and this Lease shall thereupon expire on the expiration of one hundred and eighty (180) days from the date of the giving of such notice without compensation of any kind to the Tenant. PUBLIC TAKING 19. The Landlord and Tenant shall co-operate, each with the other, in respect of any Public Taking of the Leased Premises or any part thereof so that the Tenant may receive the maximum award to which it is entitled in law for relocation costs and business interruption and so that the Landlord may receive the maximum award for all other compensation arising from or relating to such Public Taking (including all compensation for the value of the Tenant's leasehold interest subject to the Public Taking) which shall be the property of the Landlord, and the Tenant's rights to such compensation are hereby assigned to the Landlord. If the whole or any part of the Leased Premises is Publicly Taken, as between the parties hereto, their respective rights and obligations under this Lease shall continue until the day on which the Public Taking authority takes possession thereof. If the whole or any part of the Leased Premises is Publicly Taken, the Landlord shall have the option, to be exercised by written notice to the Tenant, to terminate this Lease and such termination shall be effective on the day the Public Taking authority takes possession of the whole or the portion of the Property Publicly Taken. Rent and all other payments shall be adjusted as of the date of such termination and the Tenant shall, on the date of such Public Taking, vacate the Leased Premises and surrender the same to the Landlord, with the Landlord having the right to re-enter and re-possess the Leased Premises discharged of this Lease and to remove all persons therefrom. In this paragraph, the words "Public Taking" shall include expropriation and condemnation and shall include a sale by the Landlord to an authority with powers of expropriation, condemnation or taking, in lieu of or under threat of expropriation or taking and "Publicly Taken" shall have a corresponding meaning. REGISTRATION OF 20. The Tenant agrees with the Landlord not to register this LEASE Lease in any recording office and not to register notice of this Lease in any form without the prior written consent of the Landlord. If such consent is provided such notice of Lease or caveat shall be in such form as the Landlord shall have approved and upon payment of the Landlord's reasonable fee for same and all applicable transfer or recording taxes or charges. The Tenant shall remove and discharge at Tenant's expense registration of such a notice or caveat at the expiry or earlier termination of the Term, and in the event of Tenant's failure to so remove or discharge such notice or caveat after ten (10) days' written notice by Landlord to Tenant, the Landlord may in the name and on behalf of the Tenant execute a discharge of such a notice or caveat in order to remove and discharge such notice of caveat and for the purpose thereof the Tenant hereby irrevocably constitutes and appoints any officer of the Landlord the true and lawful attorney of the Tenant. LEASE ENTIRE 21. The Tenant acknowledges that there are no covenants, AGREEMENT representations, warranties, agreements or conditions express or implied, collateral or otherwise forming part of or in any way affecting or relating to this Lease save as expressly set out in this Lease and Schedules attached hereto and that this Lease and such Schedules constitute the entire agreement between the Landlord and the Tenant and may not be modified except as herein explicitly provided or except by agreement in writing executed by the Landlord and the Tenant. 14 NOTICES 22. Any notice, advice, document or writing required or contemplated by any provision hereof shall be given in writing and if to the Landlord, either delivered personally to an officer of the Landlord or mailed by prepaid mail addressed to the Landlord at the said local office address of the Landlord shown above, and if to the Tenant, either delivered personally to the Tenant (or to an officer of the Tenant, if a corporation) or mailed by prepaid mail addressed to the Tenant at the Leased Premises, or if an address of the Tenant is shown in the description of the Tenant above, to such address. Every such notice, advice, document or writing shall be deemed to have been given when delivered personally, or if mailed as aforesaid, upon the fifth day after being mailed. The Landlord may from time to time by notice in writing to the Tenant designate another address as the address to which notices are to be mailed to it, or specify with greater particularity the address and persons to which such notices are to be mailed and may require that copies of notices be sent to an agent designated by it. The Tenant may, if an address of the Tenant is shown in the description of the Tenant above, from time to time by notice in writing to the Landlord, designate another address as the address to which notices are to be mailed to it, or specify with greater particularity the address to which such notices are to be mailed. INTERPRETATION 23. In this Agreement "herein", "hereof"', "hereby", "hereunder", "hereto", "hereinafter" and similar expressions refer to this Lease and not to any particular paragraph, clause or other portion thereof, unless there is something in the subject matter or context inconsistent therewith; and the parties agree that all of the provisions of this Lease are to be construed as covenants and agreements as though words importing such covenants and agreements were used in each separate paragraph hereof, and that should any provision or provisions of this Lease be illegal or not enforceable it or they shall be considered separate and severable from the Lease and its remaining provisions shall remain in force and be binding upon the parties hereto as though the said provision or provisions had never been included, and further that the captions appearing for the provisions of this Lease have been inserted as a matter of convenience and for reference only and in no way define, limit or enlarge the scope or meaning of this Lease or of any provisions hereof. EXTENT OF LEASE 24. This Agreement and everything herein contained shall OBLIGATIONS enure to the benefit of and be binding upon the respective heirs, executors, administrators, successors, assigns and other legal representatives, as the case may be, of each and every of the parties hereto, subject to the granting of consent by the Landlord to any assignment or sublease, and every reference herein to any party hereto shall include the heirs, executors, administrators, successors, assigns and other legal representatives of such party, and where there is more than one tenant or there is a male or female party the provisions hereof shall be read with all grammatical changes thereby rendered necessary and all covenants shall be deemed joint and several. USE AND 25. If the Tenant shall for any reason use or occupy the OCCUPANCY Leased Premises in any way prior to the commencement of PRIOR TO TERM the Term without there being an existing lease between the Landlord and Tenant under which the Tenant has occupied the Leased Premises, then during such prior use or occupancy the Tenant shall be a Tenant of the Landlord and shall be subject to the same covenants and agreements in this Lease mutatis mutandis. LIMITATION ON 26. Notwithstanding any other provision of this Lease, it LANDLORD LIABILITY is expressly understood and agreed that the total liability of the Landlord arising out of or in connection with this Lease, the relationship of the Landlord and the Tenant hereunder and/or the Tenant's use of the Leased Premises, shall be limited to the estate of the Landlord in the Property. No other property or asset of the Landlord or any partner or owner of the Landlord shall be subject to levy, execution, or other enforcement proceedings or other judicial process for the satisfaction of any judgment or any other right or remedy of the Tenant arising out of or in connection with this Lease, the relationship of the Landlord and the Tenant hereunder and/or the Tenant's use of the Leased Premises. WAIVER OF JURY 27. The Tenant hereby waives trial by jury in any claim, TRIAL action, proceeding or counterclaim brought by either party against the other on any matters arising out of or in any way connected with this Lease, the relationship of the Landlord and the Tenant, or the Tenant's use and occupancy of the Leased Premises. CHOICE OF LAW 28. This Lease shall be governed by the laws of the State in which the Leased Premises are located. Any litigation between the Landlord and the Tenant concerning this Lease shall be initiated in the county in which the Premises are located. SCHEDULES 29. The provisions of the following Schedules attached hereto shall form part of this Lease as if the same were embodied herein: Schedule "A" - Legal Description of Property Schedule "B" - Measurement of Rentable Area Schedule "B-1" - Location of Leased Premises Schedule "C" - Taxes Payable by Landlord and Tenant Schedule "D" - Services and Costs Schedule "E" - Rules and Regulations Schedule "F" - Leasehold Improvements 15 IN WITNESS WHEREOF the parties hereto have executed this Agreement. I/We have authority to bind the corporation.

16 PROPERTY NAME: 307 Orchard City Drive Campbell, California 95008 INITIAL ----------------------------- Landlord | Tenant | |