10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

000-31635
(Commission file number)

ENDWAVE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State of incorporation)	95-4333817 (I.R.S. Employer Identification No.)
776 Palomar Avenue
Sunnyvale, CA (Address of principal executive offices)	94085 (Zip code)

(408) 522-3100
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No¨.

     Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o      Accelerated filer þ      Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ.

     The number of shares of the registrant’s common stock outstanding as of July 24, 2006 was 11,429,793 shares. The number of shares of the registrant’s preferred stock outstanding as of July 24, 2006 was 300,000 shares.

ENDWAVE CORPORATION

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements		3
	Condensed Consolidated Balance Sheets as of June 30, 2006 (unaudited) and December 31, 2005		3
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2006 and 2005		4
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Qualitative and Quantitative Disclosure about Market Risk		23
Item 4.	Controls and Procedures		23
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		24
Item 1A.	Risk Factors		24
Item 6.	Exhibits		35
SIGNATURES			38
EXHIBITS			39
EXHIBIT 10.26
EXHIBIT 10.27
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ENDWAVE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	June 30,			December 31,
	2006			2005
	(unaudited)			(1)
ASSETS
Current assets:
Cash and cash equivalents	$	30,097		$	8,456
Short-term investments		36,853			13,959
Accounts receivable, net		11,921			10,487
Inventories		13,420			13,448
Other current assets		479			560
Total current assets		92,770			46,910
Property and equipment, net		1,940			1,321
Other assets, net		129			97
Restricted cash		261			25
Goodwill and intangible assets, net		4,494			4,796
	$	99,594		$	53,149
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,239		$	2,954
Accrued warranty		3,048			3,257
Accrued compensation		1,935			2,494
Restructuring liabilities		—			20
Other current liabilities		1,040			956
Total current liabilities		12,262			9,681
Other long-term liabilities		308			385
Total liabilities		12,570			10,066
Commitments and contingencies (Note 8)
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; 5,000,000 shares authorized; 300,000 and zero shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 11,429,050 and 11,358,816 shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively		11			11
Additional paid-in capital		354,914			309,583
Treasury stock, at cost, 39,150 shares at June 30, 2006 and December 31, 2005		(79	)		(79	)
Accumulated other comprehensive loss		(68	)		(63	)
Accumulated deficit		(267,754	)		(266,369	)
Total stockholders’ equity		87,024			43,083
	$	99,594		$	53,149

(1) Derived from the Company’s audited consolidated financial statements as of December 31, 2005.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ENDWAVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
	2006			2005			2006			2005
Revenues:
Product revenues	$	16,326		$	11,882		$	29,479		$	20,844
Product revenues from affiliate		—			4			—			14
Development fees		—			356			593			484
Total revenues		16,326			12,242			30,072			21,342
Costs and expenses:
Cost of product revenues*		11,434			7,958			21,430			14,132
Cost of product revenues from affiliate		—			1			—			2
Cost of product revenues, amortization of intangible assets		111			113			224			226
Research and development*		2,111			1,619			4,190			3,111
Selling, general and administrative*		3,534			2,459			6,492			4,733
Amortization of intangible assets		39			39			78			101
Restructuring charges, net		—			(46	)		—			(46	)
Total costs and expenses		17,229			12,143			32,414			22,259
Income (loss) from operations		(903	)		99			(2,342	)		(917	)
Interest and other income, net		696			219			957			388
Net income (loss)	$	(207	)	$	318		$	(1,385	)	$	(529	)
Basic net income (loss) per share	$	(0.02	)	$	0.03		$	(0.12	)	$	(0.05	)
Diluted net income (loss) per share	$	(0.02	)	$	0.03		$	(0.12	)	$	(0.05	)
Shares used in computing basic net income (loss) per share		11,410,087			10,659,553			11,387,384			10,589,105
Shares used in computing diluted net income (loss) per share		11,410,087			11,699,649			11,387,384			10,589,105

*Includes the following amounts related to stock-based compensation:
Cost of product revenues	$	126	$	—	$	214	$	—
Research and development		160		—		280		—
Selling, general and administrative		686		—		1,192		—
	$	972	$	—	$	1,686	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

ENDWAVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

	Six months ended
	June 30,
	2006			2005
Operating activities:
Net loss	$	(1,385	)	$	(529	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		476			778
Amortization of intangible assets		302			327
Stock compensation expense		1,686			—
Amortization of investments		51			64
Restructuring charges, net		—			(46	)
Loss on the sale of land and equipment		—			(76	)
Changes in operating assets and liabilities:
Accounts receivable, net		(1,434	)		303
Inventories		47			(8,014	)
Other assets		49			(287	)
Accounts payable		3,285			3,202
Accrued warranty		(209	)		(347	)
Accrued compensation, restructuring liabilities, other current liabilities and other long-term liabilities		(572	)		275
Net cash provided by (used in) operating activities		2,296			(4,350	)
Investing activities:
Cash paid in business combinations		—			(20	)
Purchases of property and equipment		(1,095	)		(110	)
Purchases of short term investments		(25,800	)		(10,570	)
Proceeds on maturities of short term investments		2,850			17,300
Increase in restricted cash		(236	)		—
Net cash provided by (used in) investing activities		(24,281	)		6,600
Financing activities:
Proceeds from the sale of Series B preferred stock and warrants, net of issuance costs		43,118			—
Proceeds from common stock issuance		379			230
Proceeds from exercises of stock options		129			1,186
Net cash provided by financing activities		43,626			1,416
Net increase in cash and cash equivalents		21,641			3,666
Cash and cash equivalents at beginning of period		8,456			4,808
Cash and cash equivalents at end of period	$	30,097		$	8,474

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

ENDWAVE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Business and Basis of Presentation

     Endwave Corporation and its wholly-owned subsidiary, Endwave Defense Systems Incorporated (together referred to as “Endwave” or the “Company”), design, manufacture and market radio frequency (“RF”) modules that enable the transmission, reception and processing of high frequency signals in telecommunication networks, defense electronics and homeland security systems. The Company’s RF modules are typically used in high-frequency applications and include:

°	integrated transceivers – assembly of electronic devices that combine both the transmit and receive functions necessary for a bi-directional radio link;
°	amplifiers — electronic devices used to increase the amplitude and power of an electronic signal;
°	synthesizers — electronic devices that can be used to generate several different radio frequency signals from a single source;
°	oscillators — electronic devices that generate radio frequency signals at a fixed frequency;
°	up and down converters — electronic devices that shift the center frequency of a radio signal without altering the signal’s data modulation;
°	frequency multipliers — electronic devices that increase the frequency of a radio signal in integer multiples; and
°	microwave switch arrays — electronic devices that can switch the routing of a radio signal.

     The accompanying unaudited condensed consolidated financial statements of Endwave have been prepared in conformity with accounting principles generally accepted in the United States of America and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not contain all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the information contained herein reflects all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2006 or any future periods. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2005.

     Certain prior year financial statement amounts have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on previously reported total assets, stockholders’ equity or net losses.

2. Short-term Investments

     The following estimated fair value amounts have been determined using available market information. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

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	June 30, 2006
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
	(In thousands)
Short-term investments:
United States government agencies	$	2,000	$	—	$	(27	)	$	1,973
Corporate securities		3,071		—		(41	)		3,030
Obligations of states and political subdivisions		31,850		—		—			31,850
Total	$	36,921	$	—	$	(68	)	$	36,853
Cash equivalents:
Commercial paper	$	25,758		—		—		$	25,758

	December 31, 2005
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
	(In thousands)
Short-term investments:
United States government agencies	$	2,000	$	—	$	(19	)	$	1,981
Corporate securities		3,122		—		(44	)		3,078
Obligations of states and political subdivisions		8,900		—		—			8,900
Total	$	14,022	$	—	$	(63	)	$	13,959
Cash equivalents:
Commercial paper	$	1,898		—		—		$	1,898

     At June 30, 2006, the Company had $35.9 million of short-term investments with maturities of less than one year and a $1.0 million short-term investment with a maturity between one and two years. At December 31, 2005, the Company had $8.9 million of short-term investments with maturities of less than one year and $5.1 million of short-term investments with maturities between one and two years.

     At June 30, 2006, the Company had net unrealized losses of $68,000 related to $5.0 million of investments in debt securities. At December 31, 2005, the Company had net unrealized losses of $63,000 related to $5.1 million of investments in debt securities. The decline in value of these investments is primarily related to changes in interest rates and is considered to be temporary in nature. Realized gains and losses were insignificant for the three and six months ended June 30, 2006 and 2005.

     The Company reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been less than the cost basis, credit quality and the Company’s ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

3. Inventories

     Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and consisted of the following (in thousands):

	June 30,		December 31,
	2006		2005
Raw materials	$	11,102	$	10,181
Work in process		1,518		1,509
Finished goods		800		1,758
	$	13,420	$	13,448

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4. Restricted Cash

     At June 30, 2006, the Company had a restricted cash balance of $261,000, which included two certificates of deposit held by a financial institution as collateral for two letters of credit in connection with the Company’s building leases. During the second quarter of 2006, the Company executed an agreement to lease 32,805 square feet in San Jose, California. The lease term is expected to commence on August 15, 2006 and is expected to terminate on August 16, 2011. In connection with the leasing of this property, the Company established a $236,000 certificate of deposit as collateral for a letter of credit. The Company will maintain a certificate of deposit for the term of the lease and will be able to reduce its restricted cash balance when it meets certain revenue levels.

     In addition, the Company has a $25,000 certificate of deposit that secures a letter of credit in connection with the Company’s building lease in Andover, Massachusetts. The $25,000 certificate of deposit will be maintained by the Company for the term of the lease, which terminates on November 30, 2008.

5. Goodwill and Intangible Assets

Goodwill

     At June 30, 2006, the Company had goodwill of $1.6 million associated with its purchase of JCA Technology, Inc. (“JCA”). The Company conducted its 2005 annual goodwill impairment analysis in the third quarter of 2005 and no goodwill impairment was indicated.

Intangible Assets

     The components of intangible assets as of June 30, 2006 were as follows (in thousands):

	Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount
Developed technology	$	2,250	$	(863	)	$	1,387
Tradename		1,060		—			1,060
Customer relationships		780		(299	)		481
Customer backlog		140		(140	)		—
Intangible assets	$	4,230	$	(1,302	)	$	2,928

     The components of intangible assets as of December 31, 2005 were as follows (in thousands):

	Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount
Developed technology	$	2,250	$	(639	)	$	1,611
Tradename		1,060		—			1,060
Customer relationships		780		(221	)		559
Customer backlog		140		(140	)		—
Intangible assets	$	4,230	$	(1,000	)	$	3,230

     The identifiable intangible assets are subject to amortization and have approximate original estimated weighted-average useful lives as follows: developed technology — five years, customer backlog — six months and customer relationships — five years.

     The tradename has a gross carrying value of $1.1 million and is not subject to amortization and will be evaluated for impairment at least annually or more frequently if events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company conducted its 2005 annual impairment analysis of the tradename in the third quarter of 2005 and no impairment was indicated.

     The customer backlog was fully amortized as of January 2005. The amortization of the identifiable intangible assets was $150,000 and $152,000 during the three months ended June 30, 2006 and 2005, respectively. The amortization of the identifiable intangible assets was $302,000 and $327,000 during the six months ended June 30,

8

2006 and 2005, respectively. The future amortization of the identifiable intangible assets is as follows (in thousands):

Years Ending December 31
2006 (July 1 through December 31)	$	304
2007		606
2008		606
2009		352
	$	1,868

6. Warranty

     The warranty periods for the Company’s products are between one and three years from date of shipment. The Company provides for estimated warranty expense at the time of shipment. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of component suppliers, its warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the estimates, revisions to the estimated warranty accrual and related costs may be required.

     Changes in the Company’s product warranty liability during the periods ended June 30, 2006 and 2005 were as follows (in thousands):

	2006			2005
Balance at January 1	$	3,257		$	4,488
Warranties accrued		402			338
Warranties settled or reversed		(611	)		(685	)
Balance at June 30	$	3,048		$	4,141

7. Restructuring Liabilities

     During the third quarter of 2004, in connection with the acquisition of JCA, the Company recorded a restructuring charge to reduce the cost structure of the combined company. During the second quarter of 2005, the Company recorded a $46,000 adjustment to reverse the remaining restructuring balance. There were no remaining obligations related to this restructuring plan as of June 30, 2005.

     During 2002, the Company implemented a restructuring program to reduce operating expenses and align resources with long-term growth opportunities. The Company recorded a restructuring charge of $3.5 million, the components of which were $1.1 million for severance and fringe benefit costs related to the elimination of 107 positions across all functions, $310,000 for lease termination payments and $2.1 million for excess equipment. At December 31, 2005, $20,000 remained in restructuring liabilities related to this restructuring program. During the first quarter of 2006, the Company paid off the remaining balance.

8. Commitments and Contingencies

     The Company is involved periodically in legal proceedings arising in the ordinary course of business, such as worker’s compensation, accounts receivable collections and the like. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any pending legal proceedings will result in judgment or settlement that will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

     Although we are not a party to the litigation now pending in the Southern District of New York entitled “Securities and Exchange Commission v. Wood River Capital Management, LLC et al.” filed as Civil Action 05-CV-8713, we have filed a proof of claim with the Court reserving our rights to pursue claims against the defendants in such action, including possible claims for disgorgement of profits pursuant to Section 16 of the Exchange Act. Because Wood River Capital Management, LLC and its affiliates (collectively, “Wood River”) have not yet publicly disclosed their trading history in our common stock, we are unable to determine at this time what claims exist, or what the damages for any such claims may be. To the extent we have any valid claims against Wood River, we intend to pursue them vigorously.

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9. Preferred Stock and Warrant Purchase Agreement

     Effective April 24, 2006, the Company entered into a Preferred Stock and Warrant Purchase Agreement (the “purchase agreement”) with Oak Investment Partners XI, Limited Partnership (“Oak”). Pursuant to the purchase agreement, Oak purchased 300,000 shares of the Company’s Series B preferred stock, par value $0.001 per share, for $150 per preferred share. The preferred shares are convertible initially into 3,000,000 shares of common stock, for an effective purchase price of $15 per common share equivalent, an approximate 12% premium to the closing price of the Company’s common stock on April 24, 2006. The Company also issued Oak a warrant (the “Warrant”) granting Oak the right to purchase an additional 90,000 shares of Series B preferred stock at an exercise price of $150 per share, which shares are convertible initially into 900,000 shares of common stock for an effective exercise price of $15 per common share equivalent. The Warrant was sold for a purchase price of $33,750, expires three years from the date of purchase and includes a “cashless exercise” feature.

     The Company received gross proceeds of $45.0 million from the sale of the Series B preferred stock and the Warrant and net proceeds of $43.1 million after the payment of legal fees and other expenses including commissions to Needham & Co., the Company’s sole placement agent and financial advisor for the private placement. The Series B preferred stock and the Warrant were issued pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended.

     The Company was required to allocate the gross proceeds of the Oak financing to the shares of Series B preferred stock and the Warrant, based on the relative fair values of the securities. The Company determined the relative fair values of the securities using a valuation analysis from an independent appraiser. In order to determine the value of the Company’s Series B preferred stock and related Warrant, the appraiser used an equity allocation model based on the Black-Scholes valuation model as of the valuation date.

     The appraiser’s analysis allocated the aggregate equity value to the various securities in the Company’s capital structure in accordance with each security’s rights and privileges. The Black-Scholes valuation model is a widely accepted formula used to estimate the value of options based on variables including the time to expiration, volatility and prevailing risk-free interest rate. The appraiser’s analysis used the Black-Scholes valuation model and included the following variables: 3 years for the time to expiration, 55% volatility, 0% dividend rate and 4.97% risk-free interest rate. Through this analysis, the appraiser estimated the aggregate value of the Series B preferred stock and the Warrant on a marketable, minority interest basis to be $40.7 million and $4.3 million, respectively, for an effective conversion price of the Series B preferred stock of $13.57 per common share.

     The fair value of the common stock on the commitment date was $13.35 per share. Because the appraised conversion price of the Series B preferred stock was in excess of this amount, the issuance of the Series B preferred stock and Warrant did not result in a deemed dividend and beneficial conversion feature in accordance with Emerging Issues Task Force No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments.”

     The Series B preferred stock ranks senior and prior to the Company’s common stock and all other classes or series of capital stock with respect to the payment of any dividends, conversion rights and any payment upon liquidation or redemption. Upon any liquidation, certain mergers, reorganizations and/or consolidations of the Company into or with another corporation or any transaction or series of related transactions in which a person, entity or group acquires 50% or more of the combined voting power of the Company’s then outstanding securities (approved by the Company’s Board of Directors), the holders are entitled to receive prior and in preference to any distribution to holders of the Company’s common stock or any other class or series of stock subordinate in liquidation preference to the Series B preferred stock, the amount invested plus all accumulated or accrued and unpaid dividends thereon. The holders of the Series B preferred stock are entitled to vote on all matters submitted to a vote of the holders of the Company’s common stock on an as if converted to common stock basis. So long as at least 150,000 shares of Series B preferred stock are outstanding, the holders of Series B preferred stock, voting separately as a series, shall be entitled to elect one member of the Company’s Board of Directors. Additionally, holders of the Series B preferred stock are entitled to participate in dividends declared with respect to the common stock as if the Series B preferred stock was converted into common stock.

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10. Stock-Based Compensation

     Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004) “Share-Based Payment” (“SFAS No. 123(R)”). SFAS No. 123(R) establishes accounting for stock-based awards exchanged for employee services. Accordingly, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. All of the Company’s stock compensation is accounted for as an equity instrument. The Company previously applied Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations and provided the required pro forma disclosures of SFAS No. 123, “Accounting for Stock-Based Compensation”.

Prior to the Adoption of SFAS No. 123(R)

     Prior to the adoption of SFAS No. 123(R), the Company provided the disclosures required under SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosures.”

     The pro-forma information for the three and six months ended June 30, 2005 was as follows (in thousands, except per share data):

	Three months ended			Six months ended
	June 30, 2005			June 30, 2005
Net income (loss), as reported	$	318		$	(529	)
Add: Stock-based employee compensation expense included in reported net loss		—			—
Deduct: Stock-based employee compensation expense determined under the fair value based method for all awards		(1,027	)		(2,006	)
Net loss, pro forma	$	(709	)	$	(2,535	)
Basic and diluted net income (loss) per share, as reported	$	0.03		$	(0.05	)
Basic and diluted net loss per share, pro forma	$	(0.07	)	$	(0.24	)

Impact of the Adoption of SFAS No. 123(R)

     The Company elected to adopt the modified prospective application method as provided by SFAS No. 123(R). The effect of recording stock-based compensation for the three and six months ended June 30, 2006 was as follows (in thousands, except per share data):

	Three months ended			Six months ended
	June 30, 2006			June 30, 2006
Stock-based compensation expense by type of award:
Employee stock options	$	843		$	1,489
Employee stock purchase plan		134			216
Amounts capitalized as inventory		(5	)		(19	)
Total stock-based compensation		972			1,686
Tax effect on stock-based compensation		—			—
Total stock-based compensation expense	$	972		$	1,686
Impact on net loss per share	$	(0.09	)	$	(0.15	)

     As of January 1, 2006, the Company had an unrecorded deferred stock-based compensation balance related to stock options of approximately $2.9 million before estimated forfeitures. In the Company’s pro forma disclosures prior to the adoption of SFAS No. 123(R), the Company accounted for forfeitures upon occurrence. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised if necessary in subsequent periods if actual forfeitures differ from those estimates. Based on the Company’s historical experience of option pre-vesting

11

cancellations and estimates of future forfeiture rates, the Company has assumed an annualized forfeiture rate of 15% for its options. Accordingly, as of January 1, 2006, the Company estimated that the stock-based compensation for the awards not expected to vest was approximately $0.8 million, and therefore, the unrecorded deferred stock-based compensation balance related to stock options was adjusted to approximately $2.1 million after estimated forfeitures.

     During the three months ended June 30, 2006, the Company granted options to purchase 35,800 shares of its common stock with an estimated total grant date fair value of $323,000. Of this amount, the Company estimated that the stock-based compensation for the awards not expected to vest was $65,000. During the three months ended June 30, 2006, the Company recorded stock-based compensation related to stock options and its employee stock purchase plan of $972,000. Approximately $5,000 of such stock-based compensation was capitalized as inventory during the three months ended June 30, 2006. The Company elected not to capitalize any stock-based compensation to inventory at January 1, 2006 when the provisions of SFAS No. 123(R) were initially adopted.

     During the six months ended June 30, 2006, the Company granted options to purchase 541,200 stock options of its common stock with an estimated total grant date fair value of $3.5 million. Of this amount, the Company estimated that the stock-based compensation for the awards not expected to vest was $998,000. During the six months ended June 30, 2006, the Company recorded stock-based compensation related to stock options and its employee stock purchase plan of $1,686,000. Approximately $19,000 of such stock-based compensation was capitalized as inventory during the six months ended June 30, 2006

     As of June 30, 2006, the unrecorded deferred stock-based compensation balance related to stock options was $3.1 million and will be recognized over an estimated weighted average amortization period of 1.4 years.

Valuation Assumptions

     The Company estimates the fair value of stock options using the Black-Scholes valuation model, consistent with the provisions of SFAS No. 123(R), Securities and Exchange Commission Staff Accounting Bulletin No. 107 and the Company’s prior period pro forma disclosures of net loss, including stock-based compensation (determined under a fair value method as prescribed by SFAS No. 123).

     The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model and the graded-vesting method with the following weighted-average assumptions:

	Three months ended						Six months ended
	June 30,						June 30,
	2006			2005			2006			2005
Risk-free interest rate		4.97	%		3.87	%		4.61	%		4.84	%
Expected life of options	4.6 years			5.0 years			4.6 years			5.0 years
Expected dividends		0.0	%		0.0	%		0.0	%		0.0	%
Volatility		70	%		70	%		80	%		74	%

     The fair value of shares purchased under the stock purchase plan is estimated using the Black-Scholes option valuation model and the graded-vesting method with the following weighted-average assumptions:

	Three months ended						Six months ended
	June 30,						June 30,
	2006			2005			2006			2005
Risk-free interest rate		5.0	%		3.18	%		4.85	%		2.97	%
Expected life of options	1.3 years			0.5 year			0.8 years			0.5 year
Expected dividends		0.0	%		0.0	%		0.0	%		0.0	%
Volatility		51	%		39	%		61	%		37	%

     The dividend yield of zero is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. Expected volatility is based on the combination of historical volatility of the Company’s common stock and the common stock of eight of the Company’s competitors, the expected moderation in future volatility over the period commensurate with the expected life of the options and other factors. The risk-free

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interest rates are taken from the Daily Federal Yield Curve Rates as of the grant dates as published by the Federal Reserve and represent the yields on actively traded Treasury securities for terms equal to the expected term of the options. The expected term calculation is based on the terms utilized by eight of the Company’s competitors, observed historical option exercise behavior and post-vesting forfeitures of options by the Company’s employees.

     The weighted-average grant date fair value of the options granted under the Company’s stock option plans was $9.02 and $12.28 per share for the three months ended June 30, 2006 and 2005, respectively. The total intrinsic value of options exercised during the three months ended June 30, 2006 was $157,000.

     The weighted-average grant date fair value of the options granted under the Company’s stock option plans was $6.45 and $11.69 per share for the six months ended June 30, 2006 and 2005, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2006 was $260,000.

Equity Incentive Program

     The Company’s equity incentive program is a broad-based, long-term retention program designed to align stockholder and employee interests. Under the Company’s equity incentive program, stock options generally have a vesting period of four years, are exercisable for a period not to exceed ten years from the date of issuance and are generally granted at prices not less than the fair market value of the Company’s common stock at the grant date.

     The following table summarizes activity under the equity incentive plans for the indicated periods:

						Weighted
				Weighted-		Average		Aggregate
				Average		Remaining		Intrinsic
	Number of			Exercise		Contractual		Value
	Shares			Price		Term (Years)		(In thousands)
Outstanding at December 31, 2005		1,292,877			14.19
Options granted		541,200			10.03
Options exercised		(28,712	)		4.48
Options cancelled		(35,653	)		12.12
Outstanding at June 30, 2006		1,769,712			13.12		8.48	$	5,118
Options vested and exercisable and expected to be exercisable at June 30, 2006		1,567,682			13.48		8.40	$	4,611
Options vested and exercisable at June 30, 2006		699,510			18.08		7.99	$	1,960

     At June 30, 2006 the Company had 1,260,972 options available for grant under its stock option plans.

     The options outstanding and exercisable at June 30, 2006 were in the following exercise price ranges:

							Options Vested and Exercisable
Options Outstanding at June 30, 2006							at June 30, 2006
					Weighted-Average
			Weighted-Average		Remaining				Weighted-Average
Range of Exercise Price	Shares		Exercise Price		Contractual Life		Shares		Exercise Price
$  0.76 — $  1.17		57,045	$	1.04		6.48		34,758	$	1.00
$  1.18 — $  1.21		25,650	$	1.21		6.08		24,473	$	1.21
$  1.93 — $  1.93		163,796	$	1.93		6.93		85,575	$	1.93
$  2.68 — $  4.80		12,625	$	4.05		5.71		10,852	$	3.94
$  5.00 — $  9.16		15,888	$	7.03		7.29		3,918	$	7.04
$  9.32 — $  9.32		120,000	$	9.32		9.67		—	$	—
$  9.68 — $  9.82		393,832	$	9.77		9.52		6,573	$	9.70
$10.20 — $10.20		161,936	$	10.20		8.09		43,743	$	10.20
$10.22 — $10.22		191,938	$	10.22		7.59		63,745	$	10.22
$10.50 — $20.32		255,276	$	14.27		8.82		54,147	$	13.97
$21.47 — $21.47		198,376	$	21.47		8.60		198,376	$	21.47
$24.00 — $56.00		173,350	$	35.58		8.77		173,350	$	35.58
		1,769,712	$	13.12		8.48		699,510	$	18.08

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Employee Stock Purchase Plan

     In October 2000, the Company established the Endwave Corporation Employee Stock Purchase Plan (“Purchase Plan”). All employees who work a minimum of 20 hours per week and are customarily employed by the Company (or an affiliate thereof) for at least five months per calendar year are eligible to participate. Under this plan, employees may purchase shares of common stock through payroll deductions of up to 15% of their earnings with a limit of 3,000 shares per offering period under the plan. The price paid for the Company’s common stock purchased under the plan is equal to 85% of the lower of the fair market value of the Company’s common stock on the date of commencement of participation by an employee in an offering under the plan or the date of purchase. During the three months and six months ended June 30, 2006, the compensation cost in connection with the purchase plan was $134,000 and $216,000, respectively. During the second quarter of 2006, there were 41,522 shares issued under the Purchase Plan at a weighted average price of $9.14 per share. At June 30, 2006, 216,771 shares were available for purchase under the Purchase Plan.

11. Net Loss Per Share

     Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed giving effect to all potentially dilutive common stock equivalents, including convertible preferred stock, warrants to purchase convertible preferred stock, stock options to purchase common stock, and shares to be purchased in connection with the Company’s stock purchase plan.

     The shares used in the computation of the Company’s basic and diluted net income (loss) per common share were as follows:

	Three months ended June 30,				Six months ended June 30
	2006		2005		2006		2005
Weighted average common shares outstanding		11,410,087		10,659,553		11,387,384		10,589,105
Dilutive effect of employee stock options		—		1,040,096		—		—
Diluted average common shares outstanding		11,410,087		11,699,649		11,387,384		10,589,105

     Diluted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options.

     Options to purchase 1,769,712 shares of common stock were outstanding at June 30, 2006 but were not included in the computation of diluted net loss per share for the three and six month periods ended June 30, 2006 as the effect would be anti-dilutive. Options to purchase 1,603,625 shares of common stock were outstanding at June 30, 2005 but were not included in the computation of diluted net loss per share for the six months ended June 30, 2005 as the effect would be anti-dilutive.

     Shares associated with common stock issuable on the conversion of the Company’s Series B preferred stock and the Warrants were not included in the calculation of diluted net loss per share for the three and six month periods ended June 30, 2006 as the effect would be anti-dilutive. The 300,000 preferred shares are convertible initially into 3,000,000 shares of common stock. The Warrant grants the holder the right to purchase an additional 90,000 shares of Series B preferred stock, which would at this time be convertible initially into 900,000 shares of common stock.

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12. Comprehensive Loss

     Comprehensive loss generally represents all changes in stockholders’ equity except those resulting from investments or contributions by stockholders. The Company’s unrealized gains and losses on its available-for-sale securities represent the only component of comprehensive loss excluded from the reported net income (loss).

     The Company’s unrealized gain (loss) on available-for-sale securities of $1,000 and ($3,000) for the three months ended June 30, 2006 and 2005, was excluded from the net income (loss) for the respective periods. Total comprehensive income (loss) for the three months ended June 30, 2006 and 2005 was ($206,000) and $315,000, respectively.

     The Company’s unrealized gain (loss) on available-for-sale securities of ($5,000) and $15,000 for the six months ended June 30, 2006 and 2005, was excluded from the net loss for the respective periods. Total comprehensive loss for the six months ended June 30, 2006 and 2005 was $1.4 million and $514,000, respectively.

13. Segment Disclosures

     The Company operates in a single segment. The Company’s product sales by geographic area (based on ship-to location of customer which may not necessarily be the end-user location) for the three and six months ended June 30, 2006 and 2005 were as follows (in thousands and as a percentage of total revenues):

	Three months ended June 30,
	2006				2005
United States	$	2,159	13.2	%	$	2,566	21.0	%
Finland		6,189	37.9	%		6,269	51.2	%
Italy		5,153	31.6	%		1,771	14.5	%
Norway		1,784	10.9	%		708	5.8	%
Other		1,041	6.4	%		928	7.5	%
Total	$	16,326	100.0	%	$	12,242	100.0	%

	Six months ended June 30,
	2006				2005
United States	$	5,606	18.6	%	$	4,173	19.6	%
Finland		9,588	31.9	%		11,724	54.9	%
Italy		9,230	30.7	%		2,781	13.0	%
Norway		3,253	10.8	%		779	3.7	%
Other		2,395	8.0	%		1,885	8.8	%
Total	$	30,072	100.0	%	$	21,342	100.0	%

     For the three months ended June 30, 2006, Nokia, Siemens and Nera accounted for approximately 38%, 32% and 12%, respectively, of the Company’s total revenues. For the three months ended June 30, 2005, Nokia and Siemens accounted for approximately 50% and 14%, respectively, of the Company’s total revenues. For the three month periods presented, no other customer accounted for more than 10% of the Company’s total revenues.

     For the six months ended June 30, 2006, Nokia, Siemens and Nera accounted for approximately 32%, 31% and 13%, respectively, of the Company’s total revenues. For the six months ended June 30, 2005, Nokia and Siemens accounted for approximately 54% and 13%, respectively, of the Company’s total revenues. For the six month periods presented, no other customer accounted for more than 10% of the Company’s total revenues.

14. Related Party Transactions

     Prior to December 2005, Northrop Grumman Corporation was considered a related party. During December 2005, a subsidiary of Northrop Grumman Corporation sold all of the remaining shares of the Company’s common stock that it owned and as a result, Northrop Grumman Corporation ceased to be considered a related party at that time. The Company continues to maintain a supply agreement and a technology services agreement with Velocium, a business unit of Northrop Grumman Space Mission & Systems Corp. and a wholly-owned subsidiary of Northrop Grumman Corporation.

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15. Recent Accounting Pronouncements

     In February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments,” (“SFAS 155”) an amendment of FASB Statements No. 133 and 140. SFAS 155 will be effective for the Company beginning in the first quarter of 2007. SFAS 155 permits interests in hybrid financial instruments that contain an embedded derivative that would otherwise require bifurcation, to be accounted for as a single financial instrument at fair value, with changes in fair value recognized in earnings. This election is permitted on an instrument-by-instrument basis for all hybrid financial instruments held, obtained, or issued as of the adoption date. The Company is assessing the impact of the adoption of SFAS 155.

     In June 2006, the FASB issued FASB Interpretation No. 48 “Accounting For Uncertain Tax Positions – An Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109 “Accounting for Income Taxes”. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact of FIN 48 to its financial position and results of operations.

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     Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements, related notes and “Risk Factors” section included elsewhere in this report on Form 10-Q, as well as the information contained under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2005. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve known and unknown risks and uncertainties, including statements regarding our expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those discussed in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements. In the past, our operating results have fluctuated and are likely to continue to fluctuate in the future.

     The terms “we,” “us,” “our” and words of similar import below refer to Endwave Corporation and its wholly-owned subsidiary, Endwave Defense Systems Incorporated.

Overview

     Revenues for the second quarter of 2006 were $16.3 million, representing an increase of $4.1 million, or 33%, from the second quarter of 2005, and an increase of $2.6 million, or 19%, from the first quarter of 2006. Revenues for the first half of 2006 were $30.1 million, representing an increase of $8.7 million, or 41%, from the first half of 2005. The growth in revenues was due primarily to increased demand from our telecommunications customers. Based on our knowledge of our customers and overall market trends we anticipate total revenues for 2006 to exceed the total revenues we achieved in 2005. However, because the markets we serve are difficult to predict and the economic recovery has been inconsistent, we cannot assure you that our expectations regarding fiscal 2006 revenues will be realized.

     We continue to seek growth through enhancing our position as a leading merchant supplier of radio frequency (“RF”) modules, continued expansion into the defense electronics and homeland security markets, and strategic acquisitions. As part of this growth strategy, we entered into a Preferred Stock and Warrant Purchase Agreement with Oak Investment Partners XI, Limited Partnership on April 24, 2006. Pursuant to this agreement, Oak purchased 300,000 shares of our Series B preferred stock for $150 per share and a warrant to purchase up to an additional 90,000 shares of our Series B preferred stock with an exercise price of $150 per share. The Company received gross proceeds of $45.0 million and net proceeds of $43.1 million after the payment of legal fees and other expenses including commissions to Needham & Co., the Company’s sole placement agent and financial advisor for the private placement. Each share of Series B preferred stock is convertible into ten shares of our common stock. The Series B preferred stock and the warrant were issued pursuant to an exemption from registration provided by Section 4(2) of the Securities Act, as amended. We intend to use the net proceeds of this financing to continue to expand our business in the telecommunications and defense and homeland security markets.

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Results of Operations

Three and six months ended June 30, 2006 and 2005

     The following table sets forth certain statement of operations data as a percentage of total revenues for the periods indicated:

	Three months ended						Six months ended
	June 30,						June 30,
	2006			2005			2006			2005
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of product revenues		70.0			65.0			71.3			66.2
Cost of product revenues, amortization of intangible assets		0.7			0.9			0.7			1.1
Research and development		12.9			13.2			13.9			14.6
Selling, general and administrative		21.6			20.1			21.6			22.2
Amortization of intangible assets		0.2			0.3			0.3			0.4
Restructuring charges, net		0.0			(0.3	)		0.0			(0.2	)
Total costs and expenses		105.5			99.2			107.8			104.3
Loss from operations		(5.5	)		0.8			(7.8	)		(4.3	)
Interest and other income, net		4.2			1.8			3.2			1.8
Net loss		(1.3	)%		2.6	%		( 4.6	)%		( 2.5	)%

Total revenues

	Three months ended June 30,							Six months ended June 30,
	2006		2005		% Change			2006		2005		% Change
	(In thousands)							(In thousands)
Total revenues	$	16,326	$	12,242		33.4	%	$	30,072	$	21,342		40.9	%
Product revenues	$	16,326	$	11,886		37.4	%	$	29,479	$	20,858		41.3	%
Development fees	$	—	$	356				$	593	$	484		22.5	%

     Total revenues consist of product revenues and development fees. Product revenues are attributable to sales of our RF modules. We generate development fees by developing product prototypes and custom products pursuant to development agreements that provide for payment of a portion of our research and development or other expenses. We expect to enter into more development contracts in the future as we seek to further penetrate the defense electronics market, where development contracts are customary, but we do not expect development fees to represent a significant percentage of our total revenues for the foreseeable future.

     During the three months ended June 30, 2006, total revenues increased by 33% compared to the same period in 2005. This increase in total revenues was due to a 48% increase in revenues from our telecommunications network customers which was offset in part by a 21% decline in revenues from our defense and homeland security customers. During the six months ended June 30, 2006, total revenues increased by 41% compared to the same period in 2005. This increase in total revenues was due to a 47% increase in revenues from our telecommunications network customers and a 17% increase in revenue from our defense and homeland security customers.

     For the three months ended June 30, 2006, revenues from our defense electronics and homeland security customers comprised 13% of our total revenues and revenues from our telecommunication customers comprised 87% of our total revenues. For the six months ended June 30, 2006, revenues from our defense electronics and homeland security customers comprised 17% of our total revenues and revenues from our telecommunication customers comprised 83% of our total revenues.

     Revenues under development contracts are generally recorded on a percentage of completion basis, using project hours as the basis to measure progress toward completing the contract and recognizing revenues. Up-front fees, if any, associated with development agreements are recognized over the estimated development and production periods. In no event are revenues recognized prior to being considered collectible from the customer. During the second quarter of 2006, we did not recognize any revenues from development fees.

Cost of product revenues

	Three months ended June 30,									Six months ended June 30,
	2006			2005			% Change			2006			2005			% Change
	(In thousands)									(In thousands)
Cost of product revenues	$	11,434		$	7,959			43.7	%	$	21,430		$	14,134			51.6	%
Percentage of total revenues		70.0	%		65.0	%					71.3	%		66.2	%

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     Cost of product revenues consists primarily of: costs of direct materials and labor utilized to assemble and test our products; equipment depreciation; costs associated with procurement, production control, quality assurance, and manufacturing engineering; costs associated with maintaining our manufacturing facilities; fees paid to our offshore manufacturing partner; reserves for potential excess or obsolete material; and accrued costs associated with potential warranty returns offset by the benefit of usage of materials that were previously written off.

     During the second quarter of 2006, the cost of product revenues as a percentage of revenues increased as compared to the same quarter of 2005 due primarily to the product mix as well as $126,000 in additional costs resulting from the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”), which was partially offset by the increased absorption of our overhead costs resulting from increased total revenues. The cost of product revenues in both periods was favorably impacted by the utilization of inventory that was previously written off, amounting to approximately $129,000 during the second quarter of 2006 and $95,000 during the second quarter of 2005.

     During the first half of 2006, the cost of product revenues as a percentage of revenues increased due primarily to the product mix as well as $214,000 in additional costs resulting from the adoption of SFAS 123(R), which was partially offset by the increased absorption of our overhead costs resulting from increased total revenues. The cost of product revenues in both periods was favorably impacted by the utilization of inventory that was previously written off, amounting to approximately $329,000 during the first half of 2006 and $290,000 during the first half of 2005.

     We intend to continue to focus on reducing the cost of product revenues as a percentage of total revenues through the introduction of new designs and technology and further improvements to our offshore manufacturing processes. In addition, our product costs are impacted by the mix and volume of products sold and will continue to fluctuate as a result. We will continue to incur costs of product revenues associated with SFAS 123(R).

Research and development expenses

	Three months ended June 30,									Six months ended June 30,
	2006			2005			% Change			2006			2005			% Change
	(In thousands)									(In thousands)
Research and development expenses	$	2,111		$	1,619			30.4	%	$	4,190		$	3,111			34.7	%
Percentage of total revenues		12.9	%		13.2	%					13.9	%		14.6	%

     Research and development expenses consist primarily of salaries and related expenses for research and development personnel, outside professional services, prototype materials, supplies and labor, depreciation for related equipment and allocated facilities costs.

     During the three months ended June 30, 2006, research and development costs declined as a percentage of total revenues compared to the same period in 2005 due to our overall growth in revenues during the second quarter of 2006. The increase in research and development costs in absolute dollars was primarily attributable to an increase of $304,000 in project-related expenses, an increase of $232,000 of personnel-related expenses and $160,000 from the adoption of SFAS 123(R) which were partially offset by lower outside professional services and other expenses.

     During the first half of 2006, research and development costs declined as a percentage of total revenues compared to the same period in 2005 due to our overall growth in revenues during the first half of 2006. The increase in research and development costs in absolute dollars was primarily attributable to an increase of $672,000 in project-related expenses, an increase of $459,000 of personnel-related expenses and $280,000 from the adoption of SFAS123(R) which were partially offset by lower outside professional services and other expenses.

     During the remainder of 2006, we expect moderate increases in research and development expenses as we continue to work on certain development programs and continue to build our technical team. We will continue to incur research and development expenses associated with SFAS 123(R).

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Selling, general and administrative expenses

	Three months ended June 30,									Six months ended June 30,
	2006			2005			% Change			2006			2005			% Change
	(In thousands)									(In thousands)
Selling, general and administrative expenses	$	3,534		$	2,459			43.7	%	$	6,492		$	4,733			37.2	%
Percentage of total revenues		21.6	%		20.1	%					21.6	%		22.2	%

     Selling, general and administrative expenses consist primarily of salaries and related expenses for executive, sales, marketing, finance, accounting, legal, information technology and human resources personnel, professional fees, facilities costs, promotional activities and costs related to the requirements under Section 404 of the Sarbanes-Oxley Act of 2002.

     During the second quarter of 2006, selling, general and administrative expenses increased in absolute dollars and as a percentage of total revenues, primarily due to $686,000 of increased costs from the adoption SFAS 123(R) and $168,000 increase in commissions due to the overall increase in revenues during the second quarter of 2006.

     During the first half of 2006, selling, general and administrative expenses declined as a percentage of total revenues primarily due to the benefit of increased overall revenues in the first half of 2006 compared to the same period in 2005. The increase in absolute dollars is primarily attributable to $1.2 million of increased costs from the adoption SFAS 123(R) and $298,000 increase in commissions due to the overall increase in revenues during the first half of 2006.

     During the remainder of 2006, we anticipate selling, general and administrative expenses will remain relatively stable in absolute dollar terms. We will continue to incur selling, general and administrative expenses associated with SFAS 123(R).

Amortization of intangible assets

	Three months ended June 30,							Six months ended June 30,
	2006		2005		% Change			2006		2005		% Change
	(In thousands)							(In thousands)
Cost of product revenues, amortization of intangible assets	$	111	$	113		(1.8	)%	$	224	$	226		(0.9	)%
Amortization of intangible assets	$	39	$	39		0	%	$	78	$	101		(22.8	)%

     As part of our acquisition of JCA Technology, Inc. in July 2004, we acquired $4.2 million of identifiable intangible assets, including $2.3 million for developed technology, $1.1 million for the tradename, $780,000 for customer relationships and $140,000 for customer backlog. These assets are subject to amortization and have approximate original estimated weighted-average useful lives as follows: developed technology — 5 years, customer backlog — 6 months and customer relationships — 5 years. The tradename intangible asset is not subject to amortization and will be evaluated for impairment at least annually or more frequently if events and changes in circumstances suggest that the carrying amount may not be recoverable.

     The amortization associated with the developed technology is a charge to cost of product revenues. The amortization associated with the developed technology was $111,000 for the second quarter of 2006 and $113,000 for the second quarter of 2005. The amortization associated with the customer backlog and the customer relationships is a charge to operating expenses. The customer backlog was fully amortized during the first quarter of 2005. The amortization of customer relationships was $39,000 for both the second quarter of 2006 and 2005.

     During the first half of 2006, the amortization associated with the developed technology was $224,000 compared to $226,000 during the first half of 2005. The amortization of customer relationships was $78,000 for the first half of 2006 compared to $101,000 during the same period of 2005.

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Interest and other income, net

	Three months ended June 30,									Six months ended June 30,
	2006			2005			% Change			2006			2005			% Change
	(In thousands)									(In thousands)
Interest and other income, net	$	696		$	219			217.8	%	$	957		$	388			146.6	%
Percentage of total revenues		4.2	%		1.8	%					3.2	%		1.8	%

     Interest and other income, net consists primarily of interest income earned on our cash, cash equivalents and short-term investments and gains and losses on the sale of fixed assets. The increase in interest and other income, net during both the three and six months ended June 30, 2006 was primarily the result of increased interest earned on a higher cash and investment balance due to the proceeds received from the sale of preferred stock and warrants to Oak during the second quarter of 2006.

Liquidity and Capital Resources

     At June 30, 2006 we had $30.1 million of cash and cash equivalents and $36.9 million in short-term investments, working capital of $80.5 million and no long-term or short-term debt outstanding. The following table sets forth selected consolidated statement of cash flows data:

	Six months ended
	June 30,
	2006			2005
	(in thousands)
Net cash provided by (used in) operating activities	$	2,296		$	(4,350	)
Net cash provided by (used in) investing activities		(24,281	)		6,600
Net cash provided by financing activities		43,626			1,416
Cash, cash equivalents and short- term investments at end of period	$	66,950		$	22,024

     During the first six months of 2006, operating activities provided $2.3 million of cash as compared to using $4.4 million in the first half of 2005. Our net loss, adjusted for depreciation and other non-cash items, contributed $1.1 million of cash in the first half of 2006 as compared to $518,000 in first half of 2005. During the first half of 2006, the remaining $1.2 million of cash provided by operating activities was primarily due to a $3.3 million increase in accounts payable, which was partially offset by a $1.4 million increase in accounts receivable, a $209,000 decrease in accrued warranty and a $572,000 decrease in accrued compensation and other current and long-term liabilities. During the first half of 2005, the remaining use of $4.9 million of cash was primarily due to an $8.0 million increase in inventory and a $347,000 decrease in accrued warranty, which were offset partially by a $3.2 million increase in accounts payable, a $303,000 decrease in accounts receivable and a $275,000 increase in accrued compensation and other current and long-term liabilities.

     Investing activities used cash of $24.3 million in the first half of 2006 as compared to providing cash of $6.6 million in the first half of 2005. The use of cash during the first half of 2006 was due to a net increase of $23.0 million of short-term investments, a $1.1 million purchase of property and equipment and a $236,000 increase in restricted cash. The provision of cash from investing activities during the first half of 2005 was primarily due to a net decrease of short-term investments by $6.7 million.

     Financing activities provided cash of $43.6 in the first half of 2006 as compared to $1.4 million in the first half of 2005. During the second quarter of 2006, we generated $43.1 million in net proceeds from the sale of 300,000 shares of Series B preferred stock and a warrant to purchase 90,000 shares of Series B preferred stock to Oak. In addition to the proceeds received from Oak, during the first half of 2006 we received $379,000 from the sale of common stock under our stock purchase plan and $129,000 from the exercise of stock options. During the first half of 2005, the $1.4 million increase in cash was due to $230,000 from the sale of common stock under our stock purchase plan and $1.2 million from the exercise of stock options.

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     We believe that our existing cash and investment balances will be sufficient to meet our operating and capital requirements for the next 12 months and the foreseeable future thereafter. With the exception of operating leases summarized below, we have not entered into any off-balance sheet financing arrangements, we have not established or invested in any variable interest entities, we do not have any unconditional purchase obligations, nor do we have non-cancelable commitments for capital expenditures. We have not guaranteed the debt or obligations of other entities or entered into options on non-financial assets.

     During the second quarter of 2006, we executed an agreement to lease property in San Jose, California. The lease term is expected to commence on August 15, 2006 and is expected to terminate on August 16, 2011. During the third quarter of 2006, we will be moving our corporate headquarters to this new location.

     The following table summarizes our future payment obligations for all of our operating leases (excluding interest, maintenance fees and real property taxes):

Years Ending December 31,	Operating Leases
	(in thousands)
2006 (July 1 — December 31)	$	269
2007		611
2008		669
2009		482
2010		385
Thereafter		227
Total minimum payments required	$	2,643

Recent Accounting Pronouncements

     In February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments,” (“SFAS 155”) an amendment of FASB Statements No. 133 and 140. SFAS 155 will be effective for the Company beginning in the first quarter of 2007. SFAS 155 permits interests in hybrid financial instruments that contain an embedded derivative that would otherwise require bifurcation, to be accounted for as a single financial instrument at fair value, with changes in fair value recognized in earnings. This election is permitted on an instrument-by-instrument basis for all hybrid financial instruments held, obtained, or issued as of the adoption date. The Company is assessing the impact of the adoption of SFAS 155.

     In June 2006, the FASB issued FASB Interpretation No. 48 “Accounting For Uncertain Tax Positions – An Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109 “Accounting for Income Taxes”. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact of FIN 48 to its financial position and results of operations.

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     Item 3. Qualitative and Quantitative Disclosures about Market Risk

     There have been no material changes in our reported market risks since our report on market risks in our Annual Report on Form 10-K for the year ended December 31, 2005 under the heading corresponding to that set forth above. Our exposure to market risk is limited to interest income sensitivity, which is affected by changes in the general level of U.S. interest rates, as our investments in cash equivalents include investment grade commercial paper and government securities. We place our investments with high-quality issuers and attempt to limit when possible the amount of credit exposure to any one issuer. Due to the nature of our short-term investments, we do not believe we are subject to any material market risk exposure. We do not have any material equity investments or foreign currency or other derivative financial instruments.

     Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

     Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were effective as of the end of the period covered by this report.

     Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and our chief executive officer and our chief financial officer have concluded that these controls and procedures are effective at the “reasonable assurance” level. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Changes in internal controls over financial reporting.

     There were no changes in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

     Item 1. Legal Proceedings

     We are not currently party to any material litigation.

     Although we are not a party to the litigation now pending in the Southern District of New York entitled “Securities and Exchange Commission v. Wood River Capital Management, LLC et al.” filed as Civil Action 05-CV-8713, we have filed a proof of claim with the Court reserving our rights to pursue claims against the defendants in such action, including possible claims for disgorgement of profits pursuant to Section 16 of the Exchange Act. Because Wood River has not yet publicly disclosed its trading history in our common stock, we are unable to determine at this time what claims exist, or what the damages for any such claims may be. To the extent we have any valid claims against Wood River, we intend to pursue them vigorously.

     Item 1A. Risk Factors

     You should consider carefully the following risk factors as well as other information in this report before investing in any of our securities. If any of the following risks actually occur, our business, operating results and financial condition could be adversely affected. This could cause the market price of our common stock to decline, and you may lose all or part of your investment.

** Indicates risk factor has been updated since our Annual Report on Form 10-K for the year ended December 31, 2005.

Risks Relating to Our Business

We have had a history of losses and may not be profitable in the future. **

     We have had a history of losses. We had a net loss of $1.4 million during the first half of 2006. We also had net losses of $874,000, $4.4 and $7.9 million for the years ended December 31, 2005, 2004 and 2003, respectively. There is no guarantee that we will achieve or maintain profitability in the future.

We depend on a small number of key customers in the telecommunications industry for a large portion of our revenues. If we lose any of our major customers, particularly Nera, Nokia or Siemens or there is any material reduction in orders for our products from any of these customers, our business, financial condition and results of operations would be adversely affected. **

     We depend, and expect to continue to depend, on a relatively small number of telecommunication network original equipment manufacturers and systems integrators, collectively referred to in this report as telecom OEMs, for a large portion of our revenues. The loss of any of our major customers, particularly Nera, Nokia or Siemens, or any material reduction in orders from any of such customers would have a material adverse effect on our business, financial condition and results of operations. In the first half of 2006, and in fiscal 2005 and 2004, revenues from Nokia accounted for approximately 32%, 47%, and 55% of our total revenues, respectively. Revenues from Siemens accounted for 31% in the first half of 2006 and 16% of our total revenues for 2005. Revenues from Nera ASA accounted for 13% in the first half of 2006 and 10% of our total revenues for 2005 and 2004. We had no other customers individually representing more than 10% of our total revenues for the first half of 2006, for fiscal 2005 or for fiscal 2004. Most of our customer agreements are in the form of purchase orders and are not pursuant to a formal agreement. As a result, none of our major customers is under any long-term commitment to purchase products from us, and there is no guarantee that any of them will continue to do business with us.

     In the second quarter of 2006, Nokia and Siemens announced a joint venture to merge the Networks Business Group of Nokia and the carrier-related operations of Siemens into a new company, Nokia Siemens Networks. If the merger is completed, it will result in further concentration of our customer base.

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We depend on the telecommunications industry for most of our revenues. If this industry suffers another downturn or fails to grow as anticipated, our revenues could decrease and our profitability could suffer. In addition, consolidation in this industry could result in delays or cancellations of orders for our products, adversely impacting our results of operations.**

     We depend, and expect to remain dependent, on the telecommunications industry for most of our revenues. Revenues from all of our telecom OEM customers comprised 83% of our total revenues in the first half of 2006 and 80% of our total revenues in 2005.

     The telecommunications industry suffered a significant worldwide downturn beginning in 2000, and has only recently begun to grow again. In connection with this downturn, there were worldwide reductions in telecommunication network projects that resulted in the loss of some of our key customers and reduced revenues from our remaining customers. We also were forced to undertake significant cost reduction measures as a result. The telecommunications industry has only recently begun to grow again, but at a more measured rate than previously. Our revenues are dependent, in part, on growth of wireless telephony particularly in developing countries, increasing data-intensive cellular traffic, deployment of third-generation, or “3G”, networks and the introduction of other high capacity data-only telecommunication networks. If similar downturns reoccur, or if the telecommunications industry fails to grow as we anticipate, our revenues may remain flat or decrease. Significantly lower revenues would likely force us to make provisions for excess inventory and abandoned or obsolete equipment and reduce our operating expenses. To reduce our operating expenses, we could be required to reduce the size of our workforce and consolidate facilities. We cannot guarantee that we would be able to reduce operating expenses to a level commensurate with the lower revenues resulting from such an industry downturn.

     The telecommunications industry has undergone significant consolidation in the past few years and we expect that consolidation to continue. The acquisition of one of our major customers in this market, or one of the communications service providers supplied by one of our major customers, could result in delays or cancellations of orders of our products and, accordingly, delays or reductions in our anticipated revenues and reduced profitability or increased net losses.

Our future success depends in part on our ability to further penetrate into new markets, such as defense electronics and homeland security, and we may be unable to do so.

     Historically, all or a large majority of our revenues have been attributable to sales of our RF modules to telecom OEMs such as Nokia. Part of our growth strategy is to design and sell high-frequency RF modules for and to OEMs and systems integrators in new markets, particularly defense electronics and homeland security. To date, only a modest percentage of our revenues have been attributable to sales of RF modules to defense systems integrators. We have only recently begun to design and sell products for the recently emerging homeland security market. The potential size of this market is unclear and we cannot predict how the market will evolve. If increased demand for high-frequency RF modules in the defense electronics and homeland security markets does not materialize, we fail to secure new design wins in these markets or we are unable to design readily manufacturable products for these new markets, our growth and revenues could be adversely impacted, thereby decreasing our profitability or increasing our net losses.

Our operating results may fluctuate significantly based on seasonal factors in the telecommunication network market. **

     In the past, our operating results have reflected lower revenues in the first and third calendar quarters due to seasonality in the telecommunication network market. Revenues attributable to telecom OEMs typically have contracted in the first quarter due to delays in purchasing resulting from wireless carriers’ budgeting processes. The third quarter generally has been slow in our telecommunication network market as many of our European telecom OEM customers shut down their factories for a portion of the summer months. The fourth quarter historically has been our strongest quarter as the wireless carriers expend their remaining capital budgets for the year. However, we did not experience this seasonality in 2005 or in the first half of 2006, and we cannot be certain what seasonal factors, if any, will impact our revenues in the future or the extent of such potential fluctuations.

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Because of the shortages of some components and our dependence on single source suppliers and custom components, we may be unable to obtain an adequate supply of components of sufficient quality in a timely fashion, or we may be required to pay higher prices or to purchase components of lesser quality.**

     Many of our products are customized and must be qualified with our customers. This means that we cannot change components in our products easily without the risks and delays associated with requalification. Accordingly, while a number of the components we use in our products are made by multiple suppliers, we may effectively have single source suppliers for some of these components.

     In addition, we currently purchase a number of components, some from single source suppliers, including, but not limited to:

• semiconductor devices;

• application-specific monolithic microwave integrated circuits;

• voltage-controlled oscillators;

• voltage regulators;

• RoHS (Restriction of Hazardous Substances Directive) surface mount components;

• high-frequency circuit boards;

• custom connectors;

• electromagnetic housings;

• yttrium iron garnet components; and

• magnetic components.

     Any delay or interruption in the supply of these or other components could impair our ability to manufacture and deliver our products, harm our reputation and cause a reduction in our revenues. In addition, any increase in the cost of the components that we use in our products could make our products less competitive and lower our margins. During 2005, we suffered from shortages of and quality issues with various components, including voltage-controlled oscillators, voltage regulators, metal enclosures and certain high-frequency circuit boards. These shortages and quality issues adversely impacted our product revenues throughout the year and could continue to do so in the future. Our single source suppliers could enter into exclusive agreements with or be acquired by one of our competitors, increase their prices, refuse to sell their products to us, discontinue products or go out of business. Even to the extent alternative suppliers are available to us and their components are qualified with our customers on a timely basis, identifying them and entering into arrangements with them may be difficult and time consuming, and they may not meet our quality standards. We may not be able to obtain sufficient quantities of required components on the same or substantially the same terms.

Our cash requirements will be impacted by our need to increase inventories.

     As part of our expansion in the telecommunications market and our increased emphasis on the defense electronics and homeland security markets, we increased the number of our products by over three times during the past fiscal year. The products we manufacture require hundreds to thousands of components obtained from a wide variety of suppliers and we have faced component shortages and quality issues from our suppliers. In addition, in order to maintain and enhance our competitive position, we must be able to satisfy our customers’ rapidly-changing needs. As a result of these challenges, we have significantly increased our raw materials inventory and added more finished products to our key customers’ consignment stocks so that they will be better-positioned to meet their own customers’ demand. These increases in raw materials and finished goods have significantly increased our working capital needs and may further increase our capital needs in the future.

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We rely heavily on a Thailand facility of HANA Microelectronics Co., Ltd., a contract manufacturer, to produce our RF modules. If HANA is unable to produce these modules in sufficient quantities or with adequate quality, or it chooses to terminate our manufacturing arrangement, we will be forced to find an alternative manufacturer and may not be able to fulfill our production commitments to our customers, which could cause sales to be delayed or lost and could harm our reputation.**

     We outsource the assembly and testing of most of our telecommunication related products to a Thailand facility of HANA Microelectronics Co., Ltd., or HANA, a contract manufacturer. We plan to continue this arrangement as a key element of our operating strategy. If HANA does not provide us with high quality products and services in a timely manner, or terminates its relationship with us, we may be unable to obtain a satisfactory replacement to fulfill customer orders on a timely basis. In the event of an interruption of supply from HANA, sales of our products could be delayed or lost and our reputation could be harmed. Our manufacturing agreement with HANA currently expires in July 2007 but will renew automatically for successive one-year periods unless either party notifies the other of its desire to terminate the agreement at least 90 days prior to the expiration of the term. In addition, either party may terminate the agreement without cause upon 120 days prior written notice to the other party, and either party may terminate the agreement if the non-terminating party is in breach and does not cure the breach within 30 days after notice of the breach is given by the terminating party. There can be no guarantee that HANA will not seek to terminate its agreement with us.

We rely on Velocium and other third-party semiconductor foundries to manufacture the semiconductors contained in our products. The loss of our relationship with any of these foundries, particularly Velocium, without adequate notice would adversely impact our ability to fill customer orders and could damage our customer relationships.**

     We design semiconductor devices. However, we do not own or operate a semiconductor fabrication facility, or foundry, and rely on a limited number of third parties to produce these components. Our largest semiconductor foundry supplier is Velocium, a business unit of Northrop Grumman Space & Mission Systems Corp. Velocium produced over 65 percent of our semiconductors in 2005, with the balance provided by other suppliers. The loss of our relationship with or our access to any of the semiconductor foundries we currently use, particularly Velocium, and any resulting delay or reduction in the supply of semiconductor devices to us, would severely impact our ability to fulfill customer orders and could damage our relationships with our customers.

     We may not be successful in forming alternative supply arrangements that provide us with a sufficient supply of gallium arsenide devices. Because there are a limited number of semiconductor foundries that use the particular process technologies we select for our products and that have sufficient capacity to meet our needs, using alternative or additional semiconductor foundries would require an extensive qualification process that could prevent or delay product shipments and revenues. We estimate that it may take up to six months to shift production of a given semiconductor circuit design to a new foundry.

Implementing our acquisition strategy could result in dilution to our stockholders and operating difficulties leading to a decline in revenues and operating profit.**

     One of our strategies is to grow through acquisitions. To that end, we have completed five acquisitions since our initial public offering and intend to pursue acquisitions in our markets as appropriate. The process of investigating, acquiring and integrating any business into our business and operations is risky and may create unforeseen operating difficulties and expenditures. The areas in which we may face difficulties include:

• diversion of our management from the operation of our core business;

• assimilating the acquired operations and personnel;

• integrating information technology and reporting systems;

• retention of key personnel;

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• retention of acquired customers; and

• implementation of controls, procedures and policies in the acquired business.

     For example, it took us longer to integrate JCA Technology into our operations at our Diamond Springs facilities than we originally anticipated. Additionally, the JCA Technology acquisition required us to devote efforts to standardize the product design and manufacturing process to reduce dependence on specific personnel. As a result of these difficulties, our ability to deliver our defense electronics products to our customers in a timely manner was temporarily adversely affected.

     In addition to the factors set forth above, we may encounter other unforeseen problems with acquisitions that we may not be able to overcome. Future acquisitions may require us to issue shares of our stock or other securities that dilute our other stockholders, expend cash, incur debt, assume liabilities, including contingent or unknown liabilities, or create additional expenses related to write-offs or amortization of intangible assets with estimated useful lives, any of which could materially adversely affect our revenues and our operating profits.

Our products may contain component, manufacturing or design defects or may not meet our customers’ performance criteria, which could cause us to incur significant repair expenses, harm our customer relationships and industry reputation, and reduce our revenues and profitability.**

     We have experienced manufacturing quality problems with our products in the past and may have similar problems in the future. As a result of these problems, we have replaced components in some products, or replaced the product, in accordance with our product warranties. Our product warranties typically last one to two years. As a result of component, manufacturing or design defects, we may be required to repair or replace a substantial number of products under our product warranties, incurring significant expenses as a result. Further, our customers may discover latent defects in our products that were not apparent when the warranty period expired. These defects may cause us to incur significant repair or replacement expenses beyond the normal warranty period. In addition, any component, manufacturing or design defect could cause us to lose customers or revenues or damage our customer relationships and industry reputation.

     For example, some radios incorporating our transceivers that are manufactured and shipped by one of our customers have experienced degraded performance after installation in the field. The cause of the degradation was identified to be a faulty semiconductor component originally developed and supplied by TRW Inc. that was incorporated in the transceiver. TRW was later acquired by Northrop Grumman Corporation and renamed Northrop Grumman Space & Mission Systems Corp. Pursuant to a settlement agreement between TRW and us, we are responsible for the direct costs associated with the repair and replacement of the degraded transceivers produced under our supply agreement with the customer. Northrop Grumman Space & Mission Systems Corp., as successor to TRW, compensated our customer for the indirect costs associated with the repair and replacement of the degraded radios and transceivers. These indirect costs include the costs associated with removing and replacing the radios in the field as well as removing and replacing the transceiver module in each returned radio. During 2001, we reserved $4.6 million for warranty charges to cover the actual repair of the transceivers containing these faulty components, of which $2.8 million had been used or reversed through June 30, 2006.

We depend on our key personnel. Skilled personnel in our industry can be in short supply. If we are unable to retain our current personnel or hire additional qualified personnel, our ability to develop and successfully market our products would be harmed.

     We believe that our future success depends upon our ability to attract, integrate and retain highly skilled managerial, research and development, manufacturing and sales and marketing personnel. Skilled personnel in our industry can be in short supply. As a result, our employees are highly sought after by competing companies and our ability to attract skilled personnel is limited. To attract and retain qualified personnel, we may be required to grant large stock option or other stock-based incentive awards, which may harm our operating results or be dilutive to our other stockholders. We may also be required to pay significant base salaries and cash bonuses, which could harm our operating results.

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     Due to our relatively small number of employees and the limited number of individuals with the skill set needed to work in our industry, we are particularly dependent on the continued employment of our senior management team and other key personnel. If one or more members of our senior management team or other key personnel were unable or unwilling to continue in their present positions, these persons would be very difficult to replace, and our ability to conduct our business successfully could be seriously harmed. We do not maintain key person life insurance policies.

Competitive conditions may require us to reduce prices in the future and, as a result, we may need to reduce our costs in order to be profitable.**

     Over the past year, we have reduced our prices by 10% to 15% in order to remain competitive and we expect market conditions will cause us to reduce our prices in the future. In order to reduce our per-unit cost of product revenues, we must continue to design and re-design products to require lower cost materials, improve our manufacturing efficiencies and successfully move production to low-cost, offshore locations. The combined effects of these actions may be insufficient to achieve the cost reductions needed to maintain or increase our gross margins or achieve profitability.

The length of our sales cycle requires us to invest substantial financial and technical resources in a potential sale before we know whether the sale will occur. There is no guarantee that the sale will ever occur and if we are unsuccessful in designing a high-frequency RF module for a particular generation of a customer’s products, we may need to wait until the next generation of that product to sell our products to that particular customer.

     Our products are highly technical and the sales cycle can be long. Our sales efforts involve a collaborative and iterative process with our customers to determine their specific requirements either in order to design an appropriate solution or to transfer the product efficiently to our offshore contract manufacturer. Depending on the product and market, the sales cycle can take anywhere from 2 to 24 months, and we incur significant expenses as part of this process without any assurance of resulting revenues. We generate revenues only if our product is selected for incorporation into a customer’s system and that system is accepted in the marketplace. If our product is not selected, or the customer’s development program is discontinued, we generally will not have an opportunity to sell our product to that customer until that customer develops a new generation of its system. There is no guarantee that our product will be selected for that new generation of its system. In the past, we have had difficulty meeting some of our major customers’ stated volume and cost requirements. The length of our product development and sales cycle makes us particularly vulnerable to the loss of a significant customer or a significant reduction in orders by a customer because we may be unable to quickly replace the lost or reduced sales.

We may not be able to design our products as quickly as our customers require, which could cause us to lose sales and may harm our reputation.

     Existing and potential customers typically demand that we design products for them under difficult time constraints. In the current market environment, the need to respond quickly is particularly important. If we are unable to commit the necessary resources to complete a project for a potential customer within the requested timeframe, we may lose a potential sale. Our ability to design products within the time constraints demanded by a customer will depend on the number of product design professionals who are available to focus on that customer’s project and the availability of professionals with the requisite level of expertise is limited.

     Each of our telecommunication network products is designed for a specific range of frequencies. Because different national governments license different portions of the frequency spectrum for the telecommunication network market, and because communications service providers license specific frequencies as they become available, in order to remain competitive we must adapt our products rapidly to use a wide range of different frequencies. This may require the design of products at a number of different frequencies simultaneously. This design process can be difficult and time consuming, could increase our costs and could cause delays in the delivery of products to our customers, which may harm our reputation and delay or cause us to lose revenues.

     In our other markets, our customers have specific requirements that can be at the forefront of technological development and therefore difficult and expensive to develop. If we are not able to devote sufficient resources to these products, or we experience development difficulties or delays, we could lose sales and damage our reputation with those customers.

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We may not be able to manufacture and deliver our products as quickly as our customers require, which could cause us to lose sales and would harm our reputation.

     We may not be able to manufacture products and deliver them to our customers at the times and in the volumes they require. Manufacturing delays and interruptions can occur for many reasons, including, but not limited to:

• the failure of a supplier to deliver needed components on a timely basis or with acceptable quality;

• lack of sufficient capacity;

• poor manufacturing yields;

• equipment failures;

• manufacturing personnel shortages;

• labor disputes;

• transportation disruptions;

• changes in import/export regulations;

• infrastructure failures at the facilities of our offshore contract manufacturer;

• natural disasters;

• acts of terrorism; and

• political instability.

     Manufacturing our products is complex. The yield, or percentage of products manufactured that conform to required specifications, can decrease for many reasons, including materials containing impurities, equipment not functioning in accordance with requirements or human error. If our yield is lower than we expect, we may not be able to deliver products on time. For example, in the past, we have on occasion experienced poor yields on certain products that have prevented us from delivering products on time and have resulted in lost sales. If we fail to manufacture and deliver products in a timely fashion, our reputation may be harmed, we may jeopardize existing orders and lose potential future sales, and we may be forced to pay penalties to our customers.

     As part of our strategy, we may expand our domestic manufacturing capacity beyond the level required for our current sales in order to accommodate anticipated increases in our defense electronics business. As a result, our domestic manufacturing facilities may be underutilized from time to time. Conversely, if we do not maintain adequate manufacturing capacity to meet demand for our defense electronic products, we may lose opportunities for additional sales. Any failure to have sufficient manufacturing capacity to meet demand could cause us to lose revenues, thereby reducing our profitability, or increasing our net losses, and could harm our reputation with customers.

Because we do not have long-term commitments from many of our customers, we must estimate customer demand, and errors in our estimates could have negative effects on our inventory levels, revenues and results of operations.

     Our sales are generally made on the basis of formal agreements and purchase orders, which may be later modified or canceled by the customer, rather than firm long-term purchase commitments. We have historically been required to place firm orders for products and manufacturing equipment with our suppliers up to six months prior to

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the anticipated delivery date and, on occasion, prior to receiving an order for the product, based on our forecasts of customer demands. Our sales process requires us to make multiple demand forecast assumptions, each of which may introduce error into our estimates, causing excess inventory to accumulate or a lack of manufacturing capacity when needed. If we overestimate customer demand, we may allocate resources to manufacturing products that we may not be able to sell when we expect or at all. As a result, we would have excess inventory, which would harm our financial results. Conversely, if we underestimate customer demand or if insufficient manufacturing capacity were available, we would lose revenue opportunities, market share and damage our customer relationships. On occasion, we have been unable to adequately respond to unexpected increases in customer purchase orders and were unable to benefit from this increased demand. There is no guarantee that we will be able to adequately respond to unexpected increases in customer purchase orders in the future, in which case we may lose the revenues associated with those additional purchase orders and our customer relationships and reputation may suffer.

Some of our customer contracts require us to manufacture products designed by our customers. While we intend to convert many of these products to products of our own design, such transitions may be difficult and/or expensive to implement and delays or difficulties in doing so could harm our operating results.

     Some of our customer contracts are based on the transfer of product manufacturing from our customers’ factories to those of our contract manufacturer, HANA. Under these contracts, we may be required to manufacture the products in a manner similar to the way our customers previously manufactured them until we are able to convert these products to products of our own design. The objective of converting a product to one of our own design is to improve manufacturability and lower costs, thereby improving our gross margins. If we encounter difficulties or delays in transitioning a customer’s product to our manufacturing process, revenues attributable to that product could be delayed or lost. The cost of manufacturing a customer-designed product is typically higher than the cost of manufacturing a product of our own design. In the short term, while we are manufacturing a customer-designed product, our gross margins will be adversely impacted. Similarly, difficulties and delays in transitioning a product to a product of our own design will result in reduced profitability over the long-term.

Any failure to protect our intellectual property appropriately could reduce or eliminate any competitive advantage we have.**

     Our success depends, in part, on our ability to protect our intellectual property. We rely primarily on a combination of patent, copyright, trademark and trade secret laws to protect our proprietary technologies and processes. As of June 30, 2006, we had 39 United States patents issued, many with associated foreign filings and patents. Our issued patents include those relating to basic circuit and device designs, semiconductors, MLMS technology and system designs. Our issued United States patents expire between 2007 and 2020. We maintain a vigorous technology development program that routinely generates potentially patentable intellectual property. Our decision as to whether to seek formal patent protection is done on a patent by patent basis and is based on the economic value of the intellectual property, the anticipated strength of the resulting patent, the cost of pursuing the patent and an assessment of using a patent as a strategy to protect the intellectual property.

     To protect our intellectual property, we enter into confidentiality and assignment of rights to inventions agreements with our employees, and confidentiality and non-disclosure agreements with third parties, and generally control access to and distribution of our documentation and other proprietary information. These measures may not be adequate in all cases to safeguard the proprietary technology underlying our products. It may be possible for a third party to copy or otherwise obtain and use our products or technology without authorization, develop similar technology independently or design around our patents. In addition, effective patent, copyright, trademark and trade secret protection may be unavailable or limited outside of the United States, Europe and Japan. We may not be able to obtain any meaningful intellectual property protection in other countries and territories. Additionally, we may, for a variety of reasons, decide not to file for patent, copyright, or trademark protection outside of the United States. We occasionally agree to incorporate a customer’s or supplier’s intellectual property into our designs, in which case we have obligations with respect to the non-use and non-disclosure of that intellectual property. We also license technology from other companies, including Northrop Grumman Corporation. There are no limitations on our rights to make, use or sell products we may develop in the future using the technology licensed to us by Northrop Grumman Corporation, provided that the products are for commercial customers and non-satellite applications. Steps taken by us to prevent misappropriation or infringement of our intellectual property or the intellectual property of our customers may not be successful. Moreover, litigation may be necessary in the future to enforce our

31

intellectual property rights, to protect our trade secrets or to determine the validity and scope of proprietary rights of others, including our customers. Litigation of this type could result in substantial costs and diversion of our resources.

     We may receive in the future, notices of claims of infringement of other parties’ proprietary rights. In addition, the invalidity of our patents may be asserted or prosecuted against us. Furthermore, in a patent or trade secret action, we could be required to withdraw the product or products as to which infringement was claimed from the market or redesign products offered for sale or under development. We have also at times agreed to indemnification obligations in favor of our customers and other third parties that could be triggered upon an allegation or finding of our infringement of other parties’ proprietary rights. These indemnification obligations would be triggered for reasons including our sale or supply to a customer or other third parties of a product which was later discovered to infringe upon another party’s proprietary rights. Irrespective of the validity or successful assertion of such claims we would likely incur significant costs and diversion of our resources with respect to the defense of such claims. To address any potential claims or actions asserted against us, we may seek to obtain a license under a third party’s intellectual property rights. However, in such an instance, a license may not be available on commercially reasonable terms, if at all.

     With regard to our pending patent applications, it is possible that no patents may be issued as a result of these or any future applications or the allowed patent claims may be of reduced value and importance. If they are issued, any patent claims allowed may not be sufficiently broad to protect our technology. Further, any existing or future patents may be challenged, invalidated or circumvented thus reducing or eliminating their commercial value. The failure of any patents to provide protection to our technology might make it easier for our competitors to offer similar products and use similar manufacturing techniques.

Risks Relating to Our Industry

We have increased our focus on sales to the United States government and other governmental agencies. Our revenues in this market largely depend upon the funding and implementation decisions of Congress and government agencies. These decisions could change abruptly and without notice, unexpectedly reducing our current or future revenues in this market. Development fees in this market can fluctuate. **

     Our growth is partially dependent on growth in sales to defense electronics and homeland security prime contractors as a first-tier subcontractor. Government appropriations and prime contractor reactions to changing levels of contract funding availability can cause re-programming of first-tier subcontractor requirements by prime contractors in a way that reduces our current revenues or future revenue forecasts. These funding and implementation decisions are difficult to predict and may change abruptly. As such, our quarterly revenues from these customers may fluctuate significantly from quarter to quarter. Additionally, if these funding and implementation decisions change in a manner unfavorable to us, we could find that previously expected and forecasted revenues do not materialize at all.

     In this market, we generate development fees by developing product prototypes and custom products pursuant to development agreements that provide for payment of a portion of our research and development or other expenses. Revenues under development contracts are generally recorded on a percentage of completion basis, using project hours as the basis to measure progress toward completing the contract and recognizing revenues. Up-front fees, if any, associated with development agreements are recognized over the estimated development and production periods, but in no event prior to becoming payable by the customer. In no event are revenues recognized prior to becoming payable by the customer. These development fees can cause our revenue levels to fluctuate significantly from quarter to quarter.

Our failure to compete effectively could reduce our revenues and margins.**

     Among merchant suppliers in the telecommunication network market, we primarily compete with Compel Electronics Inc., Filtronics plc, Linkra Srl, Microelectronics Technology Inc., Remec Broadband Wireless, Inc., Teledyne Technologies Incorporated, Thales Group SA and Xytrans Inc. In addition to these companies, there are telecom OEMs, such as Ericsson and NEC Corporation, that use their own captive resources for the design and manufacture of their high-frequency RF transceiver modules, rather than use merchant suppliers like us. We believe

32

that over one half of the high-frequency RF transceiver modules manufactured today are being produced by these captive resources. To the extent that telecom OEMs presently, or may in the future, produce their own RF transceiver modules, we lose the opportunity to gain a customer and the potential related sales. Further, if a telecom OEM were to sell its captive operation to a competitor, we would lose the opportunity to acquire those potential sales. In the defense electronics and homeland security markets, we primarily compete with Aeroflex Incorporated, AML Communications Inc., Chelton, Ltd., Ciao Wireless, CTT Inc., Herley Industries, Inc., KMIC Technology, Inc., M/A-Com, Miteq, Inc. and Teledyne Technologies Incorporated.

     Many of our current and potential competitors are substantially larger than us and have greater financial, technical, manufacturing and marketing resources. In addition, we have only recently begun to design and sell products for homeland security applications as the market for homeland security is only now emerging. If we were unable to compete successfully, our future operations and financial results would be harmed.

Our failure to comply with any applicable environmental regulations could result in a range of consequences, including fines, suspension of production, excess inventory, sales limitations and criminal and civil liabilities.

     Due to environmental concerns, the need for lead-free solutions in electronic components and systems is receiving increasing attention within the electronics industry as companies are moving towards becoming compliant with the Restriction of Hazardous Substances Directive, or RoHS Directive. The RoHS Directive is European legislation that restricts the use of a number of substances, including lead, effective July 2006. We believe that our products will be compliant with the RoHS Directive and that materials will be available to meet these emerging regulations. However, it is possible that unanticipated supply shortages or delays or excess non-compliant inventory may occur as a result of these new regulations. Failure to comply with any applicable environmental regulations could result in a range of consequences, including loss of sales, fines, suspension of production, excess inventory, and criminal and civil liabilities.

Government regulation of the communications industry could limit the growth of the markets that we serve or could require costly alterations of our current or future products.

     The markets that we serve are highly regulated. Communications service providers must obtain regulatory approvals to operate broadband wireless access networks within specified licensed bands of the frequency spectrum. Further, the Federal Communications Commission and foreign regulatory agencies have adopted regulations that impose stringent RF emissions standards on the communications industry. In response to the new environmental regulations on health and safety in Europe and China, we are required to design and build a lead-free product. Changes to these regulations may require that we alter the performance of our products.

Risks Relating to Ownership of Our Stock

The assets of Wood River Capital Management, LLC and certain of its affiliates, the holders of shares of common stock representing approximately 27% of our outstanding capital stock as of June 30, 2006, have been placed into receivership by the Securities and Exchange Commission, and the receiver may dispose of such shares of our common stock. Such disposition may adversely affect the trading price of our common stock.**

     Based on filings made with the Securities and Exchange Commission, as of June 30, 2006, Wood River Capital Management, LLC and certain of its affiliates, which we refer to collectively as Wood River, owned approximately 27% of our outstanding capital stock (measured on an as-converted to common stock basis). On October 13, 2005, the Securities and Exchange Commission filed an emergency action against Wood River and, concurrently with the filing of the action, an order was entered placing all assets of Wood River, including the Endwave shares owned by Wood River, into receivership. As a result, the receiver is also deemed to have beneficial ownership of such shares. The receiver will be required to liquidate the assets of Wood River or distribute such assets to the investors in the Wood River Funds. We currently do not know what the timing and manner of any liquidation or distribution of Endwave shares is likely to be, nor do we control any such liquidation or distribution. Such disposition of Endwave shares may have the effect of reducing the trading price of our common stock.

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The market price of our common stock has historically fluctuated and is likely to fluctuate in the future.**

     The price of our common stock has fluctuated widely since our initial public offering in October 2000. For example, in the first half of 2006, the lowest bid price for our common stock was $8.98 and the highest bid price for our common stock was $17.15 and in 2005, the lowest bid price for our common stock was $9.46 and the highest bid price for our common stock was $55.41. The market price of our common stock can fluctuate significantly for many reasons, including, but not limited to:

• our financial performance or the performance of our competitors;

• the purchase or sale of common stock, or short-selling or other transactions involving our securities, particularly by Wood River or other large stockholders;

• technological innovations or other trends or changes in the telecommunication network, defense electronics or homeland security markets;

• successes or failures at significant product evaluations or site demonstrations;

• the introduction of new products by us or our competitors;

• acquisitions, strategic alliances or joint ventures involving us or our competitors;

• decisions by major participants in the communications industry not to purchase products from us or to pursue alternative technologies;

• decisions by investors to de-emphasize investment categories, groups or strategies that include our company or industry;

• market conditions in the industry, the financial markets and the economy as a whole; and

• the low trading volume of our common stock.

     It is likely that our operating results in one or more future quarters may be below the expectations of security analysts and investors. In that event, the trading price of our common stock would likely decline. In addition, the stock market has experienced extreme price and volume fluctuations. These market fluctuations can be unrelated to the operating performance of particular companies and the market prices for securities of technology companies have been especially volatile. Future sales of substantial amounts of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock. Additionally, future stock price volatility for our common stock could provoke the initiation of securities litigation, which may divert substantial management resources and have an adverse effect on our business, operating results and financial condition. Our existing insurance coverage may not sufficiently cover all costs and claims that could arise out of any such securities litigation. We anticipate that prices for our common stock will continue to be volatile.

There are two shareholders who own a large percentage of our outstanding capital stock and are able to affect significantly the outcome of matters requiring stockholder approval.**

     Wood River owns approximately 4.2 million shares of our outstanding common stock. In addition, Oak owns shares of our Series B preferred stock that are convertible into 3,000,000 shares of our common stock, and a warrant to purchase 90,000 shares of our Series B preferred stock that upon issuance will be convertible into 900,000 shares of our common stock. Assuming the exercise in full of the warrant issued to Oak and the conversion of Oak’s preferred shares into common stock, as of June 30, 2006 Oak owned 100% of our preferred stock and warrant which are together convertible into approximately 25% of our outstanding capital stock and Wood River owned approximately 27% of our outstanding capital stock.

     Because most matters requiring approval of our stockholders require the approval of the holders of a majority of the shares of our outstanding common stock present in person or by proxy at the meeting, the significant ownership interest of Oak and Wood River allows Oak and Wood River, and the receiver of the Wood River assets, to affect significantly the election of our directors and the outcome of corporate actions requiring stockholder approval. This

34

concentration of ownership may also delay, deter or prevent a change in control and may make some transactions more difficult or impossible to complete without their support, even if the transaction is favorable to our stockholders as a whole.

Our certificate of incorporation, bylaws and arrangements with executive officers contain provisions that could delay or prevent a change in control.

     We are subject to certain Delaware anti-takeover laws by virtue of our status as a Delaware corporation. These laws prevent us from engaging in a merger or sale of more than 10% of our assets with any stockholder, including all affiliates and associates of any stockholder, who owns 15% or more of our outstanding voting stock, for three years following the date that the stockholder acquired 15% or more of our voting stock, unless the board of directors approved the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock of the corporation, or the business combination is approved by our board of directors and authorized by at least 66 2/3% of our outstanding voting stock not owned by the interested stockholder. A corporation may opt out of the Delaware anti-takeover laws in its charter documents, however we have not chosen to do so. Our certificate of incorporation and bylaws include a number of provisions that may deter or impede hostile takeovers or changes of control of management, including a staggered board of directors, the elimination of the ability of our stockholders to act by written consent, discretionary authority given to our board of directors as to the issuance of preferred stock, and indemnification rights for our directors and executive officers. Additionally, during 2005, our board of directors adopted a Stockholder Rights Plan, providing for the distribution of one preferred share purchase right for each outstanding share of common stock held as of December 12, 2005, that may lead to the delay or prevention of a change in control that is not approved by our board of directors. We have an Executive Officer Severance and Retention Plan and a Key Employee Severance and Retention Plan that provide for severance payments and the acceleration of vesting of a percentage of certain stock options granted to our executive officers and certain senior, non-executive employees under specified conditions. We also have a Transaction Incentive Plan for the benefit of our executive officers and certain senior, non-executive employees that provides for bonus payments to be made to them upon a change in control transaction. These plans may make us a less attractive acquisition target or may reduce the amount a potential acquirer may otherwise be willing to pay for our company.

     Item 6. Exhibits.

Number	Description
2.1(1)†	Asset Purchase Agreement by and among M/A-COM Tech, Inc., Tyco Electronics Logistics AG and the Registrant dated April 24, 2001.
2.2(2)†	Asset Purchase Agreement by and among Signal Technology Corporation and the Registrant dated September 24, 2002.
2.3(3)†	Purchase and Sale Agreement by and Among New Focus, Inc., Bookham Technology PLC and the Registrant dated July 21, 2004.
3.1(4)	Amended and Restated Certificate of Incorporation effective October 20, 2000.
3.2(5)	Certificate of Amendment of Amended and Restated Certificate of Incorporation effective June 28, 2002.
3.3(4)	Amended and Restated Bylaws effective October 20, 2000.
3.4(6)	Certificate of Designation for Series A Junior Participating Preferred Stock.
3.5(7)	Certificate of Designation of Series B Preferred Stock.
4.1(4)	Form of specimen Common Stock Certificate.
4.2(8)	Amended and Restated Registration Rights Agreement by and between Northrop Grumman Space & Mission Systems Corp. and the Registrant dated September 14, 2005.
4.3(6)	Rights Agreement dated as of December 1, 2005 between Endwave Corporation and Computershare Trust Company, Inc.
4.4(6)	Form of Rights Certificate.
4.5(7)	Preferred Stock and Warrant Purchase Agreement by and between Oak Investment Partners XI, Limited Partnership and the Registrant dated April 24, 2006.
4.6(7)	Warrant issued to Oak Investment Partners XI, Limited Partnership.
10.1(4)	Form of Indemnity Agreement entered into by the Registrant with each of its directors and officers.
10.2(4)*	1992 Stock Option Plan.
10.3(4)*	Form of Incentive Stock Option under 1992 Stock Option Plan.
10.4(4)*	Form of Nonstatutory Stock Option under 1992 Stock Option Plan.

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Number	Description
10.5(4)*	2000 Equity Incentive Plan, as amended.
10.6(4)*	Form of Stock Option Agreement under 2000 Equity Incentive Plan.
10.7(4)*	2000 Employee Stock Purchase Plan.
10.8(4)*	Form of 2000 Employee Stock Purchase Plan Offering.
10.9(9)*	2000 Non-Employee Directors’ Stock Option Plan, as amended.
10.10(4)*	Form of Nonstatutory Stock Option Agreement under the 2000 Non-Employee Director Plan.
10.11(10), (11)*	Description of Compensation Payable to Non-Employee Directors.
10.12(11)*	2006 Base Salaries for Named Executive Officers.
10.13(11)*	2006 Executive Incentive Compensation Plan.
10.14(12)*	Executive Officer Severance and Retention Plan.
10.15(12)*	Transaction Incentive Plan.
10.16(4)	License Agreement by and between TRW Inc. and TRW Milliwave Inc. dated February 28, 2000.
10.17(4)†	Production Agreement by and between TRW Inc. and the Registrant dated March 31, 2000 for the performance of the Development Agreement by and between TRW Inc. and Nokia Telecommunications OY dated January 28, 1999.
10.18(4)†	Services Agreement by and between TRW Inc. and the Registrant dated March 31, 2000.
10.19(14)†	Development Agreement by and between Nokia and the Registrant dated August 14, 2003.
10.20(15)†	Purchase Agreement by and between Nokia Corporation and the Registrant dated December 31, 2003.
10.21(5)	Industrial Lease by and between The Irvine Company and the Registrant dated January 28, 2004.
10.22(5)†	Amended and Restated Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated March 26, 2004.
10.23(13)	Settlement and Release Agreement by and between Northrop Grumman Space & Mission Systems Corp. and the Registrant dated March 23, 2005.
10.24†(9)	Purchase Agreement between Nokia and Endwave Corporation dated January 1, 2006.
10.25†(9)	Frame Purchase Agreement by and between Endwave Corporation and Siemens Mobile Communications Spa dated January 16, 2006.
10.26†	Lease Agreement by and between Legacy Partners I San Jose, LLC and the Registrant dated May 24, 2006
10.27†	Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated July 25, 2006.
31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on May 8, 2001 and incorporated herein by reference.
(2)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on October 11, 2002 and incorporated herein by reference.
(3)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on August 4, 2004 and incorporated herein by reference.
(4)	Previously filed with the Registrant’s Registration Statement on Form S-1 (Registration No. 333-41302) and incorporated herein by reference.
(5)	Previously filed with the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference.
(6)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on December 5, 2005 and incorporated herein by reference.
(7)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on April 26, 2006 and incorporated herein by reference.

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(8)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on September 15, 2005 and incorporated herein by reference.
(9)	Previously filed as an exhibit with the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference.
(10)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on February 3, 2005 and incorporated herein by reference.
(11)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on February 8, 2006 and incorporated herein by reference.
(12)	Previously filed with the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 and incorporated herein by reference.
(13)	Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on March 25, 2005 and incorporated herein by reference.
(14)	Previously filed with an amendment to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 filed on August 4, 2004 and incorporated herein by reference.
(15)	Previously filed with an amendment to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed on August 4, 2004 and incorporated herein by reference.
*	Indicates a management contract or compensatory plan or arrangement.
†	Confidential treatment has been requested for a portion of this exhibit.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, Endwave Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENDWAVE CORPORATION
Date: August 7, 2006
		By:	/s/ Edward A. Keible, Jr.
		Edward A. Keible, Jr.
		President and Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)
		By:	/s/ Brett W. Wallace
		Brett W. Wallace
		Executive Vice President
		and Chief Financial Officer
		(Duly Authorized Officer and Principal
		Financial and Accounting Officer)

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Index to Exhibits

Number	Description
10.26	Lease Agreement by and between Legacy Partners I San Jose, LLC and the Registrant dated May 24, 2006.
10.27	Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated July 25, 2006.
31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

39

EX-10.26

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit 10.26

Legacy Baytech Park

Lease Agreement

Basic Lease Information

Lease Date:	May 24, 2006
Landlord:	LEGACY PARTNERS I SAN JOSE, LLC,
	a Delaware limited liability company
Landlord’s Address:	c/o Legacy Partners Commercial, Inc.
	4000 East Third Avenue, Suite 600
	Foster City, California 94404-4805
Tenant:	Endwave Corporation, a Delaware corporation
Tenant’s Address:	776 Palomar Avenue
	Sunnyvale, California 94085
Premises:	Approximately 32,805 rentable square feet as shown on Exhibit A
Premises Address:	130 Baytech Drive
	San Jose, California 95134-2302
	Building                     :	Approximately 32,805 rentable square feet
	Lot:	APN 015-030-93
	Legacy Baytech Park (“Park”):	Approximately 187,742 rentable square feet
Term:	The commencement date of the Lease (“Commencement Date”) shall occur on August 15, 2006 unless the Tenant Improvements are not Substantially Complete (as each term is defined in Exhibit B) on or before such date, in which case, the Commencement Date shall be the date the Tenant Improvements are Substantially Complete; provided, however, if Tenant occupies the Premises prior to Substantial Completion of the Tenant Improvements for the purpose of doing business, then the Commencement Date shall be the date Tenant occupies the Premises. The expiration date of the Lease (“Expiration Date”) shall occur on that date which is sixty (60) months following the Commencement Date.
Base Rent (¶3):

Months of Term	Base Rent Per Month
01 – 12	$[ * ]
13 – 24	$[ * ]
25 – 26	$[ * ]
37 – 48	$[ * ]
49 – 60	$[ * ]

Advance Rent (¶3):	[ * ]
Security Deposit (¶4):	[ * ]

Tenant’s Share of Operating Expenses (¶6.1):	17.47% of the Park
Tenant’s Share of Tax Expenses (¶6.2):	17.47% of the Park
Tenant’s Share of Common Area Utility Costs (¶7.2):	17.47% of the Park
Tenant’s Share of Utility Expenses (¶7.1):	17.47% of the Park

Permitted Uses (¶9):	The Premises shall be used solely for office, research and development, software, storage, light assembly, marketing and for no other purpose without Landlord’s prior written consent, but only to the extent permitted by the City of San Jose, California, and all agencies and governmental authorities having jurisdiction thereof.
Parking Spaces:	One Hundred Twenty-Three (123) non-exclusive and non-designated spaces in the Park
Broker (¶33):	Marty Morici, Colliers International for Tenant
	Commercial Property Services (CPS) for Landlord
Exhibits:	Exhibit A -	Premises, Building, Lot and/or Park
	Exhibit B -	Tenant Improvements
	Exhibit C -	Rules and Regulations
	Exhibit D -	Intentionally omitted
	Exhibit E -	Tenant’s Initial Hazardous Materials Disclosure Certificate
	Exhibit F -	Change of Commencement Date — Example
	Exhibit G -	Sign Criteria
Addenda:	Addendum 1 -	Option to Extend the Lease Term
	Addendum 2 -	Letter of Credit

 i.

Table of Contents

		Page
1.	Premises		1
2.	Occupancy; Adjustment of Commencement Date		1
3.	Rent		1
4.	Security Deposit		2
5.	Condition of Premises; Tenant Improvements		2
6.	Additional Rent		2
7.	Utilities and Services		4
8.	Late Charges		4
9.	Use of Premises		4
10.	Alterations; and Surrender of Premises		5
11.	Repairs and Maintenance		6
12.	Insurance		7
13.	Limitation of Liability and Indemnity		8
14.	Assignment and Subleasing		8
15.	Subordination		9
16.	Right of Entry		10
17.	Estoppel Certificate		10
18.	Tenant’s Default		10
19.	Remedies for Tenant’s Default		11
20.	Holding Over		11
21.	Landlord’s Default		12
22.	Parking		12
23.	Transfer of Landlord’s Interest		12
24.	Waiver		12
25.	Casualty Damage		12
26.	Condemnation		13
27.	Environmental Matters/Hazardous Materials		13
28.	Financial Statements		14
29.	General Provisions		14
30.	Signs		15
31.	Mortgagee Protection		16
32.	Warranties of Tenant		16
33.	Brokerage Commission		16
34.	Quiet Enjoyment		16
35.	Cubicles		16

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 ii.

Lease Agreement

The Basic Lease Information and this Lease are, and shall be construed as, a single instrument.

1. Premises

Landlord leases the Premises to Tenant upon the terms and conditions contained herein. Tenant shall have the right to use, on a non-exclusive basis, parking areas and ancillary facilities located within the Common Areas of the Park, subject to the terms of this Lease. For purposes of this Lease, (i) as of the Lease Date, the rentable square footage area of each of the Premises, the Building and the Park shall be deemed to be the number of rentable square feet as set forth in the Basic Lease Information, (ii) the rentable square footage of the Premises may include a proportionate share of certain areas used in common by all occupants of the Building and/or the Park (for example corridors, common rest-rooms, an electrical room or telephone room) and (iii) the number of rentable square feet of any of the Building and the Park may subsequently change after the Lease Date commensurate with any physical modifications to any of the foregoing by Landlord (but not as a result of calculation using another standard of measurement), and Tenant’s Share shall accordingly change. The term “Project” means and collectively refers to the Building, Common Areas, Lot and Park.

2. Occupancy; Adjustment of Commencement Date

     2.1 If Landlord, for any reason whatsoever, cannot deliver possession of the Premises to Tenant on the Commencement Date in the condition specified in Section 5 and Exhibit B hereof, Landlord shall neither be subject to any liability nor shall the validity of this Lease be affected; provided, the Term and the obligation to pay Rent shall commence on the date the Premises are in the condition required by Section 5 and Exhibit B and possession is actually tendered to Tenant and the Expiration Date shall be extended commensurately. If the commencement date and/or the expiration date of this Lease is other than the Commencement Date and Expiration Date specified in the Basic Lease Information, the parties shall execute a written amendment to this Lease, substantially in the form of Exhibit F hereto specifying the actual commencement date, expiration date and the date on which Tenant is to commence paying Rent. Tenant shall execute and return such amendment to Landlord within fifteen (15) days after Tenant’s receipt thereof. The word “Term” means the initial term of this Lease and any valid extension(s) thereof.

     2.2 If Landlord permits Tenant to occupy the Premises prior to the actual Commencement Date, such occupancy shall be at Tenant’s sole risk and subject to all the provisions of this Lease (including Tenant’s obligation to pay Rent). Additionally, Landlord shall have the right to impose additional reasonable conditions on Tenant’s early occupancy. As set forth in Section 13 of Exhibit B hereto, Tenant may access the Premises prior to the Completion Date (as defined in Exhibit B) to perform Tenant’s Pre-Occupancy Work (as defined in Exhibit B).

     2.3 Tenant shall have a one-time option (the “Termination Option”) to terminate this Lease, effective as of the last day of the forty-second (42nd) full calendar month of the Lease Term (“Effective Date”). In the event this Lease is not terminated effective as of the Effective Date, this Lease shall continue in full force and effect. The Termination Option is granted subject to the following terms and conditions:

          2.3.1 Tenant delivers to Landlord a written notice of Tenant’s election to exercise the Termination Option (“Termination Notice”), which notice is given not less than three hundred sixty five (365) days prior to the Effective Date (the “Termination Date”);

          2.3.2 Tenant shall not have been in default of its obligations under this Lease beyond any applicable cure periods at any time during the Lease Term; and

          2.3.3 Tenant pays to Landlord, concurrently with Tenant’s exercise of the Termination Option and delivery to Landlord of the Termination Notice as required above, a cash lease termination fee (collectively, the “Fee”) in the aggregate amount of (a) a sum equal to the unamortized portion of the costs of the improvements and alterations made by Landlord to the Premises; (b) a sum equal to the unamortized portion of the brokerage commissions paid by Landlord in connection with this Lease and (c) an additional fee in the amount of Sixty Thousand Dollars ($60,000). If the Termination Notice is not given as and when required by the provisions of this Section 2.2 set forth above and the sums required by the provisions of this Section 2.2 set forth above are not paid concurrently with Tenant’s delivery to Landlord of the Termination Notice, then Tenant’s Termination Option as provided for herein shall forever terminate and be of no further force or effect. At all times during the period from the date the Termination Notice is given through the Termination Date Tenant shall be fully obligated to perform all obligations required to be performed by it under the Lease as and when required by this Lease, including, without limitation, the payment of Base Rent and Tenant’s Share of Direct Expenses.

          2.3.4 If Tenant timely and properly exercises the Termination Option, (i) all Rent payable under this Lease shall be paid through and apportioned as of the Termination Date (in addition to payment by Tenant of the Fee); (ii) neither party shall have any rights, estates, liabilities, or obligations under this Lease for the period accruing after the Termination Date, except those which, by the provisions of this Lease, expressly survive the expiration or termination of the Lease; (iii) Tenant shall surrender and vacate the Premises and deliver possession thereof to Landlord on or before the Termination Date in the condition required under this Lease for surrender of the Premises; and (iv) Landlord and Tenant shall enter into a written agreement reflecting the termination of this Lease upon the terms provided for herein, which agreement shall be executed within thirty (30) days after Tenant exercises the Termination Option and delivers to Landlord the Termination Notice and Fee required above. It is the parties’ intention that nothing contained herein shall impair, diminish or otherwise prevent Landlord from recovering from Tenant such additional sums as may be necessary for payment of Tenant’s Share of Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility Expenses and any other sums due and payable under this Lease (provided such sums relate to items accrued prior to the expiration or earlier termination of the Lease), including without limitation, any sums required to repair any damage to the Premises and/or restore the Premises to the condition required under the provisions of this Lease.

          2.3.5 The Termination Option shall automatically terminate and become null and void upon the earlier to occur of (i) the default by Tenant beyond any applicable cure periods of its obligations under this Lease at any time during the Lease Term; (ii) the termination of Tenant’s right to possession of the Premises; or (iii) the failure of Tenant to timely or properly exercise the Termination Option as contemplated herein. This Termination Option is personal to Tenant, and any Affiliate (as defined in Section 14.8 below) and may not be assigned, voluntarily or involuntarily, to any party or entity, separate from or as part of the Lease.

3. Rent

On the date that Tenant executes this Lease, Tenant shall deliver to Landlord the original executed Lease, the Advance Rent (which shall be applied against Rent payable for the first month(s) Tenant is required to pay Rent), the Security Deposit, and all insurance certificates required to be delivered under Section 12 and Exhibit B of this Lease. Tenant agrees to pay Landlord without prior notice or demand, abatement, offset, deduction or claim, in advance at Landlord’s Address, on the Commencement Date and thereafter on the

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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first (1st) day of each month throughout the Term (i) Base Rent and (ii) as Additional Rent, Tenant’s Share of Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility Expenses. The term “Rent” means the aggregate of all these amounts. If Landlord permits Tenant to occupy the Premises without requiring Tenant to pay rental payments for a period of time, the waiver of the requirement to pay rental payments shall only apply to the waiver of Base Rent. If any rental payment date (including the Commencement Date) falls on a day of the month other than the first day of such month or if any rental payment is for a period which is shorter than one (1) month, then the rental for any such fractional month shall be a proportionate amount of a full calendar month’s rental based on the proportion that the number of days in such fractional month bears to the number of days in the calendar month during which the fractional month occurs. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated in the same manner. To the extent not already paid as part of the Advance Rent any prorated Rent shall be paid on the Commencement Date, and any prorated Rent for the final calendar month shall be paid on the first day of the calendar month in which the date of expiration or termination occurs.

4. Security Deposit

Simultaneously with Tenant’s execution and delivery of this Lease, Tenant shall deliver to Landlord, as a Security Deposit for the faithful performance by Tenant of its obligations under this Lease, the amount specified in the Basic Lease Information. If Tenant is in default hereunder, Landlord may, but without obligation to do so, use all or any portion of the Security Deposit to cure the default or to compensate Landlord for all damages sustained by Landlord in connection therewith. Tenant shall, immediately on demand, pay to Landlord a sum equal to the portion of the Security Deposit so applied or used to replenish the amount of the Security Deposit held to increase such deposit to the amount initially deposited with Landlord. At the expiration or earlier termination of this Lease, within the time period(s) prescribed by California Civil Code Section 1950.7 (or any successor law), Landlord shall return the Security Deposit to Tenant, less such amounts as are reasonably necessary, as determined by Landlord, to remedy Tenant’s default(s) hereunder or to otherwise restore the Premises to a clean and safe condition, reasonable wear and tear excepted. If the cost to restore the Premises exceeds the amount of the Security Deposit, Tenant shall promptly deliver to Landlord any and all of such excess sums. Landlord shall not be required to segregate the Security Deposit from other funds, and, unless required by law, interest shall not be paid on the Security Deposit. Tenant shall not have any use of, or right of offset against, the Security Deposit.

5. Condition of Premises; Tenant Improvements

Tenant agrees (i) to accept the Premises on the Commencement Date (and by taking possession of the Premises Tenant shall be deemed to have accepted the Premises) as then being suitable for Tenant’s intended use and in good operating order, condition and repair in its then existing “AS IS” condition, except as otherwise set forth in Exhibit B hereto and (ii) that except as expressly set forth in this Lease, neither Landlord nor any of Landlord’s agents, representatives or employees has made any representations as to the suitability, fitness or condition of the Premises for the conduct of Tenant’s business or for any other purpose, including without limitation, any storage incidental thereto. The Tenant Improvements (defined in Exhibit B) shall be installed in accordance with the terms and provisions of Exhibit B. Notwithstanding the foregoing, within five (5) business days after the Substantial Completion (as such term is defined in Exhibit B hereto) of the Tenant Improvements representatives of Landlord and Tenant shall make a joint inspection of the Tenant Improvements and the results of such inspection shall be set forth in a written list specifying the incomplete items as well as those items for which corrections need to be made (the “Punchlist Items”). Landlord and Tenant shall promptly (by no later than three (3) business days thereafter) and in good faith approve the written list of Punchlist Items. Landlord, at its sole cost and expense, shall use commercially reasonable efforts to cause the Punchlist Items to be completed and/or corrected, as applicable, within thirty (30) days following the approval by Landlord and Tenant of the written list of Punchlist Items. Upon completion of the Punchlist Items to Tenant’s reasonable satisfaction Tenant shall promptly notify Landlord in writing that such items have been completed to Tenant’s reasonable satisfaction.

6. Additional Rent

Landlord and Tenant intend that this Lease be a “triple net lease.” The costs and expenses described in this Section 6 and all other sums, charges, costs and expenses specified in this Lease other than Base Rent are to be paid by Tenant to Landlord as additional rent (collectively, “Additional Rent”).

     6.1 Operating Expenses:

          6.1.1 Definition of Operating Expenses: Tenant shall pay to Landlord Tenant’s Share of all Operating Expenses as Additional Rent. The term “Operating Expenses” means the total amounts paid or payable by Landlord in connection with the ownership, management, maintenance, repair and operation of the Premises and Project, except as expressly excluded from the definition of Operating Expenses. The term “Common Areas” means (a) all areas and facilities within the Park exclusive of the Premises and other portions of the Park leasable exclusively to other tenants and (b) the areas within the Building which are not leased exclusively to any tenant in the Building. The Common Areas include, but are not limited to, interior lobbies, main electric room, telecommunications closets, mezzanines, parking areas, access and perimeter roads, sidewalks, and landscaped areas (and Tenant acknowledges and agrees that the size and shape of the Common Areas may be altered in the event the parcel or subdivision map referenced below in this Section 6.1.1 is recorded). Operating Expenses may include, but are not limited to, Landlord’s cost of: (i) repairs to, and maintenance of, the roof membrane, the non-structural portions of the roof and the non-structural elements of the perimeter exterior walls of the Building; (ii) maintaining the Common Areas of the Building and Park; (iii) annual insurance premium(s) for any and all insurance Landlord elects to obtain, including without limitation, “all risk” or “special purpose” coverage, earthquake and flood for the Project, rental value insurance, and subject to Section 25 below, any deductible; (iv) (a) modifications and/or new improvements to any portion of the Project occasioned by any rules, laws or regulations effective subsequent to the Lease Date; (b) reasonably necessary replacement improvements to any portion of the Project after the Commencement Date amortized as set forth below; and (c) new improvements to the Project that are intended to reduce operating costs or improve life/safety conditions; provided, if such costs are of a capital nature, then such costs or allocable portions thereof shall be amortized on a straight-line basis over the estimated useful life of the capital item in accordance with real estate industry standards, as reasonably determined by Landlord (but in no event less than ten (10) years), together with reasonable interest on the unamortized balance; (v) the management and administration of the Project, including, without limitation, a property management fee, accounting, auditing, billing, postage, salaries and benefits for employees, whether located on the Project or off-site, payroll taxes and legal and accounting costs and all fees, licenses and permits related to the ownership, operation and management of the Project; (vi) preventative maintenance and repair contracts including, but not limited to, contracts for elevator systems (if any), heating, ventilation and air conditioning systems and lifts for disabled persons; (vii) security and fire protection services for any portion of the Project, if and to the extent, in Landlord’s sole discretion, such services are provided; (viii) the creation and modification of any licenses, easements or other similar undertakings with respect to the Project, including, without limitation, the cost of the creation, management and operation of an owner’s association to manage and operate the Park at any time and from time to time (the “Association”); (ix) supplies, materials, equipment, rental equipment and other similar items used in the operation and/or maintenance of the Project and any reasonable reserves established for replacement or repair of any Common Area improvements or equipment; (x) any and all levies, charges, fees and/or assessments payable to the Association or any other applicable owner’s association or similar body; (xi) any barrier removal work or other required improvements, alterations or work to any portion of the Project generally required under the ADA (defined below) (the “ADA Work”); provided, if such ADA Work is required under the ADA due to Tenant’s use of the Premises or any Alteration (defined below) (other

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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than the initial Tenant Improvements) made to the Premises by or on behalf of Tenant, then the cost of such ADA Work shall be borne solely by Tenant and shall not be included as part of the Operating Expenses; and (xii) the repairs and maintenance items set forth in Section 11.2 below. Landlord shall have the right, from time to time, to equitably allocate and prorate some or all of the Operating Expenses among different tenants and/or different buildings of the Project and/or on a building by building basis and Tenant acknowledges and agrees that Landlord shall have the right, in its sole and absolute discretion, to record a parcel or subdivision map with respect to the Park or a portion of the Park, the recordation of which may have the effect of increasing or decreasing Tenant’s Share of Operating Expenses. In either of such events, Tenant’s Share of Operating Expenses shall be commensurately revised to reflect any such increases or decreases that may result therefrom.

          6.1.2 Operating Expense Exclusions: The term “Operating Expenses” shall not include: (i) costs (including permit, license, and inspection fees) incurred in renovating, improving or decorating vacant space or space for other tenants within the Project; (ii) costs incurred because Landlord or another tenant actually violated the terms and conditions of any lease within the Project; (iii) legal and auditing fees (other than those fees reasonably incurred in connection with the maintenance and operation of any portion the Project), leasing commissions, advertising expenses, and other costs incurred in connection with the original leasing of the Project or future re-leasing of any portion of the Project; (iv) depreciation of the Building or any other improvements situated within the Project; (v) any items for which Landlord is actually reimbursed; (vi) costs of repairs or other work necessitated by casualty (excluding any deductibles) and/or costs of repair or other work necessitated by the exercise of the right of eminent domain to the extent insurance proceeds or a condemnation award, as applicable, is actually received by Landlord for such purposes; provided, such costs of repairs or other work shall be paid by the parties in accordance with the provisions of Sections 25 and 26, below; (vii) other than any interest charges for capital improvements referred to in Section 6.1.1(iv) hereinabove, any interest or payments on any financing for the Building or the Park, interest and penalties incurred as a result of Landlord’s late payment of any invoice (provided that Tenant pays Tenant’s Share of Operating Expenses and Tax Expenses to Landlord when due as set forth herein), and any bad debt loss, rent loss or reserves for same; (viii) costs associated with the investigation and/or remediation of Hazardous Materials (hereafter defined) present in, on or about any portion of the Project, unless such costs and expenses are the responsibility of Tenant as provided in Section 27 hereof, in which event such costs and expenses shall be paid solely by Tenant in accordance with Section 27 hereof; (ix) Landlord’s cost for the repairs and maintenance items set forth in Section 11.3; (x) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in the Project to the extent the same exceeds the costs of such by unaffiliated third parties on a competitive basis; or any costs included in Operating Expenses representing an amount paid to any entity related to Landlord which is in excess of the amount which would have been paid in the absence of such relationship; (xi) any payments under a ground lease or master lease; (xii) any costs, fines, or penalties incurred due to violations by Landlord of any governmental rule or authority, this Lease or any other lease in the Project, or due to Landlord’s gross negligence or willful misconduct; (xiii) the cost of correcting any building code or other violations, which written violations were actually known to Landlord prior to the Commencement Date of this Lease; (xiv) the cost of containing, removing, or otherwise remediating any contamination of the Project (including the underlying land and ground water) by any Hazardous Materials (including, without limitation, asbestos and “PCB’s”) in the event such contamination is not the responsibility or liability of Tenant under Section 27 of this Lease; (xv) management costs to the extent they exceed commercially reasonable management fees at comparable properties or business parks; (xvi) costs for sculpture, paintings, or other objects of art (and insurance thereon or extraordinary security in connection therewith); and (xvii) any costs which may be incurred by Landlord to bring the Project into compliance with the ADA in effect prior to the Commencement Date, except to the extent such non-compliance results from Tenant’s particular use of the Premises.

     6.2 Tax Expenses: Tenant shall pay to Landlord Tenant’s Share of all Tax Expenses applicable to the Project. Prior to delinquency, Tenant shall pay any and all taxes and assessments levied upon Tenant’s Property (defined below in Section 10) located or installed in or about the Premises by, or on behalf of Tenant. To the extent any such taxes or assessments are not separately assessed or billed to Tenant, then Tenant shall pay the amount thereof as invoiced by Landlord. Tenant shall also reimburse and pay Landlord, as Additional Rent, within ten (10) days after demand therefor, one hundred percent (100%) of (i) any increase in real property taxes attributable to any and all Alterations (defined below in Section 10), Tenant Improvements, fixtures, equipment or other improvements of any kind whatsoever placed in, on or about the Premises for the benefit of, at the request of, or by Tenant, and (ii) taxes and assessments levied or assessed upon or with respect to the possession, operation, use or occupancy by Tenant of the Premises or any other portion of the Project. “Tax Expenses” means, without limitation, any form of tax and assessment (general, special, supplemental, ordinary or extraordinary), commercial rental tax, payments under any improvement bond or bonds, license fees, license tax, business license fee, rental tax, transaction tax or levy imposed by any authority having the direct or indirect power of tax (including any governmental, school, agricultural, lighting or other improvement district) as against any legal or equitable interest of Landlord in the Premises, Project or Park or any other tax, fee, or excise, however described, including, but not limited to, any tax resulting from the recordation of any parcel or subdivision map with respect to the Park and/or any tax imposed in substitution (partially or totally) of any tax previously included within the definition of Tax Expenses. “Tax Expenses” shall not include (a) any franchise, estate, inheritance, net income, or excess profits tax imposed upon Landlord, (b) any penalty or fee imposed solely as a result of Landlord’s failure to pay Tax Expenses when due, and (c) any items included as Operating Expenses. In the event that a parcel or subdivision map with respect to the Park or a portion of the Park is recorded by Landlord, Tenant’s Share of Tax Expenses shall be commensurately revised to reflect any increases or decreases that may result from the impact of such parcel or subdivision map.

     6.3 Payment of Expenses: Landlord shall estimate Tenant’s Share of the Operating Expenses and Tax Expenses for the calendar year in which the Lease commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this estimated amount shall be paid by Tenant to Landlord, as Additional Rent, and thereafter on the first (1st) day of each month throughout the remaining months of such calendar year. Thereafter, Landlord may estimate such expenses for each calendar year during the Term of this Lease and Tenant shall pay one-twelfth (1/12th) of such estimated amount as Additional Rent on the first (1st) day of each month throughout the Term. Tenant’s obligation to pay Tenant’s Share of Operating Expenses and Tax Expenses shall survive the expiration or earlier termination of this Lease.

     6.4 Annual Reconciliation: By June 30th of each calendar year, Landlord shall furnish Tenant with an accounting of actual and accrued Operating Expenses and Tax Expenses; provided, failure by Landlord to give such accounting by such date shall not constitute a waiver by Landlord of its right to collect any underpayment by Tenant at any time. Within thirty (30) days of Landlord’s delivery of such accounting, Tenant shall pay to Landlord the amount of any underpayment. Landlord shall credit the amount of any overpayment by Tenant toward the next estimated monthly installment(s) falling due, or if the Term of the Lease has expired, refund the amount of overpayment to Tenant as soon as possible thereafter, and no later than thirty (30) days following the finalization of such accounting. If the Term of the Lease expires prior to the annual reconciliation of expenses Landlord shall have the right to reasonably estimate Tenant’s Share of such expenses, and deduct any underpayment from Tenant’s Security Deposit. Failure by Landlord to accurately estimate Tenant’s Share of such expenses or to otherwise perform such reconciliation shall not constitute a waiver of Landlord’s right to collect any underpayment at any time during the Term or after the expiration or earlier termination of this Lease.

     6.5 Audit: After delivery to Landlord of at least thirty (30) days prior written notice, Tenant, at its sole cost and expense through any accountant designated by it, shall have the right to examine and/or audit the books and records evidencing such expenses for the previous one (1) calendar year, during Landlord’s reasonable business hours but not more frequently than once during any calendar year. Tenant may not compensate any such accountant on a contingency fee basis. The results of any such audit (and

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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any negotiations between the parties related thereto) shall be maintained strictly confidential by Tenant and its accounting firm and shall not be disclosed, published or otherwise disseminated to any other party other than to Landlord and its authorized agents, unless required by applicable law. Landlord and Tenant each shall use its commercially reasonable efforts to cooperate in such negotiations and to promptly resolve any discrepancies between Landlord and Tenant in the accounting of such expenses. If through such audit it is determined that there is a discrepancy of more than five percent (5%), then Landlord shall reimburse Tenant for the reasonable accounting costs and expenses incurred by Tenant in performing such audit, including Tenant’s in-house or outside auditors or accountants.

7. Utilities and Services

     Tenant shall pay the cost of all (i) water, sewer use, sewer discharge fees and sewer connection fees, gas, electricity, telephone, telecommunications, cabling and other utilities billed or metered separately to the Premises and (ii) refuse pickup and janitorial service to the Premises.

     7.1 Utility Expenses: Tenant shall pay to Landlord Tenant’s Share of any utility fees, use charges, or similar services that are not billed or metered separately to Tenant (collectively, “Utility Expenses”). If Landlord reasonably determines that Tenant’s Share of Utility Expenses is not commensurate with Tenant’s use of such services, Tenant shall pay to Landlord the amount which is attributable to Tenant’s use of the utilities or similar services, as reasonably estimated and determined by Landlord, based upon factors such as size of the Premises and intensity of use of such utilities by Tenant such that Tenant shall pay the portion of such charges reasonably consistent with Tenant’s use of such utilities and similar services. Tenant shall also pay Tenant’s Share of any assessments, charges and fees included within any tax bill for the Lot on which the Premises are situated, including without limitation, entitlement fees, allocation unit fees and sewer use fees. Notwithstanding anything to the contrary in this Section 7, if Tenant disputes Landlord’s determination of Tenant’s Share of Utility Expenses, Landlord shall, at Tenant’s sole cost and expense, have the right, in its sole and absolute discretion, to perform all work necessary to separately meter (with PG&E meters if such utility is gas or electric) the utility usage of the Premises.

     7.2 Common Area Utility Costs: Tenant shall pay to Landlord Tenant’s Share of any Common Area utility fees, charges and expenses (collectively, “Common Area Utility Costs”). Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated amount of Tenant’s Share of the Common Area Utility Costs on the Commencement Date and thereafter on the first (1st) day of each month throughout the Term. Any reconciliation thereof shall be substantially in the same manner as set forth in Section 6.4 above. Tenant acknowledges and agrees that Tenant’s Share of Common Area Utility Costs may increase or decrease in the event of the recordation of a parcel or subdivision map with respect to the Park or a portion of the Park.

     7.3 Miscellaneous: Tenant acknowledges that the Premises may become subject to the rationing of utility services or restrictions on utility use as required by a public utility company, governmental agency or other similar entity having jurisdiction thereof. Tenant agrees that its tenancy and occupancy hereunder shall be subject to such rationing restrictions as may be imposed upon Landlord, Tenant, the Premises, or other portions of the Project, and Tenant shall in no event be excused or relieved from any covenant or obligation to be kept or performed by Tenant by reason of any such rationing or restrictions.

8. Late Charges

The sums and charges set forth in this Section 8 shall be “Additional Rent”. Tenant acknowledges that late payment (the second (2nd) day of each month or any time thereafter) of Rent and all other sums due hereunder, will cause Landlord to incur costs not contemplated by this Lease. Such costs may include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any note secured by any encumbrance against the Premises, and late charges and penalties due to the late payment of real property taxes on the Premises. Therefore, if any installment of Rent or any other sum payable by Tenant is not received by Landlord when due, Tenant shall promptly pay to Landlord a late charge, as liquidated damages, in an amount equal to ten percent (10%) of such delinquent amount plus interest thereon at ten percent (10%) per annum for every month or portion thereof that such sums remain unpaid. Notwithstanding the foregoing, Landlord waives the late charge for the first (1st) instance during the Term in which Tenant fails to timely pay Rent, and interest shall not commence to accrue until the third (3^rd) day following Landlord’s giving to Tenant its notice of default. If Tenant delivers to Landlord two (2) checks for which there are not sufficient funds, Landlord may require Tenant to replace such check with a cashier’s check for the amount of such check and all other charges payable hereunder. The parties agree that this late charge and the other charges referenced above represent a fair and reasonable estimate of the costs that Landlord will incur by reason of such late payment by Tenant, excluding attorneys’ fees and costs. Acceptance of any late charge or other charges shall not constitute a waiver by Landlord of Tenant’s default with respect to the delinquent amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord for any other default of Tenant under this Lease.

9. Use of Premises

     9.1 Compliance with Laws, Recorded Matters, and Rules and Regulations: The Premises shall be used solely for the permitted uses specified in the Basic Lease Information and for no other uses without Landlord’s prior written consent. Landlord’s consent shall not be unreasonably conditioned, withheld or delayed so long as the proposed change in use (i) does not involve the use of Hazardous Materials other than as expressly permitted under the provisions of Section 27 below, (ii) does not require any additional parking spaces, and (iii) is compatible and consistent with the other uses then being made in the Project, as reasonably determined by Landlord. The use of the Premises by Tenant and its employees, representatives, agents, invitees, licensees, subtenants, customers or contractors (collectively, “Tenant’s Representatives”) shall be subject to, and at all times in compliance with, (a) any and all applicable laws, rules, codes, ordinances, statutes, orders and regulations as same exist from time to time throughout the Term (collectively, the “Laws”), including without limitation, the requirements of the Americans with Disabilities Act, a federal law codified at 42 U.S.C. 12101 et seq., including, but not limited to Title III thereof, all regulations and guidelines related thereto and all requirements of Title 24 of the State of California (collectively, the “ADA”), (b) any and all instruments, licenses, restrictions, easements or similar instruments, conveyances or encumbrances which are at any time required to be made by or given by Landlord relating to the initial development of the Project and/or the construction, from time to time, of any additional improvements in the Project, including without limitation, any Tenant Improvements (collectively, “Development Documents”), (c) any and all documents, easements, covenants, conditions and restrictions, and similar instruments, together with any and all amendments and supplements thereto made, from time to time, each of which has been or hereafter is recorded in any official or public records with respect to the Premises or any other portion of the Project (collectively, “Recorded Matters”), and (d) any and all by laws, rules and regulations set forth in Exhibit C hereto, any other reasonable rules and regulations now or hereafter promulgated by Landlord, and any rules, restrictions and/or regulations imposed by the Association or any other applicable owners association or similar entity (collectively, “Rules and Regulations”). Landlord reserves to itself the right, from time to time, (1) to grant, without the consent of Tenant, such easements, rights and dedications that Landlord deems reasonably necessary, whether in connection with the recordation of a parcel or subdivision map or otherwise; (2) to cause the recordation of parcel or subdivision maps and/or restrictions, so long as such easements, rights, dedications, maps and restrictions, as applicable, do not materially and adversely interfere with Tenant’s operations in the Premises; and (3) to create the Association. Tenant agrees to sign promptly any documents reasonably requested by Landlord to effectuate any such easements, rights, dedications, maps or restrictions, to acknowledge creation of the Association or as otherwise

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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reasonably requested by Landlord. Tenant agrees to, and does hereby, assume full and complete responsibility (x) to ensure that the Premises, including without limitation, the Tenant Improvements, are in compliance with all applicable Laws throughout the Term and (y) for the payment of all costs, fees and expenses associated with any modifications, improvements or other Alterations to the Premises and/or any other portion of the Project occasioned by the enactment of, or changes to, any Laws arising from Tenant’s particular use of the Premises or Alterations or other improvements made to the Premises regardless of when such Laws became effective. Tenant shall have no right to initiate, submit an application for, or otherwise request, any land use approvals or entitlements with respect to the Premises or any other portion of the Project. Tenant shall not be responsible for any violation or non-compliance of Laws with regard to the Premises to the extent such violation or non-compliance of Laws exists prior to the Commencement Date; provided, however, from and after the Commencement Date, Tenant shall be solely responsible for (y) the payment of all costs, fees and expenses associated with any modifications, improvements or other Alterations to the Premises and/or any other portion of the Project occasioned by the enactment of, or changes to, any Laws arising from Tenant’s particular use of the Premises or Alterations made to the Premises regardless of when such Laws became effective and (z) the payment of capital expenditures as part of Operating Expenses to the extent set forth in Section 6.1.1 above.

     9.2 Prohibition on Use: Tenant shall not use the Premises or permit anything to be done in or about the Premises nor keep or bring anything therein which will increase the existing rate of or affect any policy of insurance upon the Building or any of its contents, or cause a cancellation of any insurance policy. No auctions may be conducted in, on or about any portion of the Premises or the Project without Landlord’s prior written consent thereto. Tenant shall not do or permit anything to be done in or about the Premises which will obstruct or interfere with the rights of Landlord or other tenants or occupants of any portion of the Project. The Premises shall not be used for any unlawful purpose. Tenant shall not cause, maintain or permit any private or public nuisance in, on or about any portion of the Premises or the Project, including, but not limited to, any offensive odors, noises, fumes or vibrations. Tenant shall not damage or deface or otherwise commit or suffer to be committed any waste in, upon or about the Premises or any other portion of the Project. Tenant shall not place or store, nor permit any other person or entity to place or store, any property, equipment, materials, supplies or personal property outside of the Premises. Tenant shall not permit any animals, including, but not limited to, any household pets, to be brought or kept in or about the Premises. Tenant shall neither install any radio or television antenna, satellite dish, microwave or other device on the roof or exterior walls of the Building or any other portion of the Project nor make any penetrations of or to the roof of the Building. Tenant shall not interfere with radio, telecommunication, or television broadcasting or reception from or in the Building or elsewhere. Tenant shall place no loads upon the floors, walls, or ceilings in excess of the maximum designed load permitted by the applicable Uniform Building Code or which may damage the Building or outside areas within the Project.

10. Alterations; and Surrender of Premises

     10.1 Alterations: Tenant shall be permitted to make, at its sole cost and expense, non-structural alterations and additions to the interior of the Premises without obtaining Landlord’s prior written consent, provided said alterations are not part of Tenant’s Wi-Fi Network (defined hereinbelow), do not affect the Building systems and the cost of such alterations does not exceed Fifty Thousand Dollars ($50,000) each job and One Hundred Thousand Dollars ($100,000) cumulatively each calendar year (the “Permitted Improvements”). Tenant, however, shall first notify Landlord of such Permitted Improvements so that Landlord may post a Notice of Non-Responsibility on the Premises. Except for the Permitted Improvements, Tenant shall neither install any signs, fixtures, or improvements, nor make or permit any other alterations or additions (individually, an “Alteration”, and collectively, “Alterations”) to the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld so long as any such Alteration does not affect the Building systems, structural integrity or structural components of the Premises or Building. If any such Alteration is expressly permitted by Landlord, Tenant shall deliver at least ten (10) days prior written notice to Landlord, from the date Tenant commences construction, sufficient to enable Landlord to post and record a Notice of Non-Responsibility. Tenant shall obtain all permits or other governmental approvals prior to commencing any work and deliver a copy of same to Landlord. All Alterations shall be (i) at Tenant’s sole cost and expense in accordance with plans and specifications which have been previously submitted to and approved in writing by Landlord, and shall be installed by a licensed, insured (and bonded, at Landlord’s option) contractor (reasonably approved by Landlord) in compliance with all applicable Laws, Development Documents, Recorded Matters, and Rules and Regulations and (ii) performed in a good and workmanlike manner and so as not to obstruct access to any portion of the Project or any business of Landlord or any other tenant. Landlord’s approval of any plans, specifications or working drawings for Tenant’s Alterations shall neither create nor impose any responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with any Laws. As Additional Rent, Tenant shall reimburse Landlord, within ten (10) days after demand, for actual and reasonable legal, engineering, architectural, planning and other expenses incurred by Landlord in connection with Tenant’s Alterations, plus Tenant shall pay to Landlord a fee equal to five percent (5%) of the total cost of the Alterations. If Tenant makes any Alterations, Tenant shall carry “Builder’s All Risk” insurance, in an amount approved by Landlord and such other insurance as Landlord may require. All such Alterations shall be insured by Tenant in accordance with Section 12 of this Lease immediately upon completion. Tenant shall keep the Premises and the Lot on which the Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant. Tenant shall, prior to commencing any Alterations, (a) cause its contractor(s) and/or major subcontractor(s) to provide insurance as reasonably required by Landlord, and (b) provide such assurances to Landlord, including without limitation, waivers of lien, surety company performance bonds (for projects estimated to cost in excess of $150,000) as Landlord shall require to assure payment of the costs thereof to protect Landlord and the Project from and against any mechanic’s, materialmen’s or other liens.

          10.1.1 Wi-Fi Network: Without limiting the generality of the foregoing, in the event Tenant desires to install wireless intranet, Internet and communications network (“Wi-Fi Network“) in the Premises for the use by Tenant and its employees, then the same shall be subject to the provisions of this Section 10.1.1 (in addition to the other provisions of this Section 10). In the event Landlord consents to Tenant’s installation of such Wi-Fi Network, Tenant shall, in accordance with Section 10.2 below, remove the Wi-Fi Network from the Premises prior to the termination of the Lease. Tenant shall use the Wi-Fi Network so as not to cause any interference to other tenants in the Building or to other tenants at the Park or with any other tenant’s communication equipment, and not to damage the Building or Park or interfere with the normal operation of the Building or Park and Tenant hereby agrees to indemnify, defend and hold Landlord harmless from and against any and all claims, costs, damages, expenses and liabilities (including attorneys’ fees) arising out of Tenant’s failure to comply with the provisions of this Section 10.1.1, except to the extent same is caused by the gross negligence or willful misconduct of Landlord and which is not covered by the insurance carried by Tenant under this Lease (or which would not be covered by the insurance required to be carried by Tenant under this Lease). Should any interference occur, Tenant shall take all necessary steps as soon as reasonably possible and no later than three (3) calendar days following such occurrence to correct such interference. If such interference continues after such three (3) day period, Tenant shall immediately cease operating such Wi-Fi Network until such interference is corrected or remedied to Landlord’s reasonable satisfaction. Tenant acknowledges that Landlord has granted and/or may grant telecommunication rights to other tenants and occupants of the Building and to telecommunication service providers and in no event shall Landlord be liable to Tenant for any interference of the same with such Wi-Fi Network. Landlord makes no representation that the Wi-Fi Network will be able to receive or transmit communication signals without interference or disturbance. Tenant shall (i) be solely responsible for any damage caused as a result of the Wi-Fi Network, (ii) promptly pay any tax, license or permit fees charged pursuant to any laws or regulations in connection with the installation, maintenance or use of the Wi-Fi Network and comply with all precautions and safeguards recommended by all governmental authorities, and (iii) pay for all necessary repairs, replacements to or maintenance of the Wi-Fi Network. Should Landlord be required to retain professionals to research any interference issues that may arise and to confirm Tenant’s compliance with the terms of this Section 10.11, Landlord shall retain such professionals at commercially reasonable rates, and Tenant shall reimburse

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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Landlord within thirty (30) days following submission to Tenant of an invoice from Landlord, which costs shall not exceed $1,000 per year (except in the event of a default by Tenant hereunder). This reimbursement obligation is independent of any rights or remedies Landlord may have in the event of a breach of default by Tenant under this Lease.

     10.2 Surrender of Premises: At the expiration of the Term or earlier termination of this Lease, except as provided below in Section 10.2.1, Tenant shall surrender the Premises to Landlord (a) in good condition and repair (damage by acts of God, casualty, and normal wear and tear excepted), but with all interior walls cleaned, any carpets cleaned, all floors cleaned and waxed, all non-working light bulbs and ballasts replaced and all roll-up doors and plumbing fixtures in good condition and working order, and (b) in accordance with Section 27 hereof. Normal wear and tear shall not include any damage or deterioration that would have been prevented by proper maintenance by Tenant, or Tenant otherwise performing all of its obligations under this Lease, or any damage or deterioration due to or associated with prolonged hours, non-office use, unusually heavy people loads (defined as more than one person per two hundred (200) rentable square feet), unusually heavy utility use, unusually heavy floor loads, or other unusual occupancy factors. Except as set forth below in Section 10.2.1, on or before the expiration or earlier termination of this Lease, Tenant shall remove (i) all of Tenant’s Property (defined below) and Tenant’s signage from the Premises and other portions of the Project, (ii) any Alterations Landlord may require Tenant, by notice to Tenant given at or about the time of Landlord’s granting of consent to their installation, to remove, and Tenant shall repair any damage caused by all of such removal activities, at Tenant’s sole expense. “Tenant’s Property” means all equipment, trade fixtures, furnishings, all telephone, data, and other cabling and wiring (including any cabling and wiring associated with the Wi-Fi Network, if any) installed or caused to be installed by Tenant (including any cabling and wiring, installed above the ceiling of the Premises or below the floor of the Premises), inventories, goods and personal property of Tenant. Any of Tenant’s Property not so removed by Tenant as required herein shall be deemed abandoned and may be stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord’s retention and disposition of such property; provided, however, Tenant shall remain liable to Landlord for all costs incurred in storing and disposing of such abandoned property of Tenant. Landlord may elect to take responsibility to remove any such wiring or cabling installed above the ceiling or beneath the floors of the Premises, in which case Tenant shall pay Landlord for the actual cost incurred by Landlord therefor, (together with a five percent (5%) supervision/administration fee) within thirty (30) days after being billed for the same. All Alterations except those which Landlord requires Tenant to remove, shall remain in the Premises as the property of Landlord. Tenant shall indemnify, defend and hold the Indemnitees (hereafter defined) harmless from and against any and all Claims (defined below) (x) arising from any delay by Tenant in so surrendering the Premises including, without limitation, any Claims made against Landlord by any succeeding tenant or prospective tenant founded on or resulting from such delay and (y) suffered by Landlord due to lost opportunities to lease any portion of the Premises to any such succeeding tenant or prospective tenant.

          10.2.1 Restoration Obligation. Notwithstanding anything to the contrary in this Section 10, prior to Tenant’s surrender of the Premises, Tenant shall have the obligation to restore the area of the Premises in which Tenant’s lab shall be located to its original condition at the time of Lease execution, including, but not limited to, restoring smooth surface ceiling tiles and ESD flooring to Building Standard finishes, removal of lab equipment electrical stubbed to the distribution panel, and demolition of lab partitions; provided, however, Tenant shall not be required to remove any dedicated heating, ventilating and air conditioning (“HVAC”) unit(s) serving the lab; rather, Tenant shall have the right to leave the HVAC unit on the roof but shall remove all electrical components related to the HVAC, ductwork, diffusers and any other components related to the HVAC and make any necessary repairs to the Premises, to the reasonable satisfaction of Landlord. Such work shall be at Tenant’s sole cost and expense and shall be performed prior to the expiration or earlier termination of the Term of the Lease.

11. Repairs and Maintenance

     11.1 Tenant’s Repairs and Maintenance Obligations: Except for those portions of the Building to be maintained by Landlord, as provided in Sections 11.2 and 11.3 below, Tenant shall, at its sole cost and expense, keep and maintain all parts of the Premises and such portions of the Building as are within the exclusive control of Tenant in good, clean and safe condition and repair, promptly making all necessary repairs and replacements, whether ordinary or extraordinary, with materials and workmanship of the same character, kind and quality as the original thereof, all of the foregoing in accordance with the applicable provisions of Section 10 hereof, and to the reasonable satisfaction of Landlord including, but not limited to, repairing any damage (and replacing any property so damaged) caused by Tenant or any of Tenant’s Representatives, or due to or associated with prolonged hours, non-office use, unusually heavy people loads (defined as more than one person per two hundred (200) rentable square feet), unusually heavy utility use, unusually heavy floor loads, or other unusual occupancy factors, and restoring the Premises and other portions of the Project to the condition existing prior to the occurrence of such damage. Without limiting any of the foregoing, Tenant shall be solely responsible for promptly maintaining, repairing and replacing (a) all mechanical systems, heating, ventilation and air conditioning (“HVAC”) systems serving the Premises, (b) all plumbing work and fixtures, (c) electrical wiring systems, fixtures and equipment exclusively serving the Premises, (d) all interior lighting (including, without limitation, light bulbs and/or ballasts) and exterior lighting exclusively serving the Premises or adjacent to the Premises, (e) all glass, windows, window frames, window casements, skylights, interior and exterior doors, door frames and door closers, (f) all roll-up doors, ramps and dock equipment, including without limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights, (g) all tenant signage, (h) lifts for disabled persons serving the Premises, (i) sprinkler systems, fire protection systems and security systems, except to the extent maintained by Landlord, and (j) all partitions, fixtures, equipment, interior painting, interior walls and floors, and floor coverings of the Premises and every part thereof (including, without limitation, any demising walls contiguous to any portion of the Premises). Tenant shall maintain throughout the Term a current contract with a vendor qualified to repair and maintain the HVAC systems serving the Premises, which vendor shall be reasonably approved by Landlord. Additionally, Tenant shall be solely responsible for the performance of the regular removal of trash and debris. Notwithstanding the foregoing, Landlord shall have the right, but not the obligation, exercisable at any time, to directly contract with an HVAC vendor to perform the preventive maintenance on the mechanical and/or HVAC equipment, including, without limitation, the right to obtain a semi-annual HVAC condition report, in which event the costs and expenses associated with such services and/or report shall be part of the definition of Operating Expenses herein. Should Landlord elect to directly contract for such HVAC condition report, then Tenant, upon receipt of such report, shall promptly make all repairs and/or replacements indicated on such report. So long as Tenant does not utilize the generator currently located at the Building or request its use, Tenant shall have no responsibility for any repairs or maintenance of such generator at the Building.

     11.2 Maintenance by Landlord: Subject to Tenant’s obligation under Section 6 to reimburse Landlord, in the form of Additional Rent, for Tenant’s Share of the cost and expense of the following described items, Landlord shall repair and maintain the following items: fire protection services; the roof and roof coverings (provided that Tenant installs no additional air conditioning or other equipment on the roof that damages the roof coverings, in which event Tenant shall pay all costs relating to the presence of such additional equipment); any elevator that serves the Premises; the plumbing and mechanical systems serving the Building, including the boiler for the Building but excluding the plumbing, mechanical and electrical systems exclusively serving the Premises; any rail spur and rail crossing; exterior painting of the Building; and the parking areas, pavement, landscaping, sprinkler systems, sidewalks, driveways, curbs, and lighting systems in the Common Areas. If Landlord elects to perform any repair or restoration work required to be performed by Tenant, Tenant shall reimburse Landlord upon demand for all costs and expenses incurred by Landlord in connection therewith. Tenant shall promptly report, in writing, to Landlord any defective condition known to it which Landlord is required to repair.

     11.3 Landlord’s Repairs and Maintenance Obligations: Subject to the provisions of Sections 25 and 26, and except for repairs rendered necessary by the intentional or negligent acts or omissions of Tenant or any of Tenant’s Representatives or

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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Tenant’s failure to perform its obligations under Section 11.1 above, Landlord shall, at Landlord’s sole cost and expense, keep in good repair the structural portions of the floors, foundations and exterior perimeter walls of the Building (exclusive of glass and exterior doors), and the structural portions of the roof of the Building (excluding the roof membrane).

     11.4 Tenant’s Failure to Perform Repairs and Maintenance Obligations: If Tenant refuses or neglects to repair and maintain the Premises and the other areas properly as required herein and to the reasonable satisfaction of Landlord, (i) Landlord may, but without obligation to do so, at any time make such repairs or maintenance without Landlord having any liability to Tenant for any loss or damage that may accrue to Tenant’s Property or to Tenant’s business by reason thereof, except to the extent any damage is caused by the willful misconduct or gross negligence of Landlord or its authorized agents and representatives and (ii) Tenant shall pay to Landlord, as Additional Rent, Landlord’s costs and expenses incurred therefor. Tenant’s obligations under this Section 11 shall survive the expiration of the Term or earlier termination thereof. Tenant hereby waives any right to repair at the expense of Landlord under any applicable Laws now or hereafter in effect.

12. Insurance

     12.1 Types of Insurance: Tenant shall maintain in full force and effect at all times during the Term, at Tenant’s sole cost and expense, for the protection of Tenant and Landlord, as their interests may appear, policies of insurance issued by carriers reasonably acceptable to Landlord and its lender which afford the following coverages: (i) worker’s compensation and employer’s liability, as required by law; (ii) commercial general liability insurance (occurrence form) providing coverage against any and all claims for bodily injury and property damage occurring in, on or about the Premises arising out of Tenant’s and Tenant’s Representatives’ use or occupancy of the Premises and such insurance shall (a) include coverage for blanket contractual liability, fire damage, premises, personal injury, completed operations and products liability, and (b) have a combined single limit of not less than Two Million Dollars ($2,000,000) per occurrence with a Three Million Dollar ($3,000,000) aggregate limit and excess/umbrella insurance in the amount of Three Million Dollars ($3,000,000) (if Tenant has other locations which it owns or leases, the policy shall include an aggregate limit per location endorsement); (iii) comprehensive automobile liability insurance with a combined single limit of at least $1,000,000 per occurrence for claims arising out of any company owned automobiles; (iv) “all risk” or “special purpose” property insurance, including without limitation, sprinkler leakage, covering damage to or loss of any of Tenant’s Property and the Tenant Improvements (including the Cubicles and Equipment (as defined in Section 35)) located in, on or about the Premises, and in addition, coverage for flood and business interruption of Tenant, together with, if the property of any of Tenant’s invitees, vendors or customers is to be kept in the Premises, warehouser’s legal liability or bailee customers insurance for the full replacement cost of the property belonging to such parties and located in the Premises. Such insurance shall be written on a replacement cost basis (without deduction for depreciation) in an amount equal to one hundred percent (100%) of the full replacement value of the aggregate of the items referred to in this clause (iv); and (v) such other insurance or higher limits of liability as is then customarily required for similar types of buildings within the general vicinity of the Project or as may be reasonably required by any of Landlord’s lenders.

     12.2 Insurance Policies: Insurance required to be maintained by Tenant shall be written by companies (i) licensed to do business in the State of California, (ii) domiciled in the United States of America, and (iii) having a “General Policyholders Rating” of at least A:X (or such higher rating as may be required by a lender having a lien on the Premises) as set forth in the most current issue of “A.M. Best’s Rating Guides.” Any deductible amounts under any of the insurance policies required hereunder shall not exceed Five Thousand Dollars ($5,000). Tenant shall deliver to Landlord certificates of insurance and true and complete copies of any and all endorsements required herein for all insurance required to be maintained by Tenant hereunder at the time of execution of this Lease by Tenant. Tenant shall, at least fifteen (15) days prior to expiration of each policy, furnish Landlord with certificates of renewal or “binders” thereof. Each certificate shall expressly provide that such policies shall not be cancelable or otherwise subject to material modification except after thirty (30) days prior written notice to the parties named as additional insureds as required in this Lease (except for cancellation for nonpayment of premium, in which event cancellation shall not take effect until at least ten (10) days’ notice has been given to Landlord). Tenant shall have the right to provide insurance coverage which it is obligated to carry pursuant to the terms of this Lease under a blanket insurance policy, provided such blanket policy expressly affords coverage for the Premises and Landlord as required by this Lease.

     12.3 Additional Insureds and Coverage: Each of Landlord, Landlord’s property management company or agent, and Landlord’s lender(s) having a lien against the Premises or any other portion of the Project shall be named as additional insureds or loss payees (as applicable) under all of the policies required in Section 12.1(ii) and, with respect to the Tenant Improvements, in Section 12.1(iv) hereof. All such policies shall provide for severability of interest. All insurance to be maintained by Tenant shall, except for workers’ compensation and employer’s liability insurance, be primary, without right of contribution from insurance maintained by Landlord. Any umbrella/excess liability policy (which shall be in “following form”) shall provide that if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance. The limits of insurance maintained by Tenant shall not limit Tenant’s liability under this Lease. It is the parties’ intention that the insurance to be procured and maintained by Tenant as required herein shall provide coverage for any and all damage or injury arising from or related to Tenant’s operations of its business and/or Tenant’s or Tenant’s Representatives’ use of the Premises and any of the areas within the Project. Notwithstanding anything to the contrary contained herein, to the extent Landlord’s cost of maintaining insurance with respect to the Building and/or any other buildings within the Project is increased as a result of Tenant’s acts, omissions, Alterations, improvements, use or occupancy of the Premises, Tenant shall pay one hundred percent (100%) of, and for, each such increase as Additional Rent.

     12.4 Failure of Tenant to Purchase and Maintain Insurance: If Tenant fails to obtain and maintain the insurance required herein throughout the Term, Landlord may, but without obligation to do so, purchase the necessary insurance and pay the premiums therefor. If Landlord so elects to purchase such insurance, Tenant shall promptly pay to Landlord as Additional Rent, the amount so paid by Landlord, upon Landlord’s demand therefor. In addition, Landlord may recover from Tenant and Tenant agrees to pay, as Additional Rent, any and all Claims which Landlord may incur due to Tenant’s failure to obtain and maintain such insurance.

     12.5 Waiver of Subrogation: Landlord and Tenant mutually waive their respective rights of recovery against each other for any loss of, or damage to, either party’s property to the extent that such loss or damage is insured by an insurance policy required to be in effect at the time of such loss or damage. Each party shall obtain any special endorsements, if required by its insurer, whereby the insurer waives its rights of subrogation against the other party. This provision is intended to waive fully, and for the benefit of the parties hereto, any rights and/or claims which might give rise to a right of subrogation in favor of any insurance carrier.

     12.6 Landlord’s Insurance: Landlord shall maintain in full force and effect during the Term of this Lease, subject to reimbursement as provided in Section 6, policies of insurance which afford such coverages as are commercially reasonable and as is consistent with other properties in Landlord’s or Landlord’s affiliates’ portfolio. Notwithstanding the foregoing, Landlord shall obtain and keep in force during the Term of this Lease, as an item of Operating Expenses, a policy or policies in the name of Landlord, with loss payable to Landlord and to the holders of any mortgages, deeds of trust or ground leases on the Premises (“Lender(s)”), (i) on an “all risk” or “special form” basis, insuring loss or damage to the Building, including all improvements, fixtures (other than trade fixtures) and permanent additions (ii) insuring loss or damage to the Tenant Improvements (but not any of Tenant’s Personal Property (as defined in Exhibit B) or the Nitrogen Tank) caused by earthquake. Except as set forth above with respect to earthquake coverage for the Tenant Improvements, all alterations, additions and improvements made to the Premises by Tenant (including the Tenant Improvements and the Nitrogen Tank) shall be insured by Tenant rather than by Landlord. Subject to the foregoing, the amount of the “all risk” or “special

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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form” insurance procured by Landlord shall be equal to at least ninety percent (90%) of the full replacement cost of the Building (excluding the cost of excavation and installation of footings), including all improvements and permanent additions as the same shall exist from time to time, or the amount required by Lenders. At Landlord’s option, Landlord shall insure against all risks of direct physical loss or damage to the Building (including, without limitation, the perils of flood and earthquake), including coverage for any additional costs resulting from debris removal and reasonable amounts of coverage for the enforcement of any ordinance or law regulating the reconstruction or replacement of any undamaged sections of the Building required to be demolished or removed by reason of the enforcement of any building, zoning, safety or land use laws as the result of a covered cause of loss. If any such insurance coverage procured by Landlord has a deductible clause, the deductible shall not exceed reasonable amounts and as is then consistent with Landlord’s or its affiliates’ portfolio, and in the event of any casualty, the amount of such deductible shall be an item of Operating Expenses as so limited. Notwithstanding anything to the contrary contained herein, to the extent the cost of maintaining insurance with respect to the Building is increased as a result of Tenant’s acts, omissions, alterations, improvements (including, without limitation, the Tenant Improvements), use or occupancy of the Premises, Tenant shall pay one hundred percent (100%) of, and for, such increase(s) as Additional Rent.

13. Limitation of Liability and Indemnity

Except to the extent of Claims (defined below) resulting from the gross negligence or willful misconduct of Landlord or its authorized representatives, Tenant agrees to protect, defend (with counsel reasonably acceptable to Landlord) and hold Landlord and Landlord’s lenders, partners, members, property management company (if other than Landlord), agents, directors, officers, employees, representatives, contractors, successors and assigns and each of their respective partners, members, directors, officers, employees, representatives, agents, contractors, heirs, successors and assigns (collectively, the “Indemnitees”) harmless and indemnify the Indemnitees from and against all liabilities, damages, demands, penalties, costs, claims, losses, judgments, charges and expenses (including reasonable attorneys’ fees, costs of court and expenses necessary in the prosecution or defense of any litigation including the enforcement of this provision) (collectively, “Claims”) arising from or in any way related to, directly or indirectly, (i) Tenant’s or Tenant’s Representatives’ use of the Premises and other portions of the Project, (ii) the conduct of Tenant’s business, (iii) from any activity, work or thing done, permitted or suffered by Tenant in or about the Premises, and/or (iv) Tenant’s failure to perform any covenant or obligation of Tenant under this Lease. Tenant agrees that the obligations of Tenant herein shall survive the expiration or earlier termination of this Lease.

Except to the extent of Claims resulting from the gross negligence or willful misconduct of Landlord or its authorized representatives, to the fullest extent permitted by law, Tenant agrees that neither Landlord nor any of the Indemnitees shall at any time or to any extent whatsoever be liable, responsible or in any way accountable for any loss, liability, injury, death or damage to persons or property which at any time may be suffered or sustained by Tenant or by any person(s) whomsoever who may at any time be using, occupying or visiting the Premises or any other portion of the Project, including, but not limited to, any acts, errors or omissions of any other tenants or occupants of the Project. Tenant shall not, in any event or circumstance, be permitted to offset or otherwise credit against any payments of Rent required herein for matters for which Landlord may be liable hereunder.

14. Assignment and Subleasing

     14.1 Prohibition: Except in connection with a Transfer (defined below) to an Affiliate, Tenant shall not, without the prior written consent of Landlord, assign, mortgage, hypothecate, encumber, grant any license or concession, pledge or otherwise transfer this Lease or any interest herein, permit any assignment or other transfer of this Lease by operation of law, sublet the Premises or any part thereof, or permit the use of the Premises by any persons other than Tenant and Tenant’s Representatives (collectively, “Transfers” and any entity to whom any Transfer is made or sought to be made is sometimes referred to as a “Transferee”). No consent to any Transfer shall constitute a waiver of the provisions of this Section 14, and all subsequent Transfers may be made only with the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, but which consent shall be subject to the provisions of this Section 14.

     14.2 Request for Consent: If Tenant seeks to make a Transfer, Tenant shall notify Landlord, in writing (“Tenant’s Notice”), and deliver to Landlord at least thirty (30) days prior to the proposed commencement date of the Transfer (“Proposed Effective Date”) the following: (i) a description of the portion of the Premises to be transferred (the “Subject Space”); (ii) all of the terms of the proposed Transfer, including without limitation, the Proposed Effective Date, the name and address of the proposed Transferee, and a copy of the existing or proposed assignment, sublease or other agreement governing the proposed Transfer; (iii) current financial statements of the proposed Transferee certified by an officer, member, partner or owner thereof, and audited financial statements for the previous three (3) most recent consecutive fiscal years if available; and (iv) such other information as Landlord may then reasonably require. Within twenty (20) days after Landlord’s receipt of the Tenant’s Notice (the “Landlord Response Period”) Landlord shall notify Tenant, in writing, of its determination with respect to such requested proposed Transfer and Landlord’s election as set forth in Section 14.5. If Landlord does not elect to recapture pursuant to Section 14.5 and Landlord does consent to the requested proposed Transfer, Tenant may thereafter assign its interests in and to this Lease or sublease all or a portion of the Premises to the same party and on the same terms as set forth in the Tenant’s Notice.

     14.3 Criteria for Consent: Tenant agrees that, among other circumstances for which Landlord could reasonably withhold consent to a proposed Transfer, it shall be reasonable for Landlord to withhold its consent where (a) Tenant is in default of its obligations under this Lease beyond applicable notice and cure periods or at any time during the Term of this Lease Tenant has been in Chronic Default, (b) the use to be made of the Premises by the proposed Transferee is prohibited, or differs from the uses permitted, under this Lease, (c) the proposed Transferee or its business is subject to compliance with additional requirements of the ADA beyond those requirements which are applicable to Tenant, (d) the proposed Transferee does not intend to occupy the Premises, (e) Landlord reasonably disapproves of the proposed Transferee’s business operating ability or history, reputation or creditworthiness or the character of the business to be conducted at the Premises, (f) the proposed Transferee is a governmental agency or unit or an existing tenant in the Project, (g) the proposed Transfer would cause Landlord to violate another agreement or obligation to which Landlord is a party or otherwise subject, (h) either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee: (1) is negotiating with Landlord to lease space in the Building at such time or (2) has negotiated with Landlord during the four (4) month period immediately preceding the Tenant’s Notice, (i) the rent proposed to be charged by Tenant to the proposed Transferee during the term of such Transfer, calculated using a present value analysis, is less than seventy percent (70%) of the rent then being quoted by Landlord, at the proposed time of such Transfer, for comparable space in the Building or any other Building in the Project for a comparable term, calculated using a present value system, or (j) the proposed Transferee will use, store or handle Hazardous Materials (defined below) of a type, nature or quantity not then being used by Tenant.

     14.4 Effectiveness of Transfer and Continuing Obligations: Prior to the date on which any Transfer approved by Landlord becomes effective, Tenant shall deliver to Landlord (i) a counterpart of the fully executed Transfer document, (ii) an executed Hazardous Materials Disclosure Certificate substantially in the form of Exhibit E hereto (the “Transferee HazMat Certificate”), and (iii) Landlord’s standard form of Consent to Assignment or Consent to Sublease, as applicable (provided, Landlord shall make reasonable modifications to such standard forms so long as all other conditions of Landlord’s consent to a Transfer are satisfied), executed by Tenant and the Transferee in which each of Tenant and the Transferee confirms its obligations under this Lease. Failure or refusal of a

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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Transferee to execute any such consent instrument shall not release or discharge the Transferee from its obligation to do so or from any liability as provided herein. The voluntary, involuntary or other surrender of this Lease by Tenant, or a mutual cancellation by Landlord and Tenant, shall not work a merger, and any such surrender or cancellation shall, at the option of Landlord, either terminate all or any existing subleases or operate as an assignment to Landlord of any or all of such subleases. Each approved assignee shall assume and be deemed to assume this Lease and shall be and remain liable jointly and severally with Tenant for payment of Rent and for the due performance of, and compliance with all the terms, covenants, conditions and agreements herein contained on Tenant’s part to be performed or complied with, for the Term of this Lease. Each approved subtenant shall confirm its understanding that its sublease is subordinate to this Lease. No Transfer shall affect the continuing primary liability of Tenant (which, following assignment, shall be joint and several with the assignee) under this Lease whether occurring before or after such Transfer, and Tenant shall not be released from performing any of the terms, covenants and conditions of this Lease. An assignee of Tenant shall become directly liable to Landlord for all obligations of Tenant hereunder. The acceptance of any Rent by Landlord from any other person (whether or not such person is an occupant of the Premises) shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any Transfer. For purposes hereof, if Tenant is a business entity other than a public company traded on a nationally recognized stock exchange, direct or indirect transfer of fifty percent (50%) or more of the ownership interest of the entity (whether in a single transaction or in the aggregate through more than one transaction) shall be deemed a Transfer and shall be subject to this Section 14. Any and all options, rights of refusal, improvement allowances and other similar rights granted to Tenant in this Lease, if any, shall not be assignable by Tenant (except to an Affiliate) unless expressly authorized in writing by Landlord. Any Transfer made without Landlord’s prior written consent, shall, at Landlord’s option, be null, void and of no effect, and shall, at Landlord’s option, constitute a material default by Tenant of this Lease. As Additional Rent, Tenant shall promptly (a) pay to Landlord each time it requests a Transfer (except to an Affiliate), a fee in the amount of one thousand dollars ($1,000) and (b) reimburse Landlord for reasonable and actual legal and other expenses incurred by Landlord in connection with any actual or proposed Transfer.

     14.5 Recapture: If the Transfer (i) by itself or taken together with then existing or pending Transfers covers or totals, as the case may be, more than fifty percent (50%) of the rentable square feet of the Premises, or (ii) is for a term which by itself or taken together with then existing or pending Transfers is greater than seventy-five percent (75%) of the period then remaining in the Term of this Lease as of the time of the Proposed Effective Date, then Landlord shall have the right, to be exercised by giving written notice to Tenant, to recapture the Subject Space described in the Tenant’s Notice. If such recapture notice is given, it shall serve to terminate this Lease with respect to the proposed Subject Space, or, if the proposed Subject Space covers all the Premises, it shall serve to terminate the entire Term of this Lease, in either case, as of the Proposed Effective Date. If this Lease is terminated with respect to less than the entire Premises, Rent shall be adjusted on the basis of the proportion of rentable square feet retained by Tenant to the rentable square feet originally demised and this Lease as so amended shall continue thereafter in full force and effect.

     14.6 Transfer Premium: If Landlord consents to a Transfer, as a condition thereto, Tenant shall pay to Landlord monthly, as Additional Rent, at the same time as the monthly installments of Rent are payable hereunder, fifty percent (50%) of any Transfer Premium. The term “Transfer Premium” shall mean all rent, additional rent and other consideration received by Tenant from such Transferee, after deducting all commercially reasonable attorneys’ fees, brokerage commissions and tenant improvement costs incurred by Tenant in connection with such Transfer, which either initially or over the term of the Transfer exceeds the Rent or pro rata portion of the Rent, as the case may be, for the Subject Space.

     14.7 Waiver: Notwithstanding any Transfer, or any indulgences, waivers or extensions of time granted by Landlord to any Transferee, or failure by Landlord to take action against any Transferee, Tenant agrees that Landlord may, at its option, proceed against Tenant without having taken action against or joined such Transferee, except that Tenant shall have the benefit of any indulgences, waivers and extensions of time granted to any such Transferee.

     14.8 Affiliated Companies/Restructuring of Business Organization: The assignment or subletting by Tenant of all or any portion of this Lease or the Premises to (i) a parent or subsidiary of Tenant, or (ii) any person or entity which controls, is controlled by or under the common control with Tenant, or (iii) any entity which purchases all or substantially all of the assets of Tenant or Tenant’s parent corporation, or (iv) any entity into which Tenant or Tenant’s parent corporation is merged or consolidated (all such persons or entities described in clauses (i) (ii), (iii) and (iv) being sometimes herein referred to as “Affiliates”) shall not be deemed a Transfer under the Section 14 (hence, the aforesaid events shall not be subject to obtaining Landlord’s prior consent; Landlord shall not have any right to receive any Transfer Premium in connection therewith; and Landlord shall not have the recapture rights described in Section 14.5 above), provided in all instances that;

          14.8.1 any such Affiliate was not formed as a subterfuge to avoid the obligations of this Section 14;

          14.8.2 Tenant shall give Landlord prior written notice of any such assignment or sublease to an Affiliate (provided, if Tenant is prohibited by law from giving Landlord prior written notice, then Tenant shall provide written notice to Landlord within ten (10) days following such assignment or sublease);

          14.8.3 the successor Tenant has as of the effective date of any such assignment or sublease a tangible net worth and net assets, in the aggregate, computed in accordance with generally accepted accounting principles (but excluding goodwill as an asset), which is sufficient to meet the obligations of Tenant under this Lease, as reasonably determined by Landlord;

          14.8.4 any such assignment or sublease shall be subject to all of the terms and provisions of this Lease, and each assignee (i.e. any such Affiliate), other than in the case of an Affiliate resulting from a merger or consolidation as described in Section 14.8(iv) above, shall assume, in a written document reasonably satisfactory to Landlord and delivered to Landlord upon or prior to the effective date of such assignment, all the obligations of Tenant under this Lease (and each subtenant shall acknowledge and agree that any such sublease is subordinate to the terms of this Lease); and

          14.8.5 Tenant (except in the case of an Affiliate resulting from the acquisition of all or substantially all of the assets of Tenant described in Section 14.8(iii) or from a merger or consolidation as described in Section 14.8(iv) above) and any guarantor shall remain fully liable for all obligations to be performed by Tenant under this Lease.

15. Subordination

To the fullest extent permitted by law, this Lease, the rights of Tenant under this Lease and Tenant’s leasehold interest shall be subject and subordinate at all times to: (i) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Building, the Lot, or any other portion of the Project, and (ii) the lien of any mortgage or deed of trust which may now or hereafter exist for which the Building, the Lot, ground leases or underlying leases, any other portion of the Project or Landlord’s interest or estate therein is specified as security. Notwithstanding the foregoing, Landlord or any such ground lessor, mortgagee, or any beneficiary (any such ground lessor, mortgagee or beneficiary referred to herein as a “Holder”) shall have the right to require this Lease be superior to any such ground leases or underlying leases or any such liens, mortgage or deed of trust. If any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall attorn to and become the Tenant of the successor in interest to Landlord, provided such successor in interest agrees that it will not disturb Tenant’s use, occupancy or quiet enjoyment of the Premises if Tenant is not in material default beyond any applicable

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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cure period under this Lease. The successor in interest to Landlord following foreclosure, sale or deed in lieu thereof shall not be: (a) liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) subject to any offsets or defenses which Tenant might have against any prior lessor; (c) bound by prepayment of more than one (1) month’s Rent; or (d) liable to Tenant for any Security Deposit not actually received by such successor in interest to the extent any portion of such Security Deposit has not already been forfeited by, or refunded to, Tenant. Landlord shall be liable to Tenant for all or any portion of the Security Deposit not forfeited by, or refunded to Tenant, until and unless Landlord transfers such Security Deposit to the successor in interest. Tenant covenants and agrees to execute (and acknowledge if required by Landlord, any lender or ground lessor) and deliver, within five (5) days of a written demand or request by Landlord and in the form reasonably requested by Landlord and/or a Holder, any additional documents evidencing the priority or subordination of this Lease with respect to any such ground leases or underlying leases or the lien of any such mortgage or deed of trust.

Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale.

Tenant hereby acknowledges that as of the date of execution of this Lease, there is a deed of trust encumbering Landlord’s interest in the Park in favor of Redwood Capital Finance Company, LLC, a Delaware limited liability company (the “Current Lender”). Tenant shall within ten (10) days following a written request made by Landlord at any time, execute, notarize and deliver to Landlord a subordination, non-disturbance and attornment agreement (i) in the form attached to this Lease as Exhibit H and incorporated herein by this reference (the “SNDA”) or (ii) in such other form as may then be reasonably required by the Current Lender or other current or future Holder. Landlord shall endeavor to cause the Current Lender and any other current or future Holder to execute, notarize and deliver to Tenant the SNDA or such other form of subordination, non-disturbance and attornment agreement, as applicable, but Landlord shall not be in default under this Lease and shall have no liability to Tenant whatsoever if Landlord is unable to obtain and deliver to Tenant the SNDA or such other form of subordination, non-disturbance and attornment agreement executed by the Current Lender or other current or future Holder, as applicable.

16. Right of Entry

Landlord and its agents shall have the right to enter the Premises at all reasonable times, upon reasonable prior notice using commercially reasonable efforts to provide such notice not less than twenty four (24) hours in advance, for purposes of inspection, exhibition, posting of notices, investigation, replacements, repair, maintenance and alteration. It is further agreed (except in the event of an emergency in which case no notice shall be required) that Landlord shall have the right to use any and all means Landlord deems necessary to enter the Premises in an emergency. Landlord shall have the right to place (i) “for rent” or “for lease” signs (during the last eight (8) months of the Term) on the outside of the Premises, the Building and in the Common Areas, and (ii) “for sale” signs on the outside of the Building and in the Common Areas. Tenant hereby waives any Claim from damages or for any injury or inconvenience to or interference with Tenant’s business, or any other loss occasioned thereby except for any Claim for any of the foregoing arising out of the gross negligence or willful misconduct of Landlord or its authorized representatives.

17. Estoppel Certificate

Each party (“Responding Party”) shall execute (and acknowledge if required by any lender or ground lessor) and deliver to the other party upon its request (the “Requesting Party”), within ten (10) days after such request, a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification), the date to which the Rent and other charges are paid in advance, if any, acknowledging that there are not, to the Responding Party’s knowledge, any uncured defaults on the part of the Requesting Party hereunder or specifying such defaults as are claimed, and such other matters as may be reasonably required. Any such statement may be conclusively relied upon by Landlord and any prospective purchaser or encumbrancer of the Building or other portions of the Project, and by Tenant, its transferees, investors, lenders or other interested parties. Failure to deliver such statement within such time shall be conclusive upon the Responding Party that (a) this Lease is in full force and effect, without modification except as may be represented by the Requesting Party; (b) there are no uncured defaults in the Requesting Party’s performance; and (c) not more than one month’s Rent has been paid in advance.

18. Tenant’s Default

The occurrence of any one or more of the following events shall, at Landlord’s option, constitute a material default by Tenant of the provisions of this Lease:

     18.1 The abandonment of the Premises by Tenant, as abandonment is statutorily defined in California Civil Code Section 1951.3 or all similar or successor laws;

     18.2 The failure by Tenant to make any payment of Rent, Additional Rent or any other payment required hereunder within three (3) business days after Landlord’s delivery to Tenant of written notice that said payment is due or past due; provided, any such written notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Sections 1161 et. seq. and all similar or successor laws;

     18.3 Except as otherwise provided in Section 19.4 hereof, the failure by Tenant to observe, perform or comply with any of the conditions, covenants or provisions of this Lease (except failure to make any payment of Rent and/or Additional Rent and any other payment or charge required hereunder) and such failure is not cured within (i) thirty (30) days of the date on which Landlord delivers written notice of such failure to Tenant for all failures other than with respect to (a) Hazardous Materials (defined in Section 27 hereof), (b) Tenant making the repairs, maintenance and replacements required under the provisions of Section 11.1 hereof, or (c) the timely delivery by Tenant of a subordination, non-disturbance and attornment agreement (an “SNDA”), a counterpart of a fully executed Transfer document and a consent thereto (collectively, the “Transfer Documents”), an estoppel certificate and insurance certificates, (ii) ten (10) days of the date on which Landlord delivers written notice of such failure to Tenant for all failures in any way related to Hazardous Materials or Tenant failing to timely make the repairs, maintenance or replacements required by Section 11.1, and (iii) the time period, if any, specified in the applicable sections of this Lease with respect to subordination, assignment and sublease, estoppel certificates and insurance. However, Tenant shall not be in default of its obligations hereunder if such failure (other than any failure of Tenant to timely and properly make the repairs, maintenance, or replacements required by Section 11.1, or timely deliver an SNDA, the Transfer Documents, an estoppel certificate or insurance certificates, for which no additional cure period shall be given to Tenant) cannot reasonably be cured within such thirty (30) or ten (10) day period, as applicable, and Tenant promptly commences, and thereafter diligently proceeds with same to completion, all actions necessary to cure such failure as soon as is reasonably possible, but in no event shall the completion of such cure be later than ninety (90) days after the date on which Landlord delivers to Tenant written notice of such failure, unless Landlord, acting reasonably and in good faith, otherwise expressly agrees in writing to a longer period of time based upon the circumstances relating to such failure as well as the nature of the failure and the nature of the actions necessary to cure such failure. Any such written notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Sections 1161, et seq. and all similar or successor laws; or

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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     18.4 The making of a general assignment by Tenant for the benefit of creditors, the filing of a voluntary petition by Tenant or the filing of an involuntary petition by any of Tenant’s creditors seeking the rehabilitation, liquidation, or reorganization of Tenant under any law relating to bankruptcy, insolvency or other relief of debtors and, in the case of an involuntary action, the failure to remove or discharge the same within sixty (60) days of such filing, the appointment of a receiver or other custodian to take possession of substantially all of Tenant’s assets or this leasehold, Tenant’s insolvency or inability to pay Tenant’s debts or failure generally to pay Tenant’s debts when due, any court entering a decree or order directing the winding up or liquidation of Tenant or of substantially all of Tenant’s assets, Tenant taking any action toward the dissolution or winding up of Tenant’s affairs, the cessation or suspension of Tenant’s use of the Premises, or the attachment, execution or other judicial seizure of substantially all of Tenant’s assets or this leasehold.

19. Remedies for Tenant’s Default

     19.1 Landlord’s Rights: In the event of Tenant’s material default under this Lease, Landlord may terminate Tenant’s right to possess the Premises by any lawful means. Following delivery of written notice by Landlord, this Lease shall terminate on the date specified in such notice and Tenant shall immediately surrender possession of the Premises to Landlord. In addition, whether or not this Lease is terminated, Landlord shall have the right to immediately re-enter the Premises, and if Landlord’s right of re entry is exercised following Tenant’s abandonment of the Premises, all of Tenant’s Property left on the Premises or in the Project shall be deemed abandoned. If Landlord relets the Premises or any portion thereof, Tenant shall immediately be liable to Landlord for all costs Landlord incurs in reletting the Premises or any part thereof, including, without limitation, broker’s commissions, expenses of cleaning, redecorating, and further improving the Premises and other similar costs (collectively, the “Reletting Costs”). All Reletting Costs shall be fully chargeable to Tenant and shall not be prorated or otherwise amortized in relation to any new lease for the Premises or any portion thereof. Reletting may be for a period shorter or longer than the remaining term of this Lease. In no event shall Tenant be entitled to any excess rent received by Landlord. No act by Landlord other than giving written notice to Tenant shall terminate this Lease or Tenant’s right to possess the Premises, including without limitation, acts of maintenance, efforts to relet the Premises or the appointment of a receiver on Landlord’s initiative to protect Landlord’s interest under this Lease. At all times Landlord shall have the right to remedy any default of Tenant, to maintain or improve the Premises, to cause a receiver to be appointed to administer the Premises and any new or existing subleases and to add to the Rent payable hereunder all of Landlord’s reasonable costs in so doing, with interest at the maximum rate permitted by law from the date of such expenditure.

     19.2 Damages Recoverable: If Tenant breaches this Lease and abandons the Premises before the end of the Term, or if Landlord terminates Tenant’s right to possession following Tenant’s breach or default under this Lease, then in either such case, Landlord may recover from Tenant all damages suffered by Landlord as a result of Tenant’s failure to perform its obligations hereunder, including without limitation, the unamortized cost of any Tenant Improvements constructed by or on behalf of Tenant pursuant to Exhibit B hereto to the extent Landlord has paid for such improvements, the unamortized portion of any broker’s or leasing agent’s commission incurred with respect to the leasing of the Premises to Tenant for the balance of the Term remaining after the date on which Tenant is in default of its obligations hereunder, and all Reletting Costs, and the worth at the time of the award (computed in accordance with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil Code) of the amount by which the Rent then unpaid hereunder for the balance of the Lease Term exceeds the amount of such loss of Rent for the same period which Tenant proves could be reasonably avoided by Landlord and in such case, Landlord prior to the award, may relet the Premises for the purpose of mitigating damages suffered by Landlord because of Tenant’s failure to perform its obligations hereunder; provided, however, that even if Tenant abandons the Premises following such breach, this Lease shall nevertheless continue in full force and effect for as long as Landlord does not terminate Tenant’s right of possession, and until such termination, Landlord shall have the remedy described in Section 1951.4 of the California Civil Code (Landlord may continue this Lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations) and may enforce all its rights and remedies under this Lease, including the right to recover the Rent from Tenant as it becomes due hereunder. The “worth at the time of the award” within the meaning of Subparagraphs (a)(1) and (a)(2) of Section 1951.2 of the California Civil Code shall be computed by allowing interest at the rate of ten percent (10%) per annum. Tenant hereby waives for itself and for all those claiming under Tenant its right to obtain redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179 (or any successor or substitute statute), or under any other present or future law, in the event judgment for possession enters against Tenant or Landlord takes possession of the Premises following any default of Tenant hereunder.

     19.3 Financial Statements: In the event of Tenant’s material default of this Lease, and in the event Tenant is not then a public company whose stock is traded on a nationally recognized stock exchange, Tenant, within five (5) days after Landlord’s request therefor, shall deliver to Landlord the then current audited financial statements of Tenant (including interim periods following the end of the last fiscal year for which annual statements are available). If audited financial statements have not been prepared, Tenant shall provide Landlord with unaudited financial statements (certified by an authorized representative or officer of Tenant) and such other information, the type and form of which are reasonably acceptable to Landlord, which reflect the financial condition of Tenant.

     19.4 Chronic Default: The term “Chronic Default” as used in this Lease shall mean that Tenant has materially defaulted in the performance of any of its obligations under this Lease beyond any applicable notice and cure periods more than four (4) times during the Term of the Lease, regardless of whether or not Tenant cures any such material default. A Chronic Default is not curable by Tenant. Upon the occurrence of a Chronic Default and at all times thereafter during the balance of the Term of this Lease, Landlord shall no longer be obligated to provide Tenant written notice of default as set forth in Section 18.3 hereof and Tenant shall no longer be entitled to any cure period set forth in this Lease, including without limitation, those cure periods set forth in Section 18.3. Following a Chronic Default, Landlord, in its sole discretion, may elect to provide written notice of default to Tenant or grant Tenant a period during which it may cure any such default, however, no such delivery of written notice or grant of a cure period by Landlord shall in any way obligate Landlord to provide Tenant any subsequent written notices of default or cure periods.

     19.5 Rights and Remedies Cumulative: The foregoing rights and remedies of Landlord are not exclusive; they are cumulative in addition to any rights and remedies now or hereafter existing at law, in equity, by statute or otherwise, and to any remedies Landlord may have under bankruptcy laws or laws affecting creditors’ rights generally. In addition to all of the remedies set forth above, if Tenant materially defaults under this Lease, all options granted to Tenant hereunder shall automatically terminate, unless otherwise expressly agreed to in writing by Landlord.

20. Holding Over

If Tenant holds over after the expiration of the Term, with or without the express or implied consent of Landlord, such tenancy shall be from month-to-month only, and shall not constitute a renewal hereof or an extension for any further term, and in such case Base Rent shall be payable at a monthly rate equal to one hundred fifty percent (150%) of the Base Rent applicable during the last rental period of the Term under this Lease for the first sixty (60) days of such holdover and thereafter, at a monthly rate equal to two hundred percent (200%) of the Base Rent applicable during the last rental period of the Term under this Lease. Such month-to-month tenancy shall be subject to every other term and provision contained herein. Landlord hereby expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord in the condition required herein upon the expiration or earlier termination of this Lease. The provisions of this Section 20 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to surrender the Premises upon the expiration or earlier termination of this Lease, in addition

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all Claims resulting from such failure, including but not limited to, any Claims made by any succeeding tenant founded upon such failure to surrender, and any lost profits to Landlord resulting therefrom.

21. Landlord’s Default

Landlord shall not be considered in default of this Lease unless Landlord fails within a reasonable time to perform an obligation required to be performed by Landlord hereunder. For purposes hereof, except in cases of an emergency, a reasonable time shall be thirty (30) days after receipt by Landlord of written notice specifying the nature of the obligation Landlord has not performed; provided, however, that if the nature of Landlord’s obligation is such that more than thirty (30) days, after receipt of written notice, is reasonably necessary for its performance, then Landlord shall not be in default of this Lease if performance of such obligation is commenced within such thirty (30) day period and thereafter diligently pursued to completion. In case of emergency, Landlord shall not be considered in default so long as Landlord acts as soon as reasonably practicable.

22. Parking

Tenant may use the number of non-designated and non-exclusive parking spaces specified in the Basic Lease Information. Landlord shall exercise reasonable efforts to ensure that such spaces are available to Tenant for its use, but Landlord shall not be required to enforce Tenant’s right to use the same. Tenant and Tenant’s Representatives shall not park or permit any parking of vehicles overnight.

23. Transfer of Landlord’s Interest

Tenant acknowledges that Landlord has the right to transfer all or any portion of its interest in the Premises, Building, Project and this Lease. Tenant expressly agrees that in the event of any such transfer, Landlord shall automatically be entirely released from all liability under this Lease and Tenant agrees to look solely to such transferee for the performance of Landlord’s obligations hereunder after the date of such transfer. Landlord shall use commercially reasonable efforts to cause each such transferee to agree to perform Landlord’s obligations hereunder arising or accruing after the date of such transfer. A ground lease or similar long term lease by Landlord of the entire Building or Lot, of which the Premises are a part, shall be deemed a sale within the meaning of this Section 23. Tenant agrees to attorn to such new owner provided such new owner does not disturb Tenant’s use, occupancy or quiet enjoyment of the Premises so long as Tenant is not in material default beyond any applicable cure period under this Lease.

24. Waiver

No delay or omission in the exercise of any right or remedy of either party on any default by the other party shall impair such a right or remedy or be construed as a waiver. The subsequent acceptance of Rent by Landlord after default by Tenant of this Lease shall not be deemed a waiver of such default, other than a waiver of timely payment for the particular Rent payment involved, and shall not prevent Landlord from maintaining an unlawful detainer or other action based on such default. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly Rent and other sums due hereunder shall be deemed to be other than on account of the earliest Rent or other sums due, nor shall any endorsement or statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Landlord may accept such payment without prejudice to Landlord’s right to recover the balance of such Rent or other sum or pursue any other remedy provided in this Lease. No failure, partial exercise or delay on the part of the Landlord in exercising any right, power or privilege hereunder shall operate as a waiver thereof.

25. Casualty Damage

     25.1 Casualty: If the Premises or any part, excluding any of Tenant’s Property, any Wi-Fi Network, any Tenant Improvements and any Alterations installed by or for the benefit of Tenant (collectively, “Tenant’s FF&E”), shall be damaged or destroyed by fire or other casualty, Tenant shall give immediate written notice thereof to Landlord. Within sixty (60) days after receipt by Landlord of such notice, Landlord shall notify Tenant, in writing, of the following time period within which the necessary repairs can reasonably be made, as estimated by Landlord: (a) within one hundred eighty (180) days, or (b) in more than one hundred eighty (180) days, from the date of such notice.

          25.1.1 Minor Insured Damage: If the Premises (other than Tenant’s FF&E) are damaged only to such extent that repairs, rebuilding and/or restoration can be reasonably completed within one hundred eighty (180) days, this Lease shall not terminate and, provided that insurance proceeds are available and paid to Landlord to fully repair the damage and/or Tenant otherwise voluntarily contributes any shortfall thereof, Landlord shall repair the Premises to substantially the same condition that existed prior to the occurrence of such casualty, except Landlord shall not be required to rebuild, repair, or replace any of Tenant’s FF&E. The Rent payable hereunder shall be abated proportionately from the date and to the extent Tenant vacates the affected portions of the Premises until any and all repairs required herein to be made by Landlord are substantially completed, but such abatement shall (i) only be to the extent of the portion of the Premises which is actually rendered unusable and unfit for occupancy (it being understood that a portion of the Premises may be unusable even though it has not sustained physical damage because of its interdependence upon the damaged portion of the Premises), and (ii) only during the time Tenant is not actually using same.

          25.1.2 Major Insured Damage: If the Premises are damaged to such extent that repairs, rebuilding and/or restoration cannot be reasonably completed, as reasonably determined by Landlord, within one hundred eighty (180) days, then either Landlord or Tenant may terminate this Lease by giving written notice within twenty (20) days after notice from Landlord regarding the time period of repair. If either party notifies the other of its intention to so terminate this Lease, then this Lease shall terminate and the Rent shall be abated from the date of the occurrence of such damage, provided Tenant diligently proceeds to and expeditiously vacates the Premises (but, in all events Tenant must vacate and surrender the Premises to Landlord by no later than twenty (20) business days thereafter or there shall not be any abatement of Rent until Tenant so vacates the Premises). If neither party elects to terminate this Lease, Landlord shall promptly commence and diligently prosecute to completion the repairs to the Premises, provided insurance proceeds are available and paid to Landlord to fully repair the damage or Tenant voluntarily contributes any shortfall thereof (except that Landlord shall not be required to rebuild, repair, or replace any of Tenant’s FF&E). During the time when Landlord is prosecuting such repairs to substantial completion, the Rent payable hereunder shall be abated proportionately from the date and to the extent Tenant actually vacates the affected portions of the Premises until any and all repairs required herein to be made by Landlord are substantially completed, but such abatement shall (i) only be to the extent of the portion of the Premises which is actually rendered unusable and unfit for occupancy (it being understood that a portion of the Premises may be unusable even though it has not sustained physical damage because of its interdependence upon the damaged portion of the Premises), and (ii) only during the time Tenant is not actually using same.

          25.1.3 Damage Near End of Term: Notwithstanding anything to the contrary contained in this Lease except for the provisions of Section 25.3 below, if the Premises are substantially damaged during the last year of then applicable term of this Lease, either Landlord or Tenant may, at their option, cancel and terminate this Lease by giving written notice to the other party of its

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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election to do so within forty-five (45) days after receipt by Landlord of notice from Tenant of the occurrence of such casualty. If either party so elects to terminate this Lease, all rights of Tenant hereunder shall cease and terminate ten (10) days after Tenant’s receipt or delivery of such notice, as applicable, and Tenant shall immediately vacate the Premises and surrender possession thereof to Landlord.

     25.2 Deductible and Uninsured Casualty: Tenant shall pay to Landlord, as Additional Rent, the deductible amounts under the insurance policies obtained by Landlord and Tenant under this Lease if the proceeds are used to repair the Premises. However, if other portions of the Building are also damaged by said casualty and insurance proceeds are payable therefor, then Tenant shall only pay its proportionate share of the deductible as reasonably determined by Landlord. If any portion of the Premises is damaged and is not fully covered by the aggregate of insurance proceeds received by Landlord and any applicable deductible, and Tenant does not voluntarily contribute any shortfall thereof, then Landlord or Tenant shall have the right to terminate this Lease by delivering written notice of termination to the other party within thirty (30) days after the date of notice to Tenant of such event, whereupon all rights of Tenant shall cease and terminate ten (10) days after Tenant’s receipt of such notice, and Tenant shall immediately vacate the Premises and surrender possession thereof to Landlord.

     25.3 Tenant’s Fault and Lender’s Rights: Notwithstanding anything to the contrary contained herein, if the Premises (other than Tenant’s FF&E) or any other portion of the Building is damaged by fire or other casualty due to the acts or omissions of Tenant or any of Tenant’s Representatives, (i) the Rent shall only be abated during the repair of such damage to the extent Landlord receives rental loss insurance proceeds therefor, (ii) Tenant will not have any right to terminate this Lease due to the occurrence of such casualty, and (iii) Tenant will be responsible for the excess cost and expense of the repair and restoration of the Building (including any deductible) to the extent not covered by insurance proceeds. Notwithstanding anything to the contrary contained herein, if the holder of any indebtedness secured by the Premises or any other portion of the Project requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within thirty (30) days after the date of notice to Tenant of such event, whereupon all rights of Tenant shall cease and terminate, and Tenant shall immediately vacate the Premises and surrender possession thereof to Landlord within a reasonable time not to exceed twenty (20) business days.

     25.4 Tenant’s Waiver: Landlord shall not be liable for any inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of use of any part of the Premises by Tenant or loss of Tenant’s Property, resulting in any way from such damage or the repair thereof. With respect to any damage which Landlord is obligated to repair or may elect to repair, Tenant waives all rights to terminate this Lease or offset any amounts against Rent pursuant to rights accorded Tenant by any law currently existing or hereafter enacted, including without limitation, all rights pursuant to California Civil Code Sections 1932(2.), 1933(4.), 1941 and 1942 and any similar or successor laws.

26. Condemnation

If twenty five percent (25%) or more of the Premises is condemned by eminent domain, inversely condemned or sold in lieu of condemnation for any public or quasi public use or purpose (“Condemned”), then Tenant or Landlord may terminate this Lease as of the date when physical possession of the Premises is taken and title vests in such condemning authority, and Rent shall be adjusted to the date of termination. Tenant shall not because of such condemnation assert any claim against Landlord or the condemning authority for any compensation because of such condemnation, and Landlord shall be entitled to receive the entire amount of any award without deduction for any estate of interest or other interest of Tenant; provided, however, the foregoing shall not preclude Tenant, at Tenant’s sole cost and expense, from obtaining any separate award to Tenant for loss of, or damage to, Tenant’s Property or for damages for cessation or interruption of Tenant’s business provided such award is separate from Landlord’s award and does not diminish nor otherwise impair the award otherwise payable to Landlord. In addition to the foregoing, Tenant shall be entitled to seek compensation for the relocation costs recoverable by Tenant pursuant to the provisions of California Government Code Section 7262. If neither party elects to terminate this Lease, Landlord shall, if necessary, promptly proceed to restore the Premises or the Building, as applicable, to substantially the same condition prior to such partial condemnation, allowing for the reasonable effects of such partial condemnation, and a proportionate allowance shall be made to Tenant, as determined by Landlord, for the Rent corresponding to the time during which, and to the part of the Premises of which, Tenant is deprived on account of such partial condemnation and restoration. Landlord shall not be required to spend funds for restoration in excess of the condemnation proceeds received by Landlord.

27. Environmental Matters/Hazardous Materials

     27.1 Hazardous Materials Disclosure Certificate: Simultaneously herewith, Tenant has delivered to Landlord Tenant’s executed initial Hazardous Materials Disclosure Certificate (the “Initial HazMat Certificate”), a copy of which is attached hereto as Exhibit E. Tenant covenants, represents and warrants to Landlord that the information in the Initial HazMat Certificate is true and correct and accurately describes the use(s) of Hazardous Materials which will be made and/or used on the Premises by Tenant. Tenant shall deliver to Landlord an executed Hazardous Materials Disclosure Certificate (“the “HazMat Certificate”), in substantially the form attached hereto as Exhibit E, describing Tenant’s then present use of Hazardous Materials on the Premises, and any other reasonably necessary documents as requested by Landlord upon the occurrence of either of the following events: (a) immediately upon any material change in the types and/or quantities of Hazardous Materials used or stored in the Premises, or (b) within ten (10) days of written notice by Landlord at any time during the Term of the Lease.

     27.2 Definition of Hazardous Materials: “Hazardous Materials” means (a) any hazardous or toxic wastes, materials or substances, and other pollutants or contaminants, which are or become regulated by any Environmental Laws; (b) petroleum, petroleum by products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos and asbestos containing material, in any form, whether friable or nonfriable; (d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and lead-containing materials; (g) any other material, waste or substance displaying toxic, reactive, ignitable or corrosive characteristics, as all such terms are used in their broadest sense, and are defined or become defined by any Environmental Law (defined below); (h) any materials which cause or threatens to cause a nuisance upon or waste to any portion of the Project or any surrounding property; or (i) any materials which pose or threaten to pose a hazard to the health and safety of persons on the Premises, any other portion of the Project or any surrounding property. For purposes of this Lease, “Hazardous Materials” shall not include nominal amounts of ordinary household cleaners, office supplies and janitorial supplies which are not actionable under any Environmental Laws.

     27.3 Prohibition; Environmental Laws: Tenant shall not be entitled to use or store any Hazardous Materials on, in, or about any portion of the Premises or Project without, in each instance, obtaining Landlord’s prior written consent thereto. If Landlord, in its sole discretion, consents to any such usage or storage, then Tenant shall be permitted to use and/or store only those Hazardous Materials and in such quantities (A) that are necessary for Tenant’s business, (B) to the extent disclosed in the most recent HazMat Certificate, and (C) expressly approved by Landlord in writing. In all events such usage and storage must at all times be in full compliance with any and all applicable local, state and federal environmental, health and/or safety-related laws, statutes, orders, standards, courts’ decisions, ordinances, rules and regulations (as interpreted by judicial and administrative decisions), decrees, directives, guidelines, permits or permit conditions, currently existing and as amended, enacted, issued or adopted in the future (collectively, the “Environmental Laws”). Tenant agrees that any changes to the type and/or quantities of Hazardous Materials specified in the most recent HazMat Certificate may be implemented only with the prior written consent of Landlord, which consent may

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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be given or withheld in Landlord’s sole discretion. Tenant shall not be entitled nor permitted to install any tanks under, on or about the Premises for the storage of Hazardous Materials without the express written consent of Landlord, which may be given or withheld in Landlord’s sole discretion. Landlord shall have the right at all times during the Term to (i) inspect the Premises, (ii) conduct tests and investigations to determine whether Tenant is in compliance with this Section 27 or to determine if Hazardous Materials are present in, on or about the Project, and (iii) request lists of all Hazardous Materials used, stored or otherwise located on, under or about any portion of the Premises and/or the Common Areas. The cost of all such inspections, tests and investigations (collectively, “Inspections”) shall be borne by Tenant, if Tenant or any of Tenant’s Representatives are directly or indirectly responsible for any contamination revealed by such Inspections. The aforementioned rights granted herein to Landlord and its representatives shall not create (a) a duty on Landlord’s part to perform Inspections, monitor or otherwise observe the Premises or Tenant’s and Tenant’s Representatives’ activities with respect to Hazardous Materials, including without limitation, Tenant’s operation, use and any remediation related thereto, or (b) liability on the part of Landlord and its representatives for Tenant’s use, storage, disposal or remediation of Hazardous Materials, it being understood that Tenant shall be solely responsible for all liability in connection therewith.

     27.4 Tenant’s Environmental Obligations: Tenant shall give to Landlord immediate verbal and follow up written notice of any spills, releases, discharges, disposals, emissions, migrations, removals or transportation of Hazardous Materials on, under or about any portion of the Premises or in any Common Areas (collectively, a “Release”); provided that Tenant has knowledge of such event(s). Tenant, at its sole cost and expense, covenants and warrants to promptly investigate, clean up, remove, restore and otherwise remediate (including, without limitation, preparation of any feasibility studies or reports and the performance of any and all closures) any Release of Hazardous Materials arising from or related to the acts or omissions of Tenant or Tenant’s Representatives such that the affected portions of the Project and any adjacent property are returned to the condition existing prior to the appearance of such Hazardous Materials. Any such investigation, clean up, removal, restoration and other remediation shall only be performed after Tenant has obtained Landlord’s prior written consent, which consent shall not be unreasonably withheld so long as such actions would not potentially have a material adverse long-term or short-term effect on any portion of the Project. Notwithstanding the foregoing, Tenant shall be entitled to respond immediately to an emergency without first obtaining Landlord’s prior written consent. Tenant, at its sole cost and expense, shall conduct and perform, or cause to be conducted and performed, all closures as required by any Environmental Laws or any agencies or other governmental authorities having jurisdiction thereof. If Tenant fails to so promptly investigate, clean up, remove, restore, provide closure or otherwise so remediate, Landlord may, but without obligation to do so, take any and all steps necessary to rectify the same and Tenant shall promptly reimburse Landlord, upon written demand, for all costs and expenses to Landlord of performing investigation, clean up, removal, restoration, closure and remediation work. All such work undertaken by Tenant, as required herein, shall be performed in such a manner so as to enable Landlord to make full economic use of the Premises and the other portions of the Project after the satisfactory completion of such work.

     27.5 Environmental Indemnity: Tenant shall, protect, indemnify, defend (with counsel acceptable to Landlord) and hold Landlord and the other Indemnitees harmless from and against any and all Claims (including, without limitation, diminution in value of any portion of the Premises or the Project, damages for the loss of or restriction on the use of rentable or usable space, and from any adverse impact of Landlord’s marketing of any space within the Project) arising at any time during or after the Term in connection with or related to, directly or indirectly, the use, presence or Release of Hazardous Materials on, in or about any portion of the Project as a result (directly or indirectly) of the acts or omissions of Tenant or any of Tenant’s Representatives. Neither the written consent of Landlord to the presence, use or storage of Hazardous Materials in, on, under or about any portion of the Project nor the strict compliance by Tenant with all Environmental Laws shall excuse Tenant from its obligations of indemnification pursuant hereto. Tenant shall not be relieved of its indemnification obligations under the provisions of this Section 27.5 due to Landlord’s status as either an “owner” or “operator” under any Environmental Laws.

     27.6 Survival: Tenant’s obligations and liabilities under this Section 27 shall survive the expiration or earlier termination of this Lease. In the event Tenant has not received a closure certificate from the applicable governmental authorities (in form reasonably satisfactory to Landlord) solely with respect to the removal of the nitrogen tank of Tenant and any Hazardous Materials which may have emanated from such tank, then Landlord may require Tenant to hold over possession of the Premises until such closure certificate is obtained. Any such holdover by Tenant will be with Landlord’s consent and will not be terminable by Tenant in any event or circumstance.

28. Financial Statements

If Tenant is not a publicly traded corporation, Tenant and any permitted Transferee, for the reliance of Landlord, any lender holding or anticipated to acquire a lien upon any portion of the Project or any prospective purchaser of any portion of the Project, shall deliver to Landlord the then current audited financial statements of Tenant (including interim periods following the end of the last fiscal year for which annual statements are available) within ten (10) days after Landlord’s request therefor, but not more often than once annually so long as Tenant is not in material default of this Lease. If audited financial statements have not been prepared, Tenant and any permitted Transferee shall provide Landlord with unaudited financial statements (certified by an authorized representative or officer of Tenant) and such other information, the type and form of which are reasonably acceptable to Landlord, which reflect the financial condition of Tenant and any permitted Transferee, as applicable.

29. General Provisions

     29.1 Time: Time is of the essence in this Lease and with respect to each and all of its provisions in which performance is a factor.

     29.2 Successors and Assigns: The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of the parties hereto.

     29.3 Recordation: Tenant shall not record this Lease or a short form memorandum hereof.

     29.4 Landlord Exculpation: The liability of Landlord to Tenant for any default by Landlord under the terms of this Lease shall be limited to the actual interest of Landlord and its present or future partners or members in the Building, and Tenant agrees to look solely to Landlord’s interest in the Building for satisfaction of any liability and shall not look to other assets of Landlord nor seek any recourse against the assets of the individual partners, members, directors, officers, shareholders, agents or employees of Landlord, including without limitation, any property management company of Landlord (collectively, the “Landlord Parties”). It is the parties’ intention that Landlord and the Landlord Parties shall not in any event or circumstance be personally liable, in any manner whatsoever, for any judgment or deficiency hereunder or with respect to this Lease. The liability of Landlord under this Lease is limited to its actual period of ownership of title to the Building.

     29.5 Severability and Governing Law: Any provisions of this Lease which shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provisions hereof and such other provisions shall remain in full force and effect. This Lease shall be enforced, governed by and construed in accordance with the laws of the State of California.

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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     29.6 Attorneys’ Fees: In the event any dispute between the parties results in litigation or other proceeding, the prevailing party shall be reimbursed by the party not prevailing therein for all reasonable costs and expenses, including, without limitation, reasonable attorneys’ and experts’ fees and costs incurred by the prevailing party in connection with such litigation or other proceeding, and any appeal thereof. Such costs, expenses and fees shall be included in and made a part of any judgment recovered by the prevailing party.

     29.7 Entire Agreement: It is understood and agreed that there are no oral agreements between the parties hereto affecting this Lease and this Lease (including all exhibits and addenda) supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. This Lease and any separate agreement executed by Landlord and Tenant in connection with this Lease and dated of even date herewith (a) contain all of the terms, covenants, conditions, warranties and agreements of the parties relating in any manner to the rental, use and occupancy of the Premises, and (b) shall be considered to be the only agreement between the parties hereto and their representatives and agents. This Lease may not be modified, deleted or added to except by a writing signed by the parties hereto. All negotiations and oral agreements have been merged into and are included herein. There are no other representations or warranties between the parties, and all reliance with respect to representations is based totally upon the representations and agreements contained in this Lease. The parties acknowledge that (i) each party and/or its counsel have reviewed and revised this Lease, and (ii) no rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall be employed in the interpretation or enforcement of this Lease or any amendments or exhibits to this Lease or any document executed and delivered by either party in connection with this Lease.

     29.8 Warranty of Authority: Each party represents and warrants that (i) each person signing on its behalf is duly and validly authorized to do so on behalf of the entity it purports to so bind, and (ii) if such party is a limited liability company, partnership, corporation or trustee, that such limited liability company, partnership, corporation or trustee has full right and authority to enter into this Lease and perform all of its obligations hereunder. Tenant hereby warrants that this Lease is legal, valid and binding upon Tenant and enforceable against Tenant in accordance with its terms.

     29.9 Notices: All notices, demands, statements or communications (collectively, “Notices”) given or required to be given by either party to the other hereunder shall be in writing, shall be sent by United States certified or registered mail, postage prepaid, return receipt requested, delivered by a nationally recognized same-day or overnight courier (e.g. FedEx or UPS) or delivered personally (i) to Tenant at the Tenant’s Address set forth in the Basic Lease Information, or to such other place as Tenant may from time to time designate in a Notice to Landlord; or (ii) to Landlord at Landlord’s Address set forth in the Basic Lease Information, or to such other firm or to such other place as Landlord may from time to time designate in a Notice to Tenant. Any Notice will be deemed given on the date it is mailed as provided in this Section 29.9, upon the first (1st) business day after delivery to a nationally recognized courier, or upon the date personal delivery is made.

     29.10 Joint and Several; Covenants and Conditions: If Tenant consists of more than one person or entity, the obligations of all such persons or entities shall be joint and several. Each provision to be performed by Tenant hereunder shall be deemed to be both a covenant and a condition.

     29.11 Confidentiality: Except to the extent that Tenant, as a publicly traded company, is required by applicable law to disclose the contents of this Lease, Tenant acknowledges that the contents of this Lease and any related documents are confidential information, and Tenant shall keep and maintain such information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant’s financial, legal and space planning consultants.

     29.12 Landlord Renovations: Tenant acknowledges that Landlord may from time to time, at Landlord’s sole option, renovate, improve, develop, alter, or modify (collectively, “Renovations”) portions of the Building, Premises, Common Areas and the Project, including without limitation, systems and equipment, roof, and structural portions of the same; provided Landlord shall utilize commercially reasonable efforts to minimize the disruption and interference with Tenant’s business and operations at the Premises. In connection with such Renovations, Landlord may, among other things, erect scaffolding or other necessary structures in the Building, limit or eliminate access to portions of the Project, including portions of the Common Areas, or perform work in the Building, which work may create noise, dust or leave debris in the Building. Tenant hereby agrees that such Renovations and Landlord’s actions in connection with such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent, so long as Landlord shall uses commercially reasonable efforts to minimize the disruption and interference with Tenant’s business and operations at the Premises. Except to the extent caused by Landlord’s willful misconduct or gross negligence, Landlord shall have no responsibility, or for any reason be liable to Tenant, for any direct or indirect injury to or interference with Tenant’s business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises or of Tenant’s Property, Alterations or improvements resulting from the Renovations or Landlord’s actions in connection with such Renovations, or for any inconvenience or annoyance occasioned by such Renovations or Landlord’s actions in connection with such Renovations; provided Landlord shall utilize commercially reasonable efforts to minimize the disruption and interference with Tenant’s business and operations at the Premises.

     29.13 Waiver of Jury Trial: The parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way related to this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, Building, Park or Project and/or any claim of injury, loss or damage.

     29.14 Submission of Lease: Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or an option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant.

30. Signs

All signs and graphics of every kind visible in or from public view shall be subject to (i) Landlord’s prior written approval, not to be unreasonably conditioned, withheld or delayed, and (ii), and in compliance with, all applicable Laws (including, without limitation, the laws of the City of San Jose), Development Documents, Recorded Matters, Rules and Regulations, and Landlord’s sign criteria (“Sign Criteria”) as same may exist from time to time. Landlord’s Sign Criteria is set forth in Exhibit G hereto. Tenant shall be solely responsible for any costs related to any signs and graphics and shall remove all such signs and graphics prior to the expiration or earlier termination of this Lease. Such installations and removals shall be made in a manner as to avoid damage or defacement of the Premises and all other affected portions of the Project. Tenant shall repair any such damage, including without limitation, discoloration caused by such installation or removal. Landlord shall have the right, at its option, to deduct from the Security Deposit such sums as are reasonably necessary to remove such signs and make any repairs necessitated by such removal. Notwithstanding the foregoing, in no event shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which are likely to interfere with the visibility of any sign, canopy, advertising matter, or decoration of any kind of any other business or occupant of the Building or other portions of the Project be permitted hereunder. Tenant further agrees to maintain each such sign and graphics, as may be approved, in good condition and repair at all times.

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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31. Mortgagee Protection

Upon any default on the part of Landlord, Tenant will give written Notice by registered or certified mail to any beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises who has provided Tenant with Notice of their interest together with an address for receiving Notice, and shall offer such beneficiary or mortgagee a reasonable opportunity to cure the default, including time to obtain possession of the Premises by power of sale or a judicial foreclosure, if such should prove necessary to effect a cure. If such default cannot be cured within such time period, then such additional time as may be necessary will be given to such beneficiary or mortgagee to effect such cure so long as such beneficiary or mortgagee has commenced the cure within the original time period and thereafter diligently pursues such cure to completion, in which event this Lease shall not be terminated while such cure is being diligently pursued. Tenant agrees that each lender to whom this Lease has been assigned by Landlord is an express third party beneficiary hereof. Tenant shall not make any prepayment of Rent more than one (1) month in advance without the prior written consent of each such lender. Tenant waives the collection of any deposit from each such lender or purchaser at a foreclosure sale unless said lender or purchaser shall have actually received and not refunded the deposit. Tenant agrees to make all payments under this Lease to the lender with the most senior encumbrance upon receiving a direction, in writing, to pay said amounts to such lender. Tenant shall comply with such written direction to pay without determining whether an event of default exists under such lender’s loan to Landlord. If, in connection with obtaining financing for the Premises or any other portion of the Project, Landlord’s lender shall request reasonable modification(s) to this Lease as a condition to such financing, Tenant shall not unreasonably withhold, delay or defer its consent thereto, provided such modifications do not materially and adversely affect Tenant’s rights or materially increase Tenant’s obligations hereunder, including Tenant’s use, occupancy or quiet enjoyment of the Premises.

32. Warranties of Tenant

Tenant warrants and represents to Landlord, for the express benefit of Landlord, that Tenant has undertaken a complete and independent evaluation of the risks inherent in the execution of this Lease and the operation of the Premises for the use permitted hereby, and that, based upon said independent evaluation, Tenant has elected to enter into this Lease and hereby assumes all risks with respect thereto, except as expressly otherwise provided in this Lease. Tenant further warrants and represents to Landlord, for the express benefit of Landlord, that in entering into this Lease, Tenant has not relied upon any statement, fact, promise or representation (whether express or implied, written or oral) not specifically set forth in this Lease and that any statement, fact, promise or representation (whether express or implied, written or oral) made at any time to Tenant, which is not expressly incorporated herein, is hereby waived by Tenant.

33. Brokerage Commission

Landlord and Tenant each represents and warrants for the benefit of the other that it has had no dealings with any real estate broker, agent or finder in connection with the Premises and/or the negotiation of this Lease, except for the Broker(s) specified in the Basic Lease Information, and that it knows of no other real estate broker, agent or finder who is or might be entitled to a real estate brokerage commission or finder’s fee in connection with this Lease or otherwise based upon contacts between the claimant and Tenant. Each party shall indemnify and hold harmless the other from and against any and all Claims with respect to a fee or commission by any real estate broker, agent or finder in connection with the Premises and this Lease other than the Broker(s) (if any) resulting from the actions of the indemnifying party. Unless expressly agreed to in writing by Landlord and the Broker(s), no real estate brokerage commission or finder’s fee shall be owed to, or otherwise payable to, the Broker(s) for any renewals or other extensions of the initial term of this Lease or for any additional space leased by Tenant other than the Premises as same exists as of the Lease Date. Tenant further represents and warrants to Landlord that Tenant will not receive (i) any portion of any brokerage commission or finder’s fee payable to the Broker(s) in connection with this Lease, or (ii) any other form of compensation or incentive from the Broker(s) with respect to this Lease. Landlord shall pay the commission due to Broker consistent with Landlord’s commission agreement with Broker.

34. Quiet Enjoyment

Landlord covenants with Tenant, upon the paying of Rent and observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, during the periods that Tenant is not otherwise in default beyond any applicable cure period under this Lease, and subject to the rights of any of Landlord’s lenders, (i) that Tenant shall and may peaceably and quietly have, hold, occupy and enjoy the Premises and Common Areas during the Term, and (ii) neither Landlord, nor any successor or assign of Landlord, shall disturb Tenant’s occupancy or enjoyment of the Premises and Common Areas. The foregoing covenant is in lieu of any other covenant express or implied.

35. Cubicles

Landlord and Tenant acknowledge and agree that, (i) Landlord shall purchase a minimum of seventy-three (73) cubicles but a maximum of eighty-two (82) cubicles of comparable quality to those cubicles of Landlord situated in the Building within the Park located at 110 Baytech Drive, and otherwise of a type, and produced by a manufacturer, reasonably satisfactory to Landlord and Tenant (“Cubicles”), (ii) the Cubicles shall be configured in the manner described in the Final Space Plan (as defined in Exhibit B), (iii) the Cubicles shall be installed by Landlord and shall be wired for three (3) data lines (CAT – 5), and electrical service, and one (1) chair per Cubicle (together with the Cubicles, the foregoing are collectively, “Cubicles and Equipment”), (iv) the cost of the purchase, transport and installation of the Cubicles and Equipment shall be deducted from the Tenant Improvement Allowance, (v) during the Term of this Lease, Landlord shall lease, as owner, to Tenant, as lessee, at no additional cost or expense, all of the Cubicles and Equipment, (vi) such leasing is on an “AS-IS, WITH ALL FAULTS” basis and subject to all of the terms of this Lease (including, without limitation, Article 10, of this Lease), without recourse, representation or warranty of any kind or nature, express or implied, including without limitation, habitability, merchantability or fitness for a particular purpose, (vii) at the expiration or earlier termination of this Lease, the Cubicles and Equipment shall be returned and surrendered to Landlord in the same or substantially similar condition and repair as when delivered to Tenant, reasonable wear and tear and damage by Landlord excepted, (viii) Tenant shall be obligated to repair, maintain and insure the Cubicles and Equipment, (ix) Tenant shall not have the right or ability to (a) remove or materially modify the Cubicles and Equipment or (b) assign or sublet any of the Cubicles and Equipment except in conjunction with this Lease and the Premises and (x) Tenant shall pay any taxes, assessments and insurance premiums attributable to the Cubicles and Equipment.

///signatures on next page///

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

16

///continued from previous page///

IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease Date specified in the Basic Lease Information.

Landlord:

LEGACY PARTNERS I SAN JOSE, LLC,
a Delaware limited liability company,
Owner

By:	LEGACY PARTNERS COMMERCIAL, L.P., a California limited partnership, as Property Manager and Agent for Owner
	By:	LEGACY PARTNERS COMMERCIAL, INC., General Partner
		By:	/s/ Barry DiRaimondo
			Barry DiRaimondo
		Its:	President
Date:

Tenant:

Endwave Corporation,
a Delaware corporation

By:	/s/ Brett W. Wallace
	(Name)
Its:	Chief Financial Officer
	(Title)
By:	/s/ Curtis Sacks
	(Name)
Its:	V.P. Finance
	(Title)
Date:	June 8, 2006

If Tenant is a CORPORATION, the authorized officers must sign on behalf of the corporation and indicate the capacity in which they are signing. This Lease must be executed by the president or vice-president and the secretary or assistant secretary, unless the bylaws or a resolution of the board of directors shall otherwise provide, in which event, the bylaws or a certified copy of the resolution, as the case may be, must be attached to this Lease.

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

17

Exhibit A

Premises

This exhibit, entitled “Premises”, is and shall constitute Exhibit A to that certain Lease Agreement dated May 24, 2006 (the “Lease”), by and between LEGACY PARTNERS I SAN JOSE, LLC, a Delaware limited liability company (“Landlord”), and Endwave Corporation, a Delaware corporation (“Tenant”), for the leasing of certain premises located in Legacy Baytech Park, 130 Baytech Drive, San Jose, California 95134-2302 (the “Premises”).

The Premises consist of the rentable square footage of space specified in the Basic Lease Information and has the address specified in the Basic Lease Information. The Premises are a part of and are contained in the Building specified in the Basic Lease Information. The cross-hatched area depicts the Premises within the Project:

Exhibit A, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit B

Tenant Improvements

This exhibit, entitled “Tenant Improvements”, is and shall constitute Exhibit B to that certain Lease Agreement dated May 24, 2006 (the “Lease”), by and between LEGACY PARTNERS I SAN JOSE, LLC, a Delaware limited liability company (“Landlord”), and Endwave Corporation, a Delaware corporation (“Tenant”), for the leasing of certain premises located in Legacy Baytech Park, 130 Baytech Drive, San Jose, California 95134-2302 (the “Premises”). The terms, conditions and provisions of this Exhibit B are hereby incorporated into and are made a part of the Lease. Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease.

1. Tenant Improvements. Subject to the conditions set forth below, Landlord agrees to construct and install certain improvements (“Tenant Improvements”) in the Building of which the Premises are a part in accordance with the Final Drawings (defined below) and pursuant to the terms of this Exhibit B.

2. Definition. “Tenant Improvements” as used in this Lease shall include only (i) those interior portions of the Building which are described below (and shall expressly exclude the approval by any applicable governmental authority of the nitrogen tank of Tenant and the installation thereof) and (ii) the Cubicles and Equipment (as defined and described in Section 35 of the Lease). Except with respect to the Cubicles and Equipment, “Tenant Improvements” shall specifically not include (a) any alterations, additions or improvements installed or constructed by Tenant, and any of Tenant’s trade fixtures, equipment, furniture, furnishings, telephone equipment or other personal property (collectively, “Personal Property”) or (b) the Nitrogen Tank (defined below). The Tenant Improvements shall include any and all interior improvements to be made to the Premises as specified in the Final Drawings (defined below), as specified and agreed to by Tenant and Landlord. Tenant shall be fully responsible for the planning, permits, approvals and installation of Tenant’s nitrogen tank and all associated piping and mechanical and other work and equipment associated with such installation (collectively, “Nitrogen Tank”); provided, Landlord acknowledges that Landlord has agreed, to provide Landlord’s approval merely as an accommodation to Tenant, to submit Tenant’s application for a permit to install the nitrogen tank.

3. Tenant’s Initial Plans; the Work. Tenant desires Landlord to perform certain Tenant Improvements in the Premises in substantial accordance with the plan(s) or scope of work (collectively, the “Initial Plans”) prepared by Legacy Partners CDS, dated March 10, 2006, a copy of which is attached hereto as Schedule 1, and made a part hereof. Such work, as shown in the Initial Plans and as more fully detailed in the Final Drawings (as defined and described in Section 4 below), shall be hereinafter referred to as the “Work”. Not later than ten (10) days following the Lease Date, Tenant and/or Tenant’s Representatives shall furnish to Landlord such additional plans, drawings, specifications and finish details as Landlord may reasonably request to enable Landlord’s architects and engineers, as applicable, to prepare mechanical, electrical and plumbing plans and to prepare the Final Drawings, including, but not limited to, a final telephone layout and special electrical connections, if any. All plans, drawings, specifications and other details describing the Work which have been, or are hereafter, furnished by or on behalf of Tenant shall be subject to Landlord’s approval, which approval shall not be unreasonably withheld, conditioned or delayed. Landlord shall not be deemed to have acted unreasonably if it withholds its approval of any plans, specifications, drawings or other details or of any Change Request (hereafter defined in Section 11 below) because, in Landlord’s reasonable opinion, the work as described in any such item, or any Change Request, as the case may be: (a) is likely to adversely affect Building systems, the structure of the Building or the safety of the Building and/or its occupants; (b) might impair Landlord’s ability to furnish services to Tenant or other tenants in the Park; (c) would increase the cost of operating the Building or the Park; (d) would violate any applicable governmental, administrative body’s or agencies’ laws, rules, regulations, ordinances, codes or similar requirements (or interpretations thereof); (e) contains or uses Hazardous Materials; (f) would adversely affect the appearance of the Building or the Park; (g) might adversely affect another tenant’s premises or such other tenant’s use and enjoyment of such premises; (h) is prohibited by any ground lease affecting the Building, the Lot and/or the Park, any Recorded Matters or any mortgage, trust deed or other instrument encumbering the Building, the Lot and/or the Park; (i) is likely to be substantially delayed because of unavailability or shortage of labor or materials necessary to perform such work or the difficulties or unusual nature of such work; (j) is not, at a minimum, in accordance with Landlord’s Building Standards (defined below), or (k) would increase the Tenant Improvement Costs (defined in Section 9 below) by more than twenty-five percent (25%) from the cost originally estimated and anticipated by the parties (provided, Landlord shall not unreasonably withhold its consent to such increase in Tenant Improvement Costs so long as (i) the scope of work related to those Tenant Improvements which are not generic lab improvements (as described in Section 8 below) is unchanged from the scope of work for such lab improvements shown in the Initial Plans and (ii) Tenant pays Landlord, within two (2) business days following written demand by Landlord, all Tenant Improvement Costs which Landlord estimates may be incurred in excess of an amount equal to one hundred twenty-five percent (125%) of the Tenant Improvement Costs originally estimated and anticipated by the parties). The foregoing reasons, however, shall not be the only reasons for which Landlord may withhold its approval, whether or not such other reasons are similar or dissimilar to the foregoing. N either the approval by Landlord of the Work or the Initial Plans or any other plans, specifications, drawings or other items associated with the Work nor Landlord’s performance, supervision or monitoring of the Work shall constitute any warranty or covenant by Landlord to Tenant of the adequacy of the design for Tenant’s intended use of the Premises. Tenant agrees to, and does hereby, assume full and complete responsibility to ensure that the Work and the Final Drawings are adequate to fully meet the needs and requirements of Tenant’s intended operations of its business within the Premises and Tenant’s use of the Premises.

4. Final Drawings. If necessary for the performance of the Work and to the extent not already included as part of the Initial Plans attached hereto, Landlord shall prepare or cause to be prepared final working drawings and specifications for the Work (the “Final Drawings”) based on and consistent with the Initial Plans and the other plans, specifications, drawings, finish details or other information furnished by Tenant or Tenant’s Representatives to Landlord and approved by Landlord pursuant to Section 3 above. Tenant shall cooperate diligently with Landlord and Landlord’s architect, engineer and other representatives and Tenant shall furnish within five (5) days after any request therefor, all information required by Landlord or Landlord’s architect, engineer or other representatives for completion of the Final Drawings. So long as the Final Drawings are substantially consistent with the Initial Plans, Tenant shall approve the Final Drawings within three (3) business days after receipt of same from Landlord. Landlord and Tenant shall indicate their approval of the Final Drawings by initialing each sheet of the Final Drawings and delivering to one another a true and complete copy of such initialed Final Drawings. A true and complete copy of the approved and initialed Final Drawings shall be attached to the Lease as Exhibit B-1 and shall be made a part thereof. Tenant’s failure to approve or disapprove such Final Drawings within the foregoing three (3) business day time period, shall be conclusively deemed to be approval of same by Tenant. If Tenant reasonably disapproves of any matters included in the Final Drawings because such items are not substantially consistent with the Initial Plans, Tenant shall, within the aforementioned three (3) business day period, deliver to Landlord written notice of its disapproval and Tenant shall specify in such written notice, in sufficient detail as Landlord may reasonably require, the matters disapproved, the reasons for such disapproval, and the specific changes or revisions necessary to be made to the Final Drawings to cause such drawings to substantially conform to the Initial Plans. Any additional costs associated with such requested changes or revisions shall be paid for solely by Tenant, as the Excess Tenant Improvement Costs (defined in Section 10 below), in cash upon written demand therefor by Landlord. Any changes or revisions requested by Tenant must first be approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed subject to the provisions of Section 3 above. If Landlord approves such requested changes or revisions, Landlord shall cause the Final Drawings to be revised accordingly and Landlord and Tenant shall initial each sheet of the Final Drawings as revised and attach a true and complete copy thereof to the Lease as Exhibit B-1. Landlord and Tenant hereby covenant to each other to cooperate with each other and to act reasonably in the preparation and approval of the Final Drawings.

Exhibit B, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

5. Performance of Work. As soon as practicable after Tenant and Landlord initial and attach to the Lease as Exhibit B-1 a true and complete copy of the Final Drawings, Landlord’s general contractor, Legacy Partners CDS (the “General Contractor”), shall submit the Final Drawings to the governmental authorities having rights of approval over the Work and shall apply for the necessary approvals and building permits. Subject to the satisfaction of all conditions precedent and subsequent to its obligations under this Exhibit B, and further subject to the provisions of Section 10 hereof, as soon as practicable after Landlord or its representatives have received all necessary approvals and building permits, Landlord will put the Final Drawings out for bid to three (3) licensed, bonded and insured subcontractors for each major trade with the exception of mechanical, electrical and fire alarm, all of which shall be designbuild with Clinton Heating & Air Conditioning, Trinity Associates, Inc. and RTS, respectively. Landlord shall commence construction, or cause the commencement of construction by the General Contractor, of the Tenant Improvements, as soon as practicable. Except as hereinafter expressly provided to the contrary, Landlord shall cause the performance of the Work using (except as may be stated or otherwise shown in the Final Drawings) building standard materials, quantities and procedures then in use by Landlord (“Building Standards”), which current standards are set forth in Schedule 2 attached hereto and made a part hereof.

6. Substantial Completion. Landlord shall cause the General Contractor to Substantially Complete (defined below) the Tenant Improvements in accordance with the Final Drawings by the Commencement Date of the Lease as set forth in Section 2 of the Lease (the “Completion Date”), subject to delays due to (a) acts or events beyond its control including, but not limited to, acts of God, earthquakes, strikes, lockouts, boycotts, casualties, discontinuance of any utility or other service required for performance of the Work, moratoriums, governmental agencies and weather, (b) the lack of availability or shortage of specialized materials used in the construction of the Tenant Improvements, (c) any matters beyond the control of Landlord, the General Contractor or any subcontractors, (d) any changes required by the fire department, building and/or planning department, building inspectors or any other agency having jurisdiction over the Building, the Work and/or the Tenant Improvements (except to the extent such changes are directly attributable to Tenant’s use or Tenant’s specialized tenant improvements, in which event such delays are considered Tenant Delays) (the events and matters set forth in Subsections (a), (b), (c) and (d) are collectively referred to as “Force Majeure Delays”), or (e) any Tenant Delays (defined in Section 7 below). Landlord agrees that the Tenant Improvements shall be constructed (i) in accordance with all Laws, (ii) in accordance with the Final Drawings and (iii) in a good and workmanlike manner. The Tenant Improvements shall be deemed “Substantially Complete” on the date that the building officials of the applicable governmental agency(s) issues its final approval of the construction of the Tenant Improvements whether in the form of the issuance of a final permit, final or temporary certificate of occupancy or the written approval evidencing its final inspection on the building permit(s), or the date on which Tenant first takes occupancy of the Premises, whichever first occurs (“Substantial Completion”, or “Substantially Completed, or “Substantially Complete”) and any failure of Tenant to obtain any necessary governmental approvals for installation of Tenant’s nitrogen tank and any failure of Tenant to install the nitrogen tank shall not affect the date of Substantial Completion of the Tenant Improvements, the commencement of the Term or Tenant’s obligation to commence payment of Rent. If the Work is not deemed to be Substantially Completed on or before the scheduled Completion Date, (i) Landlord agrees to use reasonable efforts to Substantially Complete the Work as soon as practicable thereafter, (ii) the Lease shall remain in full force and effect, (iii) Landlord shall not be deemed to be in breach or default of the Lease or this Exhibit B as a result thereof and Landlord shall have no liability to Tenant as a result of any delay in occupancy (whether for damages, abatement of all or any portion of the Rent, or otherwise), and (iv) except in the event of any Tenant Delays, which will not affect the Commencement Date but will extend the Completion Date without any penalty or liability to Landlord, and notwithstanding anything to the contrary contained in the Lease, the Commencement Date and the Expiration Date of the term of the Lease (as defined in Section 2 of the Lease) shall be extended commensurately by the amount of time attributable to such Force Majeure Delays, and Landlord and Tenant shall execute a written amendment to the Lease evidencing such extensions of time, substantially in the form of Exhibit F to the Lease. Subject to the provisions of Section 10.2 of the Lease, the Tenant Improvements shall belong to Landlord and shall be deemed to be incorporated into the Premises for all purposes of the Lease, unless Landlord, in writing, indicates otherwise to Tenant.

7. Tenant Delays. There shall be no extension of the scheduled Commencement Date or Expiration Date of the term of the Lease (as otherwise permissibly extended in accordance with the provisions of Section 6 above) if the Work has not been Substantially Completed by the scheduled Commencement Date due to any delay attributable to Tenant and/or Tenant’s Representatives (collectively, “Tenant Delays”), including, but not limited to, any of the following described events or occurrences: (a) delays related to changes made or requested by Tenant to the Work and/or the Final Drawings; (b) the failure of Tenant to furnish all or any plans, drawings, specifications, finish details or other information required under Sections 3 and 4 above; (c) the failure of Tenant to comply with the requirements of Section 10 below; (d) Tenant’s requirements for special work or materials, finishes, or installations other than the Building Standards or Tenant’s requirements for special construction or phasing; (e) any changes required by the fire department, building or planning department, building inspectors or any other agency having jurisdiction over the Building, the Work and/or the Tenant Improvements if such changes are directly attributable to Tenant’s use or Tenant’s specialized tenant improvements; (f) the performance of any additional work pursuant to a Change Request (defined below in Section 11) which is requested by Tenant; (g) the performance of work in or about the Premises by any person, firm or corporation employed by or on behalf of Tenant, including, without limitation, any failure to complete or any delay in the completion of such work; or (h) any and all delays caused by or arising from acts or omissions of Tenant and/or Tenant’s Representatives, in any manner whatsoever, including, but not limited to, any and all revisions to the Final Drawings, unless required to address an error made by Landlord or Landlord’s contractor. Any delays in the construction of the Tenant Improvements due to any of the events described above, shall in no way extend or affect the date on which Tenant is required to commence paying Rent under the terms of the Lease. It is the intention of the parties that all of such delays will be considered Tenant Delays for which Tenant shall be wholly and completely responsible for any and all consequences related to such delays, including, without limitation, any costs and expenses attributable to increases in labor or materials.

8. Tenant Improvement Allowance. Landlord and Tenant hereby acknowledge and agree that the Tenant Improvement Costs (defined in Section 9 below) for the Tenant Improvements, based upon the Initial Plans approved by Landlord and Tenant in accordance with the provisions of Section 4 above, are estimated to be approximately [ * ] (the “Estimated TI Costs”), as more particularly summarized in the Bid Summary attached hereto as Schedule 3. If the actual Tenant Improvement Costs varies from this estimate by more than twenty-five percent (25%), then Landlord may require any of the following, in its sole discretion: (a) except as otherwise provided in Section 3(k) above, changes be made to the Final Drawings to reduce the cost of the Tenant Improvements and Landlord may refuse to sign any construction contract or Change Orders to the construction contract, as the case may be, until such changes are made to the sole satisfaction of Landlord; (b) Tenant to deposit into a separate escrow account cash in an amount equal to the Excess Tenant Improvement Costs (defined in Section 10 below) or Tenant to pay Landlord the amounts set forth in Section 3(k) above, or any combination thereof as directed by Landlord; (c) Tenant to provide to Landlord evidence satisfactory to Landlord, in its sole discretion, that Tenant has adequate financial resources to pay for the Excess Tenant Improvement Costs, as solely determined by Landlord; and/or (d) Tenant to pay all of the Excess Tenant Improvement Costs before Landlord’s contribution of the Tenant Improvement Allowance (defined in Section 10 below) or Tenant to pay Landlord the amounts set forth in Section 3(k) above, or any combination thereof as directed by Landlord. Subject to the foregoing, Landlord shall provide an allowance for the planning and construction of the Tenant Improvements for the Work to be performed in the Premises, as described in the Initial Plans and the Final Drawings, in the amount of [ * ] (the “Tenant Improvement Allowance”) based upon an allowance of [ * ] per rentable square foot for 32,805 square feet of the Premises which is to be improved, as described in the Initial Plans and the Final Drawings; provided, however, a portion of the Tenant Improvement Allowance up to [ * ] per rentable square foot of the Premises (or a total of up to [ * ]) may be used by Tenant toward the costs of purchasing, transporting and installing the Cubicles and Equipment, provided, however, that Landlord shall purchase not less than seventy-three (73) Cubicles as provided in Section 35 of the Lease. Tenant shall not be entitled to any credit, abatement or payment from Landlord in the event that the amount of the Tenant Improvement Allowance specified above exceeds the actual Tenant Improvement Costs. The Tenant Improvement Allowance shall only be used for generic

Exhibit B, Page 2

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

office non-specific to Tenant’s Permitted Uses, and generic lab improvements, and the Cubicles and Equipment (for purposes of this Section 8, the term “generic lab improvements” means Building Standard finishes (for walls, floors, ceilings, doors, windows, etc.), Building Standard lighting, Building Standard convenience electrical, standard HVAC capacity and distribution for open office area and excludes all plumbing, piping or other mechanical work). The Tenant Improvement Allowance shall be the maximum contribution by Landlord for the Tenant Improvement Costs and shall be subject to the provisions of Section 10 below.

9. Tenant Improvement Costs. The term “Tenant Improvement Costs”) shall mean and include any and all costs and expenses of the Work, including, without limitation, all of the following:

     (a) All costs of preliminary space planning and final architectural and engineering plans and specifications (including, without limitation, the scope of work, all plans and specifications, the Initial Plans and the Final Drawings) for the Tenant Improvements, and architectural fees, engineering costs and fees, and other costs associated with completion of said plans;

     (b) All costs of obtaining building permits and other necessary authorizations and approvals from the City of San Jose, California, and other applicable jurisdictions;

     (c) All costs of interior design and finish schedule plans and specifications including as-built drawings;

     (d) All direct and indirect costs of procuring, constructing and installing the Tenant Improvements in the Premises, including, but not limited to, the General Contractor’s fee (in an amount equal to fifteen percent (15%) of Tenant Improvement Costs for the General Contractor’s overhead, profit and general conditions), the cost of all on-site supervision, administrative staff, office expenses, equipment and temporary services rendered by Landlord’s consultants and the General Contractor in connection with construction of the Tenant Improvements, and all labor (including overtime) and materials constituting the Work (there will be no construction management fee payable to Landlord);

     (e) All fees payable to the General Contractor, architect and Landlord’s engineering firm if they are required by Tenant to redesign any portion of the Tenant Improvements following Tenant’s approval of the Final Drawings; and

     (f) As set forth in Section 35 of the Lease, all costs of purchasing, transporting and installing the Cubicles and Equipment.

10. Excess Tenant Improvement Costs. Prior to commencing the Work, Landlord shall submit to Tenant a written statement of the actual Tenant Improvement Costs (the “Actual TI Costs”) (which shall include the amount of any overtime projected as necessary to Substantially Complete the Work by the Completion Date) as then known by Landlord, and such statement shall indicate the amount, if any, by which the Actual TI Costs exceeds the Tenant Improvement Allowance (the “Excess Tenant Improvement Costs”). The term “Excess Tenant Improvement Costs” shall also include the costs related to any and all Change Orders. Tenant agrees, within three (3) days after submission to it of such statement, to execute and deliver to Landlord, in the form then in use by Landlord, an authorization to proceed with the Work. Tenant shall faithfully pay all of the Excess Tenant Improvement Costs to Landlord in the following described manner. A portion of the Excess Tenant Improvement Costs up to a maximum amount of Forty Nine Thousand Two Hundred Seven and 50/100 Dollars ($49,207.50) shall be amortized over the initial term of the Lease at a fixed interest rate of eleven percent (11%) per annum and such amortized amount (together with interest charges thereon) shall be paid by Tenant with, and as part of, the Rent for the Premises in accordance with the provisions and requirements of Section 3 of the Lease (the “Amortized Excess TI Costs”). Except as set forth in Section 3(k) above, the portion of the Excess Tenant Improvement Costs in excess of the principal amount of the Amortized Excess TI Costs shall be paid by Tenant, in cash, to Landlord within ten (10) days of Landlord’s delivery to Tenant of a written demand therefor together with a reconciliation of such costs. Within two (2) weeks after the Tenant Improvements have been Substantially Completed and the actual Tenant Improvement Costs are known, the parties shall execute and deliver a written amendment to the Lease, in the form acceptable to the parties, wherein there shall be specified, inter alia, the amount of the Base Rent payable by Tenant during the initial term of the Lease after taking into account the amount of the Amortized Excess TI Costs. No Work shall be commenced until Tenant has fully complied with the preceding provisions of this Section 10. If Tenant fails to remit the sums so demanded by Landlord pursuant to Section 8 above and this Section 10 within the time periods required, Landlord may, at its option, following the expiration of any applicable notice and cure periods, declare Tenant in default under the Lease.

11. Change Requests. No changes or revisions to the approved Final Drawings shall be made by either Landlord or Tenant unless approved in writing by both parties. Upon Tenant’s request and submission by Tenant (at Tenant’s sole cost and expense) of the necessary information and/or plans and specifications for any changes or revisions to the approved Final Drawings and/or for any work other than the Work described in the approved Final Drawings (“Change Requests”) and the approval by Landlord of such Change Request(s), which approval Landlord agrees shall not be unreasonably withheld, Landlord shall perform the additional work associated with the approved Change Request(s), at Tenant’s sole cost and expense, subject, however, to the following provisions of this Section 11. Prior to commencing any additional work related to the approved Change Request(s), Landlord shall submit to Tenant a written statement of the cost of such additional work and a proposed tenant change order therefor (“Change Order”) in the standard form then in use by Landlord. Tenant shall execute and deliver to Landlord such Change Order and shall pay the entire cost of such additional work in the following described manner. Any costs related to such approved Change Request(s), Change Order and any delays associated therewith, shall be added to the Tenant Improvement Costs and shall be paid for by Tenant as and with any Excess Tenant Improvement Costs as set forth in Section 10 above. The billing for such additional costs to Tenant shall be accompanied by evidence of the amounts billed as is customarily used in the business. Costs related to approved Change Requests and Change Orders shall include, without limitation, any architectural or design fees, the cost of all on-site supervisory and administrative staff, office, equipment and temporary services rendered by Landlord and/or Landlord’s consultants, and the General Contractor’s price for effecting the change. If Tenant fails to execute or deliver such Change Order, or to pay the costs related thereto, then Landlord shall not be obligated to do any additional work related to such approved Change Request(s) and/or Change Orders, and Landlord may proceed to perform only the Work, as specified in the Final Drawings.

12. Termination. If the Lease is terminated prior to the Completion Date, for any reason due to the default of Tenant hereunder, in addition to any other remedies available to Landlord under the Lease, Tenant shall pay to Landlord as Additional Rent under the Lease, within five (5) days of receipt of a statement therefor, any and all costs incurred by Landlord and not reimbursed or otherwise paid by Tenant through the date of termination in connection with the Tenant Improvements to the extent planned, installed and/or constructed as of such date of termination, including, but not limited to, any costs related to the removal of all or any portion of the Tenant Improvements and restoration costs related thereto. Subject to the provisions of Section 10.2 of the Lease, upon the expiration or earlier termination of the Lease, Tenant shall not be required to remove the Tenant Improvements it being the intention of the parties that the Tenant Improvements are to be considered incorporated into the Building. Notwithstanding anything to the contrary contained herein, Landlord shall have the right to terminate the Lease, upon written notice to Tenant, if Landlord is unable to obtain a building permit for the Tenant Improvements within one hundred eighty (180) days from the date the Lease is signed by Tenant, despite using its commercially reasonable efforts to do so. From and after the date on which the Lease is terminated, Tenant and Landlord shall have no further rights, obligations or claims with respect to each other arising from the Lease, except for those obligations of Tenant under the Lease which expressly survive and continue after the termination or expiration of the Lease.

Exhibit B, Page 3

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

13. Tenant Access. Landlord, in Landlord’s reasonable discretion and upon receipt of a written request from Tenant, may grant Tenant a license to have access to the Premises prior to the Completion Date to allow Tenant to do other work required by Tenant to make the Premises ready for Tenant’s use and (the “Tenant’s Pre-Occupancy Work”). It shall be a condition to the grant by Landlord and continued effectiveness of such license that:

     (a) Tenant shall give to Landlord a written request to have such access not less than five (5) business days prior to the date on which such proposed access will commence (the “Access Notice”). The Access Notice shall contain or be accompanied by each of the following items, all in form and substance reasonably acceptable to Landlord: (i) a detailed description of and schedule for Tenant’s Pre-Occupancy Work; (ii) the names and addresses of all contractors, subcontractors and material suppliers and all other representatives of Tenant who or which will be entering the Premises on behalf of Tenant to perform Tenant’s Pre-Occupancy Work or will be supplying materials for such work, and the approximate number of individuals, itemized by trade, who will be present in the Premises; (iii) copies of all contracts, subcontracts, material purchase orders, plans and specifications pertaining to Tenant’s Pre-Occupancy Work; (iv) copies of all licenses and permits required in connection with the performance of Tenant’s Pre-Occupancy Work; (v) certificates of insurance (in amounts satisfactory to Landlord and with the parties identified in, or required by, the Lease named as additional insureds) and instruments of indemnification against all claims, costs, expenses, penalties, fines, and damages which may arise in connection with Tenant’s Pre-Occupancy Work; and (vi) assurances of the ability of Tenant to pay for all of Tenant’s Pre-Occupancy Work and/or a letter of credit or other security deemed appropriate by Landlord securing Tenant’s lien-free completion of Tenant’s Pre-Occupancy Work.

     (b) Such pre-term access by Tenant and Tenant’s employees, agents, contractors, consultants, workmen, mechanics, suppliers and invitees shall be subject to scheduling by Landlord.

     (c) Tenant’s employees, agents, contractors, consultants, workmen, mechanics, suppliers and invitees shall fully cooperate, work in harmony and not, in any manner, interfere with Landlord or Landlord’s agents or representatives in performing the Work and any additional work pursuant to approved Change Orders, Landlord’s work in other areas of the Building or the Park, or the general operation of the Building. If at any time any such person representing Tenant shall not be cooperative or shall otherwise cause or threaten to cause any such disharmony or interference, including, without limitation, labor disharmony, and Tenant fails to immediately institute and maintain corrective actions as directed by Landlord, then Landlord may revoke such license upon twenty-four (24) hours’ prior written notice to Tenant.

     (d) Any such entry into and occupancy of the Premises or any portion thereof by Tenant or any person or entity working for or on behalf of Tenant shall be deemed to be subject to all of the terms, covenants, conditions and provisions of the Lease, excluding only the covenant to pay Rent. Landlord shall not be liable for any injury, loss or damage which may occur to any of Tenant’s Pre-Occupancy Work made in or about the Premises or to any property placed therein prior to the commencement of the term of the Lease, the same being at Tenant’s sole risk and liability. Tenant shall be liable to Landlord for any damage to any portion of the Premises, the Work or the additional work related to any approved Change Orders caused by Tenant or any of Tenant’s employees, agents, contractors, consultants, workmen, mechanics, suppliers and invitees. In the event that the performance of Tenant’s Pre-Occupancy Work causes extra costs to be incurred by Landlord or requires the use of other Building services, Tenant shall promptly reimburse Landlord for such extra costs and/or shall pay Landlord for such other Building services at Landlord’s standard rates then in effect.

14. Lease Provisions; Conflict. The terms and provisions of the Lease, insofar as they are applicable, in whole or in part, to this Exhibit B, are hereby incorporated herein by reference. In the event of any conflict between the terms of the Lease and this Exhibit B, the terms of this Exhibit B shall prevail. Any amounts payable by Tenant to Landlord hereunder shall be deemed to be Additional Rent under the Lease and, upon any default in the payment of same, Landlord shall have all rights and remedies available to it as provided for in the Lease.

Exhibit B, Page 4

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Schedule 1

Initial Plans

Exhibit B, Page 5

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Schedule 2

Building Standards

Outline Specification for

Legacy Baytech Park

OFFICE AREA

Demising Partition and Corridor Walls:

Note: One hr. rated walls where required based on occupancy group.

A.	6” 20-gage metal studs at 24” O.C. (or as required by code based on roof height) framed full height from finish floor to surface above.
B.	One (1) layer 5/8” drywall Type “X” both sides of wall, fire taped only.

Interior Partitions:

A.	3-5/8” 20-gage metal studs at 24” O.C. to bottom of T-Bar ceiling grid approximately 9’ 0” high.
B.	One (1) layer 5/8” drywall both sides of wall, skip trowel textured ready for paint.
C.	3-5/8” metal studs including all lateral bracing as required by code.

Perimeter Drywall (At Office Areas):

A.	3-5/8” metal studs @ 24” O.C. to 12’ 0” above finished floor. (or as required by Title-24 for full height envelope then use demising wall spec.)
B.	One (1) layer 5/8” Type “X” drywall taped and ready for paint.

Column Furring:

A.	Furring channel all sides of 2-1/2” metal studs per details.
B.	One (1) layer 5/8” drywall taped skip trowel textured and ready for paint.
C.	Columns within walls shall be furred-out.

Acoustical Ceilings:

Note: Gyp. Bd. ceiling at all restrooms Typ.

A.	2’ x 4’ standard white T-Bar grid system as manufactured by USG: Donn DX24, standard ‘T’ 9/16” with M7 wall molding.
B.	2’ x 4’ Radar Millenia clima plus by USG Interiors, white color w/ FLB edge

Painting:

A.	Sheetrock walls within office to receive two (2) coats of interior latex paint as manufactured by Kelly Moore or equal. Some portions of second coat to be single accent color. Kelly-Moore: Western Acoustic #47.
B.	Semi-gloss paint all restrooms and lunch rooms.

Window Covering:

A.	1” aluminum mini-blinds as manufactured by Levelor, Bali or equal, color to be selected by Legacy Partners Commercial, Inc. (brushed aluminum or white).
B.	Blinds to be sized to fit window module.

VCT:

A.	VCT to be 1/8” x 12” x 12” as manufactured by Armstrong -Excelon Series or equal.
B.	Slabs shall be water proofed per manufacturer recommendations, at sheet vinyl or VCT areas.

Light Fixtures:

A. 2” x 4” T-bar lay in 3-tube energy efficient fixture with cool white fluorescent tubes with 18 cell parabolic lens as manufactured by Lithonia or equal. (Approximately 50 F.C.)

Light Switches:

A. Switching as required by Title 24.

Exhibit B, Page 6

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

B. Switch assembly to be Levinton or equal, color — White

Electrical Outlet:

A.	110V duplex outlet in demising or interior partitions only, as manufactured by Leviton or equal, color to be White.
B.	Maximum eight (8) outlets per circuit, spacing to meet code or minimum 2 per office, conference room, reception and 2 dedicated over cabinet at lunch room junction boxes above ceiling for large open area with furniture partitions.
C.	Transformers to be a minimum of 20% over required capacity.
D.	Contractors to inspect electric room and to include all necessary metering cost.
E.	No aluminum wiring is acceptable.

Telephone/Data Outlet:

A.	One (1) single outlet box in wall with pullwire from outlet box to area above T-bar ceiling per office.
B.	Cover plate for phone outlets by telephone/data vendors.

Fire Sprinklers:

As required by fire codes.

Topset Base:

A.	4” rubber base as manufactured by Burke or equal, standard colors only. Johnsonite, 4” cove, 01-Snow White
B.	4” rubber base at VCT areas.

Toilet Areas:

Wet walls to receive Duraboard or Wonder Board and ceramic tile up to 48”. Floors to receive ceramic tile with self coved base as required by code.

Carpet:

Note any of the following carpets are acceptable

Shaw Industries “Supply & Demand”, “Total Concepts”; or “ Convergence”.

Wood Doors:

Shall be 3’ 0” x 9’ 0” x 1-3/4” (unless otherwise specified) solid core, pre finished clear maple at lobbies—flat cut / plain sliced, book matched veneer, clear sealer finish and paint grade doors at interior to match existing.

Door Frames:

Shall be ACI or equal, 3-3/4” or 4-7/8” throat, brushed, standard aluminum, snap-on trim.

Hardware:

1-1/2 pr. butts F179 Stanley, Latchset D10S Sparta Schlage, Lockset D53PD Sparta Schlage, Dome Type floor stop Gylnn Johnson FB13, Closer 4110LCN (where required) brushed chrome.

Insulation:

By Title 24 insulation.

Plumbing:

A.	Shall comply with all local codes and handicapped code requirements. Fixtures shall be either “American Standard”, “Kohler” or “Norris”. All toilet accessories and grab bars shall be “Bobrick” or equal and approved by owner.
B.	Plumbing bid shall include 5 gallon minimum hot water heater, or insta hot with mixer valve including all connections.

Toilet Partitions:

Shall be as manufactured by Fiat, global or equal if approved by owner. Color to be white or gray.

HVAC:

HVAC units per specifications.

Five (5) year warranty provided on all HVAC compressor units. All penetrations including curbs and sleepers to be hot moped to Legacy Partners Commercial, Inc. standard.

Exhibit B, Page 7

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Schedule 3

Bid Summary

[To be provided]

Exhibit B, Page 8

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit C

Rules & Regulations

This exhibit, entitled “Rules & Regulations”, is and shall constitute Exhibit C to that certain Lease Agreement dated for reference purposes as of May 24, 2006 (the “Lease”), by and between LEGACY PARTNERS I SAN JOSE, LLC, a Delaware limited liability company (“Landlord”), and Endwave Corporation, a Delaware corporation (“Tenant”), for the leasing of certain premises located in Legacy Baytech Park, 130 Baytech Drive, San Jose, California 95134-2302 (the “Premises”). The terms, conditions and provisions of this Exhibit C are hereby incorporated into and are made a part of the Lease. Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease:

1. Subject to Section 30 of the Lease, no advertisement, picture or sign of any sort shall be displayed on or outside the Premises or the Building without the prior written consent of Landlord. Landlord shall have the right to remove any such unapproved item without Notice and at Tenant’s expense.

2. Tenant shall park motor vehicles in those general parking areas, as designated by Landlord, except for loading and unloading. During those periods of loading and unloading, Tenant shall not unreasonably interfere with (i) traffic flow within the Project and (ii) loading and unloading activities of other tenants. Tenant shall not regularly park motor vehicles in designated parking areas after the conclusion of normal daily business activity.

3. Tenant shall not use any method of heating or air conditioning other than that supplied by Landlord without the prior written consent of Landlord.

4. All window coverings installed by Tenant and visible from the outside of the Building require the prior written approval of Landlord.

5. Subject to Section 27 of the Lease, Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance or any flammable or combustible materials in or around the Premises, the Building or any portion of the Project.

6. Tenant shall not alter any lock or install any new locks or bolts on any door at the Premises without the prior consent of Landlord. Tenant agrees not to make any duplicate keys without the prior consent of Landlord.

7. Tenant shall not disturb, solicit or canvas any occupant of the Project and shall cooperate to prevent same.

8. No person shall go on the roof without Landlord’s permission.

9. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building, to such a degree as to be objectionable to Landlord or other tenants, shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration.

10. All goods, including material used to store goods, delivered to the Premises shall be immediately moved into the Premises and shall not be left in parking or receiving areas overnight. Tenant shall not store or permit the storage or placement of goods, merchandise, pallet or equipment of any sort outside of the Premises, Building or in any of the Common Areas. No displays or sales of merchandise are allowed in the parking lots or other portions of the Common Areas.

11. No parking or storing of such trailers will be permitted in the auto parking areas of the Project or on streets adjacent thereto.

12. Forklifts which operate on asphalt paving areas shall not have solid rubber tires and shall only use tires that do not damage the asphalt.

13. Tenant is responsible for the storage and removal of all trash and refuse. All such trash and refuse shall be contained in suitable receptacles and stored behind screened enclosures at locations approved by Landlord.

14. Tenant shall not permit any animals, including, but not limited to, any household pets, to be brought or kept in the Premises, Building, Common Areas or Project.

15. Tenant shall not permit (i) any motor vehicles to be washed in any portion of the Premises or Common Areas, and (ii) any mechanical work or maintenance of motor vehicles to be performed in any portion of the Premises or Common Areas.

Exhibit C, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit E

Hazardous Materials Disclosure Certificate

Your cooperation in this matter is appreciated. Initially, the information provided by you in this Hazardous Materials Disclosure Certificate is necessary for the Landlord (identified below) to evaluate and finalize a lease agreement with you as Tenant. After a lease agreement is signed by you and the Landlord (the “Lease Agreement”), on an annual basis in accordance with the provisions of Section 27 of the signed Lease Agreement, you are to provide an update to the information initially provided by you in this certificate. The information contained in the initial Hazardous Materials Disclosure Certificate and each annual certificate provided by you thereafter will be maintained in confidentiality by Landlord subject to release and disclosure as required by (i) any lenders and owners and their respective environmental consultants, (ii) any prospective purchaser(s) of all or any portion of the property on which the Premises are located, (iii) Landlord to defend itself or its lenders, partners or representatives against any claim or demand, and (iv) any laws, rules, regulations, orders, decrees, or ordinances, including, without limitation, court orders or subpoenas. Any and all capitalized terms used herein, which are not otherwise defined herein, shall have the same meaning ascribed to such term in the signed Lease Agreement. Any questions regarding this certificate should be directed to, and when completed, the certificate should be delivered to:

Landlord: LEGACY PARTNERS I SAN JOSE, LLC, a Delaware limited liability company
c/o Legacy Partners Commercial, Inc.
4000 East Third Avenue, Suite 600
Foster City, California 94404-4805
Attn: Senior Vice President, Regional Manager
Phone: (650) 571-2200

Name of (Prospective) Tenant:	Endwave Corporation, a Delaware corporation
Mailing Address:

Contact Person, Title and Telephone Number(s):

Contact Person for Hazardous Waste Materials Management and Manifests and Telephone Number(s):

Address of (Prospective) Premises	130 Baytech Drive San Jose, California 95134-2302
Length of (Prospective) Initial Term:

1.	General Information:
Describe the initial proposed operations to take place in, on, or about the Premises, including, without limitation, principal products processed, manufactured or assembled services and activities to be provided or otherwise conducted. Existing Tenants should describe any proposed changes to on-going operations.
2.	Use, Storage and Disposal of Hazardous Materials
	2.1	Will any Hazardous Materials be used, generated, stored or disposed of in, on or about the Premises? Existing Tenants should describe any Hazardous Materials which continue to be used, generated, stored or disposed of in, on or about the Premises.
		Wastes	Yes [  ]	No [  ]
		Chemical Products	Yes [  ]	No [  ]
		Other	Yes [  ]	No [  ]
		If Yes is marked, please explain:
	2.2	If “Yes” is marked in Section 2.1, attach a list of any Hazardous Materials to be used, generated, stored or disposed of in, on or about the Premises, including the applicable hazard class and an estimate of the quantities of such Hazardous Materials at any given time; estimated annual throughput; the proposed location(s) and method of storage (excluding nominal amounts of ordinary household cleaners and janitorial supplies which are not regulated by any Environmental Laws); and the proposed location(s) and method of disposal for each Hazardous Material, including, the estimated frequency, and the proposed contractors or subcontractors. Existing Tenants should attach a list setting forth the information requested above and such list should include actual data from on-going operations and the identification of any variations in such information from the prior year’s certificate.
3.	Storage Tanks and Sumps
	3.1	Is any above or below ground storage of gasoline, diesel, petroleum, or other Hazardous Materials in tanks or sumps proposed in, on or about the Premises? Existing Tenants should describe any such actual or proposed activities.
		Yes [  ]       No [  ]
		If yes, please explain:

Exhibit E, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

4.	Waste Management
	4.1	Has your company been issued an EPA Hazardous Waste Generator I.D. Number? Existing Tenants should describe any additional identification numbers issued since the previous certificate.
		Yes [  ]       No [  ]
	4.2	Has your company filed a biennial or quarterly reports as a hazardous waste generator? Existing Tenants should describe any new reports filed.
		Yes [  ]       No [  ]
		If yes, attach a copy of the most recent report filed.
5.	Wastewater Treatment and Discharge
	5.1	Will your company discharge wastewater or other wastes to:
		storm drain?	sewer?
		surface water?	no wastewater or other wastes discharged.
		Existing Tenants should indicate any actual discharges. If so, describe the nature of any proposed or actual discharge(s).
	5.2	Will any such wastewater or waste be treated before discharge?
		Yes [  ]       No [  ]
		If yes, describe the type of treatment proposed to be conducted. Existing Tenants should describe the actual treatment conducted.
6.	Air Discharges
	6.1	Do you plan for any air filtration systems or stacks to be used in your company’s operations in, on or about the Premises that will discharge into the air; and will such air emissions be monitored? Existing Tenants should indicate whether or not there are any such air filtration systems or stacks in use in, on or about the Premises which discharge into the air and whether such air emissions are being monitored.
		Yes [  ]       No [  ]
		If yes, please describe:
	6.2	Do you propose to operate any of the following types of equipment, or any other equipment requiring an air emissions permit? Existing Tenants should specify any such equipment being operated in, on or about the Premises.
		Spray booth(s)	Incinerator(s)
		Dip tank(s)	Other (Please describe)
		Drying oven(s)	No Equipment Requiring Air Permits
		If yes, please describe:
7.	Hazardous Materials Disclosures
	7.1	Has your company prepared or will it be required to prepare a Hazardous Materials management plan (“Management Plan”) pursuant to Fire Department or other governmental or regulatory agencies’ requirements? Existing Tenants should indicate whether or not a Management Plan is required and has been prepared.
		Yes [  ]       No [  ]
		If yes, attach a copy of the Management Plan. Existing Tenants should attach a copy of any required updates to the Management Plan.
	7.2	Are any of the Hazardous Materials, and in particular chemicals, proposed to be used in your operations in, on or about the Premises regulated under Proposition 65? Existing Tenants should indicate whether or not there are any new Hazardous Materials being so used which are regulated under Proposition 65.
		Yes [  ]       No [  ]
		If yes, please explain:

Exhibit E, Page 2

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

8.	Enforcement Actions and Complaints
	8.1	With respect to Hazardous Materials or Environmental Laws, has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees or has your company received requests for information, notice or demand letters, or any other inquiries regarding its operations? Existing Tenants should indicate whether or not any such actions, orders or decrees have been, or are in the process of being, undertaken or if any such requests have been received.
		Yes [  ]       No [  ]
		If yes, describe the actions, orders or decrees and any continuing compliance obligations imposed as a result of these actions, orders or decrees and also describe any requests, notices or demands, and attach a copy of all such documents. Existing Tenants should describe and attach a copy of any new actions, orders, decrees, requests, notices or demands not already delivered to Landlord pursuant to the provisions of Section 27 of the signed Lease Agreement.
	8.2	Have there ever been, or are there now pending, any lawsuits against your company regarding any environmental or health and safety concerns?
		Yes [  ]       No [  ]
		If yes, describe any such lawsuits and attach copies of the complaint(s), cross-complaint(s), pleadings and all other documents related thereto as requested by Landlord. Existing Tenants should describe and attach a copy of any new complaint(s), cross-complaint(s), pleadings and other related documents not already delivered to Landlord pursuant to the provisions of Section 27 of the signed Lease Agreement.
	8.3	Have there been any problems or complaints from adjacent Tenants, owners or other neighbors at your company’s current facility with regard to environmental or health and safety concerns? Existing Tenants should indicate whether or not there have been any such problems or complaints from adjacent Tenants, owners or other neighbors at, about or near the Premises.
		Yes [  ]       No [  ]
		If yes, please describe. Existing Tenants should describe any such problems or complaints not already disclosed to Landlord under the provisions of the signed Lease Agreement.
9.	Permits and Licenses
	9.1	Attach copies of all Hazardous Materials permits and licenses including a Transporter Permit number issued to your company with respect to its proposed operations in, on or about the Premises, including, without limitation, any wastewater discharge permits, air emissions permits, and use permits or approvals. Existing Tenants should attach copies of any new permits and licenses as well as any renewals of permits or licenses previously issued.

The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials Disclosure Certificate is being delivered in connection with, and as required by, Landlord in connection with the evaluation and finalization of a Lease Agreement and will be attached thereto as an exhibit; (B) that this Hazardous Materials Disclosure Certificate is being delivered in accordance with, and as required by, the provisions of Section 27 of the Lease Agreement; and (C) that Tenant shall have and retain full and complete responsibility and liability with respect to any of the Hazardous Materials disclosed in the HazMat Certificate notwithstanding Landlord’s/Tenant’s receipt and/or approval of such certificate. Tenant further agrees that none of the following described acts or events shall be construed or otherwise interpreted as either (a) excusing, diminishing or otherwise limiting Tenant from the requirement to fully and faithfully perform its obligations under the Lease with respect to Hazardous Materials, including, without limitation, Tenant’s indemnification of the Indemnitees and compliance with all Environmental Laws, or (b) imposing upon Landlord, directly or indirectly, any duty or liability with respect to any such Hazardous Materials, including, without limitation, any duty on Landlord to investigate or otherwise verify the accuracy of the representations and statements made therein or to ensure that Tenant is in compliance with all Environmental Laws; (i) the delivery of such certificate to Landlord and/or Landlord’s acceptance of such certificate, (ii) Landlord’s review and approval of such certificate, (iii) Landlord’s failure to obtain such certificate from Tenant at any time, or (iv) Landlord’s actual or constructive knowledge of the types and quantities of Hazardous Materials being used, stored, generated, disposed of or transported on or about the Premises by Tenant or Tenant’s Representatives. Notwithstanding the foregoing or anything to the contrary contained herein, the undersigned acknowledges and agrees that Landlord and its partners, lenders and representatives may, and will, rely upon the statements, representations, warranties, and certifications made herein and the truthfulness thereof in entering into the Lease Agreement and the continuance thereof throughout the term, and any renewals thereof, of the Lease Agreement.

Tenant hereby certifies, represents and warrants that the information contained in this certificate is true and correct.

(Prospective) Tenant:

By:

Title:

Date:

Exhibit E, Page 3

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit F

First Amendment to Lease Agreement

Change of Commencement Date

This First Amendment to Lease Agreement (the “Amendment”) is made and entered into to be effective as of ___, 20___by and between LEGACY PARTNERS I SAN JOSE, LLC, a Delaware limited liability company (“Landlord”), and Endwave Corporation, a Delaware corporation (“Tenant”), with reference to the following facts:

Recitals

A. Landlord and Tenant have entered into that certain Lease Agreement dated May 24, 2006 (the “Lease”), for the leasing of certain premises containing approximately 32,805 rentable square feet of space located at 130 Baytech Drive, San Jose, California 95134-2302 (the “Premises”) as such Premises are more fully described in the Lease.

B. Landlord and Tenant wish to amend the Commencement Date of the Lease.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

1. Recitals: Landlord and Tenant agree that the above recitals are true and correct.

2. Commencement Date: The Commencement Date of the Lease shall be ___.

3. Expiration Date: The last day of the Term of the Lease (the “Expiration Date”) shall be ___.

4. Base Rent: The dates on which the Base Rent will be adjusted are:

for the period ___to ___, the monthly Base Rent shall be $___;
for the period ___to ___, the monthly Base Rent shall be $___;
for the period ___to ___, the monthly Base Rent shall be $___; and
for the period ___to ___, the monthly Base Rent shall be $___.

5. Effect of Amendment: Except as modified herein, the terms and conditions of the Lease shall remain unmodified and continue in full force and effect. In the event of any conflict between the terms and conditions of the Lease and this Amendment, the terms and conditions of this Amendment shall prevail.

6. Definitions: Unless otherwise defined in this Amendment, all terms not defined in this Amendment shall have the meaning set forth in the Lease.

7. Authority: Subject to the provisions of the Lease, this Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns. Each party hereto and the persons signing below warrant that the person signing below on such party’s behalf is authorized to do so and to bind such party to the terms of this Amendment.

8. The terms and provisions of the Lease are hereby incorporated in this Amendment.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first above written.

Landlord:				Tenant:
LEGACY PARTNERS I SAN JOSE, LLC,				Endwave Corporation,
a Delaware limited liability company, Owner				a Delaware corporation
By:	LEGACY PARTNERS COMMERCIAL, L.P.,			By:
	a California limited partnership,				(Name)
	as Property Manager and Agent for Owner			Its:
					(Title)
	By:	LEGACY PARTNERS COMMERCIAL, INC.,
		General Partner
		By:		By:
			Debra Smith		(Name)
		Its:	Executive Vice President	Its:
					(Title)

Exhibit F, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit G

Sign Criteria

Building	Directory Monuments (2)
• Illuminated or non-illuminated letters and logo.	• Surface applied matte black vinyl lettering.
• Tenant choice of typeface, logo and colors.	• Tenant choice of typeface and logo to fit within a defined area on directory panel.
• Channel letters and/or logo attached on a raceway on building wall.
• Building signs require a separate permit through the City of San Jose.

Sizes within defined areas as follows:

110 Baytech

• 15’x2’ (maximum 30 sf area) on building within defined area.

130 Baytech

• 15’x2’ (maximum 30 sf area) on building within defined area.

• 20’x2.5’ (maximum 50 sf area) on east or west exterior of building.

Shipping & Receiving Door	Glass Entrance
• Surface applied matte black vinyl lettering on 24” x 18” white aluminum panel.	• Surface applied vinyl lettering.
• Text to include address and information about type of entrance.	• Tenant choice of typeface, logo and colors.
	• Size approximately 5 sf to fit within a defined area on glass panel to left or right of main entrance.

All signage subject to the requirements of the Master Sign Program.

Exhibit G, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit H

Subordination, Non-Disturbance and Attornment Agreement

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Redwood Capital Finance Company, LLC
1960 East Grand Avenue, Suite 400
El Segundo, California 90245
Attention: William R. Lindsay

Space above this line for Recorder’s use.

SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is made and entered into as of ___, 2006, by and between REDWOOD CAPITAL FINANCE COMPANY, LLC a Delaware limited liability company (“Lender”), and Endwave Corporation, a Delaware corporation (“Tenant”).

RECITALS:

A. Pursuant to the Loan Agreement (as defined below), Lender has made, or has agreed to make, a loan (“Loan”) to the owner of the Property, Legacy Partners I San Jose, LLC, a Delaware limited liability company (“Borrower”), evidenced by, among other things, a promissory note executed, or to be executed, by Borrower in favor of Lender in the principal amount of the Loan (as amended from time to time, the “Note”).

B. The Note and certain other obligations of Borrower under the Loan are, or will be, secured by, among other things, a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing executed, to be executed, by Borrower in favor of Lender (as amended from time to time, the “Deed of Trust”). The Deed of Trust, is to be recorded or on or about the date of recordation of this Agreement and encumbers Borrower’s interest in certain real property situated in the City of San Jose, County of Santa Clara, State of California, and more particularly described on Exhibit A attached hereto (the “Property”). In connection with the Loan, Borrower and Lender have executed a Loan Agreement (“Loan Agreement”), and Borrower has executed the other documents and instruments which, together with the Loan Agreement, are described in the Loan Agreement as the “Loan Documents.”

C. Pursuant to that certain Lease, dated May 24, 2006, Tenant leases the portion of the Property known as 130 Baytech Drive, San Jose, California (“Premises”).

D. As a condition to making the Loan, Lender requires that Tenant subordinate the Lease to the Deed of Trust and the lien thereof, subject to the terms and conditions of this Agreement, and agree to attorn to Lender as provided below. Tenant is willing to provide such subordination and attornment on the terms and conditions contained in this Agreement. Unless otherwise defined herein, capitalized terms used in this Agreement shall have the same meanings as in the Lease.

NOW, THEREFORE, for valuable consideration, Tenant and Lender agree as follows:

1. SUBORDINATION. Tenant hereby agrees in favor of Lender:

     (a) The rights, interests, lien and charge of Lender under the Deed of Trust and the other Loan Documents, and all modifications, extensions, renewals or replacements thereof, as to the Note and all other obligations now or hereafter secured thereby, including any additional advances thereunder, and all modifications, extensions, renewals or replacements thereof, shall unconditionally and at all times be and remain prior and superior with respect to the Property to the rights, interests, lien and charge of Tenant under the Lease, and all modifications, extensions, renewals or replacements thereof. Notwithstanding the foregoing subordination as to any subsequent modifications, renewals, extensions or replacements of the Deed of Trust, the Note, the other Loan Documents or the other obligations secured thereby, including any additional advances thereunder, Tenant agrees to execute, acknowledge and deliver to Lender from time to time such further subordination and/or other agreements as Lender may request in order to confirm the continuing priority and superiority of the Deed of Trust and the other Loan Documents over the Lease;

     (b) Lender would not make the Loan without this agreement to subordinate;

     (c) This Agreement shall be the whole agreement and only agreement with regard to the subordination of the Lease to the lien of the Deed of Trust and shall supersede and cancel, but only insofar as would affect the priority between the Deed of Trust and the Lease, any prior agreements as to such subordination, including, without limitation, those provisions, if any, contained in the Lease which provide for the subordination of the Lease to a deed or deeds of trust or to a mortgage or mortgages;

     (d) Lender, in making disbursements pursuant to the Note, the Deed of Trust or the Loan Agreements, is under no obligation or duty to, nor has Lender represented that it will, see to the application of such proceeds by the person or persons to whom Lender disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat this agreement to subordinate in whole or in part; and

     (e) Tenant intentionally and unconditionally waives, relinquishes and subordinates all of Tenant’s right, title and interest in and to the Property to the lien of the Deed of Trust and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made by Lender and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for such reliance upon this waiver, relinquishment and subordination.

2. NONDISTURBANCE. Lender will not join Tenant as a party in any Foreclosure (defined below) unless the joinder is necessary or desirable to pursue Lender’s remedies under the Deed of Trust, and provided that such joinder shall not result in the termination of the Lease or disturb Tenant’s possession of the Premises. In the event of a Foreclosure, Lender agrees that the leasehold interest of Tenant under the Lease shall not be terminated by reason of the Foreclosure, but rather the Lease shall continue in full force and effect, and Lender shall recognize and accept Tenant as tenant under the Lease subject to the provisions of the Lease except as otherwise provided below; provided that, if Tenant shall then be in default under the Lease beyond any notice, grace or cure period, at

Exhibit H, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Lender’s option, the Lease shall be terminated by reason of the Foreclosure and Lender shall have no obligation to Tenant under the Lease. As used in this Agreement, “Foreclosure” means any nonjudicial or judicial foreclosure of the Deed of Trust, or any deed or other transfer in lieu thereof.

3. ATTORNMENT. In the event of a transfer of Borrower’s interest in the Property to a Purchaser (as defined below), the Lease shall continue in full force and effect and Tenant agrees to attorn to the Purchaser as its landlord under the Lease and to be bound by all of the provisions of the Lease for the balance of the term thereof; provided that the Purchaser shall not be:

     (a) Liable for any act or omission of any Prior Landlord (as defined below) or subject to any offsets or defenses which Tenant might have against any Prior Landlord;

     (b) Liable for the return of any rental security deposit, or bound by any payment of rents, additional rents or other sums which Tenant may have paid more than one month in advance to any Prior Landlord, except to the extent such sums are actually received by Purchaser;

     (c) Bound by any amendment to the Lease made without the prior written consent of Lender;

     (d) Liable for obligations under the Lease, the cost of which exceed the value of its interest in the Property, or for obligations which first accrue after Purchaser has sold or otherwise transferred its interest in the Property;

     (e) Obligated to install, construct or pay for any tenant or other improvements or alterations to or on the Premises or Property; bound to restore the Premises or Property after a casualty for a cost in excess of any insurance proceeds received by Lender with respect to such casualty; or bound to restore the Premises or Property after a taking in condemnation for a cost in excess of the portion of any condemnation award made specifically for that purpose; bound by any restriction on competition beyond the Property;

     (f) Bound by any notice of termination, cancellation or surrender of the Lease made without the prior written consent of Lender;

     (g) Bound by any option to purchase, right of first offer to purchase or right of first refusal to purchase with respect to the Property or any portion thereof;

     (h) Liable for the breach of any representation or warranty made by Prior Landlord in the Lease; or

     (i) Liable for any indemnity obligation of Prior Landlord contained in the Lease, except with respect to the Purchaser’s acts or omissions.

This attornment shall be immediately effective and self-operative, without the execution of any further instrument, upon Purchaser’s acquisition of Borrower’s interest in the Property. As used in this Agreement, “Purchaser” means any transferee, including Lender, of Borrower’s interest in the Property pursuant to a Foreclosure and the successors and assigns of such transferee, and “Prior Landlord” means any landlord, including Borrower, under the Lease prior in time to Purchaser.

4. NOTICE TO TENANT. After written notice is given to Tenant by Lender, that Borrower is in default under the Loan and that the rentals under the Lease are required to be paid to Lender pursuant to the terms of the Deed of Trust, Tenant shall thereafter pay to Lender all rent and all other sums due Borrower under the Lease.

5. NOTICE TO LENDER AND RIGHT TO CURE. Tenant shall provide written notice to Lender of any default by Borrower under the Lease or any other act or omission by Borrower under the Lease which could give Tenant the right to terminate the Lease and/or abate or make a deduction from amounts payable by Tenant under the Lease, and Tenant agrees that no notice of termination of the Lease and no notice of abatement of or deduction from rent shall be effective unless Lender shall have received written notice of the default, act or omission giving rise to such termination, abatement or rent deduction and shall have failed to cure such default, act or omission within thirty (30) days after receipt of such notice to cure such default, act or omission or if such default, act or omission cannot be cured within thirty (30) days, shall have failed within thirty (30) days after receipt of such notice to commence and thereafter diligently pursue any action necessary to cure such default, act or omission to completion, including, without limitation, any action to obtain possession of the Property. Notwithstanding the foregoing, Lender shall have no obligation to cure any such default, act or omission. Tenant shall give such notice to Lender at its address set forth below or at such other address as Lender shall specify from time to time.

6. NOTICES. Any notice or other communication required or permitted to be given pursuant to the provisions of this Agreement shall either be personally delivered, sent by registered or certified U.S. mail, return receipt requested, postage prepaid, or sent by a nationally recognized private courier service, and shall be addressed to the parties as follows:

TENANT:
LENDER:	REDWOOD CAPITAL FINANCE COMPANY, LLC 1960 East Grand Avenue, Suite 400 El Segundo, California 90245 Attention: William R. Lindsay

Any such notice shall be effective upon delivery or attempted delivery.

7. MISCELLANEOUS. This Agreement shall be binding upon and inure to the benefit of Lender and Tenant and their respective successors and assigns. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. This Agreement is the entire agreement of the parties and supersedes any prior agreement with respect to its subject matter, and no provision of this Agreement may be waived or modified except in a writing signed by all parties. If any lawsuit, arbitration or other proceeding is brought under this Agreement, the prevailing party shall be entitled to recover the reasonable fees and costs of its attorneys in such proceeding. If any provision of this Agreement is held to be invalid or unenforceable in any respect, this Agreement shall be construed without such provision. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same document. Each party represents and warrants to the other party that this Agreement is a valid and binding agreement of such party and the person(s) executing this Agreement on their behalf have the authority to do so.

Exhibit H, Page 2

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

IN WITNESS WHEREOF, Lender and Tenant have duly executed this Agreement as of the date first above written.

LENDER:

REDWOOD CAPITAL FINANCE COMPANY, LLC,
a Delaware limited liability company

By:

Name:

Title:

STATE OF	)
	) ss.
COUNTY OF	)

The foregoing instrument was acknowledged before me this ___day of ___, 200___, by                                         .

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

Notary Public

My commission expires:

TENANT:

ENDWAVE CORPORATION,

a Delaware corporation

By:

Name:

Title:

[ NOTARY ]

Exhibit H, Page 3

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EXHIBIT “A”

LEGAL DESCRIPTION OF PROPERTY

Exhibit H, Page 4

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Addendum One

Option to Extend the Lease Term

This Addendum One (the “Addendum”) is incorporated as a part of that certain Lease Agreement dated May 24, 2006 (the “Lease”), by and between LEGACY PARTNERS I SAN JOSE, LLC, a Delaware limited liability company (“Landlord”), and Endwave Corporation, a Delaware corporation (“Tenant”), for the leasing of certain premises located in Legacy Baytech Park, 130 Baytech Drive, San Jose, California 95134-2302 (the “Premises”), as more particularly described in Exhibit A to the Lease (the “Premises”). Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease.

1. Grant of Extension Option. Subject to the provisions, limitations and conditions set forth in Paragraph 5 below, Tenant shall have an Option (“Option”) to extend the initial term of the Lease for one (1) year (the “Extended Term”).

2. Tenant’s Option Notice. Tenant shall have the right to deliver written notice to Landlord of its intent to exercise this Option (the “Option Notice”). If Landlord does not receive the Option Notice from Tenant on a date which is neither more than three hundred sixty (360) days nor less than two hundred forty (240) days prior to the end of the initial term of the Lease, all rights under this Option shall automatically terminate and shall be of no further force or effect. Upon the proper exercise of this Option, subject to the provisions, limitations and conditions set forth in Paragraph 5 below, the initial term of the Lease shall be extended for the Extended Term.

3. Establishing the Initial Monthly Base Rent for the Extended Term. The initial monthly Base Rent for the Extended Term shall be equal to the then Fair Market Rental Rate, as hereinafter defined. As used herein, the “Fair Market Rental Rate” payable by Tenant for the Extended Term shall mean the Base Rent for the highest and best use for comparable space at which non-equity tenants, as of the commencement of the lease term for the Extended Term, will be leasing non-sublease, non-equity, unencumbered space comparable in size, location and quality to the Premises for a comparable term, which comparable space is located in the Building and in other comparable buildings in the vicinity of the Building, taking into consideration all out-of-pocket concessions generally being granted at such time for such comparable space, including the condition and value of existing tenant improvements in the Premises, but excluding the value of any alterations in the Building paid for by Tenant. The Fair Market Rental Rate shall include the periodic rental increases that would be included for space leased for the period of the Extended Term.

If Landlord and Tenant are unable to agree on the Fair Market Rental Rate for the Extended Term within ten (10) days of receipt by Landlord of the Option Notice for the Extended Term, Landlord and Tenant each, at its cost and by giving notice to the other party, shall appoint a competent and impartial commercial real estate broker (hereinafter “broker”) with at least five (5) years’ full-time commercial real estate brokerage experience in the geographical area of the Premises to set the Fair Market Rental Rate for the Extended Term. If either Landlord or Tenant does not appoint a broker within ten (10) days after the other party has given notice of the name of its broker, the single broker appointed shall be the sole broker and shall set the Fair Market Rental Rate for the Extended Term. If two (2) brokers are appointed by Landlord and Tenant as stated in this paragraph, they shall meet promptly and attempt to set the Fair Market Rental Rate. In addition, if either of the first two (2) brokers fails to submit their opinion of the Fair Market Rental Rate within the time frames set forth below, then the single Fair Market Rental Rate submitted shall automatically be the initial monthly Base Rent for the Extended Term and shall be binding upon Landlord and Tenant. If the two (2) brokers are unable to agree within ten (10) days after the second broker has been appointed, they shall attempt to select a third broker, meeting the qualifications stated in this paragraph within ten (10) days after the last day the two (2) brokers are given to set the Fair Market Rental Rate. If the two (2) brokers are unable to agree on the third broker, either Landlord or Tenant by giving ten (10) days’ written notice to the other party, can apply to the Presiding Judge of the Superior Court of the county in which the Premises is located for the selection of a third broker who meets the qualifications stated in this paragraph. Landlord and Tenant each shall bear one-half (¹/2) of the cost of appointing the third broker and of paying the third broker’s fee. The third broker, however selected, shall be a person who has not previously acted in any capacity for either Landlord or Tenant. Within fifteen (15) days after the selection of the third broker, the third broker shall select one of the two Fair Market Rental Rates submitted by the first two brokers as the Fair Market Rental Rate for the Extended Term. The determination of the Fair Market Rental Rate by the third broker shall be binding upon Landlord and Tenant.

In no event shall the monthly Base Rent for any period of the Extended Term be less than the highest monthly Base Rent charged during the initial term of the Lease. Upon determination of the initial monthly Base Rent for the Extended Term in accordance with the terms outlined above, Landlord and Tenant shall immediately execute an amendment to this Lease. Such amendment shall set forth the initial monthly Base Rent for the Extended Term and the actual commencement date and expiration date of the Extended Term. Tenant shall have no other right to extend the term of the Lease under this Addendum unless Landlord and Tenant otherwise agree in writing.

4. Condition of Premises and Brokerage Commissions for the Extended Term. If Tenant timely and properly exercises this Option, in strict accordance with the terms contained herein: (1) Tenant shall accept the Premises in its then “As-Is” condition and, accordingly, Landlord shall not be required to perform any additional improvements to the Premises; and (2) Tenant hereby agrees that it will be solely responsible for any and all brokerage commissions and finder’s fees payable to any broker now or hereafter procured or hired by Tenant or who otherwise claims a commission based on any act or statement of Tenant (“Tenant’s Broker”) in connection with the Option. Tenant hereby further agrees that Landlord shall in no event or circumstance be responsible for the payment of any such commissions and fees to Tenant’s Broker, and Tenant shall indemnify, defend and hold Landlord free and harmless against any liability, claim, judgment, or damages with respect thereto, including attorneys’ fees and costs.

5. Limitations On, and Conditions To, Extension Option. This Option is personal to Tenant and any Affiliate of Tenant and may not be assigned, voluntarily or involuntarily, separate from or as part of the Lease. At Landlord’s option, all rights of Tenant under this Option shall terminate and be of no force or effect if any of the following individual events occur or any combination thereof occur: (1) Tenant has been in default beyond any applicable cure period at any time during the initial term of the Lease, or is in default of any provision of the Lease beyond any applicable cure period on the date Landlord receives the Option Notice; and/or (2) Tenant has assigned its rights and obligations under all or part of the Lease or Tenant has subleased all or part of the Premises in a Transfer other than to an Affiliate of Tenant; and/or (3) there has occurred a material and adverse change in Tenant’s financial condition which would materially impair Tenant’s ability to satisfy its obligations under this Lease at the time the Option Notice is delivered to Landlord; and/or (4) Tenant has failed to exercise properly this Option in a timely manner in strict accordance with the provisions of this Addendum; and/or (5) Tenant or an Affiliate of Tenant no longer has possession of all or any part of the Premises under the Lease, or if the Lease has been terminated earlier, pursuant to the terms and provisions of the Lease.

6. Time is of the Essence. Time is of the essence with respect to each and every time period described in this Addendum.

Addendum One, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Addendum Two

Letter of Credit

This LETTER OF CREDIT Addendum (“LC Addendum”) is made and entered into by and between Legacy Partners I San Jose, LLC, a Delaware limited liability company (“Landlord”), and Endwave Corporation, a Delaware corporation (“Tenant”), and is dated as of the date of the Lease Agreement (“Lease”) by and between Landlord and Tenant to which this LC Addendum is attached. The agreements set forth in this LC Addendum shall have the same force and effect as if set forth in the Lease. To the extent the terms of this LC Addendum are inconsistent with the terms of the Lease, the terms of this LC Addendum shall control.

1. Concurrently with Tenant’s execution of the Lease, Tenant shall deliver to Landlord, as collateral for the full and faithful performance by Tenant of all of its obligations under the Lease and to compensate Landlord for all losses and damages Landlord may suffer as a result of any default by Tenant under the Lease, an irrevocable and unconditional negotiable standby letter of credit (the “Letter of Credit”), in the form attached hereto as Exhibit 1 and containing the terms required herein, payable in the County of Santa Clara, California, running in favor of Landlord issued by a solvent, nationally recognized bank with a long term rating of BBB or higher as rated by Moody’s Investors Service or Standard & Poor’s, under the supervision of the Superintendent of Banks of the State of California, or a national banking association, in the amount of Two Hundred Thirty Five Thousand Six Hundred Seventy One and 12/100 Dollars ($235,671.12) (the “Letter of Credit Amount”). The Letter of Credit shall be (i) at sight, irrevocable and unconditional, (ii) maintained in effect, whether through replacement, renewal or extension, for the period from the Lease Commencement Date and continuing until the date (the “LC Expiration Date”) which is one hundred twenty (120) days after the Lease Expiration Date, and Tenant shall deliver a new Letter of Credit or certificate of renewal or extension to Landlord at least thirty (30) days prior to the expiration of the Letter of Credit then held by Landlord, without any action whatsoever on the part of Landlord, (iii) subject to the International Standby Practice (1998 Revision) International Chamber of Commerce Publication #590, (iv) fully assignable by Landlord, and (v) permit partial draws. In addition to the foregoing, the form and terms of the Letter of Credit (and the bank issuing the same (the “Bank”)) shall be acceptable to Landlord, in Landlord’s discretion, and shall provide, among other things, in effect that: (A) Landlord, or its then managing agent, shall have the right to draw down an amount up to the face amount of the Letter of Credit (1) upon the presentation to the Bank of Landlord’s (or Landlord’s then managing agent’s) written statement that such amount is due to Landlord under the terms and conditions of the Lease, or (2) in the event Tenant, as applicant, shall have failed to provide to Landlord a new or renewal Letter of Credit satisfying the terms of this LC Addendum at least thirty (30) days prior to the expiration of the Letter of Credit then held by Landlord, it being understood that if Landlord or its managing agent be a limited liability company, corporation, partnership or other entity, then such statement shall be signed by a managing member (if a limited liability company), an officer (if a corporation), a general partner (if a partnership), or any authorized party (if another entity) and (B) the Letter of Credit will be honored by the Bank without inquiry as to the accuracy thereof and regardless of whether Tenant disputes the content of such statement.

2. The Letter of Credit shall also provide that Landlord may, at any time and without notice to Tenant and without first obtaining Tenant’s consent thereto, transfer all or any portion of its interest in and to the Letter of Credit to another party, person or entity, regardless of whether or not such transfer is separate from or as a part of the assignment by Landlord of its rights and interests in and to the Lease. In the event of a transfer of Landlord’s interest in the Building, Landlord shall transfer the Letter of Credit, in whole or in part (or cause a substitute letter of credit to be delivered, as applicable) to the transferee and thereupon Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said Letter of Credit to a new landlord. In connection with any such transfer of the Letter of Credit by Landlord, Tenant shall, at Tenant’s sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer and, Tenant shall be responsible for paying the Bank’s transfer and processing fees in connection therewith.

3. If, as result of any application or use by Landlord of all or any part of the Letter of Credit, the amount of the Letter of Credit shall be less than the Letter of Credit Amount, Tenant shall, within five (5) business days of receiving Landlord’s demand therefor, provide Landlord with additional letter(s) of credit in an amount equal to the deficiency (or a replacement letter of credit in the total Letter of Credit Amount), and any such additional (or replacement) letter of credit shall comply with all of the provisions of this LC Addendum, and if Tenant fails to comply with the foregoing, notwithstanding anything to the contrary contained in Section 18 of the Lease, the same shall constitute an incurable default by Tenant. Tenant further covenants and warrants that it will neither assign nor encumber the Letter of Credit or any part thereof and that neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the LC Expiration Date, a renewal thereof or substitute letter of credit, as applicable, shall be delivered to Landlord not later than thirty (30) days prior to the expiration of the Letter of Credit, which shall be irrevocable and automatically renewable as above provided through the LC Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to Landlord in its sole discretion. However, if the Letter of Credit is not timely renewed or a substitute letter of credit is not timely received, or if Tenant fails to maintain the Letter of Credit in the amount and in accordance with the terms set forth in this LC Addendum, Landlord shall have the right to present the Letter of Credit to the Bank in accordance with the terms of this LC Addendum, and the proceeds of the Letter of Credit may be applied by Landlord for Tenant’s failure to fully and faithfully perform all of Tenant’s obligations under this Lease and against any Rent payable by Tenant under this Lease that is not paid when due and/or to pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates that it will suffer as a result of any default by Tenant under this Lease. Any unused proceeds shall constitute the property of Landlord and need not be segregated from Landlord’s other assets.

4. Tenant hereby acknowledges and agrees that Landlord is entering into the Lease in material reliance upon the ability of Landlord to draw upon the Letter of Credit in the event Tenant fails to fully and faithfully perform all of Tenant’s obligations under this Lease and to compensate Landlord for all losses and damages Landlord may suffer as a result of the occurrence of any default on the part of Tenant under the Lease and Landlord may, at any time, but without obligation to do so, and without notice, draw upon the Letter of Credit, in part or in whole, for such purposes. Tenant agrees not to interfere in any way with payment to Landlord of the proceeds of the Letter of Credit, either prior to or following a “draw” by Landlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Tenant and Landlord as to Landlord’s right to draw from the Letter of Credit. No condition or term of the Lease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner. Tenant agrees and acknowledges that Tenant has no property interest whatsoever in the Letter of Credit or the proceeds thereof and that, in the event Tenant becomes a debtor under any chapter of the Federal Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the Federal Bankruptcy Code.

5. Landlord and Tenant acknowledge and agree that in no event or circumstance shall the Letter of Credit or any renewal thereof or substitute therefor be (i) deemed to be or treated as a “security deposit” within the meaning of California Civil Code Section 1950.7, (ii) subject to the terms of such Section 1950.7, or (iii) intended to serve as a “security deposit” within the meaning of such Section 1950.7. The parties hereto (A) recite that the Letter of Credit is not intended to serve as a security deposit and such Section

Addendum Two, Page 1

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

1950.7 and any and all other laws, rules and regulations applicable to security deposits in the commercial context (“Security Deposit Laws”) shall have no applicability or relevancy thereto and (B) waive any and all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the Security Deposit Laws.

6. Notwithstanding anything to the contrary contained in this LC Addendum, Tenant shall have the right to reduce the Letter of Credit Amount (“LC Reduction”) to One Hundred Seventeen Thousand Eight Hundred Thirty-Five and 56/100 Dollars ($117,835.56) (“Reduced LC Amount”), provided Tenant provides Landlord with documentation reasonably acceptable to Landlord that [ * ] for the [ * ]. At any time after the occurrence of the LC Reduction, Tenant shall have the right, to be exercised by written notice to Landlord, to exchange the Letter of Credit in the Reduced LC Amount for cash in the amount of the Reduced LC Amount (“Exchange Portion”). Such Exchange Portion shall be added by Landlord to and become part of the Security Deposit except that such Exchange Portion shall be returned to Tenant in equal installments every six (6) months thereafter remaining in the Term following the date such Exchange Portion was added to the Security Deposit (for example, in the event the Exchange Portion was added to the Security Deposit] on the last day of the twenty-fourth (24^th) month of the Term, then Landlord shall return the Exchange Portion to Tenant in six (6) equal monthly installments of Nineteen Thousand Six Hundred Thirty-Nine and 26/100 Dollars ($19,639.26) on the last day of each of the thirtieth (30^th), thirty-sixth (36^th), forty-second (42^nd), forty-eighth (48^th), fifty-fourth (54^th) and sixtieth (60^th) months of the Term). Tenant acknowledges and agrees that, in the event Tenant shall then be in default which shall not have been cured by Tenant or Tenant shall have been in material default at any time during the Term beyond any applicable notice and cure periods, Tenant shall have no right to (i) reduce the Letter of Credit to the Reduced LC Amount, (ii) exchange the Letter of Credit in the Reduced LC Amount for cash to be added to and become part of the Security Deposit, and/or (iii) a return of any of the Exchange Portion at any time. In the event Tenant does not elect to exchange the Letter of Credit as described above, Landlord shall continue to hold the Letter of Credit in the Reduced LC Amount pursuant to the terms of this LC Addendum.

Landlord:				Tenant:
LEGACY PARTNERS I SAN JOSE, LLC,				Endwave Corporation,
a Delaware limited liability company, Owner				a Delaware corporation
By:	LEGACY PARTNERS COMMERCIAL, L.P.,			By:
	a California limited partnership,				(Name)
	as Property Manager and Agent for Owner			Its:
					(Title)
	By:	LEGACY PARTNERS COMMERCIAL, INC.,
		General Partner
		By:		By:
			Debra Smith		(Name)
		Its:	Executive Vice President	Its:
					(Title)

Addendum Two, Page 2

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EXHIBIT 1 TO LC ADDENDUM

Contact Phones:

IRREVOCABLE STANDBY LETTER OF CREDIT

, 20___	Our irrevocable standby Letter of Credit:
Beneficiary:	No.
	Applicant:
LEGACY PARTNERS I SAN JOSE, LLC,
c/o Legacy Partners Commercial, Inc.
4000 East Third Avenue, Suite 600	Amount: Exactly USD $235,671.12
Foster City, California 94404-4805	(Two hundred Thirty Five Thousand Six Hundred Seventy One and 12/100 Dollars)
	Final Date of Expiration:                      [INSERT
	DATE WHICH IS 120 DAYS AFTER LEASE
	EXPIRATION DATE]

We (the “Bank”) hereby issue our irrevocable standby Letter of Credit No. ___in Beneficiary’s favor for the account of the above-referenced Applicant, in the aggregate amount of exactly USD $___.

This Letter of Credit is available with us at our above office by presentation of your draft drawn on us at sight bearing the clause: “Drawn under ___[INSERT NAME OF BANK] Letter of Credit No. ___” and accompanied by the following:

     1. Beneficiary’s signed certification purportedly signed by an authorized officer or agent stating:

          (A) “ Beneficiary, as landlord, is now entitled to draw upon this Letter of Credit pursuant to the terms and conditions of that certain lease agreement dated May 24, 2006 for premises located at 130 Baytech Drive, San Jose, California 95134-2302”; or

          (B) “The Bank has notified us that this Letter of Credit will not be extended beyond the current expiration date of this Letter of Credit and Applicant has not delivered to Beneficiary at least thirty (30) days prior to the current expiration of this Letter of Credit a replacement Letter of Credit satisfactory to Beneficiary.”

     2. The original of this Letter of Credit.

     Special conditions:

     Partial draws under this Letter of Credit are permitted. Notwithstanding anything to the contrary contained herein, this Letter of Credit shall expire permanently without renewal on ___[INSERT DATE WHICH IS 120 DAYS AFTER LEASE EXPIRATION DATE].

     This Letter of Credit shall be automatically extended for an additional period of one (1) year, without amendment, from the present or each future expiration date but in any event not beyond ___[INSERT DATE WHICH IS 120 DAYS AFTER LEASE EXPIRATION DATE] which shall be the final expiration date of this Letter of Credit, unless, at least thirty (30) days prior to the then current expiration date we notify you by registered mail/overnight courier service at the above address that this Letter of Credit will not be extended beyond the current expiration date.

     We hereby agree with you that all drafts drawn under and in compliance with the terms of this Letter of Credit will be duly honored upon presentation to us of the documents described in Paragraph 1 above on or before the expiration date of this Letter of Credit, without inquiry as to the accuracy thereof and regardless of whether Applicant disputes the content of any such documents or certifications.

     This Letter of Credit is transferable and any such transfer may be effected by us, provided that you deliver to us your written request for transfer in form and substance reasonably satisfactory to us. Beneficiary may, at any time and without notice to Applicant and without first obtaining Applicant’s consent thereto, transfer all or any portion of Beneficiary’s interest in and to the Letter of Credit to another party, person or entity, regardless of whether or not such transfer is separate from or as a part of the assignment by Beneficiary of Beneficiary’s rights and interests in and to the Lease. The original of this Letter of Credit together with any amendments thereto must accompany any such transfer request.

     Except so far as otherwise expressly stated, this documentary credit is subject to the International Standby Practice (1998 Revision), International Chamber Of Commerce Publication No. 590.

By:                                                             
Authorized signature

     Please direct any correspondence including drawing or inquiry quoting our reference number to the above referenced address.

Addendum Two, Page 3

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EX-10.27

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit 10.27

ENDWAVE-NGC PRIVATE / PROPRIETARY

SUPPLY AGREEMENT

     THIS SUPPLY AGREEMENT is effective as of June 30, 2006 (the “Effective Date”) by and between Endwave Corporation (“Buyer”) and Northrop Grumman Space & Mission Systems Corp., acting through its Northrop Grumman Space Technology sector (“NGST”).

     WHEREAS, Buyer desires to purchase and NGST desires to provide, the Products as specified in Exhibit 1A to this Agreement and the parties desire to define the terms and conditions under which the same will be furnished.

     NOW, THEREFOR, in consideration of the foregoing, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

Article 1
Definitions and Priority

     1.1 Definitions: The following words and phrases shall have the meanings set forth below:

Agreement:	This Supply Agreement between NGST and Buyer including the following Exhibits, attached hereto and made a part hereof:
	Exhibit A: Exhibit B: Exhibit C: Exhibit D:	List of Products and Services List of Deliverables, Quantity Commitments, and Buyer’s Site Buffer Inventory (Document [ * ])
Buffer Inventory:	Defined in Section 5.5.
Contract Price:	Defined in Section 4.1.
Delivery Date(s):	The date on which a Product leaves the NGST Plant.
NGST Plant:	Each of the factories or establishments of NGST and its suppliers located in the United States.
Products:	The products and services described in Exhibit A to be supplied by NGST.
Site:	Buyer’s facility or other location identified in Exhibit B as the destination to which transportation is to be arranged for deliverable items.
Term	Defined in Article 3.

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     1.2 Priority: In case of any inconsistencies between this Agreement and any of the Exhibits, the text of this Agreement shall prevail.

Article 2
Subject Matter of Supply; Requirements; Use of Products

     2.1 Supply: NGST hereby agrees to sell to Buyer and Buyer hereby agrees to buy from NGST, on and subject to the terms and conditions contained in this Agreement, the Products listed in Exhibit A. During the Term, Buyer may elect to purchase optional Products as described in Exhibit A under the terms and conditions set forth in this Agreement. To the extent that Buyer wishes to purchase more than the maximum quantities of the Products as provided in Exhibit B, NGST may, but is under no obligation to, provide Buyer such excess quantities. For the purchase of products not described by this Agreement (including Exhibit A), a separate purchase order shall be used by Buyer.

     2.2 Use of Products: Buyer understands and agrees that the Products to be sold by NGST hereunder are neither designed nor warranted for use in medical devices with life support functions, safety equipment (or similar applications where component failure would result in loss of life or physical harm), and military or space applications or environments. Any use of Products in these applications or environments is at Buyer’s sole and exclusive risk.

Article 3
Effective Date and Term

     This Agreement shall be effective and binding on the parties as of the Effective Date and shall remain in force and effect until September 30, 2008, unless the parties hereto choose to extend the term of this Agreement (the period between the Effective Date and the termination of this Agreement shall be hereinafter referred to as the “Term”).

Article 4
Contract Price, Taxes
Transportation, Expenses and Charges

     4.1 Price: Buyer shall pay to NGST, as and for the performance of NGST’s obligations hereunder, the prices for Products stated in Exhibit A in accordance with the provisions of Article 5. The aforementioned price is hereinafter referred to as the “Contract Price.”

     4.2 Taxes: All taxes (excluding income, but including stamp, withholding, value added and turnover taxes), duties, fees, charges, or assessments of any nature levied by any governmental authority in connection with this transaction, whether levied against Buyer or NGST, or employees of NGST as a result of Products provided by NGST under this Agreement, shall be for Buyer’s account and shall be paid directly by Buyer to the governmental authority concerned. If NGST is required by law or otherwise to pay any such levy and/or fines, penalties, or assessments in the first instance, or as a result of Buyer’s failure to comply with any applicable laws or regulations governing the payment of such levies by Buyer, as NGST’s exclusive remedy for claims under this Section 4.2, the amount of any payments so made by NGST shall be reimbursed by Buyer to NGST upon submission of NGST’s invoices and written documentation justifying NGST’s invoices.

     4.3 Transportation Expenses: Buyer shall pay for all expenses of handling, freight, in-transit insurance, and other transportation expenses including, without limiting the foregoing, all special handling charges for air shipment incurred in connection with the delivery of Products from the NGST Plant to the Site. Buyer will provide NGST with a common carrier account number for NGST’s use hereunder.

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Article 5
Orders, Forecasts, and Buffer Inventory

     5.1 Orders: For its convenience, Buyer shall use forms to order Products or to specify subsequent changes to Products which reference this Agreement and specify the desired Delivery Date(s) for Products (“Orders”). Any such Order shall not contain any preprinted or written terms and conditions, and, to the extent that it does, Buyer and NGST hereby agree that such terms and conditions of sale shall have no effect whatsoever and shall not be binding on the parties and that only the terms and conditions contained in this Agreement shall govern any sale between the parties regarding the Products.

     5.2 Acceptance of Orders: NGST shall give Buyer written acknowledgment of its receipt and notice of its acceptance or rejection of any Order within [ * ] days after receipt of such Order. If NGST rejects any such Order, it shall specify in such notice the reasons for rejection and the conditions upon which it would consider accepting such Order. NGST shall use reasonable commercial efforts to accept and supply all Orders for Products which Buyer submits hereunder, and unless otherwise agreed, NGST shall deliver Products so ordered on or before the Delivery Dates specified in each Order. Notwithstanding the foregoing, NGST shall have no obligation to accept and shall not be deemed to have accepted, unless signed by NGST, any Order (i) for any Products not listed in Exhibit A hereto or revisions thereof; (ii) for any quantity of Products in excess of the quarterly maximum quantities specified in Exhibit B hereto or revisions thereof; or (iii) that does not comply with Sections 5.3 and/or 5.4. The parties’ key contacts for management of Orders shall be:

Endwave: [ * ]
NGST:     [ * ]

     5.3 Forecast Orders: Commencing on the Effective Date and thereafter on a mutually agreed upon business day of each week during the Term hereof, Buyer shall submit to NGST a rolling, written forecast of its best estimate of its requirements for Products during the next succeeding [ * ] week period. Unless otherwise agreed by the parties, the forecast shall be in the form of an Email file attachment and shall represent a firm, non-cancelable Order for Products from Buyer for the first [ * ] weeks of each such forecast period, and Buyer’s best estimates of its requirements for Products for the balance of the forecast period. The weekly Forecast Order shall list separately for each week during the period covered by the forecast the amounts of Products which Buyer expects to purchase during such period by Product part numbers, quantities of Products, and Delivery Dates. Although the timing of delivery and quantity of Products may be altered by Buyer for the [ * ] weeks of each forecast period (weeks [ * ]) as provided in Section 5.4 below, such alteration of the forecast for weeks [ * ] shall not relieve NGST or Buyer from their respective supply or purchase requirements. Buyer’s Product and delivery requirements for Weeks [ * ], inclusive, of each forecast represent Buyer’s best estimate of its Product needs for that period, are for planning purposes only, and are non-binding on Buyer or NGST. As part of its acceptance of an Order as set out in Section 5.2 above, NGST shall provide Buyer a written shipment plan.

     5.4 Forecast Delivery Changes: Buyer may either increase or defer a Product’s delivery quantity for any Order for Weeks [ * ] by [ * ] from the original [ * ] Order forecast therefor (the “Baseline Quantity”) upon giving NGST notice in the next weekly Order forecast. Buyer may defer a Product’s delivery quantity Subject to the aforementioned limitation of [ * ] from the Baseline Quantity, Buyer may defer deliveries of Products ordered for up to [ * ] from the date first stated in Buyer’s Baseline Quantity Order therefor. Subject to the aforementioned quantity limitation of [ * ] and the availability of Products, Buyer may accelerate deliveries of Products from the date stated in Buyer’s initial Order forecast. NGST may fill the requested increase from either NGST’s existing inventory or from the Buffer Inventory. If NGST elects to use the Buffer Inventory, then the procedure described in Section 5.5 shall apply. NGST will promptly notify Buyer if it is unable to accelerate the delivery of Products as requested by Buyer.

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

     5.5 Establishment and Use of Buffer Inventory: NGST shall establish and maintain an inventory of the Products identified in Exhibit A in the quantities set forth in Exhibit C (“Buffer Inventory”). NGST shall insure that [ * ] of the Buffer Inventory for each Product is available for shipment within [ * ] days of NGST’s receipt of Buyer’s written Order therefor; the remaining [ * ] of the Buffer Inventory for each Product shall be available for delivery by NGST to Buyer within [ * ] days of Buyer’s Order therefor. Prior to the acceptance by NGST of any Buffer Inventory Order, Buyer shall specify in writing that the Order constitutes either: (a) an increase in a forecast Order as set forth in Section 5.4 above that is to be met by a temporary decrease in Buffer Inventory levels and subsequent replenishment of such Buffer Inventory by NGST to the previously authorized maximum; or (b) a permanent drawdown by Buyer of Buffer Inventory. Unless otherwise directed in writing in the Buffer Inventory Order that such Order constitutes a permanent drawdown of Buffer Inventory by Buyer, NGST shall replenish Buffer Inventory as soon as practicable following receipt and fulfillment of a Buffer Inventory Order.

     5.6 Purchase of Buffer Inventory: Upon expiration of the Term, Buyer shall purchase all Products remaining in the Buffer Inventory at the Contract Price promptly upon receipt of NGST’s invoice; provided, however that if, in [ * ] day period during the Term, Buyer fails to purchase a minimum of [ * ] of an individual Product’s Buffer Inventory level, Buyer shall purchase the entire Buffer Inventory of that Product at the Contract Price promptly upon receipt of NGST’s invoice.

Article 6
Payment

     Payment for Products shall be [ * ] days from the date of NGST’s invoice. Payment of other charges, if any, provided for in this Agreement shall be due and payable with immediately available funds within [ * ] days after the date of NGST’s invoice therefor. Payment shall be made by electronic funds transfer (EFT) to NGST’s account of immediately available funds as follows:

[ * ]

Article 7
Shipment, Title, and Risk of Loss; Export of Products

     7.1 Delivery of Products: NGST shall place Products in the possession of a common carrier at a time and date reasonably calculated to effect delivery to Buyer on or before the date or dates specified in each Order therefor for delivery to Buyer, FOB NGST’s Plant to the Site specified in Exhibit B. NGST shall place Products in the possession of a common carrier pursuant to the Delivery Date(s) specified in each Order, but no more frequently than once a week. The cost of such shipping shall be borne by Buyer.

     7.2 Protection and Packing of the Products: NGST shall arrange to have all Products suitably packaged in accordance with good commercial practices. Unless otherwise provided, all packing containers used by NGST shall be non-returnable.

     7.3 Risk of Loss and Title: Notwithstanding any provisions for payment of freight or insurance, or the form of shipping documents, or the breach or default by NGST at the time of loss, title and risk of loss for Products shall pass to Buyer on delivery to the carrier at the NGST Plant. Title and risk of loss of Products sent to NGST for adjustment shall remain with Buyer until such are received by NGST. Neither (i) the time, method, place, or medium of payment provided for herein, or any combination of the foregoing, nor (ii) the manner of consignment provided for, whether to, or to the order of, Buyer or its agent, shall in any way limit or modify the rights of NGST as the owner of the Products, to have control over the right to possession of the Products until title thereto passes to Buyer as provided herein.

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

     7.4 Shipping Documents: After Products have been shipped, NGST shall deliver to Buyer one (1) copy of the packing list. Electronic delivery of the packing list is authorized.

     7.5 Export of Products: All sales hereunder shall at all times be subject to the export control laws and regulations of the United States and any amendments thereto. Buyer agrees that it shall not make any disposition, by way of transshipment, re-export, diversion or otherwise, except as such laws and regulations may expressly permit, of Products. Further, Buyer agrees that it shall not knowingly sell, transfer, or deliver, directly or indirectly, any part or portion of the Products or related documentation supplied by NGST pursuant to this Agreement to any person or organization in any country where such sale, transfer, or delivery by Buyer would be prohibited by law or regulation now or hereafter in effect which imposes any restrictions on United States trade with foreign countries.

     7.6 Acceptance of Products: A signed air bill or other common carrier documentation indicating receipt by Buyer of the Products constitutes proof of delivery. Buyer will provide NGST with written notice of acceptance of the Products that conform to the applicable Order within ten (10) business days of receipt; provided, however, if Buyer fails to provide NGST with either written notice of acceptance or a formal statement of rejection and the reasons therefore within ten (10) business days of receipt, such Products shall be deemed accepted upon expiration of the ten (10) business day period. Acceptance shall be definitive and final in all cases, absent fraud. Following such acceptance, Buyer’s only remedy for defective Products shall be as provided in Article 8.

Article 8
Warranty

     8.1 Warranty:

     (a) NGST warrants that for a period of 24 months after the Delivery Date all Products sold hereunder (i) are made from new materials and (ii) meets the production circuit screening criteria set forth in the then current and applicable test D-document for that Product, as identified in Exhibit A hereof, at the time on wafer circuit screening occurred. NGST further warrants that (iii) no less than [ * ] of the total number of Products shipped from each wafer meet the requirements of [ * ] attached hereto as Exhibit D. For each Product that fails to satisfy the requirements of (i), (ii) or (iii) above, NGST shall, at its option, either issue a credit to Buyer, repair, or replace such Product with a similar Product, in all cases free from defect without charge and with reasonable promptness. NGST’s obligation to credit to Buyer, repair, or replace defective Products with a similar Product shall not apply to defective Products subject to (iii) above unless less than [ * ] of the total number of Products shipped from each wafer satisfy completely the requirements stated in Exhibit D, and, in the event of such failure, NGST’s sole obligation to credit to Buyer, repair or replace Products shall be limited to those number of Products necessary to achieve the [ * ] requirement. For purposes of clarity, if NGST ships to Buyer [ * ] Products from a wafer, and [ * ] Products fail to satisfy the requirements of Exhibit D, NGST will be obligated to credit to Buyer, repair or replace one [ * ] Product; if NGST ships to Buyer [ * ] Products from a wafer, and [ * ] Products fail to satisfy the requirements of Exhibit D, NGST will have no obligation to credit to Buyer, repair or replace any Products hereunder. Buyer must promptly give NGST notice of all warranty claims hereunder and affirm that the defect is of a type specified in (i) , (ii), or (iii) above; Buyer must obtain NGST’s prior written authorization via NGST’s issuance of an RMA number before returning defective Products to NGST. For each Product, NGST shall make all repairs or replacements at NGST’s Plant. NGST shall return replacements for defective Products to Buyer at the place where the defective Product was located when shipped to NGST and shall prepay at its sole expense all freight and insurance of such return shipment. Under no circumstances will NGST compensate Buyer for post-pay field return costs incurred by Buyer in returning defective Products to NGST. All defective Products replaced by NGST as herein provided shall become the property of NGST when the replacement occurs, unless held for analysis by Buyer with NGST’s prior written consent. All Products repaired or replaced by NGST shall remain under

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warranty for the remainder of the warranty period on the Products. The warranty specified in this Section 8.1 does not extend (i) to Products which fail or are damaged due to use or storage by Buyer in a manner or environment not conforming to NGST’s published instructions and specifications in effect at the time such Products are delivered to Buyer; or, (ii) to Products that are modified by Buyer or any person other than NGST. Buyer and NGST agree that circuit screening in accordance with the applicable test D-document is the sole method of determining the presence or absence of a defect affecting electrical performance in individual Products on wafer as warranted in (ii) above.

     (b) NGST warrants that title to all Products delivered to Buyer hereunder will be free and clear of all liens, encumbrances, security interests and other restrictions.

     8.2 Exclusion: OTHER THAN THE WARRANTY FOR THE PRODUCTS SET FORTH IN SECTION 8.1 HEREOF, NGST DOES NOT MAKE ANY WARRANTY, GUARANTEE OR MAKE ANY REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, INCLUDING MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, WHETHER ARISING BY LAW, CUSTOM, CONDUCT OR USAGE OF TRADE, AND THE RIGHTS AND REMEDIES PROVIDED HEREIN ARE EXCLUSIVE AND IN LIEU OF ANY OTHER RIGHT OR REMEDIES. PRODUCTS USED IN APPLICATIONS FOR WHICH THEY ARE NOT INTENDED AS SET FORTH IN SECTION 2.2 HEREOF, ARE SOLD WITHOUT WARRANTY AND ON AN “AS – IS,” “WITH ALL FAULTS” BASIS.

Article 9
Delays

     9.1 Force Majeure: No failure or omission on the part of either party to carry out or observe any of the terms or provisions of this Agreement or any Order hereunder (except the payment of money) shall be deemed a breach of this Agreement or such Order if same shall arise or result from force majeure or from any cause reasonably beyond the control of Buyer or NGST, as the case may be, including but without limitation, acts of God, acts (including delay or failure to act) of any governmental authority (de jure or de facto), war (declared or undeclared) riot, revolution, fires, labor disputes, sabotage or epidemics. Should such delay occur, the date or dates of performance by the affected party shall be extended for a period equal to the extent of the delay expected as a result of the force majeure event. The affected party shall give the other party written notice of such delay within five (5) working days after identification of the delay.

     9.2 NGST Delays: If at any time NGST discovers that is unable (whether for reasons set out in Section 8.1 or otherwise) to deliver any Products to Buyer on the scheduled delivery date, NGST shall give Buyer written notice within [ * ] days of such discovery, which notice shall specify the delivery date on which NGST shall be able to deliver such Products to Buyer. If the delivery date proposed by NGST is more than [ * ] days after the scheduled delivery date, Buyer shall have the right, without liability, to cancel (in whole or in part) its Order for such Products, by giving NGST notice of cancellation within [ * ] days of receipt of NGST’s notification of delay. To the extent that there are NGST delays as described herein or NGST resulting delays as described herein, there shall be made equitable adjustments to the purchasing and pricing provisions hereof.

Article 10
Transfers and Assignments

     10.1 Transfer: Neither party shall, without the consent in writing of the other party, which shall not be unreasonably withheld, assign or transfer this Agreement or the benefits or obligations thereof or any part thereof to any other person other than a subsidiary wholly owned by such party; provided that this shall not affect any right of either party to assign, either absolutely or by way of charge, any moneys due or to become due to it or which may become payable to it under this Agreement; further provided, that no consent

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shall be necessary to the extent that either party is acquired by merger or other acquisition or either party sells all or substantially all of its assets relating to this Agreement to a third party.

     10.2 Release of Obligations: No assignment or transfer of any right or duty hereunder by either party shall constitute a novation or otherwise release or relieve such party of its obligations hereunder.

Article 11
Default

     11.1 Event of Default: An Event of Default on the part of either party shall exist under this Agreement if:

          (a) Such party fails to pay the other party any amount required to be paid hereunder when due and payable; or

          (b) Such party fails to perform its purchase or supply obligations (as the case may be hereunder) specified in Section 2.1 during the Term hereof, or otherwise fails to perform any other material obligation required to be performed by it under any provision of this Agreement within [ * ] days after the time specified or within [ * ] days after written notice from the other party that such performance has become due; provided, however, Buyer shall have no right to terminate this Agreement for NGST’s default so long as corrective action is being diligently pursued by NGST in a manner that reasonably demonstrates that NGST’s obligations hereunder shall be completed in sufficient time to allow Buyer to reasonably meet its end-use requirements for Products without incurring additional costs or penalties (as reasonably determined by Buyer), and NGST discloses to Buyer in writing such corrective action(s).

     11.2 Remedies Available for Default: Subject to other provisions hereof which expressly limit the remedies available hereunder, if an Event of Default as defined in Section 10.1 exists on the part of either party, then the other party may terminate this Agreement upon giving written notice of termination and pursue any other remedies available at law or in equity.

Article 12
Limitation of Liability; Damages

     12.1 Limitation of Liability: NGST’s liability to Buyer on any claim of any kind (excluding bodily injury or death), whether based on contract, warranty, tort (including negligence), strict liability or otherwise, for any loss or damage arising out of, connected with, or resulting from this Agreement or any Order, or from the performance or breach thereof, or from all Products covered by or furnished under this Agreement or any Order hereunder, shall in no case exceed the sum of [ * ] for a single claim, or [ * ] in the aggregate for all claims arising during the Term. Buyer’s liability to NGST on any claim of any kind (excluding bodily injury or death), whether based on contract, warranty, tort (including negligence), strict liability or otherwise, for any loss or damage arising out of, connected with, or resulting from this Agreement or any Order, or from the performance or breach thereof, or from all Products covered by or furnished under this Agreement or any Order hereunder, shall in no case exceed the price of the specific individual Product that gives rise to the claim.

     12.2 Damages: In no event shall either party be liable for any special, indirect, incidental or consequential damages, however caused, whether by such party’s sole or concurrent negligence or otherwise, including but not limited to costs and expenses incurred in connection with labor, overhead, transportation, installation, or removal of Products or substitute facilities or supply sources.

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Article 13
Notices

     All notices, requests, consents, and other communications required or permitted to be given under this Agreement must be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) day after deposit with a nationally recognized overnight courier, special next day delivery, with written verification of receipt, addressed as follows:

If to NGST:	Northrop Grumman Space Technology
	One Space Park Drive, D1-1024
	Redondo Beach, California 90278
	Attention: Kathleen E. Hogan, Contracts
	Phone:	(310) 813-1168
	FAX:	(310) 812-7011
	kathleen.hogan@ngc.com

If to Buyer:	Endwave Corporation
	776 Palomar Avenue
	Sunnyvale, CA 94085
	Attention:	James R. Crossen
	Phone:	(408) 522-3177
	Fax:	(408) 522-3181
	jim.crossen@endwave.com

Article 14
Contract Change Procedure

     14.1 Changes: Any changes to this Agreement after the Effective Date which relate to: (i) the deletion of Products; (ii) adding additional Products; (iii) changing or modifying Products; or (iv) making other changes which do not materially alter the scope of this Agreement shall be made in accordance with the procedures set forth in this Article 14.

     14.2 Contract Changes: Every [ * ] during the Term hereof, the parties shall revisit the maximum quantity commitments and pricing of the Products. Based on changes in Buyer’s contracts and production forecasts, the parties may, but shall not be obligated to, negotiate changes to the production commitments.

     14.3 Contract Change Notice: If the parties mutually agree to implement a change request, a standard form Contract Change Notice (“CCN”) shall describe the change. Execution of a CCN by both parties shall constitute a modification hereof and shall be binding on both parties hereto.

     14.4 Exception: Substitutions relative to Products which are purchased items not manufactured by NGST may be made by NGST without the consent of Buyer if such substitutes are of like quality and are available at the same or lower cost to Buyer.

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Article 15
Intellectual Property

     15.1 Proprietary Information: For the purpose of this Agreement:

          (a) “Proprietary Information” shall mean all drawings, documents, ideas, know-how and other information supplied by one party to another (whether disclosed orally, or in documentary form, by demonstration or otherwise) for the purpose of achieving the objectives of this Agreement.

          (b) “Proper Use” shall mean use of the Proprietary Information solely by the recipient for the objectives of this Agreement.

     15.2 Nondisclosure: All Proprietary Information furnished shall remain the property of the disclosing party and shall be treated by the recipient in strict confidence, shall not be used except for Proper Use, shall be disclosed by the recipient only to persons within the recipient’s company (including companies directly or indirectly more than fifty percent (50%) owned or controlled by the recipient) who are directly concerned in the Proper Use, and shall not be disclosed to consultants or by the recipient to any other party without the disclosing party’s prior written consent, except for Proprietary Information that was:

          (a) In the public domain at the time it was disclosed; or

          (b) Known to the recipient without restriction at the time of receipt; or

          (c) Published or becomes available to others without restriction through no act or failure to act on the part of the recipient; or

          (d) Known to the recipient from a source other than the disclosing party without breach of this Agreement by the recipient; or

          (e) Subsequently designated by the disclosing party in writing as no longer proprietary; or

          (f) Independently developed by the recipient without reference to the Proprietary Information; or

          (h) Disclosed after [ * ] years from the date of delivery by the disclosing party to the recipient, which [ * ] year period shall survive the termination of this Agreement; provided, however, that if Buyer, as a result of an agreement with a customer, requires a longer nondisclosure period, the parties shall agree to such longer nondisclosure periods with regard to Proprietary Information applicable to such customer’s contract.

     If any portion of Proprietary Information falls within any one of these exceptions, the remainder shall continue to be subject to the foregoing prohibitions and restrictions. The recipient of Proprietary Information shall inform its employees of the confidential nature of the Proprietary Information and shall prohibit them from making copies of any of it except where such copies are necessary for the purposes of Proper Use, unless agreed upon by the disclosing party. The recipient of Proprietary Information shall exercise the same degree of care in protecting such Proprietary Information as it takes to preserve and safeguard its own proprietary information, and in no event less than a degree of care a reasonable recipient would use to protect its own proprietary information.

     15.3 Marking: Proprietary Information made available in written form by one party to the other party shall be marked with the legend:

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

	“ENDWAVE PROPRIETARY INFORMATION”
or -	“NGST PROPRIETARY INFORMATION”

as the case may be, or an equivalent conspicuous legend. No sheet or page of any written material shall be so labeled which is not, in good faith, believed by the disclosing party to contain Proprietary Information. A recipient of Proprietary Information hereunder shall have no obligation with respect to any portion of any written material which is not so labeled or any information received orally unless it is identified as proprietary and a written summary of such oral communication, specifically identifying the items of Proprietary Information, is furnished to the recipient within thirty (30) days of such disclosure.

          The individuals identified below are the only persons authorized to receive Proprietary Information on behalf of the parties:

For Endwave:    [ * ]
For NGST:        [ * ]

          By written notice to the other parties, these representatives may be replaced by another person from the same party.

     15.4 Compensation: The parties shall not be obligated to compensate each other for the transfer of any Proprietary Information under this Agreement and agree that no warranties of any kind are given with respect to such Proprietary Information or any use thereof. No license is hereby granted under any patent, trademark or copyrights with respect to any Proprietary Information.

     15.5 Survival: The obligations of the parties concerning confidentiality set forth in this Article 14 shall survive termination or completion of this Agreement.

     15.6 Ownership of Masksets: NGST shall retain ownership and sole possession of any and all glass plates utilized for photolithographic semiconductor processing of MMIC (as defined in Section 15.7 below) designs (“Masksets”) developed or procured by NGST under this Agreement.

     15.7 Ownership of MIMIC Designs: NGST shall retain sole ownership rights to its solely developed designs for monolithic microwave integrated circuit (“MMIC”) designs. NGST shall also retain sole ownership rights to individual circuit elements, design libraries, design rule manuals, and MIMIC fabrication processes for all MMIC designs. Buyer shall retain sole ownership rights to its solely developed designs for MMICs, including all associated documentation. If any MMIC design work or maskset fabrication was or will be performed by NGST on behalf of Buyer under a separate design and development agreement, the terms of such separate agreement shall determine the parties’ respective rights to such MMIC designs.

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Article 16
Indemnification

     16.1 Indemnification by NGST: In the event any Products to be furnished under this Agreement are not to be made in accordance with drawings, samples, or manufacturing specifications designated by Buyer, but rather are the design of NGST, NGST agrees that it shall, at its own expense and at its option, defend or settle any claim, suit, or proceeding brought against Buyer, based on an allegation that the Products furnished under this Agreement constitute a direct or a contributory infringement of any claim of any patent, mask work, copyright or any other intellectual property right. This obligation shall be effective only if Buyer shall have made all payments then due and if NGST is notified of said allegation promptly in writing and given authority, information, and assistance for the settlement or defense of said claim, suit, or proceedings. NGST shall pay all damages and costs assessed in such suit or proceedings. In the event of a final adjudication by a court of competent jurisdiction that its Products or any part thereof infringes or violates any third party intellectual property right or if the use or sale thereof is enjoined, or if the provisions of any negotiated settlement agreement prohibit the use of the Products, NGST shall at its sole option and its own expense, either:

     (a) Procure for Buyer the right to continue using the Product; or

     (b) Replace the Products with substantially equivalent non-infringing Products; or

     (c) Modify the Products so they become non-infringing but substantially equivalent; or

     (d) To the extent that the options set forth in clauses (a), (b) and (c) above are not reasonably available, terminate the Buyer’s right to use the Product and return to the Buyer and return to the Buyer the price originally paid by Buyer to NGST for the Product.

     The foregoing indemnity does not apply to the following:

1. Infringement by a combination of Products furnished under this Agreement with other products not furnished hereunder unless NGST is a contributory infringer;

2. Infringement resulting from changes or modifications made to or from the Products by the Buyer; and

3. Any settlements of a claim, suit, or proceeding made without NGST’s written consent.

     The foregoing states the entire liability of NGST with respect to infringement or violation of third party intellectual property rights in connection with Products furnished under this Agreement.

          16.2 Indemnification by Buyer: In the event any Products to be furnished under this Agreement are to be made in accordance with drawings, samples, or manufacturing specifications designated by Buyer and are not the design of NGST, Buyer agrees that it shall, at its own expense and at its option, defend or settle any claim, suit, or proceeding brought against NGST, based on an allegation that the Products furnished under this Agreement constitute a direct or a contributory infringement of any claim of any patent, mask work, copyright or any other intellectual property right.

Article 17
Miscellaneous

     17.1 Headings: The headings and titles to the articles, sections, and paragraphs of this Agreement are inserted for convenience only and shall not be deemed a part hereof or affect the construction or interpretation of any provision hereof.

     17.2 Remedies: Unless otherwise expressly provided herein, the rights and remedies hereunder are in addition to, and not in limitation of, other rights and remedies under the Agreement, at law or in equity, and exercise of one right or remedy shall not be deemed a waiver of any other right or remedy.

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

     17.3 Modification and Waiver: No cancellation, modification, amendment, deletion, addition, or other change in the Agreement or any provision hereof, or waiver of any right or remedy herein provided, shall be effective for any purpose unless specifically set forth in a writing signed by the party to be bound thereby. No waiver of any right or remedy in respect of any occurrence or event on one occasion shall be deemed a waiver of such right or remedy in respect of such occurrence or event on any other occasion.

     17.4 Entire Agreement: This Agreement supersedes all other agreements, oral or written, heretofore made with respect to the subject hereof, and the transactions contemplated hereby and contains the entire agreement of the parties.

     17.5 Severability: Any provision hereof prohibited by or unlawful or unenforceable under any applicable law of any jurisdiction shall as to such jurisdiction be ineffective without affecting any other provision of the Agreement. To the full extent, however, that the provisions of such applicable law may be waived, they are hereby waived, to the end that the Agreement be deemed to be a valid and binding agreement enforceable in accordance with its terms.

     17.6 Controlling Law: All questions concerning the validity and operation of this Agreement and the performance of the obligations imposed upon the parties hereunder shall be governed by the laws of the State of California applicable to contracts entered into and wholly to be performed in such jurisdiction.

     17.7 Successors and Assigns: The provisions of this Agreement shall be binding upon and for the benefit of NGST and Buyer and their respective successors and assigns. This provision shall not be deemed to expand or otherwise affect the limitation on assignment and transfers set forth in Article 10 and no party is intended to or shall have any right or interest under this Agreement, except, as provided in Article 10.

     17.8 Counterparts: This Agreement has been executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts together shall constitute but one and the same instrument.

     17.9 Language: If a translation of this Agreement is required or otherwise made, the English version shall be the official version and shall control in the event of differences. All communications relating to this Agreement shall be in English.

     17.10 Negotiated Terms: All terms of this Agreement were negotiated between the parties at arm’s length. The parties agree that in the event a dispute arises in connection with this Agreement, the terms contained in this Agreement shall be given their plain meaning, and that no term shall be construed in favor of one party over the other by virtue of one party having drafted a term in this Agreement.

     17.11 Disputes: All disputes between the parties in connection with or arising out of the existence, validity, construction, performance and termination of this Agreement (or any terms hereof), which the parties are unable to resolve amicably shall be finally settled by binding arbitration, preceded by pre-arbitration mediation if the parties so mutually agree at the time. The arbitration or any pre-arbitration mediation shall be held in Redondo Beach, California, or such other venue as the parties may agree, and administered by the American Arbitration Association under its Commercial Mediation Procedures, or if failing settlement, under its Arbitration Procedures for Large, Complex Commercial Disputes by three arbitrators appointed in accordance with the rules. Subject to Article 12, the arbitrators shall have authority to provide any relief available in law or equity. Judgment on the arbitral award may be entered in any court or tribunal having jurisdiction thereof. Each party shall be responsible for its own attorney fees and costs. Each party shall be responsible for its own attorney fees and court costs.

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(signature page follows)

     IN WITNESS WHEREOF, the parties have executed this Agreement in English as of the Effective Date..

ENDWAVE CORPORATION
By:	/s/ James Crossen
NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP. Northrop Grumman Space Technology
By:	/s/ Miriam Varend

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EXHIBIT A
PRODUCTS AND PRICING

1. Products

[ * ]

2. Optional Products. Buyer may elect to purchase additional Products in wafer form at prices and cycle times to be determined by NGST and agreed to by the parties at the time Buyer exercises such option.

3. Engineering Support. Engineering support for failure analysis, device troubleshooting, test or component characterization, mask layouts, and related support, shall be billed per NGST’s hourly rates then in effect. Material shall be billed as incurred.

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EXHIBIT B
LIST OF DELIVERABLES, QUANTITY COMMITMENTS,
DELIVERY SCHEDULE AND BUYER SITE

1. Deliverables

During the Term, NGST will supply Buyer with MMICs from either [ * ] Wafers, to be determined by the parties.

NGST will ensure that all Products delivered to Buyer come from wafers that meet NGST’s PCM specifications and have passed NGST’s commercial wafer-level sample visual screen criteria.

NGST will perform RF test on the wafers, and will dice the wafers and pick the die into waffle packs. Die pick and waffle pack may be performed by qualified vendors on behalf of NGST.

NGST will deliver the Products in waffle packs.

Buyer will be responsible for performing visual inspection of the Products upon receipt, and will bear all costs and yield losses for such tasks.

To minimize re-traying work for NGST, Buyer agrees that NGST may ship Products in either multiples that coincide with particular full tray quantities for each Product, or quantities rounded up or down to reasonably meet both Buyer’s forecast and use any remaining partially filled tray.

2. Quantity Commitments

NGST’s maximum quarterly MMIC quantity during the Term shall not exceed [ * ] MMICs per quarter.

3. Delivery Schedule. Not to exceed one shipment per week.

4. Buyer Sites

Billing and Notices:	Delivery of Products	Engineering/Procurement:
Endwave Corporation	Endwave Corporation	Endwave Corporation
776 Palomar Avenue Sunnyvale CA 94085	6425 Capitol Avenue, Bldg 2 Diamond Springs CA 95619	776 Palomar Avenue Sunnyvale CA 94085
Att: [ * ]	Att: [ * ]	Att: [ * ] (unless otherwise specified in the Order)
Phone: [ * ]	Phone: [ * ]	Phone: [ * ]

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EXHIBIT C
BUFFER INVENTORY

Quantities of Products in the Buffer Inventory described in Article 5 of the Agreement are as follows:

[ * ]

Replenishment Rate: When Buyer issues a purchase order to pull Products from the Buffer Inventory, nominal refresh time (fab cycle) is [ * ] weeks.

Pull Rate is within [ * ] days

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[ * ]  = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EXHIBIT D
[ * ]

[ * ]

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Edward A. Keible, Jr., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 of Endwave Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2006
	/s/ Edward A. Keible, Jr.
	Edward A. Keible, Jr.
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Brett W. Wallace, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 of Endwave Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2006
	/s/ Brett W. Wallace
	Brett W. Wallace
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.§ 1350, as adopted), Edward A. Keible, Jr., Chief Executive Officer of Endwave Corporation (the “Company”), and Brett W. Wallace, Chief Financial Officer of the Company, each hereby certifies that, to the best of his or her knowledge:

     1. The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2006, to which this Certification is attached as Exhibit 32.1 (the “Quarterly Report”) fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934, and

     2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

     In Witness Whereof, the undersigned have set their hands hereto as of the 7th day of August, 2006.

/s/ Edward A. Keible, Jr.	/s/ Brett W. Wallace
Edward A. Keible, Jr.	Brett W. Wallace
Chief Executive Officer	Chief Financial Officer

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Endwave Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.