Exhibit 10.13

MERRILL CREEK CENTER

LEASE AGREEMENT

BETWEEN

MERRILL CREEK HOLDINGS, LLC,

LANDLORD

AND

ZUMIEZ, INC.,

TENANT

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

 

Page

 

 

 

 

 

 

 

 

 

ARTICLE 1

 

 

 

 

 

PREMISES

 

 

 

1.1

 

Construction; Suitability

 

2

 

1.2

 

Location

 

2

 

1.3

 

Landlord’s Warranties

 

3

 

1.4

 

Right of First Offer

 

3

 

1.5

 

Parking

 

3

 

1.6

 

Exhibits

 

3

 

 

 

 

 

 

 

 

 

ARTICLE 2

 

 

 

 

 

BUSINESS RIGHTS AND RESTRICTIONS

 

 

 

2.1

 

Use

 

4

 

2.2

 

Restrictions

 

4

 

 

 

 

 

 

 

 

 

ARTICLE 3

 

 

 

 

 

TERM

 

 

 

3.1

 

Duration; Early Possession

 

4

 

3.2

 

Option to Extend

 

4

 

3.3

 

Intentionally Omitted

 

4

 

 

 

 

 

 

 

 

 

ARTICLE 4

 

 

 

 

 

RENT

 

 

 

4.1

 

Payment

 

4

 

(a)

 

Fixed Minimum Rent

 

5

 

(b)

 

Late Fee

 

5

 

(c)

 

Fixed Minimum Rent During Extended Term

 

5

 

4.2

 

Intentionally Deleted

 

5

 

4.3

 

Lease Year

 

5

 

 

 

 

 

 

 

 

 

ARTICLE 5

 

 

 

 

 

COMMON AREA

 

 

 

5.1

 

Definition

 

5

 

5.2

 

Reserved

 

6

 

5.3

 

Use

 

6

 

5.4

 

Maintenance and Operation

 

6

 

5.5

 

Records

 

6

 

5.6

 

Tenant’s Contribution

 

6

 

5.7

 

Operation and Control

 

7

 

5.8

 

Obstructions

 

7

 

 

 

 

 

 

 

 

 

ARTICLE 6

 

 

 

 

 

TAXES

 

 

 

6.1

 

Personal Property Taxes

 

7

 

6.2

 

Real Property Taxes

 

7

 

(a)

 

Definition; Payment

 

7

 

(b)

 

Proration

 

8

 

(c)

 

Separate Tax Bill

 

8

 

(d)

 

Tenant’s Use

 

8

 

6.3

 

Business Taxes

 

8

 

6.4

 

Substitute and Additional Taxes

 

8

 

6.5

 

Commercial Rent Tax

 

8

 

 

 

 

 

 

 

 

 

ARTICLE 7

 

 

 

 

 

UTILITIES

 

 

 

7

 

Utilities

 

8

 

 

 

 

 

 

 

 

 

ARTICLE 8

 

 

 

 

 

REPAIRS AND ALTERATIONS

 

 

 

8.1

 

Landlord’s Repairs

 

9

 

8.2

 

Tenant’s Repairs

 

9

 

8.3

 

Alterations

 

9

 

(a)

 

Tenant’s Alterations

 

9

 

 

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TABLE OF CONTENTS
(continued)

 

 

 

Page

 

 

 

 

 

 

 

(b)

 

Approval Not Required

 

10

 

8.4

 

General Conditions

 

10

 

(a)

 

Contractors

 

10

 

(b)

 

Compliance With Laws

 

10

 

(c)

 

Tenant’s Responsibility

 

10

 

(d)

 

Compliance with Americans With Disabilities Act

 

10

 

 

 

 

 

 

 

 

 

ARTICLE 9

 

 

 

 

 

INSURANCE

 

 

 

9.1

 

Use Rate

 

10

 

9.2

 

Liability Insurance

 

10

 

9.3

 

Worker’s Compensation Insurance

 

11

 

9.4

 

Property Insurance/Business Income

 

11

 

(a)

 

Landlord’s Insurance

 

11

 

(b)

 

Tenant’s Insurance

 

11

 

9.5

 

Waiver of Subrogation

 

11

 

9.6

 

General Requirements

 

11

 

(a)

 

Licensed in State

 

11

 

(b)

 

Primary

 

11

 

(c)

 

Additional Named Insured

 

11

 

(d)

 

Notice of Cancellation

 

11

 

9.7

 

Blanket Insurance

 

12

 

 

 

 

 

 

 

 

 

ARTICLE 10

 

 

 

 

 

DAMAGE AND RESTORATION

 

 

 

10.1

 

Damage and Destruction of the Premises

 

12

 

10.2

 

Damage or Destruction of Development

 

12

 

10.3

 

Tenant’s Work

 

13

 

10.4

 

Limitation of Obligations

 

13

 

10.5

 

Damage or Destruction at End of Term

 

13

 

10.6

 

Waiver

 

13

 

 

 

 

 

 

 

 

 

ARTICLE 11

 

 

 

 

 

FLOOR AREA DEFINED

 

 

 

11

 

Floor Area Defined

 

13

 

 

 

 

 

 

 

 

 

ARTICLE 12

 

 

 

 

 

EMINENT DOMAIN

 

 

 

12.1

 

Definition

 

13

 

12.2

 

Total Taking

 

13

 

12.3

 

Partial Taking of Premises

 

13

 

12.4

 

Common Area Taking

 

13

 

12.5

 

Repair and Restoration

 

14

 

12.6

 

Award

 

14

 

12.7

 

Waiver

 

14

 

 

 

 

 

 

 

 

 

ARTICLE 13

 

 

 

 

 

INDEMNITY; WAIVER

 

 

 

13.1

 

Indemnification and Waivers

 

14

 

(a)

 

Indemnity

 

14

 

(b)

 

Waivers

 

15

 

(c)

 

Definitions

 

15

 

(d)

 

Scope of Indemnities and Waivers

 

15

 

(e)

 

Duty to Defend

 

15

 

(f)

 

Obligations Independent of Insurance

 

15

 

(g)

 

Waiver of Immunity

 

15

 

(h)

 

Survival

 

16

 

 

 

 

 

 

 

 

 

ARTICLE 14

 

 

 

 

 

OPERATION OF BUSINESS

 

 

 

14

 

Operation of Business

 

16

 

 

 

 

 

 

 

 

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TABLE OF CONTENTS
(continued)

 

 

 

Page

 

 

 

 

 

 

 

 

 

ARTICLE 15

 

 

 

 

 

SIGNS AND ADVERTISING

 

 

 

15.1

 

Interior

 

16

 

15.2

 

Exterior

 

16

 

 

 

 

 

 

 

 

 

ARTICLE 16

 

 

 

 

 

LIENS

 

 

 

16

 

Liens

 

17

 

 

 

 

 

 

 

 

 

ARTICLE 17

 

 

 

 

 

RIGHT OF ENTRY

 

 

 

17

 

Right of Entry

 

17

 

 

 

 

 

 

 

 

 

ARTICLE 18

 

 

 

 

 

DELAYING CAUSES

 

 

 

18

 

Delaying Causes

 

17

 

 

 

 

 

 

 

 

 

ARTICLE 19

 

 

 

 

 

ASSIGNMENT AND SUBLEASE

 

 

 

19.1

 

Consent Required

 

17

 

19.2

 

Request for Consent

 

18

 

19.3

 

Intentionally Omitted

 

18

 

19.4

 

General Conditions

 

18

 

(a)

 

Payment of Transfer Premium

 

18

 

(b)

 

Continued Liability of Tenant

 

18

 

19.5

 

Reserved

 

18

 

19.6

 

Transfer Pursuant to Bankruptcy Code

 

18

 

 

 

 

 

 

 

 

 

ARTICLE 20

 

 

 

 

 

NOTICES

 

 

 

20

 

Notices

 

19

 

 

 

 

 

 

 

 

 

ARTICLE 21

 

 

 

 

 

SURRENDER OF POSSESSION

 

 

 

21.1

 

Surrender

 

19

 

21.2

 

Holding Over

 

19

 

 

 

 

 

 

 

 

 

ARTICLE 22

 

 

 

 

 

QUIET ENJOYMENT

 

 

 

22

 

Quiet Enjoyment

 

19

 

 

 

 

 

 

 

 

 

ARTICLE 23

 

 

 

 

 

SUBORDINATION

 

 

 

23

 

Subordination

 

19

 

 

 

 

 

 

 

 

 

ARTICLE 24

 

 

 

 

 

ESTOPPEL CERTIFICATE

 

 

 

24

 

Estoppel Certificate

 

20

 

 

 

 

 

 

 

 

 

ARTICLE 25

 

 

 

 

 

DEFAULT

 

 

 

25.1

 

Default

 

20

 

 

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TABLE OF CONTENTS
(continued)

 

 

 

Page

 

 

 

 

 

 

 

25.2

 

Remedies

 

21

 

(a)

 

Reentry and Termination

 

21

 

(b)

 

Express Termination Required

 

21

 

(c)

 

Damages

 

21

 

(d)

 

Alternative Damages

 

22

 

(e)

 

Definitions

 

22

 

(f)

 

Computation of Certain Sums

 

22

 

(g)

 

Reserved

 

22

 

(h)

 

Cumulative Remedies

 

22

 

(i)

 

No Waiver

 

22

 

25.3

 

Interest

 

22

 

 

 

 

 

 

 

 

 

ARTICLE 26

 

 

 

 

 

INSOLVENCY

 

 

 

26.1

 

Breach of Lease

 

23

 

26.2

 

Operation of Law

 

23

 

26.3

 

Non-Waiver

 

23

 

26.4

 

Events of Bankruptcy

 

23

 

26.5

 

Landlord’s Remedies

 

23

 

(a)

 

Termination of Lease

 

23

 

(b)

 

Suit for Possession

 

23

 

(c)

 

Non-Exclusive Remedies

 

24

 

(d)

 

Assumption or Assignment by Trustee

 

24

 

(e)

 

Adequate Assurance of Future Performance

 

24

 

(f)

 

Failure to Provide Adequate Assurance

 

24

 

 

 

 

 

 

 

 

 

ARTICLE 27

 

 

 

 

 

REMEDIES CUMULATIVE

 

 

 

27

 

Remedies Cumulative

 

24

 

 

 

 

 

 

 

 

 

ARTICLE 28

 

 

 

 

 

ATTORNEY’S FEES

 

 

 

28

 

Attorney’s Fees

 

24

 

 

 

 

 

 

 

 

 

ARTICLE 29

 

 

 

 

 

WAIVER OF DEFAULT

 

 

 

29

 

Waiver of Default

 

24

 

 

 

 

 

 

 

 

 

ARTICLE 30

 

 

 

 

 

NO PARTNERSHIP

 

 

 

30

 

No Partnership

 

24

 

 

 

 

 

 

 

 

 

ARTICLE 31

 

 

 

 

 

SUBTENANCIES

 

 

 

31

 

Subtenancies

 

25

 

 

 

 

 

 

 

 

 

ARTICLE 32

 

 

 

 

 

SUCCESSORS

 

 

 

32

 

Successors

 

25

 

 

 

 

 

 

 

 

 

ARTICLE 33

 

 

 

 

 

REMOVAL OF TENANT’S PROPERTY

 

 

 

33

 

Removal of Tenant’s Property

 

25

 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS
(continued)

 

 

 

Page

 

 

 

 

 

 

 

 

 

ARTICLE 34

 

 

 

 

 

EFFECT OF CONVEYANCE

 

 

 

34

 

Effect of Conveyance

 

25

 

 

 

 

 

 

 

 

 

ARTICLE 35

 

 

 

 

 

LANDLORD’S DEFAULT; NOTICE TO LENDER

 

 

 

35.1

 

Landlord’s Default

 

25

 

35.2

 

Notice to Lender

 

26

 

35.3

 

Independent Covenants, Limitation of Remedies

 

26

 

 

 

 

 

 

 

 

 

ARTICLE 36

 

 

 

 

 

CONSENT

 

 

 

36

 

Consent

 

26

 

 

 

 

 

 

 

 

 

ARTICLE 37

 

 

 

 

 

INTERPRETATION

 

 

 

37

 

Interpretation

 

26

 

 

 

 

 

 

 

 

 

ARTICLE 38

 

 

 

 

 

ENTIRE INSTRUMENT

 

 

 

38

 

Entire Instrument

 

26

 

 

 

 

 

 

 

 

 

ARTICLE 39

 

 

 

 

 

EASEMENTS

 

 

 

39

 

Easements

 

26

 

 

 

 

 

 

 

 

 

ARTICLE 40

 

 

 

 

 

SALE BY LANDLORD

 

 

 

40

 

Sale by Landlord

 

27

 

 

 

 

 

 

 

 

 

ARTICLE 41

 

 

 

 

 

CANCELLATION BY LANDLORD

 

 

 

41

 

Cancellation by Landlord

 

27

 

 

 

 

 

 

 

 

 

ARTICLE 42

 

 

 

 

 

RESERVED

 

 

 

42

 

Reserved

 

27

 

 

 

 

 

 

 

 

 

ARTICLE 43

 

 

 

 

 

WAIVER OF TRIAL BY JURY

 

 

 

43

 

Waiver of Trial by Jury

 

27

 

 

 

 

 

 

 

 

 

ARTICLE 44

 

 

 

 

 

HAZARDOUS SUBSTANCES

 

 

 

44.1

 

Indemnity

 

27

 

44.2

 

Covenant

 

27

 

44.3

 

Definitions

 

28

 

44.4

 

Breach of Obligations

 

28

 

44.5

 

Handling; Notices

 

28

 

44.6

 

Landlord’s Representations

 

29

 

 

 

 

 

 

 

 

 

ARTICLE 45

 

 

 

 

 

AUTHORITY

 

 

 

45

 

Authority

 

29

 

 

 

 

 

 

 

 

 

ARTICLE 46

 

 

 

 

 

BROKERS

 

 

 

46

 

Brokers

 

29

 

 

--------------------------------------------------------------------------------

Exhibit 10.13

MERRILL CREEK CENTER
LEASE AGREEMENT

RECITALS

A.   Landlord and Tenant are parties to that certain Lease Agreement dated
August 2, 2004 (the “Existing Lease”) along with the First Amendment dated June
21, 2005 and the Second Amendment dated November 11, 2005, under which Tenant
currently leases from Landlord space located at the project commonly known as
Merrill Creek Center.

B.   Tenant desires to lease additional space (“Building C”) from Landlord at
Merrill Creek Center on the terms and conditions set forth in this Lease
Agreement.

NOW, THEREFORE, Landlord hereby leases to Tenant and Tenant hereby leases and
accepts from Landlord the premises hereinafter described in the terms and
conditions set forth in this Lease Agreement, hereinafter called “this Lease”. 
Upon the Lease Commencement Date, this Lease Agreement shall supersede and
replace in its entirety the Existing Lease.

BASIC LEASE PROVISIONS

A.

Lease Date:

October 2, 2006

 

 

 

B.

Landlord:

Merrill Creek Center, LLC

 

 

 

C.

Tenant:

Zumiez, Inc., a Washington Corporation

 

 

 

D.

Development:

The project on property particularly described and depicted on the Site Plan
marked Exhibit “B” (the “Development”), located at 6300 Merrill Creek Parkway,
Everett, Snohomish County, Washington  98203

 

 

 

E

Premises:

The area shown by hatch-marks on Exhibit “B,” containing 124,700 rentable square
feet (“RSF”) comprised of the space currently leased by Tenant containing 
87,350 RSF (the “Existing Premises”) and the 30 foot clear warehouse building
under construction containing 37,350 RSF (“Building C”), subject to a
mutually-agreed on final measurement.   The Existing Premises combined with
Building C shall be deemed the “Premises”.

 

 

 

F.

Use of Premises:

Solely for use as a Distribution Center and Office Facility and Direct Channel
Distribution and for no other purpose.

 

 

 

G.

Initial Term:

One Hundred Twenty Six (126) months, with one (5) five-year Option

 

 

 

H.

Minimum Monthly Rent:

 

 

Lease Months

 

Minimum Monthly
Rent (NNN)

 

1

 

$33,648.00

 

2-6

 

$38,346.00

 

7-13

 

$61,503.00

 

14-18

 

$62,557.52

 

19-25

 

$63,136.44

 

26-30

 

$64,219.95

 

31-37

 

$64,813.35

 

38-42

 

$65,926.66

 

43-49

 

$66,534.90

 

50-54

 

$67,678.82

 

55-61

 

$68,302.26

 

62-66

 

$69,477.65

 

67-78

 

$71,324.38

 

79-90

 

$73,220.30

 

91-102

 

$75,166.72

 

103-114

 

$77,164.99

 

115-126

 

$79,216.49

 

127-186 (if Option is Exercised by Tenant)

 

Fair Market Rent (See Section 4.1(c))

 

 

--------------------------------------------------------------------------------

 

I.

Initial Security Deposit:

N/A

 

 

 

J.

Landlord’s Address

 

 

for Notices:

Merrill Creek Holdings, LLC

 

 

600 University Street, Suite 2800

 

 

Seattle, Washington 98101

 

 

Attention: Mark Barbieri

 

 

 

K.

Tenant’s Current

 

 

Address for Notices:

Zumiez, Inc

 

 

6300 Merrill Creek Parkway

 

 

Suite B

 

 

Everett, WA 98203

 

 

Attention: Brenda Morris

 

 

 

 

Tenant’s Address for Notices On

 

 

and After the Commencement

 

 

Date:

The Premises

 

 

 

L.

Landlord’s Broker:

N/A

 

 

 

M.

Tenant’s Broker:

N/A

 

 

 

N.

Tenant Improvement

 

 

Allowance:

Landlord shall provide Tenant with a $65,000 tenant improvement allowance to
upgrade Building C.

 

ARTICLE 1

PREMISES

1.1   Construction; Suitability.  The improvements to Building C shall be
constructed pursuant to Exhibit “A” attached hereto.  The Existing Premises
shall be delivered to Tenant in its as-is condition. Landlord shall have no
other obligation to perform any construction or other work to the interior or
exterior of the Premises, which work is not set forth on Exhibit “A”.  Except as
expressly provided herein, Tenant acknowledges that neither Landlord, nor any
agent or representative of Landlord, has made any representation or warranty
with respect to the suitability of the Premises for the use set forth in the
Basic Lease Provisions, and that Tenant has entered into this Lease based solely
upon its own investigation and inspection of the Development, the Site and the
Premises.  Landlord does not represent, and Tenant does not rely on the fact
that any specific tenant or tenants will occupy space in the Development during
the term of this Lease.  Landlord reserves and excepts from the Premises the
roof and exterior walls of the building or buildings of which the Premises are a
part.

1.2   Location.  The parties acknowledge that Exhibit “B” describes the current
perimeter of the Development before the dedication or grant of easements for
highways, streets, and public ways.  Exhibit “B” sets forth a general layout of
the Development, and shall not be deemed a representation by Landlord that the
Development shall always be constructed as indicated thereon or that any tenants
or occupants designated by name or nature of business thereon shall conduct
business in the Development during the term of this Lease; and, subject to
compliance with all applicable laws and governmental requirements and provided
that there is reasonable access to the Premises, Landlord may in its sole
discretion increase, decrease or change the location, and dimensions of the
buildings within the Development outside the

2

--------------------------------------------------------------------------------

Premises, driving lanes, driveways, walkways, parking places and other
improvements shown on Exhibit “B,” and Landlord reserves the right to make
additions and alterations  to all buildings constructed in the Development, and
to change the name of the Development from time to time, provided that such
changes, additions and alterations do not unreasonably interfere with pedestrian
and vehicular access to the Premises (including without limitation access
between the parking area and the main entrance to the Premises) or the utility
of garbage pickup areas and shipping, receiving, and loading dock areas.  The
parties shall signify their approval of Exhibit “B” by signing or initialing
Exhibit “B,” and such Exhibit is hereby made a part of this Lease.  References
to “this Lease” include all exhibits and matters incorporated by reference as
part of this Lease.

1.3   Landlord’s Warranties.  Landlord represents and warrants to Tenant that
Landlord’s Work  (if any, and as defined in Exhibit “A”) will be performed in a
good and workmanlike manner.  Landlord further represents and warrants to Tenant
that upon substantial completion of the Premises, Landlord’s Work (if any, and
as defined in Exhibit “A”) will be in compliance with all governmental rules,
orders, regulations and requirement then in effect.  Landlord’s liability under
the foregoing warranties shall be limited to the repair and/or replacement, as
the case may be, of defective materials and workmanship and/or affecting
compliance with such rules and requirements, and, in no event, shall Landlord be
liable for special or consequential damages.

1.4   Right of First Offer.  Provided that Tenant has not been in material
default under the terms and conditions of this Lease, Tenant shall have, during
the initial Term, a right of first offer to lease additional space in the
Development (the “ROFO Space”).  Tenant’s right of first offer shall be subject
and subordinate to all leases, options and rights of other third parties in
existence as of the date of mutual execution hereof.  If at any time during the
Term of this Lease, Landlord shall receive a bona fide offer from any third
party to lease all or any part of the ROFO Space, which offer Landlord shall
desire to accept, then Landlord shall promptly notify Tenant of the existence of
such offer by e-mail and by mail and shall provide Tenant with a summary of all
relevant economic terms of the third party offer.  Tenant may, within ten (10)
business days thereafter, elect by written notice to Landlord to lease the ROFO
Space on the same terms and conditions as those as provided in the bona fide
offer.  If Tenant fails to respond within such 10-business day period, Landlord
shall use reasonable efforts to contact, orally or in writing, Tenant to confirm
such non-election.  Failure of Tenant to exercise the foregoing right within the
prescribed time period above shall constitute a waiver of Tenant’s right as to
that offer with respect to the ROFO Space mentioned in Landlord’s notice and
Landlord shall have the right to lease the ROFO Space in Landlord’s sole
discretion.  In the event the bonafide third party offer does not materialize
into a lease or upon termination of the third party tenant’s lease, the ROFO
will be reinstated .  If Tenant duly elects to exercise its right of first offer
as aforesaid, Landlord shall prepare, and Tenant shall promptly execute, an
amendment to this Lease to memorialize such election, provided, however, that
failure of Tenant to execute such amendment shall not affect the binding nature
of Tenant’s election to exercise the right of first offer as aforesaid.  All
rights of Tenant under the provisions of this right of first offer shall
terminate and be of no further force or effect even after Tenant’s due and
timely exercise of the right of first offer, if after such exercise, but prior
to the occupancy of the ROFO Space, Tenant is in material default hereunder. 
The right described in this paragraph is personal to originally-named Tenant or
to an assignee or transferee permitted outright pursuant to this Lease without
Landlord’s consent and may not be exercised or be assigned, voluntarily or
involuntarily, by or to any person or entity other than Tenant, and is not
assignable separate and apart from this Lease.

1.5   Parking.   Tenant and its employees, customers, suppliers and invitees
shall have the right to use, for no additional rent, a total of 290 parking
spaces (250 associated with the Existing Premises and 40 associated with
Building C) as depicted on Exhibit “B” attached hereto. Furthermore, Tenant
shall have the right to use 2.5 spaces of additional parking for each 1,000 RSF
of additional Premises leased by Tenant for office use at the Development and
the right to use 1.0 spaces of additional parking for each 1,000 RSF of
additional Premises leased by Tenant for warehouse use at the Development. 
Landlord shall have the right to relocate any of such parking spaces to areas
reasonably convenient to the Premises.

1.6   Exhibits.  The following drawings and special provisions are attached as
exhibits and made a part of this Lease:

Exhibit “A” - Bldg C Construction Plans and Specifications
Exhibit “B” - Site Plan
Exhibit “C” - Rules and Regulations
Exhibit “D” - Delivery of Premises

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ARTICLE 2

BUSINESS RIGHTS AND RESTRICTIONS

2.1   Use.  The Premises shall be used solely for the specific use set forth in
the Basic Lease Provisions and for no other purpose or use whatsoever.

2.2   Restrictions.  Tenant shall not, without Landlord’s prior written consent,
which consent Landlord may withhold in its sole discretion:  (a) conduct any
auction or bankruptcy sales; (b) conduct any fire sale except as a result of a
fire on the Premises; (c) conduct any close-out sale except at the expiration of
the Lease term or occasional warehouse sales to the public (but not more than
thrice annually); (d) sell any so-called “surplus”, “Army and Navy”, or
“secondhand”  goods, as those terms are generally used at this time and from
time to time hereafter; (e) permit anything to be done on the Premises which
will in any way obstruct, interfere with or infringe on the rights of other
occupants or invitees of the Development; (f) cause, maintain or permit any
nuisance on the Premises or cause or permit any waste to be committed on the
Premises; (g) install or erect any satellite dish or other roof- or
building-mounted equipment without Landlords prior written consent, which shall
not be unreasonably withheld; or (h) bring or keep on the Premises any item or
thing or permit any act thereon which is prohibited by any law, statute,
ordinance or governmental regulation now in force or hereinafter enacted or
promulgated, or which is prohibited by any Standard form of fire insurance
policy.

ARTICLE 3

TERM

3.1   Duration; Early Possession.  The initial term of this Lease shall commence
on January 1, 2007 (the “Lease Commencement Date”).  Prior to the Lease
Commencement Date, Tenant shall continue to pay Rent pursuant to the Existing
Lease.  Notwithstanding the foregoing, in the event Landlord receives a
Certificate of Occupancy for Building C prior to the Lease Commencement Date,
Tenant may occupy Building C prior to the Lease Commencement Date (“Early
Possession Date”) but shall not be obligated to pay Fixed Minimum Rent with
respect to Building C, however, Tenant shall be responsible for those Common
Area Expenses associated with Building C during this Early Possession period. 
Commencing on the date Landlord tenders delivery of possession to Tenant (the
“Early Possession Date”), Tenant and Landlord shall comply with each and every
term, covenant, condition and provision of this Lease, excepting only those
provisions pertaining to Tenant’s obligation to pay Fixed Minimum Rent, which
obligation shall commence in accordance with Article 4 below.  In connection
therewith, Tenant acknowledges and agrees that certain obligations under various
articles hereof shall commence prior to the Lease Commencement Date (i.e.,
payment of certain charges, construction obligations, hold harmless, liability
insurance, etc.), and the parties agree to be bound by these articles prior to
the Lease Commencement Date.

3.2   Option to Extend.  Subject to the provisions of this Lease and provided
that on the date of exercise of the option by Tenant and on the scheduled date
of commencement of the Extended Term (as defined below):  (i) Tenant shall not
then be in default under the terms of this Lease; (ii) the original Tenant shall
be in direct occupancy of the Premises; and (iii) this Lease shall be in full
force and effect; then, the term of this Lease may be extended by Tenant for up
to one (1) additional period of five (5) years (the “Extended Term”), upon the
same terms and conditions as contained in this Lease upon compliance with the
notice provisions set forth herein. Tenant shall exercise its option, if at all,
only with respect to the immediately succeeding Extended Term, by delivering
written notice of its election thereof to Landlord, sent certified mail, return
receipt requested (the “Option Notice”), not more than 360 days nor less than
180 days prior to the expiration of the then-effective Term.   The option to
extend the term of this Lease is only exercisable by the original named Tenant
or to an assignee or transferee permitted outright pursuant to this Lease
without Landlord’s consent.

3.3   Intentionally Omitted.

ARTICLE 4

RENT

4.1   Payment.  Tenant shall pay to Landlord without prior demand, deduction,
set-off, counter claim or offset, for all periods during the Lease term, all
sums provided in this Paragraph 4.l and all other additional sums as provided in
this Lease, at the address set forth in the Basic Lease Provisions, payable in
lawful money of the United States of America on the first day of each month,
with a grace period of 3 days, except that the fixed minimum rent due for the
first month (or first partial month) shall be prepaid on the date of execution
of the Lease by Tenant. All sums of money required to be paid pursuant to the
terms of this Lease are hereby defined as “rent”, including all sums as provided
in Paragraphs 4, 5, 6, 7, 8, and 9 and provided elsewhere in this Lease, whether
or not the same are

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designated as such.  Landlord’s acceptance of Tenant’s bank check or other funds
shall not be deemed a waiver of Landlord’s right to thereafter demand and
receive timely payment in immediately available funds.

(a)   Fixed Minimum Rent.  Tenant shall pay to Landlord, on a triple net basis,
fixed minimum rent at the initial monthly rate provided in the Basic Lease
Provisions.

(b)   Late Fee.  If Tenant shall fail to pay when due (within grace period), any
installment of fixed minimum rent or any other sums due under this Lease, a late
charge equal to two percent (2%) of the overdue amount shall be payable by
Tenant to reimburse Landlord for costs relating to collecting and accounting for
said late payment(s).

(c)   Fixed Minimum Rent duringExtended Term.   Fixed Minimum Rent during the
Extended Term shall be Fair Market Rental Value, provided that in no event shall
Fixed Minimum Rent be decreased.

(1)   The term “Fair Market Rental Value” shall be the rental rate that
comparable Premises for the same term of the Extended Term would command on the
open market at the time of commencement of the Extended Term determined in the
manner set forth in this Section.   For purposes hereof, the term “comparable
Premises” shall mean premises similar in size and location to the Premises with
similar improvements and amenities including any improvements installed upon
Tenant’s initial occupancy of Premises being leased to a tenant with similar
creditworthiness as Tenant.

(2)   If Landlord and Tenant cannot agree upon the Fair Market Rental Value of
the Premises within twenty (20) days after Landlord’s receipt of Tenant’s notice
exercising the Extended Term option, then Landlord and Tenant shall agree within
ten (10) days thereafter on one real estate appraiser (who shall be a Member of
the American Institute of Real Estate Appraisers or equivalent) who will
determine the Fair Market Rental Value of the Premises.  If Landlord and Tenant
cannot mutually agree upon an appraiser within said ten (10) day period, then
one M.A.I. qualified appraiser shall be appointed by Tenant and one M.A.I.
qualified appraiser shall be appointed by Landlord within ten (10) days of
notice by one party to the other of such disagreement.  The two appraisers shall
determine the Fair Market Rental Value of the Premises within twenty (20) days
of their appointment; provided, however, if either party fails to appoint an
appraiser within such ten (10) day period, then the determination of the
appraiser first appointed shall be final, conclusive and binding upon both
parties.  The appraisers appointed shall proceed to determine Fair Market Rental
Value within twenty (20) days following such appointment.  The conclusion shall
be final, conclusive and binding upon both Landlord and Tenant.  If said
appraisers should fail to agree, but the difference in their conclusions as to
Fair Market Rental Value is ten percent (10%) or less of the lower of the two
appraisals, the Fair Market Rental Value shall be deemed the average of the two.

(3)   If the two appraisers should fail to agree on the Fair Market Rental
Value, and the difference between the two appraisals exceeds ten percent (10%),
then the two appraisers thus appointed shall appoint a third M.A.I. qualified
appraiser, and in case of their failure to agree on a third appraiser within ten
(10) days after their individual determination of the Fair Market Rental Value,
either party may apply to the Presiding Judge of the Superior Court for
Snohomish County, Washington, requesting said Judge to appoint the third M.A.I.
qualified appraiser.  The third appraiser so appointed shall promptly determine
the Fair Market Rental Value of the Premises and the average of the appraisals
of the two closest appraisers shall be final, conclusive and binding upon both
parties.  The fees and expenses of said third appraiser or the one appraiser
Landlord and Tenant agree upon, shall be borne equally by Landlord and Tenant. 
Landlord and Tenant shall pay the fees and expenses of their respective
appraiser if the parties fail to agree on a single appraiser.  All M.A.I.
appraisers appointed or selected pursuant to this subsection shall have at least
ten (10) years experience appraising commercial properties in the
Everett/Merrill Creek submarket.

4.2   Intentionally Omitted.

4.3   Lease Year.  The term “Lease Year” shall mean each period of twelve (12)
or less consecutive months which ends on December 31 of each calendar year
during the Lease term or any Extended Term, and the period from the last
December 31 during the Lease term or any Extended Term to and including the last
day of the Lease term or any Extended Term during the next calendar year. The
first and last Lease Years may be less than twelve (12) months.

ARTICLE 5

COMMON AREA

5.1   Definition.  The “Common Area” is that area within the Development which
is neither occupied by buildings (excluding roof overhangs

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and canopies, columns supporting roof overhangs and canopies, and subsurface
foundations) nor devoted permanently to the exclusive use of a particular
tenant, except that areas containing pylon signs and buildings or subsurface
utilities which are used with respect to the operation of the Common Area shall
be deemed to be a part of the Common Area.  The Common Area includes each area
designated as a building area on Exhibit “B” .

5.2   Reserved.

5.3   Use.  During the Lease term Tenant, its subtenants, concessionaires,
licensees, invitees, customers, and employees shall have the nonexclusive right
to use the Common Area with Landlord, other owners of portions of the
Development, other tenants, and their respective subtenants, concessionaires,
licensees, invitees, customers, and employees, subject to the provisions of this
Lease.  Tenant shall also have the right to use the western 3 exterior covered
docks on an exclusive basis.

5.4   Maintenance and Operation.  “Common Area Expenses” shall include, but not
be limited to, the reasonable and customary costs and expenses without markup of
operating, managing, lighting, repairing, replacing (when repairing will be
uneconomic), painting, and  maintaining the Common Area and the Development in
good and sanitary order, condition, and repair, including without limitation,
the costs and expenses, accounted for based on GAAP, of the following:  (l)
managing; (2) cleaning and removing rubbish and dirt; (3) labor costs for
personnel performing services in connection with the operation, repair and
maintenance of the Common Area or Development and the payroll taxes and benefits
related thereto; (4) all utility services utilized in connection with the Common
Area and Development which are not separately metered to the tenants, including
but not limited to heating, ventilation, and air conditioning, electricity, gas,
water charges, sewer charges, hook-up fees, and cost of installing, maintaining
and repairing the Development’s intrabuilding network cabling, repair and/or
installation of any fire protection systems, security alarm systems, lighting
systems, electrical systems and any other utility systems; (5) maintaining,
repairing, replacing, and re-marking paved and unpaved surfaces, curbs, signs,
landscaping, lighting and electrical facilities, drainage, elevators, meters,
breakers, security systems, life  safety systems, irrigation systems, fences and
gates, wiring, and repairs, modifications, additions and replacements to the
foregoing whether or not necessitated by any present or future law, statute,
regulation, or directive of any governmental agency, and other similar items;
(6) all premiums on, deductibles, retentions, and claims not covered by,
worker’s compensation, casualty, public liability, property damage, loss of
rent, fire and extended coverage, and other insurance on the Common Area and
Development obtained by Landlord pursuant to Article 9, or otherwise (Tenant is
to pay its pro-rata share of the costs in connection with such insurance) (7)
rental of or cost of tools, machinery, and equipment used in connection with
managing and maintaining the Common Area; (8) all real property and personal
property taxes and assessments levied or assessed against the Development or the
Common Area, including without limitation, transport fees, trip fees, metro-rail
fees or assessments, school fees, fees assessed by air quality management
districts or any governmental agency regulating air pollution or commercial
rental taxes; (9) the cost of all janitors, gardeners, security personnel and
equipment performing services on the Common Area; (10) any regulatory fee or
surcharge or similar imposition imposed by governmental requirements based upon
or measured by the number of parking spaces or the areas devoted to parking in
the Common Area; (11) the cost of other capital improvements to the Common Area,
amortized over their useful life based on GAAP, to the extent that the
improvement provides increased utility and functionality to the Tenant or
operations and maintenance of the Common areas; and (12)   Notwithstanding the
foregoing, following shall be excluded from Common Area Expenses:  costs
incurred due to Landlord’s negligence; promotional and advertising expenses;
real estate commissions, legal fees, depreciation and amortization, except as
provided herein and except on materials, tools, supplies and vendor-type
equipment purchased by Landlord to enable Landlord to supply services Landlord
might otherwise contract for with a third party where such depreciation and
amortization would otherwise have been included in the charge for such third
party’s services and when depreciation or amortization is permitted or required,
the item shall be amortized over its reasonably anticipated useful life

5.5   Records.  Landlord shall keep accurate records showing in reasonable
detail all expenses incurred for such maintenance.  These records shall, upon at
least five (5) business days’ request, be made available during business hours
at the offices of Landlord for inspection by Tenant.  Any such inspection by
Tenant shall take place within one (1) year following the date of the annual
reconciliation statement (as defined in Paragraph 5.6 below) setting forth such
expenses.

5.6   Tenant’s Contribution.    From and after the Commencement Date of this
Lease, and during the entire Lease term and any Extended Term(s), Tenant shall
pay to Landlord with Fixed Minimum Rent on the first day of each month (subject
to 3 day grace period), Tenant’s pro rata share of the amount of all Common Area
Expenses based on, at Landlord’s election, either:  (a) the amount of such
expenses actually incurred during the billing period; or (b) equal periodic
installments which have been estimated in advance by Landlord for a particular
period. Landlord may revise such estimates upward or downward at any time
without prior notice to Tenant.  If Landlord elects to bill Tenant based upon
estimates, Landlord shall, within sixty (60) days after the end of the calendar
year, or as soon thereafter as possible, forward to Tenant a written statement
(the “annual reconciliation statement”) which adjusts the

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estimated expenses to reflect the actual expenses incurred for such year.  If
the annual reconciliation statement shows the actual expenses to have exceeded
the estimated expenses, then Tenant’s share of such additional amount shall be
paid by Tenant to Landlord within thirty (30) days of receipt of the annual
reconciliation statement; if the annual reconciliation statement shows the
actual expenses to have been less than the estimated expenses, Landlord shall
credit Tenant’s share against the sums next due hereunder from Tenant to
Landlord (or against any outstanding sums then due).Tenant’s pro rata share
shall be equal to the ratio which Tenant’s rentable ground floor area bears to
the total rentable ground floor area which has the benefit of, or participates
in, the expense(s) or service(s) for which Tenant is being charged.

5.7   Operation and Control.  Landlord shall have control and non-exclusive
possession of the entire Common Area and may from time to time adopt rules and
regulations pertaining to the use thereof.  Landlord shall, except as otherwise
provided herein, operate and maintain the Common Area during the Lease term. 
Landlord reserves the right to use the Common Area, so long as reasonable
pedestrian and vehicular access to the Premises continue to be provided and
provided that pedestrian and vehicular access to the Premises (including without
limitation access between the parking area and the main entrance to the
Premises) and the utility of garbage pickup areas and shipping, receiving, and
loading dock areas are not thereby unreasonably interfered with, for such
promotions, exhibitions and similar uses as Landlord reasonably deems in the
best interests of the Development and its tenants.  Landlord may temporarily
close parts of the Common Area for such periods of time as may be necessary for
(i) temporary use as a work area in connection with the construction of
buildings or other improvements within the Development or contiguous property;
(ii) repairs or alterations in or to the Common Area to any utility facilities;
(iii) preventing the public from obtaining prescriptive rights in or to the
Common Area; (iv) emergency or added safety reasons; or (v) performing such
other acts as in Landlord’s reasonable judgment are appropriate for the proper
operation or maintenance of the Development.  Landlord shall have the sole and
exclusive control of the Common Area.  Landlord’s rights shall include, but not
be limited to, the right to (vii) restrain the use of the Common Area by
unauthorized persons; (viii) utilize from time to time any portion of the Common
Area for promotional, entertainment and related matters; (ix) reserved; (x)
temporarily close any portion of the Common Area for repairs, improvements or
alterations, to discourage non-customer use, to prevent dedication or an
easement by prescription, or for any other reason deemed sufficient in
Landlord’s judgment; and (xi) change the shape and size of the Common Area, add,
eliminate or change the location of improvements to the Common Area, including,
without limitation, buildings, lighting, parking areas, roadways and curb cuts,
and construct buildings on the Common Area.  Landlord may determine the nature,
size and extent of the Common Area; as well as make changes to the Common Area
from time to time which in Landlord’s opinion are deemed desirable for the
Development.  The manner in which the Common Area shall be operated and
maintained and the expenditures therefor shall be in Landlord’s sole
discretion.  Landlord reserves the right to appoint a substitute operator,
including but not limited to, any tenant in the Development, to carry out any or
all of Landlord’s rights and duties with respect to the Common Area as provided
in this Lease; and Landlord may enter into a contract either by a separate
document or in a Lease agreement with such operator on such terms and conditions
and for such period as Landlord shall deem proper.

5.8   Obstructions.  No fence, wall, structure, division, rail or obstruction
shall be placed, kept, permitted or maintained upon the Common Area or any part
thereof by Tenant.  Tenant shall not conduct any business activities of any kind
whatsoever in or upon the Common Area without Landlord’s prior written consent. 
Tenant shall not use the Common Area for solicitations, demonstrations or any
other activities that would interfere with the conduct of business in the
Development, or which might tend to create civil disorder or commotion.

ARTICLE 6

TAXES

6.1   Personal Property Taxes.  Tenant shall pay before delinquency all license
fees, public charges, taxes and assessments on the furniture, fixtures,
equipment, inventory and other personal property of or being used by Tenant in
the Premises, whether or not owned by Tenant.

6.2   Real Property Taxes.

(a)   Definition; Payment.  Tenant shall pay to Landlord as additional rent, in
the manner set forth in Paragraph 5.6, any and all real property taxes, excises,
license and permit fees, utility levies and charges, and other governmental
charges and assessments, general and special, ordinary and extraordinary,
unforeseen as well as foreseen, of any kind and nature whatsoever, and
installments thereof (including any business and occupation tax imposed on
Landlord or the Development, and any tax imposed on the rents collected
therefrom or on the income generated thereby, whether or not substituted in
whole or in part for real property taxes, as well as assessments and any license
fee imposed by a local governmental body on the collection of rent), which shall
be levied or assessed against all or any portion of the Premises, or imposed on
Landlord for any period during the term of this Lease, including the costs

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of any appeals or protests thereof (provided that any tax reductions effected by
any such appeal or protest shall be offset against taxes otherwise assessed
pursuant to this paragraph).  Said real property taxes and assessments
attributable to the years that this Lease commences and terminates shall, if
necessary, be prorated and apportioned between Landlord and Tenant to coincide
with the commencement and expiration of the Lease term.  Landlord agrees to
appeal the current tax assessment and provide Tenant copies of documentation and
Tenant shall benefit by any reduction in real estate taxes and NNN charges in
accordance with this Section.

(b)   Proration.  Tenant’s share shall be based upon the ratio of the square
footage of the Premises to the total square footage of the Development unless a
portion of the Development is assessed separately in which case Tenant’s share
shall be based upon the ratio of the square footage of the Premises to the
total  square footage which is included in the applicable tax bill.

(c)   Separate Tax Bill.  If the Premises are separately billed pursuant to a
segregation, Tenant shall pay such property taxes as additional rent, at
Landlord’s election, either (i) at least 30 days prior to delinquency, directly
to the tax collector, or (ii) together with Tenant’s Pro Rata Share of monthly
Common Area expenses, to Landlord, or (iii) twice each year within ten (10) days
after delivery of Landlord’s written statement which shall be accompanied by a
copy of the tax bill, to Landlord.  Each party shall furnish the other upon
written request, evidence of payment of such taxes and assessments.

(d)   Tenant’s Use.  Notwithstanding any other provisions of this Paragraph 6.2,
in the event that Tenant’s use of the Premises or any action undertaken by
Tenant causes an increase in real property taxes assessed against the
Development or the Premises as a result of any tax reassessment or reappraisal,
Tenant shall be solely liable for, and shall pay, in addition to all other sums
payable under this Paragraph 6.2 or elsewhere in the Lease, the entire amount of
the increase in real property taxes over the amount of real property taxes for
the Development or the Premises had such reassessment or reappraisal not
occurred.  Tenant shall not be required to pay increases in taxes caused by
other tenants’ uses of portions of the Development.

6.3   Business Taxes.  Tenant shall pay (a) all special taxes and assessments or
license fees now or hereafter levied, assessed or imposed by law or ordinance,
by reason of the use of the Premises, and (b) any business and occupation tax
and any tax, assessment, levy or charge assessed on the rent paid under this
Lease.

6.4   Substitute and Additional Taxes.  If, at any time during the Term, the
methods of taxation prevailing on the execution date hereof shall be altered so
that in lieu of, or as a supplement to , or a substitute for, the whole or any
part of the Taxes now levied, assessed or imposed on the Premises or the
Development, there shall be levied, assessed or imposed a tax, assessment, levy,
imposition or charge, wholly or partially as a capital levy or otherwise, on the
rents received therefrom, or a tax, assessment, levy (including but not limited
to any municipal, state, or federal levy), imposition or charge measured by or
based in whole or in part upon the Premises and imposed upon Landlord, or a
license fee measured by the rent payable under this Lease or by expenditures
made by Tenant on Landlord’s behalf in connection which this Lease, then all
such taxes, assessments, levies, impositions, charges of the part thereof so
measured or based, shall be deemed to be included within the term “Taxes” as
defined in Article 6 hereof, and Tenant shall pay and discharge the same in the
manner provided for the payment of Taxes herein, it being the intention of the
parties hereto that the rent to be paid hereunder shall be paid to Landlord
absolutely net, without deduction of any kind or nature whatsoever.

6.5   Commercial Rent Tax.  Tenant shall pay to Landlord, in addition to and
together with any and all installments of fixed minimum rent, additional rent
and other charges payable pursuant to this Lease, the excise, transaction,
sales, privilege, or other tax (other than net income and/or estate taxes) now
or in the future imposed by the city, county, state or any other government or
governmental agency upon Landlord and attributable to or measured by the fixed
minimum rent, common area expenses, additional rent or other charges or
prorations payable by Tenant pursuant to this Lease.

ARTICLE 7

UTILITIES

In addition to all other sums Tenant is required to pay pursuant to this Lease,
Tenant shall be solely responsible for and shall pay as additional rent prior to
delinquency all charges for electricity, telephone, water, gas (if any), heat
and any other utilities used or consumed on the Premises from and after the date
Tenant first takes possession of the Premises.  If the Premises are separately
metered by the utility service company Tenant agrees to pay all charges therefor
attributable to the Lease term directly to the appropriate utility service
company before delinquency, whether the statement or invoice therefor is
delivered to Tenant during, or after expiration of, the Lease term.  If the
Premises are separately metered by the Landlord, Tenant agrees to pay all
charges therefore attributable to the Lease term directly to Landlord before
delinquency, whether the statement or invoice therefore is delivered to Tenant
during, or

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after expiration of, the Lease term.  Tenant shall pay to Landlord before
delinquency its pro-rata share of the costs of any utility services that are not
separately metered.  Tenant’s pro-rata share shall be equal to the ratio which
Tenant’s rentable ground floor area bears to the total rentable ground floor
area which has the benefit of, or receives, the expense or utility service for
which Tenant is being charged.  Nothing contained in this Lease shall limit
Landlord in any way from granting or using easements on, across, over, and under
the Development for the purpose of providing utility services for Tenant or
others.  In no event shall Landlord be responsible for any loss, cost, liability
or expense of any person or entity resulting from any interruption of utility
services to Tenant and/or the Premises, nor shall rent be offset as a result of
any such interruption, unless any such utility interruption is due to the
Landlord’s gross negligence or intentional misconduct and continues for
forty-eight (48) hours or more after Tenant provides written notice thereof to
Landlord.

ARTICLE 8

REPAIRS AND ALTERATIONS

8.1   Landlord’s Repairs.  The Basic Building Systems (e.g. plumbing,
electrical, mechanical, etc.) will be in functional working order upon Lease
Commencement Date.  Landlord shall keep in good condition and repair the
structure, foundation, bearing walls, roof system, exterior utility lines
serving the Building at Tenant’s cost which shall be amortized over the
reasonably estimated useful life thereof if a capital expense and prorated and
paid by Tenant in accordance with Paragraph 5.6.  Unless Landlord has elected to
require Tenant to maintain the HVAC system, Landlord shall maintain the HVAC
system of the Premises, at Tenant’s cost (which shall be paid solely by Tenant
in the event that the repair or replacement relates solely to the Premises or is
necessitated by Tenant’s actions, or if not, which shall be prorated and paid by
Tenant in accordance with Paragraph 5.6), except that Landlord shall not be
required to make any such repairs or replacements occasioned by the act or
negligence of Tenant, its agents, employees, invitees, licensees,
representatives or contractors.  In addition to the foregoing, Landlord may, at
its election, employ qualified companies to provide regular inspection,
maintenance and repair of the walls, roof, utility lines, fire sprinklers and
HVAC system, the costs of which shall be included in Common Area Expenses
pursuant to Paragraph 5.4, and paid by Tenant in accordance with Paragraph 5.6.
For purposes of this particular proration, the floor area of any buildings not
included in such service contracts shall be excluded from the denominator. 
Nothing contained in this Paragraph 8.1 shall limit Landlord’s right to
reimbursement from Tenant for maintenance, repair costs and replacement costs
provided elsewhere in this Lease.  Notwithstanding the foregoing, Tenant
acknowledges that Building C does not contain an air conditioning system, but,
at Tenant’s request, Landlord shall install air conditioning and associated
improvements in Building C at Tenant’s sole cost and expense.

8.2   Tenant’s Repairs.  Except as expressly provided in Paragraph 8.1, Tenant
shall, at its sole cost, keep in first-class appearance, in a condition at least
equal to that which existed when Tenant initially began operating at the
Premises, and in good order, condition, cleanliness and repair the interior of
the Premises and every part thereof, including without limitation, the interior
surfaces of walls, floors, ceilings, and the interior surfaces of all doors,
door frames, door checks, entrances, windows, window frames, and plate glass. 
Landlord shall repair, maintain, and replace, at Tenant’s expense, swamp
coolers, all plumbing and sewage facilities within the Premises, including free
flow up to the main sewer line, fixtures, ventilation, and electrical systems
serving the Premises, sprinkler systems, exterior walls, exterior windows,
doors, door frames, and any mechanical systems or equipment installed for the
sole use by Tenant.  All equipment, facilities or fixtures shall, at Tenant’s
sole expense, be kept, repaired, maintained, replaced or added to as provided by
this paragraph at all times in accordance with all governmental requirements;
except that Tenant shall not be required to make any such repairs or
replacements occasioned by the act or negligence of Landlord, its agents,
employees, invitees, licensees, representatives or contractors.  In the event
that Tenant fails to comply with the obligations set forth in this Paragraph
8.2, Landlord may, but shall not be obligated to, perform any such obligation on
behalf of, and for the account of Tenant, and Tenant shall reimburse Landlord
for all costs and expenses paid or incurred on behalf of Tenant in connection
with performing the obligations set forth herein.  Tenant expressly waives the
right to make repairs at Landlord’s expense under any law, statute or ordinance
now or hereafter in effect.

8.3   Alterations.

(a)   Tenant’s Alterations.  Tenant shall not make any alterations,
installations or improvements (collectively, “Tenant Changes”) in, to, or about
the interior or exterior of the Premises without obtaining the prior written
consent of Landlord, which shall not be unreasonably withheld or delayed. 
Tenant’s request for Landlord’s consent to perform any Tenant Changes which
affect structural components, the electrical or HVAC system or cause penetration
through the roof or walls of the building, must be accompanied by plans and
specifications (to be prepared by Tenant at Tenant’s sole cost) for the proposed
Tenant Change in detail reasonably satisfactory to Landlord, together with
notice of the identity of the licensed contractor which Tenant has or will
engage to perform such work, plus reimbursement of Landlord’s third party costs
associated with reviewing such plans and specifications. Landlord shall grant

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or withhold its approval of such plans and specifications within fifteen (15)
business days after Tenant makes request therefor in the manner provided herein;
provided, however, if Landlord needs to consult with an outside consultant or
expert with respect thereto, Landlord’s consent shall be granted or denied
within a reasonable time after the expiration of such 15-day period.  All such
work shall be accomplished at Tenant’s sole risk, and Tenant shall indemnify,
defend and hold harmless Landlord from and against any and all loss, cost,
liability and expense (including consequential damages) relating to or arising
from the Tenant Changes. All permanent, nonmovable Tenant Changes shall become a
part of the realty upon installation thereof.

(b)   Approval Not Required.  Notwithstanding Paragraph 8.3(a), with respect to
carpeting and painting and other Tenant Changes which (i) are non-structural in
nature (i.e., do not involve changes to the structural elements of the building
or the Development); (ii) do not involve changes to the building’s systems,
including without limitation, the roof, electrical, plumbing, and HVAC systems
(the Tenant Changes described in clauses (i) and (ii) hereof are collectively
called “Non-Structural Changes”); and (iii) in the aggregate would not cost in
excess of $10,000.00 when added together with the cost of all other
Non-Structural Changes made during the prior 3 month period, Tenant need not
obtain Landlord’s prior written consent, but must notify Landlord in writing
within ten (10) days prior to the commencement of such Non-Structural Changes.

8.4   General Conditions.  Tenant shall at all times comply with the following
requirements when performing any work pursuant to Paragraphs 8.2 and 8.3:

(a)   Contractors.  Tenant shall use the contractors and mechanics then
appearing on Landlord’s approved list, which shall include at least three
independent, qualified contractors, if the Tenant Changes involve changes to the
building’s systems and/or structural elements. With respect to Non-Structural
Changes, Tenant shall use such contractors and mechanics which Landlord approves
of in writing prior to their use, which approval shall not be unreasonably
withheld. All contractors used by Tenant shall be licensed contractors who are
experienced in the type of work to be performed.

(b)   Compliance With Laws.  All Tenant Changes shall at all times comply with
all laws, rules, orders and regulations of governmental authorities having
jurisdiction thereof and all insurance requirements of this Lease, shall comply
with the rules and regulations for the Development now or hereafter in
existence, and shall comply with the plans and specifications approved by
Landlord.

(c)   Tenant’s Responsibility.  All Tenant Changes shall be made and completed
at Tenant’s sole cost and expense, and the Development and the Premises shall be
kept lien-free at all times by Tenant.

(d)   Compliance with Americans With Disabilities Act.  Tenant shall comply with
all provisions of the Americans With Disabilities Act of 1990 and all
regulations promulgated to implement the provisions of such act (collectively,
the “ADA”).  In this regard, in connection with any improvement or alteration to
the Premises done by Tenant, Tenant shall insure that the Premises are readily
accessible to and usable by individuals with disabilities, including individuals
who use wheelchairs.  New ADA requirements requiring structural changes to the
Common Areas will be the responsibility of the Landlord, and new ADA
requirements requiring structural changes to the Premises will be the
responsibility of the Tenant.

ARTICLE 9

INSURANCE

9.1   Use Rate.  Tenant shall not carry any stock of goods or do anything in or
about the Premises which will cause an increase in insurance rates on the
building in which the Premises are located.  In no event shall Tenant perform
any activities which would invalidate any insurance coverage on the Development
or the Premises.  Tenant shall pay on demand any increase in premiums that may
be charged as a result of Tenant’s use or activities, but this provision shall
not be deemed to limit in any respect Tenant’s obligations under Article 14.  In
no event shall the limits of insurance required to be maintained by Landlord or
Tenant pursuant to this Lease be deemed to limit the liability of either party
hereunder.

9.2   Liability Insurance.  Tenant shall, during the Lease term, at its sole
expense, maintain in full force a policy or policies of Commercial general
liability (CGL) insurance including contractual, on an occurrence basis, with
coverage at least as broad as the most commonly available ISO Commercial General
Liability policy CG 00 01, at least Two Million Dollars ($2,000,000) per
occurrence limit, Two Million Dollars ($2,000,000) general aggregate limit. 
Tenant shall also maintain Commercial Automobile coverage, One Million Dollars
($1,000,000) combined single limit/per accident, covering injury (or death) and
property damage arising out of the ownership, maintenance, or use of any private
passenger or commercial vehicles and of any other equipment required to be
licensed for road use.  Such

 

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limits may be achieved through the use of umbrella liability insurance otherwise
meeting the requirements of this paragraph.

9.3   Worker’s Compensation Insurance.  Tenant shall at all times maintain
worker’s compensation insurance in compliance with federal, state and local law,
including Employer’s Liability coverage (contingent liability/stop gap) in the
amount of $1,000,000 each accident; $1,000,000 bodily injury by disease policy
limit; and $1,000,000 bodily injury each employee.

9.4   Property Insurance/Business Income.

(a)   Landlord’s Insurance.  Landlord shall pay for and shall maintain in full
force and effect during the term of this Lease a standard form of extended
coverage endorsement and standard form of lender’s loss payable endorsement
issued to the holder or holders of Landlord’s mortgage or deed of trust, in an
amount equal to 90% of the replacement cost of the Development, including the
Premises (which coverage may include, at Landlord’s sole option, special
extended coverage, earthquake and sprinkler leakage coverage, boiler and
machinery,), and Business Income and Extra Expense with loss of rents coverage
equal to fixed minimum rent for up to eighteen months.  Tenant shall pay
Tenant’s pro rata share for the costs incurred by Landlord, for such insurance
in accordance with the payment provisions set forth in Paragraph 5.6 above.

(b)   Tenant’s Insurance. Tenant shall pay for and shall maintain in full force
and effect during the term of this Lease Property insurance covering its
leasehold improvements to the Premises, furniture, fixtures, equipment,
inventory and other personal property located on the Premises in an amount of
not less than one hundred percent (100%) insurable replacement value with no
coinsurance penalty,   Tenant shall also obtain and maintain Business Income and
Extra Expense coverage for a period of twelve (12) months.  Tenant may
self-insure personal property and leasehold improvements (but not inventory).

9.5   Waiver of Subrogation.  Tenant hereby waives, and Tenant’s insurance
policy or policies shall include a waiver of such carrier’s, entire right of
recovery (i.e., subrogation) against Landlord, and the officers, directors,
agents, representatives, employees, successors and assigns of Landlord which
arises or might arise by reason of any payment under Tenant’s property, worker’s
compensation and employer’s liability insurance policy or by Tenant or by reason
of any act or omission  of Landlord, its directors, partners, agents, employees
or representatives.

9.6   General Requirements.  Landlord will provide certificates of insurance on
facility with specific coverages and deductibles.  Landlord will be responsible
for notifying Tenant of changes to Insurance coverages.  All policies of
insurance required to be carried hereunder by Tenant shall be evidenced by an
appropriate evidence of insurance (ACORD Form 24 for property insurance and
ACORD Form 25 for all others), which evidences must contain the following
additional clause:

“It is agreed that this insurance will not be canceled, not renewed, or the
limits of coverage in any way reduced without at least thirty (30) days’ advance
written notice [ten (10) days for nonpayment of premiums] sent by certified
mail, return receipt requested, to the [enter Landlord’s Name and Address].”

(a)   Licensed in State.  Be written by companies reasonably satisfactory to
Landlord and licensed to do business in the state of Washington.  All policies
of insurance required to be maintained by Tenant shall be issued by insurance
companies with an A.M. Best’s financial strength rating of “A” or better and an
A.M. Best’s Financial Size Category of Class “XII” or higher, and shall not
contain a deductible greater than $2,500 or any self-insured retention unless
expressly approved in writing by Landlord.

(b)   Primary.  Contain a clause that such policy and the coverage evidenced
thereby shall be primary and non-contributing with respect to any policies
carried by Landlord, and that any coverage carried by Landlord shall be excess
insurance.  All insurance coverage must be on an “occurrence basis”; “claims
made” forms of insurance are not acceptable.

(c)   Additional Named Insured.  Liability policies shall name Landlord and the
following parties as additional insureds utilizing ISO Endorsement CG
20-11-01-96 or its equivalent (“certificate holder” status is not acceptable):

[List names of Additional Insured Entities]

Landlord shall be listed as a “loss payee” on property policies.

(d)   Notice of Cancellation.  Not be subject to cancellation or reduction in
coverage except upon at least thirty (30) days prior written notice to each
additional insured.  The policies of

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insurance containing the terms specified herein, or duly executed certificates
evidencing them,  shall be deposited with each additional insured at least 30
days prior to the Lease Commencement Date and subsequently not less than thirty
(30) days prior to the expiration of the original or any renewal term of such
coverage.  If Tenant fails to comply with the insurance requirements set forth
in this Lease, Landlord shall have the right, but not the obligation, at any
time and from time to time, without notice, to procure such insurance and/or pay
the premium for such insurance, in which event Tenant shall repay Landlord,
immediately upon demand by Landlord, as additional rent, all sums so paid by
Landlord together with interest thereon and any costs or expenses incurred by
Landlord in connection therewith, without prejudice to any other rights and
remedies of the Landlord under this Lease.

9.7   Blanket Insurance.  Each party shall be entitled to fulfill its insurance
obligations hereunder by maintaining a so-called “blanket” policy or policies of
insurance. Such policy shall contain an endorsement that names the other party
as an additional insured, references the Premises, and guarantees a minimum
limit of coverage available for the obligations under this Lease at least equal
to the insurance amounts required hereunder.  Tenant’s right to fulfill its
insurance obligations hereunder through a “blanket” policy shall be subject to
approval of such policy by Landlord and Landlord’s lender(s).

ARTICLE 10

DAMAGE AND RESTORATION

10.1 Damage and Destruction of the Premises.  If the Premises are at any time
destroyed or damaged by a casualty insured against by Landlord pursuant to
Article 9 hereof or otherwise insured against by Landlord, and if as a result of
such occurrence:

(a)   the Premises are rendered untenantable only in part, this Lease shall
continue in full force and effect and, provided Tenant shall covenant in writing
to Landlord that Tenant shall comply with the provisions of Paragraph 10.3 below
upon completion of Landlord’s reconstruction, rebuilding or repair of the
Premises, Landlord shall, subject to the provisions of Paragraph 10.4 below,
commence diligently to reconstruct, rebuild or repair the Premises to the extent
only of Landlord’s Work (Landlord shall have no obligation to construct any of
Tenant’s Work). In such event, fixed minimum rent and additional rent shall
abate proportionately to the portion of the Premises rendered untenantable from
the date of the destruction or damage until the entire Premises have been
restored by Landlord to the extent of Landlord’s Work;

(b)   the Premises are rendered totally untenantable, provided Tenant shall
covenant in writing to Landlord that Tenant shall reopen in the entire Premises
for such use and will comply with the provisions of Paragraph 10.3 below upon
completion of Landlord’s reconstruction, rebuilding or repair of the Premises,
Landlord shall, subject to Paragraph 10.4 hereof, commence diligently to
reconstruct, rebuild or repair the Premises to the same operative  condition at
the time of Lease Commencement and including the requirements of  Exhibit “A”
(Landlord shall have no obligation to perform any of Tenant’s Work).  In such
event, fixed minimum rent and additional rent shall abate entirely from the date
of the destruction or damage until the Premises have been restored  by Landlord
to the extent of Landlord’s Work.

10.2 Damage or Destruction of Development.

(a)   If 25% or more of the Leasable Area of the Premises  or 25% or more of the
Common Area of the Development, or any combination of Leasable Area of the
Premises and Common Area which aggregate 25% or more of the total square footage
of Development land, is at any time destroyed or damaged (including, without
limitation, by smoke or water damage) as a result of fire, the elements,
accident, or other casualty, whether or not the Premises are affected by such
occurrence, Landlord may, at its option (to be exercised by written notice to
Tenant within ninety (90) days following any such occurrence), elect to
terminate this Lease.  In the case of such election, the term and tenancy
created hereby shall expire on the ninety (90th) day after such notice is given,
without liability or penalty payable or any other recourse by one party to or
against the other; and Tenant shall, within such 30-day period, vacate the
Premises and surrender them to Landlord.  All rent shall be due and payable
without reduction or abatement subsequent to the destruction or damage and until
the date of termination, unless the Premises shall have been destroyed or
damaged, in which event the terms of Paragraph 10.1(a) or (b), as applicable, of
this Lease shall apply to determine the obligations of Tenant to pay rent.

(b)   If Landlord does not elect to terminate this Lease in accordance with the
terms of Paragraph 10.2(a), Landlord shall, following such destruction or
damage, commence diligently to reconstruct, rebuild, or repair, if necessary,
that part of the Development which is necessary, in Landlord’s sole judgement,
to create an economically viable unit.  However, Landlord shall reconstruct,
rebuild, or repair the Premises and the Development to the extent only of
proceeds received by Landlord from its insurers.  Further, if Landlord elects to
repair, reconstruct, or rebuild the Development, or any part thereof, Landlord
may use plans, specifications, and working drawings other than those used in the

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original construction of the Development and shall only be obligated to restore
the damaged portions thereof to a reasonably operative condition similar to that
which existed prior to the event of damage or destruction, provided that the
ultimate reconstruction does not unreasonably impair Tenant use, occupancy and
enjoyment of the Premises as the same existed prior to such event.

10.3 Tenant’s Work.  If this Lease has not been terminated after damage or
destruction as provided above, then upon receipt by Tenant of written notice
that Landlord’s Work has been substantially completed, Tenant shall forthwith
complete all Tenant’s Work, and all other work required to fully restore the
Premises for business fully fixturized, stocked, and staffed.  If the Premises
have been closed for business, Tenant shall reopen for business for the
permitted use set forth in the Basic Lease Provisions, but no later than sixty
(60) days after notice that Landlord’s Work is substantially completed.

10.4 Limitation of Obligations.  Notwithstanding anything set forth to the
contrary herein, in the event the Premises or Development are damaged as a
result of any cause in respect of which there are no insurance proceeds
available to Landlord, or the proceeds of insurance are insufficient to pay for
the costs of repair or reconstruction, or any mortgagee or other person entitled
to the proceeds of insurance does not consent to the payment to Landlord of such
proceeds to fully restore the Premises or Development, or if the Premises or
Development cannot be fully restored to its prior condition under land use and
building codes in force at the time of the casualty, then Landlord may, without
obligation or liability to Tenant, terminate this Lease on sixty (60) days’
written notice to Tenant and all rent shall be adjusted as of the effective date
of such termination, and Tenant shall vacate and surrender the Premises on the
date set forth in Landlord’s termination notice.

10.5 Damage or Destruction at End of Term.  Notwithstanding anything to the
contrary contained herein, Neither Landlord nor Tenant shall have any obligation
to repair, reconstruct, or restore the Premises or Development when the damage
or destruction occurs during the last eighteen (18) months of the term of this
Lease.

10.6 Waiver.  Tenant hereby waives any statutory and common law rights of
termination which may arise by reason of any partial or total destruction of the
Premises which Landlord is obligated to restore or may restore under any of the
provisions of this Lease.

ARTICLE 11

FLOOR AREA DEFINED

“Floor Area” or “floor area” means:  (a) as to each building or part thereof
within the Development, including Tenant’s Premises, the actual number of square
feet of ground floor space measured to the exterior faces of exterior walls and
to the center of party walls, including columns, stairs, elevators and
escalators, excluding exterior ramps and loading docks.

ARTICLE 12

EMINENT DOMAIN

12.1 Definition.  If there is any taking or condemnation of or transfer in lieu
thereof for a public or quasi-public use of all or any part of the Development
or the Premises or any interest therein because of the exercise of the power of
eminent domain or inverse condemnation, whether by condemnation proceedings or
otherwise (all of the foregoing being hereinafter referred to as “taking”)
before or during the term hereof, the rights and obligations of the parties with
respect to such taking shall be as provided in this Article 12.

12.2 Total Taking.  If there is a taking of all of the Premises, this Lease
shall terminate as of the date of such taking.  All fixed minimum rent and other
amounts due under this Lease shall be paid by Tenant to the date of such
termination.

12.3 Partial Taking of Premises.  If any part of the Premises shall be taken,
and a part thereof remains which is reasonably susceptible of occupation
hereunder for the use permitted herein, this Lease shall, as to the part so
taken, terminate as of the date title shall vest in the condemnor or transferee,
and the fixed minimum rent payable hereunder shall be reduced by the proportion
which the floor area taken from the Premises bears to the total Floor Area of
the Premises immediately before the taking; but in such event Landlord or Tenant
shall have the option to terminate this Lease as of the date when title to the
part so condemned vests in the condemnor or transferee.  All fixed minimum rent
and other amounts due under this Lease shall be paid by Tenant to the date of
any such termination.

12.4 Common Area Taking.  If so much of the Common Area is taken that in the
commercially reasonable judgement of Landlord the Development will be rendered
unsuitable for the continued use thereof for the purposes for which it was
intended, Landlord, or Tenant, if such taking 

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significantly negatively impacts Tenant’s business,  may elect to terminate this
Lease by giving the other party written notice of such election within sixty
(60) days after the date that title to the portion so taken vests in the
condemnor or transferee.  If either party  fails to give such notice, this Lease
shall remain in full force and effect. If any part of the Development is taken,
but no part of the Premises is taken, and Landlord does not elect to terminate
this Lease, the rent payable hereunder shall not be reduced, nor shall Tenant be
entitled to any part of the award made therefor.  In the event of termination,
all fixed minimum rent and other amounts due under this Lease shall be paid by
Tenant to the date of such termination.

12.5 Repair and Restoration.  If this Lease is not terminated as provided in
this Article 12, Landlord shall, at its sole expense, restore with due diligence
the remainder of the improvements occupied by Tenant so far as is practicable to
a complete unit of like quality, character, and condition as that which existed
immediately prior to the taking, provided that the scope of the work shall not
exceed the scope of the work to be done by Landlord originally in construction
of the Premises, and further provided that Landlord shall not be obligated to
expend an amount greater than that which was awarded to Landlord for such
taking. Tenant, at its sole cost and expense, shall restore its furniture,
fixtures and other allowed leasehold improvements to their condition immediately
preceding such taking.

12.6 Award.  In the event of any taking, Landlord shall be entitled to the
entire award of compensation or settlement in such proceedings, whether for a
total or partial taking or for diminution in the value of the leasehold or for
the fee. Any such amounts shall belong to and be the property of Landlord.
Without in any way diminishing the rights of Landlord under the preceding
sentence, Tenant shall be entitled to recover from the condemnor such
compensation as may be separately awarded by the condemnor to Tenant or
recoverable from the condemnor by Tenant in its own right for the taking of
trade fixtures and equipment owned by Tenant (meaning personal property, whether
or not attached to real property, which may be removed without injury to the
Premises) and for the expense of removing and relocating them, and for loss of
goodwill, but only to the extent that the compensation awarded to Tenant shall
be in addition to and shall not diminish the compensation awarded to Landlord as
provided above.

12.7 Waiver.  Tenant hereby waives any statutory and common law rights of
termination which may arise by reason of any partial taking of the Premises
under the power of eminent domain.

ARTICLE 13

INDEMNITY; WAIVER

13.1 Indemnification and Waivers.

(a)   Indemnity.  To the fullest extent permitted by law, Tenant shall, at
Tenant’s sole cost and expense, Indemnify Landlord Parties against all Claims
arising from (i) any Personal Injury, Bodily Injury or Property Damage
whatsoever occurring in or at the Premises; (ii) any Bodily Injury to an
employee of a Tenant Party arising out of and in the course of employment of the
employee and occurring anywhere in the Development; (iii) the use or occupancy,
or manner of use or occupancy, or conduct or management of the Premises or of
any business therein; (iv) subject to the waiver of subrogation provisions of
this Lease, any act, error, omission or negligence of any of the Tenant Parties
in, on or about the Premises or the Development; (v) the conduct of Tenant’s
business; (vi) any alterations, activities, work or things done, omitted,
permitted or allowed by Tenant Parties in, at or about the Premises or
Development, including the violation of or failure to comply with, or the
alleged violation of or alleged failure to comply with any applicable laws,
statutes, ordinances, standards, rules, regulations, orders, or judgments in
existence on the date of the Lease or enacted, promulgated or issued after the
date of this Lease including Hazardous Materials Laws (defined below); (vii) any
breach or default by Tenant in the full and prompt payment of any amount due
under this Lease, any breach, violation or nonperformance of any term,
condition, covenant or other obligation of Tenant under this Lease, or any
misrepresentation made by Tenant or any guarantor of Tenant’s obligations in
connection with this Lease; (viii) all damages sustained by Landlord as a result
of any holdover by Tenant or any Tenant Party in the Premises including, but not
limited to, any claims by another tenant resulting from a delay by Landlord in
delivering possession of the Premises to such tenant; (ix) any liens or
encumbrances arising out of any work performed or materials furnished by or for
Tenant; (x) commissions or other compensation or charges claimed by any real
estate broker or agent with respect to this Lease by, through or, under Tenant
or, (xi) any matter enumerated in Paragraph 13(b) below.

To the fullest extent permitted by law, Landlord shall, at Landlord’s sole cost
and expense, Indemnify Tenant Parties against all Claims arising from (i) any
Personal Injury, Bodily Injury or Property Damage whatsoever occurring in or at
the remainder of the Development other than the Premises; (ii) any Bodily Injury
to an employee of a Landlord Party arising out of and in the course of
employment of the employee and occurring anywhere in the Development outside the
Premises; (iii) any breach, violation or nonperformance of any term, condition,
covenant or other obligation of Landlord under this Lease; (iv) any liens or
encumbrances arising out of any work performed or materials furnished by or for
Landlord; or (v) commissions or other compensation or charges claimed by any
real estate

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broker or agent with respect to this Lease by, through or, under Landlord.

(b)   Waivers.  To the fullest extent permitted by law, Tenant, on behalf of all
Tenant Parties, Waives all Claims against Landlord Parties arising from the
following: (i) any Personal Injury, Bodily Injury, or Property Damage occurring
in or at the Premises; (ii) any loss of or damage to property of a Tenant Party
located in the Premises or other part of the Development by theft or otherwise;
(iii) any Personal Injury, Bodily Injury, or Property Damage to any Tenant Party
caused by other tenants of the Development, parties not occupying space in the
Development, occupants of property adjacent to the Development, or the public or
by the construction of any private, public, or quasi-public work occurring
either in the Premises or elsewhere in the Development; (iv) any interruption or
stoppage of any utility service or for any damage to persons or property
resulting from such stoppage; (v) business interruption or loss of use of the
Premises suffered by Tenant; (vi) any latent defect in construction of the
Building; (vii) damages or injuries or interference with Tenant’s business, loss
of occupancy or quiet enjoyment and any other loss resulting from the exercise
by Landlord of any right or the performance by Landlord of Landlord’s
maintenance or other obligations under this Lease, or (viii) any Bodily Injury
to an employee of a Tenant Party arising out of and in the course of employment
of the employee and occurring anywhere in the Development.

(c)   Definitions.  For purposes of this Article 13: (i) the term “Tenant
Parties” means Tenant, and Tenant’s officers, members, partners, agents,
employees, sublessees, licensees, invitees and independent contractors, and all
persons and entities claiming through any of these persons or entities; (ii) the
term “Landlord Parties” means Landlord and the members, partners, venturers,
trustees and ancillary trustees of Landlord and the respective officers,
directors, shareholders, members, parents, subsidiaries and any other affiliated
entities, personal representatives, executors, heirs, assigns, licensees,
invitees, beneficiaries, agents, servants, employees and independent contractors
of these persons or entities; (iii) the term “Indemnify” means indemnify, defend
(with counsel reasonably acceptable to Landlord) and hold free and harmless for,
from and against; (iv) the term “Claims” means all liabilities, claims, damages
(including consequential damages), losses, penalties, litigation, demands,
causes of action (whether in tort or contract, in law or at equity or
otherwise), suits, proceedings, judgments, disbursements, charges, assessments,
and expenses (including attorneys’ and experts’ fees and expenses incurred in
investigating, defending, or prosecuting any litigation, claim, or proceeding);
(v) the term “Waives” means that the Tenant Parties waive and knowingly and
voluntarily assume the risk of; and (vi) the terms “Bodily Injury”, “Personal
Injury” and “Property Damage” will have the same meanings as in the form of
commercial general insurance policy issued by Insurance Services Office, Inc.
most recently prior to the date of the injury or loss in question.

(d)   Scope of Indemnities and Waivers.  Except as provided in the following
sentence, the indemnities and waivers contained in this Article 13 shall apply
regardless of the active or passive negligence or sole, joint, concurrent, or
comparative negligence of any of the Landlord Parties, and regardless of whether
liability without fault or strict liability is imposed or sought to be imposed
on any of the Landlord Parties.  The indemnities and waivers contained in this
Article 13 shall not apply to the extent of the percentage of liability that a
final judgment of a court of competent jurisdiction establishes under the
comparative negligence principles of the state of Washington, that a Claim
against a Landlord Party was proximately caused by the willful misconduct or
gross negligence of that Landlord Party, provided, however, that in such event
the indemnity or waiver will remain valid for all other Landlord Parties.

(e)   Duty to Defend.  Tenant’s duty to defend Landlord Parties is separate and
independent of Tenant’s duty to Indemnify Landlord Parties.  Tenant’s duty to
defend includes Claims for which Landlord Parties may be liable without fault or
may be strictly liable.  Tenant’s duty to defend applies regardless of whether
issues of negligence, liability, fault, default or other obligation on the part
of Tenant Parties have been determined.  Tenant’s duty to defend applies
immediately, regardless of whether Landlord Parties have paid any sums or
incurred any detriment arising out of or relating, directly or indirectly, to
any Claims.  It is the express intention of Landlord and Tenant that Landlord
Parties will be entitled to obtain summary adjudication regarding Tenant’s duty
to defend Landlord Parties at any stage of any Claim within the scope of this
Article 13.

(f)    Obligations Independent of Insurance.  The indemnification provided in
this Article 13 shall not be construed or interpreted as in any way restricting,
limiting or modifying Tenant’s insurance or other obligations under this Lease,
and the provisions of this Article 13 are independent of Tenant’s insurance and
other obligations.  Tenant’s compliance with the insurance requirements and
other obligations under this Lease does not in any way restrict, limit or modify
Tenant’s indemnification obligations under this Lease.

(g)   Waiver of Immunity. EACH OF LANDLORD AND TENANT HEREBY WAIVES ITS IMMUNITY
WITH RESPECT TO THE PARTIES INDEMNIFIED UNDER THE PRECEDING PARAGRAPHS UNDER THE
INDUSTRIAL INSURANCE ACT (RCW TITLE 51) AND/OR THE LONGSHOREMAN’S AND
HARBORWORKER’S ACT AND/OR ANY EQUIVALENT ACTS AND

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EXPRESSLY AGREES TO ASSUME POTENTIAL LIABILITY FOR ACTIONS BROUGHT AGAINST AN
INDEMNIFIED PARTY BY THE INDEMNIFYING PARTY’S EMPLOYEES.  THIS WAIVER HAS BEEN
SPECIFICALLY NEGOTIATED BY THE PARTIES TO THIS LEASE AND EACH PARTY HAS HAD THE
OPPORTUNITY TO, AND HAS BEEN ENCOURAGED, TO CONSULT WITH INDEPENDENT COUNSEL
REGARDING THIS WAIVER.

(h)   Survival.  The provisions of this Article 13 will survive the expiration
or earlier termination of this Lease until all Claims against Landlord Parties
involving any of the indemnified or waived matters are fully and finally barred
by the applicable statutes of limitations.

ARTICLE 14

OPERATION OF BUSINESS

Tenant shall (a) keep the Premises and interior portions of windows, doors and
all other glass or plate glass fixtures in a neat, clean, sanitary and safe
condition; (b) refrain from burning any papers or refuse of any kind in the
Development; (c) store in the area designated by Landlord all trash and garbage
in neat and clean containers so as not to be visible to members of the public
and arrange for the regular pick-up and cartage of such trash or garbage at
Tenant’s expense, or cooperate in the employment of a trash removal contractor
designated by Landlord, as long as at the same rate or lower rates of other
third party providers, if Landlord deems it desirable to have all waste
materials removed by one contractor; (d) observe and promptly comply with all
governmental requirements and insurance requirements affecting the Premises or
any part of the Common Area which is under Tenant’s exclusive control and
promulgated during the term of this Lease; and (e) not use or suffer or permit
the Premises or any part thereof to be used for any use other than the use set
forth in the Basic Lease Provisions or in any manner that will constitute a
nuisance or unreasonable annoyance to the public, to other occupants of the
Development or to Landlord, or that will injure the reputation of the
Development, or for any extra hazardous purpose or in any manner that will
impair the structural strength of the building of which the Premises are a part.

ARTICLE 15

SIGNS AND ADVERTISING

15.1 Interior.  Tenant may at its own expense erect and maintain upon the
interior areas of the Premises all signs and advertising matter customary and
appropriate in the conduct of Tenant’s business, subject to Landlord’s right to
remove any signs or advertising matter which violates Article 14 or this Article
15.  The Tenant shall not affix or maintain upon the glass panes and supports of
the exterior windows and doors, or within twelve inches (12”) of the exterior
windows and doors, any signs, advertising placards, names, insignia, trademarks,
descriptive material or any other such like item or items except such as shall
have first received the written approval of the Landlord as to size, type,
color, location, copy, nature and display qualities.

15.2 Exterior.  Tenant shall be permitted, but not obligated, to place a sign on
the high-image monument sign which exists in  the Development, and shall be
permitted to place its signage on the southern and western fascia of the
Building in which the Existing Premises are situated and the exterior of
Building C, at Tenant’s expense, provided such signs conform in all respects to
the sign criteria established by Landlord for the Development from time to time,
and shall be subject to the prior written approval of Landlord as to
construction, method of attachment, size, shape, height, lighting, color and
general appearance.  All signs and other advertising media shall comply with all
applicable governmental requirements.  Except for signs which comply with the
terms of this Article, Tenant shall not erect, place, paint, or maintain in or
on the Premises, any sign, exterior advertising medium, or any other object of
any kind whatsoever, whether an advertising device or not, visible or audible
outside the Premises.  Tenant shall not change the color, size, location,
composition, wording or design of any sign or advertisement on the Premises that
may have been theretofore approved by Landlord, without the prior written
approval of Landlord and the applicable governmental authorities.  Tenant shall
at its own expense maintain and keep in good repair all installations, signs,
and advertising devices which it is permitted or required by Landlord to
maintain.

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ARTICLE 16

LIENS

Tenant shall keep the Premises and the Development free of any liens or claims
of lien arising from any work performed, material furnished or obligations
incurred by Tenant.  Notwithstanding the foregoing, in the event that any lien
is recorded in connection with Tenant’s work or materials, Tenant shall, within
twenty (20) days after recording thereof, post such bond as will release said
property from the lien claimed.

ARTICLE 17

RIGHT OF ENTRY

Landlord and its authorized agents and representatives shall be entitled to
enter the Premises at all reasonable times to inspect them, to make the repairs
which Landlord is obligated to make under this Lease, to show them to
prospective  tenants, purchasers or lenders, to cure a default of Tenant, to
post any notice provided by law that relieves a landlord from responsibility for
the acts of a tenant, to comply with any governmental requirements or insurance
requirements, to post ordinary signs advertising the Premises for sale or for
lease, and for any other lawful purpose relating to Landlord’s rights and
obligations under this Lease.  Landlord shall make reasonable efforts to notify
Tenant 24-hours prior to entering Premises unless an emergency exists in which
case no advance notice shall be required.  Nothing in the preceding sentence
shall imply or impose a duty to make repairs which Tenant has agreed to make
hereunder.  Landlord may erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed, provided that
the entrance to the Premises shall not be unreasonably blocked.  Landlord shall
have the right to use any means which Landlord may deem proper to enter the
Premises in an emergency.  Landlord’s entry to the Premises shall not under any
circumstances be construed to be a forcible or unlawful entry into the Premises
or an eviction of Tenant from the Premises.

ARTICLE 18

DELAYING CAUSES

If either party is delayed in the performance of any covenant of this Lease
because of any of the following causes (referred to elsewhere in this Lease as a
“delaying cause”):  acts of the other party, action of the elements, war, riot,
labor disputes, inability to procure or general shortage of labor or material in
the normal channels of trade, delay in transportation, delay in inspections, or
any other cause beyond the reasonable control of the party so obligated, whether
similar or dissimilar to the foregoing, financial inability excepted, then, such
performance shall be excused for the period of the delay; and the period for
such performance shall be extended for a period equivalent to the period of such
delay, except that the foregoing shall in no way affect Tenant’s obligation to
pay rent or any other amount payable hereunder, or the length of the term of
this Lease.

ARTICLE 19

ASSIGNMENT AND SUBLEASE

19.1 Consent Required.  Notwithstanding anything to the contrary contained in
this Lease, Tenant shall not assign this Lease or any interest herein or any
right or privilege appurtenant hereto or sublet, license, grant any concessions,
or otherwise give permission to anyone other than Tenant to use or occupy all or
any part of the Premises (hereinafter sometimes referred to as a “Transfer”),
without the prior written consent of Landlord,. Any actual or attempted Transfer
without the Landlord’s prior written consent or otherwise in violation of the
terms of this Lease shall, at Landlord’s election, be void and shall confer no
rights upon any third person, and shall be a non-curable default under this
Lease which shall entitle Landlord to terminate this Lease upon ten (10) days’
written notice to Tenant at any time after such actual or attempted Transfer
without regard to Landlord’s prior knowledge thereof. The acceptance of rent by
Landlord from any person or entity shall not be deemed to be a waiver by
Landlord of any provision of this Lease or consent to any Transfer.  Consent by
Landlord to one or more Transfers shall not be deemed to be consent to any
subsequent Transfer.  In addition, the option to extend the term hereunder shall
be personal to Tenant, and shall not be transferred without the prior written
consent of Landlord in accordance with the terms of this Article 19.

(a)           Notwithstanding anything in this Article 19 to the contrary,
neither (a) an assignment or transfer of this Lease as a result of a merger, a
consolidation, public offering, and/or sale of all of Tenant’s capital stock
and/or assets nor (b) an assignment of this Lease to an Affiliate of Tenant nor
(c) transfer of stock to members of the immediate family of Tenant’s
stockholders through gift, will or trust (each of (a), (b), and (c), a
“Permitted Transfer”) shall require a prior consent of Landlord, provided,
however, the same shall not be binding on Landlord until a fully executed copy
of such assignment and/or

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assumption of this Lease by the assignee shall have been delivered to Landlord,
and further, provided that:

                (i) Tenant shall not then be in default under this Lease;

                (ii) In each instance, the succeeding entity shall assume in
writing all of the obligations of this Lease on the part of Tenant;

                (iii) In the case of (a) above, the net worth of the succeeding
entity (and any guarantors thereof) immediately following such assignment shall
not be less than the net worth of Tenant (and any guarantors thereof) as of the
date of mutual execution of this Lease;

                (iv) In the case of (b) above, any such assignee in possession
of the Premises shall, during such possession, remain an Affiliate of Tenant;

                (v)  Such assignment or transfer shall in no manner relieve
Tenant of any of the obligations undertaken by it under this Lease; and

                (vi) The Premises shall continue to be operated solely for the
Permitted Use specified in this Lease and consistent with the manner in which
the Premises were prior to the effective date of (a) and (b); provided, however,
that if at any time thereafter, there is a material or adverse change in the
nature, standard or quality of the operation at the Premises, Landlord reserves
the right to declare such change a breach of this Lease, subject to the remedies
provided for in this Lease.

Tenant shall submit such information as Landlord may reasonably require
concerning all of the foregoing for Landlord’s files.

As used herein, the term “Affiliate” shall mean an entity which (a) directly or
indirectly controls Tenant, or (b) is under the direct or indirect control of
Tenant or (c) is under common direct or indirect control with Tenant.  Control
shall mean ownership of 51% or more of the voting securities or rights of the
controlled entity.

19.2 Request For Consent.  If Tenant shall desire Landlord’s consent to any
Transfer, Tenant shall notify Landlord in writing, which notice shall include:
(a) the proposed effective date ; (b) the portion of the Premises subject to the
Transfer; (c) all of the terms of the proposed Transfer and the consideration
therefor; (d) the name and address of the proposed transferee; (e) a copy of the
proposed sublease, instrument of assignment and all other documentation
pertaining to the proposed Transfer; (f) current financial statements of the
proposed transferee certified by an officer, partner or owner thereof; (g) any
information reasonably requested by Landlord to enable Landlord to determine the
financial responsibility, character, and reputation of the proposed transferee
and the nature of such transferee’s business and the proposed use the Premises;
and (h) such other information as Landlord may reasonably request

19.3 Intentionally Omitted.

19.4 General Conditions.  If Landlord consents to a Transfer, such consent shall
be subject to the following conditions, which the parties hereby agree are
reasonable:

(a)   Payment of Transfer Premium.  Landlord shall receive 90% and Tenant shall
receive 10% of any Transfer Premium derived by Tenant from such Transfer.
 “Transfer Premium” shall mean all rent and any other consideration payable by
such transferee in excess of the fixed minimum rent payable by Tenant under this
Lease (on a per square foot basis, if less than all of the Premises is
Transferred), after deducting therefrom any brokerage commissions and legal fees
in connection with the Transfer actually paid by Tenant to an unaffiliated
broker and/or attorney, as applicable.  If any part of the consideration for
such Transfer shall be payable other than in cash, Landlord’s share of such
non-cash consideration shall be in such form as is reasonably satisfactory to
Landlord.  The Transfer Premium payable hereunder shall be due within ten (10)
days after Tenant receives such payments.

(b)   Continued Liability of Tenant.  Tenant shall remain primarily liable on
its covenants hereunder unless released in writing by Landlord.  In the event of
any assignment or sublease which is consented to by Landlord, the transferee
shall agree in writing to perform and be bound by all of the covenants of this
Lease required to be performed by Tenant.

19.5 Reserved.

19.6 Transfer Pursuant to Bankruptcy Code.  Anything to the contrary
notwithstanding, if this Lease is assigned (or all or a portion of the Premises
is sublet) to any person or entity pursuant to the provisions of the Bankruptcy
Code, 11 U. S. C. 101 et. seq. (the “Bankruptcy Code”), any and all monies or
other consideration payable or otherwise to be delivered in connection with such
assignment or

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subletting shall be paid or delivered to Landlord, shall be and remains the
exclusive property of Landlord and shall not constitute property of Tenant or of
its estate within the meaning of the Bankruptcy Code.  Any and all monies or
other consideration constituting Landlord’s property under the preceding
sentence not paid or delivered to Landlord shall be held in trust for the
benefit of Landlord and be promptly paid or delivered to Landlord.  Any assignee
pursuant to the Bankruptcy Code shall be deemed to have assumed all of Tenant’s
obligations under this Lease.  Any such assignee shall on demand by Landlord
execute and deliver to Landlord a written instrument confirming such assumption.

ARTICLE 20

NOTICES

All notices, requests and demands to be made hereunder shall be in writing at
the addresses set forth in the Basic Lease Provisions by any of the following
means: (a) personal service (including service by overnight courier service);
(b) electronic communication, whether by telex, telegram or facsimile (if
confirmed in writing sent by personal service or by registered or certified,
first class mail, return receipt requested); or (c) registered or certified,
first class mail, return receipt requested.  Such addresses may be changed by
notice to the other party given in the same manner provided above.  Any notice,
request, or demand sent pursuant to clause (a) or (b) of this Article 20 shall
be deemed received upon such personal service or upon dispatch by electronic
means, and if sent pursuant to clause (c) shall be deemed received three (3)
days following deposit in the mail.

ARTICLE 21

SURRENDER OF POSSESSION

21.1 Surrender.  At the expiration of the tenancy created hereunder, whether by
lapse of time or otherwise, Tenant shall surrender the Premises broom clean and
in good condition and repair. This obligation of Tenant shall include the repair
of any damage occasioned by the installation, maintenance or removal of Tenant’s
alterations or Tenant’s Changes, furnishings, and equipment, as well as the
removal of any storage tank installed by or for Tenant (whether or not the
installation was consented to by Landlord), and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Tenant’s
Permittees, all as may then be required by applicable Laws.

21.2 Holding Over.   If Tenant fails to surrender the Premises at the expiration
or earlier termination of this Lease, occupancy of the Premises after the
termination or expiration shall be that of a tenancy at sufferance.  Tenant’s
occupancy of the Premises during the holdover shall be subject to all the terms
and provisions of this Lease and Tenant shall pay an amount (on a per month
basis without reduction for partial months during the holdover) equal to 150%
for the first 90 days of the holdover period and 200% thereafter, in each case,
of the greater of: (1) the sum of the Minimum Annual Rent and Additional Rent
due for the period immediately preceding the holdover; or (2) the fair market
gross rental for the Premises as determined by Landlord.  No holdover by Tenant
or payment by Tenant after the expiration or early termination of this Lease
shall be construed to extend the Term or prevent Landlord from immediate
recovery of possession of the Premises by summary proceedings or otherwise.  In
addition to the payment of the amounts provided above, if Landlord is unable to
deliver possession of the Premises to a new tenant, or to perform improvements
for a new tenant, as a result of Tenant’s holdover, Tenant shall be liable to
Landlord for all damages, including, without limitation, consequential damages,
that Landlord suffers from the holdover.  Nothing herein shall be construed as
consent to such holding over.

ARTICLE 22

QUIET ENJOYMENT

Subject to the provisions of this Lease and conditioned upon performance of all
of the provisions to be performed by Tenant hereunder, Landlord shall secure to
Tenant during the Lease term the quiet and peaceful possession of the Premises
and all rights and privileges appertaining thereto, free from hinderance or
molestation by Landlord and those claiming by, through or under Landlord.

ARTICLE 23

SUBORDINATION

Unless otherwise required by a lender, this Lease shall be subordinate to any
mortgage or deed of trust held by any lender, now or hereafter in force against
the Premises or the Development or any part thereof, and to all advances make or
to be made upon the security thereof. If any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by Landlord, Tenant shall, at the option of the
lender or other purchaser at any such foreclosure or

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sale, attorn to and recognize the purchaser as the Landlord under this Lease. 
Although the subordination in the immediately preceding sentence shall be
self-operating, Tenant agrees, within ten (10) business days following the
request of Landlord, to execute such documents or instruments as may be
requested by Landlord or its lender(s) to confirm such subordination, provided
that such mortgagees or beneficiaries agree in writing not to disturb Tenant’s
possession of the Premises in the event of foreclosure if Tenant is not in
default.  The failure of Tenant to so timely execute any such instrument or
other such document shall constitute a non-monetary default hereunder.  If
Tenant fails to execute and deliver such instrument or other document within
said ten (10) business day period, Landlord shall use reasonable efforts to
contact, orally or in writing, Tenant to confirm such non-election, whereafter
Tenant hereby appoints Landlord as Tenant’s attorney-in-fact for the purpose of
completing, executing and delivering the same to the person or firm requesting
it.

ARTICLE 24

ESTOPPEL CERTIFICATE; FINANCIAL STATEMENTS

Tenant shall, at any time and from time to time within ten business (10) days
after written request therefor by Landlord, without change, deliver a
certificate to Landlord or to any person or entity designated by Landlord,
certifying the date the Lease term commenced, the date the rent commenced and is
paid through, the amount of rent and other charges due under the Lease, the
expiration date of the Lease term, that this Lease is then in full force and
effect, setting forth the amount and nature of modifications, defenses, or
offsets, if any, claimed by Tenant, and any other matter concerning the Lease,
the Tenant, or the Premises requested by Landlord or such person or entity.  If
Tenant fails to respond within such 10-business day period, Landlord shall use
reasonable efforts to contact, orally or in writing, Tenant prior to declaring a
default hereunder.

Tenant acknowledges that it has provided Landlord with certain financial
statement(s) as a material inducement to Landlord’s agreement to lease the
Premises to Tenant, and that Landlord has relied on the accuracy of such
financial statement(s) in entering into this Lease.  Tenant represents and
warrants that the information contained in such financial statement(s) is true,
complete and correct in all material respects.  Within twenty (20) days from a
written request by Landlord, Tenant will make available to Landlord or to any
prospective purchaser or lender of the Development, the most recent audited
financial statements of Tenant and any guarantor, provided, if Tenant is not a
publicly traded entity, that Landlord or any such prospective purchaser or
lender agrees to maintain such statements and information in confidence. 
Notwithstanding the foregoing, so long as the named Tenant herein is a publicly
traded corporation and its financial information is readily available to the
public, Tenant will not be required to deliver additional financial statements
to Landlord.

ARTICLE 25

DEFAULT

25.1 Default.  The occurrence of any or more of the following events shall
constitute a material breach and default of this Lease (each, an “Event of
Default”):

(a)   Any failure by Tenant to pay fixed minimum rent, Common Area Expenses,
additional rent or any other charge when due; or

(b)   Any failure by Tenant to observe or perform any other provision, covenant
or condition of this Lease to be observed or performed by Tenant not provided
for in subparagraph (a) above and subparagraphs (c), (d) and (h) below where
such failure continues for thirty  (30) days after written notice thereof by
Landlord to Tenant, provided that if the nature of such breach is such that
although curable, the breach cannot reasonably be cured within a thirty (30) day
period, an Event of Default shall not exist if Tenant shall commence to cure
such breach and thereafter rectifies and cures such breach with due diligence;
or

(c)   Abandonment of the Premises; or

(d)   A general assignment by Tenant for the benefit of creditors, or the filing
by or against Tenant of any proceeding under any insolvency or bankruptcy law,
or the appointment of a trustee or receiver to take possession of all or
substantially all of Tenant’s assets located upon the Premises or of Tenant’s
interest in this Lease; or

(e)   Any three (3) or more failures of the type described in Paragraph 25.1(a)
in any twelve month period; or

(f)    Reserved; or

 

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(g)    The conducting by Tenant of a going out of business sale, bankruptcy sale
or any similar liquidation sale in violation of the provisions of this Lease
where such sale does not permanently cease within twenty-four (24) hours after
written notice of such violation by Landlord to Tenant; or

(h)    The occurrence of an Event of Default as defined in any other provision
of this Lease.

25.2  Remedies.

(a)    Reentry and Termination.  Upon and during the continuance of an Event of
Default, but after all notice and cure periods, Landlord, in addition to any
other remedies available to Landlord at law or in equity, at Landlord’s option,
may without further notice or demand of any kind to Tenant or any other person:

1.      Declare the Lease Term ended and reenter the Premises and take
possession thereof and remove all persons therefrom, and Tenant shall have no
further claim to the Premises; or

2.      Without declaring this Lease ended, reenter the Premises and occupy the
whole or any part thereof for and on account of Tenant and collect any unpaid
fixed minimum rent, rent, Additional Rent, Common Area Expenses and other
charges, which have become payable, or which may thereafter become payable; or

3.      Even though Landlord may have reentered the Premises, thereafter elect
to terminate this Lease and all of the rights of Tenant in or to the Premises.

(b)    Express Termination Required.  Should Landlord have reentered the
Premises under the provisions of Paragraph 25.2(a)(2) above, Landlord shall not
be deemed to have terminated this Lease, or the liability of Tenant to pay any
fixed minimum rent, Common Area Expenses, Additional Rent or other charges
thereafter accruing, or to have terminated Tenant’s liability for damages under
any of the provisions of this Lease, by any such reentry or by any action, in
unlawful detainer or otherwise, to obtain possession of the Premises, unless
Landlord shall have notified Tenant in writing that Landlord had elected to
terminate this Lease.  Tenant further covenants that the service by Landlord of
any notice pursuant to the unlawful detainer statutes of the State where the
Development is situated and the surrender of possession pursuant to such notice
shall not (unless Landlord elects to the contrary at the time of or at any time
subsequent to the serving of such notices and such election is evidenced by a
written notice to Tenant) be deemed to be a termination of this Lease.

(c)    Damages.  Should Landlord elect to terminate this Lease pursuant to the
provisions of Paragraphs 25.2(a)(1) or 25.2(a)(3) above, Landlord may recover
from Tenant as damages, the following:

1.      The worth at the time of award of any unpaid fixed minimum rent, Common
Area Expenses, Additional Rent or other charges which had been earned at the
time of such termination; plus

2.      The worth at the time of award of the amount by which the unpaid fixed
minimum rent,  Common Area Expenses, Additional Rent or other charges which
would have been earned after termination until the time of award exceeds the
amount of such loss Tenant proves could have been reasonably avoided; plus

3.      The worth at the time of award of the amount by which the unpaid fixed
minimum rent, Common Area Expenses, Additional Rent or other charges for the
balance of the Lease Term after the time of award exceeds the amount of such
loss that Tenant proves could be reasonably avoided; plus

4.      Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform Tenant’s obligations under
this Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to any costs or expenses incurred by
Landlord in (i) retaking possession of the Premises, including reasonable
attorneys’ fees, (ii) maintaining or preserving the Premises after the
occurrence of an Event of Default, (iii) preparing the Premises for reletting to
a new tenant, including repairs or alterations to the Premises for such
reletting, (iv) leasing commissions, and (v) any other costs necessary or
appropriate to relet the Premises; plus

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5.      At Landlord’s election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by the laws of the State
where the Development is situated.

(d)    Alternative Damages.  Should Landlord elect to bring an action against
Tenant in unlawful detainer or for damages or both or otherwise (and Landlord
may bring as many actions as Landlord may elect to bring throughout the Lease
Term), without terminating this Lease, Landlord may recover from Tenant as
damages the following:

1.      The worth at the time of award of any unpaid fixed minimum rent, Common
Area Expenses, Additional Rent or other charges which had been earned at the
time Landlord recovered possession of the Premises; plus

2.      The worth at the time of award of the amount by which the unpaid fixed
minimum rent, Common Area Expenses, Additional Rent or other charges which would
have been earned after the date Landlord recovered possession until the time of
award exceeds the amount of such loss Tenant proves could have been reasonably
avoided; plus

3.      Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform Tenant’s obligations under
this Lease, including but not limited to, any costs or expenses incurred by
Landlord in (i) retaking possession of the Premises, including reasonable
attorneys’ fees, (ii) maintaining or preserving the Premises after the
occurrence of an Event of Default, (iii) preparing the Premises for reletting to
a new tenant, including repairs or alterations to the Premises for such
reletting, (iv) leasing commissions, and (v) any other costs necessary or
appropriate to relet the Premises; plus

4.      At Landlord’s election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by the laws of the State
where the Development is situated.

(e)    Definitions.  As used in Paragraphs 25.2(c)(1), 25.2(c)(2), and
25.2(d)(1) above, the “worth at the time of award” is computed by allowing
interest at the rate of eighteen percent (18%) per annum.  As used in Paragraphs
25.2(c)(3) and 25.2(d)(2) above, the “worth at the time of award” is computed by
discounting such amount at the discount rate of the Federal Reserve Bank
situated nearest to the location of the Development at the time of award plus
one (1) percentage point.

(f)     Computation of Certain Sums.  For all purposes of this Article 25, 
Common Area Expenses, Additional Rent and other charges shall be computed on the
basis of the average monthly amount thereof accruing during the immediately
preceding sixty (60) month period, except that if it becomes necessary to
compute such amounts before such a sixty (60) month period has occurred then
such amounts shall be computed on the basis of the average monthly amounts
accruing during such shorter period.

(g)    Reserved.

(h)    Cumulative Remedies.  The remedies given to Landlord in this Paragraph 25
shall be in addition and supplemental to all other rights or remedies which
Landlord may have at law, in equity or by statute and the exercise of any one
remedy shall not preclude the subsequent or concurrent exercise of further or
additional remedies.

(i)     No Waiver.  The waiver by Landlord of any breach of any term, covenant
or condition herein contained in this Lease shall not be deemed to be a waiver
of such term, covenant or condition of any subsequent breach of the same or any
other term, covenant or condition of this Lease.  The subsequent acceptance of
fixed minimum rent, Common Area Expenses, Additional Rent or other charges due
hereunder shall not be deemed to be a waiver of any preceding breach by Tenant
of any term, covenant or condition of this Lease, other than the failure of
Tenant to pay the particular amount so accepted regardless of Landlord’s
knowledge of such preceding breach at the time of acceptance of such amount.  No
covenant, term, or condition of this Lease shall be deemed to have been waived
by Landlord unless such waiver shall be in writing and signed by Landlord.

25.3   Interest.  Any sum accruing to Landlord under the terms and provisions of
this Lease which shall not be paid when due shall bear interest at the interest
rate provided herein from the date the same becomes due and payable by the terms
and provisions of this Lease until paid, unless otherwise specifically provided
in this Lease.  The interest rate which shall apply shall be lesser of (i)
eighteen percent (18%) per annum or (ii) the highest rate allowed by applicable
law.

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ARTICLE 26

INSOLVENCY

26.1   Breach of Lease.  Subject to the applicable United States Bankruptcy Code
and other laws, the filing of any petition by or against Tenant under any
chapter of the Bankruptcy Act, or any successor statute thereto, or the
adjudication of Tenant as a bankrupt or insolvent, or the appointment of a
receiver or trustee to take possession of all or substantially all of the assets
of Tenant, or a general assignment by Tenant for the benefit of creditors, or
any other action taken or suffered by Tenant under any state or federal
insolvency or bankruptcy act, shall constitute a default under and breach of
this Lease by Tenant, regardless of Tenant’s compliance with the other
provisions of this Lease; and Landlord at its option by written notice to Tenant
may exercise all rights and remedies provided for in Article 25, including the
termination of this Lease, effective of such notice, without the necessity of
further notice under Article 25.

26.2   Operation of Law.  Neither this Lease, nor any interest herein, nor any
estate created hereby, shall pass by operation of law under any state or federal
insolvency or bankruptcy act to any trustee, receiver, assignee for the benefit
of creditors or any other person whatsoever without the prior written consent of
Landlord, which shall not be unreasonably withheld.  Any purported transfer in
violation of the provisions of this Paragraph 26.2 shall constitute a default
under and breach of this Lease, regardless of Tenant’s compliance with the other
provisions of this Lease; and Landlord at its option by written notice to Tenant
may exercise all rights and remedies provided for in Article 25, including the
termination of this Lease, effective on service of such notice without the
necessity of further notice under Article 25.

26.3   Non-Waiver.  The acceptance of rent at any time and from time to time by
Landlord from Tenant as debtor in possession or from a transferee of the type
mentioned in Paragraph 26.2, shall not preclude Landlord from exercising its
rights under this Article 26 at any time hereafter.

26.4   Events of Bankruptcy.  The following shall be Events of Bankruptcy under
this Lease:

(a)    Tenant’s becoming insolvent, as that term is defined in Title 11 of the
United States Code, entitled Bankruptcy, U.S.C. Sec.  101 et. seq. (the
“Bankruptcy Code”), or under the insolvency laws of the State in which the
Premises are situated (“Insolvency Laws”);

(b)    The appointment of a receiver or custodian for any or all of Tenant’s
property or assets, or the institution of a foreclosure action upon any of
Tenant’s real or personal property;

(c)    The filing of a voluntary petition under the provisions of the Bankruptcy
Code or Insolvency Laws;

(d)    The filing of an involuntary petition against Tenant as the subject
debtor under the Bankruptcy Code or Insolvency Laws, which is either not
dismissed within sixty (60) days of filing, or results in the issuance of an
order for relief against the debtor, whichever is later; or

(e)    Tenant’s making or consenting to an assignment for the benefit of
creditors or a common law composition of creditors.

26.5   Landlord’s Remedies.

(a)    Termination of Lease.  Upon occurrence of an Event of Bankruptcy,
Landlord shall have the right to terminate this Lease by giving written notice
to Tenant; provided, however, that this Paragraph 26.5(a) shall have no effect
while a case in which Tenant is the subject debtor under the Bankruptcy Code is
pending, unless Tenant or its Trustee is unable to comply with the provisions of
Paragraph 26.5(d) and (e) below.  At all other times this Lease shall
automatically cease and terminate, and Tenant shall be immediately obligated to
quit the Premises upon the giving of notice pursuant to this Paragraph 26.5(a). 
Any other notice to quit, or notice of Landlord’s intention to re-enter is
hereby expressly waived.  If Landlord elects to terminate this Lease, everything
contained in this Lease on the part of Landlord to be done and performed shall
cease without prejudice; subject, however, to the rights of Landlord to recover
from Tenant all rent and any other sums accrued up to the time of termination or
recovery of possession by Landlord, whichever is later, and any other monetary
damages or loss of reserved rent sustained by Landlord.

(b)    Suit for Possession.  Upon termination of this Lease pursuant to
Paragraph 26.5(a), Landlord may proceed to recover possession under and by
virtue of the provisions of laws of any applicable jurisdiction, or by such
other proceedings, including re-entry and possession, as may be applicable.

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(c)    Non-Exclusive Remedies.  Without regard to any action by Landlord as
authorized by Paragraph 26.5(a) and (b) above, Landlord may at its discretion
exercise all the additional provisions set forth in Article 25.

(d)    Assumption or Assignment by Trustee.  In the event Tenant becomes the
subject debtor in a case pending under the Bankruptcy Code, Landlord’s right to
terminate this Lease pursuant to Paragraph 26.5(a) shall be subject to the
rights of the Trustee in Bankruptcy to assume or assign this Lease.  The Trustee
shall not have the right to assume or assign this Lease unless the Trustee (i)
promptly cures all defaults under this Lease, (ii) promptly compensates Landlord
for monetary damages incurred as a result of such default, and (iii) provides
adequate assurance of future performance on the part of Tenant as debtor in
possession or on the part of the assignee Tenant.

(e)    Adequate Assurance of Future Performance.  Landlord and Tenant hereby
agree in advance that adequate assurance of future performance, as used in
Paragraph 26.5(a) above, shall mean that all of the following minimum criteria
must be met:  (i) Tenant must pay its estimated pro rata share of the cost of
all services provided by Landlord (whether directly or through agents or
contractors and whether or not previously included as part of the minimum or
base rent), in advance of the performance or provision of such services; (ii)
the Trustee must agree that Tenant’s business shall be conducted in a first
class manner, and that no liquidating sales, auctions, or other non-first class
business operations shall be conducted on the Premises (iii) the Trustee must
agree that the use of the Premises as stated in this Lease will remain unchanged
and that no prohibited use shall be permitted; and (iv) the Trustee must agree
that the assumption or assignment of this Lease will not violate or affect the
rights of other tenants in the Development.

(f)     Failure to Provide Adequate Assurance.  In the event Tenant is unable to
(i) cure its defaults, (ii) reimburse the Landlord for its monetary damages,
(iii) pay the rent due under this Lease and all other payments required of
Tenant under this Lease on time (or within three (3) days), or (iv) meet the
criteria and obligations imposed by Paragraph 26.5(d) above, Tenant agrees in
advance that it has not met its burden to provide adequate assurance of future
performance, and this Lease may be terminated by Landlord in accordance with
Paragraph 26.5(a) above.

ARTICLE 27

REMEDIES CUMULATIVE

The various rights, elections, and remedies of Landlord and Tenant contained in
this Lease shall be cumulative, and no one of them shall be construed as
exclusive of any other, or any right, priority, or remedy allowed or provided
for by law.

ARTICLE 28

ATTORNEY’S FEES

If either party hereto shall file any action or bring any proceeding against the
other party arising out of this Lease or for the declaration of any rights
hereunder, the prevailing party therein shall be entitled to recover from the
other party all costs and expenses, including reasonable attorneys’ fees,
incurred by the prevailing party as determined by the court.  If either party
(“secondary party”) without its fault is made a party to litigation instituted
by or against the other party, the primary party shall pay to the secondary
party all costs and expenses, including reasonable attorneys’ fees, incurred by
the secondary party in connection therewith.

ARTICLE 29

WAIVER OF DEFAULT

The waiver by either party of any default in the performance by the other of any
covenant contained herein shall not be construed to be a waiver of any preceding
or subsequent default of the same or any other covenant contained herein.  The
subsequent acceptance of rent or other sums hereunder by Landlord shall not be
deemed a waiver of any preceding default other than the failure of Tenant to pay
the particular rent or other sum or portion thereof so accepted, regardless of
Landlord’s knowledge of such preceding default at the time of acceptance of such
rent or other sum.

ARTICLE 30

NO PARTNERSHIP

Landlord shall not in any way for any purpose be deemed a partner, joint
venturer or member of any joint enterprise with Tenant.

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ARTICLE 31

SUBTENANCIES

The voluntary or other surrender of this Lease by Tenant or a mutual
cancellation of this Lease shall not effect a merger and shall, at Landlord’s
option, terminate all existing subtenancies or operate as an assignment to
Landlord of any or all of such subtenancies.

ARTICLE 32

SUCCESSORS

This Lease shall be binding upon and shall inure to the benefit of the parties
hereto and their successors and permitted assigns.  The term “successors” is
used herein in its broadest possible meaning and includes, but is not limited
to, every person succeeding to any interest in this Lease or the premises of
Landlord or Tenant herein whether such succession results from the act or
omission of such party.  Every covenant and condition of this Lease shall be
binding upon all assignees, subtenants, licensees, and concessionaires of
Tenant.

ARTICLE 33

REMOVAL OF TENANT’S PROPERTY

Upon the expiration of the term of this Lease or upon any earlier termination
thereof, Tenant shall remove at its own expense all trade fixtures, equipment,
inventory, and personal property (collectively called “Tenant’s property”) in
this Lease which were installed by Tenant or any subtenant, concessionaire or
licensee in or upon the Premises.  All equipment and personal property which
existed in the Premises prior to the Lease Commencement shall remain thereon.  
In case of any injury or damage to the building or any portion of the Premises
resulting from the removal of Tenant’s property, Tenant shall promptly pay to
Landlord the cost of repairing such injury or damage, excepting normal wear and
tear over the term of the lease.  Tenant shall also remove at its own expense
all of its racking and mezzanine storage equipment, and shall repair, or
promptly reimburse Landlord for the cost of repairing, all damage done to the
Premises or the Building by such removal.  Tenant shall complete all of the
foregoing repairs, restoration and removal by the time provided in the first
sentence of this Article 33 unless prevented from so doing by a delaying cause,
or Landlord may, at Landlord’s option, retain any or all of Tenant’s property,
and title thereto shall thereupon vest in Landlord without the execution of
documents or sale or conveyance by Tenant; or Landlord may remove any or all
items of Tenant’s property from the Premises and dispose of them in any manner
Landlord sees fit, and Tenant shall pay upon demand to Landlord the actual
expense of such removal and disposition together with interest from the date of
payment by Landlord until repayment by Tenant.

Notwithstanding the foregoing, with regards to Tenant’s Existing Premises
including the 3,000 SF office addition as well as the 1,500 SF office build out
within Building C, Tenant shall not be required to remove such office
improvements upon expiration of this Lease.  With regards to future ROFO Space,
if Landlord has approved improvements requested by Tenant and at the time of
approval Landlord has not requested that those improvements be removed at lease
expiration, Landlord shall waive the requirement for Tenant to remove said
improvements upon termination of this Lease.

ARTICLE 34

EFFECT OF CONVEYANCE

If, during the term of this Lease, Landlord conveys its interest in the
Development, the Premises or this Lease, then, from and after the effective date
of such conveyance, Landlord shall be released and discharged from any and all
further obligations and responsibilities under this Lease, and the transferee
shall be deemed, without any further agreement between the parties or their
successors in interest or between the parties and any such transferee, to have
assumed and agreed to carry out any and all of the covenants and obligations of
the Landlord under this Lease.  Any security given by Tenant to secure
performance of its obligations hereunder may be transferred and assigned by
Landlord to such transferee.

ARTICLE 35

LANDLORD’S DEFAULT; NOTICE TO LENDER

35.1   Landlord’s Default.  In the case of a default by Landlord, Landlord shall
commence promptly to cure such default immediately after receipt of written
notice from Tenant specifying the nature of such default and shall complete such
cure within thirty (30) days thereafter, provided that if the

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nature of such default is such that it cannot be cured within said thirty (30)
day period, Landlord shall not be in default hereunder if Landlord shall
commence to cure such breach and thereafter rectifies and cures such breach with
due diligence.

35.2   Notice to Lender.  Whenever Tenant is required to serve notice on
Landlord of Landlord’s default, written notice shall also be served at the same
time upon the mortgagee under any first mortgage or beneficiary under any first
deed of trust, so long as Landlord has provided Tenant with written notice of
such mortgagee.  Such mortgagee or beneficiary shall have the periods of time
within which to cure Landlord’s defaults as are provided in Paragraph 35.1,
which periods shall commence to run ten (10) days after the commencement of the
periods within which Landlord must cure its defaults under Paragraph 35.1.  In
this connection, any representative of the mortgagee or beneficiary shall have
the right to enter upon the Premises for the purpose of curing the Landlord’s
default.  Such mortgagee or beneficiary shall notify Landlord and Tenant in the
manner provided by Article 20 of the address of such mortgagee or beneficiary to
which such notice shall be sent, and the agreements of Tenant hereunder are
subject to prior receipt of such notice.

35.3   Independent Covenants; Limitation of Remedies. The obligations of
Landlord and Tenant, respectively, under this Lease are expressly agreed by the
parties to be independent covenants.  If Landlord fails to perform any
obligation under this Lease required to be performed by Landlord, Tenant shall
have no right to: (i) terminate this Lease; (ii) avail itself of self-help or to
perform any obligation of Landlord except as expressly permitted in Section 35.1
above; (iii) abate or withhold any rent or any other charges or sums payable by
Tenant under this Lease; or (iv) any right of setoff.  If Landlord is in default
hereunder, and as a consequence Tenant recovers a money judgment against
Landlord, such judgment shall be satisfied only out of the proceeds of sale
received on execution of the judgment and levy against the right, title and
interest of Landlord in the Premises, and out of rent or other income from the
Premises receivable by Landlord or out of the consideration received by Landlord
from the sale or other disposition of all or any part of Landlord’s right, title
and interest in the Premises.  Neither Landlord, nor any agent, officer,
director, partner or employee of Landlord shall be personally liable for any
portion of such a judgment.

ARTICLE 36

CONSENT

In consideration of each covenant made elsewhere under this Lease wherein one of
the parties agrees not to unreasonably withhold its consent or approval, the
requesting party hereby releases the other and waives all claims for any damages
arising out of or connected with any alleged or claimed unreasonable withholding
or consent or approval, and the requesting party’s sole remedy shall be to have
the consent granted.

ARTICLE 37

INTERPRETATION

The captions by which the articles and paragraphs of this Lease are identified
are for convenience only, and shall not affect the interpretation of this
Lease.  Wherever the context so requires, the singular number shall include the
plural, the plural shall refer to the singular and the neuter gender shall
include the masculine and feminine genders.  If there is more than one signatory
hereto as Tenant, the liability of such signatories shall be joint and several. 
If any provision of this Lease shall be held to be invalid by a court, the
remaining provisions shall remain in effect and shall in no way be impaired
thereby.

ARTICLE 38

ENTIRE INSTRUMENT

It is understood that there are no oral agreements between the parties hereto
affecting this Lease, and this Lease 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.  All of the agreements heretofore and contemporaneously
made by the parties are contained in this Lease, and this Lease cannot be
modified in any respect except by a writing executed by Landlord and Tenant.

ARTICLE 39

EASEMENTS

This Lease is made expressly subject to:

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(a)    any conditions, covenants and restrictions and/or easements of record on
the Premises and/or the Development; and

(b)    any easements for utilities or ingress and egress which now or hereafter
may be placed of record by Landlord for purposes of the common benefit of the
occupants of the Development.  Tenant agrees, subject to the provisions of
Article 23, to execute such documents necessary to subordinate its interest
hereunder to such easements.

ARTICLE 40

SALE BY LANDLORD

The Premises and/or Landlord’s interest under this Lease may be freely sold or
assigned by Landlord, and in the event of any such sale or assignment, the
covenants and obligations of Landlord herein shall be binding on each successive
“landlord,” and its successors and assigns, only during their respective periods
of ownership.

ARTICLE 41

CANCELLATION BY LANDLORD

In the event that the Lease Commencement Date has not occurred within two (2)
years following the date of execution hereof for any reason other than a default
by Landlord hereunder, then Landlord shall have the right to cancel this Lease
with no obligation or liability whatsoever upon notice to Tenant.

ARTICLE 42

RESERVED

ARTICLE 43

WAIVER OF TRIAL BY JURY

Tenant hereby waives trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto on any matters whatsoever arising out of
or in any way connected with this Lease, including without limitation, the
relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises,
or any claim of injury or damage, or the enforcement of any remedy under any
law, statute, or regulation.

ARTICLE 44

HAZARDOUS SUBSTANCES

44.1   Indemnity.  Tenant shall be solely responsible and liable for, and shall
indemnify, defend and hold harmless Landlord for, from and against any and all
Hazardous Substances, unless determined to be pre-existing, existing on the
Premises or the Development or any other property, or present in or on the air,
ground water, soil, buildings or other improvements or otherwise in, on, under
or about the Premises or the Development or any other property, resulting from
the Handling by Tenant’s Permittees of any Hazardous Substance during the period
of Tenant’s occupancy or use of the Premises.  Without limiting the generality
of the foregoing, Tenant shall, at any time during the term of the Lease and at
the end of the term of the Lease, perform all work necessary to render the
Premises or any other property “clean” and free of all Hazardous Substances, in
accordance with all present and then-applicable Laws.

44.1.1      Nothing else in this Lease notwithstanding, Tenant shall be
responsible for only the Hazardous Substances introduced to or released at the
Development by the Tenant, its agents, contractors and employees.  Tenant shall
have no liability to Landlord for Hazardous materials installed in the Premises
or the Common Areas by Landlord, previous tenants or their agents, contractors,
employees or other parties.

44.2   Covenant.  Tenant shall not cause or permit any Hazardous Substance to be
Handled in, upon, under or about the Premises (or any part thereof) or any part
of the Development by Tenant’s Permittees without the prior written consent of
Landlord. Notwithstanding the foregoing, Tenant shall promptly deliver to
Landlord true copies of all governmental permits and approvals relating to the
Handling of Hazardous Substances and all correspondence sent or received by
Tenant’s Permittees regarding any Handling of Hazardous Substances in or about
the Premises, including, without limitation, inspection reports and citations.

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44.3   Definitions.  As used in this Article 44, the following terms shall have
the following definitions:

(a)    “Hazardous Substance” means any chemical, compound, material, substance
or other matter that: (i) is a flammable explosive, asbestos, radioactive
material, nuclear medicine material, drug, vaccine, bacteria, virus, hazardous
waste, toxic substance, petroleum product, or related injurious or potentially
injurious material, whether injurious or potentially injurious by itself or in
combination with other Substance; (ii) is controlled, designated in or governed
by any Hazardous Substance Law; (iii) gives rise to any reporting, notice or
publication requirements under any Hazardous Substance Law; or (iv) gives rise
to any liability, responsibility or duty on the part of Tenant or Landlord with
respect to any third person under any Hazardous Substance Law.

(b)    “Handle” or “Handled” or “Handling” means generated, produced, brought
upon, used, handled, stored, treated or disposed of.

(c)    “Tenant’s Permittees” means and includes Tenant, Tenant’s employees,
licensees, contractors, subcontractors, representatives, agents, officers,
partners, directors, subtenants, sub-subtenants and invitees.

(d)    “Laws” means all applicable present and future laws, ordinances, rules,
regulations, statutes, requirements, actions, policies, and common law of any
local, state, Federal or quasi-governmental agency, body, board or commission.

44.4   Breach of Obligations.  If Tenant breaches the obligations set forth in
Paragraphs 44.1 and 44.2 of this Lease, or if the presence of Hazardous
Substances in, upon, under or about the Premises, excluding pre-existing
Hazardous Substances not released by Tenant or its agents, employees or
contractors, caused or permitted by Tenant’s Permittees results in contamination
of the Premises or any other property, or if contamination of the Premises or
any other property by Hazardous Substances otherwise occurs or exists at any
time during or after the term of this Lease, resulting from Tenant’s Permittee’s
use of the Premises, then Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all liabilities, costs, expenses, claims,
judgments, damages, penalties, fines or losses (including without limitation,
damages for the loss or restriction on use of rentable or usable space or of any
amenity of the Premises or the Development, claims by any government agency or
other third parties, and sums paid in settlement of claims, attorneys’ fees,
consultants’ fees, experts’ fees and the like) which arise at any time during
the term of this Lease or after the term of this Lease as a direct result
therefrom.  This obligation of Tenant to indemnify, defend and hold Landlord
harmless shall survive and extend beyond the expiration or earlier termination
of this Lease and includes, without limitation, indemnification against all
costs incurred in connection with any investigation of site conditions or any
studies, testing, reports, monitoring, clean-up, detoxification,
decontamination, repairs, replacements, restoration and remedial work required
by any federal, state or local governmental agency, authority or political
subdivision because of any Hazardous Substance present in soil, ground water,
air, buildings or other improvements or otherwise in, upon, under or about the
Premises or the adjacent Development or any other property, air or water. 
Without limiting the foregoing, if the presence of any Hazardous Substance in,
on, under or about the Premises or the Development due to the Handling of
Hazardous Substances by Tenant’s Permittees results in contamination of the
Premises or the Development or any other property, air or water, Tenant shall
immediately take all actions at its sole cost and expense as are necessary or
appropriate to return the Premises and the Development to the condition existing
prior to the Handling, provided that Tenant obtains Landlord’s prior written
approval of such actions and of the contractors and other persons performing
such actions, which approval shall not be unreasonably withheld, so long as such
actions would not potentially have any materially adverse long-term or
short-term effect on the Premises or the Development.  In any event, any and all
actions by Tenant to return the Premises and the Development to the condition
existing prior to the Handling of any such Hazardous Substance shall be done in
compliance with all Laws, and in such a manner and at such times as to avoid
interference with and/or inconvenience to any or all other tenants, occupants,
contractors and invitees of any adjacent property to the maximum extent
possible.  It is the intent of Landlord and Tenant (and Landlord and Tenant
hereby agree) that Landlord shall have no liability whatsoever for the existence
or presence of Hazardous Substances in, upon, under or about the Premises
resulting from the Handling of any Hazardous Substances in connection with
Tenant’s occupancy or use of the Premises, and that Tenant shall have sole and
absolute responsibility for the existence or presence of Hazardous Substances
in, upon, under or about the Premises and shall fully indemnify and hold
Landlord harmless from and against any liabilities, costs, expenses (including
attorneys’ fees), claims, judgments, damages, demand, penalties, fines and
losses arising from or in connection with the existence or presence of Hazardous
Substances in, upon, under or about the Premises or the migration thereof from
or to the Premises resulting from the Handling of any Hazardous Substances in
connection with Tenant’s occupancy or use of the Premises.  Tenant’s obligations
under this Article shall survive the termination of this Lease.

44.5   Handling; Notices.  Without in any way diminishing or waiving the
limitations on and obligations of Tenant set forth in this Article 44, if
Tenant’s Permittees Handle Hazardous Substances in,

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upon, under or about the Premises, such Handling shall be done in full
compliance with all Laws.  In that connection, Landlord and its agents and
representatives shall have the right, but not the obligation, at Tenant’s cost,
to enter onto and to inspect the Premises and conduct investigations, studies,
tests, reports, monitoring and analysis of the Premises and any and all
Hazardous Substances at any and all reasonable times to determine whether Tenant
is complying with its obligations under this Lease; provided, however, that
before Landlord enters the Premises to conduct any such tests or investigations,
Landlord shall provide Tenant with at least five (5) working days’ prior
notice.  Furthermore, Tenant shall immediately upon receipt thereof, provide to
Landlord written notice of the following:

(a)    Any enforcement, clean-up or other regulatory action taken or threatened
by any governmental authority (including, without limitation, the Washington
State Department of Ecology or any other federal, state or local governmental
entity) with respect to the presence of any Hazardous Substances in, upon under
or about the Premises or the migration thereof from or to other property;

(b)    All demands or claims made or threatened by any third party against
Tenant or the Premises relating to any loss or injury resulting from any
Hazardous Substances;

(c)    Any spill, release, discharge or disposal of Hazardous Substances in,
upon, under or about the Premises;

(d)    All matters with respect to which Tenant is required to give notice
pursuant to any applicable health and safety regulations.

Landlord shall have the right to join and participate in, as a party if it so
elects, any legal proceedings or actions affecting the Premises initiated in
connection with any Hazardous Substances or related laws.

44.6   Landlord Representations.  Landlord represents and warrants, to the best
of its knowledge, that the Building and Premises do not contain any asbestos,
PCB’s, underground storage tanks, or other Hazardous Substances and that the
Premises shall be in compliance with all applicable federal, state and local
ordinance and laws relating to environmental protection and/or Hazardous
Substances as of the Commencement Date of this Lease.

ARTICLE 45

AUTHORITY

If Tenant is other than a natural person, each person executing this Lease on
behalf of Tenant hereby covenants and warrants to Landlord that:  such person is
duly authorized to execute this Lease on behalf of Tenant; Tenant is duly
qualified in all respects; all steps have been taken prior to the date hereof to
qualify Tenant to do business in the state in which the Premises are situated;
all franchise and other taxes have been paid to date; and all forms, reports,
fees and other documents necessary to comply with applicable laws will be filed
when due.  Tenant will furnish to Landlord promptly upon demand, a corporate
resolution, proof of due authorization of partners, or other appropriate
documentation reasonably requested by Landlord evidencing the due authorization
of Tenant to enter into this Lease.

ARTICLE 46

BROKERS

Tenant hereby represents and warrants that, Tenant has not employed any broker
with regard to this Lease and that Tenant has no knowledge of any other broker
being instrumental in bringing about this Lease transaction.  Tenant shall
indemnify Landlord against any expense incurred by Landlord as a result of any
claim for brokerage or other commissions made by any other broker, finder, or
agent, whether or not meritorious, employed by Tenant or claiming by, through or
under Tenant. Tenant acknowledges that Landlord shall not be liable for any
representations of Landlord’s leasing agent or other agents of Landlord
regarding this Lease transaction except for the representations and covenants of
Landlord expressly set forth in this Lease.

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IN WITNESS WHEREOF, the parties hereto have executed this lease the day and year
first above written.

LANDLORD:

MERRILL CREEK HOLDINGS, LLC

By:   WASHINGTON REAL ESTATE HOLDINGS, LLC

By:
                                                                                        

Name:
                                                                                   

Its:
                                                                                        

Date:                                                                                      

TENANT:

ZUMIEZ, INC., A WASHINGTON CORPORATION

By:
                                                                                                        

Name:
                                                                                                   

Its:
                                                                                                        

Date:                                                                                                      

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STATE OF WASHINGTON

 

 

 

 

   ss.

 

 

COUNTY OF KING

 

 

I certify that I know or have satisfactory evidence that
_________________________ is the person who appeared before me, and said person
acknowledged that said person signed this instrument, on oath stated that said
person was authorized to execute the instrument and acknowledged it as the
_____________ of WASHINGTON REAL ESTATE HOLDINGS, LLC, a Washington limited
liability company, the ___________ of MERRILL CREEK  HOLDINGS, LLC, a Washington
limited liability company, to be the free and voluntary act of such limited
liability company for the uses and purposes mentioned in the instrument.

Dated this _________________________ day of _________________________, 2006.

 

                                                                                                               
(Signature of Notary)

                                                                                                               
(Legibly Print or Stamp Name of Notary)

Notary public in and for the state of Washington,
residing at
                                                                                           

My appointment expires
                                                                   

 

 

STATE OF WASHINGTON

 

 

 

 

   ss.

 

 

COUNTY OF KING

 

 

I certify that I know or have satisfactory evidence that
_________________________ is the person who appeared before me, and said person
acknowledged that said person signed this instrument, on oath stated that said
person was authorized to execute the instrument and acknowledged it as the
_________________________ of ZUMIEZ, Inc., a Washington corporation, to be the
free and voluntary act of such corporation for the uses and purposes mentioned
in the instrument.

Dated this _________________________ day of _________________________, 2006.

 

                                                                                                               
(Signature of Notary)

                                                                                                               
(Legibly Print or Stamp Name of Notary)

Notary public in and for the state of Washington,
residing at
                                                                                           

My appointment expires
                                                                   

 

31

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EXHIBIT “A”

BUILDING C CONSTRUCTION PLANS AND SPECIFICATIONS

Plans set:

Plans dated 4/21/06 “Owner Revisions”

Sheets - A1.0, A1.1,A2.0, A2.1, A3.0, A4.0, A4.1, A4.2, A5.0, S0.1, S1.1, S1.2,
S2.1, S2.2, S3.1, S3.2, S4.1, S4.2, S4.3, D1.0, D1.1, C1.0, C2.0, C3.0, C3.1,
C4.0, CS1, L-1and L-2.

Specifications Building C - by Lance Mueller and Associates, dated March, 2006

The following improvements, should Tenant elected to install in Building C,
shall be part of the tenant improvements paid for by Tenant and Tenant’s
Allowance whether shown in the plans and specifications or not:

1.                     Office space build out

2.                     Bathroom buildout

3.                     Air conditioning

4.                     Two additional dock doors with seals

5.                     Five additional dock levelers

6.                     Motor drives on dock doors (power will be installed to
all dock door locations)

7.                     Entrance canopy(s)

8.                     Door security or card key access and electric strike door
hardware (power will be installed to all door locations)

9.                     All costs associated with the architectural and
engineering work, permits, City fees and Washignton State Sales Tax required for
the above items.

Any tenant improvement work in Building C performed by SGA and completed on or
before the latter of November 15, 2006 or the date of the Certificate of
Occupancy for the Building C shell construction, shall not have a general
conditions costs charge to the applicable Tenant Improvement work.

 

A-1

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EXHIBIT “B”

SITE PLAN

B-1

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EXHIBIT “C”

RULES AND REGULATIONS

Dated:                           , 2006.

This Exhibit is attached to and becomes a part of that certain Lease by and
between Merrill Creek Holdings, LLC, as Landlord, and Zumiez, Inc., as Tenant.

1.                                       The outside sidewalks and loading areas
immediately adjoining the Premises, and all other Common Areas, shall be kept
clean and free from dirt and rubbish by Tenant and Tenant shall not place or
permit any obstructions in such areas, except with Landlord’s prior written
consent.

2.                                       Tenant shall not make or permit any
noise or odors that annoy or interfere with other tenants or persons having
business within the Development.

3.                                       No radio or television aerial or
satellite dish (or similar device) shall be installed or erected on the roof or
exterior walls of the Leased Premises, or on the grounds of the Development
generally, without first obtaining in each instance the written consent of
Landlord.  Any aerial or satellite dish so installed without such written
consent shall be subject to removal without notice at any time.

4.                                       All of Tenant’s refuse and rubbish
shall be removed to central trash bins located in the Development.  Tenant shall
not place any rubbish or other matter outside any building within the
Development, except in such containers as are authorized from time to time by
Landlord.  Trash enclosures where any food-related trash is deposited, shall be
emptied on a daily basis.  Dumpsters for food-related trash shall be supplied
with closable lids, and shall be kept closed at all times.  Trash shall not be
allowed to accumulate outside of/or within a trash enclosure, or outside of a
dumpster or other approved receptacle.  All necessary measures shall be taken to
ensure that the accumulation of trash does not attract animals or insects.

5.                                       No window coverings, shades, or awnings
shall be installed or used by Tenant, except with prior written consent of
Landlord.

6.                                       Tenant shall make no use of the roof
without obtaining the consent of Landlord.

7.                                       Tenant shall not use any method of
heating or air conditioning other than as provided by Landlord, without
Landlord’s prior written consent.

8.                                       Tenant shall not use, and shall not
allow anyone else to use, the Premises as a habitation.

9.                                       Tenant will obey all posted signs and
park only in the areas designated for vehicle parking.

10.                                 The maintenance, washing, waxing, cleaning,
and repairing of vehicles in the Common Areas is prohibited.

11.                                 Landlord reserves the right to make such
other reasonable rules and regulations as it may from time to time deem
necessary for the appropriate operation and safety of the Development, its
occupants and customers.  Tenant agrees to abide by these and such rules and
regulations.  Rules shall be enforced fairly against all tenants of the
Development.

C-1

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EXHIBIT “D”

DELIVERY OF PREMISES

NAME OF DEVELOPMENT:

MERRILL CREEK CENTER

 

 

NAME OF TENANT:

ZUMIEZ, INC.

 

 

PREMISES ADDRESS:

6300 Merrill Creek Parkway

 

Everett, WA 98203

 

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ACKNOWLEDGEMENT

As stipulated under Paragraph 3.1 (“Term”) of the Lease Agreement executed by
Landlord and Tenant herein for the above-referenced demised Premises, Tenant
does hereby acknowledge that Tenant is in receipt of the keys to said Existing
Premises and shall receive keys to Building C upon receipt of the Certificate of
Occupancy.  Tenant shall have the right to Early Possession and can begin tenant
improvement work as approved by Landlord when contracted to do so.

 

 

TENANT:

 

 

 

 

 

 

ZUMIEZ, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

Date:

 

 

 

D-1

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