Exhibit 10.65

 
                        [f10k2011_patient0.jpg]
 
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET
 
AIR COMMERCIAL REAL ESTATE ASSOCIATION
 
1.
Basic Provisions ("Basic Provisions").

 
1.1 Parties: This Lease ("Lease"), dated for reference purposes only December 5,
2011              ,is made by and between Don Wilson Builders, a California
Corporation as agent for Lomita Boulevard #1, LLC, a California Limited
Liability Company, and Cox Orange,LLC a Lilabilty
Company                              ("Lessor") and Patient Safety Technologies,
Inc., a Delaware Corporation             ("Lessee"), (collectively the
"Parties", or individually a "Party").
 
1.2(a)      Premises: That certain portion of the Project (as defined below),
including all improvements therein or to be provided by Lessor under the terms
of this Lease,commonly known by the street address of 8 Goodyear, Suite 100 ,
located in the City of
Irvine                                                                                ,
County of Orange                                ,
StateofCalifornia                                                      , with
zip code 92618 , as outlined on Exhibit A        attached hereto ("Premises")
and generally described as (describe briefly the nature of the Premises):Located
at 8 Goodyear in Goodyear Business Park, Suite 100 consists of approximately
3,799 total rentable square feet, with  approximately 1,634 rentable square feet
of warehouse space..In addition to Lessee's rights to use and occupy the
Premises as hereinafter specified, Lessee shall have non-exclusive rights to any
utility raceways of the building containing the Premises ("Building") and to the
common Areas (as defined in Paragraph 2.7 below), but shall not have any rights
to the roof or exterior walls of the Building or to any other buildings in the
Project. The Premises, the Building, the Common Areas, the land upon which they
are located, along with all other buildings and improvements thereon, are herein
collectively referred to as the "Project." (See also Paragraph 2)
 
1.2(b)      Parking: Ten (10)                            unreserved vehicle
parking spaces. (See also Paragraph 2.6)
 
1.3           Term: Two (2)                   years and Zero (0)                
months ("Original Term") commencing January 1, 2012                   
("Commencement Date") and ending December 31, 2013                  
("Expiration Date"). (See also Paragraph 3)
 
1.4           Early Possession: If the Premises are available Lessee may have
non-exclusive possession of the Premises commencing See addendum               
("Early Possession Date"). (See also Paragraphs 3.2 and 3.3)
 
1.5           Base Rent: $   3,229.15      per month ("Base Rent"), payable on
the First (1st)          day of each month commencing January 1, 2012          
 . (See also Paragraph 4)
 
þ If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted. See Paragraph 50
 
1.6           Lessee's Share of Common Area Operating Expenses: Two & 63/100ths
percent ( 2.63%) ("Lessee's Share"). In the event that the size of the Premises
and/or the Project are modified during the term of this Lease, Lessor shall
recalculate Lessee's Share to reflect such modification.
 
1.7   Base Rent and Other Monies Paid Upon Execution:
 
(a) Base Rent: $3,229.15           for the period February 1-29.
2012                     .
(b) Common Area Operating Expenses: $1,367.64          for the period january
1-31, 2012                        .
(c) Security Deposit: $3,229.15            ("Security Deposit"). (See also
Paragraph 5)
(d) Other: $                   N/A                     for
N/A                                                 .
(e) Total Due Upon Execution of this Lease:
$7,825.94                                     
                                                                                                          .
 
1.8   Agreed Use: General office and warehouse for medical design and
distribution of medical devices as approved by the City of
Irvine.                   . (See also Paragraph 6)
 
1.9   Insuring Party. Lessor is the "Insuring Party". (See also Paragraph 8)
 
1.10          Real Estate Brokers: (See also Paragraph 15)
 
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(a) Representation: The following real estate brokers (the "Brokers") and
brokerage relationships exist in this transaction
 
(check applicable boxes):
o                             represents Lessor exclusively ("Lessor's Broker");
o                             represents Lessee exclusively ("Lessee's Broker");
or
þ                                                 represents both Lessor and
lessee ("Dual Agency").
 
(b) Payment to Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the Brokers the brokerage fee agreed to in a
separate written agreement (or if there is no such agreement, the sum of  or %
of the total Base Rent for the brokerage services rendered by the Brokers).
 
1.11          Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by ("Guarantor"). (See also Paragraph 37)
 
1.12          Attachments. Attached hereto are the following, all of which
constitute a part of this Lease:
 
þ
an Addendum consisting of Paragraphs
50                                                  through              61             ;

 

þ
a site plan depicting the Premises;(Exhibit A)

 
þ
a site plan depicting the Project;(Exhibit B)

 
þ
a current set of the Rules and Regulations for the Project;(Exhibit C)

 
þ
a current set of the Rules and Regulations adopted by the owners'
association;(Exhibit G)

 
o
a Work Letter;

 
þ
other (specify);Parking Plan (Exhibit D), Disclosure Form (Exhibit E), Estoppel
Certificate  (Exhibit F).

 
2.
Premises.

 
2.1   Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. While the approximate square
footage of the Premises may have been used in the marketing of the Premises for
purposes of comparison, the Base Rent stated herein is NOT tied to square
footage and is not subject to adjustment should the actual size be determined to
be different. NOTE: Lessee is advised to verify the actual size prior to
executing this Lease.
 
2.2    Condition. Lessor shall deliver that portion of the Premises contained
within the Building ('Unit") to Lessee broom clean and free of debris on the
Commencement Date or the Early Possession Date, whichever first occurs ("Start
Date"), and, so long as the required service contracts described in Paragraph
7.1(b) below are obtained by Lessee and in effect within thirty days following
the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems ("HVAC"), loading
doors, sump pumps, if any, and all other such elements in the Unit, other than
those constructed by Lessee, shall be in good operating condition on said date,
that the structural elements of the roof, bearing walls and foundation of the
Unit shall be free of material defects, and that the Unit does not contain
hazardous levels of any mold or fungi defined as toxic under applicable state or
federal law. If a non-compliance with such warranty exists as of the Start Date,
or if one of such systems or elements should malfunction or fail within the
appropriate warranty period, Lessor shall, as Lessor's sole obligation with
respect to such matter, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, malfunction or failure, rectify same
at Lessor's expense. The warranty periods shall be as follows: (i) 6 months as
to the HVAC systems, and (ii) 30 days as to the remaining systems and other
elements of the Unit. If Lessee does not give Lessor the required notice within
the appropriate warranty period, correction of any such non-compliance,
malfunction or failure shall be the obligation of Lessee at Lessee's sole cost
and expense (except for the repairs to the fire sprinkler systems, roof,
foundations, and/or bearing walls - see Paragraph 7).
 
2.3   Compliance. Lessor warrants that to the best of its knowledge the
improvements on the Premises and the Common Areas comply with the building codes
that were in effect at the time that each such improvement, or portion thereof,
was constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date ("Applicable
Requirements"). Said warranty does not apply to the use to which Lessee will put
the Premises, modifications which may be required by the Americans with
Disabilities Act or any similar laws as a result of Lessee's use (see Paragraph
49), or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements and especially the zoning
are appropriate for Lessee's intended use, and acknowledges that past uses of
the Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within 6
months following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense. If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Unit, Premises
and/or Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building ("Capital Expenditure"), Lessor and Lessee shall allocate the cost of
such work as follows:
 
(a)Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required
as a result of the specific and unique use of the Premises by Lessee as compared
with uses by tenants in general, Lessee shall be fully responsible for the cost
thereof, provided, however that if such Capital Expenditure is required during
the last 2 years of this Lease and the cost thereof exceeds 6 months' Base Rent,
Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee's termination notice that Lessor
has elected to pay the difference between the actual cost thereof and the amount
equal to 6 months' Base Rent. If Lessee elects termination, Lessee shall
immediately cease the use of the Premises which requires such Capital
Expenditure and deliver to Lessor written notice specifying a termination date
at least 90 days thereafter. Such termination date shall, however, in no event
be earlier than the last day that Lessee could legally utilize the Premises
without commencing such Capital Expenditure.
 
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(b) If such Capital Expenditure is not the result of the specific and unique use
of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor shall pay for such Capital Expenditure and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease or any extension thereof, on the date that on which the Base Rent is
due, an amount equal to 144th of the portion of such costs reasonably
attributable to the Premises. Lessee shall pay Interest on the balance but may
prepay its obligation at any time. If, however, such Capital Expenditure is
required during the last 2 years of this Lease or if Lessor reasonably
determines that it is not economically feasible to pay its share thereof, Lessor
shall have the option to terminate this Lease upon 90 days prior written notice
to Lessee unless Lessee notifies Lessor, in writing, within 10 days after
receipt of Lessor's termination notice that Lessee will pay for such Capital
Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct
same, with Interest, from Rent until Lessor's share of such costs have been
fully paid. If Lessee is unable to finance Lessor's share, or if the balance of
the Rent due and payable for the remainder of this Lease is not sufficient to
fully reimburse Lessee on an offset basis, Lessee shall have the right to
terminate this Lease upon 30 days written notice to Lessor.
 
(c) Notwithstanding the above, the provisions concerning Capital Expenditures
are intended to apply only to non-voluntary, unexpected, and new Applicable
Requirements. If the Capital Expenditures are instead triggered by Lessee as a
result of an actual or proposed change in use, change in intensity of use, or
modification to the Premises then, and in that event, Lessee shall either: (i)
immediately cease such changed use or intensity of use and/or take such other
steps as may be necessary to eliminate the requirement for such Capital
Expenditure, or (ii) complete such Capital Expenditure at its own expense.
Lessee shall not have any right to terminate this Lease.
 
2.4   Acknowledgements. Lessee acknowledges that: (a) it has been given an
opportunity to inspect and measure the Premises, (b) it has been advised by
Lessor and/or Brokers to satisfy itself with respect to the size and condition
of the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements and the Americans with Disabilities Act), and their
suitability for Lessee's intended use, (c) Lessee has made such investigation as
it deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to its occupancy of the Premises, (d) it is not
relying on any representation as to the size of the Premises made by Brokers or
Lessor, (e) the square footage of the Premises was not material to Lessee's
decision to lease the Premises and pay the Rent stated herein, and (f) neither
Lessor, Lessor's agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have
made no representations, promises or warranties concerning Lessee's ability to
honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor's
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants.
 
2.5   Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph
2 shall be of no force or effect if immediately prior to the Start Date Lessee
was the owner or occupant of the Premises. In such event, Lessee shall be
responsible for any necessary corrective work.
 
2.6   Vehicle Parking. Lessee shall be entitled to use the number of parking
spaces specified in Paragraph 1.2(b) on those portions of the Common Areas
designated from time to time by Lessor for parking. Lessee shall not use more
parking spaces than said number. Said parking spaces shall be used for parking
by vehicles no larger than full-size passenger automobiles or pick-up trucks,
herein called "Permitted Size Vehicles." Lessor may regulate the loading and
unloading of vehicles by adopting Rules and Regulations as provided in Paragraph
2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common
Area without the prior written permission of Lessor. In addition:
 
(a) Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities.
 
(b) Lessee shall not service or store any vehicles in the Common Areas.
 
(c) If Lessee permits or allows any of the prohibited activities described in
this Paragraph 2.6, then Lessor shall have the right, without notice, in
addition to such other rights and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
 
2.7   Common Areas - Definition. The term "Common Areas" is defined as all areas
and facilities outside the Premises and within the exterior boundary line of the
Project and interior utility raceways and installations within the Unit that are
provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other tenants of the Project and their
respective employees, suppliers, shippers, customers, contractors and invitees,
including parking areas, loading and unloading areas, trash areas, roadways,
walkways, driveways and landscaped areas.
 
2.8   Common Areas - Lessee's Rights. Lessor grants to Lessee, for the benefit
of Lessee and its employees, suppliers, shippers, contractors, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Project. Under no circumstances shall the
right herein granted to use the Common Areas be deemed to include the right to
store any property, temporarily or permanently, in the Common Areas. Any such
storage shall be permitted only by the prior written consent of Lessor or
Lessor's designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
 
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2.9   Common Areas - Rules and Regulations. Lessor or such other person(s) as
Lessor may appoint shall have the exclusive control and management of the Common
Areas and shall have the right, from time to time, to establish, modify, amend
and enforce reasonable rules and regulations ("Rules and Regulations") for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees. Lessee agrees to abide by and conform to all such Rules and
Regulations, and shall use its best efforts to cause its employees, suppliers,
shippers, customers, contractors and invitees to so abide and conform. Lessor
shall not be responsible to Lessee for the non-compliance with said Rules and
Regulations by other tenants of the Project.
 
2.10         Common Areas - Changes. Lessor shall have the right, in Lessor's
sole discretion, from time to time:
 
(a) To make changes to the Common Areas, including, without limitation, changes
in the location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas, walkways and utility raceways;
 
(b) To close temporarily any of the Common Areas for maintenance purposes so
long as reasonable access to the Premises remains available;
 
(c) To designate other land outside the boundaries of the Project to be a part
of the Common Areas;
 
(d) To add additional buildings and improvements to the Common Areas;
 
(e) To use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Project, or any portion thereof; and
 
(f) To do and perform such other acts and make such other changes in, to or with
respect to the Common Areas and Project as Lessor may, in the exercise of sound
business judgment, deem to be appropriate.
 
3.
Term.

 
3.1   Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
 
3.2   Early Possession. Any provision herein granting Lessee Early Possession of
the Premises is subject to and conditioned upon the Premises being available for
such possession prior to the Commencement Date. Any grant of Early Possession
only conveys a non-exclusive right to occupy the Premises. If Lessee totally or
partially occupies the Premises prior to the Commencement Date, the obligation
to pay Base Rent shall be abated for the period of such Early Possession. All
other terms of this Lease (including but not limited to the obligations to pay
Lessee's Share of Common Area Operating Expenses, Real Property Taxes and
insurance premiums and to maintain the Premises) shall be in effect during such
period. Any such Early Possession shall not affect the Expiration Date.
 
3.3   Delay In Possession. Lessor agrees to use its best commercially reasonable
efforts to deliver possession of the Premises to Lessee by the Commencement
Date. If, despite said efforts, Lessor is unable to deliver possession as
agreed, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or change the Expiration Date. Lessee
shall not, however, be obligated to pay Rent or perform its other obligations
until Lessor delivers possession of the Premises and any period of rent
abatement that Lessee would otherwise have enjoyed shall run from the date of
the delivery of possession and continue for a period equal to what Lessee would
otherwise have enjoyed, but minus any days of delay caused by the acts or
omissions of Lessee. If possession is not delivered within 60 days after the
Commencement Date, Lessee may, at its option, by notice in writing within 10
days after the end of such 60 day period, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee's right to
cancel shall terminate. Except as otherwise provided, if possession is not
tendered to Lessee by the Commencement Date and Lessee does not terminate this
Lease, as aforesaid, any period of rent abatement that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts or omissions of Lessee.
If possession of the Premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.
 
3.4   Lessee Compliance. Lessor shall not be required to tender possession of
the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.
 
4.
Rent.

 
4.1   Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease (except for the Security Deposit) are deemed to be rent ("Rent").
 
4.2   Common Area Operating Expenses. Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee's Share (as specified in Paragraph
1.6) of all Common Area Operating Expenses, as hereinafter defined, during each
calendar year of the term of this Lease, in accordance with the following
provisions
 
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(a)  "Common Area Operating Expenses" are defined, for purposes of this Lease,
as all costs incurred by Lessor relating to the ownership and operation of the
Project, including, but not limited to, the following:
 
  (i)   The operation, repair and maintenance, in neat, clean, good order and
condition , and if necessary the replacement, of the following:
 
 (aa)The Common Areas and Common Area improvements, including parking areas,
loading and unloading areas, trash areas, roadways, parkways, walkways,
driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting
facilities, fences and gates, elevators, roofs, and roof drainage systems.
 
 (bb)Exterior signs and any tenant directories.
 
 (cc)Any fire sprinkler systems.
 
  (ii)          The cost of water, gas, electricity and telephone to service the
Common Areas and any utilities not separately metered.
 
 (iii)          The cost of trash disposal, pest control services, property
management, security services, owners' association dues and fees, the cost to
repaint the exterior of any structures and the cost of any environmental
inspections.
 
  (iv)         Reserves set aside for maintenance, repair and/or replacement of
Common Area improvements and equipment.
 
  (v)          Real Property Taxes (as defined in Paragraph 10).
 
  (vi)         The cost of the premiums for the insurance maintained by Lessor
pursuant to Paragraph 8.
 
  (vii)        Any deductible portion of an insured loss concerning the Building
or the Common Areas.
 
  (viii)       Auditors', accountants' and attorneys' fees and costs related to
the operation, maintenance, repair and replacement of the Project.
 
  (ix)         The cost of any capital improvement to the Building or the
Project not covered under the provisions of Paragraph 2.3 provided; however,
that Lessor shall allocate the cost of any such capital improvement over a 12
year period and Lessee shall not be required to pay more than Lessee's Share of
1/144th of the cost of such capital improvement in any given month.
 
  (x)   The cost of any other services to be provided by Lessor that are stated
elsewhere in this Lease to be a Common Area Operating Expense.
 
(b)  Any Common Area Operating Expenses and Real Property Taxes that are
specifically attributable to the Unit, the Building or to any other building in
the Project or to the operation, repair and maintenance thereof, shall be
allocated entirely to such Unit, Building, or other building. However, any
Common Area Operating Expenses and Real Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all
buildings in the Project.
 
(c)  The inclusion of the improvements, facilities and services set forth in
Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to
either have said improvements or facilities or to provide those services unless
the Project already has the same, Lessor already provides the services, or
Lessor has agreed elsewhere in this Lease to provide the same or some of them.
 
(d)  Lessee's Share of Common Area Operating Expenses is payable monthly on the
same day as the Base Rent is due hereunder. The amount of such payments shall be
based on Lessor's estimate of the annual Common Area Operating Expenses. Within
60 days after written request (but not more than once each year) Lessor shall
deliver to Lessee a reasonably detailed statement showing Lessee's Share of the
actual Common Area Operating Expenses incurred during the preceding year. If
Lessee's payments during such year exceed Lessee's Share, Lessor shall credit
the amount of such over-payment against Lessee's future payments. If Lessee's
payments during such year were less than Lessee's Share, Lessee shall pay to
Lessor the amount of the deficiency within 10 days after delivery by Lessor to
Lessee of the statement.
 
(e)  Common Area Operating Expenses shall not include any expenses paid by any
tenant directly to third parties, or as to which Lessor is otherwise reimbursed
by any third party, other tenant, or insurance proceeds.
 
4.3   Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is due.
All monetary amounts shall be rounded to the nearest whole dollar. In the event
that any invoice prepared by Lessor is inaccurate such inaccuracy shall not
constitute a waiver and Lessee shall be obligated to pay the amount set forth in
this Lease. Rent for any period during the term hereof which is for less than
one full calendar month shall be prorated based upon the actual number of days
of said month. Payment of Rent shall be made to Lessor at its address stated
herein or to such other persons or place as Lessor may from time to time
designate in writing. Acceptance of a payment which is less than the amount then
due shall not be a waiver of Lessor's rights to the balance of such Rent,
regardless of Lessor's endorsement of any check so stating. In the event that
any check, draft, or other instrument of payment given by Lessee to Lessor is
dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in
addition to any Late Charge and Lessor, at its option, may require all future
Rent be paid by cashier's check. Payments will be applied first to accrued late
charges and attorney's fees, second to accrued interest, then to Base Rent and
Common Area Operating Expenses, and any remaining amount to any other
outstanding charges or costs.
 
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5.      Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount already due Lessor, for Rents
which will be due in the future, and/ or to reimburse or compensate Lessor for
any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security
Deposit, Lessee shall within 10 days after written request therefor deposit
monies with Lessor sufficient to restore said Security Deposit to the full
amount required by this Lease. If the Base Rent increases during the term of
this Lease, Lessee shall, upon written request from Lessor, deposit additional
monies with Lessor so that the total amount of the Security Deposit shall at all
times bear the same proportion to the increased Base Rent as the initial
Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended
to accommodate a material change in the business of Lessee or to accommodate a
sublessee or assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor's reasonable judgment, to account for
any increased wear and tear that the Premises may suffer as a result thereof. If
a change in control of Lessee occurs during this Lease and following such change
the financial condition of Lessee is, in Lessor's reasonable judgment,
significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially
reasonable level based on such change in financial condition. Lessor shall not
be required to keep the Security Deposit separate from its general accounts.
Within 90 days after the expiration or termination of this Lease, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor. No
part of the Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee under this
Lease.
 
6. 
Use.

 
6.1   Use. Lessee shall use and occupy the Premises only for the Agreed Use, or
any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of
or causes damage to neighboring premises or properties. Other than guide, signal
and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets,
animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or
delay its consent to any written request for a modification of the Agreed Use,
so long as the same will not impair the structural integrity of the Building or
the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Project. If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in the Agreed
Use.
 
6.2   Hazardous Substances.
 
(a)  Reportable Uses Require Consent. The term "Hazardous Substance" as used in
this Lease shall mean any product, substance, or waste whose presence, use,
manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.
 
(b)  Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe,
that a Hazardous Substance has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor, and provide Lessor with
a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.
 
(c)  Lessee Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, comply with all Applicable Requirements and take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.
 
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(d)  Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys' and consultants' fees arising out of or
involving any Hazardous Substance brought onto the Premises by or for Lessee, or
any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from areas outside of the Project not caused or contributed
to by Lessee). Lessee's obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.
 
(e)  Lessor Indemnification. Lessor and its successors and assigns shall
indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which are suffered as a direct result of Hazardous Substances on
the Premises prior to Lessee taking possession or which are caused by the gross
negligence or willful misconduct of Lessor, its agents or employees. Lessor's
obligations, as and when required by the Applicable Requirements, shall include,
but not be limited to, the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease.
 
(f)  Investigations and Remediations. Lessor shall retain the responsibility and
pay for any investigations or remediation measures required by governmental
entities having jurisdiction with respect to the existence of Hazardous
Substances on the Premises prior to the Lessee taking possession, unless such
remediation measure is required as a result of Lessee's use (including
"Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.
 
(g)  Lessor Termination Option. If a Hazardous Substance Condition (see
Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease shall
continue in full force and effect, but subject to Lessor's rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate
such condition exceeds 12 times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within 30 days after
receipt by Lessor of knowledge of the occurrence of such Hazardous Substance
Condition, of Lessor's desire to terminate this Lease as of the date 60 days
following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within the
time provided, this Lease shall terminate as of the date specified in Lessor's
notice of termination.
 
6.3   Lessee's Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to such Requirements, without regard to whether said
Requirements are now in effect or become effective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor's written request, provide Lessor
with copies of all permits and other documents, and other information evidencing
Lessee's compliance with any Applicable Requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving the failure of Lessee or
the Premises to comply with any Applicable Requirements. Likewise, Lessee shall
immediately give written notice to Lessor of: (i) any water damage to the
Premises and any suspected seepage, pooling, dampness or other condition
conducive to the production of mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.
 
6.4   Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30) and consultants shall have the right to enter into Premises at any
time, in the case of an emergency, and otherwise at reasonable times after
reasonable notice, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a violation of Applicable
Requirements, or a Hazardous Substance Condition (see Paragraph 9.1) is found to
exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheets (MSDS) to Lessor within 10
days of the receipt of written request therefor.
 
7.
Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

 
7.1   Lessee's Obligations.
 
(a)  In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2
(Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee
shall, at Lessee's sole expense, keep the Premises, Utility Installations
(intended for Lessee's exclusive use, no matter where located), and Alterations
in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, HVAC equipment, electrical, lighting facilities, boilers,
pressure vessels, fixtures, interior walls, interior surfaces of exterior walls,
ceilings, floors, windows, doors, plate glass, and skylights but excluding any
items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee,
in keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair.
 
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(b)  Service Contracts. Lessee shall, at Lessee's sole expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in the maintenance of the
following equipment and improvements, if any, if and when installed on the
Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, and (iii)
clarifiers. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain any or all of such service contracts, and Lessee shall
reimburse Lessor, upon demand, for the cost thereof.
 
(c)  Failure to Perform. If Lessee fails to perform Lessee's obligations under
this Paragraph 7.1, Lessor may enter upon the Premises after 10 days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, and Lessee shall promptly pay
to Lessor a sum equal to 115% of the cost thereof.
 
(d)  Replacement. Subject to Lessee's indemnification of Lessor as set forth in
Paragraph 8.7 below, and without relieving Lessee of liability resulting from
Lessee's failure to exercise and perform good maintenance practices, if an item
described in Paragraph 7.1(b) cannot be repaired other than at a cost which is
in excess of 50% of the cost of replacing such item, then such item shall be
replaced by Lessor, and the cost thereof shall be prorated between the Parties
and Lessee shall only be obligated to pay, each month during the remainder of
the term of this Lease, on the date on which Base Rent is due, an amount equal
to the product of multiplying the cost of such replacement by a fraction, the
numerator of which is one, and the denominator of which is 144 (ie. 1/144th of
the cost per month). Lessee shall pay Interest on the unamortized balance but
may prepay its obligation at any time.
 
7.2   Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),
7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.
 
7.3   Utility Installations; Trade Fixtures; Alterations.
 
(a)  Definitions. The term "Utility Installations" refers to all floor and
window coverings, air and/or vacuum lines, power panels, electrical
distribution, security and fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).
 
(b)  Consent. Lessee shall not make any Alterations or Utility Installations to
the Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Alterations or Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, will not affect the
electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3 month's
Base Rent in the aggregate or a sum equal to one month's Base Rent in any one
year. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i)
acquiring all applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of one month's Base Rent, Lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor.
 
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(c)  Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use on
the Premises, which claims are or may be secured by any mechanic's or
materialman's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 10 days notice prior to the commencement of any work
in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim
or demand, then Lessee shall, at its sole expense defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof. If
Lessor shall require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any such
action, Lessee shall pay Lessor's attorneys' fees and costs.
 
7.4   Ownership; Removal; Surrender; and Restoration.
 
(a)  Ownership. Subject to Lessor's right to require removal or elect ownership
as hereinafter provided, all Alterations and Utility Installations made by
Lessee shall be the property of Lessee, but considered a part of the Premises.
Lessor may, at any time, elect in writing to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations
and Utility Installations shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by Lessee with the Premises.
 
(b)  Removal. By delivery to Lessee of written notice from Lessor not earlier
than 90 and not later than 30 days prior to the end of the term of this Lease,
Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or termination of this Lease. Lessor
may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.
 
(c)  Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear" shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if
this Lease is for 12 months or less, then Lessee shall surrender the Premises in
the same condition as delivered to Lessee on the Start Date with NO allowance
for ordinary wear and tear. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations, furnishings, and equipment as well as the removal
of any storage tank installed by or for Lessee. Lessee shall also completely
remove from the Premises any and all Hazardous Substances brought onto the
Premises by or for Lessee, or any third party (except Hazardous Substances which
were deposited via underground migration from areas outside of the Project) even
if such removal would require Lessee to perform or pay for work that exceeds
statutory requirements. Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee. Any personal property of Lessee not removed on or
before the Expiration Date or any earlier termination date shall be deemed to
have been abandoned by Lessee and may be disposed of or retained by Lessor as
Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant
to this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below.
 
8.
Insurance; Indemnity.

 
8.1   Payment of Premiums. The cost of the premiums for the insurance policies
required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and
8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Start Date or Expiration Date.
 
8.2   Liability Insurance.
 
(a)  Carried by Lessee. Lessee shall obtain and keep in force a Commercial
General Liability policy of insurance protecting Lessee and Lessor as an
additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000. Lessee shall add Lessor as an additional insured by means of an
endorsement at least as broad as the Insurance Service Organization's
"Additional Insured-Managers or Lessors of Premises" Endorsement. The policy
shall not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall
provide an endorsement on its liability policy(ies) which provides that its
insurance shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.
 
(b)  Carried by Lessor. Lessor shall maintain liability insurance as described
in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required
to be maintained by Lessee. Lessee shall not be named as an additional insured
therein.
 
8.3   Property Insurance - Building, Improvements and Rental Value.
 
(a)  Building and Improvements. Lessor shall obtain and keep in force a policy
or policies of insurance in the name of Lessor, with loss payable to Lessor, any
ground-lessor, and to any Lender insuring loss or damage to the Premises. The
amount of such insurance shall be equal to the full insurable replacement cost
of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee's personal property shall be insured
by Lessee not by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence.
 
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(b)  Rental Value. Lessor shall also obtain and keep in force a policy or
policies in the name of Lessor with loss payable to Lessor and any Lender,
insuring the loss of the full Rent for one year with an extended period of
indemnity for an additional 180 days ("Rental Value  insurance"). Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next 12 month period.
 
(c)  Adjacent Premises. Lessee shall pay for any increase in the premiums for
the property insurance of the Building and for the Common Areas or other
buildings in the Project if said increase is caused by Lessee's acts, omissions,
use or occupancy of the Premises.
 
(d)  Lessee's Improvements. Since Lessor is the Insuring Party, Lessor shall not
be required to insure Lessee Owned Alterations and Utility Installations unless
the item in question has become the property of Lessor under the terms of this
Lease.
 
8.4   Lessee's Property; Business Interruption Insurance.
 
(a)  Property Damage. Lessee shall obtain and maintain insurance coverage on all
of Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations and
Utility Installations. Such insurance shall be full replacement cost coverage
with a deductible of not to exceed $1,000 per occurrence. The proceeds from any
such insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.
 
(b)  Business Interruption. Lessee shall obtain and maintain loss of income and
extra expense insurance in amounts as will reimburse Lessee for direct or
indirect loss of earnings attributable to all perils commonly insured against by
prudent lessees in the business of Lessee or attributable to prevention of
access to the Premises as a result of such perils.
 
(c)  No Representation of Adequate Coverage. Lessor makes no representation that
the limits or forms of coverage of insurance specified herein are adequate to
cover Lessee's property, business operations or obligations under this Lease.
 
8.5   Insurance Policies. Insurance required herein shall be by companies duly
licensed or admitted to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least A-, VI, as set forth in the most current issue of "Best's Insurance
Guide", or such other rating as may be required by a Lender. Lessee shall not do
or permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior to the Start Date, deliver to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of the required insurance. No such policy shall be cancelable or subject to
modification except after 30 days prior written notice to Lessor. Lessee shall,
at least 10 days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or "insurance binders" evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand. Such policies shall be
for a term of at least one year, or the length of the remaining term of this
Lease, whichever is less. If either Party shall fail to procure and maintain the
insurance required to be carried by it, the other Party may, but shall not be
required to, procure and maintain the same.
 
8.6   Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated thereby.
 
8.7   Indemnity. Except for Lessor's gross negligence or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys' and consultants' fees, expenses and/or liabilities arising
out of, involving, or in connection with, the use and/or occupancy of the
Premises by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or indemnified.
 
8.8   Exemption of Lessor and its Agents from Liability. Notwithstanding the
negligence or breach of this Lease by Lessor or its agents, neither Lessor nor
its agents shall be liable under any circumstances for: (i) injury or damage to
the person or goods, wares, merchandise or other property of Lessee, Lessee's
employees, contractors, invitees, customers, or any other person in or about the
Premises, whether such damage or injury is caused by or results from fire,
steam, electricity, gas, water or rain, indoor air quality, the presence of mold
or from the breakage, leakage, obstruction or other defects of pipes, fire
sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any
other cause, whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the Building, or from other sources
or places, (ii) any damages arising from any act or neglect of any other tenant
of Lessor or from the failure of Lessor or its agents to enforce the provisions
of any other lease in the Project, or (iii) injury to Lessee's business or for
any loss of income or profit therefrom. Instead, it is intended that Lessee's
sole recourse in the event of such damages or injury be to file a claim on the
insurance policy(ies) that Lessee is required to maintain pursuant to the
provisions of paragraph 8.
 
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8.9   Failure to Provide Insurance. Lessee acknowledges that any failure on its
part to obtain or maintain the insurance required herein will expose Lessor to
risks and potentially cause Lessor to incur costs not contemplated by this
Lease, the extent of which will be extremely difficult to ascertain.
Accordingly, for any month or portion thereof that Lessee does not maintain the
required insurance and/or does not provide Lessor with the required binders or
certificates evidencing the existence of the required insurance, the Base Rent
shall be automatically increased, without any requirement for notice to Lessee,
by an amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/costs that Lessor will incur by
reason of Lessee's failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee's Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise of
any of the other rights and remedies granted hereunder, nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease.
 
9.
Damage or Destruction.

 
9.1   Definitions.
 
(a)  "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in 3 months or less from the
date of the damage or destruction, and the cost thereof does not exceed a sum
equal to 6 month's Base Rent. Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total. Notwithstanding the foregoing, Premises Partial Damage
shall not include damage to windows, doors, and/or other similar items which
Lessee has the responsibility to repair or replace pursuant to the provisions of
Paragraph 7.1.
 
(b)  "Premises Total Destruction" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in 3
months or less from the date of the damage or destruction and/or the cost
thereof exceeds a sum equal to 6 month's Base Rent. Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
 
(c)  "Insured Loss" shall mean damage or destruction to improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
 
(d)  "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.
 
(e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a
condition involving the presence of, or a contamination by, a Hazardous
Substance, in, on, or under the Premises which requires restoration.
 
9.2   Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds as and when
required to complete said repairs. In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within 10 days following receipt of written notice of such shortage and request
therefor. If Lessor receives said funds or adequate assurance thereof within
said 10 day period, the party responsible for making the repairs shall complete
them as soon as reasonably possible and this Lease shall remain in full force
and effect. If such funds or assurance are not received, Lessor may nevertheless
elect by written notice to Lessee within 10 days thereafter to: (i) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shall not
be entitled to reimbursement of any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood or earthquake
shall be subject to Paragraph 9.3, notwithstanding that there may be some
insurance coverage, but the net proceeds of any such insurance shall be made
available for the repairs if made by either Party.
 
9.3   Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not
an Insured Loss occurs, unless caused by a negligent or willful act of Lessee
(in which event Lessee shall make the repairs at Lessee's expense), Lessor may
either: (i) repair such damage as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) terminate this Lease by giving written notice to Lessee within 30 days
after receipt by Lessor of knowledge of the occurrence of such damage. Such
termination shall be effective 60 days following the date of such notice. In the
event Lessor elects to terminate this Lease, Lessee shall have the right within
10 days after receipt of the termination notice to give written notice to Lessor
of Lessee's commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.
 
9.4   Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate 60 days following
such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.
 
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9.5   Damage Near End of Term. If at any time during the last 6 months of this
Lease there is damage for which the cost to repair exceeds one month's Base
Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective
60 days following the date of occurrence of such damage by giving a written
termination notice to Lessee within 30 days after the date of occurrence of such
damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option and (b) providing Lessor with
any shortage in insurance proceeds (or adequate assurance thereof) needed to
make the repairs on or before the earlier of (i) the date which is 10 days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's commercially reasonable expense, repair such damage as soon
as reasonably possible and this Lease shall continue in full force and effect.
If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in the
termination notice and Lessee's option shall be extinguished.
 
9.6   Abatement of Rent; Lessee's Remedies.
 
(a)  Abatement. In the event of Premises Partial Damage or Premises Total
Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.
 
(b)  Remedies. If Lessor is obligated to repair or restore the Premises and does
not commence, in a substantial and meaningful way, such repair or restoration
within 90 days after such obligation shall accrue, Lessee may, at any time prior
to the commencement of such repair or restoration, give written notice to Lessor
and to any Lenders of which Lessee has actual notice, of Lessee's election to
terminate this Lease on a date not less than 60 days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not
commenced within 30 days thereafter, this Lease shall terminate as of the date
specified in said notice. If the repair or restoration is commenced within such
30 days, this Lease shall continue in full force and effect. "Commence" shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.
 
9.7   Termination; Advance Payments. Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.
 
10.
Real Property Taxes.

 
10.1          Definition. As used herein, the term "Real Property Taxes" shall
include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Project, Lessor's right
to other income therefrom, and/or Lessor's business of leasing, by any authority
having the direct or indirect power to tax and where the funds are generated
with reference to the Project address and where the proceeds so generated are to
be applied by the city, county or other local taxing authority of a jurisdiction
within which the Project is located. The term "Real Property Taxes" shall also
include any tax, fee, levy, assessment or charge, or any increase therein: (i)
imposed by reason of events occurring during the term of this Lease, including
but not limited to, a change in the ownership of the Project, (ii) a change in
the improvements thereon, and/or (iii) levied or assessed on machinery or
equipment provided by Lessor to Lessee pursuant to this Lease. In calculating
Real Property Taxes for any calendar year, the Real Property Taxes for any real
estate tax year shall be included in the calculation of Real Property Taxes for
such calendar year based upon the number of days which such calendar year and
tax year have in common.
 
10.2          Payment of Taxes. Except as otherwise provided in Paragraph 10.3,
Lessor shall pay the Real Property Taxes applicable to the Project, and said
payments shall be included in the calculation of Common Area Operating Expenses
in accordance with the provisions of Paragraph 4.2.
 
10.3          Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the exclusive enjoyment of such other lessees.
Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the
entirety of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility Installations placed upon the Premises by
Lessee or at Lessee's request or by reason of any alterations or improvements to
the Premises made by Lessor subsequent to the execution of this Lease by the
Parties.
 
10.4   Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.
 
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10.5   Personal Property Taxes. Lessee shall pay prior to delinquency all taxes
assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the real property of Lessor. If any of Lessee's said property shall be
assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee's property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.
 
11.   Utilities and Services. Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. Notwithstanding the provisions of
Paragraph 4.2, if at any time in Lessor's sole judgment, Lessor determines that
Lessee is using a disproportionate amount of water, electricity or other
commonly metered utilities, or that Lessee is generating such a large volume of
trash as to require an increase in the size of the trash receptacle and/or an
increase in the number of times per month that it is emptied, then Lessor may
increase Lessee's Base Rent by an amount equal to such increased costs. There
shall be no abatement of Rent and Lessor shall not be liable in any respect
whatsoever for the inadequacy, stoppage, interruption or discontinuance of any
utility or service due to riot, strike, labor dispute, breakdown, accident,
repair or other cause beyond Lessor's reasonable control or in cooperation with
governmental request or directions.
 
12.
Assignment and Subletting.

 
12.1          Lessor's Consent Required.
 
(a)  Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or encumber (collectively, "assign or assignment") or sublet all or any
part of Lessee's interest in this Lease or in the Premises without Lessor's
prior written consent.
 
(b)  Unless Lessee is a corporation and its stock is publicly traded on a
national stock exchange, a change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of 25% or
more of the voting control of Lessee shall constitute a change in control for
this purpose.
 
(c)  The involvement of Lessee or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an
assignment of this Lease to which Lessor may withhold its consent. "Net Worth of
Lessee" shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles.
 
(d)  An assignment or subletting without consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unapproved assignment or subletting as a noncurable Breach, Lessor may
either: (i) terminate this Lease, or (ii) upon 30 days written notice, increase
the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (i) the purchase price of any option
to purchase the Premises held by Lessee shall be subject to similar adjustment
to 110% of the price previously in effect, and (ii) all fixed and non-fixed
rental adjustments scheduled during the remainder of the Lease term shall be
increased to 110% of the scheduled adjusted rent.
 
(e)  Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited
to compensatory damages and/or injunctive relief.
 
(f)       Lessor may reasonably withhold consent to a proposed assignment or
subletting if Lessee is in Default at the time consent is requested.
 
(g)  Notwithstanding the foregoing, allowing a de minimis portion of the
Premises, ie. 20 square feet or less, to be used by a third party vendor in
connection with the installation of a vending machine or payphone shall not
constitute a subletting.
 
12.2          Terms and Conditions Applicable to Assignment and Subletting.
 
(a)  Regardless of Lessor's consent, no assignment or subletting shall: (i) be
effective without the express written assumption by such assignee or sublessee
of the obligations of Lessee under this Lease, (ii) release Lessee of any
obligations hereunder, or (iii) alter the primary liability of Lessee for the
payment of Rent or for the performance of any other obligations to be performed
by Lessee.
 
(b)  Lessor may accept Rent or performance of Lessee's obligations from any
person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for Lessee's Default or Breach.
 
(c)  Lessor's consent to any assignment or subletting shall not constitute
consent to any subsequent assignment or subletting.
 
(d)  In the event of any Default or Breach by Lessee, Lessor may proceed
directly against Lessee, any Guarantors or anyone else responsible for the
performance of Lessee's obligations under this Lease, including any assignee or
sublessee, without first exhausting Lessor's remedies against any other person
or entity responsible therefore to Lessor, or any security held by Lessor.
 
(e)  Each request for consent to an assignment or subletting shall be in
writing, accompanied by information relevant to Lessor's determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $500 as
consideration for Lessor's considering and processing said request. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36)
 
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(f)  Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment, entering into such sublease, or entering into
possession of the Premises or any portion thereof, be deemed to have assumed and
agreed to conform and comply with each and every term, covenant, condition and
obligation herein to be observed or performed by Lessee during the term of said
assignment or sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.
 
(g)  Lessor's consent to any assignment or subletting shall not transfer to the
assignee or sublessee any Option granted to the original Lessee by this Lease
unless such transfer is specifically consented to by Lessor in writing. (See
Paragraph 39.2)
 
12.3         Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
 
(a)  Lessee hereby assigns and transfers to Lessor all of Lessee's interest in
all Rent payable on any sublease, and Lessor may collect such Rent and apply
same toward Lessee's obligations under this Lease; provided, however, that until
a Breach shall occur in the performance of Lessee's obligations, Lessee may
collect said Rent. In the event that the amount collected by Lessor exceeds
Lessee's then outstanding obligations any such excess shall be refunded to
Lessee. Lessor shall not, by reason of the foregoing or any assignment of such
sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee. Lessee hereby irrevocably authorizes and directs
any such sublessee, upon receipt of a written notice from Lessor stating that a
Breach exists in the performance of Lessee's obligations under this Lease, to
pay to Lessor all Rent due and to become due under the sublease. Sublessee shall
rely upon any such notice from Lessor and shall pay all Rents to Lessor without
any obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary.
 
(b)  In the event of a Breach by Lessee, Lessor may, at its option, require
sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.
 
(c)  Any matter requiring the consent of the sublessor under a sublease shall
also require the consent of Lessor.
 
(d)  No sublessee shall further assign or sublet all or any part of the Premises
without Lessor's prior written consent.
 
(e)  Lessor shall deliver a copy of any notice of Default or Breach by Lessee to
the sublessee, who shall have the right to cure the Default of Lessee within the
grace period, if any, specified in such notice. The sublessee shall have a right
of reimbursement and offset from and against Lessee for any such Defaults cured
by the sublessee.
 
13.
Default; Breach; Remedies.

 
13.1          Default; Breach. A "Default" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A "Breach" is defined as the occurrence of one or
more of the following Defaults, and the failure of Lessee to cure such Default
within any applicable grace period:
 
(a)  The abandonment of the Premises; or the vacating of the Premises without
providing a commercially reasonable level of security, or where the coverage of
the property insurance described in Paragraph 8.3 is jeopardized as a result
thereof, or without providing reasonable assurances to minimize potential
vandalism.
 
(b)  The failure of Lessee to make any payment of Rent or any Security Deposit
required to be made by Lessee hereunder, whether to Lessor or to a third party,
when due, to provide reasonable evidence of insurance or surety bond, or to
fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of 3 business days following
written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT
OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS,
INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES.
 
(c)  The failure of Lessee to allow Lessor and/or its agents access to the
Premises or the commission of waste, act or acts constituting public or private
nuisance, and/or an illegal activity on the Premises by Lessee, where such
actions continue for a period of 3 business days following written notice to
Lessee.
 
(d)  The failure by Lessee to provide (i) reasonable written evidence of
compliance with Applicable Requirements, (ii) the service contracts, (iii) the
rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate or financial statements, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested
under Paragraph 41, (viii) material data safety sheets (MSDS), or (ix) any other
documentation or information which Lessor may reasonably require of Lessee under
the terms of this Lease, where any such failure continues for a period of 10
days following written notice to Lessee.
 
(e)  A Default by Lessee as to the terms, covenants, conditions or provisions of
this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those
described in subparagraphs 13.1(a), (b), (c) or (d), above, where such Default
continues for a period of 30 days after written notice; provided, however, that
if the nature of Lessee's Default is such that more than 30 days are reasonably
required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently
prosecutes such cure to completion.
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(f)       The occurrence of any of the following events: (i) the making of any
general arrangement or assignment for the benefit of creditors; (ii) becoming a
"debtor" as defined in 11 U.S.C. § 101 or any successor statute thereto (unless,
in the case of a petition filed against Lessee, the same is dismissed within 60
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this subparagraph is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.
 
(g)  The discovery that any financial statement of Lessee or of any Guarantor
given to Lessor was materially false.
 
(h)  If the performance of Lessee's obligations under this Lease is guaranteed:
(i) the death of a Guarantor, (ii) the termination of a Guarantor's liability
with respect to this Lease other than in accordance with the terms of such
guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy
filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a Guarantor's
breach of its guaranty obligation on an anticipatory basis, and Lessee's
failure, within 60 days following written notice of any such event, to provide
written alternative assurance or security, which, when coupled with the then
existing resources of Lessee, equals or exceeds the combined financial resources
of Lessee and the Guarantors that existed at the time of execution of this
Lease.
 
13.2          Remedies. If Lessee fails to perform any of its affirmative duties
or obligations, within 10 days after written notice (or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on
Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and
expenses incurred by Lessor in such performance upon receipt of an invoice
therefor. In the event of a Breach, Lessor may, with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:
 
(a)  Terminate Lessee's right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Lessee shall immediately surrender
possession to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the unpaid Rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Premises, expenses of reletting, including necessary renovation and alteration
of the Premises, reasonable attorneys' fees, and that portion of any leasing
commission paid by Lessor in connection with this Lease applicable to the
unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of the District within which the Premises are located at the time of award
plus one percent. Efforts by Lessor to mitigate damages caused by Lessee's
Breach of this Lease shall not waive Lessor's right to recover damages under
Paragraph 12. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit. If a
notice and grace period required under Paragraph 13.1 was not previously given,
a notice to pay rent or quit, or to perform or quit given to Lessee under the
unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and
the unlawful detainer statute shall run concurrently, and the failure of Lessee
to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.
 
(b)  Continue the Lease and Lessee's right to possession and recover the Rent as
it becomes due, in which event Lessee may sublet or assign, subject only to
reasonable limitations. Acts of maintenance, efforts to relet, and/or the
appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.
 
(c)  Pursue any other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration
or termination of this Lease and/or the termination of Lessee's right to
possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.
 
13.3          Inducement Recapture. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease, all of which concessions are hereinafter referred to as "Inducement
Provisions", shall be deemed conditioned upon Lessee's full and faithful
performance of all of the terms, covenants and conditions of this Lease. Upon
Breach of this Lease by Lessee, any such Inducement Provision shall
automatically be deemed deleted from this Lease and of no further force or
effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an Inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance.
 
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13.4          Late Charges. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall immediately pay
to Lessor a one-time late charge equal to 10% of each such overdue amount or
$100, whichever is greater. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor's option, become due and payable quarterly in advance.
 
13.5         Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within 30 days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest ("Interest") charged shall be computed at the rate of 10%
per annum but shall not exceed the maximum rate allowed by law. Interest is
payable in addition to the potential late charge provided for in Paragraph 13.4.
 
13.6         Breach by Lessor.
 
(a)  Notice of Breach. Lessor shall not be deemed in breach of this Lease unless
Lessor fails within a reasonable time to perform an obligation required to be
performed by Lessor. For purposes of this Paragraph, a reasonable time shall in
no event be less than 30 days after receipt by Lessor, and any Lender whose name
and address shall have been furnished Lessee in writing for such purpose, of
written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor's obligation is such
that more than 30 days are reasonably required for its performance, then Lessor
shall not be in breach if performance is commenced within such 30 day period and
thereafter diligently pursued to completion.
 
(b)  Performance by Lessee on Behalf of Lessor. In the event that neither Lessor
nor Lender cures said breach within 30 days after receipt of said notice, or if
having commenced said cure they do not diligently pursue it to completion, then
Lessee may elect to cure said breach at Lessee's expense and offset from Rent
the actual and reasonable cost to perform such cure, provided however, that such
offset shall not exceed an amount equal to the greater of one month's Base Rent
or the Security Deposit, reserving Lessee's right to reimbursement from Lessor
for any such expense in excess of such offset. Lessee shall document the cost of
said cure and supply said documentation to Lessor.
 
14.   Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than 10% of the floor area of the Unit, or more than 25%
of the parking spaces is taken by Condemnation, Lessee may, at Lessee's option,
to be exercised in writing within 10 days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If Lessee does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in proportion to the reduction in
utility of the Premises caused by such Condemnation. Condemnation awards and/or
payments shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation paid by the condemnor for Lessee's relocation
expenses, loss of business goodwill and/or Trade Fixtures, without regard to
whether or not this Lease is terminated pursuant to the provisions of this
Paragraph. All Alterations and Utility Installations made to the Premises by
Lessee, for purposes of Condemnation only, shall be considered the property of
the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
 
15.
Brokerage Fees.

 
15.1         Additional Commission. In addition to the payments owed pursuant to
Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
or anyone affiliated with Lessee acquires from Lessor any rights to the Premises
or other premises owned by Lessor and located within the Project, (c) if Lessee
remains in possession of the Premises, with the consent of Lessor, after the
expiration of this Lease, or (d) if Base Rent is increased, whether by agreement
or operation of an escalation clause herein, then, Lessor shall pay Brokers a
fee in accordance with the schedule of the Brokers in effect at the time of the
execution of this Lease.
 
15.2          Assumption of Obligations. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Brokers shall be third party beneficiaries of the provisions of
Paragraphs 1.10, 15, 22 and 31. if Lessor fails to pay to Brokers any amounts
due as and for brokerage fees pertaining to this Lease when due, then such
amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts
to Lessee's Broker when due, Lessee's Broker may send written notice to Lessor
and Lessee of such failure and if Lessor  fails to pay  such amounts within 10
days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor's Broker for the limited purpose of collecting any
brokerage fee owed.
 
15.3         Representations and Indemnities of Broker Relationships. Lessee and
Lessor each represent and warrant to the other that it has had no dealings with
any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
 
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16.
Estoppel Certificates.

 
(a)  Each Party (as "Responding Party") shall within 10 days after written
notice from the other Party (the "Requesting Party") execute, acknowledge and
deliver to the Requesting Party a statement in writing in form similar to the
then most current "Estoppel Certificate" form published by the AIR Commercial
Real Estate Association, plus such additional information, confirmation and/or
statements as may be reasonably requested by the Requesting Party.
 
(b)  If the Responding Party shall fail to execute or deliver the Estoppel
Certificate within such 10 day period, the Requesting Party may execute an
Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party's performance, and (iii)
if Lessor is the Requesting Party, not more than one month's rent has been paid
in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
 
(c)  If Lessor desires to finance, refinance, or sell the Premises, or any part
thereof, Lessee and all Guarantors shall within 10 days after written notice
from Lessor deliver to any potential lender or purchaser designated by Lessor
such financial statements as may be reasonably required by such lender or
purchaser, including but not limited to Lessee's financial statements for the
past 3 years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth.
 
17.           Definition of Lessor. The term "Lessor" as used herein shall mean
the owner or owners at the time in question of the fee title to the Premises,
or, if this is a sublease, of the Lessee's interest in the prior lease. In the
event of a transfer of Lessor's title or interest in the Premises or this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor. Upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.
 
18.            Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
 
19.            Days. Unless otherwise specifically indicated to the contrary,
the word "days" as used in this Lease shall mean and refer to calendar days.
 
20.           Limitation on Liability. The obligations of Lessor under this
Lease shall not constitute personal obligations of Lessor, or its partners,
members, directors, officers or shareholders, and Lessee shall look to the
Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against Lessor's partners, members, directors, officers or shareholders, or any
of their personal assets for such satisfaction.
 
21.            Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.
 
22.            No Prior or Other Agreements; Broker Disclaimer. This Lease
contains all agreements between the Parties with respect to any matter mentioned
herein, and no other prior or contemporaneous agreement or understanding shall
be effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease
and as to the use, nature, quality and character of the Premises. Brokers have
no responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
 
23.            Notices.
 
23.1         Notice Requirements. All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate in writing.
 
23.2          Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given 72 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.
 
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24.           Waivers.
 
(a)    No waiver by Lessor of the Default or Breach of any term, covenant or
condition hereof by Lessee, shall be deemed a waiver of any other term, covenant
or condition hereof, or of any subsequent Default or Breach by Lessee of the
same or of any other term, covenant or condition hereof. Lessor's consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of
Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or
be construed as the basis of an estoppel to enforce the provision or provisions
of this Lease requiring such consent.
 
(b)   The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of
moneys or damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such statements and/or
conditions shall be of no force or effect whatsoever unless specifically agreed
to in writing by Lessor at or before the time of deposit of such payment.
 
(c)   THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO
ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR
FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
 
25.            Disclosures Regarding The Nature of a Real Estate Agency
Relationship.
 
(a)    When entering into a discussion with a real estate agent regarding a real
estate transaction, a Lessor or Lessee should from the outset understand what
type of agency relationship or representation it has with the agent or agents in
the transaction. Lessor and Lessee acknowledge being advised by the Brokers in
this transaction, as follows:
 
(i) Lessor's Agent. A Lessor's agent under a listing agreement with the Lessor
acts as the agent for the Lessor only. A Lessor's agent or subagent has the
following affirmative obligations: To the Lessor: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee
and the Lessor: (a) Diligent exercise of reasonable skills and care in
performance of the agent's duties. (b) A duty of honest and fair dealing and
good faith. (c) A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or
within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party which does not involve the affirmative duties set forth above.
 
(ii) Lessee's Agent. An agent can agree to act as agent for the Lessee only. In
these situations, the agent is not the Lessor's agent, even if by agreement the
agent may receive compensation for services rendered, either in full or in part
from the Lessor. An agent acting only for a Lessee has the following affirmative
obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty,
and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (a)
Diligent exercise of reasonable skills and care in performance of the agent's
duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to
disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. An agent is not obligated to reveal
to either Party any confidential information obtained from the other Party which
does not involve the affirmative duties set forth above.
 
(iii) Agent Representing Both Lessor and Lessee. A real estate agent, either
acting directly or through one or more associate licenses, can legally be the
agent of both the Lessor and the Lessee in a transaction, but only with the
knowledge and consent of both the Lessor and the Lessee. In a dual agency
situation, the agent has the following affirmative obligations to both the
Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty
and loyalty in the dealings with either Lessor or the Lessee. (b) Other duties
to the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In
representing both Lessor and Lessee, the agent may not without the express
permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that
the Lessee is willing to pay a higher rent than that offered. The above duties
of the agent in a real estate transaction do not relieve a Lessor or Lessee from
the responsibility to protect their own interests. Lessor and Lessee should
carefully read all agreements to assure that they adequately express their
understanding of the transaction. A real estate agent is a person qualified to
advise about real estate. If legal or tax advice is desired, consult a competent
professional.
 
(b)    Brokers have no responsibility with respect to any Default or Breach
hereof by either Party. The Parties agree that no lawsuit or other legal
proceeding involving any breach of duty, error or omission relating to this
Lease may be brought against Broker more than one year after the Start Date and
that the liability (including court costs and attorneys' fees), of any Broker
with respect to any such lawsuit and/or legal proceeding shall not exceed the
fee received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker's liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.
 
(c)    Lessor and Lessee agree to identify to Brokers as "Confidential" any
communication or information given Brokers that is considered by such Party to
be confidential.
 
26.            No Right To Holdover. Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or termination of this
Lease. In the event that Lessee holds over, then the Base Rent shall be
increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as
consent by Lessor to any holding over by Lessee.
 
27.            Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
 
28.   Covenants and Conditions; Construction of Agreement. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
had prepared it.
 
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29.   Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
 
30.
Subordination; Attornment; Non-Disturbance.

 
30.1          Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lender") shall have no liability or obligation to perform any of
the obligations of Lessor under this Lease. Any Lender may elect to have this
Lease and/or any Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.
 
30.2          Attornment. In the event that Lessor transfers title to the
Premises, or the Premises are acquired by another upon the foreclosure or
termination of a Security Devise to which this Lease is subordinated (i) Lessee
shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to
such new owner, and upon request, enter into a new lease, containing all of the
terms and provisions of this Lease, with such new owner for the remainder of the
term hereof, or, at the election of the new owner, this Lease will automatically
become a new lease between Lessee and such new owner, and (ii) Lessor shall
thereafter be relieved of any further obligations hereunder and such new owner
shall assume all of Lessor's obligations, except that such new owner shall not:
(a) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (b) be subject to any
offsets or defenses which Lessee might have against any prior lessor, (c) be
bound by prepayment of more than one month's rent, or (d) be liable for the
return of any security deposit paid to any prior lessor which was not paid or
credited to such new owner.
 
30.3          Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within 60 days after the execution of this Lease, Lessor
shall, if requested by Lessee, use its commercially reasonable efforts to obtain
a Non-Disturbance Agreement from the holder of any pre-existing Security Device
which is secured by the Premises. In the event that Lessor is unable to provide
the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.
 
30.4          Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
 
31.   Attorneys' Fees. If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any
such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgment. The term, "Prevailing Party" shall include, without limitation, a
Party or Broker who substantially obtains or defeats the relief sought, as the
case may be, whether by compromise, settlement, judgment, or the abandonment by
the other Party or Broker of its claim or defense. The attorneys' fees award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys' fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach ($200 is a reasonable minimum per
occurrence for such services and consultation).
 
32.   Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times after reasonable prior notice for
the purpose of showing the same to prospective purchasers, lenders, or tenants,
and making such alterations, repairs, improvements or additions to the Premises
as Lessor may deem necessary or desirable and the erecting, using and
maintaining of utilities, services, pipes and conduits through the Premises
and/or other premises as long as there is no material adverse effect on Lessee's
use of the Premises. All such activities shall be without abatement of rent or
liability to Lessee.
 
33.   Auctions. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.
 
34.   Signs. Lessor may place on the Premises ordinary "For Sale" signs at any
time and ordinary "For Lease" signs during the last 6 months of the term hereof.
Except for ordinary "For Sublease" signs which may be placed only on the
Premises, Lessee shall not place any sign upon the Project without Lessor's
prior written consent. All signs must comply with all Applicable Requirements.
 
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35.   Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within 10 days following any such event
to elect to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor's election to have such event constitute the
termination of such interest. 36.Consents. Except as otherwise provided herein,
wherever in this Lease the consent of a Party is required to an act by or for
the other Party, such consent shall not be unreasonably withheld or delayed.
Lessor's actual reasonable costs and expenses (including but not limited to
architects', attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor's consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor's consent shall
not preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within 10 business days following such
request.
 
37.   Guarantor.
 
37.1          Execution. The Guarantors, if any, shall each execute a guaranty
in the form most recently published by the AIR Commercial Real Estate
Association.
 
37.2          Default. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide: (a) evidence of the
execution of the guaranty, including the authority of the party signing on
Guarantor's behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c)
an Estoppel Certificate, or (d) written confirmation that the guaranty is still
in effect.
 
38.   Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
 
39.   Options. If Lessee is granted an option, as defined below, then the
following provisions shall apply.
 
39.1          Definition. "Option" shall mean: (a) the right to extend or reduce
the term of or renew this Lease or to extend or reduce the term of or renew any
lease that Lessee has on other property of Lessor; (b) the right of first
refusal or first offer to lease either the Premises or other property of Lessor;
(c) the right to purchase, the right of first offer to purchase or the right of
first refusal to purchase the Premises or other property of Lessor.
 
39.2          Options Personal To Original Lessee. Any Option granted to Lessee
in this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.
 
39.3         Multiple Options. In the event that Lessee has any multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
prior Options have been validly exercised.
 
39.4          Effect of Default on Options.
 
(a)  Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Rent is unpaid (without
regard to whether notice thereof is given Lessee), (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or
more notices of separate Default, whether or not the Defaults are cured, during
the 12 month period immediately preceding the exercise of the Option.
 
(b)  The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee's inability to exercise an Option
because of the provisions of Paragraph 39.4(a).
 
(c)  An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term or completion of the
purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent
becomes due (without any necessity of Lessor to give notice thereof),or (ii) if
Lessee commits a Breach of this Lease.
 
40.   Security Measures. Lessee hereby acknowledges that the Rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
 
41.   Reservations. Lessor reserves the right: (i) to grant, without the consent
or joinder of Lessee, such easements, rights and dedications thatbLessor deems
necessary, (ii) to cause the recordation of parcel maps and restrictions, and
(iii) to create and/or install new utility raceways, so long as such easements,
rights, dedications, maps, restrictions, and utility raceways do not
unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate such rights.
 
42.   Performance Under Protest. . If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay. A Party who
does not initiate suit for the recovery of sums paid "under protest" within 6
months shall be deemed to have waived its right to protest such payment.
 
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43.   Authority; Multiple Parties; Execution.
 
(a)  If either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease on behalf
of such entity represents and warrants that he or she is duly authorized to
execute and deliver this Lease on its behalf. Each Party shall, within 30 days
after request, deliver to the other Party satisfactory evidence of such
authority.
 
(b)  If this Lease is executed by more than one person or entity as "Lessee",
each such person or entity shall be jointly and severally liable hereunder. It
is agreed that any one of the named Lessees shall be empowered to execute any
amendment to this Lease, or other document ancillary thereto and bind all of the
named Lessees, and Lessor may rely on the same as if all of the named Lessees
had executed such document.
 
(c)  This Lease may be executed by the Parties in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.
 
44.           Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
 
45.   Offer. Preparation of this Lease by either party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
 
46.   Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
 
47.   Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT
OF THIS AGREEMENT.
 
48.   Arbitration of Disputes. An Addendum requiring the Arbitration of all
disputes between the Parties and/or Brokers arising out of this Lease ois þis
not attached to this Lease.
 
49.   Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee's specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee's use of
the Premises requires modifications or additions to the Premises in order to be
in ADA compliance, Lessee agrees to make any such necessary modifications and/or
additions at Lessee's expense.
 
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
 
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL
REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
 
1.      SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
 
2.      RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION
OF THE PREMISES. SAID
 
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF
HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE
CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH
DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
 
WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED.
 
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
 
Executed at:                 
 
Executed at:
On:                                                                
On:                                           By LESSOR:   
By LESSEE:
     Don Wilson Builders as agent for
Lomita                                         
                                              Boulevard #1, LLC and Cox Orange,
LLC                                         
                                              
By:                                                       
  By:                                                      Name Printed: John
Caskey                                             
Name Printed:                              
Title:  President                                                       
Title:                                        
     
By:                                                       
  By:                                                      Name
Printed:                                                                      
Name Printed:                              
Title:                                                                         
Title:                                        
Address: P.O. Box 3188                                         
Address:                                              Torrance, CA
90510-3188                                  
                                        
                                                         
                                    
Telephone:(310) 539-9902                                             
  Telephone:(   )                             
Facsimile:(310) 539-2876                                     
 
Facsimile:(    )                                                                                                                       

 
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Federal ID No.                                          Federal ID No.  BROKER: 
  BROKER:       Voit Commercial Brokerage -
Irvine                                           Voit Commercial Brokerage -
Irvine                                                                          
                                     
Attn: Travis Haining                                  
 
Attn: Xavier Colombi                          
Title:                                                                      
Title:                                    
Address: 2020 Main Street Suite 100                                 
 
Address:                                      
    Irvine, CA 92614                                      
                                   
Telephone:(949 ) 851-5100                                          
 
Telephone:(    )                             
Facsimile:(949 )261-9092                                   
 
Facsimile:(    )                               
Email:                                           
 
Email:                                 
Federal ID No.                                      
 
Federal ID No.                             
     

 
NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite
800, Los Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.: (213)
687-8616.
 
©Copyright 1999 By AIR Commercial Real Estate Association.
 
All rights reserved. No part of these works may be reproduced in any form
without permission in writing.
 
 
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GOODYEAR BUSINESS PARK
 
ADDENDUM #1 TO LEASE BETWEEN DON WILSON BUILDERS AND
 
This LEASE ADDENDUM (“Addendum”) is attached to, incorporated into and amends
and supplements that certain Standard Industrial/Commercial Multi-Lessee Lease -
Net (the “Lease”) dated December 5, 2011 , by and between DON WILSON BUILDERS, A
CALIFORNIA CORPORATION, agent for LOMITA BOULEVARD #1, LLC AND COX ORANGE LLC
(“Lessor”) and PATIENT SAFETY TECHNOLOGIES, INC. A DELAWARE CORPORATION
(“Lessee”). Lessor and Lessee agree that notwithstanding anything contained in
the Lease to the contrary, the Lease as modified by the provisions set forth in
this Addendum represents the full negotiated agreement and the parties, and the
provisions of this Addendum will be deemed to be a part of the Lease and will
supersede any contrary or conflicting provisions in the Lease and prevail and
control for all purposes. This Addendum, together with the Lease itself, and all
other Exhibits, and Addenda attached thereto represents the fully integrated and
binding agreement of the parties. All references in the Lease and in this
Addendum to “Lease” are to be construed to mean the Lease as amended and
supplemented by this Addendum. All terms used in this Addendum, unless
specifically defined in this Addendum, have the same meaning as such terms have
in the Lease.
 
50.   Section 1.5-Base Rent shall be as follows:
Months 1 $0.00*
Months 2-24$3,229.15
 
*Lessee shall be responsible for CAM payment during “free rent” period.
 
51.   Section 1.6 - Lessee's Share of Common Area Operating Expenses. Lessee's
share is the percentage derived from a fraction, the numerator of which is the
floor area of the Premises and the denominator of which is the aggregate floor
area of all seven (7) buildings in the Project as depicted on Exhibit “B”.
 
In accordance with Paragraph 4.2(d), concurrently with the monthly payment of
Base Rent hereunder, Lessee shall pay one twelfth (1/12th) of Lessee's Share of
annual Common Area operating Expenses as estimated by Lessor. Initially and
until further notice from Lessor, Lessee shall pay the sum of $1,367.64 per
month as Lessee's Share of Common Area Operating Expenses, beginning when the
Lease commences (at the date of early possession).
 
52.   Section 34 - Signs. The following is hereby added to Section 34:
 
(a) Interior of Premises. Lessee, at its sole cost and expense, may install
identification signage anywhere in the Premises provided that such signs must
not be visible from the exterior of the Premises. All of Lessee's interior
signs, window coverings and blinds, as well as all similar items to the extent
the same are visible from the exterior of the Premises, shall be subject to the
approval by Lessor at Lessor’s sole discretion.
 
(b) Exterior Signage.
 
(i) Description. Lessee shall be entitled to retain in place throughout the
Lease Term exterior building signage in a specified location. All Lessee's
Signage shall be subject to (i) Lessee's receipt of all required governmental
permits and approvals (ii) all applicable governmental laws and ordinances and
(iii) all Restrictions and other covenants, conditions and restrictions
affecting the Project. Exhibit “C” outlines the signage requirements for the
Project. Lessee must use the Project sign vendor, Graffiti, Inc. for the
purchase and installation of Lessee’s signage. Lessor has elected to use the
non-illuminated signage specification per the approved signage program for the
Project. The cost of installation of Lessee's Signage, as well as all costs of
design and construction of such signage and all other costs associated with such
signage, including, without limitation permits, maintenance and repair, removal
and restoration of the building following sign removal shall be the sole
responsibility of Lessee.
 
(ii) Approval by Lessor. All signage must be approved in writing by Lessor prior
to such signage being ordered and purchased by Lessee.
 
 
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(iii) Maintenance. Should Lessee's Signage require maintenance or repairs as
determined in Lessor's reasonable judgment, Lessor shall have the right to
provide written notice thereof to Lessee and Lessee shall cause such repairs
and/or maintenance to be performed within thirty (30) days after receipt of such
notice from Lessor, at Lessee's sole cost and expense; provided, however, if
such repairs and/or maintenance are reasonably expected to require longer than
thirty (30) days to perform, Lessee shall commence such repairs and/or
maintenance within such thirty (30) day period and shall diligently prosecute
such repairs and maintenance to completion. Should Lessee fail to perform such
maintenance and repairs within the periods described in the immediately
preceding sentence, Lessor shall have the right to cause such work to be
performed and to charge Lessee as additional rent for the costs of such work
plus interest at the Interest Rate from the date of Lessor's payment of such
costs to the date of Lessee's reimbursement to Lessor. Upon the expiration or
earlier termination of this Lease, Lessee shall, at Lessee's sole cost and
expense, cause the Lessee's Signage to be removed from the exterior of the
Premises and shall cause the exterior of the Premises to be restored to the
condition existing prior to the placement of such signage, reasonable wear and
tear excepted. If Lessee fails to remove such signage or to restore the exterior
of the Premises as provided in the immediately preceding sentence within thirty
(30) days following the expiration or earlier termination of this Lease, then
Lessor may perform such work, and all costs and expenses incurred by Lessor in
so performing plus interest at the Interest Rate from the date of Lessor's
payment of such costs to the date of Lessee's reimbursement to Lessor shall be
reimbursed by Lessee to Lessor within ten (10) days after Lessee's receipt of
invoice therefore. Lessor may apply the Security Deposit towards the costs of
performing any of Lessee's obligations under this Section. The immediately
preceding sentence shall survive the expiration or earlier termination of this
Lease.
 
53.   In the event of any Default by Lessee, in addition to any other remedies
available to Lessor at law or in equity and under this Lease, Lessor shall have
the remedy described in California Civil Code Section 1951.4. Lessor may
continue this Lease in effect after Lessee’s Default and abandonment and recover
Rent as it becomes due. In addition, Lessor shall not be liable in any way for
its failure or refusal to relet the Premises.
 
54.   Whenever a provision of the lease and a provision of any statute or other
law cover the same matter, the provisions of the lease shall control.
 
55.   Lessee agrees to allow the security deposit to be used for future rent as
well as past rent, in the event of any Default by Lessee.
 
56.   Lessor shall procure and maintain, at Lessee’s expense (included in the
Common Area Operating Expenses), a ventilating and air conditioning system
preventative maintenance contract.
 
57.   Lessee Improvements: Lessee accepts the Premises in “as-is” condition.
 
58.   Lease Execution: Lessee shall have seven (7) days to return two (2)
executed copies of the lease agreement with an insurance certificate and a check
for monies due. If these items are not received within the specified time frame,
the terms of the lease agreement will be null and void.
 
59.   Attorneys Fees: If any action shall be instituted by either of the parties
for the enforcement or interpretation of any its rights or remedies under this
Lease, the prevailing party shall be entitled to recover from the losing party
all costs incurred by the prevailing party in said action and any appeal
therefrom, including reasonable attorneys fees to be fixed by the court therein.
Said costs and attorneys fees shall be included as part of the judgement in any
such action.
 
60.   Commencement of this Lease shall be contingent upon City of Irvine’s
written approval of Lessee’s use in the Project. Lessee shall have early access
upon execution of Leases and receipt of monies and Insurance due.
 
61.   Termination: Lessee shall have a one-time right to terminate the Lease
after 14 months of tenancy with a fee equal to two (2) month’s rent.
 
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the day
and year of execution of the Lease.
 
 
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LESSOR: LESSEE:     DON WILSON BUILDERS  
as agent for
 
LOMITA BOULEVARD #1, LLC 
  and  
COX ORANGE LLC
 

 

By:
 
  By:    
John Caskey, President
   
 
       
 
Date:     Date:  

 
 
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EXHIBIT "C"
RULES AND REGULATIONS
ATTACHED TO AND MADE PART OF THIS LEASE
 
   The following Rules and Regulations are prescribed by Landlord in order to
provide and maintain, to the best of Landlord's ability, an orderly, clean and
desirable Project, building and parking facilities for the Tenants therein and
to regulate conduct in and use of leased Property, the building and parking
facilities in such a manner as to minimize interference by others in the proper
use of leased Property by Tenant. In the following Rules and Regulations, all
references to Tenant include not only the Tenant, but, also, Tenant's agents,
employees, invitees, licensees, visitors, assignees, and/or sublessees:
 
1.   Landlord reserves the right to refuse access to any persons Landlord in
good faith judges to be a threat to the safety, reputation, or property of the
Project and its occupants.
 
2.   Landlord will not be responsible for lost or stolen personal property,
equipment, money, or any article taken from the leased Property, building, or
parking facilities regardless of how or when loss occurs.
 
3.   Tenant shall not keep animals or birds within the Project and shall not
bring bicycles, skateboards, in-line skates, motorcycles or other vehicles into
areas not designated as authorized for same.
 
4.   Canvassing, soliciting, peddling and / or loitering, in-line skating or
skateboarding on the Premises are strictly prohibited. Tenant shall cooperate to
prevent such activities.
 
5.   Tenant shall not cut, drill into, or in any way deface any part of the
Premises without the prior written consent of the Landlord, and as the Landlord
may direct. Upon removal of any wall decorations or installations or floor
coverings by Tenant, any damage to the walls or floors shall be repaired by
Tenant at Tenant's sole cost and expense. Without limitations upon any
provisions of the lease, Tenant shall refer all contractors or suppliers
rendering any service in connection with the repair, maintenance or improvement
of Premises to Landlord for any work valued at $5,000 or more, for Landlord's
approval and control before performance of any such work. Plans and
specifications for such work, prepared at Tenant's sole expense, shall be
submitted to Landlord and shall be subject to Landlord's prior written approval
in each instance before the commencement of work.
 
6.   No name, sign, trademark, design, notice, advertisement, or miscellaneous
stickers shall be painted, applied, or affixed to the doors or windows or to the
exterior of any wall or any office or posted in any common area.
 
7.   Tenant shall not block or obstruct any of the entries, exits, sidewalks,
passages, doors, hallways, or stairways of building or parking area, or place,
empty, or throw and rubbish, litter, trash, or material of any nature into such
areas, or permit such areas to be used at any time except for ingress or egress
of Tenants.
 
8.   The toilet rooms, toilets, urinals, wash bowls, partitions, mirrors and
other apparatus shall not be used for any purpose other than that for which they
were installed; no foreign substance of any kind shall be placed therein, and
the expense of any breakage, stoppage, or damage resulting from a violation of
this provision shall be borne by Tenant.
 
9.   Tenant shall permit Landlord, during the three (3) months prior to the
termination of this lease, to show leased Property during business or
non-business hours to prospective lessees and to advertise leased Property for
rent.
 
10.          Landlord shall provide two (2) keys to the Property to Tenant upon
occupancy. Tenant accepts the responsibility to re-key the locks for security
purposes and shall provide Landlord with any new keys in case of emergency. Any
additional keys required by Tenant during the term of the lease shall be the
responsibility of and paid for by Tenant. In the event new locks are requested
by Tenant, then Tenant shall pay all costs associated with such request
(including hardware, installation, and keys). Tenant shall be required to
furnish to Landlord two (2) keys to all locks upon Tenant's vacation of the
Property.
 
11.          Tenant shall not use the building, leased Property, or parking
facilities for housing, lodging, or sleeping purposes.
 
12.          Tenant shall not permit storage outside the Property, including
without limitation, outside storage of trucks and other vehicles, or dumping of
waste of refuse or permit any harmful materials to be placed in any drainage
system or sanitary system in or about the Property.
 
13.          Tenant shall not permit litter except in appropriate receptacles
for that purpose. No material shall be placed in the trash receptacles if such
material is of such nature that it may not be disposed of in the ordinary manner
of removing and disposing of trash and garbage in the City of Irvine without
being in violation of any law or ordinance governing such disposal. Any
cardboard boxes shall be cut up and / or flattened and placed in the dumpster
utilizing as little space as possible. If the dumpster is full, waste will be
stored in Tenant's leased space until the dumpster is emptied.
 
14.         All moveable trash receptacles provided by the trash disposal firm
for the Property must be kept in the trash enclosure areas provided for that
purpose. Door to trash enclosures, if any, must be closed after each use.
 
15.         Tenant will use the Property in a careful, safe and proper manner
and will not subject the Property to use that would damage the Property.
 
16.         Tenant shall not store any dangerous or flammable material in the
Premises other than such materials that would normally be expected in the
quantities and containers as is considered safe and in compliance with all
governing agencies' requirements.
 
17.         Tenant shall not make or permit noise, vibrations, or odors that
annoy or interfere with other Tenants or persons having business within in
Premises.
 
18.         Tenant shall ensure that the doors of its Premises are closed and
locked and that all water faucets, water apparatus and utilities are shut off
before Tenant or Tenant's employees leave the Premises so as to prevent waste or
damage. Tenant shall be held liable for all injuries sustained by other Tenants
or occupants of the Premises as a result of Tenant's failure to comply with said
regulation. Tenant assumes all risks from theft or vandalism and agrees to keep
its Premises locked as may be required.
 
19.          Landlord shall have the right to prohibit any publicity,
advertising, or use of the name of the Premises by Tenant which in Landlord's
opinion, tends to impair the reputation off the Premises or its desirability as
a building for offices and industry, and upon written notice from Landlord,
Tenant shall refrain from or discontinue any such publicity, advertising or use
of the property name.
 
20.          Tenant shall be responsible for damage to the Premises arising from
moving any equipment, furniture, or freight in or out of the Premises.
 
21.          No Tenant, employee, or invitee shall go upon the roof of the
Premises without prior written consent of Landlord.
 
22.          No Tenant shall install any radio or television antenna, speaker,
satellite dish or other device without written consent of Landlord.
 
23.          Tenant shall comply with all provisions of the Amended and Restated
Declaration of Covenants, Conditions, Easements and Restrictions for Goodyear
Business Park (Goodyear CC&Rs) recorded September 20, 2007, the associated
Bylaws for the association, and these rules and regulations. A copy of the
Goodyear CC&Rs can be obtained from the Lessor upon request.
 
PARKING RULES
 
1    The common parking facilities are available for use by any and all Tenants
including guest and staff of the Church located at 10 Goodyear. The common
parking facilities shown on the parking plan that are designated Reserved
Condominium Unit Parking Spaces shall not ever be used for church parking. The
balance of the spaces, considered Unreserved, may be used by members of the
church during church hours which are defined as follows:
 
■   7:00 PM to 2:00 AM Monday through Friday
■   4:00 PM on Saturday to 11:59 PM on Sunday
■   All day on New Year's Day, Christmas, President's Day, Memorial Day, July
4th, Labor Day, and Thanksgiving
 
2.   Landlord reserves the right to assign or allocate parking in the event of
conflicts, abuse, or improper use of these common parking facilities. It is
generally understood that any Tenant should utilize only those parking spaces
immediately adjacent to that Tenant's specified leased Property.
 
3.   Proper use of the common parking facilities is deemed to be that use which
is occasioned by the normal in and out traffic required by the Tenant, in the
normal course of the Tenant's business operations.
 
4.   Vehicles that are abandoned, disabled, have expired registration stickers,
obstructing any means of ingress or egress to any leased Property, or in any way
a general nuisance or hazard are subject to removal without notice by Landlord's
towing service. All costs associated with such removal shall be at the
Tenant'sNehicle Owner's expense.
 
5.   The maintenance, washing, waxing or cleaning of vehicles in the parking
area or common area is prohibited.
 
6.   Parking areas shall be used only for parking by vehicles no longer than
full size passenger automobiles herein called "Permitted Size Vehicles."
Vehicles other than Permitted Size Vehicles are herein referred to as "Oversized
Vehicles." No unauthorized parking of recreational vehicles, motor homes, boats
and / or trailers is permitted within the Project.
 
7.   Tenant may not leave any vehicle in the parking area for more than
twenty-four (24) hours or Landlord may have it towed at TenantsNehicle Owner's
expense.
 
These Rules and Regulations are in addition to, and shall not be constructed to
in any way modify or amend; In whole or part, the agreements;. covenants,
Conditions and restrictions, or provisions of any lease of the Premises.
LandloYd reserves thetight to waive any one of these rules or regulations, and /
or any other rule -or regulation or any subsequent:application thereof fo such
Tenant. Landlord reserves the right to maketuch other reasonable rules and
regulations as it may from time to time deem necessary forte appropriate
operation and safety of the Premises and its occupants. Tenant agrees to abide
by these rules, and to exercise its best efforts to secure.compliance with such
cibligations by employees, contractors, agents, Invitees, licensees. guests and
visitors of Tenant.
 
 
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[f10k2011_patient3.jpg]

 
 
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EXHIBIT "E"
 

 [f10k2011_patient4.jpg]   CITY OF IRVINE OCCUPANCY DISCLOSURE FORM       
Project Name     Project Developer     Development Case Number  

    Type of Project Residential   Non-Residential                  
Information on this form is correct as of thisding to my knowledge
   
[f10k2011_patient5.jpg]
   
(Signature of Developer's Representative)

 
Address or Property to be purchased or occupied:

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NOTE TO PURCHASER OR OCCUPANT: The City of Irvine requires the developer to
provide the following information to ensure that you are adequately informed
about the property you will he purchasing or occupying. Please read the
information after each item marked with an "x" in the left hand column. Some
items require the developer to furnish an information packet or City form; do
not sign unless the information has been given to you. You do not need to be
concerned about any items marked "n/a," as these do not apply to the property.
When you have read through all items, please sign on the last page. The
developer will provide you with a copy of this form.
 
NOTE TO DEVELOPER: This form shall be included as part of the CC&R's, final
rental/lease agreement:, and sales literature and must be signed prior to
occupancy by each prospective buyer or lessee and/or occupant listed on the
lease agreement for the project.
 

 
Zoning Confirmation Letter: Prior to initial and all subsequent occupancy or
change in land use of any non-residential condominium space, the condominium
owner(s) and /oroccupant(s) shall apply to the Community Development Department,
and obtain written approval of zoning confirmation, using the

 

 
City's Zoning Confirmation Letter Request Form, or issuance of any applicable
building permits, verifying conformance with zoning, building and fire
requirements.

 
 
Aircraft and Helicopter Noise: f am aware that the property may be subject to
noise from aircraft and/or helicopter activity from John Wayne Airport.

 

 
Private & Publicimprovements; and Developments adjacent to or in proximity to
the project: I am aware that public and private improvement exist, or are
planned to be constructed, in the vicinity. The facilities are described on the
attached list, which covers the following points:

 
·
The locations of, and type of amenities provided within existing and proposed pa
rks.

·
The existing and proposed pedestrian, bicycle, and equestrian trails and pastas.

·
Streets and/or drives with parking restrictions.

·
Future street construction projects, including bridges.

 · 
Future plans for public transit, including bus routes, Park-N-Ride facilities,
transit terminals and routes.

 
Schools: I have been informed about the existing and planned school Facilities
that serve this property, as described on the attached list. which covers the
following items:
 
  ·  
The location of the elementary, middle, and high schools which will serve the
project (including text and map).

  ·  
The type and provider of transportation available to transport students to the
school sites.

  ·  
The estimated opening date of any new schools proposed to be constructed or any
revisions to student capacity in existing schools within the existing attendance
boundaries of schools servicing the project.

  ·  
A statement that all proposed school locations is within the control of the
school district and is subject to change.

  ·  
A statement describing the general nature of activities, typically organized
recreational events, which can be expected to take place after school and on
weekends on school grounds.

 
 
Earthquake Preparedness Packet: I have received a copy of the City's Earthquake
Preparedness Information.

 
 
Flood Hazard: I am aware that the property is located within a Special Flood
Hazard Area (SFHA), an area subject to the 100 year flood. Availability of flood
insurance and the requirement for the purchase of flood insurance for any
Federally backed mortgages or Federal Programs associated with the property are
described on the attached statement.

 
 

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Signature of Buyer or Occupant Date

 
 
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EXHIBIT "F"
 
TENANT ESTOPPEL CERTIFICATE
 
To:
Allstate Investments, LLC

 
3075 Sanders Road, Suite G5C

 
Northbrook, IL 60062-7127

 
Attn:Commercial Mortgage Division Servicing Manager

 
Re: 
Lease of Suite(s)                              ("Premises") of the property
commonly known
as:                                                                                                                                       
("Property").

 
A.
Tenant hereby certifies that the following representations are accurate and
complete as to the Lease as ofthe date hereof:

 
1.
Lease: The "Lease"consists of the Lease Agreement
dated                                       , between                         
, as "Landlord" and                                     , as "Tenant,"
guaranteed
by                                                                                                                                                                                                                                                                          ("Guarantor"),
and the

 
 
following amendments [indicate None" or describe below]:

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 (a)  
The Lease has not been modified or amended, and there are no other side letters
or other agreements pertaining to the Lease, except those listed above;

(b)  
the Lease is presently in full force and effect and represents the entire
agreement between Tenant and Landlord with respect to the Premises;

(c)  
there are no options to terminate the Lease, except as follows [indicate "None"
or describe below]:

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(d)  
Tenant has not been granted any option to expand the Premises, or options or
rights of first refusal to purchase the Premises or the Property [indicate
"None" or describe]:

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(e)  
the Lease has not been assigned and the Premises have not been sublet by Tenant;
and Tenant does not have any operating exclusives for the Property under the
Lease.

 
2.
Lease Terms:

 

   (a)
Commencement Date
     (b)
Expiration Date
     (c) Current Annual Base Rent                     Next Adjustment  
DateRental Amount
   (d) Next Rent Increase          (e)
Square Footage of Premises
         (f)
Security Deposit Paid to the Landlord
          Landlord has no obligation to segregate the Security Deposit or to pay
interest thereon.          (g)
Renewal Options:                                Additional Terms for       years
each at base rental of $            /year.
   

 

3.
Tenant:

 
 (a) 
Tenant has accepted the Premises, is occupying the Premises, is open for
business or is operating its business at the Premises and is currently paying
base rent as described in 2(c) above;

 (b) 
no installment of rent or other charges under the Lease other than current
monthly rent has been paid more than 30 days in advance and Tenant is not in
arrears on any rental payment or other charges; and

 (c) 
Tenant has never been adjudicated as bankrupt, filed or had filed against it any
petition in bankruptcy or otherwise take advantage of any bankruptcy, insolvency
or other readjustment of debt laws.

 
 
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4.
Landlord:

 
 (a)
Landlord is not in default under the Lease and no event has occurred which, with
the giving of notice or passage of time, or both, could result in a default by
the Landlord;

(b)  
Tenant has no existing defenses, offsets, liens, claims or credits against its
payment obligations under the Lease; and

(c)  
all construction, tenant improvement and/or other allowances and concessions due
to Tenant have been paid.

 
5.
Premises and Property:

 
(a) 
Tenant has not received notice of violation of any federal, state, county or
municipal laws, regulations, ordinances, orders or directives ("Laws") relating
to the use or condition of the Premises or the Property; and

(b) 
other than hazardous materials in quantities and of types reasonably and
customarily associated with general office use which are stored, used and
disposed of in compliance with all applicable Laws and which do not require
compliance with any reporting requirements under any Law, no hazardous wastes or
toxic substances, as defined by all applicable Laws, have been stored, used or
disposed of on or about the Premises or the Property by Tenant.

 
B.
Tenant acknowledges and agrees to the following:

 
1. 
Loan: One or more insurance companies affiliated with Allstate Investments, LLC
("Lender") is/are about to provide financing (the "Loan")which shall be
evidenced by a promissory note(s) ("Note(s)") and secured by a Deed of Trust or
Mortgage and Assignment of Leases and Rents ("Mortgage") upon the Property.
Tenant acknowledges that Landlord's interest in the Lease is being duly assigned
to Lender as security for the Notes. All rent payments under the Lease shall
continue to be paid to the Landlord in accordance with the terms of the Lease
until Tenant is notified otherwise in writing by Lender.

 
2. 
Reliance: Tenant acknowledges and agrees that Lender holding the Note(s) and
Mortgage at any time after the date of this Certificate shall have the right to
rely on the information contained in this Certificate. Tenant further agrees
that Lender may assign this Certificate and any of Lender's rights hereunder to
any assignee of the Notes and Mortgage or to any purchaser at a foreclosure sale
or purchaser of the Property from Lender.

 
3.
Attornment and Nondisturbance: In the event that Lender succeeds to Landlord's
interest under the Lease, Tenant agrees to attorn to Lender. In consideration of
Tenant's attornment and provided that Tenant is not in default under the Lease
beyond any applicable notice and grace periods, the Lease will remain in full
force and effect and Lender will not disturb Tenant's rights under the Lease.

 
4. 
Notice: Tenant shall deliver to Lender a copy of any notice of default sent to
the Landlord by Tenant, at the same time that Tenant delivers such notice to the
Landlord, and Lender shall have the right, but not the obligation, to cure such
Landlord's default within thirty (30) days after such notice or within a
reasonable period if such default cannot be cured within that time, provided
Lender is proceeding with due diligence to cure such default.

 
5. 
Successors and Assigns: Wherever "Lender" is used in this Certificate, Lender's
successors and assigns shall also be included in such reference.

 
The undersigned is authorized to execute this Tenant Estoppel Certificate on
behalf of Tenant.
 

   
TENANT:
             
a corporation/LLC/LP/GP

 
 
 
By:
   
Its:
   
Date:
 

 
 
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EXHIBT G
 
Tenant has been given a copy of the Amended and Restated Covenants, Conditions,
Restrictions, and Easements for Goodyear Business Park.
 
 
11 

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