AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE – NET
__________________________________________________

1.

Basic Provisions ("Basic Provisions").

1.1

Parties

:  This Lease ("Lease"), dated for reference purposes only, January 10, 2011, is
made by and between Michael Franges ("Lessor") and Sugarmade ("Lessee"),
(collectively the "Parties," or individually a "Party").

1.2

Premises

:  That certain real property, including all improvements therein or to be
provided by Lessor under the terms of this Lease, and commonly known as 2280
Lincoln #200 Ave., San Jose, located in the County of Santa Clara, State of
California, and generally described as (describe briefly the nature of the
property and, if applicable, the "Project", if the property is located within a
Project) 1560 Sq. Ft. of north side of building ("Premises").  (See also
Paragraph 2)

1.3

Term

:  3 years and 2 months ("Original Term") commencing February 1, 2011
("Commencement Date") and ending 38 months after fully executed ("Expiration
Date").  (See also Paragraph 3)

1.4

Early Possession

:  Two weeks ("Early Possession Date") (See also Paragraphs 3.2 and 3.3).

1.5

Base Rent

:  $3,697 per month ("Base Rent"), payable on the first day of each month
commencing (2) months from date of lease commencement. (See also Paragraph 4)

If this box is checked, there are provisions in this Lease for the Base Rent to
be adjusted.

1.6

Base Rent Paid Upon Execution

:  $  (See Attachment) as Base Rent for the period
 ____________________________.

1.7

Security Deposit

:  $3,994 ("Security Deposit").  (See also Paragraph 5)

1.8

Agreed Use

:   Administrative Offices (See also Paragraph 6).

1.9

Insuring Party

:  Lessor is the "Insuring Party" unless otherwise stated herein.  (See also
Paragraph 8)

1.10

Real Estate Brokers

:  (See also Paragraph 15)

(a)

Representation:  The following real estate brokers (the "Brokers") and brokerage
relationships exist in this transaction (check applicable boxes):

  ___________________________________________________________________________
represents Lessor exclusively ("Lessor's Broker(s)");

  ________________________________________________________________________
represents Lessee exclusively ("Lessee's Broker(s)"); or

  CB Richard Ellis – Michael Machado,
Associate_____________________________________ 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 Broker the fee agreed to in their separate written
agreement (or if there is no such agreement, the sum of 5% 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 Scott
Lantz ("Guarantor(s)").  (See also Paragraph 37)

1.12

Addendums and Exhibits

.  Attached hereto is an Addendum or Addenda consisting of Paragraphs 50 through
58 and Exhibits Scheme A, all of which constitute a part of this Lease:

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.  Unless otherwise provided herein, any
statement of size set forth in this Lease, or that may have been used in
calculating rental, is an approximation which the Parties agree is reasonable
and the rental based thereon are not subject to revision whether or not the
actual size is more or less.

2.2

Condition

.  Lessor shall deliver the Premises 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 Premises,
other than those constructed by Lessee, shall be in good operating condition on
said date and that the structural elements of the roof, bearing walls and
foundation of any buildings on the Premises (the "Building") shall be free of
material defects.  If a non-compliance with said warranty exists as of the Start
Date, 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

 

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Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify same at Lessors expense if, after the Start Date, Lessee
does not give Lessor written notice of any non-compliance with this warranty
within:  (i) one year as to the surface of the roof and the structural portions
of the roof, foundations and bearing walls, (ii) six (6) months as to the HVAC
systems, and (iii) thirty (30) days as to the remaining systems and other
elements of the Building, correction of any such non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.

2.3

Compliance

.  Lessor warrants that the improvements on the Premises comply with all
applicable laws, covenants or restrictions of record, building codes,
regulations, and ordinances ("Applicable Requirements") in effect on the Start
Date.  Said warranty does not apply to the use to which Lessee will put the
Premises 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 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 six (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 (as opposed to being in existence at the Start Date, which is addressed
in Paragraph 6.2(e) below) so as to require during the term of this Lease the
construction of an addition to or an alteration of the Premises and/or Building,
the remediation of any Hazardous Substance, or the reinforcement or other
physical modification of the 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 two (2) years of this Lease and the cost thereof exceeds six (6)
months' Base Rent, Lessee may instead terminate this Lease unless Lessor
notifies Lessee, in writing, within ten (10) days after receipt of Lessee's
termination notice that Lessor has elected to pay the difference between the
actual cost thereof and an amount equal to six (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 ninety (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.

(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 and Lessee shall allocate the obligation to pay for such costs
pursuant to the provisions of Paragraph 7.1(d); provided, however, that if such
Capital Expenditure is required during the last two 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
ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor,
in writing, within ten (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 thirty (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 by fully
responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.

2.4

Acknowledgements

.  Lessee acknowledges that:  (a) it has been advised by Lessor and/or Brokers
to satisfy itself with respect to the 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 their
suitability for Lessee's intended use, (b) 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, and (c) 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:  (a) Broker has
made no representations, promises or warranties concerning Lessee's ability to
honor the Lease or suitability to occupy the Premises, and (b) 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.

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

.  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 Real Property Taxes and insurance premiums
and to maintain the Premises) shall, however, 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.  Lessee shall not, however, be obligated to pay Rent or perform its
other obligations until Lessor delivers possession of the Premises.  If
possession is not delivered within sixty (60) days after the Commencement Date,
Lessee may, at its option, by notice in writing within ten (10) days after the
end of such sixty (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 ten (10) day period, Lessee's right to cancel
shall

 

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terminate.  Except as otherwise provided, if possession of the Premises is not
tendered to Lessee by the Start 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 acts or omissions of Lessee.  If
possession of the Premises is not delivered within four (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 deliver 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

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 Rent for any
period during the term hereof which is for less than one (1) 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.

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 due Lessor 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 ten (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 moneys 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 fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, 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 properties.  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 improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises.  If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in 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, 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.

 

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(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,
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.

(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 adjacent properties).  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 existed as a result of Hazardous Substances the Premises prior to the
Start Date 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 Start Date, 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 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 twelve (12) times
the then monthly Base Rent or $100,000, whichever is greater, give written
notice to Lessee, within thirty (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 sixty (60) days following the date of such
notice.  In the event Lessor elects to give a termination notice, Lessee may,
within ten (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 twelve (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 thirty (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 the Premises, without regard to
whether said requirements are now in effect or become effective after the Start
Date.  Lessee shall, within ten (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.

6.4

Inspection; Compliance

.  Lessor and Lessor's "Lender" (as defined in Paragraph 30 below) and
consultants shall have the right to enter into Premises at any time, in the case
of an emergency, and otherwise at reasonable times, 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 contamination 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 inspections, so long as such inspection is
reasonably related to the violation or contamination.

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,

 

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keep the Premises, Utility Installations, 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, heating, ventilating, air-conditioning, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls
(interior and exterior), foundations, ceilings, roofs, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking, lots, fences, retaining
walls, signs, sidewalks and parkways located in, on, or adjacent to the
Premises.  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.  Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building in a first-class condition consistent with the
exterior appearance of other similar facilities of comparable age and size in
the vicinity, including, when necessary, the exterior repainting of the
Building.

(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 01 the following
equipment and improvements ("Basic Elements"), if any, if and when installed on
the Premises:  (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire
extinguishing systems, including fire alarm and/or smoke detection,
(iv) landscaping and irrigation systems, (v) roof covering and drains,
(vi) driveways and parking lots, (vii) clarifiers (viii) basic utility feed to
the perimeter of the Building, and (ix) any other equipment, if reasonably
required by Lessor.

(c)

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 the
Basic Elements 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 Basic Elements,
then such Basic Elements 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 the number of months of the useful life of such replacement as such
useful life is specified pursuant to Federal income tax regulations or
guidelines for depreciation thereof (including interest on the unamortized
balance as is then commercially reasonable in the judgment of Lessor's
accountants), with Lessee reserving the right to prepay its obligation at any
time.

7.2

Lessor's Obligations

.  Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9
(Damage or Destruction) and 14  (Condemnation), it is intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, or the equipment therein, all of which obligations are
intended to be that of the Lessee.  It is the intention of the Parties that the
terms of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises, and they expressly waive 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; Consent Required.  The term "Utility Installations" refers to all
floor and window coverings, air lines, power panels, electrical distribution,
security and fire protection systems, communication systems, 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).  Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent.  Lessee
may, however, make non-structural 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, and the cumulative cost
thereof during this Lease as extended does not exceed $50,000 in the aggregate
or $10.000 in any one year.

(b)

Consent.  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 equal to the greater of one month's Base Rent, or $10,000,
Lessor may condition its consent upon Lessee providing a lien and completion
bond in an amount equal to one and one-half times the estimated cost of such
Alteration or Utility Installation and/or upon Lessee's posting an additional
Security Deposit with Lessor.

(c)

Indemnification.  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
materialmen's lien against the Premises or any interest therein.  Lessee shall
give Lessor not less than ten (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 one and one-half times 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.

 

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(b)

Removal.  By delivery to Lessee of written notice from Lessor not earlier than
ninety (90) and not later than thirty (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.  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, and the
removal, replacement, or remediation of any soil, material or groundwater
contaminated by Lessee.  Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee.  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 For Insurance

.  Lessee shall pay for all insurance required under Paragraph 8 except to the
extent of the cost attributable to liability insurance carried by Lessor under
Paragraph 8.2(b) in excess of $2,000,000 per occurrence.  Premiums for policy
periods commencing prior to or extending beyond the Lease term shall be prorated
to correspond to the Lease term.  Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice.

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 against claims for
bodily injury, personal injury and property damage based upon or arising out or
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 $2,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises Endorsement" and contain
the "Amendment of the Pollution Exclusion Endorsement" for damage caused by
heat, smoke or fumes from a hostile fire.  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.  All insurance carried by Lessee
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.  The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor, with loss payable to Lessor, any
groundlessor, and to any Lender(s) insuring loss or damage to the Premises.  The
amount of such insurance shall be equal to the full replacement cost of the
Premises, as the same shall exist from time to time, or the amount required by
any Lenders, but in no event more than the commercially reasonable and available
insurable value thereof.  If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee's personal
property shall be insured by Lessee under Paragraph 8.4 rather than 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, and Lessee shall be liable for such deductible
amount in the event of an Insured Loss.

(b)

Rental Value.  The Insuring Party shall 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 (1) year.  Said insurance shall
provide that in the event the Lease is terminated by reason of an insured loss,
the period of indemnity for such coverage shall be extended beyond the date of
the completion of repairs or replacement of the Premises, to provide for one
full year's loss of Rent from the date of any such loss.  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 twelve (12) month period.  Lessee
shall be liable for any deductible amount in the event of such loss.

(c)

Adjacent Premises.  If the Premises are part of a larger building, or of a group
of buildings owned by Lessor which are adjacent to the Premises, the Lessee
shall pay for any increase in the premiums for the property insurance of such
building or buildings if said increase is caused by Lessee's acts, omissions,
use or occupancy of the Premises.

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.

 

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(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 properly, 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 B+, V, 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 modification except
after thirty (30) days prior written notice to Lessor.  Lessee shall, at least
thirty (30) 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 Of 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 from Liability

.  Lessor shall not be liable for 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, 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 of
which the Premises are a part, or from other sources or places.  Lessor shall
not be liable for any damages arising from any act or neglect of any other
tenant of Lessor.  Notwithstanding Lessor's negligence or breach of this Lease,
Lessor shall under no circumstances be liable for injury to Lessee's business or
for any loss of income or profit therefrom.

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 six (6) months or less from the date of the
damage or destruction.  Lessor shall notify Lessee in writing within thirty (30)
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.

(b)

"Premises Total Destruction" shall mean damage or destruction to the Premises,
other than Lessee Owned Alterations and Utility Installations and Trade
Fixtures, which cannot reasonably be repaired in six (6) months or less from the
date of the damage or destruction.   Lessor shall notify Lessee in writing
within thirty (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 as defined in Paragraph 6.2(a), in, on, or under the Premises.

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 lull 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 (except as to the deductible which is Lessee's

 

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responsibility) 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 01
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt of written
notice of such shortage and request therefor.  If Lessor receives said funds or
adequate assurance thereof within said ten (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 erect by written notice to
Lessee within ten (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 thirty (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 thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such damage.  Such termination shall be effective
sixty (60) days following the date of such notice.  In the event Lessor elects
to terminate this Lease, Lessee shall have the right within ten (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 thirty (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 sixty (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.

9.5

Damage Near End of Term

.  If at any time during the last six (6) months of this Lease there is damage
for which the cost to repair exceeds one (1) month's Base Rent, whether or not
an Insured Loss, Lessor may terminate this Lease effective sixty (60) days
following the date of occurrence of such damage by giving a written termination
notice to Lessee within thirty (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 ten 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
dale 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 shall be obligated to repair or restore the Premises and
does not commence, in a substantial and meaningful way, such repair or
restoration within ninety (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 dale not less than sixty (60)
days following the giving of such notice.  If Lessee gives such notice and such
repair or restoration is not commenced within thirty (30) days thereafter, this
Lease shall terminate as of the date specified in said notice.  If the repair or
restoration is commenced within said thirty (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.

9.8

Waive Statutes

.  Lessor and Lessee agree that the terms of this Lease shall govern the effect
of any damage to or destruction of the Premises with respect to the termination
of this Lease and hereby waive the provisions of any present or future statute
to the extent inconsistent herewith.

10.

Real Property Taxes.

10.1

Definition of "Real Property Taxes."

  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 Premises, 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

 

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Building 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
Premises are located.  The term "Real Property Taxes" shall also include any
tax, fee, levy, assessment or charge, or any increase therein, imposed by reason
of events occurring during the term of this Lease, including but not limited to
a change in the ownership of the Premises.

10.2

  

(a)

Payment of Taxes.  Lessee shall pay the Real Property Taxes applicable to the
Premises during the term of this Lease.  Subject to Paragraph 10.2(b), all such
payments shall be made at least ten (10) days prior to any delinquency date.
 Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid.  If any such taxes shall cover any period of time prior to or
after the expiration or termination of this Lease, Lessee's share of such taxes
shall be prorated to cover only that portion of the tax bill applicable to the
period that this Lease is in effect, and Lessor shall reimburse Lessee for any
overpayment.  If Lessee shall fail to pay any required Real Property Taxes,
Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor
therefor upon demand.

(b)

Advance Payment.  In the event Lessee incurs a late charge on any Rent payment,
Lessor may, at Lessor's option, estimate the current Real Property Taxes, and
require that such taxes be paid in advance to Lessor by Lessee, either:   (i) in
a lump sum amount equal to the installment due, at least twenty (20) days prior
to the applicable delinquency date, or (ii) monthly in advance with the payment
of the Base Rent.  If Lessor elects to require payment monthly in advance, the
monthly payment shall be an amount equal to the amount of the estimated
installment of taxes divided by the number of months remaining before the month
in which said installment becomes delinquent.  When the actual amount of the
applicable tax bill is known, the amount of such equal monthly advance payments
shall be adjusted as required to provide the funds needed to pay the applicable
taxes.  If the amount collected by Lessor is insufficient to pay such Real
Property Taxes when due, Lessee shall pay Lessor, upon demand, such additional
sums as are necessary to pay such obligations.  All moneys paid to Lessor under
this Paragraph may be intermingled with other moneys of Lessor and shall not
bear interest.  In the event of a breach by Lessee in the performance of its
obligations under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may at the option of Lessor, be treated as an
additional Security Deposit.

10.3

Joint Assessment

.  If the Premises are not separately assessed, Lessee's liability 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
conclusively determined by Lessor from the respective valuations assigned in the
assessor's work sheets or such other information as may be reasonably available.

10.4

Personal Property Taxes

.  Lessee shall pay, prior to delinquency, all taxes assessed against and levied
upon Lessee Owned Alterations, Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property of Lessee.  When possible,
Lessee shall cause such property to be assessed and billed separately from the
real property of Lessor.  If any of Lessee's said personal property shall be
assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee's property within ten (10) days after receipt of a
written statement.

11.

Utilities

.  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.  If any such services are not separately metered to
lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of
all charges jointly metered.

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)

A change in the control of lessee shall constitute an assignment requiring
consent.  The transfer, on a cumulative basis, of twenty-five percent (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
twenty-five percent (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 thirty (30) days written notice,
increase the monthly Base Rent to one hundred ten percent (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 one hundred ten
percent (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 One Hundred Ten Percent (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.

12.2

Terms and Conditions Applicable to Assignment and Subletting

.

 

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(a)

Regardless of Lessor's consent, any assignment or subletting shall not:  (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 a 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 $1,000 or
ten percent (10%) of the current monthly Base Rent applicable to the portion of
the Premises which is the subject of the proposed assignment or sublease,
whichever is greater, 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.

(f)

Any assignee of, or sublessee under, this lease shall, by reason of accepting
such assignment or entering into such sublease, 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.

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.  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 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 three (3) business days
following written notice to Lessee.

 

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(c)

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) a Estoppel Certificate, (v) a
requested subordination, (vi) evidence concerning any guaranty and/or Guarantor,
(vii) any document requested under Paragraph 42 (easements), or (viii) 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
ten (10) days following written notice to Lessee.

(d)

A Default by Lessee as to the terms, covenants, conditions or provisions of this
Lease, or of the rules adopted under Paragraph 40 hereof, other than those
described in subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice; provided,
however, that if the nature of Lessee's Default is such that more than
thirty (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 thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

(e)

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 sixty (60)
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located al the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within
thirty (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 thirty (30)
days, provided, however, in the event that any provision of this
subparagraph (e) is contrary to any applicable law, such provision shall be of
no force or effect, and not affect the validity of the remaining provisions.

(f)

The discovery that any financial statement of Lessee or of any Guarantor given
to Lessor was materially false.

(g)

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 sixty (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 ten (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.  The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor.  If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require all future payments to be made by Lessee to be by cashier's check.
 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 (1%).  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

 

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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.

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 five (5) days after such amount shall be due, then,
without any requirement for notice to Lessee, Lessee shall pay to Lessor a
one-time late charge equal to ten percent (10%) of each such overdue amount.
 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
three (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 thirty (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 thirty-first (31st) day after it was due as to non-scheduled payments,
 The interest ("Interest") charged shall be equal to the prime rate reported in
the Wall Street Journal as published closest prior to the date when due plus
four percent (4%), 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 thirty (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 thirty (30) days are reasonably required for its
performance, then Lessor shall not be in breach if performance is commenced
within such thirty (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 thirty (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 an amount equal to the greater of one month's Base Rent or the Security
Deposit, and to pay an excess of such expense under protest, reserving Lessee's
right to reimbursement from Lessor.  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 ten percent (10%) of any building portion of the premises, or more
than twenty-five percent (25%) of the land area portion of the premises not
occupied by any building, is taken by Condemnation, Lessee may, at Lessee's
option, to be exercised in writing within ten (10) days after Lessor shall have
given Lessee written notice of such taking (or in the absence of such notice,
within ten (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 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.

Brokers' Fee

.

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 acquires any rights to the Premises
or other premises owned by Lessor and located within the same Project, if any,
within which the Premises is located, (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 said 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.  Each Broker shall be a third party
beneficiary of the provisions of Paragraphs 1.10, 15, 22 and 31.  If Lessor
fails to pay to a Broker any amounts due as and for commissions 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 ten (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.

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

 

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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.

16.

Estoppel Certificates

.

(a)

Each Party (as "Responding Party") shall within ten (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 American
Industrial 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 ten 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 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 three (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.  Except as provided in Paragraph 15, 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.  Notwithstanding
the above, and subject to the provisions of Paragraph 20 below, the original
Lessor under this Lease, and all subsequent holders of the Lessor's interest in
this Lease shall remain liable and responsible with regard to the potential
duties and liabilities of Lessor pertaining to Hazardous Substances as outlined
in Paragraph 6 above.

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

. Subject to the provisions of Paragraph 17 above, the obligations of Lessor
under this Lease shall not constitute personal obligations of Lessor, the
individual partners of Lessor or its or their individual partners, 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 the individual partners of
Lessor, or its or their individual partners, 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 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.  The liability
(including court costs and attorneys' fees), of any Broker with respect to
negotiation, execution, delivery or performance by either Lessor or Lessee under
this Lease or any amendment or modification hereto shall be limited to an amount
up to 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.

23.

Notices

.

23.1

Notice Requirements

. All notices required or permitted by this Lease 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 sent 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 forty-eight (48) hours after the same is addressed
as required herein and mailed with postage prepaid.  Notices delivered by United
States Express Mail or

 

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overnight courier that guarantee next day delivery shall be deemed given
twenty-four (24) hours alter 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, 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.

24.

Waivers

.  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.  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.

25.

Recording

.  Either Lessor or Lessee shall, upon request of the other, execute,
acknowledge and deliver to the other a short form memorandum of this Lease for
recording purposes.  The Party requesting recordation shall be responsible for
payment of any fees applicable thereto.

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 one hundred fifty
percent (150%) of the Base Rent applicable during the month 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.

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

.  Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees to
attorn to a lender or any other party who acquires ownership of the Premises by
reason of a foreclosure of a Security Device, and that in the event of such
foreclosure, such new owner shall not:  (i) be liable for any act or omission of
any prior Lessor or with respect to events occurring prior to acquisition of
ownership; (ii) be subject to any offsets or defenses which Lessee might have
against any prior Lessor, or (iii) be bound by prepayment of more than one (1)
month's rent.

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 sixty (60) days after the execution of this Lease, Lessor shall 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 sixty (60) days, then Lessee may, at Lessee's option, directly contact
Lessor's 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
to enforce the terms hereof 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 tee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably

 

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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.

32.

Lessor's Access; Showing Premises; Repairs

.  Lessor and Lessor's agents shall have the right to enter the Premises at any
lime, in the case of an emergency, and otherwise at reasonable times for the
purpose of showing the same to prospective purchasers, lenders, or Lessees, and
making such alterations, repairs, improvements or additions to the Premises as
Lessor may deem necessary.  All such activities shall be without abatement of
rent or liability to Lessee.  Lessor may at any time place on the Premises any
ordinary "For Sale" signs and Lessor may during the last six (6) months of the
term hereof place on the Premises any ordinary "For Lease" signs.  Lessee may at
any time place on or about the Premises any ordinary "For SubLease" sign.

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

.  Except for ordinary for SubLease signs, Lessee shall not place any sign upon
the Premises without Lessor's prior written consent.  All signs must comply with
all Applicable Requirements.

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 anyone or all existing subtenancies.
 Lessor's failure within ten (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 ten (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 American Industrial Real Estate Association, and each
such Guarantor shall have the same obligations as Lessee under this Lease.

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) a 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

.

39.1

Definition

.  "Option" shall mean:  (a) the right to extend the term of or renew this Lease
or to extend 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 or the right of first
refusal to purchase the Premises or other property of Lessor.

39.2

Options Personal To Original Lessee

.  Each 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
three (3) or more notices of separate Default, whether or not the Defaults are
cured, during the twelve (12) month performed immediately preceding the exercise
of the Option.

 

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(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, (i) Lessee fails to pay Rent for
a period of thirty (30) days after such Rent becomes due (without any necessity
of Lessor to give notice thereof), (ii) Lessor gives to Lessee three (3) or more
notices of separate Default during any twelve (12) month period, whether or not
the Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.

40.

Multiple Buildings

.  If the Premises are a part of a group of buildings controlled by Lessor,
Lessee agrees that it will observe all reasonable rules and regulations which
Lessor may make from time to time for the management, safety, and care of said
properties, including the care and cleanliness of the grounds and including the
parking, loading and unloading of vehicles, and that Lessee wilt pay its fair
share of common expenses incurred in connection therewith.

41.

Security Measures

.  Lessee hereby acknowledges that the rental 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.

42.

Reservations

.  Lessor reserves to itself the right, from time to time, to grant, without
consent or joinder of Lessee, such easements, rights and dedications that Lessor
deems necessary, and to cause the recordation of parcel maps and restrictions,
so long as such easements, rights, dedications, maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee.  Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate any such
easement rights, dedication, map or restrictions.

43.

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.

44.

Authority

.  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
thirty (30) days after request, deliver to the other party satisfactory evidence
of such authority.

45.

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.

46.

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.

47.

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.

48.

Multiple Parties

.  If more than one person or entity is named herein as either Lessor or Lessee,
such multiple Parties shall have joint and several responsibility to comply with
the terms of this Lease.

49.

Mediation and Arbitration of Disputes

.  An Addendum requiring the Mediation and/or the Arbitration of all disputes
between the Parties and/or Brokers arising out of this Lease  is  not attached
to this Lease.

 

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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 TEAMS 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 AMERICAN
INDUSTRIAL 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, AND THE SUITABILITY
OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING:  IF THE PREMISES IS 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 IS LOCATED.

The parties hereto have executed this Lease at the place and 00 the dates
specified above their respective signatures.

Executed at: _______________________________________________

on: _______________________________________________________

Executed at _______________________________________________

on:_______________________________________________________

By LESSOR

By LESSEE:

/s/      Michael
Franges                                                          
_______________________________________________
By:________________________________________________________
Name Printed:_______________________________________________

Title:_______________________________________________________

/s/      Scott
Lantz                                                                  
_______________________________________________
By:________________________________________________________
Name Printed:_______________________________________________

Title:_______________________________________________________

 

 

By: ________________________________________________________
Name Printed:  Michael
Franges                                                     

Title:
Owner                                                                               

Address: 1671
Juanita                                                                  

Telephone:
408-242-2242                                                              

Facsimile: __________________________________________________

Federal ID No.: ______________________________________________

By: ________________________________________________________
Name Printed: Scott
Lantz                                                             

Title:
CEO                                                                                 

Address: 1702
Meridian                                                                

Telephone:
408-375-8839                                                             

Facsimile:___________________________________________________

Federal ID No.:_______________________________________________

NOTE:  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:  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower
Street, Suite 600, Los Angeles, California 90017.

 

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