Exhibit 10.2

LEASE AGREEMENT

FOR

KEYES, CALIFORNIA

ETHANOL PRODUCTION FACILITY

This industrial lease (“Lease”) is entered into as of this 1st day of December,
2009, by and between Cilion, Inc., a Delaware corporation (hereinafter
“Landlord”), AE Advanced Fuels Keyes, Inc., a Delaware corporation (hereinafter
“Tenant”) and AE Advanced Fuels, Inc., a Delaware corporation (“Parent Sub”),
each of which are wholly-owned subsidiaries of AE Biofuels, Inc., a Nevada
corporation (“Parent”).

RECITALS

A.

Landlord, Tenant and Parent have entered into that certain Project Agreement,
dated of even date herewith (the “Project Agreement”), of which this Lease is a
part.  It is the intention of the parties that unless the Project Agreement is
in full force and effect, this Lease shall have no validity separate and apart
from the Project Agreement.  Capitalized terms used but not otherwise defined in
this Lease have the meanings assigned to such terms in the Project Agreement.

B.

Subject to the terms and conditions set forth herein and in the Project
Agreement, Landlord desires to lease to Tenant and Tenant desires to Lease from
Landlord that certain real property and improvements thereon known as the Keyes
Plant and located at 4209 Jessup Road, Keyes, California (the “Leased
Premises”), as more particularly described on Exhibit “A” and Exhibit “B”
attached hereto and incorporated herein.  The Leased Premises consist of an
ethanol production facility with a nameplate annual production capacity of 55
million gallons as further described on Exhibit “B” and the real property
identified in Exhibit “A.”

C.

In accordance with the Project Agreement, Parent (on behalf of Tenant) has
agreed to complete certain Repair and Retrofit Activities with respect to the
Keyes Plant.

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and
other good and valuable consideration, the receipt of which is hereby
acknowledged by each party, the parties hereby agree as follows:

DEMISE; TERM

Section 1.01 Demise of Leased Premises; Term.  Landlord hereby leases and
demises to Tenant, and Tenant hereby takes and hires from Landlord, upon and
subject to the terms, covenants, provisions and conditions of this Lease, the
Leased Premises.  The term of this Lease is for a period of thirty-six (36)
months, commencing on the Lease Commencement Date and ending on the date (the
“Expiration Date”) which is thirty-six (36) months from the Lease Commencement
Date, unless terminated sooner as provided in this Lease (the “Term”).  Within
ten (10) business days of when the Lease Commencement Date is determined,
Landlord and Tenant shall confirm the Lease

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Commencement Date and the expiration date of the Term in writing.  This Lease
shall be effective upon execution and delivery of this Lease by both parties
hereto and Tenant hereby agrees that execution and delivery of this Lease by
Tenant shall, without further act, irrevocably constitute acceptance by Tenant
of the Leased Premises for all purposes of this Lease.  Except for events caused
by Landlord’s gross negligence or willful misconduct, all risk of loss of the
Leased Premises shall pass to Tenant as of the Possession Date.  Notwithstanding
anything in this Lease or the Project Agreement to the contrary, Landlord shall
have the right, in its sole and absolute discretion, upon written notice to
Tenant, to terminate this Lease and Tenant’s right to possession of the Leased
Premises if the Repair and Retrofit Activities are not Substantially Complete on
or prior to July 31, 2010, such termination to be effective as of the date set
forth in such notice.  Upon such termination, this Lease shall be null and void
and neither party shall have any liabilities or obligations hereunder except as
otherwise expressly set forth herein.

Section 1.02 Early Termination.  Notwithstanding the foregoing, Landlord, in its
sole and absolute discretion, shall have the right to terminate this Lease prior
to the Expiration Date, which termination shall be effective on the last day of
the twenty-fourth (24th) month after the Lease Commencement Date (the “Early
Termination Effective Date”).  Landlord shall give Tenant prior written notice
of Landlord’s intention to terminate this Lease pursuant to this Section 1.02
(the “Early Termination Notice”) no later than three (3) months prior to the
Early Termination Effective Date; and provided further that if Landlord
terminates this Lease pursuant to this Section 1.02 on the Early Termination
Effective Date, Landlord shall within sixty (60) after the Early Termination
Effective Date pay to either the Tenant or Parent, at Parent's written request,
an amount (such amount referred to herein as the “Early Termination Fee”) in
cash equal to (i) one hundred percent (100%) of the approved, documented costs
actually incurred by Parent or the Tenant for Capital Expenditures and Repair
and Retrofit Activities as defined in the Project Agreement, plus (ii) actual
documented Startup Losses in an amount not to exceed Two Million Dollars
($2,000,000), if any, plus (iii) an amount equal to eight percent (8%) of the
total amounts set forth in (i) and (ii) above multiplied by the actual number of
years (or partial years) in the Actual Term (as defined below) of this Lease.
 The “Actual Term” of this Lease shall be the Term as may be earlier terminated
pursuant to this Section 1.02.  Notwithstanding anything herein to the contrary,
Landlord shall have the right to reduce the amount of the Early Termination Fee
payable by Landlord by the dollar amount of damages directly resulting from an
uncured default by Tenant.  Upon such termination, this Lease shall be null and
void and neither party shall have any liabilities or obligations hereunder
except as otherwise expressly set forth herein.

Section 1.03 Effects of Termination.  Upon any expiration or termination of this
Lease, (i) all rights in the Leased Premises and the Project shall revert to
Landlord; (ii) Tenant shall transfer or caused to be transferred any and all
Permits relating to the Leased Premises to Landlord; (iii) Tenant and Parent
shall cease any and activity or operations with respect to the Leased Premises;
and (iv) all licenses hereunder shall terminate, including the Praj License.

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Section 1.04 Encumbrances.  This Lease and Tenant’s leasehold estate hereunder
are subordinate, under and subject to all liens, documents and matters of public
record, to the extent valid and enforceable, and all applicable laws, ordinances
and regulations.

Section 1.05 Tenant’s Occupancy.  Tenant recognizes and agrees that, beginning
on the Possession Date, Tenant shall be required to comply with all of Tenant’s
obligations in this Lease (including, without limitation, the provisions
requiring Tenant to obtain insurance and to indemnify and exculpate Landlord)
other than those provisions requiring Tenant to pay Base Rent (which obligation
shall begin on the Lease Commencement Date), and Tenant’s access to the Leased
Premises shall be subject to the provisions hereof.

RENT

Section 2.01 Base Rent.  Beginning on the Lease Commencement Date, Tenant shall
pay Landlord as base rent (“Base Rent”), for the possession and use of the
Leased Premises, the sum of $250,000 per month, payable in advance for each
monthly period and continuing until the expiration or earlier termination of
this Lease.  Rent (as defined below), and all other sums due and payable by
Tenant to Landlord under this Lease, shall be paid in lawful money of the United
States and shall be paid via wire transfer pursuant to Landlord’s wiring
instructions set forth on Exhibit “C” attached hereto and made a part  hereto,
or such other method as Landlord shall from time to time during the Term
designate by written notice to Tenant.  The Base Rent must be paid, without the
need for notice, demand, offset, or deduction, by the first day of each calendar
month.  If the Term commences on a date other than the first day of a month,
Tenant must pay the prorated rent for such prorated month on first day in which
the Lease Commencement Date occurs.  All sums other than Base Rent that Tenant
is obligated to pay under this Lease will be deemed to be “additional rent” due,
regardless of whether those sums are designated as additional rent, and shall be
paid by Tenant without deduction, offset or abatement.  Landlord shall have the
same rights and remedies for non-payment of additional rent as Landlord has for
non-payment of Base Rent.  The term “Rent” means the Base Rent and all
additional rent payable under this Lease.  The covenant to pay Rent shall be
independent of all other covenants in this Lease.

Section 2.02 Security Deposit. A Security Deposit shall not be required.

Section 2.03 Rent Increases. During the Term of this Lease, there shall be no
increases in the Base Rent as set forth above.

Section 2.04 Net Lease.  It is intended that the provisions of this Lease shall
require Tenant to pay all costs and expenses attributable to the Leased Premises
during the Term as if Tenant owned the Leased Premises during the Term,
including, without limitation, all real estate taxes, special and general
assessments, insurance premiums, and maintenance and repair costs and expenses,
all as more particularly set forth herein.  It is intended that (a) Landlord
shall incur no cost or expense with respect to the Leased Premises during the
Term, except as otherwise expressly provided herein, and (b) the Base Rent shall
be an absolute net return to Landlord throughout the Term of this Lease,

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without offset or deduction and free of all expenses, charges, diminution and
other deductions whatsoever.

TAXES

Section 3.01 Taxes.  Landlord shall pay all property taxes, general and special
assessments, excises, levies or other governmental charges (each, an
“Imposition”) that shall or may during the period beginning on the Lease
Commencement Date and continuing until the expiration or earlier termination of
this Lease be imposed on, or arise in connection with the Leased Premises or any
part thereof (including, without limitation, any property tax increases
pertaining to any conveyance or transfer by Landlord of the Leased Premises that
results in reassessment of the Leased Premises for property tax purposes) and
that do not relate to Tenant’s leasehold interest, facilities, equipment,
machinery or other property placed on the Leased Premises by or for Tenant, or
Tenant’s improvements, entitlements or operations; provided that, so long as
Landlord promptly provides Tenant with a copy of the applicable tax bill, Tenant
shall promptly reimburse Landlord for any such Impositions paid by Landlord.

USE OF THE PREMISES

Section 4.01 Use and Restrictions on Use. The Leased Premises shall be used for
the sole purpose of production of ethanol and related byproducts from corn and
other cellulosic feedstock, including ethanol-related product development and
testing and other related purposes incidental thereto, and for no other use
whatsoever.  In no event shall Tenant perform any activities or use the Leased
Premises except as expressly set forth in this Lease or the Project Agreement.

Section 4.02 Smoking. Smoking is not allowed on the Leased Premises, whether in
common areas or private offices, and the entire property is designated “smoke
free.”

Section 4.03 Compliance with Law.  Except as otherwise set forth herein, Tenant
agrees that at all times from and after the Possession Date, Tenant will, at its
expense, promptly comply with the following: (a) all applicable federal, state,
county, city and municipal or other statutes, charters, laws, rules, orders,
regulations and ordinances affecting the Leased Premises, the occupancy, use or
repair thereof ; (b) all rules, orders, and regulations of all public officers
including the police, health and fire departments and with the National Board of
Fire Underwriters or other similar organizations for the prevention of fire or
the corrections of hazardous conditions; and (c) the requirements of all
insurance companies having liability, fire and other insurance coverages in
force and effect with respect to the Leased Premises, whether or not such law,
ordinance, order, rule, regulation or requirement necessitates structural
changes or improvements or interferes with the use and enjoyment of the Leased
Premises.  Tenant shall give prompt notice to Landlord of any notice it receives
of the violation of any of the foregoing.

Section 4.04 Permits.  At all times from and after the Possession Date, Tenant,
at Tenant’s sole cost and expense, shall procure and maintain all Permits,
licenses and authorizations required for the Leased Premises and each part
thereof, any use of the

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Leased Premises then being made, and for the lawful and proper operation and
maintenance thereof.

REPAIR AND RETROFIT ACTIVITIES

Section 5.01 Repair and Retrofit.  The Parent and the Tenant have undertaken, or
will undertake, the Repair and Retrofit Activities in accordance with the terms
of the Project Agreement and previously approved in writing by Landlord, and
Tenant covenants and agrees that all Repair and Retrofit Activities shall be
completed in accordance with the terms and conditions of the Project Agreement.

UTILITIES

Section 6.01 Utilities. Landlord is providing no utilities whatsoever at
Landlord’s expense, and Tenant shall be solely responsible for and shall
promptly pay all utilities, trash removal, and similar expenses used or consumed
at the Leased Premises, including in each instance, all sales and other taxes
applicable to the sale or supply of such utilities, said responsibility
commencing on the Possession Date and continuing through the expiration or
earlier termination of this Lease.  Tenant shall purchase all utility services,
including fuel, water, telephone and communication, sewerage and electricity,
directly from the utility or municipality providing such service, and Tenant
shall pay for such services when payments therefor are due.  Should Landlord
elect or be required to supply or make available any utility used or consumed at
the Leased Premises, Tenant agrees to purchase and pay for same, as additional
rent, every month, in the amounts which Tenant would pay directly to the utility
companies for direct service.  If the local authority, municipality, utility or
other body collects for the water and/or sewerage or sanitary service and/or
consumption, as aforesaid, Tenant covenants and agrees to pay the amount
allocable to the Leased Premises of the water and sewer rent charge (both
minimum and otherwise) and any other tax, rent, levy, connection fee or meter or
other charge which now or hereafter is assessed, imposed or may become a lien
upon the Leased Premises, or the realty of which it is a part, pursuant to law,
order or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, or the water or sewerage connection or system.

Section 6.02 No Landlord Liability for Interruption.  Except to the extent
caused by the gross negligence or willful misconduct of Landlord, in no event
shall Landlord be liable to Tenant in damages or otherwise for any interruption,
curtailment or suspension of any of the foregoing utility services due to the
need for repairs and replacements, action of public authority, strikes, acts of
God or public enemy, or any other cause, whether similar or dissimilar to the
aforesaid; nor shall any such interruption, curtailment or suspension (a)
constitute a constructive eviction or interference or disturbance with Tenant’s
use, possession or enjoyment of the Leased Premises, (b) constitute grounds for
abatement, reduction or rebate, in whole or in part, of Base Rent or additional
rent or any other sum payable by Tenant under this Lease, or (c) release or
relieve Tenant of or from any of Tenant’s obligations under this Lease.

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PARKING RIGHTS

Section 7.01 Parking Rights. Tenant has the exclusive use of parking spaces in
the parking areas of the facility.  Landlord shall not be responsible or liable
for any damage to Tenant’s vehicles as a result of fire, theft, vandalism and/or
collision.  It is understood and agreed that Landlord’s sole obligation
hereunder is to make available to Tenant said parking spaces, and it is hereby
understood and agreed that Landlord shall not be responsible for “monitoring” or
“policing” the parking area so as to ensure Tenant’s use thereof.

CLEANING AND JANITORIAL

Section 8.01 Cleaning and Janitorial. Landlord is providing no janitorial,
cleaning or trash removal services whatsoever to the Leased Premises and Tenant
shall be solely responsible for contracting with service providers providing
such services and shall pay for such services when payments therefor are due.

ALTERATIONS BY TENANT

Section 9.01 Alterations. Tenant shall not make any alterations, additions or
modifications to the Leased Premises except in accordance with the Project
Agreement, or except as otherwise expressly provided herein with respect to
Tenant’s repair and maintenance obligations, and in each case only with prior
notice to, and written consent of, Landlord.

Section 9.02 Ownership of Improvements. Subject to the terms of the Project
Agreement and to Tenant's removal obligations set forth in Section 9.05 below
and Landlord’s obligation (if applicable) to pay the Early Termination Fee set
forth in Section 1.02 above, and specifically excluding any equipment or
improvements directly related to Parent’s proprietary technology, any
improvements, alterations and additions to the Leased Premises made by Tenant
shall become the asset of Landlord without compensation to Tenant at the
expiration or earlier termination of this Lease, and such improvements shall
automatically and without any act of Tenant or any third party become Landlord’s
property upon expiration or earlier termination of this Lease, without cost or
charge to Landlord.  Within thirty (30) days following the expiration or earlier
termination of this Lease, Tenant shall execute, acknowledge and deliver to
Landlord any quitclaim deed or other document which may be requested by Landlord
to evidence the foregoing.  Improvements shall not include licensed technology,
developed technology, personal items, books & records, office equipment,
engineering equipment, test equipment, research & development equipment,
production equipment or other removable equipment provided by Tenant or AE or a
related party (collectively “Excluded Property”).  Notwithstanding anything in
this Lease to the contrary, in no event shall any fixtures at the Leased
Premises by deemed or otherwise considered Excluded Property and the same shall
not be removed by Tenant without the express written consent of Landlord (in
Landlord’s sole and absolute discretion).

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Section 9.03 Standard of Work. All work to be performed by or for Tenant
pursuant to this Lease will be performed, without expense to Landlord,
diligently, in a good, first-class and workmanlike manner, consistent with the
norm of the city of Keyes, California and in compliance with all applicable
laws, ordinances, regulations, and rules of any public authority having
jurisdiction over the Leased Premises.

Section 9.04 Mechanic’s Liens.  After the Possession Date and except in the
ordinary course of business under which such liens are removed (at Tenant’s sole
cost and expense) after completion of work, Tenant shall not suffer or permit
any mechanic’s lien to be filed against the interest of Landlord or Tenant in
the Leased Premises by reason of work, services or materials supplied to Tenant,
the Leased Premises, or any part thereof, and Tenant agrees to keep the Leased
Premises free of all liens and claims for labor performed on and material
delivered to the Leased Premises. If a lien is placed on the Leased Premises at
any time after the Possession Date resulting from any such labor or material or
construction on or to the Leased Premises resulting from any act of Tenant,
Tenant, at its sole cost and expense, shall cause such lien to be removed,
expunged or bonded around within thirty (30) days following the recordation of
such lien.  In the event Tenant fails to timely so remove any lien recorded
against the Leased Premises, Landlord may obtain a bond to remove such lien, and
any costs to Landlord in doing same, including any legal costs or attorney’s
fees incurred, will become additional rent due from Tenant to Landlord payable
upon written demand therefor.

Section 9.05 Election to Require Removal.  Excluding items listed in the Repair
and Retrofit Activities and items specifically approved in writing by Landlord,
Landlord may elect to require the removal of all or a portion of any
improvements, alterations or additions to the Leased Premises made by Tenant
upon the expiration or earlier termination of this Lease.  Landlord shall make
such election to require removal by delivering to Tenant written notice of such
election (a “Removal Notice”) not less than three (3) months before the
expiration date of the Term, in which case Tenant shall complete such removal by
the expiration of the Term, except that upon any earlier termination of this
Lease, Landlord shall deliver to Tenant any Removal Notice within thirty (30)
days after such earlier termination of this Lease, in which case Tenant shall
complete such removal with sixty (60) days after delivery of the Removal Notice.
 The duty to remove such improvements, alterations or additions imposed by this
Section 9.05 includes, but is not limited to, the duty to leave the Leased
Premises safe and free from debris and Hazardous Materials on the Leased
Premises as a result of Tenant’s use of the Leased Premises, in a condition at
least as good as the condition of the Leased Premises on the Possession Date.
 Such restoration shall include, but not be limited to, remediation (or at
Landlord’s election, payment to Landlord of Landlord’s remediation costs within
thirty (30) days after receipt of an invoice for such costs) of contamination of
the Leased Premises by Hazardous Materials resulting from Tenant’s use or
occupation of the Leased Premises.  In the event that Tenant fails to restore
the Leased Premises, Landlord may elect to perform such restoration, and Tenant
shall pay Landlord for the costs and expenses of such restoration incurred by
Landlord, within thirty (30) days after receipt of an invoice for such costs.
 This Section 9.05 shall survive the expiration or earlier termination of this
Lease.

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REPAIRS AND MAINTENANCE

Section 10.01 Tenant’s Obligations.  Tenant shall, at its sole cost and expense,
at all times from and after the Possession Date, maintain and preserve, in good
condition, the Leased Premises and the fixtures, systems and appurtenances
thereon and shall on the expiration or earlier termination of this Lease, return
the Leased Premises in the same condition as received by Tenant on the
Possession Date, reasonable wear and tear and alterations required to be
performed pursuant to the Project Agreement or hereunder excepted.  Except as
otherwise expressly set forth in this Lease, Tenant shall also be responsible
for all necessary repairs and replacements, structural and non-structural,
interior and exterior, ordinary and extraordinary, in and to the building and
the facilities and systems thereof, and shall pay any and all expenses in
connection with the maintenance and operation of the Leased Premises, including
repair and upkeep of grounds, sidewalks, driveways and party areas, in a good
condition.  All repairs and replacements shall be made with materials of equal
or better quality then the items being repaired or replaced, but under no
circumstances shall this Section be interpreted to require Tenant to improve the
condition of the Leased Premises to a better condition than existed as of the
Possession Date.  To the extent practicable, Tenant shall give Landlord
sufficient prior written notice of all such repairs and replacements and
Landlord may consent to all such repairs and replacements in its sole and
absolute discretion.

Section 10.02 No Obligation of Landlord to Make Repairs.  Landlord shall not be
required to furnish any services or facilities or to make any repairs or
replacements in or to the Leased Premises.  Tenant hereby assumes the full and
sole responsibility for the condition, operation, repair, replacement,
maintenance and management of the Leased Premises.

Section 10.03 Commission of Waste.  Tenant shall not cause or permit any waste
or damage, disfigurement or injury to any of the Leased Premises or any part or
parts thereof.

PERSONAL PROPERTY TAXES

Section 11.01 Personal Property Taxes. Prior to delinquency, Tenant will pay all
applicable taxes and assessments levied on trade fixtures, alterations,
additions, improvements, inventories, and other personal property located or
installed on the Leased Premises by Tenant, including, but not limited to,
Tenant’s leasehold interest, facilities, equipment, machinery or other property
placed on the Leased Premises by or for Tenant, or Tenant’s improvements,
entitlements or operations.

INSURANCE  

Section 12.01 Tenant’s Obligations. Tenant will, at Tenant’s expense, obtain and
keep in full force at all times from and after the Possession Date the following
insurance to the satisfaction of the Landlord and, except as set forth below, to
have Landlord or a designee of Landlord, including its mortgagee, be listed as
additional loss payee on all contracts:

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(a) Workers’ Compensation and Employer’s Liability Insurance. Workers’
compensation insurance having limits not less than those required by state
statute, and covering all persons employed by Tenant in the conduct of Tenant’s
operations on the Leased Premises, and employer’s liability insurance in an
amount not less than $1,000,000 per accident/per employee.  Neither Landlord nor
any designee of Landlord may be an additional loss payee with respect to
workers’ compensation insurance.  Notwithstanding the foregoing, Tenant may
carry employer’s liability insurance in an amount of $500,000 provided that
Tenant has an umbrella policy that provides additional coverage such that the
aggregate coverage meets the foregoing coverage limit.

(b) General Liability Insurance. A policy of commercial general liability
insurance (occurrence form) having a combined single limit (including any
umbrella coverage) of not less than $10 million per occurrence, providing
coverage for, among other things, blanket contractual liability, premises,
products and completed operations against any claims for bodily injury, death or
property damage, occurring on, in or about the Leased Premises, and on, in or
about the adjoining streets, property, parking lots and passageways, and against
contractual liability for any such claims.

(c) Hazard Insurance.  A policy of commercial hazard insurance having a combined
single limit of not less than $90 million per occurrence will be held by
Landlord and Tenant will reimburse Landlord for the cost of maintaining
Landlord’s Hazard Insurance, within thirty (30) days following written demand
therefor.

(d) Business Interruption Insurance. During the period of the Term of this
Lease, the Tenant shall maintain business interruption insurance having such
terms and conditions as are reasonably satisfactory to Landlord.  Except for
rent payments and any other amounts payable to Landlord hereunder by Tenant,
Landlord shall not be entitled to receive any portion of any insurance proceeds
from this policy; provided, however, notwithstanding the foregoing, upon
expiration of this Lease or early termination of this Lease (provided that
Tenant shall have at least 60 (sixty) days prior notice of such termination),
such policy shall provide for payment to Landlord of any insurance proceeds with
respect to any periods of coverage following the termination of this Lease.

(e) Builder’s Risk.  During any period during which Repair and Retrofit
Activities or any other alterations to the Leased Premises are being performed,
builder’s risk property insurance in amounts equal to the sum of construction
contracts and anticipated soft costs for the construction work being undertaken.

(f) Other Coverages.  Such other policy or policies as are either reasonably
deemed necessary by Landlord or its mortgagee or required by insurers by reason
of a change in Tenant’s use of, or activities at, the Leased Premises or
required by Environmental Law.  Tenant shall have sixty (60) days after receipt
of Landlord’s request under this Section 12.01(f) to procure such insurance.

Section 12.02 Insurance to be Maintained by Landlord.  Landlord shall at all
times keep the Leased Premises insured for the protection of Landlord against
such risks, and with such coverages, as Landlord or its mortgagee shall from
time to time require, including

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without limitation, broad form fire and extended coverage insurance, in an
amount not less than the full replacement value (as from time to time designated
by Landlord) of all improvements, with coverage (in addition to the standard
coverage afforded by such insurance) for theft, plate glass damage, vandalism,
malicious mischief, and, if required by Landlord (in its sole and absolute
discretion), boiler explosion, war risk and earthquake, and rent insurance with
respect to the Rent payable for the one year period following the occurrence of
any casualty, and any other insurance that Landlord deems prudent or advisable
in its sole and absolute discretion.

Section 12.03 General Insurance Provisions:

(a) Insurance Companies. Insurance required to be maintained by Tenant will be
written by companies licensed to do business in the State of California having
an A.M. Best’s rating of at least “A”, and (ii) not be subject to cancellation
or material change or non-renewal without at least thirty (30) days’ prior
written notice to Landlord and/or Landlord’s designee, as the case may be,
except for non-payment of premium, which shall be ten (10) days.  

(b) Certificates of Insurance. Tenant will deliver to Landlord certificates of
insurance for all insurance required to be maintained by Tenant no later than
the Possession Date conforming to the requirements hereof.  Tenant will, at
least thirty (30) days prior to expiration of the policy, furnish Landlord with
certificates of renewal or binders.  If Tenant fails to maintain any insurance
required in this Lease, Tenant will be liable for all losses and costs resulting
from that failure; Landlord will have the right, but not the obligation, to
obtain insurance on behalf of Tenant, and Tenant will immediately on demand pay
Landlord the premiums on the insurance; and Landlord may declare a default under
this Lease.

(c) Primary Coverage. All insurance to be maintained by Tenant must, except for
workers’ compensation and employer’s liability insurance, be primary, without
right of contribution from insurance of Landlord.  All general liability
policies shall name Landlord and/or its designees as additional insureds. The
limits of insurance maintained by Tenant will not limit Tenant’s liability under
this Lease.

(d) Accidents.  Upon the occurrence of any accident, injury or personal property
casualty in or about the Leased Premises, Tenant shall give immediate notice
thereof to Landlord, and shall provide Landlord with evidence that such
liability of Landlord relating thereto is covered by the insurance which Tenant
is required by this Lease to carry.

INDEMNIFICATION

Section 13.01 Indemnification by Tenant.  Except to the extent caused by the
gross negligence or willful misconduct of Landlord, Landlord will not be liable
for any loss or damage to person or property caused by theft, fire, acts of God,
acts of a public enemy, riot, strike, insurrection, war, court order,
requisition, or order of government body or authority.  Except to the extent of
the gross negligence or willful misconduct of a

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Landlord Indemnified Party (as defined below), Tenant and Parent shall, jointly
and severally, defend, indemnify and hold harmless Landlord and Landlord’s
employees, agents, partners, Affiliates, shareholders, directors, officers, and
assigns (each, a “Landlord Indemnified Party”), by counsel acceptable to
Landlord, from and against the following:

(a) any and all losses, costs, damages, fines, penalties, interests,
assessments, fees or expenses (including reasonable attorney’s fees) (“Losses”)
arising from third-party claims for property damage or personal injury
(including emotional distress) that directly or indirectly arise out of or
result from any negligent, willful, reckless, or otherwise tortious act or
omission (including strict liability) during the performance of the Repair and
Retrofit Activities or operation of the Leased Premises, by Tenant, Parent, any
subcontractor, or any of their respective Affiliates;

(b) Losses that directly arise out of or result from (i) all claims for payment,
whether or not reduced to a lien or mechanics lien, filed by Tenant, Parent or
any of its or their Affiliates or subcontractors, or other persons performing
any portion of the Repair and Retrofit Activities; and (ii) employers’ liability
or workers’ compensation claims filed by any employees or agents of Tenant,
Parent or any of its or their subcontractors or Affiliates;

(c) Losses issued by any Governmental Authority that directly arise out of or
result from the failure of Tenant or Parent or any of its or their Affiliates or
subcontractors to comply with the terms and conditions of any Legal Requirements
relating to the use or possession of the Leased Premises;

(d) Losses in connection with the operation of the Leased Premises by Tenant or
Parent, or any of their Affiliates or agents, including, without limitation, any
Losses arising in connection with any alleged infringement of any intellectual
property rights of Third Parties in connection with the operation of the Leased
Premises by Tenant, Parent, or any of their agents or Affiliates;

(e) Losses arising in connection with the breach by Tenant or Parent of any of
their representations, warranties, covenants or agreements contained herein;

(f) Losses as a result of any claims by any Governmental Authority that arise
out of or result from the failure of Tenant or Parent to pay, as and when due,
all taxes, duties, levies, assessments, tariffs, imposts, fees or charges of any
kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any Governmental
Authority for which Tenant or Parent is obligated to pay pursuant to the terms
of this Lease;

(g) all Losses, including claims for property damage, remedial action or
personal injury (including emotional distress), whether or not involving damage
to the Leased Premises, that directly or indirectly arise out of or result from
(i) the use, storage, transportation, manufacture, processing or disposal
whether or not in compliance with Legal Requirements, of Hazardous Materials at
the Leased Premises from and after the

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Possession Date; and (ii) the presence or existence of or contamination of the
Leased Premises, caused by the spill or release of Hazardous Materials brought
onto, or handled at, the Leased Premises (excluding Landlord); and

(h) Losses arising in connection with the condition of the Leased Premises or
any other act, event, failure or omission by Tenant, Parent or any of its or
their employees, contractors, subcontractors, consultants, agents,
representatives, invitees, licensees or permittees (collectively, “Tenant
Parties”).

Section 13.02 Indemnification By Landlord.  Except for Losses arising out of or
resulting from the gross negligence or willful misconduct of a Tenant Party,
Landlord shall defend, indemnify and hold harmless the Tenant Parties from and
against the following:

(a)  Losses arising from third-party claims for property damage or personal
injury (including emotional distress) that directly or indirectly arise out of
or result from any negligent, reckless, or otherwise tortious act or omission
(including strict liability) by Landlord prior to the Possession Date;

(b)  Losses that directly arise out of or result from (i) all claims for
payment, whether or not reduced to a lien or mechanics’ lien, filed by Landlord,
or any of its Affiliates or subcontractors, or other persons prior to the
Possession Date; and (ii) employers’ liability or workers’ compensation claims
filed by any employees of Landlord or any of its subcontractors or Affiliates;

(c)  Losses arising in connection with the breach by Landlord of any of its
representations, warranties, covenants or agreements contained herein;

(d)  Losses as a result of any claims by any Governmental Authority that arise
out of or result from the failure of Landlord to pay, as and when due, all
taxes, duties, levies, assessments, tariffs, imposts, fees or charges of any
kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any Governmental
Authority for which Landlord is obligated to pay and for which a Tenant Party is
not required to reimburse Landlord; and

(e)  all Losses, including claims for property damage, remedial action or
personal injury (including emotional distress), whether or not involving damage
to the Leased Premises, that directly or indirectly arise out of or result from
(i) the use, storage, transportation, manufacture, processing or disposal by or
for the benefit of Landlord whether or not in compliance with Legal
Requirements, of Hazardous Materials at the Leased Premises occurring prior to
the Possession Date; and (ii) the presence or existence of or contamination of
the Leased Premises, caused by the spill or release of Hazardous Materials
brought onto, or handled at, the Leased Premises, occurring prior to the
Possession Date.  

Section 13.03 Claims for Indemnification.  

(a) A person entitled to indemnification under this Section 13 (an “Indemnified
Party”) shall give prompt written notification to the person from whom
indemnification is sought (the “Indemnifying Party”) of the commencement of any
action, suit or proceeding relating to a Third Party claim for which

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indemnification may be sought or, if earlier, upon the assertion of any such
claim by a Third Party (it being understood and agreed, however, that the
failure by an Indemnified Party to give notice of a Third-Party claim as
provided in this Section 13 shall not relieve the Indemnifying Party of its
indemnification obligation under this Lease except and only to the extent that
such Indemnifying Party is actually prejudiced as a result of such failure to
give notice).

(b) Within thirty (30) days after delivery of such notification, the
Indemnifying Party may, upon written notice thereof to the Indemnified Party,
assume control of the defense of such action, suit, proceeding or claim with
counsel reasonably satisfactory to the Indemnified Party.  If the Indemnifying
Party does not assume control of such defense, the Indemnified Party shall
control such defense.  The party not controlling such defense may participate
therein at its own expense; provided that if the Indemnifying Party assumes
control of such defense and the Indemnified Party reasonably concludes, based on
advice from counsel, that the Indemnifying Party and the Indemnified Party have
conflicting interests with respect to such action, suit, proceeding or claim,
the Indemnifying Party shall be responsible for the reasonable fees and expenses
of counsel to the Indemnified Party solely in connection therewith; provided
further, however, that in no event shall the Indemnifying Party be responsible
for the fees and expenses of more than one counsel in any one jurisdiction for
all Indemnified Parties.

(c) The party controlling such defense shall keep the other party advised of the
status of such action, suit, proceeding or claim and the defense thereof and
shall consider recommendations made by the other party with respect thereto.

(d) The Indemnified Party shall not agree to any settlement of such action,
suit, proceeding or claim without the prior written consent of the Indemnifying
Party, which shall not be unreasonably withheld.  The Indemnifying Party shall
not agree to any settlement of such action, suit, proceeding or claim or consent
to any judgment in respect thereof that does not include a complete and
unconditional release of the Indemnified Party from all liability with respect
thereto or that imposes any liability or obligation on the Indemnified Party
without the prior written consent of the Indemnified Party.

Section 13.04 Survival.  Without limiting or in any way agreeing to waive a
party’s right to make a claim at common law as permitted pursuant to applicable
law for contribution or indemnification with respect to third-party claims, and
notwithstanding any other provision in this Lease to the contrary, the
indemnities set forth in this Section 13 shall survive the expiration or earlier
termination of this Lease.

HAZARDOUS MATERIALS

Section 14.01 Definitions. As used in this Section, “Hazardous Material” means
any chemical, substance, material or waste (including constituents thereof),
that is or may be hazardous to human health or safety or to the environment,
that are now or become in the future listed, defined, or regulated in any manner
by any Environmental Law, whether such law is regulatory or statutory, and is
local, state or federal, and from time to time adopted.

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Section 14.02 Use of Hazardous Materials. Tenant will not cause or permit any
Hazardous Materials to be released or to become present on, under, or about the
Leased Premises or other properties in the vicinity of the Leased Premises,
except for Hazardous Materials that are typically found, brought into, stored or
used at comparable ethanol production facilities similar to the Leased Premises,
and, in all instances, in accordance with all applicable Legal Requirements and
prudent industry practices and in a manner that does not expose the Leased
Premises or other neighboring properties to any risk of contamination or damage
or Landlord to any liability.  Without limiting the generality of the foregoing,
any removal, transportation or disposal of Hazardous Materials from the Leased
Premises shall be performed by duly licensed haulers and such Hazardous
Materials shall be transported to facilities duly licensed for final disposal of
such Hazardous Materials.  Tenant shall, at its sole cost and expense, prepare
and comply with all environmental plans related to the Project or Tenant’s use
of the Leased Premises as required by applicable Legal Requirements.  Under no
circumstances shall Tenant install any underground storage tanks, underground
pipelines or other conduits under the Leased Premises.  On January 1 of each
year of the Term and on January 1 of the year following the expiration or
earlier termination of the Term, Tenant shall disclose in writing to Landlord
the names and amounts of any and all Hazardous Materials that are used, placed,
generated, released, stored or disposed in, on, under or around the Leased
Premises or transported to or from the Leased Premises.  

Section 14.03 No Landlord Liability.  Except to the extent caused by Landlord or
its employees, contractors, subcontractors, consultants, agents,
representatives, invitees, licensees or permittees (collectively, “Landlord
Parties”) and except to the extent Hazardous Materials are present in, on, under
or about the Leased Premises prior to the Possession Date, from and after the
Possession Date none of the Landlord Parties shall be liable to Tenant for any
claim or injury to any person or property of any kind or character arising from
or caused by the presence of any Hazardous Materials in, on, under or about the
Leased Premises or the soils or groundwater of the Leased Premises, whether
known or unknown, including, but not limited to, liability under any applicable
Legal Requirements.  Tenant hereby waives on behalf of the Tenant Parties all
claims against any of the Landlord Parties for any such claims.  Tenant’s
activities shall not cause or contribute to Landlord being in non-compliance
with any applicable Legal Requirements.

Section 14.04 Landlord’s Inspection Rights.  Upon not less than two (2) business
days’ written notice to Tenant (except in the event of an emergency which is not
being attended to by Tenant) , Tenant shall permit Landlord and its
representatives access to the Leased Premises (accompanied by a representative
of Tenant but only to the extent such Tenant’s representative is made reasonably
available and without cost to Landlord) from time to time, to conduct any
environmental assessment, investigation or sampling: (i) required by any
mortgagee of Landlord or prospective purchaser of an interest in the Leased
Premises; (ii) required pursuant to Environmental Laws; or (iii) requested by
the Landlord prior to the expiration or sooner termination of this Lease, all at
Landlord’s sole cost and expense, except to the extent that such environmental
assessment, investigation  or sampling identifies contamination caused or
resulting from the use or occupancy of the Leased Premises by any Tenant Party.
 In connection with such access, the Landlord shall not unreasonably interfere
with the Tenant’s use and occupancy of the Leased Premises.

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Section 14.05 Hazardous Materials Notices.  Tenant, at its sole cost and
expense, shall be solely responsible for providing any notice of the use,
placement, generation, release, storage, disposal or transportation of any
Hazardous Materials to persons occupying or entering the Leased Premises and
other neighboring properties that is required under applicable Legal
Requirements.  If Tenant knows or has reasonable cause to believe that any
Hazardous Material has come to be located in, on, under or about the Leased
Premises, other than in compliance with Section 14.02 , then Tenant shall
immediately provide written notice thereof to Landlord, which shall include a
complete copy of any report, notice, claim or other documentation in Tenant’s
possession concerning the presence of such Hazardous Material.  Tenant shall
also notify Landlord in writing, within ten (10) business days of becoming aware
of any notice of violation, investigation, order or enforcement proceeding
relating to the Project or the Leased Premises and shall include with such
written notice a complete copy of any order, complaint, agreement or other
document in Tenant’s possession which has been issued, executed or proposed,
whether in draft or final form.  Tenant shall not enter into any settlement
agreement, consent decree or other agreement with respect to any complaint or
claim relating to any Hazardous Materials in any way connected with the Leased
Premises without first notifying Landlord of Tenant’s intention to do so and
affording Landlord with ample opportunity to appear, intervene or otherwise
appropriately assert and protect Landlord’s interest in the contemplated action.

Section 14.06 Hazardous Materials Remediation.  Tenant shall, at Tenant’s sole
cost and expense, after obtaining Landlord’s prior written approval, promptly
take all investigatory and/or remedial action reasonably advisable or
recommended, whether or not formally ordered or required, for the clean-up of
any contamination and maintenance, security and/or monitoring of (i) the Leased
Premises, except to the extent such contamination was caused by Landlord or any
Landlord Party during the Term and except to the extent Hazardous Materials are
present in, on, under or about the Leased Premises prior to the Possession Date,
and (ii) any other neighboring properties, to the extent that a Tenant Party
caused or contributed to such Hazardous Materials contamination.  

Section 14.07 Landlord’s Obligations.  If, subsequent to Possession Date, it is
determined that there are Hazardous Materials in the Leased Premises which were
present in, on, under or about the Leased Premises prior to the Possession Date,
and such Hazardous Materials are required by Environmental Law or other
applicable law to be removed, encapsulated or otherwise treated (“Remediated”),
Landlord, at Landlord’s expense, shall as soon as practicable after notice
thereof from Tenant, remediate said Hazardous Materials in accordance with
Environmental Law.

Section 14.08 Hazardous Materials Obligations at End of Lease.  Upon the
expiration or earlier termination of this Lease, Tenant shall, at its sole cost
and expense, upon Landlord’s request and in compliance with all applicable Legal
Requirements, except to the extent caused by a Landlord Party during the Term
and except to the extent Hazardous Materials are present in, on, under or about
the Leased Premises prior to the Possession Date:  (i) remove, remediate, abate
and dispose of any Hazardous Materials located in, on or under the Leased
Premises introduced or otherwise brought onto the

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Leased Premises by a Tenant Party from and after the Possession Date; (ii)
remove, remediate, abate, compact, dispose of and/or replace any contaminated
soil to the extent caused by or arising out of the use and occupancy of the
Leased Premises by a Tenant Party; and (iii) remediate, remove, abate and/or
dispose of any contamination of the surface water or ground water to the extent
caused by or arising out of the use and occupancy of the Leased Premises by a
Tenant Party, such that the Project and the Leased Premises are free of
Hazardous Materials to the same extent as they were when originally delivered by
Landlord to Tenant.

Tenant’s obligations under this Section 14 shall survive the expiration or
earlier termination of this Lease.

DAMAGE AND DESTRUCTION

Section 15.01 Notification.  Tenant shall give prompt written notice to Landlord
of (a) any occurrence in or about the Leased Premises for which Landlord might
be liable, and (b) any fire or other casualty upon the Leased Premises.
 Landlord shall give to Tenant an estimate of the time it will take to repair
the Leased Premises within thirty (30) days following such damage or
destruction.

Section 15.02 Damage and Destruction. If the Leased Premises shall be destroyed
by fire or other casualty or shall be so damaged by fire or other casualty that
(in the opinion of a reputable contractor or architect designated by Landlord)
the ethanol production facility located on the Leased Premises is rendered
inoperable and cannot be repaired within one hundred eighty (180) days, or the
repair or restoration of the Leased Premises would require the expenditure of
more than fifty percent (50%) of the full insurable value of the Leased Premises
immediately prior to the casualty, Landlord, in its sole and absolute
discretion, shall have the option to terminate this Lease by providing written
notice to Tenant within one hundred twenty (120) days from the date of the
casualty.  In such event, Landlord shall provide Tenant with a termination
notice and the termination shall be effective on the date of Landlord’s notice.
 In connection with such termination, Tenant shall turn over or assign to
Landlord all of Tenant’s right, title and interest in any insurance proceeds in
connection therewith other than proceeds from business interruption insurance or
any similar insurance policy to the extent provided for in Section 12.01(d).

Section 15.03 Repair Provisions.  To the extent consistent with Landlord’s
obligations to its mortgagees, if the Leased Premises are damaged or destroyed
by fire or other casualty by any cause other than the fault of Tenant and
Landlord does not, or is not permitted to, terminate this Lease, then Landlord,
at Landlord’s expense shall repair such damage after Landlord has collected the
insurance proceeds attributable to such damage for purposes of such repairs and
any rent due for the time Tenant is out of possession of the Leased Premises
shall be abated.  Notwithstanding the foregoing, Landlord shall have no
obligation whatsoever to repair any material damage to the Leased Premises that
occurs prior to the Lease Commencement Date or during the last twelve (12)
months of the Term of this Lease.

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Section 15.04 Insufficiency of Insurance Proceeds.  Notwithstanding anything
herein contained to the contrary, if the net proceeds of Landlord’s insurance
recovered or recoverable as a result of the damage (free of all claims by
Landlord's mortgagees and others and all costs of collection or otherwise) shall
be insufficient to pay fully for the cost of replacement of the Leased Premises
and/or the building in which they are located and the balance of the building,
or the Leased Premises or the building shall be damaged as a result of a risk
which is not covered by Landlord’s insurance, or Landlord is unable to rebuild
any portion of the Leased Premises due to any inability to obtain any required
governmental approval in connection therewith, Landlord shall have the right, to
be exercised in writing delivered to Tenant within one hundred twenty (120) days
after said occurrence, to elect to cancel and terminate this Lease.  Upon the
giving of such notice to Tenant, the term of this Lease shall expire on the
thirtieth (30th) day after such notice is given, and Tenant shall vacate the
Leased Premises and surrender the same to Landlord.

EMINENT DOMAIN

Section 16.01 Total Condemnation. Either party shall give prompt notice to the
other upon learning of a threatened condemnation.  If all of the Leased Premises
is condemned by eminent domain, inversely condemned, or sold in lieu of
condemnation for any public or quasi-public use or purpose, this Lease will
terminate as of the date of title vesting in that proceeding and the Rent will
be abated from the date of termination.  In such event, Tenant shall turn over
or assign all of its right, title and interest in and to such award or proceeds
to Landlord.

Section 16.02 Partial Condemnation.

(a) If any portion of the Leased Premises is condemned by eminent domain,
inversely condemned, or sold in lieu of condemnation for any public or
quasi-public use or purpose such that, in Landlord’s reasonable opinion, the
ethanol production facility located thereon cannot be operated for Tenant’s
business, Tenant shall have the option to terminate this Lease, by providing
written notice thereof to Landlord, as of the date of vesting of title on such
taking and this Lease will terminate as of the date of title vesting or order of
immediate possession in that proceeding and the Rent will be abated to the date
of termination.

(b) If, in Landlord’s reasonable opinion, the partial condemnation does not
render the Leased Premises unusable for the business of Tenant, then this Lease,
only as to the portion or portions so taken, shall terminate as of the date
possession thereof shall be delivered to the condemnor but otherwise this Lease
shall remain in full force and effect.  Tenant and Landlord shall agree on an
abatement in rent in an amount equal to the reduction in leasehold value
resulting from such partial condemnation.  In the event Tenant and Landlord
cannot agree on such a reasonable value, then the parties shall submit such
dispute to the American Arbitration Association, the decision of which shall be
binding on the parties.

Section 16.03 Award. If the Leased Premises are wholly or partially condemned,
Landlord will be entitled to the entire award paid for the condemnation, and
Tenant

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waives any claim to any part of the award from Landlord or the condemning
authority. However, Tenant will have the right to recover from the condemning
authority any compensation that may be separately awarded to Tenant in
connection with any award allowable to Tenant by law, including but not limited
to lost profits, destruction of the improvements, relocation, loss in value of
leasehold interests, costs in removing Tenant’s improvements, merchandise,
furniture, fixtures, Leasehold improvements, and equipment to a new location,
but only to the extent that such award does not decrease the amount awarded to
Landlord.

DEFAULT

Section 17.01  Events of Default. The occurrence of any of the following events
will, at Landlord’s option, constitute an event of default (“Event of Default”):

(a) in the event Rent is late as defined hereunder, failure to pay Rent within
fifteen (15) days following written demand to pay such delinquent Rent by
Landlord;

(b) the vacating of or abandonment of the Leased Premises for a period of thirty
(30) consecutive days;

(c) failure to perform Tenant’s or Parent’s covenants under this Lease (except
default in the payment of Rent which is addressed by paragraph (a) above);
provided that if this default is susceptible of cure and Tenant or Parent has
promptly commenced the cure of this default and is diligently prosecuting the
cure to completion, then the default must remain uncured for thirty (30) days
after written notice from Landlord;

(d) the making of a general assignment by Tenant or Parent for the benefit of
creditors, the filing of a voluntary petition by Tenant or Parent, or the filing
of an involuntary petition by any of Tenant or Parent’s creditors seeking the
rehabilitation, liquidation, or reorganization of Tenant or Parent under any law
relating to bankruptcy, insolvency, or other relief of debtors and, in the case
of an involuntary action, the failure to remove or discharge the petition within
sixty (60) days of the filing;

(e) any representation or warranty made by Tenant or Parent in this Lease or in
the Project Agreement shall prove to have been false or incorrect in any respect
when such representation or warranty was made or given, and remains a
misrepresentation or breach of warranty which is materially adverse to Landlord
at the time discovered;

(f) Tenant shall have failed to maintain any insurance as and when required to
be provided under this Lease;

(g) Tenant shall have caused or permitted any use of the Leased Premises that
constitutes waste or public or private nuisance; or

(h) there occurs an event of default, beyond all applicable notice and cure
periods, on the part of Tenant or Parent under the Project Agreement, or the
Project Agreement is otherwise terminated for any reason whatsoever.

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Section 17.02  Remedies. Upon the occurrence and during the continuance of an
Event of Default, Landlord shall have the following remedies in addition to all
rights and remedies provided by law or equity or provided elsewhere in this
Lease:

(a) Termination. In the event of the occurrence of any uncured Event of Default,
Landlord will have the right to give a written termination notice to Tenant and,
on the date specified in that notice, unless on or before that date all arrears
of Rent and all other sums payable by Tenant under this Lease and all costs and
expenses incurred by or on behalf of Landlord have been fully and
unconditionally paid by Tenant and all other Events of Default at the time
existing have been fully and unconditionally cured to the sole satisfaction of
Landlord.  On the date specified in Landlord’s termination notice, this Lease
will terminate and Tenant shall immediately surrender the Leased Premises to
Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any
other remedy which it may have for possession or arrearages in rent, resort to
legal process and take possession of the Leased Premises and expel or remove
Tenant and any other person who may be occupying the Leased Premises or any part
thereof, without being liable for prosecution or any claim or damages therefor.
 In addition, Landlord may terminate this Agreement immediately by providing
written notice to Tenant at any time in the event that (i) the Lease
Commencement Date does not occur on or prior to July 31, 2010; or (ii) the
Project Agreement is terminated prior to the Lease Commencement Date.

(b) Repossession. Following termination, without prejudice to other remedies
Landlord may have, Landlord may (A) peaceably re-enter the Leased Premises on
voluntary surrender by Tenant; (B) remove Tenant and any other persons occupying
the Leased Premises, using any legal proceedings that may be available; (C)
repossess the Leased Premises or relet the Leased Premises or any part of them
for any term (which may be for a term extending beyond the Term), at any rental
and on any other terms and conditions that Landlord in Landlord’s sole
discretion may determine, with the right to make reasonable alterations and
repairs to the Leased Premises; and (D) remove all personal property.

(c) Unpaid Rent. Landlord will have all the rights and remedies of a landlord
provided by applicable law, including the right to recover from Tenant (i) the
worth, at the time of award of the unpaid Rent that had been earned at the time
of termination; plus (ii) the worth, at the time of award, of the amount by
which the unpaid Rent that would have been earned after the date of termination
until the time of award exceeds the amount of loss of rent that Tenant proves
could have been reasonably avoided; plus (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 the loss of rent that Tenant proves could
have been reasonably avoided; plus (iv) any other amount, and court costs,
necessary to compensate Landlord for all detriment proximately caused by
Tenant’s default or which in the ordinary course of things would be likely to
result therefrom, specifically including but not limited to, brokerage
commissions and advertising expenses incurred, expenses of remodeling the Leased
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; and (v)
at Landlord’s election, such other amounts in

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addition to or in lieu of the foregoing as may be permitted from time to time by
applicable law.

The term “rent” as used in this Section 17 shall be deemed to be and to mean all
sums of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others.  As used in Sections 17.02(c)(i) and
(ii) above, the “worth at the time of award” shall be computed by allowing
interest at ten percent (10%) per annum.  As used in Section 17.02(c)(iii)
above, the “worth at the time of award” shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).

(d) Right to Cure.  If Tenant fails to perform any affirmative duty or
obligation of Tenant under this Lease, Landlord may elect, in its sole and
absolute discretion, after written notice to Tenant (or in case of an emergency,
without notice), to perform such duty or obligation on Tenant’s behalf,
including, but not limited to, obtaining reasonably required surety bonds,
insurance policies or Permits.  Tenant shall pay to Landlord the costs and
expenses of any such performance by Landlord within thirty (30) days after
delivery to Tenant of an invoice therefor.  Notwithstanding anything to the
contrary contained in this Lease, Landlord shall have no duty or obligation
whatsoever to mitigate damages upon the occurrence of an Event of Default.

Section 17.03 Continuation. Upon the occurrence of an Event of Default, Landlord
shall have the remedy described in California Civil Code Section 1951.4 (lessor
may continue lease in effect after lessee’s breach and abandonment and recover
rent as it becomes due, if lessee has the right to sublet or assign, subject
only to reasonable limitations), in which event this Lease will continue in
effect for so long as Landlord does not terminate Tenant’s right to possession.
Also, Landlord may enforce all of Landlord’s rights and remedies under this
Lease, including the right to recover Rent as it becomes due. No act by Landlord
under this Lease, including acts of maintenance, preservation, or efforts to
Lease the Leased Premises or the appointment of a receiver on application of
Landlord to protect Landlord’s interest under this Lease, will terminate this
Lease unless Landlord notifies Tenant that Landlord elects to terminate this
Lease. In the event that Landlord elects to relet the Leased Premises, the rent
that Landlord receives from reletting will be applied to pay the following in
the order listed:

(a) any indebtedness from Tenant to Landlord other than Base Rent and other
amounts owing to Landlord under this Lease;

(b) all costs, including maintenance, incurred by Landlord in reletting; and

(c) Base Rent and other amounts owing to Landlord under this Lease. After
deducting the payments referred to above, any sum remaining from the rental
Landlord receives from reletting will be held by Landlord and applied in payment
of future Rent as Rent becomes due under this Lease. In no event will Tenant be
entitled to any excess rent received by Landlord. So long as this Lease is not
terminated, Landlord will have the right to remedy any default of Tenant, to
maintain or improve the Leased Premises, to cause a receiver to be appointed to
administer the Leased Premises and new or existing

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subleases, and to add to the Rent all of Landlord’s reasonable costs in so
doing, with interest at the Applicable Interest Rate from the date of the
expenditure.

Section 17.04 Cumulative. Each right and remedy of Landlord provided for in this
Lease or now or later existing at law, in equity, by statute, or otherwise, will
be cumulative and will not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or later existing at law or in
equity, by statute, or otherwise. No payment by Tenant of a lesser amount than
the Rent, or any endorsement on any check or letter accompanying any check or
payment as Rent, will be deemed an accord and satisfaction of full payment of
Rent. However, Landlord may accept this payment without prejudice to Landlord’s
right to recover the balance of Rent or to pursue other remedies.

Section 17.05 No Relief from Indemnity Obligations.  Tenant shall not be
relieved from liability, and its obligations to indemnify shall continue, with
respect to matters occurring or accruing from and after the Possession Date or
by reason of Tenant’s occupancy of the Leased Premises regardless of the
expiration or termination of this Lease and/or the termination of Tenant’s right
to possession of the Leased Premises.

Section 17.06 Statutory Notices of Tenant Default.  Any notice of any Event of
Default under this Section 17 shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 et seq.

ASSIGNMENT AND SUBLETTING

Section 18.01 Prohibition.  This Lease is personal to the named Tenant herein.
 Tenant may not directly or indirectly (in one or more transactions) assign,
mortgage, pledge or encumber this Lease or sublet, whether voluntarily or
involuntarily or by operation of law, the Leased Premises or any part of the
Leased Premises (all of the foregoing are hereinafter sometimes referred to
collectively as “Transfers”), without on each occasion first obtaining the prior
written consent of Landlord, which consent shall not, except as otherwise
expressly set forth herein, be unreasonably withheld.  This prohibition against
Transfers shall be construed to include a prohibition against any assignment or
subletting by operation of law.  For purposes of this Section 18, a Change in
Control (as defined below) of Tenant or a merger, consolidation or
reorganization of Tenant shall also constitute an assignment of this Lease
requiring Landlord’s prior written consent.  Except as set forth herein,
violation of this Section 18 by Tenant shall be an Event of Default without
notice or opportunity to cure and shall be voidable by Landlord (as elected in
Landlord’s sole, absolute and subjective discretion).  As used herein, the term
“Change in Control” shall mean any change in ownership of Tenant, whether in a
single transaction or a series of transactions, the result of which is that
Parent holds less than fifty-one percent (51%) of the voting control in Tenant
or ceases to have effective direct or indirect managerial control of Tenant (or
any such other entity).

Section 18.02 Tenant to Remain Liable.  Regardless of any consent of Landlord to
any assignment of Tenant’s interest in this Lease or sublease of the Leased
Premises, such assignment or sublease shall not: (i) be effective without the
express written assumption by such assignee or sublessee (each, a “Transferee”)
of the obligations of Tenant under

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this Lease, (ii) release Tenant of any direct and primary obligations to
Landlord under this Lease, or (iii) alter the primary liability of Tenant for
the payment of Rent or the performance of any other obligations to be performed
by Tenant under this Lease.  Landlord may accept any Rent or performance of
Tenant’s obligations from any person other than Tenant pending approval or
disapproval of a request for Landlord’s consent to an assignment or sublease.
 Any delay in the approval or disapproval of such assignment or sublease or
acceptance of any Rent or performance shall not constitute a waiver or estoppel
of Landlord’s right to exercise its remedies for any Event of Default.

Section 18.03 Subsequent Transfers.  The consent of Landlord to any assignment
of Tenant’s interest in this Lease or sublease of the Leased Premises shall not
constitute consent of Landlord to any subsequent assignment or subletting by
Tenant or to any subsequent or successive assignment or subletting.  Landlord
may consent to subsequent assignments or subleases without notifying Tenant or
anyone else liable under this Lease or obtaining their consent, and such action
shall not relieve such persons from any liability under this Lease.  

Section 18.04 Requests for Consent to Transfer.  Each request for consent to a
Transfer shall be in writing, accompanied by information relevant to Landlord’s
determination as to the financial and operational responsibility and
appropriateness of the proposed Transferee, including but not limited to the
intended use and/or required modification of the Leased Premises, if any,
together with a non refundable deposit of $1,000, as reasonable consideration
for Landlord’s consideration and processing of the request for consent.  Tenant
agrees to provide Landlord with such other or additional information and/or
documentation as may be reasonably requested by Landlord.  The proposed Transfer
shall be subject to the prior written consent of Landlord, which consent will
not be unreasonably withheld but, without limiting the generality of the
foregoing, it shall be reasonable for Landlord to deny such consent if: (i) the
use to be made of the Leased Premises by the proposed Transferee is (a) not
generally consistent with the character and nature of the Leased Premises, or
(b) a use which would be prohibited by any other portion of this Lease or is
otherwise unlawful, illegal or a nuisance; (ii) the creditworthiness and
operating experience of the proposed Transferee and its parent entity is not
reasonably satisfactory to Landlord; or (iii) the proposed Transferee is either
a governmental agency or instrumentality thereof.

Section 18.05 Restrictions Reasonable.  Landlord and Tenant hereby agree that
the restrictions on assignment and subletting contained in this Lease are
reasonable, pursuant to California Civil Code Section 1995.250

ESTOPPEL CERTIFICATES

Section 19.01 Estoppel Certificates. Within ten (10) business days after request
by Landlord or Tenant, Landlord or Tenant, as the case will be, will deliver an
estoppel certificate duly executed (and acknowledged, if required by any
mortgagee), to any proposed mortgagee, or purchaser, (a) certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications, that it is in full force and effect as modified and stating the
modifications), (b) certifying the dates to which Base Rent,

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additional rent and other charges have been paid in advance, if any,
(c) confirming the Possession Date, the Lease Commencement Date and the
expiration date of this Lease, (d) certifying that Tenant is in occupancy of the
Leased Premises, (e)  stating whether or not, to the best knowledge of the
respective party, none of Landlord, Parent or Tenant is in default in the
performance of any covenant, agreement or condition contained in this Lease and,
if so, specifying each such default of which Landlord, Parent or Tenant, as
applicable, may have knowledge, and (f) such other matters as the requesting
party may reasonably request. Tenant’s failure to deliver this statement in that
time period will be an Event of Default under this Lease and it will be
conclusive on Landlord or Tenant that

(a) this Lease is in full force and effect, without modification except as may
be represented by Landlord or Tenant;

(b) except for the failure to provide an estoppel certificate, there are no
uncured defaults in Landlord’s or Tenant’s performance; and

(c) no Rent payments are in arrears.

ATTORNMENT

Section 20.01 Attornment. In the event of a foreclosure proceeding, the exercise
of the power of sale under any mortgage or deed of trust or the termination of a
ground Lease, (i) no person which, as a result of any of the foregoing, has
succeeded to the interest of Landlord in this Lease and none of the successors
or assigns of such person (any such person, and his or its successors and
assigns, being hereinafter called a “Successor”) shall be liable for any default
by Landlord or any other matter which occurred prior to the date such Successor
succeeded to Landlord’s interest in this Lease nor shall such Successor be bound
by or subject to any offsets or defenses which Tenant may have against any
predecessor in interest of such Successor; (ii) Tenant will, if requested,
attorn to the Successor and recognize that Successor as “Landlord” under this
Lease (provided that such Successor shall agree not to disturb Tenant’s
occupancy so long as there in no uncured Event of Default hereunder, on a form
customarily used by, or otherwise reasonably acceptable to, such Successor) and
Tenant shall execute and deliver such instruments as may be necessary or
appropriate to evidence such attornment within fifteen (15) days after receipt
of a written request to do so; and (iii) no Successor shall be bound to
recognize any prepayment by more than thirty (30) days of any Rent or other sum
payable hereunder or any amendment or modification of this Lease made without
the consent of the then current Successor if required under the mortgage held by
such Successor.  

SUBORDINATION

Section 21.01 Subordination to Liens. This Lease is subject and subordinate to
the lien of all mortgages and deeds of trust currently now or hereafter
affecting the Leased Premises or Landlord’s interest and to renewals,
modifications, refinancings and extensions thereof, without the necessity of
Tenant’s executing further instruments to effect the subordination.  This clause
shall be self-operative and upon written request from

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Landlord, Tenant shall execute a subordination agreement acceptable to Landlord
in favor of Landlord’s mortgagee.  In lieu of having a mortgage be superior to
this Lease, Landlord’s mortgagee shall have the right at any time to subordinate
its mortgage to this Lease.

ENTRY

Section 22.01 Entry. Landlord reserves the right for itself and its duly
authorized representatives to enter the Leased Premises upon reasonable notice
to Tenant (except in case of an emergency, in which case no notice would be
required) to inspect the Leased Premises or the performance by Tenant of the
terms and conditions of this Lease and to show them to prospective purchasers or
mortgagees of the Premises, and, during the last nine (9) months of the Term,
show the Leased Premises to prospective tenants.

SIGNS

Section 23.01 Signage. Tenant may erect or cause to be erected any signs
relating to the Tenant’s business on the Leased Premises, provided the signage:

(a) conforms to all applicable zoning or other municipal requirements; and

(b) is in conformance to the rules and regulations of the Landlord, as from time
published by Landlord.

Any signage installed by Tenant shall be removed at Tenant’s sole cost and
expense within ten (10) days of the expiration or earlier termination of this
Lease or Tenant’s right to possession of the Premises and Tenant, at its sole
cost and expense, shall restore the area in which the signage was installed to
the condition it was in prior to installation, ordinary wear and tear excepted.
 Such signage shall be subject to Landlord’s approval and shall be installed at
Tenant’s sole cost and expense and shall be maintained at Tenant’s sole cost and
expense.

LATE CHARGES AND INTEREST

Section 24.01 Late Charges. The late payment of any Rent or any other sums due
and payable hereunder will cause Landlord to incur additional costs, including
administration and collection costs, processing and accounting expenses, and
increased debt service.  If Landlord has not received any installment of Rent or
any other sums due and payable hereunder within fifteen (15) days after that
amount is due, Tenant must pay three percent (3%) of the delinquent amount,
which is agreed to represent a reasonable estimate of the cost incurred by
Landlord. In addition, all delinquent amounts will bear interest from the date
the amount was due until paid in full at the rate of eight percent (8%) per
year.

ENTIRE AGREEMENT

Section 25.01 Entire Agreement. This Lease and the Project Agreement set forth
all the agreements between Landlord and Tenant concerning the Leased Premises,
and there are no other agreements, either oral or written, other than as set
forth in this Lease and the

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Project Agreement.  This Lease may not be modified or amended except pursuant to
an instrument in writing signed by the parties hereto.

AS-IS NATURE OF LEASED PREMISES

Section 26.01 No Representations or Warranties.  Tenant hereby acknowledges
that, except as otherwise expressly set forth in this Lease or the Project
Agreement, Landlord has made and makes no representations or warranties of any
kind or nature, express or implied, with respect to the Leased Premises,
including, but not limited to, any representations or warranties concerning (i)
the development or investment potential of the Leased Premises, (ii) the
habitability or merchantability of the Leased Premises or the suitability of the
Leased Premises for any particular purpose, (iii) the zoning of the Leased
Premises or any other restriction on use of the Leased Premises, (iv) the
compliance of the Leased Premises with any applicable Legal Requirements, (v)
the physical condition of the Leased Premises, including but not limited to
soils, subsoils and groundwater, (vi) the presence, storage, release, disposal,
migration, transportation, mitigation, remediation, investigation, testing
and/or removal of Hazardous Materials in, on, under, to or from the Leased
Premises, or (vii) the accuracy or completeness of third-party documents,
reports, analysis, studies or materials commissioned or obtained by Landlord or
Tenant with respect to the Leased Premises.

Section 26.02 Disclaimer of Warranties.  Except for the representations,
warranties, covenants and agreements of Landlord set forth in this Lease and the
Project Agreement, Landlord hereby expressly disclaims (i) all warranties of
habitability, merchantability and suitability for a particular purpose, (ii) any
warranties implied or arising from a course of dealing or usage of trade, and
(iii) any warranties that the Leased Premises now or in the future will comply
with any applicable Legal Requirements.

Section 26.02 “As-Is” Clause.  The transaction contemplated by this Lease has
been negotiated between Tenant and Landlord, and this Lease reflects the mutual
agreement of Tenant and Landlord.  Tenant has had an opportunity to conduct all
review, inquiries, analyses, audits, tests, studies, analyses, investigations
and inspections with respect to the Leased Premises that Tenant deemed necessary
or desirable (collectively, “Inspections”), including but not limited to
Inspections with respect to the physical condition of the Leased Premises, the
existing entitlements for the Leased Premises, the presence of Hazardous
Materials in, on, under or around the Leased Premises and all other matters
related to the Leased Premises (collectively, the “Feasibility Review”), or
Tenant elected at its own risk not to conduct such Feasibility Review of the
Leased Premises, and, except for the representations, warranties, covenants and
agreements of Landlord set forth in this Lease or the Project Agreement, Tenant
shall rely solely on Tenant’s own judgment, knowledge and expertise in
determining whether to enter into this Lease or lease the Leased Premises.
 Subject to the representations, warranties, covenants and agreements of
Landlord set forth in this Lease and the Project Agreement, Tenant shall enter
into this Lease and lease the Leased Premises, “as-is” with all faults and
conditions, including but not limited to any patent or latent defects or
conditions existing with respect to the Leased Premises and any Hazardous
Materials that may be located in, on, under or around the Leased Premises.
 Except for the representations, warranties, covenants and

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agreements of Landlord expressly set forth in this Lease and the Project
Agreement, Tenant hereby assumes all risk and liability resulting or arising
from or relating to the entry into, use, operation, occupancy, possession,
maintenance and development of the Leased Premises, including but not limited to
all risk and liability resulting or arising from or relating to any Hazardous
Materials that may be located in, on, under or around the Leased Premises.

TIME OF ESSENCE

Section 27.01 Time. Time is of the essence in this Lease.

ATTORNEY FEES

Section 28.01 Attorney’s Fees. In any action that either party brings to enforce
its rights under this Lease, the prevailing party shall be entitled to all of
its costs plus reasonable attorney fees to be fixed by the court. Those costs
and attorney fees will be considered a part of the judgment in that action.

SEVERABLE

Section 29.01 Severable. Any term or provision of this Lease that is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.  If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or phrases, or
to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.

GOVERNING LAW

Section 30.01 Governing Law. This Lease will be construed and enforced in
accordance with the laws of the State of California, County of Stanislaus.

SUCCESSORS AND ASSIGNS

Section 31.01 Successors. This Lease will be binding on and inure to the benefit
of the successors and assigns of Landlord and Tenant, their heirs and court
appointed representative.

ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES

Section 32.01 Entire Agreement; No Third Party Beneficiaries. This Lease
(including the documents and the instruments referred to herein) and the Project
Agreement:  (a)

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constitute the entire agreement between the parties and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) are not intended to confer upon
any Person other than the parties hereto and thereto any rights or remedies
hereunder.

RECORDATION

Section 33.01 Memorandum of Lease. Tenant shall not record this Lease, any
memorandum of this Lease, nor any other document which will or may create a
cloud on title to any portion of the property of which the Leased Premises are a
part, and any attempt to record or file same by Tenant shall be deemed a default
by it hereunder.

NO AGENCY, PARTNERSHIP, OR JOINT VENTURE

Section 34.01 No Agency, Etc. Nothing contained in this Lease will be deemed or
construed by the parties, or by any third party, as creating the relationship of
principal and agent, partnership, or joint venture by the parties. It is
understood and agreed that no provision contained in this Lease or any acts of
the parties will be deemed to create any relationship other than the
relationship of landlord and tenant.

NO MERGER

Section 35.01 No Merger. The voluntary or other surrender of this Lease by
Tenant or a mutual cancellation of this Lease or a termination by Landlord will
not work a merger and will, at the option of Landlord, terminate all of any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any subtenancies.

NO WAIVER

Section 36.01 No Waiver. No waiver of any default or breach under this Lease
will be implied from any omission to take action on account of this Lease,
regardless of any custom and practice or course of dealing. No waiver will
affect any default other than the default specified in the waiver, and then the
waiver will be operative only for the time and to the extent stated in this
Lease. Waivers of any covenant will not be construed as a waiver of any
subsequent breach of the same covenant. No waiver by either party of any
provision under this Lease will be effective unless in writing and signed by
that party.

NOTICES

Section 37.01 Notices. All notices to be given under this Lease will be in
writing and mailed, postage prepaid, by certified or registered mail, return
receipt requested, or delivered by personal or courier delivery, or sent by
telecopy (immediately followed by one of the preceding methods), to Landlord’s
Address and Tenant’s Address, or to any other place that Landlord or Tenant may
designate in a written notice given to the other party. Notices will be deemed
served on the earlier of receipt or three (3) days after the date of mailing.
Notices to Landlord shall be sent to 31120 West Street, P.O. Box 1029, Goshen,
CA 93227 (“Landlord’s Address”).  Notices to Tenant shall be sent to 20400
Stevens Creek Blvd., Suite 700, Cupertino, CA 95014 (“Tenant’s Address”).  When
this

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Lease requires service of a notice, that notice shall replace rather than
supplement any equivalent or similar statutory notice, including any notices
required by California Code of Civil Procedure Section 1161 or any similar or
successor statute.  When a statute requires service of a notice in a particular
manner, service of that notice (or a similar notice required by this Lease) in
the manner required by this paragraph shall replace and satisfy the statutory
service-of-notice procedures, including those required by California Code of
Civil Procedure Section 1162 or any similar or successor statute.

REPRESENTATIONS AND WARRANTIES

Section 38.01 Authority.  Each party warrants that it has full power, authority
and legal right to execute and deliver this Lease, and to keep and observe all
of the terms and provisions of this Lease on such party’s part to be observed
and performed.  Each individual executing this Lease on behalf of Landlord and
Tenant represents and warrants that she or he is duly authorized to execute and
deliver this Lease on behalf of Landlord and Tenant and that the execution is
binding upon Landlord and Tenant.  Each party hereby represents and warrants to
the other party that it is a corporation, duly organized and existing in the
State of Delaware.  The performance by each party of their obligations and
responsibilities under this Lease will not violate or constitute a default under
the terms and provisions of such party’s bylaws or any material agreement,
document or instrument to which such party is a party or by which such party is
bound or affected.  All proceedings required to be taken by or on behalf of each
party to authorize such party to execute, deliver and perform the terms and
conditions of this Lease have been duly and properly taken.  No further consent
of any person or entity is required in connection with the execution and
delivery of, or performance by each party of its obligations under this Lease.

Section 38.02 Enforceability.  This Lease constitutes or shall constitute the
valid and binding obligation of each party, enforceable against it in accordance
with its terms, except as such enforcement may be limited by (a) the effect of
bankruptcy, insolvency, reorganization, receivership, conservatorship,
arrangement, moratorium or other applicable Legal Requirements affecting or
relating to the rights of creditors generally, or (b) the rules governing the
availability of specific performance, injunctive relief or other equitable
remedies and general principles of equity, regardless of whether considered in a
proceeding in equity or at law.

Section 38.03 Litigation.  There are no judgments, orders, suits, actions,
garnishments, attachments or proceedings of any nature by or before any court,
commission, board or other governmental body pending, or, to the knowledge of
the parties, threatened, which involve or affect, or will involve or affect the
validity or enforceability of this Lease or involve any risk of any judgment or
liability being imposed upon such party that could materially adversely affect
such party’s ability to observe or perform fully its agreements and obligations
hereunder.

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HOLDING OVER

Section 39.01 Holding Over.  If Tenant fails to surrender possession of the
Leased Premises or any part of the Leased Premises after the expiration or
earlier termination of this Lease, the holding over will constitute a
month-to-month tenancy, at a rent equal to the Base Rent in effect immediately
prior to the holding over plus twenty-five percent (25%) and Tenant shall be
subject to and shall perform all its agreements and obligations under this
Lease.  This paragraph will not be construed as Landlord’s permission for Tenant
to hold over. Acceptance of Rent by Landlord following expiration or termination
shall not constitute a renewal of this Lease.  In addition to the payment of the
amounts provided above, if Landlord is unable to deliver possession of the
Leased Premises to a new tenant, or to perform improvements for a new tenant, as
a result of Tenant’s hold-over, Tenant shall be liable to Landlord for all
damages that Landlord suffers from the hold-over.  In addition, Tenant shall
save Landlord, its agents and employees, harmless and will exonerate, defend and
indemnify Landlord, its agents and employees, from and against any and all
damages which Landlord may suffer on account of Tenant’s hold-over in the Leased
Premises after the expiration or earlier termination of this Lease.

TITLE TO LEASED PROPERTY

Section 40.01 No Acquired Rights. Tenant’s use and occupancy of the Leased
Premises shall not convey to Tenant any title or right in the fee interest in
the Leased Premises, and Tenant agrees not to make any claim of right or title
to or assail Landlord’s fee title to the Leased Premises.  

Section 41.02 No Subordination of Fee Interest.  Landlord’s fee interest in the
Leased Premises shall at all times be senior and prior to the interests of
Tenant and any other third party now or hereinafter obtaining a security
interest in Tenant’s leasehold interest.  Under no circumstances shall Landlord
have any obligation to subordinate its fee interest to the interests or
reversionary rights in whole or in part of any third party.

LIMITATION OF LANDLORD’S LIABILITY

Section 42.01 Limitation of Landlord’s Liability. The obligations of Landlord
under this Lease do not constitute personal obligations of the individual
partners, directors, officers, or shareholders of Landlord, and Tenant shall
look solely to the real estate that is the subject of this Lease and to no other
assets or property of the Landlord for satisfaction of any liability in respect
of this Lease and shall not seek recourse against any other property of
Landlord, or against the individual partners, directors, officers or
shareholders of Landlord or any of their personal assets for such satisfaction.
 In no event shall any Landlord Party be liable to Tenant for any special,
punitive, incidental, indirect or consequential damages arising out of or in
connection with this Lease, however caused, whether arising in contract, tort
(including negligence), strict liability, or otherwise.

SURRENDER

Section 43.01 Surrender. Upon the expiration or earlier termination of this
Lease or Tenant’s right to possession of the Leased Premises, Tenant will
surrender the Leased

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Premises to Landlord in broom clean, and in good order, condition and repair,
ordinary wear and tear excepted.  If Tenant fails to remove any of Tenant’s
property within ten (10) days after the termination of this Lease or of Tenant’s
right to possession, Landlord, at Tenant’s sole cost and expense, shall be
entitled (but not obligated) to remove and store Tenant’s property without
liability to Landlord.  Landlord shall not be responsible for the value,
preservation or safekeeping of Tenant’s property.  Tenant shall pay Landlord,
upon demand, the expenses and storage charges incurred for Tenant’s property.
 In addition, if Tenant fails to remove Tenant’s property from the Leased
Premises or storage, as the case may be, within thirty (30) days after written
notice, Landlord may deem all or any part of Tenant’s property to be abandoned,
and title to Tenant’s property shall be deemed to be immediately vested in
Landlord.  

SURVIVAL

Section 44.01 Survival. All agreements and obligations of Tenant hereunder which
require observance or performance after the expiration or termination of this
Lease, or which can not reasonably be ascertained as having been observed or
performed at the time of such expiration or termination, shall survive, and be
enforceable against Tenant following, such expiration or termination.

BROKERS

Section 45.01 Brokers. Landlord and Tenant each represent and warrant to the
other that it has had no dealings with any person, firm, broker or finder in
connection with the negotiation of this Lease or the consummation of the
transactions contemplated hereby, and that no broker or other person, firm or
entity is entitled to any commission or finder’s fee in connection with said
transactions.  Each party shall indemnify, protect, defend and hold the other
party harmless from and against any claims which may be asserted by any such
unnamed broker, finder or other similar party by reason of any dealings or
actions of the indemnifying party.  This indemnification shall survive the
expiration or earlier termination of this Lease.

FURTHER ASSURANCES

Section 46.01 Further Assurances. Landlord and Tenant shall promptly sign all
further commercially reasonable documents necessary to accomplish the intent of
this Lease.

CALIFORNIA CIVIL CODE WAIVER

Section 47.01 California Civil Code Waiver.  Tenant waives the provisions of
California Civil Code Sections 1932(2) and 1933(4) with respect to the
destruction of the Leased Premises, California Civil Code Sections 1941 and 1942
with respect to Landlord’s repair duties and Tenant’s right to repair, and
California Code of Civil Procedure Section 1265.130, allowing either party to
petition the Superior Court to terminate this Lease in the event of a partial
taking of the Leased Premises by condemnation as herein defined, and any right
of redemption or reinstatement of Tenant under any present or future case law or
statutory provision (including California Code of Civil Procedure Sections 473
and 1179 and California Civil Code Section 3275) in the event Tenant is
dispossessed

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from the Leased Premises for any reason.  This waiver applies to future statutes
enacted in addition or in substitution of the statutes specified herein.

COUNTERPARTS

Section 48.01 Counterparts. This Lease may be executed in one or more
counterparts, each of which shall be considered one and the same Lease and shall
become effective when two or more counterparts have been signed by each of the
parties and delivered to the other parties.

NO OFFER

Section 49.01 No Offer. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of the Leased Premises, an
offer, or an option for a lease, and it is not effective as a lease or otherwise
until execution by and delivery to both Landlord and Tenant.

[signatures appear on following page]

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

LANDLORD:

Cilion, Inc.,

a Delaware corporation

_______/S/ Kevin H. Kruse________

By:

Kevin H. Kruse
Title:

Chairman and Chief Executive Officer

TENANT:

AE Advanced Fuels Keyes, Inc.,

a Delaware corporation

______/S/ Eric A. McAfee_________

By:

Eric A. McAfee

Title:

Chairman and Chief Executive Officer

PARENT:

AE Biofuels, Inc.,

a Nevada corporation

__________/S/ Eric A. McAfee____

By:

Eric A. McAfee

Title:

Chairman and Chief Executive Officer

PARENT SUB:

AE Advanced Fuels, Inc.,

a Delaware corporation

__________/S/ Eric A. McAfee __

By:

Eric A. McAfee

Title:

Chairman and Chief Executive Officer