AIR
COMMERCIAL REAL ESTATE ASSOCIATION
 STANDARD
INDUSTRIAL/COMMERCIAL
 MULTI-TENANT
LEASE - GROSS




1.Basic
Provisions ("Basic Provisions").
  1.1Parties:This Lease("Lease"), dated
for reference purposes onlyJanuary
22, 2009, is made by
and between1212
Flower RealEstate, LLC, a Delaware limited liability
company ("Lessor") andPeople'sLiberation,
Inc., aCalifornia
corporation ("Lessee"), (collectively the
"Parties",
or individually a "Party").
  1.2(a)Premises:That
certain portion of the Project (as defined below), including all improvements
therein or to be provided by Lessor under the
terms of this Lease, commonly known by the street address of1226
S. Flower Street, located in
the City ofLos
Angeles, County
ofLos
Angeles, State ofCalifornia, with zip
code90015, as
outlined on ExhibitAattached hereto("Premises")and
generally described as (describe briefly the nature of the Premises):theground
floor of thewarehouse space
located at 1226 S. Flower,comprising
approximately 7,500 RSF of warehousespace. In
addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to any utility raceways of the
building containing the Premises ("Building")and
to the Common Areas (as defined in Paragraph 2.7 below), but shall not have any
rights to the roof, or exterior walls of the Building or to any other buildings
in the Project. The Premises, the Building, the Common Areas, the land upon
which they are located, along with all other buildings and improvements thereon,
are herein collectively referred to as the "Project."
(See also Paragraph 2)




1.2(b)Parking: ____________________unreserved
vehicle parking spaces . (See also
Paragraph 2.6)
  1.3Term:1years and0.5months("Original
Term")commencingFebruary 15, 2009 ("Commencement
Date")and endingFebruary
28,2010("Expiration
Date"). (See
also Paragraph 3)
  1.4Early
Possession:
If the Premises are available Lessee may have non-exclusive possession of the
Premises commencing ________________ ("Early
Possession Date").
(See also Paragraphs 3.2 and 3.3)
  1.5Base
Rent:
$4,500.00per month("Base
Rent"), payable
on thefirst (1st)day of
each month commencingon
March 1, 2009. (See
also Paragraph 4)
 o If this box is
checked, there are provisions in this Lease for the Base Rent to be adjusted.
See Paragraph
  1.6Lessee's
Share of Common Area Operating Expenses:One
Hundredpercent (100%)
("Lessee's
Share").




In the
event that the size of the Premises and/or the Project are modified during the
term of this Lease or another tenant moves
into the Building, Lessor shall recalculate Lessee's Share to reflect
such modification.




1.7 Base Rent and Other Monies Paid Upon
Execution:
  (a) Base Rent: $6,750.00 for the period February 15, 2009 to March
31,2009.
  (b) Common Area Operating
Expenses: $750.00 for the
period 2/15/09 -
3/31/09.
  (c) Security Deposit: $9,000.00 ("Security Deposit"). (See
also Paragraph 5)
  (d) Other: $
_______________ for
_______________ .
  (e) Total Due Upon Execution of this
Lease: $ 16,500.00
..
  1.8 Agreed
      Use:
              Warehousing and distribution of clothing inventory and sample sewing. 
      (See also Paragraph 6)


1.9 Insuring Party. Lessor is the
"Insuring Party". (See
also Paragraph 8)
 1.10 Real Estate Brokers: (See also
Paragraph 15)
 (a) Representation: The following
real estate brokers (the "Brokers") and brokerage
relationships exist in this transaction (check applicable
boxes):
  þ CB Richard Ellis -
Nico M. Vilgiate "Lessor's Broker"
  þ Madison Partners -
Gary Weiss represents Lessee exclusively ("Lessee's Broker");
or
  o __________________________represents both Lessor and
Lessee ("Dual
Agency").
  (b) Payment to Brokers: Upon
execution and delivery of this Lease by both Parties, Lessor shall pay to the
Brokers the
brokerage fee agreed to in a separate written agreement (or if there is no such
agreement, the sum of __________ or _________% of
the total Base Rent for the
brokerage services rendered by the Brokers).
  1.11 Guarantor. The obligations of the Lessee
under this Lease are to be guaranteed by
__________________________________________________________ ("Guarantor"). (See
also Paragraph 37)
  1.12 Attachments. Attached hereto
are the following, all of which constitute a part of this Lease:
 þ an Addendum
consisting of Paragraphs50through54;
  þ a site plan
depicting the Premises;


o a site plan depicting the Project;


o a current set of the Rules and Regulations for the
Project;


o a current set of the Rules and Regulations adopted by the
owners' association;




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  o a Work
Letter;
  o other
      (specify):




2.Premises.


2.1 Letting.
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all
of the terms, covenants and conditions set forth in this Lease. While the
approximate square footage of the Premises may have been used in the marketing
of the Premises for purposes of comparison, the Base Rent stated herein is NOT
tied to square footage and is not subject to adjustment should the actual size
be determined to be different. NOTE:
Lessee is advised to verify the actual size prior to executing this
Lease.





2.2Condition.
Lessor shall deliver that portion of the Premises contained within the Building
("Unit")
to Lessee broom clean and free of debris on the Commencement Dateor the Early Possession
Date, whichever first occurs("Start
Date"), and, so long as the required servicecontracts described in Paragraph
7.1(b) below are obtained by Lessee and in effect within thirty days
following the Start Date, warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems
("HVAC"),
loading doors, sump pumps, if any, and all other such elements in the
Unit, other than those constructed by Lessee, shall be in good operating
condition on said date, that the structural elements of the roof, bearing walls
and foundation of the Unit shall be free of material defects, and that the Unit
does not contain hazardous levels of any mold or fungi defined as toxic under
applicable state or federal law. If a non-compliance with such warranty exists
as of the Start Date, or if one of such systems or elements should malfunction
or fail within the appropriate warranty period, Lessor shall, as Lessor's sole
obligation with respect to such matter, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, malfunction or
failure, rectify same at Lessor's expense.  The warranty periods shall
be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the
remaining systems and other elements of the Unit. If Lessee does not give Lessor
the required notice within the appropriate warranty period, correction of any
such non-compliance, malfunction or failure shall be the obligation of Lessee at
Lessee's sole cost and expense (except for the repairs to the fire sprinkler
systems, roof, foundations, and/or bearing walls - see Paragraph
7).





2.3Compliance.
Lessor warrants that to the best of
its knowledge the improvements on the Premises and the Common Areas complywith thebuilding codes that were
in effect at the time that each such improvement, or portion thereof, was
constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the StartDate ("Applicable
Requirements"). Said warranty does not
apply to the use to which Lessee will put the Premises, modifications which may
be required by the Americans with Disabilities Act or any similar laws as a
result of Lessee's use (see Paragraph 49), or to any Alterations or Utility
Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee.NOTE:
Lessee is responsible for determining whether or not theapplicable
laws, covenants or restrictions of record, regulations, and ordinances in effect
as of the Commencement Date ("Applicable Requirements")Applicable
Requirements, and
especially the zoning are appropriate for Lessee's intended use, and
acknowledges that past uses of the Premises may no longer be allowed.If
the Premises do not comply with said warranty,Lessor shall, except as
otherwise provided, promptly after receipt of written notice from Lessee setting
forth with specificity the nature and extent of such non-compliance, rectify the
same at Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within 6 months following the
Start Date, correction of that non-compliance shall be the obligation of Lessee
at Lessee's sole cost and expense.  If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Unit, Premises
and/or Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building ("Capital
Expenditure"), Lessor and Lessee shall allocate the cost of such work as
follows:




(a)
Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as
a result of the specific and unique use of the Premises by Lessee as compared
with uses by tenants in general, Lessee shall be fully responsible for the cost
thereof, provided, however, that if such Capital Expenditure is required during
the last 2 yearsmonths of this
Lease and the cost thereof exceeds one (1)months' Base Rent,
Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee's termination notice that Lessor
has elected to pay the difference between the actual cost thereof and the amount
equal to one
(1) months' Base Rent. If Lessee elects termination, Lessee shall
immediately cease the use of the Premises which requires such Capital
Expenditure and deliver to Lessor written notice specifying a termination date
at least 9030 days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.





(b)  If
such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications),
then Lessor shall pay for such
Capital Expenditure and Lessee shall only be obligated to pay, each month during
theremainderof the term of this Lease
or any extension thereof, on the date that on which the Base Rent is due, an
amount equal to 144th of the portion of such costs reasonably attributable to
the Premises. Lessee shall pay Interest on the balance but may prepay its
obligation at any time. If, however, such Capital Expenditure is required during
the last 2 years of this Lease or ifand Lessor
reasonably determines that it is not economically feasibleto undertake such Capital
Expenditureto pay its share
thereof, Lessor shall have the option to terminate this Lease upon 9045 days prior
written notice to Lessee unless Lessee notifies Lessor, in writing, within 10
days after receipt of Lessor's termination notice that Lessee will pay for such
Capital Expenditure. If Lessor does not elect
to terminate, and fails to tender its share of any such Capital Expenditure,
Lessee may advance such funds and deduct same, with Interest, from Rent until
Lessor's share of such costs have been fully paid. If Lessee is unable to
finance Lessor's share, or if the balance of the Rent due and payable for the
remainder of this Lease is not sufficient to fully reimburse Lessee on an offset
basis, Lessee shall have the right to terminate this Lease upon 30 days written
notice to Lessor.





(c)
Notwithstanding the above, the provisions concerning Capital Expenditures are
intended to apply only to non-voluntary, unexpected, and new Applicable
Requirements.  If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall
either: (i) immediately cease such changed use or intensity of use and/or take
such other steps as may be necessary to eliminate the requirement for such
Capital Expenditure, or (ii) complete such Capital Expenditure at its own
expense. Lessee shall not have any right to terminate this Lease.





2.4 Acknowledgements.
Lessee acknowledges that: (a) it has been given an opportunity to inspect and
measure the Premises, (b) it has been advised by Lessor and/or Brokers to
satisfy itself with respect to the size and condition of the Premises (including
but not limited to the electrical, HVAC and fire sprinkler systems, security,
environmental aspects, and compliance with Applicable Requirements and the
Americans with Disabilities Act), and their suitability for Lessee's intended
use, (c) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate to
its occupancy of the Premises, (d) it is not relying on any representation as to
the size of the Premises made by Brokers or Lessor, (e) the square footage of
the Premises was not material to Lessee's decision to lease the Premises and pay
the Rent stated herein, and (f) neither Lessor, Lessor's agents, nor Brokers
have made any oral or written representations or warranties with respect to said
matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (i) Brokers have made no representations, promises or
warranties concerning Lessee's ability to honor the Lease or suitability to
occupy the Premises, and (ii) it is Lessor's sole responsibility to investigate
the financial capability and/or suitability of all proposed
tenants.





2.5Lessee
as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately




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prior to the Start Date
Lessee was the owner or occupant of the Premises. In such event, Lessee shall be
responsible for any necessary corrective work.





2.6Vehicle
Parking. Lessee shall notbe entitled to
use the number ofanyParking Spaces specified in Paragraph 1.2(b)in connection with this
Leaseon
those portions of the Common Areas designated from time to time by Lessor for
parking. Lessee shall not use more parking spacesthan said number. Said
parking spaces shall be used for parking by vVehicles
no larger than full-size passenger automobiles or pick-up trucks, herein
called"Permitted
Size Vehicles."  Lessor may regulate the loading and unloading
of vehicles by adopting Rules and Regulations as provided in Paragraph
2.9.  No vehicles other than Permitted Size Vehicles may accessbe parkedin the Common Area
without the prior written permission of Lessor. In addition:





(a) Lessee shall not permit or allow any vehicles that belong to or are controlled
by Lessee or Lessee's employees, suppliers, shippers, customers, contractors or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Lessor for such activities.





(b)Lessee
shall not service or store any vehicles in the Common
Areas.




(c) Becausethere is no
parking associated with this Lease, Lessee may only access the Premises from
public ways. Lessee shall not be permitted access
through Project parking in connection with this Lease.





(cd) If Lessee
permits or allows any of the prohibited activities described in this Paragraph
2.6, then Lessor shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove or tow away the vehicle involved
and charge the cost to Lessee, which cost shall be immediately payable upon
demand by Lessor.





2.7Common
Areas - Definition. The term "Common
Areas" is defined as all areas and facilities outside the Premises and
within the exterior boundary line of the Project and interior utility raceways
and installations within the Unit that are provided and designated by the Lessor
from time to time for the general non-exclusive use of Lessor, Lessee and other
tenants of the Project and their respective employees, suppliers, shippers,
customers, contractors and invitees, including parking areas, loading and
unloading areas, trash areas, roadways, walkways, driveways and landscaped
areas.





2.8Common
Areas - Lessee's Rights. Lessor grants to Lessee, for the benefit of
Lessee and its employees, suppliers, shippers, contractors, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Project. Under no circumstances shall the
right herein granted to use the Common Areas be deemed to include the right to
store any property, temporarily or permanently, in the Common Areas. Any such
storage shall be permitted only by the prior written consent of Lessor or
Lessor's designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur, then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.





2.9Common
Areas - Rules and Regulations. Lessor or such other person(s) as Lessor
may appoint shall have the exclusive control and management of the Common Areas
and shall have the right, from time to time, to establish, modify, amend and
enforce reasonable rules and regulations ("Rules
and Regulations") for the management, safety, care, and cleanliness of
the grounds, the parking and unloading of vehicles and the preservation of good
order, as well as for the convenience of other occupants or tenants of the
Building and the Project and their invitees. Lessee agrees to abide by and
conform to all such Rules and Regulations, and shall use its best efforts to
cause its employees, suppliers, shippers, customers, contractors and invitees to
so abide and conform. Lessor shall not be responsible to Lessee for the
non-compliance with said Rules and Regulations by other tenants of the
Project.





2.10Common
Areas - Changes. Lessor shall have the right, in Lessor's sole
discretion, from time to time:





(a) To
make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas, walkways and utility raceways;




(b)To close temporarily any of the Common
Areas for maintenance purposes so long as reasonable access to the Premises
remains available;
  (c)To designate other land outside the
boundaries of the Project to be a part of the Common Areas;
  (d)To add additional buildings and
improvements to the Common Areas;
  (e)To
use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and




(f) To do
and perform such other acts and make such other changes in, to or with respect
to the Common Areas and Project as Lessor may, in the exercise of sound business
judgment, deem to be appropriate.





3.Term.


3.1Term.
The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.


3.2Early
Possession.
Any provision herein granting Lessee Early Possession of the Premises is subject
to and conditioned upon thePremises
being available for such possession prior to the Commencement Date. Any grant of
Early Possession only conveys a non-exclusive right to occupy the Premises. If
Lessee totally or partially occupies the Premises prior to the Commencement
Date, the obligation to pay Base Rent shall be abated for the period of such
Early Possession. All other terms of this Lease (including but not limited to
the obligations to pay Lessee's Share of Common Area Operating Expenses, Real
Property Taxes and insurance premiums and to maintain the Premises) shall be in
effect during such period. Any such Early Possession shall not affect the
Expiration Date.





3.3Delay
In Possession. Lessor agrees to use its best commercially reasonable
efforts to deliver possession of the Premises to Lessee by the Commencement
Date. If, despite said efforts, Lessor is unable to deliver possession as
agreed, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or change the Expiration Date. Lessee
shall not, however, be obligated to pay Rent or perform its other obligations
until Lessor delivers possession of the Premises and any period of rent
abatement that Lessee would otherwise have enjoyed shall run from the date of
the delivery of possession and continue for a period equal to what Lessee would
otherwise have enjoyed, but minus any days of delay caused by the acts or
omissions of Lessee. If possession is not delivered within 60 days after the
Commencement Date, Lessee may, at its option, by notice in writing within 10
days after the end of such 60 day period, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee's right to
cancel shall terminate. Except as otherwise provided, if possession is not
tendered to Lessee by the Commencement Date and Lessee does not terminate this
Lease, as aforesaid, any period of rent abatement that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts or omissions of Lessee.
If possession of the Premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.





3.4Lessee
Compliance. Lessor shall not be required to tender possession of the
Premises to Lessee until Lessee complies with its obligation to provide evidence
of insurance (Paragraph 8.5).  Pending delivery of such evidence,
Lessee shall be required to perform all of its obligations under this Lease from
and after the StartCommencementDate, including the payment of Rent, notwithstanding Lessor's election to
withhold possession pending receipt of such evidence of insurance. Further, if
Lessee is required to perform any other conditions prior to or concurrent with
the




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StartCommencementDate,
the StartCommencementDate shall occur but Lessor may elect to withhold possession until such
conditions are satisfied.





4.Rent.


4.1. Rent
Defined. All monetary obligations of Lessee to Lessor under the terms of
this Lease (except for the Security Deposit) are deemed to
be rent ("Rent").





4.2Common
Area Operating Expenses". Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee's Share (as specified in Paragraph
1.6) of all Common Area Operating Expenses, as hereinafter defined, during each
calendar year of the term of this Lease, in accordance with the following
provisions:





(a) The
following costs relating to the ownership and operation of the Project are
defined as "Common
Area Operating Expenses":
  (i) Costs
relating to the operation, repair and maintenance, in neat, clean, good order
and condition, but not the replacement (see
subparagraph (e)), of the following:





(aa) The
Common Areas and Common Area improvements, including parking areas, loading and
unloading areas, trash areas, roadways, parkways, walkways, driveways,
landscaped areas, bumpers, irrigation systems, Common Area lighting facilities,
fences and gates, elevators, roofs, and roof drainage systems.





(bb)AnyExterior signs
and any tenant directories.




(cc) Any
fire sprinkler systems.





(ii)  The
cost of water, gas, electricity and telephone to service the Common Areas and
any utilities not separately metered.





(iii)  The
cost of trash disposal, pest control services, property management, security
services, owner's association dues and fees, the cost to repaint the exterior of
any structures and the cost of any environmental inspections.





(iv) Reserves
set aside for maintenance and repair of Common Areas and Common Area
equipment.


(v) Any
increase above the Base Real Property Taxes (as defined in Paragraph
10).


(v) Any
"Insurance Cost Increase" (as defined in Paragraph 8).


(vii) Any
deductible portion of an insured loss concerning the Building or the Common
Areas.


(viii) Auditors',
accountants' and attorneys' fees and costs related to the operation,
maintenance, repair and replacement
of the Project.





(ix)  The
cost of any capital improvement to the Building or the Project not covered under
the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate
the cost of any such capital improvement over a 12 year period and Lessee shall
not be required to pay more than Lessee's Share of 1/144th of the cost of such
capital improvement in any given month.





(x)  The
cost of any other services to be provided by Lessor that are stated elsewhere in
this Lease to be a Common Area Operating Expense.





(b) Any
Common Area Operating Expenses and Real Property Taxes that are specifically
attributable to the Unit, the Building or to any other building in the Project
or to the operation, repair and maintenance thereof, shall be allocated entirely
to such Unit, Building, or other building. However, any Common Area Operating
Expenses and Real Property Taxes that are not specifically attributable to the
Building or to any other building or to the operation, repair and maintenance
thereof, shall be equitably allocated by Lessor to all buildings in the
Project.





(c) The
inclusion of the improvements, facilities and services set forth in Subparagraph
4.2(a) shall not be deemed to impose an obligation upon Lessor to either have
said improvements or facilities or to provide those services unless the Project
already has the same, Lessor already provides the services, or Lessor has agreed
elsewhere in this Lease to provide the same or some of them.





(d)
Lessee's Share of Common Area Operating Expenses is payable monthly on the same
day as the Base Rent is due hereunder. The amount of such payments shall be
based on Lessor's estimate of the annual Common Area Operating Expenses. Within
60 days after written request (but not more than once each year) Lessor shall
deliver to Lessee a reasonably detailed statement showing Lessee's Share of the
actual Common Area Operating Expenses incurred during the preceding year. If
Lessee's payments during such year exceed Lessee's Share, Lessor shall credit
the amount of such over-payment against Lessee's future payments. If Lessee's
payments during such year were less than Lessee's Share, Lessee shall pay to
Lessor the amount of the deficiency within 10 days after delivery by Lessor to
Lessee of the statement.





(e) Common
Area Operating Expenses shall not include the cost of replacing equipment or
capital components such as the roof, foundations, exterior walls or Common Area
capital improvements, such as the parking lot paving, elevators, fences that
have a useful life for accounting purposes of 5 years or more.





(f) Common
Area Operating Expenses shall not include any expenses paid by any tenant
directly to third parties, or as to which Lessor is otherwise reimbursed by any
third party, other tenant, or insurance proceeds.





(g) See
Addendum, Section 51.


4.3 Payment.Lessee shall cause payment of Rent to be received by Lessor in lawful
money of the United States, without offset or deduction
(except as specifically permitted in this Lease), on or before the day on which
it is due. All monetary amounts shall be rounded to the nearest whole dollar. In
the event that any statement or invoice prepared by Lessor is inaccurate such
inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay
the amount set forth in this Lease. Rent for any period during the term hereof
which is for less than one full calendar month shall be prorated based upon the
actual number of days of said month. Payment of Rent shall be made to Lessor at
its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. Acceptance of a payment which is less than
the amount then due shall not be a waiver of Lessor's rights to the balance of
such Rent, regardless of Lessor's endorsement of any check so stating. In the
event that any check, draft, or other instrument of payment given by Lessee to
Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of
$25 in addition to any Late Charge and Lessor, at its option, may require all
future Rent be paid by cashier's check. Payments will be applied first to
accrued late charges and attorney's fees, second to accrued interest, then to
Base Rent and Common Area Operating Expenses, and any remaining amount to any
other outstanding charges or costs.





5.Security
Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount already due Lessor, for Rents
which will be due in the future, and/ or to reimburse or compensate Lessor for
any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security
Deposit, Lessee shall within 10 days after written request therefor deposit
monies with Lessor sufficient to restore said Security Deposit to the full
amount required by this Lease. If the Base Rent increases during the term of
this Lease, Lessee shall, upon written request from Lessor, deposit additional
monies with Lessor so that the total amount of the Security Deposit shall at all
times bear the same proportion to the increased Base Rent as the initial
Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended
to accommodate a material change in the business of Lessee or to accommodate a
sublessee or assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor's reasonable judgment, to account for
any increased wear and tear that the Premises may suffer as a result thereof. If
a change in control of Lessee occurs during this Lease and following such change
the financial condition of Lessee is, in Lessor's reasonable judgment,
significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially
reasonable level based on such change in financial condition. Lessor shall not
be required to keep the Security Deposit separate from its




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general
accounts. Within 90 days after the expiration or termination of this Lease,
Lessor shall return that portion of the Security Deposit not used or applied by
Lessor. No part of the Security Deposit shall be considered to be held in trust,
to bear interest or to be prepayment for any monies to be paid by Lessee under
this Lease.





6. Use.


6.1 Use.
Lessee shall use and occupy the Premises only for the Agreed Use, or any other
legal use which is reasonably comparable thereto,
and for no other purpose. Lessee shall not use or permit the use of the Premises
in a manner that is unlawful, creates damage, waste or a nuisance, or that
disturbs occupants of or causes damage to neighboring premises or properties.
Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in
the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use., so long as the same will not impair the
structural integrity of the Building or the mechanical orelectrical systems
therein, and/or is not significantly more burdensome to the Project. If
Lessor elects to withhold consent, Lessor shall within 730days after such
request give written notification of same, which notice shall include an
explanation of Lessor's objections to the change in the Agreed
Use.





6.2 Hazardous Substances.


(a) Reportable
Uses Require Consent. The term "Hazardous
Substance"as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or release,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or fractions thereof.  Lessee shall not engage in any activity in or
on the Premises which constitutes a Reportable Use of Hazardous Substances
without the express prior written consent of Lessor and timely compliance (at
Lessee's expense) with all Applicable Requirements. "Reportable
Use" shall mean (i) the installation or use of any above or below ground
storage tank, (ii) the generation, possession, storage, use, transportation, or
disposal of a Hazardous Substance that requires a permit from, or with respect
to which a report, notice, registration or business plan is required to be filed
with, any governmental authority, and/or (iii) the presence at the Premises of a
Hazardous Substance with respect to which any Applicable Requirements requires
that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Lessee may use any
ordinary and customary materials reasonably required to be used in the normal
course of the Agreed Use, ordinary office supplies (copier toner, liquid paper,
glue, etc.) and common household cleaning materials, so long as such use is in
compliance with all Applicable Requirements, is not a Reportable Use, and does
not expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself,
the public, the Premises and/or the environment against damage, contamination,
injury and/or liability, including, but not limited to, the installation (and
removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing the Security
Deposit.





(b)Duty to
Inform Lessor. If Lessee knows, or has reasonable cause to believe, that
a Hazardous Substance has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor, and provide Lessor with
a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.





(c)Lessee
Remediation.  Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense,comply with all Applicable Requirements and take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third
party.





(d)Lessee
Indemnification. Lessee shall indemnify, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys' and consultants' fees arising out of or
involving any Hazardous Substance brought onto the Premises by or for Lessee, or
any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from areas outside of the Project not caused or contributed
to by Lessee). Lessee's obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.





(e)Lessor
Indemnification. Lessor and its successors and assigns shall indemnify,
defend, reimburse and hold Lessee, its employees and lenders, harmless from and
against any and all environmental damages, including the cost of remediation,
which suffered as a direct result of Hazardous Substances on the Premises prior
to Lessee taking possession or which are
caused by the gross negligence or willful misconduct of Lessor, its agents or
employees. Lessor's obligations, as and when required by the Applicable
Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.





(f)Investigations
and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having
jurisdiction with respect to the existence of Hazardous Substances on the
Premises prior to Lessee taking possession, unless such remediation measure is
required as a result of Lessee's use (including "Alterations", as defined in
paragraph 7.3(a) below) of the Premises, in which event Lessee shall be
responsible for such payment. Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing Lessor and Lessor's
agents to have reasonable access to the Premises at reasonable times in order to
carry out Lessor's investigative and remedial responsibilities.





(g)Lessor
Termination Option. If a Hazardous Substance Condition (see Paragraph
9.1(e)) occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease shall
continue in full force and effect, but subject to Lessor's rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate
such condition exceeds $50,00012 times the then monthly
Base Rent or $100,000, whichever is greater, give written notice to
Lessee, within 3015 days after
receipt by Lessor of knowledge of the occurrence of such Hazardous Substance
Condition, of Lessor's desire to terminate this Lease as of the date 6030 days following
the date of such notice. In the event Lessor elects to give a termination
notice, Lessee may, within 10 days thereafter, give written notice to Lessor of
Lessee's commitment to pay the amount by which the cost of the remediation of
such Hazardous Substance Condition exceeds an amount equal to $50,00012 times the then monthly
Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor
with said funds or satisfactory assurance thereof within 30 days following such
commitment. In such event, this Lease shall continue in full force and effect,
and Lessor shall proceed to make such remediation as soon as reasonably possible
after the required funds are available. If Lessee does not give such notice and
provide the required




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funds or
assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor's notice of termination.





6.3Lessee's
Compliance with Applicable Requirements. Except as otherwise provided in
this Lease, Lessee shall, at Lessee's sole expense, fully, diligently and in a
timely manner, materially comply with all Applicable Requirements, the
requirements of any applicable fire insurance underwriter or rating bureau, and
the recommendations of Lessor's engineers and/or consultants which relate in any
manner to such Requirements, without regard to whether said Requirements are now
in effect or become effective after the StartCommencementDate.
Lessee shall, within 10 days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements. Likewise,
Lessee shall immediately give written notice to Lessor of: (i) any water damage
to the Premises and any suspected seepage, pooling, dampness or other condition
conducive to the production of mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.





6.4Inspection;
Compliance.  Lessor and Lessor's"Lender"
(as defined in Paragraph 30) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise at reasonable
times after reasonable notice, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease. The cost of
any such inspections shall be paid by Lessor, unless a violation of Applicable
Requirements, or a Hazardous Substance Condition (see Paragraph 9.1) is found to
exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheets (MSDS)
to Lessor within 10 days of the receipt of written request
therefor.





7.Maintenance;
Repairs; Utility Installations; Trade Fixtures and Alterations.


7.1Lessee's
Obligations.


(a) In
General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee's Compliance with Applicable Requirements),
7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation),
Lessee shall, at Lessee's sole expense, keep the Premises, Utility Installations
(intended for Lessee's exclusive use, no matter where located), and Alterations
in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, HVAC equipment, electrical, lighting facilities, boilers,
pressure vessels, fixtures, interior walls, interior surfaces of exterior walls,
ceilings, floors, windows, doors, plate glass, and skylights but excluding any
items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee,
in keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair.





(b)Service
Contracts.  Lessee shall, at Lessee's sole expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in the maintenance of the
following equipment and improvements, if any, if and when installed on the
Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, and (iii)
clarifiers. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain any or all of such service contracts, and Lessee shall
reimburse Lessor, upon demand, for the cost thereof.





(c)Failure
to Perform.  If Lessee fails to perform Lessee's obligations
under this Paragraph 7.1, Lessor may enter upon the Premises after 10 days'
prior written notice to Lessee (except in the case of an emergency, in which
case no notice shall be required), perform such obligations on Lessee's behalf,
and put the Premises in good order, condition and repair, and Lessee shall
promptly pay to Lessor a sum equal to 115% of the cost thereof.





(d)Replacement.Subject to Lessee's indemnification
of Lessor as set forth in Paragraph 8.7 below, and without relieving Lesseeofliability resulting from
Lessee's failure to exercise and perform good maintenance practices, if an item
described in Paragraph 7.1(b) cannot be repaired other than at a cost which is
in excess of 50% of the cost of replacing such item, then such item shall be
replaced by Lessor, and the cost thereof shall be prorated between the Parties
and Lessee shall only be obligated to pay, each month during the remainder of
the term of this Lease, on the date on which Base Rent is due, an amount equal
to the product of multiplying the cost of such replacement by a fraction, the
numerator of which is one, and the denominator of which is 144 (ie. 1/144th of
the cost per month). Lessee shall pay Interest on the unamortized balance but
may prepay its obligation at any time.





7.2Lessor's
Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's
Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject
to reimbursement pursuant to Paragraph 4.2,and only if such systems
were in existence and fully functional at the date of execution of this
Lease, shall keep in good order, condition and repair the foundations,
exterior walls, structural condition of interior bearing walls, exterior roof,
fire sprinkler system, Common Area fire alarm and/or smoke detection systems,
fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences,
signs and utility systems serving the Common Areas and all parts thereof, as
well as providing the services for which there isLessor actually chargesa Common Area Operating Expense pursuant to Paragraph
4.2.  Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.





7.3Utility
Installations; Trade Fixtures; Alterations.


(a) Definitions.
The term "Utility Installations" refers to all floor and window coverings, air
and/or vacuum lines, power panels, electrical
distribution, security and fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade
Fixtures" shall mean Lessee's machinery and equipment that can be removed
without doing material damage to the Premises.  The term"Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee
Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a).





(b) Consent.
Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor's prior written consent. Lessee may, however, make
non-structural Alterations or Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, will not affect the
electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3 month's
Base Rent in the aggregate or a sum equal to one month's Base Rent in any one
year.  Notwithstanding the foregoing, Lessee shall not make or
permit any roof penetrations and/or install anything on the roof without the
prior written approval of Lessor. Lessor may, as a precondition to granting such
approval, require Lessee to utilize a contractor chosen and/or approved by
Lessor. Any Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of the Lessor shall be presented to Lessor in
written form with detailed plans. Consent shall be deemed conditioned upon
Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other




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 Applicable
Requirements in a prompt and expeditious manner. Any Alterations or Utility
Installations shall be performed in a workmanlike manner with good and
sufficient materials. Lessee shall promptly upon completion furnish Lessor with
as-built plans and specifications. For work which costs an amount in excess of
one month's Base Rent, Lessor may condition its consent upon Lessee providing a
lien and completion bond in an amount equal to 150% of the estimated cost of
such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.





(c) Liens;
Bonds. Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use on
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest
therein.  Lessee shall give Lessor not less than 10 days notice prior
to the commencement of any work in, on or about the Premises, and Lessor shall
have the right to post notices of non-responsibility. If Lessee shall contest
the validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Lessor shall require, Lessee shall furnish a
surety bond in an amount equal to 150% of the amount of such contested lien,
claim or demand, indemnifying Lessor against liability for the same. If Lessor
elects to participate in any such action, Lessee shall pay Lessor's attorneys'
fees and costs.





7.4 Ownership; Removal; Surrender; and
Restoration.


(a) Ownership.
Subject to Lessor's right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.





(b) Removal.
By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be
removed by the expiration or termination of this Lease. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent.





(c) Surrender;
Restoration. Lessee shall surrender the Premises by the Expiration Date
or any earlier termination date, with all of the improvements, parts and
surfaces thereof broom clean and free of debris, and in good operating order,
condition and state of repair, ordinary wear and tear
excepted.  "Ordinary wear and tear" shall not include any damage or
deterioration that would have been prevented by good maintenance practice.
Notwithstanding the foregoing, if this Lease is for 12 months or less, then
Lessee shall surrender the Premises in the same condition as delivered to Lessee
on the StartCommencement Date
with NO allowance for ordinary wear and tear. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee. Lessee shall
also completely remove from the Premises any and all Hazardous Substances
brought onto the Premises by or for Lessee, or any third party (except Hazardous
Substances which were deposited via underground migration from areas outside of
the Premises) even if such removal would require Lessee to perform or pay for
work that exceeds statutory requirements.  Trade Fixtures shall remain
the property of Lessee and shall be removed by Lessee. Any personal property of
Lessee not removed on or before the Expiration Date or any earlier termination
date shall be deemed to have been abandoned by Lessee and may be disposed of or
retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.





8.Insurance;
Indemnity.


8.1Payment
of Premium Increases.


(a) As
used herein, the term "Insurance
Cost Increase"is defined as any increase in the actual cost of the
insurance applicable
to the Building and/or the Project and required to be carried by Lessor,
pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), ("Required
Insurance"), over and above the Base Premium, as hereinafter defined,
calculated on an annual basis. Insurance Cost Increase shall include, but not be
limited to, requirements of the holder of a mortgage or deed of trust covering
the Premises, Building and/or Project, increased valuation of the Premises,
Building and/or Project, and/or a general premium rate increase. The term
Insurance Cost Increase shall not, however, include any premium increases
resulting from the nature of the occupancy of any other tenant of the Building.
The "Base
Premium" shall be the annual premium applicable to the 12 month period
immediately preceding the StartCommencementDate.
If, however, the Project was not insured for the entirety of such 12 month
period, then the Base Premium shall be the lowest annual premium reasonably
obtainable for the Required Insurance as of the StartCommencementDate,
assuming the most nominal use possible of the Building. In no event, however,
shall Lessee be responsible for any portion of the premium cost attributable to
liability insurance coverage in excess of $2,000,000$3,000,000procured
under Paragraph 8.2(b).





(b) Lessee
shall pay any Insurance Cost Increase to Lessor pursuant to Paragraph
4.2.  Premiums for policy periods commencing prior to, or extending
beyond, the term of this Lease shall be prorated to coincide with the
corresponding StartCommencementDate or Expiration Date.





8.2 Liability Insurance.


(a) Carried
by Lessee. Lessee shall obtain and keep in force a Commercial General
Liability policy of insurance protecting Lessee and Lessor
as an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000$2,000,000per
occurrence with an annual aggregate of not less than $2,000,000$3,000,000. Lessee
shall add Lessor as an additional insured by means of an endorsement at least as
broad as the Insurance Service Organization's "Additional Insured-Managers or
Lessors of Premises" Endorsement. The policy shall not contain any intra-insured
exclusions as between insured persons or organizations, but shall include
coverage for liability assumed under this Lease as an "insured
contract" for the performance of Lessee's indemnity obligations under
this Lease. The limits of said insurance shall not, however, limit the liability
of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide
an endorsement on its liability policy(ies) which provides that its insurance
shall be primary to and not contributory with any similar insurance carried by
Lessor, whose insurance shall be considered excess insurance
only.





(b) Carried
by Lessor. Lessor shall maintain liability insurance as described in
Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to
be maintained by Lessee. Lessee shall not be named as an additional insured
therein.





8.3Property
Insurance - Building, Improvements and Rental Value.


(a) Building
and Improvements. Lessor shall obtain and keep in force a policy or
policies of insurance in the name of Lessor, with loss
payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage
to the Premises. The amount of such insurance shall be equal to the full
insurable replacement cost of the Premises, as the same shall exist from time to
time, or the amount required by any Lender, but in no event more than the
commercially reasonable and available insurable value thereof. Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee's personal
property shall be insured by Lessee not by Lessor. If the coverage is available
and commercially appropriate, such policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for debris removal
and the enforcement of any Applicable Requirements requiring the upgrading,
demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall also contain an agreed
valuation provision in lieu of any coinsurance clause, waiver of subrogation,
and inflation guard protection causing an increase in the annual property
insurance coverage




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amount by
a factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest to where the Premises are
located. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed $1,000 per occurrence.





(b) Rental
Value. Lessor shall also obtain and keep in force a policy or policies in
the name of Lessor with loss payable to Lessor and any Lender, insuring the loss
of the full Rent for one year with an extended period of indemnity for an
additional 180 days ("Rental Value
insurance").  Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee, for the next 12 month
period.





(c) Adjacent
Premises. Lessee shall pay for any increase in the premiums for the
property insurance of the Building and for the Common Areas or other buildings
in the Project if said increase is caused by Lessee's acts, omissions, use or
occupancy of the Premises.





(d) Lessee's
Improvements. Since Lessor is the Insuring Party, Lessor shall not be
required to insure Lessee Owned Alterations and Utility Installations unless the
item in question has become the property of Lessor under the terms of this
Lease.





8.4Lessee's
Property; Business Interruption Insurance.


(a) Property
Damage. Lessee shall obtain and maintain insurance coverage on all of
Lessee's personal property, Trade Fixtures, and Lessee
Owned Alterations and Utility Installations.  Such insurance shall be
full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned Alterations
and Utility Installations. Lessee shall provide Lessor with written evidence
that such insurance is in force.





(b)Business
Interruption.  Lessee shall obtain and maintain loss of income
and extra expense insurance in amounts as will reimburse Lessee for direct or
indirect loss of earnings attributable to all perils commonly insured against by
prudent lessees in the business of Lessee or attributable to prevention of
access to the Premises as a result of such perils.





(c) No
Representation of Adequate Coverage. Lessor makes no representation that
the limits or forms of coverage of insurance specified herein are adequate to
cover Lessee's property, business operations or obligations under this
Lease.





8.5Insurance
Policies. Insurance required herein shall be by companies duly licensed
or admitted to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least A-, VI, as set forth in the most current issue of "Best's Insurance
Guide", or such other rating as may be required by a Lender. Lessee shall not do
or permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior to the StartCommencementDate,
deliver to Lessor certified copies of policies of such insurance or certificates
evidencing the existence and amounts of the required insurance.  No
such policy shall be cancelable or subject to modification except after 30 days
prior written notice to Lessor. Lessee shall, at least 10 days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.





8.6Waiver
of Subrogation. Without affecting any other rights or remedies, Lessee
and Lessor each hereby release and relieve the other, and waive their entire
right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated
thereby.





8.7Indemnity.
Except for Lessor's gross negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its
agents, Lessor's master or ground lessor, partners and Lenders, from and against
any and all claims, loss of rents and/or damages, liens, judgments, penalties,
attorneys' and consultants' fees, expenses and/or liabilities arising out of,
involving, or in connection with, the use and/or occupancy of the Premises by
Lessee. If any action or proceeding is brought against Lessor by reason of any
of the foregoing matters, Lessee shall upon notice defend the same at Lessee's
expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate
with Lessee in such defense. Lessor need not have first paid any such claim in
order to be defended or indemnified.





8.8Exemption
of Lessor and its Agents from Liability. NotwithstandingExcept to the extent of
Lessor's gross negligence or willful misconduct, notwithstandingthe
negligence or breach of this Lease by Lessor or its agents, neither Lessor nor
its agents shall be liable under any circumstances for: (i) injury or damage to
the person or goods, wares, merchandise or other property of Lessee, Lessee's
employees, contractors, invitees, customers, or any other person in or about the
Premises, whether such damage or injury is caused by or results from fire,
steam, electricity, gas, water or rain, indoor air quality, the presence of mold
or from the breakage, leakage, obstruction or other defects of pipes, fire
sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any
other cause, whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the Building, or from other sources
or places, (ii) any damages arising from any act or neglect of any other tenant
of Lessor or from the failure of Lessor or its agents to enforce the provisions
of any other lease in the Project, or (iii) injury to Lessee's business or for
any loss of income or profit therefrom. Instead, it is intended that Lessee's
sole recourse in the event of such damages or injury be to file a claim on the
insurance policy(ies) that Lessee is required to maintain pursuant to the
provisions of paragraph 8.





8.9Failure
to ProvideInsurance.  Lessee
acknowledges that any failure on its part to obtain or maintain the insurance
required herein will expose Lessor to risks and potentially cause Lessor to
incur costs not contemplated by this Lease, the extent of which will be
extremely difficult to ascertain. Accordingly, for any month or portion thereof
that Lessee does not maintain the required insurance and/or does not provide
Lessor with the required binders or certificates evidencing the existence of the
required insurance, the Base Rent shall be automatically increased, without any
requirement for notice to Lessee, by an amount equal to 10% of the then existing
Base Rent or $100, whichever is greater. The parties agree that such increase in
Base Rent represents fair and reasonable compensation for the additional
risk/costs that Lessor will incur by reason of Lessee's failure to maintain the
required insurance. Such increase in Base Rent shall in no event constitute a
waiver of Lessee's Default or Breach with respect to the failure to maintain
such insurance, prevent the exercise of any of the other rights and remedies
granted hereunder, nor relieve Lessee of its obligation to maintain the
insurance specified in this Lease.





9.Damage
or Destruction.


9.1Definitions.


(a) "Premises
Partial Damage"shall mean damage or destruction to the improvements on
the Premises, other than Lessee Owned
Alterations and Utility Installations, which can reasonably be repaired in 3
months or less from the date of the damage or destruction, and the cost thereof
does not exceed a sum equal toone (1) month's
Base Rent.  Lessor shall notify Lessee in writing within 30 days from
the date of the damage or destruction as to whether or not the damage is Partial
or Total. Notwithstanding the foregoing, Premises Partial Damage shall not
include damage to windows, doors, and/or other similar items which Lessee has
the responsibility to repair or replace pursuant to the provisions of Paragraph
7.1.





(b) "Premises
Total Destruction" shall mean damage or destruction to the improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations
and Trade Fixtures, which cannot reasonably be repaired in 3 months or less from
the date of the damage or destruction and/or the cost thereof exceeds a sum
equal to one
(1) month's Base Rent. Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.




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(c) "Insured
Loss" shall mean damage or destruction to improvements on the Premises,
other than Lessee Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a), irrespective of any deductible amounts or
coverage limits involved.





(d) "Replacement
Cost" shall mean the cost to repair or rebuild the improvements owned by
Lessor at the time of the occurrence to their condition existing immediately
prior thereto, including demolition, debris removal and upgrading required by
the operation of Applicable Requirements, and without deduction for
depreciation.





(e)"Hazardous
Substance Condition" shall mean the occurrence or discovery of a
condition involving the presence of, or a contamination by, a Hazardous
Substance, in, on, or under the Premises which requires
restoration.





9.2Partial
Damage - Insured Loss.  If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000equal to one
month's Base Rentor less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds as and when
required to complete said repairs.  In the event, however, such
shortage was due to the fact that, by reason of the unique nature of the
improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or adequate
assurance thereof, within 10 days following receipt of written notice of such
shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said 10 day period, the party responsible for making
the repairs shall complete them as soon as reasonably possible and this Lease
shall remain in full force and effect. If such funds or assurance are not
received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect, or (ii) have this Lease terminate 30 days
thereafter.  Lessee shall not be entitled to reimbursement of any
funds contributed by Lessee to repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.





9.3Partial
Damage - Uninsured Loss.  If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee's commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.





9.4Total
Destruction. Notwithstanding any other provision hereof, if a Premises
Total Destruction occurs, this Lease shall terminate 60 days following such
Destruction. If the damage or destruction was caused by the gross negligence or
willful misconduct of Lessee, Lessor shall have the right to recover Lessor's
damages from Lessee, except as provided in Paragraph 8.6.





9.5Damage
Near End of Term. If at any time during the last 6 months of this Lease
there is damage for which the cost to repair exceeds one month's Base Rent,
whether or not an Insured Loss, Lessor may terminate this Lease effective 60
days following the date of occurrence of such damage by giving a written
termination notice to Lessee within 30 days after the date of occurrence of such
damage. Notwithstanding the
foregoing, if Lessee at that time has an exercisable option to extend this Lease
or to purchase the Premises, then Lessee may preserve this Lease by, (a)
exercising such option and (b) providing Lessor with any shortage in insurance
proceeds (or adequate assurance thereof) needed to make the repairs on or before
the earlier of (i) the date which is 10 days after Lessee's receipt of Lessor's
written notice purporting to terminate this Lease, or (ii) the day prior to the
date upon which such option expires. If Lessee duly exercises such option during
such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at Lessor's commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this Lease
shall terminate on the date specified in the termination notice and Lessee's
option shall be extinguished.





9.6Abatement
of Rent; Lessee's Remedies.


(a) Abatement.
In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which
Lessee is not responsible under this Lease, the Rent payable by Lessee for the
period required for the repair, remediation or restoration of such damage shall
be abated in proportion to the degree to which Lessee's use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.





(b) Remedies.
If Lessor is obligated to repair or restore the Premises and does not commence,
in a substantial and meaningful way, such repair or restoration within 90 days
after such obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration, give written notice to Lessor and to
any Lenders of which Lessee has actual notice, of Lessee's election to terminate
this Lease on a date not less than 60 days following the giving of such notice.
If Lessee gives such notice and such repair or restoration is not commenced
within 30 days thereafter, this Lease shall terminate as of the date specified
in said notice. If the repair or restoration is commenced within such 30 days,
this Lease shall continue in full force and effect. "Commence" shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first
occurs.





9.7Termination;
Advance Payments.  Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by
Lessor.





10.Real
Property Taxes.


10.1Definitions.


(a) "Real
Property Taxes."As used herein, the term "Real
Property Taxes" shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Project, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Project address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Project is located. The term
"Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein: (i) imposed by reason of events occurring
during the term of this Lease, including but not limited to, a change in the
ownership of the Project, (ii) a change in the




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improvements
thereon, and/or (iii) levied or assessed on machinery or equipment provided by
Lessor to Lessee pursuant to this Lease.





(b) "Base
Real Property Taxes."As used herein, the term"Base
Real Property Taxes" shall be the amount of Real Property Taxes, which
are assessed against the Premises, Building, Project or Common Areas in the
calendar year during which the Lease is executed. In calculating Real Property
Taxes for any calendar year, the Real Property Taxes for any real estate tax
year shall be included in the calculation of Real Property Taxes for such
calendar year based upon the number of days which such calendar year and tax
year have in common.





10.2Payment
of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall
pay the Real Property Taxes applicable to the Project, and said payments shall
be included in the calculation of Common Area Operating Expenses in accordance
with the provisions of Paragraph 4.2.





10.3Additional
Improvements.  Common Area Operating Expenses shall not include
Real Property Taxes specified in the tax assessor's records and work sheets as
being caused by additional improvements placed upon the Project by other tenants
or by Lessor for the exclusive enjoyment of such other Tenants. Notwithstanding
Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time Common
Area Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed solely by reason of Alterations,
Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at
Lessee's request or by reason of any alterations or improvements to the Premises
made by Lessor subsequent to the execution of this Lease by the
Parties.





10.4Joint
Assessment. If the Building is not separately assessed, Real Property
Taxes allocated to the Building shall be an equitable proportion of the Real
Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.  Lessor's reasonable determination
thereof, in good faith, shall be conclusive.





10.5Personal
Property Taxes.  Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises.  When possible, Lessee shall
cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal property to be assessed and billed
separately from the real property of Lessor. If any of Lessee's said property
shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee's property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.





11.Utilitiesand
Services.  Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. Notwithstanding the provisions of
Paragraph 4.2, if at any time in Lessor's sole judgment, Lessor determines that
Lessee is using a disproportionate amount of water, electricity or other
commonly metered utilities, or that Lessee is generating such a large volume of
trash as to require an increase in the size of the trash receptacle and/or an
increase in the number of times per month that it is emptied, then Lessor may
increase Lessee's Base Rent by an amount equal to such increased costs. There
shall be no abatement of Rent and Lessor shall not be liable in any respect
whatsoever for the inadequacy, stoppage, interruption or discontinuance of any
utility or service due to riot, strike, labor dispute, breakdown, accident,
repair or other cause beyond Lessor's reasonable control or in cooperation with
governmental request or directions.





12.Assignment
and Subletting.


12.1Lessor's
Consent Required.


(a)
Lessee shall not voluntarily or
by operation of law assign, transfer, mortgage or encumber (collectively,"assign
or assignment") or sublet all or any
part of Lessee's interest in this Lease or in the Premises without Lessor's
prior written consent.





(b) Unless Lessee is a corporation and its
stock is publicly traded on a national stock exchange, a change in the control
of Lessee shall
constitute an assignment requiring consent. The transfer, on a cumulative basis,
of 25% or more of the voting control of Lessee shall constitute a change in
control for this purpose.





(c) The involvement of Lessee or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an
assignment of this Lease to which Lessor may withhold its consent."Net
Worth of Lessee" shall mean the net worth of Lessee (excluding any
guarantors) established under generally acceptedaccounting
principles.See Addendum, Section
52.





(d) An assignment or
sublettingA
Transferwithout consent shall, at Lessor's option, be a Default curable
after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity
of any notice and grace period. If Lessor elects to treat such unapprovedTransferassignment or
subletting as a noncurable Breach, Lessor may either: (i) terminate this
Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to
110% of the Base Rent then in effect. Further, in the event of such Breach and
rental adjustment, (i) the purchase price of any option to purchase thePremises
held by Lessee shall be subject to similar adjustment to 110% of the price
previously in effect, and (ii) all fixed and non-fixed rental adjustments
scheduled during the remainder of the Lease term shall be increased to 110% of
the scheduled adjusted rent.





(e) Lessee's remedy for any
breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages
and/or injunctive relief.


(f) Lessor may
reasonablywithhold consent to a proposed Transferassignment or
subletting,
in its sole and absolute discretionif Lessee is
in Default at the time consent is requested.





(g)
Notwithstanding the foregoing, allowing a de minimis portion of the Premises,
ie. 20 square feet or less, to be used by a third party vendor in connection
with the installation of a vending machine or payphone shall not constitute a
subletting.





12.2 Terms and ConditionsApplicable to Assignment and Subletting.


(a)
Regardless of Lessor's consent, no assignment or subletting shall : (i) be
effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.





(b) Lessor
may accept Rent or performance of Lessee's obligations from any person other
than Lessee pending approval or disapproval of an assignment. Neither a delay in
the approval or disapproval of such assignment nor the acceptance of Rent or
performance shall constitute a waiver or estoppel of Lessor's right to exercise
its remedies for Lessee's Default or Breach.





(c)Lessor's
consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.


(d)In the
event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any
Guarantorsor anyone else responsible
for the performance of Lessee's obligations under this Lease, including any
assignee or sublessee, without first exhausting Lessor's remedies against any
other person or entity responsible therefor to Lessor, or any security held by
Lessor.





(e) Each request for consent
to an assignment or subletting shall be in writing, accompanied by information
relevant to Lessor's determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee,
including but not limited to the intended use and/or required modification of
the Premises, if any, together with a fee of $500 as consideration for Lessor's
considering and processing said request.  Lessee agrees to provide
Lessor with such other or additional information and/or documentation as may be
reasonably requested. (See also Paragraph
36)




(f) Any
assignee of, or
sublesseeTransfereeunder,
this Lease shall, by reason of accepting such assignment, entering into
such




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sublease,
or entering into possession of the Premises or any portion thereof, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.





(g)
Lessor's consent to any assignment or subletting shall not transfer to the
assignee or sublessee any Option granted to the original Lessee by this Lease
unless such transfer is specifically consented to by Lessor in writing. (See
Paragraph 39.2)




12.3Additional
Terms and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the
Premises and shall be deemed included in all subleases under this Lease whether
or not expressly incorporated therein:




(a) Lessee
hereby assigns and transfers to Lessor all of Lessee's interest in all Rent
payable on any sublease, and Lessor may collect such Rent and apply same toward
Lessee's obligations under this Lease; provided, however, that until a Breach
shall occur in the performance of Lessee's obligations, Lessee may collect said
Rent. In the event that the amount collected by Lessor exceeds Lessee's then
outstanding obligations any such excess shall be refunded to Lessee. Lessor
shall not, by reason of the foregoing or any assignment of such sublease, nor by
reason of the collection of Rent, be deemed liable to the sublessee for any
failure of Lessee to perform and comply with any of Lessee's obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating that a Breach exists in the
performance of Lessee's obligations under this Lease, to pay to Lessor all Rent
due and to become due under the sublease. Sublessee shall rely upon any such
notice from Lessor and shall pay all Rents to Lessor without any obligation or
right to inquire as to whether such Breach exists, notwithstanding any claim
from Lessee to the contrary.





(b) In the
event of a Breach by Lessee, Lessor may, at its option, require sublessee to
attorn to Lessor, in which event Lessor shall undertake the obligations of the
sublessor under such sublease from the time of the exercise of said option to
the expiration of such sublease; provided, however, Lessor shall not be liable
for any prepaid rents or security deposit paid by such sublessee to such
sublessor or for any prior Defaults or Breaches of such sublessor.





(c) Any matter
requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor.


(d) No
sublessee shall further assign or sublet all or any part of the Premises without
Lessor's prior written consent.


(e) Lessor
shall deliver a copy of any notice of Default or Breach by Lessee to the
sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The sublessee
shall have a right of reimbursement and offset from and against Lessee for any
such Defaults cured by the sublessee.





13.Default;
Breach; Remedies.


13.1 Default;
Breach. A "Default"is defined as a failure by the Lessee to comply with or perform any of
the terms, covenants, conditions
or Rules and Regulations under this Lease. A "Breach" is defined as the
occurrence of one or more of the following Defaults, and the failure of Lessee
to cure such Default within any applicable grace
period:
  (a) The
abandonment of the Premises; or the vacating of the Premises without providing a
commercially reasonable level of security, or where the coverage of the property
insurance described in Paragraph 8.3 is jeopardized as a result thereof, or
without providing reasonable assurances to minimize potential
vandalism.





(b) The
failure of Lessee to make any payment of Rent or any Security Deposit required
to be made by Lessee hereunder, whether to Lessor or to a third party, when due,
to provide reasonable evidence of insurance or surety bond, or to fulfill any
obligation under this Lease which endangers or threatens life or property, where
such failure continues for a period of 3 business days following written notice
to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY
DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING
LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES.





(c) The
failure of Lessee to allow Lessor and/or its agents access to the Premises or
the commission of waste, act or acts constituting public or private nuisance,
and/or an illegal activity on the Premises by Lessee, where such actions
continue for a period of 3 business days following written notice to
Lessee.





(d) The
failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an
unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial
statements, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or
Guarantor, (vii) any document requested under Paragraph 41, (viii)
material data safety sheets (MSDS), or (ix) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of 10 days following
written notice to Lessee.





(e) A
Default by Lessee as to the terms, covenants, conditions or provisions of this
Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those
described in subparagraphs 13.1(a), (b), (c) or (d), above, where such Default
continues for a period of 30 days after written notice; provided, however, that
if the nature of Lessee's Default is such that more than 30 days are reasonably
required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently
prosecutes such cure to completionwithin 60
days.





(f) The
occurrence of any of the following events: (i) the making of any general
arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor"
as defined in 11 U.S.C. § 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within 60 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within 30 days; provided, however, in the event that any provision of
this subparagraph is contrary to any applicable law, such provision shall be of
no force or effect, and not affect the validity of the remaining
provisions.





(g)The
discovery that any financial statement of Lessee or
of any Guarantorgiven to Lessor was materially
false.


(h) If
the performance of Lessee's obligations under this Lease is guaranteed: (i) the
death of a Guarantor, (ii) the terminationof a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iiiii) a Guarantor's becoming
insolvent or the subject of a bankruptcy filing, (iiiv) a Guarantor's refusal
to honor the guaranty, or (iv)
a Guarantor's breach of its guaranty obligation on an anticipatory basis,
and Lessee's failure, within 60 days following written notice of any such event,
to provide written alternative assurance or security, which, when coupled with
the then existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.





13.2Remedies.
If Lessee fails to perform any of its affirmative duties or obligations, within
10 days after written notice (or in case of an emergency, without notice),
Lessor may, at its option, perform such duty or obligation on Lessee's behalf,
including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. Lessee shall
pay to Lessor an amount equal to 115% of the costs and expenses incurred by
Lessor in such performance upon receipt of an invoice therefor. In the event of
a Breach, Lessor may, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach:




(a)
Terminate Lessee's right to possession of the Premises by any lawful means, in
which case this Lease shall terminate and Lessee shall immediately surrender
possession to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the unpaid Rent which had




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been
earned at the time of termination; (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided; (iii) the worth at the time of award
of the amount by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss that the Lessee proves
could be reasonably avoided; and (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by the Lessee's failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to the
cost of recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and that portion of any leasing commission paid by Lessor in connection with
this Lease applicable to the unexpired term of this Lease. The worth at the time
of award of the amount referred to in provision (iii) of the immediately
preceding sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of the District within which the Premises are
located at the time of award plus one percent. Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and
the unlawful detainer statute shall run concurrently, and the failure of Lessee
to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.





(b)
Continue the Lease and Lessee's right to possession and recover the Rent as it
becomes due, in which event Lessee may sublet or assign, subject only to
reasonable limitations.  Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.





(c) Pursue
any other remedy now or hereafter available under the laws or judicial decisions
of the state wherein the Premises are located. The expiration or termination of
this Lease and/or the termination of Lessee's right to possession shall not
relieve Lessee from liability under any indemnity provisions of this Lease as to
matters occurring or accruing during the term hereof or by reason of Lessee's
occupancy of the Premises.




13.3Inducement
Recapture. Any agreement for free or abated rent or other charges, or for
the giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement
Provisions", shall be deemed conditioned upon Lessee's full and faithful
performance of all of the terms, covenants and conditions of this Lease. Upon
Breach of this Lease by Lessee, any such Inducement Provision shall
automatically be deemed deleted from this Lease and of no further force or
effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an Inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such
acceptance.





13.4Late
Charges.  Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall immediately pay
to Lessor a one-time late charge equal to 10% of each such overdue amount or
$100, whichever is greater. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor's option, become due and payable quarterly in advance.





13.5Interest.  Any
monetary payment due Lessor hereunder, other than late charges, not received by
Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for non-scheduled payment, shall bear
interest from the date when due, as to scheduled payments, or the 31st day after
it was due as to non-scheduled payments. The interest ("Interest")
charged shall be computed at the rate of 10% per annum but shall not exceed the
maximum rate allowed by law. Interest is payable in addition to the potential
late charge provided for in Paragraph 13.4.





13.6Breach
by Lessor.


(a) Notice
of Breach. Lessor shall not be deemed in breach of this Lease unless
Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than 30 days after receipt by Lessor,
and any Lender whose name and address shall have been furnished to Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor's obligation is such that more than 30 days are reasonably required for
its performance, then Lessor shall not be in breach if performance is commenced
within such 30 day period and thereafter diligently pursued to
completion.





(b)Performance
by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within 30 days after receipt of said
notice, or if having commenced said cure they do not diligently pursue it to
completion, then Lessee may elect to cure said breach at Lessee's expense and
offset from Rent the actual and reasonable cost to perform such cure, provided
however, that such offset shall not exceed an amount equal to the greater of one
month's Base Rent or the Security Deposit, reserving Lessee's right to
reimbursement from Lessor for any such expense in excess of such offset. Lessee
shall document the cost of said cure and supply said documentation to
Lessor.





14.Condemnation.
If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively
"Condemnation"),
this Lease shall terminate as to the part taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more than 10% of
the floor area of the Unit, or more than 25% of the
parking spaces is taken by Condemnation, Lessee may, at Lessee's option,
to be exercised in writing within 10 days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If Lessee does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in proportion to the reduction in
utility of the Premises caused by such Condemnation.  Condemnation
awards and/or payments shall be the property of Lessor, whether such award shall
be made as compensation for diminution in value of the leasehold, the value of
the part taken, or for severance damages; provided, however, that Lessee shall
be entitled to any compensation paid by the condemnor for Lessee's relocation
expenses, loss of business goodwill and/or Trade Fixtures, without regard to
whether or not this Lease is terminated pursuant to the provisions of this
Paragraph. All Alterations and Utility Installations made to the Premises by
Lessee, for purposes of Condemnation only, shall be considered the property of
the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor.  In the event that this Lease is not terminated by
reason of the Condemnation, Lessor shall repair any damage to the Premises
caused by such Condemnation.


15.Brokerage
Fees.


15.1 Additional
Commission. In addition to the payments owed pursuant to Paragraph 1.10
above, and unless Lessor and the Brokers




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otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
or anyone affliated with Lessee acquires from Lessor any rights to the Premises
or other premises owned by Lessor and located within the Project, (c) if Lessee
remains in possession of the Premises, with the consent of Lessor, after the
expiration of this Lease, or (d) if Base Rent is increased, whether by agreement
or operation of an escalation clause herein, then, Lessor shall pay Brokers a
fee in accordance with the schedule of the Brokers in effect at the time of the
execution of this Lease.




15.2Assumption
of Obligations. Any buyer or transferee of Lessor's interest in this
Lease shall be deemed to have assumed Lessor'sobligation hereunder. Brokersshall
be third party beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and
31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees
pertaining to this Lease when due, then such amounts shall accrue Interest. In
addition, if Lessor fails to pay any amounts to Lessee's Broker when due,
Lessee's Broker may send written notice to Lessor and Lessee of such failure and
if Lessor fails to pay such amounts within 10 days after said notice, Lessee
shall pay said monies to its Broker and offset such amounts against Rent. In
addition, Lessee's Broker shall be deemed to be a third party beneficiary of any
commission agreement entered into by and/or between Lessor and Lessor's Broker
for the limited purpose of collecting any brokerage fee
owed.




15.3Representations
and Indemnities of Broker Relationships. Lessee and Lessor each represent
and warrant to the other that it has had no dealings with any person, firm,
broker or finder (other than the Brokers, if any) in connection with this Lease,
and that no one other than said named Brokers is entitled to any commission or
finder's fee in connection herewith. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, attorneys' fees
reasonably incurred with respect thereto.


16.Estoppel
Certificates.


(a) Each
Party (as "Responding
Party") shall within 10 days after written notice from the other Party
(the "Requesting
Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel
Certificate" form published by the AIR Commercial Real Estate
Association, plus such additional information, confirmation and/or statements as
may be reasonably requested by the Requesting Party.




(b) If the
Responding Party shall fail to execute or deliver the Estoppel Certificate
within such 10 day period, the Requesting Party may execute an Estoppel
Certificate stating that: (i) the Lease is in full force and effect without
modification except as may be represented by the Requesting Party, (ii) there
are no uncured defaults in the Requesting Party's performance, and (iii) if
Lessor is the Requesting Party, not more than one month's rent has been paid in
advance. Prospective purchasers and encumbrancers may rely upon the Requesting
Party's Estoppel Certificate, and the Responding Party shall be estopped from
denying the truth of the facts contained in said Certificate.





(c) If
Lessor desires to finance, refinance, or sell the Premises, or any part thereof,
Lessee and all
Guarantorsshall within 10 days after written notice from Lessor deliver
to any potential lender or purchaser designated by Lessor such financial
statements as may be reasonably required by such lender or purchaser, including
but not limited to Lessee's financial statements for the past 3 years. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set
forth.




17.Definition
of Lessor.  The term "Lessor"
as used herein shall mean the owner or owners at the time in question of the fee
title to the Premises, or, if this is a sublease, of the Lessee's interest in
the prior lease. In the event of a transfer of Lessor's title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in
cash or by credit) any unused Security Deposit held by Lessor. Upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.


18.Severability.
The invalidity of any provision of this Lease, as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other
provision hereof.


19.Days.
Unless otherwise specifically indicated to the contrary, the word "days"
as used in this Lease shall mean and refer to calendar
days.


20.Limitation
on Liability. The obligations of Lessor under this Lease shall not
constitute personal obligations of Lessor, or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor's
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.


21.Time of
Essence. Time is of the essence with respect to the performance of all
obligations to be performed or observed by the Parties under this
Lease.




22.No
Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers
that it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the use, nature, quality and character of the Premises.
Brokers have no responsibility with respect thereto or with respect to any
default or breach hereof by either Party.


23. Notices.


23.1 Notice
Requirements. All notices required or permitted by this Lease or
applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate in
writing.




23.2Date of
Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given 72 hours after the same is addressed as
required herein and mailed with postage prepaid. Notices delivered by United
States Express Mail or overnight courier that guarantees next day delivery shall
be deemed given 24 hours after delivery of the same to the Postal Service or
courier.  Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business
day.


24. Waivers.


(a) No
waiver by Lessor of the Default or Breach of any term, covenant or condition
hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent.


(b)The acceptance of Rent by Lessor shall
not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may
be


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accepted
by Lessor on account of monies or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.




(c) THE
PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL
MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE
STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS
LEASE.


25. Disclosures
Regarding The Nature of a Real Estate Agency Relationship.


(a)
When entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outsetunderstand what type of
agency relationship or representation it has with the agent or agents in the
transaction.  Lessor and Lessee acknowledge being advised by the
Brokers in this transaction, as
follows:




(i)Lessor's
Agent.A Lessor's agent under a listing agreement with the Lessor acts as the
agent for the Lessor only. A Lessor's agent or
subagent has the following affirmative obligations:To
the Lessor: A fiduciary duty of utmost care, integrity, honesty, and
loyalty in dealings
with the Lessor.To
the Lessee and the Lessor: a. Diligent exercise of reasonable skills and
care in performance of the agent's duties. b. Aduty of honest and fair
dealing and good faith. c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An
agent is not obligated to reveal to either Party any confidential information
obtained from the other Party which does not involve the affirmative duties set
forth above.




(ii)Lessee's
Agent.  An agent can agree to act as agent for the Lessee
only.  In these situations, the agent is not theLessor's agent, even if
by agreement the agent may receive compensation for services rendered, either in
full or in part from the Lessor. An agent acting only for a Lessee has the
following affirmative obligations.To
the Lessee:
A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings
with the Lessee.To
the Lessee and the Lessor: a. Diligent exercise of reasonable skills and
care in performance of the agent's duties. b. A duty of honest and fair
dealing and good faith. c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An
agent is not obligated to reveal to either Party any confidential information
obtained from the other Party which does not involve the affirmative duties set
forth above.




(iii)Agent
Representing Both Lessor and Lessee. A real estate agent, either acting
directly or through one or more associatelicenses, can legally be
the agent of both the Lessor and the Lessee in a transaction, but only with the
knowledge and consent of both the Lessor and the Lessee. In a dual agency
situation, the agent has the following affirmative obligations to both the
Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty
and loyalty in the dealings with either Lessor or the Lessee. b. Other duties to
the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In
representing both Lessor and Lessee, the agent may not without the express
permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that
the Lessee is willing to pay a higher rent than that offered. The above duties
of the agent in a real estate transaction do not relieve a Lessor or Lessee from
the responsibility to protect their own interests. Lessor and Lessee should
carefully read all agreements to assure that they adequately express their
understanding of the transaction. A real estate agent is a person qualified to
advise about real estate. If legal or tax advice is desired, consult a competent
professional.




(b) Brokers have no responsibility with
respect to any default or breach hereof by either Party. The Parties agree that
no lawsuit orother legal proceeding
involving any breach of duty, error or omission relating to this Lease may be
brought against Broker more than one year after the Start Date and that the
liability (including court costs and attorneys' fees), of any Broker with
respect to any such lawsuit and/or legal proceeding shall not exceed the fee
received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker's liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.




(c) Lessor and Lessee agree to identify to
Brokers as "Confidential" any communication or information given Brokers that is
consideredbysuch Party to be
confidential.




26.No
Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
150% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.


27.Cumulative
Remedies. No remedy or election hereunder shall be deemed exclusive but
shall, wherever possible, be cumulative with all other remedies at law or in
equity.


28.Covenants
and Conditions; Construction of Agreement. All provisions of this Lease
to be observed or performed by Lessee are both covenants and conditions. In
construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared
it.


29.Binding
Effect; Choice of Law. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located.  Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.


30. Subordination; Attornment;
Non-Disturbance.


30.1 Subordination.
This Lease and any
Option granted herebyshall be subject and subordinate to any ground
lease, mortgage, deed of trust,
or other hypothecation or security device (collectively, "Security
Device"), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and
extensions thereof. Lessee agrees that the holders of any such Security Devices
(in this Lease together referred to as "Lender")
shall have no liability or obligation to perform any of the obligations of
Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted
hereby superior to the lien of its Security Device by giving written
notice thereof to Lessee, whereupon this Leaseand such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.




30.2Attornment.
In the event that Lessor transfers title to the Premises, or the Premises are
acquired by another upon the foreclosure or termination of a Security DeviseDevice to which
this Lease is subordinated (i) Lessee shall, subject to the non-disturbance
provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter
into a new lease, containing all of the terms and provisions of this Lease, with
such new owner for the remainder of the term hereof, or, at the election of the
new owner, this Lease will automatically become a new lease between Lessee and
such new owner, and (ii) Lessor shall thereafter be relieved of any further
obligations hereunder and such new owner shall assume all of Lessor's
obligations, except that such new owner shall not: (a) be liable for any act or
omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) be subject to any offsets or defenses which Lessee
might have against any prior lessor, (c) be bound by prepayment of more than one
month's rent, or (d) be liable for the return of any security deposit paid to
any prior lessor which was not paid or credited to such new owner.




30.3Non-Disturbance.  With
respect to Security Devices entered into by Lessor after the execution of this
Lease, Lessee's subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a "Non-Disturbance
Agreement") from the Lender which Non-Disturbance Agreement provides that
Lessee's possession of the Premises, and this Lease, including any options
to extend the term hereof, will not be disturbed so long as Lessee is not
in Breach hereof and attorns to the record owner of the Premises. Further, within 60 days
after the execution of this Lease, Lessor shall, if requested by Lessee, use its
commercially reasonable efforts to obtain a Non-Disturbance Agreement from the
holder of any pre-existing Security Device which is secured by the Premises. In
the event that Lessor is unable to provide the


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Non-Disturbance Agreement
within said 60 days, then Lessee may, at Lessee's option, directly contact
Lender and attempt to negotiate for the execution and delivery of a
Non-Disturbance Agreement.




30.4Self-Executing.
The agreements contained in this Paragraph 30 shall be effective without the
execution of any further documents; provided, however, that, upon written
request from Lessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Lessee and Lessor shall execute such further
writings as may be reasonably required to separately document any subordination,
attornment and/or Non-Disturbance Agreement provided for herein.




31.Attorneys'
Fees. If any Party or Broker brings an action or proceeding involving the
Premises whether founded in tort, contract or equity, or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"Prevailing
Party" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys' fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach ($200 is a reasonable minimum per occurrence for such
services and consultation).


32.Lessor's
Access; Showing Premises; Repairs. Showing Premises; Repairs. Lessor and
Lessor's agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times after reasonable prior
notice for the purpose of showing the same to prospective purchasers, lenders,
or tenants, and making such alterations, repairs, improvements or additions to
the Premises as Lessor may deem necessary or desirable and the erecting, using
and maintaining of utilities, services, pipes and conduits through the Premises
and/or other premises as long as there is no material adverse effect on Lessee's
use of the Premises.  All such activities shall be without abatement
of rent or liability to Lessee.Notwithstanding anything
to the contrary contained herein, Lessor and any future tenant of the Building
shall have access to the Premises at any time in order to access the second
floor of the Building through the Premises.




33.Auctions.
Lessee shall not conduct, nor permit to be conducted, any auction upon the
Premises without Lessor's prior written consent. Lessor shall not be obligated
to exercise any standard of reasonableness in determining whether to permit an
auction.


34.Signs.
Lessor may place on the Premises ordinary "For Sale" signs at any time and
ordinary "For Lease" signs during the last 6 months of the term hereof. Except for ordinary "For
Sublease" signs which may be placed only on the Premises, Lessee shall
not place any sign upon the Project without Lessor's prior written consent. All
signs must comply with all Applicable Requirements.


35.Termination;
Merger. Unless specifically stated otherwise in writing by Lessor, the
voluntary or other surrender of this Lease by Lessee, the mutual termination or
cancellation hereof, or a termination hereof by Lessor for Breach by Lessee,
shall automatically terminate any sublease or lesser estate in the Premises;
provided, however, that Lessor may elect to continue any one or all existing
subtenancies.  Lessor's failure within 10 days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.


36.Consents.
Except as otherwise provided herein, wherever in this Lease the consent of a
Party is required to an act by or for the other Party, such consent shall not be
unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses
(including but not limited to architects', attorneys', engineers' and other
consultants' fees) incurred in the consideration of, or response to, a request
by Lessee for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance, shall
be paid by Lessee upon receipt of an invoice and supporting documentation
therefor.  Lessor's consent to any act, assignment or subletting shall
not constitute an acknowledgment that no Default or Breach by Lessee of this
Lease exists, nor shall such consent be deemed a waiver of any then existing
Default or Breach, except as may be otherwise specifically stated in writing by
Lessor at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request.


37. Guarantor.


37.1 Execution.
The Guarantors, if any, shall each execute a guaranty in the form most recently
published by the AIR Commercial Real Estate
Association,.




37.2Default.
It shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a) evidence of theexecution of the
guaranty, including the authority of the party signing on Guarantor's behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d)
written confirmation that the guaranty is still in
effect.


38. Quiet
Possession.  Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term
hereof.


39. Options. If Lessee is granted an
option, as defined below, then the following provisions shall
apply.


39.1. Definition.
"Option"shall mean: (a) the right to extend or reduce the term of or renew this
Lease or to extend or reduce the term of orrenew any lease that Lessee
has on other property of Lessor; (b) the right of first refusal or first offer
to lease either the Premises or other property of Lessor; (c) the right to
purchase, the right of first offer to purchase or the right of first refusal to
purchase the Premises or other property of Lessor.
  39.2Options
Personal To Original Lessee. Any Option granted to Lessee in this Lease
is personal to the original Lessee, and cannotbe assignedor exercised by anyone
other than said original Lessee and only while the original Lessee is in full
possession of the Premises and, if requested by Lessor, with Lessee certifying
that Lessee has no intention of thereafter assigning or
subletting.




39.3MultipleOptions.  In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless the
prior Options have been validly exercised.


39.4 Effect of Default on
Options.


(a)
Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Rent is unpaid (without
regard to whether notice thereof is given Lessee), (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or
more notices of separate Default, whether or not the Defaults are cured, during
the 12 month period immediately preceding the exercise of the
Option.




(b) The period of time within which an
Option may be exercised shall not be extended or enlarged by reason of Lessee's
inability toexercisean Option because of the provisions of Paragraph
39.4(a).




(c) An Option shall terminate and be of no
further force or effect, notwithstanding Lessee's due and timely exercise of the
Option, if,after such exercise and
prior to the commencement of the extended term or completion of the purchase,
(i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due
(without any necessity of Lessor to give notice thereof), or (ii) if Lessee
commits a Breach of this Lease.




40.Security
Measures. Lessee hereby acknowledges that the Rent payable to Lessor
hereunder does not include the cost of guard service or


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other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties.




41.Reservations.
Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary, (ii)
to cause the recordation of parcel maps and restrictions, and (iii) to create
and/or install new utility raceways, so long as such easements, rights,
dedications, maps, restrictions, and utility raceways do not unreasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate such
rights.


42.Performance
Under Protest. If at any time a dispute shall arise as to any amount or
sum of money to be paid by one Party to the other under the provisions hereof,
the Party against whom the obligation to pay the money is asserted shall have
the right to make payment "under protest" and such payment shall not be regarded
as a voluntary payment and there shall survive the right on the part of said
Party to institute suit for recovery of such sum. If it shall be adjudged that
there was no legal obligation on the part of said Party to pay such sum or any
part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay. A Party who does not initiate
suit for the recovery of sums paid "under protest" within 6 months shall be
deemed to have waived its right to protest such payment.


43. Authority.;Multiple Parties;
Execution.


(a) If
either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each Party shall, within 30
days after request, deliver to the other Party satisfactory evidence of such
authority.




(b) If
this Lease is executed by more than one person or entity as "Lessee", each such
person or entity shall be jointly and severally liable hereunder. It is agreed
that any one of the named Lessees shall be empowered to execute any amendment to
this Lease, or other document ancillary thereto and bind all of the named
Lessees, and Lessor may rely on the same as if all of the named Lessees had
executed such document.




(c) This
Lease may be executed by the Parties in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.




44.Conflict.
Any conflict between the printed provisions of this Lease and the typewritten or
handwritten provisions shall be controlled by the typewritten or handwritten
provisions.


45.Offer.
Preparation of this Lease by either party or their agent and submission of same
to the other Party shall not be deemed an offer to lease to the other Party.
This Lease is not intended to be binding until executed and delivered by all
Parties hereto.




46.Amendments.
This Lease may be modified only in writing, signed by the Parties in interest at
the time of the modification. As long as they do not materially change Lessee's
obligations hereunder, Lessee agrees to make such reasonable non-monetary
modifications to this Lease as may be reasonably required by a Lender in
connection with the obtaining of normal financing or refinancing of the
Premises.




47.Waiver of Jury Trial.THE PARTIES HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE
PROPERTY OR ARISING OUT OF THIS AGREEMENT.




48.Arbitration
of Disputes. An Addendum requiring the Arbitration of all disputes
between the Parties and/or Brokers arising out of this Lease


o is þ is not attached
to this Lease.


49.Americans
with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee's specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee's use of
the Premises requires modifications or additions to the Premises in order to be
in ADA compliance, Lessee agrees to make any such necessary modifications and/or
additions at Lessee's expense.




LESSOR
AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO.  THE PARTIES HEREBY AGREE
THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND
LESSEE WITH RESPECT TO THE PREMISES.




ATTENTION:
NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES
ARE URGED TO:




1.  SEEK
ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.


2.  RETAIN
APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES.
SAID INVESTIGATION
SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS
SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION
OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH
DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED
USE.




WARNING:
IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS
OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN
WHICH THE PREMISES ARE LOCATED.


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




Executed
      at:
                Los
      Angeles, California
                
                Executed:
                Los
      Angeles, CaliforniaOn:
                January
      22, 2009
                
                On:
                PartnerBy
      LESSOR:
                
                
                By LESSEE:1212
      Flower Real Estate, LLC,
                
                People's
      Liberation, Inc.,a
      Delaware limited liability company
                
                a
      California corporationBy:
                Petit
      Real Estate Limited Partnership
                
                By:Name Printed:
                its
      sole member
                
                Name Printed:FedeTitle:
                Kor
      Trio, LLC, its general partner
                
                Title:By:Name Printed:
                
                
                Name Printed:Title:
                
                
                Title:


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      16 OF 17INITIALS
              
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      - AIR COMMERCIAL REAL ESTATE ASSOCIATION
              
              FORM
      MTG-8-08/08E


Address:
              c/o
      Kor Realty Group, LLC
              
              Address:
              1212
      S. Flower St., Suite5001212
      S. Flower St., Suite 400
              
              Los
      Angeles, CA 90015Los
      Angeles, CA 90015Attention:
      Frank
      IaffaldanoTelephone:
              (213)745-2123[Note
      that prior to March 1, 2009, Lessor shall be located in Suite
      500]
              
              Facsimile:
              (213)745-2032Federal
      ID No.Telephone:
              (323)930-3700Facsimile:
              (323)930-3701Federal
      ID No.BROKER:
              
              
              BROKER:CB
      Richard Ellis
              
              Madison
      PartnersAtt:
              Nico
      M. Vilgiate
              
              Att:
              Gary
      WeissTitle:
              Senior
      Vice President
              
              Title:
              PartnerAddress:
              355
      S. Grand Avenue, 27th Floor
              
              Address:Los
      Angeles, CA 90071Telephone:
              (213)613-3331
              
              Telephone:
              ()Facsimile:
              (213)613-3068
              
              Facsimile:
              ()Federal
      ID No.
              
              
              Federal
      ID No.





NOTICE:
These forms are often modified to meet changing requirements of law and industry
needs. Always write or call to make sure you are utilizing the most current
form:  AIR Commercial Real Estate Association,  800 W 6th
Street, Suite 800, Los Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.:
(213) 687-8616.




(c)Copyright
1998 By AIR Commercial Real Estate Association. All rights
reserved.


No
part of these works may be reproduced in any form without permission in
writing.




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      17 OF 17INITIALS
            
            INITIALS©1998
      - AIR COMMERCIAL REAL ESTATE ASSOCIATION
            
            FORM
      MTG-8-08/08E