EXHIBIT 10.17


LEASE AGREEMENT


THIS LEASE
AGREEMENT is made this     day of August 2005, between ProLogis
Development Services Incorporated (“Landlord”), and the Tenant named below.


	
  Tenant:

  	
   

  	
  Liquidity Services, Inc.

  
	
   

  	
   

  	
   

  
	
  Tenant’s Representative,

  	
   

  	
  Brian Johnson

  
	
  Address, and Telephone:

  	
   

  	
  2131 K Street NW, 4th Floor

  
	
   

  	
   

  	
  Washington, DC 20037

  
	
   

  	
   

  	
  (202) 467-6868 ext. 262

  
	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
  That portion of the Building, containing
  approximately 48,507 rentable square feet, as determined by Landlord, as
  shown on Exhibit A.

  
	
   

  	
   

  	
   

  
	
  Project:

  	
   

  	
  Cranbury Business Park

  
	
   

  	
   

  	
   

  
	
  Building:

  	
   

  	
  Building Five

  
	
   

  	
   

  	
  5 Santa Fe Way

  
	
   

  	
   

  	
  Suite 2

  
	
   

  	
   

  	
  Cranbury, NJ 08512

  
	
   

  	
   

  	
   

  
	
  Tenant’s Proportionate Share of Project:

  	
   

  	
  2.35%

  
	
   

  	
   

  	
   

  
	
  Tenant’s Proportionate Share of Building:

  	
   

  	
  36.09%

  
	
   

  	
   

  	
   

  
	
  Lease Term:

  	
   

  	
  Beginning on the Commencement Date and ending on the
  last day of the 49 full calendar month thereafter.

  
	
   

  	
   

  	
   

  
	
  Lease Commencement Date:

  	
   

  	
  October 1, 2005

  
	
   

  	
   

  	
   

  
	
  Rent Commencement Date:

  	
   

  	
  November 1, 2005

  
	
   

  	
   

  	
   

  
	
  Initial Monthly Base Rent:

  	
   

  	
  See Addendum 1

  
	
   

  	
   

  	
   

  
	
  Initial Estimated Monthly Operating Expense
  Payments: (estimates only and subject to adjustment to
  actual costs and expenses according to the provisions of this Lease)

  	
   

  	
  1. Utilities:                                

                                                     

  2. Common Area
  Charges:     $1,374.37

                                                     

  3. Taxes:                                   $2,991.27

                                                     

  4. Insurance:                            $202.11

                                                     

  5. Others:   Mgmt.
  Fee          $687.18

   

  
	
   

  	
   

  	
   

  
	
  Initial Estimated Monthly Operating Expense
  Payments:

  	
   

  	
  $5,254.93

  
	
   

  	
   

  	
   

  
	
  Initial Monthly Base Rent and Operating Expense
  Payments:

  	
   

  	
  $24,051.39

  
	
   

  	
   

  	
   

  
	
  Security Deposit:

  	
   

  	
  $50,000.00

  
	
   

  	
   

  	
   

  
	
  Broker:

  	
   

  	
  Sheldon Gross Realty, Inc.

  
	
   

  	
   

  	
   

  
	
  Addenda:

  	
   

  	
  1.   Base Rent Adjustments   2.   Construction
  (Turnkey)   3.   One Renewal Option at Market   4.   Right of
  First Offer

  
	
   

  	
   

  	
   

  
	
  Exhibits:

  	
   

  	
  A. Site Plan B. Standard Customer Workletter C.
  Office Layout

  



 


1.             Granting
Clause.  In consideration of
the obligation of Tenant to pay rent as herein provided and in consideration of
the other terms, covenants, and conditions hereof, Landlord leases to Tenant,
and Tenant takes from Landlord, the Premises, to have and to hold for the Lease
Term, subject to the terms, covenants and conditions of this Lease.


2.             Acceptance
of Premises.  Tenant shall
accept the Premises in its condition as of the Commencement Date, subject to
all applicable laws, ordinances, regulations, covenants and restrictions.  Landlord has made no representation or warranty
as to the suitability of the Premises for the conduct of Tenant’s business, and



 1
 








Tenant waives any implied warranty that the Premises
are suitable for Tenant’s intended purposes. 
Except as provided in Paragraph 10, in no event shall Landlord have any
obligation for any defects in the Premises or any limitation on its use.  The taking of possession of the Premises
shall be conclusive evidence that Tenant accepts the Premises and that the
Premises were in good condition at the time possession was taken except for
items that are Landlord’s responsibility under Paragraph 10 and any punchlist
items agreed to in writing by Landlord and Tenant.


3.             Use.  The Premises shall be used only for the
purpose of receiving, storing, shipping and selling (but limited to wholesale
sales and Tenant’s online sales) products, materials and merchandise made
and/or distributed by Tenant and for such other lawful purposes as may be
incidental thereto; provided, however, with Landlord’s prior written consent,
Tenant may also use the Premises for light manufacturing.  Tenant shall not conduct or give notice of
any auction, liquidation, or going out of business sale on the Premises, except
for Tenant’s online sales.  Tenant will
use the Premises in a careful, safe and proper manner and will not commit
waste, overload the floor or structure of the Premises or subject the Premises
to use that would damage the Premises.  
Tenant shall not permit any objectionable or unpleasant odors, smoke,
dust, gas, noise, or vibrations to emanate from the Premises, or take any other
action that would constitute a nuisance or would disturb, unreasonably
interfere with, or endanger Landlord or any tenants of the Project.  Outside storage, including without limitation,
storage of trucks and other vehicles, is prohibited without Landlord’s prior
written consent. Tenant, at its sole expense, shall use and occupy the Premises
in compliance with all laws, including, without limitation, the Americans With
Disabilities Act, orders, judgments, ordinances, regulations, codes,
directives, permits, licenses, covenants and restrictions now or hereafter
applicable to the Premises (collectively, “Legal Requirements”).  The Premises shall not be used as a place of
public accommodation under the Americans With Disabilities Act or similar state
statutes or local ordinances or any regulations promulgated thereunder, all as
may be amended from time to time.  Tenant
shall, at its expense, make any alterations or modifications, within or without
the Premises, that are required by Legal Requirements related to Tenant’s use
or occupation of the Premises.  Tenant
will not use or permit the Premises to be used for any purpose or in any manner
that would void Tenant’s or Landlord’s insurance, increase the insurance risk,
or cause the disallowance of any sprinkler credits.  If any increase in the cost of any insurance
on the Premises or the Project is caused by Tenant’s use or occupation of the
Premises, or because Tenant vacates the Premises, then Tenant shall pay the
amount of such increase to Landlord.  Any
occupation of the Premises by Tenant prior to the Commencement Date shall be
subject to all obligations of Tenant under this Lease.


4.             Base Rent.  Tenant shall pay Base Rent in the amount set
forth above.  The first month’s Base
Rent, the Security Deposit, and the first monthly installment of estimated
Operating Expenses (as hereafter defined) shall be due and payable on the date
hereof, and Tenant promises to pay to Landlord in advance, without demand,
deduction or set-off, monthly installments of Base Rent on or before the first
day of each calendar month succeeding the Commencement Date.  Payments of Base Rent for any fractional
calendar month shall be prorated.  All
payments required to be made by Tenant to Landlord hereunder (or to such other
party as Landlord may from time to time specify in writing) shall be made by
Electronic Fund Transfer (“EFT”) of immediately available federal funds before
11:00 a.m., Eastern Time, at such place, within the continental United States,
as Landlord may from time to time designate to Tenant in writing.  The obligation of Tenant to pay Base Rent and
other sums to Landlord and the obligations of Landlord under this Lease are
independent obligations.  Tenant shall
have no right at any time to abate, reduce, or set-off any rent due hereunder
except as may be expressly provided in this Lease.  If Tenant is delinquent in any monthly
installment of Base Rent or of estimated Operating Expenses for more than 5 days,
Tenant shall pay to Landlord on demand a late charge equal to 8 percent of such
delinquent sum.  The provision for such
late charge shall be in addition to all of Landlord’s other rights and remedies
hereunder or at law and shall not be construed as a penalty.


5.             Security
Deposit.  The Security Deposit
shall be held by Landlord as security for the performance of Tenant’s
obligations under this Lease.  The
Security Deposit is not an advance rental deposit or a measure of Landlord’s
damages in case of Tenant’s default. 
Upon each occurrence of an Event of Default (hereinafter defined),
Landlord may use all or part of the Security Deposit to pay delinquent payments
due under this Lease, and the cost of any damage, injury, expense or liability
caused by such Event of Default, without prejudice to any other remedy provided
herein or provided by law.  Tenant shall
pay Landlord on demand the amount that will restore the Security Deposit to its
original amount.  Landlord’s obligation
respecting the Security Deposit is that of a debtor, not a trustee; no interest
shall accrue thereon.  The Security
Deposit shall be the property of Landlord, but shall be paid to Tenant when
Tenant’s obligations under this Lease have been completely fulfilled.  Landlord shall be released from any
obligation with respect to the Security Deposit upon transfer of this Lease and
the Premises to a person or entity assuming Landlord’s obligations under this
Paragraph 5.


6.             Operating
Expense Payments.  During each
month of the Lease Term, on the same date that Base Rent is due, Tenant shall
pay Landlord an amount equal to 1/12 of the annual cost, as estimated by
Landlord from time to time, of Tenant’s Proportionate Share (hereinafter
defined) of Operating Expenses for the Project. 
Payments thereof for any fractional calendar month shall be
prorated.  The term “Operating Expenses”
means all costs and expenses incurred by Landlord with respect to the
ownership, maintenance, and operation of the Project including, but not limited
to costs of: Taxes (hereinafter defined) and fees payable to tax consultants
and attorneys for consultation and contesting taxes; insurance; utilities;
maintenance, repair and replacement of all portions of the Project, including
without limitation, paving and parking areas, roads, roofs (including the roof membrane),
alleys, and driveways, mowing, landscaping, snow removal, exterior painting,
utility lines, heating, ventilation and air conditioning systems, lighting,
electrical systems and other mechanical and building systems; amounts paid to
contractors and subcontractors for work or services performed in connection
with any of the foregoing; charges or assessments of any association to which
the Project is subject; property management fees payable to a property manager,
including any affiliate of Landlord, or if there is no property manager, an
administration fee of 15 percent of Operating Expenses payable to Landlord;
security services, if any; trash collection, sweeping and removal; and
additions or alterations made by Landlord to the Project or the Building in
order to comply with Legal Requirements



 2
 








(other than those expressly required herein to be made
by Tenant) or that are appropriate to the continued operation of the Project or
the Building as a bulk warehouse facility in the market area, provided that the
cost of additions or alterations that are required to be capitalized for
federal income tax purposes shall be amortized on a straight line basis over a
period equal to the lesser of the useful life thereof for federal income tax
purposes or 10 years.  Operating Expenses
do not include costs, expenses, depreciation or amortization for capital
repairs and capital replacements required to be made by Landlord under
Paragraph 10 of this Lease, debt service under mortgages or ground rent under
ground leases, costs of restoration to the extent of net insurance proceeds
received by Landlord with respect thereto, leasing commissions, or the costs of
renovating space for tenants.


If Tenant’s total payments of Operating Expenses for any year
are less than Tenant’s Proportionate Share of actual Operating Expenses for
such year, then Tenant shall pay the difference to Landlord within 30 days
after demand, and if more, then Landlord shall retain such excess and credit it
against Tenant’s next payments.  For
purposes of calculating Tenant’s Proportionate Share of Operating Expenses, a
year shall mean a calendar year except the first year, which shall begin on the
Commencement Date, and the last year, which shall end on the expiration of this
Lease.  With respect to Operating
Expenses which Landlord allocates to the entire Project, Tenant’s “Proportionate
Share” shall be the percentage set forth on the first page of this Lease as
Tenant’s Proportionate Share of the Project as reasonably adjusted by Landlord
in the future for changes in the physical size of the Premises or the Project;
and, with respect to Operating Expenses which Landlord allocates only to the
Building, Tenant’s “Proportionate Share” shall be the percentage set forth on
the first page of this Lease as Tenant’s Proportionate Share of the Building as
reasonably adjusted by Landlord in the future for changes in the physical size
of the Premises or the Building. 
Landlord may equitably increase Tenant’s Proportionate Share for any
item of expense or cost reimbursable by Tenant that relates to a repair,
replacement, or service that benefits only the Premises or only a portion of
the Project or Building that includes the Premises or that varies with
occupancy or use.  The estimated
Operating Expenses for the Premises set forth on the first page of this Lease
are only estimates, and Landlord makes no guaranty or warranty that such
estimates will be accurate.


7.             Utilities.  Tenant shall pay for all water, gas,
electricity, heat, light, power, telephone, sewer, sprinkler services, refuse
and trash collection, and other utilities and services used on the Premises,
all maintenance charges for utilities, and any storm sewer charges or other
similar charges for utilities imposed by any governmental entity or utility provider,
together with any taxes, penalties, surcharges or the like pertaining to Tenant’s
use of the Premises.  Landlord may cause
at Tenant’s expense any utilities to be separately metered or charged directly
to Tenant by the provider.  Tenant shall
pay its share of all charges for jointly metered utilities based upon
consumption, as reasonably determined by Landlord.  No interruption or failure of utilities shall
result in the termination of this Lease or the abatement of rent. Tenant agrees
to limit use of water and sewer for normal restroom use.


8.             Taxes.  Landlord shall pay all taxes, assessments and
governmental charges (collectively referred to as “Taxes”) that accrue against
the Project during the Lease Term, which shall be included as part of the Operating
Expenses charged to Tenant.  Landlord may
contest by appropriate legal proceedings the amount, validity, or application
of any Taxes or liens thereof.  All
capital levies or other taxes assessed or imposed on Landlord upon the rents
payable to Landlord under this Lease and any franchise tax, any excise,
transaction, sales or privilege tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents from the Premises and/or the
Project or any portion thereof shall be paid by Tenant to Landlord monthly in
estimated installments or upon demand, at the option of Landlord, as additional
rent; provided, however, in no event shall Tenant be liable for any net income
taxes imposed on Landlord unless such net income taxes are in substitution for
any Taxes payable hereunder.  If any such
tax or excise is levied or assessed directly against Tenant, then Tenant shall
be responsible for and shall pay the same at such times and in such manner as
the taxing authority shall require. 
Tenant shall be liable for all taxes levied or assessed against any
personal property or fixtures placed in the Premises, whether levied or
assessed against Landlord or Tenant.


9.             Insurance.  Landlord shall maintain all risk property
insurance covering the full replacement cost of the Building.  Landlord may, but is not obligated to,
maintain such other insurance and additional coverages as it may deem
necessary, including, but not limited to, commercial liability insurance and
rent loss insurance.  All such insurance
shall be included as part of the Operating Expenses charged to Tenant.  The Project or Building may be included in a
blanket policy (in which case the cost of such insurance allocable to the
Project or Building will be determined by Landlord based upon the insurer’s
cost calculations).  Tenant shall also
reimburse Landlord for any increased premiums or additional insurance which
Landlord reasonably deems necessary as a result of Tenant’s use of the
Premises.


Tenant,
at its expense, shall maintain during the Lease Term: all risk property
insurance covering the full replacement cost of all property and improvements
installed or placed in the Premises by Tenant at Tenant’s expense; worker’s
compensation insurance with no less than the minimum limits required by law;
employer’s liability insurance with such limits as required by law; and
commercial liability insurance, with a minimum limit of $1,000,000 per
occurrence and a minimum umbrella limit of $1,000,000, for a total minimum
combined general liability and umbrella limit of $2,000,000 (together with such
additional umbrella coverage as Landlord may reasonably require) for property
damage, personal injuries, or deaths of persons occurring in or about the
Premises.  Landlord may from time to time
require reasonable increases in any such limits.  The commercial liability policies shall name
Landlord as an additional insured, insure on an occurrence and not a
claims-made basis, be issued by insurance companies which are reasonably
acceptable to Landlord, not be cancelable unless 30 days’ prior written notice
shall have been given to Landlord, contain a hostile fire endorsement and a
contractual liability endorsement and provide primary coverage to Landlord (any
policy issued to Landlord providing duplicate or similar coverage shall be
deemed excess over Tenant’s policies). 
Such policies or certificates thereof shall be delivered to Landlord by
Tenant upon commencement of the Lease Term and upon each renewal of said
insurance.



 3
 








The
all risk property insurance obtained by Landlord and Tenant shall include a
waiver of subrogation by the insurers and all rights based upon an assignment
from its insured, against Landlord or Tenant, their officers, directors,
employees, managers, agents, invitees and contractors, in connection with any
loss or damage thereby insured against. 
Neither party nor its officers, directors, employees, managers, agents,
invitees or contractors shall be liable to the other for loss or damage caused
by any risk coverable by all risk property insurance, and each party waives any
claims against the other party, and its officers, directors, employees,
managers, agents, invitees and contractors for such loss or damage.  The failure of a party to insure its property
shall not void this waiver.  Landlord and
its agents, employees and contractors shall not be liable for, and Tenant
hereby waives all claims against such parties for, business interruption and
losses occasioned thereby sustained by Tenant or any person claiming through
Tenant resulting from any accident or occurrence in or upon the Premises or the
Project from any cause whatsoever, including without limitation, damage caused
in whole or in part, directly or indirectly, by the negligence of Landlord or
its agents, employees or contractors.


10.           Landlord’s Repairs.  Landlord shall maintain, at its expense, the
structural soundness of the roof, foundation, and exterior walls of the
Building in good repair, reasonable wear and tear and uninsured losses and
damages caused by Tenant, its agents and contractors excluded.  The term “walls” as used in this Paragraph 10
shall not include windows, glass or plate glass, doors or overhead doors,
special store fronts, dock bumpers, dock plates or levelers, or office
entries.  Tenant shall promptly give Landlord
written notice of any repair required by Landlord pursuant to this
Paragraph 10, after which Landlord shall have a reasonable opportunity to
repair.


11.           Tenant’s Repairs.  Landlord, at Tenant’s expense as provided in
Paragraph 6, shall maintain in good repair and condition the parking areas and
other common areas of the Building, including, but not limited to driveways,
alleys, landscape and grounds surrounding the Premises.  Subject to Landlord’s obligation in Paragraph
10 and subject to Paragraphs 9 and 15, Tenant, at its expense, shall
repair,  replace and maintain in good
condition all portions of the Premises and all areas, improvements and systems
exclusively serving the Premises including, without limitation, dock and
loading areas, truck doors, plumbing, water and sewer lines up to points of
common connection, fire sprinklers and fire protection systems, entries, doors,
ceilings, windows, interior walls, and the interior side of demising walls, and
heating, ventilation and air conditioning systems.  Such repair and replacements include capital
expenditures and repairs whose benefit may extend beyond the Term.  Heating, ventilation and air conditioning
systems and other mechanical and building systems serving the Premises shall be
maintained at Tenant’s expense pursuant to maintenance service contracts
entered into by Tenant or, at Landlord’s election, by Landlord.  The scope of services and contractors under
such maintenance contracts shall be reasonably approved by Landlord.  At Landlord’s request, Tenant shall enter
into a joint maintenance agreement with any railroad that services the
Premises.  If Tenant fails to perform any
repair or replacement for which it is responsible, Landlord may perform such
work and be reimbursed by Tenant within 10 days after demand therefor.  Subject to Paragraphs 9 and 15, Tenant shall
bear the full cost of any repair or replacement to any part of the Building or
Project that results from damage caused by Tenant, its agents, contractors, or
invitees and any repair that benefits only the Premises.


12.           Tenant-Made Alterations
and Trade Fixtures.  Any
alterations, additions, or improvements made by or on behalf of Tenant to the
Premises (“Tenant-Made Alterations”) shall be subject to Landlord’s prior
written consent.  Tenant shall cause, at
its expense, all Tenant-Made Alterations to comply with insurance requirements
and with Legal Requirements and shall construct at its expense any alteration
or modification required by Legal Requirements as a result of any Tenant-Made Alterations.  All Tenant-Made Alterations shall be
constructed in a good and workmanlike manner by contractors reasonably
acceptable to Landlord and only good grades of materials shall be used.   All plans and specifications for any
Tenant-Made Alterations shall be submitted to Landlord for its approval.  Landlord may monitor construction of the
Tenant-Made Alterations.  Tenant shall
reimburse Landlord for its costs in reviewing plans and specifications and in
monitoring construction.  Landlord’s
right to review plans and specifications and to monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to see that such
plans and specifications or construction comply with applicable laws, codes,
rules and regulations.  Tenant shall
provide Landlord with the identities and mailing addresses of all persons
performing work or supplying materials, prior to beginning such construction,
and Landlord may post on and about the Premises notices of non-responsibility
pursuant to applicable law.  Tenant shall
furnish security or make other arrangements satisfactory to Landlord to assure
payment for the completion of all work free and clear of liens and shall
provide certificates of insurance for worker’s compensation and other coverage
in amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during
construction.  Upon completion of any
Tenant-Made Alterations, Tenant shall deliver to Landlord sworn statements setting
forth the names of all contractors and subcontractors who did work on the
Tenant-Made Alterations and final lien waivers from all such contractors and
subcontractors.  Upon surrender of the
Premises, all Tenant-Made Alterations and any leasehold improvements
constructed by Landlord or Tenant shall remain on the Premises as Landlord’s
property, except to the extent Landlord requires removal at Tenant’s expense of
any such items or Landlord and Tenant have otherwise agreed in writing in
connection with Landlord’s consent to any Tenant-Made Alterations.  Tenant shall repair any damage caused by such
removal.


Tenant,
at its own cost and expense and without Landlord’s prior approval, may erect
such shelves, bins, machinery and trade fixtures (collectively “Trade Fixtures”)
in the ordinary course of its business provided that such items do not alter
the basic character of the Premises, do not overload or damage the Premises,
and may be removed without injury to the Premises, and the construction,
erection, and installation thereof complies with all Legal Requirements and
with Landlord’s requirements set forth above. 
Tenant shall remove its Trade Fixtures and shall repair any damage
caused by such removal.


13.           Signs.  Tenant shall not make any changes to the
exterior of the Premises, install any exterior lights, decorations, balloons,
flags, pennants, banners, or painting, or erect or install any signs, windows
or door



 4
 








lettering, placards, decorations, or advertising media
of any type which can be viewed from the exterior of the Premises, without
Landlord’s prior written consent.  Upon
surrender or vacation of the Premises, Tenant shall have removed all signs and
repair, paint, and/or replace the building facia surface to which its signs are
attached.  Tenant shall obtain all
applicable governmental permits and approvals for sign and exterior
treatments.  All signs, decorations,
advertising media, blinds, draperies and other window treatment or bars or
other security installations visible from outside the Premises shall be subject
to Landlord’s approval and conform in all respects to Landlord’s requirements.


14.           Parking.  Tenant shall be entitled to park in common
with other tenants of the Project in those areas designated for nonreserved
parking.  Landlord may allocate parking
spaces among Tenant and other tenants in the Project if Landlord determines
that such parking facilities are becoming crowded.  Landlord shall not be responsible for
enforcing Tenant’s parking rights against any third parties.


15.           Restoration.  If at any time during the Lease Term the
Premises are damaged by a fire or other casualty, Landlord shall notify Tenant
within 60 days after such damage as to the amount of time Landlord reasonably
estimates it will take to restore the Premises. 
If the restoration time is estimated to exceed 6 months, either Landlord
or Tenant may elect to terminate this Lease upon notice to the other party
given no later than 30 days after Landlord’s notice.  If neither party elects to terminate this
Lease or if Landlord estimates that restoration will take 6 months or less,
then, subject to receipt of sufficient insurance proceeds, Landlord shall
promptly restore the Premises excluding the improvements installed by Tenant or
by Landlord and paid by Tenant, subject to delays arising from the collection
of insurance proceeds or from Force Majeure events.  Tenant at Tenant’s expense shall promptly
perform, subject to delays arising from the collection of insurance proceeds,
or from Force Majeure events, all repairs or restoration not required to be
done by Landlord and shall promptly re-enter the Premises and commence doing
business in accordance with this Lease. 
Notwithstanding the foregoing, either party may terminate this Lease if
the Premises are damaged during the last year of the Lease Term and Landlord
reasonably estimates that it will take more than one month to repair such
damage.  Base Rent and Operating Expenses
shall be abated for the period of repair and restoration in the proportion
which the area of the Premises, if any, which is not usable by Tenant bears to
the total area of the Premises.  Such
abatement shall be the sole remedy of Tenant, and except as provided herein,
Tenant waives any right to terminate the Lease by reason of damage or casualty
loss.


16.           Condemnation.  If any part of the Premises or the Project
should be taken for any public or quasi-public use under governmental
law, ordinance, or regulation, or by right of eminent domain, or by private
purchase in lieu thereof (a “Taking” or “Taken”), and the Taking would prevent
or materially interfere with Tenant’s use of the Premises or in Landlord’s
judgment would materially interfere with or impair its ownership or operation
of the Project, then upon written notice by Landlord this Lease shall terminate
and Base Rent shall be apportioned as of said date.  If part of the Premises shall be Taken, and
this Lease is not terminated as provided above, the Base Rent payable hereunder
during the unexpired Lease Term shall be reduced to such extent as may be fair
and reasonable under the circumstances. 
In the event of any such Taking, Landlord shall be entitled to receive
the entire price or award from any such Taking without any payment to Tenant,
and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such
award.  Tenant shall have the right, to
the extent that same shall not diminish Landlord’s award, to make a separate
claim against the condemning authority (but not Landlord) for such compensation
as may be separately awarded or recoverable by Tenant for moving expenses and
damage to Tenant’s Trade Fixtures, if a separate award for such items is made
to Tenant.


17.           Assignment and Subletting.  Without Landlord’s prior written consent,
Tenant shall not assign this Lease or sublease the Premises or any part thereof
or mortgage, pledge, or hypothecate its leasehold interest or grant any
concession or license within the Premises and any attempt to do any of the
foregoing shall be void and of no effect. 
For purposes of this paragraph, a transfer of the ownership interests
controlling Tenant shall be deemed an assignment of this Lease unless such
ownership interests are publicly traded. 
Notwithstanding the above, Tenant may assign or sublet the Premises, or
any part thereof, to any entity controlling Tenant, controlled by Tenant or
under common control with Tenant (a “Tenant Affiliate”), without the prior
written consent of Landlord.  Tenant
shall reimburse Landlord for all of Landlord’s reasonable out-of-pocket
expenses in connection with any assignment or sublease.  Upon Landlord’s receipt of Tenant’s written
notice of a desire to assign or sublet the Premises, or any part thereof (other
than to a Tenant Affiliate), Landlord may, by giving written notice to Tenant
within 30 days after receipt of Tenant’s notice, terminate this Lease with
respect to the space described in Tenant’s notice, as of the date specified in
Tenant’s notice for the commencement of the proposed assignment or sublease.


Notwithstanding
any assignment or subletting, Tenant and any guarantor or surety of Tenant’s
obligations under this Lease shall at all times remain fully responsible and
liable for the payment of the rent and for compliance with all of Tenant’s
other obligations under this Lease (regardless of whether Landlord’s approval
has been obtained for any such assignments or sublettings).  In the event that the rent due and payable by
a sublessee or assignee (or a combination of the rental payable under such
sublease or assignment plus any bonus or other consideration therefor or
incident thereto) exceeds the rental payable under this Lease, then Tenant
shall be bound and obligated to pay Landlord as additional rent hereunder all
such excess rental and other excess consideration within 10 days following
receipt thereof by Tenant.


If
this Lease be assigned or if the Premises be subleased (whether in whole or in
part) or in the event of the mortgage, pledge, or hypothecation of Tenant’s
leasehold interest or grant of any concession or license within the Premises or
if the Premises be occupied in whole or in part by anyone other than Tenant,
then upon a default by Tenant hereunder Landlord may collect rent from the
assignee, sublessee, mortgagee, pledgee, party to whom the leasehold interest
was hypothecated, concessionee or licensee or other occupant and, except to the
extent set forth in the preceding paragraph, apply the amount collected to the
next rent payable hereunder; and all such rentals collected by Tenant shall be
held in trust for Landlord and immediately forwarded to Landlord.  No such



 5
 








transaction or collection of rent or application
thereof by Landlord, however, shall be deemed a waiver of these provisions or a
release of Tenant from the further performance by Tenant of its covenants,
duties, or obligations hereunder.


18.           Indemnification.  Except for the
negligence of Landlord, its agents, employees or contractors, and to the extent
permitted by law, Tenant agrees to indemnify, defend and hold harmless
Landlord, and Landlord’s agents, employees and contractors, from and against
any and all losses, liabilities, damages, costs and expenses (including
attorneys’ fees) resulting from claims by third parties for injuries to any
person and damage to or theft or misappropriation or loss of property occurring
in or about the Project and arising from the use and occupancy of the Premises
or from any activity, work, or thing done, permitted or suffered by Tenant in
or about the Premises or due to any other act or omission of Tenant, its
subtenants, assignees, invitees, employees, contractors and agents.  The furnishing of insurance required
hereunder shall not be deemed to limit Tenant’s obligations under this
Paragraph 18.


19.           Inspection and Access.  Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose. 
Landlord and Landlord’s representatives may enter the Premises during
business hours for the purpose of showing the Premises to prospective
purchasers and, during the last year of the Lease Term, to prospective
tenants.  Landlord may erect a suitable
sign on the Premises stating the Premises are available to let or that the
Project is available for sale.  Landlord
may grant easements, make public dedications, designate common areas and create
restrictions on or about the Premises, provided that no such easement,
dedication, designation or restriction materially interferes with Tenant’s use
or occupancy of the Premises.  At
Landlord’s request, Tenant shall execute such instruments as may be necessary
for such easements, dedications or restrictions.


20.           Quiet Enjoyment.  If Tenant shall perform all of the covenants
and agreements herein required to be performed by Tenant, Tenant shall, subject
to the terms of this Lease, at all times during the Lease Term, have peaceful
and quiet enjoyment of the Premises against any person claiming by, through or
under Landlord.


21.           Surrender.  Upon termination of the Lease Term or earlier
termination of Tenant’s right of possession, Tenant shall surrender the
Premises to Landlord in the same condition as received, broom clean, ordinary
wear and tear and casualty loss and condemnation covered by Paragraphs 15 and
16 excepted.  Any Trade Fixtures,
Tenant-Made Alterations and property not so removed by Tenant as permitted or
required herein shall be deemed abandoned and may be stored, removed, and
disposed of by Landlord at Tenant’s expense, and Tenant waives all claims against
Landlord for any damages resulting from Landlord’s retention and disposition of
such property.  All obligations of Tenant
hereunder not fully performed as of the termination of the Lease Term shall
survive the termination of the Lease Term, including without limitation,
indemnity obligations, payment obligations with respect to Operating Expenses
and obligations concerning the condition and repair of the Premises.


22.           Holding Over.  If Tenant retains possession of the Premises
after the termination of the Lease Term, unless otherwise agreed in writing,
such possession shall be subject to immediate termination by Landlord at any
time, and all of the other terms and provisions of this Lease (excluding any
expansion or renewal option or other similar right or option) shall be
applicable during such holdover period, except that Tenant shall pay Landlord
from time to time, upon demand, as Base Rent for the holdover period, an amount
equal to double the Base Rent in effect on the termination date, computed on a
monthly basis for each month or part thereof during such holding over.  All other payments shall continue under the
terms of this Lease.  In addition, Tenant
shall be liable for all damages incurred by Landlord as a result of such
holding over.  No holding over by Tenant,
whether with or without consent of Landlord, shall operate to extend this Lease
except as otherwise expressly provided, and this Paragraph 22 shall not be
construed as consent for Tenant to retain possession of the Premises.  For purposes
of this Paragraph 22, “possession of the Premises” shall continue until, among
other things, Tenant has delivered all keys to the Premises to Landlord,
Landlord has complete and total dominion and control over the Premises, and
Tenant has completely fulfilled all obligations required of it upon termination
of the Lease as set forth in this Lease, including, without limitation, those
concerning the condition and repair of the Premises.


23.           Events of Default.  Each of the following events shall be an event
of default (“Event of Default”) by Tenant under this Lease:


(i)            Tenant shall fail to pay any
installment of Base Rent or any other payment required herein when due, and
such failure shall continue for a period of 5 days from the date such payment
was due.


(ii)           Tenant or any guarantor or surety of
Tenant’s obligations hereunder shall (A) make a general assignment for the
benefit of creditors; (B) commence any case, proceeding or other action seeking
to have an order for relief entered on its behalf as a debtor or to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property (collectively a “proceeding
for relief”); (C) become the subject of any proceeding for relief which is not
dismissed within 60 days of its filing or entry; or (D) die or suffer a legal
disability (if Tenant, guarantor, or surety is an individual) or be dissolved
or otherwise fail to maintain its legal existence (if Tenant, guarantor or
surety is a corporation, partnership or other entity).



 6
 








(iii)          Any insurance required to be
maintained by Tenant pursuant to this Lease shall be cancelled or terminated or
shall expire or shall be reduced or materially changed, except, in each case,
as permitted in this Lease.


(iv)          Tenant shall not occupy or shall
vacate the Premises or shall fail to continuously operate its business at the
Premises for the permitted use set forth herein, whether or not Tenant is in
monetary or other default under this Lease.


(v)           Tenant shall attempt or there shall
occur any assignment, subleasing or other transfer of Tenant’s interest in or
with respect to this Lease except as otherwise permitted in this Lease.


(vi)          Tenant shall fail to discharge any
lien placed upon the Premises in violation of this Lease within 30 days after
any such lien or encumbrance is filed against the Premises.


(vii)         Tenant shall fail to comply with any
provision of this Lease other than those specifically referred to in this
Paragraph 23, and except as otherwise expressly provided herein, such default
shall continue for more than 30 days after Landlord shall have given Tenant
written notice of such default.


24.           Landlord’s Remedies.  Upon each occurrence of an Event of Default
and so long as such Event of Default shall be continuing, Landlord may at any
time thereafter at its election: terminate this Lease or Tenant’s right of
possession, (but Tenant shall remain liable as hereinafter provided) and/or
pursue any other remedies at law or in equity. 
Upon the termination of this Lease or termination of Tenant’s right of
possession, it shall be lawful for Landlord, without formal demand or notice of
any kind, to re-enter the Premises by summary dispossession proceedings or any
other action or proceeding authorized by law and to remove Tenant and all
persons and property therefrom.  If Landlord
re-enters the Premises, Landlord shall have the right to keep in place and use,
or remove and store, all of the furniture, fixtures and equipment at the
Premises.


If
Landlord terminates this Lease, Landlord may recover from Tenant the sum
of:  all Base Rent and all other amounts
accrued hereunder to the date of such termination; the cost of reletting the
whole or any part of the Premises, including without limitation brokerage fees
and/or leasing commissions incurred by Landlord, and costs of removing and
storing Tenant’s or any other occupant’s property, repairing, altering,
remodeling, or otherwise putting the Premises into condition acceptable to a
new tenant or tenants, and all reasonable expenses incurred by Landlord in
pursuing its remedies, including reasonable attorneys’ fees and court costs;
and the excess of the then present value of the Base Rent and other amounts
payable by Tenant under this Lease as would otherwise have been required to be
paid by Tenant to Landlord during the period following the termination of this
Lease measured from the date of such termination to the expiration date stated
in this Lease, over the present value of any net amounts which Tenant
establishes Landlord can reasonably expect to recover by reletting the Premises
for such period, taking into consideration the availability of acceptable
tenants and other market conditions affecting leasing.  Such present values shall be calculated at a
discount rate equal to the 90-day U.S. Treasury bill rate at the date of such
termination.


If
Landlord terminates Tenant’s right of possession (but not this Lease), Landlord
may, but shall be under no obligation to, relet the Premises for the account of
Tenant for such rent and upon such terms as shall be satisfactory to Landlord
without thereby releasing Tenant from any liability hereunder and without
demand or notice of any kind to Tenant. 
For the purpose of such reletting Landlord is authorized to make any
repairs, changes, alterations, or additions in or to the Premises as Landlord
deems reasonably necessary or desirable. 
If the Premises are not relet, then Tenant shall pay to Landlord as
damages a sum equal to the amount of the rental reserved in this Lease for such
period or periods, plus the cost of recovering possession of the Premises
(including attorneys’ fees and costs of suit), the unpaid Base Rent and other
amounts accrued hereunder at the time of repossession, and the costs incurred
in any attempt by Landlord to relet the Premises.  If the Premises are relet and a sufficient
sum shall not be realized from such reletting [after first deducting therefrom,
for retention by Landlord, the unpaid Base Rent and other amounts accrued
hereunder at the time of reletting, the cost of recovering possession
(including attorneys’ fees and costs of suit), all of the costs and expense of
repairs, changes, alterations, and additions, the expense of such reletting
(including without limitation brokerage fees and leasing commissions) and the
cost of collection of the rent accruing therefrom] to satisfy the rent provided
for in this Lease to be paid, then Tenant shall immediately satisfy and pay any
such deficiency.  Any such payments due
Landlord shall be made upon demand therefor from time to time and Tenant agrees
that Landlord may file suit to recover any sums falling due from time to
time.  Notwithstanding any such reletting
without termination, Landlord may at any time thereafter elect in writing to
terminate this Lease for such previous breach.


Exercise
by Landlord of any one or more remedies hereunder granted or otherwise available
shall not be deemed to be an acceptance of surrender of the Premises and/or a
termination of this Lease by Landlord, whether by agreement or by operation of
law, it being understood that such surrender and/or termination can be effected
only by the written agreement of Landlord and Tenant.  Any law, usage, or custom to the contrary
notwithstanding, Landlord shall have the right at all times to enforce the
provisions of this Lease in strict accordance with the terms hereof; and the
failure of Landlord at any time to enforce its rights under this Lease strictly
in accordance with same shall not be construed as having created a custom in
any way or manner contrary to the specific terms, provisions, and covenants of
this Lease or as having modified the same. 
Tenant and Landlord further agree that forbearance or waiver by Landlord
to enforce its rights pursuant to this Lease or at law or in equity, shall not
be a waiver of Landlord’s right to enforce one or more of its rights in
connection with any subsequent default. 
A receipt by Landlord of rent or other payment with knowledge of the
breach of any covenant hereof shall not be deemed a waiver of such breach, and
no waiver by Landlord of any provision of this Lease shall be deemed to have
been made unless expressed in writing and signed by Landlord.  To the greatest extent permitted by law,
Tenant



 7
 








waives the service of notice of Landlord’s intention
to re-enter as provided for in any statute, or to institute legal proceedings
to that end, and also waives all right of redemption in case Tenant shall be
dispossessed by a judgment or by warrant of any court or judge.  The terms “enter,” “re-enter,” “entry” or “re-entry,”
as used in this Lease, are not restricted to their technical legal
meanings.  Any reletting of the Premises
shall be on such terms and conditions as Landlord in its sole discretion may
determine (including without limitation a term different than the remaining
Lease Term, rental concessions, alterations and repair of the Premises, lease
of less than the entire Premises to any tenant and leasing any or all other
portions of the Project before reletting the Premises).  Landlord shall not be liable, nor shall
Tenant’s obligations hereunder be diminished because of, Landlord’s failure to
relet the Premises or collect rent due in respect of such reletting.


25.           Tenant’s
Remedies/Limitation of Liability. 
Landlord shall not be in default hereunder unless Landlord fails to
perform any of its obligations hereunder within 30 days after written notice
from Tenant specifying such failure (unless such performance will, due to the
nature of the obligation, require a period of time in excess of 30 days, then
after such period of time as is reasonably necessary).  All obligations of Landlord hereunder shall
be construed as covenants, not conditions; and, except as may be otherwise
expressly provided in this Lease, Tenant may not terminate this Lease for
breach of Landlord’s obligations hereunder. 
All obligations of Landlord under this Lease will be binding upon Landlord
only during the period of its ownership of the Premises and not
thereafter.  The term “Landlord” in this
Lease shall mean only the owner, for the time being of the Premises, and in the
event of the transfer by such owner of its interest in the Premises, such owner
shall thereupon be released and discharged from all obligations of Landlord
thereafter accruing, but such obligations shall be binding during the Lease
Term upon each new owner for the duration of such owner’s ownership.  Any liability of Landlord under this Lease
shall be limited solely to its interest in the Project, and in no event shall
any personal liability be asserted against Landlord in connection with this
Lease nor shall any recourse be had to any other property or assets of Landlord.


26.           Waiver of Jury Trial.  TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL
BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING
OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.


27.           Subordination.  This Lease and Tenant’s interest and rights
hereunder are and shall be subject and subordinate at all times to the lien of
any first mortgage, now existing or hereafter created on or against the Project
or the Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant.  Tenant agrees, at the election of the holder
of any such mortgage, to attorn to any such holder.  Tenant agrees upon demand to execute,
acknowledge and deliver such instruments, confirming such subordination and
such instruments of attornment as shall be requested by any such holder.  Tenant hereby appoints Landlord attorney in
fact for Tenant irrevocably (such power of attorney being coupled with an
interest) to execute, acknowledge and deliver any such instrument and
instruments for and in the name of the Tenant and to cause any such instrument
to be recorded. Notwithstanding the foregoing, any such holder may at any time
subordinate its mortgage to this Lease, without Tenant’s consent, by notice in
writing to Tenant, and thereupon this Lease shall be deemed prior to such
mortgage without regard to their respective dates of execution, delivery or
recording and in that event such holder shall have the same rights with respect
to this Lease as though this Lease had been executed prior to the execution,
delivery and recording of such mortgage and had been assigned to such
holder.  The term “mortgage” whenever
used in this Lease shall be deemed to include deeds of trust, security
assignments and any other encumbrances, and any reference to the “holder” of a
mortgage shall be deemed to include the beneficiary under a deed of trust.


28.           Mechanic’s Liens.  Tenant has no express or implied authority to
create or place any lien or encumbrance of any kind upon, or in any manner to
bind the interest of Landlord or Tenant in, the Premises or to charge the
rentals payable hereunder for any claim in favor of any person dealing with
Tenant, including those who may furnish materials or perform labor for any
construction or repairs. Tenant covenants and agrees that it will pay or cause
to be paid all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises and that it will save and hold Landlord harmless from all loss, cost
or expense based on or arising out of asserted claims or liens against the
leasehold estate or against the interest of Landlord in the Premises or under
this Lease.  Tenant shall give Landlord
immediate written notice of the placing of any lien or encumbrance against the
Premises and cause such lien or encumbrance to be discharged within 30 days of
the filing or recording thereof; provided, however, Tenant may contest such
liens or encumbrances as long as such 
contest prevents foreclosure of the lien or encumbrance and Tenant
causes such lien or encumbrance to be bonded or insured over in a manner
satisfactory to Landlord within such 30 day period.


29.           Estoppel Certificates.  Tenant agrees, from time to time, within 10
days after request of Landlord, to execute and deliver to Landlord, or Landlord’s
designee, any estoppel certificate requested by Landlord, stating that this
Lease is in full force and effect, the date to which rent has been paid, that
Landlord is not in default hereunder (or specifying in detail the nature of
Landlord’s default), the termination date of this Lease and such other matters
pertaining to this Lease as may be requested by Landlord.  Tenant’s obligation to furnish each estoppel
certificate in a timely fashion is a material inducement for Landlord’s
execution of this Lease.  No cure or
grace period provided in this Lease shall apply to Tenant’s obligations to
timely deliver an estoppel certificate. 
Tenant hereby irrevocably appoints Landlord as its attorney in fact to
execute on its behalf and in its name any such estoppel certificate if Tenant
fails to execute and deliver the estoppel certificate within 10 days after
Landlord’s written request thereof.


30.           Environmental Requirements.  Except for Hazardous Material contained in
products used by Tenant in de minimis quantities for ordinary cleaning and
office purposes, Tenant shall not permit or cause any party



 8
 








to bring any Hazardous Material upon the Premises or
transport, store, use, generate, manufacture or release any Hazardous Material
in or about the Premises without Landlord’s prior written consent.  Tenant, at its sole cost and expense, shall
operate its business in the Premises in strict compliance with all
Environmental Requirements and shall remediate in a manner satisfactory to
Landlord any Hazardous Materials released on or from the Project by Tenant, its
agents, employees, contractors, subtenants or invitees.  Tenant shall complete and certify to disclosure
statements as requested by Landlord from time to time relating to Tenant’s
transportation, storage, use, generation, manufacture or release of Hazardous
Materials on the Premises.  The term “Environmental
Requirements” means all applicable present and future statutes, regulations,
ordinances, rules, codes, judgments, orders or other similar enactments of any
governmental authority or agency regulating or relating to health, safety, or
environmental conditions on, under, or about the Premises or the environment,
including without limitation, the following: 
the Comprehensive Environmental Response, Compensation and Liability
Act; the Resource Conservation and Recovery Act; and all state and local
counterparts thereto, and any regulations or policies promulgated or issued
thereunder.  The term “Hazardous
Materials” means and includes any substance, material, waste, pollutant, or
contaminant listed or defined as hazardous or toxic, under any Environmental
Requirements, asbestos and petroleum, including crude oil or any fraction
thereof, natural gas liquids, liquified natural gas, or synthetic gas usable
for fuel (or mixtures of natural gas and such synthetic gas).  As defined in Environmental Requirements,
Tenant is and shall be deemed to be the “operator” of Tenant’s “facility” and
the “owner” of all Hazardous Materials brought on the Premises by Tenant, its
agents, employees, contractors or invitees, and the wastes, by-products, or
residues generated, resulting, or produced therefrom.


Tenant
shall indemnify, defend, and hold Landlord harmless from and against any and
all losses (including, without limitation, diminution in value of the Premises
or the Project and loss of rental income from the Project), claims, demands,
actions, suits, damages (including, without limitation, punitive damages), expenses
(including, without limitation, remediation, removal, repair, corrective
action, or cleanup expenses), and costs (including, without limitation, actual
attorneys’ fees, consultant fees or expert fees and including, without
limitation, removal or management of any asbestos brought into the property or
disturbed in breach of the requirements of this Paragraph 30, regardless of
whether such removal or management is required by law) which are brought or
recoverable against, or suffered or incurred by Landlord as a result of any
release of Hazardous Materials for which Tenant is obligated to remediate as
provided above or any other breach of the requirements under this Paragraph 30
by Tenant, its agents, employees, contractors, subtenants, assignees or invitees,
regardless of whether Tenant had knowledge of such noncompliance.  The obligations of Tenant under this
Paragraph 30 shall survive any termination of this Lease.


Landlord
shall have access to, and a right to perform inspections and tests of, the
Premises to determine Tenant’s compliance with Environmental Requirements, its
obligations under this Paragraph 30, or the environmental condition of the
Premises.  Access shall be granted to
Landlord upon Landlord’s prior notice to Tenant and at such times so as to
minimize, so far as may be reasonable under the circumstances, any disturbance
to Tenant’s operations.  Such inspections
and tests shall be conducted at Landlord’s expense, unless such inspections or
tests reveal that Tenant has not complied with any Environmental Requirement,
in which case Tenant shall reimburse Landlord for the reasonable cost of such
inspection and tests.  Landlord’s receipt
of or satisfaction with any environmental assessment in no way waives any
rights that Landlord holds against Tenant.


31.           Rules and Regulations.  Tenant shall, at all times during the Lease
Term and any extension thereof, comply with all reasonable rules and
regulations at any time or from time to time established by Landlord covering
use of the Premises and the Project.  The
current rules and regulations are attached hereto.  In the event of any conflict between said
rules and regulations and other provisions of this Lease, the other terms and
provisions of this Lease shall control. 
Landlord shall not have any liability or obligation for the breach of
any rules or regulations by other tenants in the Project.


32.           Security Service.  Tenant acknowledges and agrees that, while
Landlord may patrol the Project, Landlord is not providing any security
services with respect to the Premises and that Landlord shall not be liable to
Tenant for, and Tenant waives any claim against Landlord with respect to, any
loss by theft or any other damage suffered or incurred by Tenant in connection
with any unauthorized entry into the Premises or any other breach of security
with respect to the Premises.


33.           Force Majeure.  Landlord shall not be held responsible for
delays in the performance of its obligations hereunder when caused by strikes,
lockouts, labor disputes, acts of God, inability to obtain labor or materials
or reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, delay in issuance of permits, enemy or
hostile governmental action, civil commotion, fire or other casualty, and other
causes beyond the reasonable control of Landlord (“Force Majeure”).


34.           Entire Agreement.  This Lease constitutes the complete agreement
of Landlord and Tenant with respect to the subject matter hereof.  No representations, inducements, promises or
agreements, oral or written, have been made by Landlord or Tenant, or anyone
acting on behalf of Landlord or Tenant, which are not contained herein, and any
prior agreements, promises, negotiations, or representations are superseded by
this Lease.  This Lease may not be
amended except by an instrument in writing signed by both parties hereto.


35.           Severability.  If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws, then and in
that event, it is the intention of the parties hereto that the remainder of
this Lease shall not be affected thereby. 
It is also the intention of the parties to this Lease that in lieu of
each clause or provision of this Lease that is illegal, invalid or
unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.



 9














 


36.           Brokers.  Tenant represents and warrants that it has
dealt with no broker, agent or other person in connection with this transaction
and that no broker, agent or other person brought about this transaction, other
than the broker, if any, set forth on the first page of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from and against any claims by
any other broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with regard to this leasing
transaction.


37.           Miscellaneous.  (a)  Any payments or
charges due from Tenant to Landlord hereunder shall be considered rent for all
purposes of this Lease.


(b)           If and when included within the term “Tenant,”
as used in this instrument, there is more than one person, firm or corporation,
each shall be jointly and severally liable for the obligations of Tenant.


(c)           All notices required or permitted to
be given under this Lease shall be in writing and shall be sent by registered
or certified mail, return receipt requested, or by a reputable national
overnight courier service, postage prepaid, or by hand delivery addressed to
the parties at their addresses below, and with a copy sent to Landlord at 14100
East 35th Place, Aurora, Colorado 80011.  
Either party may by notice given aforesaid change its address for all
subsequent notices.  Except where
otherwise expressly provided to the contrary, notice shall be deemed given upon
delivery.


(d)           Except as otherwise expressly
provided in this Lease or as otherwise required by law, Landlord retains the
absolute right to withhold any consent or approval.


(e)           At Landlord’s request from time to
time Tenant shall furnish Landlord with true and complete copies of its most
recent annual and quarterly financial statements prepared by Tenant or Tenant’s
accountants and any other financial information or summaries that Tenant
typically provides to its lenders or shareholders.


(f)            Neither this Lease nor a memorandum
of lease shall be filed by or on behalf of Tenant in any public record.  Landlord may prepare and file, and upon
request by Landlord Tenant will execute, a memorandum of lease.


(g)           The normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Lease or any exhibits or
amendments hereto.


(h)           The submission by Landlord to Tenant
of this Lease shall have no binding force or effect, shall not constitute an
option for the leasing of the Premises, nor confer any right or impose any
obligations upon either party until execution of this Lease by both parties.


(i)            Words of any gender used in this
Lease shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural, unless the context
otherwise requires.  The captions
inserted in this Lease are for convenience only and in no way define, limit or
otherwise describe the scope or intent of this Lease, or any provision hereof,
or in any way affect the interpretation of this Lease.


(j)            Any amount not paid by Tenant within
5 days after its due date in accordance with the terms of this Lease shall bear
interest from such due date until paid in full at the lesser of the highest
rate permitted by applicable law or 15 percent per year.  It is expressly the intent of Landlord and
Tenant at all times to comply with applicable law governing the maximum rate or
amount of any interest payable on or in connection with this Lease.  If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord’s and
Tenant’s express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any
new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.


(k)           Construction and interpretation of
this Lease shall be governed by the laws of the state in which the Project is
located, excluding any principles of conflicts of laws.


(l)            Time is of the essence as to the
performance of Tenant’s obligations under this Lease.


(m)          All exhibits and addenda attached
hereto are hereby incorporated into this Lease and made a part hereof.  In the event of any conflict between such
exhibits or addenda and the terms of this Lease, such exhibits or addenda shall
control.


(n)           In
the event either party hereto initiates litigation to enforce the terms and
provisions of this Lease, the non-prevailing party in such action shall
reimburse the prevailing party for its reasonable attorney’s fees, filing fees,
and court costs.


38.           Landlord’s Lien/Security
Interest.  Tenant hereby
grants Landlord a security interest, and this Lease constitutes a security
agreement, within the meaning of and pursuant to the Uniform Commercial Code of
the state in which the Premises are situated as to all of Tenant’s property
situated in, or upon, or used in connection with the Premises (except
merchandise sold in the ordinary course of business) as security for all of
Tenant’s obligations hereunder, including, without limitation, the obligation
to pay rent.  Such personalty thus
encumbered includes



 10
 






 



specifically all trade and other fixtures for the
purpose of this Paragraph and inventory, equipment, contract rights, accounts
receivable and the proceeds thereof.  In
order to perfect such security interest, Tenant shall execute such financing
statements and file the same at Tenant’s expense at the state and county
Uniform Commercial Code filing offices as often as Landlord in its discretion
shall require; and Tenant hereby irrevocably appoints Landlord its agent for
the purpose of executing and filing such financing statements on Tenant’s
behalf as Landlord shall deem necessary.


39.           Limitation of Liability of
Trustees, Shareholders, and Officers of ProLogis.  Any obligation or liability whatsoever of
ProLogis, a Maryland real estate investment trust, which may arise at any time
under this Lease or any obligation or liability which may be incurred by it
pursuant to any other instrument, transaction, or undertaking contemplated
hereby shall not be personally binding upon, nor shall resort for the
enforcement thereof be had to the property of, its trustees, directors,
shareholders, officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort, or otherwise.


IN
WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and
year first above written.


	
  TENANT:

  	
   

  	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liquidity
  Services, Inc.

  	
   

  	
   

  	
  PROLOGIS DEVELOPMENT SERVICES INCORPORATED, a
  Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Jaime Mateus-Tique

  	
   

  	
  Name:

  	
  Charles E. Sullivan

  	
   

  
	
  Title:

  	
  President & COO

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2131 K Street
  NW, 4th Floor

  	
   

  	
   

  	
  One Capital Drive

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Suite 103

  	
   

  
	
  Washington, DC
  20037

  	
   

  	
   

  	
   

  	
  Cranbury, NJ 08512

  	
   

  
									



 



 11
 






 



Rules and
Regulations


1.                                       The
sidewalk, entries, and driveways of the Project shall not be obstructed by
Tenant, or its agents, or used by them for any purpose other than ingress and
egress to and from the Premises.


2.                                       Tenant
shall not place any objects, including antennas, outdoor furniture, etc., in
the parking areas, landscaped areas or other areas outside of its Premises, or
on the roof of the Project.


3.                                       Except
for seeing-eye dogs, no animals shall be allowed in the offices, halls, or
corridors in the Project.


4.                                       Tenant
shall not disturb the occupants of the Project or adjoining buildings by the
use of any radio or musical instrument or by the making of loud or improper
noises.


5.                                       If
Tenant desires telegraphic, telephonic or other electric connections in the
Premises, Landlord or its agent will direct the electrician as to where and how
the wires may be introduced; and, without such direction, no boring or cutting
of wires will be permitted.  Any such
installation or connection shall be made at Tenant’s expense.


6.                                       Tenant
shall not install or operate any steam or gas engine or boiler, or other
mechanical apparatus in the Premises, except as specifically approved in the
Lease.  The use of oil, gas or
inflammable liquids for heating, lighting or any other purpose is expressly
prohibited.  Explosives or other articles
deemed extra hazardous shall not be brought into the Project.


7.                                       Parking
any type of recreational vehicles is specifically prohibited on or about the
Project.  Further, parking any type of trucks,
trailers or other vehicles in the Premises is specifically prohibited.  Except for the overnight parking of operative
vehicles, no vehicle of any type shall be stored in the parking areas at any
time.  In the event that a vehicle is
disabled, it shall be removed within 48 hours. 
There shall be no “For Sale” or other advertising signs on or about any
parked vehicle.  All vehicles shall be
parked in the designated parking areas in conformity with all signs and other
markings.  All parking will be open
parking, and no reserved parking, numbering or lettering of individual spaces
will be permitted except as specified by Landlord.


8.                                       Tenant
shall maintain the Premises free from rodents, insects and other pests.


9.                                       Landlord
reserves the right to exclude or expel from the Project any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs
or who shall in any manner do any act in violation of the Rules and Regulations
of the Project.


10.                                 Tenant
shall not cause any unnecessary labor by reason of Tenant’s carelessness or
indifference in the preservation of good order and cleanliness.  Landlord shall not be responsible to Tenant
for any loss of property on the Premises, however occurring, or for any damage
done to the effects of Tenant by the janitors or any other employee or person.


11.                                 Tenant
shall give Landlord prompt notice of any defects in the water, lawn sprinkler,
sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any
other service equipment affecting the Premises.


12.                                 Tenant
shall not permit storage outside the Premises, including without limitation,
outside storage of trucks and other vehicles, or dumping of waste or refuse or
permit any harmful materials to be placed in any drainage system or sanitary
system in or about the Premises.


13.                                 All
moveable trash receptacles provided by the trash disposal firm for the Premises
must be kept in the trash enclosure areas, if any, provided for that purpose.


14.                                 No
auction, public or private, will be permitted on the Premises or the Project,
except for Tenant’s online sales.


15.                                 No
awnings shall be placed over the windows in the Premises except with the prior
written consent of Landlord.


16.                                 The
Premises shall not be used for lodging, sleeping or cooking or for any immoral
or illegal purposes or for any purpose other than that specified in the
Lease.  No gaming devices shall be
operated in the Premises.



 12
 






 



17.                                 Tenant
shall ascertain from Landlord the maximum amount of electrical current which
can safely be used in the Premises, taking into account the capacity of the
electrical wiring in the Project and the Premises and the needs of other
tenants, and shall not use more than such safe capacity.  Landlord’s consent to the installation of
electric equipment shall not relieve Tenant from the obligation not to use more
electricity than such safe capacity.


18.                                 Tenant
assumes full responsibility for protecting the Premises from theft, robbery and
pilferage.


19.                                 Tenant
shall not install or operate on the Premises any machinery or mechanical
devices of a nature not directly related to Tenant’s ordinary use of the
Premises and shall keep all such machinery free of vibration, noise and air
waves which may be transmitted beyond the Premises.



 13
 






 



ADDENDUM 1


BASE RENT
ADJUSTMENTS


ATTACHED TO AND A PART OF THE LEASE AGREEMENT

DATED     , BETWEEN


ProLogis Development Services Incorporated

and

Liquidity Services, Inc.


Base Rent shall equal the following amounts for the
respective periods set forth below:




	
  Period

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  October 1, 2005 to October 31, 2005

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  November 1, 2005 to October 31, 2006

  	
   

  	
  $

  	
  18,796.46

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  November 1, 2006 to October 31, 2007

  	
   

  	
  $

  	
  19,172.39

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  November 1, 2007 to October 31, 2008

  	
   

  	
  $

  	
  19,555.84

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  November 1, 2008
  to October 31, 2009

  	
   

  	
  $

  	
  19,946.96

  	
   

  






 



 14
 






 



ADDENDUM 2


CONSTRUCTION

(TURNKEY)


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT

DATED    , BETWEEN


ProLogis
Development Services Incorporated

and

Liquidity Services, Inc.


(a)   Landlord
agrees to furnish or perform at Landlord’s sole cost and expense those items of
construction and those improvements (the “Initial Improvements”) specified
below:


Construct approximately 1,200 square feet of finished office space in
accordance with the Office Floor Plan, Exhibit C, and Landlord’s Standard
Customer Workletter, attached hereto as Exhibit B.  Further, Landlord shall provide up to an
additional (48) 400-watt, metal halide fixtures in the warehouse.


Landlord may
collect a construction management fee, payable by Tenant within 30 days
following receipt of Landlord’s invoice from time to time throughout the period
of construction of the Initial Improvements, which such fee shall be calculated
based upon the scope of work of the Initial Improvements as described herein,
taking into account costs generally payable for similar services within the
market area in which the Project is located.


(b)           If Tenant shall desire any changes,
Tenant shall so advise Landlord in writing and Landlord shall determine whether
such changes can be made in a reasonable and feasible manner.  Any and all costs of reviewing any requested
changes, and any and all costs of making any changes to the Initial
Improvements which Tenant may request and which Landlord may agree to shall be
at Tenant’s sole cost and expense and shall be paid to Landlord upon demand and
before execution of the change order.


(c)           Landlord shall proceed with and
complete the construction of the Initial Improvements.  As soon as such improvements have been
Substantially Completed, Landlord shall notify Tenant in writing of the date
that the Initial Improvements were Substantially Completed.  Such date, unless an earlier date is
specified as the Commencement Date in this Lease or otherwise agreed to in
writing between Landlord and Tenant, shall be the “Commencement Date,”  unless the completion of such improvements
was delayed due to any act or omission of, or delay caused by, Tenant
including, without limitation, Tenant’s failure to approve plans, complete
submittals or obtain permits within the time periods agreed to by the parties
or as reasonably required by Landlord, in which case the Commencement Date
shall be the date such improvements would have been completed but for the
delays caused by Tenant.  The Initial
Improvements shall be deemed substantially completed (“Substantially
Completed”) when, in the opinion of the construction manager (whether an
employee or agent of Landlord or a third party construction manager) (“Construction
Manager”), the Premises are substantially completed except for punch list
items which do not prevent in any material way the use of the Premises for the
purposes for which they were intended. 
In the event Tenant, its employees, agents, or contractors cause construction
of such improvements to be delayed, the date of Substantial Completion shall be
deemed to be the date that, in the opinion of the Construction Manager,
Substantial Completion would have occurred if such delays had not taken
place.  Without limiting the foregoing,
Tenant shall be solely responsible for delays caused by Tenant’s request for
any changes in the plans, Tenant’s request for long lead items or Tenant’s
interference with the construction of the Initial Improvements, and such delays
shall not cause a deferral of the Commencement Date beyond what it otherwise
would have been.  After the Commencement
Date Tenant shall, upon demand, execute and deliver to Landlord a letter of
acceptance of delivery of the Premises. 
In the event of any dispute as to the Initial Improvements, including the
Commencement Date, the certificate of the Construction Manager shall be
conclusive absent manifest error.


(d)           The failure of Tenant to take
possession of or to occupy the Premises shall not serve to relieve Tenant of
obligations arising on the Commencement Date or delay the payment of rent by
Tenant.  Subject to applicable ordinances
and building codes governing Tenant’s right to occupy or perform in the
Premises, Tenant shall be allowed to install its tenant improvements,
machinery, equipment, fixtures, or other property on the Premises during the
final stages of completion of construction provided that Tenant does not
thereby interfere with the completion of construction or cause any labor
dispute as a result of such installations, and provided further that Tenant
does hereby agree to indemnify, defend, and hold Landlord harmless from any
loss or damage to such property, and all liability, loss, or damage arising
from any injury to the Project or the property of Landlord, its contractors,
subcontractors, or materialmen, and any death or personal injury to any person
or persons arising out of such installations, unless any such loss, damage,
liability, death, or personal injury was caused by Landlord’s negligence.  Any such occupancy or performance in the
Premises shall be in accordance with the provisions



 15
 






 



governing Tenant-Made Alterations and Trade
Fixtures in the Lease, and shall be subject to Tenant providing to Landlord
satisfactory evidence of insurance for personal injury and property damage
related to such installations and satisfactory payment arrangements with
respect to installations permitted hereunder. 
Delay in putting Tenant in possession of the Premises shall not serve to
extend the term of this Lease or to make Landlord liable for any damages
arising therefrom.


ADDENDUM 3


ONE
RENEWAL OPTION AT MARKET


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT

DATED    , BETWEEN


ProLogis
Development Services Incorporated

and

Liquidity Services, Inc.


(a)   Provided
that as of the time of the giving of the Extension Notice and the Commencement
Date of the Extension Term, (x) Tenant is the Tenant originally named herein,
(y) Tenant actually occupies all of the Premises initially demised under
this Lease and any space added to the Premises, and (z) no Event of Default
exists or would exist but for the passage of time or the giving of notice, or
both; then Tenant shall have the right to extend the Lease Term for an
additional term of 4 years (such additional term is hereinafter called
the “Extension Term”) commencing on the day following the expiration of
the Lease Term (hereinafter referred to as the “Commencement Date of the
Extension Term”).  Tenant shall give
Landlord notice (hereinafter called the “Extension Notice”) of its
election to extend the term of the Lease Term at least 9 months, but not
more than 12 months, prior to the scheduled expiration date of the Lease Term.


(b)   The Base
Rent payable by Tenant to Landlord during the Extension Term shall be the
greater of (i) the Base Rent applicable to the last year of the initial Lease
term and (ii) the then prevailing market rate for comparable space in the
Project and comparable buildings in the vicinity of the Project, taking into
account the size of the Lease, the length of the renewal term, market escalations
and the credit of Tenant.  The Base Rent
shall not be reduced by reason of any costs or expenses saved by Landlord by
reason of Landlord’s not having to find a new tenant for such premises
(including, without limitation, brokerage commissions, costs of improvements,
rent concessions or lost rental income during any vacancy period).  In the event Landlord and Tenant fail to
reach an agreement on such rental rate and execute the Amendment (defined
below) at least 6 months prior to the expiration of the Lease, then
Tenant’s exercise of the renewal option shall be deemed withdrawn and the Lease
shall terminate on its original expiration date.


(c)   The
determination of Base Rent does not reduce the Tenant’s obligation to pay or
reimburse Landlord for Operating Expenses and other reimbursable items as set
forth in the Lease, and Tenant shall reimburse and pay Landlord as set forth in
the Lease with respect to such Operating Expenses and other items with respect
to the Premises during the Extension Term without regard to any cap on such
expenses set forth in the Lease.


(d)   Except for
the Base Rent as determined above, Tenant’s occupancy of the Premises during
the Extension Term shall be on the same terms and conditions as are in effect
immediately prior to the expiration of the initial Lease Term; provided,
however, Tenant shall have no further right to any allowances, credits or
abatements or any options to expand, contract, renew or extend the Lease.


(e)   If Tenant
does not give the Extension Notice within the period set forth in paragraph (a)
above, Tenant’s right to extend the Lease Term shall automatically
terminate.  Time is of the essence as to
the giving of the Extension Notice.


(f)    Landlord
shall have no obligation to refurbish or otherwise improve the Premises for the
Extension Term.  The Premises shall be
tendered on the Commencement Date of the Extension Term in “as-is” condition.


(g)   If the
Lease is extended for the Extension Term, then Landlord shall prepare and
Tenant shall execute an amendment to the Lease confirming the extension of the
Lease Term and the other provisions applicable thereto (the “Amendment”).


(h)   If Tenant
exercises its right to extend the term of the Lease for the Extension Term
pursuant to this Addendum, the term  “Lease
Term” as used in the Lease, shall be construed to include, when practicable,
the Extension Term except as provided in (d) above.



 16
 






 



ADDENDUM 4


RIGHT OF
FIRST OFFER


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT

DATED    , BETWEEN


ProLogis
Development Services Incorporated

and

Liquidity Services, Inc.


(a)   “Offered
Space” shall mean The adjacent 85,893 SF unit currently occupied by Delta
Apparel.


(b)   Provided
that as of the date of the giving of Landlord’s Notice, (x) Tenant is the
Tenant originally named herein, (y) Tenant actually occupies all of the
Premises originally demised under this Lease and any premises added to the
Premises, and (z) no Event of Default or event which but for the passage of
time in the giving of notice, or both, would constitute an Event of Default has
occurred and is continuing, if at any time during the Lease Term any lease for
any portion of the Offered Space shall expire, then Landlord, before offering
such Offered Space to anyone, other than the tenant then occupying such space
(or its affiliates), shall offer to Tenant the right to include the Offered
Space within the Premises on the same terms and conditions upon which Landlord
intends to offer the Offered Space for lease.


(c)   Such offer
shall be made by Landlord to Tenant in a written notice (hereinafter called the
“First Offer Notice”) which offer shall designate the space being offered and
shall specify the terms which Landlord intends to offer with respect to any
such Offered Space.  Tenant may accept
the offer set forth in the First Offer Notice by delivering to Landlord an
unconditional acceptance (hereinafter called “Tenant’s Notice”) of such offer
within 5 business days after delivery by Landlord of the First Offer Notice to
Tenant.  Time shall be of the essence
with respect to the giving of Tenant’s Notice. 
If Tenant does not accept (or fails to timely accept) an offer made by
Landlord pursuant to the provisions of this Addendum with respect to the
Offered Space designated in the First Offer Notice, Landlord shall be under no
further obligation with respect to such space by reason of this Addendum.


(d)   Tenant must
accept all Offered Space offered by Landlord at any one time if it desires to
accept any of such Offered Space and may not exercise its right with respect to
only part of such space.  In addition, if
Landlord desires to lease more than just the Offered Space to one tenant,
Landlord may offer to Tenant pursuant to the terms hereof all such space which
Landlord desires to lease, and Tenant must exercise its rights hereunder with
respect to all such space and may not insist on receiving an offer for just the
Offered Space.


(e)   If Tenant
at any time declines any Offered Space offered by Landlord, Tenant shall be
deemed to have irrevocably waived all further rights under this Addendum, and
Landlord shall be free to lease the Offered Space to third parties including on
terms which may be less favorable to Landlord than those offered to Tenant.



 17