EXHIBIT 10.28


 


OFFICE LEASE


 


This lease is made and entered into at Salem, Oregon, this 19 day of
January 1999, by and between Retro, LLC,
Landlord, and Advanced TelCom Group, Inc., a California
corporation, Tenant.


 


Landlord hereby leases to Tenant a portion of the building located at
198 Commercial St. SE, Salem, Oregon (the “Building”), as follows:  approximately 6,873 net useable square feet on
the first floor as shown on the attached floor plan marked as Exhibit “A”, (the
“Premises”).  Said Premises shall include
twenty (20) parking spaces.  Said parking
spaces shall be either non-exclusive permit parking spaces located on the third
through fifth floors of the adjacent city-owned parking structure, and/or
parking spaces for exclusive use in either one of the surface parking lots
located diagonally across Commercial Street, and/or behind the parking garage
on Ferry Street detailed on Exhibits “B” & “C”, or a combination thereof.  The exact location of said parking spaces and
Tenant suite number shall be determined prior to occupancy.


 


Tenant’s proportionate share of total building square footage for
purposes of Sections 32 and 34 shall be twenty and three tenths (20.3%) percent.  Tenant’s total rentable square feet,
including their proportionate share of common areas, as further detailed in
paragraph 2, is approximately 7,815.


 


Landlord and Tenant covenant and agree as follows:


 


1.                                      Term
and Monthly Base Rent.


This lease is for a term of ten (10) years commencing on the later of
the following (the “Commencement Date”):  (A) the date by which all of the following
have occurred:  (i) Landlord has
substantially completed the Tenant Improvements set forth in Section 39 in
accordance with the Lease, (ii) there remains no incomplete or defective item
of the Tenant Improvements that would adversely effect Tenant’s intended use of
the Premises; (iii) Landlord has delivered possession of the Premises to
Tenant; and (iv) Landlord has obtained all approvals and permits from the
appropriate governmental authorities required for the legal occupancy of the
Premises for Tenant’s intended use; or (B) one hundred twenty (120) days from
execution hereof (the “Commencement Date”), and continuing through the last day
of the one hundred twentieth (120th) month thereafter, at a Monthly
Full Service Gross (FSG) Base Rent for the usable area as follows:


 


	
  Year 1 $9,627.50

  	
  per mo. FSG

  	
  Year 6

  	
  $10,734.00 per mo. FSG

  
	
  Year 2 $9,820.00

  	
  per mo. FSG

  	
  Year 7

  	
  $11,056.00 per mo. FSG

  



 


	
   

  	
   

  	
  Please initial

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Landlord

  	
  Tenant

  



 


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  Year 3 $10,016.00

  	
  per mo. FSG

  	
  Year 8

  	
  $11,387.00 per mo. FSG

  
	
  Year 4 $10,217.00

  	
  per mo. FSG

  	
  Year 9

  	
  $11,729.00 per mo. FSG

  
	
  Year 5 $10,421.00

  	
  per mo. FSG

  	
  Year 10

  	
  $12,081.00 per mo. FSG

  



 


Rent is payable in advance on the first day of each month commencing on
the Commencement Date.  The rent for the
first month of the lease term shall be paid by Tenant upon the execution of the
lease agreement.


 


2.                                      Common
Areas.


Landlord shall grant to Tenant and Tenant’s employees, agents, customers
and invitees the non-exclusive right during the Lease Term and any renewal Term
to use in common with others granted the use thereof the Common Areas which
shall be those areas, indoors and outdoors, provided by Landlord for the
general use of the tenants of the Building and shall include, without
limitation, the restrooms, if any, for the use of more than one tenant or the
public, lobbies, common, hallways, parking areas, roadways, pedestrian
sidewalks, delivery areas, landscaped areas and all other areas or improvements
which may be provided by Landlord for the general use of tenants of the
Building and their agents, employees and customers.  The manner in which the Common Areas shall be
maintained and the expenditures therefor shall be at the reasonable discretion
of the Landlord.  Landlord shall be
responsible for the operation, management and maintenance of the Common Areas.  The manner in which the Common Areas shall be
maintained shall be at the reasonable discretion of the Landlord; provided however,
that Landlord shall use reasonable efforts not to unduly interfere with or
disrupt Tenant’s occupancy of the Building. 
Tenant shall pay monthly as additional rent Tenant’s proportionate share
of interior space devoted to the Common Areas (Common Area Rent).  Said Common Areas of the Building are
stipulated to be 5,400 square feet, which equates to 13.7% of the overall
building square footage excluding basement. 
Tenant’s proportionate share of the Common Areas equals 1,096 square
feet.  Tenant’s monthly base rental for
it’s proportionate share of the Common Area is Sixteen Hundred forty-four and
no/100 Dollars ($1,644.00).  The total
usable and common area base monthly rental for year one is $11,271.50
($9,627.50 + $1,644.00 = $11,271.50).  The
monthly rent on the common area shall be increased on an annual basis at the
same rate as the usable area which is 2% annually for the first five years and
3% annually for the second five years of the lease term which shall be the
following amounts:


 


	
  Year 1

  	
  $1,644.00 per mo.

  	
  Year 6

  	
  $1,833.00 per mo.

  
	
  Year 2

  	
  $1,677.00 per mo.

  	
  Year 7

  	
  $1,888.00 per mo.

  
	
  Year 3

  	
  $1,710.00 per mo.

  	
  Year 8

  	
  $1,945.00 per mo.

  
	
  Year 4

  	
  $1,745.00 per mo.

  	
  Year 9

  	
  $2,003.00 per mo.

  
	
  Year 5

  	
  $1,780.00 per mo.

  	
  Year 10

  	
  $2,063.00 per mo.

  



 


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3.                                      Delivery
of Possession.


Should Landlord be unable to deliver possession of the Premises on the
date fixed for the commencement of the term, commencement will be deferred and
Tenant shall owe no rent until notice from Landlord tendering possession to
Tenant.  Landlord shall have no liability
to Tenant for delay in delivering possession, nor shall such delay extend the
term of this lease in any manner unless the parties execute a written extension
agreement.  In the event the Commencement
Date shall not have occurred for any reason which is within Landlords control,
on or before May 31, 1999 then the date Tenant is otherwise obliged to commence
payment of rent shall be delayed by one additional day for each day that the
Commencement Date is delayed beyond May 31, 1999.  In the event the Commencement Date shall not
have occurred for any reason which is within Landlords control, on or before
June 30, 1999, then Tenant may terminate this Lease by written notice to Landlord,
whereupon any monies previously paid by Tenant to Landlord shall be reimbursed
to Tenant.


 


4.                                      Rent
Payment.


Tenant shall pay the Base Rent for the Premises and any additional rent
provided herein without deduction or offset. 
Rent for any partial month during the lease term shall be prorated to
reflect the number of days during the month that Tenant occupies the Premises.  Additional rent means amounts determined
under Sections 32 through 34 of this Lease and any other sums payable by Tenant
to Landlord under this Lease.  Rent not
paid within five (5) days of when due shall bear interest at the rate of
one-and-one-half percent per month until paid. 
Landlord may at its option impose a late charge of $.05 for each $1 of
rent for rent payments made more than 5 days late in lieu of interest for the
first month of delinquency, without waiving any other remedies available for
default.  Failure to impose a late charge
shall not be a waiver of Landlord’s rights hereunder.


 


5.                                      Security
Deposit.


Tenant shall pay upon the execution hereof a security deposit equal to
one months base rental totaling $11,271.50. 
Said security deposit shall be held by Landlord for the term of the
lease, including the option to extend, if exercised by Tenant, for Tenant’s
faithful performance of all lease terms. 
Landlord shall return all or a portion of Tenant’s security deposit upon
termination of the lease and the Premises being returned by Tenant to Landlord
free from any defaults and in satisfactory condition reasonable wear and tear
excepted.


 


6.                                      Use.


Tenant shall use the Premises for general office, storage and
maintenance of telecommunications equipment, marketing, sales and customer
service and other related office uses and for no other purpose without Landlord’s
written consent.  In connection with its
use, Tenant shall at its expense promptly comply and cause the Premises to
comply with all applicable laws, ordinances, rules and regulations of any
public authority and shall not annoy, obstruct, or interfere with the rights of
other


 


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tenants of the Building.  Tenant
shall create no nuisance nor allow any objectionable fumes, noise, or
vibrations to be emitted from the Premises. 
Tenant shall not conduct any activities that will in any manner degrade
or damage the reputation of the Building. 
In the event Landlord’s insurance rates on the building increase due to
Tenant’s particular use, Tenant agrees to pay 100% of the additional cost.  Notwithstanding anything to the contrary in
the Lease, Tenant shall not be required to comply with or cause the Premises to
comply with any laws, rules, regulations, codes, ordinances, underwriters’
requirements, covenants, conditions and restrictions (collectively, “Laws”)
unless such compliance is necessitated solely due to Tenant’s particular use of
the Premises.


 


7.                                      Equipment.


Tenant shall install in the Premises office equipment as is customary
for their use and shall not overload the floors or existing electrical circuits
of the Premises or Building or alter the plumbing or wiring of the Premises or
Building.  Landlord must approve in
advance the location of and manner of installing any additional wiring or
electrical, HVAC, heat generating or communication equipment or exceptionally
heavy articles.  All telecommunications
and computer related equipment, electrical, conduit, cables and wiring,
additional dedicated circuits and any additional air conditioning required
because of heat generating equipment or special lighting installed by Tenant, at
it’s expense, shall also be operated on a monthly basis at Tenant’s expense.  Landlord acknowledges that Tenant, at it’s
sole cost, shall install additional electrical service, an approximate 15’ x 20’
transformer room and HVAC in order to operate the equipment that Tenant plans
to install into the building.  Landlord
must approve of the location of Tenant’s equipment and the additional
electrical and HVAC prior to installation. 
Tenant agrees to remove, at it’s sole cost, all of its equipment,
electrical, conduit, generator and all other personal property or trade
fixtures at the end of the lease term, including option, if exercised, and
restore the building to it’s condition prior to the installation of Tenant’s
improvements and equipment.  The
restoration of the building shall also include the removal of the transformer
required by PGE to be located in the building, the 3 hour fire rated walls,
overhead and personnel doors and replace exterior block wall with two (2)
windows the same size and material as the ones removed.


 


8.                                      Signs.


No signs, awnings, antennas, or other apparatus shall be painted on or
attached to the Building or anything placed on any glass or woodwork of the
Premises or positioned so as to be visible from outside the Premises without Landlord’s
written approval, which shall not be unreasonably withheld, delayed or
conditioned as to design, materials, size, location, and color.  All signs installed by Tenant shall comply
with Landlord’s standards for signs and all applicable codes and all signs and
sign hardware shall be removed upon termination of this lease with the sign
location restored to its former state unless Landlord elects to retain all or
any portion thereof.  Said installation,
removal and restoration shall be at Tenant’s sole cost and expense.


 


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Notwithstanding the foregoing, Landlord shall provide, at Tenant’s sole
cost, a lobby tenant directory and suite entry sign as well as two (2) exterior
signs mounted on the entry of the building. 
The cost of the two (2) exterior building signs shall be approximately
$1,100.00 installed.  The exterior
building signs are totally at Tenant’s option. 
The total cost of all signage shall not exceed $1,500.00 installed.  Tenant’s execution hereof shall be deemed to
be Tenant’s approval of the terms of this section.


 


9.                                      Utilities
and Services.


Landlord will furnish water and electricity to the Building at all
times and will furnish heat and air conditioning during the normal Building
hours as established by Landlord which, at a minimum, shall be 7 am - 7 pm
Monday through Friday and Saturday 8 am - 12 pm.  Janitorial service will be provided Monday
through Friday in accordance with the regular schedule of the Building, which
schedule and service may change from time to time.  Tenant shall comply with all government laws
or regulations regarding the use or reduction of use of utilities on the
Premises.  Interruption of services or
utilities shall not be deemed an eviction or disturbance of Tenant’s use and
possession of the Premises, render Landlord liable to Tenant for damages, or
relieve Tenant from performance of Tenant’s obligations under this lease.  Landlord shall take all reasonable steps to
correct any interruptions in service.  Electrical
service furnished will be 110 volts unless different service already exists in
the Premises.  Tenant shall provide its
own surge protection for power furnished to the Premises.  The utility service provided by Landlord will
be for normal administrative office use and does not include the utility
service for Tenant’s special equipment needs. 
Tenant shall pay separately for their special utility and service and
repair needs for their equipment and the additional HVAC.  If there is any interruption, failure, stoppage
or interference of the utilities, services or access to the Premises or due to
the presence of any Hazardous Materials on or about the Building or the project
of which the Building is a part (the “Project”) (except to the extent released
or emitted by Tenant), and such interruption continues for seven (7)
consecutive calendar days, then Tenant shall be entitled to an equitable
abatement of rent to the extent of the interference with Tenant’s use of the
Premises occasioned thereby.  If the
interference, which is in control of the Landlord, persists for more than
thirty (30) consecutive calendar days, then Tenant shall have the right to
terminate the Lease.


 


10.                               Extra
Usage.


If Tenant uses excessive amounts of utilities or services of any kind
because of operation outside of normal Building hours, high demands from office
machinery and equipment, nonstandard lighting, or any other cause, Landlord may
impose a reasonable charge for supplying such extra utilities or services,
which charge shall be payable monthly by Tenant in conjunction with rent
payments.  In case of dispute over any
extra charge under this section, Landlord shall designate a qualified
independent engineer whose decision shall be conclusive on both parties.  Landlord and Tenant shall each pay one-half
of the cost of such determination.


 


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11.                               Security.


Landlord may but shall have no obligation to provide security service
or to adopt security measures regarding the Premises, and Tenant shall
cooperate with all reasonable security measures adopted by Landlord.  Tenant may install a security system within
the leased Premises with Landlord’s written consent which will not be
unreasonably withheld.  Landlord will be
provided with an access code to any security system.  Landlord may modify the type or amount of
security measures or services provided to the Building or the Premises at any
time.  Notwithstanding anything to the
contrary in the Lease, Landlord shall not have access to the switch area except
in the event of an emergency, and in the event of such emergency, must be
accompanied by an authorized agent of Tenant.


 


12.                               Maintenance
and Repair.


Landlord shall have no liability for failure to perform required
maintenance and repair unless written notice of such maintenance or repair is
given by Tenant, and Landlord fails to commence efforts to remedy the problem
in a reasonable time and manner.  Landlord
shall have the right to erect scaffolding and other apparatus necessary for the
purpose of making repairs, and Landlord shall have no liability for
interference with Tenant’s use because of repairs and installations provided
Landlord shall use reasonable efforts to minimize disruption to Tenant’s
business.  Tenant shall have no claim
against Landlord for any interruption or reduction of services or interference
with Tenant’s occupancy, and no such interruption or reduction shall be
construed as a constructive or other eviction of Tenant provided Landlord shall
use reasonable efforts to minimize disruption to Tenant’s business.  Repair of damage caused by negligent or
intentional acts or breach of this lease by Tenant, its employees or invitees
shall be at Tenant’s expense after first applying the proceeds of insurance to
cover such loss, if any.  Notwithstanding
the foregoing, Landlord shall have no obligation whatsoever for the maintenance
and repair of the additional electrical and HVAC installed in the Premises by
Tenant due to Tenant’s special equipment needs.


 


Notwithstanding the foregoing, Landlord shall perform and construct,
and Tenant shall have no responsibility to perform or construct, any repair,
maintenance or improvements (a) necessitated by the acts or omissions of
Landlord or any other occupant of the Building, or their respective agents,
employees or contractors, (b) occasioned by fire or other casualty or
condemnation, (c) which could be treated as a “capital expenditure” under
generally accepted accounting principles, (d) to the heating, ventilating, air
conditioning, electrical, water, sewer, and plumbing systems serving the
Premises or the Building other than any additional systems installed by Tenant,
and (e) to any portion of the Building outside of the demising walls of the
Premises.  Notwithstanding the foregoing,
Tenant shall pay for its share of the repairs described in subsections (c)-(e)
to the extent such costs are properly included in operating expenses.


 


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Landlord warrants and represents that, as of the Commencement Date, (i)
the Premises, and the Building will comply with all applicable laws, rules,
regulations, codes, ordinances, underwriters’ requirements, covenants,
conditions and restrictions, (ii) the Premises will be in good and clean
operating condition and repair, (iii) the electrical, mechanical, HVAC,
plumbing, sewer, elevator and other systems serving the Premises and the
Building will be in good operating condition and repair, and (iv) the roof of
the Building will be in good condition and water tight.  Landlord shall, promptly after receipt of
notice from Tenant, remedy any non-compliance with such warranty at Landlord’s
sole cost and expense.


 


13.                               Alterations.


Tenant shall not make any alterations, additions, or improvements to
the Premises, change the color of the interior, or install any wall or floor
covering without Landlord’s prior written consent which may be withheld in
Landlord’s reasonable discretion, excepting the alterations and additions
acknowledged and approved by Landlord herein. 
Any such improvements, alterations, wiring, cables or conduit installed
by Tenant shall at once become part of the Premises and belong to Landlord
except for removable machinery and unattached movable trade fixtures.  Landlord may at its option require that
Tenant remove any improvements, alterations, wiring, cables or conduit
installed by or for Tenant and restore the Premises to the original condition
upon termination of this lease.  Landlord
shall have the right to approve the contractor used by Tenant for any work in the
Premises, which approval shall not be unreasonably withheld delayed or
conditioned and to post notices of nonresponsibility in connection with work
being performed by Tenant in the Premises. 
Work by Tenant shall comply with all laws then applicable to the
Premises.


 


14.                               Indemnity.


Tenant shall not allow any liens to attach to the Building or Tenant’s
interest in the Premises as a result of its activities.  Except to the extent of the negligence or
willful misconduct of Landlord or its agents, contractors, or invitees Tenant
shall indemnify and defend Landlord and its managing agents from any claim,
liability, damage, or loss occurring on the Premises, arising out of any
activity by Tenant, its agents, or invitees or resulting from Tenant’s failure
to comply with any term of this lease.  Except
to the extent of the negligence or willful misconduct of Landlord or its
agents, contractors, or invitees neither Landlord nor its managing agent shall
have any liability to Tenant because of loss or damage to Tenant’s property or
for death or bodily injury caused by the acts or omissions of other Tenants of
the Building, or by third parties (including criminal acts).  Notwithstanding anything to the contrary in
this Lease, Landlord shall not be released or indemnified from, and shall
indemnify, defend, protect and hold harmless Tenant from, all losses, damages,
liabilities, judgments, actions, claims, attorneys’ fees, consultants’ fees,
payments, costs and expenses arising from the negligence or willful misconduct
of Landlord or its agents, contractors, licensees or invitees, Landlord’s
violation of any law, order or regulation, or a breach of Landlord’s
obligations or representations under the Lease.


 


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15.                               Insurance.


Tenant shall carry liability insurance with limits of not less Two
Million Dollars ($2,000,000), combined single limit bodily injury and property
damage which insurance shall have an endorsement naming Landlord and Landlord’s
managing agent, if any, as an additional insured, covering the liability
insured under Section 14 of this lease and be in form and with companies
reasonably acceptable to Landlord.


 


Prior to occupancy, Tenant shall furnish a certificate evidencing such
insurance which shall state that the coverage shall not be canceled or
materially changed without 10 days advance notice to Landlord and Landlord’s
managing agent, if any.  A renewal
certificate shall be furnished at least 10 days prior to expiration of any
policy.  Landlord shall maintain “all
risk” property insurance insuring against risk of loss or damage to the
Building for the full replacement cost thereof.


 


16.                               Fire
or Casualty.


“Major Damage” means damage by fire or other casualty to the Building
or the Premises which causes the Premises or any substantial portion of the
Building to be unusable, or which will cost more than 25% of the pre-damage
value of the Building to repair, or which is not covered by insurance.  In case of Major Damage, Landlord may elect
to terminate this lease by notice in writing to the Tenant within 30 days after
such date.  If this lease is not
terminated following Major Damage, or if damage occurs which is not Major
Damage, Landlord shall promptly restore the Premises to the condition existing
just prior to the damage.  Landlord shall
not be required to restore damage to tenant improvements or alterations
installed by Tenant.  Rent shall be
reduced from the date of damage until the date restoration work being performed
by Landlord is substantially complete, with the reduction to be in proportion
to the area of the Premises not useable by Tenant.  Notwithstanding the foregoing, in the event
such damage cannot reasonably be or is not infact repaired, within 180 days of
the date thereof, Tenant may terminate this lease.  Notwithstanding anything to the contrary in
the Lease, Landlord shall not have the right to terminate the Lease if (i) the
Building is damaged by a peril required to be insured against by Landlord under
the Lease, or (ii) the damage is relatively minor (e.g., the cost of
repair or restoration does not exceed five percent (5%) of the then replacement
cost of the Building).


 


17.                               Waiver
of Subrogation.


Tenant shall be responsible for insuring its personal property and
trade fixtures located on the Premises and any alterations or tenant
improvements it has made to the Premises. 
Notwithstanding anything to the contrary herein neither Landlord, its
managing agent nor Tenant or their respective agents shall be liable to the
other for any loss or damage caused by water damage, sprinkler leakage, fire,
or any of the risks that are or could be covered by a special all risk property
insurance policy, or for any business interruption without regard to the
negligence of either party, and there shall be no subrogated claim by one party’s
insurance carrier against the other party arising out of any such loss.  Each party shall cause each insurance policy
it obtains to


 


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include a waiver of subrogation regarding the liabilities released
hereby.  All of Landlord’s and Tenant’s
repair and indemnity obligations under the Lease shall be subject to the waiver
contained in this paragraph.


 


18.                               Eminent
Domain.


If a condemning authority takes title by eminent domain or by agreement
in lieu thereof to the entire Building or a portion sufficient to render the
Premises unsuitable for Tenant’s use, then either party may elect to terminate
this lease effective on the date that possession is taken by the condemning
authority.  Rent shall be reduced for the
remainder of the term in an amount proportionate to the reduction in area of
the Premises caused by the taking.  All
condemnation proceeds shall belong to Landlord, and Tenant shall have no claim
against Landlord or the condemnation award because of the taking provided,
however, Tenant shall receive a portion of the condemnation proceeds (whether
by award or payment under threat of condemnation) based on:  (i) the unamortized value, allocable to the
remainder of the Lease term, of any improvements installed at Tenant’s expense,
which are not removable; (ii) Tenant’s moving cost; (iii) loss to Tenant’s
goodwill as a consequence of the condemnation; and (iv) Tenant’s trade
fixtures.


 


19.                               Assignment
and Subletting.


This lease shall bind and inure to the benefit of the parties, their
respective heirs, successors, and assigns, provided that Tenant shall not
assign its interest under this lease or sublet all or any portion of the
Premises without first obtaining Landlord’s consent in writing.  No assignment shall relieve Tenant of its
obligation to pay rent or perform other obligations required by this lease, and
no consent to one assignment or subletting shall be a consent to any further
assignment or subletting.  Landlord shall
not unreasonably withhold, delay or condition its consent to any assignment or
subletting provided the proposed Tenant is compatible with Landlord’s normal
standards for the Building.  Compatibility
may or may not be based on a competitive use within the building.  Landlord, in its reasonable discretion, shall
make this determination.  If an
assignment or subletting is permitted, any cash profit, or the net value of any
other consideration received by Tenant as a result of such transaction shall be
paid to Landlord promptly following its receipt by Tenant after subtracting
Tenant’s reasonable costs in connection therewith, including, without
limitation, reasonable broker commissions and attorneys’ fees, the cost of
improvements made by Tenant to the Premises for the benefit of any such
subtenant or assignee, and the unamortized cost of improvements paid for by
Tenant.  Tenant shall pay any costs
incurred by Landlord in connection with a request for assignment or subletting
(not to exceed $1,000), including reasonable attorneys’ fees.


 


Notwithstanding anything to the contrary in the Lease, Tenant may,
without Landlord’s prior written consent and without being subject to any
recapture rights or bonus rent provisions, sublet the Premises or assign the
Lease to (a) a subsidiary, affiliate, division or corporation controlling,
controlled by or under common control


 


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with Tenant, (b) a successor corporation related to Tenant by merger,
consolidation, nonbankruptcy reorganization, or government action, or (c) a
purchaser of substantially all of Tenant’s assets located in the Premises (each
a “Permitted Assignee”).  A sale or
transfer of Tenant’s capital stock shall not be deemed an assignment,
subletting or any other transfer of the Lease or the Premises.


 


20.                               Default.


Any of the following shall constitute a default by Tenant under this
lease:


 


(a)          Tenant’s failure to pay rent or any other
charge under this lease within 10 days after written notice of nonpayment, or
failure to comply with any other term or condition within 20 days following
written notice from Landlord specifying the noncompliance.  If such noncompliance cannot be cured within
the 20-day period, this provision shall be satisfied if Tenant commences
correction within such period and thereafter proceeds in good, faith and with
reasonable diligence to effect compliance as soon as possible.  Time is of the essence of this lease.


 


(b)         Tenant’s insolvency, business failure or
assignment for the benefit of its creditors. 
Tenants commencement of proceedings under any provision of any
bankruptcy or insolvency law or failure to obtain dismissal of any petition
filed against it under such laws within the time required to answer; or the
appointment of a receiver for all or any portion of Tenant’s properties or
financial records.


 


21.                               Remedies
for Default.


In case of default as described in Section 20, Landlord shall have the
right to the following remedies which are intended to be cumulative and in
addition to any other remedies provided under applicable law:


 


(a)          Landlord may at its option terminate the
lease by notice to Tenant.  Upon
termination, Landlord may retake possession of the Premises and may use or
relet the Premises without waiving the right to damages.  Following such retaking of possession,
efforts by Landlord to relet the Premises shall be sufficient if Landlord
follows its usual procedures for finding tenants for the space at rates not
less than the current rates for other comparable space in the Building.  If Landlord has other vacant space in the
Building, prospective tenants may be placed in such other space without
prejudice to Landlord’s claim to damages or loss of rentals from Tenant.


 


(b)         Landlord may recover all damages caused by
Tenant’s default which shall include an amount equal to rentals lost because of
the default, lease commissions paid for this lease, and the unamortized cost of
any tenant improvements installed by Landlord to meet Tenant’s special
requirements.  Landlord may sue
periodically to recover damages as they occur throughout the lease term, and no
action for accrued damages shall bar a later action for damages subsequently
accruing.  Landlord may elect in any one
action to recover accrued damages plus damages


 


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attributable to the remaining term of the lease.  Such damages shall be measured by the
difference between the rent under this lease and the reasonable rental value of
the Premises for the remainder of the term, both discounted to the time of
judgment at the prevailing interest rate on judgments.


 


(c)          Landlord may make any payment or perform any
obligation which Tenant has failed to perform, in which case Landlord shall be
entitled to recover from Tenant upon demand all amounts so expended, plus
interest from the date of the expenditure at the rate of one-and-one-half
percent per month.  Any such payment or
performance by Landlord shall not waive Tenant’s default.


 


(d)         In the event Landlord fails to perform any of
its obligations herein or under the Lease and (except in case of emergency
posing an immediate threat to persons or property, in which case no prior
notice shall be required) fails to cure such default within thirty (30) days
after written notice from Tenant specifying the nature of such default where
such default could reasonably be cured within said thirty (30) day period, or
fails to commence such cure within said thirty (30) day period and thereafter
continuously with due diligence prosecute such cure to completion where such
default could not reasonably be cured within said thirty (30) day period, then
Tenant shall have the right, but not the obligation, to cure such default and
to demand reimbursement by Landlord of the cost of such cure, with interest
thereon at the rate of ten percent (10%) per annum or the highest rate allowed
by law, whichever is less, from the date of the expenditure until repaid.


 


22.                               Surrender.


On expiration or early termination of this lease, Tenant shall deliver
all keys to Landlord and surrender the Premises vacuumed, swept, and free of
debris and in the same condition as at the commencement of the term subject
only to reasonable wear and tear from ordinary use and damage by casualty
and/or act of God excepted.  Tenant shall
remove all of its furnishings and trade fixtures that remain its property and
repair all damage resulting from such removal. 
Failure to remove shall be an abandonment of the property, and Landlord
may dispose of it in any manner without liability.  If Tenant fails to vacate the Premises when
required, including failure to remove all its personal property, Landlord may
elect either:  (i) to treat Tenant as a
tenant from month to month, subject to the provisions of this lease except that
rent shall be one-and-one-half times the total rent being charged when the
lease term expired, and any option or other rights regarding extension of the
term or expansion of the Premises shall no longer apply; or (ii) to eject
Tenant from the Premises and recover damages caused by wrongful holdover.


 


23.                               Regulations.


Landlord shall have the right but shall not be obligated to make,
revise and enforce regulations or policies consistent with this lease for the
purpose of promoting safety, health (including moving, use of common areas and
prohibition of smoking), order,


 


11





















 


economy, cleanliness, and good service to all tenants of the Building.  All such regulations and policies shall be
complied with as if part of this lease.  Tenant
shall not be required to comply with any new rule or regulation unless the same
applies non-discriminatorily to all occupants of the Building, does not
unreasonably interfere with Tenant’s use of the Premises or Tenant’s parking
rights and does not materially increase the obligations or decrease the rights
of Tenant under the Lease.


 


24.                               Access.


During times other than normal Building hours Tenant’s officers and
employees or those having business with Tenant may be required to identify
themselves or show passes in order to gain access to the Building.  Landlord shall have no liability for
permitting or refusing to permit access by anyone.  Landlord may regulate access to any Building
elevators outside of normal Building hours. 
Landlord shall have the right to enter upon the Premises at any time by
passkey or otherwise to determine Tenant’s compliance with this lease, to
perform necessary services, maintenance and repairs or alterations to the
Building or the Premises, or to show the Premises to any prospective tenant or
purchasers.  Except in case of emergency
such entry shall be at such times and in such manner as to minimize
interference with the reasonable business use of the Premises by Tenant and
shall be after at least twenty-four (24) hours’ notice to Tenant.  Any such entry by Landlord shall not impair
Tenant’s operations more than reasonably necessary and shall be subject to
Tenant’s reasonable security measures.  Landlord
shall not show the Premises to tenants or brokers except during the last one
hundred eighty (180) days of the term of the Lease (including any extensions
thereof).


 


25.                               Furniture
and Bulky Articles.


Tenant shall move furniture and bulky articles in and out of the
Building or make independent use of the elevators only at times approved by
Landlord following at least 24 hours written notice to Landlord of the intended
move.  Landlord will not unreasonably
withhold its consent under this section.


 


26.                               Notices.


Notices between the parties relating to this lease shall be in writing,
effective when delivered, or if mailed, effective on the second day following
mailing, postage prepaid, to the address for the party stated in this lease or
to such other address as either party may specify by notice to the other.  Rent shall be payable to Landlord at the same
address and in the same manner, but shall be considered paid only when
received.


 


27.                               Subordination
and Attornment.


This lease shall be subject to and subordinate to any mortgages, deeds
of trust, or land sale contracts (hereafter collectively referred to as encumbrances)
now existing against the Building.  At
Landlord’s option this lease shall be subject and subordinate to any future
encumbrance hereafter placed against the Building (including the


 


12





















 


underlying land) or any modifications of existing encumbrances, and
Tenant shall execute such documents as may reasonably be requested by Landlord
or the holder of the encumbrance to evidence this subordination.  If any encumbrance is foreclosed, then if the
purchaser at foreclosure sale gives to Tenant a written agreement to recognize
Tenant’s lease, Tenant shall attorn to such purchaser and this Lease shall
continue.


 


Notwithstanding anything to the contrary in the Lease, the
subordination of Tenant’s rights and interest under the Lease to any mortgage
or deed of trust shall be contingent upon Tenant’s having received from any
such mortgagee or beneficiary of any deed of trust a written recognition
agreement in form reasonably satisfactory to Tenant providing that Tenant’s
rights and interest shall not be disturbed in the event of any foreclosure of
any such mortgage or deed of trust and confirming that Tenant shall receive all
of the rights and services provided for under the Lease.  Notwithstanding anything to the contrary in
the Lease, Landlord shall, prior to the Commencement Date, use its best efforts
to obtain from all ground lessors or mortgagees holding a security interest in
the Premises, the Building or the Project, a written recognition agreement in
form reasonably satisfactory to Tenant providing that Tenant’s rights and
interest shall not be disturbed in the event of any foreclosure of any such
mortgage or other security instrument and confirming that Tenant shall receive
all of the rights and services provided for under the Lease.


 


28.                               Transfer
of Building.


If the Building is sold or otherwise transferred by Landlord or any
successor, Tenant shall attorn to the purchaser or transferee and recognize it
as the landlord under this lease, and, provided the purchaser or transferee
assumes all obligations hereunder, the transferor shall have no further
liability hereunder accruing after the transfer.


 


29.                               Estoppels.


Either party will within 20 days after notice from the other execute,
acknowledge and deliver to the other party a certificate certifying whether or
not this lease has been modified and is in full force and effect; whether there
are any modifications or alleged breaches by the other party; the dates to
which rent has been paid in advance, and the amount of any security deposit or
prepaid rent; and any other facts that may reasonably be requested.  Failure to deliver the certificate within the
specified time shall be conclusive upon the party of whom the certificate was
requested that the lease is in full force and effect and has not been modified
except as may be represented by the party requesting the certificate.  If requested by the holder of any
encumbrance, or any ground lessor, Tenant will agree to give such holder or
lessor notice of and the same opportunity as Landlord to cure any default by
Landlord under this lease.


 


13





















 


30.                               Attorneys’
Fees.


In any litigation arising out of this lease, the prevailing party shall
be entitled to recover attorneys’ fees at trial and on any appeal.  If Landlord incurs attorneys’ fees because of
a default by Tenant, Tenant shall pay all such fees whether or not litigation
is filed.


 


31.                               Quiet
Enjoyment.


Landlord warrants that so long as Tenant complies with all terms of this
lease it shall be entitled to peaceable and undisturbed possession of the
Premises free from any eviction or disturbance by Landlord.  Neither Landlord nor its managing agent shall
have any liability to Tenant for loss or damages arising out of the acts,
including criminal acts, of other tenants of the Building or third parties, nor
any liability for any reason which exceeds the value of its interest in the
Building.


 


32.                               Additional
Rent - Tax Adjustment.


After the property has been fully assessed, which is presumed to be the
tax year 1999-2000, for any July 1 - June 30 tax year, the real property taxes
levied against the Building and its underlying land and the land for the
surface parking lot across the street, so long as this is available for use by
Tenant, it’s customers and invitees, exceed those levied for the first year the
property is fully assessed (or the 1999-2000 tax year, whichever is later),
then the monthly rental for the next succeeding calendar year shall be
increased by one-twelfth of such tax increase times Tenant’s Proportionate
Share.  “Real Property Taxes” as used
herein means all taxes and assessments of any public authority against the
Building and the land on which it is located, the cost of contesting any tax
and any form of fee or charge imposed on Landlord as a direct consequence of
owning or leasing the Premises, including but not limited to rental taxes,
gross receipt taxes, leasing taxes, or any fee or charge wholly or partially in
lieu of or in substitution for ad valorem real property taxes or assessments,
whether now existing or hereafter enacted. 
If any portion of the Building is occupied by a tax-exempt tenant so
that the Building has a partial exemption under ORS 307.112 or a similar
statute, then real property taxes shall mean taxes computed as if such partial
exemption did not exist.  If a separate
assessment or identifiable tax increase arises solely because of improvements
added to the Premises by Tenant, then Tenant shall pay 100% of such increase.  Notwithstanding anything to the contrary in
the Lease, “Real Estate Taxes” shall not include and Tenant shall not be
required to pay any portion of any tax or assessment expense or any increase
therein (a) levied on Landlord’s rental income, unless such tax or assessment
expense is imposed in lieu of real property taxes; (b) in excess of the amount
which would be payable if such tax or assessment expense were paid in
installments over the longest possible term; (c) imposed on land and
improvements other than the Project; or (d) attributable to Landlord’s net
income, inheritance, gift, transfer, estate or state taxes.


 


14





















 


33.                               Additional
Rent - Option to Extend.


In the event Tenant exercises the option to extend the lease, as detailed
in section 43 hereof, the Landlord shall adjust the monthly rental for the
first year of the option period.  Said
rental adjustment for the first year shall be the fair market full service
gross (FSG) rent for downtown Salem Class “A” office space with a minimum of
3/1000 sq. ft. of parking and nightly janitorial included in the monthly rental.  Said fair market FSG rental shall be
determined, by a letter opinion of value, within sixty (60) days after Tenant’s
notice exercising said Option to Extend, by a qualified MAI appraiser chosen by
Landlord and Tenant who is active in the area and knowledgeable of commercial
office rents in the area at that time.  The
cost of said letter opinion of value shall be split 50/50.  Said fair market rent as determined by
appraiser for the first year of the option period shall be not less than
$1.88/sq. ft./mo. FSG.  The second
through the fifth year of the option period, the monthly rental shall be
increased each year on the anniversary date by the same percentage as the
increase, if any, in the Consumer Price Index as published by the U.S.
Department of Labor, Bureau of Labor Statistics.  The change shall be computed by comparing the
schedule entitled “U.S. City Average, All Items, All Urban Consumers, 1982-84 =
100” for Portland-Vancouver-Salem for the latest available month preceding the
month in which the option term commenced with the same figure for the same
month in the years for which the adjustment is computed.  All comparisons shall be made using index
figures derived from the same base period and in no event shall this provision
operate to decrease the monthly rental for the Premises below the initial
stated monthly rental, plus property tax adjustments and operating expense
adjustments as provided in this lease.  If
the index cited above is revised or discontinued during the term of this lease
then the index that is designated by the Portland Metropolitan Association of
Building Owners and Managers to replace it shall be used.  If the monthly rent for the renewal term is
determined by appraisal and if Tenant does not, in Tenant’s sole discretion,
approve the rental amount established thereby, then Tenant may rescind its
exercise of the renewal option by giving Landlord written notice of such
election to rescind within ten (10) days after such monthly rent amount has
been established.  If Tenant rescinds its
exercise of the renewal option, then Tenant shall pay all costs and expenses of
the appraisal.


 


34.                               Additional
Rent - Operating Expense Adjustment.


Tenant shall pay as additional rent Tenant’s Proportionate Share of the
amount by which operating expenses for the Building increase over those
experienced by Landlord during the first full year of the lease term (Base
Year).  Effective January 1, 2000, the
Landlord shall estimate the amount by which operating expenses are expected to
increase, if any, over those proposed or incurred in the base year.  Monthly rental for that year shall be
increased by one-twelfth of Tenant’s share of the estimated increase.  Following the end of each calendar year,
Landlord shall compute the actual increase in operating expenses and bill
Tenant for any deficiency or credit Tenant with any excess collected.  As used herein “operating expenses” shall
mean all costs of operating and maintaining the Building as determined by
standard real estate


 


15





















 


accounting practice, including, but not limited to:  all water and sewer charges; parking;
landscaping; trash removal; the cost of natural gas and electricity provided to
the Building; janitorial and cleaning supplies and services; administration
costs and management fees; security services, if any; insurance premiums;
licenses, permits for the operation and maintenance of the Building and all of its
component elements and mechanical systems; the annual amortized capital
improvement cost (amortized over such a period as Landlord may select but not
shorter than the period allowed under the Internal Revenue Code and at a
current market interest rate) for any capital improvements to the Building
required by any governmental authority.  Operating
expenses shall not include any item not charged to all other Tenants of the
building, excepting excessive electrical useage, if any, by Tenant.  Notwithstanding anything to the contrary in
the Lease:  (A) If the operating expenses
for the Base Year are not based on a fully leased Building, then such amounts
shall be increased to reflect a fully leased Building; and (B) operating
expenses shall not include and Tenant shall in no event have any obligation to
perform or to pay for the following (collectively, “Costs”):  (a) Costs occasioned by the act, omission or
violation of any Law by Landlord or any other occupant of the Building, or
their respective agents, employees or contractors; (b) Costs occasioned by
casualty or condemnation; (c) Costs to correct any construction defect in the
Premises or the Building or to comply with any CC&Rs or Law applicable to
the Premises or the Building on the Commencement Date; (d) Costs of any
renovation, improvement, painting or redecorating of any portion of the
Building not made available for Tenant’s use; (e) Costs incurred in connection
with marketing or advertising the Building, or the violation by Landlord or any
occupant of the Building (other than Tenant) of the terms and conditions of any
lease or other agreement; (f) insurance Costs for coverage not customarily paid
by tenants of similar projects in the vicinity of the Premises, increases in
insurance Costs caused by the activities of another occupant of the Project,
insurance deductibles in excess of $10,000, and co-insurance payments; (g)
Costs incurred in connection with the presence of any Hazardous Material,
except to the extent caused by the release or emission of the Hazardous
Material in question by Tenant; (h) Costs in the nature of depreciation or
other expense reserves; (i) Costs to repair, replace, restore or maintain the
structural portions of the Building (including the structural portion of roofs)
or the parking facilities serving the Building; (j) executives’ salaries; (k)
Costs which could properly be capitalized under generally accepted accounting
principles, except capital improvements to the Building required by Law not in
effect as of the Commencement Date, capital improvements to the extent they
reduce operating expenses, or capital improvements to restore or replace
existing systems and components of the Building (except as otherwise excluded
from operating expenses in this paragraph), and all such permitted capital
improvements shall be amortized over the useful life of the capital item in
question.


 


35.                               Tenant
Audit.


Tenant may audit the books, records and supporting documents of
Landlord to the extent necessary to determine the accuracy of Landlord’s
computation of additional


 


16





















 


rent or rent adjustment under Sections 32 and 34 of this Lease during
normal business hours.  Such audit, if
any, will occur within one hundred twenty (120) days after Tenant receives such
notice.  Tenant shall bear the cost of
such audit, unless such audit discloses that Landlord has overstated the total
costs by more than five percent (5%) of the actual amount of such costs, in
which event Landlord shall pay the cost of Tenant’s audit not to exceed $500.00
or the overstated amount, whichever is lesser. 
Landlord shall promptly refund any overcharges to Tenant.


 


36.                               Complete
Agreement; No Implied Covenants.


This lease and the attached Exhibits and Schedules if any, constitute
the entire agreement of the parties and supersede all prior written and oral
agreements and representations, and there are no implied covenants or other
agreements between the parties except as expressly set forth in this Lease.  Neither Landlord nor Tenant is relying on any
representations other than those expressly set forth herein.


 


37.                               Captions.


The titles to the sections of this lease are descriptive only and are
not intended to change or influence the meaning of any section or to be part of
this lease.


 


38.                               Non-waiver.


Failure by either party to promptly enforce any regulation, remedy or
right of any kind under this Lease shall not constitute a waiver of the same
and such right or remedy may be asserted at any time after such party becomes
entitled to the benefit thereof notwithstanding delay in enforcement.


 


39.                               Tenant
Improvements.


Landlord at it’s sole cost and expense, shall provide tenant
improvements (the “Tenant Improvements”) to suit as detailed in Exhibit “A”
attached hereto, excepting the transformer room marked room 112.  Said tenant improvements shall be delivered
by Landlord on the commencement of the lease in a finished condition including
taped, sanded and painted drywall partitions, HVAC, drop ceiling and
fluorescent lighting fixtures, carpeting, Armstrong Excelon SDT Static
Dissipative tile (does not include installation of additional copper grounding
strips) flooring in computer rooms, and 110-volt electrical outlets every 10
feet.  Landlord shall provide the
generator room with concrete floor, 2 hour rated walls and ceiling, 110-volt
electrical outlets on walls and fluorescent lighting fixtures.  Landlord shall also provide fully improved
common areas including ground floor lobby, elevator, corridors and restrooms.  Landlord shall be responsible for all costs
associated with fire code compliance and ADA compliance.  The final cost estimate shall be determined
within ten (10) days of Landlord’s receipt of Tenant’s final space plan.


 


Tenant’s final space plan is attached hereto as Exhibit A and has been
approved by the parties hereto.  Landlord
shall cause to be prepared, as quickly as possible, final plans, specifications
and working drawings of the Tenant Improvements (“Final


 


17





















 


Plans”), all of which conform to or represent logical evolutions of or
developments from Tenant’s final space plan. 
Within ten (10) days after receipt thereof, at its election (a) Tenant
may approve the Final Plans, or (b) Tenant may deliver to Landlord the specific
written changes to such plans that are necessary, in Tenant’s opinion, to
conform such plans to Tenant’s final space plan.  If Tenant desires changes, Landlord shall not
unreasonably withhold its approval of such changes and the parties shall confer
and negotiate in good faith to reach agreement on modifications to the Final
Plans.  As soon as approved by Landlord
and Tenant, Landlord shall submit the Final Plans to all appropriate
governmental agencies and thereafter the Landlord shall use its best efforts to
obtain required governmental approvals as soon as practicable.  After the Final Plans have been approved,
neither party shall have the right to require extra work or change orders with
respect to the construction of the Tenant Improvements without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed.  All change orders shall
specify any change in the final cost estimate as a consequence of the change
order.


 


Upon Landlord obtaining the required governmental approvals for the
Tenant Improvements, Landlord shall provide Tenant early occupancy of the
Premises for Tenant’s construction of Tenant’s additional improvements set
forth below and for the installation of Tenant’s trade fixtures and equipment.  Such early occupancy shall be on the same
terms and conditions of this Lease except that Tenant shall have no obligation
to pay rent during such early occupancy.


 


Tenant shall reimburse Landlord, in cash, prior to lease commencement
for any costs that exceed $135,000.00 due to changes or additions caused by
Tenant or it’s special utility and HVAC needs, but only if such excess cost is
reflected in the final cost estimate.


 


Tenant has advised Landlord and Landlord has approved of Tenant’s
requirement for additional improvements to be located at the Premises.  Said additional improvements that are
exclusively for Tenant’s use may include, but are not necessarily limited to, a
1,200-amp, 120/208-volt, 3 phase power service with distribution, an on-site
transformer room #112 required by PGE, and ten (10) tons of roof mounted HVAC
with distribution to service Tenant’s equipment.  All costs associated with the additional
electrical and HVAC equipment installation and the transformer room shall
solely be the obligation and responsibility of Tenant.  Tenant shall contract separately with a
licensed and bonded contractor, that is pre-approved by Landlord, for said
additional tenant improvements.  Landlord
shall be held harmless and have no responsibility whatsoever for any delays
that may occur in Landlord’s completion of the standard tenant improvements to
be built by Landlord and delivery of the Premises to Tenant that are caused by
the installation of the additional tenant improvements to be installed by
Tenant.  No delay in the commencement
date of the lease term and the payment of rent when due shall be specifically
caused by the


 


18





















 


Tenant installation of such additional tenant improvements.  The selection of a contractor, the location
and cost of said additional tenant improvements, including Landlord’s approval
thereof, shall be determined prior to the commencement of construction.


 


Notwithstanding anything to the contrary, Landlord shall pay, and
Tenant shall have no responsibility for, the following costs associated with
Tenant’s additional improvements:  (i)
costs to bring the Building into compliance with applicable Laws, including,
without limitation, the Americans with Disabilities Act and Hazardous Materials
Laws and (ii) costs incurred to remove Hazardous Materials from the Premises or
the Building.


 


Effective upon delivery of the Premises to Tenant, Landlord warrants
that (i) construction of the Tenant Improvements was performed in accordance
with all Laws and the Final Plans and in a good and workmanlike manner, and
(ii) all material and equipment installed in the Premises conformed to the
Final Plans and was new and otherwise of good quality.


 


40.                               Designer
Time.


Landlord, at its sole cost and expense, shall provide Tenant three (3)
hours of the Landlord’s building designer time to coordinate the carpet and
paint colors and other materials in Tenant’s leased space so they will
coordinate with the building exterior and interior colors and materials.  Tenant, at its sole cost and expense, may, at
its option, contract separately with said designer for professional services
and furniture in excess of the three hours of time provided by Landlord.


 


41.                               Financial
Information.


Landlord shall keep all financial information provided by Tenant
confidential.


 


42.                               Broker
License Disclosure.


Tenant acknowledges that it has been informed that Larry Tokarski and
Dennis Young are licensed real estate brokers in the state of Oregon, and both
have an ownership interest in the referenced property.  Dennis Young of Coldwell Banker Commercial is
representing Landlord and Tim Campbell of Campbell Commercial Real Estate is
representing Tenant.


 


43.                               Option
to Extend.


If Tenant is not then in default under any of the terms, covenants and
conditions of this Lease, and providing it shall deliver written notice to
Landlord within one hundred eighty (180) days prior to the termination of the
lease term of its election to extend the term hereof, then Tenant shall have
the option to extend the term of this Lease for one (1) additional period of
five (5) years.  It is the intent of the
parties hereto that the option herein granted to Tenant shall not be
exercisable by Tenant unless Tenant shall be in possession of the Premises as
of the date of its exercise hereof.  This
option shall terminate and be of no further force and effect in the event


 


19





















 


Tenant shall either sublease or agree to sublease over fifty percent
(50%) of the Premises for all of the then current term of this lease, or assign
this Lease for the then current term hereof, or agree to enter into such
sublease or assignment, at any time up to and including the end of the lease
term, except where such sublease or assignment shall be to a Permitted
Assignee, provided that said assignee shall have assumed in full the
obligations of Tenant under this Lease.


 


44.                               Future
Development.


Landlord may in the future develop the surface parking lot located
diagonally across Commercial Street with a commercial building(s) and/or a
parking structure.  Tenant agrees to
cooperate with Landlord in the relocation of its parking spaces that are situated
on this lot to another area within a reasonable distance and/or within the
attached city owned parking structure (Liberty Square) provided there is no
additional expense to Tenant.


 


45.                               Force
Majeure.


In the event that either party hereto shall be delayed, hindered in or
prevented from performing any act required hereunder by reason of strikes,
lockouts, inability to procure material, failure of power, restrictive
governmental laws or regulations, riots, insurrection, adverse weather
conditions or fire or any other casualty any other reason of a like nature not
the fault of or beyond control of the party delayed in performing such act,
then performance of such act shall be excused for the period of the delay and
the period allowed for the performance of such act shall be extended for a
period equivalent to the period of such delay. 
This paragraph, however, shall not be deemed to extend the time at which
Tenant is entitled to an abatement of rent or to terminate the Lease
(including, without limitation, any right to abate rent or terminate the Lease
set forth in Section 3, 9, 16 and 18).


 


46.                               Repainting
and Carpet Cleaning.


At the end of the fifth (5th) year of the lease term and
provided Tenant is not and has not theretofore been in default of any terms of
the lease, Landlord shall, at it’s sole cost, repaint the interior walls of
Tenant’s suite and have the carpet cleaned. 
The paint shall be a similar color and grade as the paint originally
used.  Tenant shall be responsible, at it’s
sole cost, to relocate any of it’s furniture, fixtures and equipment so that
said painting and carpet cleaning can be done in the most timely and cost
effective manner.


 


47.                               Additional
Parking and Fire System.


(a)          Landlord has been advised by Tenant that they
will require additional surface parking lot spaces for storage of their service
vehicles that can be fenced and secured. 
Said additional parking spaces should be within reasonable proximity to
the Premises.  The number, location and
the sole cost thereof shall be the responsibility of Tenant and shall not be a
condition of this lease.  Landlord shall,
however, use it’s best efforts to help Tenant secure said additional parking
spaces.


 


20





















 


(b)         Landlord has been advised by Tenant that it
must cap the existing water fire sprinkler system in the area(s) that Tenant’s
computer equipment will be located and replace with a Halon or equivalent fire
system.  This is acceptable to Landlord
provided said system is installed at Tenant’s sole cost, it meets all
governmental codes that have jurisdiction over the Premises and that Tenant
removes said fire system and replaces the existing water fire sprinkler system
upon the termination of the lease and Tenant vacating the Premises.


 


48.                               Hazardous
Materials.


To the best knowledge of Landlord, (a) no Hazardous Material is present
in the Premises or in the Building or the soil, surface water or groundwater
thereof, (b) no underground storage tanks are present on or about the Building,
and (c) no action, proceeding or claim is pending or threatened regarding the
Building concerning any Hazardous Material or pursuant to any environmental Law
except for asbestos containing floor tiles which are presently non-friable and
are or will be encapsulated by carpeting and other vinyl and ceramic floor
coverings.  Further, Landlord has been
advised that there are two (2) abandoned underground storage tanks in the alley
adjacent to the easterly property line of the Premises.  The alley is not a part of the Premises and
is publicly owned.  Under no circumstance
shall Tenant be liable for, and Landlord shall indemnify, defend, protect and
hold harmless Tenant, its agents, contractors, stockholders, directors,
successors, representatives, and assigns from and against, all losses, costs,
claims, liabilities and damages (including attorneys’ and consultants’ fees) of
every type and nature, directly or indirectly arising out of or in connection
with any Hazardous Material present at any time in, on or about the Premises or
the Building, or the soil, air, improvements, groundwater or surface water
thereof, or the violation of any environmental Law, except to the extent that
any of the foregoing actually results from the release or emission of Hazardous
Material by Tenant or its agents in violation of applicable environmental Laws.  As used in this Lease, “Hazardous Material”
shall mean any material which is now or hereafter regulated by any governmental
authority or which poses a hazard to the environment or human life.


 


49.                               No
Liens.


Landlord shall have no security interest or lien on any item of Tenant’s
trade fixtures, furniture, equipment and other personal property.  Landlord waives any right of distraint,
distress for rent or Landlord’s lien that may arise at law.


 


50.                               Title
to Premises.


Landlord represents and warrants that it has good and marketable title
to the Project, free and clear of any liens and encumbrances (except for
Continental Mortgage Company in the amount of $2,300,000.00).


 


21





















 


51.                               Approvals.


Whenever the Lease requires an approval, consent, designation,
determination, selection or judgment by either Landlord or Tenant, such
approval, consent, designation, determination, selection or judgment and any
conditions imposed thereby shall be reasonable and shall not be unreasonably
withheld or delayed and, in exercising any right or remedy hereunder, each
party shall at all times act reasonably and in good faith.


 


52.                               Specialized
Equipment.


Landlord acknowledges that Tenant will keep on the Premises certain
specialized equipment in connection with the operation of Tenant’s business,
including, without limitation, the following:  (a) batteries specialized for computers, (b) a
power generator, and (c) a diesel fuel storage tank containing approximately
1,000 gallons of diesel fuel.  Landlord
hereby consents to Tenant’s storage and use of such items on the Premises.  Said diesel fuel shall be completely
contained at all times by Tenant within the generator room.


 


53.                               Reasonable
Expenditures.


Any expenditure by a party permitted or required under the Lease, for
which such party is entitled to demand and does demand reimbursement from the
other party, shall be limited to the fair market value of the goods and
services involved, shall be reasonably incurred, and shall be substantiated by
documentary evidence available for inspection and review by the other party or
its representative during normal business hours.


 


54.                               Tenant’s
Property.


Alterations and other interior improvements paid for by Tenant and
trade fixtures, furniture, equipment and other personal property installed in
the Premises (“Tenant’s Property”) shall at all times be and remain Tenant’s
Property.  Tenant may at any time remove
Tenant’s Property from the Premises, provided that Tenant repairs all damage
caused by such removal.


 


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left blank)


 


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55.                               Exhibits


The following Exhibits are attached hereto and incorporated as a part
of this lease: Exhibit “A” - Floor and Space Plan, Exhibits “B” & “C”-
Surface Parking Lots.


 


IN WITNESS WHEREOF, the duly authorized representatives of the parties
have executed this lease as of the day and year first written below.


 


	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  RETRO, LLC,

  	
  ADVANCED TELCOM GROUP INC.,

  
	
  an Oregon Limited Liability Company

  	
  a California corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Lawrence Tokarski

  	
   

  	
  By:

  	
   

  	
  /s/ Charlene S. Curry

  
	
   

  	
  Lawrence Tokarski

  	
   

  	
  Charlene Curry

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Managing Member

  	
   

  	
  Title:

  	
   

  	
  Controller

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  1-20-99

  	
   

  	
  Date:

  	
   

  	
  1-19-99

  
	
   

  	
   

  
	
  Address for Notices:

  	
   

  
	
   

  	
   

  
	
  Landlord:

  	
  Tenant:

  
	
   

  	
   

  
	
  698 12th Street SE, Suite 210

  	
  885 N. San Antonio Rd, Suite R

  
	
  Salem, OR 97301

  	
  Los Altos, CA 94022

  
	
  Telephone: (503) 361-7168

  	
  Telephone: (650) 559-8900

  
										



 


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