LEASE AGREEMENT






STANDARD
MULTI-TENANT OFFICE LEASE - GROSS

AIR COMMERCIAL REAL
ESTATE ASSOCIATION


1. Basic
Provisions (“Basic Provisions”).


             1.1 Parties:
This Lease (“Lease”), dated for reference purposes
only January 1, 2007, is made by and between Karen Morrison (“Lessor”) and New World Mortgage Corporation
(“Lessee”), (collectively the “Parties”, or individually a “Party”).


             1.2(a) Premises:
That certain portion of the Project (as defined below), known as Suite
Numbers(s) 200 and warehouse, 1st and 2nd floor(s),
consisting of approximately _______________________ rentable square feet and
approximately 6824 useable square
feet(“Premises”). The Premises are located at: 41655 Date Street, in the City of Murrieta, County of Riverside, State of
California, with zip code 92562. In addition to Lessee’s rights to use and
occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not
have any rights to the roof, the exterior walls, the area above the dropped
ceilings, or the utility raceways of the building containing the Premises
(“Building”) or to any other buildings in the Project. The Premises, the
Building, the Common Areas, the land upon which they are located, along with all other buildings and improvements
thereon, are herein collectively referred to as the “Project.” The Project
consists of Approximately_______________________
rentable square feet. (See also Paragraph 2)


             1.2(b) Parking:
10 unreserved and _______________ reserved vehicle parking spaces at a monthly cost
of $__________________ per unreserved space and $________________
per reserved space. (See Paragraph 2.6)


             1.3 Term: ______________________________________
years and 8 months (“Original Term”) commencing May 1, 2007 (“Commencement
Date”) and ending December 31, 2007 (“Expiration Date”). (See also
Paragraph 3)


             1.4 Early
Possession: n/a (“Early Possession
Date”). (See also Paragraphs 3.2 and 3.3)


             1.5 Base
Rent: $7,744.00 per month (“Base Rent)”, payable on the 1st
day of each month commencing 5/1/07. (See also Paragraph 4)


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


             1.6 Lessee’s
Share of Operating Expense Increase: ___________________________ percent (________%) (“Lessee’s Share”).
Lessee’s Share has been
calculated by dividing the approximate rentable square footage of the Premises
by the total approximate square footage of the rentable space contained in the
Project and shall not be subject to revision except in connection with an
actual change in the size of the Premises or a change in the space available
for lease in the Project.


             1.7 Base
Rent
and Other Monies Paid Upon Execution:


                            (a)          Base
Rent: $7,744.00 for the period 5/1/07 through
5/31/07.


                            (b)          Security
Deposit: $0.00 (“Security Deposit”). (See also Paragraph 5)


                            (c)          Parking:
$ _______________ for the period __________________________________________.


                            (d)          Other:
$___________________ for _________________________________________________.


                            (e)          Total
Due Upon Execution of this Leage: $7,744.00.


             1.8 Agreed
Use: Office. (See also Paragraph 6) 


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             1.9 Base
Year; Insuring Party. The Base Year is
2007. Lessor is the “Insuring Party”. (See also Paragraphs 4.2 and 8)


             1.10 Real
Estate Brokers: (See also
Paragraph 15)


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


o ______________________________________________ represents Lessor exclusively (“Lessor’s
Broker”);


o ____________________________________________ represents Lessee exclusively (“Lessee’s
Broker”); or

x Karen Morrison represents both
Lessor and Lessee (“Dual Agency”).


                            (b) Payment
to Brokers: Upon execution
and delivery of this Lease by both Parties, Lessor shall pay to the Brokers the
brokerage fee agreed to in a separate
written agreement (or if there is no such agreement, the sum of ___________________________________________________________________
or __________________% of the total Base Rent for
the brokerage services rendered by the Brokers).


             1.11 Guarantor.
The obligations of the Lessee under this Lease shall be guaranteed by Francis
Leonard (“Guarantor”). (See also Paragraph
37)


             1.12 Business
Hours for the Building: _______ a.m. to ________ p.m.,
Mondays through Fridays (except Building Holidays) and _________ a.m. to _________ p.m.
on Saturdays (except Building Holidays). “Building Holidays” shall mean the
dates of observation of New Year’s Day, President’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and ______________________.


             1.13 Lessor
Supplied Services. Notwithstanding
the provisions of Paragraph 11.1, Lessor is NOT obligated to provide the
following:

x  Janitorial
services for the suite


x  Electricity


o  Other
(specify): ____________________________________________________________________________________


             1.14 Attachments. Attached hereto
are the following, all of which constitute a part of this Lease:


o   an
Addendum consisting of Paragraphs ______________ through_______________;


x  a plot plan depicting the Premises; Exhibit
“A”


x  a current set of the Rules and Regulations;
Exhibit “B”


o  a Work Letter;


o  a janitorial schedule;


o  other (specify): _____________________________________________________________________________________

____________________________________________________________________________________________________.


2. Premises.


          2.1 Letting.
Lessor hereby
leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the
term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may
have been used in calculating Rent, is an approximation which the Parties agree
is reasonable and any payments based thereon are not subject to revision whether or not the actual size
is more or less. Note: Lessee is advised to verify the actual size prior to
executing this Lease.


          2.2 Condition.
Lessor shall deliver the Premises to Lessee in a clean condition on
the Commencement Date or the Early Possession Date, whichever first
occurs (“Start Date”), and warrants that the existing electrical, plumbing,
fire sprinkler, lighting, heating, ventilating and air conditioning
systems (“HVAC”), and all other items which the Lessor is obligated to
construct pursuant to the Work Letter attached hereto, if any, other than those constructed by Lessee, shall be in good
operating condition on said date, that the structural elements of the roof,
bearing walls and foundation of the Unit shall be free of material
defects, and that the Premises do not contain hazardous levels of any mold or
fungi defined as toxic under applicable state or federal law.


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


                         (a)
Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as
a result of the specific and unique use of the Premises by Lessee
as compared with uses by tenants in general, Lessee shall be fully responsible
for the cost thereof, provided, however that if such Capital Expenditure is
required during the last 2 years of this Lease and the cost thereof exceeds 6
months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days
after receipt of Lessee’s termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to 6
months’ Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such
Capital Expenditure and deliver to Lessor written notice specifying a
termination date at least 90 days thereafter. Such termination date
shall, however, in no event be earlier than the last day that Lessee could
legally utilize the Premises without commencing such Capital Expenditure.


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                         (b) If
such Capital
Expenditure is not the result of the specific and unique use of the Premises by
Lessee (such as, governmentally mandated seismic modifications), then Lessor
shall pay for such Capital Expenditure and Lessee shall only be obligated to
pay, each month during the remainder of the
term of this Lease, on the date that on which the Base Rent is due, an amount
equal to 144th of the portion of such costs reasonably attributable to the
Premises. Lessee shall pay interest on the balance but may prepay its
obligation at any time. If, however, such Capital Expenditure is required
during the last 2 years of this Lease or if Lessor reasonably determines that
it is not economically feasible to pay its share thereof, Lessor shall have the
option to terminate this Lease upon 90 days prior written notice to Lessee
unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that Lessee
will pay for such Capital Expenditure. If Lessor does not elect to terminate,
and fails to tender its share of any
such Capital Expenditure, Lessee may advance such funds and deduct same, with
interest, from Rent until Lessor’s share of such costs have been fully
paid. If Lessee is unable to finance Lessor’s share, or if the balance of the
Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset
basis, Lessee shall have the right to terminate this Lease upon 30 days written
notice to Lessor.


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


          2.4 Acknowledgements.
Lessee acknowledges that: (a) Lessee has been advised by Lessor and/or Brokers
to satisfy itself with respect to the condition of the Premises
(including but not limited to the electrical, HVAC and fire sprinkler systems,
security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee’s intended use, (b) Lessee has
made such investigation as it deems necessary with
reference to such matters and assumes all responsibility therefor as the same
relate to its occupancy of the Premises, and (c) neither Lessor, Lessor’s
agents, nor Brokers have made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made
no representations, promises or warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the
Premises, and (ii) it is Lessor’s sole responsibility to investigate the
financial capability and/or suitability of all proposed tenants.


          2.5 Lessee
as Prior Owner/Occupant. The warranties made by
Lessor in Paragraph 2 shall be of no force or effect if immediately prior
to the Start Date, Lessee was the owner or occupant of the Premises. In such
event, Lessee shall be responsible for any necessary corrective work.


          2.6 Vehicle
Parking. So long as Lessee is not in default, and subject
to the Rules and Regulations attached hereto, and as established
by Lessor from time to time, Lessee shall be entitled to rent and use the
number of parking spaces specified in Paragraph 1.2(b) at the rental
rate applicable from time to time for monthly parking as set by Lessor and/or
its licensee.


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


                         (b)
The monthly rent per parking space specified in
Paragraph 1.2(b) is subject to change upon 30 days prior written notice to Lessee.
The rent for the parking is payable one month in advance prior to the first day
of each calendar month.


          2.7 Common
Areas - Definition. The term “Common Areas” is defined as all
areas and facilities outside the Premises and within the exterior
boundary line of the Project and interior utility raceways and installations
within the Premises that are provided and designated by the Lessor from
time to time for the general nonexclusive use of Lessor, Lessee and other tenants
of the Project and their respective employees, suppliers, shippers,
customers, contractors and invitees, including, but not limited to, common
entrances, lobbies, corridors, stairwells, public restrooms, elevators, parking
areas, loading and unloading areas, trash areas, roadways, walkways, driveways
and landscaped areas.


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


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


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


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


                           (b) To
close
temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available;


                          (c) To
designate other land outside the boundaries of the Project to be a part of the
Common Areas;


                           (d) To
add additional buildings and improvements to the Common Areas;


                           (e) To
use the Common Areas while engaged in making additional improvements, repairs
or alterations to the Project, or any portion thereof; and


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


3. Term.


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


          3.2 Early
Possession. If Lessee
totally or partially occupies the Premises prior to the Commencement Date, the
obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not limited to the
obligations to pay Lessee’s Share of the Operating Expense
Increase) shall be in effect during such period. Any such early possession
shall not affect the Expiration


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Date.


          3.3
Delay In Possession. Lessor agrees to use its
best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said
efforts, Lessor is unable to deliver possession by such date, Lessor shall not
be subject to any liability therefor,
nor shall such failure affect the validity of this Lease. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations until
Lessor delivers possession of the Premises and any period of rent abatement
that Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any “?”
of delay caused by the acts or omissions of Lessee. If possession is not
delivered within 60 days after the Commencement Date, as the same may be
extended under the terms of any Work Letter executed by Parties, Lessee may, at
its option, by notice in writing within 10 days after the end of such 60 day period, cancel this Lease, in which
event the Parties shall be discharged from all obligations hereunder. If such
written notice is not received by
Lessor within said 10 day period, Lessee’s right to cancel shall terminate. If
possession of the Premises is not delivered within 120 days after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing. 


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


4. Rent. 


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


          4.2
Operating Expense Increase. Lessee shall pay to Lessor during the term hereof,
in addition to the Base Rent, Lessee’s Share of the amount by which all Operating Expenses
for each Comparison Year exceeds the amount of all Operating Expenses for the
Base Year, such excess being hereinafter
referred to as the “Operating Expense Increase”, in accordance with the
following provisions:  



                    (a)
“Base Year” is as specified in Paragraph 1.9. 



                    (b)
“Comparison Year” is defined as each calendar year during the term of this Lease
subsequent to the Base Year; provided, however, Lessee shall have no obligation
to pay a share of the Operating Expense increase applicable to the first 12
months of the Lease Term (other than such as are mandated by a governmental
authority, as to which government mandated expenses Lessee shall pay Lessee’s
Share, notwithstanding
they occur during the first twelve (12) months). Lessee’s Share of the
Operating Expense Increase for the first and last Comparison Years of the Lease Term
shall be prorated according to that portion of such Comparison Year as to which
Lessee is responsible for a share of such increase. 



                    (c)
The following costs
relating to the ownership and operation of the Project, calculated as if the
Project was at least 95% occupied, are
defined as “Operating Expenses”: 


                              
(i) Costs relating to
the operation, repair, and maintenance in neat, clean, safe, good order and
condition, but not the replacement (see subparagraph (g)), of the following:


                                        (aa)
The Common Areas, including their surfaces, coverings, decorative items,
carpets, drapes and window coverings, and including parking areas, loading and unloading
areas, trash areas, roadways, sidewalks, walkways, stairways, parkways, driveways, landscaped areas, striping,
bumpers, irrigation systems, Common Area lighting facilities, building
exteriors and roofs, fences and gates;


                                        
(bb) All heating, air
conditioning, plumbing, electrical systems, life safety equipment,
communication systems and other equipment used in common by, or for the benefit of,
tenants or occupants of the Project, including elevators and escalators, tenant
directories, fire detection
systems including sprinkler system maintenance and repair.


                              
(ii)
The cost of trash disposal, janitorial and security services, pest control
services, and the costs of any environmental
inspections;


                              
(iii) The cost of any other service to be provided by Lessor that is elsewhere in
this Lease stated to be an “Operating
Expense”;


                              
(iv)
The cost of the premiums for the insurance policies maintained by Lessor
pursuant to paragraph 8 and any deductible
portion of an insured loss concerning the Building or the Common Areas;


                              
(v)  The amount of the Real Property Taxes payable by
Lessor pursuant to paragraph 10;


                              
(vi)
The cost of water, sewer, gas, electricity, and other publicly mandated
services not separately metered;


                              
(vii)
Labor, salaries, and applicable fringe benefits and costs, materials, supplies
and tools, used in maintaining and/or cleaning the Project and accounting and
management fees attributable to the operation of the Project;


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


                              
(ix)
The cost to replace equipment or improvements that have a useful life for
accounting purposes of 5 years or less.


                              
(x)  Reserves set aside for maintenance, repair and/or
replacement of Common Area improvements and equipment.


                    (d) Any
item of Operating
Expense that is specifically attributable to the Premises, the Building or to
any other building in the Project
or to the operation, repair and maintenance thereof, shall be allocated
entirely to such Premises, Building, or other building. However, any such item
that is not specifically attributable to the Building or to any other building
or to the operation, repair and maintenance thereof, shall be equitably
allocated by Lessor to all buildings in the Project.


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


                    (f)
Lessee’s Share of
Operating Expense Increase is payable monthly on the same day as the Base Rent
is due hereunder. The amount of such payments shall be based on Lessor’s estimate of the
Operating Expense Expenses. Within 60 days after written request (but not more than once each
year) Lessor shall deliver to Lessee a reasonably detailed statement showing
Lessee’s Share of the actual Common Area Operating Expenses incurred during the
preceding year. If Lessee’s payments during such Year exceed Lessee’s Share,
Lessee shall credit the amount of such over-payment against Lessee’s future
payments. If Lessee’s payments during such Year were less than Lessee’s Share,
Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor
to Lessee of said statement. Lessor and Lessee shall forthwith adjust between them by cash
payment any balance determined to exist with respect to that portion of the
last Comparison Year for which Lessee is responsible as to Operating Expense Increases,
notwithstanding that the Lease term may have terminated before the end of such
Comparison Year.


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


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


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


5. Security Deposit.
Lessee shall deposit with Lessor upon execution hereof the Security Deposit as
security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or
otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the
payment of any amount due already due Lessor, for Rents which will be due in
the future, and/ or to reimburse or compensate
Lessor for any liability, expense, loss or damage which Lessor may suffer or
incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefor deposit monies with Lessor
sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent increases during
the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so
that the total amount of the Security Deposit shall at all times bear the same
proportion to the increased Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the
Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or
assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor’s reasonable judgment,
to account for any increased wear and tear that the Premises may suffer as a
result thereof. If a change in
control of Lessee occurs during this Lease and following such change the
financial condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall deposit such
additional monies with Lessor as shall be sufficient to cause the Security
Deposit to be at a commercially
reasonable level based on such change in financial condition. Lessor shall not
be required to keep the Security Deposit separate from its general accounts. Within 90 days after the
expiration or termination of this Lease, Lessor shall return that portion of
the Security Deposit not used or applied by Lessor. No part of the
Security Deposit shall be considered to be held in trust, to bear interest or
to be prepayment for any monies to be paid by Lessee under this Lease. 


6. Use. 


          6.1
Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other
legal use which is reasonably comparable thereto, and for no other purpose. Lessee
shall not use or permit the use of the Premises in a manner that is unlawful,
creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring
premises or properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow
in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not
unreasonably withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the
improvements of the Building, will not adversely affect the mechanical,
electrical, HVAC, and other systems of the Building, and/or will not affect the
exterior appearance of the Building. “?” Lessor
elects to withhold consent, Lessor shall within 7 days after such request give
written notification of same, which notice shall include an explanation
of Lessor’s objections to the change in the Agreed Use. 


          6.2 Hazardous Substances. 


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



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



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



                    (d)
Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground lessor, 


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



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



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



                     (g)
Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs
during the term of this Lease, unless Lessee is legally responsible therefor (in
which case Lessee shall make the investigation and remediation thereof required
by the Applicable Requirements and this Lease shall continue in full force and
effect, but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph
13), Lessor may,
at Lessor’s option, either (i) investigate and remediate such Hazardous
Substance Condition, if required, as soon as reasonably possible at Lessor’s expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days
after receipt by Lessor of knowledge of the
occurrence of such Hazardous Substance Condition, of Lessor’s desire to
terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee’s commitment to pay the amount by which the cost of
the remediation of such Hazardous Substance Condition exceeds an amount equal
to 12 times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall continue
in full force and effect, and Lessor shall proceed to make such remediation as
soon as reasonably possible after the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified
in Lessor’s notice of termination. 


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


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


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


               7.1
Lessee’s
Obligations. Notwithstanding Lessor’s obligation to keep the Premises in good
condition and repair, Lessee shall be responsible for payment of the cost thereof to Lessor
as additional rent for that portion of the cost of any maintenance and repair
of the Premises, or any equipment (wherever located) that serves only Lessee or
the Premises, to the extent such cost is attributable to abuse or misuse.
Lessee shall be responsible
for the cost of painting, repairing or replacing wall coverings, and to repair
or replace any improvements with the Premises. Lessor may, at its option, upon reasonable notice, elect to have
Lessee perform any particular such maintenance or repairs the cost of which is
otherwise Lessee’s responsibility hereunder.


          7.2
Lessor’s
Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 4.2 (Operating Expenses), 6 (Use), 7.1
(Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order,
condition and repair the foundations, exterior walls, structural condition of
interior bearing walls, exterior roof, fire sprinkler system, fire alarm and/or smoke detection
systems, fire hydrants, and the Common Areas. Lessee expressly waives the
benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of
this Lease.


          7.3
Utility Installations; Trade Fixtures; Alterations. 



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



                    (b)
Consent. Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without such consent but upon notice to Lessor, as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof,
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walls,
will not affect the electrical, plumbing, HVAC, and/or life safety systems, and
the cumulative cost thereof during this Lease as extended does not exceed $2000. Notwithstanding the foregoing, Lessee
shall not make or permit any roof penetrations and/or install anything on the
roof without the prior written approval of Lessor. Lessor may, as a
precondition to granting such approval, require Lessee to utilize a contractor
chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form with detailed plans.
Consent shall be deemed conditioned upon Lessee’s: (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both the permits
and the plans and specifications prior to commencement of the work, and (iii)
compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon
completion furnish Lessor with asbuilt plans and specifications. For work which
costs an amount in excess of one month’s Base Rent, Lessor may condition its
consent upon Lessee providing a lien and
completion bond in an amount equal to 150% of the estimated cost of such
Alteration or Utility Installation and/or upon Lessee’s posting an additional Security Deposit with Lessor.


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


          7.4 Ownership;
Removal; Surrender; and Restoration.


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


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


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


8 Insurance; Indemnity.


          8.1 Insurance
Premiums. The cost of the
premiums for the insurance policies maintained by Lessor pursuant to paragraph
8 are included
as Operating Expenses (see paragraph 4.2 (c)(iv)). Said costs shall include
increases in the premiums resulting from additional coverage related to requirements of the holder of a
mortgage or deed of trust covering the Premises, Building and/or Project,
increased valuation of the Premises, Building
and/or Project, and/or a general premium rate increase. Said costs shall not,
however, include any premium increases resulting from the nature of the occupancy of any other tenant of the
Building. If the Project was not insured for the entirety of the Base Year,
then the base premium shall be the
lowest annual premium reasonably obtainable for the required insurance as of
the Start Date, assuming the most nominal use possible of the Building and/or Project. In no event, however,
shall Lessee be responsible for any portion of the premium cost attributable to
liability insurance coverage in excess of $2,000,000 procured under
Paragraph 8.2(b).


          8.2 Liability
Insurance.


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


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


          8.3 Property
Insurance - Building, Improvements and Rental
Value.


                    (a)
Building and Improvements. Lessor shall obtain
and keep in force a policy or policies of insurance in the name of Lessor, with
loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or
damage to the Building and/or Project. The amount of such insurance shall be
equal to the full insurable replacement cost of the Building and/or Project, as
the same shall exist from time to time, or the amount required by any Lender,
but in no event more than the commercially reasonable and available insurable
value thereof. Lessee Owned Alterations and Utility Installations, Trade
Fixtures, and Lessee’s personal property shall be insured by Lessee under
Paragraph 8.4. If the coverage is available and


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commercially appropriate, such policy or policies
shall insure against all risks of direct physical loss or damage (except the
perils of flood and/or earthquake unless required by a Lender), including
coverage for debris removal and the enforcement of any Applicable Requirements
requiring the upgrading, demolition, reconstruction or replacement of any
portion of the Premises as the result of a covered loss. Said policy or
policies shall also contain an
agreed valuation provision in lieu of any coinsurance clause, waiver of
subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest to where the Premises
are located. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed $1,000 per
occurrence.


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


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


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


          8.4 Lessee’s
Property; Business Interruption Insurance.


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


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


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


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


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


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


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


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


9. Damage or Destruction.


          9.1 Definitions.


                    (a)
“Premises Partial Damage” shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in 3 months or less
from the date of the damage or destruction, and the cost thereof does not
exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in
writing within 30 days from the date of the damage or


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destruction as to whether or not the damage
is Partial or Total.


                    (b) “Premises
Total Destruction” shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations
and Trade Fixtures, which cannot reasonably be repaired in 3 months or less
from the date of the damage or destruction
and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor
shall notify Lessee in writing within 30 days from the date of the
damage or destruction as to whether or not the damage is Partial or Total.


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


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


                    (e)
“Hazardous Substance Condition” shall mean the
occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on,
or under the Premises which requires repair, remediation, or restoration.


          9.2 Partial
Damage - Insured Loss. If a Premises Partial
Damage that is an insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such
damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in full force
and effect; provided, however, that Lessee shall, at Lessor’s election, make
the repair of any damage or destruction the total cost to repair of which is $5,000 or less, and,
in such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis
for that purpose. Notwithstanding the foregoing, if the required insurance was
not in force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in proceeds
as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason
of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless
Lessee provides Lessor with the funds to cover same, or adequate assurance
thereof, within 10 days following receipt of written notice of such shortage
and request therefor. If Lessor receives said funds or adequate assurance
thereof within said 10 day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If such funds or assurance are not
received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this
Lease shall remain in full force and
effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shall not
be entitled to reimbursement of any funds contributed by Lessee to
repair any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net
proceeds of any such insurance shall be made available for the repairs if made
by either Party.


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


          9.4 Total
Destruction. Notwithstanding any
other provision hereof, if a Premises Total Destruction occurs, this Lease
shall terminate “?”0 days following such Destruction. If the damage or destruction
was caused by the gross negligence or willful misconduct of Lessee, Lessor
shall have the right to
recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.


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


          9.6 Abatement
of Rent; Lessee’s Remedies.


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


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


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


10. Real
Property Taxes.


          10.1 Definitions.
As used herein, the
term “Real Property Taxes” shall include any form of assessment; real estate,
general, special,


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ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income
or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable
interest of Lessor in the Project, Lessor’s right to other income therefrom,
and/or Lessor’s business of leasing, by any authority having the direct or
indirect power to tax and where the funds are generated with reference to the
Project address and where the proceeds so generated are to be applied by
the city, county or other local taxing authority of a jurisdiction within which
the Project is located. “Real Property Taxes” shall also include any tax, fee, levy,
assessment or charge, or any increase therein: (i) Imposed by reason of events
occurring during the term of this Lease, including but not limited to, a
change In the ownership of the Project, (ii) a change in the improvements
thereon, and/or (iii) levied “?” assessed on machinery or
equipment provided by Lessor to Lessee pursuant to this Lease.


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


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


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


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


11. Utilities and Services.


          11.1
Services Provided by Lessor. Lessor shall provide heating, ventilation, air
conditioning, reasonable amounts of electricity for normal lighting and
office machines, water for reasonable and normal drinking and lavatory use in
connection with an office, and replacement light bulbs and/or fluorescent tubes
and ballasts for standard overhead fixtures. Lessor shall also provide
janitorial services to the Premises and Common Areas 5 times per week, excluding Building Holidays, or pursuant to the attached
janitorial schedule, if any. Lessor shall not, however, be required to provide
janitorial services to kitchens or storage areas included within the Premises.


          11.2
Services Exclusive to Lessee. Lessee shall pay for all water, gas, light,
power, telephone and other utilities and services specially or exclusively
supplied and/or metered exclusively to the Premises or to Lessee, together with
any taxes thereon. If a service is deleted by Paragraph 1.13 and such
service is not separately metered to the Premises, Lessee shall pay at Lessor’s
option, either Lessee’s Share or a reasonable proportion to be determined by Lessor of all charges for such
jointly metered service.


          11.3
Hours of Service. Said services and utilities shall be provided
during times set forth in Paragraph 1.12. Utilities and services required at other times shall be subject to advance request
and reimbursement by Lessee to Lessor of the cost thereof.


          11.4
Excess Usage by Lessee. Lessee shall not make connection to the
utilities except by or through existing outlets and shall not install or use machinery or equipment in or about the Premises
that uses excess water, lighting or power, or suffer or permit any act that
causes extra burden upon the utilities or services, including but not limited
to security and trash services, over standard office usage for the Project.
Lessor shall require Lessee to
reimburse Lessor for any excess expenses or costs that may arise out of a
breach of this subparagraph by Lessee. Lessor may, in its sole discretion,
install at Lessee’s expense supplemental equipment and/or separate metering
applicable to Lessee’s excess usage or loading.


          11.5
Interruptions. There shall be no
abatement of rent and Lessor shall not be liable in any respect whatsoever for
the inadequacy, stoppage, interruption
or discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor’s reasonable
control or in cooperation with governmental request or directions. 


12. Assignment and
Subletting.


          12.1
Lessor’s Consent Required.



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


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



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


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


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


                    (f)
Lessor may reasonably withhold consent
to a proposed assignment or subletting if Lessee is in Default at the time consent
is requested.


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


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          12.2 Terms and Conditions Applicable to Assignment and
Subletting.


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


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


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


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


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


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


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


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


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


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


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


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


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


13. Default; Breach; Remedies.


          13.1
  Default; Breach. A
“Default” is defined as a failure
by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this
Lease. A “Breach” is defined as the occurrence of one or more of the following
Defaults, and the failure of Lessee to cure such Default within any applicable
grace period:


                    (a)
The abandonment of the Premises; or
the vacating of the Premises without providing a commercially reasonable level
of security, or where the coverage of the property insurance described
in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.


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


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


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


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


                    (f)
The occurrence of any of the following
events: (i) the making of any general arrangement or assignment for the benefit
of creditors; (ii) becoming a
“debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto
(unless, in the case of a petition filed against Lessee, the same is dismissed
within 60 days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee’s assets located at the
Premises or of Lessee’s interest in this Lease, where possession is not
restored to Lessee within 30 days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Lessee’s assets located at the
Premises or of Lessee’s interest in this Lease, where such seizure is not
discharged


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within 30 days; provided,
however, in the event that any provision of this subparagraph is contrary to
any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.


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


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


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


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


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


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


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


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


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


          13.6
Breach by Lessor.



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



                    (b)
Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor
Lender cures said breach within 30 days after receipt of said notice, or if
having commenced said cure they do not diligently pursue it to completion, then
Lessee may elect to cure said breach at Lessee’s expense and offset from Rent
the actual and reasonable cost to perform such cure, provided however, that
such offset shall not exceed an 



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amount
equal to the greater of one month’s Base Rent or the Security Deposit,
reserving Lessee’s right to seek reimbursement from Lessor for any such expense
in excess of such offset. Lessee shall document the cost of said cure and
supply said documentation to Lessor.


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


15. Brokerage Fees.


          15.1
Additional
Commission. In addition to the payments owed pursuant to Paragraph 1.10 above,
and unless Lessor and the Brokers otherwise agree in writing, Lessor agrees
that: (a) if Lessee exercises any Option, (b) if Lessee or anyone affiliated
with Lessee acquires from Lessor any rights to the Premises or other premises
owned by Lessor and located within the Project, (c) if Lessee remains in
possession of the Premises, with the consent of Lessor, after the expiration
of this Lease, or (d) if Base Rent is increased, whether by agreement or
operation of an escalation clause herein, then, Lessor shall pay Brokers a fee
in accordance with the schedule of the Brokers in effect at the time of the
execution of this Lease.


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


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


16. Estoppel Certificates.



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


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


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


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


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


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


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


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


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


23. Notices.




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


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


24. Waivers.


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


                    (b)
The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach
by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys
or damages due Lessor, notwithstanding any qualifying statements or conditions
made by Lessee in connection therewith, which such statements and/or conditions
shall be of no force or effect whatsoever unless specifically agreed to in
writing by Lessor at or before the time of deposit of such payment.


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


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


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


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


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


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


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


                    (c)
Buyer and Seller agree to identify to Brokers as “Confidential” any
communication or information given Brokers that is considered by such Party to
be confidential.


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


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


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


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




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initiated in the county in which the Premises are
located.


30. Subordination;
Attornment; Non-Disturbance,


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


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



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


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


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


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


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


34. Signs. Lessor may place on the
Premises ordinary “For Sale” signs at any time and ordinary “For Lease” signs
during the last 6 months of the term hereof.


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


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


37. Guarantor.


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


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


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


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



               39.1 Definition.
“Option” shall mean: (a)
the right to extend or reduce the term of or renew this Lease or to extend or
reduce the term “?” or renew any lease that Lessee has on other property of Lessor;
(b) the right of first refusal or first offer to lease either the Premises or
other property “?” Lessor; (c) the right to purchase, the right of first offer to
purchase or the right of first refusal to purchase the Premises or other
property of Lessor. 


               39.2 Options
Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal
to the original Lessee, and cannot be assigned or exercised by anyone other
than said original Lessee and only while the original Lessee is in full
possession of the Premises and, if requested by Lessor, with Lessee certifying
that Lessee has no intention of thereafter assigning or subletting.


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


               39.4 Effect
of
Default on Options.


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


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


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


40. Security
Measures.
Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not
include the cost of guard service or other security measures, and that Lessor
shall have no obligation whatsoever to provide same. Lessee assumes all
responsibility for the protection of the Premises, Lessee, its agents and
invitees and their property from the acts of third parties. In the event,
however, that Lessor should elect to provide security services, then the cost
thereof shall be an Operating Expense.


41. Reservations.


                                (a)
Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary,
(ii) to cause the recordation of parcel maps and restrictions, (iii) to create
and/or install new utility raceways, so long as such easements, rights,
dedications, maps, restrictions, and utility raceways do not unreasonably
interfere with the use of the Premises by Lessee. Lessor may also: change the
name, address or title of the Building or Project upon at least 90 days prior
written notice; provide and install, at Lessee’s expense, Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Lessor shall reasonably deem appropriate; grant to any lessee the exclusive
right to conduct any business as long as such exclusive right does not conflict
with any rights expressly given herein; and to place such signs, notices or
displays as Lessor reasonably deems necessary or advisable upon the roof,
exterior of the Building or the Project or on signs in the Common Areas. Lessee
agrees to sign any documents reasonably requested by Lessor to effectuate such
rights. The obstruction of Lessee’s view, air, or light by any structure
erected in the vicinity of the Building, whether by Lessor or third parties,
shall in no way affect this Lease or impose any liability upon Lessor.


                                (b)
Lessor also reserves the right to move Lessee to other space of comparable size
in the Building or Project. Lessor must
provide at least 45 days prior written notice of such move, and the new
space must contain improvements of comparable quality to those contained within the Premises. Lessor shall pay the
reasonable out of pocket costs that Lessee incurs with regard to such
relocation, including the expenses of moving and necessary stationary revision costs. In no
event, however, shall Lessor be required to pay an amount in excess of two
months Base Rent. Lessee may not be relocated more than once during the term of
this Lease.


                                (c)
Lessee shall not: (i) use a representation (photographic or otherwise) of the
Building or Project or their name(s) in connection with Lessee’s business; or
(ii) suffer or permit anyone, except in emergency, to go upon the roof of the
Building.


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


43. Authority;
Multiple Parties; Execution


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


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


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


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


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


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


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


48. Mediation
and Arbitration of Disputes. An Addendum requiring the Mediation and/or the
Arbitration of all disputes between the Parties


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and/or Brokers
arising out of this Lease  o is o is not
attached to this Lease.


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


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


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


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


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


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


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



	
 

	
 

	
 


	
Executed at:

	
 

	
Executed at:
 


	
 

	
 

	
 


	
On:

	
 

	
On: 


	
 

	
 

	
 


	
 

	
 

	
 


	
By
 LESSOR:

	
 

	
By
 LESSEE: 


	
 

	
 

	
 


	
Karen Morrison

	
 

	
New World Mortgage
 Corporation 


	
 

	
 

	
 


	 

	
 

	 


	
 


	
By:

	
 

	
By: 


	
 

	
 

	
 


	
Name Printed: Karen Morrison

	
 

	
Name Printed: Francis Leonard


	
Title: Owner

	
 

	
Title: President 


	
 

	
 

	
 


	
By:

	
 

	
By: 


	
 

	
 

	
 


	
Name Printed:

	
 

	
Name Printed: 


	
 

	
 

	
 


	
Title:

	
 

	
Title: 


	
 

	
 

	
 


	
Address: 41655 Date Street,
 Suite 100

	
 

	
Address: 41655 Date Steet,
 Suite 200 


	
Murrieta, Ca
 92562

	
 

	
Murrieta, Ca 92562 


	
 

	
 

	
 


	 

	
 

	 


	
Telephone: (951) 698-4000

	
 

	
Telephone: (951) 834-9830
 


	
Facsimile: (951) 698-5000

	
 

	
Facsimile: (951) 848-9359
 


	
Federal ID
 No.

	
 

	
Federal ID No. 


	
 

	
 

	
 


	
 

	
 

	
 


	
LESSOR’S
 BROKER:

	
 

	
LESSEE’S BROKER:


	
 

	
 

	
 


	
Karen
 Morrison

	
 

	
Karen Morrison 


	
 


	
Attn:

	
 

	
Attn: 


	
 

	
 

	
 


	
Address:

	
 

	
Address: 


	
 

	
 

	
 


	
 

	
 

	
 


	 

	
 

	 


	
 

	
 

	
 


	 

	
 

	 







	
 

	
 

	
 

	
 


	
 


	
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Telephone:(____)

	
 

	
 

	
Telephone:(___)

	
 


	
 

	 

	
 

	
 

	 


	
Facsimile:(____)

	
 

	
 

	
Facsimile:(____)

	
 


	
 

	 

	
 

	
 

	 





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


©Copyright 1999-By AIR Commercial Real Estate Association.

All rights reserved. 

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




	
 

	
 

	
 

	
 


	
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©1999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION

	
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State of California
Secretary of State 

	



	
 





 


          I,
DEBRA BOWEN, Secretary of State of the State of California, hereby certify:



          That
the attached transcript of 1 page(s) has been compared with
the record on file in this office, of which it purports to be a copy, and that
it is full, true and correct.


	
 

	
 

	
 


	


	
 

	
 


	
 

	
 


	
 

	
IN
WITNESS WHEREOF, I execute
this
 certificate and affix the Great Seal of the State of California this day of


	
 

	
 


	
 

	
OCT 09
2007


	
 


	
 

	 


	
 

	
 


	
 

	
 

	



	
 

	
 

	
DEBRA BOWEN

 Secretary of State







	
 

	
 

	
 


	
Sec/State Form CE-107 (REV 1/2007) 

	


	
  OSP 05 99734