**Exhibit 10.18**

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**STANDARDINDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET**

**AIRCOMMERCIAL REAL ESTATE ASSOCIATION**

1.             **Basic Provisions (“Basic Provisions”).**

1.1           **Parties:**This Lease **(“Lease”)**,dated for reference purposes only August 7, 2006, is made by and between AMJ Properties, LLC **(“Lessor”)**and 1st Pacific Bank of California **(“Lessee”)**, (collectively the **“Parties”**, or individually a **“Party”**).

1.2(a)      **Premises:**That certain portion of the Project (as defined below), including allimprovements therein or to be provided by Lessor under the terms of this Lease, commonly known by the street address of 343E. Main Street, located in the City of El Cajon, County of San Diego, State of California, with zip code 92020, as outlined on Exhibit A attached hereto **(“Premises”)** andgenerally described as (describe briefly the nature of the Premises): Theentire ground floor, consisting of approximately 4,000 square feet. Exactsquare footage shall be determined pursuant to the final space plan.  Inaddition to Lessee’s rights to use and occupy the Premises as hereinafterspecified, Lessee shall have non-exclusive rights to the any utility raceways of the building containing thePremises (“**Building**”) and to thecommon Areas (as defined in Paragraph 2.7 below), but shall not have any rights to the roof or exterior walls ofthe Building or to any other buildings in the Project. The Premises, theBuilding, the Common Areas, the land upon which they are located, along with all other buildings and improvementsthereon, are herein collectively referred to as the **“Project.”**(See also Paragraph 2)

1.2(b)      **Parking: *** unreserved vehicle parking spaces.  *****Lessee shall be entitled to the use of no less than fifty percent (50%)of the total number of parking spaces, free for the term and any expansions orextensions on an unreservedbasis except that five (5) reserved spaces as shown on Exhibit B shall bespecifically reserved for use by Lessee. (See also Paragraph 2.6)

1.3           **Term:**ten (10) years and zero (0) months **(“OriginalTerm”)** commencing Ninety(90) days following substantial completion of the project **(“Commencement Date”)** and ending Ten (10) yearsthereafter **(“ExpirationDate”)**. (See also Paragraph3)

1.4           **Early Possession:**N/A**(“Early PossessionDate”)**. (See also Paragraphs3.2 and 3.3)

1.5           **Base Rent:**$ 2.30/sq.ft. per month **(“Base Rent”)**,payable on the 1st day of eachmonth commencing on the Commencement Date.  (See also Paragraph 4) x If this box is checked, there are provisionsin this Lease for the Base Rent to be adjusted.

1.6           **Lessee’s Share of Common AreaOperating Expenses:**Fifty percent(50%) **(“Lessee’s Share”)**. Lessee’s Share has been calculated by dividing the approximate squarefootage of the Premises by the approximate square footage of the Project. In the event that the size of the Premisesand/or the Project are modified during the term of this Lease, Lessor shallrecalculate Lessee’s Share to reflect such modification.

1.7           **Base Rent and Other MoniesPaid Upon Execution:**

(a)           **Base Rent:**$9,200.00 for the period the first month.

(b)           **Common Area OperatingExpenses:**$N/A for the period N/A.

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

(d)           **Other:**$N/A for

(e)           **Total Due Upon Execution ofthis Lease:**$9,200.00.

1.8           **Agreed Use:**BusinessBanking services, inclusive of an ATM and general office uses.  (Seealso Paragraph 6)

1.9           **Insuring Party**. Lessor is the **“Insuring Party”**. (See also Paragraph 8)

1.10         **Real Estate Brokers:**(See also Paragraph 15)

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

x BurnhamReal Estate - Kyle Clark representsLessor exclusively ( **“Lessor’s Broker”**);x Irving Hughes - Shaun Burnett represents Lessee exclusively ( **“Lessee’s Broker”**); oro represents both Lessor and Lessee ( **“Dual Agency”**).

(b)           **Payment to Brokers:**Upon execution and delivery of this Lease byboth Parties, Lessor shall pay to the Brokers the brokerage fee agreed to in aseparate written agreement (or if there is no such agreement, the sum of fivepercent or 5% of the total Base Rent for the first sixty (60) months and two &one half percent (2.5%) for the second sixty (60) months for the brokerage services rendered by theBrokers).

1.11         **Guarantor**. The obligations of the Lessee under thisLease are to be guaranteed by N/A **(“Guarantor”)**. (See also Paragraph 37)

1.12         **Attachments**. Attached hereto are the following, all ofwhich constitute a part of this Lease:x an Addendum consisting of Paragraphs 50through 61;

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þ a site plan depicting the Premises;

þ a site plan depicting the Project;

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

o a current set of the Rules and Regulationsadopted by the owners’ association;

o a Work Letter;

o other (specify);                                                                                                                                 .

2.             **Premises**.

2.1           **Letting**. Lessor hereby leases to Lessee, and Lesseehereby leases from Lessor, the Premises, for the term, at the rental, and uponall of the terms, covenants and conditions set forth in this Lease. Unlessotherwise provided herein, any statement of size set forth in this Lease, orthat may have been used in calculating Rent, is an approximation which theParties agree is reasonable and any payments based thereon are not subject torevision whether or not the actual size is more or less. **NOTE: Lessee is advised to verify the actual sizeprior to executing this Lease.**

2.2           **Condition**. Lessor shall deliver that portion of thePremises contained within the Building **(‘Unit”)**to Lessee broom clean and free of debris on the Commencement Date orthe Early Possession Date, whichever first occurs **(“Start Date”)**, and, so long as the required service contractsdescribed in Paragraph 7.1(b) below are obtained by Lessee and in effect withinthirty days following the Start Date, warrants that the existing electrical,plumbing, fire sprinkler, lighting, heating, ventilating and air conditioningsystems **(“HVAC”)**, loading doors,sump pumps, if any, and all other such elements in the Unit, other than thoseconstructed by Lessee, shall be in good operating condition on said date, thatthe structural elements of the roof, bearing walls and foundation of the Unitshall be free of material defects, and that the Unit does not contain hazardouslevels of any mold or fungi defined as toxic under applicable state or federallaw. If a non-compliance with such warranty exists as of the Start Date, or ifone of such systems or elements should malfunction or fail within theappropriate warranty period, Lessor shall, as Lessor’s sole obligation withrespect to such matter, except as otherwise provided in this Lease, promptlyafter receipt of written notice from Lessee setting forth with specificity thenature and extent of such non-compliance, malfunction or failure, rectify sameat Lessor’s expense. The warranty periods shall be as follows: (i) 6 months asto the HVAC systems, and (ii) 30 days as to the remaining systems and otherelements of the Unit. If Lessee does not give Lessor the required notice withinthe appropriate warranty period, correction of any such non-compliance,malfunction or failure shall be the obligation of Lessee at Lessee’s sole costand expense (except for the repairs to the fire sprinkler systems, roof,foundations, and/or bearing walls - see Paragraph 7).

2.3           **Compliance**. Lessor warrants that to the best of itsknowledge the improvements on the Premises and the Common Areas comply with thebuilding codes that were in effect at the time that each such improvement, orportion thereof, was constructed, and also with all applicable laws, covenantsor restrictions of record, regulations, and ordinances in effect on the StartDate **(“Applicable Requirements”).**Said warranty does not apply to the use to which Lessee will put the Premises,modifications which may be required by the Americans with Disabilities Act orany similar laws as a result of Lessee’s use (see Paragraph 49), or to anyAlterations or Utility Installations (as defined in Paragraph 7.3(a)) made orto be made by Lessee. **NOTE: Lessee isresponsible for determining whether or not the Applicable Requirements andespecially the zoning are appropriate for Lessee’s intended use, andacknowledges that past uses of the Premises may no longer be allowed.**If the Premises do not comply with said warranty, Lessor shall, except asotherwise provided, promptly after receipt of written notice from Lesseesetting forth with specificity the nature and extent of such non-compliance,rectify the same at Lessor’s expense. If Lessee does not give Lessor writtennotice of a non-compliance with this warranty within 6 months following theStart Date, correction of that non-compliance shall be the obligation of Lesseeat Lessee’s sole cost and expense. If the Applicable Requirements are hereafterchanged so as to require during the term of this Lease the construction of anaddition to or an alteration of the Unit, Premises and/or Building, theremediation of any Hazardous Substance, or the reinforcement or other physicalmodification of the Unit, Premises and/or Building **(“Capital Expenditure”),** Lessor and Lessee shall allocate thecost of such work as follows:

(a)           Subject to Paragraph 2.3(c) below, if such Capital Expenditures arerequired as a result of the specific and unique use of the Premises by Lesseeas compared with uses by tenants in general, Lessee shall be fully responsiblefor the cost thereof, provided, however that if such Capital Expenditure isrequired during the last 2 years of this Lease and the cost thereof exceeds 6months’ Base Rent, Lessee may instead terminate this Lease unless Lessornotifies Lessee, in writing, within 10 days after receipt of Lessee’stermination notice that Lessor has elected to pay the difference between theactual cost thereof and the amount equal to 6 months’ Base Rent. If Lesseeelects termination, Lessee shall immediately cease the use of the Premiseswhich requires such Capital Expenditure and deliver to Lessor written noticespecifying a termination date at least 90 days thereafter. Such terminationdate shall, however, in no event be earlier than the last day that Lessee couldlegally utilize the Premises without commencing such Capital Expenditure.

(b)           If such Capital Expenditure is not the result of the specific and uniqueuse of the Premises by Lessee (such as, governmentally mandated seismicmodifications), then Lessor and Lessee shall allocate the obligation to pay forthe portion of such costs reasonably attributable to the Premises pursuant tothe formula set out in Paragraph 7.1(d); provided, however, that if suchCapital Expenditure is required during the last 2 years of this Lease or ifLessor reasonably determines that it is not economically feasible to pay itsshare thereof, Lessor shall have the option to terminate this Lease upon 90days prior written notice to Lessee unless Lessee notifies Lessor, in writing,within 10 days after receipt of Lessor’s termination notice that Lessee willpay for such Capital Expenditure. If Lessor does not elect to terminate, andfails to tender its share of any such Capital Expenditure, Lessee may advancesuch funds and deduct same, with Interest, from Rent until Lessor’s share ofsuch 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 Leaseis not sufficient to fully reimburse Lessee on an offset basis, Lessee shallhave the right to terminate this Lease upon 30 days written notice to Lessor.

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

2.4           **Acknowledgements**. Lessee acknowledges that: (a) it has beenadvised by Lessor and/or Brokers to satisfy itself with respect to thecondition of the Premises (including but not limited to the electrical, HVACand fire sprinkler systems, security, environmental aspects, and compliancewith Applicable Requirements and the Americans with Disabilities Act), andtheir suitability for Lessee’s intended use, (b) Lessee has made suchinvestigation as it deems necessary with reference to such matters and assumesall responsibility therefor as the same relate to its occupancy of thePremises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made anyoral or written representations or warranties with respect to said mattersother than as set forth in this Lease. In addition, Lessor acknowledges that:(i) Brokers have made no representations, promises or warranties concerningLessee’s ability to honor the Lease or suitability to occupy the Premises, and(ii) it is Lessor’s sole responsibility to investigate the financial capabilityand/or suitability of all proposed tenants.

2.5           **Lessee as PriorOwner/Occupant**. Thewarranties made by Lessor in Paragraph 2 shall be of no force or effect ifimmediately prior to the Start Date Lessee was the owner or occupant of thePremises. In such event, Lessee shall be responsible for any necessarycorrective work.

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2.6           **Vehicle Parking**. Lessee shall be entitled to use the numberof parking spaces specified in Paragraph 1.2(b) on those portions of the CommonAreas designated from time to time by Lessor for parking. Lessee shall not usemore parking spaces than said number. Said parking spaces shall be used forparking by vehicles no larger than full-size passenger automobiles or pick-uptrucks, herein called **“Permitted SizeVehicles.”**Lessor may regulate the loading and unloading of vehiclesby adopting Rules and Regulations as provided in Paragraph 2.9. No vehiclesother than Permitted Size Vehicles may be parked in the Common Area without theprior written permission of Lessor. In addition:

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

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

(c)           If Lessee permits or allows any of the prohibited activities describedin this Paragraph 2.6, then Lessor shall have the right, without notice, inaddition to such other rights and remedies that it may have, to remove or towaway the vehicle involved and charge the cost to Lessee, which cost shall beimmediately payable upon demand by Lessor.

2.7           **Common Areas - Definition**. The term **“CommonAreas”**is defined as all areas and facilities outside the Premisesand within the exterior boundary line of the Project and interior utility racewaysand installations within the Unit that are provided and designated by theLessor from time to time for the general non-exclusive use of Lessor, Lesseeand other tenants of the Project and their respective employees, suppliers,shippers, customers, contractors and invitees, including parking areas, loadingand unloading areas, trash areas, roadways, walkways, driveways and landscapedareas.

2.8           **Common Areas - Lessee’sRights**. Lessor grants toLessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors,customers and invitees, during the term of this Lease, the non-exclusive rightto use, in common with others entitled to such use, the Common Areas as theyexist from time to time, subject to any rights, powers, and privileges reservedby Lessor under the terms hereof or under the terms of any rules andregulations or restrictions governing the use of the Project. Under nocircumstances shall the right herein granted to use the Common Areas be deemedto include the right to store any property, temporarily or permanently, in theCommon Areas. Any such storage shall be permitted only by the prior writtenconsent of Lessor or Lessor’s designated agent, which consent may be revoked atany time. In the event that any unauthorized storage shall occur then Lessorshall have the right, without notice, in addition to such other rights andremedies that it may have, to remove the property and charge the cost toLessee, which cost shall be immediately payable upon demand by Lessor.

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

2.10         **Common Areas - Changes.** So long as changes do not materially affect access to Lessee’s business, Lessor shall have the right, in Lessor’s solediscretion, from time to time:

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

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

(c)           To designate other land outside the boundaries of the Project to be apart 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 makesuch other changes in, to or with respect to the Common Areas and Project asLessor may, in the exercise of sound business judgment, deem to be appropriate.

3.             **Term**.

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

3.2           **Early Possession**. If Lessee totally or partially occupies thePremises prior to the Commencement Date, the obligation to pay Base Rent shallbe abated for the period of such early possession. All other terms of thisLease (including but not limited to the obligations to pay Lessee’s Share ofCommon Area Operating Expenses, Real Property Taxes and insurance premiums andto maintain the Premises) shall be in effect during such period. Any such earlypossession shall not affect the Expiration Date.

3.3           **Delay In Possession**. Lessor agrees to use its best commerciallyreasonable efforts to deliver possession of the Premises to Lessee by theCommencement Date. If, despite said efforts, Lessor is unable to deliverpossession as agreed, Lessor shall not be subject to any liability therefor,nor shall such failure affect the validity of this Lease or change theExpiration Date. Lessee shall not, however, be obligated to pay Rent or performits other obligations until Lessor delivers possession of the Premises and anyperiod of rent abatement that Lessee would otherwise have enjoyed shall runfrom the date of the delivery of possession and continue for a period equal towhat Lessee would otherwise have enjoyed, but minus any days of delay caused bythe acts or omissions of Lessee. If possession is not delivered within 60 daysafter the Commencement Date, Lessee may, at its option, by notice in writingwithin 10 days after the end of such 60 day period, cancel this Lease, in whichevent the Parties shall be discharged from all obligations hereunder. If suchwritten notice is not received by Lessor within said 10 day period, Lessee’sright to cancel shall terminate. Except as otherwise provided, if possession isnot tendered to Lessee by the Start Date and Lessee does not terminate thisLease, as aforesaid, any period of rent abatement that Lessee would otherwisehave enjoyed shall run from the date of delivery of possession and continue fora period equal to what Lessee would otherwise have enjoyed under the termshereof, but minus any days of delay caused by the acts or omissions of Lessee.If possession of the Premises is not delivered within 4 months after theCommencement Date, this Lease shall terminate unless other agreements arereached between Lessor and Lessee, in writing.

3.4           **Lessee Compliance**. Lessor shall not be required to tenderpossession of the Premises to Lessee until Lessee complies with its obligationto provide evidence of insurance (Paragraph 8.5). Pending delivery of suchevidence, Lessee shall be required to perform all of its obligations under thisLease from and after the Start Date, including the payment of Rent,notwithstanding Lessor’s election to withhold possession pending receipt ofsuch evidence of insurance. Further, if Lessee is required to perform any otherconditions prior to or concurrent with the Start Date, the Start Date shalloccur but Lessor may elect to withhold possession until such conditions aresatisfied.

4.             **Rent**.

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

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4.2           **Common Area OperatingExpenses.** Lessee shall pay toLessor during the term hereof, in addition to the Base Rent, Lessee’s Share (asspecified in Paragraph 1.6) of all Common Area Operating Expenses, ashereinafter defined, during each calendar year of the term of this Lease, inaccordance with the following provisions:

(a)           **“Common Area OperatingExpenses”**are defined, forpurposes of this Lease, as all costs incurred by Lessor relating to theownership and operation of the Project, including, but not limited to, thefollowing:

(i)                                     The operation, repair and maintenance, inneat, clean, good order and condition, and if necessary the replacement, of thefollowing:

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

(bb)         Exterior signs and any tenant directories.

(cc)         Any fire sprinkler systems.

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

(iii)                               Trash disposal, pest control services, property management, securityservices, owners’ association dues and fees, the cost to repaint the exteriorof any structures and the cost of any environmental inspections.

(iv)                              Reserves set aside for maintenance, repair and/or replacement of CommonArea improvements and equipment.

(v)                                 Real Property Taxes (as defined in Paragraph10).

(vi)                              The cost of the premiums for the insurance maintained by Lessor pursuantto Paragraph 8.

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

(viii)                        Auditors’, accountants’ and attorneys’ fees and costs related to theoperation, maintenance, repair and replacement of the Project **said fees and costs shall not include those incurredby Lessor as a result of a loan refinance, sale of the property or othersimilar action.**

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

(x)                                   Any other services to be provided by Lessorthat are stated elsewhere in this Lease to be a Common Area Operating Expense.

(b)           Any Common Area Operating Expenses and Real Property Taxes that arespecifically attributable to the Unit, the Building or to any other building inthe Project or to the operation, repair and maintenance thereof, shall beallocated entirely to such Unit, Building, or other building. However, anyCommon Area Operating Expenses and Real Property Taxes that are notspecifically attributable to the Building or to any other building or to theoperation, repair and maintenance thereof, shall be equitably allocated byLessor to all buildings in the Project.

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

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

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

4.3           **Payment**. Lessee shall cause payment of Rent to bereceived by Lessor in lawful money of the United States, without offset or deduction(except as specifically permitted in this Lease), on or before the day on whichit is due. All monetary amounts shall be rounded to the nearest whole dollar.In the event that any invoice prepared by Lessor is inaccurate such inaccuracyshall not constitute a waiver and Lessee shall be obligated to pay the amountset forth in this Lease. Rent for any period during the term hereof which isfor less than one full calendar month shall be prorated based upon the actualnumber of days of said month. Payment of Rent shall be made to Lessor at itsaddress stated herein or to such other persons or place as Lessor may from timeto time designate in writing. Acceptance of a payment which is less than theamount then due shall not be a waiver of Lessor’s rights to the balance of suchRent, regardless of Lessor’s endorsement of any check so stating. In the eventthat any check, draft, or other instrument of payment given by Lessee to Lessoris dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 inaddition to any Late Charge and Lessor, at its option, may require all futureRent be paid by cashier’s check. Payments will be applied first to accrued latecharges and attorney’s fees, second to accrued interest, then to Base Rent andCommon Area Operating Expenses, and any remaining amount to any other outstandingcharges or costs.

5.             **Security Deposit**. Lessee shall deposit with Lessor upon execution hereof the SecurityDeposit as security for Lessee’s faithful performance of its obligations underthis Lease. If Lessee fails to pay Rent, or otherwise Defaults under thisLease, Lessor may use, apply or retain all or any portion of said SecurityDeposit for the payment of any amount due Lessor or to reimburse or compensateLessor for any liability, expense, loss or damage which Lessor may suffer orincur by reason thereof. If Lessor uses or applies all or any portion of theSecurity Deposit, Lessee shall within 10 days after written request therefordeposit monies with Lessor sufficient to restore said Security Deposit to thefull amount required by this Lease. If the Base Rent increases during the termof this Lease, Lessee shall, upon written request from Lessor, depositadditional monies with Lessor so that the total amount of the Security Depositshall at all times bear the same proportion to the increased Base Rent as theinitial Security Deposit bore to the initial Base Rent. Should the Agreed Usebe amended to accommodate a material change in the business of Lessee or toaccommodate a sublessee or assignee, Lessor shall have the right to increasethe 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 aresult thereof. If a change in control of Lessee occurs during this Lease andfollowing such change the financial condition of Lessee is, in Lessor’sreasonable judgment, significantly reduced, Lessee shall deposit suchadditional monies with Lessor as shall be sufficient to cause the SecurityDeposit to be at a commercially reasonable level based on such change infinancial condition. Lessor shall not be required to keep the Security Depositseparate from its general accounts. Within 14 days after the expiration ortermination of this Lease, if Lessor elects to apply the Security Deposit onlyto unpaid Rent, and otherwise within 30 days after the Premises have beenvacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion ofthe Security Deposit not used or applied by Lessor. No part of the SecurityDeposit shall

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be considered to be held intrust, to bear interest or to be prepayment for any monies to be paid by Lesseeunder this Lease.

6.             **Use**.

6.1           **Use**. Lessee shall use and occupy the Premisesonly 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 thePremises in a manner that is unlawful, creates damage, waste or a nuisance, orthat disturbs occupants of or causes damage to neighboring premises orproperties. Other than guide, signal and seeing eye dogs, Lessee shall not keepor allow in the Premises any pets, animals, birds, fish, or reptiles. Lessorshall not unreasonably withhold or delay its consent to any written request fora modification of the Agreed Use, so long as the same will not impair thestructural integrity of the Building or the mechanical or electrical systemstherein, and/or is not significantly more burdensome to the Project. If Lessorelects to withhold consent, Lessor shall within 7 days after such request givewritten notification of same, which notice shall include an explanation ofLessor’s objections to the change in the Agreed Use.

6.2           **Hazardous Substances**. (See Paragraph 60)

(a)           **Reportable Uses RequireConsent**. The term **“Hazardous Substance”**as used in this Leaseshall mean any product, substance, or waste whose presence, use, manufacture,disposal, transportation, or release, either by itself or in combination withother materials expected to be on the Premises, is either: (i) potentiallyinjurious to the public health, safety or welfare, the environment or thePremises, (ii) regulated or monitored by any governmental authority, or (iii) abasis for potential liability of Lessor to any governmental agency or thirdparty under any applicable statute or common law theory. Hazardous Substancesshall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/orcrude oil or any products, by-products or fractions thereof. Lessee shall notengage in any activity in or on the Premises which constitutes a Reportable Useof Hazardous Substances without the express prior written consent of Lessor andtimely compliance (at Lessee’s expense) with all Applicable Requirements. **“Reportable Use”**shall mean (i) theinstallation or use of any above or below ground storage tank, (ii) thegeneration, possession, storage, use, transportation, or disposal of aHazardous Substance that requires a permit from, or with respect to which areport, notice, registration or business plan is required to be filed with, anygovernmental authority, and/or (iii) the presence at the Premises of aHazardous Substance with respect to which any Applicable Requirements requiresthat a notice be given to persons entering or occupying the Premises orneighboring properties. Notwithstanding the foregoing, Lessee may use anyordinary and customary materials reasonably required to be used in the normalcourse of the Agreed Use, ordinary office supplies (copier toner, liquid paper,glue, etc.) and common household cleaning materials, so long as such use is in compliancewith all Applicable Requirements, is not a Reportable Use, and does not exposethe Premises or neighboring property to any meaningful risk of contamination ordamage or expose Lessor to any liability therefor. In addition, Lessor maycondition its consent to any Reportable Use upon receiving such additionalassurances as Lessor reasonably deems necessary to protect itself, the public,the Premises and/or the environment against damage, contamination, injuryand/or liability, including, but not limited to, the installation (and removalon or before Lease expiration or termination) of protective modifications (suchas concrete encasements) and/or increasing the Security Deposit.

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

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

(d)           **Lessee Indemnification**. Lessee shall indemnify, defend and holdLessor, its agents, employees, lenders and ground lessor, if any, harmless fromand against any and all loss of rents and/or damages, liabilities, judgments,claims, expenses, penalties, and attorneys’ and consultants’ fees arising outof or involving any Hazardous Substance brought onto the Premises by or forLessee, or any third party (provided, however, that Lessee shall have noliability under this Lease with respect to underground migration of anyHazardous Substance under the Premises from areas outside of the Project notcaused or contributed to by Lessee). Lessee’s obligations shall include, butnot be limited to, the effects of any contamination or injury to person,property or the environment created or suffered by Lessee, and the cost ofinvestigation, removal, remediation, restoration and/or abatement, and shallsurvive the expiration or termination of this Lease. No termination,cancellation or release agreement entered into by Lessor and Lessee shallrelease Lessee from its obligations under this Lease with respect to HazardousSubstances, unless specifically so agreed by Lessor in writing at the time ofsuch agreement.

(e)           **Lessor Indemnification**. Lessor and its successors and assigns shallindemnify, defend, reimburse and hold Lessee, its employees and lenders,harmless from and against any and all environmental damages, including the costof remediation, which are suffered as a direct result of Hazardous Substanceson the Premises prior to Lessee taking possession or which are caused by thegross 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 ortermination of this Lease.

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

(g)           **Lessor Termination Option**. If a Hazardous Substance Condition (seeParagraph 9.1(e)) occurs during the term of this Lease, unless Lessee islegally responsible therefor (in which case Lessee shall make the investigationand remediation thereof required by the Applicable Requirements and this Leaseshall continue in full force and effect, but subject to Lessor’s rights underParagraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i)investigate and remediate such Hazardous Substance Condition, if required, assoon as reasonably possible at Lessor’s expense, in which event this Leaseshall continue in full force and effect, or (ii) if the estimated cost toremediate such condition exceeds 12 times the then monthly Base Rent or$100,000, whichever is greater, give written notice to Lessee, within 30 daysafter receipt by Lessor of knowledge of the occurrence of such HazardousSubstance Condition, of Lessor’s desire to terminate this Lease as of the date60 days following the date of such notice. In the event Lessor elects to give atermination notice, Lessee may, within 10 days thereafter, give written noticeto Lessor of Lessee’s commitment to pay the amount by which the cost of theremediation of such Hazardous Substance Condition exceeds an amount equal to 12times the then monthly Base Rent or $100,000, whichever is greater. Lesseeshall provide Lessor with said funds or satisfactory assurance thereof within30 days following such commitment. In such event, this Lease shall continue infull force and effect, and Lessor shall proceed to make such remediation assoon as reasonably possible after the required funds are available. If Lesseedoes not give such notice and provide the required funds or assurance thereofwithin the time provided, this Lease shall terminate as of the date specifiedin Lessor’s notice of termination.

6.3           **Lessee’s Compliance withApplicable Requirements**.Except as otherwise provided in this Lease, Lessee shall, at Lessee’s

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sole expense, fully,diligently and in a timely manner, materially comply with all ApplicableRequirements, the requirements of any applicable fire insurance underwriter orrating bureau, and the recommendations of Lessor’s engineers and/or consultantswhich relate in any manner to such Requirements, without regard to whether saidRequirements are now in effect or become effective after the Start Date. Lesseeshall, within 10 days after receipt of Lessor’s written request, provide Lessorwith copies of all permits and other documents, and other information evidencingLessee’s compliance with any Applicable Requirements specified by Lessor, andshall immediately upon receipt, notify Lessor in writing (with copies of any documentsinvolved) of any threatened or actual claim, notice, citation, warning,complaint or report pertaining to or involving the failure of Lessee or the Premisesto comply with any Applicable Requirements. Likewise, Lessee shall immediatelygive written notice to Lessor of: (i) any water damage to the Premises and anysuspected seepage, pooling, dampness or other condition conducive to theproduction of mold; or (ii) any mustiness or other odors that might indicatethe presence of mold in the Premises.

6.4           **Inspection; Compliance**. Lessor and Lessor’s **“Lender”** (as defined in Paragraph30) and consultants shall have the right to enter into Premises at any time, inthe case of an emergency, and otherwise at reasonable times after reasonablenotice, for the purpose of inspecting the condition of the Premises and forverifying compliance by Lessee with this Lease. The cost of any suchinspections shall be paid by Lessor, unless a violation of ApplicableRequirements, or a Hazardous Substance condition (see Paragraph 9.1) is foundto exist or be imminent, or the inspection is requested or ordered by a governmentalauthority. In such case, Lessee shall upon request reimburse Lessor for thecost of such inspection, so long as such inspection is reasonably related tothe violation or contamination. In addition, Lessee shall provide copies of allrelevant material safety data sheets (**MSDS**)to Lessor within 10 days of the receipt of written request therefor.

7.             **Maintenance; Repairs, Utility Installations; Trade Fixturesand Alterations**.

7.1           **Lessee’s Obligations**.

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

(b)           **Service Contracts**. Lessee shall, at Lessee’s sole expense,procure and maintain contracts, with copies to Lessor, in customary form andsubstance for, and with contractors specializing and experienced in themaintenance of the following equipment and improvements, if any, if and wheninstalled on the Premises: (i) HVAC equipment, (ii) boiler and pressurevessels, (iii) clarifiers, and (iv) any other equipment, if reasonably requiredby Lessor. However, Lessor reserves the right, upon notice to Lessee, toprocure and maintain any or all of such service contracts, and Lessee shallreimburse Lessor, upon demand, for the cost thereof.

(c)           **Failure to Perform**. If Lessee fails to perform Lessee’sobligations under this Paragraph 7.1, Lessor may enter upon the Premises after10 days’ prior written notice to Lessee (except in the case of an emergency, inwhich case no notice shall be required), perform such obligations on Lessee’sbehalf, and put the Premises in good order, condition and repair, and Lesseeshall promptly pay to Lessor a sum equal to 115% of the cost thereof.

(d)           **Replacement**. Subject to Lessee’s indemnification ofLessor as set forth in Paragraph 8.7 below, and without relieving Lessee ofliability resulting from Lessee’s failure to exercise and perform goodmaintenance practices, if an item described in Paragraph 7.1(b) cannot berepaired other than at a cost which is in excess of 50% of the cost ofreplacing such item, then such item shall be replaced by Lessor, and the cost thereofshall be prorated between the Parties and Lessee shall only be obligated topay, each month during the remainder of the term of this Lease, on the date onwhich Base Rent is due, an amount equal to the product of multiplying the costof such replacement by a fraction, the numerator of which is one, and thedenominator of which is 144 (ie. 1/144th of the cost per month). Lessee shallpay Interest on the unamortized balance but may prepay its obligation at anytime.

7.2           **Lessor’s Obligations**. Subject to the provisions of Paragraphs 2.2(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation),Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in goodorder, condition and repair the foundations, exterior walls, structuralcondition of interior bearing walls, exterior roof, fire sprinkler system,Common Area fire alarm and/or smoke detection systems, fire hydrants, parkinglots, walkways, parkways, driveways, landscaping, fences, signs and utilitysystems serving the Common Areas and all parts thereof, as well as providingthe services for which there is a Common Area Operating Expense pursuant toParagraph 4.2. Lessor shall not be obligated to paint the exterior or interiorsurfaces of exterior walls nor shall Lessor be obligated to maintain, repair orreplace windows, doors or plate glass of the Premises. Lessee expressly waivesthe benefit of any statute now or hereafter in effect to the extent it isinconsistent with the terms of this Lease. (See Paragraph 58)

7.3           **Utility Installations; TradeFixtures; Alterations**.

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

(b)           **Consent**. Lessee shall not make any Alterations orUtility Installations to the Premises without Lessor’s prior written consent.Lessee may, however, make non-structural Utility Installations to the interiorof the Premises (excluding the roof) without such consent but upon notice toLessor, as long as they are not visible from the outside, do not involvepuncturing, relocating or removing the roof or any existing walls, will notaffect the electrical, plumbing, HVAC, and/or life safety systems, and thecumulative cost thereof during this Lease as extended does not exceed a sumequal to 3 month’s Base Rent in the aggregate or a sum equal to one month’sBase Rent in any one year. Notwithstanding the foregoing, Lessee shall not makeor permit any roof penetrations and/or install anything on the roof without theprior written approval of Lessor. Lessor may, as a precondition to grantingsuch approval, require Lessee to utilize a contractor chosen and/or approved byLessor. Any Alterations or Utility Installations that Lessee shall desire tomake and which require the consent of the Lessor shall be presented to Lessorin written form with detailed plans. Consent shall be deemed conditioned uponLessee’s: (i) acquiring all applicable governmental permits, (ii) furnishingLessor with copies of both the permits and the plans and specifications priorto commencement of the work, and (iii) compliance with all conditions of saidpermits and other Applicable Requirements in a prompt and expeditious manner.Any Alterations or Utility Installations shall be performed in a workmanlikemanner with good and sufficient materials. Lessee shall promptly uponcompletion furnish Lessor with as-built plans and specifications. For workwhich costs an

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amount in excess of one month’sBase Rent, Lessor may condition its consent upon Lessee providing a lien andcompletion bond in an amount equal to 150% of the estimated cost of suchAlteration or Utility Installation and/or upon Lessee’s posting an additionalSecurity Deposit with Lessor.

(c)           **Liens; Bonds**. Lessee shall pay, when due, all claims forlabor or materials furnished or alleged to have been furnished to or for Lesseeat or for use on the Premises, which claims are or may be secured by anymechanic’s or materialman’s lien against the Premises or any interest therein.Lessee shall give Lessor not less than 10 days notice prior to the commencementof any work in, on or about the Premises, and Lessor shall have the right topost notices of non-responsibility. If Lessee shall contest the validity of anysuch lien, claim or demand, then Lessee shall, at its sole expense defend andprotect itself, Lessor and the Premises against the same and shall pay andsatisfy any such adverse judgment that may be rendered thereon before theenforcement thereof. If Lessor shall require, Lessee shall furnish a suretybond in an amount equal to 150% of the amount of such contested lien, claim ordemand, indemnifying Lessor against liability for the same. If Lessor elects toparticipate in any such action, Lessee shall pay Lessor’s attorneys’ fees andcosts.

7.4           **Ownership; Removal;Surrender; and Restoration**.

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

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

(c)           **Surrender; Restoration**. Lessee shall surrender the Premises by theExpiration Date or any earlier termination date, with all of the improvements,parts and surfaces thereof broom clean and free of debris, and in goodoperating order, condition and state of repair, ordinary wear and tearexcepted. “Ordinary wear and tear” shall not include any damage ordeterioration that would have been prevented by good maintenance practice.Notwithstanding the foregoing, if this Lease is for 12 months or less, thenLessee shall surrender the Premises in the same condition as delivered toLessee on the Start Date with NO allowance for ordinary wear and tear. Lesseeshall repair any damage occasioned by the installation, maintenance or removalof Trade Fixtures, Lessee owned Alterations and/or Utility Installations,furnishings, and equipment as well as the removal of any storage tank installedby or for Lessee. Lessee shall also completely remove from the Premises any andall Hazardous Substances brought onto the Premises by or for Lessee, or any thirdparty (except Hazardous Substances which were deposited via undergroundmigration from areas outside of the Project) even if such removal would requireLessee to perform or pay for work that exceeds statutory requirements. TradeFixtures 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 orany earlier termination date shall be deemed to have been abandoned by Lesseeand may be disposed of or retained by Lessor as Lessor may desire. The failureby Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c)without the express written consent of Lessor shall constitute a holdover underthe provisions of Paragraph 26 below.

8.             **Insurance; Indemnity**.

8.1           **Payment of Premiums**. The cost of the premiums for the insurancepolicies required to be carried by Lessor, pursuant to Paragraphs 8.2(b),8.3(a) and 8.3(b), shall be a Common Area Operating Expense. Premiums forpolicy periods commencing prior to, or extending beyond, the term of this Leaseshall be prorated to coincide with the corresponding Start Date or ExpirationDate.

8.2           **Liability Insurance**.

(a)           **Carried by Lessee**. Lessee shall obtain and keep in force aCommercial General Liability policy of insurance protecting Lessee and Lessoras an additional insured against claims for bodily injury, personal injury andproperty damage based upon or arising out of the ownership, use, occupancy ormaintenance of the Premises and all areas appurtenant thereto. Such insuranceshall be on an occurrence basis providing single limit coverage in an amountnot less than $1,000,000 per occurrence with an annual aggregate of not lessthan $2,000,000. Lessee shall add Lessor as an additional insured by means ofan endorsement at least as broad as the Insurance Service Organization’s “AdditionalInsured-Managers or Lessors of Premises” Endorsement and coverage shall also beextended to include damage caused by heat, smoke or fumes from a hostile fire.The policy shall not contain any intra-insured exclusions as between insuredpersons or organizations, but shall include coverage for liability assumedunder this Lease as an “**insured contract**”for the performance of Lessee’s indemnity obligations under this Lease. Thelimits of said insurance shall not, however, limit the liability of Lessee norrelieve Lessee of any obligation hereunder. Lessee shall provide an endorsementon its liability policy(ies) which provides that its insurance shall be primaryto and not contributory with any similar insurance carried by Lessor, whose insuranceshall be considered excess insurance only.

(b)           **Carried by Lessor**. Lessor shall maintain liability insurance asdescribed in Paragraph 8.2(a), in addition to, and not in lieu of, theinsurance required to be maintained by Lessee. Lessee shall not be named as anadditional insured therein.

8.3           **Property Insurance -Building, Improvements and Rental Value**.

(a)           **Building and Improvements**. Lessor shall obtain and keep in force apolicy or policies of insurance in the name of Lessor, with loss payable toLessor, any ground-lessor, and to any Lender insuring loss or damage to thePremises. The amount of such insurance shall be equal to the full insurablereplacement cost of the Premises, as the same shall exist from time to time, orthe amount required by any Lender, but in no event more than the commerciallyreasonable and available insurable value thereof. Lessee Owned Alterations andUtility Installations, Trade Fixtures, and Lessee’s personal property shall beinsured by Lessee under Paragraph 8.4. If the coverage is available andcommercially appropriate, such policy or policies shall insure against allrisks of direct physical loss or damage (except the perils of flood and/orearthquake unless required by a Lender), including coverage for debris removaland the enforcement of any Applicable Requirements requiring the upgrading,demolition, reconstruction or replacement of any portion of the Premises as theresult of a covered loss. Said policy or policies shall also contain an agreedvaluation provision in lieu of any coinsurance clause, waiver of subrogation,and inflation guard protection causing an increase in the annual propertyinsurance coverage amount by a factor of not less than the adjusted U.S. Departmentof Labor Consumer Price Index for All Urban Consumers for the city nearest towhere the Premises are located. If such insurance coverage has a deductibleclause, the deductible amount shall not exceed $1,000 per occurrence.

(b)           **Rental Value**. Lessor shall also obtain and keep in force apolicy or policies in the name of Lessor with loss payable to Lessor and anyLender, insuring the loss of the full Rent for one year with an extended periodof indemnity for an additional 180 days (“Rental Value insurance”). Saidinsurance shall contain an agreed valuation provision in lieu of anycoinsurance clause, and the amount of coverage shall be adjusted annually toreflect the projected Rent otherwise payable by Lessee, for the next 12 monthperiod.

(c)           **Adjacent Premises**. Lessee shall pay for any increase in thepremiums for the property insurance of the Building and for the Common Areas orother 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, Lessorshall not be required to insure Lessee Owned Alterations and UtilityInstallations unless the item in question has become the property of Lessorunder the terms of this Lease.

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8.4           **Lessee’s Property; BusinessInterruption Insurance**.

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

(b)           **Business Interruption**. Lessee shall obtain and maintain loss ofincome and extra expense insurance in amounts as will reimburse Lessee fordirect or indirect loss of earnings attributable to all perils commonly insuredagainst by prudent lessees in the business of Lessee or attributable toprevention of access to the Premises as a result of such perils.

(c)           **No Representation of AdequateCoverage**. Lessor makes norepresentation that the limits or forms of coverage of insurance specifiedherein are adequate to cover Lessee’s property, business operations orobligations under this Lease.

8.5           **Insurance Policies**. Insurance required herein shall be bycompanies duly licensed or admitted to transact business in the state where thePremises are located, and maintaining during the policy term a “GeneralPolicyholders Rating” of at least A-, VI, as set forth in the most currentissue of “Best’s Insurance Guide”, or such other rating as may be required by aLender. Lessee shall not do or permit to be done anything which invalidates therequired insurance policies. Lessee shall, prior to the Start Date, deliver toLessor certified copies of policies of such insurance or certificates evidencingthe existence and amounts of the required insurance. No such policy shall becancelable or subject to modification except after 30 days prior written noticeto Lessor. Lessee shall, at least 10 days prior to the expiration of suchpolicies, furnish Lessor with evidence of renewals or “insurance binders”evidencing renewal thereof, or Lessor may order such insurance and charge thecost thereof to Lessee, which amount shall be payable by Lessee to Lessor upondemand. Such policies shall be for a term of at least one year, or the lengthof the remaining term of this Lease, whichever is less. If either Party shallfail to procure and maintain the insurance required to be carried by it, theother Party may, but shall not be required to, procure and maintain the same.

8.6           **Waiver of Subrogation**. Without affecting any other rights orremedies, Lessee and Lessor each hereby release and relieve the other, andwaive their entire right to recover damages against the other, for loss of ordamage to its property arising out of or incident to the perils required to beinsured against herein. The effect of such releases and waivers is not limitedby the amount of insurance carried or required, or by any deductiblesapplicable hereto. The Parties agree to have their respective property damageinsurance carriers waive any right to subrogation that such companies may haveagainst Lessor or Lessee, as the case may be, so long as the insurance is notinvalidated thereby.

8.7           **Indemnity**. Except for Lessor’s gross negligence orwillful misconduct, Lessee shall indemnify, protect, defend and hold harmless thePremises, Lessor and its agents, Lessor’s master or ground lessor, partners andLenders, from and against any and all claims, loss of rents and/or damages,liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/orliabilities arising out of, involving, or in connection with, the use and/oroccupancy of the Premises by Lessee. If any action or proceeding is broughtagainst Lessor by reason of any of the foregoing matters, Lessee shall uponnotice defend the same at Lessee’s expense by counsel reasonably satisfactoryto Lessor and Lessor shall cooperate with Lessee in such defense. Lessor neednot have first paid any such claim in order to be defended or indemnified.

8.8           **Exemption of Lessor fromLiability**. Other than if a result of gross negligence orwillful misconduct of Lessor. Lessorshall not be liable for 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 orinjury is caused by or results from fire, steam, electricity, gas, water orrain, 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 saidinjury or damage results from conditions arising upon the Premises or uponother portions of the Building, or from other sources or places. Lessor shallnot be liable for any damages arising from any act or neglect of any othertenant of Lessor nor from the failure of Lessor to enforce the provisions ofany other lease in the Project. Notwithstanding Lessor’s negligence or breachof this Lease, Lessor shall under no circumstances be liable for injury toLessee’s business or for any loss of income or profit therefrom.

8.9           **Failure to Provide Insurance**. Lessee acknowledges that any failure on its partto obtain or maintain the insurance required herein will expose Lessor to risksand potentially cause Lessor to incur costs not contemplated by this Lease, theextent of which will be extremely difficult to ascertain. Accordingly, for anymonth or portion thereof that Lessee does not maintain the required insuranceand/or does not provide Lessor with the required binders or certificatesevidencing the existence of the required insurance, the Base Rent shall beautomatically increased, without any requirement for notice to Lessee, by anamount equal to 10% of the then existing Base Rent or $100, whichever isgreater. The parties agree that such increase in Base Rent represents fair andreasonable compensation for the additional risk/costs that Lessor will incur byreason of Lessee’s failure to maintain the required insurance. Such increase inBase Rent shall in no event constitute a waiver of Lessee’s Default or Breachwith respect to the failure to maintain such insurance, prevent the exercise ofany of the other rights and remedies granted hereunder, nor relieve Lessee ofits 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 theimprovements on the Premises, other than Lessee Owned Alterations and UtilityInstallations, which can reasonably be repaired in 3 months or less from thedate of the damage or destruction, and the cost thereof does not exceed a sumequal to 6 month’s Base Rent. Lessor shall notify Lessee in writing within 30days from the date of the damage or destruction as to whether or not the damageis Partial or Total. Notwithstanding the foregoing, Premises Partial Damageshall not include damage to windows, doors, and/or other similar items whichLessee has the responsibility to repair or replace pursuant to the provisionsof Paragraph 7.1.

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

(c)           **“Insured Loss”**shall mean damage or destruction toimprovements on the Premises, other than Lessee Owned Alterations and UtilityInstallations and Trade Fixtures, which was caused by an event required to becovered by the insurance described in Paragraph 8.3(a), irrespective of anydeductible amounts or coverage limits involved.

(d)           **“Replacement Cost”**shall mean the cost to repair or rebuild theimprovements owned by Lessor at the time of the occurrence to their conditionexisting immediately prior thereto, including demolition, debris removal andupgrading required by the operation of Applicable Requirements, and withoutdeduction for depreciation.

(e)           **“Hazardous SubstanceCondition”**shall mean theoccurrence or discovery of a condition involving the presence of, or acontamination 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 anInsured 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 andeffect; provided, however, that Lessee shall, at Lessor’s election, make therepair of any damage or

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destruction the total cost torepair of which is $10,000 or less, and, in such event, Lessor shall make anyapplicable insurance proceeds available to Lessee on a reasonable basis forthat purpose. Notwithstanding the foregoing, if the required insurance was notin force or the insurance proceeds are not sufficient to effect such repair,the Insuring Party shall promptly contribute the shortage in proceeds as andwhen required to complete said repairs. In the event, however, such shortagewas due to the fact that, by reason of the unique nature of the improvements,full replacement cost insurance coverage was not commercially reasonable andavailable, Lessor shall have no obligation to pay for the shortage in insuranceproceeds or to fully restore the unique aspects of the Premises unless Lesseeprovides Lessor with the funds to cover same, or adequate assurance thereof,within 10 days following receipt of written notice of such shortage and requesttherefor. If Lessor receives said funds or adequate assurance thereof withinsaid 10 day period, the party responsible for making the repairs shall completethem as soon as reasonably possible and this Lease shall remain in full forceand effect. If such funds or assurance are not received, Lessor maynevertheless elect by written notice to Lessee within 10 days thereafter to: (i)make such restoration and repair as is commercially reasonable with Lessorpaying any shortage in proceeds, in which case this Lease shall remain in full forceand effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shallnot be entitled to reimbursement of any funds contributed by Lessee to repairany such damage or destruction. Premises Partial Damage due to flood orearthquake shall be subject to Paragraph 9.3, notwithstanding that there may besome insurance coverage, but the net proceeds of any such insurance shall bemade available for the repairs if made by either Party.

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

9.4           **Total Destruction**. Notwithstanding any other provision hereof,if a Premises Total Destruction occurs, this Lease shall terminate 60 daysfollowing such Destruction. If the damage or destruction was caused by thegross negligence or willful misconduct of Lessee, Lessor shall have the rightto recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6. If a Premises total destruction was caused bythe gross negligence or willful misconduct of Lessor, Lessee shall have theright to recover Lessee’s damages from Lessor.

9.5           **Damage Near End of Term.** If at any time during the last 6 months ofthis Lease there is damage for which the cost to repair exceeds one month’sBase Rent, whether or not an Insured Loss, Lessor may terminate this Leaseeffective 60 days following the date of occurrence of such damage by giving awritten termination notice to Lessee within 30 days after the date ofoccurrence of such damage. Notwithstanding the foregoing, if Lessee at thattime has an exercisable option to extend this Lease or to purchase thePremises, then Lessee may preserve this Lease by, (a) exercising such optionand (b) providing Lessor with any shortage in insurance proceeds (or adequateassurance 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 noticepurporting to terminate this Lease, or (ii) the day prior to the date uponwhich such option expires. If Lessee duly exercises such option during suchperiod and provides Lessor with funds (or adequate assurance thereof) to coverany shortage in insurance proceeds, Lessor shall, at Lessor’s commerciallyreasonable expense, repair such damage as soon as reasonably possible and thisLease shall continue in full force and effect. If Lessee fails to exercise suchoption and provide such funds or assurance during such period, then this Leaseshall terminate on the date specified in the termination notice and Lessee’soption shall be extinguished.

9.6           **Abatement of Rent; Lessee’sRemedies.**

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

(b)           **Remedies**. If Lessor shall be obligated to repair orrestore the Premises and does not commence, in a substantial and meaningfulway, such repair or restoration within 90 days after such obligation shallaccrue, Lessee may, at any time prior to the commencement of such repair orrestoration, give written notice to Lessor and to any Lenders of which Lesseehas actual notice, of Lessee’s election to terminate this Lease on a date notless than 60 days following the giving of such notice. If Lessee gives suchnotice and such repair or restoration is not commenced within 30 daysthereafter, 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 shallcontinue in full force and effect. “Commence” shall mean either theunconditional authorization of the preparation of the required plans, or thebeginning of the actual work on the Premises, whichever first occurs.

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

9.8           **Waive Statutes**. Lessor and Lessee agree that the terms ofthis Lease shall govern the effect of any damage to or destruction of thePremises with respect to the termination of this Lease and hereby waive theprovisions of any present or future statute to the extent inconsistent herewith.

10.           **Real Property Taxes**.

10.1         **Definition**. As used herein, the term **“Real Property Taxes”**shall include any form of assessment; real estate, general, special, ordinaryor extraordinary, or rental levy or tax (other than inheritance, personalincome or estate taxes); improvement bond; and/or license fee imposed upon orlevied against any legal or equitable interest of Lessor in the Project, Lessor’sright to other income therefrom, and/or Lessor’s business of leasing, by anyauthority having the direct or indirect power to tax and where the funds aregenerated with reference to the Project address and where the proceeds sogenerated are to be applied by the city, county or other local taxing authorityof a jurisdiction within which the Project is located. The term “Real PropertyTaxes” shall also include any tax, fee, levy, assessment or charge, or anyincrease therein: (i) imposed by reason of events occurring during the term ofthis Lease, including but not limited to the second a change in theownership of the Project, (anytax increase resulting from the 1st sale by original Lessor, shall not bepassed on to Lessee,****(ii) a change in the improvements thereon,and/or (iii) levied or assessed on machinery or equipment provided by Lessor toLessee pursuant to this Lease. In calculating Real Property Taxes for anycalendar year, the Real Property Taxes for any real estate tax year shall beincluded in the calculation of Real Property Taxes for such calendar year basedupon the number of days which such calendar year and tax year have in common.

10.2         **Payment of Taxes**. Except as otherwise provided in Paragraph10.3, Lessor shall pay the Real Property Taxes applicable to the Project, andsaid payments shall be included in the calculation of Common Area OperatingExpenses in accordance with the provisions of Paragraph 4.2.

10.3         **Additional Improvements.** Common Area Operating Expenses shall notinclude Real Property Taxes specified in the tax

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assessor’s records and worksheets as being caused by additional improvements placed upon the Project byother lessees or by Lessor for the exclusive enjoyment of such other lessees.Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor atthe time Common Area Operating Expenses are payable under Paragraph 4.2, theentirety of any increase in Real Property Taxes if assessed solely by reason ofAlterations, Trade Fixtures or Utility Installations placed upon the Premisesby Lessee or at Lessee’s request or by reason of any alterations orimprovements to the Premises made by Lessor subsequent to the execution of thisLease 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 proportionof the Real Property Taxes for all of the land and improvements included withinthe tax parcel assessed, such proportion to be determined by Lessor from therespective valuations assigned in the assessor’s work sheets or such otherinformation as may be reasonably available. Lessor’s reasonable determinationthereof, in good faith, shall be conclusive.

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

11.           **Utilities and Services.** Lessee shall pay for all water, gas, heat,light, power, telephone, trash disposal and other utilities and services suppliedto the Premises, together with any taxes thereon. Notwithstanding theprovisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessordetermines that Lessee is using a disproportionate amount of water, electricityor other commonly metered utilities, or that Lessee is generating such a largevolume of trash as to require an increase in the size of the trash receptacleand/or an increase in the number of times per month that it is emptied, thenLessor may increase Lessee’s Base Rent by an amount equal to such increasedcosts. There shall be no abatement of Rent and Lessor shall not be liable inany respect whatsoever for the inadequacy, stoppage, interruption ordiscontinuance of any utility or service due to riot, strike, labor dispute,breakdown, accident, repair or other cause beyond Lessor’s reasonable controlor in cooperation with governmental request or directions.

12.           **Assignment and Subletting.**

12.1         **Lessor’s Consent Required.** (See Paragraph 57)

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

(b)           Unless Lessee is a corporation and its stock is publicly traded on anational stock exchange, a change in the control of Lessee shall constitute anassignment requiring consent. The transfer, on a cumulative basis, of 25% ormore of the voting control of Lessee shall constitute a change in control forthis purpose.

(c)           The involvement of Lessee or its assets in any transaction, or series oftransactions (by way of merger, sale, acquisition, financing, transfer,leveraged buy-out or otherwise), whether or not a formal assignment orhypothecation of this Lease or Lessee’s assets occurs, which results or willresult 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 thisLease or at the time of the most recent assignment to which Lessor hasconsented, or as it exists immediately prior to said transaction ortransactions constituting such reduction, whichever was or is greater, shall beconsidered an assignment of this Lease to which Lessor may withhold itsconsent. **“Net Worth of Lessee”**shallmean the net worth of Lessee (excluding any guarantors) established undergenerally 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 Breachwithout the necessity of any notice and grace period. If Lessor elects to treatsuch unapproved assignment or subletting as a noncurable Breach, Lessor mayeither: (i) terminate this Lease, or (ii) upon 30 days written notice, increasethe monthly Base Rent to 110% of the Base Rent then in effect. Further, in theevent of such Breach and rental adjustment, (i) the purchase price of anyoption to purchase the Premises held by Lessee shall be subject to similaradjustment to 110% of the price previously in effect, and (ii) all fixed andnon-fixed rental adjustments scheduled during the remainder of the Lease termshall be increased to 110% of the scheduled adjusted rent.

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

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

(g)           Notwithstanding the foregoing, allowing a diminimus portion of thePremises, ie. 20 square feet or less, to be used by a third party vendor inconnection with the installation of a vending machine or payphone shall notconstitute a subletting.

12.2         **Terms and ConditionsApplicable to Assignment and Subletting.**

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

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

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

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

(e)           Each request for consent to an assignment or subletting shall be inwriting, accompanied by information relevant to Lessor’s determination as tothe financial and operational responsibility and appropriateness of theproposed assignee or sublessee, including but not limited to the intended useand/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 informationand/or documentation as may be reasonably requested. (See also Paragraph 36)

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

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

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

(a)           Lessee hereby assigns and transfers to Lessor all of Lessee’s interestin all Rent payable on any sublease, and Lessor may collect such Rent and applysame toward Lessee’s obligations under this Lease; provided, however, thatuntil a Breach shall occur in the performance of Lessee’s obligations, Lesseemay collect said Rent. In the event that the amount collected by Lessor exceedsLessee’s then outstanding obligations any such excess shall be refunded toLessee. Lessor shall not, by reason of the foregoing or any assignment of suchsublease, nor by reason of the collection of Rent, be deemed liable to thesublessee for any failure of Lessee to perform and comply with any of Lessee’s obligationsto such sublessee. Lessee hereby irrevocably authorizes and directs any suchsublessee, upon receipt of a written notice from Lessor stating that a Breachexists in the performance of Lessee’s obligations under this Lease, to pay toLessor all Rent due and to become due under the sublease. Sublessee shall relyupon any such notice from Lessor and shall pay all Rents to Lessor without anyobligation 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, requiresublessee to attorn to Lessor, in which event Lessor shall undertake theobligations of the sublessor under such sublease from the time of the exerciseof said option to the expiration of such sublease; provided, however, Lessorshall not be liable for any prepaid rents or security deposit paid by suchsublessee to such sublessor or for any prior Defaults or Breaches of suchsublessor.

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

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

(e)           Lessor shall deliver a copy of any notice of Default or Breach by Lesseeto the sublessee, who shall have the right to cure the Default of Lessee withinthe grace period, if any, specified in such notice. The sublessee shall have aright of reimbursement and offset from and against Lessee for any such Defaultscured 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 anyof the terms, covenants, conditions or Rules and Regulations under this Lease.A **“Breach”**is defined as theoccurrence of one or more of the following Defaults, and the failure of Lesseeto cure such Default within any applicable grace period:

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

(b)           The failure of Lessee to make any payment of Rent or any SecurityDeposit required to be made by Lessee hereunder, whether to Lessor or to athird party, when due, to provide reasonable evidence of insurance or suretybond, or to fulfill any obligation under this Lease which endangers orthreatens life or property, where such failure continues for a period of 3business days following written notice to Lessee.

(c)           The commission of waste, act or acts constituting public or privatenuisance, and/or an illegal activity on the Premises by Lessee, where suchactions continue for a period of 3 business days following written notice toLessee.

(d)           The failure by Lessee to provide (i) reasonable written evidence ofcompliance with Applicable Requirements, (ii) the service contracts, (iii) therescission of an unauthorized assignment or subletting, (iv) an EstoppelCertificate, (v) a reasonably requested subordination, (vi) evidenceconcerning any guaranty and/or Guarantor, (vii) any document requested underParagraph 41, (viii) material data safety sheets (MSDS), or (ix) any otherdocumentation or information which Lessor may reasonably require of Lesseeunder the terms of this Lease, where any such failure continues for a period of10 days following written notice to Lessee.

(e)           A Default by Lessee as to the terms, covenants, conditions or provisionsof this Lease, or of the rules adopted under Paragraph 2.9 hereof, other thanthose described in subparagraphs 13.1(a), (b), (c) or (d), above, where suchDefault 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 daysare reasonably required for its cure, then it shall not be deemed to be aBreach if Lessee commences such cure within said 30 day period and thereafterdiligently 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”**asdefined in 11 U.S.C. § 101 or anysuccessor 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 orreceiver to take possession of substantially all of Lessee’s assets located atthe Premises or of Lessee’s interest in this Lease, where possession is notrestored to Lessee within 30 days; or (iv) the attachment, execution or otherjudicial seizure of substantially all of Lessee’s assets located at thePremises or of Lessee’s interest in this Lease, where such seizure is notdischarged within 30 days; provided, however, in the event that any provisionof this subparagraph is contrary to any applicable law, such provision shall beof no force or effect, and not affect the validity of the remaining provisions.

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

(h)           If the performance of Lessee’s obligations under this Lease isguaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor’sliability with respect to this Lease other than in accordance with the terms ofsuch guaranty, (iii) a Guarantor’s becoming insolvent or the subject of abankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) aGuarantor’s breach of its guaranty obligation on an anticipatory basis, andLessee’s failure, within 60 days following written notice of any such event, toprovide written alternative assurance or security, which, when coupled with thethen existing resources of Lessee, equals or exceeds the combined financialresources of Lessee and the Guarantors that existed at the time of execution ofthis Lease.

13.2         **Remedies**. If Lessee fails to perform any of itsaffirmative duties or obligations, within 10 days after written notice (or incase of an emergency, without notice), Lessor may, at its option, perform suchduty or obligation on Lessee’s behalf, including but not limited to theobtaining of reasonably required bonds, insurance policies, or governmentallicenses, permits or approvals. Lessee shall pay to Lessor an amount equal to115% of the costs and expenses incurred by Lessor in such performance uponreceipt of an invoice therefor. In the event of a Breach, Lessor may, with or withoutfurther notice or demand, and without limiting Lessor in the exercise of anyright or remedy which Lessor may have by reason of such Breach:

(a)           Terminate Lessee’s right to possession of the Premises by any lawfulmeans, in which case this Lease shall terminate and Lessee shall immediatelysurrender possession to Lessor. In such event Lessor shall be entitled torecover from Lessee: (i) the unpaid Rent which had been earned at the time oftermination; (ii) the worth at the time of award of the amount by which theunpaid rent which would have been earned after termination until the time ofaward exceeds the amount of such rental loss that the Lessee proves could havebeen reasonably avoided; (iii) the worth at the time of award of the amount bywhich the unpaid rent for the balance of the term after the time of awardexceeds the amount of such rental loss that the Lessee proves could bereasonably avoided; and (iv) any other amount necessary to compensate Lessorfor all the detriment proximately caused by the Lessee’s failure to perform itsobligations under this Lease or which in the ordinary course of things would belikely to result therefrom, including but not limited to the cost of recoveringpossession of the Premises, expenses of reletting, including necessaryrenovation and alteration of the Premises, reasonable attorneys’ fees, and thatportion of any leasing commission paid by Lessor in connection with this Leaseapplicable to the unexpired term of this Lease. The worth at the time of awardof the amount referred to in provision (iii) of the immediately precedingsentence shall be computed by discounting such amount at the discount rate ofthe Federal Reserve Bank of the District within which the Premises are locatedat the time

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of award plus one percent.Efforts by Lessor to mitigate damages caused by Lessee’s Breach of this Leaseshall not waive Lessor’s right to recover damages under Paragraph 12. Iftermination of this Lease is obtained through the provisional remedy ofunlawful detainer, Lessor shall have the right to recover in such proceedingany unpaid Rent and damages as are recoverable therein, or Lessor may reservethe right to recover all or any part thereof in a separate suit. If a noticeand grace period required under Paragraph 13.1 was not previously given, anotice to pay rent or quit, or to perform or quit given to Lessee under theunlawful detainer statute shall also constitute the notice required byParagraph 13.1. In such case, the applicable grace period required by Paragraph13.1 and the unlawful detainer statute shall run concurrently, and the failureof Lessee to cure the Default within the greater of the two such grace periodsshall constitute both an unlawful detainer and a Breach of this Lease entitlingLessor 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 Rentas it becomes due, in which event Lessee may sublet or assign, subject only toreasonable limitations. Acts of maintenance, efforts to relet, and/or theappointment of a receiver to protect the Lessor’s interests, shall notconstitute a termination of the Lessee’s right to possession.

(c)           Pursue any other remedy now or hereafter available under the laws orjudicial decisions of the state wherein the Premises are located. Theexpiration or termination of this Lease and/or the termination of Lessee’sright to possession shall not relieve Lessee from liability under any indemnityprovisions of this Lease as to matters occurring or accruing during the termhereof or by reason of Lessee’s occupancy of the Premises.

13.3         **Inducement Recapture.** Any agreement for free or abated rent orother charges, or for the giving or paying by Lessor to or for Lessee of anycash or other bonus, inducement or consideration for Lessee’s entering intothis Lease, all of which concessions are hereinafter referred to as **“Inducement Provisions”,** shall be deemedconditioned 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 thisLease and of no further force or effect, and any rent, other charge, bonus,inducement or consideration theretofore abated, given or paid by Lessor undersuch an Inducement Provision shall be immediately due and payable by Lessee to Lessor,notwithstanding any subsequent cure of said Breach by Lessee. The acceptance byLessor of rent or the cure of the Breach which initiated the operation of thisparagraph shall not be deemed a waiver by Lessor of the provisions of thisparagraph unless specifically so stated in writing by Lessor at the time ofsuch acceptance.

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

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

13.6         **Breach by Lessor**.

(a)           **Notice of Breach**. Lessor shall not be deemed in breach of thisLease unless Lessor fails within a reasonable time to perform an obligationrequired to be performed by Lessor. For purposes of this Paragraph, areasonable 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 inwriting for such purpose, of written notice specifying wherein such obligationof Lessor has not been performed; provided, however, that if the nature ofLessor’s obligation is such that more than 30 days are reasonably required forits performance, then Lessor shall not be in breach if performance is commencedwithin such 30 day period and thereafter diligently pursued to completion.

(b)           **Performance by Lessee onBehalf of Lessor.** In theevent that neither Lessor nor Lender cures said breach within 30 days afterreceipt of said notice, or if having commenced said cure they do not diligentlypursue it to completion, then Lessee may elect to cure said breach at Lessee’sexpense and offset from Rent the actual and reasonable cost to perform suchcure, provided however, that such offset shall not exceed an amount equal tothe greater of one month’s Base Rent or the Security Deposit, reserving Lessee’sright to reimbursement from Lessor for any such expense in excess of suchoffset. Lessee shall document the cost of said cure and supply saiddocumentation to Lessor.

14.           **Condemnation**. If the Premises or any portion thereof aretaken under the power of eminent domain or sold under the threat of theexercise of said power (collectively **“Condemnation”**),this Lease shall terminate as to the part taken as of the date the condemningauthority takes title or possession, whichever first occurs. If more than 10%of the floor area of the Unit, or more than 25% of Lessee’s Reserved ParkingSpaces, is taken by Condemnation, Lessee may, at Lessee’s option, to beexercised in writing within 10 days after Lessor shall have given Lesseewritten notice of such taking (or in the absence of such notice, within 10 daysafter the condemning authority shall have taken possession) terminate thisLease as of the date the condemning authority takes such possession. If Lesseedoes not terminate this Lease in accordance with the foregoing, this Leaseshall remain in full force and effect as to the portion of the Premisesremaining, except that the Base Rent shall be reduced in proportion to thereduction in utility of the Premises caused by such Condemnation. Condemnationawards and/or payments shall be the property of Lessor, whether such awardshall be made as compensation for diminution in value of the leasehold, thevalue of the part taken, or for severance damages; provided, however, thatLessee shall be entitled to any compensation for Lessee’s relocation expenses,loss of business goodwill and/or Trade Fixtures, without regard to whether ornot this Lease is terminated pursuant to the provisions of this Paragraph. AllAlterations and Utility Installations made to the Premises by Lessee, forpurposes of Condemnation only, shall be considered the property of the Lesseeand 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 toParagraph 1.10 above, and unless Lessor and the Brokers otherwise agree inwriting, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lesseeacquires from Lessor any rights to the Premises or other premises owned byLessor and located within the Project, (c) if Lessee remains in possession ofthe 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 anescalation clause herein, then, Lessor shall pay Brokers a fee in accordancewith the schedule of the Brokers in effect at the time of the execution of thisLease.

15.2         **Assumption of Obligations.** Any buyer or transferee of Lessor’s interestin this Lease shall be deemed to have assumed Lessor’s obligation hereunder.Brokers shall be third party beneficiaries of the provisions of Paragraphs1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as andfor brokerage fees pertaining to this Lease when due, then such amounts shallaccrue Interest. In addition, if Lessor fails to

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pay any amounts to Lessee’sBroker when due, Lessee’s Broker may send written notice to Lessor and Lesseeof such failure and if Lessor fails to pay such amounts within 10 days aftersaid notice, Lessee shall pay said monies to its Broker and offset such amountsagainst Rent. In addition, Lessee’s Broker shall be deemed to be a third partybeneficiary of any commission agreement entered into by and/or between Lessorand Lessor’s Broker for the limited purpose of collecting any brokerage feeowed.

15.3         **Representations andIndemnities of Broker Relationships.** Lessee and Lessor each represent and warrant to the other that it hashad no dealings with any person, firm, broker or finder (other than theBrokers, if any) in connection with this Lease, and that no one other than saidnamed 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 holdthe other harmless from and against liability for compensation or charges whichmay be claimed by any such unnamed broker, finder or other similar party byreason of any dealings or actions of the indemnifying Party, including anycosts, expenses, attorneys’ fees reasonably incurred with respect thereto.

16.           **Estoppel Certificates**.

(a)           Each Party (as **“Responding Party”**)shall within 20 days after written notice from the other Party(the **“Requesting Party”**) execute,acknowledge and deliver to the Requesting Party a statement in writing in formsimilar to the then most current **“EstoppelCertificate”**form published by the AIR Commercial Real EstateAssociation, plus such additional information, confirmation and/or statementsas may be reasonably requested by the Requesting Party.

(b)           If the Responding Party shall fail to execute or deliver the EstoppelCertificate within such 10 day period, the Requesting Party may execute anEstoppel Certificate stating that: (i) the Lease is in full force and effectwithout 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 paidin advance. Prospective purchasers and encumbrancers may rely upon theRequesting Party’s Estoppel Certificate, and the Responding Party shall beestopped from denying the truth of the facts contained in said Certificate.

(c)           If Lessor desires to finance, refinance, or sell the Premises, or anypart thereof, Lessee and all Guarantors shall deliver to any potential lenderor purchaser designated by Lessor such financial statements as may bereasonably required by such lender or purchaser, including but not limited toLessee’s financial statements for the past 3 years. All such financialstatements shall be received by Lessor and such lender or purchaser inconfidence 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 inquestion of the fee title to the Premises, or, if this is a sublease, of theLessee’s interest in the prior lease. In the event of a transfer of Lessor’stitle or interest in the Premises or this Lease, Lessor shall deliver to thetransferee or assignee (in cash or by credit) any unused Security Deposit heldby Lessor. Except as provided in Paragraph 15, upon such transfer or assignmentand delivery of the Security Deposit, as aforesaid, the prior Lessor shall berelieved of all liability with respect to the obligations and/or covenantsunder this Lease thereafter to be performed by the Lessor. Subject to theforegoing, the obligations and/or covenants in this Lease to be performed bythe Lessor shall be binding only upon the Lessor as hereinabove defined.

18.           **Severability**. The invalidity of any provision of thisLease, as determined by a court of competent jurisdiction, shall in no wayaffect the validity of any other provision hereof.

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

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

21.           **Time of Essence**. Time is of the essence with respect to theperformance of all obligations to be performed or observed by the Parties underthis Lease.

22.           **No Prior or Other Agreements;Broker Disclaimer.** This Leasecontains all agreements between the Parties with respect to any matter mentionedherein, and no other prior or contemporaneous agreement or understanding shallbe effective. Lessor and Lessee each represents and warrants to the Brokersthat it has made, and is relying solely upon, its own investigation as to thenature, quality, character and financial responsibility of the other Party tothis Lease and as to the use, nature, quality and character of the Premises.Brokers have no responsibility with respect thereto or with respect to anydefault or breach hereof by either Party. The liability (including court costsand attorneys’ fees), of any Broker with respect to negotiation, execution,delivery or performance by either Lessor or Lessee under this Lease or anyamendment or modification hereto shall be limited to an amount up to the feereceived by such Broker pursuant to this Lease; provided, however, that theforegoing limitation on each Broker’s liability shall not be applicable to anygross negligence or willful misconduct of such Broker.

23.           **Notices**.

23.1         **Notice Requirements.** All notices required or permitted by thisLease or applicable law shall be in writing and may be delivered in person (byhand or by courier) or may be sent by regular, certified or registered mail orU.S. Postal Service Express Mail, with postage prepaid, or by facsimiletransmission, and shall be deemed sufficiently given if served in a mannerspecified in this Paragraph 23. The addresses noted adjacent to a Party’ssignature on this Lease shall be that Party’s address for delivery or mailingof notices. Either Party may by written notice to the other specify a differentaddress for notice, except that upon Lessee’s taking possession of thePremises, the Premises shall constitute Lessee’s address for notice. A copy ofall notices to Lessor shall be concurrently transmitted to such party or partiesat such addresses as Lessor may from time to time hereafter designate inwriting.

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

24.           **Waivers**. No waiver by Lessor of the Default or Breachof any term, covenant or condition hereof by Lessee, shall be deemed a waiverof any other term, covenant or condition hereof, or of any subsequent Defaultor 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 renderunnecessary the obtaining of Lessor’s consent to, or approval of, any subsequentor similar act by Lessee, or be construed as the basis of an estoppel to enforcethe provision or provisions of this Lease requiring such consent. Theacceptance of Rent by Lessor shall not be a waiver of any Default or Breach byLessee. Any payment by Lessee may be accepted by Lessor on account of moneys ordamages due Lessor, notwithstanding any qualifying statements or conditionsmade by Lessee in connection therewith, which such statements and/or conditionsshall be of no force or effect whatsoever unless specifically agreed to inwriting by Lessor at or before the time of deposit of such payment.

25.           **Disclosures Regarding TheNature of a Real Estate Agency Relationship.**

(a)           When entering into a discussion with a real estate agent regarding areal estate transaction, a Lessor or Lessee should from the

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outset understand what type ofagency relationship or representation it has with the agent or agents in thetransaction. Lessor and Lessee acknowledge being advised by the Brokers in thistransaction, as follows:

(i)            *Lessor’s Agent*. A Lessor’s agent under a listing agreementwith the Lessor acts as the agent for the Lessor only. A Lessor’s agent orsubagent has the following affirmative obligations: To the Lessor: Afiduciary duty of utmost care, integrity, honesty, and loyalty in dealings withthe Lessor. To the Lessee and the Lessor : (a) Diligent exercise ofreasonable skills and care in performance of the agent’s duties. (b) A duty ofhonest and fair dealing and good faith. (c) A duty to disclose all facts knownto the agent materially affecting the value or desirability of the propertythat are not known to, or within the diligent attention and observation of, theParties. An agent is not obligated to reveal to either Party any confidentialinformation obtained from the other Party which does not involve theaffirmative duties set forth above.

(ii)           *Lessee’s Agent*. An agent can agree to act as agent for theLessee only. In these situations, the agent is not the Lessor’s agent, even ifby agreement the agent may receive compensation for services rendered, eitherin full or in part from the Lessor. An agent acting only for a Lessee has thefollowing affirmative obligations. To the Lessee: A fiduciary duty ofutmost care, integrity, honesty, and loyalty in dealings with the Lessee. Tothe Lessee and the Lessor : (a) Diligent exercise of reasonable skills andcare in performance of the agent’s duties. (b) A duty of honest and fairdealing and good faith. (c) A duty to disclose all facts known to the agentmaterially affecting the value or desirability of the property that are notknown to, or within the diligent attention and observation of, the Parties. Anagent is not obligated to reveal to either Party any confidential informationobtained from the other Party which does not involve the affirmative duties setforth above.

(iii)          *Agent Representing BothLessor and Lessee.* A realestate 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 adual agency situation, the agent has the following affirmative obligations toboth the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity,honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Otherduties 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 theexpress permission of the respective Party, disclose to the other Party thatthe Lessor will accept rent in an amount less than that indicated in thelisting 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 aLessor or Lessee from the responsibility to protect their own interests. Lessorand Lessee should carefully read all agreements to assure that they adequatelyexpress their understanding of the transaction. A real estate agent is a personqualified to advise about real estate. If legal or tax advice is desired,consult a competent professional.

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

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

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

27.           **Cumulative Remedies**. No remedy or election hereunder shall bedeemed exclusive but shall, wherever possible, be cumulative with all otherremedies 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 covenantsand conditions. In construing this Lease, all headings and titles are for theconvenience of the Parties only and shall not be considered a part of thisLease. Whenever required by the context, the singular shall include the pluraland vice versa. This Lease shall not be construed as if prepared by one of theParties, but rather according to its fair meaning as a whole, as if bothParties 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 thelaws of the State in which the Premises are located. Any litigation between theParties hereto concerning this Lease shall be initiated in the county in whichthe Premises are located.

30.           **Subordination; Attornment;Non-Disturbance.**

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

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

30.3         **Non-Disturbance**. With respect to Security Devices enteredinto by Lessor after the execution of this Lease, Lessee’s subordination ofthis Lease shall be subject to receiving a commercially reasonablenon-disturbance agreement (a **“Non-DisturbanceAgreement”**) from the Lender which Non-Disturbance Agreementprovides that Lessee’s possession of the Premises, and this Lease, includingany options to extend the term hereof, will not be disturbed so long as Lesseeis 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 use itscommercially reasonable efforts to obtain a Non-Disturbance Agreement from theholder of any pre-existing **or future**Security Device which is secured by thePremises. In the event that Lessor is unable to provide the Non-Disturbance Agreementwithin said 60 days, then Lessee may, at Lessee’s option, directly contactLender and attempt to negotiate for the execution and delivery of aNon-Disturbance Agreement.

30.4         **Self-Executing**. The agreements contained in this Paragraph30 shall be effective without the execution of any further documents; provided,however, that, upon written request from Lessor or a Lender in connection witha sale, financing or refinancing of the Premises, Lessee and Lessor shallexecute such further writings as may be reasonably required to separatelydocument any subordination, attornment and/or Non-Disturbance Agreementprovided for herein.

31.           **Attorneys’ Fees**. If any Party or Broker brings an action orproceeding involving the Premises whether founded in tort, contract or equity,or

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to declare rights hereunder,the Prevailing Party (as hereafter defined) in any such proceeding, action, orappeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees maybe awarded in the same suit or recovered in a separate suit, whether or notsuch action or proceeding is pursued to decision or judgment. The term, **“Prevailing Party”**shall include, withoutlimitation, a Party or Broker who substantially obtains or defeats the relief sought,as the case may be, whether by compromise, settlement, judgment, or theabandonment 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, butshall be such as to fully reimburse all attorneys’ fees reasonably incurred. Inaddition, Lessor shall be entitled to attorneys’ fees, costs and expensesincurred in the preparation and service of notices of Default and consultationsin connection therewith, whether or not a legal action is subsequentlycommenced in connection with such Default or resulting Breach ($200 is areasonable minimum per occurrence for such services and consultation).

32.           **Lessor’s Access; ShowingPremises; Repairs.** Except for non-Bank hours,****Lessor and Lessor’s agents shall have the right to enter the Premises atany time, in the case of an emergency, and otherwise at reasonable times afterreasonable prior notice for the purpose of showing the same to prospectivepurchasers, lenders, or tenants, and making such alterations, repairs,improvements or additions to the Premises as Lessor may deem necessary ordesirable and the erecting, using and maintaining of utilities, services, pipesand conduits through the Premises and/or other premises as long as there is nomaterial adverse effect on Lessee’s use of the Premises. All such activitiesshall be without abatement of rent or liability to Lessee.

33.           **Auctions**. Lessee shall not conduct, nor permit to beconducted, any auction upon the Premises without Lessor’s prior writtenconsent. Lessor shall not be obligated to exercise any standard of reasonablenessin determining whether to permit an auction.

34.           **Signs**. Lessor may place on the Premises ordinary “ForSale” signs at any time and ordinary “For Lease” signs during the last 6 monthsof the term hereof. Except for ordinary “For Sublease” signs which may beplaced only on the Premises, Lessee shall not place any sign upon the Project withoutLessor’s prior written consent. All signs must comply with all ApplicableRequirements. (See Paragraph 54)

35.           **Termination; Merger**. Unless specifically stated otherwise inwriting by Lessor, the voluntary or other surrender of this Lease by Lessee,the mutual termination or cancellation hereof, or a termination hereof byLessor for Breach by Lessee, shall automatically terminate any sublease orlesser estate in the Premises; provided, however, that Lessor may elect tocontinue any one or all existing subtenancies. Lessor’s failure within 10 days followingany such event to elect to the contrary by written notice to the holder of anysuch lesser interest, shall constitute Lessor’s election to have such eventconstitute 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 forthe other Party, such consent shall not be unreasonably withheld or delayed.Lessor’s actual reasonable costs and expenses (including but not limited toarchitects’, attorneys’, engineers’ and other consultants’ fees) incurred inthe consideration of, or response to, a request by Lessee for any Lessorconsent, including but not limited to consents to an assignment, a sublettingor the presence or use of a Hazardous Substance, shall be paid by Lessee upon receiptof an invoice and supporting documentation therefor. Lessor’s consent to anyact, assignment or subletting shall not constitute an acknowledgment that noDefault or Breach by Lessee of this Lease exists, nor shall such consent bedeemed a waiver of any then existing Default or Breach, except as may beotherwise specifically stated in writing by Lessor at the time of such consent.The failure to specify herein any particular condition to Lessor’s consentshall not preclude the imposition by Lessor at the time of consent of suchfurther or other conditions as are then reasonable with reference to theparticular matter for which consent is being given. In the event that eitherParty disagrees with any determination made by the other hereunder andreasonably requests the reasons for such determination, the determining partyshall furnish its reasons in writing and in reasonable detail within 10business days following such request.

37.           **Guarantor**.

37.1         **Execution**. The Guarantors, if any, shall each execute aguaranty in the form most recently published by the AIR Commercial Real EstateAssociation.

37.2         **Default**. It shall constitute a Default of the Lesseeif any Guarantor fails or refuses, upon request to provide: (a) evidence of theexecution of the guaranty, including the authority of the party signing onGuarantor’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 themaking of such guaranty, (b) current financial statements, (c) an EstoppelCertificate, or (d) written confirmation that the guaranty is still in effect.

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

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

39.1         **Definition**. **“Option”**shallmean: (a) the right to extend the term of or renew this Lease or to extend orrenew any lease that Lessee has on other property of Lessor; (b) the right offirst refusal or first offer to lease either the Premises or other property ofLessor; (c) the right to purchase or the right of first refusal to purchase thePremises or other property of Lessor.

39.2         **Options Personal To OriginalLessee.** Any Option granted toLessee in this Lease is personal to the original Lessee, and cannot be assignedor exercised by anyone other than said original Lessee **unless the new Lessee is a financial/securitiesinstitution,**and only while theoriginal Lessee is in full possession of the Premises and, if requested byLessor, with Lessee certifying that Lessee has no intention of thereafter assigningor subletting.

39.3         **Multiple Options**. In the event that Lessee has any multipleOptions to extend or renew this Lease, a later Option cannot be exercisedunless 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 periodcommencing with the giving of any notice of Default and continuing until saidDefault is cured, (ii) during the period of time any Rent is unpaid (withoutregard to whether notice thereof is given Lessee), (iii) during the time Lesseeis in Breach of this Lease, or (iv) in the event that Lessee has been given 3or 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 beextended or enlarged by reason of Lessee’s inability to exercise an Optionbecause 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 suchexercise and prior to the commencement of the extended term or completion ofthe purchase, (i) Lessee fails to pay Rent for a period of 30 days after suchRent 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 Rentpayable to Lessor hereunder does not include the cost of guard service or othersecurity measures, and that Lessor shall have no obligation whatsoever toprovide same. Lessee assumes all responsibility for the protection of thePremises, Lessee, its agents and invitees and their property from the acts ofthird parties.

41.           **Reservations**. So long as any such action does not materially affect access to Lessee’sbusiness****Lessor reserves the right: (i) to grant,without the consent or joinder of Lessee, such easements, rights anddedications that Lessor deems necessary, (ii) to cause the recordation of parcelmaps and restrictions, and (iii) to create and/or install new utility raceways,so long as such easements, rights, dedications, maps, restrictions, and utilityraceways do not unreasonably interfere with the use of the Premises by Lessee.Lessee agrees to sign any documents reasonably

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requested by Lessor toeffectuate such rights.

42.           **Performance Under Protest.**. If at any time a dispute shall arise as toany amount or sum of money to be paid by one Party to the other under theprovisions hereof, the Party against whom the obligation to pay the money isasserted shall have the right to make payment “under protest” and such paymentshall not be regarded as a voluntary payment and there shall survive the righton the part of said Party to institute suit for recovery of such sum. If itshall be adjudged that there was no legal obligation on the part of said Partyto pay such sum or any part thereof, said Party shall be entitled to recoversuch sum or so much thereof as it was not legally required to pay. A Party whodoes not initiate suit for the recovery of sums paid “under protest” within 6months 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 liabilitycompany, partnership, or similar entity, each individual executing this Leaseon behalf of such entity represents and warrants that he or she is dulyauthorized to execute and deliver this Lease on its behalf. Each Party shall,within 30 days after request, deliver to the other Party satisfactory evidenceof 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. Itis agreed that any one of the named Lessees shall be empowered to execute anyamendment to this Lease, or other document ancillary thereto and bind all ofthe named Lessees, and Lessor may rely on the same as if all of the namedLessees had executed such document.

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

44.           **Conflict**. Any conflict between the printed provisionsof this Lease and the typewritten or handwritten provisions shall be controlledby the typewritten or handwritten provisions.

45.           **Offer**. Preparation of this Lease by either party ortheir agent and submission of same to the other Party shall not be deemed anoffer to lease to the other Party. This Lease is not intended to be bindinguntil 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 asthey do not materially change Lessee’s obligations hereunder, Lessee agrees tomake such reasonable non-monetary modifications to this Lease as may be reasonablyrequired by a Lender in connection with the obtaining of normal financing orrefinancing of the Premises.

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

48.           **Mediation and Arbitration ofDisputes.** An Addendumrequiring the Mediation and/or the Arbitration of all disputes between theParties and/or Brokers arising out of this Lease x is o isnot attached to this Lease.

49.           **Americans with DisabilitiesAct.**Since compliance withthe Americans with Disabilities Act (ADA) is dependent upon Lessee’s specificuse of the Premises, Lessor makes no warranty or representation as to whetheror not the Premises comply with ADA or any similar legislation. In the eventthat Lessee’s use of the Premises requires modifications or additions to thePremises in order to be in ADA compliance, Lessee agrees to make any suchnecessary modifications and/or additions at Lessee’s expense.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACHTERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOWTHEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, ATTHE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLYREASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITHRESPECT TO THE PREMISES. 

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

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

2.             RETAINAPPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THEPREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLEPRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURALINTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THEAMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE’SINTENDED USE.

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

The parties hereto haveexecuted this Lease at the place and on the dates specified above theirrespective signatures.
| Executed at:                                 |                                         |                           | Executed at:   |                 |
|----------------------------------------------|----------------------------------------------|--------------------------------|----------------|----------------------|
| On:                                          |                                         |                           | On:            |                 |
|                                         |                                         |                           |           |                 |
| **By LESSOR:**                               | ** **                                   | **By LESSEE:**                 |           |
| AMJ PROPERTIES, LLC                          |                                         | 1ST PACIFIC BANK OF CALIFORNIA |
|                                         |                                         |                           |
|                                         |                                         |                           |           |                 |
| By:                                          |                                         |                           | By:            | /s/ Larry A. Prosi   |
| Name Printed:                                |                                         |                           | Name Printed:  | Larry A. Prosi       |
| Title:                                       |                                         |                           | Title:         | Exec. Vice President |
|                                         |                                         |                           |           |                 |
| By:                                          |                                         |                           | By:            |                 |
| Name Printed:                                |                                         |                           | Name Printed:  |                 |
| Title:                                       |                                         |                           | Title:         |                 |
| Address:                                     |                                         |                           | Address:       |                 |
|                                         |                                         |                           |           |                 |
|                                         |                                         |                           |           |                 |
| Telephone:                                   | (       ) |                           |           | Telephone:           | (       ) |   |
| Facsimile:                                   | (       ) |                           |           | Facsimile:           | (       ) |   |
| Federal ID No.                               |                                         |                           | Federal ID No. |                 |
|                                         |                                         |                           |           |                 |
| **BROKER:**                                  |                                         | ** **                     | **BROKER:**    |                 |
| JOHN BURNHAM REAL ESTATE SERVICES, INC. A    |                                         | IRVING HUGHES                  |
| Delaware corporation AKA Burnham Real Estate |                                         |                           |           |
|                                         |                                         |                           |           |                 |
| Attn:                                        | Kyle Clark                                   | ** **                     | Attn:          | Shaun Burnett        |
| Title:                                       | Vice President                               |                           | Title:         | Sr. Vice President   |
|                                              |                                              |                                |                |                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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| Address:             | 110 West A St.,  Suite 900  |                | Address:       | 550 West C St., Suite 2000 |
|----------------------|-----------------------------|---------------------|----------------|----------------------------|
| San Diego, CA  92101 |                        | San Diego, CA 92101 |
| Telephone:           | (619) 525-2751              |                | Telephone:     | (619) 238-4393             |
| Facsimile:           | (858) 334-6855              |                | Facsimile:     | (619) 238-1025             |
| Email:               | clark@burnhamrealestate.com |                | Email:         | shaunb@irvinghughes.com    |
| Federal ID No.       |                        |                | Federal ID No. |                       |
|                      |                             |                     |                |                            |  |  |  |  |  |  |  |  |

 

**These formsare often modified to meet changing requirements of law and needs of theindustry. Always write or call to make sure you are utilizing the most currentform: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 700 South Flower Street, Suite600, Los Angeles, CA 90017. (213) 687-8777.**

**©Copyright1999 By AIR Commercial Real Estate Association.**

**All rightsreserved.**

**No part of these works may be reproduced in any form withoutpermission in writing.**

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**ADDENDUM**
| **Date:**                | August 7, 2006     |
|--------------------------|--------------------|
| ** **               |               |
| **By and Between**       | **(Lessor)**       | AMJ PROPERTIES, LLC |
|                     | **(Lessee)**       | 1ST PACIFIC BANK OF CALIFORNIA |
| ** **               |               |
| **Address of Premises:** | 343 E MAIN STREET  |
| ** **               | EL CAJON, CA 92020 |
|                          |                    |  |  |  |

 

50. Base Rent: TheBase Rent shall be adjusted upward on each anniversary date by three percent(3%) per annum.

51. Tenant Improvements: Lesseeshall, at its sole and expense fund all monies necessary to complete its TenantImprovements over and above Lessor’s allowance of ten dollars ($10) perrentable square foot.

52. Construction: Lesseeshall competitively bid the Tenant Improvement construction with mutuallyapproved contractors, including Lessor’s company and select the contractor withLessor’s reasonable consent. Lessor shall not impose any charge for profit,overhead or supervision in connection with the construction of the TenantImprovements.

53. Architect: Lesseeshall have the right to engage its own architect/space planner (and engineers/consultants),subject to Lessor’s reasonable approval.

54. Signage: Lesseeshall have the right to install building top signage on the face of building onMain Street and eyebrow signage on the Avocado side of the building. Lessor andLessee shall mutually agree to the design and location of such signage. Lesseeshall also have the right to install monument signage on the top portion of themonument, building standard lobby directory, and suite identification signage.

55. Expansion Option: Lesseeshall have the right of first refusal to expand into up to an additional one thousand(1,000) rentable square feet within the building during its first forty-eightmonths of initial tenancy. Lessor shall give Lessee written notice of availablespace and Lessee shall give Lessor a written notice of interest within ten (10)business days of receipt of Lessor intent to lease.

56. Renewal Option: Lesseeshall have three (3) five (5) year Renewal Options at Fair Market Rent by providingat least six (6) months prior written notice before the effective date of eachRenewal Option Term. Fair Market Rent shall be defined to include the terms andconditions that would be offered to a non-renewing lessee for comparable officespace in the El Cajon area to include typical tenant improvements, rentalrates, operation expense base year, rent increases and commissions. The FairMarket Rent shall also consider the credit of Lessee and size of Premises.

57. Subleasing: Lesseeshall have the right to sublease or assign any portion of the Premises to anyrelated entity, subsidiary or successor, including without limitation anysurviving entity resulting from a merger, acquisition or other similartransaction (“Affiliate”) without Lessor’s consent, but by providing notice to Lessor.Such sublease or assignment to an Affiliate shall not relieve Lessee fromliability under the Lease. An assignment or subletting to any entity other thanan Affiliate shall require Lessor’s consent, which shall not be unreasonablywithheld, conditioned or delayed.

58. Building Maintenance: Duringthe Lease Term and any Renewal Option periods, Lessor shall maintain and replaceall structural walls, foundations, concrete sub flooring, structural elementsof the roof and underground utilities (“Structural Elements”) of the buildingand site structures at Lessor’s sole cost, which cost shall not be included inthe Operating Expenses. Any capital replacement cost for any non-structural

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component shall be paid by Lessor and amortized overthe useful life of such replacement and included as an Operating Expense.

59. Building Condition: Lessorshall warrant that the roof, existing, windows and seals, structural components,and all electrical and plumbing systems of the building and Premises are ingood working condition before Lessee’s funds and its Tenant ImprovementAllowance are spent. Lessor shall also deliver the building and Premises(including the parking areas) in a condition that meets all current codes andconditions including fire and life safety, Americans With Disabilities Act andTitle 24 requirements before Lessee’s funds and its Tenant ImprovementAllowance are spent.

60. Monitoring Wells. Lessorhas informed Lessee that the site was used previously as a service station, andthat site remediation work will incorporate the use of multiple monitoringwells that will be installed and monitored by the remediation contractor duringthe Lease Term. All costs relating to the monitoring wells shall be bornesolely by Lessor.

61. Mediation. Exceptas provided herein, no civil action with respect to any dispute, claim orcontroversy arising out of or relating to this Agreement may be commenced untilthe matter has been submitted to JAMS for mediation. Either party may commencemediation by providing to JAMS and the other party a written request formediation, setting forth the subject of the dispute and the relief requested.The parties will cooperate with JAMS and with one another in selecting amediator from JAMS panel of neutrals, and in scheduling the mediationproceedings. The parties covenant that they will participate in the mediationin good faith, and that they will share equally in its costs. All offers,promises, conduct and statements, whether oral or written, made in the courseof the mediation by any of the parties, their agents, employees, experts and attorneys,and by the mediator and any JAMS employees, are confidential, privileged andinadmissible for any purpose, including impeachment, in any litigation or otherproceeding involving the parties, provided that evidence that is otherwiseadmissible or discoverable shall not be rendered inadmissible ornon-discoverable as a result of its use in the mediation. Either party may seekequitable relief prior to the mediation to preserve the status quo pending thecompletion of that process. Except for such an action to obtain equitablerelief, neither party may commence a civil action with respect to the matterssubmitted to mediation until after the completion of the initial mediationsession, or 45 days after the date of filing the written request for mediation,whichever occurs first. Mediation may continue after the commencement of acivil action, if the parties so desire. The provisions of this Clause may beenforced by any Court of competent jurisdiction, and the party seekingenforcement shall be entitled to an award of all costs, fees and expenses,including attorneys’ fees, to be paid by the party against whom enforcement isordered.

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**EXHIBIT A**

**FLOORPLAN**

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**EXHIBIT B**

**SITEPLAN**

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