**Exhibit10.21**

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

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

1.1           **Parties:** ThisLease **(“Lease”)**, dated forreference purposes only March 6, 2007, is made by and between VRS Chatsworth LLC, a Virginia limitedliability company **(“Lessor”)**and Natrol, Inc., aDelaware corporation **(“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 9453 Owensmouth Avenue, located in the City of Chatsworth(Los Angeles), County of LosAngeles, State of California, with zip code 91311, as outlined on Exhibit 1 attached hereto **(“Premises”)**and generally described as (describe briefly thenature of the Premises):  anapproximately 81,291 square foot portion of a larger approximately 132,600square foot concrete tilt-up industrial building, situated on an approximately[insert land area] square feet of land,as more particularly described on Exhibit 1 attached hereto and incorporatedherein by reference. In additionto Lessee’s rights to use and occupy the Premises as hereinafter specified,Lessee shall have non-exclusive rights to the any utility raceways of thebuilding containing the Premises (“**Building**”)and to the common Areas (as defined in Paragraph 2.7 below), but shall not haveany rights to the roof or exterior walls of the Building or to any otherbuildings in the Project. The Premises, the Building, the Common Areas, theland upon which they are located, along with all other buildings andimprovements thereon, are herein collectively referred to as the **“Project.”**(See also Paragraph 2)

1.2(b)      **Parking:**46unreserved vehicle parkingspaces. (See also Paragraph 2.6)

1.3           **Term:**Five(5) years and zero (0) months **(“OriginalTerm”)**commencing see Paragraph 50.1 **(“Commencement Date”)** and ending see Paragraph 50.2 **(“Expiration Date”)**. As used in this Lease, “Term” shall mean the Original Term and allextensions or renewals thereof.    (See also Paragraph 3)

1.4           **Early Possession:**N/A **(“EarlyPossession Date”)**. (See alsoParagraphs 3.2 and 3.3)

1.5           **Base Rent:** $48,775.00 per month **(“Base Rent”)**, payable on the first(1st) day of each month commencing onthe Commencement Date. (See alsoParagraph 4) 

x If this box is checked, there are provisionsin this Lease for the Base Rent to be adjusted. See Paragraphs 52 and 53.

1.6           **Lessee’s Share of CommonArea Operating Expenses:** sixty-one & 3/10 percent (61.3%) **(“Lessee’s Share”)**. Lessee’sShare has been calculated by dividing the approximate square footage of thePremises by the approximate square footage of the Project. In the event thatthe size of the Premises and/or the Project are modified during the term ofthis Lease, Lessor shall recalculate Lessee’s Share to reflect suchmodification.

1.7           **Base Rent and OtherMonies Paid Upon**~~Execution~~ the Commencement Date:

(a)                                  **Base Rent:** $TBD for the period see Paragraph 50.3.

(b)                                 **Common Area OperatingExpenses:** $TBD for the period see Paragraph 50.3.

(c)                                  **Security Deposit:** $48,775.00 **(“Security Deposit”)**. (See also Paragraph 5)

(d)                                 **Other:** $                               for                                                                     .

(e)                                  **Total Due Upon Execution ofthis Lease:** $seeParagraph 50.3.

1.8           **Agreed Use:**warehousingand storage, and related 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 relationships exist in this transaction (check applicable boxes):
| o                                                                                                                     |   | represents Lessor exclusively (**“Lessor’s  Broker”**);    |
|-----------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|
| o                                                                                                                     |   | represents Lessee exclusively (**“Lessee’s  Broker”**); or |
| x CB Richard Ellis, Inc. (Bennett  Robinson)  represents both Lessor and Lessee ( **“Dual  Agency”**). |

 

(b)           **Payment to Brokers:**~~Upon execution and delivery of this Lease by both Parties, Lessor~~Pursuant to the Purchase Contract (as definedin Paragraph 50.1), Lessee****shall pay to the Brokers the brokerage feeagreed to in a separate written agreement ~~(or if there is no such agreement,the sum of                        ~~~~ ~~~~or          ~~~~%of the total Base Rent~~ forthe brokerage services rendered by the Brokers in connection with the Purchase Contract and the Original Term of thisLease. Lessor and Brokers have entered into a separate written agreement withrespect to the payment of commissions due, if any, for periods after theOriginal Term ).

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

1.12         Attachments. Attached hereto are the following, all of whichconstitute a part of this Lease:
| x an Addendum consisting of Paragraphs 50                        through                    ; |                              |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|--------|
| o a                                                                                                                                                                                                                                                                                                        | site plan depicting the Premises; |   |   |
|                                                                                                                                                                                                                                                                                                            |                                   |        |  |

 
|                                                         | ** ** | ** **           |
|---------------------------------------------------------|------------|----------------------|
|                                                    |       |                 |
| **INITIALS**                                            | ** ** | **INITIALS**         |
|                                                    |       |                 |
| **©1999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION** | ** ** | **FORM MTN-5-5/05E** |

 

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| o a site plan depicting the Project;                                                           |   |
|------------------------------------------------------------------------------------------------|--------|
| o a current set of the Rules and Regulations  for the Project;                                 |   |
| o a current set of the Rules and Regulations  adopted by the owners’ association;         |   |
| o a Work Letter;                                                                               |   |
| x other (specify); Exhibit 1 (legal  description of the Project) and Exhibit 2 (parking area). |   |

 

2.                                       **Premises**.

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

2.2           **~~Condition~~**~~.  Lessor shall deliver that portion of thePremises contained within the Building **(‘Unit”)**to Lessee broom clean and free of debris on the Commencement Date or the EarlyPossession Date, whichever first occurs **(“StartDate”)**, and, so long as the required service contracts described inParagraph 7.1(b) below are obtained by Lessee and in effect within thirty daysfollowing the Start Date, warrants that the existing electrical, plumbing, firesprinkler, lighting, heating, ventilating and air conditioning systems **(“HVAC”)**, loading doors, sump pumps, ifany, and all other such elements in the Unit, other than those constructed byLessee, shall be in good operating condition on said date, that the structuralelements of the roof, bearing walls and foundation of the Unit shall be free ofmaterial defects, and that the Unit does not contain hazardous levels of anymold or fungi defined as toxic under applicable state or federal law. If anon-compliance with such warranty exists as of the Start Date, or if one ofsuch systems or elements should malfunction or fail within the appropriatewarranty period, Lessor shall, as Lessor’s sole obligation with respect to suchmatter, except as otherwise provided in this Lease, promptly after receipt ofwritten notice from Lessee setting forth with specificity the nature and extentof such non-compliance, malfunction or failure, rectify same at Lessor’sexpense.  The warranty periods shall beas follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to theremaining systems and other elements of the Unit.  If Lessee does not give Lessor the requirednotice within the appropriate warranty period, correction of any suchnon-compliance, malfunction or failure shall be the obligation of Lessee atLessee’s sole cost and expense (except for the repairs to the fire sprinklersystems, roof, foundations, and/or bearing walls - see Paragraph 7).~~**  CertainDefinitions:  AS used in this Lease, (a) “Unit”shall mean that portion of the Premises contained within the Building; (b) “StartDate” shall mean the Commencement Date or the Early Possession Date, whicheverfirst occurs, (c) “HVAC” shall mean the heating, ventilating and airconditioning systems in the Unit, and (d) “Applicable Requirements” shall meanbuilding codes, applicable laws, covenants or restrictions of record,regulations and ordinances.**

2.3          **Compliance**.  ~~Lessorwarrants that to the best of its knowledge the improvements on the Premises andthe Common Areas comply with the building codes that were in effect at the timethat each such improvement, or portion thereof, was constructed, and also withall applicable laws, covenants or restrictions of record, regulations, andordinances in effect on the Start Date **(“ApplicableRequirements”)**.  Said warrantydoes not apply to the use to which Lessee will put the Premises, modificationswhich may be required by the Americans with Disabilities Act or any similarlaws as a result of Lessee’s use (see Paragraph 49), or to any Alterations orUtility Installations (as defined in Paragraph 7.3(a)) made or to be made byLessee.~~  **NOTE: Lessee is responsiblefor determining whether or not the Applicable Requirements and especially thezoning are appropriate for Lessee’s intended use, and acknowledges that pastuses of the Premises may no longer be allowed**.  ~~If the Premises do notcomply with said warranty, Lessor shall, except as otherwise provided, promptlyafter receipt of written notice from Lessee setting forth with specificity thenature and extent of such non-compliance, rectify the same at Lessor’s expense.  If Lessee does not give Lessor written noticeof a non-compliance with this warranty within 6 months following the StartDate, correction of that non-compliance shall be the obligation of Lessee atLessee’s sole cost and expense.~~  Ifthe Applicable Requirements are hereafter changed so as to require during theterm of this Lease the construction of an addition to or an alteration of theUnit, Premises and/or Building, the remediation of any Hazardous Substance not caused or contributed to either beforeor after the Commencement Date by Lessee or the Lessee Parties, 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, ifsuch Capital Expenditures are required as a result of the specific ~~andunique~~ use of the Premises by Lessee as compared with uses by tenants ingeneral, Lessee shall be fully responsible for the cost thereof, provided, howeverthat if such Capital Expenditure is required during the last ~~2 years~~12 months 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 Lessee elects termination, Lessee shallimmediately cease the use of the Premises which requires such CapitalExpenditure and deliver to Lessor written notice specifying a termination dateat least 90 days thereafter.  Suchtermination date shall, however, in no event be earlier than the last day thatLessee could legally utilize the Premises without commencing such CapitalExpenditure.

(b)           If such CapitalExpenditure is not the result of the specific ~~and unique~~ use of thePremises by Lessee (such as, governmentally mandated seismic modifications),then Lessor and Lessee shall allocate the obligation to pay for the portion ofsuch costs reasonably attributable to the Premises pursuant to the formula setout in Paragraph 7.1(d); provided, however, that if such Capital Expenditure isrequired during the last 2 years of this Lease or if Lessor reasonablydetermines that it is not economically feasible to pay its share thereof,Lessor shall have the option to terminate this Lease upon 90 days prior writtennotice to Lessee unless Lessee notifies Lessor, in writing, within 10 daysafter receipt of Lessor’s termination notice that Lessee will pay for suchCapital Expenditure. If Lessor does not elect to terminate, and fails to tenderits share of any such Capital Expenditure, Lessee may advance such funds anddeduct same, with Interest, from Rent until Lessor’s share of such costs havebeen fully paid.  If Lessee is unable tofinance Lessor’s share, or if the balance of the Rent due and payable for theremainder of this Lease is not sufficient to fully reimburse Lessee on anoffset basis, Lessee shall have the right to terminate this Lease upon 30 dayswritten notice to Lessor.

(c)           Notwithstanding theabove, the provisions concerning Capital Expenditures are intended to applyonly to non-voluntary, unexpected, and new Applicable Requirements.  If the Capital Expenditures are insteadtriggered by Lessee as a result of an actual or proposed change in use, changein intensity of use, or modification to the Premises then, and in that event,Lessee shall either: (i) immediately cease such changed use or intensity of useand/or take such other steps as may be necessary to eliminate the requirementfor such Capital Expenditure, or (ii) complete such Capital Expenditure at itsown expense.  Lessee shall not have anyright to terminate this Lease.

                2.4           **Acknowledgements.**  Lessee acknowledges that:  (a) it has been advised by Lessor and/orBrokers to satisfy itself with respect to the condition of the Premises(including but not limited to the electrical, HVAC and fire sprinkler systems,security, environmental aspects, and compliance with Applicable Requirementsand the Americans with Disabilities Act), and their suitability for Lessee’sintended use, (b) Lessee has made such investigation as it deems necessary withreference to such matters and assumes all responsibility therefor as the samerelate to its occupancy of the Premises, and (c) neither Lessor, Lessor’sagents, nor Brokers have made any oral or written representations or warrantieswith respect to said matters other than as set forth in this Lease.  In addition, Lessor acknowledges that: (i)Brokers have made no representations, promises or warranties concerning Lessee’sability to honor the Lease or suitability to occupy the Premises, and (ii) itis Lessor’s sole responsibility to investigate the financial

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capability and/or suitabilityof all proposed tenants.

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

2.6           **Vehicle Parking**.  Lessee shall be entitled to use the number ofparking 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 use more parking spaces thansaid number.  Said parking spaces shallbe used for parking by vehicles no larger than full-size passenger automobilesor pick-up trucks, herein called **“PermittedSize Vehicles.”**  Lessee may also stage and park trucks andtrailers in the portion of the Project’s truck loading area which is adjacentto the Premises, in the area shown on Exhibit 2 attached hereto, subject to therights of other occupants of the Project and to Applicable Requirements,including but not limited to the terms of the reciprocal easement agreementbetween the owner of the Project and the owner of the adjacent property.  Subject to the preceding sentence,  Lessor may regulate the loading and unloading of vehicles by adopting Rulesand Regulations as provided in Paragraph 2.9. ~~No~~**Except as provided inthis Paragraph 2.6,**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 anyvehicles that belong to or are controlled by Lessee or Lessee’s employees,suppliers, shippers, customers, contractors or invitees to be loaded, unloaded,or parked in areas other than those designated by Lessor for such activities.  Lessor’sdesignation of any such areas after the Commencement Date shall not tomaterially interfere with the operation of Lessee’s business within theProject.

(b)           Lessee shall notservice or store any vehicles in the Common Areas.

(c)           If Lessee permits orallows any of the prohibited activities described in this Paragraph 2.6, thenLessor shall have the right, ~~without~~upon not less than 48 hours****notice, in addition to such other rights andremedies that it may have, to remove or tow away the vehicle involved andcharge the cost to Lessee, which cost shall be immediately payable upon demandby 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 utilityraceways and installations within the Unit that are provided and designated bythe Lessor from time to time for the general non-exclusive use of Lessor,Lessee and other tenants of the Project and their respective employees,suppliers, shippers, customers, contractors and invitees, including parkingareas, loading and unloading areas, trash areas, roadways, walkways, drivewaysand landscaped areas.

2.8           **Common Areas - Lessee’s Rights**.  Lessor grants to Lessee, for the benefit ofLessee and its employees, suppliers, shippers, contractors, customers andinvitees, during the term of this Lease, the non-exclusive right to use, incommon with others entitled to such use, the Common Areas as they exist fromtime to time, subject to any rights, powers, and privileges reserved by Lessorunder the terms hereof or under the terms of any rules and regulations orrestrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the CommonAreas be deemed to include the right to store any property (including vehicles, except as provided inParagraph 2.6 above), temporarily or permanently, in the CommonAreas.  Any such storage shall bepermitted only by the prior written consent of Lessor or Lessor’s designatedagent, which consent may be revoked at any time.  In the event that any unauthorized storageshall occur then Lessor shall have the right, without notice, in addition tosuch other rights and remedies that it may have, to remove the property andcharge the cost to Lessee, which cost shall be immediately payable upon demandby Lessor.

2.9           **Common Areas - Rules and Regulations**.  Subjectto the terms of this Lease,****Lessoror such other person(s) as Lessor may appoint shall have the exclusive controland management of the Common Areas and shall have the right, from time to time,to establish, modify, amend and enforce reasonable rules and regulations **(“Rules and Regulations”)** for 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 abideby and conform to all such reasonableand uniformly-enforced****Rulesand Regulations, and shall use its best efforts to cause its employees,suppliers, shippers, customers, contractors and invitees to so abide andconform.  Lessor shall not be responsibleto Lessee for the non-compliance with said Rules and Regulations by othertenants of the Project.

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

(a)           To make changes tothe 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, landscapedareas, walkways andutilityraceways, so long as suchchanges do not materially impair Lessee’s access to or use of the Premisesand/or the parking and truck loading areas of the Premises;

(b)           To close temporarilyany of the Common Areas for maintenance purposes so long as reasonable accessto the Premises, including parking and truck loading areas, remains available;

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

(d)           To add additional ~~buildingsand~~ improvements to the Common Areas that do not materially interfere with Lessee’s access to or use of the Premises and/or theparking and truck loading areas of the Premises ;

(e)           To use the CommonAreas temporarily, only for solong and to the extent necessary,****while engaged in making additional improvements, repairs oralterations to the Project, or any portion thereof; and

(f)            To do and performsuch other acts and make such other changes in, to or with respect to theCommon Areas and Project as Lessor may, in the exercise of sound businessjudgment, deem to be appropriate,provided that such other acts or changes shall not materially impair Lessee’s access to or useof the Premises and/or the parking and truck loading areas of the Premises.

3.                                       **Term**.

3.1           **Term**. The Commencement Date, Expiration Date and Original Term of this Leaseare 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 this Lease (including butnot limited to the obligations to pay Lessee’s Share of Common Area OperatingExpenses, Real Property Taxes and insurance premiums and to maintain thePremises) shall be in effect during such period.  Any such early possession shall not affectthe 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 saidefforts, Lessor is unable to deliver possession as agreed, Lessor shall not besubject to any liability therefor, nor shall such failure affect the validityof this Lease or change the Expiration Date. Lessee shall not, however, beobligated to pay Rent or perform its other obligations until Lessor deliverspossession of the Premises and any period of rent abatement that Lessee wouldotherwise have enjoyed shall run from the date of the delivery of possessionand continue for a period equal to what Lessee would otherwise have enjoyed,but minus any days of delay caused by the acts or omissions of Lessee.  If possession is not delivered within 60 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~~

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~~as otherwise provided, ifpossession is not tendered to Lessee by the Start Date and Lessee does notterminate this Lease, as aforesaid, any period of rent abatement that Lesseewould otherwise have enjoyed shall run from the date of delivery of possessionand continue for a period equal to what Lessee would otherwise have enjoyedunder the terms hereof, but minus any days of delay caused by the acts oromissions of Lessee.  If possession ofthe Premises is not delivered within 4 months after the Commencement Date, thisLease shall terminate unless other agreements are reached between Lessor andLessee, 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 such evidence, Lesseeshall be required to perform all of its obligations under this Lease from andafter the Start Date, including the payment of Rent, notwithstanding Lessor’selection to withhold possession pending receipt of such evidence ofinsurance.  Further, if Lessee isrequired to perform any other conditions prior to or concurrent with the StartDate, the Start Date shall occur but Lessor may elect to withhold possessionuntil such conditions are satisfied.~~

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”)**.

4.2           **Common Area Operating Expenses**.  Lessee shall pay to Lessor during the termhereof, in addition to the Base Rent, Lessee’s Share (as specified in Paragraph1.6) of all Common Area Operating Expenses, as hereinafter defined, during eachcalendar year of the term of this Lease, in accordance with the followingprovisions:

(a)           **“CommonArea Operating Expenses”**  aredefined, for purposes of this Lease, as all costs incurred by Lessor relatingto the ownership and operation of the Project, including, but not limited to,the following:

(i)            The operation, repair andmaintenance, in neat, clean, good order and condition, and if necessary thereplacement, of the following:

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

(bb)        Exteriorsigns and any tenant directories.

(cc)         Anyfire sprinkler systems.

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

(iii)          Trash disposal, pest control services,property management, security services, owners’ association dues and fees, thecost to repaint the exterior of any structures (to the extent****permitted by this Lease) and the cost of any environmental inspections.

(iv)          Reserves set aside formaintenance,  repair and/or replacementof Common Area improvements and equipment.

(v)           Real Property Taxes (as defined inParagraph 10).

(vi)         The cost of the premiums for theinsurance maintained by Lessor pursuant to Paragraph 8.

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

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

(ix)           The cost of any capital improvement to the Building or theProject not covered under the provisions of Paragraph 2.3 provided; however,that Lessor shall allocate the cost of any such capital improvement over (A)****a ~~12~~ 10 year period and Lesseeshall not be required to pay more than Lessee’s Share of ~~1/144th~~ 1/120th****of the cost of such capital improvement in anygiven month, with respect to the roof, and (B) a 7 year period andLessee shall not be required to pay more than Lessee’s Share of 1/84th of thecost of such capital improvement in any given month, with respect to all othercapital improvements.

(x)            Any other services to be provided byLessor that are stated elsewhere in this Lease to be a Common Area OperatingExpense.

(b)           Any Common Area OperatingExpenses and Real Property Taxes that are specifically attributable to theUnit, the Building or to any other building in the Project or to the operation,repair and maintenance thereof, shall be allocated entirely to such Unit,Building, or other building.  However,any Common Area Operating Expenses and Real Property Taxes that are 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 theimprovements, facilities and services set forth in Subparagraph 4.2(a) shallnot be deemed to impose an obligation upon Lessor to either have saidimprovements or facilities or to provide those services unless the Projectalready has the same, Lessor already provides the services, or Lessor hasagreed elsewhere in this Lease to provide the same or some of them.

                                (d)           Lessee’s Share of Common AreaOperating Expenses is payable monthly on the same day as the Base Rent is duehereunder.  The amount of such paymentsshall be based on Lessor’s estimate of the annual Common Area OperatingExpenses.  Within 60 days after writtenrequest (but not more than once each year) Lessor shall deliver to Lessee areasonably detailed statement showing Lessee’s Share of the actual Common AreaOperating Expenses incurred during the preceding year.  If Lessee’s payments during such year exceedLessee’s Share, and provided no Default of any of Lessee’s monetaryobligations under this Lease then exists, Lessor shall credit the amount of such over-payment against Lessee’s future payments of Common Area Operating Expenses.  IfLessee’s payments during such year were less than Lessee’s Share, Lessee shallpay to Lessor the amount of the deficiency within 10 days after delivery byLessor to Lessee of the statement.

(e)           Common Area OperatingExpenses shall not include any expenses paid by any tenant directly to third parties, or as to whichLessor is otherwise reimbursed by any third party, other tenant, or insuranceproceeds.

4.3           **Payment**. Lessee shall unconditionally causepayment of Rent to be received by Lessor in lawful money of the United States,without offset or deduction (except as specifically permitted in this Lease),on or before the day on which it is due. All monetary amounts shall be roundedto the nearest whole dollar.  In theevent that any invoice prepared by Lessor is inaccurate such inaccuracy shallnot constitute a waiver and Lessee shall be obligated to pay the amount setforth in this Lease.  Rent for any periodduring the term hereof which is for less than one full calendar month shall beprorated based upon the actual number of days of said month.  Payment of Rent shall be made to Lessor atits address stated herein or to such other persons or place as Lessor may fromtime to time designate in writing. Acceptance of a payment which is less than the amount then due shall notbe a waiver of Lessor’s rights to the balance of such Rent, regardless ofLessor’s endorsement of any check so stating. In the event that any check, draft, or other instrument of payment givenby Lessee to Lessor is dishonored for any reason, Lessee agrees to pay toLessor the sum of $25 in addition to any Late Charge and Lessor, at its option,may require all future Rent be paid by cashier’s check.  Payments will be applied first to accruedlate charges and attorney’s fees, second to accrued interest, then to Base Rentand Common Area Operating Expenses, and any remaining amount to any other outstandingcharges or costs.

5.             **Security Deposit**.  Lessee shall deposit with Lessor upon executionhereof the Security Deposit as security for Lessee’s faithful performance ofits obligations under this Lease.  IfLessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor mayuse, apply or retain all or any portion

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of said Security Deposit forthe payment of any amount due Lessor or to reimburse or compensate Lessor forany liability, expense, loss or damage which Lessor may suffer or incur byreason thereof.  If Lessor uses orapplies all or any portion of the Security Deposit, Lessee shall within 10 daysafter written request therefor deposit monies with Lessor sufficient to restoresaid Security Deposit to the full 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 Use be amended toaccommodate a material change in the business of Lessee or to accommodate asublessee or assignee, Lessor shall have the right to increase the SecurityDeposit to the extent necessary, in Lessor’s reasonable judgment, to accountfor any increased wear and tear that the Premises may suffer as a resultthereof.  If a change in control ofLessee occurs during this Lease and following such change the financialcondition of Lessee is, in Lessor’s reasonable judgment, significantly reduced,Lessee shall deposit such additional monies with Lessor as shall be sufficientto cause the Security Deposit to be at a commercially reasonable level based onsuch change in financial condition.~~ Lessor shall not be required to keep the Security Deposit separate fromits general accounts.  Within 14 daysafter the expiration or termination of this Lease, if Lessor elects to applythe Security Deposit only to unpaid Rent, and otherwise within 30 days afterthe Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shallreturn that portion of the Security Deposit not used or applied by Lessor.  No part of the Security Deposit shall beconsidered to be held in trust, to bear interest or to be prepayment for anymonies to be paid by Lessee under this Lease.

6.                                       **Use**.

6.1           **Use**. Lessee shall use and occupy the Premises only for the Agreed Use, ~~orany other legal use which is reasonably comparable thereto,~~ and for noother purpose.  Lessee shall not use orpermit the use of the Premises in a manner that is unlawful, creates damage,waste or a nuisance, or that disturbs occupants of or causes damage toneighboring premises or properties. Other than guide, signal and seeing eyedogs, Lessee shall not keep or allow in the Premises any pets, animals, birds,fish, or reptiles. Lessor shall not unreasonably withhold or delay its consentto any written request for a modification of the Agreed Use, so long as thesame will not impair the structural integrity of the Building, is not a part of the “adult entertainmentindustry or involves the use of Hazardous Substances not previously approved byLessor pursuant to Paragraph 55.12 or otherwise permitted in accordance with Paragraph6.2(a) (with regard to Permitted Hazardous Substances) or the mechanical or electrical systemstherein which are shared withother premises in the Building,and/or is not significantly more burdensome to the Project.  If Lessor elects to withhold consent, Lessorshall within ~~7~~ 10business days after such requestgive written notification of same, which notice shall include an explanation ofLessor’s objections to the change in the Agreed Use.

6.2           **Hazardous Substances.**

(a)           **ReportableUses Require Consent**.  Theterm **“Hazardous Substance”** as usedin this Lease shall mean any product, substance, or waste whose presence, use,manufacture, disposal, transportation, or release, either by itself or incombination with other materials expected to be on the Premises, is either:(i)  ~~potentially~~ injurious to thepublic health, safety or welfare, the environment or the Premises, (ii)regulated or monitored by any governmental authority, or (iii) a basis forpotential liability of Lessor to any governmental agency or third party underany applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,petroleum, gasoline, and/or crude oil or any products, by-products or fractionsthereof.  Lessee shall not engage in anyactivity in or on the Premises which constitutes a Reportable Use of HazardousSubstances without the express prior written consent of Lessor and timelycompliance (at Lessee’s expense) with all Applicable Requirements.  **“ReportableUse”** shall mean (i) the installation or use of any above or belowground storage tank, (ii) the generation, possession, storage, use,transportation, or disposal of a Hazardous Substance that requires a permitfrom, or with respect to which a report, notice, registration or business planis required to be filed with, any governmental authority, and/or (iii) thepresence at the Premises of a Hazardous Substance with respect to which anyApplicable Requirements requires that a notice be given to persons entering oroccupying the Premises or neighboring properties.  Notwithstanding the foregoing, Lessee may useany ordinary and customary materials reasonably required to be used in thenormal course of the Agreed Usedescribed on the HazMat Certificate, ordinary office supplies (copiertoner, liquid paper, glue, etc.) and common household cleaning materials, solong as such use is in compliance with all Applicable Requirements, is not aReportable Use, and does not expose the Premises or neighboring property to anymeaningful risk of contamination or damage or expose Lessor to any liabilitytherefor (collectively, the “PermittedHazardous Substances”).  Inaddition, Lessor may condition its consent to any Reportable Use upon receivingsuch additional assurances as Lessor reasonably deems necessary to protectitself, the public, the Premises and/or the environment against damage,contamination, injury and/or liability, including, but not limited to, theinstallation (and removal on or before Lease expiration or termination) of protectivemodifications (such as concrete encasements) and/or increasing the SecurityDeposit.

(b)           **Dutyto Inform Lessor**.  If Lesseeknows, or has reasonable cause to believe, that a Hazardous Substance has cometo be located in, on, under or about the Premises, other than as previouslyconsented to by Lessor, Lessee shall immediately give written notice of suchfact to Lessor, and provide Lessor with a copy of any report, notice, claim orother documentation which it has concerning the presence of such HazardousSubstance.

(c)           **LesseeRemediation**.  Lessee shall notcause or permit any Hazardous Substance to be spilled or released in, on,under, or about the Premises (including through the plumbing or sanitary sewersystem) and shall promptly, at Lessee’s expense, comply with all ApplicableRequirements and take all investigatory and/or remedial action reasonablyrecommended, whether or not formally ordered or required, for the cleanup ofany contamination of, and for the maintenance, security and/or monitoring ofthe Premises or neighboring properties, that was caused or materiallycontributed to by Lessee, or pertaining to or involving any Hazardous Substancebrought onto the Premises during the term of this Lease, by or for Lessee, orany third party. 

(d)           **LesseeIndemnification**.  Lessee shallindemnify,  defend and hold Lessor, itsagents, employees, lenders and ground lessor, if any, harmless from and againstany and all loss of rents and/or damages, liabilities, judgments, claims,expenses, penalties, and attorneys’ and consultants’ fees arising out of orinvolving any Hazardous Substance brought onto the Premises, whether prior to or after the Commencement Date, by or for Lessee or Lessee’s employees, agents, invitees,Affiliates, assignees, sublessees, successors and assigns (collectively, the “LesseeParties”),  ~~or any third party~~ (provided, however,that Lessee shall have no liability under this Lease with respect tounderground migration of any Hazardous Substance under the Premises from areasoutside of the Project not caused or contributed to by Lessee). Lessee’sobligations shall include, but not be limited to, the effects of anycontamination or injury to person, property or the environment created orsuffered by Lessee, and the cost of investigation, removal, remediation,restoration and/or abatement, and shall survive the expiration or terminationof 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)           **LessorIndemnification**.  Lessor andits successors and assigns shall indemnify, defend, reimburse and hold Lessee,its employees and lenders, harmless from and against any and all environmentaldamages, including the cost of remediation, which are suffered as a directresult of Hazardous Substances on the Premises ~~prior to Lessee takingpossession~~ not caused orcontributed to, whether prior to or after the Commencement Date, by Lessee orthe Lessee Parties or which are caused by the gross negligence orwillful misconduct of Lessor, its agents or employees.  Lessor’s obligations, as and when required bythe Applicable Requirements, shall include, but not be limited to, the cost ofinvestigation, removal, remediation, restoration and/or abatement, and shallsurvive the expiration or termination of this Lease.

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(f)            **Investigationsand Remediations**.  Lessorshall retain the responsibility and pay for any investigations or remediationmeasures required by governmental entities having jurisdiction with respect tothe existence of Hazardous Substances on the Premises ~~prior to the Lesseetaking possession,~~ unless such remediation measure is required as a resultof Lessee’s or any of the LesseeParties’****use (including “Alterations”,as defined in paragraph 7.3(a) below) of the Premises, or as a result of any Hazardous Substance Condition caused or contributedto by Lessee, whether prior to or after the Commencement Date, in which event Lessee shall be responsible forsuch payment.  Lessee shall cooperatefully in any such activities at the request of Lessor, including allowing Lessor and Lessor’s agents to havereasonable access to the Premises at reasonable times in order to carry outLessor’s investigative and remedial responsibilities.

(g)           **LessorTermination Option**.  If aHazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term ofthis Lease, unless Lessee or a LesseeParty is ~~legally~~ responsible therefor under the terms of this Lease (in which case Lessee shall make theinvestigation and remediation thereof required by the Applicable Requirementsand this Lease shall continue in full force and effect, but subject to Lessor’srights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’soption, either (i) investigate and remediate such Hazardous SubstanceCondition, if required, as soon as reasonably possible at Lessor’s expense, inwhich event this Lease shall continue in full force and effect, or (ii) if theestimated cost to remediate such condition exceeds ~~12~~ 9 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 a termination notice, Lessee may,within 10 days thereafter, give written notice to Lessor of Lessee’s commitmentto pay the amount by which the cost of the remediation of such HazardousSubstance Condition exceeds an amount equal to ~~12~~ 9 times 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.  Insuch event, this Lease shall continue in full force and effect, and Lessorshall proceed to make such remediation as soon as reasonably possible after therequired 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 with Applicable Requirements**.  Except as otherwise provided in this Lease,Lessee shall, at Lessee’s sole expense, fully, diligently and in a timelymanner, materially comply with all Applicable Requirements, the requirements ofany applicable fire insurance underwriter or rating bureau, and therecommendations of Lessor’s engineers and/or consultants which relate in anymanner to such Requirements, without regard to whether said Requirements arenow in effect or become effective after the Start Date.  Lessee shall, within 10 days after receipt ofLessor’s written request, provide Lessor with copies of all permits and otherdocuments, and other information evidencing Lessee’s compliance with anyApplicable Requirements specified by Lessor, and shall immediately uponreceipt, notify Lessor in writing (with copies of any documents involved) ofany threatened or actual claim, notice, citation, warning, complaint or reportpertaining to or involving the failure of Lessee or the Premises to comply withany Applicable Requirements.  Likewise,Lessee shall immediately give written notice to Lessor of: (i) any water damageto the Premises and any suspected seepage, pooling, dampness or other conditionconducive to the production of mold; or (ii) any mustiness or other odors thatmight indicate the presence of mold in the Premises.

6.4           **Inspection; Compliance**.  Lessor and Lessor’s “ **Lender**” (as defined in Paragraph 30) andconsultants shall have the right to enter into Premises at any time, in thecase of an emergency, and otherwise at reasonable times after reasonable telephonic notice, subject to compliance with Lessee’s securityrequirements, for the purpose of inspecting the condition of thePremises and for verifying compliance by Lessee with this Lease.  Lessee shall be entitled to have itsrepresentatives accompany Lessor, its Lender and their consultants on the Premises. The cost of any such inspections shall be paid by Lessor, unless aviolation of Applicable Requirements, or a Hazardous Substance condition (seeParagraph 9.1)  caused by Lessee****is found toexist or be imminent, or the inspection is requested or ordered by agovernmental authority.  In such case,Lessee shall upon request reimburse Lessor for the cost of such inspection, solong as such inspection is reasonably related to the violation orcontamination.  In addition, Lessee shallprovide copies of all relevant material safety data sheets (**MSDS**) to Lessor within 10 days of thereceipt of written request therefor.

7.                                       **Maintenance; Repairs, UtilityInstallations; Trade Fixtures and 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 Applicable Requirements), 7.2(Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation),Lessee shall, at Lessee’s sole expense, keep the Premises, UtilityInstallations (intended for Lessee’s exclusive use, no matter where located),and Alterations in good order, condition and repair (whether or not the portionof the Premises requiring repairs, or the means of repairing the same, arereasonably or readily accessible to Lessee, and whether or not the need forsuch repairs occurs as a result of Lessee’s use, any prior use, the elements orthe age of such portion of the Premises), including, but not limited to, allequipment or facilities, such as plumbing, HVAC equipment, electrical, lightingfacilities, boilers, pressure vessels, fixtures, interior walls, interiorsurfaces of exterior walls, ceilings, floors, windows, doors, plate glass, andskylights but excluding any items which are the responsibility of Lessorpursuant to Paragraph 7.2.  Lessee, inkeeping the Premises in good order, condition and repair, shall exercise andperform good maintenance practices, specifically including the procurement andmaintenance of the service contracts required by Paragraph 7.1(b) below. Lessee’sobligations shall include restorations, replacements or renewals when necessaryto keep the Premises and all improvements thereon or a part thereof in goodorder, 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) HVACequipment,  ~~(ii) boiler and pressurevessels,~~ (iii) clarifiers, and (iv) any other equipment, if reasonablyrequired by Lessor.  However, Lessorreserves the right, upon notice to Lessee, to procure and maintain any or allof such service contracts, and Lessee shall reimburse Lessor, upon demand, forthe 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’sindemnification of Lessor as set forth in Paragraph 8.7 below, and withoutrelieving Lessee of liability resulting from Lessee’s failure to exercise andperform good maintenance practices, if an item described in Paragraph 7.1(b)cannot be repaired other than at a cost which is in excess of 50% of the costof replacing such item, then such item shall be replaced by Lessor, and thecost thereof shall be prorated between the Parties and Lessee shall only beobligated to pay, each month during the remainder of the term of this Lease, onthe date on which Base Rent is due, an amount equal to the product ofmultiplying the cost of such replacement by a fraction, the numerator of whichis one, and the denominator of which is ~~144 (ie. 1/144th of the cost permonth)~~****120 (i.e., 1/120th of the cost per month) with respect to replacement of the roof, and 84 (i.e., 1/84thof the cost per month) with respect to all other capital replacements.  Lessee shall pay Interest on the unamortizedbalance at a rate not to exceed eightpercent (8%) per annum, but may prepay its obligation at any time.

7.2           **Lessor’s Obligations**.  Subject to the provisions of Paragraphs ~~2.2(Condition)~~, 2.3 (Compliance), 4.2 (Common Area Operating

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Expenses), 6 (Use), 7.1(Lessee’s Obligations), 9 (Damage or Destruction)  ~~and~~14 (Condemnation) and 55.16 (Performance of Certain Work byLessor), Lessor, subjectto reimbursement pursuant to Paragraph 4.2, shall keep in good order, conditionand repair the foundations, exterior walls, structural condition of interiorbearing walls, exterior roof, fire sprinkler system, Common Area fire alarmand/or smoke detection systems, fire hydrants, parking lots, walkways,parkways, driveways, landscaping, fences, signs and utility systems serving theCommon Areas and all parts thereof, as well as providing the services for whichthere is a Common Area Operating Expense pursuant to Paragraph 4.2.  Lessor shall not be obligated to paint the ~~exterior~~or interior surfaces of exterior walls nor shall Lessor be obligated tomaintain, repair or replace windows, doors or plate glass of the Premises.  Lessee expressly waives the benefit of anystatute now or hereafter in effect to the extent it is inconsistent with theterms of this Lease.

7.3           **Utility Installations; Trade Fixtures; 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~~installed or constructed within the Premises.  The term “ **Trade Fixtures**” shall mean Lessee’smachinery and equipment that can be removed without doing material damage tothe Premises.  The term “ **Alterations**” shall mean any modification ofthe improvements, other than Utility Installations or Trade Fixtures, made to the Premises after the CommencementDate, whether by addition ordeletion.  “ **Lessee Owned Alterations and/or Utility Installations**” aredefined as Alterations and/or Utility Installations made by Lessee after the Commencement Date that are not yet owned by Lessor pursuant toParagraph 7.4(a).

(b)           **Consent**. Except as otherwiseexpressly provided in this Lease, Lessee shall not make any Alterations or Utility Installations to thePremises without Lessor’s prior written consent.  Lessee may, however, make non-structural Alterations and Utility Installations to the interior of thePremises (excluding the roof) andmay install its Trade Fixtures withoutsuch consent but upon notice to Lessor, as long as they are not visible fromthe outside, do not involve puncturing, relocating or removing the roof or any ~~existing~~ structural bearing walls, will not affect ~~the~~ any electrical, plumbing, and/orHVAC systems which are shared with other premisesin the Building, and/or life safetysystems, and the cumulative costthereof during this Lease as extended does not exceed a sum equal to ~~3~~**~~~~**~~month’s Base Rent~~ $200,000 in the aggregate or a sum equal to ~~one month’s Base Rent~~ $50,000 in any one year.  Notwithstandingthe foregoing, Lessee shall not make or permit any roof penetrations and/orinstall anything on the roof without the prior written approval of Lessor.  Lessor may, as a precondition to grantingsuch approval, require Lessee toutilize a contractor ~~chosen and/or~~ approved by Lessor,****suchapproval not to be unreasonably withheld or delayed.  Lessor may require the use of its contractorif proposed Alterations affect the structural aspects of the Building or thefailure to do so will void a warranty applicable to the Premises.  Any Alterations or Utility Installations thatLessee shall desire to make and which require the consent of the Lessor shallbe presented to Lessor in written form with reasonably detailedplans.  Consent shall be deemedconditioned upon Lessee’s:  (i) acquiringall applicable governmental permits, (ii) furnishing Lessor with copies of boththe permits and the plans and specifications prior to commencement of the work,and (iii) compliance with all conditions of said permits and other ApplicableRequirements in a prompt and expeditious manner.  Any Alterations or Utility Installationsshall be performed in a workmanlike manner with good and sufficientmaterials.  Lessee shall promptly uponcompletion furnish Lessor with as-built plans and specifications. For work whichcosts an amount in excess of ~~one month’s~~ six (6) months’ Base Rent,Lessor may condition its consent upon Lessee providing a lien and completionbond in an amount equal to 150% of the estimated cost of such Alteration orUtility Installation and/or upon Lessee’s posting an additional SecurityDeposit with Lessor, saidadditional Security Deposit (if any) to be returned to Lessee upon completion, in the manner required underthis Lease, of such work (including Lessor’s receipt of final unconditional lienreleases with respect thereto).

(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 any mechanic’sor materialman’s lien against the Premises or any interest therein.  Lessee shall give Lessor not less than 10days notice prior to the commencement of any work in, on or about the Premises,and Lessor shall have the right to post notices of non-responsibility.  If Lessee shall contest the validity of 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 shallrequire, Lessee shall furnish a surety bond in an amount equal to 150% of theamount of such contested lien, claim or demand, indemnifying Lessor againstliability for the same.  If Lessor electsto participate in any such action, Lessee shall pay Lessor’s attorneys’ feesand costs.

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 anytime, elect in writing to be the owner of all or any specified part of theLessee Owned Alterations and Utility Installations.  Unless otherwise instructed per paragraph7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, atthe expiration or termination of this Lease, become the property of Lessor and besurrendered by Lessee with the Premises.

(b)           **Removal**.  ~~By delivery to Lessee of written noticefrom Lessor not earlier than 90 and not later than 30 days prior to the end ofthe term of this Lease~~ Within 90days prior to the expiration of the Term, Lessee shall deliver a list of allAlterations and Utility Installations made to the Premises after theCommencement Date, if any.  Within 30days following said delivery, Lessor may require that any or all Lessee Owned Alterations orUtility Installations made afterthe Commencement Date be removedby the expiration or termination of this Lease. Provided Lessee timelydelivers Lessor the notice described in the first sentence of this Paragraph7.4(b), Lessor’s failure to give the written notice described in the secondsentence of this Paragraph 7.4(b) within such time shall constitute Lessor’selection that such Lessee Owned Alterations or Utility Installations not beremoved.  If Lessee has constructedAlterations or Utility Installations after the Commencement Date and fails todeliver to Lessor the notice described in the first sentence of this Paragraph7.4(b), Lessee shall be required to remove all Alterations and UtilityInstallations constructed after the Commencement Date and requested by Lessorwithin 30 days after the expiration or earlier termination of this Lease.  Notwithstanding the foregoing, Lessee shallbe obligated to remove all of its Trade Fixtures from the Premises.  Lessormay require the removal at any time of all or any part of any Lessee OwnedAlterations or Utility Installations made after the Commencement Date withoutthe required consent.

                                (c)           **Surrender;Restoration**.  Lessee shallsurrender the Premises by the Expiration Date or any earlier termination date,with all of the improvements, parts and surfaces thereof broom clean and freeof debris, and in ~~good operating order, condition and state of repair~~ the same operating order, condition and stateof repair as existed on the Commencement Date, ordinary wear and tear excepted.  “Ordinary wear and tear” shall not includeany damage or deterioration that would have been prevented by good maintenancepractice, except to the extentLessor has elected to maintain any service contracts pursuant to Paragraph7.1(b) above.  ~~Notwithstanding the foregoing, if thisLease is for 12 months or less, then Lessee shall surrender the Premises in thesame condition as delivered to Lessee on the Start Date with NO allowance forordinary wear and tear.~~  Lessee shallrepair any damage occasioned by the installation, maintenance or removal (whenever installed) of Trade Fixtures, Lessee owned Alterationsand/or Utility Installations, furnishings, and equipment as well as the removalof any storage tank installed by or for Lessee. Lessee shall also completely remove from the Premises any and all HazardousSubstances brought onto the Premises by or for Lessee or the Lessee

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Parties, ~~or any third party (except HazardousSubstances which were deposited via underground migration from areas outside ofthe Project)~~ even if such removal would require Lessee to perform or payfor work that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removedby Lessee. Any personal property of Lessee not removed on or before the ExpirationDate or any earlier termination date shall be deemed to have been abandoned byLessee and may be disposed of or retained by Lessor as Lessor may desire.  The failure by Lessee to timely vacate thePremises pursuant to this Paragraph 7.4(c) without the express written consentof Lessor shall constitute a holdover under the provisions of Paragraph 26below.

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 for policy periods commencing priorto, or extending beyond, the term of this Lease shall be prorated to coincidewith the corresponding Start Date or Expiration Date.

8.2           LiabilityInsurance.

(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 insurance shall be on an occurrencebasis providing single limit coverage in an amount not less than ~~$1,000,000~~$2,000,000 per occurrence with an annual aggregate of notless than  ~~$2,000,000~~ $5,000,000; provided, however, that Lessee may provide such coveragethrough a combination of primary and excess or “umbrella” coverage so long asthe same covers all damages and the form is approved by Lessor in its reasonablediscretion.  Lessor hereby approves ofthe liability insurance maintained by Lessee as of the Commencement Date. Lessee shall add Lessor as an additional insured by means of an endorsement atleast as broad as the Insurance Service Organization’s “AdditionalInsured-Managers or Lessors of Premises” and “Amendment of the Pollution Exclusion” Endorsements and coverage shall also be extended toinclude damage caused by heat, smoke or fumes from a hostile fire.  The policy shall not contain any intra-insuredexclusions as between insured persons or organizations, but shall includecoverage for liability assumed under this Lease as an “ **insured contract**” for the performance ofLessee’s indemnity obligations under this Lease.  The limits of said insurance shall not,however, limit the liability of Lessee nor relieve Lessee of any obligationhereunder.  Lessee shall provide anendorsement on its liability policy(ies) which provides that its insuranceshall be primary to and not contributory with any similar insurance carried byLessor, whose insurance shall 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 an additional 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 insuranceshall be equal to the full insurable replacement cost of the Premises, as thesame shall exist from time to time, or the amount required by any Lender, butin no event more than the commercially reasonable and available insurable valuethereof.  Lessee Owned Alterations andUtility Installations made afterthe Commencement Date,Trade Fixtures, and Lessee’s personal property shall be insured by Lessee underParagraph 8.4.  If the coverage isavailable and commercially appropriate, such policy or policies shall insureagainst all risks of direct physical loss or damage (except the perils of floodand/or earthquake unless required by a Lender), including coverage for debrisremoval and the enforcement of any Applicable Requirements requiring theupgrading, demolition, reconstruction or replacement of any portion of thePremises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provisionin lieu of any coinsurance clause, waiver of subrogation, and inflation guardprotection causing an increase in the annual property insurance coverage amountby a factor of not less than the adjusted U.S. Department of Labor ConsumerPrice Index for All Urban Consumers for the city nearest to where the Premisesare located.  If such insurance coveragehas a deductible clause, the deductible amount shall not exceed $10,000 per occurrence. Lessor may satisfy such coverage requirements with blanket policies, solong as the same otherwise provides the coverage to the Premises required underthis Lease.

(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”).  Said insurance shall contain an agreedvaluation provision in lieu of any coinsurance clause, and the amount ofcoverage shall be adjusted annually to reflect the projected Rent otherwisepayable by Lessee, for the next 12 month period.

(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 made after theCommencement Date unlessthe item in question has become the property of Lessor under the terms of thisLease.

8.4           **Lessee’s Property; Business Interruption Insurance ;** Workers’Compensation 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 replacement cost coverage with a deductibleof not to exceed $10,000 per occurrence.  The proceeds from any such insurance shall beused by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations andUtility Installations.  By way ofexample and not limitation, such policies shall provide protection against anyperil included within the classification “fire and extended coverage”, againstvandalism and malicious mischief, theft, and sprinkler leakage.  Lesseeshall provide Lessor with written evidence that such insurance 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 Adequate Coverage**.  Lessor makes no representation that thelimits or forms of coverage of insurance specified herein are adequate to coverLessee’s property, business operations or obligations under this Lease.

**(d)           Workers’ Compensation Insurance.** Lessee shall, at all times during the Term hereof, maintain in effectworkers’ compensation insurance as required by applicable law.

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-,  X~~VI~~, as set forth in the mostcurrent issue of “Best’s Insurance Guide”, or such other rating as may berequired by a Lender.  Notwithstanding the foregoing, Lessor hereby approvesof Lessee’s insurance carriers providing such coverage as of the CommencementDate.  Lessee shall not do or permit to be done anythingwhich invalidates the required insurance policies.  Lessee shall, prior to the Start Date,deliver to Lessor certified copies of policies of such insurance orcertificates evidencing the existence and amounts of the requiredinsurance.  No such policy shall becancelable or subject to modification except after 30 days prior written noticeto Lessor.  Lessee shall, at least 10days prior to the expiration of such policies, furnish Lessor with evidence of 

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renewalsor “insurance binders” evidencing renewal thereof, or Lessor may order suchinsurance and charge the cost thereof to Lessee, which amount shall be payableby Lessee to Lessor upon demand.  Suchpolicies shall be for a term of at least one year, or the length of theremaining term of this Lease, whichever is less.  If either Party shall fail to procure andmaintain the insurance required to be carried by it, the other Party may, butshall 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 ofsuch releases and waivers is not limited by the amount of insurance carried orrequired, or by any deductibles applicable hereto.  The Parties agree to have their respectiveproperty damage insurance carriers waive any right to subrogation that suchcompanies may have against Lessor or Lessee, as the case may be, so long as theinsurance is not invalidated thereby.

8.7           **Indemnity**. Except for Lessor’s gross negligence or willful misconduct, Lessee shallindemnify, protect, defend and hold harmless the Premises, Lessor and itsagents, Lessor’s master or ground lessor, partners and Lenders, from andagainst any and all claims, loss of rents and/or damages, liens, judgments,penalties, attorneys’ and consultants’ fees, expenses and/or liabilitiesarising out of, involving, or in connection with, the use and/or occupancy ofthe Premises by Lessee.  If any action orproceeding is brought against Lessor by reason of any of the foregoing matters,Lessee shall upon notice defend the same at Lessee’s expense by counselreasonably satisfactory to Lessor and Lessor shall cooperate with Lessee insuch defense.  Lessor need not have firstpaid any such claim in order to be defended or indemnified.

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

8.9           **Failure to Provide Insurance.**  ~~Lessee~~ Each Party****acknowledgesthat any failure on its part to obtain or maintain the insurance requiredherein will expose ~~Lessor~~ theother Party to risks and potentially cause ~~Lessor~~ it to incur costs not contemplated bythis Lease, ~~the extent of which will be extremely difficult toascertain.  Accordingly, for any month orportion thereof that Lessee does not maintain the required insurance and/ordoes not provide Lessor with the required binders or certificates evidencingthe existence of the required insurance, the Base Rent shall be automaticallyincreased, without any requirement for notice to Lessee, by an amount equal to10% of the then existing Base Rent or $100, whichever is greater.  The parties agree that such increase in BaseRent represents fair and reasonable compensation for the additional risk/coststhat Lessor will incur by reason of Lessee’s failure to maintain the requiredinsurance.  Such increase in Base Rentshall in no event constitute a waiver of Lessee’s Default or Breach withrespect to the failure to maintain such insurance, prevent the exercise of anyof the other rights and remedies granted hereunder, nor relieve Lessee of itsobligation to maintain the insurance specified in this Lease.~~

9.                                       **Damage or Destruction**.

9.1           Definitions.

(a)           **“PremisesPartial Damage”** shall mean damage or destruction to the improvementson the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which canreasonably be repaired in ~~3~~**9**monthsor less from the date of the damage or destruction~~,  and the cost thereof does not exceed a sumequal to 6 month’s Base Rent~~.  Lessorshall notify Lessee in writing within ~~30~~60 days from the date of the damage or destruction as to whetheror not the damage is Partial or Total.  Notwithstandingthe foregoing, Premises Partial Damage shall not include damage to windows,doors, and/or other similar items which Lessee has the responsibility to repairor replace pursuant to the provisions of Paragraph 7.1.

(b)           **“PremisesTotal 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 ~~3~~9 months or less from the date of the damage or destruction~~and/or thecost thereof exceeds a sum equal to 6 month’s Base Rent~~.  Lessor shall notify Lessee in writing within ~~30~~60 days from the date of the damage or destruction as to whether or not thedamage is Partial or Total.

(c)           **“Insured Loss”** shall mean damage ordestruction to improvements on the Premises, other than Lessee Owned Alterationsand Utility Installations constructedafter the Commencement Date andTrade Fixtures, which was caused by an event required to be covered by theinsurance described in Paragraph 8.3(a), irrespective of any deductible amountsor coverage limits involved.

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

(e)           **“Hazardous Substance Condition”** shall meanthe occurrence 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           **PartialDamage - Insured Loss**.  If aPremises Partial Damage that is an Insured Loss occurs, then Lessor shall, atLessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or LesseeOwned Alterations and Utility Installations) as soon as reasonably possible andthis Lease shall continue in full force and effect; provided, however, thatLessee shall, at Lessor’s election, make the repair of any damage ordestruction the total cost to repair of which is $10,000 or less, and, in suchevent, Lessor shall make any applicable insurance proceeds available to Lesseeon a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not inforce or the insurance proceeds are not sufficient to effect such repair, theInsuring Party shall, subject toParagraph 55.26, promptly contribute the shortage in proceeds as and whenrequired to complete said repairs.  Inthe event, however, such shortage was due to the fact that, by reason of the uniquenature of the improvements, full replacement cost insurance coverage was notcommercially reasonable and available, Lessor shall have no obligation to payfor the shortage in insurance proceeds or to fully restore the unique aspectsof the Premises unless Lessee provides Lessor with the funds to cover same, oradequate assurance thereof, within 10 days following receipt of written noticeof such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said10 day period, the party responsible for making the repairs shall complete themas soon as reasonably possible and this Lease shall remain in full force andeffect.  If such funds or assurance arenot received, Lessor may nevertheless elect by written notice to Lessee within10 days thereafter to:  (i) make suchrestoration and repair as is commercially reasonable with Lessor paying anyshortage in proceeds, in which case this Lease shall remain in full force andeffect, or (ii) have this Lease terminate 30 days thereafter.  Lessee shall not be entitled to reimbursementof any funds contributed by Lessee to repair any such damage or destruction.   Premises Partial Damage due to flood orearthquake, the cost of which exceeds$100,000, shall be subject to Paragraph 9.3, notwithstanding that theremay be some insurance coverage, but the net proceeds of any such

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insurance shall be madeavailable for the repairs if made by either Party.

9.3           **Partial Damage - Uninsured Loss**.  If a Premises Partial Damage that is not anInsured Loss occurs, unless caused by a negligent or willful act of Lessee (inwhich event Lessee shall make the repairs at Lessee’s expense), Lessor mayeither:  (i) repair such damage as soonas reasonably possible at Lessor’s expense, in which event this Lease shallcontinue in full force and effect, or (ii) terminate this Lease by givingwritten notice to Lessee within 30 days after receipt by Lessor of knowledge ofthe occurrence of such damage.  Suchtermination shall be effective ~~60~~120days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall havethe 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 said funds or satisfactory assurancethereof within 30 days after making such commitment.  In such event this Lease shall continue infull force and effect, and Lessor shall proceed to make such repairs as soon asreasonably possible after 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 thedamage or destruction was caused by the ~~gross~~negligence or willfulmisconduct of Lessee, Lessor shall have the right to recover Lessor’s damagesfrom Lessee, except as provided in Paragraph 8.6.

9.5           **Damage Near End of Term**.  If at any time during the last ~~6~~12 months of this Lease there isdamage for which the cost to repair exceeds ~~one month’s~~three months’ Base Rent, whether ornot an Insured Loss, Lessor may terminate this Lease effective ~~60~~90 days following the date ofoccurrence of such damage by giving a written termination notice to Lesseewithin 30 days after the date of occurrence of such damage.  Notwithstanding the foregoing, if Lessee atthat time 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 Lesseeduly exercises such option during such period and provides Lessor with funds(or adequate assurance thereof) to cover any shortage in insurance proceeds,Lessor shall, at Lessor’s commercially reasonable expense, repair such damageas soon as reasonably possible and this Lease shall continue in full force andeffect.  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’s Remedies .**

(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 ofLessee hereunder shall be performed by Lessee, and Lessor shall have noliability for any such damage, destruction, remediation, repair or restorationexcept 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~~60 days after suchobligation shall accrue, Lessee may, at any time prior to the commencement ofsuch repair or restoration, give written notice to Lessor and to any Lenders ofwhich Lessee has actual notice, of Lessee’s election to terminate this Lease ona date not less than 60 days following the giving of such notice.  If Lessee gives such notice and such repairor restoration is not commenced within 30 days thereafter, this Lease shallterminate as of the date specified in said notice.  If the repair or restoration is commencedwithin such 30 days, this Lease shall continue 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’s Security Deposit as has not been, or isnot then required to be, used by Lessor.

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 inconsistentherewith.

10.           ** Real Property Taxes**.

10.1         **Definition**. As used herein, the term “ **RealProperty Taxes**” shall include any form of assessment; real estate,general, special, ordinary or extraordinary, or rental levy or tax (other thaninheritance, personal income or estate taxes); improvement bond; and/or licensefee imposed upon or levied against any legal or equitable interest of Lessor inthe Project, Lessor’s right to other income therefrom, and/or Lessor’s businessof leasing, by any authority having the direct or indirect power to tax andwhere the funds are generated with reference to the Project address and wherethe proceeds so generated are to be applied by the city, county or other localtaxing authority of a jurisdiction within which the Project is located.  The term “Real Property Taxes” shall alsoinclude any tax, fee, levy, assessment or charge, or any increase therein: (i)imposed by reason of events occurring during the term of this Lease,  including but not limited to,  a change in the ownership of the Project,(ii) a change in the improvements thereon, and/or (iii) levied or assessed onmachinery or equipment provided by Lessor to Lessee pursuant to thisLease.  In calculating Real PropertyTaxes for any calendar year, the Real Property Taxes for any real estate taxyear shall be included in the calculation of Real Property Taxes for suchcalendar year based upon the number of days which such calendar year and taxyear 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 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 otherlessees.  Notwithstanding Paragraph 10.2hereof, Lessee shall, however, pay to Lessor at the time Common Area OperatingExpenses are payable under Paragraph 4.2, the entirety of any increase in RealProperty Taxes if assessed solely by reason of Alterations, Trade Fixtures orUtility Installations placed upon the Premises by Lessee or at Lessee’s request~~or by reason of any alterations or improvements to the Premises made byLessor subsequent to the execution of this Lease by the Parties .~~

10.4         **Joint Assessment**.  If the Building is not separately assessed, RealProperty Taxes allocated to the Building shall be an equitable proportion ofthe 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 determination thereof, in good faith, shall beconclusive.

10.5         **Personal Property Taxes**.  Lessee shall pay prior to delinquency all taxesassessed 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 its Lessee Owned Alterations andUtility Installations, Trade Fixtures, furnishings, equipment and all otherpersonal property to be assessed and billed separately from the real propertyof 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

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applicable to Lessee’sproperty.

11.                   **Utilities and Services**.  Lessee shall pay for all water, gas, heat,light, power, telephone, trash disposal and other utilities and servicessupplied to the Premises, together with any taxes thereon.  Notwithstanding the provisions of Paragraph4.2, if at any time in Lessor’s sole judgment, Lessor determines that Lessee isusing a disproportionate amount of water, electricity or other commonly meteredutilities, or that Lessee is generating such a large volume of trash as torequire an increase in the size of the trash receptacle and/or an increase inthe number of times per month that it is emptied, then Lessor may increaseLessee’s Base Rent by an amount equal to such increased costs.  There shall be no abatement of Rent andLessor shall not be liable in any respect whatsoever for the inadequacy,stoppage, interruption or discontinuance of any utility or service due to riot,strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor’sreasonable control or in cooperation with governmental request or directions.

12.           ** Assignment and Subletting**.

12.1         **Lessor’s Consent Required.**

(a)           Lessee shall notvoluntarily or by operation of law assign, transfer, mortgage or encumber(collectively, **“assign or assignment”**)or sublet all or any part of Lessee’s interest in this Lease or in the Premiseswithout Lessor’s prior written consent.

(b)           Unless Lessee is acorporation and its stock is publicly traded on a national stock exchange, achange in the control of Lessee shall constitute an assignment requiringconsent.  The transfer, on a cumulativebasis, of 25% or more of the voting control of Lessee shall constitute a changein control for this purpose.

(c)           The involvement of Lessee or itsassets in any transaction, or series of transactions (by way of merger, sale,acquisition, financing, transfer, leveraged buy-out or otherwise), whether ornot a formal assignment or hypothecation of this Lease or Lessee’s assetsoccurs, which results or will result in a reduction of the Net Worth of Lesseeby an amount greater than 25% of such Net Worth as it was represented at thetime of the execution of this Lease or at the time of the most recentassignment to which Lessor has consented, or as it exists immediately prior tosaid transaction or transactions constituting such reduction, whichever was oris greater, shall be considered an assignment of this Lease to which Lessor maywithhold its consent.  **“Net Worth of Lessee”** shall mean the networth of Lessee (excluding any guarantors) established under generally acceptedaccounting principles.

(d)           An assignment orsubletting without consent shall, ~~at Lessor’s option,~~ be a Defaultcurable after notice perParagraph 13.1(d)~~Paragraph13.1(c), or a noncurable Breach without the necessity of any notice and graceperiod.  If Lessor elects to treat suchunapproved assignment or subletting as a noncurable Breach, Lessor may either:(i) terminate this Lease, or (ii) upon 30 days written notice, increase themonthly Base Rent to 110% of the Base Rent then in effect.  Further, in the event of such Breach andrental adjustment, (i) the purchase price of any option to purchase thePremises held by Lessee shall be subject to similar adjustment to 110% of theprice previously in effect, and (ii) all fixed and non-fixed rental adjustmentsscheduled during the remainder of the Lease term shall be increased to 110% ofthe scheduled adjusted rent .~~

(e)           Lessee’s remedy forany breach of Paragraph 12.1 by Lessor shall be limited to compensatory damagesand/or injunctiverelief and recovery of attorneys’ fees as providedin this Lease .

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

(g)           Notwithstanding theforegoing, allowing a ~~diminimus~~de minimis portionof the Premises, ie. 20 square feet or less, to be used by a third party vendorin connection with the installation of a vending machine or payphone shall notconstitute a subletting.

(h)**          **Subjectto Paragraph 12.1(c), Lessee shall have the right to assign this Lease orsublease some or all of the Premises without the need to obtain Lessor’sconsent (but upon prior notice to Lessor), if such assignment or sublease is toany person or entity who or which controls, is controlled by or is under commoncontrol with Lessee, or which acquires all of Lessee’s assets and operations atthe Premises.  Each of the foregoingassignees and sublessees described in this Paragraph 12.1(h) shall be referredto as an “Affiliate”.

12.2         **Terms and Conditions Applicable to Assignment and Subletting .**

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

(b)           Lessor may acceptRent or performance of Lessee’s obligations from any person other than Lesseepending approval or disapproval of an assignment.  Neither a delay in the approval ordisapproval of such assignment nor the acceptance of Rent or performance shallconstitute a waiver or estoppel of Lessor’s right to exercise its remedies forLessee’s Default or Breach.

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

(d)           In the event of anyDefault or Breach by Lessee, Lessor may proceed directly against Lessee, ~~anyGuarantors~~ or anyone else responsible for the performance of Lessee’s obligationsunder this Lease, including any assignee or sublessee, without first exhaustingLessor’s remedies against any other person or entity responsible therefore toLessor, or any security held by Lessor.

(e)           Each request forconsent to an assignment or subletting shall be in writing, accompanied byinformation relevant to Lessor’s determination as to the financial andoperational responsibility and appropriateness of the proposed assignee orsublessee, including but not limited to the intended use and/or requiredmodification of the Premises, if any, ~~together with a fee of $500 asconsideration for Lessor’s considering and processing said request.~~  Lessee agrees to provide Lessor with suchother or additional information and/or documentation as may be reasonablyrequested. (See also Paragraph 36)

                                (f)            Anyassignee of, or sublessee under, this Lease shall, by reason of accepting suchassignment, entering into such sublease, or entering into possession of thePremises or any portion thereof, be deemed to have assumed and agreed toconform and comply with each and every term, covenant, condition and obligationherein to be observed or performed by Lessee during the term of said assignmentor sublease, other than such obligations as are contrary to or inconsistentwith provisions of an assignment or sublease to which Lessor has specificallyconsented to in writing where suchconsent is required hereunder.

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

12.3         **Additional Terms and Conditions Applicable toSubletting**.  The followingterms and conditions shall apply to any subletting by Lessee of all or any partof the Premises and shall be deemed included in all subleases under this Leasewhether or not expressly incorporated therein:

(a)           Lessee hereby assignsand transfers to Lessor all of Lessee’s interest in all Rent payable on anysublease, and Lessor may collect such Rent and apply same toward Lessee’sobligations under this Lease; provided, however, that until a Breach shalloccur in the performance of Lessee’s obligations, Lessee may collect said Rent.In the event that the amount collected by Lessor exceeds Lessee’s thenoutstanding obligations any such excess shall be refunded to Lessee.  Lessor shall not, by reason of the foregoingor any assignment of such sublease, nor by reason of the collection of Rent, bedeemed liable to the sublessee for any failure of Lessee to perform and complywith any of Lessee’s obligations to such sublessee.  Lessee hereby irrevocably authorizes anddirects any such sublessee, upon receipt of a written notice from Lessorstating that a Breach exists in the performance of Lessee’s obligations underthis Lease, to pay to Lessor all Rent due and to become due under the sublease.  Sublessee shall rely upon any such noticefrom Lessor and shall pay all Rents to Lessor without any obligation or rightto inquire as to whether such

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Breach exists,notwithstanding any claim from Lessee to the contrary.

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

~~(c)           Any matter requiringthe consent of the sublessor under a sublease shall also require the consent ofLessor.~~

(d)           No sublessee shallfurther assign or sublet all or any part of the Premises without Lessor’s priorwritten consent.

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

13.           **Default; Breach; Remedies**.

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

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

(b)           The failure of Lesseeto make any payment of Rent or any Security Deposit required to be made byLessee hereunder, whether to Lessor or to a third party, when due, to providereasonable evidence of insurance or surety bond, or to fulfill any obligationunder this Lease which endangers or threatens life or property, where suchfailure continues for a period of ~~3 business~~5 calendar days following written notice to Lessee.

(c)           The commission of waste,act or acts constituting public or private nuisance, and/or an illegal activityon the Premises by Lessee, where such actions continue for a period of ~~3~~5 business days following written notice to Lessee.

(d)           The failure by Lesseeto provide (i) reasonable written evidence of compliance with ApplicableRequirements, (ii) the service contracts, (iii) the rescission of anunauthorized assignment or subletting, (iv) an Estoppel Certificate, (v) arequested subordination, ~~(vi) evidence concerning any guaranty and/orGuarantor,~~ (vii) any document requested under Paragraph 41, (viii) materialdata safety sheets (MSDS), or (ix) any other documentation or information whichLessor may reasonably require of Lessee under the terms of this Lease, whereany such failure continues for a period of ~~10~~15 business days following written notice to Lessee.

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

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

(g)           The discovery thatany financial statement of Lessee or of any Guarantor given to Lessor wasmaterially false.

(h)           So long as Lessor owns and Lessee leasesthose certain premises located at 21411 Prairie Street, Chatsworth, California(the “Other Premises”), the occurrence of a Breach under that certain StandardIndustrial/Commercial Single-Tenant Lease, of even date herewith, by andbetween Lessor and Lessee, with respect to the Other Premises. ~~If the performance~~~~of Lessee’s obligations under this Lease isguaranteed:  (i) the death of aGuarantor, (ii) the termination of a Guarantor’s liability with respect to thisLease other than in accordance with the terms of such guaranty, (iii) aGuarantor’s becoming insolvent or the subject of a bankruptcy filing, (iv) aGuarantor’s refusal to honor the guaranty, or (v) a Guarantor’s breach of itsguaranty obligation on an anticipatory basis, and Lessee’s failure, within 60days following written notice of any such event, to provide written alternativeassurance or security, which, when coupled with the then existing resources ofLessee, equals or exceeds the combined financial resources of Lessee and theGuarantors that existed at the time of execution of this Lease.~~

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

                                (a)           Terminate Lessee’s right topossession of the Premises by any lawful means, in which case this Lease shallterminate and Lessee shall immediately surrender possession to Lessor.  In such event Lessor shall be entitled torecover from Lessee:  (i) the unpaid Rentwhich had been earned at the time of termination; (ii) the worth at the time ofaward of the amount by which the unpaid rent which would have been earned aftertermination until the time of award exceeds the amount of such rental loss thatthe Lessee proves could have been reasonably avoided; (iii) the worth at thetime of award of the amount by which the unpaid rent for the balance of theterm after the time of award exceeds the amount of such rental loss that theLessee proves could be reasonably avoided; and (iv) any other amount necessaryto compensate Lessor for all the detriment proximately caused by the Lessee’sfailure to perform its obligations under this Lease or which in the ordinarycourse of things would be likely to result therefrom, including but not limitedto the cost of recovering possession of the Premises, expenses of reletting,including necessary renovation and alteration of the Premises, reasonableattorneys’ fees,  and that portion of anyleasing commission paid by Lessor in connection with this Lease applicable tothe unexpired term of thisLease; provided, however, thatin no event shall Lessor be entitled to double recovery from Lessee for damageincurred as a result of such Breach.  The worth at the time of award of the amountreferred to in provision (iii) of the immediately preceding sentence shall becomputed by discounting such amount at the discount rate of the Federal ReserveBank of the District within which the Premises are located at the time of awardplus one percent.  Efforts by Lessor tomitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’sright to recover damages under Paragraph 12. If termination of this Lease is obtained through the provisional remedyof unlawful 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 notice and grace period required underParagraph 13.1 was not previously given, a notice to pay rent or quit, or toperform or quit given to Lessee under the unlawful detainer statute shall alsoconstitute the notice required by Paragraph 13.1.  In such case, the applicable grace periodrequired by Paragraph 13.1 and the unlawful detainer statute shall runconcurrently, and the failure of Lessee to cure the Default within the greaterof the

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twosuch grace periods shall constitute both an unlawful detainer and a Breach ofthis Lease entitling Lessor to the remedies provided for in this Lease and/orby said statute.

(b)           Continue the Leaseand Lessee’s right to possession and recover the Rent as it becomes due, inwhich event Lessee may sublet or assign, subject only to reasonablelimitations.  Acts of maintenance,efforts to relet, and/or the appointment of a receiver to protect the Lessor’sinterests, shall not constitute a termination of the Lessee’s right topossession.

(c)           Pursue any otherremedy now or hereafter available under the laws or judicial decisions of thestate wherein the Premises are located. The expiration or termination of this Lease and/or the termination ofLessee’s right to possession shall not relieve Lessee from liability under anyindemnity provisions of this Lease as to matters occurring or accruing duringthe term hereof 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 shallautomatically be deemed deleted from this Lease and of no further force or effect,and any rent, other charge, bonus, inducement or consideration theretoforeabated, given or paid by Lessor under such an Inducement Provision shall beimmediately due and payable by Lessee to Lessor, notwithstanding any subsequentcure of said Breach by Lessee.  Theacceptance by Lessor of rent or the cure of the Breach which initiated theoperation of this paragraph shall not be deemed a waiver by Lessor of theprovisions of this paragraph unless specifically so stated in writing by Lessorat the time of such 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.  Such costs include, but are not limited to,processing and accounting charges, and late charges which may be imposed uponLessor by any Lender.  Accordingly, ifany Rent shall not be received by Lessor within ~~5~~10 days after such amount shall be due, then, without anyrequirement for notice to Lessee, Lessee shall immediately pay to Lessor aone-time late charge equal to ~~10%~~5%of each such overdue amount or $100, whichever is greater.  The parties hereby agree that such latecharge represents a fair and reasonable estimate of the costs Lessor will incurby reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute awaiver of Lessee’s Default or Breach with respect to such overdue amount, norprevent the exercise of any of the other rights and remedies grantedhereunder.  In the event that a latecharge is payable hereunder, whether or not collected, for 3 consecutiveinstallments of Base Rent, then notwithstanding any provision of this Lease tothe contrary, Base Rent shall, at Lessor’s option, become due and payable quarterlyin advance.

13.5         **Interest**. Any monetary payment due Lessor hereunder, other than late charges, notreceived by Lessor, when due as to scheduled payments (such as Base Rent) orwithin 30 days following the date on which it was due for non-scheduled payment,shall bear interest from the date when due, as to scheduled payments, or the31st day after it was due as to non-scheduled payments. The interest ( **“Interest”**) charged shall be computed atthe rate of 10%  per annum but shall notexceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge providedfor 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.  Forpurposes of this Paragraph, a reasonable time shall in no event be less more than 30 days after receipt by Lessor, and any Lender whose name andaddress shall have been furnished Lessee in writing for such purpose, ofwritten notice specifying wherein such obligation of Lessor has not beenperformed; provided, however, that if the nature of Lessor’s obligation is suchthat more than 30 days are reasonably required for its performance, then Lessorshall not be in breach if performance is commenced within such 30 day periodand thereafter diligently pursued to completion.

(b)           **Performance by Lessee on Behalf of Lessor**.  In the event that neither Lessor nor Lendercures said breach within 30 days after receipt of said notice, or if havingcommenced said cure they do not diligently pursue it to completion within a reasonable time, then after Lessee gives Lessora second written notice and Lessor fails to commence the cure within 3 businessdays after said notice, 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 costof said cure and supply said documentation to Lessor.

14.           **Condemnation**.  If the Premises or any portion thereof aretaken under the power of eminent domain or sold under the threat of the exerciseof 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 theUnit, or more than 25% of Lessee’s Reserved Parking Spaces, is permanently taken by Condemnation (or taken for more than 90 days in atemporary taking by Condemnation) and such taking materially and adverselyaffects Lessee’s use or occupancy of the Premises, Lessee may, at Lessee’s option, to be exercised in writing within 10 days after Lessor shall have givenLessee written notice of such taking (or in the absence of such notice, within10 days after the condemning authority shall have taken possession) terminatethis Lease as of the date the condemning authority takes such possession.  If Lessee does not terminate this Lease inaccordance with the foregoing, this Lease shall remain in full force and effectas to the portion of the Premises remaining, except that the Base Rent shall bereduced in proportion to the reduction in utility of the Premises caused bysuch Condemnation, subject toParagraph 55.26 below.  Condemnation awards and/or payments shall bethe property of Lessor, whether such award shall be made as compensation fordiminution in value of the leasehold, the value of the part taken, or forseverance damages; provided, however, that Lessee shall be entitled to ~~any~~pursue a separate award for compensation for Lessee’s relocation expenses,loss of business goodwill and/or Trade Fixtures, and the unamortized costof any Alterations or Utility Installations made after the Commencement Datefor which Lessor will require removal pursuant to Paragraph 7.4(c), without regard to whether or not this Lease is terminated pursuant tothe provisions of this Paragraph.  All such Alterations and Utility Installations made to the Premises by Lessee,for purposes of Condemnation only, shall be considered the property of theLessee and Lessee shall be entitled to any and all compensation which ispayable therefor.  ~~In the event thatthis Lease is not terminated by reason of the Condemnation, Lessor shall repairany 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) ifLessee exercises any Option,  ~~(b) ifLessee acquires from Lessor any rights to the Premises or other premises ownedby Lessor and located within the Project, (c) if Lessee remains in possessionof the Premises, with the consent of Lessor, after the expiration of thisLease, or (d) if Base Rent is increased, whether by agreement or operation ofan escalation clause herein,~~ then, Lessor shall pay Brokers a fee****pursuant to theseparate written agreement described in Paragraph 1.9(b). ~~in accordance with the schedule of the Brokersin effect at the time of the execution of this Lease .~~

15.2         **Assumption of Obligations**.  Any buyer or transferee of Lessor’s interestin this Lease shall be deemed to have assumed Lessor’s obligationhereunder.  Brokers shall be third partybeneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31.  ~~If Lessor fails to pay to Brokers anyamounts due as and for brokerage fees pertaining to this Lease when due, thensuch amounts shall accrue Interest.  Inaddition, if Lessor fails to pay any amounts to Lessee’s Broker when due,Lessee’s Broker may send written notice to Lessor and Lessee of such failureand if Lessor fails to pay such~~

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~~amounts within 10 days aftersaid notice, Lessee shall pay said monies to its Broker and offset such amountsagainst Rent.  In addition, Lessee’sBroker shall be deemed to be a third party beneficiary of any commissionagreement entered into by and/or between Lessor and Lessor’s Broker for thelimited purpose of collecting any brokerage fee owed.~~

15.3         **Representations and Indemnities of BrokerRelationships**.  Lessee andLessor each represent and warrant to the other that it has had no dealings withany person, firm, broker or finder (other than the Brokers, if any) inconnection with this Lease, and that no one other than said named Brokers isentitled to any commission or finder’s fee in connection herewith.  Lessee and Lessor do each hereby agree toindemnify, protect, defend and hold the other harmless from and againstliability for compensation or charges which may be claimed by any such unnamedbroker, finder or other similar party by reason of any dealings or actions ofthe indemnifying Party, including any costs, expenses, attorneys’ feesreasonably incurred with respect thereto.

16.           **Estoppel Certificates**.

(a)           Subject to Paragraph 55.22, each****~~Each~~Party (as **“Responding Party”**) shall within 10 daysafter written notice from the other Party (the **“Requesting Party”**) execute, acknowledge and deliver to theRequesting Party a statement in writing in form similar to the then mostcurrent **“Estoppel Certificate”**form published by the AIR Commercial Real Estate Association, plus suchadditional information, confirmation and/or statements as may be reasonablyrequested by the Requesting Party.

(b)           Ifthe Responding Party is requiredand shall fail to executeor deliver the Estoppel Certificate within such 10 day period, the RequestingParty may execute an Estoppel Certificate stating that: (i) the Lease is infull force and effect without modification except as may be represented by theRequesting Party, (ii) there are no uncured defaults in the Requesting Party’sperformance, and (iii) if Lessor is the Requesting Party, not more than onemonth’s rent has been paid in advance. Prospective purchasers and encumbrancersmay rely upon the Requesting Party’s Estoppel Certificate, and the RespondingParty shall be estopped from denying the truth of the facts contained in saidCertificate.

(c)           IfLessor desires to finance, refinance, or sell the Premises, or any partthereof, or if Lessor is reasonablyconcerned about Lessee’s financial condition,****Lessee ~~andall Guarantors~~shall deliver to any potential lender or purchaserdesignated by Lessor such publiclyavailable financial statements asmay be reasonably required by such lender or purchaser, including but notlimited to Lessee’s publiclyavailable financial statementsfor the past 3 years.  All such financialstatements shall be received by Lessor and such lender or purchaser inconfidence and shall be used onlyfor the purposes herein set forth.  So long as the stock of Lessee ispublicly traded on a national stock exchange, Lessee’s delivery of itspublicly-available financial statements shall satisfy its obligations underthis Paragraph 16(c).

17.           **Definitionof Lessor**.  The term **“Lessor”** as used herein shall mean theowner or owners at the time in question of the fee title to the Premises, or,if this is a sublease, of the Lessee’s interest in the prior lease.  In the event of a transfer of Lessor’s titleor 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 inParagraph 15, upon such transfer or assignment and delivery of the SecurityDeposit, as aforesaid, the prior Lessor shall be relieved of all liability withrespect to the obligations and/or covenants under this Lease thereafter to beperformed 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~~Notwithstanding anything to the contrary in this Lease, the****obligations of Lessor under this Lease shall not constitute personal obligations of Lessor,or its partners, members, directors, officers or shareholders, and Lessee shalllook to the Premises and the proceeds of the insurance required to bemaintained by Lessor hereunder,and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to thisLease, and shall not seek recourse against Lessor’s investment advisors,****partners, members, directors, officers or shareholders, or any of theirpersonal assets 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 OtherAgreements; Broker Disclaimer**. This Lease contains all agreements between the Parties with respect to ~~anymatter mentioned herein~~Lessee’slease of the Premises, andno other prior or contemporaneous agreement or understanding shall beeffective.  Lessor and Lessee eachrepresents and warrants to the Brokers that it has made, and is relying solelyupon, its own investigation as to the nature, quality, character and financialresponsibility of the other Party to this Lease and as to the use, nature,quality and character of the Premises. Brokers have no responsibility or liability****with respect thereto or with respect to anydefault or breach hereof by either Party.  The Purchase Contract shallgovern the terms of Lessor’spurchase of the Project from Lessee’s Affiliate, and shall remain in effect asand to the extent provided therein.  ~~Theliability (including court costs and attorneys’ fees), of any Broker withrespect to negotiation, execution, delivery or performance by either Lessor orLessee under this Lease or any amendment or modification hereto shall belimited to an amount up to the fee received by such Broker pursuant to thisLease; provided, however, that the foregoing limitation on each Broker’sliability shall not be applicable to any gross negligence or willful misconductof such Broker.~~

23.           **Notices**.

23.1 **NoticeRequirements**.  All noticesrequired or permitted by this Lease or applicable law shall be in writing andmay be delivered in person (by hand or by courier) or may be sent by regular,certified or registered mail or U.S. Postal Service Express Mail, with postageprepaid, or by facsimile transmission, and shall be deemed sufficiently givenif served in a manner specified 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 writtennotice to the other specify a different address for notice, ~~except that uponLessee’s taking possession of the Premises, the Premises shall constituteLessee’s address for notice.~~  A copy ofall notices to Lessor shall be concurrently transmitted to such party orparties at such addresses as Lessor may from time to time hereafter designatein writing.

                23.2 **Date of Notice**.  Any notice sent by registered or certifiedmail, return receipt requested, shall be deemed given on the date of deliveryshown on the receipt card, or if no delivery date is shown, the postmarkthereon.  If sent by regular mail thenotice shall be deemed given 72 hours after the same is addressed as requiredherein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courierthat guarantee next day delivery shall be deemed given 24 hours after deliveryof the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemeddelivered upon telephone confirmation of receipt (confirmation report from faxmachine is sufficient), provided a copy is also delivered via delivery ormail.  If notice is received on aSaturday, Sunday or legal holiday, it shall be deemed received on the nextbusiness day.

24.          **Waivers**.  No waiver by ~~Lessor~~either Party****of the Default or Breach of, or failure to perform**,** any term, covenant or condition hereof byLessee, shall be deemed a waiver of any other term, covenant or conditionhereof, or of any subsequent Default or Breach ~~by Lessee~~ of, or failure to perform, the same or of any other term, covenant orcondition hereof.  Lessor’s consent to,or approval of, any act shall not be deemed to render unnecessary the obtainingof Lessor’s consent to, or approval of, any subsequent or similar act byLessee, or be construed as the basis of an estoppel to enforce the provision orprovisions of this Lease requiring such consent.  The acceptance of Rent by Lessor shall not bea waiver of any Default or

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Breach by Lessee.  ~~Any~~Except as provided in Paragraph 42 below, any****paymentby Lessee may be accepted by Lessor on account of moneys or damages due Lessor,notwithstanding any qualifying statements or conditions made by Lessee inconnection therewith, which such statements and/or conditions shall be of noforce or effect whatsoever unless specifically agreed to in writing by Lessorat or before the time of deposit of such payment.

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

~~(a)           When entering into adiscussion with a real estate agent regarding a real estate transaction, aLessor or Lessee should from the outset understand what type of agencyrelationship or representation it has with the agent or agents in thetransaction.  Lessor and Lesseeacknowledge being advised by the Brokers in this transaction, 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 or subagent has thefollowing affirmative obligations:  Tothe Lessor:  A fiduciary duty of utmostcare, integrity, honesty, and loyalty in dealings with the Lessor.  To the Lessee and the Lessor :  (a) Diligent exercise of reasonable skillsand care in performance of the agent’s duties. (b) A duty of honest and fair dealing and good faith.  (c) A duty to disclose all facts known to theagent materially affecting the value or desirability of the property that arenot known to, or within the diligent attention and observation of, theParties.  An agent is not obligated toreveal to either Party any confidential information obtained from the otherParty which does not involve the affirmative duties set forth above.~~

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

~~(iii)          *Agent Representing Both Lessor and Lessee*.  A real estate agent, either acting directlyor through one or more associate licenses, can legally be the agent of both theLessor and the Lessee in a transaction, but only with the knowledge and consentof both the Lessor and the Lessee. In a dual agency situation, the agent hasthe following affirmative obligations to both the Lessor and the Lessee: (a) Afiduciary duty of utmost care, integrity, honesty and loyalty in the dealingswith either Lessor or the Lessee.  (b)Other duties to the Lessor and the Lessee as stated above in subparagraphs (i)or (ii). In representing both Lessor and Lessee, the agent may not without 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.  Lessor and Lessee should carefully read allagreements to assure that they adequately express their understanding of thetransaction.  A real estate agent is aperson qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.~~

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

~~(c)           Buyer and Seller agree to identify toBrokers as “Confidential” any communication or information given Brokers thatis considered by such Party to be 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 holdsover, then the Base Rent shall be increased to ~~150%~~125% of the Base Rent applicable immediately preceding the expiration or termination for the first sixty (60) days of such holding over, and thereafter 150%of the Base Rent applicable immediatelypreceding the expiration or termination.  Nothing contained herein shallbe construed as consent by Lessor 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 beobserved or performed by Lessee are both covenants and conditions.~~  In construing this Lease, all headings andtitles are for the convenience of the Parties only and shall not be considereda part of this Lease.  Whenever requiredby the context, the singular shall include the plural and vice versa.  This Lease shall not be construed as ifprepared by one of the Parties, but rather according to its fair meaning as awhole, as if both Parties had prepared it.

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

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

30.1         **Subordination**.  ~~This~~ Subject to Paragraph 30.3 below, 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,  **“SecurityDevice”**), now or hereafter placed upon the Premises, to any and alladvances made on the security thereof, and to all renewals, modifications, andextensions thereof.  Lessee agrees thatthe holders of any such Security Devices (in this Lease together referred to as**“Lender”**) shall have no liabilityor obligation to perform any of the obligations of Lessor under thisLease.  Any Lender may elect to have thisLease and/or any Option granted hereby superior to the lien of its Security Deviceby giving written notice thereof to Lessee, whereupon this Lease and suchOptions shall be deemed prior to such Security Device, notwithstanding therelative dates of the documentation or recordation thereof.

                30.2         **Attornment**. In the event that Lessor transfers title to the Premises, or thePremises are acquired by another upon the foreclosure or termination of aSecurity Device to which this Lease is subordinated (i) Lessee shall, subjectto the non-disturbance provisions of Paragraph 30.3, attorn to such new owner,and upon request, enter into a new lease, containing all of the terms andprovisions of this Lease, with such new owner for the remainder of the termhereof, or, at the election of the new owner, this Lease will automaticallybecome a new lease between Lessee and such new owner, and (ii) Lessor shallthereafter be relieved of any further obligations hereunder and such new ownershall assume all of Lessor’s obligations, except that such new owner shallnot:  (a) be liable for any act oromission of any prior lessor or with respect to events occurring prior toacquisition of ownership; (b) be subject to any offsets or defenses whichLessee might have against any prior lessor, (c) be bound by prepayment of morethan one month’s rent, or (d) be liable for the return of any security depositpaid to any prior lessor unless thesecurity deposit has been received by such new owner.

30.3         **Non-Disturbance**.  With respect to Security Devices entered intoby Lessor after the execution of this Lease, Lessee’s subordination of thisLease shall be subject to receiving a commercially reasonable non-disturbanceagreement (a **“Non-Disturbance Agreement”**)from the Lender which Non-Disturbance Agreement provides that Lessee’spossession of the Premises, and this Lease, including any options to extend theterm hereof, will not be disturbed so long as Lessee is not in Breach hereofand attorns to the record owner of the Premises.  Further, within 60 days after the executionof this Lease, Lessor shall use its commercially reasonable efforts to obtain aNon-Disturbance Agreement from the holder of any

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pre-existingSecurity Device which is secured by the Premises.  In the event that Lessor is unable to providethe Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’soption, directly contact Lender and attempt to negotiate for the execution anddelivery of a Non-Disturbance Agreement.

30.4         **Self-Executing**.  The agreements contained in this Paragraph 30shall 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 ~~orBroker~~ brings an action or proceeding involving the Premises whetherfounded in tort, contract or equity, or to declare rights hereunder, thePrevailing Party (as hereafter defined) in any such proceeding, action, orappeal thereon, shall be entitled to reasonable attorneys’ fees.  Such fees may be awarded in the same suit orrecovered in a separate suit, whether or not such action or proceeding ispursued to decision or judgment.  Theterm,  **“PrevailingParty”** shall include, without limitation, a Party ~~or Broker~~who ~~substantially~~ obtains ~~or defeats the relief sought, as the casemay be, whether by compromise, settlement,~~a final non-appealable****judgment, or the abandonment by the otherParty ~~or Broker~~ of its claim or defense. The attorneys’ fees award shall not be computed in accordance with anycourt fee schedule, but shall be such as to fully reimburse all attorneys’ feesreasonably incurred.  In addition, Lessorshall be entitled to attorneys’ fees, costs and expenses incurred in thepreparation and service of validnotices of Default andconsultations in connection therewith, whether or not a legal action issubsequently commenced in connection with such Default or resulting Breach($200 is a reasonable minimum per occurrence for such services andconsultation).

32.                    **Lessor’sAccess; Showing Premises; Repairs**. Subject to compliancewith Lessee’s security requirements, Lessor and Lessor’s agentsshall have the right to enter the Premises at any time, in the case of anemergency, and otherwise at reasonable times after reasonable prior notice (which may be verbal) for the purpose of showing the same toprospective purchasers, lenders, or, during the last nine months of the Term, to tenants, and making such alterations,repairs, improvements or additions to the Premises as Lessor may ~~deemnecessary or desirable~~ bepermitted or required to make,****and the erecting, using and maintaining ofutilities, services, pipes and conduits through the Premises and/or otherpremises as long as there is no material adverse effect on Lessee’s use of or access to the Premises or anymaterial portion thereof.  All such activities authorized under this Paragraph 32 shall be without abatement of rent orliability 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 beobligated to exercise any standard of reasonableness in determining whether topermit 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 “ForSublease” signs which may be placed only on the Premises, Lessee shall notplace any sign upon the Project without Lessor’s prior written consent. Allsigns must comply with all Applicable Requirements.  Lessor hereby approves of Lessee’s signs existing as of the Commencement Date.

35.           **Termination;Merger**.  Unless specificallystated otherwise in writing by Lessor, the voluntary or other surrender of thisLease by Lessee, the mutual termination or cancellation hereof, or atermination hereof by Lessor for Breach by Lessee, shall automaticallyterminate any sublease or lesser estate in the Premises; provided, however,that Lessor may elect to continue any one or all existing subtenancies.  Lessor’s failure within 10 days following anysuch event to elect to the contrary by written notice to the holder of any suchlesser interest, shall constitute Lessor’s election to have such eventconstitute the termination of such interest.

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

~~37.           **Guarantor**.~~

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

~~37.2         **Default**. It shall constitute a Default of the Lessee if any Guarantor fails orrefuses, upon request to provide:  (a)evidence of the execution of the guaranty, including the authority of the partysigning on Guarantor’s behalf to obligate Guarantor, and in the case of acorporate Guarantor, a certified copy of a resolution of its board of directorsauthorizing the making of such guaranty, (b) current financial statements, (c)an Estoppel Certificate, or (d) written confirmation that the guaranty is stillin 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”** shall mean:  (a) the right to extend the term of or renewthis Lease or to extend or renew any lease that Lessee has on other property ofLessor; (b) the right of first refusal or first offer to lease either thePremises or other property of Lessor; (c) the right to purchase or the right offirst refusal to purchase the Premises or other property of Lessor.

39.2         **Options ~~Personal To Original Lessee~~**May Not Be Separated.  Any Option granted to Lessee in this Lease ~~ispersonal to the original Lessee, and~~ cannot be assigned or exercised byanyone other than said ~~original~~ Lessee or an Affiliate and only while the original Lessee or an Affiliate is in full possessionof the Premises ~~and, if requested by Lessor, with Lessee certifying thatLessee has no intention of thereafter assigning or 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 toexercise an Option:  (i) during theperiod commencing with the giving of any notice of Default and continuing untilsaid Default is cured,  ~~(ii) duringthe period of time any Rent is unpaid (without regard to whether notice thereofis given Lessee),~~ (iii) during the time Lessee is in Breach of thisLease,  or (iv) in the event that Lesseehas been given 3 or more valid noticesof separate Default, whether or not the Defaults are cured, during the 12 monthperiod immediately preceding the exercise of the Option.

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

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(c)           An Option shall terminate and be ofno further force or effect, notwithstanding Lessee’s due and timely exercise ofthe Option, if, after such exercise and prior to the commencement of theextended term or completion of the purchase, (i) Lessee ~~fails to pay Rent for a period of 30 days after such Rentbecomes due~~commits aDefault under Paragraph 13.1(f) above (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 allresponsibility and liability for the protection of the Premises, Lessee,its agents**,** employees, contractors and invitees and their property from the actsof third parties.

41.          **Reservations**.  Lessorreserves the right: (i) to grant, without the consent or joinder of Lessee,such easements, rights and dedications that Lessor deems necessary, (ii) tocause the recordation of parcel maps and restrictions, and (iii) to createand/or install new utility raceways, so long as such easements, rights,dedications, maps, restrictions, and utility raceways do not unreasonably and/or materially interfere with the use of the Premises byLessee.  Lessee agrees to sign anydocuments reasonably requested by Lessor to effectuate such rights. Lessee hereby approves of alleasements affecting the Project as of the Commencement Date.

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 it shall be adjudged that there was no legalobligation on the part of said Party to pay such sum or any part thereof, saidParty shall be entitled to recover such sum or so much thereof as it was notlegally 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; MultipleParties; Execution.**

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

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

(c)            This Lease may beexecuted by the Parties in counterparts, each of which shall be deemed anoriginal and all of which together shall constitute one and the sameinstrument.

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.  ThisLease is not intended to be binding until executed and delivered by all Partieshereto.

46.          **Amendments**.  This Leasemay be modified only in writing, signed by the Parties in interest at the timeof the modification.  As long as they donot materially change Lessee’s obligations hereunder, Lessee agrees to makesuch 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**.  **THE PARTIESHEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION ORPROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT**.~~

48.           **Mediation and Arbitrationof Disputes**.  An Addendumrequiring the Mediation and/or the Arbitration of all disputes between theParties and/or Brokers arising out of this Lease o is x is not attached to this Lease.

49.           **Americans withDisabilities Act.**  Sincecompliance with the Americans with Disabilities Act (ADA) is dependent uponLessee’s specific use of the Premises, Lessor makes no warranty orrepresentation as to whether or not the Premises comply with ADA or any similarlegislation.  In the event that Lessee’suse of the Premises requires modifications or additions to the Premises inorder to be in ADA compliance, Lessee agrees to make any such necessarymodifications and/or additions at Lessee’s expense.

**LEASECONTINUES ON NEXT PAGE**

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ADDENDUM TO LEASE

This Addendum tothe Standard Industrial/Commercial [Multi Tenant - Lessee Lease – Net](the “**Addendum**”) is entered into by andbetween VRS Chatsworth LLC, a Virginia limited liability company (“Lessor”),and Natrol, Inc., a Delaware corporation (“Lessee”).  To the extent that the provisions ofthis Addendum are inconsistent with the terms and conditions of the lease towhich it is attached (the “**Lease**”), theprovisions of this Addendum shall control. Capitalized terms in this Addendum shall have the same meaning ascapitalized terms in the Lease.

**50.****                               AdditionalMatters Relating to Commencement and Expiration Dates.**

50.1                           TheCommencement Date shall be that date upon which Lessor acquires the Premisespursuant to the closing of that certain Purchase Agreement dated March 29,2007, by and between Realty Advisors Associates, LLC, as purchaser, and NatrolReal Estate, Inc. and Natrol Real Estate II, Inc., collectively as seller (the “**Purchase Contract**”).

50.2                           TheExpiration Date shall be the date which is the day prior to the fifth (5th) anniversary of theCommencement Date.

50.3                           TheBase Rent and Lessor’s Reimbursable Expenses for the first month of theOriginal Term shall be prorated, based upon the closing date of thetransactions pursuant to the Purchase Contract. Upon such closing, the Base Rent, Lessor’s Reimbursable Expenses throughthe end of the calendar month in which such closing occurs, and the SecurityDeposit, each shall be credited to Lessor through the escrow under the PurchaseContract, and shall be deemed, for purposes of this Lease, to have been paid byLessee to Lessor thereupon.  Lessee’sfirst payment of Base Rent thereafter shall be due upon the first day of thecalendar month following such closing under the Purchase Contract.

50.4                           Uponthe request of either Party, the other Party shall acknowledge in writing theamount of Base Rent and Lessor’s Reimbursable Expenses paid on behalf of Lesseeat the closing under the Purchase Contract and enter into a writtenconfirmation of the Commencement Date.

**51.****                               ManagementFee.**  For so long as Lessor retains aseparate property manager for the Premises, Lessor shall be entitled tocollect, and Lessee shall pay to Lessor, a property management fee equal to twopercent (2%) of the Base Rent.

**52.****                               BaseRent Increases.**  On each anniversaryof the Commencement Date, the monthly Base Rent shall increase by three percent(3%) from the rate applicable in the prior year (i.e., Lease Year 2,$50,238.00; Lease Year 3, $51,745.00; Lease Year 4, $53,298.00; and Lease Year5, $54,897.00).

**53.****                               AdditionalFirst Year Rent Provisions.**  Lesseehereby confirms the “commencement date” of that certain lease, dated                 ,by and between Lessee, as landlord, and Currie, as tenant, occurred February 1,2007.  Accordingly, in addition to allother Rent payable under this Lease, for the period commencing on theCommencement Date of this Lease through January 31, 2008, Lessee shall payadditional rent (the **“Currie Make-up Payment”**)in the amount of $5,644 per month.  TheCurrie Make-up Payment applicable to the period from the closing under thePurchase Contract through the end of the calendar month in which said closingoccurs shall be prorated in the manner described in Paragraph 50.3 above.

**54.****                               Optionsto Extend.** Subject to Paragraph 39 of the Lease, Lessor hereby grants toLessee the options to extend of this Lease (individually, an **“Option”,** and collectively, the **“Options”,**andrespectively, the “**First Option**”and “**Second Option**”) for two (2) consecutiveperiods of five (5) years each (the first such period being referred to hereinas the **“First****OptionPeriod”,**and the second such period being referred to herein as the **“Second Option Period”**), commencing upon the expiration ofthe Original Term or the First Option Period, as the case may be, upon each andall of the following terms and conditions:

(a)                                  Lesseegives to Lessor, and Lessor actually receives, on a date which is prior to thedate that the First Option Period or Second Option Period, as applicable, wouldcommence (if such Option were to be exercised) by at least twelve (12) and notless than nine (9) months, a binding written notice of the exercise of theapplicable Option, time being of the essence. If said notification of the exercise of said Option is not so given andreceived, the Option shall automatically expire;

(b)                                 Allof the terms and conditions of this Lease shall apply, except wherespecifically modified by this Paragraph 54. Lessee shall only be entitled to exercise the Second Option if Lesseehas timely and properly exercised the First Option;

(c)                                  Themonthly Base Rent for each month of the First Option Period and Second OptionPeriod shall be the Prevailing Market Rent for the Premises as of 120 daysprior to the commencement of the First Option Period and the Second OptionPeriod, as the case may be.

(d)                                 Theterm **“Prevailing Market Rent”** as used inthis Paragraph 54 is defined to mean the fair market rent of the Premisesaccording to comparable properties in the general area.  In determining fair market monthly rent itshall be assumed that:

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(i)                                     ThePremises are in good condition and repair and are required to be maintained byLessee, as modified by the AIR Form lease.

(ii)                                  ThePremises would be leased for the period of the Option being exercised by atenant with the credit standing of Lessee, as the same exists at the time ofexercise.

(iii)                               ThePremises would be leased on the same terms of this Lease insofar as theobligations for repair, maintenance, insurance and real estate taxes existed asof the expiration of the Original Term or First Option Period, as applicable,of this Lease.

(iv)                              Considerationshall be given on a renewal (as opposed to a new lease) basis to the following,if any:  to allowances for market-basedreal estate brokerage commissions, free rent and other inducements then beingoffered in the market for comparable premises.

(v)                                 ThePremises will be used for the use permitted under Paragraph 1.7.

(e)                                  Usingthe above assumptions, the Prevailing Market Rent shall be determined by Lessorand submitted to Lessee (“**Lessor’s Submission**”)within the twenty (20) day period following Lessee’s exercise of the FirstOption or Second Option, as applicable. If Lessee disagrees with the Prevailing Market Rent in Lessor’s Submission,Lessee shall, within twenty (20) days after receipt of Lessor’s Submission,submit to Lessor in writing Lessee’s judgment as to the Prevailing Market Rent(“**Lessee’s Judgment**”).  In the event that Lessor fails to timelygenerate Lessor’s Submission, then Lessee may commence such negotiations byproviding the initial notice, in which event Lessor shall have twenty (20) days(“**Lessor’s Review Period**”) after receiptof Lessee’s notice of the new rental within which to accept such rental.  In the event Lessor fails to accept inwriting such rental proposed by Lessee, then such proposal shall be deemedrejected, and Lessor and Lessee shall attempt in good faith to agree upon suchPrevailing Market Rate, using their best good faith efforts.  If Lessor and Lessee fail to reach agreementwithin fifteen (15) days following Lessor’s Review Period (which shall be, insuch event, the “**Outside Agreement Date**” in lieu ofthe above definition of such date), then the Prevailing Market Rent shall bedetermined in accordance with Subsections (i) through (v) below:

(i)                                     Withinseven (7) days following the Outside Agreement Date, Lesser and Lessee shalleach select one (1) independent broker with at least fifteen (15) years ofexperience in office/manufacturing/industrial space in the West San FernandoValley submarket in Los Angeles, California (a “**QualifiedBroker**”), to determine the Prevailing Market Rate.  If one party shall fail to select a QualifiedBroker within the seven (7) day period, then the Qualified Broker chosen by theother party shall be the sole arbitrator. If the two appointed independent Qualified Brokers are unable to agreeon Prevailing Market Rate within a second period of seven (7) days followingtheir appointment, the two independent Qualified Brokers shall within seven (7)days from the date that they were required to agree on the Prevailing MarketRate but were unable to do so, select a third independent Qualified Broker (the“**Third Qualified Broker**”) and the ThirdQualified Broker shall be the sole arbitrator of the Prevailing MarketRate.  Neither Lessor nor Lessee, northere respective Qualified Brokers, shall have consulted with such ThirdQualified Broker as to their respective opinion as to the Prevailing MarketRent prior to the appointment.  SuchThird Qualified Broker may hold such hearings and require such additionalsubmittals from the Parties as the Third Qualified Broker, in his or her solediscretion, determines is necessary.  Inaddition, Lessor or Lessee may submit to the Third Qualified Broker, with acopy to the other party, within five (5) business days after the appointment ofthe Third Qualified Broker, any market data and additional information suchParty deems relevant to the determination of the Prevailing Market Rent (“**Data**”), and the other Party may submit a reply in writingwithin five (5) business days after receipt of such Data.

(ii)                                  TheThird Qualified Broker shall, within thirty (30) days of his or herappointment, determine the Prevailing Market Rate based on the factors describedherein.

(iii)                               The decision of theThird Qualified Broker shall be final and binding upon Lessor and Lessee.

(iv)                              Ifthe initial Qualified Brokers selected by Lessor and Lessee fail to agree onthe Third Qualified Broker, then the appointment of the Third Qualified Brokershall be made by the Presiding Judge of the Los Angeles County Superior Court,or if he or she refuses to act, by any judge having jurisdiction over thePremises.

(v)                                 Thecost of the Third Qualified Broker shall be paid in equal shares by Lessor andLessee.

(f)                                    Iffor any reason the Prevailing Market Rent has not been determined by thecommencement of the applicable Option Period, Lessee shall continue paying rentat the rate previously in effect or as specified in Lessee’s Judgment, whicheveris greater, and the Parties shall promptly make the appropriate adjustments assoon as the Prevailing Market Rent is determined.

**55.****                               Miscellaneous.**

55.1.                        **No Representations or Warranties**.  Notwithstanding anything in the Lease to thecontrary, Lessee accepts the Premises in its “as is” “where is” condition as ofthe Commencement Date and acknowledges that Lessor has made no representationor warranty as to the suitability of the 

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Premises for theconduct of Lessee’s business, and Lessee waives any implied warranty that thePremises is suitable for Lessee’s intended purposes.  Notwithstanding anything in the Lease to thecontrary, Lessor makes no representation or warranty that Lessee’s use ispermitted by applicable zoning laws or other laws and regulations.  In no event shall any portion of the Premisesbe used for retail sales.  Lessee shallnot initiate, submit an application for, or otherwise request, any land use approvalsor entitlements with respect to the Project, including, without limitation, anyvariance, conditional use permit or rezoning, without first obtaining Lessor’sprior written consent, which may be given or withheld in Lessor’s solediscretion.  Lessee shall not (a) installany antenna, dish or other device on the roof of the Building or outside of thePremises, (b) make any penetrations into the roof of the Building, (c) placeloads upon floors, walls or ceilings in excess of the load such items weredesigned to carry, (d) place or store, nor permit any other person or entity toplace or store, any property, equipment, materials, supplies or other itemsoutside of the Building in which the Premises is located, except if approved byLessor or (e) change the exterior of the Premises.  Lessee agrees that Lessor shall not be liableto Lessee for its failure to furnish water, gas, electricity, telephone, sewer,refuse and trash collection or any other utility services or building serviceswhen such failure is occasioned, in whole or in part, by repairs, replacementsor improvements, by any strike, lockout or other labor trouble, by inability tosecure electricity, gas, water, telephone service or other utility at theProject, by any accident, casualty or event arising from any cause whatsoever,including the negligence of Lessor, its employees, agents and contractors, byact, negligence or default of Lessee or any other person or entity, or by anyother cause, and such failures shall never be deemed to constitute an evictionor disturbance of Lessee’s use and possession of the Premises or relieve Lesseefrom the obligation of paying Rent or performing any of its obligations underthis Lease.  Furthermore, Lessor shallnot be liable under any circumstances for loss of property or for injury to, orinterference with, Lessee’s business, including, without limitation, loss ofprofits, however occurring, through or in connection with or incidental to afailure to furnish any such services or utilities.  Lessor may comply with voluntary controls orguidelines promulgated by any governmental entity relating to the use orconservation of energy, water, gas, light or electricity or the reduction ofautomobile or other emissions without creating any liability of Lessor toLessee under this Lease.  Notwithstandingthe foregoing, Lessor shall be liable to the extent of Landlord’s grossnegligence or willful misconduct.

55.2.                        **Intentionally deleted**.

55.3.                        **Tax Protest**.  Fromtime to time Lessor may challenge the assessed value of the Project asdetermined by applicable taxing authorities and/or Lessor may attempt to causethe Real Property Taxes to be reduced on other grounds.  If Lessor is successful in causing the RealProperty Taxes to be reduced or in obtaining a refund, rebate, credit orsimilar benefit (hereinafter collectively referred to as a “**reduction**”), Lessor shall credit the reduction(s) to RealProperty Taxes for the calendar year(s) to which a reduction applies and torecalculate the Real Property Taxes owed by Lessee for years in which thereduction applies based on the reduced Real Property Taxes.  All costs incurred by Lessor in obtaining theReal Property Tax reductions shall be considered an Operating Expense, andLessor shall determine, in its reasonable discretion, to which years anyreductions will be applied.  In addition,all accounting and related costs incurred by Lessor in making the adjustmentsshall be an Operating Expense.  Lessorshall have the right to compensate a person or entity it employs to obtain areduction in Real Property Taxes by giving such person or entity a percentageof any reduction or credit obtained, and in this event the reduction or creditobtained by Lessor shall be deemed to be the reduction or credit given by thetaxing authority less the compensation paid to such person or entity.  Lessee waives any right to contest orchallenge taxes; provided, however, that Lessor shall reasonably consider anyrequest from Lessee that Lessor challenge the assessed value of theProject.  Notwithstanding the foregoing,if, on final appeal, the costs of pursuing the Real Property Tax protestexceeds the savings for one (1) year, Lessor shall be responsible for all costsrelated to the challenge of Real Property Taxes and the same shall notconstitute an Operating Expense.

55.4.                        **Intentionally deleted.**

55.5.                        **Lessor’s Rights**.  Lessorshall have the right: (a) to change the name and address of the Project orBuilding upon not less than ninety (90) days prior written notice and (b) topermit any Lessee the exclusive right to conduct any business as long as suchexclusive right does not conflict with any rights expressly given herein.

55.6.***                       *Changes**. * *Lessor shall have the right,in Lessor’s sole discretion, from time to time, to make changes to the size,shape, location, number and extent of the improvements comprising the Project(hereinafter referred to as “**Changes**”)including, but not limited to, the interior and exterior of buildings, andareas surrounding the Building, or perform work in the Building, which work maycreate noise, dust or leave debris in the Building.  Lessee hereby agrees that such Changes andLessor’s actions in connection with such Changes shall in no way constitute aconstructive eviction of Lessee or entitle Lessee to any abatement ofrent.  Lessor shall have noresponsibility or for any reason be liable to Lessee for any direct or indirectinjury to or interference with Lessee’s business arising from the Changes, norshall Lessee be entitled to any compensation or damages from Lessor for anyinconvenience or annoyance occasioned by such Changes or Lessor’s actions inconnection with such Changes.

55.7.                        **View**.  The obstruction of Lessee’s view, air orlight by any structure erected in the vicinity of the Project, whether byLessor or third parties, shall in no way affect this Lease or impose anyliability upon Lessor.

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55.8                           **Security**.* *Lessee hereby acknowledges thatLessor shall have no obligation whatsoever to provide guard service or othersecurity measures for the benefit of the Premises or the Project, and Lessorshall have no liability to Lessee due to its failure to provide suchservices.  Lessee assumes allresponsibility for the protection of Lessee, its agents, employees, contractorsand invitees and the property of Lessee and of Lessee’s agents, employees,contractors and invitees from acts of third parties.  Nothing herein contained shall preventLessor, at Lessor’s sole option, from implementing security measures for theProject or any part thereof, in which event Lessee shall participate in suchsecurity measures and the cost thereof shall be included within the definitionof Operating Expenses, and Lessor shall have no liability to Lessee and itsagents, employees, contractors and invitees arising out of Lessor’s negligentprovision of security measures.  Lessorshall have the right, but not the obligation, to require all persons enteringor leaving the Project to identify themselves to a security guard and toreasonably establish that such person should be permitted access to theProject.

55.9.                        **Transfers**.  Lesseeshall fully comply at its sole expense with all present or future programsimplemented or required by any governmental or quasi-governmental entity tomanage parking, transportation, air pollution or traffic in and around theProject or the metropolitan area in which the Project is located.

55.10.                  **No Recording**.  Neitherthis Lease, nor any memorandum, affidavit or other writing with respectthereto, shall be recorded by Lessee or by anyone acting through, under or onbehalf of Lessee.

55.11.**                  WAIVER OF JURY TRIAL**.  TOTHE EXTENT PERMITTED BY APPLICABLE LAW, LESSOR AND LESSEE HEREBY WAIVE THEIRRESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIMOR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHERLESSOR AGAINST LESSEE OR LESSEE AGAINST LESSOR ON ANY MATTER WHATSOEVER ARISINGOUT OF, OR IN ANY WAY CONNECTED WITH, THIS LEASE, THE RELATIONSHIP OF LESSORAND LESSEE, LESSEE’S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OF INJURYOR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR REGULATION,EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN EFFECT.

55.12.                  **Hazardous Substances Disclosure Statement**.  Prior to executing this Lease, Lessee hasdelivered to Lessor Lessee’s executed initial Hazardous Substances DisclosureCertificate (the “**Initial HazMat Certificate”**).  Lessee covenants, represents and warrants toLessor that the information contained in the Initial HazMat Certificate is trueand correct in all material respects and accurately describes in all materialrespects the use(s) of Hazardous Substances which will be made and/or used onthe Premises by Lessee.  Notwithstandinganything contained in the Lease to the contrary (except for Permitted HazardousSubstances), Lessee shall not have the right to use any Hazardous Substances atthe Premises that are not described on the Initial HazMat Certificate or toincrease the quantity of any Hazardous Material used at the Premises beyond thequantity described on the Initial HazMat Certificate, without Lessor’sapproval, which may be withheld in Lessor’s sole discretion.  Upon the prior written request of Lessor,Lessee shall deliver to Lessor a new Hazardous Substances DisclosureCertificate (each, a **“Supplemental HazMatCertificate”**) executed by Lessee and describing Lessee’sthen-present use of Hazardous Substances on the Premises.  The Initial HazMat Certificate andSupplemental HazMat Certificates required hereunder shall be in the formattached hereto as **Exhibit 3**.

55.13.                  **Assignment and Subletting.**

(a)                                  **General Information**. In addition to any other information requested by Lessor pursuant toParagraph 12 of the Lease, Lessee’s written request for Lessor’s consent shallinclude all of the following information: (a) financial statements for theproposed assignee or subtenant for the past three (3) years (or if the proposedassignee or subtenant has not been in existence for three (3) years, for asmany years as the proposed assignee or subtenant has been in existence), (b) areasonably detailed description of the business the proposed assignee orsubtenant intends to operate at the Premises, (c) the proposed effective dateof the assignment or sublease, (d) a copy of the proposed sublease orassignment agreement which includes all of the terms and conditions of theproposed sublease or assignment, (e) a detailed description of any Alterationsthe proposed assignee or subtenant desires to make to the Premises, and (f) aHazardous Substances Disclosure Statement substantially in the form of **Exhibit 3** attached hereto.

(b)                                 **Transfer Premium**. Lessor shall be entitled to receive from Lessee (as and when received byLessee) as an item of additional rent one-half of the Transfer Premiumreceived by Lessee from the subtenant or assignee in excess of the amountspayable by Lessee to Lessor under the Lease.  The Transfer Premium shall be reduced bythe reasonable brokerage commissions, cost of Alterations and legal feesactually paid by Lessee in order to assign the Lease or to sublet a portion ofthe Premises.  “Transfer Premium” shallmean all Base Rent, additional rent or other consideration of any typewhatsoever payable by the assignee or subtenant in excess of the Base Rent andadditional rent payable by Lessee under this Lease.  If less than all of the Premises istransferred, the Base Rent and the additional rent shall be determined on aper-leasable-square-foot basis.  “TransferPremium” shall also include, but not be limited to, key money and bonus moneypaid by the assignee or subtenant to Lessee in connection with such Transfer,and any payment in excess of fair-market value for services rendered by Lesseeto the assignee or subtenant or for assets, fixtures, inventory, equipment orfurniture transferred by Lessee to the assignee or subtenant in connection withsuch Transfer.

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(c)                                  **Recapture**.  Except withregard to transfers to Affiliates, Lessor shall have the option, by givingwritten notice to Lessee within fifteen (15) days after receipt of any requestby Lessee to assign or sublease this Lease, to terminate this Lease as to saidportion Lessee desires to transfer effective as of the date that is thirty (30)days after the date of Lessor’s written notice.

55.14.                  **Lessor****Insurance**.  Lessor shall maintain the insurance describedin Section 8.3 of the Lease. Notwithstanding anything in the Lease to the contrary, there shall be nolimitation on the amount of liability insurance that may be purchased by Lessoror the types of insurance that may be purchased by Lessor, and all of Lessor’sinsurance costs may be included in Operating Expenses.  Subject to the preceding sentence, Lessorshall have the right to determine in its sole discretion the types and amountsof insurance it obtains with respect to the Project.  Lessor, at Lessor’s sole election, may insurethe Project for losses or damage resulting from the perils of terrorism, floodand/or earthquake, and the cost of such insurance shall be included as anOperating Expense.  Lessee shall not havethe right to purchase insurance on behalf of Lessor; provided, however, in theevent that after the initial Lessor transfers the Project to a new owner thatis not affiliated with the initial Lessor, Lessee objects to Lessor’s estimateof the cost of the earthquake coverage, Lessee shall be permitted to recommendto Lessor a less expensive company meeting the requirements of Section 8.5 ofthe Lease (“**Lessee’s Recommended Insurance Company**”).  In the event said coverage is less than therate offered by Lessor’s insurance company, then Lessor shall be required topurchase insurance from Lessee’s Recommended Insurance Company.

55.15.                  **Intentionally Deleted.**

55.16.                  **Performance of Certain Work by Lessor**.  Notwithstanding Lessee’s obligations underParagraph 7.1 of the Lease, Lessor shall employ contractors to perform allrepairs, maintenance and replacement of the sprinkler systems, fire alarmsystems and fire detection systems that service the Premises..  The items described in the previous sentencethat Lessor will cause to be repaired, maintained and replaced are hereinafterreferred to as the **“Lessor Maintenance Items”**.  Lessor shall determine in its sole discretionthe scope and timing of the performance of such Lessor Maintenance Items, andLessee shall not perform such Lessor Maintenance Items.  Lessee shall immediately give Lessor writtennotice of any repair or maintenance required by Lessor pursuant to thissection, after which Lessor shall have a reasonable time in which to completesuch repair or maintenance.  Lessor shallinclude the cost of Lessor Maintenance Items as Lessor’s ReimbursableExpenses.  The cost of replacing LessorMaintenance Items (as opposed to repairing Lessor Maintenance Items) shall beamortized as provided in Paragraph 7.1(d) of the Lease.  Lessor shall be permitted to require Lesseeto maintain Lessor Maintenance Items upon thirty (30) days advance writtennotice to Lessee, in which case Lessee shall be liable for all costs associatedtherewith, subject to Section 7.1(d) of the Lease.

55.17.                  **Intentionally Deleted.**

55.18.                  **Certain Repairs**.  Inaddition to Lessee’s other obligations under the Lease, Lessee shall pay atLessee’s sole cost and expense for the cost of repairing all damage to thePremises resulting from the acts of vandalism, malicious mischief, burglary andother acts of Lessee, its employees, invitees, contractors and other thirdparties.  Such damages shall include, butare not limited to, damages to exterior walls, roofs, vents and overheaddoors.  In addition, if Lessee dirties orsoils the exterior of the Premises, Lessee shall pay to Lessor on demand thecost of cleaning the exterior of the Premises.

55.19.                  **Intentionally deleted.**

55.20.                  **Intentionally deleted.**

55.21.                  **Lessor Default**. Notwithstanding anything in the Lease to the contrary, this Lease andthe obligations of each Party hereunder (other than Lessee’s obligation to payRent or other monetary obligations which can be fulfilled with the payment ofmoney such as insurance premiums), shall not be affected or impaired becausethe other Party is unable to fulfill any of its obligations hereunder or isdelayed in doing so, if such inability or delay is caused by reason of fire,earthquake, weather delays or other acts of God, strikes, boycotts, terrorism,war, riot, insurrection, embargoes, shortages of equipment, labor or materials,delays in issuance of governmental permits or approvals, or any other causebeyond the reasonable control of such Party, and the time for such Party’sperformance shall be extended for the period of any such delay.  Any claim, demand, right or defense by Lesseethat arises out of this Lease or the negotiations which preceded this Leaseshall be barred unless Lessee commences an action thereon, or interposes adefense by reason thereof, within twelve (12) months after the date of theinaction, omission, event or action that gave rise to such claim, demand, rightor defense.  Lessee hereby waives itsright to recover consequential damages (including, but not limited to, lostprofits) or punitive damages arising out of a Lessor default.

55.22.                  **Estoppel Certificates**. Lessor shall have no obligation to provide an Estoppel Certificate toLessee other than in response to Lessee’s request for same in connection with(a) the sale by Lessee of its business at the Premises and/or (b) the requestof Lessee’s lender or prospective lender.

55.23.                  **Expelling Certain Persons**. Lessor shall have the right to exclude or expel from the Premises orProject any person who, in Lessor’s sole judgment, is intoxicated or under theinfluence of drugs, or who is otherwise behaving in an inappropriate manner.

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55.24.                  **Signs and Alarm Systems**. Lessor shall have the right to approve in Lessor’s sole and absolutediscretion all signs installed after the Commencement Date and (to the extentthey tie into the Premises’ fire sprinklers and/or fire alarm systems) alarmsystems prior to their installation, and all signs and alarm systems shall beinstalled at Lessee’s sole cost and expense. Lessee shall remove all signs and alarm systems upon the termination ofthe Lease, and Lessee shall repair any damage to the Premises and Building causedby such removal, at Lessee’s sole cost and expense.

55.25.                  **Rubbish Removal**. Lessee shall place all rubbish, refuse and other trash (collectively, “**Refuse**”) in the Project’s trash receptacles.  No Refuse shall be left in the Common Areasor outside the Premises.  If Lesseeleaves Refuse in the Common Areas or outside the Premises, Lessor shall havethe right to immediately remove the Refuse, and Lessee shall upon Lessor’sdemand reimburse Lessor for the cost of such removal.  Lessee shall pay at Lessee’s sole expense forthe cost of removal of Refuse created, produced or resulting from Lessee’sactivities where the volume of Refuse exceeds two cubic yards per week.

55.26                     **Lessor’s Rights**.  Notwithstanding anything in the Leaseto the contrary, (a) if there is Premises Partial Damage and Lessor is requiredto pay $250,000 or more of the available insurance proceeds to Lessor’s Lender,then Lessor may terminate this Lease by giving written notice to Lessee of itselection to terminate within 120 days after the damage and not less than 60days prior to the date of termination, and (b) if there is Premises PartialDamage and Lessor receives proceeds from its insurer which are insufficient tocomplete the required restoration by $250,000 or more, then Lessor mayterminate this Lease by giving written notice of its election to terminatewithin 120 days after the damage and not less than 60 days prior to the date oftermination.  If Lessor elects to terminate in accordance with clause (b)of the preceding sentence, Lessee may, within thirty (30) days after Lessor’snotice of termination is given, deliver to Lessor any shortage in insuranceproceeds (or adequate assurance thereof), in which event this Lease shall notterminate, and Lessor shall proceed to make the required repairs.

55.27.                  **Lessor’s Reimbursable Expenses/Operating Expenses**.  Notwithstanding anything in the Lease to thecontrary, in addition to Operating Expenses, Lessee shall pay Lessor’sReimbursable Expenses.  For the purposesof this Lease, the term “Lessor’s Reimbursable Expenses” shall mean anyexpenses incurred by Lessor for the sprinkler system, fire detection system andfire alarm system, payments made by Lessor under any easement, license,operating agreement, declaration, restrictive covenant or other agreementrelating to the sharing of costs among property owners, the cost of allbusiness licenses, permits or similar fees relating to the operation,ownership, repair or maintenance of the Premises (other than the cost oflicenses, permits or similar fees relating to the operation of Lessor asopposed to the Premises), and the cost of any other item the cost of which isstated in the Lease to be a Lessor’s Reimbursable Expense.  Notwithstanding anything in the Lease to thecontrary, the following items shall be treated as Operating Expenses and notcapital improvements:  (i) the cost ofpainting all or part of the Project and (ii) the cost of resurfacing andrestriping roadways and parking areas. References to facilities, services, utilities or other items in thisParagraph 55.27 shall not impose an obligation on Lessor to have saidfacilities or to provide said services unless such facilities and servicesalready exist at the Premises.  Lessorwill, from time to time, estimate what Lessor’s Reimbursable Expenses will beand the same shall be payable by Lessee monthly during each calendar year ofthe Lease Term, on the same day as the Base Rent is due hereunder.  In the event that Lessee pays Lessor’sestimate of Lessor’s Reimbursable Expenses, Lessor shall use its best effortsto deliver to Lessee within 120 days after the expiration of each calendar yeara reasonably detailed statement (the **“Statement”**)showing Lessor’s Reimbursable Expenses incurred during such year.  Lessor’s failure to deliver the Statement toLessee within said period shall not constitute Lessor’s waiver of its right tocollect said amounts or otherwise prejudice Lessor’s rights hereunder.  If the total of Lessee’s payments under thisParagraph 55.27 during said calendar year exceed the amount indicated on theStatement, Lessee shall be entitled to credit the amount of such overpaymentagainst Lessor’s Reimbursable Expenses next falling due.  If the amount to be paid by Lessee asindicated on the Statement exceeds the total of Lessee’s payments under thisParagraph 55.27 during said calendar year, Lessee shall pay to Lessor theamount of the deficiency within thirty (30) days after delivery of theStatement by Lessor to Lessee.  Lessorand Lessee shall forthwith adjust between them by cash payment any balancedetermined to exist with respect to that portion of the last calendar year forwhich Lessee is responsible for Lessor’s Reimbursable Expenses, notwithstandingthat the Lease term may have terminated before the end of such calendar year,and this provision shall survive the expiration or earlier termination of theLease.

55.28                     **Condemnation**.  If a temporary taking byCondemnation lasts for less than ninety (90) days, Lessee’s Base Rent shall beabated during said period but Lessee shall not have the right to terminate thisLease.  If Lessee does not terminate this Lease in accordance with Section14 above, this Lease shall remain in full force and effect as to the portion ofthe Premises remaining, except that the Base Rent shall be reduced inproportion to the reduction in utility of the Premises caused by suchcondemnation, but in no event shall such reduction in Base Rent exceed theamount which Lessor was compensated by the condemning authority for loss of anyrent.  In the event that this Lease isnot terminated by reason of such condemnation, and subject to the requirementsof any Lender, Lessor shall to the extent of severance damages received byLessor in connection with such condemnation, repair any damage to the Premisescaused by such condemnation (but not damage to any Trade Fixtures, to anyAlterations or Utility Installations made after the Commencement Date, nor tothose portions of the Premises described on Exhibit 2).  In the event the requirements of any Lender preventLessor from repairing the Premises (other than Lessee’s Trade Fixtures, anyAlterations or Utility Installations made after the Commencement Date, andthose portions of the Premises described on Exhibit 2, with respect 

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towhich Lessor shall have no repair obligation), Lessor promptly shall notifyLessee in writing of the estimated shortage in proceeds, and Lessee shallelect, within 10 business days after such notice, whether to (a) terminate thisLease 60 days thereafter by written notice to Lessor, or (b) if approved byLender, pay for the repair cost of the Premises in excess of the amount of suchproceeds available to Lessor (in which event Lessee shall provide the funds orsatisfactory assurance thereof to Lessor within 30 days after such election),in which event this Lease shall not terminate.  The option in Paragraph(b) shall only be permitted if said arrangement is approved by Lender.  Lessee’s failure to make an election withinthe time provided shall constitute Lessee’s election to terminate this Lease 60days after the expiration of said 10 business day period.  Paragraph 14together with this Paragraph 55.28, not general principles of law or CaliforniaCode of Civil Procedure sections 1230.010 et seq., shall govern the rights andobligations of Lessor and Lessee with respect to the condemnation of all or anyportion of the Premises.

55.29                     **Adequate Assurance**.** **As used in the Lease, the term “adequateassurance thereof” or words of like import shall mean an irrevocableunconditional letter of credit issued to Lessor as the Beneficiary, in formacceptable to Lessor or an escrow arrangement reasonably acceptable to Lessor.

LESSOR AND LESSEEHAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISIONCONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMEDCONSENT THERETO.  THE PARTIES HEREBYAGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARECOMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR ANDLESSEE WITH RESPECT TO THE PROJECT.

ATTENTION:  NO REPRESENTATION OR RECOMMENDATION IS MADEBY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGALSUFFICIENCY, EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TOWHICH IT RELATES.  THE PARTIES ARE URGEDTO:

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

2.                                       RETAINAPPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THEPROJECT.  SAID INVESTIGATION SHOULDINCLUDE BUT NOT BE LIMITED TO THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,THE ZONING OF THE PROJECT, THE STRUCTUAL INTEGRITY OF THE PROJECT, THECONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITHDISABILITIES ACT AND THE SUITABILITY OF THE PROJECT FOR LESSEE’S INTENDED USE.

The Parties heretohave executed this Lease at the place and on the dates specified above theirrespective signatures.
| Executed at:                          |                   |                         | Executed at:   | Chatsworth, CA          |
|---------------------------------------|------------------------|------------------------------|----------------|-------------------------|
| On:                                   |                   | , 2007                       |           | On:                     | April 2 | , 2007 |
| ** **                            | ** **             |                         |
| **LESSOR:**                           | ** **             | **LESSEE:**                  |
| ** **                            | ** **             |                         |
| VRS Chatsworth  LLC,                  |                   | Natrol, Inc.,                |
| a Virginia  limited liability company |                   | a Delaware corporation       |
|                                  |                   |                         |
| By:                                   | TA Richmond LLC,       |                         |           |
|                                  | Its Member             |                         |           |
|                                  |                   |                         | By:            | /s/ Dennis R. Jolicoeur |
|                                  | By:                    | TA/VRS Manager  LLC,         |           | Name:                   | Dennis R. Jolicoeur |
|                                  |                   | Its Manager                  |           | Title:                  | CFO |
|                                  |                   |                         |           |                    |
|                                  |                   | By:                          | TA Realty LLC, |                    |   |
|                                  |                   |                         | Its Manager    |                    |   |
|                                  |                   |                         |           |                    |
| By:                                   | /s/ James P.  Raisides |                         |           | By:                     | /s/ Steven S. Spitz |
| Name:                                 | James P.  Raisides     |                         |           | Name:                   | Steven S. Spitz |
| Title:                                | Sr. Vice  President    |                         |           | Title:                  | General Counsel |
|                                  |                   |                         |
|                                  |                   |                         |
| Address:                              |                   | Address:                     |
|                                  |                   |                         |
| c/o TA  Associates Realty             |                   | 21411 Prairie Street         |
| 1301 Dove  Street, Suite 860          |                   | Chatsworth, California 91311 |
| Newport Beach,  California 92660-2440 |                   | Attention: General Counsel   |
|                                  |                   |                         |
| Telephone: (949)  852-2030            |                   | Telephone: (818) 739-6000    |
| Facsimile: (949)  852-2031            |                   | Facsimile: (818) 739-6032    |
|                                       |                        |                              |                |                         |  |  |  |  |  |  |  |  |  |  |  |

 

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| With a Copy to:              |   |   |
|------------------------------|--------|--------|
|                         |   |   |
| c/o TA  Associates Realty    |   |   |
| 28 State Street,  10th Floor |   |   |
| Boston,  Massachusetts 02109 |   |   |
|                         |   |   |
| Telephone: (617)  476-2700   |   |   |
| Facsimile: (617)  476-2799   |   |   |

 

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EXHIBIT      

Form of HazMatCertificate

General Information
| Name of Responding Company: |   |
|-----------------------------|--------|
|                        |   |   |   |
| Mailing Address:            |   |
|                        |   |   |   |
| Signature:                  |   |
|                        |   |   |   |
| Title:                      |   |   | Phone: |   |
|                        |   |   |   |
| Date:                       |   |   | Age of Facility: |   |   | Length of Occupancy: |   |
|                             |        |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| Major  products manufactured and/or activities conducted on the property: |   |
|---------------------------------------------------------------------------|--------|
|                                                                      |
|                                                                      |

 
| Type of Business Activity(ies):    | Hazardous Materials Activities: |
|------------------------------------|---------------------------------|
| (check all that apply)             | (check all that apply)          |
|                               |                            |
| o  machine shop                    | o  degreasing                   |
| o  light assembly                  | o  chemical/etching/milling     |
| o  research and development        | o  wastewater treatment         |
| o  product service or repair       | o  painting                     |
| o  photo processing                | o  striping                     |
| o  automotive service and repair   | o  cleaning                     |
| o  manufacturing                   | o  printing                     |
| o  warehouse                       | o  analytical lab               |
| o  integrated/printed circuit      | o  plating                      |
| o  chemical/pharmaceutical product | o  chemical/missing/synthesis   |
|                               | o  silkscreen                   |
|                               | o  lathe/mill machining         |
|                               | o  deionizer water product      |
|                               | o  photo masking                |
|                               | o  wave solder                  |
|                               | o  metal finishing              |

 

HAZARDOUS MATERIALS/WASTEHANDLING AND STORAGE

A.                                   Arehazardous materials handled on any of your shipping and receiving docks incontainer quantities greater than one gallon?        o Yes oNo

B.                                     IfHazardous materials or waste are stored on the premises, please check off thenature of the storage and type(s) of materials below:
| Types of Storage  Container         | Type of Hazardous Materials and/or Waste Stored |
|-------------------------------------|-------------------------------------------------|
| (list above-ground storage only)    |                                            |
|                                |                                            |
| o  1 gallon or 3 liter bottles/cans | o  acid                                         |
| o  5 to 30 gallon carboys           | o  phenol                                       |
| o  55 gallon drums                  | o  caustic/alkaline cleaner                     |
| o  tanks                            | o  cyanide                                      |
|                                | o  photo resist stripper                        |
|                                | o  paint                                        |
|                                | o  flammable solvent                            |
|                                | o  gasoline/diesel fuel                         |
|                                | o  nonflammable/chlorinated solvent             |
|                                | o  oil/cutting fluid                            |

 

C.                                     Doyou accumulate hazardous waste onsite?        o Yes oNo

If yes, how is it beinghandled?
| o  on-site treatment or recovery |
|----------------------------------|
| o  discharged to sewer           |   |   |
| o  hauled offsite                | If hauled offsite, by whom |   |
| o  incineration                  |   |   |

 

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D.                                    Indicateyour hazardous waste storage status with Department of Health Services:

o generator

o interim statusfacility

o permitted TSDF

o none of the above

WASTEWATERTREATMENT/DISCHARGE

A.                                   Doyou discharge industrial wastewater to:

o sewer

o storm drain

o surface water

o no industrial discharge

B.                                     Isyour industrial wastewater treated before discharge?          o Yes oNo

If yes, what type oftreatment is being conducted?

o neutralization

o metal hydroxideformation

o closed-looptreatment

o cyanidedestruct

o HF treatment

o other

SUBSURFACE CONTAINMENT OFHAZARDOUS MATERIALS/WASTES

A.                                   Areburied tanks/sumps being used for any of the following:

o hazardous wastestorage

o chemicalstorage

o gasoline/dieselfuel storage

o waste treatment

o wastewaterneutralization

o industrialwastewater treatment

o none of the above

B.                                     Ifburied tanks are located onsite, indicate their construction:

o steel                  ofiberglass                    oconcrete

o inside open vault              odouble walled

C.                                 Are hazardous materialsor untreated industrial wastewater transported via buried piping to tanks,process areas or treatment areas?      oYes o No

D.                                Do you have wet floors inyour process areas?           o Yes   oNo
|  | If yes, name processes: |   |   |
|--|-------------------------|--------|--------|

 

E.                                      Areabandoned underground tanks or sumps located on the property?         oYes   o No

HAZARDOUS MATERIALSSPILLS

A.                                   Havehazardous materials ever spilled to:

o the sewer

o the storm drain

o onto theproperty

o no spills have occurred

B.                                     Haveyou experienced any leaking underground tanks or sumps?         oYes  o No

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C.                                     Ifspills have occurred, were they reported?         oYes  o No

Check which thegovernment agencies that you contacted regarding the spill(s):

o Department ofHealth Services

o Department ofFish and Game

o EnvironmentalProtection Agency

o Regional WaterQuality Control Board

o Fire Department

D.                                    Haveyou been contacted by a government agency regarding soil or groundwatercontamination on your site?

o Yes   oNo

Do you have exploratorywells onsite?    oYes  o No

If yes, indicate thefollowing:

Number of wells:                            Approximatedepth of wells:                            Welldiameters:                            

PLEASE ATTACH ENVIRONMENTALREGULATORY PERMITS, AGENCY REPORTS THAT APPLY TO YOUR OPERATION AND HAZARDOUSWASTE MANIFESTS.

Check off those enclosed:

o HazardousMaterials Inventory Statement, HMIS

o HazardousMaterials Management Plan, HMMP

o Department ofHealth Services, Generatory Inspection Report

o UndergroundTank Registrations

o IndustrialWastewater Discharge Permit

oHazardous Waste Manifest

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