Exhibit
10.4


LEASE


THIS LEASE,
made this 1st day of
June, 2007, by and between MERRITT/BAVAR-VA, LLC, a Maryland limited liability
company, hereinafter called “Landlord,” and TESSCO Technologies, Inc.
hereinafter called “Tenant.”


WITNESSETH,
that in consideration of the rentals hereinafter agreed upon and the
performance of all the conditions and covenants hereinafter set forth on the
part of the Tenant to be performed, the Landlord does hereby lease unto the
said Tenant, and the latter does hereby rent from the former the following
premises (hereinafter sometimes called the “premises”):


BEING all those premises containing approximately
65,940 rentable square feet,  the square
footage is calculated per BOMA’s Standard Method for Measuring SQFT in
Industrial Buildings using the Exterior Wall Methodology (Method “A”), and
outlined in red on the Lease Plan attached hereto as Exhibit A, within
the building (hereinafter sometimes called the “Building”) known as 10999
McCormick Road, Hunt Valley, MD 21031, within the development known as the “Hunt
Valley Business Center” (the “Property”), which Property includes the Building
and the common areas and facilities relating thereto.


This Lease is made
subject to the following additional terms, covenants and conditions:


1.                                      Term.


The term of this Lease
shall be for a period of forty-nine (49) months, beginning on July 1, 2007 and
terminating on July 31, 2011.  Landlord
agrees that it will, at its sole cost and expense, as soon as reasonably possible
after the execution of this Lease, commence and pursue to completion the
Landlord’s Work set forth on Exhibit B, which Landlord estimates to be July 1,
2007.


2.                                      Payment
of Rental.


(a)                                  The
rent reserved under this Lease shall constitute a net payment to Landlord over
and above Tenant’s proportionate share (as hereinafter defined) of all costs
and expenses attributable to the Property during the term of this Lease.


(b)                                 The
base rental shall be as follows:


	
  Term:

  	
   

  	
  Annual Rate:

  	
   

  	
  Monthly Rate:

  	
   

  	
  Per Sq. Ft.:

  	
   

  
	
  Month 1

  	
   

  	
   

  	
  N/A

  	
   

  	
  -0-

  	
   

  	
  -0-

  	
   

  
	
  Months 2-13

  	
   

  	
   

  	
  $

  	
  428,610.00

  	
   

  	
  $

  	
  35,717.50

  	
   

  	
  $

  	
  6.50

  	
   

  
	
  Months 14-25

  	
   

  	
   

  	
  $

  	
  439,160.40

  	
   

  	
  $

  	
  36,596.70

  	
   

  	
  $

  	
  6.66

  	
   

  
	
  Months 26-37

  	
   

  	
   

  	
  $

  	
  450,370.20

  	
   

  	
  $

  	
  37,530.85

  	
   

  	
  $

  	
  6.83

  	
   

  
	
  Months 38-49

  	
   

  	
   

  	
  $

  	
  461,580.00

  	
   

  	
  $

  	
  38,465.00

  	
   

  	
  $

  	
  7.00

  	
   

  



 


Commencing on August 1,
2007, Tenant covenants and agrees to pay all rentals reserved hereunder to
Landlord, without notice or demand, in advance on the first day of each month 













during the term of this
Lease, without setoff or deduction.  The
rental for the fractional monthly periods at the beginning or at the end of
each Lease year shall be prorated on a per diem basis and shall be payable on
the first (1st) day of the month in advance.


(c)                                  All
rentals shall be paid to MERRITT/BAVAR-VA, LLC at
2066 Lord Baltimore Drive, Baltimore, Maryland 21244, or at such other place or
to such appointee of the Landlord as the Landlord may from time to time
designate in writing.


3.                                      Use.


Tenant covenants and
agrees to use and occupy the premises solely for the following purposes:  distribution, light manufacturing, and
warehouse, together with ancillary offices for the use of Tenant, its officers,
agents and employees.  Tenant agrees to
comply with all applicable zoning and other laws and regulations applicable to
Tenant’s specific use of the premises, and provide and install at its own
expense any additional equipment or alterations required to comply with all
such laws and regulations as required from time to time.  Tenant further agrees not to make, or cause or
permit to be made, any use of the premises which shall constitute a nuisance or
shall materially interfere with the rights of other tenants in the Building to
quietly enjoy, use and occupy the premises leased by them and the common areas
of the Building.  Tenant will not permit,
allow or cause any public or private auction sales or sheriffs’ or constables’
sales to be conducted on or from the premises.


4.                                      Services
and Utilities.


(a)                                  Water
and Utilities:  Landlord agrees to
provide water and other utility services for the Building subject to the
provisions of paragraph 4(d) hereof. 
Tenant agrees to pay monthly payment addressed in Section 5 (e) as
additional rent Tenant’s pro rata share of water rent and sewer service charges
chargeable to the Building based upon the size of the premises in proportion to
the total square footage of the Building, unless such utilities are separately
metered in which event Tenant shall pay the metered charges.  If, in Landlord’s sole judgment, the water
and sewer charges for the premises are substantially higher than normal due to
Tenant’s water usage, then Tenant agrees that it will, upon written notice from
Landlord, install a water meter, at Tenant’s expense, and thereafter pay all
water charges for the premises based on such meter readings.  Tenant shall pay all costs of electricity,
gas, telephone and other utilities used or consumed on the premises, together
with all taxes, levies or other charges on such utilities.  If Tenant defaults in payment of any such
utilities, charges or taxes, Landlord may, at its option, pay the same for and
on Tenant’s account, in which Tenant shall promptly reimburse Landlord
therefor.


(b)                                 HVAC
Maintenance, Trash Removal, Common Area Lighting:  Landlord agrees to provide the following
services: (i) maintenance, repair and replacement  of the HVAC system serving the premises; (ii)
trash removal from the dumpster located on the exterior of the building, it
being understood that Tenant shall have the obligation to remove all trash from
the premises and place the same within the dumpster; and (iii) reasonable
Building and exterior site maintenance and illumination of the parking and
common areas within the property, including snow and ice removal.  Tenant agrees to pay its pro rata share of
the cost of all of the foregoing services (excluding HVAC repair or replacement
which shall be paid solely by Landlord) as part of “Operating Costs” as set
forth in Section 5 hereof.



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(c)                                  Specialty
HVAC Maintenance:  Tenant shall maintain
and repair Tenant’s separate HVAC equipment and other separate climate control
equipment for any computer or similar equipment, if any, designed specifically
for Tenant (e.g. for a computer or telephone room), whether the same was
installed initially, or at a later date, by Landlord or by Tenant.


(d)                                 Failure
to Furnish Services:  Landlord shall not
be in default hereunder or be liable for any damages directly or indirectly
resulting from, nor shall the rent be abated by reason of (i) the installation,
use of interruption of use of any equipment in connection with the furnishing
of any of the services to be furnished by Landlord as set forth in this Lease;
(ii) failure to furnish or delay in furnishing any such services where such
failure or delay is caused by accident or any condition or event beyond the
reasonable control of Landlord, or by the making of necessary repairs or
improvements to the premises or Building and such failure or delay lasts for a
period of less than seventy-two (72) consecutive hours; or (iii) the
limitation, curtailment or rationing of, or restrictions on, use of water, gas
or any other form of energy serving the premises of Building.  Landlord shall not be liable under any
circumstances for a loss of or injury to property or business, however
occurring, through or in connection with or incidental to failure to furnish
any such services.


Notwithstanding
the above, Notwithstanding anything to the contrary contained in this Lease, if
any utility service to the Leased Premises is interrupted due to Landlord’s for
more than seventy-two (72) consecutive hours, then commencing with the first
full business day thereafter, there shall be an equitable abatement of minimum
annual rental and all Additional Rent and utility charges for the utility so
affected reflecting the extent of Tenant’s ability to conduct business in the
premises is impaired.  If any utility
service to the premises is interrupted for more than thirty (30) consecutive
days, then Tenant shall have the right to terminate this Lease upon thirty (30)
days prior written notice to Landlord.


5.                                      Operating
Costs.


(a)                                  Generally:  “Operating Costs” are the costs of managing,
operating and insuring the Building and all common areas and facilities within
the Property and of maintaining the exterior of the Building and all common
areas, including, but not limited to, loading areas, parking areas, pavements
(excluding any repaving) and walkways, landscaping, gardening, storm drainage
and other utility systems; trash removal services furnished by Landlord with
respect to the exterior parking and common areas; the cost of utilities for
such common areas and facilities and all utility costs for the Building which
are not separately metered; fire protection and security services, if any;
traffic control equipment; maintenance of all building systems and equipment,
including HVAC; parking lot striping; lighting; sanitary control; removal of
snow and ice, and all costs associated with such snow and ice removal (except
with respect to a fenced in area, if any, for Tenant, in which event Tenant
shall pay all such snow and ice removal costs within the fenced in area),
trash, rubbish, garbage and other refuse from the parking and common areas;
depreciation on or rentals of machinery and equipment used in such maintenance;
the cost of personnel to implement such services; all insurance of whatsoever
nature kept, or caused to be kept, by Landlord out of or in connection with the
ownership of the Building and common areas, including, but not limited to,
insurance insuring the same against loss or damage by, or abatement of rental
income resulting from, fire and other such hazards, casualties and 



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contingencies, and
liability and indemnity insurance; plus Landlord’s actual administrative and
overhead costs in connection therewith not to exceed five percent (5%) of the
other costs (excluding Taxes, as defined below).  Such costs shall not include (i) the cost of
any capital improvements to the Building as determined under generally accepted
accounting principles; and (ii) work which Landlord performs specifically for
or at the expense of any tenant of the Building.


(b)                                 Property
Taxes:  “Operating Costs” shall also
include all taxes and assessments (as hereinafter defined) levied or assessed
against the Property and Building (excluding taxes attributable to improvements
to other Tenant’s spaces), including all such taxes resulting from an increase
in the tax rate, or the levy, assessment or imposition of any tax on real
estate as such not now levied, assessed or imposed, including, without
limitation, assessments, fees or charges imposed under any declaration of
protective covenants, or similar covenants affecting the Property or any
charges or assessments of any community or neighborhood association, all of
which assessments, taxes and charges shall be considered “taxes” for the purposes
of this paragraph and shall be included in Operating Costs.  Notwithstanding the foregoing, in the event
of any new taxes or increases in real estate taxes resulting from improvements,
alterations or additions made by Tenant, Landlord may, but is not obligated to,
require Tenant to pay the entire amount of any increase in taxes resulting from
such improvements, alterations or additions. 
“Taxes” as used herein shall also include, but not by way of limitation,
all paving taxes, special paving taxes, special taxing district assessments and
any and all other benefits or assessments which may be levied on the Property
or the Building, but shall not include any income tax on the income or rent
payable hereunder, capital stock, sales or similar taxes.  “Taxes” shall also include all reasonable
expenses incurred by Landlord (including attorneys’ fees and costs) in
contesting any increase in, or applying for any reduction of, a tax assessment.


(c)                                  Common
Area Maintenance:  “CAM” shall mean the
total costs incurred by Landlord for the operation, maintenance, repair,
insuring and management of all common facilities within Landlord’s entire
property, known as Hunt Valley Business Center and consisting of approximately
twelve and seven -tenths (12.7) acres (the “Park”) and/or Park-wide common area
charges for which Landlord pays its pro rata share of maintenance costs,
including, but not limited to, common roads, snow removal, lighting of common
areas, Taxes payable by Landlord, or its successors, with respect thereto and
other similar operational and maintenance expenses.  CAM shall not include any Operating Costs.


(d)                                 Proportionate
Share of Operating Costs:  Tenant shall
pay Landlord its proportionate share of Operating Costs throughout the Lease
term, which proportionate share is the same proportion which the rentable
square foot area of the premises (65,940 square feet) bears to the total
rentable square foot area of the Building (65,940 square feet) or one hundred
percent (100%) (“Tenant’s Percentage”). 
Tenant shall also pay Landlord its proportionate share of CAM, which
shall be determined by dividing the total rentable square foot area of the
Building by the total rentable square foot area of all improvements within the
Park, and multiplying the same by Tenant’s Percentage.



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(e)                                  Estimated
Operating Costs:  Landlord shall notify
Tenant from time to time of the amount which Landlord estimates will be the
amount payable by Tenant in accordance with paragraph (d) above, and Tenant
shall pay such amounts to Landlord in equal monthly installments, in advance,
on the first day of each month, simultaneously with payments of the rent
reserved pursuant to Section 2 hereof. 
Within a reasonable period of time following the end of each annual
period of the term, Landlord shall submit to Tenant a statement showing the
actual amounts incurred by Landlord as set forth in paragraph (d), the amount
theretofore paid by Tenant, and the amount of the resulting balance due
thereon, or overpayment thereof, as the case may be.  In the event any balance may be due by
Tenant, Tenant shall pay said balance within ten (10) business days from the
date of such statement.  In the event
Tenant has made any overpayment, such overpayment shall be credited by Landlord
against the next installment or installments of rent which are due and payable
hereunder, or if the term of this Lease has expired, such overpayment shall be
refunded by Landlord to Tenant, without interest, within ten (10) business days
after the date of such statement. Each such statement submitted by Landlord
shall be final and conclusive between the parties hereto as to the matters
therein set forth, if no objection is raised with respect thereto within
fifteen (15) days after submission of each such statement.


6.                                      Repairs
and Maintenance.


(a)                                  Except
as expressly provided in Exhibit B, Landlord shall be under no liability, nor
have any obligation to do any work or make any repairs in or to the premises,
except for structural, roof, foundation, exterior walls, gutters and
downspouts, which shall be repaired or replaced at Landlord’s sole cost, and
any work which may be necessary to outfit the premises for Tenant’s occupancy
or for the operation of Tenant’s business therein is the sole responsibility of
Tenant and shall be performed by Tenant at its own cost and expense.  Tenant acknowledges that it has fully
inspected the premises prior to the execution of this Lease, and Tenant further
acknowledges that Landlord has made no warranties or representations with
respect to the condition or state of repairs of the premises.


(b)                                 Tenant,
at Tenant’s sole expense, shall maintain the interior of the premises in good
order, condition and repair, including the interior surfaces of the ceilings,
walls and floors, all doors, all interior windows, all plumbing, pipes and
fixtures, electrical wiring, switches and fixtures, Building standard
furnishings and special items and equipment installed by or at the expense of
Tenant.


(c)                                  Tenant
shall be responsible for all repairs and alterations in and to the premises and
Building and the facilities and systems thereof, the need for which arises out
of (i) Tenant’s use or occupancy of the premises other than such resulting from
normal wear and tear; (ii) the installation, removal, use or operation of
Tenant’s property in the premises; (iii) the moving of Tenant’s property into
or out of the Building; or (iv) any act, omission, misuse or negligence of
Tenant, its agents, contractors, employees or invitees not covered by insurance
carried by Landlord.


(d)                                 If
Tenant fails to maintain the premises in good order, condition and repair,
Landlord may give Tenant notice to do such acts as are reasonably required to
so maintain the premises.  If Tenant
fails to promptly commence such work and diligently prosecute it to 



 5
 









completion, then Landlord
shall have the right to do such acts and expend such funds at the expense of
Tenant as are reasonably required to perform such work.  Any amount so expended by Landlord shall be
paid by Tenant promptly after demand, with interest from the date of such work,
at a rate equal to four (4) percentage points above the prime commercial rate
of interest published by the Wall Street Journal closest to the date such work
was commenced.  Landlord shall have no
liability to Tenant for any damage, inconvenience, or interference with the use
of the premises by Tenant as a result of performing any such work.


(e)                                  Tenant
shall not place a load upon any floor of the premises which exceeds the load
per square foot, which such floor was designed to carry, as determined by
Landlord’s structural engineer.  Landlord
reserves the right to consult with its structural engineer if necessary, in
Landlord’s opinion, to resolve any questions concerning this matter, in which
event the determination of the engineer shall be conclusive and the cost of any
such determination shall be paid for by Tenant upon demand.  Tenant shall not install business machines or
mechanical equipment, which cause noise or vibration to such a degree as to be
reasonably objectionable to Landlord or other Building tenants.


(f)                                    Except
as otherwise expressly provided in this Lease, Landlord shall have no liability
to Tenant nor shall Tenant’s obligations under this Lease be reduced or abated
in any manner whatsoever by reason of any inconvenience, annoyance,
interruption or injury to business arising from Landlord’s making any repairs
or changes which Landlord is required or permitted by this Lease or by any
other tenant’s lease or required by law to make in or to any portion of the
Building or the premises.  Landlord
shall, nevertheless, use reasonable efforts to minimize any interference with
Tenant’s business in the premises.


(g)                                 Tenant
shall give Landlord prompt notice of any damage to or defective condition in
any part or appurtenance of the Building’s mechanical, electrical, plumbing,
HVAC or other systems serving, located in, or passing through the premises, or
any condition such as excessive moisture which could create an environment
conducive to mold growth.


(h)                                 Upon
the expiration or earlier termination of this Lease, Tenant shall return the
premises to Landlord clean and in the same condition as on the date Tenant took
possession, except for normal wear and tear. 
Any damage to the premises, including any structural damage, resulting
from Tenant’s use or from the removal of Tenant’s fixtures, furnishings and
equipment shall be repaired by Tenant at Tenant’s expense.  Landlord shall bill Tenant, as promptly as is
practicable, for the costs of any cleanup and/or repairs to the premises necessitated
by Tenant’s use and occupancy thereof (normal wear and tear excepted) and such
costs shall constitute additional rental due and payable hereunder
notwithstanding any expiration or termination of this Lease.


7.                                      Compliance
with Laws.


Tenant covenants and
agrees that it will, at its own expense, observe, comply with and execute all
laws, orders, rules, requirements and regulations of any and all governmental
departments, bodies, bureaus, agencies and officers, and all rules, directions,
requirements and recommendations of the local board of fire underwriters and
the fire insurance rating organizations having jurisdiction over the area in
which the premises are situated, or other bodies 



 6
 









or agencies now or
hereafter exercising similar functions in the area in which the premises are
situated, in any way pertaining to Tenant’s use and occupancy thereof.  In the event Tenant shall fail or neglect to
comply with any of the aforesaid laws, orders, rules, requirements or
recommendations, Landlord or its agents may enter the premises and take all
such action and do all such work in or to the premises as may be necessary in
order to cause compliance with such laws, orders, rules, requirements or
recommendations, and Tenant covenants and agrees to reimburse Landlord promptly
upon demand for the expense incurred by Landlord in taking such action and
performing such work.


8.                                      Assignment
and Subletting.


(a)                                  Tenant
covenants and agrees not to assign this Lease, in whole or in part, nor sublet
the premises, or any part or portion thereof, nor grant any license or
concession for all or any part thereof other than to an affiliated entity,
without the prior written consent of the Landlord in each instance first had
and obtained.  If such assignment or
subletting is permitted, Tenant shall not be relieved from any liability
whatsoever under this Lease.  In the
event that the amount of the rent or other consideration to be paid to the
Tenant by any assignee or sublessee is greater than the rent required to be
paid by the Tenant to the Landlord pursuant to this Lease, Tenant shall pay to
Landlord any such excess as is received by Tenant from such assignee or
sublessee.  Any consent by Landlord to an
assignment or subletting of this Lease shall not constitute a waiver of the
necessity of such consent as to any subsequent assignment or subletting.  An assignment for the benefit of Tenant’s
creditors or otherwise by operation of law shall not be effective to transfer
or assign Tenant’s interest under this Lease unless Landlord shall have first
consented thereto in writing.


(b)                                 In
the event Tenant desires to assign this Lease or to sublease all or any
substantial portion of the premises to an assignee for which Landlord’s consent
is required, Landlord shall have the right and option to terminate this Lease,
which right or option shall be exercisable by written notice from Landlord to
Tenant within thirty (30) days from the date Tenant gives Landlord written
notice of its desire to assign or sublease.


(c)                                  Notwithstanding
any other provisions set forth in this Lease, in the event of a “Transfer” (as
hereinafter defined) to a new or successor entity, the new entity (“Successor
Tenant”) shall be required to disclose to Landlord, not later than ten (10)
days prior to the effective date of the Transfer, such financial information as
may be reasonably required by Landlord regarding the Successor Tenant and any
parent of the Successor Tenant or any other entity, which has or will have
after the Transfer, voting or operating control over the successor Tenant
(collectively, the “Parent Company”). 
Landlord shall have the right to require the Parent Company to execute a
guaranty, on Landlord’s standard Guaranty form, guarantying the Successor
Tenant’s Lease obligations arising from and after the date of the Transfer,
whether or not Landlord has consented to the Transfer or whether or not Tenant
is permitted to assign this Lease to the Successor Tenant without Landlord’s
consent.  As used herein, Transfer shall
mean any of the following:  (i) an assignment
of Tenant’s interest under the Lease; and (ii) any other transaction which
results in a successor to Tenant having title to either Tenant’s leasehold
interest or having control over Tenant’s voting rights or operations.



 7
 









9.                                      Increase
in Landlord’s Insurance Rates.


Tenant will not do, or
suffer to be done other than in connection with the permitted use, anything in
or about the premises, or keep or suffer to be kept, anything in or about the
premises which will contravene or affect any policy of insurance against loss
by fire or other hazards, including, but not limited to, public liability, now
existing or which the Landlord may hereafter place thereon, or which will
prevent the Landlord from procuring such policies in companies acceptable to
Landlord at standard rates.


10.                               Insurance
- Indemnity.


(a)                                  Tenant
covenants and agrees that from and after the date of delivery of the premises
from Landlord to Tenant, Tenant will carry and maintain, at its sole cost and
expense and in the amounts specified and in the form hereinafter provided, the
following types of insurance:


(i)                                     Public
Liability and Property Damage.  General
Public Liability Insurance covering the premises and Tenant’s use thereof
against claims for personal injury or death and property damage occurring upon,
in or about the premises, such insurance to afford protection to the limit of
not less than $2,000,000 arising out of any one occurrence, and against
property damage to afford protection to the limit of not less than $2,000,000;
or such insurance may be for a combined single limit of $2,000,000 per
occurrence.  The insurance coverage
required under this Section 9(a)(i) shall, in addition, extend to any liability
of Tenant arising out of Tenant’s indemnities hereinafter provided, as well as
Independent Contractors’ Liability, Products/Completed Operations Liability,
Personal Injury Liability and Contractual Liability.


(ii)                                  Boilers.  If Tenant’s premises shall contain a boiler
or other pressure vessel, Tenant shall carry Boiler and Machinery Insurance
with a direct damage limit not less than the full value of the Building.  Such insurance shall be written on a “repair
and replacement” (i.e., replacement cost) basis.


(iii)                               Tenant
Improvements and Property.  Insurance
covering all leasehold improvements and other improvements installed by Tenant
upon the premises, trade fixtures and personal property from time to time in,
on or upon the premises and any alterations, improvements, additions or changes
made by Tenant thereto in an amount not less than one hundred percent (100%) of
their full replacement cost from time to time during the Lease term, providing
protection against perils included within the standard form of fire and
extended coverage insurance policy for the jurisdiction in which the premises
are located, together with insurance against sprinkler leakage or other
sprinkler damage, vandalism and malicious mischief.  Any policy proceeds from such insurance, so
long as this Lease shall remain in effect, shall be held in trust by Tenant’s
insurance company first for the repair, reconstruction, restoration or
replacement of the property damaged or destroyed.


(iv)                              Plate
Glass.  Plate glass insurance covering
all plate glass in the premises.  Tenant
shall be and remain liable for the repair and restoration of all such plate
glass.



 8
 









(v)                                 Worker’s
Compensation.  Worker’s compensation
insurance covering Tenant’s employees for statutory benefits payable in the
state in which the premises are located and including employer’s liability
insurance with limits of not less than One Hundred Thousand Dollars
($100,000.00) per accident, One Hundred Thousand Dollars ($100,000.00) per
employee for disease and Five Hundred Thousand Dollars ($500,000.00) as a
policy limit for disease.


Tenant further
covenants and agrees to carry and maintain, at all times during the term of
this Lease, the aforegoing types of insurance (and any other types of
insurance) in amounts at least equal to the minimum amounts of such insurance
coverage’s commonly required of tenants in comparable office buildings in the
area.


(b)                                 All
policies of insurance to be provided by Tenant shall be issued in form
acceptable to Landlord by insurance companies with general policyholder’s
rating of not less than A and a financial rating of AAA as rated in the most
current available “Best’s” Insurance Reports, and qualified to do business in
the jurisdiction in which the premises are located.  Each such policy shall be issued in the names
of Landlord and Tenant.  Said policies
shall be for the mutual and joint benefit and protection of each of said
parties and executed copies of each such policy of insurance or a certificate
thereof shall be delivered to Landlord within ten (10) days after delivery of
possession of the premises to Tenant and thereafter at least fifteen (15) days
prior to the expiration of each such policy. 
As often as any such policy shall expire or terminate, renewal or
additional policies shall be procured and maintained by Tenant in like manner
and to like extent.  All such policies of
insurance shall contain a provision that the company writing said policy will
give to Landlord at least thirty (30) days’ notice in writing in advance of any
cancellations, or lapse, or the effective date of any reduction in the amounts
of insurance.  In the event Tenant shall
fail to promptly furnish any insurance herein required, Landlord may effect the
same for a period not exceeding one (1) year and Tenant shall promptly
reimburse Landlord upon demand, as additional rent, the premium so paid by
Landlord.  If, upon Tenant’s failure,
rather than purchase separate insurance coverage, Landlord chooses to include
Tenant’s coverage under Landlord’s insurance policies, then Tenant shall
promptly reimburse Landlord upon demand, as additional rent, the greater of the
increase in Landlord’s premium resulting therefrom or One Thousand Dollars
($1,000.00).  All such public liability,
property damage and other casualty policies shall be written as primary
policies which do not contribute to and are not in excess of coverage which
Landlord may carry.  All such public
liability and property damage policies shall contain a provision that Landlord
shall nevertheless be entitled to recover under said policies for any loss
occasioned to it, its servants, agents and employees by reason of the
negligence of Tenant or any other named assured.  Any insurance provided for may be affected by
a policy or policies of blanket insurance, covering additional items or
locations; provided, however, that (i) Landlord shall be named as an additional
assured thereunder as its interests may appear; (ii) the coverage afforded
Landlord will not be reduced or diminished by reason of the use of such blanket
policy of insurance; (iii) any such policy or policies (except any covering the
risks referred to in paragraph (a)(i) above, shall specify therein (or Tenant
shall furnish Landlord with a written statement from the insurers under such
policy specifying) the amount of the 
total insurance allocated to the “Tenant Improvements and Property” more
specifically detailed in paragraph (iii), above; and (iv) the requirements set
forth herein are otherwise satisfied. 
Any 



 9
 









insurance policies herein
required to be procured by Tenant shall contain an express waiver of any right
of subrogation by the insurance company against the Landlord, and all other
tenants or occupants of space in the Building.


(c)                                  Tenant
shall, and does hereby, indemnify, defend and hold harmless Landlord and any
other parties in interest set forth in paragraph (b), above, from and against any
and all liabilities, fines, claims, damages and actions, costs and expenses of
any kind or nature (including attorneys’ fees) and of anyone whatsoever (i)
relating to or arising from the use and occupancy of the premises; (ii) due to
or arising out of any mechanic’s lien filed against the premises, the Building,
or any part thereof, for labor performed or for materials furnished or claimed
to be furnished to Tenant, or (iii) due to or arising out of any breach,
violation or nonperformance of any covenant, condition or agreement in this
Lease set forth and contained on the part of Tenant to be fulfilled, kept,
observed or performed, unless such damage or injury shall be occasioned by the
gross negligence or willful act or omission of the Landlord, in which event,
Landlord shall indemnify and hold harmless Tenant to the extent of such
negligence or willful act or omission. 
Notwithstanding the foregoing, Tenant shall at all times remain liable
for, and indemnify and hold harmless Landlord as aforesaid against, any damage
or injury arising from perils against which Tenant is required by this Lease to
insure, regardless of the negligence or willful acts or omissions of others.


Landlord will
indemnify Tenant, its officers, directors, members, shareholders, partners,
lenders, agents and employees against, and hold them harmless from, any and all
demands, claims, causes of action, fines, penalties, damages (including without
limitation consequential damages), losses, liabilities, judgments, and expenses
(including without limitation attorneys’ fees and court costs) arising on the
Property.


(d)                                 Waiver
of Right of Recovery.  Notwithstanding
anything to the contrary contained in this Lease, Tenant waives all rights to
recover against Landlord, its officers, directors, shareholders, partners,
joint ventures, employees or agents, for any loss or damage to Tenant’s
property to the extent covered by insurance either actually carried or required
to be carried hereunder. Landlord waives (except for the amount of any deductible)
all rights to recover against Tenant, its officers, directors, shareholders,
partners, joint ventures, employees or agents, for any loss or damage to
Landlord’s property to the extent covered by insurance either actually carried
or required to be carried hereunder. 
Neither Landlord nor Tenant shall be liable to each other or any
insurance company (by way of subrogation or otherwise) which insured any such
losses, damages or expenses.  Each party
shall use reasonable efforts to cause their respective insurers to issue
appropriate waiver of subrogation rights endorsements to all policies of
insurance carried in connection with the Property or the premises or the
contents of either of them, and if obtained then each party shall deliver to
the other party (within a reasonable period of time after a written request for
the same) adequate written proof (for example, a policy and certificate of
insurance with attached endorsement) of the issuance of the foregoing.


11.                               Alterations.


Tenant shall not make any
material alterations ($5,000 individually or $50,000 in the aggregate) to the
premises, or any part thereof, without prior written consent of Landlord in
each instance first had and obtained which consent shall not be unreasonably
withheld, conditioned or delayed 



 10
 









and shall be deemed given
if not disapproved within five (5) business days after request thereof.  If Tenant shall desire to make such
alterations, plans for the same shall first be submitted to and approved by
Landlord, and all work and installations shall be performed by Tenant at its
own expense in accordance with approved plans. 
Tenant agrees that all such work shall be done in a good and workmanlike
manner, that the structural  integrity of
the Building shall not be impaired, and that no liens shall attach to the
premises by reason thereof.  Tenant
agrees to obtain, at Tenant’s expense, all permits required for such
alterations.  Tenant shall have the right
to install rooftop antennas and/or satellite dishes with prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed and shall be deemed given if not disapproved within five (5) business
days after request thereof.  Tenant shall
have the right to post appropriate Company signage on the building or premises
in accordance with Landlord’s standard signage specification.


12.                               Ownership
of Alterations.


Unless Landlord shall
elect that all or part of any alteration or installation (including cabling and
wiring) made or installed by Tenant to the premises (including any alteration
consented to by Landlord pursuant to Section 11 hereof) shall remain on the
premises after the termination of this Lease, the premises shall be restored to
their original condition by Tenant before the expiration of this Lease at Tenant’s
sole expense, such election to be made at time Landlord approves said
alterations.  Upon such election by
Landlord, any such alterations, installations, improvements, betterments or
mechanical equipment, including but not limited to, heating and air
conditioning systems, shall become the property of Landlord as soon as they are
affixed to the premises, and all right, title and interest thereof of Tenant
shall immediately cease, unless otherwise agreed to in writing by Landlord.  Tenant shall promptly pay any franchise,
minor privilege or other tax or assessment resulting directly or indirectly
from any alterations or improvements made by Tenant to the premises.  Tenant shall repair promptly, at its own
expense, any damage to the premises or Building caused by bringing into the
premises any property for Tenant’s use, or by the installation or removal of
such property, regardless of fault or by whom such damage shall be caused.


13.                               Default.


(a)                                  Any
of the following events shall constitute an Event of Default by Tenant:


(i)                                     If
the rent (basic or additional) shall be in arrears, in whole or in part for
more than five (5) business days after written notice; or


(ii)                                  If
Tenant shall have failed to perform or comply with any other term, condition,
or covenant of this Lease on its part to be performed or complied with, for a
period of thirty (30) days after notice of such failure from Landlord; or


(iii)                               If
the premises are vacant, unoccupied or deserted for a period of fifteen (15)
days or more at any time during the term of this Lease; or


(iv)    If there shall occur an Act of Bankruptcy,
as defined in



 11
 









Section 38 hereof;
or


(v)                                 If
Tenant’s leasehold interest under this Lease is sold under execution,
attachment or decree of court to satisfy any debt of Tenant, or if any lien
(including a mechanic’s lien) is filed against Tenant’s leasehold interest and
is not discharged within ten (10) days thereafter.


(b)                                 Upon
the happening of an Event of Default as defined in paragraph (a) hereof,
Landlord, in addition to any and all legal and equitable remedies it may have,
shall have the following remedies:


(i)                                     To
distrain for any rent or additional rent in default;


(ii)                                  At
any time after an Event of Default, without notice, to declare this Lease
terminated and enter the premises with or without legal process; and in such
event Landlord shall have the benefit of all provisions of law now or hereafter
in force respecting the speedy recovery of possession from Tenant’s holding
over or proceedings in forcible entry and detainer, and Tenant waives any and
all provisions for notice under such laws; and


(iii)                               At
any time after an Event of Default, without notice, to re-enter the premises
without terminating the Lease, with the benefit of all laws referred to in
clause (ii) above.


Notwithstanding
such re-entry and/or termination, Tenant shall immediately be liable to
Landlord for the sum of the following: (a) all rent and additional rent then in
arrears, without apportionment to the termination date; (b) all other
liabilities of Tenant and damages sustained by Landlord as a result of Tenant’s
default, including, but not limited to, the reasonable costs of reletting the
premises and any broker’s commissions payable as a result thereof; (c) all of
Landlord’s costs and expenses (including reasonable counsel fees) in connection
with such default and recovery of possession; (d) the difference between the
rent reserved under this Lease for the balance of the term and the fair rental
value of the premises for the balance of the term to be determined as of the
date of re-entry; or at Landlord’s option in lieu thereof, Tenant shall pay the
amount of the rent and additional rent reserved under this Lease at the times
herein stipulated for payment of rent and additional rent for the balance of
the term, less any amount received by Landlord during such period from others
to whom the premises may be rented on such terms and conditions and at such
rentals as Landlord, in its sole discretion, shall deem proper; and (e) any
other damages recoverable by law.  In the
event Landlord brings any action against Tenant to enforce compliance by Tenant
with any covenant or condition of this Lease, including the covenant to pay
rent, and it is judicially determined that Tenant has defaulted in performing
or complying with any such covenant or condition, then and in such event,
Tenant shall pay to Landlord all costs and expenses incurred by Landlord in
bringing and prosecuting such action against Tenant, including Landlord’s
attorney’s fees.



 12















(c)                                  Tenant
hereby waives any right to recover possession of the premises or to redeem or
reinstate this Lease, which the Tenant would otherwise have after Landlord
recovers possession of the premises in accordance with this Section 13.


(d)                                 In
the event Tenant fails to pay Landlord any rental payment or other charge due
hereunder on the date due, Tenant shall pay a late charge equal to fifteen
percent (15%) of the rental payment or other such charge, which late charge
shall be collectible as additional rent and shall be payable by Tenant to
Landlord within five (5) days after written notice from Landlord to Tenant
assessing the same.  In addition, any
such rental payment or other charge which is delinquent for five (5) days or
more, shall bear interest from the date on which same was due at a rate equal
to four (4) percentage points above the prime rate of interest published by the
Wall Street Journal on the date closest to the date on which any such payment
was due.


14.                               Damage
or Destruction.


(a)                                  If,
during the Lease term, the premises hereby leased are damaged by fire or other
casualty, but not to the extent that Tenant is prevented from carrying on
business in more than ten percent (10%) of the premises, Landlord shall
promptly cause such damage to be repaired; if such damage renders a substantial
portion of the premises untenantable, the rent reserved hereunder shall be
reduced during the period of its untenantability proportionately to the amount
by which the area so rendered untenantable bears to the entire gross rentable
area of the premises, and such reduction shall be apportioned from the date of
the casualty to the date when the premises are rendered fully tenantable.  Notwithstanding the foregoing, in the event such
fire or other casualty damages or destroys any of Tenant’s leasehold
improvements, alterations, betterments, fixtures or equipment, Tenant shall, at
its sole election, cause the same to be repaired or restored at Tenant’s sole
cost and expense and Landlord shall have no liability for the restoration or
repair thereof.


(b)                                 If,
during the Lease term, the premises or a substantial portion of the premises
(more than ten percent (10%) of the premises) are rendered wholly untenantable
as the result of fire, the elements, unavoidable accident or other casualty, or
Tenant is otherwise unable to use the premises for its intended purpose and
such cannot be repaired or restored to use within one hundred twenty (120) days
after the casualty, the Tenant shall have the right to terminate this Lease on
written notice to Landlord.  If Tenant
does not elect to termination this Lease, then Landlord shall have the option
either to restore the premises to their condition immediately prior to the
casualty or to terminate this Lease, such option shall be exercised by Landlord
by written notice to Tenant within thirty (30) days after the fire, accident or
casualty.  In the event of such
termination, the rent reserved hereunder shall be adjusted as of the date of
the fire, accident or casualty.  If
Landlord elects to restore the premises, such restoration shall be completed as
promptly as reasonably possible and the rent reserved hereunder shall abate
until the premises are again rendered tenantable.


15.                               Possession.


In case this Lease
provides for a specifically designated commencement date, and if possession of
the premises, in whole or in part, cannot be given to Tenant on or before such
commencement date, Landlord agrees to abate the rent proportionately until
possession is given to Tenant, and 



 13
 









Tenant agrees to accept
such pro rata abatement as liquidated damages for the failure to obtain
possession on the commencement date herein specified.  If possession of the premises is not given to
Tenant by July 1, 2007, then Tenant shall have the right to terminate this
Lease immediately upon written notice to Landlord, and both parties be released
of all of their obligations under this Lease. 
The parties hereto covenant and agree that if the term of this Lease
commences on a date other than the date herein specified, they will, upon the
request of either of them, execute an agreement in recordable form setting
forth the new commencement and termination dates of the Lease term.  Under no circumstances shall Landlord be
under any liability for failure to deliver possession of the premises to Tenant
on the date herein specified.


16.                               Exterior
of Premises – Signs.


(a)                                  Tenant
covenants and agrees that it will not place or permit any window display, sign,
billboard, marquee, lights, awning, poles, placard, advertising matter, or other
thing of any kind, in or about the exterior of the premises or the Building
(including without limitation any displays on or in any motor vehicles used by
Tenant, its employees, agents and servants), nor paint or make any change in,
to or on the exterior of said premises to change the uniform architecture,
paint or appearance of the Building, without in each such instance obtaining
the prior written consent of Landlord, which shall not be unreasonably
conditioned, withheld or delayed, and, if applicable, of any owners’
association or similar entity which may govern the use of the premises.  Tenant shall obtain, at Tenant’s expense, all
permits required for such installation. 
Tenant further agrees to maintain any sign, billboard, marquee, awning,
decoration, placard, or advertising matter or other thing of any kind as may be
approved by Landlord in good condition and repair at all times.


(b)                                 Tenant
further covenants and agrees not to pile or place anything on the sidewalk,
parking lot or other exterior portion of the premises or Building in the front,
rear or sides of the building other than temporarily during normal business
hours, nor block any sidewalk, parking lot or other exterior portion of the
premises or Building, nor do anything that directly or indirectly will
materially interfere with any of the rights of ingress or egress or of light
from any other tenant, nor do anything which will, in any way, change the
uniform and general design of the Building or the Property.


17.                               Relocation.
Intentionally deleted.


18.                               For
Rent/Sale Signs.


Landlord shall have the
right to place a “For Rent” sign on any portion of said premises for six (6)
months prior to termination of this Lease and to place a “For Sale” sign
thereon at any time.  During such
six-month period, Landlord may show the premises and all parts thereof to
prospective tenants between the hours of 9:00 A.M. and 5:00 P.M. on any day
except Sunday or any legal holiday on which Tenant shall not be open for
business.


19.                               Water
and Other Damages.


Landlord shall not be
liable for, and Landlord is hereby released and relieved from, all claims and
demands of any kind by reason of or resulting from damage or injury to person
or property of Tenant or any other party, directly or indirectly caused by (a)
dampness, water, rain or snow, in any part of the premises or in any part of
any other property of Landlord or of others, and/or 



 14
 









(b) falling plaster,
steam, gas, electricity, or any leak or break in any part of the premises or
from any pipes, appliances or plumbing or from sewers or the street or
subsurface or from any other place or any part of any other property of
Landlord or of others or in the pipes of the plumbing or heating facilities
thereof, no matter how caused.


20.                               Right
of Entry.


Landlord and its agents,
servants, employees, including any builder or contractor employed by Landlord,
shall have the absolute and unconditional right, license and permission, at any
and all reasonable times, to enter and inspect the premises or any part
thereof, and at the option of Landlord, to make such reasonable repairs and/or
replacements in the premises as Landlord may deem necessary or proper and/or to
enforce and carry out any provision of this Lease.


21.                               Termination
of Term.


(a)                                  It
is agreed that the term of this Lease shall expire and terminate at the end of
the original term hereof (or at the expiration of the last renewal term, if
this Lease contains a renewal option and the same is properly exercised),
without the necessity of any notice by or to any of the parties hereto, unless
otherwise provided herein.  If Tenant
shall occupy the premises after such expiration or termination, it is
understood that Tenant shall hold the premises as a tenant from month-to-month,
subject to all the other terms and conditions of this Lease, at an amount equal
to 125% the highest monthly rental installment reserved in this Lease, plus all
additional rent required under this Lease. 
Landlord shall, upon such expiration or termination of this Lease, be
entitled to the benefit of all public general or local laws relating to the
speedy recovery of possession of lands and tenements held over by Tenants that
may be now in force or may hereafter be enacted.


(b)                                 At
the time Tenant surrenders the premises to Landlord, the premises shall be in compliance
with all applicable building code requirements insofar as such requirements
relate to Tenant’s use and occupancy of the premises or to any installations,
alterations or improvements made by Tenant thereto.


22.                               Condemnation.


(a)                                  If,
during the term of this Lease, all or a substantial part of the premises shall
be taken by police power or under power of eminent domain, this Lease shall
terminate as of, and the rent (basic and additional) shall be apportioned to
and abate from and after, the date of taking. 
Tenant shall have no right to participate in any award or damages for
such taking and hereby assigns all of its right, title and interest therein to
Landlord.  For the purposes of this
paragraph, “a substantial part of the premises” shall mean such part that the
remainder thereof is rendered inadequate for Tenant’s business and that such
remainder cannot practicably be repaired and improved so as to be rendered
adequate to permit Tenant to carry on its business with substantially the same
efficiency as before the taking.


(b)                                 If,
during the Lease term, less than a substantial part of the premises (as
hereinabove defined) is taken by police power or under power of eminent domain,
this Lease shall remain in full force and effect according to its terms; and
Tenant shall not have the right to participate in any award or damages for such
taking and Tenant hereby assigns all of its right, title and interest in and to
the award to Landlord.  In such event
Landlord shall, at its expense, 



 15
 









promptly make such repairs
and improvements as shall be necessary to make the remainder of the premises
adequate to permit Tenant to carry on its business to substantially the same
extent and with substantially the same efficiency as before the taking;
provided that in no event shall Landlord be required to expend an amount in
excess of the award received by Landlord for such taking.  If, as a result of such taking, any part of
the premises is rendered permanently unusable, the basic annual rent reserved
hereunder shall be reduced in such amount as may be fair and reasonable, which
amount shall not exceed the proportion which the area so taken or made unusable
bears to the total area which was usable by Tenant prior to the taking.  If the taking does not render any part of the
premises unusable, there shall be no abatement of rent.


(c)                                  For
purposes of this section, “taking” shall include a negotiated sale or lease and
transfer of possession to a condemning authority under bona fide threat of
condemnation for public use, and Landlord alone shall have the right to
negotiate with the condemning authority and conduct and settle all litigation
connected with the condemnation.  As
hereinabove used, the words “award or damages” shall, in the event of such sale
or settlement, include the purchase or settlement price.


(d)                                 Nothing
herein shall be deemed to prevent Tenant from claiming and receiving from the
condemning authority, if legally payable, compensation for the taking of Tenant’s
own tangible property and such amount as may be payable by statute or ordinance
toward Tenant’s damages for Tenant’s loss of business, removal and relocation
expenses.


23.                               Subordination.


This Lease shall be
subject to and subordinate at all times to the lien of any mortgages and/or
deeds of trust upon the Building now or hereafter to be made, unless the
mortgagee or holder of the deed of trust elects to have Tenant’s interest
hereunder superior to the interest of the mortgagee or holder of such deed of
trust.  This subordination provision
shall be self-operative and no further instrument of subordination shall be
required.  The Tenant agrees to execute
any documents necessary, subsequent to the execution of this Lease, which are
required to effect such subordination. 
Tenant further hereby constitutes and appoints Landlord as Tenant’s
attorney-in-fact to execute any such instrument for and on behalf of Tenant.


24.                               Attornment.


(a)                                  If
Landlord assigns this Lease or the rents hereunder to a creditor as security
for a debt, Tenant shall, after notice of such assignment and upon demand by
Landlord or the assignee, pay all sums thereafter becoming due to Landlord
hereunder either to Landlord or to such assignee, as required by such
notice.  Tenant shall also, upon receipt
of such notice, have all policies of insurance required hereunder endorsed so
as to protect the assignee’s interest as it may appear and shall deliver such
policies, or certificates thereof, to the assignee.


(b)                                 In
the event the premises are sold at any foreclosure sale or sales, by virtue of
any judicial proceedings or otherwise, this Lease shall continue in full force
and effect and Tenant agrees, upon request, to attorn to and acknowledge the
foreclosure purchaser or purchasers at such sale as the landlord hereunder.  It is understood that such purchaser or
purchasers may, at its or their option, terminate this Lease immediately, upon
giving written notice thereof to Tenant.



 16
 









25.                               Notices
to Mortgagee.


Tenant agrees that a copy
of any notice of default from Tenant to Landlord shall also be sent to the
holder of any mortgage or deed of trust on the premises, provided Tenant has
been given written notice of the fact that such mortgage or deed of trust has
been made; and Tenant shall allow said mortgagee or holder of the deed of trust
a reasonable time, not to exceed ninety (90) days from the receipt of said
notice, to cure, or cause to be cured, any such default.  If such default cannot reasonably be cured
within the time specified herein, then such additional time as may be necessary
shall be allowed, provided the curing of such default is commenced and
diligently pursued (including, but not limited to, commencement of foreclosure
proceedings if necessary to effect such cure) in which event this Lease shall
not be terminated while such remedies are being thus diligently pursued.


26.                               Estoppel
Certificate.


Tenant shall, at any time
and from time to time during the term of this Lease or any renewal thereof,
upon request of Landlord, execute, acknowledge, and deliver to Landlord (or its
designee) a statement in writing, certifying that this Lease is unmodified and
in full force and effect if such is the fact (or if there have been any
modifications thereof, that the same is in full force as modified and stating
the modifications) and the dates to which the rents and other charges have been
paid in advance, if any.  Any such
statement delivered pursuant to this paragraph may be relied upon by any
prospective purchaser of the estate of Landlord or by the mortgagee or any assignee
of any mortgagee or the trustee or beneficiary of any deed of trust
constituting a lien on the premises or the Building.


27.                               Right
to Perform Covenants.


If either party shall
fail to perform any covenant or duty required of it by this Lease beyond an
applicable cure period or by law, the non-defaulting shall have the right (but
not the obligation) to perform the same, and if necessary to enter the premises
or Property for such purposes without notice. 
The reasonable cost thereof to the non-defaulting party shall be deemed
to be additional rent hereunder payable by the defaulting party, shall be due
and payable by the defaulting party upon demand.


28.                               Non-Waiver
of Future Enforcement.


The receipt of rent by
Landlord, with knowledge of any breach of this Lease by Tenant or of any
default on the part of Tenant in the observance or performance of any of the
conditions or covenants of this Lease, shall not be deemed to be a waiver of
any provision of this Lease, including the provision breached.  No failure on the part of Landlord or of the
Tenant to enforce any covenant or provision herein contained nor any waiver of
any right hereunder by Landlord or Tenant shall discharge or invalidate such
covenant or provision or shall affect the right of Landlord or Tenant to
enforce the same in the event of any subsequent default.  The receipt by Landlord of any rent or any
sum of money or any other consideration hereunder paid by Tenant after the
termination, in any manner, of the term herein demised, or after the giving by
Landlord of any notice hereunder to effect such termination, shall not
reinstate, continue or extend the term herein demised, or destroy, or in any
manner impair the efficacy of any such notice of termination as may have been
given hereunder by Landlord to Tenant prior to the receipt of any such sum of
money or other consideration, unless so agreed to in writing and signed by 



 17
 









Landlord.  Neither acceptance of the keys nor any other
act or thing done by Landlord or any agent or employee during the term herein
demised shall be deemed to be an acceptance of a surrender of the premises,
excepting only an agreement in writing signed by Landlord accepting or agreeing
to accept such surrender.


29.                               Personal
Property Taxes.


Tenant shall be
responsible for and shall pay any taxes or assessments levied or assessed
during the term of this Lease against any leasehold interest of Tenant or
personal property or trade fixtures of Tenant of any kind, owned by Tenant or
placed in, upon or about the premises by Tenant.


30.                               Recordation
of Lease.


Tenant agrees that it
will, upon Landlord’s request, execute a Memorandum of this Lease in a form
suitable for recording under the applicable law of the jurisdiction in which
the premises are located.  The party
recording such Memorandum of Lease shall pay all costs of recordation,
including any transfer or recordation taxes thereon.


31.                               Severability.


(a)                                  It
is agreed that, for the purpose of any suit brought or based on this Lease,
this Lease shall be construed to be a divisible contract, to the end that
successive actions may be maintained thereon as successive periodic sums shall
mature or be due hereunder, and it is further agreed that failure to include in
any suit or action any sum or sums then matured or due shall not be a bar to
the maintenance of any suit or action for the recovery of said sum or sums so
omitted; and Tenant agrees that it will not, in any suit or suits brought or
arising under this Lease for a matured sum for which judgment has not
previously been obtained or entered, plead, rely on or interpose the defenses
of res adjudicata, former recovery, extinguishment, merger, election of
remedies or other similar defense as a default to said suit or suits.


(b)                                 If
any term, clause or provision of this Lease is declared invalid by a court of
competent jurisdiction, the validity of the remainder of this Lease shall not
be affected thereby but shall remain in full force and effect.


32.                               Non-Waiver.


It is understood and
agreed that nothing herein shall be construed to be a waiver of any of the
terms, covenants or conditions herein contained, unless the same shall be in
writing, signed by the party to be charged with such waiver, and no waiver of
the breach of any covenant herein shall be construed as a waiver of such
covenant or any subsequent breach thereof. 
No mention in this Lease of any specific right or remedy shall preclude
Landlord from exercising any other right or from having any other remedy or
from maintaining any action to which it may be otherwise entitled either at law
or in equity.


33.                               Successors
and Assigns.


(a)                                  Except
as herein provided, this Lease and the covenants and conditions herein
contained shall inure to the benefit of and be binding upon Landlord, its
successors and assigns; shall be binding upon Tenant, its successors and
assigns (including without limitation



 18
 









any trustee in bankruptcy
or debtor-in-possession, and any assignee of the same); and shall inure to the
benefit of Tenant and only such assignees of Tenant to whom an assignment by
Tenant has been consented to in writing by Landlord.  In the event more than one person, firm or
corporation is named herein as Tenant, the liability of all parties named
herein as Tenant shall be joint and several.


(b)                                 In
the event Landlord’s interest under this Lease is transferred or assigned and
written notice thereof is given to Tenant, Landlord (or any subsequent assignee
or transferee of Landlord’s interest under this Lease who gives such notice to
Tenant) shall automatically be relieved and released from and after the date of
such transfer or conveyance from all liability thereafter accruing or arising
hereunder.  Further, the liability of
Landlord, its successors and assigns, under this Lease shall at all times be
limited solely to Landlord’s interest in the land and improvements comprising
the Building and in the event the owner of Landlord’s interest in this Lease is
at any time an individual, partnership, joint venture or unincorporated
association, Tenant agrees that such individual or the members or partners of
such partnership, joint venture or unincorporated association shall not be
personally or individually liable or responsible for the performance of any of
Landlord’s obligations hereunder.


34.                               Security
Deposit. Intentionally deleted.


35.                               Bankruptcy.


(a)                                  An
“Act of Bankruptcy” shall mean:


(i)                                     the
application by Tenant or any guarantor of Tenant or its or their consent to the
appointment of a receiver, trustee or liquidator of Tenant or any guarantor of
Tenant or a substantial part of its or their assets;


(ii)                                  the
filing of a voluntary petition in bankruptcy or the admission in writing by
Tenant or any guarantor of Tenant of its inability to pay its debts as they
become due;


(iii)                               the
making by Tenant or any guarantor of Tenant of an assignment for the benefit of
its creditors;


(iv)                              the
filing of a petition or an answer seeking a reorganization or an arrangement
with its creditors or an attempt to take advantage of any insolvency law;


(v)                                 the
filing of an answer admitting the material allegations of a petition filed
against Tenant or any guarantor of Tenant in any bankruptcy, reorganization or
insolvency proceeding;


(vi)                              the
entering of an order, judgment or decree by any court of competent jurisdiction
adjudicating Tenant or any guarantor of Tenant, as a bankrupt or an insolvent,
approving a petition seeking such a reorganization, or appointing a receiver,
trustee or liquidator of Tenant or any guarantor of Tenant or of all or a
substantial part of its or their assets; or



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(vii)                           the
commencing of any proceeding under any bankruptcy, reorganization, arrangement,
insolvency, readjustment, receivership or similar law, and the continuation of
such order, judgment, decree or proceeding unstayed for a period of sixty (60)
days.


(b)                                 Upon
the occurrence of an Act of Bankruptcy, this Lease and all rights of Tenant
hereunder shall automatically terminate with the same force and effect as if
the date of any such event were the date stated herein for the expiration of
the term, and Tenant shall vacate and surrender the premises, but shall remain
liable as herein provided.  Landlord
reserves any and all remedies provided herein or at law or in equity.


(c)                                  If
this Lease is not terminated in accordance with subsection (b) above because
such termination is not permitted under the Bankruptcy Code, 11 U.S.C. §101 et seq.
(the “Bankruptcy Code”), then upon the filing of a petition by or against
Tenant under the Bankruptcy Code, Tenant, as debtor and as debtor in
possession, and any trustee who may be appointed, agree:


(i)                                     To
perform each and every obligation of Tenant under this Lease until such time as
this Lease is either rejected or assumed by order of the United States
Bankruptcy Court;


(ii)                                  To
pay monthly in advance on the first day of each month as reasonable
compensation for use and occupancy of the premises an amount equal to all basic
rent and all additional rent reserved hereunder;


(iii)                               To
reject or assume this Lease within sixty (60) days of the filing of such
petition under Chapter 7 of the Bankruptcy Code or within thirty (30) days of
the filing of a petition under any other Chapter;


(iv)                              To
give Landlord at least forty-five (45) days prior written notice of any
proceeding relating to any assumption of this Lease;


(v)                                 To
give Landlord at least thirty (30) days prior written notice of any abandonment
of the premises, any such abandonment to be deemed conclusively a rejection of
this Lease;


(vi)                              To
be deemed conclusively to have rejected this Lease in the event of the failure
to comply with any of the above; and


(vii)                           To be
deemed to have consented to the entry of an order by an appropriate United
States Bankruptcy Court providing all of the above, waiving notice and hearing
of the entry of same.


(d)                                 Notwithstanding
anything in this Lease to the contrary, all amounts payable by Tenant to or on
behalf of Landlord hereunder, whether or not expressly denominated 



 20
 









as rent, shall constitute
“rent” for the purposes of Section 502(b)(7) of the Bankruptcy Code, including,
without limitation, reasonable attorney’s fees incurred by Landlord by reason
of Tenant’s bankruptcy.


(e)                                  In
the event that this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, any and all monies or other consideration
payable or otherwise to be delivered in connection with such assignment shall
be paid or delivered to Landlord, shall be and remain the exclusive property of
Landlord, and shall not constitute property of Tenant or of the estate of
Tenant within the meaning of the Bankruptcy Code.  Any and all monies or other consideration
constituting Landlord’s property under the preceding sentence not directly paid
or delivered to Landlord shall be held in trust for the benefit of Landlord by
the recipient thereof and be promptly paid to or turned over to Landlord.  If Tenant assumes this Lease and proposes to
assign the same pursuant to the provisions of the Bankruptcy Code to any person
or entity who shall have made a bona fide offer to accept an assignment of this
Lease on terms acceptable to Tenant, the notice of such proposed assignment
setting forth (i) the name and address of such person; (ii) all of the terms
and conditions of such offer; and (iii) adequate assurance to be provided to
Landlord to assure such assignee’s future performance under the Lease,
including, without limitation, the assurance referred to in Section 365(b)(3)
of the Bankruptcy Code, or any such successor or substitute legislation or rule
thereto, shall be given to landlord by Tenant no later than twenty (20) days
after receipt by Tenant, but in any event no later than ten (10) days prior to
the date that Tenant shall make application to a court of competent
jurisdiction for authority and approval to enter into such assignment and
assumption, and Landlord shall thereupon have the prior right and option, to be
exercised by notice to Tenant given at any time prior to the effective date of
such proposed assignment, to accept an assignment of this Lease upon the same
terms and conditions and for the same consideration, if any, as the bona fide
offer made by such person, less any brokerage commission which may be payable
out of the consideration to be paid by such person for the assignment of this
Lease.  Any person or entity to which
this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall
be deemed without further act or deed to have assumed all of the obligations
arising under this Lease on and after the date of such assignment.  Any such assignee shall, upon demand, execute
and deliver to Landlord an instrument confirming such assumption.


(f)                                    Nothing
contained in this Section 35 shall be deemed in any manner to limited Landlord’s
rights and remedies under the Bankruptcy Code, as presently existing or as may
hereafter be amended.


(g)                                 No
default under this Lease by Tenant, either prior to or subsequent to any Act of
Bankruptcy, shall be deemed to have been waived unless expressly done so in
writing by Landlord.


(h)                                 Neither
Tenant’s interest in this Lease, nor any estate created hereby in Tenant nor
any interest herein or therein, shall pass to any trustee or receiver or assignee
for the benefit of creditors or otherwise by operation of law except as may
specifically be provided by the Bankruptcy Code.



 21
 









36.                               Broker’s
Commission.


Tenant and Landlord
warrant that they have dealt with no broker in connection with this Lease except
Richie Blue of Blue and Obrecht, and agree to indemnify, defend and save the
other harmless from all claims, actions, damages, costs and expenses and
liability whatsoever, including reasonable attorney’s fees, that may arise from
any breach of this warranty.  Landlord
shall be solely responsible for any fee or commission due to the foregoing
named broker and/or agent.


37.                               Rules
and Regulations.


Tenant shall faithfully observe and comply with the
rules and regulations attached hereto as Exhibit C, and with any amendments or
modifications thereto that Landlord shall, from time to time, promulgate with
respect to the Building.  Any such
amendments or modifications to the rules and regulations shall be binding upon
Tenant upon delivery of a copy of them to Tenant.  Landlord shall not be responsible to Tenant
for the nonperformance of any of said rules and regulations by any other
tenants or occupants.


38.                               Environmental
Provisions.


(a)                                  Tenant
and its successors and assigns shall use and operate the building, the property
and the leased premises, respectively, at all times during the term hereof,
under and in compliance with the laws of the jurisdiction in which the premises
are located and in compliance with all applicable Environmental Legal
Requirements.  “Environmental Legal
Requirements” shall mean any applicable law relating to public health, safety
or the environment, including, without limitation, relating to releases,
discharges or omissions to air, water, land or groundwater, to the withdrawal
or use of groundwater, to the use and handling of polychlorinated biphenyls (“PCBs”)
or asbestos, or asbestos containing products, to the disposal, treatment,
storage or management of solid or other hazardous or harmful wastes or to
exposure to toxic, hazardous or other harmful materials (collectively “Hazardous
Substances”) to the handling, transportation, discharge or release of gaseous
or liquid substance and any regulation or final order or directive issues
pursuant to such statute or ordinance, in each case applicable to the premises,
the building or its operation, construction or modification, including without
limitation the following: the Clean Air Act, the Federal Water Pollution
Control Act (“FWPCA”), the Safe Drinking Water Act, the Toxic Substances Control
Act, the Comprehensive Environmental Response Compensation and Liability Act,
as amended by the Solid and Hazardous Waste Amendments of 1984 (“RCRA”), the
Occupational Safety and Health Act, the Emergency Planning and Community
Right-to-Know Act of 1986, the Solid Waste Disposal Act, and any state statutes
addressing similar matters, and any state statute providing for financial
responsibility for clean-up or other actions with respect to the release or
threatened release of any of the above-referenced substances.


(b)                                 Tenant
hereby indemnifies, defends and saves Landlord harmless from all liabilities
and claims arising from the use, storage or placement of any Hazardous
Substances upon the premises or elsewhere within the building or property of
Landlord (if brought or placed thereon by Tenant, its agents, employees,
contractors or invitees); and Tenant shall (i) within fifteen (15) days after
written notice thereof, take or cause to be taken, at its sole expense, such
actions as may be necessary to comply with all Environmental Legal Requirements
and (ii) 



 22
 









within fifteen (15) days
after written demand therefor, reimburse Landlord for any amounts expended by
Landlord to comply with any Environmental Legal Requirements with respect to
the premises or with respect to any other portions of Landlord’s building or
property as the result of the placement or storage of Hazardous Substances by
Tenant, its agents, employees, contractors or invitees, or in connection with
any judicial or administrative investigation or proceeding relating thereto,
including, without limitation, reasonable attorneys’ fees, fines or other
penalty payments.


(c)                                  For
purposes of this provision, Tenant shall be conclusively deemed to have
violated the Environmental Requirements if (i) any notice or order is directed
to either Landlord or Tenant by any governmental agency, body, or court
alleging that such violation has occurred; or (ii) if Landlord obtains and
delivers to Tenant a report prepared by an engineer or other party engaged in
the business of testing or determining the existence of Hazardous Substances,
which report states that there are Hazardous Substances used, stored or placed
upon the premises.  In the event Tenant
is deemed to have violated any of the Environmental Requirements as set forth
in the preceding sentence, Landlord shall have the right and option, after
fifteen (15) days’ prior written notice to Tenant, to terminate this Lease by
written notice thereof to Tenant, in which event Landlord shall retain all
rights and remedies, and tenant shall be subject to all liabilities set forth
in Article 13 of this Lease notwithstanding such termination.


(d)                                 Tenant
further agrees that, in the event Landlord notifies Tenant of Landlord’s
intention to remediate mold in the Premises or in any adjoining property of
Landlord, Tenant will provide access to the Premises to permit Landlord to
remediate any such problem.  In the event
Landlord determines that Tenant should vacate the Premises during such
remediation which was not caused by any act or omission of Tenant, its agents,
employees, contractors or invitees, Tenant agrees to relocate, at Landlord’s
expense, to another premises owned by Landlord or an affiliate of Landlord, if
necessary, in order for Landlord to complete such remediation.


(e)                                  Tenant
hereby grants Landlord, and Landlord’s agents and employees (including, but not
limited to, any engineers or other parties engaged in the testing of Hazardous
Substances) the reasonable right to enter upon the premises for the purpose of
determining whether Tenant, its agents, employees, contractors or invitees, has
violated any of the provisions of this Section.


39.                               Captions.


The captions of the
various sections of this Lease are for convenience only and are not a part of
this Lease.  Such captions shall not be
construed to define or limit any of the provisions of this Lease.


40.                               Final
and Entire Agreement.


This Lease
contains the final and entire agreement between the parties hereto, and neither
they nor their agents shall be bound by any terms, conditions or
representations not herein written. 
Tenant acknowledges that neither Landlord nor any broker, agent or
employee of Landlord has made any representations or promises with respect to
the premises or Building, except as expressly set forth herein.  Any representation, inducement, warranty,
understanding or 



 23
 









agreement that is
not contained in this Lease shall not be of any force or effect.


41.                               Counterparts.


This Lease may be
executed in separate counterparts, each of which shall be deemed an original
and all of which taken together shall constitute one and the same document.


42.                               Authority.


The person
executing and delivering this Lease on behalf of Tenant hereby covenants and
warrants that such person is duly authorized to execute and deliver this Lease
on behalf of Tenant.


43.                               Notices.


Any notice required by
this Lease shall be sent by certified mail, postage prepaid, return receipt
requested, or by a recognized overnight delivery service such as Federal
Express with a receipt by addressee, to Landlord at Merritt Properties, LLC,
2066 Lord Baltimore Drive, Baltimore, Maryland 21244.  Any notice required by this Lease shall be
sent in the same manner to Tenant at the premises. with a copy to Robert P. Legg,
Esquire, Neuberger, Quinn, Gielen, Rubin & Gibber P.A., One South Street,
27th Floor, Baltimore, Maryland 21202. 
Either party may, at any time, and from time to time, designate in
writing a substitute address for that set forth above, and thereafter all
notices to such party shall be sent by certified mail to such substitute
address.


44.                               Tenant
Representative.


The name, address and telephone number of Tenant’s
representative to be contacted in event of emergency are as follows:


Name: Doug Rein


Business Phone:
(410) 229-1292


Cell Phone: (410) 336-1130


45.                               Waiver
of Jury Trial.


THE LANDLORD AND THE
TENANT WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, COUNTERCLAIM, OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS LEASE.  THIS WAIVER APPLIES TO ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS AND PROCEEDINGS, INCLUDING PARTIES WHO ARE NOT PARTIES
TO THIS LEASE.  THIS WAIVER IS KNOWINGLY,
INTENTIONALLY, AND VOLUNTARILY MADE BY THE TENANT AND THE TENANT ACKNOWLEDGES
THAT NEITHER THE LANDLORD, NOR ANY PERSON ACTING ON BEHALF OF THE LANDLORD, HAS
MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN
ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. 
THE TENANT FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD
THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS LEASE AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE
WILL, IN THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.


46.                               Submission
Not An Offer.


The submission of
this document for examination does not constitute an option or offer to lease 



 24
 









the Premises.  This document shall have no binding effect on
the parties unless executed by both Landlord and Tenant and a fully executed
copy is delivered to each of them.


47.                               Renewal
Option.


If Tenant is not then in default under this Lease or
any of the provisions hereof, Tenant may extend the term of this Lease for one
(1) additional successive period of three (3) years, by notifying Landlord in
writing of its intention to do so at least one hundred eighty (180) days prior
to the expiration of the then current term. 
Such renewal term shall be under the same terms and conditions as are
herein set forth except that the annual rental for the renewal term shall be
adjusted as follows:


RENTAL FOR THE FIRST YEAR
OF THE RENEWAL TERM SHALL BE ONE HUNDRED THREE PERCENT (103%) OF THE RENT
DURING THE LAST YEAR OF THE INITIAL TERM. 
THEREAFTER, THE RENTAL RATE SHALL INCREASE ANNUALLY AT A RATE OF THREE
PERCENT (3%) OVER THE PRECEDING YEAR’S RENTAL RATE THROUGHOUT THE RENEWAL TERM.


48.                               Additional
Items.


Landlord shall provide a
fifty thousand dollar ($50,000.00) Tenant Improvement Allowance which shall be
used for Improvements to the premises, and shall be reimbursed to the Tenant in
the form of a rental credit.   In
addition, Landlord, at Landlord’s sole cost and expense, shall paint the
warehouse walls and polish and seal warehouse floor in a similar condition as
test strip performed by Consolidated Coatings and approved by Tenant on May 30,
2007.


49.                               Termination
Option.


Tenant is hereby granted
one (1) one (1) time option to terminate this Lease as of the end of the third
(3rd)
year of the Lease term provided all of the following conditions are complied
with: (i) Tenant shall not be in default under any of Tenant’s obligations
under the Lease as of the date Tenant exercises the option to terminate; (ii)
Tenant must give Landlord written notice of Tenant’s election to terminate not
later than one hundred and eighty (180) days prior to the expiration of the
third (3rd) year of
the Lease term and; (iii) Tenant shall pay a termination fee of twenty-five
thousand dollars ($25,000.00) thirty (30) days prior to the expiration of the
third (3rd) year of
the Lease term. Tenant shall continue to make all such rental payments when and
as the same are due and payable.  All
rentals and other charges payable by Tenant to Landlord shall be adjusted as of
the termination date.


50.                               Fees
and Costs.


In the event of a dispute
under this Lease, the prevailing party in such dispute, or litigation arising
from such dispute, shall be entitled to recover from the other its reasonable
attorneys’ and experts’ fees, costs and expenses incidental to such dispute or
litigation, including any appeal.


51.                               Time.


Time is of the essence for all purposes in this Lease.


- Signature Page to Follow -



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WITNESS the hands and seals of
the parties hereto as of the day and year first above written.


	
  WITNESS:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MERRITT/BAVAR-VA, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Merritt Management Corporation, Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
    /s/

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS/ATTEST:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TESSCO Technologies, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
    /s/

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title: