Document:

Exhibit 10.4

SEVERANCE COMPENSATION AGREEMENT

This agreement is entered into the 27th day of June, 2007,
by and between Citizens Business Bank (the “Bank”), and Chris A. Walters, Executive Vice President of the Bank (the
“Executive”).

Whereas, the Bank’s Board of Directors has determined
that it is appropriate to reinforce and encourage the continued attention and dedication of members of the Bank’s Senior Management Committee,
including the Executive, to their assigned duties without distraction in potentially disturbing circumstances arising from the possibility of a Change
in Control (as defined herein) of CVB Financial Corporation (the “Company”) directly or indirectly the Bank, a wholly owned subsidiary of the
Company; and

Whereas, this Agreement sets forth the compensation which
the Bank agrees it will pay to the Executive upon a Change in Control and termination or resignation of the Executive’s
employment,

Now, therefore, in consideration of these promises and the
mutual covenants and agreements contained herein and to induce the Executive to remain employed by the Bank and to continue to exert his best efforts
on behalf of the Bank, the parties agree as follows:

	1.
	 	Compensation Upon a Change in Control.

A.    In the event that a Change in Control occurs during the employment of the Executive and

(i)    the
Executive’s employment is terminated by the Company or the Bank or any successor to the Company or the Bank other than for Cause (as defined
below) within one (1) year of the completion of such Change in Control; or

(ii)    the
Executive resigns his employment for any reason within one (1) year of the completion of such Change in Control; or

(iii)    the
Executive is offered a position with any successor to the Company or the Bank at or around the time of such Change in Control but decides that he does
not wish to accept such a position and, as a result, the Executive suffers a job loss (either by termination or resignation);

the Executive
shall receive an amount equal to 2 times the Executive’s annual base compensation for the last calendar year ended immediately preceding the
Change in Control, plus 2 times the average annual bonus received for the last two calendar years ended immediately preceding the Change in Control.
Such amounts, less applicable withholdings, employment and payroll taxes (which taxes shall be paid upon termination or resignation of Executive’s
employment or at the time payments are made hereunder, as required by law), shall be paid (without interest or other adjustment) in 24 equal monthly
installments on the first day of each month commencing with the first such date that is at least six (6)

months after
the effective date of the termination or resignation of the Executive’s employment and continuing for 23 successive months thereafter. This
payment schedule is intended to comply with the requirements of Section 409A of the Internal Revenue Code and shall be interpreted consistently
therewith.

B.    The Executive may designate in writing (only on a form provided by the Bank and delivered by the Executive to
the Bank before Executive’s death) primary and contingent beneficiaries to receive the balance of any payment under Section 1A that are not made
prior to the Executive’s death and the proportions in which such beneficiaries are to receive such payment. The total amount of the balance of
such payment shall be paid to such beneficiaries in a single unreduced lump sum payment made within ninety (90) days following the Executive’s
death. The Executive may change beneficiary designations from time to time by completing and delivering additional such forms to the Bank. The last
written beneficiary designation delivered by the Executive to the Bank prior to the Executive’s death will control. If the Executive fails to
designate a beneficiary in such manner, or if no designated beneficiary survives the Executive, then Executive’s payment balance shall be paid to
the Executive’s estate in an unreduced lump sum payment within ninety (90) days following the Executive’s death.

	2.
	 	Definitions.

A.    Change in Control. For purposes of this Agreement, a “Change in Control” shall deemed to have
occurred if:

(i)    any
one person, or more than one person acting as a group, acquires (or has acquired during the 12 month period ending on the date of the most recent
acquisition) ownership of stock of the Company or the Bank possessing more than 50% of the total voting power of the Company’s or the Bank’s
stock; provided, however, it is expressly acknowledged by the Executive that this provision shall not be applicable to any person who is, as of the
date of this Agreement, a Director of the Company or the Bank;

(ii)    a
majority of the members of the Company’s or the Bank’s Board of Directors is replaced during any 12 month period by directors whose
appointment for election is not endorsed by a majority of the members of the Company’s or the Bank’s board prior to the date of the
appointment or election;

(iii)    a
merger or consolidation where the holders of the Bank’s or the Company’s voting stock immediately prior to the effective date of such merger
or consolidation own less than 50% of the voting stock of the entity surviving such merger or consolidation;

(iv)    any
one person, or more than one person acting as a group, acquired (or has acquired during the twelve month period ending on the date of the most recent
acquisition by such person or persons) assets from the Bank that have a total fair market value greater than 50% of the total

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fair market value of all of
the Bank’s assets immediately before the acquisition or acquisitions; provided, however, transfer of assets which otherwise would satisfy the
requirements of this subsection (iv) will not be treated as a change in the ownership of such assets if the assets are transferred to:

(a)    an
entity, 50% or more of the total value or voting power of which is owned, directly or indirectly by the Company or the Bank;

(b)    a
person, or more than one person acting as a group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the
outstanding stock of the Company or the Bank; or

(c)    an
entity, at least 50% of the total value or voting power is owned, directly or indirectly by a person who owns, directly or indirectly, 50% or more of
the total value or voting power of all the outstanding stock of the Bank.

Each event
comprising a Change in Control is intended to constitute a “change in ownership or effective control”, or a “change in the ownership of
a substantial portion of the assets,” of the Company or the Bank as such terms are defined for purposes of Section 409A of the Internal Revenue
Code and “Change in Control” as used herein shall be interpreted consistently therewith.

Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur as a result of any transaction which merely changes the jurisdiction of incorporation
of the Company or the Bank.

B.    Cause. For purposes of this Agreement, the Bank shall have “Cause” to terminate the
Executive’s employment and shall not be obligated to make any payments hereunder or otherwise in the event the Executive has:

(i)    committed a significant act of dishonesty, deceit or breach of fiduciary duty in the performance of
Executive’s duties as an employee of the Bank;

(ii)    grossly neglected or willfully failed in any way to perform substantially the duties of such employment;
or

(iii)    acted or failed to act in any other way that reflects materially and adversely on the Bank. In the event of a
termination of Executive’s employment by the Bank for Cause, the Bank shall deliver to Executive at the time the Executive is notified of the
termination of his employment a written statement setting forth in reasonable detail the facts and circumstances claimed by the Bank to provide a basis
for the termination of the Executive’s employment for Cause.

	3.
	 	Term.

This agreement shall terminate, except to the extent that
any obligation of the Bank hereunder remains unpaid as of such time, upon the earliest of:

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(i)    the
termination or resignation of the Executive’s employment from the Bank for any reason if a Change in Control has not occurred prior to the date of
such termination or resignation;

(ii)    three (3)
years from the date hereof if a Change in Control has not occurred during such period;

(iii)    the
termination of Executives’ employment from the Bank for Cause within one (1) year after a Change in Control;

(iv)    one (1)
year after a Change in Control if Executive is still employed with the Bank or its successor; or

(v)    after a
Change in Control of the Company or the Bank upon satisfaction of all of the Company’s or the Bank’s obligations hereunder.

	4.
	 	No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights.

A.    The Executive shall not be required to mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another employer after the effective date of termination or resignation, or
otherwise, by his engagement as a consultant or his conduct of any other business activities.

B.    The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish the Executive’s existing rights, or rights which would accrue solely as a result of the passage of time,
under any employment agreement or other plan, arrangement or deferred compensation agreement, except as otherwise agreed to in writing by the Bank and
the Executive.

	5.
	 	Successor to the Bank.

A.    The Bank will require any successor or assign (whether direct or indirect by purchase or otherwise) to all or
substantially all of the business and/or assets of the Bank, by written agreement with the Executive, to assume and agree to perform this Agreement in
full. As used in this Agreement, “Bank” shall mean the Bank as herein before defined and any successor or assign to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in this section 5 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operations of law. Notwithstanding the assumption of this Agreement by a successor assign of the Bank, if a Change in
Control (as defined in section 2 (a) above) has occurred, the Executive shall have and be entitled from such successor to all rights under section 1 of
this Agreement.

B.    If the Executive should die while any amounts are still payable to him hereunder, all such amounts shall be
paid in accordance with the terms of this Agreement to the Executive’s designated beneficiary(ies) or, if there are no such

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designated
beneficiary(ies), to the Executive’s estate. This Agreement shall, therefore, inure to the benefit of and be enforceable by the Executive’s
designated beneficiaries, personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees.

	6.
	 	Confidentiality.

The Executive shall retain in confidence any and all
confidential information known to the Executive concerning the Company and the Bank and its business so long as such information is not otherwise
publicly disclosed.

	7.
	 	Legal Fees and Expenses.

The Bank shall pay all legal fees and expenses which the
Executive may incur as a result of the Bank’s contesting the validity, enforceability or the Executive’s interpretation of, or
determinations, under, this Agreement if the Executive prevails in any such contest or proceeding.

	8.
	 	Limitation on Payments.

This Agreement is made expressly subject to the provision
of law codified at 12 U.S.C. 1828 (k) and 12 C.F.R. Part 359 which regulate and prohibit certain forms of benefits to Executive. Executive acknowledges
that he understands these sections of law and that the Bank’s obligations to make payments hereunder are expressly relieved if such payments
violate these sections of law or any successors thereto.

Notwithstanding any other provisions of this Agreement, if
the Company’s principal tax advisor determines that the total amounts payable pursuant to this Agreement, together with other payments to which
Executive is entitled, would constitute an “excess parachute payment” (as defined in Section 280G of the Internal Revenue Code), as amended,
such payments shall be reduced, in such order and manner as the Bank and/or Resulting Entity and Executive may agree, (or in the absence of such
agreement, as shall be determined by Executive), to the largest amount which may be paid without any portion of such amount being subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code.

	9.
	 	Notice.

For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be deemed to have been given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid as follows:

	If the Bank:
	 	Citizens Business Bank
 701 N. Haven Avenue, Suite 350

Ontario, California 91764
 Attention: Christopher D. Myers, President and CEO

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If to the Executive: At the address below his signature or
such other address as either party may have been furnished to the other in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

	10.
	 	Validity.

The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and
effect.

	11.
	 	Counterparts.

This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

	12.
	 	Miscellaneous.

No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Bank. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or any prior to subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set
forth expressly in this Agreement. Any and all prior discussions, negotiations, agreements and/or Severance Agreements on the subject matter hereof
here merged and integrated into and are superseded by this Agreement. This Agreement shall be governed by and construed in accordance with the laws of
the State of California.

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above,

Citizens Business Bank

	By:    
	 	                                                                

Christopher D. Myers
 President and CEO

	EXECUTIVE:    
	 	                                                                            

Chris A. Walters,
 Executive Vice President

Address: 701 N. Haven Avenue

City and State: Ontario, California 91764

6a5465931ex10_5.htm

    Exhibit
      10.5

     

    

    
      
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    or
      that
      may have been used In calculating Rent, is an approxlmatlon
      which the Parties agree Is reasonable and any payments based thereon are not
      subject to revision whether or not the actual size Is more or
      less. Note: Lessee is advised to verify the actual size
prior to executing this Lease.

    
      2.2
        Condition. Lessor shall deliver the Premises to Lessee broom
        clean and free of debris on the Commencement Date or the Early
Possession Date, whichever first occurs ("Start Date"),
and, so long as the required service
        contracts described in Paragraph
        7.1(b) below are obtained by Lessee and in effect within thirty days following
        the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
        lighting, heating, ventilating and air conditioning systems ("HVAC"), loading
        doors, sump pumps,if
        any, and all other such elements in the Premises, other than those
        constructed by Lessee, shall be In good operating condition on said date
        and
        that the structural elements of the roof, bearing walls and foundation ofany
        buildings on the Premises (the "Building") 
        shall be free of material defects. If a non-compliance with
        said
        warranty exists as of the Start Date, or if one of such systems or elements
        should malfunction or fail within the appropriate warranty period. Lessor
        shall,
        as Lessor's sole obligation with respect to Such matter, except as otherwise
        provided in this Lease, promptly after receipt of written notice from Lessee
        setting forth with specificity the nature and extent of such
non-compliance, malfunction or failure, rectify same at
        Lessor's expense. The warranty periods shall be as foilows: (i) 6 months
        as to
        the HVAC systems, and (ii) 30 days as to the remaining systems and other
        elements of the Building. If Lessee does not give Lessor the required notice
        within the appropriate warranty period, correction of any such non-compliance,
        malfunction or failure shall be the obligation of Lessee at Lessee's
sole
        cost
        and expense.

      2.3
        Compliance. Lessor warrants that the improvements on the
        Premises comply with the building codes, applicable laws, covenants or
        restrictions of record, regulations, and ordinances ("Applicable
        Requirements")  that were in effect at the time
        that each improvement, or portion thereof, was constructed. Said warranty
        does
        not apply to the use to which Lessee will put the Premises, modifications
        which
        may be required by the Americans with Disabilities Act or any similar laws
        as a
        result of Lessee's use (see Paragraph 50), or to any Alterations or Utility
        Installations (as defined in Paragraph 7.3(a)) made or to be made by
        Lessee. NOTE: Lessee Is responsible for determining
        whether or not the Applicable Requirements, and especially the zoning,
        are appropriate for Lessee's Intended use, and acknowledges that past uses
        of
        the Premises may no longer be allowed. If the Premises do not comply
        with said warranty, Lessor shall, except as otherwise provided, promptly
        after
        receipt of written notice from Lessee setting forth with specificity the
        nature
        and extent of such non-compliance, rectify the same at Lessor's expense.
        If
        Lessee does not give Lessor written notice of a non-compliance with this
        warranty within 6 months following the Start Date, correction of that
        non-compliance shall be the obligation of Lessee at Lessee's sole cost and
        expense. If the Applicable Requirements are hereafter changed so as to require
        during the term of this Lease the construction of an addition to or an
        alteration of the Premises and/or Building, the remediation of any Hazardous
        Substance, or the reinforcement or other physical modification of the Unit,
        Premises and/or Building
        ("CapitalExpenditure"),
Lessor and Lessee shall
        allocate the cost of
        such
        work as follows:

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

      (b)  If
        such
        Capital Expenditure is not the result of the specific and unique use of the
        Premises by Lessee (such as, governmentally mandated
        seismic modifications), then Lessor and Lessee shall allocate the obligation
        topay
        for such costs pursuant to the provisions ofParagraph
        7.1(d); provided, however, that'd such Capital Expenditure is required during
        the last 2 years of this Lease or if Lessor reasonably determines that it
        is not
        economically feasible to payits share thereof, Lessor shall have the option
        to
        terminate this Lease upon 90 days prior written notice to Lessee unless Lessee
        notifies Lessor, in writing, within 10 days after receipt of Lessors termination
        notice that Lessee will pay for such Capital Expenditure. If Lessor does
        not
        elect to terminate, and fails to tender its share of any such Capital
        Expenditure. Lessee may advance such funds and deduct same, with interest,
fromRent until Lessor's
        share of
        such casts have been fully paid. If Lessee Is unable to finance Lessor's
        share, or If the balance of the Rent dueand payablefor the remainder of this
        Lease is not suffident to fully reimburse Lessee on an offset basis, Lessee
        shall have the right to terminate
        this Lease upon 30 days written notice to Lessor.

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

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

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

       

      3.             Term.

       

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

      3.2          Early
        Possession. If Lessee totally or partially occupies
        the Premises prior to the Commencement Date, the obligation to pay Base Rent
        shall be abated for the period of such early possession. All other terms
        of this
        Lease (including but not limited to the obligations to pay Real Properfy.
        Taxes and Insurance premiums and to maintain the Premises)
        shall, however, be In effect dudng such period. Any such easy possession
        shall
        not
        affect the Expiration Date.

       

      
        
          
          

        

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

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

       

      4.   Rent.

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

      4.2Payment.
        Lessee shall cause payment of Rent to be received by Lessor in lawful
        money of the United States on or before the day on
        which
        It is due, without offset or deduction (except as specifically permitted
        in this
        Lease). Rent for any period during the term hereof which is for less than
        one
        full calendar month shall be prorated based upon the actual number of days
        of
        said month. Payment of Rent shall be made to Lessor at its address
stated herein or to such other persons or place as Lessor
        may from time
        to time designate in writing. Acceptance of a payment which is less than the amount
        then due shall not be a waiver of Lessor's rights to the
balance of such Rent, regardless of Lessor's endorsement
        of any check
        so stating. In the event that any check, draft, or other
        instrument of payment given by Lessee to Lessor Is dishonored for any reason,
        Lessee agrees to pay to Lessor the sum of $25 In addition to any We Charge
        and Lessor, at Its
        option, may require all future payments to be made by Lessee to be by cashier's
        check. Payments will be applied first to accrued late charges and attomey's
        fees, second to accrued interest, then to Base Rent and Operating Expense
        Increase, and any remaining amount to any other outstanding charges or
        costs.

      4.3
        Association Fees. In addition to the Base Rent, Lessee
        shall pay to Lessor each month an amount equal to any owner's association
        or
        condominium fees levied or assessed against the Premises. Said monies shall
        be
        paid at the same time and in the same manner as the Base
        Rent

       

      5.   Security
        Deposit. Lessee shall deposit with Lessor upon executlon hereof the
        Security Deposit as security for Lessee's faithful performance of Its
        obligations under this Lease. If Lessee fails to pay Rent, or
        otherwise Defaults under this Lease, Lessor may use, apply or retain all
        or any
        portion of said Security Deposit for the payment of any amount due Lessor
        or to
        reimburse or compensate Lessor for any liability, expense, loss or damage
        which
        Lessor may suffer or incur by reason thereof. If Lessor uses or applies all
        or
        any portion of the Security Deposit, Lessee shall within 10 days after written
        request therefor deposit monies with Lessor sufficient to restore said Security
        Deposit to the full amount required by this Lease. If the Base Rent Increases
        dudng the term of this rase. Lessee shall, upon written request from Lessor,
        deposit additional moneys with Lessor so that the total amount
of the Security Deposit shall at all times bear the same
        proportion to
        the increased Base Rent as the initial Security Deposit bore to the initial
        Base
        Rent. Should the Agreed Use be amended to accommodate
a
        material change in the business of Lessee or to accommodate a sublessee or
        assignee, Lessor shall have the right to increase the Security Deposit to
        the
        extent necessary, In Lessor's reasonable judgment, to account for any
increased wear and tear that the Premises may suffer as a
        result thereof. If a change In control of Lessee occurs during this Lease
        and
        following such change the financial condition of Lessee is, in Lessors
        reasonable judgment, significantly reduced, Lessee shall deposit such additional
        monies with Lessor as shall be sufficient to cause the Security
        Deposit to be at a commercially reasonable level based on
        such change in financial condition. Lessor shall not be required to keep the Security
        Deposit
        separate from its general accounts. Within 14 days after the expiration or
        termination of this Lease, if Lessor wools to apply the Security Deposit
        only to
        unpaid Rent, and otherwise within 30 days after the Premises have been vacated
        pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
        Security Deposit not used or applied by Lessor. No part of the Security Deposit
        shall be considered to be held in trust, to bear interest or to
        be prepayment for any monies to be paid by Lessee under this Lease.

       

      6.  Use.

       

      6.1
        Use. Lessee shall use and occupy the Premises only
        for
        the Agreed Use, or any other legal use which is reasonably comparable thereto,
        and for no other purpose. Lessee shall not use or permit the use of the Premises
        in a manner that is unlawful, creates damage, waste or a nuisance, or
that disturbs occupants of or causes damage to neighboring
        premises or properties. Lessor shall not unreasonably withhold or delay it
        consent to any written request for a modification of the Agreed Use, so long
        as
        the same will not impair the structural integrity of the improvements on
        the
        Premises or the mechanical or electrical systems therein, and/or Is not
        significantly more burdensome to the Premises. If Lessor elects to withhold
        consent, Lessor stall within 7 days after such request give written notification
        of same, which notice shall include an explanation of Lessor's objections
        to the
        change in the Agreed Use.

      6.2           Hazardous
        Substances.

      (a)
        Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product,
        substance, or waste whose
        presence, use, manufacture, disposal, transportation, or release,
either by itself or in combination with other materials
        expected to be on the Premises, is either. (I) potentially
        Injurious to the public health, safety or welfare, the environment or the
        Premises, (ii) regulated or monitored by any
        governmental authority, or (III) a is for potential liability of Lessor
        to any govemmental agency or third party under any applicable statute or
        common
        law theory. Hazardous Substances shall Indude, but not be limited to,
        hydrocarbons, petroleum, gasoline, and/or crude oil or any products,
        by-products or fractions thereof. Lessee shall not engage In any activity
        in or
        on the Premises which constitutes a Reportable Use of Hazardous Substances
        without the express prior written consent of Lessor and timely compliance
        (at
        Lessee's expense) with all Applicable Requirements. "Reportable
Use" shall mean (1) the installation or use of any above
        or below
        ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that
        requires a permit from, or with respect to which a report, notice, registration
        or business
        plan Is required to be filed with,
        any governmental authority, and/or (iii) the presence at the Premises
        of
        a Hazardous Substance with respect to
        which any Applicable Requirements requires
that a notice be
        given to persons entering or occupying the Premises or neighboring
        properties. Notwithstanding
        the foregoing. Lessee may use any ordinary and customary materials reasonably
        required to be used in the normal course of the Agreed Use, ordinary office
        supplies (copier toner, liquid paper, glue, etc.) and common household leaning
        materials, so long as such use is in compliance with all Applicable
Requirements, Is not a Reportable Use, and does not expose
        the Premises
        or neighboring property to any meaningful risk
        of contamination
        or damage
        or
        expose Lessor to any liability therefor. In addition; Lessor may condition
        its
        consent to any Reportable Use upon receiving such additional
        assurances as
        Lessor reasonably deems necessary to protect Itself, the public, the Premises
        and/or the environment against damage,
        contamination, Injury and/or
        liability, Induding, but not limited to, the installation (and removal on
        or
        before Lease expiration or termination) of protective
        modifications (such as concrete encasements) and/or increasing
        the Security Deposit.

       

      
        
          
          

        

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

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

      (d)  Lessee
        Indemnification. Lessee shall Indemnify, defend and hold Lessor, Its
        agents, employees, lenders and ground lessor,If
        any,
        harmless from and against any and all loss of rents and/or damages, liabilities,
        judgments, daims, expenses, penalties, and attorneys' and consultants' fees
        arising out of or involving any Hazardous Substance brought
        onto the Premises by or for Lessee, or any third party (provided, however,
        that
        Lessee shall have no liability under this Lease with respect to underground
        migration of any Hazardous Substance under the Premises from adjacent properties
        not caused or  ontributed to by Lessee). Lessee's obligations shall
        include, but not be limited to, the effects of any contamination or injury
        to
        person, property or the environment created or suffered by Lessee, and the
        cost
        of investigation, removal, remediation, restoration and/or abatement,
        and shall survive the expiration or termination of this Lease. No
        termination, cancellation or release agreement entered Into by Lessor
        and Lessee shall release Lessee from its obligations under this Lease
        with respect to Hazardous Substances, unless specifically
        so agreed by Lessor in writing at the time of such
agreement.

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

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

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

      6.3
        Lessee's Compliance with Applicable
Requirements. Except as otherwise
        provided in this Lease, Lessee shall,
        at Lessee's sole expense, fully, diligently and in a timely
        manner, materially comply with all Applicable Requirements, the requirements
        of
        any applicable fire insurance underwriter or rating bureau, and the
        recommendations of Lessor's engineers and/or consultants which relate in
        any
        manner to the such Requirements, without regard to
whether such Requirements are now In effect or
        become
        effective after the Start Data. Lessee shall, within 10 days after receipt
        of
        Lessors written request, provide Lessor with
        copies of all permits and other documents, and other information
        evidendng Lessee's compliance
        with any Applicable Requirements specified by Lessor, and shall
        immediately upon receipt, notify Lessor in writing (with copies of any documents
        involved) of any threatened or actual claim, notice, citation, warning,
        complaint or report pertaining to or Involving the failure of Lessee or the
        Premises
        to comply with
        any Applicable
        Requirements.                                                                       

    

     

    
      
         

      

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

    7.          Maintenance;
      Repairs, Utility Installations; 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, Utility Installations
      (Intended for Lessee's exclusive use, no matter where located), and Alterations
      in good order, condition and repair (whether or not the portion of the Premises
      requiring repairs, or the means of repairing the same, are reasonably or readily
      accessible to Lessee, and whether or not the need for such repairs occurs as
      a
      result of Lessee's use, any prior use, the elements or the age of such portion
      of the Premises), including, but not limited to, all equipment or facilities,
      such as plumbing, HVAC equipment, electrical, lighting facilities, boilers,
      pressure vessels, fire protection system, fixtures, walls (interior and
      exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows,
      doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
      retaining walls, signs, sidewalks and parkways located in, on, or adjacent
      to
      the Premises. Lessee, In keeping the Premises in good order, condition and
      repair, shall exercise and perform good maintenance practices, specifically
      including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee's obligations shall
      include restorations, replacements or renewals when necessary to keep the
      Premises and all Improvements thereon or a part thereof in good order, condition
      and state of repair. Lessee shall, during the term of this Lease, keep the
      exterior appearance of the Building in a first-Gass condition
      (Including, e.g. graffiti removal) consistent with the exterior
appearance of other similar facilities of comparable age and
      size in the vicinity, including, when necessary, the exterior repainting
      of the Building.

    (b)  Service
      Contracts. Lessee shall, at Lessee's sole expense, procure and maintain
      contracts, with copies to Lessor, In customary form and substance for, and
      with
      contractors specializing and experienced in the maintenance of the following
      equipment and improvement, if any, if and when installed on the
      Premises: (I) HVAC equipment, (il) boiler, and pressure vessels, (iii) fire
      extinguishing systems, Including fire alarm and/or smoke detection, (iv)
      landscaping and Irrigation systems, (v)
      roof covering and drains. (vi) clarifiers (vii) basic utility feed to
      the
perimeter of the Building, and (viil) any other equipment, if
      reasonably required by Lessor. However, Lessor reserves the right, upon notice
      to Lessee, to procure and maintain any or all of such service
      contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand,
      for the cost.

    (c)  Failure
      to Perform. If Lessee falls to perform Lessee's obligations under this
      Paragraph 7.1, Lessor may enter upon the Premises
      after 10 days' prior written notice to Lessee (except in the case of an
      emergency, in which case no notice shall be required), perform such obligations
      on Lessee's behalf, and put the Premises in good order, condition and repair,
      and Lessee shall promptly pay to Lessor a sum equal to 115% of the cost thereof.
      thereof. 

    7.2         
      Lessor's Obligations. Subject to the provisions of Paragraphs
      2.2 (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14
      (Condemnation), it is
      intended by the Parties hereto that Lessor have no obligation, In any
      manner whatsoever, to repair and maintain the Premises, or the equipment
      therein, all of which obligations are intended to be that of the Lessee. It
      is
      the intention of the Parties that the terms of this Lease govern
the respective obligations of the Parties as to
      maintenance and repair of the Premises, and they expressly waive the benefit
      of
      any statute now or hereafter in effect to the extent It is Inconsistent with
      the
      terns of this Lease.

    7.3          Utility
      Installations; Trade Fixtures; Alterations.

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

    (b)  Consent.
      Lessee shall not make any Alterations or Utility Installations to the
      Premises without Lessor's prior written consent. Lessee may,
however, make non-structural Utility Installations
      to the
      Interior of the Premises (excluding the root) without such consent but upon
      notice to Lessor, as long as they are not visible from the
      outside, do not invdve puncturing, relocating or removing the roof or any
      existing walls, will not
      affect the electrical, plumbing, HVAC, andlor fife safety systems, and the
      cumulative cost thereof during this Lease as extended does not exceed a sum
      equal to 3 month's Base Rent in the aggregate or a sum equal to
      one month's Base Rent in any one year. Notwithstanding the foregoing, Lessee
      shall not make or permit
      any roof penetrations andlor install anything on the roof
      without the prior written approval of Lessor. Lessor may. as a precondition
      to
      granting such approval, require Lessee to utilize a contractor
      chosen and/or approved by Lessor. Any Alterations or Utility Installations
      that
      Lessee shall desire to make and which require
the consent of the Lessor shall be presented
      to Lessor in written form
      with detailed plans. Consent shall be deemed conditioned upon
      Lessee's: (1) acquiring all applicable governmental permits, (ii) furnishing
      Lessor with copies of both the permits and the plans and specifications prior
      to
      commencement of the work, and (iii) compliance with all conditions of said
      permits and other Applicable Requirements in a prompt and expeditious manner.
      Any Alterations or Utility Installations shall be performed in
      a workmanlike manner with good and sufficient materials. Lessee shall
      promptly upon completion famish Lessor with as-built plans and specifications.
      For work which costs an amount in excess,
      one month's Base Rent. Lessor may condition its consent upon
Lessee providing a lien and completion bond In
      an amount equal to 150% of
      the estimated cost of such Alteration or Utility installation and/or
      upon
      Lessee's posting an additional Security Deposit with Lessor.

     

    
      
         

      

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

    7.4          Ownership;
      Removal; Surrender, and Restoration.

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

    (b)  Removal.
      nless
      otherwise agreed in writing, Lessor may require that any or all Lessee Owned
      Alterations or Utility Installations be removed by the expiration or termination
      of this Lease notwithstanding that
      their Installation may have Imen consented to
      by
      Lcseor.
Lessor may require the removal at any time of all or any part of any
      Lessee Owned Alterations or Utility Installations made without the required
      consent.

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

    8.          Insurance;
      Indemnity.

    8.1      
      Payment For Insurance. Lessee shall pay for all insurance
      required under Paragraph 8 except to the extent of the cost attributable to
      liability Insurance carried by Lessor under Paragraph 8.2(b) in
      excess of $2,000,000 per occurrence. Premiums for policy periods commencing
      prior to or extending beyond the Lease term shall be prorated to correspond
      to
      the Lease term. Payment shall be made by Lessee to Lessor within 10 days
      following receipt of an invoice.

    8.2          Liability
      Insurance.

    (a)  Carried
      by Lessee. Lessee all obtain and keep In force a
      Commercial General Liability policy of insurance protecting Lessee and Lessor
      as
      an additional insured against daims for bodily Injury, personal Injury and
      property damage based upon or arising out of the ownership, use,
occupancy or. maintenance of the Premises and all areas appurtenant
      thereto. Such Insurance shall be on an occurrence basis providing
      single limit coverage In an amount not less than $1,000,000 per occurrence
      with
      an annual aggregate of not less than $2,000,000, an "Additional
      Insured-Managers or Lessors of Premises Endorsement" and contain the "Amendment
      of the Pollution Exclusion Endorsement" for damage caused by heat, smoke or
      fumes from a hostile fire. The policy shall not contain any antra-insured
      exclusions as between insured persons or organizations, but shall
Include coverage for liability assumed under this Lease as an
      "insured contract" for the performance of Lessee's indemnity obligations under
      this Lease. The limits of said Insurance shall not, however, limit the liability
      of Lessee nor relieve Lessee of any obligation hereunder. All Insurance carried
      by Lessee shall be primary to and not contributory with any similar insurance
      carried by Lessor, whose insurance shall be considered excess insurance
      only.

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

    8.3          Property
      Insurance -Building, Improvements and Rental
Value.

    (a)Building
      and improvements.
The Insuring
      Party
      shall obtain and keep in
      force a policy or policies in the
      name of Lessor, with loss payable to
      Lessor, any ground-lessor, and to any
      Lender insuring loss or damage to the Premises. The amount of such insurance
      shall be equal to the full replacement
      cost of the
      Premises, as the same shall exist from time to time, or the amount required
      by
      any Lender, but in no event more than the commercially
      reasonable and
      available insurable value
      thereof. If Lessor Is
      the Insuring Party, however, Lessee Owned Alterations and Utility Installations,
      Trade Fixtures, and Lessee's personal property shall be Insured by Lessee under
      Paragraph 8.4 rather than by Lessor. If the coverage Is available and
      commercially appropriate, such policy or policies shall insure against all
      risks
of
      direct physical loss
      or
      damage (except the perils of flood and/or earthquake unless required by a
      Lender), including coverage for debris removal and the enforcement of any
      Applicable Requirements requiring the upgrading, demolition, reconstruction
      or
replacement
      of any portion
      of
      the Premises as the result of a covered loss. Said policy or polldes shall
      also
      contain an agreed valuation provision In lieu of any coinsurance clause, waiver
      of subrogation, and inflation guard protection causing an increase in the annuat
      property insurance coverage amount by a factor of not less than the adjusted
      U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
      city nearest
to
      where the Premises are located. If
      such Insurance coverage has a deductible clause, the deductible amount shall
      pqt
      exceed $1,000 per occurrence, and Lessee shall be liable for such deductible
      amount in the event of an Insured Loss.

     

    
      
         

      

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

    (c)  Adjacent
      Premises.If
      the Premises are part of a larger building, or of a group of buildings
      owned by Lessor which are adjacent to the Premises, the Lessee shall pay
      for any Increase in the premiums for the property Insurance of such
      building or buildings if said increase is caused by Lessee's acts, omissions,
      use or occupancy of the Premises.

    8.4          Lessee's
      Property; Business Interruption Insurance.

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

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

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

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

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

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

    8.8          
      Exemption of lessor from Liability. Lessor shall not be liable
      for injury or damage to the person or goods, wares, merchandise or other
      property of lessee, Lessee's employees, contractors, Invitees,
      customers, or any other person In or about the Premises, whether such damage
      or
      Injury is caused by or results from fire, steam, electricity, gas, water or
      rain, or from the breakage, leakage, obstruction or other defects of pipes,
      fire
      sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from
      any
      other cause, whether the said Injury or damage results from conditions
arising upon the Premises or upon other portions of the
      building of which the Premises are a part, or from other sources or places.
      Lessor shall not be liable for any damages arising from any ad or neglect of
      any
      other tenant of Lessor nor from the failure of Lessor to enforce the provisions
      of any other lease in the Project. Notwithstanding Lessor's negligence or breach
      of this Lease. Lessor shall under no circumstances be liable for injury to
      Lessee's business or for any loss of income or profit therefrom.

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

     

    9.              Damage
      or Destruction.

       
      9.1          Definitions.

    (a)  "Premises
      Partial Damage" shall mean damage or destruction to the improvements on
      the Premises, other than Lessee Owned Alterations and Utility Installations,
      which can reasonably be repaired in 6 months ar less from the date of the damage
      or destruction. Lessor shall notify Lessee in witting within 30 days from the
      date of the damage or destruction as to whether or not the damage is Partial
      or
      Total.

    (b)  "Premises
      Total Destruction" shall mean damage or destruction to the Premises,
      other than Lessee Owned Alterations and Utility Installations and Trade
      Fixtures, which cannot reasonably be repaired in 6 months or
      less from the date of the damage or destruction. sor shall notify Lessee in
      writing within 30 days from the date of the damage or destruction as to whether
      or not the damage is Partial or Total.

     

    
      
         

      

      
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    (c)  "Insured
      Loss" shall mean damage or destruction to improvements
      on the Premises, other than Lessee Owned Alterations and Utility Installations
      and Trade Fixtures, which was caused by an event required to be covered by
      the
      Insurance described In Paragraph 6.3(a), Irrespective
      of any deductible
      amounts or
      coverage
limits
      involved.

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

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

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

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

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

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

    9.6          Abatement
      of Rent; Lessee'sRemedies.

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

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

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

    

    
      
         

      

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

    10.  Real
      Property Taxes.

    10.1          Definition.
      As used herein, the term "Real Property Taxes" shall Include any form of
      assessment; real estate, general, special,ordinary
      or extraordinary, or rental levy or tax (other than
      inheritance, personal Income or estate taxes); Improvement bond; and/or license
      fee imposed upon or levied against any legal or equitable Interest of Lessor
      in
      the Premises or the Project, Lessor's right to other income therefrom, and/or
      Lessors business of leasing, by any authority having the direct
      or
      Indirect power to tax and where the funds are generated with reference
      to
      the Building address and where the proceeds so
generated are to be applied by
the city, county or other
      local
      taxing authority of a jurisdiction within which the Premises are located. Real
      Property Taxes shall also include any tax, fee, levy, assessment or charge,
      or
      any Increase therein: (i) imposed by reason of events occurring during the
      term
      of this Lease, including but not limited to, a change in the ownership of the
      Premises, and (ii) levied or assessed on machinery
      or equipment provided by Lessor to Lessee pursuant to this Lease. 

    10.2          Payment
      ofTaxes. In addition to Base Rent,
      Lessee shall pay to Lessor an amount equal to the Real Property Tax installment
      due
      at
      least 20 days prior to the applicable delinquency date. If any such installment
      shall cover any period of time prior to or after the expiration or termination
      of this Lease, Lessee's share of such installment shall be prorated. In the
      event Lessee Incurs a late charge on any Rent payment. Lessor may
      estimate the current Real Property Taxes, and require that such taxes be paid
      in
      advance to Lessor by Lessee monthly in advance with the payment of the Base
      Rent
      Such monthly payments shall be an amount equal to the amount of the estimated
      installment of taxes divided by the number
      of
      months remaining before the month in which said installment becomes delinquent
      When the actual amount of the applicable tax bill is known, the amount of such
      equal monthly advance payments shall be adjusted as required to provide the
      funds needed to pay the applicable taxes. If the
      amount
      collected by Lessor is insufficient to pay such Real Property Taxes when due,
      Lessee shall pay Lessor, upon demand, such additional sum as Is necessary.
      Advance payments may be intermingled with other moneys of Lessor and shall
      not
      bear interest. In the event of a Breach by Lessee in
      the
      performance of its obligations under this Lease, then any such advance payments
      may be treated by Lessor as an additional Security Deposit.

    10.3
      Joint Assessment. If the Premises are not separately assessed, Lessee's
      liability shall be an equitable proportion of the Real Property Taxes for all
      of
      the land and Improvements Included within the tax parcel assessed, such
      proportion to be conclusively determined by
      Lessor from the respective valuations assigned in the assessors work
      sheets or such other information as may be reasonably available.

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

    11.   Utilities
      and Services. Lessee shall pay for all water, gas,
      heat, light, power, telephone, trash disposal and other utilities and services
      supplied to the Premises, together with any taxes thereon. If any such services
      are not separately metered or billed to Lessee, Lessee shall pay a reasonable
      proportion, to be determined by Lessor, of all charges jointly metered or
      billed. There shall be no abatement of rent and Lessor shall not be liable
      in
      any respect whatsoever for the inadequacy, stoppage, Interruption or
      discontinuance of any utility or service due to riot, strike, labor dispute,
      breakdown, accident, repair or other cause beyond Lessors reasonable control
      or
      In cooperation with governmental request or directions.

    12.  Assignmentand
      Subletting.

    12.1          Lessor'sConsent
      Required.

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

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

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

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

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

    12.2         Terms
      and Conditions Applicable to Assignment andSubletting.

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

    (b)  Lessor
      may accept Rent or performance of Lessee's obligations from any person other
      than Lessee pending approval or disapproval a waiver or estoppel of
      Lessor's right to exerese Its remedies for Lessee's Default or
      Breath.

     

    
      
         

      

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

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

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

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

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

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

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

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

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

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

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

    13.         Default;
      Breach; Remedies.

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

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

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

    (c)  The
      failure by Lessee to provide (i) reasonable
      written evidence of compliance with Applicable Requirements, (ii) the service
      contracts,
      (iii) the resdsslon of an unauthorized assignment or subletting, (iv) an
      Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
      any guaranty and/or Guarantor, (vii) any document requested
under Paragraph 42, (viii) material safety data sheets (MSDS),
      or (ix)
      any other documentation or information which Lessor may reasonably require
      of
      Lessee under the terns of this Lease, where any such failure continues for
      a
      period
      of 10 days following written notice to Lessee.

     (d)  A
      Default
      by Lessee as to the Perms, covenants, conditions or provisions of this Lease,
      or
      of the rules adopted under Paragraph 40
      hereof, other than those described in
subparagraphs 13.1(a), (b) or (c),
above,
where
      such Default continues for a period of 30 days after written
      notice; provided, however, that if the nature of Lessee's
      Default Is such that more than 30 days are reasonably required for its cure,
      then It shall not be deemed
      to be a Breach if Lessee commences such cure within
      said 30 day period and thereafter diligently
      prosecutes such cure to completion.

    (e)  The
      occurrence of any of the following events: (i) the making of any general
      arrangement or assignment for the benefit of creditors;
      (ii) becoming
a "debtor" as
      defined In 11 U.S.G. §101 or any
      successor statute thereto (unless. In the case of
      a petition filed
      against Lessee, the
      same is dismissed within 60 days);
      (iii) the appointment of a trustee or receiver to take possession of
      substantially all of Lessee's assets located at the
      Premises or of Lessee's Interest In
      this Lease, where possession Is not restored to Lessee within 30 days; or (iv)
      the attachment, execution or other judidal
      seizure of
      substantially
      all of
      Lessee's assets
      located at the Premises or of Lessee's
      interest in this Lease, where such
      seizure is not discharged
      within 30 days; provided, however, in the event that any provision of
this subparagraph
      (e) Is contrary to any
      applicable law, such provision shall be of
      no
      force
      or effect, and not affect the validity of
      the remaining provisions. 

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

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

     

    
      
         

      

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

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

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

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

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

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

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

    13.6          Breach
      by Lessor.

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

    (b)  Performance
      by Lessee on Behalf of Lessor. In the event that neither Lessor nor
      Lender cures said breach within 30 days after receipt of said notice, or if
      having commenced said cure they do not diligently pursue It to completion,
      then
      Lessee may elect to cure said breach,
      at
      Lessee's expense and offset from Rent the actual and reasonable
      cost to perform such cure, provided however, that such offset shall not exceed
      an amount equal to the greater of one month's Base Rent or the Security Deposit,
      reserving Lessee's right to seek reimbursement from Lessor. Lessee shall
      document the cost of said cure and suppty said documentation to
      Lessor.

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

     

    
      
         

      

      
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    15.Brokerage
      Fees

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

    16.  Estoppel
      Certificates.

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

    (b)  If
      the
      Responding Party shall fail to execute or deliver the Estoppel Certificate
      within such 10 day period, the Requesting Party may execute an Estoppel
Certificate stating that: (1) the Lease is in full force
      and effect
      without modification except as may be represented by the
Requesting.Party, (ii) there are no uncured defaults in the
      Requesting Party's performance, and (iii) If Lessor is the Requesting Party,
      not
      more than one month's rent has been paid in advance.
Prospective purchasers and enwmbrancers
      may rely upon the Requesting
      Party's Estoppel Certificate, and the Responding Party shall be estopped
from denying the truth of the facts contained in said
      Certificate.

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

    17.   Definition
      of Lessor. The term "Lessor" as used herein shall mean the owner or
      owners at the time in question of the fee title to The Premises, or, If this
      is
      a sublease, of the Lessee's interest
      in the
      prior lease. In the event of a transfer of Lessors title or interest In the
      Premises or this Lease, Lessor shall deliver to the transferee or assignee
      On
      cash or by
      credit) any unused Security Deposit held by Lessor, Except as
      provided in Paragraph 15, upon such transfer or assignment and delivery of
      the
      Security Deposit, as aforesaid, the prior Lessor shall be relieved of all
      liability with respect to the obligations and/or covenants under this Lease
      thereafter to be performed by the Lessor. Subject to the foregoing, the
      obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon
      the Lessor
      as hereinabove defined.

     

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

     

    
      19.          Days.
        Unless otherwise specifically Indicated to the contrary, the word "days"
        as used
        In this Lease shall mean and refer to calendar days.

    

     

    
      
         

      

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

     

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

     

    22.
      No Prior or OtherAgreements; Broker Disclaimer. This
Lease contains all agreements between
      the Parties with respect
      to any matter mentioned herein, and no other prior or contemporaneous agreement
      or understanding shall be effective. Lessor and
      Lessee each represents and warrants to the Brokers that it has made, and is
      relying solely upon, its own Investigation as to the nature, quality, character
      and financial responsibility of the other Party to this Lease and as to the
      use,
      nature, quality and character of the Premises. Brokers have no responsibility
      with respect thereto or with respect to any default
or breach hereof by either Party.
      The liability
      {including court costs and attorneys' fees), of any Broker with respect to
      negotiation, execution, delivery or performance by either Lessor or Lessee
      under
      this Lease or any amendment or modification hereto shall be limited to an amount
      up to the fee received by such Broker pursuant to this Lease;
      provided, however, that the foregoing limitation on each Brokers liability
      shale
      not be applicable to any gross negligence orwillful misconduct of such
      Broker.

     

    23.  Notices.

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

    23.2Date
      of Notice. Any notice sent by registered or certified
      mail, return receipt requested, shall be deemed given on the date of delivery
      shown on the receipt card, or If no delivery data is shown, the postmark
      thereon. If sent by regular mail the notice shall be deemed given 48 hours
      after
      the same is addressed as required herein and mailed with postage prepaid.
      Notices delivered by United States Express Mail or overnight courier
that guarantee next day delivery shall be deemed given 24 hours
      after delivery of the same to the Postal Service or courier_ Notices transmitted
      by facsimile Iransmisslon or similar means shall be deemed delivered upon
      telephone confirmation of receipt (confirmation report from fax machine is
      sufficient), provided a copy is also delivered via delivery or
      mail. If notice Is received on a Saturday, Sunday or legal holiday, It shall
      be
      deemed received on the next business day.

    24.  Waivers.
      No waiver by Lessor of the Default or Breach of any term, covenant or condition
      hereof by Lessee, shall be deemed a waiver of any other tom, covenant or
      condition hereof, or of any subsequent Default or Breach by Lessee of the same
      or of any other term, covenant or condition hereof. Lessors consent to, or
      approval of, any act shall not be deemed to render unnecessary the obtaining
      of
      Lessor's consent to, or approval of, any subsequent or similar act by
lessee, or be construed as the basis of an estoppel to enforce
      the provision or provisions of this Lease requiring such consent. The acceptance
      of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee.
      Any
      payment by Lessee may be accepted by Lessor on account of moneys or damages
      due
      lessor, notwithstanding any qualifying statements or conditions made by Lessee
      in connection therewith, which such statements and/or conditions shall be of
      no
      force or effect whatsoever unless specifically agreed to in writing by Lessor
      at
      or before the time of deposit of such payment.

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

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

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

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

    (iii)
      Agent Representing Both Lessor and Lessee. A real estate agent, either
      acting directly or through one or more associate licenses, can legally be the
      agent of both the Lessor and the Lessee in a transaction, but only with the
      knowledge and consent of both the Lessor and the Lessee. In a dual agency
      situation, the agent has the following affirmative obligations to both the
      Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty
      and loyalty in the dealings with either 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 the express permission of the respective
      Party,
      disclose to the other Party that the Lessor will accept rent in an amount less
      than that Indicated In the listing or that the Lessee is
      willing to pay a Higher rent than that offered. The above duties of the
agent
      In a
      real estate transaction do not relieve a Lessor or Lessee from the
      responsibility to protect their own interests. Lessor and Lessee should
      carefully read all agreements to assure that they adequately express their
      understanding of the transaction. A real estate agent is a
      person qualified to advise about real estate. If legal or tax advice is desired,
      consult a competent professional.

     

    
      
         

      

      
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    (b)  Brokers
      have no responsibility with respect to any default or breach hereof by either
      Party. The liability (including court costs and attorneys' fees), of
      any Broker
      with respect to any breach of duty, error or omission relating to this Lease
      shall not exceed the fee received by such Broker pursuant to this Lease;
      provided, however, that the foregoing limitation on each Broker's liability
      shall not be applicable to any gross negligence or willful misconduct of such
      Broker.

     

    (c)  Lessor
      and
      Lessee agree to Identify to Brokers as "Confidential" any communication or
      Information given Brokers that is considered by such Party to be
      confidential.

     

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

     

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

     

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

     

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

     

    30.  Subordination;
      Attomment;
      Non-Disturbance.

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

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

    30.3
      Non-Disturbance. With respect to Security Devices entered into by
      Lessor after the execution of this Lease, Lessee's subordination
of this Lease shall be subject to receiving a
      commercially reasonable non-disturbance agreement {a
      "Non-Disturbance Agreement")
      from the Lender
      which Non-Disturbance Agreement provides that Lessee's possession of the
      Premises, and this Lease, Including any options to extend the
term
      hereof, will
not
      be disturbed
so
      long as
      Lessee Is not
      in
Breach hereof
      and attoms to the record owner
      of the Premises.

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

     

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

     

    
      
         

      

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

     

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

     

    34.  Signs.
      Lessor may place on the Premises ordinary "For
      Sale" signs at any time and ordinary "For Lease"
      signs during the last 6 months of the term hereof. Except for ordinary "for
      sublease" signs, Lessee shall not place any sign upon the Premises without
      Lessor's prior written consent. All signs must comply with all Applicable
      Requirements.

     

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

     

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

    37.  Guarantor.

    37.1Execution.
The
      Guarantors, if any, shall each execute a
      guaranty in the tom most recently published by the AIR Commercial Real
Estate
      Association, and each such Guarantor
shall have the same obligations
      as Lessee under this
      Lease. 

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

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

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

    39.1Definition.
      "Option" than mean: (a) the right to extend
      the tens of or renew this Lease or to extend or renew any lease that Lessee
      has
      on other property of Lessor; (b) the right of first refusal or first or to
      lease
      either the Premises or other property of Lesson (c) the right to purchase or
      the
      right of first refusal to purchase the Premises or other property of
      Lessor.

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

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

    39.4  Effect
      ofDefault on Options.

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

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

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

     

    
      
         

      

      
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          15 OF
          17

        
          

        

      

      
         

      

    

     

    40.
      Multiple Buildings. If the Premises area part of a group
of buildings controlled by Lessor, Lessee agrees
      that it will abide by
      and conform to all 'reasonable
      rules and regulations which Lessor may make from time
      to time for the management, safety, and care of said properties, Including
      the
      care and cleanliness of the grounds and Including the parking, loading and
      unloading of vehldes, and to cause its employees, suppliers, shippers,
      customers, contractors and invitees to so abide and conform. Lessee also agrees
      to pay its fair share of common expenses Incurred in connection with such rules
      and regulations.

     

    41.
      Security Measures. Lessee hereby acknowledges that the Rent payable to
      Lessor hereunder does not include the cost of guard service or other security
      measures, and that Lessor shall have no obligation whatsoever
      to provide same. Lessee assumes all responsibility for the protection of the
      Premises, Lessee, its agents and invitees and their property from the acts
      of
      third parties.

     

    42.
      Reservations. Lessor reserves to itself the right, from time to time,
      to grant, without the consent or joinder of Lessee, such easements, rights
      and
      dedications that Lessor deems necessary, and to cause the recordation of parcel
      maps and restrictions, so long as such easements, rights, dedications, maps
      and
      restrictions do not unreasonably interfere with the use of the Premises by
      Lessee. Lessee agrees to sign any documents reasonably requested by
Lessor to effectuate any such easement rights,
      dedication, map or restrictions.

     

    43.
      Performance Under Protest. If at any time a dispute shall arise as to
      any amount or sum of money to be paid by one Party to the other under
the provisions hereof, the Party against whom the
      obligation to pay the money is asserted shall have the right to make payment
      "under protest" and such payment shall not be regarded as a voluntary payment
      and There shall survive the right on the part of said Parry to institute suit
      for recovery of such sum. If it shalt be adjudged that there was no legal
      obligation on the part of said Party to pay such sum or any part thereof, said
      Party shall be entitled to rdeover such sum or so much thereof as It was not
      legally required to pay.

     

    44.          Authority;
      Multiple Parties; Execution.

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

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

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

     

    45.
      Conflict. Any conflict between the printed provisions of this Lease and
      typewritten or handwritten provisions shall be controlled by the typewritten
      or handwritten provisions.

     

    46.
      Offer.Preparation of this Lease by either Party or
      their agent and submission of same to the other Party shall not be deemed an
      offer to lease
      to
      the other Party. This Lease Is not intended to be binding until exewted and
      delivered by all Parties hereto.

     

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

     

    48.
      Waiverof Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE
      RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
      INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

     

    49.
      Mediation and Arbitration of Disputes. An Addendum requiring the
      Mediation and/or the Arbitration of all disputes between the Parties
and/or
      Brokers arising out of this Lease q is þ
      Is not attached to this
      Lease.

     

    50.
      Americans with Disabilities Act. Since compliance with the Americans
      with Disabilities Act (ADA) is dependent upon Lessee's specific use of the
      Premises, Lessor makes no warranty or representation as to whether or not the
      Premises comply with ADA or any similar legislation, in the event that
Lessee's use of the Premises regUlres modifications or
      additions to the Premises in order to be in ADA compliance, Lessee agrees to
      make any such necessary modifications and/or additions at Lessee's
      expense.

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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          16 OF
          17

        
          

        

      

      
         

      

    

     

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

     

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

     

    
      	Executed
              at: San Diego, California	Executed
              at: San Diego, California
	On:
              8/22/05	On:
              August 17, 2005
	 	 
	By
              LESSOR:	By
              Lessee:
	Hazard
              Commercial Complex, LLC	Bio-Matrix
              Scientific Group, Inc. ("BMXG") a Delaware Corporation
	by
              HCCM, Inc. a California Corporation, Managing Member	 
	 	 
	By:
              /s/ Terry G. Hazard	By:
              /s/ David Koos
	Name
              Printed: Terry G. Hazard	Name
              Printed: David Koos
	Title:
              Vice President	Title:
              Chairman & CEO
	By:
              /s/ Thomas B. Hazard	By:
              /s/ Brian Pockett
	Name
              Printed: Thomas B. Hazard	Name
              Printed: Brian Pockett
	Title:
              Vice President	Title:
              Managing Director & COO
	Address:
              c/o CBRE Property Management	Address:
              8885 Recho Road
	4365
              Executive Drive, Suite 900	San
              Diego, CA 92121
	San
              Diego, CA 92121	Telephone:
              (619) 702-1404
	Telephone:
              (858) 546-4600	Fascimile:
              (619) 325-0702
	Fascimile:
              (858) 546-3985	Federal
              ID No.
	Federal
              ID No.	 
	 	 
	BROKER	BROKER:
              INSERT NAME HERE, PRESIDENT
	Attn:	Attn:
	Title:	Title:
	Address:	Address:
	Telephone:    	Telephone:
	Fascmile:	Fascmile:
	Federal
              ID No.	Federal
              ID No.:

    

                                       

    NOTE:These
      forms are often modified to meet the changing requirements of law and
      industry needs. Always write or calf to make sure you are utilizing the most
      current form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 700 So.Flower
      Street, Suite 600,Los Angeles, California 90017.
      (213)687-8777. Fax No. (213) 687-8616

     

    © Copyright
      2001 - By AIR Commercial Real Estate Association. All rights reserved.

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

    

    
      
         

      

      
        PAGE
          17 OF
          17

        
          

        

      

      
         

      

    

     

    ADDENDUM
      TO STANDARD INDUSTRIAL LEASE

     

    51.  RECIPROCAL
      RIGHTS: Lessee acknowledges that all
driveways,
      parking and loading areas (not including loading docks) in the
      Project are to be used in common with other tenants in the Project, and their
      guests, customers, and suppliers, and that, except as otherwise provided herein,
      none of said areas are for the exclusive use of Lessee.

     

    52.  PARKING:
      Surface parking is provided free of charge with unassigned parking spaces.
      Any
      motor vehicle used by Lessee in its business other than unmarked passenger
      cars,
      shall be parked inside the Premises any time such vehicles are on the property
      which comprises the Project - no such vehicles shall be parked on Rehco Road.
      No
      vehicle maintenance shall be performed iax the Project.

     

    53.  TENANT
      IMPROVEMENTS: Lessee to lease the Premises in an "as is" condition. or to
      December 1, 2005, Lessee shall cause the Premises to be upgraded to meet
      Lessee's use requirements (the "Upgrades") at Lessee's sole cost and expense
      and
      subject to Section 7.3 of this lease document. Such Upgrades shall be performed
      in a good and workmanlike manner using building standard materials,
      such as
      painting and
      the installation on non-load bearing walls (the
      "Improvements").

     

    All
      plans
      and contracts for the Upgrades and Improvements and the contractor(s) selected
      to construct the Upgrades and Improvements shall be subject to Lessor's prior
      approval, which approval wi11 not be unreasonably withheld.

     

    54.  OPTION
      TO
      EXTEND: Lessor grants Lessee the option to
      extend the term of this Lease for one (1) five (5) year period, provided
      that Lessee is not in default under this Lease either at the time it elects
      to
      exercise the option, or at the commencement date of the extension period. If
      Lessee elects to exercise this option, it shall do so by delivery of written
      notice of such election to Lessor not less than six (6) and no more than the
      nine (9) months prior to the expiration date of the Lease Term. The monthly
      Base
      Rent and method of annual increases thereto for each extension period shall
      be
      the then fair market rental rate and method for annual increases for comparable
      space in the Sorrento Mesa/Miramar area of San Diego, California. This market
      rate and method for increases shall be mutually agreed upon by Lessor and Lessee
      within thirty (30) days after Lessor's receipt of Lessee's written notice of
      the
      exercise of the option (the "Agreement Period"). If Lessor and Lessee are unable
      to so agree within the Agreement Period, each shall select an appraiser and,
      within fifteen (15) days after the expiration of the Agreement Period, shall
      notify the other of the name, business address and telephone number of the
      appraiser so selected. Said two (2) appraisers shall, within thirty (30) days
      after the expiration of the Agreement Period, jointly select a third appraiser
      and shall notify Lessor and Lessee of the name, business address and telephone
      number of said appraiser. Each of the three (3) appraisers shall, within
      forty-five (45) days after expiration of the Agreement Period, make a good
      faith
      determination of the then fair market rental rate of the Premises and the method
      for annual increases in said rate and shall notify Lessor, Lessee and each
      other
      appraiser of such determinations. If all appraisers do not agree on the fair
      market rental rate and method for annual increases, the common decision of
      two
      (2) of them shall be determinative. If two (2) of the three (3) appraisers
      are
      unable to so agree, the fair market rental rate that is neither the highest
      nor
      lowest of the three (3) determinations shall be the monthly Base Rent and the
      method for annual increases shall be the method specified by the appraiser
      who's
      determination of fair market rental is used.

    Lessor
      and
      Lessee shall each cooperate with all reasonable requests by any of the
      appraisers in order to assist the appraisers in the timely performance of their
      duties hereunder. To be eligible to serve as an appraiser, one must be a
      licensed real estate broker in California with a minimum of five (5) years
      continuous experience in the leasing of commercial and light industrial space
      in
      the Sorrento Mesa/Miramar area of San Diego, California, and must be actively
      engaged in such activity at the time of his or her selection. Lessor and Lessee
      shall each pay the fees and expenses of its own appraiser and one-half (1/2)
      of
      the fees and expenses of the third appraiser.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Notwithstanding
      anything to the contrary in this Lease, monthly Base Rent during the extension
      period shall not be less than monthly Base Rent in effect for the last year
      of
      the Original Term.

     

    55. 
      RENT INCREASES: Effective December 1st of each year of the Original Term, the
      monthly Base Rent shall be increased according to the following
      schedule:

     

    Effective
      December 1, 2006, monthly Base Rent shall be $19,498.00; 

    Effective
      December 1, 2007, monthly Base Rent shall be $20,084.00; 

    Effective
      December 1, 2008, monthly Base Rent shall be $20,687.00; 

    and
      Effective December 1, 2009, monthly Base Rent shall be $21,307.00.

     

    56.
      COMMON
      AREA OPERATING EXPENSES: Lessee's share of Common Area Operating Expenses
      pertaining to the Building shall be 100% and its share of Common Area Operating
      Expenses pertaining to the Project shall be the percentage that the square
      footage of the Premises is of the total square footage of all rentable areas
      of
      the Project. Common Area Expenses include (i) janitorial services for
      non-leasable areas, (ii) costs of professional management, if any, which cost
      shall not exceed ten percent (10%) of total Common Area Operating Expenses
      on an
      annual basis, and (iii) costs for Lessor's management, accounting, bookkeeping,
      payment of Common Area Operating Expenses, collection of reimbursements and
      related services, which shall not exceed ten percent (10%) of total Common
      Area
      Operating Expenses on an annual basis. As used in this Lease, the term "Project"
      shall mean the industrial complex known as Hazard Commercial Complex located
      on
      Rehco Road in San Diego California. Notwithstanding any other provision in
      this
      Lease regarding roof replacement, in the event the roof of the Premises needs
      to
      be replaced during the Term, the cost of such replacement shall be amortized
      over a twenty (20) year period and one-two hundred fortieth (1/240) of such
      cost
      shall be included as part of each monthly Common Area Operating
      Expense.

     

    57.  ASSIGNMENT
      AND SUBLETTING: In the event Lessee assigns and/or sublets any
      portion(s) of its interest under this Lease or in the Premises, any
      consideration received by it, after deducting any real estate broker's
      commissions incurred solely for the purpose of and in
connection with the assignment or subletting, for said assignment
      and/or subletting shall be divided equally with Lessor to the extent it exceeds
      the consideration due Lessor from Lessee under this Lease. The amount due Lessor
      shall be paid to Lessor within ten (10) days after its receipt by Lessee. Lessee
      shall act as Lessor's agent in collecting such amounts from any such assignee
      or
      sublessee. This paragraph does not modify and is in addition to Lessor's and
      Lessee's rights and duties under paragraph 12 of this Lease.

     

    58.  TRASH:
      Lessee shall keep its trash enclosure and the surrounding area clean at all
      times and shall pay, upon demand by Lessor, all charges incurred by Lessor
      for
      disposing of trash in said container.

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