Document:

4

ACQUISITION MEMORANDUM

 “Proposed 100% Interest Purchase Agreement”

February 15, 2006

Attn: Mr. C.W. Tucker and Mr. Thomas H. Noble

                

Quest Oil Corporation (Buyer) is interested in pursuing the purchase of 100% interest in L-TEXX Petroleum, LP, L-TEXX Management, LLC and Longleaf Production, LLC (the Companies) held equally by members C. W. (Bill) Tucker & Thomas H. Noble (Sellers).

The following terms as agreed will form the basis of a formal “Acquisition Agreement”.  Upon signing “Acquisition Memorandum” the parties will have 45 days to conclude due diligence and decide to conclude the “Acquisition Agreement”.  The Acquisition Agreement and related closing documents will have such terms that are customary for this type of transaction.

1.

The “Acquisition Memorandum” is representing the 100% Interest Purchase Agreement of the Companies as they are presently being operated, including all staff, equipment, liabilities, assets, reserves, production and infrastructure as identified on the financial statements of the Companies as of this date as executed on the “Acquisition Memorandum”.

 

2.

Proven Reserve Assets belonging to the Companies consist of those contained in the leases owned by the Companies, as detailed in Exhibit “A” and subject to verification by independent legal opinion providing confirmation the leases are in good standing, as represented free of all liens (other than assumed Bank debt), encumbrances and environmental issues.

 

3.

Equipment Assets are those belonging to the Companies as detailed in Exhibit “B”. All the equipment type assets owned by the Companies listed under Exhibit “B”, is understood to be the tools-of-the-trade, roads, electrical systems and the oil & gas gathering systems, to the extent owned by the Companies, will be included as part of the 100% Interest Purchase Agreement.  Included in the “Acquisition” is the Dula Pipeline, consisting of 7.5 miles of 6 inch diameter intrastate trunk line with several additional miles of 2 & 3 inch gathering systems.  The Dula Pipeline is within the geographical area of the leases, located in Harrison County – near the city of Waskom, Texas. All rights titles and interests will be assigned to “Buyer” at closing.  

Quest Oil and Longleaf Term Sheet

February 15, 2006

4.

All assets owned by the Companies, the Dula Pipeline and the Sellers’ interest in the Companies and the Dula Pipeline are being sold by Sellers “where is/as is.”  Sellers “warrants and represents” there will be no existing liens on any of the assets being sold (other than liens securing any assumed Bank debt) and there is no known pending litigation involving the Companies or any of the assets being sold.  There are no other warranties and all other warranties and representations will be expressly disclaimed and excluded. 

5.

The acquisition of the Companies, will include all intellectual property not limited to, seismic data, structure maps, logs, production data, web sites, domains, and other related documentation owned by the Companies. It will also include all historical accounting records and all active oil & gas purchase agreements presently in place.

6.

Acquisition Terms: 

a.

$100,000 non-refundable deposit held in trust by Sellers’ legal counsel, to be deposited with Sellers’ legal counsel within 3 business days of signing this Acquisition Memorandum. Deposit will be applied to cash payment at closing.  Deposit will be returned to Quest Oil Corporation if there is evidence of fraud, non-disclosure, falsifying records relating to but not limited to; production levels, number of wells, leases, assets, bank debt, accounts payable, other liabilities and obligations, environmental issues. The Deposit will be paid to Sellers if Quest does not close at no fault or default of Sellers.

b.

Issuance of 2,000,000 Class A Voting common shares of Quest Oil Corporation, issued under Rule 144 subject to liquidation rules and Trade Agreement as defined in Exhibit “C”.

i.

Stock price trigger of events.

1.

10 day average trailing closing price of $2.50 or greater at date of second anniversary and Buyer will make available legal opinion on Sellers shares allowing shares to be free and clear to trade according to the Trade Agreement.

2.

10 day average trailing closing price of $1.50 - $2.50 stock price at date of second anniversary Sellers are entitled to top up provision totaling a stock value of $5 million and in addition Buyer will make available legal opinion on Sellers shares allowing shares to be free and clear to trade according to the Trade Agreement.

3.

10 day average trailing closing price of under $1.49 stock price at date of second anniversary Sellers are entitled to a cash payment from Quest Oil Corporation of $5 million and the shares will be transferred by Seller back to Quest Oil Corporation.

Quest Oil and Longleaf Term Sheet

February 15, 2006

c.

$1,200,000 cash payment; payable $1,200,000 due and payable at closing.

d.

Seller’s are entitled to a security interest, deed of trust lien and collateral assignment (subordinate only to any existing liens securing the assumed Bank debt) on all of the assets of the Companies and on Sellers ownership interest in the Companies being sold to Quest Oil Corporation to secure performance of Quest Oil Company’s obligations.  The liens shall be released at such time that the  trigger event is removed or stock and cash obligations are met.  

7.

Bank debt instruments of approximately $1,100,000 will be assumed by the Buyer and will be retired or restructured within a period of six months after closing.  Sellers will remain on debt with personal guarantees for a period of six months.  The Buyer will provide Sellers indemnification until such time Buyer can repay debt or restructure up to a period of six months. Buyer must provide Sellers a formal release from any personal guaranties of such debt within a period of six months after closing.

8.

The Company’s staff and management agree to work together and assist Buyer in the purchase transition. This will give Buyer the opportunity and latitude to discuss employment and terms with the Companies employees. Company management, Bill Tucker and Superintendent will be made available for a period of 60 days at no cost to Buyer.

9.

At 12:01 am of the day of Closing, all oil in the tanks will become the property of Buyer and all gas passing the Sales Meter recorded after Closing will belong to Buyer.

10.

Sellers limit their liability up to $250,000 and for no more than two years after Closing.   Accordingly, any indemnity and related provisions contained in the definitive purchase agreement from Sellers in favor of Buyer will be limited to a maximum of $250,000 and two years.

11.

Sellers agree to have a new Reserve Analysis Report prepared (at their cost) by an independent third-party engineering firm mutually agreed to by Buyer and Sellers.  Sellers make no warranty or representation regarding the Reserve Analysis Report or the Proven Reserve Assets and Buyer shall rely solely on its own investigation and analysis in regards to the Proven Reserve Assets.

14.

Buyer agrees that it will replace Sellers obligations on bonding guarantee of $50,000 cash bond in place with the TRRC within 30 days of Closing.  Any refund of the $50,000 cash bond that Sellers currently have in place with the TRCC shall belong to and be paid to Sellers.

15.

Buyers agree that all outstanding Accounts Receivables belonging to the Companies at Closing will be turned-over to the Seller’s lawyer and held in trust to offset accounts payable received by Buyer after closing. Accounts Payable 

Quest Oil and Longleaf Term Sheet

February 15, 2006

defined as expenses relating to or incurred by the Companies in the day to day operations until closing date.

16.

The Buyer agrees to maintain adequate insurance coverage on the Equipment Assets assure full replacement value in case of loss or damage where applicable. Sellers will be named as lienholders on such insurance.  Buyer also agrees to maintain comprehensive liability insurance coverage with coverages not less than currently being maintained by the Companies.

17.

Each party will pay its own closing costs and expenses.  Buyer will pay for any due diligence reports, testing, surveys, and title policy or anything as Buyer may desire to conclude due diligence.

18.

Sellers’ accountant will prepare internal financial statements for the purpose of closing “acquisition agreement”, all federal income tax returns for the Companies to reflect the change in ownership as of the closing date, with Sellers being responsible for all income realized from ownership of the Companies prior to and through the closing date and Buyer being responsible for all income realized from ownership of the Companies after the closing date.  The cost of preparation valid internal monthly statements will be the cost of the Seller. The cost of the preparation of the audited and consolidated financial statements will be paid by the Buyer.

19.

The definitive agreement will have a dispute resolution clause providing that the Agreement is governed by Texas law and all disputes will be resolved by binding arbitration conducted in Jefferson County, Texas.

ACCEPTED BY:                                                         ACCEPTED BY:

QUEST OIL CORPORATION

                                                                         

_______________________,

 

________

,

Cameron S. King

C. W. (Bill) Tucker       

President and CEO

      

Member

Date:

,

Date: 

,

                           

                                                                              

ACCEPTED BY:

                                                                            ___________________, ______

                                                                            Thomas H. Noble            Date

Member

Quest Oil and Longleaf Term Sheet

February 15, 2006

EXHIBIT “A”

“LEASES”

Quest Oil and Longleaf Term Sheet

February 15, 2006

EXHIBIT “B”

“COMPANY ASSETS”

Quest Oil and Longleaf Term Sheet

February 15, 2006

EXHIBIT “C”

“STRUCTURED TRADE AGREEMENT”

Quest Oil and Longleaf Term Sheet

February 15, 2006Exhibit 10.28

    
      
        

      

    

    1.1 Basic
      Lease Terms.

    
      
        
          
            	
                    A       
                      

                  	
                    REFERENCE
                      DATE OF LEASE 

                  	
                    December
                      19, 2005

                  	 
	 	 	 	 
	
                    B

                  	
                    TENANT:

                  	
                    Zones,
                      Inc.

                  	 
	 	
                    Trade
                      Name: 

                  	
                    _________________________

                  	 
	 	
                    Address
                      (Leased Premises):

                  	
                    2701
                      NW Vaughn Street, Suite 620

                  	 
	 	 	
                    Portland,
                      Oregon 97210

                  	 
	 	 	
                    _________________________

                  	 
	 	 	 	 
	 	
                    Address
                      (For Notices):

                  	
                    2701
                      NW Vaughn Street, Suite 620

                  	 
	 	 	
                    Portland,
                      Oregon 97210

                  	 
	 	 	
                    _________________________

                  	 
	 	 	 	 
	
                    C

                  	
                    LANDLORD:

                  	
                    Montgomery
                      Park I, LLC,

                  	 
	 	 	
                    an
                      Oregon limited liability company

                  	 
	 	 	 	 
	 	
                    Address
                      (For Notices):

                  	
                    Bill
                      Naito Company

                  	 
	 	 	
                    2701
                      NW Vaughn, Suite 710

                  	 
	 	 	
                    Portland,
                      OR 97210

                  	 
	 	 	 	 
	 	 	 	 
	
                    D

                  	
                    PREMISES:  
                      Suite
                      620
                      in
                      the Montgomery Park Building (the “Building”) at 2701 NW Vaughn St. in
                      Portland, Oregon, as generally shown on Exhibit A hereto.
                      

                  
	 	 	 	 
	
                    E

                  	
                    PREMISES
                      AREA:

                  	
                    Approximately
                      22,550
                      Rentable Square Feet (See Exhibit “A”); the final premises shall be
                      mutually agreed upon by Landlord and Tenant and subject to
                      a final space
                      plan. 

                  
	 	 	 	 
	
                    F

                  	
                    LOAD
                      FACTOR: 14%

                  	 	 
	 	 	 	 
	
                    G

                  	
                    BUILDING
                      AREA:  
                      Approximately 726,730   Rentable Square
                      Feet

                  	 
	 	 	 	 
	
                    H

                  	
                    TENANT’S
                      PROPORTIONATE SHARE:  
                      3.10%. Landlord may modify Tenant's Proportionate Share
                      if the
                      Building size is increased or decreased, as the case may
                      be.

                  
	 	 	 	 
	
                    I

                  	
                    TENANT'S
                      PERMITTED USE OF PREMISES:  
                      Premises shall be used as general offices.

                  
	 	______________________________________	 	 
	
                    J

                  	
                    TERM
                      OF LEASE: 
                      Target Commencement Date:

                  	
                    February
                      1, 2006

                  	 
	 	
                    Expiration
                      Date:

                  	
                    July
                      31, 2016

                  	 
	 	
                    Number
                      of Full Calendar Months:

                  	
                    126

                  	 
	 	 	 	 
	
                    K

                  	
                    CONCESSION
                      RENT:
                      No Base Rent shall be due for the first six (6) months of the
                      Lease

                  

          
 

      

    

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              Montgomery
                Park - Zones Inc. 

            	
              Please
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                Page
                  1

              

            	
              _________      
                _______

            
	
              December
                2005

            	
              Landlord          
                Tenant 

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                L        
                  

              	
                BASE
                  RENT ADJUSTMENT:

              

      

       

    

    
      	
              Period

            	
              Monthly
                Base Rent

            	
              Rate/RSF

            	
              Total
                Base Rent

            
	
               
                Months 1 through 6

            	
              $0.00

            	
              $0.00

            	
              $0.00

            
	
               
                Months 7 through 12

            	
                $15,125.00*

            	
              $16.50

            	
              $90,750.00

            
	
               
                Months 13 through 24

            	
              $31,945.83

            	
              $17.00

            	
              $383,350.00

            
	
               
                Months 25 through 36

            	
              $32,885.42

            	
              $17.50

            	
              $394,625.00

            
	
               
                Months 37 through 48

            	
              $33,881.38

            	
              $18.03

            	
              $406,576.50

            
	
               
                Months 49 through 60

            	
              $34,896.13

            	
              $18.57

            	
              $418,753.50

            
	
               
                Months 61 through 72

            	
              $35,948.46

            	
              $19.13

            	
              $431,381.50

            
	
               
                Months 73 through 84

            	
              $37,019.58

            	
              $19.70

            	
              $444,235.00

            
	
               
                Months 85 through 96

            	
              $38,128.29

            	
              $20.29

            	
              $457,539.50

            
	
               
                Months 97 through 108

            	
              $39,274.58

            	
              $20.90

            	
              $471,295.00

            
	
               
                Months 109 through 120

            	
              $40,458.46

            	
              $21.53

            	
              $485,501.50

            
	
               
                Months 121 through 126

            	
              $41,661.13

            	
              $22.17

            	
              $249,966.75

            

    

    *
      Monthly
      Base Rent for months 7-12 is based on 11,000 RSF.

     

    
      
        	
                M

              	
                BASE
                  YEAR:   
                  REAL PROPERTY TAXES 2006 - 2007 EXPENSES 2006

              
	 	 
	
                N       
                  

              	
                PARKING:       
                  88 Spaces (See Addendum)

              
	 	 
	
                O

              	
                PREPAID
                  RENT:    $15,125.00

              
	 	 
	
                P

              	
                SECURITY
                  DEPOSIT:    $0.00
                  (Includes $0 cleaning fee)

              
	 	 
	
                Q

              	
                BROKER(S):        
                  The Andover Company, Inc./Integrated Corporate Property Services
                  represents Tenant and shall be paid a fee of 5% for months 6-66
                  and 2.5%
                  for monthls 67-126 of the fully serviced lease amount. Landlord
                  shall pay
                  a fee of 5% on expansion and 2.5% on renewal, so long as The Andover
                  Company/Integrated Corporate Property Services represents Tenant
                  and is
                  actively involved in the deal.

              
	 	 
	
                R

              	
                GUARANTORS:  
                  N/A

              
	 	
                If
                  Guarantor(s) is/are listed, Tenant shall cause all Guarantor(s)
                  to return
                  to Landlord an executed Guaranty of this Lease in the form attached
                  as
                  Exhibit D at the same time as Lease
                  execution..

              

      

    

     

    For
      valuable consideration, Landlord and Tenant covenant and agree as
      follows:

    

    1.2 Lease
      of Premises.

    Landlord
      leases to Tenant the premises described in the Basic Lease Terms and shown
      on
      Exhibit A (the “Premises”), located in the building described in the Basic
      Lease Terms (the “Building”), subject to the terms and conditions of this Lease.

    

    1.3 Delivery
      of Possession and Commencement.

    Should
      Landlord be unable to deliver possession of the Premises on the Target
      Commencement Date stated in the Basic Lease Terms, the commencement date will
      be
      deferred and Tenant shall owe no rent until notice from Landlord tendering
      possession to Tenant. If possession is not so tendered within forty five (45)
      days following the commencement date set forth in the Basic Lease Terms, then
      Tenant may elect to terminate this Lease by notice to Landlord within ten (10)
      days following expiration of the 45-day period. Landlord shall have no liability
      to Tenant for delay in delivering possession. The expiration date of this Lease
      shall be the date which is stated in the Basic Lease Terms or, if later, the
      last day of the calendar month that is the number of full calendar months stated
      in the Basic Lease Terms from the month in which the commencement date occurs.
      The Premises shall be improved in accordance with Exhibit D “Work Letter”.
      The existence of any “punchlist”-type items shall not postpone the commencement
      date of this Lease Agreement. Landlord and Tenant agreed to execute a
      commencement date agreement (Exhibit E) after Tenant’s occupancy of the Premises
      to confirm the actual commencement date, the actual size of the Premises and
      the
      schedule of base rent.

    
      

        
          	 	 	    
	 	 
	
                  Montgomery
                    Park - Zones Inc. 

                	
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                    2005

                	
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    2.1 Rent
      Payment.

    Tenant
      shall pay to Landlord the Base Rent for the Premises and any additional rent
      provided herein, without deduction or offset. At the same time as execution
      of
      the Lease, Tenant shall pay the Base Rent for the first full month of the Lease
      term for which rent is payable. Rent is payable in advance on the first day
      of
      each month commencing on the commencement date of this Lease. Rent for any
      partial month during the Lease term shall be prorated to reflect the number
      of
      days during the month that Tenant occupies the Premises. Additional rent means
      amounts determined under Section 19 of this Lease and any other sums payable
      by
      Tenant to Landlord under this Lease. Rent not paid when due shall bear interest
      at the rate of one-and-one-half percent per month, or if less the maximum
      applicable rate of interest permitted by law, until paid. Landlord may at its
      option impose a late charge of the greater of $.05 for each $1 of rent or $50
      for rent payments made more than ten (10) days late in lieu of interest for
      the
      first month of delinquency. Tenant acknowledges that late payment by Tenant
      to
      Landlord of any rent or other sums due under this Lease will cause Landlord
      to
      incur costs not contemplated by this Lease, the exact amount of such costs
      being
      extremely difficult and impracticable to ascertain, and that such late charge
      represents a fair and reasonable estimate of the costs that Landlord will incur
      by reason of any such late payment and is not a penalty. Neither imposition
      or
      collection nor failure to impose or collect such late charge shall be considered
      a waiver of any other remedies available for default. In addition to such late
      charge, an additional charge of $75 shall be recoverable by Landlord for any
      returned checks.

    

    3.1 Security
      Deposit. Intentionally
      deleted

    

    4.1 Use.

    Tenant
      shall use the Premises as a business for the Tenant's Permitted Use stated
      in
      the Basic Lease Terms and for no other purpose without Landlord’s written
      consent. In connection with its use, Tenant shall at its expense promptly comply
      and cause the Premises to comply with all applicable laws, ordinances, rules
      and
      regulations of any public authority (“Laws”) and shall not annoy, obstruct, or
      interfere with the rights of other tenants of the Building. Tenant shall create
      no nuisance nor allow any objectionable fumes, noise, light, vibration,
      radiation, or electromagnetic waves to be emitted from the Premises. If any
      sound or vibration produced by Tenant's activities is detectable outside of
      the
      Premises, Tenant shall provide such insulation as is required to muffle such
      sound or vibration and render it undetectable at Tenant's cost. Tenant shall
      not
      conduct any activities that will increase Landlord’s insurance rates for any
      portion of the Building or that will in any manner degrade or damage the
      reputation of the Building. Tenant shall pay before delinquency all taxes,
      assessments, license fees and public charges levied, assessed or imposed upon
      its business operations as well as upon all trade fixtures, leasehold
      improvements, merchandise and other personal property in or about the
      Premises.

    

    4.2 Equipment.

    Tenant
      shall install in the Premises only such equipment as is customary for Tenant's
      Permitted Use and shall not overload the floors or electrical circuits of the
      Premises or Building or alter the plumbing or wiring of the Premises or
      Building. Landlord must approve in advance the location of and manner of
      installing any wiring or electrical, heat generating, climate sensitive or
      communication equipment or exceptionally heavy articles. All telecommunications
      equipment, conduit, cables and wiring, additional dedicated circuits and any
      additional air conditioning required because of heat generating equipment or
      special lighting installed by Tenant shall be installed and operated at Tenant’s
      expense. Landlord shall have no obligation to permit the installation of
      equipment by any telecommunications provider whose equipment is not then
      servicing the Building. Tenant shall have no right to install any equipment
      on
      or through the roof of the Building, or use or store any equipment or other
      items outside of the interior boundary of the Premises. 

    
      

        
          	 	 	    
	 	 
	
                  Montgomery
                    Park - Zones Inc. 

                	
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                    2005

                	
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    4.3 Signs
      and Other Installations.

    No
      signs,
      awnings, or other apparatus shall be painted on or attached to the Building
      or
      anything placed on any glass or woodwork of the Premises or positioned so as
      to
      be visible from outside the Premises, including any window covering (e.g.,
      shades, blinds, curtains, drapes, screens, or tinting materials) without
      Landlord’s written consent, and Landlord's approval as to design, size,
      location, and color. All signs installed by Tenant shall comply with Landlord’s
      standards for signs and all applicable codes and all signs and sign hardware
      shall be removed upon termination of this Lease with the sign location restored
      to its former state unless Landlord elects to retain all or any portion thereof.
      Tenant may not install any alarm boxes, foil protection tape or other security
      equipment on the Premises without Landlord's prior written consent. Any material
      violating this provision may be removed and disposed by Landlord without
      compensation to Tenant, and Tenant shall reimburse Landlord for the cost of
      the
      same upon request.

    

    4.4 Parking.

    If
      a
      number of parking spaces is designated in the Basic Lease Terms, then during
      the
      term of this Lease, Landlord shall make available to Tenant’s employees such
      number of parking space(s) at the parking lot servicing the Building. Landlord's
      obligation pursuant to this paragraph shall be limited to making such spaces
      available in whatever manner Landlord deems appropriate (attended, unattended,
      marked stalls, or other means), so long as the number of spaces referred to
      are
      made available to Tenant. Tenant shall be required to pay no rental for the
      spaces made available to, and used by Tenant. 

    

    5.1 Utilities
      and Services.

    Landlord
      will furnish water and electricity to the Building at all times and will furnish
      heat and air conditioning (if the Building is air conditioned), at building
      standard levels, during the normal Building hours, which are 6:00 a.m. to 6:00
      p.m. Monday through Friday, and 6:00 a.m. to 12:00 p.m. Saturday, excluding
      typically recognized holidays. Air conditioning in the building shall be
      sufficient to maintain temperatures consistent with standard temperatures
      maintained in office buildings that are similar in age, use and character as
      the
      Building. Landlord shall provide 24 hour air for Tenant’s telephone room and
      computer room. Tenant will reimburse Landlord for additional electricity costs
      associated with this service. The space will be separately metered.

    

    Janitorial
      service will be provided on a five (5) times per week schedule consistent with
      other Class A office buildings. The schedule and service may change from time
      to
      time. Tenant shall comply with all government laws or regulations regarding
      the
      use or reduction of use of utilities on the Premises. Interruption of services
      or utilities shall not be deemed an eviction or disturbance of Tenant’s use and
      possession of the Premises, render Landlord liable to Tenant for damages, or
      relieve Tenant from performance of Tenant’s obligations under this Lease.
      Landlord shall take all reasonable steps to correct any interruptions in service
      caused by defects in utility systems within Landlord's reasonable control.
      Electrical service furnished will be 110 volts unless different service already
      exists in the Premises. Tenant shall provide its own surge protection for power
      furnished to the Premises. Landlord shall have the exclusive right to choose
      the
      utility service providers to the Premises and may change providers at its
      discretion. Tenant shall cooperate with Landlord and the utility service
      providers at all times as reasonably necessary, and shall allow Landlord and
      utility service providers, reasonable access to the pipes, lines, feeders,
      risers, wiring, and any other machinery within the Premises. Tenant shall not
      contract or engage any other utility provider without prior written approval
      of
      Landlord, which approval Landlord may withhold or condition in Landlord’s
      discretion.

    
      

        
          	 	 	    
	 	 
	
                  Montgomery
                    Park - Zones Inc. 

                	
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                    2005

                	
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    5.2 Extra
      Usage.

    If
      Tenant
      uses excessive amounts of utilities or services of any kind because of operation
      outside of normal Building hours, high demands from office machinery and
      equipment, nonstandard lighting, or any other cause, Landlord may impose a
      reasonable charge for supplying such extra utilities or services, which charge
      shall be payable monthly by Tenant in conjunction with rent payments. In case
      of
      dispute over any extra charge under this paragraph, Landlord shall designate
      a
      qualified independent engineer whose decision shall be conclusive on both
      parties. Landlord and Tenant shall each pay one-half of the cost of such
      determination. Landlord reserves the right to install separate meters for any
      such utility and to charge Tenant for the cost of such
      installation.

    

    5.3 Security.

    Landlord
      shall maintain security service to the building on a 24 hours per day, seven
      days a week basis throughout the term of the Lease and Tenant shall cooperate
      with all reasonable security measures adopted by Landlord. Tenant may install
      a
      security system within the Premises with Landlord’s written consent which will
      not be unreasonably withheld. Landlord will be provided with an access code
      to
      any security system and shall not have any liability for accidentally setting
      off Tenant’s security system. Landlord may modify the type or amount of security
      measures or services provided to the Building or the Premises at any time
      without notice. Security services, policies and procedures, along with other
      building policies are detailed in the Montgomery Park Tenant Handbook (Exhibit
      F).

    

    6.1 Maintenance
      and Repair.

    
      	
              6.1.1

            	
              Landlord
                shall maintain and repair in good condition the Building structure,
                roof,
                exterior walls and doors, exterior windows and common areas of the
                Building, and the electrical, mechanical, plumbing, heating and air
                conditioning systems, facilities and components located in the Building
                that are used in common by all tenants of the Building (including
                replacing building standard light bulbs). Tenant shall maintain and
                repair
                the Premises in good condition, including, without limitation, maintaining
                and repairing all walls, floors, and ceilings, all interior doors,
                partitions and windows, and all Premises systems, fixtures and equipment
                that are not the maintenance responsibility of Landlord, as well
                as damage
                caused by Tenant, its agents, employees, contractors or
                invitees.

            

    

    

    
      	
              6.1.2

            	
              Landlord
                shall have no liability for failure to perform required maintenance
                and
                repair unless written notice of such maintenance or repair is given
                by
                Tenant and Landlord fails to commence efforts to remedy the problem
                in a
                reasonable time and manner. Landlord shall have the right to erect
                scaffolding and other apparatus necessary for the purpose of making
                repairs or alterations to the Building, and Landlord shall have no
                liability for interference with Tenant’s use because of such work. Work
                may be done during normal business hours. Tenant shall have no claim
                against Landlord for any interruption or reduction of services or
                interference with Tenant’s occupancy caused by Landlord’s maintenance and
                repair, and no such interruption or reduction shall be construed
                as a
                constructive or other eviction of Tenant.

            

    

    

    
      	
              6.1.3

            	
              Landlord's
                cost of repair and maintenance shall be considered “operating expenses”
                for purposes of Section 19.3, except the structural replacement of
                the
                roof, walks, walls and foundation of the building and except the
                repair of
                damage caused by negligent or intentional acts or breach of this
                Lease by
                Tenant, its contractors, agents or invitees shall be at Tenant’s
                expense.

            

    

    

    6.2 Alterations.

    
      	
              6.2.1

            	
              Tenant
                shall not make any alterations, additions, or improvements to the
                Premises, change the color of the interior, or install any wall or
                floor
                covering without Landlord’s prior written consent which may be withheld in
                Landlord’s sole discretion. Should Landlord consent in writing to Tenant's
                alteration of the Premises, Tenant shall contract with a contractor
                approved by Landlord for the construction of such alterations, shall
                secure all appropriate governmental approvals and permits, and shall
                complete such alterations with due diligence in compliance with the
                plans
                and specifications approved by Landlord. All such construction shall
                be
                performed in a manner which will not interfere with the quiet enjoyment
                of
                other tenants of the Building. Any such improvements, alterations,
                wiring,
                cables or conduit installed by Tenant shall at once become part of
                the
                Premises and belong to Landlord, except for removable machinery and
                unattached movable trade fixtures, however Tenant shall have the
                right to
                use such improvements over the term of the Lease and any lease renewals.
                Landlord may at its option require that Tenant remove any improvements,
                except for initial improvements described in Exhibit D, alterations,
                wiring, cables or conduit installed by or for Tenant and restore
                the
                Premises to the original condition upon termination of this Lease.
                Landlord shall have the right to approve the contractor used by Tenant
                for
                any work in the Premises, and to post notices of nonresponsbility
                in
                connection with work being performed by Tenant in the Premises. Work
                by
                Tenant shall comply with all laws then applicable to the Premises.
                Tenant
                shall not allow any liens to attach to the Building or Tenant’s interest
                in the Premises as a result of its activities or any alterations.
                Landlord
                shall provide notice to Tenant prior to approval of and completion
                of
                alterations if such alterations will be required to be
                restored.

            

    

    
      

        
          	 	 	    
	 	 
	
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              6.2.2

            	
              Landlord
                may perform alterations to or change the configuration of the Building,
                the Building, the parking area, and other common
                areas.

            

    

    

    7.1 Indemnity.

    Tenant
      shall indemnify, defend, and hold harmless Landlord and its managing agents
      and
      employees from any claim, liability, damage, or loss occurring on the Premises,
      or any cost or expense in connection therewith (including attorney fees),
      arising out of (a) any damage to any person or property occurring in, the
      Premises, (b) use by Tenant or its agents, invitees or contractors of the
      Premises and/or the Building except to the extent caused by Landlord’s
      negligence, and/or (c) Tenant's breach or violation of any term of this
      Lease.

    

    7.2 Insurance.

    Tenant
      shall carry liability insurance with limits of not less than Two Million Dollars
      ($2,000,000) combined single limit bodily injury and property damage. This
      may
      be combined through the use/purchase of a General Liability and Umbrella/Excess
      Liability policy. Insurance shall have an endorsement naming Landlord and
      Landlord’s managing agent, if any, as an additional insured, shall cover the
      liability insured under paragraph 7.1 of this Lease and be in a form and with
      companies reasonably acceptable to Landlord (Best Rating of A-/VII or better).
      Upon
      signing this Lease, Tenant shall furnish a certificate evidencing such
      insurance
      which
      shall state that the insurer shall endeavor to provide thirty (30) days advance
      notice to Landlord of cancellation or material change. Tenant shall endeavor
      to
      furnish to Landlord a renewal certificate at least thirty (30) days prior to
      expiration of any policy.

    

    8.1 Fire
      or Casualty.

    “Major
      Damage” means damage by fire or other casualty to the Building or the Premises
      which causes the Premises or any substantial portion of the Building to be
      unusable, or which will cost more than 25 percent of the pre-damage value of
      the
      Building to repair, or which is not covered by insurance. In case of Major
      Damage, Landlord may elect to terminate this Lease by notice in writing to
      the
      Tenant within thirty (30) days after such date. If this Lease is not
      terminated following Major Damage, or if damage occurs which is not Major
      Damage, Landlord shall promptly restore the Premises to the condition existing
      just prior to the damage. Tenant shall promptly restore all damage to tenant
      improvements or alterations installed or paid for by Tenant or pay the cost
      of
      such restoration to Landlord if Landlord elects to do the restoration of such
      improvements. If the Premises suffers Major damage and the Premises are not
      restored to useable condition within 6 months of occurrence of such damage,
      Tenant shall have the right to terminate the Lease with no further obligations
      to the Landlord whatsoever. Unless the casualty was caused by Tenant, rent
      shall
      be reduced from the date of damage until the date restoration work being
      performed by Landlord is substantially complete, with the reduction to be in
      proportion to the area of the Premises not usable by Tenant.

    
      

        
          	 	 	    
	 	 
	
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    8.2 Waiver
      of Subrogation.

    Tenant
      shall be responsible for insuring its personal property and trade fixtures
      located on the Premises and any alterations or tenant improvements it has made
      to the Premises. Neither Landlord, its managing agent nor Tenant shall be liable
      to the other for any loss or damage caused by water damage, sprinkler leakage,
      or any of the risks that are covered by property insurance or could be covered
      by a customary broad form of property insurance policy, or for any business
      interruption, and there shall be no subrogated claim by one party’s insurance
      carrier against the other party arising out of any such loss. 

    

    9.1 Eminent
      Domain.

    If
      a
      condemning authority takes title by eminent domain or by agreement in lieu
      thereof to the entire Building or a portion sufficient to render the Premises
      unsuitable for Tenant’s use, then either party may elect to terminate this Lease
      effective on the date that possession is taken by the condemning authority.
      If
      this Lease is not terminated, then rent shall be reduced for the remainder
      of
      the term in an amount proportionate to the reduction in area of the Premises
      caused by the taking. All condemnation proceeds shall belong to Landlord, and
      Tenant shall have no claim against Landlord or the condemnation award because
      of
      the taking.

    

    10.1 Assignment
      and Subletting.

    Except
      as
      defined in 26.1, Tenant shall not assign or encumber its interest under this
      Lease or sublet all or any portion of the Premises without first obtaining
      Landlord’s consent in writing. This provision shall apply to all transfers by
      operation of law, and to all mergers and changes in control of Tenant, all
      of
      which shall be deemed assignments for the purposes of this paragraph. No
      assignment shall relieve Tenant of its obligation to pay rent or perform other
      obligations required by this Lease, and no consent to one assignment or
      subletting shall be a consent to any further assignment or subletting. If Tenant
      proposes a subletting or assignment for which Landlord's consent is required,
      Landlord shall have the option of terminating this Lease and dealing directly
      with the proposed subtenant or assignee, or any third party. If Landlord does
      not terminate this Lease, Landlord shall not unreasonably withhold its consent
      to any assignment or subletting provided the effective rental paid by the
      subtenant or assignee is not less than the current scheduled rental rate of
      the
      Building for comparable space and the proposed Tenant is compatible with
      Landlord’s normal standards for the Building. If an assignment or subletting is
      permitted, any cash net profit, or the net value of any other consideration
      received by Tenant as a result of such transaction shall be paid to Landlord
      promptly following its receipt by Tenant. Tenant shall pay any costs incurred
      by
      Landlord in connection with a request for assignment or subletting, including
      reasonable attorneys’ fees.

    

    11.1 Default.
      

    Any
      of
      the following shall constitute an Event of Default by Tenant under this Lease
      (time of performance being of the essence of this Lease):

    

    
      	
              11.1.1

            	
              Tenant’s
                failure to pay rent or any other charge under this Lease within
                ten (10) days after it is due.

            

    

    

    
      	
              11.1.2

            	
              Tenant’s
                failure to comply with any other term or condition within twenty
                (20) days
                following written notice from Landlord specifying the noncompliance.
                If
                such noncompliance cannot be cured within the 20-day period, this
                provision shall be satisfied if Tenant commences correction within
                such
                period and thereafter proceeds in good faith and with reasonable
                diligence
                to complete correction as soon as possible but not later than ninety
                (90)
                days after the date of Landlord's
                notice.

            

    

    
      

        
          	 	 	    
	 	 
	
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              11.1.3

            	
              Failure
                of Tenant to execute the documents described in Section 16.1 or 16.3
                within the time required under such Sections; failure of Tenant to
                provide
                or maintain the insurance required of Tenant pursuant hereto; or
                failure
                of Tenant to comply with any Laws as required pursuant hereto within
                24
                hours after written demand by
                Landlord.

            

    

    

    
      	
              11.1.4

            	
              Tenant’s
                insolvency, business failure or assignment for the benefit of its
                creditors. Tenant’s commencement of proceedings under any provision of any
                bankruptcy or insolvency law or failure to obtain dismissal of any
                petition filed against it under such laws within the time required
                to
                answer; or the appointment of a receiver for all or any portion of
                Tenant’s properties or financial
                records.

            

    

    

    
      	
              11.1.5

            	
              Assignment
                or subletting by Tenant in violation of paragraph
                10.1.

            

    

    

    
      	
              11.1.6

            	
              Vacation
                or abandonment of the Premises without the written consent of Landlord
                or
                failure to occupy the Premises within twenty (20) days after notice
                from
                Landlord tendering possession.

            

    

    

    11.2 Remedies
      for Default.

    Upon
      occurrence of an Event of Default as described in paragraph 11.1, Landlord
      shall
      have the right to the following remedies, which are intended to be cumulative
      and in addition to any other remedies provided under applicable law or under
      this Lease:

    

    
      	
              11.2.1

            	
              Landlord
                may at its option terminate this Lease, without prejudice to its
                right to
                damages for Tenant's breach. With or without termination, Landlord
                may
                retake possession of the Premises and may use or relet the Premises
                without accepting a surrender or waiving the right to damages. Following
                such retaking of possession, efforts by Landlord to relet the Premises
                shall be sufficient if Landlord follows its usual procedures for
                finding
                tenants for the space at rates not less than the current rates for
                other
                comparable space in the Building. If Landlord has other vacant space
                in
                the Building, prospective tenants may be placed in such other space
                without prejudice to Landlord’s claim to damages or loss of rentals from
                Tenant.

            

    

    

    
      	
              11.2.2

            	
              Landlord
                may recover all damages caused by Tenant’s default which shall include an
                amount equal to rentals lost because of the default, Lease commissions
                paid for this Lease, and the unamortized cost of any tenant improvements
                installed by or paid for by Landlord. Landlord may sue periodically
                to
                recover damages as they occur throughout the Lease term, and no action
                for
                accrued damages shall bar a later action for damages subsequently
                accruing. Landlord may elect in any one action to recover accrued
                damages
                plus damages attributable to the remaining term of the Lease. Such
                damages
                shall be measured by the difference between the rent under this Lease
                and
                the reasonable rental value of the Premises for the remainder of
                the term,
                discounted to the time of judgment at the prevailing interest rate
                on
                judgments.

            

    

    

    11.3 Landlord's
      Right To Cure Default. 

    Landlord
      may, but shall not be obligated to, make any payment or perform any obligation
      which Tenant has failed to perform when required under this Lease. All of
      Landlord's expenditures incurred to correct the failure to perform shall be
      reimbursed by Tenant upon demand with interest from the date of expenditure
      at
      the rate of one and one-half percent per month. Landlord's right to correct
      Tenant's failure to perform is for the sole protection of Landlord and the
      existence of this right shall not release Tenant from the obligation to perform
      all of the covenants herein required to be performed by Tenant, or deprive
      Landlord of any other right which Landlord may have by reason of default of
      this
      Lease by Tenant, whether or not Landlord exercises its right under this
      paragraph.

    
      

        
          	 	 	    
	 	 
	
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    12.1 Surrender;
      Holdover.

    On
      expiration or early termination of this Lease Tenant shall deliver all keys
      to
      Landlord and surrender the Premises vacuumed, swept, and free of debris and
      in
      the same condition as at the commencement of the term subject only to reasonable
      wear from ordinary use. Tenant shall remove all of its furnishings and trade
      fixtures that remain its property and any alterations, cables or conduits if
      required by paragraph 6.2.1 and shall repair all damage resulting from such
      removal. Failure to remove shall be an abandonment of the property, and Landlord
      may remove or dispose of it in any manner without liability, and recover the
      cost of removal and other damages from Tenant. If Tenant fails to vacate the
      Premises when required, including failure to remove all its personal property,
      Landlord may elect either: (i) to treat Tenant as a tenant from month to month,
      subject to the provisions of this Lease except that rent shall be 125% of the
      total rent being charged when the Lease term expired, and any option or other
      rights regarding extension of the term or expansion of the Premises shall no
      longer apply; or (ii) to eject Tenant from the Premises (using self-help or
      otherwise) and recover damages caused by Tenant continuing to occupy the
      Premises after the Lease term has expired without the permission of the
      Landlord. In
      the
      absence of a lease extension or agreement otherwise, no less than one hundred
      (100) days prior to the expiration of the Lease, Tenant shall provide Landlord
      written notice advising the Landlord that the Tenant will not be extending
      the
      Lease and in said notice, Tenant shall request notice from the Landlord whether
      the Landlord will require the Tenant to vacate on or before the Lease expiration
      date or if the Landlord will approve of the Tenant remaining in the Premises
      after the expiration date as a month to month Tenant. Landlord shall respond
      and
      answer this notice from Tenant within ten (10) days of receipt.

    

    13.1 Regulations.

    Landlord
      shall have the right but shall not be obligated to make, revise and enforce
      rules and regulations or policies consistent with this Lease for the purpose
      of
      promoting safety, health, order, economy, cleanliness, and good service to
      all
      tenants of the Building, including, but not limited to, moving, use of common
      areas and prohibition of smoking. All such regulations and policies including
      those, if any, attached to this Lease, shall be complied with as if part of
      this
      Lease and failure to comply shall be a default. 

    

    14.1 Access.

    Tenant
      shall have access to its premises 24 hours a day, seven days a week, subject
      to
      emergency conditions which may preclude access and subject to normal building
      security policies for after hours access. During times other than normal
      Building hours Tenant’s officers and employees or those having business with
      Tenant may be required to identify themselves or show passes in order to gain
      access to the Building. Landlord shall have no liability for permitting or
      refusing to permit access by anyone. Landlord may regulate access to any
      Building elevators outside of normal Building hours. Landlord shall have the
      right to enter upon the Premises at any time by passkey or otherwise to
      determine Tenant’s compliance with this Lease, to perform necessary services,
      maintenance and repairs or alterations to the Building or the Premises, to
      post
      notices of nonresponsibility, or to show the Premises to any prospective tenant
      or purchasers. Except in case of emergency such entry shall be at such times
      and
      in such manner as to minimize interference with the reasonable business use
      of
      the Premises by Tenant.

    

    14.2 Furniture
      and Bulky Articles.

    Tenant
      shall move furniture and bulky articles in and out of the Building or make
      independent use of any elevators only at times approved by Landlord following
      at
      least 24 hours written notice to Landlord of the intended move.

    

    15.1 Notices.

    Notices
      between the parties relating to this Lease shall be in writing, effective when
      delivered during business hours by facsimile transmission, hand delivery,
      private courier, or regular or certified U.S. mail. Notices shall be delivered
      postage prepaid, to the address or facsimile number for the party stated in
      the
      Basic Lease Terms or to such other address as either party may specify by notice
      to the other. Notice to Tenant may always be delivered to the Premises. Rent
      shall be payable to Landlord at the same address and in the same manner, but
      shall be considered paid only when received.

    
      

        
          	 	 	    
	 	 
	
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    16.1 Subordination
      and Attornment.

    This
      Lease shall be subject to and subordinate to any mortgages, deeds of trust,
      ground lease, master lease or land sale contracts (here after collectively
      referred to as encumbrances) now existing against the Building. At Landlord’s
      option this Lease shall be subject and subordinate to any future encumbrance,
      ground lease or master lease hereafter placed against the Building (including
      the underlying land) or any modifications of existing encumbrances, and Tenant
      shall execute such documents as may reasonably be requested by Landlord or
      the
      holder of the encumbrance to evidence this subordination. If any encumbrance
      is
      foreclosed, then if the purchaser at foreclosure sale gives to Tenant a written
      agreement to recognize Tenant’s Lease, Tenant shall attorn to such purchaser and
      this Lease shall continue.

    

    16.2 Transfer
      of Building.

    If
      the
      Building is sold or otherwise transferred by Landlord or any successor, Tenant
      shall attorn to the purchaser or transferee and recognize it as the landlord
      under this Lease, and, provided the purchaser or transferee assumes all
      obligations under this Lease thereafter accruing, the transferor shall have
      no
      further liability hereunder.

    

    16.3 Estoppels.

    Either
      party will within ten (10) days after notice from the other execute, acknowledge
      and deliver to the other party a certificate certifying whether or not this
      Lease has been modified and is in full force and effect; whether there are
      any
      modifications or alleged breaches by the other party; the dates to which rent
      has been paid in advance, and the amount of any security deposit or prepaid
      rent; and any other facts that may reasonably be requested. Failure to deliver
      the certificate within the specified time shall be conclusive upon the party
      of
      whom the certificate was requested that the Lease is in full force and effect
      and has not been modified except as may be represented by the party requesting
      the certificate. If requested by the holder of any encumbrance, or any
      underlying lessor, Tenant will agree to give such holder or lessor notice of
      and
      an opportunity to cure any default by Landlord under this Lease.

    

    17.1 Attorneys’
      Fees.

    In
      any
      litigation arising out of this Lease, including any bankruptcy proceeding,
      the
      prevailing party shall be entitled to recover attorneys’ fees at trial and on
      any appeal or petition for review. If Landlord incurs attorneys’ fees because of
      a default by Tenant, Tenant shall pay all such fees whether or not litigation
      is
      filed. If Landlord employs a collection agency to recover delinquent charges,
      Tenant agrees to pay all collection agency and other fees charged to Landlord
      in
      addition to rent, late charges, interest and other sums payable under this
      Lease.

    

    18.1 Quiet
      Enjoyment.

    Landlord
      warrants that so long as Tenant complies with all terms of this Lease it shall
      be entitled to possession of the Premises free from any eviction or disturbance
      by Landlord or parties claiming through Landlord. 

    

    18.2 Limitation
      on Liability.

    Notwithstanding
      any provision in this Lease to the contrary, neither Landlord nor its managing
      agent or employees shall have any liability to Tenant for loss or damages to
      Tenant’s property from any cause, nor arising out of the acts, including
      criminal acts, of other tenants of the Building or third parties, nor any
      liability for consequential damages, nor liability for any reason which exceeds
      the value of its interest in the Building. 

    
      

        
          	 	 	    
	 	 
	
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    19.1 Additional
      Rent: Tax Adjustment.

    Whenever
      for any July 1 - June 30 tax year the real property taxes levied against the
      Building and its underlying land exceed those levied for the Base Year for
      taxes
      stated in the Basic Lease Terms, then the monthly rent for the next succeeding
      calendar year shall be increased by one-twelfth of such tax increase times
      Tenant’s Proportionate Share. Landlord may revise Tenant’s monthly payments of
      real property tax increases during any year with reasonable cause and the
      additional estimate shall be payable as equal additions to rent for the
      remainder of the calendar year. Following the end of each calendar year, or
      when
      actual tax year information becomes available, Landlord shall compute the actual
      real property taxes and bill Tenant for any deficiency or credit Tenant with
      any
      excess collected. Tenant shall pay any such deficiency within thirty (30) days
      after Landlord’s billing, whether or not this Lease shall have expired or
      terminated at the time of such billing. “Real property taxes” as used herein
      means all taxes and assessments of any public authority against the Building
      and
      the land on which it is located, the cost of contesting any tax and any form
      of
      fee or charge imposed on Landlord as a direct consequence of owning or leasing
      the Premises, including but not limited to rent taxes, gross receipt taxes,
      leasing taxes, or any fee or charge wholly or partially in lieu of or in
      substitution for ad valorem real property taxes or assessments, whether now
      existing or hereafter enacted. If any portion of the Building is occupied by
      a
      tax-exempt tenant so that the Building has a partial tax exemption under ORS
      307.112 or a similar statute, then real property taxes shall mean taxes computed
      as if such partial exemption did not exist. If a separate assessment or
      identifiable tax increase arises because of improvements to the Premises, then
      Tenant shall pay 100 percent of such increase.

    

    19.2 Additional
      Rent: Operating Expense Adjustment.

    Tenant
      shall pay as additional rent Tenant’s Proportionate Share, of the amount by
      which operating expenses for the Building increase over those experienced by
      Landlord during the Base Year for expenses stated in the Basic Lease Terms.
      Effective January 1 of each year Landlord shall estimate the amount by which
      operating expenses are expected to increase, if any, over those incurred in
      the
      base year. Monthly rent for that year shall be increased by one-twelfth of
      Tenant’s share of the estimated increase, provided that Landlord may revise its
      estimate during any year with reasonable cause and the additional estimate
      shall
      be payable as equal additions to rent for the remainder of the calendar year.
      Following the end of each calendar year, Landlord shall compute the actual
      increase in operating expenses and bill Tenant for any deficiency or credit
      Tenant with any excess collected. Tenant shall pay any such deficiency within
      thirty (30) days after Landlord’s billing, whether or not this Lease shall have
      expired or terminated at the time of such billing. As used herein “operating
      expenses” shall mean all costs of operating, maintaining and repairing the
      Building as determined by standard real estate accounting practice, including,
      but not limited to: all water and sewer charges; the cost of natural gas and
      electricity provided to the Building; janitorial and cleaning supplies and
      services; administration costs and market management fees; superintendent fees;
      security services, if any; insurance premiums; licenses, permits for the
      operation and maintenance of the Building and all of its component elements
      and
      mechanical systems; ordinary and emergency repairs and maintenance, and the
      annual amortized capital improvement cost (amortized over such a period as
      Landlord may select but not shorter than the period allowed under the Internal
      Revenue Code and at a current market interest rate) for any capital improvements
      to the Building required by any governmental authority or those which have
      a
      reasonable probability of improving the operating efficiency of the Building.
      “Operating Expenses” shall also include all assessments under recorded covenants
      or master plans and/or by owner's associations. If electricity or other energy
      costs increase between the date of this Lease and last day of the Base Year,
      (i)
      Tenant shall pay to Landlord, on a monthly basis as additional rent, its
      Proportionate Share of such cost increase for the period from the date of such
      increase until the first estimated payment due under this paragraph, and (ii)
      Landlord may adjust the calculation of Base Year operating expenses by using
      the
      energy costs in effect on the date of this Lease.

    
      

        
          	 	 	    
	 	 
	
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    19.3 Disputes.

    If
      Tenant
      disputes any computation of additional rent or rent adjustment under paragraphs
      19.1 through 19.3 of this Lease, it shall give notice to Landlord not later
      than
      thirty (30) days after the notice from Landlord describing the computation
      in
      question, but in any event not later than (thirty) 30 days after expiration
      or
      earlier termination of this Lease. If Tenant fails to give such a notice, the
      computation by Landlord shall be binding and conclusive between the parties
      for
      the period in question. If Tenant gives a timely notice, the dispute shall
      be
      resolved by an independent certified public accountant selected by Landlord
      whose decision shall be conclusive between the parties. Each party shall pay
      one-half of the fee for making such determination except that if the adjustment
      in favor of Tenant does not exceed ten percent of the escalation amounts for
      the
      year in question, Tenant shall pay (i) the entire cost of any such
      third-party determination; and (ii) Landlord’s out-of-pocket costs and
      reasonable expenses for personnel time in responding to the audit. Nothing
      herein shall reduce Tenant’s obligations to make all payments as required by
      this Lease.

     

    20.1 Hazardous
      Materials. 

    Neither
      Tenant nor Tenant's agents or employees shall cause or permit any Hazardous
      Material, as hereinafter defined, to be brought upon, stored, used, generated,
      released into the environment, or disposed of on, in, under, or about the
      Premises, except reasonable quantities of cleaning supplies and office supplies
      necessary to or required as part of Tenant's business that are generated, uses,
      kept, stored, or disposed of in a manner that complies with all laws regulating
      any such Hazardous Materials and with good business practices. Tenant covenants
      to remove from the Premises (or the Building, if applicable), upon the
      expiration or sooner termination of this Lease and at Tenant's sole cost and
      expense, any and all Hazardous Materials brought upon, stored, used, generated,
      or released into the environment during the term of this Lease. To the fullest
      extent permitted by law, Tenant hereby agrees to indemnify, defend, protect,
      and
      hold harmless Landlord, Landlord's managing agent and their respective agents
      and employees, and their respective successors and assigns, from any and all
      claims, judgments, damages, penalties, fines, costs, liabilities, and losses
      that arise during or after the term directly or indirectly from the use,
      storage, disposal, release or presence of Hazardous Materials on, in, or about
      the Premises which occurs during the term of this Lease. Tenant shall promptly
      notify Landlord of any release of Hazardous Materials in, on, or about the
      Premises that Tenant
      or
      Tenant's agents or employees becomes aware of during the Term of this Lease,
      whether caused by Tenant, Tenant's agents or employees, or any other persons
      or
      entities.
      As used
      herein, the term “Hazardous Material” means any hazardous or toxic substance,
      material, or waste which is or becomes regulated by any local governmental
      authority, the state of Oregon or the United States government. The term
“Hazardous Material” includes, without limitation, any material or substance
      that is (i) defined as a “hazardous waste,” “extremely hazardous waste,”
“restricted hazardous waste,” “hazardous substance,” “hazardous material,” or
“waste” under any federal, state or local law, (ii) petroleum, and
      (iii) asbestos.
      The
      provisions of this Section 20, including, without limitation, the
      indemnification provisions set forth herein, shall survive any termination
      of
      this Lease.

    

    21.1 Complete
      Agreement; No Implied Covenants.

    This
      Lease and the attached Exhibits and Schedules if any, constitute the entire
      agreement of the parties and supersede all prior written and oral agreements
      and
      representations and there are no implied covenants or other agreements between
      the parties except as expressly set forth in this Lease. Neither Landlord nor
      Tenant is relying on any representations other than those expressly set forth
      herein.

    

    21.1.1 Space
      Leased AS IS.

    Unless
      as
      otherwise stated in the Lease, the Premises are leased AS IS in the condition
      delivered to Tenant in accordance with paragraph 1.3 of the Lease, with no
      other
      alterations or other work to be performed by Landlord other than as specified
      in
      paragraph 1.3 (punchlist items as described in the Lease).

    
      

        
          	 	 	    
	 	 
	
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                    Park - Zones Inc. 

                	
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    21.2 Captions.

    The
      titles to the paragraphs of this Lease are descriptive only and are not intended
      to change or influence the meaning of any paragraph or to be part of this
      Lease.

    

    21.3 Nonwaiver.

    Failure
      by Landlord to promptly enforce any regulation, remedy or right of any kind
      under this Lease shall not constitute a waiver of the same and such right or
      remedy may be asserted at any time after Landlord becomes entitled to the
      benefit thereof notwithstanding delay in enforcement.

    

    21.4 
      Consent.

    Except
      where otherwise provided in this Lease, either party may withhold its consent
      for any reason or for no reason whenever that party’s consent is required under
      this Lease.

    

    21.5 
      Force Majeure.

    If
      performance by Landlord of any portion of this Lease is made impossible by
      any
      prevention, delay, or stoppage caused by strikes, lockouts, labor disputes,
      acts
      of God, inability to obtain services, labor, or materials or reasonable
      substitutes for those items, government actions, civil commotions, fire or
      other
      casualty, or other causes beyond the reasonable control of Landlord, performance
      by Landlord for a period equal to the period of that prevention, delay, or
      stoppage is excused.

    

    21.6 
      Commissions.

    Each
      party represents that it has not had dealings with any real estate broker,
      finder or other person with respect to this Lease in any manner, except for
      the
      broker(s) identified in the Basic Lease Terms. Landlord shall pay a leasing
      commission in accordance with a separate listing agreement between Landlord
      and
      its broker.

    

    21.7 
      Successors. 

    This
      Lease shall bind and inure to the benefit of the parties, their respective
      heirs, successors, and permitted assigns.

    

    21.8 
      Exhibits.

    The
      following Exhibits are attached hereto and incorporated as a part of this
      Lease:

    

    Addendum
      to Lease

    
      	
              Exhibit
                A

            	
              Leased
                Premises

            
	
              Exhibit
                B

            	
              Montgomery
                Park Legal Description

            
	
              Exhibit
                C

            	
              Rules
                and Regulations

            
	
              Exhibit
                D

            	
              Work
                Agreement

            
	
              Exhibit
                E

            	
              Commencement
                Date Agreement Form

            
	
              Exhibit
                F

            	
              Tenant
                Manual

            

    

    

    IN
      WITNESS WHEREOF, the duly authorized representatives of the parties have
      executed this Lease as of the day and year first written above.

    
      

        
          	 	 	    
	 	 
	
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                    Park - Zones Inc. 

                	
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              LANDLORD:

            	 	
              TENANT:

            	 
	
              MONTGOMERY
                PARK I, LLC,

            	 	
              ZONES,
                INC.,

            	 
	
              an
                Oregon limited liability company

            	 	 	 	 
	 	 	 	 	 	 
	
              By:
                Bill Naito Company,

            	 	
              By:
                

            	 	 
	
              an
                Oregon corporation, member

            	 	 	 	 
	 	 	 	
              Its:
                

            	 	 
	
              By:
                

            	 	 	 	 	 
	 	
              Lawrence
                Naito

            	 	Date:	 	 
	 	 	 	 	 	 
	
              Its:
                President

            	 	 	 	 
	 	 	 	 	 	 
	
              Date:
                

            	 	 	 	 	 

    

    
      
        

          
            	 	 	    
	 	 
	
                    Montgomery
                      Park - Zones Inc. 

                  	
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    ADDENDUM
      TO LEASE

    

    Between

    

    MONTGOMERY
      PARK I, LLC,

    an
      Oregon limited liability company

    

    and

    

    ZONES,
      INC.,

    

    

    
      	
              22.1

            	
              Parking.

            

    

    During
      the term of the Lease, Landlord will provide 88 unreserved monthly parking
      spaces as designated by Landlord at no additional cost to Tenant (4.0 spaces
      per
      1,000 RSF). Additional month-to-month parking spaces may
      be
      purchased, subject to availability, at a monthly rate of $60.00 per
      space.

    

    
      	
              23.1

            	
              Early
                Access.

            

    

    Effective
      January 1, 2006 Tenant shall have early access to the Premises for completion
      of
      any work by Tenant such as installation of telecommunications, equipment, data
      services, systems furniture, etc. provided it does not interfere with completion
      of Tenant Improvements. Early access shall be at no charge to Tenant and shall
      not trigger commencement of the lease.

    

    
      	
              24.1

            	
              Option
                to Renew.

            

    

    Tenant
      shall have the right to renew the Lease for one (1) additional term of five
      (5)
      years (“Renewal Term”). Tenant agrees to notify Landlord in writing of its
      intent to renew nine (9) months prior to the termination of the preceding term.
      The Renewal Term shall be under the same terms and conditions subject to the
      following conditions:

    

    
      	 	
              (i)

            	
              There
                shall not be a default under any of the terms or provisions of this
                Lease
                beyond any applicable notice and cure period at the commencement
                of the
                Renewal Term.

            

    

    

    
      	 	
              (ii)

            	
              The
                Renewal Term shall be under the same terms and conditions as specified
                in
                the Lease, except Tenant shall lease the Premises in its then "as-is"
                condition, and the Rent for the Renewal Term shall be at 95% of the
                then
                Market Rate, but not less than the Rent for the Premises in effect
                immediately prior to the commencement of such Renewal
                Term.

            

    

    

    
      	 	
              (iii)

            	
              As
                used herein, the term "Market Rate" shall be determined by the amount
                of
                base annual rent per square foot then prevailing market rate being
                charged
                in comparable buildings located in the metropolitan area of Portland,
                Oregon (the "Comparable Office Buildings") for space comparable to
                the
                Premises calculated on a per square foot basis for leases covering
                Comparable Office Buildings (taking into account all relevant factors,
                including but not limited to the size of space, setting, type, age,
                quality of the Building, method of paying taxes, utilities, and operating
                expenses, length of term, free rent or other concessions, brokerage
                commissions and improvement obligations or allowance, but as adjusted
                for
                any variances between such buildings and the Building, the
                creditworthiness of the tenants, and omitting from same value attributable
                to improvements made by or at the cost of Tenant.
                

            

    

    
      

        
          	 	 	    
	 	 
	
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                    Park - Zones Inc. 

                	
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              (iv)

            	
              Within
                thirty (30) days after Landlord receives the notice of Tenant's exercise
                of the renewal option, Landlord shall notify Tenant of the proposed
                Market
                Rate. In the event that Landlord and Tenant are not able to agree
                as to
                the Market Rate and the applicable escalation rate within sixty (60)
                days
                of good faith negotiation, then the Rent for the Renewal Term shall
                be
                determined in accordance with the arbitration provision set forth
                below:

            

    

    

    (A)    If
      Landlord and Tenant cannot agree upon the Market Rate as provided above, then
      each party shall, within five (5) days following expiration of the sixty (60)
      day period set forth above, select an arbitrator to determine the Market Rate.
      If the two arbitrators cannot agree, within fifteen (15) days following their
      appointment, on the Market Rate, then they shall, within five (5) days
      thereafter, select a third arbitrator who will consider the proposal of each
      party's arbitrator, and shall, within five (5) days from the third arbitrator's
      appointment, adopt the finding of either the Landlord's or the Tenant's
      arbitrator with respect to Market Rate, which finding shall be final and binding
      upon the parties. If the first two arbitrators are unable to agree upon the
      third arbitrator, then the third arbitrator shall be appointed by the presiding
      judge of the Circuit Court of the State of Oregon for the County of Multnomah.
      If one of the parties appoints an arbitrator, and the other does not do so
      within the period provided herein, the decision of the single arbitrator
      appointed by the one party shall be binding upon the parties. All arbitrators
      selected pursuant to this Section shall be independent commercial real estate
      appraisers or real estate brokers licensed in the State of Oregon with at least
      ten (10) years' experience, immediately prior to the date in question,
      evaluating rental rates for similar properties in the Portland, Oregon, market
      and who have not previously been employed by either Landlord or Tenant within
      the last 12 months. The appraisers shall have no right to modify the terms
      of
      this Lease in their findings. 

    

    (B)    In
      the
      event Tenant fails to timely notify Landlord in the manner herein specified,
      Tenant shall be conclusively deemed to have waived its right to enter into
      the
      Renewal Term.

    

    Should
      Tenant exercise the Renewal Term, Landlord shall provide Tenant a $5.00 per
      rentable square foot refurbishment package to be used at Tenant’s discretion
      with Landlord’s approval, which shall not be unreasonably withheld.

    

    
      	
              25.1

            	
              Right
                of First Offer.

            

    

    Tenant
      shall have a continuous right of first offer on any contiguous space that may
      come available in the building and the approximate 22,000 rentable square feet
      directly above Tenant’s premises on the seventh floor during the Initial Term or
      Renewal Term provided Tenant is not then in default on any of the lease terms
      and obligations (the "Right of First Offer Space"). At the time of the delivery
      to a prospective tenant by Landlord of a bona fide proposal to lease all or
      a
      portion of the Right of Offer Space, Landlord shall provide, and hereby grants,
      to Tenant, a right of first offer with respect to the Offered Space (as defined
      below) on the following terms and conditions:

    

    
      	 	
              (i)

            	
              At
                such time as Landlord delivers to a prospective tenant a bona fide
                proposal for leasing any portion of the Right of Offer Space (the
                "Offered
                Space"), Landlord shall provide Tenant a written notice ("Landlord's
                Notice of Terms") describing the financial terms and conditions of
                the
                proposed lease between Landlord and the prospective
                tenant.

            

    

    
      

        
          	 	 	    
	 	 
	
                  Montgomery
                    Park - Zones Inc. 

                	
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              (ii)

            	
              The
                deadline for Tenant to exercise its right to lease the Offered Space
                (the
                "Exercise Deadline") shall be seven (7) days from the receipt of
                Landlord's Notice of Terms. If Tenant fails to provide written notice
                of
                exercise to Landlord prior to the Exercise Deadline, Landlord shall
                have
                the right to lease the Offered Space to a third party on terms and
                conditions no more favorable to the third party than those set forth
                in
                Landlord's Notice of Terms. If Landlord does not enter into a lease
                for
                the Offered Space on such terms within six (6) months following Tenant's
                receipt of Landlord's Notice of Terms, Landlord shall be required
                to
                re-offer the Offered Space to Tenant prior to leasing it to any third
                party.

            

    

    

    
      	 	
              (iii)

            	
              If
                Tenant exercises its right of first offer prior to the Exercise Deadline,
                Tenant shall lease the Offered Space on the terms and conditions
                set forth
                in Landlord's Notice of Terms. Landlord and Tenant shall enter into
                a new
                lease or an amendment to this Lease with respect to the Offered Space
                containing terms and conditions identical to those specified in Landlord's
                Notice of Terms.

            

    

    

    
      	
              26.1

            	
              Assignment
                and Subletting.
                

            

    

    Tenant
      shall have a continuing right to sublease all or a portion of the premises
      with
      Landlord’s approval, which shall not be unreasonably withheld, conditioned or
      delayed. Landlord shall deliver a response to Tenant within ten (10) days
      following Tenant’s request to sublease.

    

    Tenant
      shall have the right to sublease or assign its rights under the terms of this
      Lease to its subsidiaries, affiliates, successor legal entities or subsidiaries
      or affiliates of Tenant without Landlord’s consent provided signee is of equal
      or greater financial standing with no significant change of use. Such company
      shall assume Tenant’s obligations hereunder. Tenant shall notify Landlord in
      writing of any transfer under this paragraph.

    

    
      	
              27.1

            	
              Right
                to Cancel.

            

    

    Tenant
      shall have the right to cancel the lease after the 68th
      month of
      the lease term, October 1, 2011. Tenant must provide at least twelve (12) months
      prior written notice to cancel the lease, and at such time pay to Landlord
      all
      the unamortized Tenant Improvement costs (including credit received by Tenant)
      and leasing commissions paid by Landlord, plus three (3) months of the scheduled
      base rent at the time notice is given. 

    

    
      	
              28.1

            	
              Signage.

            

    

    Landlord
      will provide at its sole cost directory and suite signage consistent with
      Building  standards.
      In lieu of outside signage, Tenant may hang their corporate flag on a flagpole
      in front of the Building main entrance.

    

    
      	
              29.1

            	
              Training
                Room.

            

    

    Landlord
      shall provide a room within the building to be used by Tenant for the purpose
      of
      initial hiring and training of new employees beginning January 2, 2006 at no
      charge. The room shall accommodate 50 people and have data connectivity and
      electrical power to run approximately 50 PCs. This will be provided until
      Landlord delivers possession of the Premises to Tenant in accordance with
      paragraph 1.3 of the Lease.

    

    
      	
              30.1

            	
              Interview
                Offices.

            

    

    Landlord
      shall provide two offices within the Building for Tenant to use for interviewing
       purposes
      effective November 29, 2005.

    
      

        
          	 	 	    
	 	 
	
                  Montgomery
                    Park - Zones Inc. 

                	
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              31.1

            	
              Fitness
                Facility.

            

    

    Landlord
      shall, at its sole cost, construct an athletic fitness facility with lockers
      and
      showers consistent with the plan provided by Tenant. Fitness membership shall
      include access to facility, towel service and day lockers. The membership fee
      shall be $5.00 per month for Tenant’s employees and other building occupants.
      Fees for the fitness facility shall not increase annually by more than the
      CPI,
      and never shall the membership fee be more than 50% of the fee charge by a
      24
      Hour Fitness facility in the Portland metropolitan area.

    

    
      	
              32.2

            	
              After
                hours HVAC Service

            

    

    After
      hours HVAC charges are $20.00 per hour. Building standard hours are 6:00 a.m.
      to
      6:00 p.m. Monday through Friday and 6:00 a.m. to 12:00 p.m. on
      Saturday.

     

    
      
        	 	 	    
	 	 
	
                Montgomery
                  Park - Zones Inc. 

              	
                Please
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