Document:

Exhibit 10.20

AIR COMMERCIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE – NET

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.             Basic
Provisions (“Basic Provisions”).

1.1           Parties: This Lease (“Lease”), dated for reference purposes only
March 6, 2007, is made by and between VRS Chatsworth LLC, a Virginia limited
liability company (“Lessor”) and
Natrol, Inc., a Delaware corporation (“Lessee”),
(collectively the “Parties,” or
individually a “Party”).

1.2           Premises: That certain real property,
including all improvements therein or to be provided by Lessor under the terms
of this Lease, and commonly known as 21411 Prairie Street, located in the
County of Los Angeles, State of California and generally described as (describe
briefly the nature of the property and, if applicable, the “Project”, if the property is located
within a Project) an approximately 93,120 square foot concrete tilt-up
industrial building situated on approximately [insert land area] square feet of
land, as more particularly described on Exhibit 1 (which is incorporated herein
by reference) (“Premises”). (See also Paragraph 2)

1.3           Term: Five (5) years and Zero (0) months (“Original Term”) commencing see Paragraph
51.1 (“Commencement
Date”) and ending see Paragraph 51.2 (“Expiration Date”). As used in this Lease, “Term” shall mean the Original Term
and all extensions or renewals thereof. (See also
Paragraph 3)

1.4           Early Possession: N/A (“Early Possession Date”). (See also
Paragraphs 3.2 and 3.3)

1.5           Base Rent: $61,459.00 per month (“Base Rent”), payable on the first (1st)
day of each month commencing on the Commencement Date. (See also
Paragraph 4)

x If this
box is checked, there are provisions in this Lease for the Base Rent to be
adjusted. See Paragraph 53.

1.6           Base Rent and Other Monies Paid Upon Execution  the Commencement Date:

(a)           Base
Rent: $ TBD for the period see Paragraph 51.3

(b)           Security
Deposit: $61,459.00 (“Security
Deposit”). (See also Paragraph 5)

(c)           Association
Fees: $N/A for the period

(d)           Other:
$ TBD for Lessor’s Reimbursable Expenses as provided in Paragraph
51.3.

(e)           Total
Due Upon Execution of this Lease: $see Paragraph 51.3.

1.7           Agreed Use: warehousing, light
manufacturing of non-hazardous consumer products, and/or offices. (See also
Paragraph 6)

1.8           Insuring Party: Lessor is the “Insuring Party” unless otherwise stated
herein. (See also Paragraph 8)

1.9           Real Estate Brokers: (See also Paragraph
15)

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

o                                                                            represents Lessor
exclusively ( “Lessor’s Broker”);

o                                                                            represents
Lessee exclusively (“Lessee’s Broker”);
or

x CB Richard Ellis, Inc. (Bennett
Robinson) represents both Lessor and Lessee ( “Dual
Agency”).

(b) Payment to
Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor Pursuant to the
Purchase Contract (as defined in
Paragraph 51.1), Lessee shall pay to the Broker the fee agreed to in
their separate written agreement (or if there is no such agreement, the sum
of or % of the total Base Rent) for the brokerage services rendered by the
Brokers in connection with the Purchase Contract and the
Original Term of this Lease. Lessor and Brokers have entered into a separate written agreement with respect to the
payment of commissions due, if any, for periods after the Original Term.

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

1.11         Attachments. Attached hereto are the
following, all of which constitute a part of this Lease:

x an Addendum consisting of Paragraphs 51
through 55.28                    ;

o a plot plan depicting the Premises;

o a current set of the Rules and Regulations;

o a Work Letter;

x other (specify): Exhibit 1 (legal
description of Premises) and Exhibit 2 (Alterations required to be removed by
Lessee upon surrender).

 

	
  INITIALS

  	
   

  	
  INITIALS

  
	
  ©2001 -
  AIR COMMERCIAL REAL ESTATE ASSOCIATION

  	
   

  	
  FORM STN-8-5/05E

  

 

 1
 

2.             Premises.

2.1           Letting. Lessor hereby leases to Lessee,
and Lessee hereby leases from Lessor, the Premises, for the term, at the
rental, and upon all of the terms, covenants and conditions set forth in this
Lease. Unless otherwise provided herein, any statement of size set forth in
this Lease, or that may have been used in calculating Rent, is an approximation
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,
that the structural elements of the roof, bearing walls and foundation of any
buildings on the Premises (the “Building”)
shall be free of material defects, and that the Premises do not contain
hazardous levels of any mold or fungi defined as toxic under applicable state
or federal law. 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 follows: (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. Certain Definitions:
As used in this Lease, (a) “Start Date” shall mean the Commencement Date or the
Early Possession Date, whichever
first Occurs, (b) “HVAC” shall mean the heating, ventilating and air
conditioning systems of the Premises, (c) “Building” shall mean the building on the Premises, and (d) “Applicable
Requirements” shall mean building codes, applicable laws, covenants or restrictions of record,
regulations and ordinances.

2.3           Compliance. Lessor warrants that to the
best of its knowledge 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 not caused by Lessee or the Lessee Parties
either before or after the Commencement Date , or the reinforcement or
other physical modification of the Unit, Premises and/or Building ( “Capital Expenditure”), 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 of the
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 12 months  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 the
difference between the actual cost thereof and an amount equal to 6 months’
Base Rent. If Lessee elects termination, Lessee shall immediately cease the use
of the Premises which requires such Capital Expenditure and deliver to Lessor
written notice specifying 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 to pay for such costs pursuant to the provisions of
Paragraph 7.1(d); provided, however, that if 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 pay its 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 Lessor’s 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, from Rent until Lessor’s share of such costs have
been fully paid. If Lessee is unable to finance Lessor’s share, or if the
balance of the Rent due and payable for the remainder of this Lease is not
sufficient 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 shall 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 (ii) 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 (including 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 financial 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 

 2
 

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 Property Taxes and insurance premiums and to maintain the Premises) shall
be in effect during such period. Any such early possession shall not affect the
Expiration Date.

3.3           Delay In Possession. Lessor agrees to use
its 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 continue 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”).

4.2           Payment. Lessee shall unconditionally cause payment of Rent
to be received by Lessor in lawful money of the United States, without offset
or deduction (except as specifically permitted in this Lease), on or before the
day on which it is due. All monetary amounts shall be rounded to the nearest
whole dollar. In the event that any invoice prepared by Lessor is inaccurate
such inaccuracy shall not constitute a waiver and Lessee shall be obligated to
pay the amount set forth 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 Late Charge and Lessor, at its option,
may require all future Rent be paid by cashier’s check. Payments will be
applied first to accrued late charges and attorney’s fees, second to accrued
interest, then to Base Rent and Common Area Operating Expenses, 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 execution 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 during the term of this Lease, 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 Lessor’s 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 elects 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. Other than
guide, signal and seeing eye dogs, Lessee shall not keep or allow in the
Premises any pets, animals, birds, fish, or reptiles. Lessor shall not
unreasonably withhold or delay its consent to any 

 3
 

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 , is not a part of the “adult entertainment” industry or involves the use of
Hazardous Substances not previously approved by Lessor pursuant to Paragraph 55.12 or otherwise
permitted in accordance with Paragraph 6.2(a) (with regard to Permitted
Hazardous Substances) or
the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor
shall within 7 10 business 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 basis for potential
liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substances shall include, but
not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any
products, by-products or 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 (i) 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 described on
the HazMat Certificate, ordinary office supplies (copier toner, liquid
paper, glue, etc.) and common household cleaning 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 (collectively, the “Permitted Hazardous Substances”). 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, including, 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.

(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, claim 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
(including 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 contamination 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, claims,
expenses, penalties, and attorneys’ and consultants’ fees arising out of or
involving any Hazardous Substance brought onto the Premises, whether prior to or after the Commencement Date, by or for Lessee or Lessee’s employees, agents, invitees,
Affiliates, assignees, sublessees, successors and assigns (collectively, the “Lessee Parties”), 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 contributed to by
Lessee or the Lessee Parties).
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 lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which result from Hazardous Substances which existed on the
Premises prior to Lessee’s occupancy not caused or contributed to, whether prior to or after the Commencement Date, by Lessee or the Lessee
Parties 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 include, 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 Remediations. Lessor shall retain the responsibility 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 occupanc, unless such remediation measure
is required as a result of Lessee’s or
any of the Lessee Parties’ use (including “Alterations”, as defined in
paragraph 7.3(a) below) of the Premises, or as a result of any Hazardous Substance Condition caused or contributed
to by Lessee, whether prior to
or after the Commencement Date, in which event Lessee shall be
responsible for such payment. Lessee shall cooperate fully in any such activities
at the request of Lessor, including 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 or a Lessee Party  is legally responsible
therefor under the provisions of this
Lease (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this 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) if the estimated cost to remediate
such condition exceeds 12 9  times the then monthly Base Rent or
$100,000, whichever is greater, give written 

 4
 

notice
to Lessee, within 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 amount by which the cost of the remediation of such Hazardous Substance Condition
exceeds an amount equal to 12 9 times the then monthly Base Rent or
$100,000, whichever is greater. 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 Date.
Lessee shall, within 10 days after receipt of Lessor’’s written request,
provide Lessor with copies of all permits and other documents, and other
information evidencing 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. Likewise, Lessee shall immediately give written notice to Lessor
of: (i) any water damage to the Premises and any suspected seepage, pooling,
dampness or other condition conducive to the production of mold; or (ii) any
mustiness or other odors that might indicate the presence of mold in the
Premises.

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 an emergency, and otherwise at reasonable times after
reasonable telephonic notice, subject to Lessor’s compliance with Lessee’s security requirements,
for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease. Lessee shall be entitled to have its representatives accompany Lessor,
its Lender and their consultants on the Premises. The cost of any such inspections shall be paid by
Lessor, unless a violation of Applicable Requirements by Lessee, or a Hazardous Substance Condition (see paragraph 9.1) caused by Lessee is found to exist or
be imminent, or the inspection is requested or ordered by a governmental
authority. In such case, 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-class 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 improvements, if any, if and when installed on the
Premises: (i) HVAC equipment, (ii) 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
(viii) 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 Lessee shall reimburse Lessor, upon
demand, for the cost thereof.

(c) Failure to
Perform. If Lessee fails 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.

(d) Replacement. Subject
to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7 below, and
without relieving Lessee of liability resulting from Lessee’s failure to
exercise and perform good maintenance practices, if an item described in
Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of
50% of the cost of replacing such item, then such item shall be replaced by
Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the
numerator of which is one, and the denominator of which is 144 (ie. 1/144th
of the cost per month) 120 (i.e.,
1/120th of the cost per month) with respect to replacement of the roof, and 84 (i.e., 1/84th of the cost per month) with
respect to all other capital replacements. Lessee shall pay interest on
the unamortized balance (at a rate
equal to the lesser of ten percent (10%) per annum or the maximum lawful
amount) but may prepay its obligation at any time.

7.2           Lessor’s Obligations. Subject to the
provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 7.1(d) (Replacement), 9 (Damage or
Destruction) , and 14
(Condemnation), and 55.16 (Performance
of Certain Work by Lessor), 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 

 5
 

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 terms 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 installed or constructed within the
Premises after the Commencement Date.
The term “Trade Fixtures” 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, made
to the Premises after the Commencement Date, whether by addition or
deletion. “Lessee Owned Alterations and/or
Utility Installations ” are defined as Alterations and/or Utility
Installations made by Lessee after the Commencement Date that are not
yet owned by Lessor pursuant to Paragraph 7.4(a).

(b) Consent. Except as otherwise expressly provided in
this Lease, Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor’s prior written consent. Lessee
may, however, make non-structural Alterations
and Utility Installations to the interior of the Premises (excluding the
roof) , and may install its Trade
Fixtures, without such consent but upon notice to Lessor, as long as
they are not visible from the outside, do not involve puncturing, relocating or
removing the roof or any existing structural bearing walls, will not affect the electrical,
plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof
during this Lease as extended does not exceed a sum equal to 3 month’s Base
Rent $200,000 in the
aggregate or a sum equal to one month’s Base Rent $50,000 in any one year.
Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or 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, such approval not to be unreasonably withheld or delayed. Lessor may require the use of its contractor
if proposed Alterations affect the structural aspects of the Building or the failure to do so will void a warranty
applicable to the Premises. 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 reasonably detailed plans. Consent shall be deemed conditioned
upon Lessee’s: (i) 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 furnish Lessor with as-built plans and specifications.
For work which costs an amount in excess of one month’s six (6) months’ 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 , said additional Security Deposit (if any) to be returned to Lessee upon
completion, in the manner required under this Lease, of such work (including Lessor’s receipt of final
unconditional lien releases with respect thereto).

(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 materialmen’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 Lessor’s right 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
property of Lessor and be surrendered by Lessee with the Premises.

(b) Removal. Within 90 days prior to the expiration of the
Term, Lessee shall deliver a list of all Alterations and Utility Installations made to the Premises
after the Commencement Date, if any. Within 30 days following said delivery, By
delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations made after the Commencement Date be
removed by the expiration or termination of this Lease. Provided Lessee timely delivers Lessor the notice described in the first
sentence of this Paragraph 7.4(b), Lessor’s failure to give the written notice described in the
second sentence of this Paragraph 7.4(b) within such time shall constitute
Lessor’s election that such
Lessee Owned Alterations or Utility Installations not be removed. If Lessee has
constructed Alterations or Utility Installations after the Commencement Date and fails to deliver to Lessor
the notice described in the first sentence of this Paragraph 7.4(b), Lessee shall be required to
remove all Alterations and Utility Installations constructed after the
Commencement Date and requested
by Lessor within 30 days after the expiration or earlier termination of this
Lease. Notwithstanding the foregoing,
Lessee shall be obligated to remove all of its Trade Fixtures from the
Premises, as well as those Alterations and Utility Installations described in Exhibit 2 attached
hereto and incorporated herein by reference. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made after the
Commencement Date 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 clean and free of debris, and in good operating
order, condition and state of repair, the same operating order,
condition and state of repair as existed on the Commencement Date, ordinary
wear and tear excepted. “Ordinary wear and tear” shall not include any damage
or deterioration that would have been prevented by good maintenance practice except to the extent Lessor has elected to maintain any service contracts
pursuant to Paragraph 7.1(b) above. 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 (whenever installed) 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 

 6
 

shall
completely remove from the Premises any and all Hazardous Substances brought
onto the Premises by or for Lessee or
the Lessee Parties, whether
before or after the Commencement Date, or any third party (except
Hazardous Substances which were deposited via underground migration from areas
outside of the Premises, or if applicable, the Premises) 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 property 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 this
Lease. 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. See
Paragraph 55.27.

8.2           Liability Insurance.

(a) Carried by
Lessee. Lessee shall obtain and keep in force a Commercial General
Liability policy of insurance protecting Lessee and Lessor as an additional insured
against claims 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 $2,000,000 per occurrence with
an annual aggregate of not less than $2,000,000 $5,000,000; provided,
however, that Lessee may provide such coverage through a combination of primary
and excess or “umbrella” coverage so long as the same covers all damages and the form is approved by Lessor in
its reasonable discretion. Lessor hereby approves of the liability insurance maintained by Lessee as
of the Commencement Date. Lessee shall add Lessor as an additional
insured by means of an endorsement at least as broad as the Insurance Service
Organization’s “Additional Insured-Managers or Lessors of Premises” and “Amendment of the Pollution Exclusion” Endorsements  and
coverage shall also be extended to include damage caused by heat, smoke or
fumes from a hostile fire. The policy shall not contain any intra-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. Lessee shall provide an endorsement on its liability policy(ies)
which provides that its insurance 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 insurable 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 made after the Commencement Date,
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 policies 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 annual 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 not exceed $1 0,000 per occurrence, and Lessee shall
be liable for such deductible amount in the event of an Insured Loss. Lessor may satisfy such coverage requirements
with blanket policies, so long as the same otherwise provides the coverage to the Premises required under
this Lease.

(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 ; Workers Compensation Insurance.

(a) Property Damage.
Lessee shall obtain and maintain insurance coverage on all of
Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and
Utility Installations. Such insurance shall be full replacement cost coverage
with a deductible of not to exceed $10,000
per occurrence. The proceeds from any such insurance shall be used by Lessee
for the replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. By
way of example, and not limitation, such policies shall provide protection
against any peril included
within the classification “fire and extended coverage”, against vandalism and
malicious mischief, theft, and sprinkler leakage. 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 direct or 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) No Representation 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.

 7
 

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

8.5           Insurance Policies. Insurance required
herein shall be by companies duly licensed or admitted to transact business in
the state where the Premises are located, and maintaining during the policy
term a “General Policyholders Rating” of at least A-, X VI, as set forth in the most current issue of “Best’s
Insurance Guide”, or such other rating as may be required by a Lender. Notwithstanding the foregoing, Lessor hereby approves of Lessee’s insurance carriers
providing such coverage as of the Commencement Date. 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 10 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
policies shall 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
property damage insurance carriers 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, attorneys’ 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 and its Agents from Liability.
Notwithstanding Except to the
extent caused by the gross negligence
or breach of this Lease by Lessor or its agents, neither Lessor nor its agents
shall be liable under any circumstances for: (i) injury or damage to the person
or goods, wares, merchandise or other property of Lessee, Lessee’s employees,
contractors, invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, indoor air quality, the presence of mold 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, (ii) any damages arising from any act or
neglect of any other tenant of Lessor or from the failure of Lessor or its
agents to enforce the provisions of any other lease in the Project, or (iii)
injury to Lessee’s business or for any loss of income or profit therefrom.
Instead, it is intended that Lessee’s sole recourse in the event of such
damages or injury be to file a claim on the insurance policy(ies) that Lessee
is required to maintain pursuant to the provisions of paragraph 8.

8.9           Failure to Provide Insurance. Lessee Each Party acknowledges that any
failure on its part to obtain or maintain the insurance required herein will
expose Lessor the other Party to
risks and potentially cause Lessor it 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 to maintain 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 and Trade Fixtures, which can
reasonably be repaired in 6 9 months
or less from the date of the damage or destruction. Lessor shall notify Lessee
in writing within 30 60 days
from the date of the damage or destruction as to whether or not the damage is
Partial or Total. Notwithstanding the foregoing, Premises Partial Damage shall
not include damage to windows, doors, and/or other similar items which Lessee
has the responsibility to repair or replace pursuant to the provisions of
Paragraph 7.1.

(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 9 months or less from the date of the damage or destruction.
Lessor shall notify Lessee in writing within 30 60 days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.

(c) “Insured Loss” shall
mean damage or destruction to improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations and Trade Fixtures and those portions of the Premises required
to be restored by Lessee prior to its surrender of the Premises, as described in Exhibit 2,
which was caused by an event required to be covered by the insurance described
in Paragraph 8.3(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) “Hazardous
Substance 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, remediation, or restoration.

9.2           Partial Damage - Insured Loss. If a Premises
Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s 

 8
 

expense,
repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations
and Utility Installations , and not
those portions of the Premises
required to be restored by Lessee prior to its surrender of the Premises, as
described in Exhibit 2 ) as soon as reasonably possible and this Lease
shall continue in full force and effect; provided, however, that Lessee shall,
at Lessor’s 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 Party shall ,
subject to Paragraph 55.26, 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 , the cost of repair of
which exceeds $100,000, 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           Partial Damage - Uninsured Loss. If a
Premises Partial Damage that is not an Insured Loss occurs, unless caused by a
negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon
as reasonably possible at Lessor’s 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 60 120 days following the date of such
notice. In the event Lessor elects to terminate this Lease, Lessee shall 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.

9.4           Total 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 Lessor’s damages from Lessee,
except as provided in Paragraph 8.6.

9.5           Damage Near End of Term. If at any time
during the last 6 12 months
of this Lease there is damage for which the cost to repair exceeds one
month’s three months’ Base
Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective
60 90 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 Lessor’s 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 Lessor’s commercially reasonable expense, repair such damage
as soon as reasonably possible and this Lease shall continue in full force and
effect. If Lessee fails to exercise such option and provide such funds or
assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee’s option shall be extinguished.

9.6           Abatement of Rent; Lessee’s Remedies.

(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, remediation, 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.

9.7           Termination; 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.

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
Lessor’s 

 9
 

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 of Taxes. 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 Lessee’s occupancy, 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 but if Lessee is not in Breach, applied to the payment of Real Property Taxes
when due, and Lessee’s obligations with respect thereto shall be deemed to have been satisfied to the
extent thereof.

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 assessor’s 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 Lessor’s 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 Lessor’s reasonable control
or in cooperation with governmental request or directions.

12.           Assignment
and Subletting.

12.1         Lessor’s Consent 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 Lessor’s prior written consent.

(b) Unless Lessee is a corporation and its stock is
publicly traded on a national stock exchange, a change in the control of Lessee
shall constitute an 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 otherwise), 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 Lessor’s option, be a Default curable after notice per Paragraph 13.1(d).  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 Breach 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 term 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 and recovery of attorneys’ fees as provided
in this Lease.

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

(g) Notwithstanding the foregoing, allowing a diminimus de minimis portion of the
Premises, ie. 20 square feet or less, to be used by a third party vendor in
connection with the installation of a vending machine or payphone shall not
constitute a subletting. 

(h) Subject to Paragraph
12.1(c), Lessee shall have the right to assign this Lease or sublease some or
all of the Premises without the need to obtain Lessor’s
consent (but upon written notice to Lessor), if such assignment or sublease is
to any person or entity who or
which controls, is controlled by or is under common control with Lessee, or
which acquires all of Lessee’s assets
and operations at the Premises. Each of the foregoing assignees and sublessees
described in this Paragraph 12.1(h) shall be referred to as an “Affiliate”.

12.2         Terms and Conditions Applicable to Assignment and
Subletting.

(a) Regardless of Lessor’s consent, no assignment or
subletting shall: (i) be effective without the express written assumption by 

 10
 

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
of an assignment. Neither a delay in the approval or disapproval of such
assignment nor the acceptance of Rent or performance shall constitute a waiver
or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or
Breach.

(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 consideration 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, entering into such sublease, or
entering into possession of the Premises or any portion thereof, 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 where such consent is
required hereunder.

(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)

12.3         Additional Terms and 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
included 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 then outstanding 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 attorn 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 cure
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.

13.1         Default; 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 where 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 property, where such failure continues for a
period of 3 business 5 calendar days following written notice to Lessee.

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

(d) The failure by Lessee to provide (i) reasonable
written evidence of compliance with Applicable Requirements, (ii) the service
contracts, (iii) the rescission 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 terms of this Lease, where any such failure continues for a
period of 10 15 business days following written notice to Lessee.

(e) A Default by Lessee as to the terms, 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), (c) or
(d), 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.

(f) The occurrence of any of the following events: (i)
the making of any general arrangement or assignment for the benefit of
creditors; (ii) becoming a “debtor” as
defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case
of a petition filed against Lessee, 

 11
 

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
judicial 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 is contrary to any applicable law, such provision shall be
of no force or effect, and not affect the validity of the remaining provisions.

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

(h) So long as Lessor owns and Lessee leases those certain premises located at 9453 Owensmoutn
Avenue, Chatsworth, California
(the “Other Premises”), the occurrence of a Breach under that certain Standard
Industrial/Commercial Multi-Tenant
Lease - Net, of even date herewith, by and between Lessor and Lessee, with
respect to the Other Premises. 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 Guarantor’s 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 time of execution of this Lease.

13.2         Remedies. If Lessee fails to perform any of
its affirmative duties or obligations, within 10 days after written notice (or
in case of an emergency, 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
shall 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 termination
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 reletting, including
necessary renovation and alteration (to
the extent described in Paragraph
7.4(c) and Exhibit 2) 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 Lease ; provided, however, that in no event shall Lessor be entitled to double recovery from Lessee for damage
incurred as a result of such Breach. 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 detainer 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 concurrently, 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, shall 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 right 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.

13.3         Inducement 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 “Inducement Provisions,” shall
be deemed conditioned upon Lessee’s full and faithful performance of all of the
terms, covenants and conditions of this Lease. Upon Breach of this Lease by
Lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further force 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 this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.

13.4         Late Charges. 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 10 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% 5% 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 Lessor’s 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 

 12
 

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 shall 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 breach 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 more 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 Lessor’s 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 within a reasonable
time, then after Lessee gives Lessor a second written notice
and Lessor fails to commence the cure within 3 business days after said notice,
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 for any such expense in excess of such offset. Lessee
shall document the cost of said cure and supply 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 title 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 permanently taken
by Condemnation (or taken for more than
90 days in a temporary taking by Condemnation) and such taking materially and adversely affects Lessee’s use
or occupancy of the Premises , Lessee may, at Lessee’s option, to be
exercised in writing within 10 days after Lessor shall have 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 , subject to Paragraph 55.26 below. 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 pursue a
separate award for 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 Installations made to the Premises by Lessee after the Commencement Date for which Lessor
will require removal pursuant to Paragraph 7.4(c), and those portions of the Premises described on Exhibit 2,
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.

15.           Brokerage
Fees.

15.1         Additional Commission. In addition to the
payments owed pursuant to Paragraph 1.9 above, and unless Lessor and the
Brokers otherwise agree in writing, Lessor agrees that: (a) if Lessee exercises
any Option, (b) if Lessee acquires any rights to the Premises or other
premises owned by Lessor and located within the same Project, if any, within
which the Premises is located, (c) if Lessee remains in possession of the
Premises, with the consent of Lessor, after the expiration of this Lease, or
(d) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then, Lessor shall pay Brokers a fee pursuant to the separate written agreement
described in Paragraph 1.9(b). in accordance with the schedule of the
Brokers in effect at the time of the execution of this Lease.

15.2         Assumption of Obligations. Any buyer or
transferee of Lessor’s interest in this Lease shall be deemed to have assumed
Lessor’s obligation hereunder. Brokers shall be third party beneficiaries of
the provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to
Brokers any amounts due as and for brokerage fees pertaining to this Lease when
due, then such amounts shall accrue Interest. In addition, if Lessor fails to
pay any amounts to Lessee’s Broker when due, Lessee’s Broker may send written
notice to Lessor and Lessee of such failure and if Lessor fails to pay such
amounts within 10 days after said notice, Lessee shall pay said monies to its
Broker and offset such amounts against Rent. In addition, Lessee’s Broker shall
be deemed to be a third party beneficiary of any commission agreement entered
into by and/or between Lessor and Lessor’s Broker for the limited purpose of
collecting any brokerage fee owed.

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 finder’s fee in
connection herewith. Lessee and Lessor do each hereby agree to indemnify,
protect, defend and hold the other harmless from and against liability for
compensation or charges which may be claimed 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, attorneys’ fees reasonably incurred with
respect thereto.

16.           Estoppel
Certificates.

(a) Subject to
Paragraph 55.22, each 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
in form 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 is required and shall fail
to execute or deliver the Estoppel Certificate within such 10 day period, the
Requesting Party may execute an Estoppel Certificate stating that: (i) 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, 

 13
 

not
more than one month’s rent has been paid in advance. Prospective purchasers and
encumbrancers 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, or
if Lessor is reasonably concerned about Lessee’s financial condition, 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 shall be used only for the purposes
herein set forth. So long as the stock
of Lessee is publicly traded on a national stock exchange, Lessee’s delivery of
its publicly-available financial statements
shall satisfy its obligations under this Paragraph 16(c).

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 Lessor’s title or interest in
the Premises or this Lease, Lessor shall deliver to the transferee or assignee
(in 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.

20.           Limitation
on Liability. The Notwithstanding
anything to the contrary in this Lease, the obligations of Lessor under
this Lease shall not constitute personal obligations of Lessor or its partners,
members, directors, officers or shareholders, and Lessee shall look to the
Premises and the proceeds of any insurance maintained by
Lessor hereunder , 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 investment
advisors, 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 Other Agreements; Broker Disclaimer. This Lease contains
all agreements between the Parties with respect to any matter  mentioned
herein Lessee’s lease of the
Premises, 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 or liability with respect thereto or
with respect to any default or breach hereof by either Party. The Purchase Contract shall govern the terms of Lessor’s purchase of the
Premises from Lessee’s Affiliate, and shall remain in effect as and to the
extent provided therein. 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 Broker’s
liability shall not be applicable to any gross negligence or willful misconduct
of such Broker.

23.           Notices.

23.1         Notice Requirements. 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 mail 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.

23.2         Date 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 date is
shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 72 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 transmission 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 either Party of the Default or Breach
of , or failure to perform, any
term, covenant or condition hereof by Lessee the other Party, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of, or failure to perform, the
same or of any other term, covenant or condition hereof. Lessor’s consent to,
or approval of, any act shall not be deemed to 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 Except as provided in Paragraph 43 below, 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 

 14
 

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)              Lessor’s
Agent. A Lessor’s agent under a listing agreement with the Lessor acts as
the agent for the Lessor only. A Lessor’s 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 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.

(ii)           Lessee’s
Agent. An agent can agree to act as agent for the Lessee only. In these
situations, the agent is not the Lessor’s 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.

(b)           Brokers
have no responsibility with respect to any default or breach hereof by either
Party. The Parties agree that no lawsuit or other legal proceeding involving
any breach of duty, error or omission relating to this Lease may be brought
against Broker more than one year after the Start Date and that the liability
(including court costs and attorneys’ fees), of any Broker with respect to any
such lawsuit and/or legal proceeding 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 To Holdover. 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% 125%  of the Base Rent applicable
immediately preceding the expiration or termination for the first sixty (60) days of such holding over, and thereafter 150%
of the Base Rent applicable 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 concerning this Lease shall be initiated in the county in which
the Premises are located.

30.           Subordination;
Attornment; Non-Disturbance.

30.1         Subordination. This Subject to Paragraph 30.3 below, this Lease
and any Option granted 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 (in 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.

30.2         Attornment. 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, attorn 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 

 15
 

remainder
of the term hereof, or, at the election of the new owner, this Lease will
automatically become a new lease between Lessee and such new owner, 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, 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 unless the
security deposit has been
received by such new owner.

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 attorns to the record owner of the Premises.
Further, within 60 days after the execution of this Lease, Lessor shall use its
commercially reasonable efforts to obtain a Non-Disturbance Agreement from the
holder of any pre-existing Security Device which is secured by the Premises. In
the event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and
attempt to negotiate for the execution and delivery of a Non-Disturbance
Agreement.

30.4         Self-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, financing or refinancing of the Premises,
Lessee and Lessor shall execute such further writings as may be reasonably
required to separately document any subordination, attornment and/or Non-Disturbance
Agreement provided for herein.

31.           Attorneys’
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 fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
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, a final,
non-appealable 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 valid notices
of Default and consultations in connection therewith, whether or not a legal
action is subsequently commenced in connection with such Default or resulting
Breach ($200 is a reasonable minimum per occurrence for such services and
consultation).

32.           Lessor’s
Access; Showing Premises; Repairs. Subject to compliance with Lessee’s security requirements, Lessor
and Lessor’s agents shall have the right to enter the Premises at any time, in
the case of an emergency, and otherwise at reasonable times after reasonable
prior notice (which may be verbal) for
the purpose of showing the same to prospective purchasers, lenders, or during the last nine months of the Term, to tenants, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may deem
necessary or desirable be permitted or required to make, 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 or
access to the Premises or any
material portion thereof. All such activities authorized under this Paragraph 32 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. Lessor hereby approves of Lessee’s signs existing as of the Commencement
Date.

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. Lessor’s failure within 10 30 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. Lessor’s actual
reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ 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. Lessor’s 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 Breach, 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 Lessor’s 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.

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

 16
 

37.2         Default. It shall constitute a Default of
the Lessee if any Guarantor fails or refuses, upon request to provide: (a)
evidence of the execution of the guaranty, including the authority of the party
signing on Guarantor’s behalf to obligate Guarantor, and in the case of a
corporate Guarantor, a certified copy of a resolution of its board of directors
authorizing 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
Possession. 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 term hereof.

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

39.1         Definition. “Option” shall mean: (a) the
right to extend the term 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 offer to lease either the Premises or other property of Lessor; (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 May Not Be
Separated. 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 or an Affiliate and only while the
original Lessee or an Affiliate is in full possession of at least 50% 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 of Default on Options.

(a) Lessee shall have no right to exercise an Option:
(i) during the period commencing 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), or  (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessee has been given 3 or more valid 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 commits a Default under Paragraph 13.1(f) above (without any
necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach
of this Lease.

40.           Multiple
Buildings. If the Premises are a 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
vehicles, 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 and
liability for the protection of the Premises, Lessee, its agents , employees, contractors 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 and/or
materially 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. Lessee hereby approves of all easements affecting the Premises as of the Commencement Date.

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 Party to institute suit for recovery of such sum. If it shall 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 recover such sum
or so much thereof as it was not legally required to pay. A Party who does not
initiate suit for the recovery of sums paid “under protest” with within 6 months shall be deemed to
have waived its right to protest such payment.

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
Party 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 document
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 document.

(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 

 17
 

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 executed 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.           Waiver of 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 o  is  x  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 requires 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.

LEASE CONTINUES ON NEXT PAGE

 18

ADDENDUM TO LEASE

 

This Addendum to
the Standard Industrial/Commercial [Single - Lessee Lease – Net]
(the “Addendum”) is entered into by and
between VRS Chatsworth LLC, a Virginia limited liability company (“Lessor”),
and Natrol, Inc., a Delaware corporation (“Lessee”). To the extent that the
provisions of this Addendum are inconsistent with the terms and conditions of
the lease to which it is attached (the ”Lease”),
the provisions of this Addendum shall control. Capitalized terms in this
Addendum shall have the same meaning as capitalized terms in the Lease.

51.          Additional Matters Relating to
Commencement and Expiration Dates.

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

51.2         The Expiration Date shall be the date
which is the day prior to the fifth (5th) anniversary of the Commencement Date.

51.3         The Base Rent and Lessor’s Reimbursable
Expenses for the first month of the Original Term shall be prorated, based upon
the closing date of the transactions pursuant to the Purchase Contract. Upon
such closing, the Base Rent, Lessor’s Reimbursable Expenses through the end of
the calendar month in which such closing occurs, and the Security Deposit, each
shall be credited to Lessor through the escrow under the Purchase Contract, and
shall be deemed, for purposes of this Lease, to have been paid by Lessee to
Lessor thereupon. Lessee’s first payment of Base Rent thereafter shall be due
upon the first day of the calendar month following such closing under the
Purchase Contract.

51.4         Upon the request of either Party, the
other Party shall acknowledge in writing the amount of Base Rent and Lessor’s
Reimbursable Expenses paid on behalf of Lessee at the closing under the
Purchase Contract and enter into a written confirmation of the Commencement
Date.

52.          Management Fee. For
so long as Lessor retains a separate property manager for the Premises, Lessor
shall be entitled to collect, and Lessee shall pay to Lessor, a property
management fee equal to two percent (2%) of the Base Rent.

53.          Base Rent Increases.
On each anniversary of the Commencement Date during the Original Term, the
monthly Base Rent shall increase by three percent (3%) from the rate applicable
in the prior year (i.e., Lease Year 2, $63,303.00; Lease Year 3, $65,202.00;
Lease Year 4, $67,158.00; and Lease Year 5, $69,173.00).

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

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

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

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

(d)           The term “Prevailing
Market Rent” as used in this Paragraph 54 is defined to mean the
fair market rent of the Premises according to comparable properties in the
general area. In determining fair market monthly rent it shall be assumed that:

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

 19
 

(ii)           The Premises would be leased for the
period of the Option being exercised by a tenant with the credit standing of
Lessee, as the same exists at the time of exercise.

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

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

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

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

(i)            Within
seven (7) days following the Outside Agreement Date, Lesser and Lessee shall
each select one (1) independent broker with at least fifteen (15) years of
experience in office/manufacturing/industrial space in the West San Fernando
Valley submarket in Los Angeles, California (a “Qualified
Broker”), to determine the Prevailing Market Rate. If one party
shall fail to select a Qualified Broker within the seven (7) day period, then
the Qualified Broker chosen by the other party shall be the sole arbitrator. If
the two appointed independent Qualified Brokers are unable to agree on
Prevailing Market Rate within a second period of seven (7) days following their
appointment, the two independent Qualified Brokers shall within seven (7) days
from the date that they were required to agree on the Prevailing Market Rate
but were unable to do so, select a third independent Qualified Broker
(the “Third Qualified Broker”) and the
Third Qualified Broker shall be the sole arbitrator of the Prevailing Market
Rate. Neither Lessor nor Lessee, nor there respective Qualified Brokers, shall
have consulted with such Third Qualified Broker as to their respective opinion
as to the Prevailing Market Rent prior to the appointment. Such Third Qualified
Broker may hold such hearings and require such additional submittals from the
Parties as the Third Qualified Broker, in his or her sole discretion,
determines is necessary. In addition, Lessor or Lessee may submit to the Third
Qualified Broker, with a copy to the other party, within five (5) business days
after the appointment of the Third Qualified Broker, any market data and
additional information such Party deems relevant to the determination of the
Prevailing Market Rent (“Data”), and the
other Party may submit a reply in writing within five (5) business days after
receipt of such Data.

(ii)           The
Third Qualified Broker shall, within thirty (30) days of his or her
appointment, determine the Prevailing Market Rate based on the factors
described herein.

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

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

(v)           The
cost of the Third Qualified Broker shall be paid in equal shares by Lessor and
Lessee.

(f)            If for any reason the Prevailing
Market Rent has not been determined by the commencement of the applicable
Option Period, Lessee shall continue paying rent at the rate previously in
effect or as specified in Lessee’s Judgment, whichever is greater, and the
Parties shall promptly make the appropriate adjustments as soon as the
Prevailing Market Rent is determined.

55.          Miscellaneous.

55.1.        No Representations or
Warranties. Notwithstanding anything in the Lease to the contrary,
Lessee accepts the Premises in its “as is” “where is” condition as of the
Commencement Date and acknowledges that Lessor has made no representation or
warranty as to the suitability of the Premises for the conduct of Lessee’s
business, and Lessee waives any implied warranty that the Premises are suitable
for Lessee’s intended purposes. Notwithstanding anything in the Lease to the
contrary, Lessor makes no representation or warranty that Lessee’s use is permitted
by applicable zoning laws or other laws and regulations. In no event shall any
portion of the Premises be used for retail sales.

 20
 

Lessee shall not
initiate, submit an application for, or otherwise request, any land use
approvals or entitlements with respect to the Premises, including, without
limitation, any variance, conditional use permit or rezoning, without first
obtaining Lessor’s prior written consent, which may be given or withheld in
Lessor’s sole discretion. Lessee shall not (a) install any antenna, dish or
other device on the roof of the Building or outside of the Premises, (b) make
any penetrations into the roof of the Building, (c) place loads upon floors,
walls or ceilings in excess of the load such items were designed to carry, (d)
place or store, nor permit any other person or entity to place or store, any
property, equipment, materials, supplies or other items outside of the Building
in which the Premises is located, except if approved by Lessor or (e) change
the exterior of the Premises. Lessee agrees that Lessor shall not be liable to
Lessee for its failure to furnish water, gas, electricity, telephone, sewer,
refuse and trash collection or any other utility services or building services
when such failure is occasioned, in whole or in part, by repairs, replacements
or improvements, by any strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, telephone service or other utility at the
Premises, by any accident, casualty or event arising from any cause whatsoever,
including the negligence of Lessor, its employees, agents and contractors, by
act, negligence or default of Lessee or any other person or entity, or by any
other cause, and such failures shall never be deemed to constitute an eviction
or disturbance of Lessee’s use and possession of the Premises or relieve Lessee
from the obligation of paying Rent or performing any of its obligations under
this Lease. Furthermore, Lessor shall not be liable under any circumstances for
loss of property or for injury to, or interference with, Lessee’s business,
including, without limitation, loss of profits, however occurring, through or
in connection with or incidental to a failure to furnish any such services or
utilities. Lessor may comply with voluntary controls or guidelines promulgated
by any governmental entity relating to the use or conservation of energy,
water, gas, light or electricity or the reduction of automobile or other
emissions without creating any liability of Lessor to Lessee under this Lease. Notwithstanding
the foregoing, Lessor shall be liable to the extent of Landlord’s gross
negligence or willful misconduct.

55.2.         Intentionally deleted.

55.3.        Tax Protest. From time to time Lessor may challenge the
assessed value of the Premises as determined by applicable taxing authorities
and/or Lessor may attempt to cause the Real Property Taxes to be reduced on
other grounds. If Lessor is successful in causing the Real Property Taxes to be
reduced or in obtaining a refund, rebate, credit or similar benefit (hereinafter
collectively referred to as a “reduction”),
Lessor shall credit the reduction(s) to Real Property Taxes for the calendar
year(s) to which a reduction applies and to recalculate the Real Property Taxes
owed by Lessee for years in which the reduction applies based on the reduced
Real Property Taxes. All costs incurred by Lessor in obtaining the Real
Property Tax reductions shall be considered a Lessor’s Reimbursable Expenses,
and Lessor shall determine, in its reasonable discretion, to which years any
reductions will be applied. In addition, all accounting and related costs
incurred by Lessor in making the adjustments shall be a Lessor’s Reimbursable
Expense. Lessor shall have the right to compensate a person or entity it
employs to obtain a reduction in Real Property Taxes by giving such person or
entity a percentage of any reduction or credit obtained, and in this event the
reduction or credit obtained by Lessor shall be deemed to be the reduction or
credit given by the taxing authority less the compensation paid to such person
or entity. Lessee waives any right to contest or challenge taxes; provided,
however, that Lessor shall reasonably consider any request from Lessee that
Lessor challenge the assessed value of the Premises. Notwithstanding the foregoing,
if, on final appeal, the costs of pursuing the Real Property Tax protest
exceeds the savings for one (1) year, Lessor shall be responsible for all costs
related to the challenge of Real Property Taxes and the same shall not
constitute Lessor Reimbursable Expenses.

55.4.        Intentionally deleted.

55.5.        Lessor’s Rights.
Lessor shall have the right, so long as the address of the Premises set forth
in Paragraph 1.2 remains valid, to designate another address of the Premises
upon not less than ninety (90) days prior written notice.

55.6.        Intentionally
Deleted.

55.7.        Intentionally
deleted.

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

55.9.        Transfers. Lessee
shall fully comply at its sole expense with all present or future programs
implemented or required by any governmental or quasi-governmental entity to
manage parking, transportation, air pollution or traffic in and around the
Premises or the metropolitan area in which the Premises is located.

55.10.      No Recording. Neither this Lease, nor any memorandum,
affidavit or other writing with respect thereto, shall be recorded by Lessee or
by anyone acting through, under or on behalf of Lessee.

 21
 

55.11.      WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, LESSOR AND LESSEE HEREBY
WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND/OR HEARING
BROUGHT BY EITHER LESSOR AGAINST LESSEE OR LESSEE AGAINST LESSOR ON ANY MATTER
WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS LEASE, THE
RELATIONSHIP OF LESSOR AND LESSEE, LESSEE’S USE OR OCCUPANCY OF THE PREMISES,
OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY
LAW, STATUTE, OR REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN
EFFECT.

55.12.      Hazardous Substances
Disclosure Statement. Prior to executing this Lease, Lessee has
delivered to Lessor Lessee’s executed initial Hazardous Substances Disclosure
Certificate (the “Initial HazMat
Certificate”). Lessee covenants, represents and warrants to Lessor
that the information contained in the Initial HazMat Certificate is true and
correct in all material respects and accurately describes in all material
respects the use(s) of Hazardous Substances which will be made and/or used on
the Premises by Lessee. Notwithstanding anything contained in the Lease to the
contrary (except for Permitted Hazardous Substances), Lessee shall not have the
right to use any Hazardous Substances at the Premises that are not described on
the Initial HazMat Certificate or to increase the quantity of any Hazardous
Material used at the Premises beyond the quantity described on the Initial
HazMat Certificate, without Lessor’s approval, which may be withheld in Lessor’s
sole discretion. Upon the prior written request of Lessor, Lessee shall deliver
to Lessor a new Hazardous Substances Disclosure Certificate (each, a “Supplemental HazMat Certificate”) executed by Lessee and
describing Lessee’s then-present use of Hazardous Substances on the Premises. The
Initial HazMat Certificate and Supplemental HazMat Certificates required
hereunder shall be in the form attached hereto as Exhibit 3.

55.13.      Assignment and Subletting.

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

(b)           Transfer Premium.
Lessor shall be entitled to receive from Lessee (as and when received by
Lessee) as an item of additional rent one-half of the Transfer Premium
received by Lessee from the subtenant or assignee in excess of the amounts
payable by Lessee to Lessor under the Lease. The Transfer Premium shall be
reduced by the reasonable brokerage commissions, cost of Alterations and legal
fees actually paid by Lessee in order to assign the Lease or to sublet a
portion of the Premises. “Transfer Premium” shall mean all Base Rent,
additional rent or other consideration of any type whatsoever payable by the
assignee or subtenant in excess of the Base Rent and additional rent payable by
Lessee under this Lease. If less than all of the Premises is transferred, the
Base Rent and the additional rent shall be determined on a
per-leasable-square-foot basis. “Transfer Premium” shall also include, but not
be limited to, key money and bonus money paid by the assignee or subtenant to
Lessee in connection with such Transfer, and any payment in excess of
fair-market value for services rendered by Lessee to the assignee or subtenant
or for assets, fixtures, inventory, equipment or furniture transferred by
Lessee to the assignee or subtenant in connection with such Transfer.

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

55.14.      Lessor  Insurance. Lessor shall maintain the insurance described in
Section 8.3 of the Lease. Notwithstanding anything in the Lease to the
contrary, there shall be no limitation on the amount of liability insurance
that may be purchased by Lessor or the types of insurance that may be purchased
by Lessor, and all of Lessor’s insurance costs may be included in Lessor’s
Reimbursable Expenses. Subject to the preceding sentence, Lessor shall have the
right to determine in its sole discretion the types and amounts of insurance it
obtains with respect to the Premises. Lessor, at Lessor’s sole election, may
insure the Premises for losses or damage resulting from the perils of
terrorism, flood and/or earthquake, and the cost of such insurance shall be
included as a Lessor’s Reimbursable Expense. Lessee shall not have the right to
purchase insurance on behalf of Lessor; provided, however, in the event that
after the initial Lessor transfers the Premises to a new owner that is not
affiliated with the initial Lessor, Lessee objects to Lessor’s estimate of the
cost of the earthquake coverage, Lessee shall be permitted to recommend to
Lessor a less expensive company meeting the requirements of Section 8.5 of the
Lease (“Lessee’s Recommended Insurance Company”).
In the event said coverage is less than the rate offered by Lessor’s insurance
company, then Lessor shall be required to purchase insurance from Lessee’s
Recommended Insurance Company.

 22
 

55.15.      Intentionally Deleted.

55.16.      Performance of Certain
Work by Lessor. Notwithstanding Lessee’s obligations under Paragraph
7.1 of the Lease, Lessor shall employ contractors to perform all repairs,
maintenance and replacement of the sprinkler systems, fire alarm systems and
fire detection systems that service the Premises. The items described in the
previous sentence that Lessor will cause to be repaired, maintained and
replaced are hereinafter referred to as the “Lessor
Maintenance Items”. Lessor shall determine in its sole discretion
the scope and timing of the performance of such Lessor Maintenance Items, and
Lessee shall not perform such Lessor Maintenance Items. Lessee shall
immediately give Lessor written notice of any repair or maintenance required by
Lessor pursuant to this section, after which Lessor shall have a reasonable
time in which to complete such repair or maintenance. Lessor shall include the
cost of Lessor Maintenance Items as Lessor’s Reimbursable Expenses. The cost of
replacing Lessor Maintenance Items (as opposed to repairing Lessor Maintenance
Items) shall be amortized as provided in Paragraph 7.1(d) of the Lease. Lessor
shall be permitted to require Lessee to maintain Lessor Maintenance Items upon
thirty (30) days advance written notice to Lessee, in which case Lessee shall
be liable for all costs associated therewith, subject to Section 7.1(d) of the
Lease.

55.17.      Intentionally Deleted.

55.18.      Certain Repairs.
In addition to Lessee’s other obligations under the Lease, Lessee shall pay at
Lessee’s sole cost and expense for the cost of repairing all damage to the
Premises resulting from the acts of vandalism, malicious mischief, burglary and
other acts of Lessee, its employees, invitees, contractors and other third
parties. Such damages shall include, but are not limited to, damages to
exterior walls, roofs, vents and overhead doors. In addition, if Lessee dirties
or soils the exterior of the Premises, Lessee shall pay to Lessor on demand the
cost of cleaning the exterior of the Premises.

55.19.      Intentionally deleted.

55.20.      Intentionally deleted.

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

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

55.23.      Intentionally deleted.

55.24.      Signs and Alarm Systems.
Lessor shall have the right to approve in Lessor’s sole and absolute discretion
all signs installed after the Commencement Date and (to the extent they tie
into the Premises’ fire sprinklers and/or fire alarm systems) alarm systems
prior to their installation, and all signs and alarm systems shall be installed
at Lessee’s sole cost and expense. Lessee shall remove all signs and alarm
systems upon the termination of the Lease, and Lessee shall repair any damage
to the Premises and Building caused by such removal, at Lessee’s sole cost and
expense.

55.25.      Intentionally deleted.

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

 23
 

55.27.      Lessor’s Reimbursable
Expenses. Notwithstanding anything in the Lease to the contrary,
Lessee shall pay Lessor’s Reimbursable Expenses. For the purposes of this
Lease, the term “Lessor’s Reimbursable Expenses” shall mean any expenses
incurred by Lessor for the sprinkler system, fire detection system and fire
alarm system, the management fee described in Section 52 above, Real Property
Taxes, all of Lessor’s insurance costs, including, deductibles, costs to
protest Real Property Taxes (except as provided in Section 55.3 above),
payments made by Lessor under any easement, license, operating agreement,
declaration, restrictive covenant or other agreement relating to the sharing of
costs among property owners, the cost of all business licenses, permits or
similar fees relating to the operation, ownership, repair or maintenance of the
Premises (other than the cost of licenses, permits or similar fees relating to
the operation of Lessor as opposed to the Premises), and the cost of any other
item the cost of which is stated in the Lease to be a Lessor’s Reimbursable
Expense. Notwithstanding anything in the Lease to the contrary, the following
items shall be treated as Lessor’s Reimbursable Expenses and not capital
improvements: (i) the cost of painting all or part of the Premises and (ii) the
cost of resurfacing and restriping roadways and parking areas. References to
facilities, services, utilities or other items in this Paragraph 55.27 shall
not impose an obligation on Lessor to have said facilities or to provide said
services unless such facilities and services already exist at the Premises. Lessor
will, from time to time, estimate what Lessor’s Reimbursable Expenses will be
and the same shall be payable by Lessee monthly during each calendar year of
the Lease Term, on the same day as the Base Rent is due hereunder. In the event
that Lessee pays Lessor’s estimate of Lessor’s Reimbursable Expenses, Lessor
shall use its best efforts to deliver to Lessee within 120 days after the
expiration of each calendar year a reasonably detailed statement (the “Statement”) showing Lessor’s Reimbursable Expenses incurred
during such year. Lessor’s failure to deliver the Statement to Lessee within
said period shall not constitute Lessor’s waiver of its right to collect said
amounts or otherwise prejudice Lessor’s rights hereunder. If the total of
Lessee’s payments under this Paragraph 55.27 during said calendar year exceed
the amount indicated on the Statement, Lessee shall be entitled to credit the
amount of such overpayment against Lessor’s Reimbursable Expenses next falling
due. If the amount to be paid by Lessee as indicated on the Statement exceeds
the total of Lessee’s payments under this Paragraph 55.27 during said calendar
year, Lessee shall pay to Lessor the amount of the deficiency within thirty
(30) days after delivery of the Statement by Lessor to Lessee. Lessor and
Lessee shall forthwith adjust between them by cash payment any balance
determined to exist with respect to that portion of the last calendar year for
which Lessee is responsible for Lessor’s Reimbursable Expenses, notwithstanding
that the Lease term may have terminated before the end of such calendar year,
and this provision shall survive the expiration or earlier termination of the
Lease.

55.28       Condemnation.  If a temporary taking by Condemnation
lasts for less than ninety (90) days, Lessee’s Base Rent shall be abated during
said period but Lessee shall not have the right to terminate this Lease. 
If Lessee does not terminate this Lease in accordance with Section 14 above,
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, but in no
event shall such reduction in Base Rent exceed the amount which Lessor was
compensated by the condemning authority for loss of any rent. In the event that
this Lease is not terminated by reason of such condemnation, and subject to the
requirements of any Lender, Lessor shall to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage to
the Premises caused by such condemnation (but not damage to any Trade Fixtures,
to any Alterations or Utility Installations made after the Commencement Date,
nor to those portions of the Premises described on Exhibit 2). In the event the
requirements of any Lender prevent Lessor from repairing the Premises (other
than Lessee’s Trade Fixtures, any Alterations or Utility Installations made
after the Commencement Date, and those portions of the Premises described on
Exhibit 2, with respect to which Lessor shall have no repair obligation),
Lessor promptly shall notify Lessee in writing of the estimated shortage in
proceeds, and Lessee shall elect, within 10 business days after such notice,
whether to (a) terminate this Lease 60 days thereafter by written notice to
Lessor, or (b) if approved by Lender, pay for the repair cost of the Premises
in excess of the amount of such proceeds available to Lessor (in which event
Lessee shall provide the funds or satisfactory assurance thereof to Lessor
within 30 days after such election), in which event this Lease shall not terminate. 
The option in Paragraph (b) shall only be permitted if said arrangement is
approved by Lender. Lessee’s failure to make an election within the time
provided shall constitute Lessee’s election to terminate this Lease 60 days
after the expiration of said 10 business day period.  Paragraph 14
together with this Paragraph 55.28, not general principles of law or California
Code of Civil Procedure sections 1230.010 et seq., shall govern the rights and
obligations of Lessor and Lessee with respect to the condemnation of all or any
portion of the Premises.

55.29       Adequate Assurance.  As used in the Lease, the term “adequate assurance thereof”
or words of like import shall mean an irrevocable unconditional letter of
credit issued to Lessor as the Beneficiary, in form acceptable to Lessor or an
escrow arrangement reasonably acceptable to Lessor.

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
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.

 24
 

ATTENTION: NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, 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 STRUCTUAL INTEGRITY OF THE PREMISES, THE
CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH
DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.

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

	
  Executed at:

  	
   

  	
   

  	
  Executed at:

  	
  Chatsworth, CA

  
	
  On:

  	
   

  	
  , 2007

  	
   

  	
  On:

  	
  April 2

  	
  , 2007

  
	
   

  	
   

  	
   

  
	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
   

  
	
  VRS Chatsworth
  LLC,

  	
   

  	
  Natrol, Inc.,

  
	
  a Virginia
  limited liability company

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  TA Richmond LLC,

  	
   

  	
   

  
	
   

  	
  Its Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Dennis R. Jolicoeur

  
	
   

  	
  By:

  	
  TA/VRS Manager
  LLC,

  	
   

  	
  Name: 

  	
  Dennis R. Jolicoeur

  
	
   

  	
   

  	
  Its Manager

  	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  TA Realty LLC,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its Manager

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James P.
  Raisides

  	
   

  	
   

  	
  By:

  	
  /s/ Steven S. Spitz

  
	
  Name:

  	
  James P.
  Raisides

  	
   

  	
   

  	
  Name:

  	
  Steven S. Spitz

  
	
  Title:

  	
  Sr. Vice
  President

  	
   

  	
   

  	
  Title:

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  c/o TA
  Associates Realty

  	
   

  	
  21411 Prairie Street

  
	
  1301 Dove
  Street, Suite 860

  	
   

  	
  Chatsworth, California 91311

  
	
  Newport Beach,
  California 92660-2440

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
  Telephone: (949)
  852-2030

  	
   

  	
  Telephone: (818) 739-6000

  
	
  Facsimile: (949)
  852-2031

  	
   

  	
  Facsimile: (818) 739-6032

  
	
   

  	
   

  	
   

  
	
  With a Copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  c/o TA
  Associates Realty

  	
   

  	
   

  
	
  28 State Street,
  10th Floor

  	
   

  	
   

  
	
  Boston,
  Massachusetts 02109

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Telephone: (617)
  476-2700

  	
   

  	
   

  
	
  Facsimile: (617)
  476-2799

  	
   

  	
   

  
																	

 

 25

EXHIBIT 3

Form of HazMat
Certificate

General Information

	
  Name of Responding Company:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Mailing Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Phone:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Age of Facility:

  	
   

  	
   

  	
  Length of Occupancy:

  	
   

  
													

 

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

	
  Type of Business
  Activity(ies):

  	
  Hazardous Materials Activities:

  
	
  (check all that apply)

  	
  (check all that apply)

  
	
   

  	
   

  
	
  o
  machine shop

  	
  o
  degreasing

  
	
  o
  light assembly

  	
  o
  chemical/etching/milling

  
	
  o
  research and development

  	
  o
  wastewater treatment

  
	
  o
  product service or repair

  	
  o
  painting

  
	
  o
  photo processing

  	
  o
  striping

  
	
  o
  automotive service and repair

  	
  o
  cleaning

  
	
  o
  manufacturing

  	
  o
  printing

  
	
  o
  warehouse

  	
  o
  analytical lab

  
	
  o
  integrated/printed circuit

  	
  o
  plating

  
	
  o
  chemical/pharmaceutical product

  	
  o
  chemical/missing/synthesis

  
	
   

  	
  o
  silkscreen

  
	
   

  	
  o
  lathe/mill machining

  
	
   

  	
  o
  deionizer water product

  
	
   

  	
  o
  photo masking

  
	
   

  	
  o
  wave solder

  
	
   

  	
  o
  metal finishing

  

 

HAZARDOUS MATERIALS/WASTE
HANDLING AND STORAGE

A.                                   Are
hazardous materials handled on any of your shipping and receiving docks in
container quantities greater than one gallon?              
o Yes o
No

B.                                     If
Hazardous materials or waste are stored on the premises, please check off the nature
of the storage and type(s) of materials below:

	
  Types of Storage
  Container

  	
  Type of Hazardous Materials and/or Waste Stored

  
	
  (list above-ground storage only)

  	
   

  
	
   

  	
   

  
	
  o
  1 gallon or 3 liter bottles/cans

  	
  o
  acid

  
	
  o
  5 to 30 gallon carboys

  	
  o
  phenol

  
	
  o
  55 gallon drums

  	
  o
  caustic/alkaline cleaner

  
	
  o
  tanks

  	
  o
  cyanide

  
	
   

  	
  o
  photo resist stripper

  
	
   

  	
  o
  paint

  
	
   

  	
  o
  flammable solvent

  
	
   

  	
  o
  gasoline/diesel fuel

  
	
   

  	
  o
  nonflammable/chlorinated solvent

  
	
   

  	
  o
  oil/cutting fluid

  

 

C.                                     Do
you accumulate hazardous waste onsite?          
o Yes o
No

If yes, how is it being
handled?

	
  o on-site treatment or recovery

  
	
  o
  discharged to sewer

  	
   

  
	
  o
  hauled offsite

  	
  If hauled offsite, by whom

  	
   

  
	
  o
  incineration

  	
   

  

 

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

o generator

o interim status
facility

o permitted TSDF

o none of the above

WASTEWATER
TREATMENT/DISCHARGE

A.                                   Do
you discharge industrial wastewater to:

o sewer

o storm drain

o surface water

o no industrial
discharge

 

B.                                     Is
your industrial wastewater treated before discharge?              
o Yes o
No

If yes, what type of
treatment is being conducted?

o neutralization

o metal hydroxide
formation

o closed-loop
treatment

o cyanide
destruct

o HF treatment

o other

SUBSURFACE CONTAINMENT OF
HAZARDOUS MATERIALS/WASTES

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

o hazardous waste
storage

o chemical
storage

o gasoline/diesel
fuel storage

o waste treatment

o wastewater
neutralization

o industrial
wastewater treatment

o none of the above

B.                                     If
buried tanks are located onsite, indicate their construction:

o steel
              o
fiberglass                 o
concrete

o inside open vault
             o
double walled

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

D.                                Do you have wet floors in
your process areas?          
o Yes o
No

If yes, name processes:                                                                         

E.                                      Are
abandoned underground tanks or sumps located on the property?            o
Yes o No

HAZARDOUS MATERIALS
SPILLS

A.                                   Have
hazardous materials ever spilled to:

o the sewer

o the storm drain

o onto the
property

o no spills have occurred

B.                                     Have
you experienced any leaking underground tanks or sumps?             o
Yes o No

C.                                     If
spills have occurred, were they reported?            o
Yes o No

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

o Department of
Health Services

o Department of
Fish and Game

o Environmental
Protection Agency

o Regional Water
Quality Control Board

o Fire Department

D.                                    Have
you been contacted by a government agency regarding soil or groundwater
contamination on your site?

o Yes o
No

Do you have exploratory
wells onsite? o Yes o
No

If yes, indicate the
following:

Number of wells:                          Approximate
depth of wells:                      Well
diameters:                     

PLEASE ATTACH
ENVIRONMENTAL REGULATORY PERMITS, AGENCY REPORTS THAT APPLY TO YOUR OPERATION
AND HAZARDOUS WASTE MANIFESTS.

Check off those enclosed:

o Hazardous
Materials Inventory Statement, HMIS

o Hazardous
Materials Management Plan, HMMP

o Department of
Health Services, Generatory Inspection Report

o Underground
Tank Registrations

o Industrial
Wastewater Discharge Permit

o
Hazardous Waste ManifestExhibit
10.21

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET

AIR COMMERCIAL REAL ESTATE ASSOCIATION

1.             Basic Provisions (“Basic Provisions”) .

1.1           Parties: This
Lease (“Lease”), dated for
reference purposes only March 6, 2007, is made by and between VRS Chatsworth LLC, a Virginia limited
liability company (“Lessor”)
and Natrol, Inc., a
Delaware corporation (“Lessee”), (collectively the “Parties”, or individually a “Party”).

 

1.2 (a)     Premises:
That certain portion of the Project (as defined below), including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 9453 Owensmouth Avenue, located in the City of Chatsworth
(Los Angeles), County of Los
Angeles, State of California, with zip code 91311, as outlined on Exhibit 1 attached hereto (“Premises”) and generally described as (describe briefly the
nature of the Premises):  an
approximately 81,291 square foot portion of a larger approximately 132,600
square foot concrete tilt-up industrial building, situated on an approximately
[insert land area] square feet of land,
as more particularly described on Exhibit 1 attached hereto and incorporated
herein by reference. In addition
to Lessee’s rights to use and occupy the Premises as hereinafter specified,
Lessee shall have non-exclusive rights to the any utility raceways of the
building containing the Premises (“Building”)
and to the common Areas (as defined in Paragraph 2.7 below), but shall not have
any rights to the roof or exterior walls of the Building or to any other
buildings in the Project. The Premises, the Building, the Common Areas, the
land upon which they are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the “Project.” (See also Paragraph 2)

1.2(b)      Parking:  46
unreserved vehicle parking
spaces. (See also Paragraph 2.6)

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

1.4           Early Possession:
N/A (“Early
Possession Date”). (See also
Paragraphs 3.2 and 3.3)

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

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

1.6           Lessee’s Share of Common
Area Operating Expenses:   sixty-one & 3/10 percent (61.3%) (“Lessee’s Share”). Lessee’s
Share has been calculated by dividing the approximate square footage of the
Premises by the approximate square footage of the Project. In the event that
the size of the Premises and/or the Project are modified during the term of
this Lease, Lessor shall recalculate Lessee’s Share to reflect such
modification.

1.7           Base Rent and Other
Monies Paid Upon Execution the Commencement Date:

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

(b)                                 Common Area Operating
Expenses: $TBD for the period see Paragraph 50.3.

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

(d)                                 Other: $                               for                                                                     .

(e)                                  Total Due Upon Execution of
this Lease: $see
Paragraph 50.3.

1.8           Agreed Use:  warehousing
and storage, and related office uses                    .          (See
also Paragraph 6)

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

1.10         Real Estate Brokers:
(See also Paragraph 15)

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

	
  o

  	
   

  	
  represents Lessor exclusively (“Lessor’s
  Broker”);

  
	
  o

  	
   

  	
  represents Lessee exclusively (“Lessee’s
  Broker”); or

  
	
  x CB Richard Ellis, Inc. (Bennett
  Robinson)  represents both Lessor and Lessee ( “Dual
  Agency”).

  

 

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

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

1.12         Attachments. Attached hereto are the following, all of which
constitute a part of this Lease:

	
  x an Addendum consisting of Paragraphs 50
                        through                    ;

  	
   

  	
   

  
	
  o a

  	
  site plan depicting the Premises;

  	
   

  	
   

  
				

 

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  
	
   

  	
   

  	
   

  
	
  ©1999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION

  	
   

  	
  FORM MTN-5-5/05E

  

 

 1
 

 

	
  o a site plan depicting the Project;

  	
   

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

  	
   

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

  	
   

  
	
  o a Work Letter;

  	
   

  
	
  x other (specify); Exhibit 1 (legal
  description of the Project) and Exhibit 2 (parking area).

  	
   

  

 

2.                                       Premises.

2.1           Letting. 
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the Premises, for the term, at the rental, and upon all of the terms, covenants
and conditions set forth in this Lease. 
Unless otherwise provided herein, any statement of size set forth in
this Lease, or that may have been used in calculating Rent, is an approximation
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 that portion of the
Premises contained within the Building (‘Unit”)
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 Unit, other than those constructed by
Lessee, shall be in good operating condition on said date, that the structural
elements of the roof, bearing walls and foundation of the Unit shall be free of
material defects, and that the Unit does not contain hazardous levels of any
mold or fungi defined as toxic under applicable state or federal law. If a
non-compliance with such 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 follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the
remaining systems and other elements of the Unit.  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 (except for the repairs to the fire sprinkler
systems, roof, foundations, and/or bearing walls - see Paragraph 7).  Certain
Definitions:  AS used in this Lease, (a) “Unit”
shall mean that portion of the Premises contained within the Building; (b) “Start
Date” shall mean the Commencement Date or the Early Possession Date, whichever
first occurs, (c) “HVAC” shall mean the heating, ventilating and air
conditioning systems in the Unit, and (d) “Applicable Requirements” shall mean
building codes, applicable laws, covenants or restrictions of record,
regulations and ordinances.

2.3
          Compliance.  Lessor
warrants that to the best of its knowledge the improvements on the Premises and
the Common Areas comply with the building codes that were in effect at the time
that each such improvement, or portion thereof, was constructed, and also with
all applicable laws, covenants or restrictions of record, regulations, and
ordinances in effect on the Start Date (“Applicable
Requirements”).  Said warranty
does not apply to the use to which Lessee will put the Premises, modifications
which may be required by the Americans with Disabilities Act or any similar
laws as a result of Lessee’s use (see Paragraph 49), 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
Unit, Premises and/or Building, the remediation of any Hazardous Substance not caused or contributed to either before
or after the Commencement Date by Lessee or the Lessee Parties, or the reinforcement or other physical
modification of the Unit, Premises and/or Building (“Capital Expenditure”), 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 of the 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  12 months 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 the difference between the
actual cost thereof and the amount equal to 6 months’ Base Rent.  If Lessee elects termination, Lessee shall
immediately cease the use of the Premises which requires such Capital
Expenditure and deliver to Lessor written notice specifying 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 to pay for the portion of
such costs reasonably attributable to the Premises pursuant to the formula set
out in Paragraph 7.1(d); provided, however, that if 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 pay its 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 Lessor’s 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, from Rent until Lessor’s share of such costs have
been fully paid.  If Lessee is unable to
finance Lessor’s share, or if the balance of the Rent due and payable for the
remainder of this Lease is not sufficient 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 shall 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 (ii) complete such Capital Expenditure at its
own expense.  Lessee shall not 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
(including 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 financial

 2
 

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.

2.6           Vehicle Parking.  Lessee shall be entitled to use the number of
parking spaces specified in Paragraph 1.2(b) on those portions of the Common
Areas designated from time to time by Lessor for parking.  Lessee shall not use more parking spaces than
said number.  Said parking spaces shall
be used for parking by vehicles no larger than full-size passenger automobiles
or pick-up trucks, herein called “Permitted
Size Vehicles.”  Lessee may also stage and park trucks and
trailers in the portion of the Project’s truck loading area which is adjacent
to the Premises, in the area shown on Exhibit 2 attached hereto, subject to the
rights of other occupants of the Project and to Applicable Requirements,
including but not limited to the terms of the reciprocal easement agreement
between the owner of the Project and the owner of the adjacent property.  Subject to the preceding sentence,  Lessor may regulate the loading and unloading of vehicles by adopting Rules
and Regulations as provided in Paragraph 2.9. 
No Except as provided in
this Paragraph 2.6, vehicles
other than Permitted Size Vehicles may be parked in the Common Area without the
prior written permission of Lessor. In addition:

(a)           Lessee shall not permit or allow any
vehicles that belong to or are controlled by Lessee or Lessee’s employees,
suppliers, shippers, customers, contractors or invitees to be loaded, unloaded,
or parked in areas other than those designated by Lessor for such activities.  Lessor’s
designation of any such areas after the Commencement Date shall not to
materially interfere with the operation of Lessee’s business within the
Project.

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

(c)           If Lessee permits or
allows any of the prohibited activities described in this Paragraph 2.6, then
Lessor shall have the right, without  upon not less than 48 hours  notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and
charge the cost to Lessee, which cost shall be immediately payable upon demand
by Lessor.

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

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

2.9           Common Areas - Rules and Regulations.  Subject
to the terms of this Lease,  Lessor
or such other person(s) as Lessor may appoint shall have the exclusive control
and management of the Common Areas and shall have the right, from time to time,
to establish, modify, amend and enforce reasonable rules and regulations (“Rules and Regulations”) for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees.  Lessee agrees to abide
by and conform to all such reasonable
and uniformly-enforced  Rules
and Regulations, and shall use its best efforts to cause its employees,
suppliers, shippers, customers, contractors and invitees to so abide and
conform.  Lessor shall not be responsible
to Lessee for the non-compliance with said Rules and Regulations by other
tenants of the Project.

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

(a)           To make changes to
the Common Areas, including, without limitation, changes in the location, size,
shape and number of driveways, entrances, parking spaces, parking areas,
loading and unloading areas, ingress, egress, direction of traffic, landscaped
areas, walkways and  utility
raceways, so long as such
changes do not materially impair Lessee’s access to or use of the Premises
and/or the parking and truck loading areas of the Premises;

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

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

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

(e)           To use the Common
Areas temporarily, only for so
long and to the extent necessary,  while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and

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

3.                                       Term.

3.1           Term. 
The Commencement Date, Expiration Date and Original Term of this 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 Lessee’s Share of Common Area Operating
Expenses, Real Property Taxes and insurance premiums and to maintain the
Premises) shall be in effect during such period.  Any such early possession shall not affect
the Expiration Date.

3.3           Delay In Possession.  Lessor agrees to use its 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 as agreed, Lessor shall not be
subject to any liability therefor, nor shall such failure affect the validity
of this Lease or change the Expiration Date. 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 the delivery of possession
and continue for a period equal to what Lessee would otherwise have enjoyed,
but minus any days of delay caused by the acts or omissions of Lessee.  If possession is not delivered within 60 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.  Except

 3
 

as otherwise provided, if
possession is not tendered to Lessee by the Start Date and Lessee does not
terminate this Lease, as aforesaid, any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of possession
and continue 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 of
the Premises is not delivered within 4 months 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 tender
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”).

4.2           Common Area Operating Expenses.  Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee’s Share (as specified in Paragraph
1.6) of all Common Area Operating Expenses, as hereinafter defined, during each
calendar year of the term of this Lease, in accordance with the following
provisions:

(a)           “Common
Area Operating Expenses”  are
defined, for purposes of this Lease, as all costs incurred by Lessor relating
to the ownership and operation of the Project, including, but not limited to,
the following:

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

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

(bb)        Exterior
signs and any tenant directories.

(cc)         Any
fire sprinkler systems.

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

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

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

(v)           Real Property Taxes (as defined in
Paragraph 10).

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

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

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

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

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

(b)           Any Common Area Operating
Expenses and Real Property Taxes that are specifically attributable to the
Unit, the Building or to any other building in the Project or to the operation,
repair and maintenance thereof, shall be allocated entirely to such Unit,
Building, or other building.  However,
any Common Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other building or to the
operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Project.

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

                                (d)           Lessee’s Share of Common Area
Operating Expenses is payable monthly on the same day as the Base Rent is due
hereunder.  The amount of such payments
shall be based on Lessor’s estimate of the annual Common Area Operating
Expenses.  Within 60 days after written
request (but not more than once each year) Lessor shall deliver to Lessee a
reasonably detailed statement showing Lessee’s Share of the actual Common Area
Operating Expenses incurred during the preceding year.  If Lessee’s payments during such year exceed
Lessee’s Share, and provided no Default of any of Lessee’s monetary
obligations under this Lease then exists, Lessor shall credit the amount of such over-payment against Lessee’s future payments of Common Area Operating Expenses.  If
Lessee’s payments during such year were less than Lessee’s Share, Lessee shall
pay to Lessor the amount of the deficiency within 10 days after delivery by
Lessor to Lessee of the statement.

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

4.3           Payment. 
Lessee shall unconditionally cause
payment of Rent to be received by Lessor in lawful money of the United States,
without offset or deduction (except as specifically permitted in this Lease),
on or before the day on which it is due. All monetary amounts shall be rounded
to the nearest whole dollar.  In the
event that any invoice prepared by Lessor is inaccurate such inaccuracy shall
not constitute a waiver and Lessee shall be obligated to pay the amount set
forth 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 Late Charge and Lessor, at its option,
may require all future Rent be paid by cashier’s check.  Payments will be applied first to accrued
late charges and attorney’s fees, second to accrued interest, then to Base Rent
and Common Area Operating Expenses, and any remaining amount to any other outstanding
charges or costs.

5.             Security Deposit.  Lessee shall deposit with Lessor upon execution
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

 4
 

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 during the term
of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies 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 Lessor’s 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 elects 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. Other than guide, signal and seeing eye
dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds,
fish, or reptiles. Lessor shall not unreasonably withhold or delay its 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 Building, is not a part of the “adult entertainment
industry or involves the use of Hazardous Substances not previously approved by
Lessor pursuant to Paragraph 55.12 or otherwise permitted in accordance with Paragraph
6.2(a) (with regard to Permitted Hazardous Substances) or the mechanical or electrical systems
therein which are shared with
other premises in the Building,
and/or is not significantly more burdensome to the Project.  If Lessor elects to withhold consent, Lessor
shall within 7 10
business 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 basis for
potential liability of Lessor to any governmental agency or third party under
any applicable statute or common law theory. 
Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or 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 (i) 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
described on the HazMat Certificate, ordinary office supplies (copier
toner, liquid paper, glue, etc.) and common household cleaning 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 (collectively, the “Permitted
Hazardous Substances”).  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, including, 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.

(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, claim 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 (including 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 contamination 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, claims,
expenses, penalties, and attorneys’ and consultants’ fees arising out of or
involving any Hazardous Substance brought onto the Premises, whether prior to or after the Commencement Date, by or for Lessee or Lessee’s employees, agents, invitees,
Affiliates, assignees, sublessees, successors and assigns (collectively, the “Lessee
Parties”),  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 areas
outside of the Project not caused or contributed 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 lenders, harmless from and against any and all environmental
damages, including the cost of remediation, which are suffered as a direct
result of Hazardous Substances on the Premises prior to Lessee taking
possession not caused or
contributed to, whether prior to or after the Commencement Date, by Lessee or
the Lessee Parties 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 include, 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.

 5
 

(f)            Investigations
and Remediations.  Lessor
shall retain the responsibility 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 the Lessee
taking possession, unless such remediation measure is required as a result
of Lessee’s or any of the Lessee
Parties’  use (including “Alterations”,
as defined in paragraph 7.3(a) below) of the Premises, or as a result of any Hazardous Substance Condition caused or contributed
to by Lessee, whether prior to or after the Commencement Date, in which event Lessee shall be responsible for
such payment.  Lessee shall cooperate
fully in any such activities at the request of Lessor, including 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 or a Lessee
Party is legally responsible therefor under the terms of this Lease (in which case Lessee shall make the
investigation and remediation thereof required by the Applicable Requirements
and this 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) if the
estimated cost to remediate such condition exceeds 12 9 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 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 amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 9 times the then monthly Base Rent or
$100,000, whichever is greater.  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 such Requirements, without regard to whether said Requirements are
now in effect or become effective after the Start Date.  Lessee shall, within 10 days after receipt of
Lessor’s written request, provide Lessor with copies of all permits and other
documents, and other information evidencing 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.  Likewise,
Lessee shall immediately give written notice to Lessor of: (i) any water damage
to the Premises and any suspected seepage, pooling, dampness or other condition
conducive to the production of mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.

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 an emergency, and otherwise at reasonable times after reasonable telephonic notice, subject to compliance with Lessee’s security
requirements, for the purpose of inspecting the condition of the
Premises and for verifying compliance by Lessee with this Lease.  Lessee shall be entitled to have its
representatives accompany Lessor, its Lender and their consultants on the Premises.
 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)  caused by Lessee  is found to
exist or be imminent, or the inspection is requested or ordered by a
governmental authority.  In such case,
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 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, fixtures, interior walls, interior
surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and
skylights but excluding any items which are the responsibility of Lessor
pursuant to Paragraph 7.2.  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.

(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 improvements, if any, if and when
installed on the Premises:  (i) HVAC
equipment,  (ii) boiler and pressure
vessels, (iii) clarifiers, and (iv) 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 Lessee shall reimburse Lessor, upon demand, for
the cost thereof.

(c)           Failure to Perform.  If Lessee fails 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.

                                (d)           Replacement. Subject to Lessee’s
indemnification of Lessor as set forth in Paragraph 8.7 below, and without
relieving Lessee of liability resulting from Lessee’s failure to exercise and
perform good maintenance practices, if an item described in Paragraph 7.1(b)
cannot be repaired other than at a cost which is in excess of 50% of the cost
of replacing such item, then such item shall be replaced by Lessor, and the
cost thereof shall be prorated between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease, on
the date on which Base Rent is due, an amount equal to the product of
multiplying the cost of such replacement by a fraction, the numerator of which
is one, and the denominator of which is 144 (ie. 1/144th of the cost per
month)  120 (i.e., 1/120th of the cost per month) with respect to replacement of the roof, and 84 (i.e., 1/84th
of the cost per month) with respect to all other capital replacements.  Lessee shall pay Interest on the unamortized
balance at a rate not to exceed eight
percent (8%) per annum, but may prepay its obligation at any time.

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

 6
 

Expenses), 6 (Use), 7.1
(Lessee’s Obligations), 9 (Damage or Destruction)  and 14 (Condemnation) and 55.16 (Performance of Certain Work by
Lessor), Lessor, subject
to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition
and repair the foundations, exterior walls, structural condition of interior
bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm
and/or smoke detection systems, fire hydrants, parking lots, walkways,
parkways, driveways, landscaping, fences, signs and utility systems serving the
Common Areas and all parts thereof, as well as providing the services for which
there is a Common Area Operating Expense pursuant to Paragraph 4.2.  Lessor shall not be obligated to paint the exterior
or interior surfaces of exterior walls nor shall Lessor be obligated to
maintain, repair or replace windows, doors or plate glass of the Premises.  Lessee expressly waives the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms 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  installed or constructed within the Premises.  The term “ Trade Fixtures” 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, made to the Premises after the Commencement
Date, whether by addition or
deletion.  “ Lessee Owned Alterations and/or Utility Installations” are
defined as Alterations and/or Utility Installations made by Lessee after the Commencement Date that are not yet owned by Lessor pursuant to
Paragraph 7.4(a).

(b)           Consent. 
Except as otherwise
expressly provided in this Lease, Lessee shall not make any Alterations or Utility Installations to the
Premises without Lessor’s prior written consent.  Lessee may, however, make non-structural Alterations and Utility Installations to the interior of the
Premises (excluding the roof) and
may install its Trade Fixtures without
such consent but upon notice to Lessor, as long as they are not visible from
the outside, do not involve puncturing, relocating or removing the roof or any existing structural bearing walls, will not affect the any electrical, plumbing, and/or
HVAC systems which are shared with other premises
in the Building, and/or life safety
systems, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3  month’s Base Rent $200,000 in the aggregate or a sum equal to one month’s Base Rent $50,000 in any one year.  Notwithstanding
the foregoing, Lessee shall not make or permit any roof penetrations and/or
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,  such
approval not to be unreasonably withheld or delayed.  Lessor may require the use of its contractor
if proposed Alterations affect the structural aspects of the Building or the
failure to do so will void a warranty applicable to the Premises.  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 reasonably detailed
plans.  Consent shall be deemed
conditioned upon Lessee’s:  (i) 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 furnish Lessor with as-built plans and specifications. For work which
costs an amount in excess of one month’s six (6) months’ 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, said
additional Security Deposit (if any) to be returned to Lessee upon completion, in the manner required under
this Lease, of such work (including Lessor’s receipt of final unconditional lien
releases with respect thereto).

(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 materialman’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 Lessor’s right 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 property of Lessor and be
surrendered by Lessee with the Premises.

(b)           Removal.  By delivery to Lessee of written notice
from Lessor not earlier than 90 and not later than 30 days prior to the end of
the term of this Lease Within 90
days prior to the expiration of the Term, Lessee shall deliver a list of all
Alterations and Utility Installations made to the Premises after the
Commencement Date, if any.  Within 30
days following said delivery, Lessor may require that any or all Lessee Owned Alterations or
Utility Installations made after
the Commencement Date be removed
by the expiration or termination of this Lease. 
Provided Lessee timely
delivers Lessor the notice described in the first sentence of this Paragraph
7.4(b), Lessor’s failure to give the written notice described in the second
sentence of this Paragraph 7.4(b) within such time shall constitute Lessor’s
election that such Lessee Owned Alterations or Utility Installations not be
removed.  If Lessee has constructed
Alterations or Utility Installations after the Commencement Date and fails to
deliver to Lessor the notice described in the first sentence of this Paragraph
7.4(b), Lessee shall be required to remove all Alterations and Utility
Installations constructed after the Commencement Date and requested by Lessor
within 30 days after the expiration or earlier termination of this Lease.  Notwithstanding the foregoing, Lessee shall
be obligated to remove all of its Trade Fixtures from the Premises.  Lessor
may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made after the Commencement Date 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 clean and free
of debris, and in good operating order, condition and state of repair the same operating order, condition and state
of repair as existed on the Commencement Date, ordinary wear and tear excepted.  “Ordinary wear and tear” shall not include
any damage or deterioration that would have been prevented by good maintenance
practice, except to the extent
Lessor has elected to maintain any service contracts pursuant to Paragraph
7.1(b) above.  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 (whenever installed) 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 also completely remove from the Premises any and all Hazardous
Substances brought onto the Premises by or for Lessee or the Lessee

 7
 

Parties, or any third party (except Hazardous
Substances which were deposited via underground migration from areas outside of
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 property 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 of Premiums.  The cost of the premiums for the insurance
policies required to be carried by Lessor, pursuant to Paragraphs 8.2(b),
8.3(a) and 8.3(b), shall be a Common Area Operating Expense.  Premiums for policy periods commencing prior
to, or extending beyond, the term of this Lease shall be prorated to coincide
with the corresponding Start Date or Expiration Date.

8.2           Liability
Insurance.

(a)           Carried by Lessee.  Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor
as an additional insured against claims 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
$2,000,000 per occurrence with an annual aggregate of not
less than  $2,000,000 $5,000,000; provided, however, that Lessee may provide such coverage
through a combination of primary and excess or “umbrella” coverage so long as
the same covers all damages and the form is approved by Lessor in its reasonable
discretion.  Lessor hereby approves of
the liability insurance maintained by Lessee as of the Commencement Date. Lessee shall add Lessor as an additional insured by means of an endorsement at
least as broad as the Insurance Service Organization’s “Additional
Insured-Managers or Lessors of Premises” and “Amendment of the Pollution Exclusion” Endorsements and coverage shall also be extended to
include damage caused by heat, smoke or fumes from a hostile fire.  The policy shall not contain any intra-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.  Lessee shall provide an
endorsement on its liability policy(ies) which provides that its insurance
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.  Lessor shall obtain and keep in force a
policy or policies of insurance 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 insurable 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.  Lessee Owned Alterations and
Utility Installations made after
the Commencement Date,
Trade Fixtures, and Lessee’s personal property shall be insured by Lessee under
Paragraph 8.4.  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 policies 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 annual 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 not exceed $10,000 per occurrence. 
Lessor may satisfy such coverage requirements with blanket policies, so
long as the same otherwise provides the coverage to the Premises required under
this Lease.

(b)           Rental Value.  Lessor shall also 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.

(c)           Adjacent Premises.  Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Project if said increase is caused by Lessee’s acts,
omissions, use or occupancy of the Premises.

(d)           Lessee’s Improvements.  Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee Owned Alterations and Utility
Installations made after the
Commencement Date unless
the item in question has become the property of Lessor under the terms of this
Lease.

8.4           Lessee’s Property; Business Interruption Insurance ; Workers’
Compensation Insurance.

(a)           Property Damage.  Lessee shall obtain and maintain insurance
coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. 
Such insurance shall be full replacement cost coverage with a deductible
of not to exceed $10,000 per occurrence.  The proceeds from any such insurance shall be
used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and
Utility Installations.  By way of
example and not limitation, such policies shall provide protection against any
peril included within the classification “fire and extended coverage”, against
vandalism and malicious mischief, theft, and sprinkler leakage.  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
direct or 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)           No Representation 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.

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

8.5           Insurance Policies.  Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a “General
Policyholders Rating” of at least A-,  XVI, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be
required by a Lender.  Notwithstanding the foregoing, Lessor hereby approves
of Lessee’s insurance carriers providing such coverage as of the Commencement
Date.  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 10
days prior to the expiration of such policies, furnish Lessor with evidence of 

 8
 

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
policies shall 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
property damage insurance carriers 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, attorneys’ 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 and its Agents from Liability.  Notwithstanding Except to extent caused by the gross negligence or breach of this
Lease by Lessor or its agents, neither Lessor nor its agents shall be liable
under any circumstances for: (i) injury or damage to the person or goods,
wares, merchandise or other property of Lessee, Lessee’s employees,
contractors, invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, indoor air quality, the presence of mold 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, or from other sources
or places, (ii) any damages arising from any act or neglect of any other tenant
of Lessor or from the failure of Lessor or its agents to enforce the provisions
of any other lease in the Project, or (iii) injury to Lessee’s business or for
any loss of income or profit therefrom. 
Instead, it is intended that Lessee’s sole recourse in the event of such
damages or injury be to file a claim on the insurance policy(ies) that Lessee
is required to maintain pursuant to the provisions of paragraph 8.

8.9           Failure to Provide Insurance.  Lessee Each Party  acknowledges
that any failure on its part to obtain or maintain the insurance required
herein will expose Lessor the
other Party to risks and potentially cause Lessor it 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 to maintain 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 and Trade Fixtures, which can
reasonably be repaired in 3 9 months
or less from the date of the damage or destruction,  and the cost thereof does not exceed a sum
equal to 6 month’s Base Rent.  Lessor
shall notify Lessee in writing within 3060 days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.  Notwithstanding
the foregoing, Premises Partial Damage shall not include damage to windows,
doors, and/or other similar items which Lessee has the responsibility to repair
or replace pursuant to the provisions of Paragraph 7.1.

(b)           “Premises
Total Destruction” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in 39 months or less from the date of the damage or destruction and/or the
cost thereof exceeds a sum equal to 6 month’s Base Rent.  Lessor shall notify Lessee in writing within 3060 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

(c)           “Insured Loss” shall mean damage or
destruction to improvements on the Premises, other than Lessee Owned Alterations
and Utility Installations constructed
after the Commencement Date and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(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)           “Hazardous Substance 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, remediation, or restoration.

                9.2           Partial
Damage - Insured Loss.  If a
Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at
Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee
Owned Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect; provided, however, that
Lessee shall, at Lessor’s 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 Party shall, subject to
Paragraph 55.26, promptly contribute the shortage in proceeds 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, the cost of which exceeds
$100,000, shall be subject to Paragraph 9.3, notwithstanding that there
may be some insurance coverage, but the net proceeds of any such

 9
 

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

9.3           Partial Damage - Uninsured Loss.  If a Premises Partial Damage that is not an
Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in
which event Lessee shall make the repairs at Lessee’s expense), Lessor may
either:  (i) repair such damage as soon
as reasonably possible at Lessor’s 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 60120
days following the date of such notice. 
In the event Lessor elects to terminate this Lease, Lessee shall 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.

9.4           Total 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 Lessor’s damages
from Lessee, except as provided in Paragraph 8.6.

9.5           Damage Near End of Term.  If at any time during the last 612 months of this Lease there is
damage for which the cost to repair exceeds one month’s three months’ Base Rent, whether or
not an Insured Loss, Lessor may terminate this Lease effective 6090 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 Lessor’s 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 Lessor’s commercially reasonable expense, repair such damage
as soon as reasonably possible and this Lease shall continue in full force and
effect.  If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this Lease
shall terminate on the date specified in the termination notice and Lessee’s
option shall be extinguished.

9.6           Abatement of Rent; Lessee’s Remedies .

(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, remediation, 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 9060 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.

9.7           Termination; 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.

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 Project, Lessor’s right to other income therefrom, and/or Lessor’s business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Project 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 Project is located.  The term “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 Project,
(ii) a change in the improvements thereon, and/or (iii) levied or assessed on
machinery or equipment provided by Lessor to Lessee pursuant to this
Lease.  In calculating Real Property
Taxes for any calendar year, the Real Property Taxes for any real estate tax
year shall be included in the calculation of Real Property Taxes for such
calendar year based upon the number of days which such calendar year and tax
year have in common.

10.2         Payment of Taxes.  Except as otherwise provided in Paragraph
10.3, Lessor shall pay the Real Property Taxes applicable to the Project, and
said payments shall be included in the calculation of Common Area Operating
Expenses in accordance with the provisions of Paragraph 4.2.

10.3         Additional Improvements.  Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor’s records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the exclusive enjoyment of such other
lessees.  Notwithstanding Paragraph 10.2
hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating
Expenses are payable under Paragraph 4.2, the entirety of any increase in Real
Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or
Utility Installations placed upon the Premises by Lessee or at Lessee’s request
or by reason of any alterations or improvements to the Premises made by
Lessor subsequent to the execution of this Lease by the Parties .

10.4         Joint Assessment.  If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of
the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available. 
Lessor’s reasonable determination thereof, in good faith, shall be
conclusive.

10.5         Personal Property Taxes.  Lessee shall pay prior to delinquency all taxes
assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. 
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 Lessor’s 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

 10
 

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.  Notwithstanding the provisions of Paragraph
4.2, if at any time in Lessor’s sole judgment, Lessor determines that Lessee is
using a disproportionate amount of water, electricity or other commonly metered
utilities, or that Lessee is generating such a large volume of trash as to
require an increase in the size of the trash receptacle and/or an increase in
the number of times per month that it is emptied, then Lessor may increase
Lessee’s Base Rent by an amount equal to such increased costs.  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 Lessor’s
reasonable control or in cooperation with governmental request or directions.

12.            Assignment and Subletting .

12.1         Lessor’s Consent 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 Lessor’s prior written consent.

(b)           Unless Lessee is a
corporation and its stock is publicly traded on a national stock exchange, a
change in the control of Lessee shall constitute an 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 otherwise), 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 Lessor’s option, be a Default
curable after notice per
Paragraph 13.1(d)  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 Breach 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 term 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 and recovery of attorneys’ fees as provided
in this Lease .

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

(g)           Notwithstanding the
foregoing, allowing a diminimus  de minimis portion
of the Premises, ie. 20 square feet or less, to be used by a third party vendor
in connection with the installation of a vending machine or payphone shall not
constitute a subletting.

(h)           Subject
to Paragraph 12.1(c), Lessee shall have the right to assign this Lease or
sublease some or all of the Premises without the need to obtain Lessor’s
consent (but upon prior notice to Lessor), if such assignment or sublease is to
any person or entity who or which controls, is controlled by or is under common
control with Lessee, or which acquires all of Lessee’s assets and operations at
the Premises.  Each of the foregoing
assignees and sublessees described in this Paragraph 12.1(h) shall be referred
to as an “Affiliate”.

12.2         Terms and Conditions Applicable to Assignment and Subletting .

(a)           Regardless of Lessor’s
consent, no assignment or subletting shall: 
(i) be effective without the express written assumption by such assignee
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 of an assignment.  Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or performance shall
constitute a waiver or estoppel of Lessor’s right to exercise its remedies for
Lessee’s Default or Breach.

(c)           Lessor’s consent to
any assignment or subletting shall not constitute 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 therefore 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
consideration 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, entering into such sublease, or entering into possession of the
Premises or any portion thereof, 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 where such
consent is required hereunder.

(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)

12.3         Additional Terms and 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 included 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 then
outstanding 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

 11
 

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 attorn 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 cure 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
.

13.1         Default; 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 where 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 property, where such
failure continues for a period of 3 business  5 calendar days following written notice to Lessee.

(c)           The commission of waste,
act or acts constituting public or private nuisance, and/or an illegal activity
on the Premises by Lessee, where such actions continue for a period of 35 business days following written notice to Lessee.

(d)           The failure by Lessee
to provide (i) reasonable written evidence of compliance with Applicable
Requirements, (ii) the service contracts, (iii) the rescission 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 41, (viii) material
data safety sheets (MSDS), or (ix) any other documentation or information which
Lessor may reasonably require of Lessee under the terms of this Lease, where
any such failure continues for a period of 1015 business days following written notice to Lessee.

(e)           A Default by Lessee
as to the terms, covenants, conditions or provisions of this Lease, or of the
rules adopted under Paragraph 2.9 hereof, other than those described in
subparagraphs 13.1(a), (b), (c) or (d), 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.

(f)            The occurrence of
any of the following events:  (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a “debtor” as
defined in 11 U.S.C.  § 101 or any successor statute thereto (unless,
in the case of a petition filed against Lessee, the same is dismissed within 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 judicial 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 is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.

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

(h)           So long as Lessor owns and Lessee leases
those certain premises located at 21411 Prairie Street, Chatsworth, California
(the “Other Premises”), the occurrence of a Breach under that certain Standard
Industrial/Commercial Single-Tenant Lease, of even date herewith, by and
between Lessor and Lessee, with respect to the Other Premises. 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 Guarantor’s 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 time of execution of this Lease.

13.2         Remedies. 
If Lessee fails to perform any of its affirmative duties or obligations,
within 10 days after written notice (or in case of an emergency, 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 shall 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
termination 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 reletting,
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
Lease; provided, however, that
in no event shall Lessor be entitled to double recovery from Lessee for damage
incurred as a result of such Breach.  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 detainer 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
concurrently, and the failure of Lessee to cure the Default within the greater
of the

 12
 

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, shall 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 right 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.

13.3         Inducement 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 “Inducement Provisions”, shall be deemed
conditioned upon Lessee’s full and faithful performance of all of the terms,
covenants and conditions of this Lease. 
Upon Breach of this Lease by Lessee, any such Inducement Provision shall
automatically be deemed deleted from this Lease and of no further force 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 this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.

13.4         Late Charges.  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 510 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%5%
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 Lessor’s 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 shall 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 breach 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 more 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 Lessor’s 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 within a reasonable time, then after Lessee gives Lessor
a second written notice and Lessor fails to commence the cure within 3 business
days after said notice, 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 reimbursement from Lessor for any such expense in excess of such
offset.  Lessee shall document the cost
of said cure and supply 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 title or possession, whichever first occurs.  If more than 10% of the floor area of the
Unit, or more than 25% of Lessee’s Reserved Parking Spaces, is permanently taken by Condemnation (or taken for more than 90 days in a
temporary taking by Condemnation) and such taking materially and adversely
affects Lessee’s use or occupancy of the Premises, Lessee may, at Lessee’s option, to be exercised in writing within 10 days after Lessor shall have 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, subject to
Paragraph 55.26 below.  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 pursue a separate award for compensation for Lessee’s relocation expenses,
loss of business goodwill and/or Trade Fixtures, and the unamortized cost
of any Alterations or Utility Installations made after the Commencement Date
for which Lessor will require removal pursuant to Paragraph 7.4(c), without regard to whether or not this Lease is terminated pursuant to
the provisions of this Paragraph.  All such Alterations and Utility Installations made to the Premises by Lessee,
for purposes of Condemnation only, shall be considered the property of 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.

15.           Brokerage Fees.

                15.1         Additional Commission.  In addition to the payments owed pursuant to
Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that:  (a) if
Lessee exercises any Option,  (b) if
Lessee acquires from Lessor any rights to the Premises or other premises owned
by Lessor and located within the Project, (c) if Lessee remains in possession
of the Premises, with the consent of Lessor, after the expiration of this
Lease, or (d) if Base Rent is increased, whether by agreement or operation of
an escalation clause herein, then, Lessor shall pay Brokers a fee  pursuant to the
separate written agreement described in Paragraph 1.9(b). in accordance with the schedule of the Brokers
in effect at the time of the execution of this Lease .

15.2         Assumption of Obligations.  Any buyer or transferee of Lessor’s interest
in this Lease shall be deemed to have assumed Lessor’s obligation
hereunder.  Brokers shall be third party
beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31.  If Lessor fails to pay to Brokers any
amounts due as and for brokerage fees pertaining to this Lease when due, then
such amounts shall accrue Interest.  In
addition, if Lessor fails to pay any amounts to Lessee’s Broker when due,
Lessee’s Broker may send written notice to Lessor and Lessee of such failure
and if Lessor fails to pay such

 13
 

amounts within 10 days after
said notice, Lessee shall pay said monies to its Broker and offset such amounts
against Rent.  In addition, Lessee’s
Broker shall be deemed to be a third party beneficiary of any commission
agreement entered into by and/or between Lessor and Lessor’s Broker for the
limited purpose of collecting any brokerage fee owed.

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 finder’s fee in connection herewith.  Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed 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, attorneys’ fees
reasonably incurred with respect thereto.

16.           Estoppel Certificates.

(a)           Subject to Paragraph 55.22, each  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 in form 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 is required
and shall fail to execute
or deliver the Estoppel Certificate within such 10 day period, the Requesting
Party may execute an Estoppel Certificate stating that: (i) 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 encumbrancers
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, or if Lessor is reasonably
concerned about Lessee’s financial condition,
Lessee and
all Guarantors shall deliver to any potential lender or purchaser
designated by Lessor such publicly
available financial statements as
may be reasonably required by such lender or purchaser, including but not
limited to Lessee’s publicly
available financial statements
for the past 3 years.  All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only
for the purposes herein set forth.  So long as the stock of Lessee is
publicly traded on a national stock exchange, Lessee’s delivery of its
publicly-available financial statements shall satisfy its obligations under
this Paragraph 16(c).

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 Lessor’s title
or interest in the Premises or this Lease, Lessor shall deliver to the
transferee or assignee (in 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.

20.           Limitation on Liability.  The Notwithstanding anything to the contrary in this Lease, the  obligations of Lessor under this Lease shall not constitute personal obligations of Lessor,
or its partners, members, directors, officers or shareholders, and Lessee shall
look to the Premises and the proceeds of the insurance required to be
maintained by Lessor hereunder,
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 investment advisors,  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 Other
Agreements; Broker Disclaimer. 
This Lease contains all agreements between the Parties with respect to any
matter mentioned herein  Lessee’s
lease of the Premises, 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 or liability  with respect thereto or with respect to any
default or breach hereof by either Party.  The Purchase Contract shall
govern the terms of Lessor’s
purchase of the Project from Lessee’s Affiliate, and shall remain in effect as
and to the extent provided therein.  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 Broker’s
liability shall not be applicable to any gross negligence or willful misconduct
of such Broker.

23.           Notices.

23.1 Notice
Requirements.  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 mail 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.

                23.2 Date 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 date is shown, the postmark
thereon.  If sent by regular mail the
notice shall be deemed given 72 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 transmission 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
either Party  of the Default or Breach of, or failure to perform, any term, covenant or condition hereof by
Lessee, shall be deemed a waiver of any other term, covenant or condition
hereof, or of any subsequent Default or Breach by Lessee of, or failure to perform, the same or of any other term, covenant or
condition hereof.  Lessor’s consent to,
or approval of, any act shall not be deemed to 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

 14
 

Breach by Lessee.  Any Except as provided in Paragraph 42 below, 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)            Lessor’s Agent.  A Lessor’s agent under a listing agreement
with the Lessor acts as the agent for the Lessor only.  A Lessor’s 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 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.

(ii)           Lessee’s Agent.  An agent can agree to act as agent for the
Lessee only.  In these situations, the
agent is not the Lessor’s 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.

(b)           Brokers have no responsibility with
respect to any Default or Breach hereof by either Party. The Parties agree that
no lawsuit or other legal proceeding involving any breach of duty, error or
omission relating to this Lease may be brought against Broker more than one
year after the Start Date and that the liability (including court costs and
attorneys’ fees), of any Broker with respect to any such lawsuit and/or legal
proceeding 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)           Buyer and Seller 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 To Holdover.  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%125% of the Base Rent applicable immediately preceding the expiration or termination for the first sixty (60) days of such holding over, and thereafter 150%
of the Base Rent applicable 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 concerning this Lease shall be
initiated in the county in which the Premises are located.

30.           Subordination;
Attornment; Non-Disturbance .

30.1         Subordination.  This Subject to Paragraph 30.3 below, this Lease and any Option granted 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 (in 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.

                30.2         Attornment. 
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, attorn 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 the new owner, this Lease will automatically
become a new lease between Lessee and such new owner, and (ii) Lessor shall
thereafter be relieved of any further obligations hereunder and such new owner
shall assume all of Lessor’s obligations, 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 unless the
security deposit has been received by such new owner.

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 attorns to the record owner of the Premises.  Further, within 60 days after the execution
of this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any

 15
 

pre-existing
Security Device which is secured by the Premises.  In the event that Lessor is unable to provide
the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.

30.4         Self-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, financing or refinancing of the Premises, Lessee and Lessor shall
execute such further writings as may be reasonably required to separately
document any subordination, attornment and/or Non-Disturbance Agreement
provided for herein.

31.           Attorneys’
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 fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision 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,  a final non-appealable  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 valid
notices of Default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach
($200 is a reasonable minimum per occurrence for such services and
consultation).

32.                    Lessor’s
Access; Showing Premises; Repairs. 
Subject to compliance
with Lessee’s security requirements, Lessor and Lessor’s agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times after reasonable prior notice (which may be verbal) for the purpose of showing the same to
prospective purchasers, lenders, or, during the last nine months of the Term, to tenants, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem
necessary or desirable be
permitted or required to make,  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 on Lessee’s use of or access to the Premises or any
material portion thereof.  All such activities authorized under this Paragraph 32 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 which may be placed only on the Premises, Lessee shall not
place any sign upon the Project without Lessor’s prior written consent. All
signs must comply with all Applicable Requirements.  Lessor hereby approves of Lessee’s signs existing as of the Commencement Date.

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.  Lessor’s 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.  Lessor’s actual reasonable costs and expenses
(including but not limited to architects’, attorneys’, engineers’ and other
consultants’ 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.  Lessor’s 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 Breach, 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 Lessor’s 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.

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

37.2         Default. 
It shall constitute a Default of the Lessee if any Guarantor fails or
refuses, upon request to provide:  (a)
evidence of the execution of the guaranty, including the authority of the party
signing on Guarantor’s behalf to obligate Guarantor, and in the case of a
corporate Guarantor, a certified copy of a resolution of its board of directors
authorizing 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 Possession.  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 term hereof. 

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

39.1         Definition. 
“Option” shall mean:  (a) the right to extend the term 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 offer to lease either the
Premises or other property of Lessor; (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  May Not Be Separated.  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 or an Affiliate and only while the original Lessee or an Affiliate 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 of Default on Options.

(a)           Lessee shall have no right to
exercise an Option:  (i) during the
period commencing 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 valid 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).

 16
 

(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 commits a
Default under Paragraph 13.1(f) above (without any necessity of Lessor to give notice thereof),or (ii)  if Lessee commits a Breach of this Lease.

40.           Security Measures.  Lessee hereby acknowledges that the 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 and liability for the protection of the Premises, Lessee,
its agents, employees, contractors and invitees and their property from the acts
of third parties.

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

42.
                   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 Party to institute suit for recovery of such sum.  If it shall 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 recover such sum or so much thereof as it was not
legally required to pay.  A Party who
does not initiate suit for the recovery of sums paid “under protest” within 6
months shall be deemed to have waived its right to protest such payment.

43.           Authority; Multiple
Parties; Execution.

(a)           If either Party
hereto is a corporation, trust, limited 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 Party 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
document 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 document.

(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.

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

45.           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 executed and delivered by all Parties
hereto.

46.
          Amendments.  This Lease
may be modified only in writing, signed by the Parties in interest at the time
of the modification.  As long 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.

47.           Waiver of 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 .

48.           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 o is x is not attached to this Lease.

49.           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 requires 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.

LEASE
CONTINUES ON NEXT PAGE

 17

ADDENDUM TO LEASE

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

50.                               Additional
Matters Relating to Commencement and Expiration Dates.

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

50.2                           The
Expiration Date shall be the date which is the day prior to the fifth (5th) anniversary of the
Commencement Date.

50.3                           The
Base Rent and Lessor’s Reimbursable Expenses for the first month of the
Original Term shall be prorated, based upon the closing date of the
transactions pursuant to the Purchase Contract. 
Upon such closing, the Base Rent, Lessor’s Reimbursable Expenses through
the end of the calendar month in which such closing occurs, and the Security
Deposit, each shall be credited to Lessor through the escrow under the Purchase
Contract, and shall be deemed, for purposes of this Lease, to have been paid by
Lessee to Lessor thereupon.  Lessee’s
first payment of Base Rent thereafter shall be due upon the first day of the
calendar month following such closing under the Purchase Contract.

50.4                           Upon
the request of either Party, the other Party shall acknowledge in writing the
amount of Base Rent and Lessor’s Reimbursable Expenses paid on behalf of Lessee
at the closing under the Purchase Contract and enter into a written
confirmation of the Commencement Date.

51.                               Management
Fee.  For so long as Lessor retains a
separate property manager for the Premises, Lessor shall be entitled to
collect, and Lessee shall pay to Lessor, a property management fee equal to two
percent (2%) of the Base Rent.

52.                               Base
Rent Increases.  On each anniversary
of the Commencement Date, the monthly Base Rent shall increase by three percent
(3%) from the rate applicable in the prior year (i.e., Lease Year 2,
$50,238.00; Lease Year 3, $51,745.00; Lease Year 4, $53,298.00; and Lease Year
5, $54,897.00).

53.                               Additional
First Year Rent Provisions.  Lessee
hereby confirms the “commencement date” of that certain lease, dated                 ,
by and between Lessee, as landlord, and Currie, as tenant, occurred February 1,
2007.  Accordingly, in addition to all
other Rent payable under this Lease, for the period commencing on the
Commencement Date of this Lease through January 31, 2008, Lessee shall pay
additional rent (the “Currie Make-up Payment”)
in the amount of $5,644 per month.  The
Currie Make-up Payment applicable to the period from the closing under the
Purchase Contract through the end of the calendar month in which said closing
occurs shall be prorated in the manner described in Paragraph 50.3 above.

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

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

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

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

(d)                                 The
term “Prevailing Market Rent” as used in
this Paragraph 54 is defined to mean the fair market rent of the Premises
according to comparable properties in the general area.  In determining fair market monthly rent it
shall be assumed that:

 18
 

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

(ii)                                  The
Premises would be leased for the period of the Option being exercised by a
tenant with the credit standing of Lessee, as the same exists at the time of
exercise.

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

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

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

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

(i)                                     Within
seven (7) days following the Outside Agreement Date, Lesser and Lessee shall
each select one (1) independent broker with at least fifteen (15) years of
experience in office/manufacturing/industrial space in the West San Fernando
Valley submarket in Los Angeles, California (a “Qualified
Broker”), to determine the Prevailing Market Rate.  If one party shall fail to select a Qualified
Broker within the seven (7) day period, then the Qualified Broker chosen by the
other party shall be the sole arbitrator. 
If the two appointed independent Qualified Brokers are unable to agree
on Prevailing Market Rate within a second period of seven (7) days following
their appointment, the two independent Qualified Brokers shall within seven (7)
days from the date that they were required to agree on the Prevailing Market
Rate but were unable to do so, select a third independent Qualified Broker (the
“Third Qualified Broker”) and the Third
Qualified Broker shall be the sole arbitrator of the Prevailing Market
Rate.  Neither Lessor nor Lessee, nor
there respective Qualified Brokers, shall have consulted with such Third
Qualified Broker as to their respective opinion as to the Prevailing Market
Rent prior to the appointment.  Such
Third Qualified Broker may hold such hearings and require such additional
submittals from the Parties as the Third Qualified Broker, in his or her sole
discretion, determines is necessary.  In
addition, Lessor or Lessee may submit to the Third Qualified Broker, with a
copy to the other party, within five (5) business days after the appointment of
the Third Qualified Broker, any market data and additional information such
Party deems relevant to the determination of the Prevailing Market Rent (“Data”), and the other Party may submit a reply in writing
within five (5) business days after receipt of such Data.

(ii)                                  The
Third Qualified Broker shall, within thirty (30) days of his or her
appointment, determine the Prevailing Market Rate based on the factors described
herein.

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

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

(v)                                 The
cost of the Third Qualified Broker shall be paid in equal shares by Lessor and
Lessee.

(f)                                    If
for any reason the Prevailing Market Rent has not been determined by the
commencement of the applicable Option Period, Lessee shall continue paying rent
at the rate previously in effect or as specified in Lessee’s Judgment, whichever
is greater, and the Parties shall promptly make the appropriate adjustments as
soon as the Prevailing Market Rent is determined.

55.                               Miscellaneous.

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

 19
 

Premises for the
conduct of Lessee’s business, and Lessee waives any implied warranty that the
Premises is suitable for Lessee’s intended purposes.  Notwithstanding anything in the Lease to the
contrary, Lessor makes no representation or warranty that Lessee’s use is
permitted by applicable zoning laws or other laws and regulations.  In no event shall any portion of the Premises
be used for retail sales.  Lessee shall
not initiate, submit an application for, or otherwise request, any land use approvals
or entitlements with respect to the Project, including, without limitation, any
variance, conditional use permit or rezoning, without first obtaining Lessor’s
prior written consent, which may be given or withheld in Lessor’s sole
discretion.  Lessee shall not (a) install
any antenna, dish or other device on the roof of the Building or outside of the
Premises, (b) make any penetrations into the roof of the Building, (c) place
loads upon floors, walls or ceilings in excess of the load such items were
designed to carry, (d) place or store, nor permit any other person or entity to
place or store, any property, equipment, materials, supplies or other items
outside of the Building in which the Premises is located, except if approved by
Lessor or (e) change the exterior of the Premises.  Lessee agrees that Lessor shall not be liable
to Lessee for its failure to furnish water, gas, electricity, telephone, sewer,
refuse and trash collection or any other utility services or building services
when such failure is occasioned, in whole or in part, by repairs, replacements
or improvements, by any strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, telephone service or other utility at the
Project, by any accident, casualty or event arising from any cause whatsoever,
including the negligence of Lessor, its employees, agents and contractors, by
act, negligence or default of Lessee or any other person or entity, or by any
other cause, and such failures shall never be deemed to constitute an eviction
or disturbance of Lessee’s use and possession of the Premises or relieve Lessee
from the obligation of paying Rent or performing any of its obligations under
this Lease.  Furthermore, Lessor shall
not be liable under any circumstances for loss of property or for injury to, or
interference with, Lessee’s business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any such services or utilities.  Lessor may comply with voluntary controls or
guidelines promulgated by any governmental entity relating to the use or
conservation of energy, water, gas, light or electricity or the reduction of
automobile or other emissions without creating any liability of Lessor to
Lessee under this Lease.  Notwithstanding
the foregoing, Lessor shall be liable to the extent of Landlord’s gross
negligence or willful misconduct.

55.2.                        Intentionally deleted.

55.3.                        Tax Protest.  From
time to time Lessor may challenge the assessed value of the Project as
determined by applicable taxing authorities and/or Lessor may attempt to cause
the Real Property Taxes to be reduced on other grounds.  If Lessor is successful in causing the Real
Property Taxes to be reduced or in obtaining a refund, rebate, credit or
similar benefit (hereinafter collectively referred to as a “reduction”), Lessor shall credit the reduction(s) to Real
Property Taxes for the calendar year(s) to which a reduction applies and to
recalculate the Real Property Taxes owed by Lessee for years in which the
reduction applies based on the reduced Real Property Taxes.  All costs incurred by Lessor in obtaining the
Real Property Tax reductions shall be considered an Operating Expense, and
Lessor shall determine, in its reasonable discretion, to which years any
reductions will be applied.  In addition,
all accounting and related costs incurred by Lessor in making the adjustments
shall be an Operating Expense.  Lessor
shall have the right to compensate a person or entity it employs to obtain a
reduction in Real Property Taxes by giving such person or entity a percentage
of any reduction or credit obtained, and in this event the reduction or credit
obtained by Lessor shall be deemed to be the reduction or credit given by the
taxing authority less the compensation paid to such person or entity.  Lessee waives any right to contest or
challenge taxes; provided, however, that Lessor shall reasonably consider any
request from Lessee that Lessor challenge the assessed value of the
Project.  Notwithstanding the foregoing,
if, on final appeal, the costs of pursuing the Real Property Tax protest
exceeds the savings for one (1) year, Lessor shall be responsible for all costs
related to the challenge of Real Property Taxes and the same shall not
constitute an Operating Expense.

55.4.                        Intentionally deleted.

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

55.6.                        Changes.  Lessor shall have the right,
in Lessor’s sole discretion, from time to time, to make changes to the size,
shape, location, number and extent of the improvements comprising the Project
(hereinafter referred to as “Changes”)
including, but not limited to, the interior and exterior of buildings, and
areas surrounding the Building, or perform work in the Building, which work may
create noise, dust or leave debris in the Building.  Lessee hereby agrees that such Changes and
Lessor’s actions in connection with such Changes shall in no way constitute a
constructive eviction of Lessee or entitle Lessee to any abatement of
rent.  Lessor shall have no
responsibility or for any reason be liable to Lessee for any direct or indirect
injury to or interference with Lessee’s business arising from the Changes, nor
shall Lessee be entitled to any compensation or damages from Lessor for any
inconvenience or annoyance occasioned by such Changes or Lessor’s actions in
connection with such Changes.

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

 20
 

55.8                           Security.  Lessee hereby acknowledges that
Lessor shall have no obligation whatsoever to provide guard service or other
security measures for the benefit of the Premises or the Project, and Lessor
shall have no liability to Lessee due to its failure to provide such
services.  Lessee assumes all
responsibility for the protection of Lessee, its agents, employees, contractors
and invitees and the property of Lessee and of Lessee’s agents, employees,
contractors and invitees from acts of third parties.  Nothing herein contained shall prevent
Lessor, at Lessor’s sole option, from implementing security measures for the
Project or any part thereof, in which event Lessee shall participate in such
security measures and the cost thereof shall be included within the definition
of Operating Expenses, and Lessor shall have no liability to Lessee and its
agents, employees, contractors and invitees arising out of Lessor’s negligent
provision of security measures.  Lessor
shall have the right, but not the obligation, to require all persons entering
or leaving the Project to identify themselves to a security guard and to
reasonably establish that such person should be permitted access to the
Project.

55.9.                        Transfers.  Lessee
shall fully comply at its sole expense with all present or future programs
implemented or required by any governmental or quasi-governmental entity to
manage parking, transportation, air pollution or traffic in and around the
Project or the metropolitan area in which the Project is located.

55.10.                  No Recording.  Neither
this Lease, nor any memorandum, affidavit or other writing with respect
thereto, shall be recorded by Lessee or by anyone acting through, under or on
behalf of Lessee.

55.11.                  WAIVER OF JURY TRIAL.  TO
THE EXTENT PERMITTED BY APPLICABLE LAW, LESSOR AND LESSEE HEREBY WAIVE THEIR
RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM
OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHER
LESSOR AGAINST LESSEE OR LESSEE AGAINST LESSOR ON ANY MATTER WHATSOEVER ARISING
OUT OF, OR IN ANY WAY CONNECTED WITH, THIS LEASE, THE RELATIONSHIP OF LESSOR
AND LESSEE, LESSEE’S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OF INJURY
OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR REGULATION,
EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN EFFECT.

55.12.                  Hazardous Substances Disclosure Statement.  Prior to executing this Lease, Lessee has
delivered to Lessor Lessee’s executed initial Hazardous Substances Disclosure
Certificate (the “Initial HazMat Certificate”).  Lessee covenants, represents and warrants to
Lessor that the information contained in the Initial HazMat Certificate is true
and correct in all material respects and accurately describes in all material
respects the use(s) of Hazardous Substances which will be made and/or used on
the Premises by Lessee.  Notwithstanding
anything contained in the Lease to the contrary (except for Permitted Hazardous
Substances), Lessee shall not have the right to use any Hazardous Substances at
the Premises that are not described on the Initial HazMat Certificate or to
increase the quantity of any Hazardous Material used at the Premises beyond the
quantity described on the Initial HazMat Certificate, without Lessor’s
approval, which may be withheld in Lessor’s sole discretion.  Upon the prior written request of Lessor,
Lessee shall deliver to Lessor a new Hazardous Substances Disclosure
Certificate (each, a “Supplemental HazMat
Certificate”) executed by Lessee and describing Lessee’s
then-present use of Hazardous Substances on the Premises.  The Initial HazMat Certificate and
Supplemental HazMat Certificates required hereunder shall be in the form
attached hereto as Exhibit 3.

55.13.                  Assignment and Subletting.

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

(b)                                 Transfer Premium. 
Lessor shall be entitled to receive from Lessee (as and when received by
Lessee) as an item of additional rent one-half of the Transfer Premium
received by Lessee from the subtenant or assignee in excess of the amounts
payable by Lessee to Lessor under the Lease.  The Transfer Premium shall be reduced by
the reasonable brokerage commissions, cost of Alterations and legal fees
actually paid by Lessee in order to assign the Lease or to sublet a portion of
the Premises.  “Transfer Premium” shall
mean all Base Rent, additional rent or other consideration of any type
whatsoever payable by the assignee or subtenant in excess of the Base Rent and
additional rent payable by Lessee under this Lease.  If less than all of the Premises is
transferred, the Base Rent and the additional rent shall be determined on a
per-leasable-square-foot basis.  “Transfer
Premium” shall also include, but not be limited to, key money and bonus money
paid by the assignee or subtenant to Lessee in connection with such Transfer,
and any payment in excess of fair-market value for services rendered by Lessee
to the assignee or subtenant or for assets, fixtures, inventory, equipment or
furniture transferred by Lessee to the assignee or subtenant in connection with
such Transfer.

 21
 

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

55.14.                  Lessor  Insurance.  Lessor shall maintain the insurance described
in Section 8.3 of the Lease. 
Notwithstanding anything in the Lease to the contrary, there shall be no
limitation on the amount of liability insurance that may be purchased by Lessor
or the types of insurance that may be purchased by Lessor, and all of Lessor’s
insurance costs may be included in Operating Expenses.  Subject to the preceding sentence, Lessor
shall have the right to determine in its sole discretion the types and amounts
of insurance it obtains with respect to the Project.  Lessor, at Lessor’s sole election, may insure
the Project for losses or damage resulting from the perils of terrorism, flood
and/or earthquake, and the cost of such insurance shall be included as an
Operating Expense.  Lessee shall not have
the right to purchase insurance on behalf of Lessor; provided, however, in the
event that after the initial Lessor transfers the Project to a new owner that
is not affiliated with the initial Lessor, Lessee objects to Lessor’s estimate
of the cost of the earthquake coverage, Lessee shall be permitted to recommend
to Lessor a less expensive company meeting the requirements of Section 8.5 of
the Lease (“Lessee’s Recommended Insurance Company”).  In the event said coverage is less than the
rate offered by Lessor’s insurance company, then Lessor shall be required to
purchase insurance from Lessee’s Recommended Insurance Company.

55.15.                  Intentionally Deleted.

55.16.                  Performance of Certain Work by Lessor.  Notwithstanding Lessee’s obligations under
Paragraph 7.1 of the Lease, Lessor shall employ contractors to perform all
repairs, maintenance and replacement of the sprinkler systems, fire alarm
systems and fire detection systems that service the Premises..  The items described in the previous sentence
that Lessor will cause to be repaired, maintained and replaced are hereinafter
referred to as the “Lessor Maintenance Items”.  Lessor shall determine in its sole discretion
the scope and timing of the performance of such Lessor Maintenance Items, and
Lessee shall not perform such Lessor Maintenance Items.  Lessee shall immediately give Lessor written
notice of any repair or maintenance required by Lessor pursuant to this
section, after which Lessor shall have a reasonable time in which to complete
such repair or maintenance.  Lessor shall
include the cost of Lessor Maintenance Items as Lessor’s Reimbursable
Expenses.  The cost of replacing Lessor
Maintenance Items (as opposed to repairing Lessor Maintenance Items) shall be
amortized as provided in Paragraph 7.1(d) of the Lease.  Lessor shall be permitted to require Lessee
to maintain Lessor Maintenance Items upon thirty (30) days advance written
notice to Lessee, in which case Lessee shall be liable for all costs associated
therewith, subject to Section 7.1(d) of the Lease.

55.17.                  Intentionally Deleted.

55.18.                  Certain Repairs.  In
addition to Lessee’s other obligations under the Lease, Lessee shall pay at
Lessee’s sole cost and expense for the cost of repairing all damage to the
Premises resulting from the acts of vandalism, malicious mischief, burglary and
other acts of Lessee, its employees, invitees, contractors and other third
parties.  Such damages shall include, but
are not limited to, damages to exterior walls, roofs, vents and overhead
doors.  In addition, if Lessee dirties or
soils the exterior of the Premises, Lessee shall pay to Lessor on demand the
cost of cleaning the exterior of the Premises.

55.19.                  Intentionally deleted.

55.20.                  Intentionally deleted.

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

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

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

 22
 

55.24.                  Signs and Alarm Systems. 
Lessor shall have the right to approve in Lessor’s sole and absolute
discretion all signs installed after the Commencement Date and (to the extent
they tie into the Premises’ fire sprinklers and/or fire alarm systems) alarm
systems prior to their installation, and all signs and alarm systems shall be
installed at Lessee’s sole cost and expense. 
Lessee shall remove all signs and alarm systems upon the termination of
the Lease, and Lessee shall repair any damage to the Premises and Building caused
by such removal, at Lessee’s sole cost and expense.

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

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

55.27.                  Lessor’s Reimbursable Expenses/Operating Expenses.  Notwithstanding anything in the Lease to the
contrary, in addition to Operating Expenses, Lessee shall pay Lessor’s
Reimbursable Expenses.  For the purposes
of this Lease, the term “Lessor’s Reimbursable Expenses” shall mean any
expenses incurred by Lessor for the sprinkler system, fire detection system and
fire alarm system, payments made by Lessor under any easement, license,
operating agreement, declaration, restrictive covenant or other agreement
relating to the sharing of costs among property owners, the cost of all
business licenses, permits or similar fees relating to the operation,
ownership, repair or maintenance of the Premises (other than the cost of
licenses, permits or similar fees relating to the operation of Lessor as
opposed to the Premises), and the cost of any other item the cost of which is
stated in the Lease to be a Lessor’s Reimbursable Expense.  Notwithstanding anything in the Lease to the
contrary, the following items shall be treated as Operating Expenses and not
capital improvements:  (i) the cost of
painting all or part of the Project and (ii) the cost of resurfacing and
restriping roadways and parking areas. 
References to facilities, services, utilities or other items in this
Paragraph 55.27 shall not impose an obligation on Lessor to have said
facilities or to provide said services unless such facilities and services
already exist at the Premises.  Lessor
will, from time to time, estimate what Lessor’s Reimbursable Expenses will be
and the same shall be payable by Lessee monthly during each calendar year of
the Lease Term, on the same day as the Base Rent is due hereunder.  In the event that Lessee pays Lessor’s
estimate of Lessor’s Reimbursable Expenses, Lessor shall use its best efforts
to deliver to Lessee within 120 days after the expiration of each calendar year
a reasonably detailed statement (the “Statement”)
showing Lessor’s Reimbursable Expenses incurred during such year.  Lessor’s failure to deliver the Statement to
Lessee within said period shall not constitute Lessor’s waiver of its right to
collect said amounts or otherwise prejudice Lessor’s rights hereunder.  If the total of Lessee’s payments under this
Paragraph 55.27 during said calendar year exceed the amount indicated on the
Statement, Lessee shall be entitled to credit the amount of such overpayment
against Lessor’s Reimbursable Expenses next falling due.  If the amount to be paid by Lessee as
indicated on the Statement exceeds the total of Lessee’s payments under this
Paragraph 55.27 during said calendar year, Lessee shall pay to Lessor the
amount of the deficiency within thirty (30) days after delivery of the
Statement by Lessor to Lessee.  Lessor
and Lessee shall forthwith adjust between them by cash payment any balance
determined to exist with respect to that portion of the last calendar year for
which Lessee is responsible for Lessor’s Reimbursable Expenses, notwithstanding
that the Lease term may have terminated before the end of such calendar year,
and this provision shall survive the expiration or earlier termination of the
Lease.

55.28                     Condemnation.  If a temporary taking by
Condemnation lasts for less than ninety (90) days, Lessee’s Base Rent shall be
abated during said period but Lessee shall not have the right to terminate this
Lease.  If Lessee does not terminate this Lease in accordance with Section
14 above, 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, but in no event shall such reduction in Base Rent exceed the
amount which Lessor was compensated by the condemning authority for loss of any
rent.  In the event that this Lease is
not terminated by reason of such condemnation, and subject to the requirements
of any Lender, Lessor shall to the extent of severance damages received by
Lessor in connection with such condemnation, repair any damage to the Premises
caused by such condemnation (but not damage to any Trade Fixtures, to any
Alterations or Utility Installations made after the Commencement Date, nor to
those portions of the Premises described on Exhibit 2).  In the event the requirements of any Lender prevent
Lessor from repairing the Premises (other than Lessee’s Trade Fixtures, any
Alterations or Utility Installations made after the Commencement Date, and
those portions of the Premises described on Exhibit 2, with respect 

 23
 

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

55.29                     Adequate Assurance.  As used in the Lease, the term “adequate
assurance thereof” or words of like import shall mean an irrevocable
unconditional letter of credit issued to Lessor as the Beneficiary, in form
acceptable to Lessor or an escrow arrangement reasonably acceptable to Lessor.

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
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 PROJECT.

ATTENTION:  NO REPRESENTATION OR RECOMMENDATION IS MADE
BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, 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
PROJECT.  SAID INVESTIGATION SHOULD
INCLUDE BUT NOT BE LIMITED TO THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING OF THE PROJECT, THE STRUCTUAL INTEGRITY OF THE PROJECT, THE
CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH
DISABILITIES ACT AND THE SUITABILITY OF THE PROJECT FOR LESSEE’S INTENDED USE.

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

	
  Executed at:

  	
   

  	
   

  	
  Executed at:

  	
  Chatsworth, CA

  
	
  On:

  	
   

  	
  , 2007

  	
   

  	
  On:

  	
  April 2

  	
  , 2007

  
	
   

  	
   

  	
   

  
	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
   

  
	
  VRS Chatsworth
  LLC,

  	
   

  	
  Natrol, Inc.,

  
	
  a Virginia
  limited liability company

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  TA Richmond LLC,

  	
   

  	
   

  
	
   

  	
  Its Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Dennis R. Jolicoeur

  
	
   

  	
  By:

  	
  TA/VRS Manager
  LLC,

  	
   

  	
  Name: 

  	
  Dennis R. Jolicoeur

  
	
   

  	
   

  	
  Its Manager

  	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  TA Realty LLC,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its Manager

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James P.
  Raisides

  	
   

  	
   

  	
  By:

  	
  /s/ Steven S. Spitz

  
	
  Name:

  	
  James P.
  Raisides

  	
   

  	
   

  	
  Name:

  	
  Steven S. Spitz

  
	
  Title:

  	
  Sr. Vice
  President

  	
   

  	
   

  	
  Title:

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  c/o TA
  Associates Realty

  	
   

  	
  21411 Prairie Street

  
	
  1301 Dove
  Street, Suite 860

  	
   

  	
  Chatsworth, California 91311

  
	
  Newport Beach,
  California 92660-2440

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
  Telephone: (949)
  852-2030

  	
   

  	
  Telephone: (818) 739-6000

  
	
  Facsimile: (949)
  852-2031

  	
   

  	
  Facsimile: (818) 739-6032

  
																

 

 24
 

 

	
  With a Copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  c/o TA
  Associates Realty

  	
   

  	
   

  
	
  28 State Street,
  10th Floor

  	
   

  	
   

  
	
  Boston,
  Massachusetts 02109

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Telephone: (617)
  476-2700

  	
   

  	
   

  
	
  Facsimile: (617)
  476-2799

  	
   

  	
   

  

 

 25

EXHIBIT      

Form of HazMat
Certificate

General Information

	
  Name of Responding Company:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Mailing Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Phone:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Age of Facility:

  	
   

  	
   

  	
  Length of Occupancy:

  	
   

  
															

 

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

  	
   

  
	
   

  
	
   

  

 

	
  Type of Business Activity(ies):

  	
  Hazardous Materials Activities:

  
	
  (check all that apply)

  	
  (check all that apply)

  
	
   

  	
   

  
	
  o
  machine shop

  	
  o
  degreasing

  
	
  o
  light assembly

  	
  o
  chemical/etching/milling

  
	
  o
  research and development

  	
  o
  wastewater treatment

  
	
  o
  product service or repair

  	
  o
  painting

  
	
  o
  photo processing

  	
  o
  striping

  
	
  o
  automotive service and repair

  	
  o
  cleaning

  
	
  o
  manufacturing

  	
  o
  printing

  
	
  o
  warehouse

  	
  o
  analytical lab

  
	
  o
  integrated/printed circuit

  	
  o
  plating

  
	
  o
  chemical/pharmaceutical product

  	
  o
  chemical/missing/synthesis

  
	
   

  	
  o
  silkscreen

  
	
   

  	
  o
  lathe/mill machining

  
	
   

  	
  o
  deionizer water product

  
	
   

  	
  o
  photo masking

  
	
   

  	
  o
  wave solder

  
	
   

  	
  o
  metal finishing

  

 

HAZARDOUS MATERIALS/WASTE
HANDLING AND STORAGE

A.                                   Are
hazardous materials handled on any of your shipping and receiving docks in
container quantities greater than one gallon?        
o Yes o
No

B.                                     If
Hazardous materials or waste are stored on the premises, please check off the
nature of the storage and type(s) of materials below:

	
  Types of Storage
  Container

  	
  Type of Hazardous Materials and/or Waste Stored

  
	
  (list above-ground storage only)

  	
   

  
	
   

  	
   

  
	
  o
  1 gallon or 3 liter bottles/cans

  	
  o
  acid

  
	
  o
  5 to 30 gallon carboys

  	
  o
  phenol

  
	
  o
  55 gallon drums

  	
  o
  caustic/alkaline cleaner

  
	
  o
  tanks

  	
  o
  cyanide

  
	
   

  	
  o
  photo resist stripper

  
	
   

  	
  o
  paint

  
	
   

  	
  o
  flammable solvent

  
	
   

  	
  o
  gasoline/diesel fuel

  
	
   

  	
  o
  nonflammable/chlorinated solvent

  
	
   

  	
  o
  oil/cutting fluid

  

 

C.                                     Do
you accumulate hazardous waste onsite?        
o Yes o
No

If yes, how is it being
handled?

	
  o
  on-site treatment or recovery

  
	
  o
  discharged to sewer

  	
   

  	
   

  
	
  o
  hauled offsite

  	
  If hauled offsite, by whom

  	
   

  
	
  o
  incineration

  	
   

  	
   

  

 

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

o generator

o interim status
facility

o permitted TSDF

o none of the above

WASTEWATER
TREATMENT/DISCHARGE

A.                                   Do
you discharge industrial wastewater to:

o sewer

o storm drain

o surface water

o no industrial discharge

B.                                     Is
your industrial wastewater treated before discharge?         
 o Yes o
No

If yes, what type of
treatment is being conducted?

o neutralization

o metal hydroxide
formation

o closed-loop
treatment

o cyanide
destruct

o HF treatment

o other

SUBSURFACE CONTAINMENT OF
HAZARDOUS MATERIALS/WASTES

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

o hazardous waste
storage

o chemical
storage

o gasoline/diesel
fuel storage

o waste treatment

o wastewater
neutralization

o industrial
wastewater treatment

o none of the above

B.                                     If
buried tanks are located onsite, indicate their construction:

o steel                  o
fiberglass                    o
concrete

o inside open vault              o
double walled

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

D.                                Do you have wet floors in
your process areas?           o Yes   o
No

	
  

  	
  If yes, name processes:

  	
   

  	
   

  

 

E.                                      Are
abandoned underground tanks or sumps located on the property?        
 o
Yes   o No

HAZARDOUS MATERIALS
SPILLS

A.                                   Have
hazardous materials ever spilled to:

o the sewer

o the storm drain

o onto the
property

o no spills have occurred

B.                                     Have
you experienced any leaking underground tanks or sumps?        
 o
Yes  o No

C.                                     If
spills have occurred, were they reported?        
 o
Yes  o No

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

o Department of
Health Services

o Department of
Fish and Game

o Environmental
Protection Agency

o Regional Water
Quality Control Board

o Fire Department

D.                                    Have
you been contacted by a government agency regarding soil or groundwater
contamination on your site?

o Yes   oNo

Do you have exploratory
wells onsite?    o
Yes  o No

If yes, indicate the
following:

Number of wells:                            Approximate
depth of wells:                            Well
diameters:                            

PLEASE ATTACH ENVIRONMENTAL
REGULATORY PERMITS, AGENCY REPORTS THAT APPLY TO YOUR OPERATION AND HAZARDOUS
WASTE MANIFESTS.

Check off those enclosed:

o Hazardous
Materials Inventory Statement, HMIS

o Hazardous
Materials Management Plan, HMMP

o Department of
Health Services, Generatory Inspection Report

o Underground
Tank Registrations

o Industrial
Wastewater Discharge Permit

o
Hazardous Waste Manifest

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]