Document:

Exhibit 10.1

Exhibit 

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STOCK EXCHANGE AGREEMENT

AND PLAN OF REORGANIZATION

STOCK EXCHANGE AGREEMENT AND PLAN OF

REORGANIZATION (the "Agreement ") dated as of August 10, 2004, by and among Zeolite Mining Corporation, a Nevada corporation whose principal office is located at Unit 16, 6211 Boundary Drive West, Surrey, B.C V3X 3G7, Canada ("ZMC"); the principal ZMC shareholders listed on Exhibit A (the "PRINCIPAL ZMC SHAREHOLDER"); each of the persons listed on Exhibit B who are directors and principal shareholders of GNCC (collectively referred to as "SELLER"); and GLOBAL NATIONAL COMMUNICATIONS CORPORATION, a corporation organized under the laws of the British Virgin Islands whose principal office is located at 2nd Floor, Hang Tian Wei Building, Road No.2, North Part of Gaoxin Park District, Shenzhen, 518057, People's Republic of China ("GNCC").

R E C I T A L S

A.   GNCC, through its wholly owned subsidiary Gunnuo (Shenzhen) Industrial Co. Ltd. ("Gunnuo"), a PRC company, is a manufacturer of telecommunications devices and digital television parts and accessories.

B.   SELLER owns the number of shares of common stock of GNCC set forth on Exhibit B.

C.   ZMC is a publicly quoted corporation with nominal assets and liabilities. On the Closing Date (as defined herein), ZMC will have authorized capital of 100,000,000 shares of common stock, $0.00001 par value per share.

D.   Prior to the Closing Date of the Agreement, ZMC will have (6,138,000) shares of Common Stock issued and outstanding.

E.   ZMC desires to acquire one hundred percent (100%) of the issued and outstanding common stock of GNCC, in consideration for which ZMC shall issue to GNCC's shareholders (9,800,000) shares of its Common Stock in a tax-free reorganization pursuant to Section 368(a)(1)(B) of the United States Internal Revenue Code, as amended ("Code").

F.   Simultaneously with the Closing, ZMC shall issue, for consideration of financial advisory services they have provided to ZMC and other good and valuable consideration, (i) 1,450,000 shares of its common stock to Yarek Bartosz, (ii) 1,300,000 shares of its commons stock to Jia Na De Financing Consulting Company, (iii) 1,000,000 shares of its common stock to Maple Leaf Enterprises, and (iv) 312,000 shares of its common stock to Wilfred Yu (collectively "Investor Shareholders").

 

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AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows.

ARTICLE I

ACQUISITION OF GNCC SHARES BY ZMC

1.1   Acquisition of GNCC. In the manner and subject to the terms and conditions set forth herein, ZMC shall acquire from SELLER, one hundred percent (100%) of the issued and outstanding shares of GNCC (the "GNCC Shares").

1.2   Effective Date. If all of the conditions precedent to the obligations of each of the parties hereto as hereinafter set forth shall have been satisfied or shall have been waived, the transactions set forth herein (the "Exchange") shall become effective on the Closing Date as defined herein.

1.3   Consideration.

(a)   In connection with the acquisition of the GNCC Shares, (i) ZMC shall issue to SELLER 9,800,000 shares of ZMC and (ii) the PRINCIPAL ZMC SHAREHOLDER shall cancel 5,000,000 common shares of ZMC in consideration for a payment of $65,000 U.S. Item a(i) shall be referred to as the "ZMC Shares".

(b)   If the outstanding shares of ZMC Common Stock are changed into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization, or other similar transaction, then the number of shares of Common Stock referenced in Section 1.3(a), above, shall be appropriately adjusted to constitute 65.33% of all of the issued and outstanding shares of capital stock of ZMC as of the Closing Date.

(c)   No fractional shares of ZMC Common Stock shall be issued in connection with this Agreement, and no certificates or scrip for any such fractional shares shall be issued. 

1.4   Effect of Stock Exchange. As of the Closing Date, all of the following shall occur:

(a)   The Articles of Incorporation of GNCC and ZMC, as in effect on the Effective Date, shall continue in effect without change or amendment.

(b)   The Bylaws of GNCC and ZMC, as in effect on the Closing Date, shall continue in effect without change or amendment.

 

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(c)   Upon the Closing Date, Wang Hanqing shall be appointed President of ZMC, and Wu Wenbin shall be appointed Chief Financial Officer and Peng Xiaoyan Secretary of ZMC, Wang Hanqing, Wu Wenbin, Peng Xiaoyan and Charles Shao shall be appointed to the Board of Directors of ZMC, in accordance with the notice provisions of Rule 14f-1 of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, Alan Brandys and Douglas Hopper shall remain on the Board of Directors of ZMC but shall submit resignations which shall become effective 45 days after the Closing.

1.5   Disclosure Schedules. Simultaneously with the execution of this Agreement: (a) ZMC shall deliver a schedule relating to ZMC which, along with the reports of ZMC filed with the Securities and Exchange Commission, shall be referred to as the "ZMC Disclosure Schedule" , and (b) SELLER and GNCC shall deliver a schedule relating to SELLER and GNCC (the "GNCC Disclosure Schedule" and collectively with the ZMC Disclosure Schedule, the "Disclosure Schedules") setting forth the matters required to be set forth in the Disclosure Schedules as described elsewhere in this Agreement. The Disclosure Schedules shall be deemed to be part of this Agreement. ZMC'S Disclosure Schedule shall include, but is not limited to, all publicly filed documents of ZMC.

1.6   Further Action. From time to time after the Closing, without further consideration, the parties shall execute and deliver such instruments of conveyance and transfer and shall take such other action as any party reasonably may request to more effectively transfer the GNCC Shares and ZMC Shares.

ARTICLE II

CONDUCT OF BUSINESS PENDING CLOSING; STOCKHOLDER APPROVAL

ZMC, SELLER and GNCC covenant that between the date hereof and the Closing Date (as hereinafter defined):

2.1   Access by SELLER and GNCC. ZMC shall afford to SELLER, GNCC, and their legal counsel, accountants and other representatives, throughout the period prior to the Closing Date, full access, during normal business hours, to (a) all of the books, contracts and records of ZMC, and shall furnish SELLER and GNCC, during such period, with all information concerning ZMC that SELLER or GNCC may reasonably request and (b) the properties of ZMC in order to conduct inspections at SELLER and GNCC's expense to determine that ZMC is operating in material compliance with all applicable federal, state and local and foreign statutes, rules and regulations, and that ZMC's assets are substantially in the condition and of the capacities represented and warranted in this Agreement. Any such investigation or inspection by SELLER or GNCC shall not be deemed a waiver of, or otherwise limit, the representations, warranties and covenants contained herein. SELLER and GNCC shall grant identical access to ZMC and its agents.

2.2   Conduct of Business. During the period from the date hereof to the Closing Date,

 

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the business of ZMC and GNCC shall be operated by the respective entities in the usual and ordinary course of such business and in material compliance with the terms of this Agreement. Without limiting the generality of the foregoing:

(a)   ZMC and GNCC, respectively, shall each use its reasonable efforts to (i) keep available the services of the present agents of ZMC and GNCC; (ii) complete or maintain all existing material arrangements; (iii) maintain the integrity of all confidential information of ZMC and GNCC; and (iv) comply in all material respects with all applicable laws; and (b) Except as contemplated by this Agreement, ZMC and GNCC shall not (i) sell, lease, assign, transfer or otherwise dispose of any of their material assets or property including cash; (ii) agree to assume, guarantee, endorse or in any way become responsible or liable for, directly or indirectly, any material contingent obligation; make any material capital expenditures; (iii) enter into any transaction concerning a merger or consolidation other than with the other party hereto or liquidate or dissolve itself (or suffer any liquidation or dissolution) or convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of related transactions, all or a substantial part of its property, business, or assets, or stock or securities convertible into stock of any subsidiary, or make any material change in the present method of conducting business; (iv) declare or pay any dividends or make any other distribution (whether in cash or property) on any shares of its capital stock or purchase, redeem, retire or otherwise acquire for value any shares of its capital stock or warrants or options whether now or hereafter outstanding; (v) make or suffer to exist any advances or loans to, or investments in any person, firm, corporation or other business entity not a party to this Agreement; (vi) enter into any new material agreement or be or become liable under any new material agreement, for the lease, hire or use of any real or personal property; (vii) create, incur, assume or suffer to exist, any mortgage, pledge, lien, charge, security interest or encumbrance of any kind upon any of its property or assets, income or profits, whether now owned or hereafter acquired; or (viii) agree to do any of the foregoing.

2.3   Exclusivity to SELLER and GNCC. ZMC and its officers, directors, representatives and agents, from the date hereof, until the Closing Date (unless this Agreement shall be earlier terminated as hereinafter provided), shall not hold discussions with any person or entity, other than SELLER and GNCC or their respective agents concerning the Exchange, nor solicit, negotiate or entertain any inquiries, proposals or offers to purchase the business of ZMC, nor the shares of capital stock of ZMC from any person other than SELLER and GNCC, nor, except in connection with the normal operation of ZMC's respective business, or as required by law, or as authorized in writing by SELLER, disclose any confidential information concerning ZMC to any person other than SELLER, GNCC and SELLER and GNCC's representatives or agents. SELLER and GNCC shall from the date hereof, and until the Closing Date, owe the identical obligations of confidentiality and exclusivity to ZMC concerning the Exchange as stated in this Section.

2.4   Board and Shareholder Approval. The Board of Directors of ZMC has determined that the Exchange is fair to and in the best interests of its stockholders and has approved and adopted this Agreement and the terms of the Exchange. Upon recommendation by

 

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the Board of Directors, the shareholders of ZMC have also approved this Agreement and terms of the Exchange. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by ZMC, the valid and binding obligation of ZMC, enforceable in accordance with their respective terms.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ZMC

Except as set forth in the ZMC Disclosure Schedule (which incorporates all the reports of ZMC filed with the United States Securities and Exchange Commission) ZMC represents and warrants to SELLER and GNCC as follows and the PRINICPAL ZMC SHAREHOLDER, with respect to Section 3.25 only, represents and warrants to SELLER AND GNCC as follows, with the knowledge and understanding that SELLER and GNCC are relying materially upon such representations and warranties.

3.1   Organization and Standing. ZMC is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. ZMC has all requisite corporate power to carry on its business as it is now being conducted and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary under applicable law except where the failure to qualify (individually or in the aggregate) will not have any material adverse effect on the business or prospects of ZMC. The copies of the Articles of Incorporation and Bylaws of ZMC, as amended to date and made available to SELLER and GNCC, are true and complete copies of these documents as now in effect.

3.2   Capitalization.

(a)   The number of shares of capital stock which are issued and outstanding are set forth in Recital D. All of such shares of capital stock that are issued and outstanding are duly authorized, validly issued and outstanding, fully paid and nonassessable, and were not issued in violation of the preemptive rights of any person. Other than as set forth in the ZMC Disclosure Schedule and Recital D, there are no subscriptions, warrants, rights or calls or other commitments or agreements to which ZMC is a party or by which it is bound, pursuant to which ZMC is or may be required to issue or deliver securities of any class. Other than as set forth in the ZMC Disclosure Schedule and Recital D, there are no outstanding securities convertible or exchangeable, actually or contingently, into common stock or any other securities of ZMC. 

(b)   To ZMC'S knowledge, all outstanding shares of ZMC capital stock have been issued and granted in compliance with all applicable securities laws and other applicable legal requirements.

(c)   ZMC has good and marketable title to all of the ZMC Shares, free and clear of all liens, claims and encumbrances of any third persons.

 

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(d)   The PRINCIPAL ZMC SHAREHOLDER has good and marketable title to all of their shares of ZMC intended to be cancelled at Closing, free and clear of all liens, claims and encumbrances of any third persons.

3.3   Subsidiaries. ZMC owns no subsidiaries nor does it own or have an interest in any other corporation, partnership, joint venture or other entity.

3.4   Authority. ZMC's Board of Directors has determined that the Exchange is fair to and in the best interests of ZMC's stockholders. The execution, delivery and performance by ZMC of this Agreement (including the contemplated issuance of 9,800,000 of the ZMC Shares in accordance with this Agreement) has been duly authorized by all necessary action on the part of ZMC. ZMC has the absolute and unrestricted right, power and authority to perform its obligations under this Agreement. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by ZMC in accordance herewith, the valid and binding obligations of ZMC, enforceable in accordance with their respective terms.

3.5   Assets. Except as set forth in the ZMC Disclosure Schedule, ZMC has no material assets. ZMC has good and marketable title to all of the assets and properties listed on Schedule 3.5 and as reflected on the balance sheet included in the ZMC Financial Statements (as hereinafter defined).

3.6   Contracts and Other Commitments. Except as set forth in the ZMC Disclosure Schedule, ZMC is not a party to any contracts or agreements.

3.7   Litigation. There is no claim, action, proceeding, or investigation pending or, to its knowledge, threatened against or affecting ZMC before or by any court, arbitrator or governmental agency or authority which, in its reasonable judgment, could have a material adverse effect on the operations or prospects of ZMC. There are no decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against ZMC or asserted against ZMC that has not been paid.

3.8   Taxes. For purposes of this Agreement, (A) "Tax" (and, with correlative meaning, "Taxes") shall mean any federal, state, local or foreign income, alternative or add_ on minimum, business, employment, franchise, occupancy, payroll, property, sales, transfer, use, value added, withholding or other tax, levy, impost, fee, imposition, assessment or similar charge together with any related addition to tax, interest, penalty or fine thereon; and (B) "Returns" shall mean all returns (including, without limitation, information returns and other material information), reports and forms relating to Taxes.

(a)   ZMC has duly filed all Returns required to be filed by it other than Returns (individually and in the aggregate) where the failure to file would have no material adverse effect on the business or prospects of ZMC. All such Returns were, when filed, and to the knowledge of ZMC are, accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations. ZMC has paid or will pay in full or has adequately reserved

 

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against all Taxes otherwise assessed against it through the Closing Date.

(b)   ZMC is not a party to any pending action or proceeding by any governmental authority for the assessment of any Tax, and, to the knowledge of ZMC, no claim for assessment or collection of any Tax related to ZMC has been asserted against ZMC that has not been paid. There are no Tax liens upon the assets of ZMC. There is no valid basis, to ZMC 's knowledge, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to ZMC by any governmental authority.

3.9   Compliance with Laws and Regulations. ZMC has complied and is presently complying, in all material respects, with all laws, rules, regulations, orders and requirements (federal, state and local and foreign) applicable to it in all jurisdictions where the business of ZMC is conducted or to which ZMC is subject, including all requisite filings with the SEC. ZMC has not made any misrepresentation nor has omitted any material facts in any of its SEC filings to date.

3.10   Hazardous Materials. To the knowledge of ZMC, ZMC has not violated, or received any written notice from any governmental authority with respect to the violation of any law, rule, regulation or ordinance pertaining to the use, maintenance, storage, transportation or disposal of "Hazardous Materials." As used herein, the term "Hazardous Materials" means any substance now or hereafter designated pursuant to Section 307(a) and 311 (b)(2)(A) of the Federal Clean Water Act, 33 USC ss ss 1317(a), 1321(b)(2)(A), Section 112 of the Federal Clean Air Act, 42 USC ss 3412, Section 3001 of the Federal Resource Conservation and Recovery Act, 42 USC ss 6921, Section 7 of the Federal Toxic Substances Control Act, 15 USC ss 2606, or Section 101(14) and Section 102 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC ss ss 9601(14), 9602.

3.11   No Breaches. The making and performance of this Agreement will not (i) conflict with or violate the Articles of Incorporation or the Bylaws of ZMC, (ii) violate any laws, ordinances, rules, or regulations, or any order, writ, injunction or decree to which ZMC is a party or by which ZMC or any of its businesses, or operations may be bound or affected or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any material asset of ZMC under, or create any rights of termination, cancellation or acceleration in any person under, any contract.

3.12   Employees. ZMC has no employees that are represented by any labor union or collective bargaining unit. Nor does ZMC have any employment agreements or compensation plans which are in effect with anyone.

3.13   Financial Statements. Year end audited financial statements and unaudited quarterly stub financial statements are available online at www.sec.gov (collectively the "Financial Statements"). The Financial Statements present fairly, in all material respects, the financial position on the dates thereof and results of operations of ZMC for the periods indicated, prepared in accordance with generally accepted accounting principles ("GAAP"), consistently

 

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applied. There are no assets of ZMC the value of which is materially overstated in said balance sheets.

3.14   Absence of Certain Changes or Events. Except as set forth in the ZMC Disclosure Schedule, since Mar 31, 2004 (the "Balance Sheet Dates"), there has not been:

(a)   any material adverse change in the financial condition, properties, assets, liabilities or business of ZMC;

(b)   any material damage, destruction or loss of any material properties of ZMC, whether or not covered by insurance;

(c)   any material adverse change in the manner in which the business of ZMC and has been conducted;

(d)   any material adverse change in the treatment and protection of trade secrets or other confidential information of ZMC; and

(e)   any occurrence not included in paragraphs (a) through (d) of this Section 3.14 which has resulted, or which ZMC has reason to believe, might be expected to result in, a material adverse change in the business or prospects of ZMC. 

3.15   Government Licenses, Permits, Authorizations. ZMC has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted ("Licenses and Permits"). All such Licenses and Permits are in full force and effect, and no proceedings for the suspension or cancellation of any thereof is pending or, to the knowledge of ZMC, threatened.

3.16   Employee Benefit Plans.

(a)   ZMC has no bonus, material deferred compensation, material incentive compensation, stock purchase, stock option, severance pay, termination pay, hospitalization, medical, insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plan.

(b)   ZMC has not maintained, sponsored or contributed to, any employee pension benefit plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any similar pension benefit plan under the laws of any foreign jurisdiction.

(c)   Except as set forth in the ZMC Disclosure Schedule, neither the execution, delivery or performance of this Agreement, nor the consummation of the Exchange or any of the other transactions contemplated by this Agreement, will result in any bonus, golden parachute, severance or other payment or obligation to any current or former employee or director of any of ZMC, or result in any acceleration of the time of payment, provision or vesting of any such

 

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benefits.

3.17   Business Locations. Other than as set forth in the ZMC Disclosure Schedule, ZMC does not own or lease any real or personal property in any state or country.

3.18   Intellectual Property. ZMC owns no intellectual property of any kind. ZMC is not currently in receipt of any notice of any violation or infringements of, and is not knowingly violating or infringing, or to the best of its knowledge has not violated or infringed the rights of others in any trademark, trade name, service mark, copyright, patent, trade secret, know-how or other intangible asset.

3.19   Governmental Approvals. Except as set forth in the ZMC Disclosure Schedule, no authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by ZMC with, any governmental authority, domestic or foreign, federal, state or local, is required in connection with ZMC's execution, delivery and performance of this Agreement. Except as set forth in the ZMC Disclosure Schedule, no consents of any other parties are required to be received by or on the part of ZMC to enable ZMC to enter into and carry out this Agreement.

3.20   Transactions with Affiliates. Except as set forth in the ZMC Disclosure Schedule, ZMC is not indebted for money borrowed, either directly or indirectly, from any of its officers, directors, or any Affiliate (as defined below), in any amount whatsoever; nor are any of its officers, directors, or Affiliates indebted for money borrowed from ZMC; nor are there any transactions of a continuing nature between ZMC and any of its officers, directors, or Affiliates not subject to cancellation which will continue beyond the Closing Date, including, without limitation, use of the assets of ZMC for personal benefit with or without adequate compensation. For purposes of this Agreement, the term "Affiliate" shall mean any person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified. As used in the foregoing definition, the term (i) "control" shall mean the power through the ownership of voting securities, contract or otherwise to direct the affairs of another person and (ii) "person" shall mean an individual, firm, trust, association, corporation, partnership, government (whether federal, state, local or other political subdivision, or any agency or bureau of any of them) or other entity.

3.21   No Distributions. ZMC has not made nor has any intention of making any distribution or payment to any of its shareholders with respect to any of its shares prior to the Closing Date.

3.22   Liabilities. ZMC has no material direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise ("Liabilities"), whether or not of a kind required by generally accepted accounting principles to be set forth on a financial statement, other than (i) Liabilities fully and adequately reflected or reserved against on the ZMC Balance Sheet, (ii) Liabilities incurred since the Balance Sheet Date in the ordinary course of the business of ZMC, or (iii) Liabilities otherwise disclosed in this

 

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Agreement, including the exhibits hereto and ZMC Disclosure Schedule.

3.23   Accounts Receivable. ZMC has no accounts receivable.

3.24   Insurance. ZMC has no insurance policies in effect.

3.25   Principal ZMC Shareholder Representations and Warranties. THE PRINCIPAL ZMC SHAREHOLDER represents and warrants that he has the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and the other Closing Documents to which he is a party and to perform his obligations under this Agreement and the other Closing Documents to which he is a party, and he has good and marketable title to all of the ZMC Shares listed in Exhibit A hereto, free and clear of all liens, claims and encumbrances of any third persons.

3.26   No Omissions or Untrue Statements. To the best of each party's knowledge no representation or warranty made by ZMC or the PRINCIPAL ZMC SHARHOLDER (with respect to Section 3.25 only) to SELLER and GNCC in this Agreement, the ZMC Disclosure Schedule or in any certificate of an ZMC officer required to be delivered to SELLER pursuant to the terms of this Agreement, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading as of the date hereof and as of the Closing Date. 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER AND GNCC

Except as set forth in the GNCC Disclosure Schedule, SELLER and GNCC jointly and severally represent and warrant to ZMC as follows as of the date hereof and as of the Closing Date:

4.1   Organization and Standing of GNCC. GNCC is a corporation duly organized, validly existing and in good standing under the laws of the British Virgin Islands, and has the corporate power to carry on its business as now conducted and to own its assets and is duly qualified to transact business as a foreign corporation in each state where such qualification is necessary except where the failure to qualify will not have a material adverse effect on the business or prospects of GNCC. The copies of the Articles of Incorporation and Bylaws of GNCC, as amended to date, and made available to ZMC, are true and complete copies of those documents as now in effect.

4.2   Authority. The Board of Directors of GNCC has determined that the Exchange is advisable and in the best interests of the SELLER and GNCC. GNCC has approved and adopted this Agreement and the terms of the Exchange and has adopted a resolution recommending approval and adoption of this Agreement and the Exchange by GNCC's stockholders. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when 

 

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executed and delivered by GNCC in accordance herewith, the valid and binding obligations of GNCC, enforceable in accordance with their respective terms.

4.3   No Conflict. The making and performance of this Agreement will not (i) conflict with the Articles of Incorporation or the Bylaws of GNCC, (ii) violate any laws, ordinances, rules, or regulations, or any order, writ, injunction or decree to which GNCC is a party or by which GNCC or any of their material assets, business, or operations may be bound or affected or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any material asset of GNCC, or create any rights of termination, cancellation, or acceleration in any person under any material agreement, arrangement, or commitment.

4.4   Properties. Except as set forth in the GNCC Disclosure Schedule, SELLER has good and marketable title to all of the GNCC Shares, free and clear of all liens, claims and encumbrances of third persons whatsoever, and GNCC has good and marketable title to all of the assets and properties which it purports to own as reflected on the balance sheet included in the GNCC Financial Statements (as hereinafter defined), or thereafter acquired. 

4.5   Capitalization of GNCC. The authorized capital stock of GNCC consists of 1,000,000,000 shares of Common Stock, $.1 par value per share, of which 10,000 shares are issued and outstanding. Such outstanding shares of Common Stock are duly authorized, validly issued, fully paid, and non-assessable. As of the date hereof, there were no outstanding options, warrants or rights of conversion or other rights, agreements, arrangements or commitments relating to the capital stock of GNCC or obligating GNCC to issue or sell shares of Common Stock. To GNCC'S knowledge, all outstanding shares of GNCC capital stock have been issued and granted in compliance with all applicable legal requirements.

4.6   Governmental Approval; Consents. No authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by SELLER or GNCC with any governmental authority, domestic or foreign, federal, state or local, is required in connection with SELLERS OR GNCC's execution, delivery and performance of this Agreement. Except as set forth in the GNCC Disclosure Schedule, no consents of any other parties are required to be received by or on the part of SELLER or GNCC to enable SELLER and GNCC to enter into and carry out this Agreement.

4.7   Adverse Developments. Since July 31, 2004 there have been no material adverse changes in the assets, liabilities, properties, operations or financial condition of GNCC, and no event has occurred other than in the ordinary and usual course of business or as set forth in the GNCC Financial Statements which could be reasonably expected to have a materially adverse effect upon GNCC.

4.8 Taxes. GNCC has duly filed all returns required to be filed. All such returns were, when filed, and to GNCC 's knowledge are, accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations. GNCC has paid in full all

 

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taxes through the Closing Date. GNCC is not a party to any pending action or proceeding by any governmental authority for the assessment of any tax, and, to the knowledge of GNCC, no claim for assessment or collection of any tax has been asserted against GNCC that have not been paid. There are no tax liens upon the assets of GNCC. There is no valid basis, to GNCC 's knowledge, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any tax to be issued to GNCC by any governmental authority.

4.9 Litigation. Except as set forth on the GNCC Disclosure Schedule, there is no material claim, action, proceeding, or investigation pending or, to their knowledge, threatened against or affecting SELLER or GNCC before or by any court, arbitrator or governmental agency or authority. There are no material decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against SELLER or GNCC. 

4.10   Compliance with Laws and Regulations. GNCC has complied and is presently complying, in all material respects, with all laws, rules, regulations, orders and requirements applicable to it in all jurisdictions in which its operations are currently conducted or to which it is currently subject.

4.11   Governmental Licenses, Permits and Authorizations. GNCC has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted. All such licenses, permits, authorizations and approvals are in full force and effect, and no proceedings for the suspension or cancellation of any thereof is pending or threatened.

4.12   Liabilities. GNCC has no material direct or indirect liabilities, as that term is defined in Section 3.22 ("GNCC Liabilities"), whether or not of a kind required by generally accepted accounting principles to be set forth on a financial statement, other than (i) GNCC Liabilities fully and adequately reflected or reserved against on the GNCC Balance Sheet, (ii) GNCC Liabilities incurred in the ordinary course of the business of GNCC, and (iii) GNCC Liabilities otherwise disclosed in this Agreement, including the Exhibits hereto.

4.13   SELLER's Representations Regarding ZMC Shares.

(a)   SELLER acknowledges that ZMC has limited assets and business and that the ZMC Shares are speculative and involve a high degree of risk, including among many other risks that the ZMC Shares will be restricted as elsewhere described in this Agreement and will not be transferable unless first registered under the Securities Act of 1933, as amended ("Act"), or pursuant to an exemption from the Act's registration requirements.

(b)   SELLER acknowledges and agrees that it has been furnished with copies of the periodic reports of ZMC filed with the United States Securities and Exchange Commission including those on Forms 10-KSB and 10-QSB for the past two years. SELLER has had an opportunity to ask questions of and receive answers from ZMC regarding its business, assets, results of operations, financial condition and plan of operation and the terms and conditions of the issuance of the ZMC Shares.

 

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(c)   SELLER is not a U.S. person (as defined in Regulation S promulgated under the Act ("Regulation S"), is acquiring the ZMC Shares for its own account, and not for the account of any other person other than the benefit of SELLER, and SELLER has no current intent to make any resale, pledge, hypothecation, distribution or public offering of the ZMC Shares except as permitted by applicable law, including the provisions of Regulation S.

(d)   SELLER, acting with the assistance of counsel and other professional advisers, possesses such knowledge and experience in financial, tax and business matters as to enable them to utilize the information made available by ZMC, to evaluate the merits and risks of acquiring the ZMC Shares and to make an informed investment decision with respect thereto.

(e)   SELLER was not solicited by ZMC or anyone on ZMC's behalf to enter into any transaction whatsoever, by any form of general solicitation or general advertising, as those terms are defined in Regulation S.

(f)   SELLER: (i) is domiciled and has SELLER'S principal place of business and/or residence outside the United States; and (ii) certifies that SELLER is not a U.S. Person and is not acquiring the ZMC Shares for the account or benefit of any U.S. Person; and (iii) at the time of the Closing, SELLER or persons acting on SELLER'S behalf in connection therewith, will be located outside the United States.

4.14   Contracts and Other Commitments. Schedule 4.14 of the GNCC Disclosure Schedule consists of a true and complete list of all material contracts, agreements, commitments and other instruments (whether oral or written) to which GNCC is a party. GNCC has made or will make available to ZMC a copy of each such contract. All such contracts are valid and binding upon GNCC and are in full force and effect and are enforceable in accordance with their respective terms. No such contracts are in breach, and no event has occurred which, with the lapse of time or action by a third party, could result in a material default under the terms thereof. To GNCC'S knowledge, no stockholder of GNCC has received any payment from any contracting party in connection with or as an inducement for causing GNCC to enter into any such contract.

4.15   Absence of Certain Changes or Events. Except as set forth in the GNCC Disclosure Schedule, since April 30, 2004 (the "Balance Sheet Date"), there has not been:

(a)   any material adverse change in the financial condition, properties, assets, liabilities or business of GNCC;

(b)   any material damage, destruction or loss of any material properties of GNCC, whether or not covered by insurance;

(c)   any material adverse change in the manner in which the business of GNCC and has been conducted;

 

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(d)   any material adverse change in the treatment and protection of trade secrets or other confidential information of GNCC; and

(e)   any occurrence not included in paragraphs (a) through (d) of this Section 4.15 which has resulted, or which GNCC has reason to believe, might be expected to result in a material adverse change in the business or prospects of GNCC.

4.16   Financial Statements. The GNCC Disclosure Schedule contains an audited financial statements for the two years ending 2002 and 2003 and an unaudited stub period ending April 30, 2004 (collectively the "GNCC Financial Statements"). The GNCC Financial Statements present fairly, in all material respects, the financial position on the dates thereof and results of operations of GNCC for the periods indicated, prepared in accordance with GAAP, consistently applied. There are no assets of GNCC the value of which is materially overstated in said balance sheets.

4.17   GNCC Intellectual Property. Schedule 4.17 of the GNCC Disclosure Schedule sets forth a complete and correct list and summary description of all intellectual property, including computer software, trademarks, trade names, service marks, service names, brand names, copyrights and patents, registrations thereof and applications therefore, applicable to or used in the business of GNCC, together with a complete list of all licenses granted by or to GNCC with respect to any of the above. Except as otherwise set forth in Schedule 4.17 all such trademarks, trade names, service marks, service names, brand names, copyrights and patents are owned by GNCC, free and clear of all liens, claims, security interests and encumbrances of any nature whatsoever. GNCC is not currently in receipt of any notice of any violation or infringements of, and is not knowingly violating or infringing, the rights of others in any trademark, trade name, service mark, copyright, patent, trade secret, know-how or other intangible asset. GNCC has not (i) licensed any of the material proprietary assets to any person or entity on an exclusive basis, or (ii) entered into any covenant not to compete or agreement limiting its ability to exploit fully any proprietary asset or to transact business in any market or geographical area or with any person or entity.

4.18   Subsidiaries. Except as set forth in Schedule 4.18 of the GNCC Disclosure Schedule, GNCC owns no subsidiaries nor does it own or have an interest in any other corporation, partnership, joint venture or other entity.

4.19   Hazardous Materials. To the knowledge of GNCC, GNCC has not violated, or received any written notice from any governmental authority with respect to the violation of any law, rule, regulation or ordinance pertaining to the use, maintenance, storage, transportation or disposal of "Hazardous Materials." As used herein, the term "Hazardous Materials" means any substance now or hereafter designated which is found to be toxic or harmful to humans or the environment when present in certain amounts or quantities.

4.20   Employees. GNCC has no employees that are represented by any labor union or collective bargaining unit.

 

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4.21   Employee Benefit Plans. The GNCC Disclosure Schedule identifies each salary, bonus, material deferred compensation, material incentive compensation, stock purchase, stock option, severance pay, termination pay, hospitalization, medical, insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plan, program or material agreement.

4.22   Business Locations. Other than as set forth in the GNCC Disclosure Schedule, GNCC does not own or lease any real or personal property in any state or country.

4.23   Insurance. Except as set forth in Schedule 4.23 of the GNCC Disclosure Schedule, GNCC has no insurance policies in effect.

4.24   No Omission or Untrue Statement. To the best of each party's knowledge, no representation or warranty made by SELLER or GNCC to ZMC or the PRINCIPAL ZMC SHAREHOLDER in this Agreement, in the GNCC Disclosure Schedule or in any certificate of a GNCC officer required to be delivered to ZMC pursuant to the terms of this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading as of the date hereof and as of the Closing Date.

ARTICLE V

CLOSING

5.1   Closing. The Exchange shall be completed on the first business day after the day on which the last of the conditions contained in this Article V is fulfilled or waived (the "Closing Date"); provided, however, that in no event shall the Closing occur later than September 30, 2004, unless otherwise agreed to by the parties. The Closing shall take place at the offices of Jun He Law Offices, LLC, 500 Fifth Avenue, Suite 1930, New York, NY 10110, USA or such other place as the parties may agree. At the Closing, ZMC, the PRINICPAL ZMC SHAREHOLDER, SELLER and GNCC shall make the deliveries contemplated by this Agreement, and in accordance with the terms of this Agreement.

5.2   ZMC's Closing Deliveries. At the Closing, in addition to documents referred elsewhere, ZMC and/or the PRINCIPAL ZMC SHAREHOLDER shall deliver, or cause to be delivered, to GNCC:

(a)   a certificate, dated as of the Closing Date, executed by the President or Chief Executive Officer of ZMC, to the effect that the representations and warranties contained in this Agreement are true and correct in all material respects at and as of the Closing Date and that ZMC has complied with or performed in all material respects all terms, covenants and conditions to be complied with or performed by ZMC on or prior to the Closing Date;

(b)   certificates representing the ZMC Shares issuable upon consummation of

 

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the Exchange;

(c)   Certified resolution of the Board of Directors and shareholders authorizing and approving the transactions set forth herein;

(d)   The ZMC Disclosure Schedule;

(e)   An escrow agreement to be entered into by and among the ZMC, the SELLER, and the Investor Shareholders (the "Escrow Agreement") which shall contain the following principal terms:

(i)   At the Closing and upon issuance of the shares of common stock of ZMC to the Investor Shareholders; the Investor Shareholders shall set aside, pro rata, 500,000 shares of common stock to be issued to the Investor Shareholders to be held in escrow (the "Escrowed Shares") by Jun He Law Offices, LLC (the "Escrowee");

(ii)   The Escrowed Shares shall be released to the Investor Shareholders if ZMC, through the effort of the Investor Shareholders, obtains a firm commitment of a Qualified Financing (defined below) 60 days after the Closing; 

(iii)   Qualified Financing shall mean cash investment of at least $2 million in ZMC for ZMC's common stock (or convertible preferred stock) at a minimum of $1.00 per share;

(iv)   If ZMC does not receive commitment of a Qualified Financing within 60 days after the Closing, then ZMC shall transfer the Escrowed Shares pro rata to SELLER for the consideration of $1.00; and

(v)   In connection with the Escrowed Shares, the Investor Shareholders shall sign all share transfer documents including but without limitation blank stock power, etc. to be held in escrow along with the Escrowed Shares.

and

(f)   such other documents as SELLER, GNCC, or their counsel may reasonably require.

5.3   GNCC's Closing Deliveries. At the Closing, in addition to documents referred to elsewhere, SELLER and/or GNCC shall deliver to ZMC:

 

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(a)   a certificate of GNCC, dated as of the Closing Date, executed by the President or Chief Executive Officer of GNCC to the effect that the representations and warranties of SELLER contained in this Agreement are true and correct in all material respects and that GNCC has complied with or performed in all material respects all terms, covenants, and conditions to be complied with or performed by GNCC on or prior to the Closing Date; 

(b)   certificates representing GNCC Shares owned by SELLER, duly endorsed for transfer or accompanied by a properly executed stock power;

(c)   certified resolutions of the Board of Directors and shareholders of GNCC, authorizing and approving the transactions set forth herein;

(d)   the GNCC Disclosure Schedule;

(e)   the Escrow Agreement as described in Section 5.2(e) hereinabove; and

(f)   such other documents as ZMC or it's counsel may reasonably require.

ARTICLE VI

CONDITIONS TO OBLIGATIONS OF ZMC AND PRINCIPAL ZMC

SHAREHOLDER

The obligation of ZMC and the PRINCIPAL ZMC SHAREHOLDER to consummate the Closing is subject to the following conditions, any of which may be waived by it in its sole discretion.

6.1   Compliance by SELLER and GNCC. SELLER and GNCC shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with in all material respects by SELLER and GNCC prior to or on the Closing Date;

6.2   Accuracy of SELLER and GNCC's Representations. SELLER and GNCC's representations and warranties contained in this Agreement (including the Disclosure Schedule) or any schedule, certificate, or other instrument delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby shall be true and correct in all material respects at and as of the Closing Date (except for such changes permitted by this Agreement) and shall be deemed to be made again as of the Closing Date.

6.3   Documents. All documents and instruments required hereunder to be delivered by SELLER or GNCC to ZMC at the Closing shall be delivered in form and substance reasonably satisfactory to ZMC and its counsel.

 

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6.4   Litigation. No litigation seeking to enjoin the transactions contemplated by this Agreement or to obtain damages on account hereof shall be pending or, to ZMC's knowledge, be threatened.

6.5   Material Adverse Change. Except for operations in the ordinary course of business, no material adverse change shall have occurred subsequent to July 31, 2004 in the financial position, results of operations, assets, or liabilities of GNCC, nor shall any event or circumstance have occurred which would result in a material adverse change in the financial position, results of operations, assets, or liabilities of GNCC.

6.6   Approval by Board of Directors and Shareholders. The Board of Directors and Shareholders of ZMC shall have approved this Agreement and the transactions contemplated hereby.

6.7   Satisfaction with Due Diligence. ZMC shall have been satisfied with its due diligence review of GNCC, its subsidiaries and their operations.

6.8   Regulatory Compliance. ZMC shall have received any and all regulatory approvals and consents required to complete the transactions contemplated hereby.

ARTICLE VII

CONDITIONS TO SELLER AND GNCC'S OBLIGATIONS

SELLER and GNCC's obligation to consummate the Closing is subject to the following conditions:

7.1   Compliance by ZMC and the PRINICIPAL ZMC SHAREHOLDER. ZMC and the PRINCIPAL ZMC SHAREHOLDER shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by them prior to or on the Closing Date.

7.2   Accuracy of Representations of ZMC and the PRINCIPAL ZMC SHAREHOLDER. The representations and warranties of ZMC and the PRINCIPAL ZMC SHAREHOLDER contained in this Agreement (including the exhibits hereto and the ZMC Disclosure Schedule) or any schedule, certificate, or other instrument delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby shall be true and correct in all material respects at and as of the Closing Date (except for changes permitted by this Agreement) and shall be deemed to be made again as of the Closing Date.

7.3   Continuation as Publicly Traded Company. ZMC shares shall continue to trade on the NASD OTC Bulletin Board System.

 

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7.4   Litigation. No litigation seeking to enjoin the transactions contemplated by this Agreement or to obtain damages on account hereof shall be pending or to SELLER and GNCC's knowledge, be threatened.

7.5   Documents. All documents and instruments required hereunder to be delivered by ZMC and the PRINCIPAL ZMC SHAREHOLDER to SELLER and GNCC at the Closing shall be delivered in form and substance reasonably satisfactory to SELLER, GNCC and their counsel.

7.6   Balance Sheet. Except as set forth in Section 7.6 of the ZMC Disclosure Schedule, ZMC shall have no liabilities except as incurred in the ordinary course of business, as reflected on ZMC's most recent balance sheet, or as otherwise approved by SELLER.

7.7   Approval by Board of Directors and Shareholders. The Board of Directors and shareholders of GNCC shall have approved this Agreement and the transactions contemplated hereby.

7.8   Satisfaction with Due Diligence. GNCC shall have been satisfied with its due diligence review of ZMC and its subsidiary and satisfied itself that ZMC continues to trade its shares on the NASD OTC Bulletin Board System.

7.9   Regulatory Compliance. GNCC shall have received any and all regulatory approvals and consents required to complete the transactions contemplated hereby.

7.10   Outstanding Shares. ZMC remains a publicly traded corporation and ZMC shall have 6,138,000 shares of ZMC common stock issued and outstanding prior to the Closing.

7.11   Escrow Agreement. GNCC shall have received the Escrow Agreement as described in Section 5.2 hereinabove.

ARTICLE VIII

TERMINATION

8.1   Termination Prior to Closing.

(a)   If the Closing has not occurred by September 30, 2004, any party may terminate this Agreement at any time thereafter by giving written notice of termination to the other, provided, however, that no party may terminate this Agreement if such party has breached any material terms or conditions of this Agreement and such breach has prevented the timely closing of the Exchange. Notwithstanding the above, such deadline may be extended one or more times, only by mutual written consent of SELLER, GNCC, ZMC and the PRINCIPAL ZMC SHAREHOLDER;

 

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(b)   Prior to September 30, 2004, any party may terminate this Agreement following the insolvency or bankruptcy of the other party hereto, or if any one or more of the conditions to Closing set forth in Article VI or Article VII shall become incapable of fulfillment or there shall have occurred a material breach of this Agreement and either such condition of breach shall not have been waived by the party for whose benefit the condition was established, then ZMC (in the case of a condition in Article VI) or SELLER (in the case of a condition specified in Article VII) may terminate this Agreement. In addition, either ZMC or SELLER may terminate this Agreement upon written notice to the other if it shall reasonably determine that the Exchange has become inadvisable by reason of the institution or threat by any federal, state or municipal governmental authorities of a formal investigation or of any action, suit or proceeding of any kind against either or both parties.

8.2   Consequences of Termination. Upon termination of this Agreement pursuant to this Article VIII or any other express right of termination provided elsewhere in this Agreement, the parties shall be relieved of any further obligation under this Agreement except for the obligations in Section 11.4; provided, however, that no termination of this Agreement, pursuant to this Article VIII hereof or under any other express right of termination provided elsewhere in this Agreement shall operate to release any party from any liability to any other party incurred otherwise than under this Agreement before the date of such termination, or from any liability resulting from any willful misrepresentation of a material fact made in connection with this Agreement or willful breach of any material provision hereof.

ARTICLE IX

ADDITIONAL COVENANTS

9.1   Mutual Cooperation. The parties hereto will cooperate with each other, and will use all reasonable efforts to cause the fulfillment of the conditions to the parties' obligations hereunder and to obtain as promptly as possible all consents, authorizations, orders or approvals from each and every third party, whether private or governmental, required in connection with the transactions contemplated by this Agreement.

9.2   Changes in Representations and Warranties of a Party. Between the date of this Agreement and the Closing Date, no party shall directly or indirectly, enter into any transaction, take any action, or by inaction permit an otherwise preventable event to occur, which would result in any of the representations and warranties of such party herein contained not being true and correct at and as of the Closing Date. Each party shall promptly give written notice to the other parties upon becoming aware of (A) any fact which, if known on the date hereof, would have been required to be set forth or disclosed pursuant to this Agreement, and (B) any impending or threatened breach in any material respect of any of the party's representations and warranties contained in this Agreement and with respect to the latter shall use all reasonable efforts to remedy same.

 

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9.3   Name Change. As soon as practicable after the Closing, ZMC shall change its name to "Global National Communications Corporation" or other similar name approved by SELLER.

9.4   SEC Filings. The parties agree that the following filings shall be made with the Securities and Exchange Commission ("Commission"): (a) an information statement prepared pursuant to the requirements of Rule 14f-1 under the Exchange Act shall be filed with the Commission; (b) a report on Form 8-K will be filed with the Commission disclosing the consummation of the Exchange; and, (c) any and all other filings necessary to comply with the Exchange Act.

9.5   Conduct of Business. During the period from the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, GNCC shall continue to conduct its businesses and maintain its business relationships in the ordinary and usual course consistent with past practice and will not, without limitation, without the prior written consent of ZMC:

(a)   Sell, lease, assign transfer or otherwise dispose of any of its material assets, including cash;

(b)   Agree to, or assume guarantee, endorse or otherwise in any way be or become responsible or liable for, directly or indirectly, any material contingent obligation;

(c)   Make any material capital expenditures;

(d)   Enter into any transaction concerning a merger or consolidation other than with the other party hereto or liquidate or dissolve itself (or suffer any liquidation or dissolution) or convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of related transactions, all or a substantial part of its property, business, or assets, or stock or securities convertible into stock of any subsidiary, or make any material change in the present method of conducting business;

(e)   Declare or pay any dividends or make any other distribution (whether in cash or property) on any shares of its capital stock or purchase, redeem, retire or otherwise acquire for value any shares of its capital stock or warrants or options whether now or hereafter outstanding;

(f)   Make or suffer to exist any advances or loans to, or investments in any person, firm, corporation or other business entity not a party to this Agreement;

(g)   Enter into any new material agreement or be or become liable under any new material agreement, for the lease, hire or use of any real or personal property; or

(h)   Create, incur, assume or suffer to exist, any mortgage, pledge, lien, charge, security interest or encumbrance of any kind upon any of its property or assets, income or profits, whether now owned or hereafter acquired.

 

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ARTICLE X

SECURITIES

10.1   ZMC Shares Not Registered. SELLER has been advised that the ZMC Shares have not been and when issued, will not be registered under the Securities Act of 1933, the securities laws of any state of the United States or the securities laws of any other country and that in issuing and selling the ZMC Shares to SELLER pursuant hereto, ZMC is relying upon the "safe harbor provided by Regulation S for offers and sales of securities occurring outside the United States ("Regulation S") and/or on section 4(2) under the Act. Resales of the ZMC Shares may only be made pursuant to an effective registration statement or the availability of an exemption from registration. All certificates evidencing the ZMC Shares shall, unless and until removed in accordance with law, bear a restrictive legend substantially in the following form:

THE SHARES REPRESENTED HEREBY MAY NOT BE OFFERED AND SOLD BY THE HOLDER HEREOF EXCEPT: (A) IF THE OFFER OR SALE IS WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OF A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")) AND THE SECURITIES ARE OFFERED AND SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO REGULATION S OR RULE 144 UNDER THE ACT.

10.2   Indemnification by ZMC. ZMC shall indemnify SELLER and GNCC in respect of, and hold SELLER and GNCC harmless against, any and all debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), monetary damages, fines fees, penalties, interest obligations, deficiencies, losses and expenses (including without limitation attorneys fees and litigation costs) incurred or suffered by SELLER and GNCC: 

(a)   resulting from any misrepresentation, breach of warranty or failure to perform any covenant or agreement of ZMC contained in this Agreement; and

(b)   resulting from any liability of ZMC incurred or resulting from activities that took place prior to the Closing not disclosed on the ZMC Financial Statements.

10.3   Indemnification by SELLER and GNCC. SELLER and GNCC shall jointly and severally indemnify ZMC in respect of, and hold ZMC harmless against, any and all debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), monetary damages, fines fees, penalties, interest obligations, deficiencies, losses and expenses (including without limitation attorneys fees and litigation costs) incurred or suffered by ZMC:

(a)   resulting from any misrepresentation, breach of warranty or failure to perform any covenant or agreement of SELLER or GNCC contained in this Agreement;

 

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(b)   resulting from any employment, excess or property taxes owing or arising on account of or in connection with the operation of SELLER or GNCC prior to the Closing; and

(c)   resulting from any liability of SELLER or GNCC incurred or resulting from activities that took place prior to the Closing not disclosed on the GNCC Financial Statements.

ARTICLE XI

MISCELLANEOUS

11.1   Expenses. Each party shall each pay its own expenses incident to the negotiation, preparation, and carrying out of this Agreement, including legal and accounting and audit fees.

11.2   Survival of Representations, Warranties and Covenants. All statements contained in this Agreement or in any certificate delivered by or on behalf of ZMC, the PRINCIPAL ZMC SHAREHOLDER or SELLER or GNCC pursuant hereto, or in connection with the actions contemplated hereby shall be deemed representations, warranties and covenants by SELLER, GNCC, ZMC and the PRINCIPAL ZMC SHAREHOLDER as the case may be, hereunder. All representations, warranties, and covenants made by ZMC, the PRINCIPAL ZMC SHAREHOLDER or SELLER or GNCC in this Agreement, or pursuant hereto, shall survive the Closing in a period of two (2) years.

11.3   Publicity. The PRINCIPAL ZMC SHAREHOLDER, SELLER, GNCC, and ZMC shall not issue any press release or make any other public statement, in each case, relating to, in connection with or arising out of this Agreement or the transactions contemplated hereby, without obtaining the prior approval of the other, which shall not be unreasonably withheld or delayed, except that prior approval shall not be required if, in the reasonable judgment of ZMC prior approval by SELLER or GNCC would prevent the timely dissemination of such release or statement in violation of applicable federal securities laws, rules or regulations or policies of the Bulletin Board.

11.4   Non Disclosure. A disclosing party will not at any time after the date of this Agreement, without the recipient's consent, except in the ordinary operation of its business or as required by law, divulge, furnish to or make accessible to anyone any knowledge or information with respect to confidential or secret processes, inventions, discoveries, improvements, formulae, plans, material, devices or ideas or know-how, whether patentable or not, with respect to any confidential or secret aspects of such party (including, without limitation, customer lists, supplier lists and pricing arrangements with customers or suppliers) ("Confidential Information"). The parties will not at any time after the date of this Agreement and prior to the Exchange use, divulge, furnish to or make accessible to anyone any Confidential Information (other than to its representatives as part of its due diligence or corporate investigation). Any information, which (i)

 

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at or prior to the time of disclosure by the disclosing party was generally available to the public through no breach of this covenant, (ii) was available to the public on a non-confidential basis prior to its disclosure by the disclosing party, or (iii) was made available to the public from a third party provided that such third party did not obtain or disseminate such information in breach of any legal obligation of the disclosing party, shall not be deemed Confidential Information for purposes hereof, and the undertakings in this covenant with respect to Confidential Information shall not apply thereto. The undertakings of the parties set forth above in this Section 11.4 shall terminate upon consummation of the Closing. If this Agreement is terminated pursuant to the provisions of Article VIII or any other express right of termination set forth in this Agreement, the recipient shall return to the disclosing party all copies of all Confidential Information previously furnished to it by the disclosing party.

11.5   Succession and Assignments and Third Party Beneficiaries. This Agreement may not be assigned (either voluntarily or involuntarily) by any party hereto without the express written consent of the other parties. Any attempted assignment in violation of this Section shall be void and ineffective for all purposes. In the event of an assignment permitted by this Section, this Agreement shall be binding upon the heirs, successors and assigns of the parties hereto. There shall be no third party beneficiaries of this Agreement except as expressly set forth herein to the contrary.

11.6   Notices. All notices, requests, demands, or other communications with respect to this Agreement shall be in writing and shall be (i) sent by facsimile transmission, (ii) sent by the United States Postal Service or the PRC Postal Service, as the case may be, registered or certified mail, return receipt requested, or (iii) personally delivered by a nationally recognized express overnight courier service, charges prepaid, to the following addresses (or such other addresses as the parties may specify from time to time in accordance with this Section)

(a)   To SELLER:

2nd Floor, Hang Tian Wei Buiding

Road No.2, North Part of Gaoxin Park District

Shenzhen, 518057

People's Republic of China

Attn: Peng Xiaoyan

(b)   To GNCC:

2nd Floor, Hang Tian Wei Buiding

Road No.2, North Part of Gaoxin Park District

Shenzhen, 518057

People's Republic of China

Attn: Peng Xiaoyan

 

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With a copy to:

Jun He Law Offices, LLC

500 Fifth Avenue, Suite 1930

New York, NY 10110

Telephone: (212) 703-8702

Facsimile: (212) 703-8720

Attn: Xiaolin Zhou, Esq.

(c)   To ZMC:

6211 Boundary Drive West

Unit 16

Surrey, B.C.

V3X 3G7

Canada

Attn: Alan Brandys

(d)   To PRINCIPAL ZMC SHAREHOLDER:

See Exhibit A

Any such notice shall, when sent in accordance with the preceding sentence, be deemed to have been given and received on the earliest of (i) the day delivered to such address or sent by facsimile transmission, (ii) the tenth business day following the date deposited with the United States Postal Service or the PRC Postal Service, as the case may be, or (iii) 72 hours after shipment by such courier service.

11.7   Construction. This Agreement shall be construed and enforced in accordance with the internal laws of the State of Nevada without giving effect to the principles of conflicts of law thereof. All parties hereby irrevocably submit to the exclusive jurisdiction of the any state or federal court sitting in the state of Nevada for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waive, and agree not to assert in any suit, action or proceeding, any claim that he/she/it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper.

11.8   Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the

 

 

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same Agreement.

11.9   No Implied Waiver; Remedies. No failure or delay on the part of the parties hereto to exercise any right, power, or privilege hereunder or under any instrument executed pursuant hereto shall operate as a waiver nor shall any single or partial exercise of any right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. All rights, powers, and privileges granted herein shall be in addition to other rights and remedies to which the parties may be entitled at law or in equity. 

11.10   Entire Agreement. This Agreement, including the Exhibits and Disclosure Schedules attached hereto, sets forth the entire understandings of the parties with respect to the subject matter hereof, and it incorporates and merges any and all previous communications, understandings, oral or written as to the subject matter hereof, and cannot be amended or changed except in writing, signed by the parties.

11.11   Headings. The headings of the Sections of this Agreement, where employed, are for the convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meanings of the parties.

11.12   Severability. To the extent that any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted hereof and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

11.13   Attorneys Fees. In the event any legal action is brought to interpret or enforce this Agreement, the party prevailing in such action shall be entitled to recover its attorneys' fees and costs in addition to any other relief that it is entitled.

11.14   Consultants. Each party represents to the others that there is no broker or finder entitled to a fee or other compensation for bringing the parties together to effect the Exchange.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.

	
ZMC:
	
ZEOLITE MINING CORORATION, a Nevada

	 	
Corporation

	 
	 	 	
By.
	
/s/ Alan Brandys

	 	 	
Its:
	
President and Director

 

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(Execution Pages of Principal ZMC Shareholders)

	
PRINCIPAL ZMC SHAREHOLDER:

	 	
/s/ Alan Brandys

	 	
Alan Brandys

	 
	 	
/s/ Douglas H. Hopper

	 	
Douglas H. Hopper

 

 

 

 

 

 

 

 

 

 

 

 

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(Execution page of GNCC and SELLER)

	
GNCC: 
	
GLOBAL NATIONAL COMMUNICATIONS CORPORATION, a corporation organized under the laws of the British Virgin Islands

	 
	 	
/s/ Wang, Hanqing

	 	
By: Wang, Hanqing

	 	
Its: President

	
SELLER:
	
/s/ Wang, Hanqing
	
/s/ Peng, Xiaoyan

	 	
Wang, Hanqing 
	
Peng, Xiaoyan

	 	 
	 	
/s/ Wu, Wenbin 
	
/s/ Ni, Ding

	 	
Wu, Wenbin 
	
Ni, Ding

	 	 
	 	
/s/ Di, Yong 
	
/s/ Song, Xiaojia

	 	
Di, Yong
	
Song, Xiaojia

	 	 
	 	
/s/ Lian, Hongtao 
	
/s/ Peng, Shaodong

	 	
Lian, Hongtao 
	
Peng, Shaodong

	 	 
	 	
/s/ Wu, Yuejin 
	
/s/ Bai Mei

	 	
Wu, Yuejin 
	 	
Bai Mei

	 	 
	 	
/s/ Cao, Yong 
	
/s/ Zou, Jiarui

	 	
Cao, Yong 
	
Zou, Jiarui

	 	 
	 	
/s/ Cai, Lizhi 
	
/s/ Zhang, Li

	 	
Cai, Lizhi 
	
Zhang, Li

	 	 
	 	
/s/ Wang, Lizong 
	
/s/ Peng, Jihu

	 	
Wang, Lizong 
	
Peng, Jihu

 

 

 

 

-28-

Execution Copy

	 	
EXHIBIT A 
	
PRINCIPAL ZMC SHAREHOLDER

	 	
EXHIBIT B 
	
SHAREHOLDER-DIRECTORS OF GNCC

	 	
EXHIBIT C 
	
ZMC SHARES

 

 

 

 

 

 

 

 

 

 

 

 

-29-

Execution Copy

EXHIBIT A

	
PRINCIPAL ZMC SHAREHOLDERS

	 
	
Alan Brandys

	
6211 Boundary Drive West

	
Unit 16

	
Surrey, B.C.

	
V3X 3G7

	
Canada

	 
	
Shares held: 2,500,000

	 
	
Douglas Hopper

	
203-828 West Hasting Street

	
Vancouver, B.C

	
V6C 1C8

	
Canada

	 
	
Shares Held: 2,500,000

 

 

 

 

 

 

 

 

-30-

Execution Copy

EXHIBIT B

SELLERS

	
NAME 
	
No. of Shares 
	
Percentage Ownership

	 	 	 
	
Wang, Hanqing 
	
5,100 
	
51%

	
Peng, Xiaoyan 
	
2,300 
	
23%

	
Wu, Wenbin 
	
1,000 
	
10%

	
Ni, Ding 
	
200 
	
2%

	
Di, Yong 
	
200 
	
2%

	
Song, Xiaojia 
	
200 
	
2%

	
Lian, Hongtao 
	
150 
	
1.5%

	
Peng, Shaodong 
	
150 
	
1.5%

	
Wu, Yuejin 
	
100 
	
1%

	
Bai, Mei 
	
100 
	
1%

	
Cao, Yong 
	
100 
	
1%

	
Zou, Jiarui 
	
100 
	
1%

	
Cai, Lizhi 
	
100 
	
1%

	
Zhang, Li 
	
100 
	
1%

	
Wang, Lizong 
	
50 
	
0.5%

	
Peng, Jihu 
	
50 
	
0.5%

	
Total: 
	
10,000 
	
100%

 

 

 

 

 

 

 

 

 

-31-

Execution Copy

EXHIBIT C

ZMC SHARES

	
Name 
	
GNCC Shares 
	
Percent of Class 
	
ZMC Shares 
	
Percent of Class

	 	 	 	 
	
Wang, Hanqing 
	
5,100
	
51%
	
4,998,000
	
33.32%

	
Peng, Xiaoyan
	
2,300
	
23%
	
2,254,000
	
15.03%

	
Wu, Wenbin
	
1,000
	
10%
	
980,000
	
6.53%

	
Ni, Ding
	
200
	
2%
	
196,000
	
1.31%

	
Di, Yong
	
200
	
2%
	
196,000
	
1.31%

	
Song, Xiaojia
	
200
	
2%
	
196,000
	
1.31%

	
Lian, Hongtao
	
150
	
1.50%
	
147,000
	
0.98%

	
Peng, Shaodong
	
150
	
1.50%
	
147,000
	
0.98%

	
Wu, Yuejin
	
100
	
1%
	
98,000
	
0.65%

	
Bai, Mei
	
100
	
1%
	
98,000
	
0.65%

	
Cao, Yong
	
100
	
1%
	
98,000
	
0.65%

	
Zou, Jiarui
	
100
	
1%
	
98,000
	
0.65%

	
Cai, Lizhi
	
100
	
1%
	
98,000
	
0.65%

	
Zhang, Li
	
100
	
1%
	
98,000
	
0.65%

	
Wang, Lizong
	
50
	
0.50%
	
49,000
	
0.33%

	
Peng, Jihu
	
50
	
0.50%
	
49,000
	
0.33%

	 	 	 	 
	
TOTALS
	
10,000
	
100.00%
	
9,800,000
	
65.33%

 

 

 

 

 

 

 

 

-32-

Execution Copy

ZMC Disclosure Schedule

Section 3.2   Capitalization

There are only 6,138,000 shares issued and outstanding.

Section 3.5   Assets

Company presently has approx $62,000 U.S in bank account.

Section 3.6   Contracts and other commitments

None

Section 3.12   Employees

ZMC has no employees

Section 3.14   Absence of Certain Changes or Events

None

Section 3.16 Employee Benefits Plans

None

Section 3.17   Business locations

Unit 16, 6211 Boundary Drive West, Surrey, B.C V3X 3G7

Section 3.19   Governmental Approvals

None

Section 3.20   Transactions with Affiliates

None

Section 3.22   Liabilities

None

Section 3.26   No Omissions or Untrue Statements

None

 

-33-

Execution Copy

GNCC Disclosure Schedule

Section 4.4   List of Properties

100% ownership interests in Guonuo (Shenzhen) Industrial Co., Ltd. 

Section 4.6   Governmental Approval; Consents

None

Section 4.9   Litigation

None

Section 4.14   Contracts and Other Commitments

None

Section 4.15   Absence of Certain Changes or Events

None

Section 4.16   Financial Statements

Audited Financial Statements for Years 2002-2003

Unaudited Financial Statement as of April 30, 2004

Section 4.17   Intellectual Property

None

Section 4.17   Subsidiaries

Guonuo (Shenzhen) Industrial Co., Ltd. 100% owned.

Section 4.21   Employee Benefit Plans

None

Section 4.22   Business Locations

 

-34-

Execution Copy

2nd Floor, Hang Tian Wei Building, Road No.2, North Part of Gaoxin Park District, Shenzhen, People's Republic of China

Section 4.23   Insurance Policies

None

 

 

 

 

 

 

 

 

 

 

 

 

-35-<PAGE>
EXHIBIT 10.1

                         CENTRE POINTE DISTRIBUTION PARK
                             BASIC LEASE INFORMATION
                             -----------------------

LANDLORD:                           CRESCENT RESOURCES, LLC
                                    400 South Tryon Street, Suite 1300 zip code
                                    28202
                                    P.O. Box 1003 zip code 28201-1003 Charlotte,
                                    North Carolina Attention: Director of
                                    Property Management

TENANT:                             HOT TOPIC, INC.
                                    Address:  18305 San Jose Avenue
                                    City of Industry, California 91748-1237
                                    Attention: Real Estate

LEASE EXECUTION
DATE:                               June 1, 2004

ADDRESS OF
PREMISES:                           6001 Reliance Drive (Street # to be verified
                                                         prior to Execution)
                                    LaVergne, Tennessee 37086

PREMISES:                           Approximately 300,000 gross square feet of
                                    space in the Building, of which
                                    approximately 17,000 square feet is office
                                    space and the balance is warehouse space.

BUILDING:                           That certain building known as Centre Pointe
                                    Building Six (6) to be constructed by
                                    Landlord in the Center which is located at
                                    6001 Reliance Drive in the City of LaVergne,
                                    Tennessee, and located on that certain tract
                                    of land that is more particularly described
                                    on EXHIBIT A hereto (the "Land").

CENTER:                             That certain complex of land and buildings,
                                    including the Land and the Building, and
                                    designated by Landlord as "Centre Pointe
                                    Distribution Park", LaVergne, Tennessee.

TENANT OPERATIONS:                  General offices, warehousing, and
                                    distribution of men's and women's apparel,
                                    lingerie, swimwear, sleepwear, T-shirts,
                                    shoes; accessories to include but not be
                                    limited to hats, handbags, hosiery, hair
                                    goods, belts, beauty products, jewelry,
                                    watches, sunglasses; miscellaneous gift
                                    items to include, but not be limited to,
                                    stickers, posters, patches, calendars,
                                    buttons, books, magazines, paper goods,
                                    scented products; consumables (including
                                    candy and soda pop); compact discs, vinyl,
                                    tapes and videos; ear piercing; and other
                                    consumer products.

LEASE TERM:                         Ten (10) years commencing on the
                                    Commencement Date. The Lease Term is subject
                                    to extension to include any partial calendar
                                    month at the end of the Lease Term (as
                                    provided in the definition of Expiration
                                    Date set forth below).

<PAGE>

BENEFICIAL
OCCUPANCY DATE:                     Tenant will have limited occupancy on
                                    October 4, 2004, described as "Stage 1"
                                    below ("Beneficial Occupancy"). Landlord
                                    will deliver the Building to the Tenant in
                                    separate stages. Stage 1 (column lines 1
                                    thru column line 7) will be delivered on or
                                    before October 4, 2004.

                                    Completion will require the following items
                                    to be constructed and complete (and for
                                    purposes of Stage 1, Beneficial Occupancy
                                    will require the following as to Stage 1):
                                    Floor slab poured (unless noted otherwise in
                                    the Lease), tilt-up concrete, exterior walls
                                    erected, structural steel erected, roof
                                    decking installed, roof insulation & roof
                                    membrane installed, ESFR sprinkler piping
                                    roughed-in, temporary lighting installed,
                                    (2) dock door openings with levelers &
                                    bumpers installed, paved access to the same
                                    (2) dock door openings and temporary
                                    electrical service available for the
                                    Tenant's use.

                                    (By December 1, 2004, the entire Building
                                    will be secure & lockable.)

LEASE
COMMENCEMENT
DATE:                               March 1, 2005, or such later date as same
                                    may be extended pursuant to PARAGRAPH 3
                                    herein (herein, the "Commencement Date").
                                    Further, the Commencement Date may be
                                    earlier as set forth in Paragraph 3(c)
                                    herein.

EXPIRATION                          DATE: The day immediately preceding the
                                    tenth (10th) anniversary of the Commencement
                                    Date. Provided, however, if the Commencement
                                    Date is any day other than the first day of
                                    a calendar month, the Expiration Date shall
                                    be extended automatically through the last
                                    day of the calendar month in which the tenth
                                    (10th) anniversary of the Commencement Date
                                    occurs. Additionally, the Expiration Date is
                                    subject to extension pursuant to PARAGRAPH 3
                                    herein.

RENEWAL TERM:                       See Exhibit F

EXPANSION:                          See Exhibit H

OPTION TO PURCHASE:                 See Exhibit G.

BROKER:                             The Staubach Company
                                    (Agents: Chris Skibinski and Jeff Manley)

LANDLORD'S INITIALS:       /S/ PGE
                           -------

TENANT'S INITIALS:         /S/ EM
                           ------

<PAGE>
<TABLE>
                                                  TABLE OF CONTENTS
<CAPTION>

                                                                                                                PAGE
                                                                                                                ----
<S>                                                                                                              <C>
1.       DESCRIPTION OF PREMISES; PURPOSE.........................................................................1

2.       LEASE TERM...............................................................................................1

3.       CONSTRUCTION AND ACCEPTANCE OF PREMISES..................................................................1

4.       ANNUAL RENTAL............................................................................................2
        (a)     MINIMUM RENTAL....................................................................................2
        (b)     ANNUAL ADJUSTMENTS IN MINIMUM RENTAL..............................................................2
        (c)     TENANT'S PROPORTIONATE SHARE......................................................................3
                (1)      TENANT'S PROPORTIONATE  SHARE OF TAXES...................................................3
                (2)      TENANT'S PROPORTIONATE SHARE OF INSURANCE PREMIUMS.......................................3
                (3)      TENANT'S PROPORTIONATE SHARE OF COMMON AREA MAINTENANCE COSTS............................3
        (d)     PAYMENT OF TENANT'S PROPORTIONATE SHARE...........................................................3
        (e)     LATE CHARGE.......................................................................................4

5.       ALTERATIONS AND IMPROVEMENTS BY  TENANT..................................................................4

6.       USE OF PREMISES..........................................................................................4

7.       TAXES....................................................................................................5

8.       FIRE AND EXTENDED COVERAGE INSURANCE.....................................................................5

9.       LANDLORD'S LIMITED COVENANT TO REPAIR AND REPLACE........................................................5

10.      TENANT'S COVENANT TO REPAIR..............................................................................6

11.      TRADE FIXTURES AND EQUIPMENT; NON-LIABILITY FOR CERTAIN DAMAGES..........................................6

12.      UTILITIES................................................................................................7

13.      DAMAGE OR DESTRUCTION OF PREMISES........................................................................7

14.      MUTUAL WAIVER; WAIVER OF SUBROGATION.....................................................................7

15.      SIGNS AND ADVERTISING....................................................................................7

16.      INDEMNIFICATION, LIABILITY INSURANCE AND HAZARDOUS SUBSTANCES............................................8
        (a)     INDEMNIFICATION BY TENANT.........................................................................8
        (c)     LIABILITY INSURANCE...............................................................................8
        (d)     PRESENCE AND USE OF HAZARDOUS SUBSTANCES..........................................................8
        (e)     UNAUTHORIZED RELEASES OF HAZARDOUS SUBSTANCES; CLEANUP COSTS; DEFAULT AND INDEMNIFICATION.........9

17.      LANDLORD'S RIGHT OF ENTRY...............................................................................10

18.      EMINENT DOMAIN..........................................................................................10

                                                         i
<PAGE>

19.      EVENTS OF DEFAULT AND LANDLORD'S REMEDIES...............................................................10

20.      SUBORDINATION...........................................................................................11

21.      ASSIGNING AND SUBLETTING................................................................................11

22.      COVENANT OF QUIET ENJOYMENT.............................................................................12

23.      ESTOPPEL CERTIFICATES...................................................................................12

24.      PROTECTION AGAINST LIENS................................................................................12

25.      FORCE MAJEURE...........................................................................................12

26.      NONWAIVER...............................................................................................12

27.      LANDLORD LIABILITY......................................................................................13

28.      HOLDING OVER; ABANDONMENT...............................................................................13

29.      NOTICES.................................................................................................13

30.      MISCELLANEOUS...........................................................................................13
        (a)     RULES AND REGULATIONS............................................................................13
        (b)     EVIDENCE OF AUTHORITY............................................................................13
        (c)     NATURE AND EXTENT OF AGREEMENT...................................................................14
        (d)     SEVERABILITY.....................................................................................14
        (e)     BINDING EFFECT...................................................................................14
        (f)     CAPTIONS AND HEADINGS............................................................................14
        (h)     LEASE REVIEW.....................................................................................14
        (i)     BROKERAGE........................................................................................14
        (j)     MEMORANDUM OF LEASE..............................................................................14
        (l)     SURVIVAL OF OBLIGATIONS..........................................................................14
        (m)     CONFIDENTIALITY..................................................................................15
        (n)     ATTORNEYS' FEES..................................................................................15
        (o)     TIME OF PERFORMANCE..............................................................................15
        (p)     REAL ESTATE INVESTMENT TRUST.....................................................................15

Exhibit A - Legal Description
Exhibit B - Building Plans and Designation of Premises (5 sections)

Exhibit C - Workletter
Exhibit D - Rules and Regulations
Exhibit E - Rent Schedule
Exhibit F - Renewal Terms
Exhibit F-1 - Arbitration of Renewal Term Rent
Exhibit G - Option to Purchase
Exhibit H - Expansion Option
Exhibit H-1 - Right of First Offer

                                                         ii
</TABLE>
<PAGE>

         THIS LEASE AGREEMENT (this "Lease") is made and entered into as of the
Lease Execution Date by and between

                           CRESCENT RESOURCES, LLC,
                           A Georgia limited liability company,

hereinafter called "Landlord"; and

                           Hot Topic, Inc,
                           a California corporation

hereinafter called "Tenant";

                              W I T N E S S E T H:
                              --------------------

         In consideration of the mutual covenants and agreements contained
herein, the parties agree for themselves, their successors, and assigns, as
follows:

(The provisions of the Basic Lease Information are hereby incorporated into and
made a part of this Lease, provided in the event of any inconsistency the terms
used in this Lease shall govern. Capitalized terms used in this Lease and not
otherwise defined shall have the meanings ascribed to them in the Basic Lease
Information (e.g., the headings of the Basic Lease Information).)

         1. DESCRIPTION OF PREMISES; PURPOSE. Landlord hereby leases to Tenant,
and Tenant hereby accepts and rents from Landlord, the Premises located in the
Building (as those terms are defined in the Basic Lease Information), together
with the exclusive right to use all parking areas, driveways, sidewalks and
other common facilities furnished by Landlord from time to time in the Building
or on the Land for the common use of tenants in the Building. Provided however,
in the event Tenant fails to exercise its Expansion Option and Landlord
constructs additional space on the Expansion Premises for an adjoining tenant,
Tenant's parking rights shall become exclusive only as to a minimum of 200
spaces adjacent to the Premises (although it is understood that Landlord may,
consistent with the foregoing, build over or move some parking spaces to
accommodate expansion of the Building contemplated hereby) and nonexclusive as
to remaining spaces. The Premises and Building shall be as described in the
documentation, collectively, attached as EXHIBIT B. Tenant shall use the
Premises with respect to its Tenant Operations only and for no other purpose.

         2. LEASE TERM. The term of this Lease (the "Lease Term") shall commence
on the Commencement Date and shall end at midnight on the Expiration Date. As
used herein, the term "Lease Year" shall mean each year of the Lease Term
commencing on the Commencement Date, or any anniversary thereof, and ending at
the expiration of twelve (12) months thereafter. In the event the Commencement
Date is any day other than the first day of a calendar month, there will be a
partial Lease Year at the end of the Lease Term (which partial Lease Year shall
consist of a partial calendar month).

<PAGE>

         3. CONSTRUCTION AND ACCEPTANCE OF PREMISES.

         (a) Landlord shall proceed with reasonable diligence to construct the
Building and improvements upon the Premises in compliance with EXHIBIT C
attached hereto, with such minor and reasonable variations as Landlord may deem
advisable, and shall tender the Premises to Tenant. The Premises shall be deemed
to be "Ready for Occupancy" when Landlord has substantially completed the work
as described in Exhibit C and consistent herewith, and has obtained and
delivered an appropriate Certificate of Occupancy. The Commencement date shall
be determined as set forth in Paragraph 3(c) below. After the Commencement Date
has been delayed for sixty (60) days beyond March 1, 2005 for reasons other than
Force Majeure Matters and Tenant Delay Factors (which shall mean delays caused
by Tenant and Tenant's agents, employees, contractors, subcontractors or
licensees, including, without limitation, change orders requested by Tenant
relative to the Description of Landlord's Work), the Annual Rental shall be
abated (i.e.. accrued as a credit against amounts later payable as Annual
Rental) at the rate of $3,200.00 for each day the Commencement Date is so
delayed beyond said sixty (60) day period. After the Commencement Date has been
delayed for one hundred eighty (180) days beyond March 1, 2005 for reasons other
than Force Majeure Matters and Tenant Delay Factors, or for two hundred seventy
(270) days for any reason other than Tenant Delay Factors, Tenant may, at its
option, terminate this Lease by written notice to Landlord delivered within
thirty (30) days following the expiration of such respective period, in which
event neither party shall have any further liabilities or obligations hereunder,
except Landlord shall repay to Tenant any prepaid rent or security deposit
previously given and all indemnification obligations herein shall survive such
termination. Time is of the essence relative to Tenant's right to terminate this
Lease pursuant to this PARAGRAPH 3(A). By accepting possession of the Premises,
Tenant shall be deemed to have accepted the same and to have acknowledged that
the same fully comply with Landlord's covenants and obligations hereunder;
subject to representations and warranties of Landlord herein and in exhibits
hereto and workletters executed in connection herewith.

                  (b) If any Tenant Work is specified in EXHIBIT C, Tenant
agrees to proceed with due diligence to perform the work as described in EXHIBIT
C, all of such work to be performed in a good and workmanlike manner, using new
materials, in accordance with EXHIBIT C, and to install Tenant's fixtures,
furniture and equipment in the Premises. Any Tenant Work or any other work in or
with respect to the Premises performed by Tenant in the future causing venting,
opening, sealing, waterproofing or any altering of the roof of the Building
shall be performed by Landlord's roofing contractor at Tenant's expense provided
the rates, quality and availability are reasonably acceptable to Tenant. Tenant
shall provide Landlord with a certificate from Landlord's roofing contractor
that all such work causing venting, opening, sealing, waterproofing or in any
way altering the roof of the Building has been performed properly. Tenant hereby
holds Landlord harmless from any damage to the Premises resulting, directly or
indirectly, from Tenant's venting, opening, sealing, waterproofing or in any
other way altering the roof of the Building unless such a certificate from
Landlord's roofing contractor was delivered (unless it is unreasonably withheld
by Landlord's contractor) to Landlord contemporaneously with the completion of
such work.

                  (c) In the event the Premises shall be Ready for Occupancy (as
defined in PARAGRAPH 3(A) herein) prior to the Commencement Date that is set
forth in the Basic Lease Information, the Commencement Date shall be the earlier
of (i) the date that is set forth as the Commencement Date in the Basic Lease
Information or (ii) the date that Tenant commences product distribution from the
Premises. In the event of a delay in the completion of Landlord's Work beyond
March 1, 2005, the term "Commencement Date" herein shall automatically be
modified to become the actual date the Premises shall become Ready for Occupancy
(following reasonable notice) and the Expiration Date shall automatically be
modified on a consistent basis (i.e., to afford the full Lease Term, as defined
in the Basic Lease Information). Provided, however, and notwithstanding the
foregoing terms and provisions to the contrary, to the extent the Premises are
not Ready for Occupancy on or before the Commencement Date set forth in the
Basic Lease Information as a result of one or more Tenant Delay Factors, the
Commencement Date and the Expiration Date that are set forth in the Basic Lease
Information (and Tenant's obligation to pay Annual Rent hereunder) are not to be
adjusted.

         (d) In the event Landlord fails to deliver Beneficial Occupancy by
October 4, 2004, except to the extent such failure is the result of Force
Majeure Matters and/or Tenant Delay Factors, the Annual Rental shall be abated
(i.e.. accrued as a credit against amounts later payable as Annual Rental) at
the rate of $3,200.00 for each day of delay in so delivering Beneficial
Occupancy.

         4. ANNUAL RENTAL. During the full Lease Term, Tenant shall pay to
Landlord, without notice, demand, reduction, setoff or any defense (except as
provided herein), a total annual rental (the "Annual Rental") consisting of the
sum total of the Minimum Rental and Tenant's Proportionate Share (as said terms
are defined herein). If the Commencement Date is a date other than the first day
of a calendar month and/or the Expiration Date is a date other than the last day
of a calendar month, the Annual Rental shall be prorated daily and paid in
advance on the Commencement Date and/or the first day of the calendar month in
which the Expiration Date occurs.

                  (a) MINIMUM RENTAL. Tenant shall pay annually a minimum rental
(the "Minimum Rental") as shown on Exhibit E payable in equal monthly
installments as set forth in Exhibit E each in advance on or before the first
day of each calendar month during the Lease Term.

                  (b) ANNUAL ADJUSTMENTS IN MINIMUM RENTAL. Minimum Rental
payable hereunder shall be adjusted pursuant to EXHIBIT E.

                  (c) TENANT'S PROPORTIONATE SHARE. "Tenant's Proportionate
Share" of the taxes, of the insurance premiums and of common area maintenance
costs (including any assessment by a property owner's association), as described
herein, shall be determined by multiplying each such amount by a fraction, which
fraction in each case is described below.

                           (1) TENANT'S PROPORTIONATE SHARE OF TAXES. Tenant
shall pay an amount equal to Tenant's Proportionate Share of any ad valorem
taxes (or any tax hereafter imposed in lieu thereof) payable for the Building
and Land relative to the Lease Term. Tenant's Proportionate Share of taxes shall
be paid as provided in PARAGRAPH 4(D) herein. Anything contained herein to the
contrary notwithstanding, any increase in ad valorem taxes on the Premises as a
result of alterations, additions or improvements made by, for or on account of
Tenant shall be reimbursed entirely by Tenant to Landlord (as additional rent
hereunder) within thirty (30) days after Tenant's receipt of written demand
therefor. The applicable fraction for such taxes shall be the total rentable
square feet of the Premises as to the total rentable square feet of the
Building.

                           (2) TENANT'S PROPORTIONATE SHARE OF INSURANCE
PREMIUMS. Tenant shall pay an amount equal to Tenant's Proportionate Share of
any amount of premiums charged for fire and extended coverage, together with all
endorsements thereto, carried by Landlord on the Building relative to the Lease
Term. Tenant's Proportionate Share of insurance premiums shall be paid as
provided in PARAGRAPH 4(D) herein. The applicable fraction in this case shall be
the total rentable square feet of the Premises as to the total rentable square
feet of the Building.

                                       3
<PAGE>

                           (3) TENANT'S PROPORTIONATE SHARE OF COMMON AREA
MAINTENANCE COSTS. Tenant shall pay an amount equal to Tenant's Proportionate
Share of the costs of maintaining the Building's common areas (as designated
from time to time by Landlord for the common use of tenants of the Building)
relative to the Lease Term. Common area maintenance costs shall include, but are
not limited to, the cost of grass mowing, shrub care and general landscaping;
the cost of repairing, replacing and maintaining parking areas, driveways,
sidewalks, exterior lighting, common plumbing, common advertising signs and
other facilities operated with respect to the Building; the cost of providing
security for the Building and the Land; the cost of providing fire alarm
monitoring for the Building; and property management fees and expenses (provided
the parties agree property management fees and expenses shall not be increased
more than four percent (4%) per calendar year). Tenant's Proportionate Share of
common area maintenance costs shall be paid as provided in PARAGRAPH 4(D)
herein. Landlord shall use good faith efforts to keep the operating and
maintenance costs in line with costs for other similarly situated first class
centers. Tenant, at its expense, shall provide its own garbage collection,
recycling and disposal provided however, Landlord shall provide sufficient power
hookups for installation and maintenance of one baler and trash compactor. For
purposes of this paragraph, the applicable fraction for the common area
maintenance costs attributable to the Building's common areas shall be the total
rentable square feet of the Premises as to the total rentable square feet of the
Building.

                  (d) PAYMENT OF TENANT'S PROPORTIONATE SHARE. The estimated
amounts of Tenant's Proportionate Share for taxes, insurance premiums and common
area maintenance costs for the partial Lease Year ending December 31 of the
calendar year in which the Commencement Date (i.e., the Commencement Date that
is set forth in the Basic Lease Information) falls shall be set forth in a
notice to be given by Landlord to Tenant prior to the Commencement Date. For
each succeeding calendar year during the Lease Term, Landlord shall submit a
good faith estimate of Tenant's Proportionate Share for taxes, insurance
premiums and common area maintenance costs on or before April 1 of each such
succeeding calendar year. If an estimate of Tenant's Proportionate Share of
expenses for any calendar year during the Lease Term has not been submitted on
or before the first day of any month in such calendar year, Tenant shall pay
Tenant's Proportionate Share for such month(s) at the estimated rate for the
previous calendar year, and such payment(s) shall be adjusted effective as of
January 1 of such calendar year at such time as the estimate for such calendar
year is submitted, at which time the deficiency or overage (as the case may be)
in the estimated payments for the preceding months in such calendar year also
shall be collected or credited (as the case may be). Landlord shall charge, and
Tenant shall pay, the estimated Tenant's Proportionate Share of expenses on a
monthly basis, payable in advance and subject to adjustment after the end of the
respective calendar year on the basis of the actual costs incurred for such
calendar year. Tenant's Proportionate Share of estimated taxes, insurance
premiums and common area maintenance costs shall be paid in a like manner, with
the monthly rental installments being adjusted accordingly. In the event such
costs actually decrease for any such calendar year, Landlord shall reimburse
Tenant for any overage paid and the monthly rental installments for the next
period shall be reduced accordingly (but in no event below the then-current
Minimum Rental). Upon the Expiration Date of this Lease, Landlord may elect to
either (i) require Tenant to pay any unpaid estimated Tenant's Proportionate
Share within thirty (30) days after the Expiration Date, which estimate shall be
made by Landlord based upon actual and estimated costs for such year, or (ii)
elect to withhold Tenant's Security Deposit until the exact amount of Tenant's
Proportionate Share shall have been determined and paid, after which Landlord
shall return any excess Security Deposit to Tenant. With respect to the taxes,
insurance premiums and common area maintenance costs referenced above, Landlord
shall maintain reasonable books and records providing documentation thereof.
Tenant, at Tenant's sole cost and expense, and after giving Landlord reasonable
advance notice may cause an examination to be made of such books and records
(but not more than once a year). If it discloses an error in calculation of the

                                       4
<PAGE>

billings to Tenant (in examination of which the parties shall with reasonable
good faith consider and agree upon), Tenant shall promptly pay any underpayment
and Landlord shall promptly pay any overpayment, whichever the case may be, and
if there has been an overpayment of more than 5%, Landlord shall reimburse
Tenant for the reasonable cost of such examination.

                  (e) LATE CHARGE. If Tenant should fail more than twice in any
calendar year to pay to Landlord when due any installment of Annual Rental or
other sum to be paid hereunder, Tenant shall pay Landlord within ten (10) days
on demand a late charge of four percent (4%) of the amount due. Failure to pay
such late charge within ten (10) days following demand therefore shall be an
Event of Default (as defined herein) hereunder. Provision for such late charge
shall be in addition to all other rights and remedies available to Landlord
hereunder or at law or in equity and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner; and such late charge
shall accrue automatically, regardless of whether Landlord shall have given
Tenant written notice of any such delay in payment.

         5. ALTERATIONS AND IMPROVEMENTS BY TENANT. Any (i) structural changes
or (ii) other material alterations, additions, or improvements made to the
Premises by Tenant to the extent exceeding $25,000 in a particular case, shall
be subject to the prior written consent of Landlord and shall be at the sole
cost and expense of Tenant. All such alterations, additions or improvements
shall be constructed in a good and workmanlike manner, using new materials, in
accordance with plans and specifications approved by Landlord and in compliance
with the term of PARAGRAPH 3(B) herein and all Applicable Laws. As used herein,
"Applicable Laws" shall mean all material laws, ordinances (including Fire and
Building Codes), regulations, orders, interpretations and zoning requirements of
any governmental authority, agency or other public or private regulatory
authority (including insurance underwriters or rating bureaus) which may be in
effect from time to time and relating to the Tenant Operations, the Premises or
Tenant's business conducted therein. Additionally, Tenant covenants and agrees
that no improvements, changes, alterations, additions, maintenance or repairs
shall be made by Tenant to the Premises which impair the structural soundness of
the Building, which result in an overload of the weight capacity of floors in
the Building, which result in an overload of capacity of electric lines serving
the Building, or which interfere with electric or electronic equipment in the
Building or on any adjacent or nearby property. Upon the expiration or earlier
termination of this Lease, other than with respect to the improvements made in
accordance with Exhibit C, or structural changes approved by Landlord in
accordance with the above provisions (for which Landlord and Tenant shall
reasonably determine at the time of approval the appropriate treatment upon
termination of the lease), all alterations, additions or improvements,
including, without limitation, all walls, railings, carpeting, floor and wall
coverings and other permanent real estate fixtures (excluding, however, Tenant's
trade fixtures and equipment, as described in PARAGRAPH 11 herein) made by, for,
or at the direction of Tenant, and upon the reasonable election of Landlord,
shall either: (i) become the property of Landlord and remain upon the Premises
or (ii) be removed from the Premises by Tenant, at Tenant's sole cost and
expense.

         6. USE OF PREMISES. Tenant shall use the Premises only for the Tenant
Operations and for no other purpose and shall comply with all Applicable Laws in
connection with the use of the Premises. Tenant shall be responsible for any and
all costs and expenses associated with Tenant's compliance with all Applicable
Laws, including the cost of altering the Tenant Improvements to comply with
Applicable Laws (including changes therein from time to time). Without limiting
the generality of the foregoing, Tenant shall be responsible, at Tenant's
expense, for all costs of complying with the requirements of the Americans With
Disabilities Act (as amended) (the "ADA"), including costs for alterations, (i)
relative to the Premises and, (ii) to the extent such compliance is required as
a result of the specific use made by Tenant of the Premises, relative to the
exterior and common areas and facilities of the Building. Landlord shall be

                                       5
<PAGE>

responsible for complying with the requirements of the ADA relative to the
exterior and common areas and facilities of the Building in all instances other
than where such compliance is required as a result of the specific use made of
space in the Building by any tenant in the Building. Additionally, Tenant
covenants and agrees that nothing shall be done or kept in the Premises which
result in an overload of the weight capacity of floors in the Building, which
result in an overload of capacity of electric lines serving the Building, or
which interfere with electric or electronic equipment in the Building or on any
adjacent or nearby property. Tenant shall not do any act or follow any practice
relating to the Premises which shall constitute a nuisance. If, within thirty
(30) days of demand therefor by Landlord, Tenant fails, at its expense, to make
any alterations required to be made by Tenant pursuant to this paragraph, then
Landlord shall have the right to make such alterations (including any entry
required in the Premises to make such alterations), and Tenant shall pay to
Landlord (as additional rent hereunder) all costs and expenses reasonably
incurred by Landlord relative to such alterations; and such additional rent
shall be paid by Tenant to Landlord within thirty (30) days after demand
therefor by Landlord. Additionally, Tenant shall save Landlord harmless from any
penalties, fines, costs, expenses or damages resulting from Tenant's failure to
comply with the terms and requirements of this paragraph.

         7. TAXES. Tenant shall pay in a timely manner and prior to delinquency
any taxes or assessments of any nature imposed or assessed upon its trade
fixtures, equipment, machinery, inventory, merchandise or other personal
property located on the Premises and owned by or in the custody of Tenant.
Landlord shall pay all ad valorem property taxes which are now or hereafter
assessed upon the Center, the Building and the Premises, except as otherwise
expressly provided in this Lease.

         8. FIRE AND EXTENDED COVERAGE INSURANCE. Landlord shall maintain and
pay for fire insurance, with extended coverage, covering the replacement value
of the Building exclusive of coinsurance. Provided, however, if Tenant uses the
Premises for any purpose or in any manner which causes an increase in Landlord's
insurance rates, Tenant shall pay such additional insurance premium (in addition
to all other payments due under this Lease) to Landlord as additional rent
within thirty (30) days after demand from Landlord. Tenant shall maintain and
pay for all fire and extended coverage insurance on its contents in the
Premises, including trade fixtures, equipment, machinery, merchandise or other
personal property belonging to or in the custody of Tenant.

         9. LANDLORD'S LIMITED COVENANT TO REPAIR AND REPLACE.

                  (a) During the Lease Term, Landlord shall be responsible for
repairs or replacements to the roof, exterior walls and structural members,
including foundation and subflooring of the Premises (except office fronts,
plate glass windows, doors, door closure devices, window and door frames,
nailing, locks and hardware and painting or other treatment of interior walls),
and underground utility lines that are not the responsibility of the respective
utility provider. Landlord's efforts to repair and replace pursuant to this
paragraph shall be made within a reasonable time after written notice from
Tenant of the need for such repair or replacement to be made (exclusive of
repairs and replacements necessitated by an "Event of Tenant Misconduct," as
defined in PARAGRAPH 16(A) herein). If Landlord cannot, using due diligence,
complete its repairs and replacements within sixty (60) days after written
notice from Tenant and if the resulting condition renders a material portion of
the Premises untenantable for the Tenant Operations, then, following the
expiration of such sixty (60) day period and continuing until such time as the
repair or replacement is completed (or is completed sufficiently so as to not
render a material portion of the Premises untenantable for the Tenant
Operations), Tenant may terminate this Lease effective upon thirty (30) days
prior written notice, without prejudice to Landlord's rights to receive payment
from Tenant for uninsured damages caused directly or indirectly by Tenant as

                                       6
<PAGE>

stated below. If the cause of such repairs or replacements is the result of an
Event of Tenant Misconduct, then Tenant shall not be entitled to terminate this
Lease pursuant to this paragraph, and Tenant shall pay Landlord the full amount
of such cost, damage, and expense (except as otherwise provided in PARAGRAPH 14
herein). Furthermore, in the event Landlord diligently pursues the completion of
the required repairs and replacements during the sixty (60) day period provided
above but is unable to complete such repairs and replacements prior to the
expiration of such period, such sixty (60) day period shall be extended for all
purposes under this paragraph (including Tenant's termination right) for such
additional, reasonable period of time (not to exceed thirty (30) days) as is
necessary to allow Landlord to complete such repair or replacement (provided
Landlord must continue to pursue the completion of such repair or replacement in
a diligent manner). Landlord's duty to repair or replace as prescribed in this
paragraph shall be Tenant's sole remedy and shall be in lieu of all other
warranties or guaranties of Landlord, express or implied, except as set forth
herein or any Exhibit hereto or workletter executed in connection herewith.
Furthermore, the terms of this PARAGRAPH A shall have no application to casualty
events and exercises of the power of eminent domain that affect the Building or
the Land, which shall be governed by the terms and provisions in PARAGRAPH 13
herein and PARAGRAPH 18 herein, respectively.

                  (b) In addition to and notwithstanding the provisions above,
if any repairs required to be made by Landlord hereunder are not made within
sixty (60) days after written notice delivered to Landlord by Tenant (provided
no advance written notice shall be required in cases of emergency), Tenant may,
at its option, make necessary repairs described above, and Landlord shall
reimburse reasonable expenses of Tenant in connection therewith. If Landlord
diligently pursues the completion of required repairs or replacements during the
sixty (60) day period provided above but is unable to complete such repairs and
replacements prior to the end of such period, such period shall be extended for
all purposes of this paragraph (including applicable termination rights) for
such additional, reasonable period of time (not to exceed 30 days) as is
necessary to allow Landlord to complete such repair or replacement (provided
Landlord must continue to pursue the completion of such repair or replacement in
a diligent manner).

         10. TENANT'S COVENANT TO REPAIR.

                  (a) Tenant shall be responsible for the repair, replacement
and maintenance in good order and condition of all parts and components of the
Premises, other than those specified for maintenance by Landlord herein,
including, without limitation, the plumbing, wiring, electrical system, heating
system, air conditioning system, glass and plate glass, equipment and machinery
constituting fixtures located within the Premises and shall keep all plumbing
units, pipes and connections free from obstruction and protected against ice and
freezing. At the end of the Lease Term, Tenant shall return the Premises to
Landlord in as good of a condition as existed at the time all of the Landlord's
Work and all of the Tenant's Work (if any) was completed pursuant to PARAGRAPH 3
herein, excepting only normal wear and tear, acts of God and repairs required to
be made by Landlord hereunder. Tenant's duty to maintain the heating and air
conditioning system serving the Premises shall specifically include the duty to
inspect the system, to replace filters as recommended and to perform other
recommended periodic servicing. During the entire Lease Term, Tenant shall
obtain and maintain a service contract with an independent maintenance
contractor reasonably satisfactory to Landlord to provide such service for the
heating and air conditioning system. The service contract must include all
services suggested by the applicable equipment manufacturer(s) in the operation
and maintenance manual(s) and must become effective on the Commencement Date.

                  (b) In addition to and notwithstanding the provisions above,
if any repairs required to be made by Tenant hereunder are not made within sixty

                                       7
<PAGE>

(60) days after written notice delivered to Tenant by Landlord (provided no
advance written notice shall be required in cases of emergency), Landlord may,
at its option make necessary repairs described above, and Tenant shall reimburse
reasonable expenses of Landlord in connection therewith. If Tenant diligently
pursues the completion of required repairs or replacements during the sixty (60)
day period provided above but is unable to complete such repairs and
replacements prior to the end of such period, such period shall be extended for
all purposes of this paragraph (including applicable termination rights) for
such additional, reasonable period of time (not to exceed 30 days) as is
necessary to allow Tenant to complete such repair or replacement in a diligent
manner).

         11. TRADE FIXTURES AND EQUIPMENT; NON-LIABILITY FOR CERTAIN DAMAGES.

                  (a) Except as otherwise provided herein, any trade fixtures
and equipment installed in the Premises at Tenant's expense (including using any
allocated tenant improvement allowance) shall remain Tenant's personal property,
and Tenant shall have the right at any time during the Lease Term to remove such
fixtures and equipment provided Tenant makes reasonable repairs to and/or
restoration of the Premises, ordinary wear and tear and acts of God alone
excepted. Any trade fixtures and equipment not removed by Tenant at the
expiration or an earlier termination of this Lease shall, at Landlord's
reasonable option, either: (i) become the property of Landlord or (ii) be
removed by Landlord, at Tenant's expense.

                  (b) Except as provided herein, neither party shall be liable
to the other for any injury to person or damage to property caused by the
Premises becoming out of repair or by defect in or failure of equipment, pipes
or wiring, or broken glass, or by the backing up of drains, or by gas, water,
steam, electricity or oil leaking, escaping or flowing into the Premises, nor
shall either party be liable to the other for any loss or damage that may be
occasioned by or through the acts or omissions of other tenants of the Center or
of any other persons or entities whomsoever, excepting only duly authorized
employees and agents of the party. Landlord shall not be liable to Tenant for
any compensation, damages or reduction of rent by reason of inconvenience or
annoyance or loss of business arising from power losses or shortages or from the
necessity of Landlord's entering the Premises for any of the purposes authorized
in this Lease or for repairing the Premises provided Landlord's activities are
conducted in a reasonable manner so as to minimize any disruption to Tenant's
occupancy.

         12. UTILITIES. Tenant shall pay in a timely manner and prior to
delinquency for all utilities or services related to its use of the Premises,
including electricity, gas, heat, sewer, water, telephone and janitorial
services. Landlord shall not be responsible for the stoppage or interruption of
utilities services, other than as required by its limited covenant to repair and
replace set forth herein.

         13. DAMAGE OR DESTRUCTION OF PREMISES. If the Building is so damaged by
fire or other casualty that substantial alteration or reconstruction to greater
than 50% of the Building shall be required (whether or not the Premises shall
have been damaged by such casualty) or in the event any mortgagee of Landlord
should require that all or any substantial portion of the insurance proceeds
payable as a result of a casualty amounting to greater than 50% of the fair
market value of the Building be applied to the payment of the underlying
mortgage debt, Landlord or Tenant may, at its reasonable option, terminate this
Lease by notifying the other in writing of such termination within sixty (60)
days after the date the casualty event occurs. If the Premises are damaged by
fire or other casualty but are not rendered untenantable for Tenant's business,
either in whole or in part, and if either party does not terminate this Lease
pursuant to the immediately preceding sentence, Landlord shall cause such damage
to be repaired without unreasonable delay and the Annual Rental shall not be
abated. If by reason of such casualty, the Premises are rendered untenantable

                                       8
<PAGE>

for Tenant's business, either in whole or in part, and either party does not
terminate this Lease as provided in the first sentence above in this PARAGRAPH
13, Landlord shall cause the damage to be repaired or replaced without
unreasonable delay, and in the interim, the Annual Rental shall be equitably
reduced as appropriate. Any such abatement of rent shall not, however, create an
extension of the Lease Term. Provided, however, if by reason of such casualty,
the Premises are rendered substantially untenantable, and Landlord fails to give
Tenant reasonable assurances that the amount of time required to repair the
damage, using due diligence, shall not exceed two hundred ten (210) days from
the date the casualty event occurs, then either party shall have the right to
terminate this Lease by giving written notice of termination within sixty (60)
days after the date the casualty event occurs. Notwithstanding the other
provisions of this PARAGRAPH 13, in the event there is a casualty loss to the
Premises to the extent of fifty percent (50%) or more of the replacement value
during the last Lease Year of the Lease Term, including any extended Lease Term
that has then been exercised by Tenant, either party may, at its option,
terminate this Lease by giving written notice within sixty (60) days after the
date the casualty event occurs; and, in such case, rent shall abate as of the
date of the occurrence of such casualty. Except as provided herein, there shall
be no obligation of Landlord to rebuild or repair in case of fire or other
casualty, and no termination under this PARAGRAPH 13 shall affect any rights of
Landlord or Tenant hereunder because of prior defaults of the other party.
Tenant shall give Landlord immediate notice of any fire or other casualty in the
Premises.

         14. MUTUAL WAIVER; WAIVER OF SUBROGATION. The parties mutually release
and waive unto the other, all rights to claim damages, costs or expenses for any
injury to persons (including death) or property caused by a casualty of any type
whatsoever in, on or about the Premises, the Building or the Center to the
extent of such damages, costs or expenses has been paid to such damaged party
under the terms of any policy of insurance. All insurance policies carried with
respect to this Lease, if permitted under applicable law, shall contain a
provision whereby the insurer waives prior to loss all rights of subrogation
against either Landlord or Tenant (as the case may be).

         15. SIGNS AND ADVERTISING. In order to provide architectural control
for the Center, Tenant may install, at Tenant's expense, only such exterior
signs, marquees, billboards, outside lighting fixtures and/or other decorations
on the Premises as shall have been approved in advance and in writing by
Landlord which approval shall not be unreasonably withheld. The care and
maintenance of all such approved signs shall be the sole responsibility of
Tenant. Landlord shall have the right to remove any such sign or other
decoration and fully restore the exterior of the Premises at the cost and
expense of Tenant if any such exterior work is done without Landlord's prior
written approval. Upon the expiration or earlier termination of this Lease,
Tenant shall remove any such sign or decoration and fully restore the exterior
of the Premises, at Tenant's sole cost and expense

         16. INDEMNIFICATION, LIABILITY INSURANCE AND HAZARDOUS SUBSTANCES.

                  (a) INDEMNIFICATION BY THE PARTIES. Each party shall indemnify
and save the other harmless against any and all claims, suits, demands, actions,
fines, damages and liabilities and all costs and expenses thereof (including,
without limitation, reasonable attorneys' fees) arising out of injury to persons
(including death) or property occurring in, on or about, or arising out of, the
Premises, the Building or other areas in the Center if caused by or occasioned
wholly or in part by any willful or negligent act or omission of the such party,
its agents, subtenants, licensees, invitees, contractors, subcontractors or
employees (collectively, an "Event of Tenant Misconduct as to Tenant"). Each
party shall give the other immediate written notice of any such happening
causing injury to persons or property which would be the subject of their
indemnification.

                                       9
<PAGE>

                  (b) Intentionally Deleted.

                  (c) LIABILITY INSURANCE. At all times during the Lease Term,
Tenant shall, at its own expense, keep in force comprehensive public liability
insurance in such amounts and with such companies as shall, from time to time,
be reasonably acceptable to Landlord (and to any mortgagee having a mortgage
interest in the Premises) and naming Landlord as an additional insured. The
amounts of such coverage, until changed at Landlord's reasonable request, shall
be $1,000,000.00 with respect to bodily injury or death of one person as a
result of any one accident and $500,000.00 with respect to damage to property.
Tenant shall first furnish to Landlord a copy of the required policy or
certificate of insurance, evidencing the required coverage and naming Landlord
as an additional insured under such policy, prior to the Commencement Date and
thereafter prior to each policy renewal date. Such policy also shall include
contractual liability coverage, to the extent insurable, for the performance by
Tenant of the indemnity obligations of Tenant under this Lease and such policy
shall contain a provision whereby the insurer is not allowed to cancel, fail to
renew or materially change the coverage without first giving thirty (30) days
written notice to Landlord.

                  (d) PRESENCE AND USE OF HAZARDOUS SUBSTANCES. Tenant shall
not, without Landlord's prior written consent, keep on or around the Premises,
the common areas or facilities in or relating to the Building, the Land, or the
Center, for use, disposal, treatment, generation, storage or sale, any
substances designated as, or containing components designated as, hazardous,
dangerous, toxic or harmful, and/or any substance that is subject to regulation
by any then-current federal, state or local law, statute or ordinance and the
rules and regulations implementing them, including, but not limited to, the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 ET SEQ.); the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
ss. 9601 ET SEQ.); the Clean Water Act (33 U.S.C. ss. 1251 ET SEQ.); the Clean
Air Act (42 U.S.C. ss. 7401 ET SEQ.); and the Toxic Substances Control Act (15
U.S.C. ss. 2601 ET SEQ.) (such substances being herein collectively referred to
as "Hazardous Substances"). With respect to any Hazardous Substance brought to
or kept at the Premises by Tenant, Tenant shall:

                           (1) Comply promptly, timely and completely with all
governmental requirements for reporting, keeping and submitting manifests and
obtaining and keeping current identification numbers;

                           (2) Submit to Landlord true and correct copies of all
reports, manifests and identification numbers at the same time as they are
required to be and/or are submitted to the appropriate governmental authorities;

                           (3) Within five (5) days of Landlord's request from
time to time, submit written reports to Landlord regarding Tenant's use,
storage, treatment, transportation, generation, disposal or sale of Hazardous
Substances and provide evidence satisfactory to Landlord of Tenant's compliance
with the applicable governmental laws, statutes, ordinances, rules, regulations
and requirements;

                           (4) Allow Landlord or Landlord's agent or
representative to enter the Premises at all times to check Tenant's compliance
with all applicable governmental laws, statutes, ordinances, rules, regulations
and requirements regarding Hazardous Substances;

                           (5) Comply with minimum levels, standards or other
performance standards or requirements which may be set forth or established for
certain Hazardous Substances; and if minimum standards or levels are applicable

                                       10
<PAGE>

to Hazardous Substances present on the Premises, such standards or levels shall
be established and documented by an on-site inspection by the appropriate
governmental authorities and shall be set forth in an addendum to this Lease;

                           (6) Comply with all applicable governmental laws,
statutes, ordinances, rules, regulations and requirements regarding the proper
and lawful use, sale, transportation, generation, treatment and disposal of such
Hazardous Substances; and

                           (7) Pay to Landlord upon demand as additional rent
any and all reasonable costs incurred by Landlord and associated with Landlord's
inspection of the Premises and Landlord's monitoring of Tenant's compliance with
this PARAGRAPH 16(D), including Landlord's attorneys' fees and costs.

The terms and provisions in this PARAGRAPH 16(D) shall survive the expiration of
the Lease Term or the earlier termination of this Lease.

                  (e) UNAUTHORIZED RELEASES OF HAZARDOUS SUBSTANCES; CLEANUP
COSTS; DEFAULT AND INDEMNIFICATION.

                           (1) Tenant shall give prompt written notice to
Landlord of any release, spill, discharge or threatened discharge of any
Hazardous Substance on or at the Premises, the common areas or facilities in or
relating to the Building, the Land, the Center, or the surrounding environment,
which release, spill, discharge or threatened discharge was not made pursuant to
or in conformance with the terms of any permit or license issued to Tenant by
the appropriate governmental authority. Such notice shall include a description
of measures taken or proposed to be taken by Tenant to contain and/or remedy the
release, spill, discharge or threatened discharge and any resultant damage to
property, persons, the Premises, the common areas or facilities in or relating
to the Building, the Land, the Center, and/or the surrounding environment.
Tenant also shall give immediate written notice to Landlord of any private or
governmental investigation relating to Hazardous Substances on or about the
Premises.

                           (2) At Tenant's own expense, Tenant shall promptly
take all steps necessary to contain and remedy any release, spill, discharge or
threatened discharge of Hazardous Substances on or at the Premises, the common
areas or facilities in or relating to the Building, the Land, the Center, or the
surrounding environment, and all resultant damage or injury to property,
persons, and the environment resulting from Tenant's activities. Landlord shall
have the right, but not the obligation, to participate in and approve any
environmental assessment or remedial cleanup plan for the Premises, the common
areas or facilities in or relating to the Building, the Land and the Center.
Tenant, its employees, agents and contractors shall fully cooperate with any and
all federal, state and local governmental officials having jurisdiction over the
Premises in resolving or addressing any situation involving the presence of
Hazardous Substances on or about the Premises.

                           (3) Tenant shall be fully and completely liable to
Landlord for any and all cleanup costs and any and all other charges, fees, and
penalties (civil and criminal) imposed by any governmental authority with
respect to Tenant's use, generation, handling, storage, containment, disposal,
transportation, and/or sale of Hazardous Substances.

                                       11
<PAGE>

                           (4) Tenant shall indemnify, defend and save Landlord
harmless from any and all of the costs, fees, penalties and charges assessed
against or imposed upon Landlord (as well as Landlord's attorneys' fees and
costs) as a result of Tenant's use, generation, handling, storage, containment,
disposal, transportation, and/or sale of Hazardous Substances.

                           (5) Upon Tenant's default under PARAGRAPH 16(D)
herein or this PARAGRAPH 16(E) and in addition to the rights and remedies set
forth elsewhere in this Lease, Landlord shall be entitled to the following
rights and remedies:

                                    (A) At Landlord's option, to terminate this
Lease immediately; and

                                    (B) To recover any and all damages
associated with the default, including, but not limited to, cleanup costs and
charges, civil and criminal penalties and fees, all liability to third parties,
and Landlord's attorneys' fees and costs.

and

                                    (C) With respect to the Premises and Center,
Landlord warrants and represents to Tenant that Landlord has not disposed of nor
placed thereon any Hazardous Substances. Further, Landlord has no knowledge of
the presence of any Hazardous Substances on the Premises or Center. Landlord's
knowledge is limited to the knowledge of F. David McRae. Landlord shall
indemnify, defend and save Tenant harmless from any and all of the costs, fees,
penalties and charges assessed against or imposed upon Tenant (as well as
Tenant's attorneys' fees and costs) in the event of a breach of the
representation and warranties of this paragraph.

The terms and provisions in this PARAGRAPH 16(E) shall survive the expiration of
the Lease Term or the earlier termination of this Lease.

         17. LANDLORD'S RIGHT OF ENTRY. Landlord and those persons authorized by
Landlord shall have the right to enter the Premises at all reasonable times and
upon reasonable notice for the purposes of making repairs, making connections,
installing utilities, providing services to the Premises or for any other
tenant, making inspections or showing the Premises to prospective purchasers
and/or lenders during the hours of 9:00 am and 5:00 pm. Further, during the last
six (6) months of the Lease Term, including any extended Lease Term that has
then been exercised by Tenant, Landlord and those persons authorized by it shall
have the right, at reasonable times and upon reasonable notice to Tenant, to
show the Premises to prospective tenants during the hours of 9:00 am and 5:00
pm. Notwithstanding any term or provision in this Lease, including this
PARAGRAPH 17, to the contrary, Landlord shall be entitled to enter the Premises
at all times and without any advance notice to Tenant if Landlord reasonably
determines or believes that an emergency circumstance or situation exists that
requires such entry.

         18. EMINENT DOMAIN. If any substantial portion of the Premises is to be
taken under the power of eminent domain (including any conveyance made in lieu
thereof) or if any such taking shall materially impair the normal operation of
Tenant's business, then either party shall have the right to terminate this
Lease by giving written notice of such termination within thirty (30) days after
such taking or the notice thereof. If neither party elects to terminate this
Lease pursuant to the immediately preceding sentence, Landlord shall repair and
restore the Premises to a tenantable condition and the Annual Rental shall be
equitably reduced as to the portion of the Premises that is taken. All

                                       12
<PAGE>

compensation awarded for any taking (or the proceeds of a private sale in lieu
thereof) shall be the property of Landlord, whether such award is for
compensation for damages to Landlord's or Tenant's interest in the Premises, and
Tenant hereby assigns all of its interest in any such award to Landlord;
provided, however, Landlord shall not have any interest in any separate award
made to Tenant for loss of business, moving expenses or the taking of Tenant's
trade fixtures or equipment if a separate award for such items is made to
Tenant.

         19. EVENTS OF DEFAULT AND LANDLORD'S REMEDIES.

                  (a) Upon the occurrence of any one or more of the following
events (each, an "Event of Default"; collectively, "Events of Default"),
Landlord shall be entitled to exercise any rights or remedies available in this
Lease, at law or in equity. Events of Default shall be:

                           (1) Tenant's failure to pay when due any rental or
other sum of money payable hereunder if not remedied within ten (10) days after
written notice thereof is given to Tenant (provided, however, and
notwithstanding the foregoing to the contrary, Tenant shall not be entitled to
such notice and cure period more than two (2) times during any given Lease
Year).

                           (2) Failure by Tenant to perform any of the other
material terms, covenants or conditions contained in this Lease if such failure
is not remedied within thirty (30) days after written notice thereof is given to
Tenant or such extended time during which Tenant is diligently pursuing curing
such failure; and

                           (3) Tenant, or any guarantor of Tenant's obligations
under this Lease (if any), becomes bankrupt or insolvent, files any debtor
proceedings, files pursuant to any statute a petition in bankruptcy or
insolvency or for reorganization, or files a petition for the appointment of a
receiver or trustee for all or substantially all of such party's assets and such
petition or appointment is not set aside within sixty (60) days from the date of
such petition or appointment or if such party makes an assignment for the
benefit of creditors or petitions for or enters into such an arrangement.

                  (b) In addition to its other remedies at law or in equity,
Landlord, upon an Event of Default by Tenant, shall have the immediate right to
re-enter and remove all persons and property from the Premises and dispose of
such property as it deems fit, all without resort to legal process and without
being guilty of trespassing or being liable for any damages caused thereby. If
Landlord re-enters the Premises, either with or without legal process, it may
either terminate this Lease or, from time to time without terminating this
Lease, make such alterations and repairs as may be necessary or appropriate to
relet the Premises, and relet the Premises upon such terms and conditions as
Landlord deems advisable, without any responsibility of Landlord whatsoever to
account to Tenant for any surplus rents collected. Tenant also shall be liable
for and shall pay to Landlord, in addition to any other sum provided to be paid
herein, brokers' fees incurred by Landlord in connection with reletting the
whole or any part of the Premises; the costs of removing from the Premises and
storing Tenant's or other occupants' property which shall not be treated
unreasonably; the reasonable costs of repairing, altering, remodeling or
otherwise putting the Premises into condition acceptable to a new tenant or
tenants, and all reasonable expenses incurred by Landlord in enforcing or
defending Landlord's rights and/or remedies under this Lease, including
reasonable attorneys' fees. No retaking of possession of the Premises by
Landlord shall be deemed as an election to terminate this Lease unless a written
notice of such intention is given by Landlord to Tenant at the time of re-entry;
but, notwithstanding any such re-entry or reletting without termination,
Landlord may at any time thereafter elect to terminate this Lease for such

                                       13
<PAGE>

previous default. In the event of an elected termination of this Lease by
Landlord, whether before or after re-entry, Landlord may recover from Tenant
damages, including the costs of recovering the Premises, and Tenant shall remain
liable to Landlord for the total Annual Rental that would have been payable by
Tenant hereunder for the remainder of the Lease Term, less the rentals actually
received by Landlord from any reletting. If any rent owing under this Lease is
collected by or through an attorney, Tenant agrees to pay Landlord's reasonable
attorneys' fees to the extent allowed by applicable law.

                  (c) Upon the occurrence of any one or more failures to perform
material obligations hereunder by Landlord, Tenant shall be entitled to exercise
any rights or remedies available at law or in equity, except as expressly
limited by the terms of this Lease. In addition to such rights, Tenant, upon
failure by Landlord to perform any of its covenants hereunder to act with
respect to the Premises, if such failure is not remedied within the longer of
(i) thirty (30) days or (ii) such other period permitted by the terms hereof
(including such extended time during which Landlord is permitted hereby to
diligently pursue curing such failure), after written notice thereof is given to
Landlord, shall have the immediate right to perform such covenants. Landlord
shall be liable for and shall pay to Tenant all reasonable expenses incurred by
Tenant in connection herewith.

         20. SUBORDINATION. Subject to Tenant's nondisturbance rights set forth
below, this Lease is subject and subordinate to any and all mortgages or deeds
of trust now or hereafter placed upon the property of which the Premises are a
part, and this clause shall be self-operative, without any further instrument
necessary to effect such subordination, provided any such lender may, at its
option and without seeking or obtaining Tenant's consent, subordinate the lien
of its mortgage or deed of trust to this Lease. At the request from time to time
of Landlord or any lender that holds a mortgage or deed of trust on the property
of which the Premises are a part, Tenant shall promptly execute and deliver to
Landlord any such instrument or instruments as Landlord or such lender may
reasonably request evidencing the subordination of this Lease to such mortgage
or deed of trust. Provided, however, as a condition to Tenant's obligation to
execute and deliver any such instrument(s), the applicable lender must agree
that Tenant's rights to quiet enjoyment and possession of the Premises under
this Lease shall not be divested by foreclosure or other default proceedings
under the applicable mortgage or deed of trust so long as Tenant shall not be in
default under this Lease. Tenant shall continue its obligations under this Lease
in full force and effect, notwithstanding any foreclosure or default proceedings
by any such lender. In the event that a mortgage is placed on the Building or
any part thereof, the Landlord will use good faith best efforts to provide
Tenant a mutually agreed upon subordination and non-disturbance agreement
executed by the mortgagor.

         21. ASSIGNING AND SUBLETTING. Tenant shall not assign, sublet,
mortgage, pledge or encumber this Lease, the Premises, or any interest in the
whole or in any portion thereof, without the prior written consent of Landlord.
Landlord agrees not to withhold its consent (i) for assignment to a parent,
affiliate or subsidiary of Tenant or to an entity acquiring all or substantially
all of the assets of Tenant (including by way of a merger or reverse merger), or
(ii) for other assignment or subletting provided Landlord has determined in its
reasonable discretion that the proposed assignee or subtenant is not materially
incompatible with Landlord's rules and regulations applicable to the Center as
in effect from time to time. If Tenant makes any such assignment, mortgage,
sublease or pledge (whether with or without Landlord's written consent), except
as permitted by Landlord and except for a complete assignment to an entity
acquiring all or substantially all of the assets of Tenant (including by way of
a merger or reverse merger), Tenant named herein and any guarantor of Tenant's
obligations under this Lease will nonetheless remain primarily liable for the
performance and observation of all of the terms of this Lease required to be
observed or performed by Tenant hereunder. One half of any rental or any fee or
charge received by Tenant in connection with any such assignment or sublease

                                       14
<PAGE>

which is in excess of the Annual Rental payable to Landlord hereunder shall be
paid immediately by Tenant to Landlord as additional rental under this Lease.
Consent by Landlord to one or more assignments or sublettings shall not operate
as a waiver of Landlord's rights as to any subsequent assignments or
sublettings.

         22. COVENANT OF QUIET ENJOYMENT. Landlord represents that it has full
right and authority to lease the Premises and that Tenant shall peacefully and
quietly hold and enjoy the Premises for the full Lease Term so long as Tenant
does not default in the performance of any of the terms hereof.

         23. ESTOPPEL CERTIFICATES. Within fifteen (15) days after any request
by Landlord, but not more than once per calendar year, Tenant shall deliver a
written estoppel certificate addressed to Landlord and/or any other party
designated by Landlord, certifying any facts that are then true with respect to
this Lease, including, without limitation, that this Lease is in full force and
effect, that no default known to Tenant exists on the part of Landlord or Tenant
hereunder, that Tenant is in possession of the Premises, that Tenant has
commenced the payment of rent hereunder, and that there are no defenses or
offsets claimed by Tenant with respect to payment of rentals under this Lease.

         24. PROTECTION AGAINST LIENS. Tenant shall do all things necessary to
prevent the filing of any mechanic's, materialmen's or other types of liens
whatsoever, against all or any part of the Premises, the Building, the Land or
the Center by reason of any claims made by, against, through or under Tenant. If
any such lien is filed against the Premises, the Building, the Land or the
Center (or any portion thereof), Tenant shall either cause the same to be
discharged of record within twenty (20) days after filing or, if Tenant, in its
discretion and in good faith, determines that such lien should be contested,
Tenant shall furnish such security as may be necessary to prevent any
foreclosure proceedings against the Premises, the Building, the Land or the
Center (or any portion thereof) during the pendency of such contest. If Tenant
shall fail to discharge such lien within said time period or fail to furnish
such security, then Landlord may, at its election and in addition to any other
right or remedy available to it, discharge the lien by paying the amount claimed
to be due or by procuring the discharge by giving security or in such other
manner as may be allowed by law. If Landlord acts to discharge or secure any
such lien as permitted herein, then Tenant shall promptly (pursuant to the terms
hereof) reimburse Landlord (as additional rent) for all sums paid and all costs
and expenses (including reasonable attorneys' fees) incurred by Landlord
relative to such lien, together with interest on the total expenses and costs at
the maximum lawful rate.

         25. FORCE MAJEURE. Following the Commencement Date, whenever a period
of time is herein prescribed for the taking of any action by Landlord, Landlord
shall not be liable or responsible for, and there shall be excluded from the
computation of such period of time, any delays due to any condition, matter or
circumstance beyond the reasonable control of Landlord (collectively, "Force
Majeure Matters"; each, a "Force Majeure Matter"), resulting from the following:
strikes; lockouts; acts of God; war or enemy action or invasion; civil
commotion; insurrection; riot; mob violence; malicious mischief or sabotage;
fire or any other casualty; adverse weather conditions or unusual inclement
weather; or condemnation or any law subsequently enacted. Prior to the
Commencement Date, in the event a Force Majeure Matter affects Landlord's
construction and delivery obligation(s) relative to the Premises under this
Lease, the period of time during which Landlord may complete such construction
and delivery obligation(s) shall be extended by the same number of days as the
number of days of delay caused by such Force Majeure Matter on the critical path
of completing such construction and delivery obligation(s).

         26. NONWAIVER. No course of dealing between Landlord and Tenant and no
delay or omission of Landlord in exercising any right arising from Tenant's
default shall impair such right or be construed to be a waiver of a default.

                                       15
<PAGE>

         27. LANDLORD LIABILITY. All obligations of Landlord hereunder will be
construed as covenants, not conditions, and all such obligations will be binding
upon Landlord only during the period of its ownership and possession of the
Building and not thereafter. The term "Landlord," under this Lease, shall mean
only the owner, for the time being, of the Building. If Landlord shall sell,
assign or transfer all or any part of its interest in the Premises or in this
Lease to a successor in interest which expressly assumes the obligations of
Landlord hereunder, then the selling, assigning or transferring Landlord shall
thereupon be released and discharged from all covenants and obligations
hereunder, and Tenant shall look solely to such successor in interest for the
performance of all of Landlord's obligations hereunder. Tenant's obligations
under this Lease shall in no manner be affected by Landlord's assignment or
transfer hereunder, and Tenant shall thereafter attorn and look solely to such
successor in interest as the landlord hereunder. Notwithstanding any other
provision hereof, Landlord's directors, officers and employees shall not have
any personal liability hereunder. In the event of any breach or default by
Landlord in any term or provision of this Lease, Tenant agrees to look solely to
Landlord's interest in the Land and the Building; however in no extent shall any
deficiency judgment or any money judgment of any kind be sought or obtained
against Landlord; notwithstanding the foregoing, however, Tenant shall not be
prohibited from seeking and obtaining equitable relief such as specific
performance where appropriate.

         28. HOLDING OVER; ABANDONMENT. If Tenant remains in possession of the
Premises or any part thereof after the expiration of the Lease Term, whether
with or without Landlord's acquiescence, Tenant shall be deemed only a tenant at
will and there shall be no renewal of this Lease without a written agreement
signed by both parties specifying such renewal; in addition, the monthly Minimum
Rental required to be paid under this Lease relative to any holdover period
shall automatically become one hundred fifty percent (150%) of the monthly
Minimum Rental payable immediately prior to the expiration of the Lease Term.
Tenant also shall be liable for any and all damages, direct and consequential,
suffered by Landlord as a result of any holdover without Landlord's unequivocal
written acquiescence. If during the Lease Term Tenant shall vacate or abandon
the Premises for greater than twelve (12) consecutive months, Landlord may, at
its option, so long as Tenant has not reinhabited same, terminate this Lease by
written notice to Tenant in which event neither party shall have any further
liabilities or obligations hereunder, except Landlord shall repay to Tenant any
prepaid rent or security deposit previously given and all indemnification
obligations herein shall survive such termination.

         29. NOTICES. Any notice allowed or required by this Lease shall be
deemed to have been sufficiently served if the same shall be in writing and
placed in the United States Mail, via certified mail or registered mail, return
receipt requested, with proper postage prepaid and addressed or reputable
national overnight delivery service:

                  AS TO LANDLORD:            To Landlord's address set forth
                                             in the Basic Lease Information.

                  AS TO TENANT:              to Tenant's address set forth
                                             in the Basic Lease Information.

         The addresses of Landlord and Tenant to which notices shall be directed
may be changed or added from time to time by either party giving notice to the
other in the prescribed manner.

                                       16
<PAGE>

         30. MISCELLANEOUS.

                  (a) RULES AND REGULATIONS. Attached hereto as EXHIBIT D are
the rules and regulations currently in effect with respect to the Building.
Landlord shall have the right from time to time to reasonably amend these rules
and regulations for Tenant's use of the Premises, the Building and the Land.
Tenant shall abide by and actively enforce such rules and regulations,
including, without limitation, rules and regulations governing parking of
vehicles on designated portions of the Land as to its employees, agents,
invitees and licensees. Notwithstanding the foregoing, in the event of any
inconsistency between this Lease (exclusive of Exhibit D) and such rules and
regulations, as the same may be amended from time to time, the provisions of
this Lease shall govern with respect to Tenant.

                  (b) EVIDENCE OF AUTHORITY. If requested by Landlord, Tenant
shall furnish appropriate legal documentation evidencing the valid existence and
good standing of Tenant and the authority of any parties signing this Lease on
behalf of Tenant to act for Tenant.

                  (c) NATURE AND EXTENT OF AGREEMENT. This Lease, together with
all exhibits hereto and workletters that shall be entered into in connection
herewith, contains the complete agreement of the parties concerning the subject
matter hereof, and there are no oral or written understandings, representations,
or agreements pertaining thereto (including, without limitation, the two letters
between the parties dated May 4, 2004, which shall hereafter be of no force and
effect) which have not been incorporated herein. This Lease creates only the
relationship of landlord and tenant between the parties, and nothing herein
shall impose upon either party any powers, obligations or restrictions not
expressed herein. This Lease shall be construed and governed by the laws of the
state in which the Premises are located.

                  (d) SEVERABILITY. If any term or provision of this Lease, or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and enforced to the fullest
extent permitted by law, notwithstanding the invalidity of any other term or
provision hereof.

                  (e) BINDING EFFECT. This Lease shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns. This Lease shall not be binding on Landlord until
executed by an officer of Landlord having a title of Vice President or higher
and delivered to Tenant. No amendment or modification of this Lease shall be
binding upon either party unless same is in writing and executed by an officer
of the party having a title of Vice President or higher.

                  (f) CAPTIONS AND HEADINGS. The captions and headings in this
Lease are for convenience and reference only, and they shall in no way be held
to explain, modify, or construe the meaning of the terms of this Lease.

                  (g) Intentionally deleted.

                  (h) LEASE REVIEW. The submission of this Lease to Tenant for
review does not constitute a reservation for or option for the Premises, and
this Lease shall become effective as a contract only upon execution and delivery
by Landlord and Tenant.

                                       17
<PAGE>

                  (i) BROKERAGE. Landlord warrants and represents to Tenant that
Landlord has not engaged or contracted with any person, firm or entity to serve
or act as a Realtor(R), broker, agent or finder, other than Broker (if any)
identified in the Basic Lease Information, for the purpose of leasing the
Premises or in regard to this Lease. Tenant warrants and represents to Landlord
that Tenant has not engaged, contracted with or dealt with any person, firm or
entity (other than Broker, if any) to serve or act as a Realtor(R), broker,
agent or finder for the purpose of leasing the Premises or in regard to this
Lease. Landlord agrees to be solely responsible for the payment of any
commission to Broker (if any) relating to this Lease pursuant to a separate
agreement between Landlord and Broker (if any). Tenant shall and does hereby
indemnify and hold harmless Landlord from and against any claim for any
consulting fee, finder's fee, commission, or like compensation, including
reasonable attorneys' fees in defense thereof, payable in connection with this
Lease and asserted by any party arising out of any act or agreement by Tenant,
excluding the commission payable by Landlord to Broker (if any) as described
above. Landlord shall and does hereby indemnify and hold harmless Tenant from
and against any claim for any consulting fee, finder's fee, commission, or like
compensation, including reasonable attorneys' fees in defense thereof, payable
in connection with this Lease and asserted by any party arising out of any act
or agreement by Landlord (including the commission payable by Landlord to
Broker, if any, as described above).

                  (j) MEMORANDUM OF LEASE. Upon the request of either party, the
other party shall join in the execution of a memorandum of this Lease (a
"Memorandum") in recordable form. Either party may record the Memorandum in the
appropriate land record office, at its own expense. However, neither party shall
record this Lease (or any portion thereof) without the written consent of the
other party.

                  (k) Intentionally Deleted.

                  (l) SURVIVAL OF OBLIGATIONS. Notwithstanding any term or
provision in this Lease to the contrary, any liability or obligation of Landlord
or Tenant arising during or accruing with respect to the Lease Term shall
survive the expiration or earlier termination of this Lease, including, without
limitation, obligations and liabilities relating to (i) rental payments, (ii)
the condition of the Premises and the removal of Tenant's property, and (ii)
indemnity and hold harmless provisions in this Lease.

                  (m) CONFIDENTIALITY. Tenant shall not disclose the terms of
this Lease to any third party except (i) legal counsel to Tenant, (ii) any
assignee of Tenant's interest in this Lease or any sublessee of Tenant relative
to the Premises (or any portion thereof), (iii) as required by applicable law or
by subpoena or other similar legal process or by any government or securities
regulatory agency, or (iv) for financial reporting purposes.

                  (n) ATTORNEYS' FEES. In the event of a dispute regarding the
performance of any of the terms of this Lease and the other party employs
attorney(s) in connection therewith, the prevailing party shall be entitled to
prevailing party's reasonable attorneys' fees actually incurred (calculated at
such attorneys' reasonable and customary hourly rates and without regard to the
amount in controversy) and costs of litigation.

                  (o) TIME OF PERFORMANCE. Except as expressly otherwise herein
provided, with respect to all required acts of Tenant, time is of the essence of
this Lease.

                  (p) REAL ESTATE INVESTMENT TRUST. During the Lease Term,
should a real estate investment trust become Landlord hereunder, all provisions
of this Lease shall remain in full force and effect except as modified by this

                                       18
<PAGE>

PARAGRAPH 30(P). If Landlord in good faith determines that its status as a real
estate investment trust under the provisions of the Internal Revenue Code of
1986, as heretofore or hereafter amended, will be jeopardized because of any
provision of this Lease, Landlord may request reasonable amendments to this
Lease and Tenant will not unreasonably withhold, delay or defer its consent
thereto, provided that such amendments do not (a) increase the monetary
obligations of Tenant pursuant to this Lease or (b) in any other manner
adversely affect Tenant's interest in the Premises.

         IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed under seal as of the Lease Execution Date pursuant to authority duly
given.

                                  LANDLORD:

                                  CRESCENT RESOURCES, LLC

                                  BY: /S/ PATRICK G.EMERY
                                      -----------------------------------------
                                  ITS: PATRICK G. EMERY, REGIONAL VICE PRESIDENT

                                  TENANT:

                                  HOT TOPIC, INC
[CORPORATE SEAL]

/S/ JAMES MCGINTY                 BY:  /S/ ELIZABETH MCLAUGHLIN
-----------------------------          ----------------------------------------
ITS: JAMES MCGINTY, SECRETARY     ITS: ELIZABETH MCLAUGHLIN, CEO
     ------------------------          ----------------------------------------

                                       19
<PAGE>

                                    EXHIBIT A
                                       TO
                                 LEASE AGREEMENT

                                LEGAL DESCRIPTION
                                -----------------

NOTE: THIS IS INTENDED TO BE A LEGAL DESCRIPTION OF THE REAL ESTATE SHOWN ON THE
SITE PLAN. THE LEGAL DESCRIPTION SHALL BE PREPARED BY RAGAN-SMITH ASSOCIATES AND
ADDED TO THIS LEASE BY AMENDMENT SIGNED BY THE PARTIES.

<PAGE>

                                    EXHIBIT B
                                       TO
                                 LEASE AGREEMENT

ATTACH:     1. SITE PLAN
            2. PLAN SHOWING DIMENSIONS OF BUILDING (FLOOR PLAN)
            3. BUILDING ELEVATIONS (INCLUDING EXTERIOR MATERIALS SPECIFICATIONS)
            4. MECHANICAL PLAN
            5. BUILDING SPECIFICATIONS

<PAGE>

                                    EXHIBIT C
                                   WORKLETTER

Landlord:         Crescent Resources, LLC
Tenant:           Hot Topic, Inc.

RECITALS

         A. This workletter is attached to and forms a part of the certain lease
dated June 1, 2004, (the "Lease"), pursuant to which Landlord has leased to
Tenant certain space (the "Premises") in the Building.

         B. The Lease provides for Landlord to build a Building (the "Building")
on the Land, make office improvements to the Premises (the "Tenant
Improvements"), and Tenant desires to have Landlord make them, prior to
occupancy, upon the terms and conditions contained in this workletter.

                  1.       Definitions. In this workletter, some defined terms
                           are used. They are (in addition to other defined
                           terms either defined herein or in the Lease):

                  (a)      Base Building Plans: Landlord will have T.W. Frierson
                           prepare civil, architectural, electrical, mechanical,
                           plumbing and fire protection construction documents
                           as required to obtain all applicable permits and to
                           construct the building. The Base Building Plans will
                           be consistent with the drawings and specifications
                           included in Exhibit B. On June 21, 2004 the Landlord
                           will submit a complete set of the Base Building Plans
                           to the Tenant for review. The Tenant will have 5
                           working days to review the plans and submit written
                           comments to the Landlord. The Landlord will make
                           reasonable efforts to incorporate the Tenant's
                           comments into the Base Building Plans, provided such
                           comments do not result in a material increase in the
                           construction cost of the Building, and will issue
                           modified Base Building plans to the Tenant within 5
                           working days after receiving comments from the
                           Tenant.

                  (b)      Tenant Improvement Allowance: $595,000.00 and is to
                           be applied by Landlord to the cost of Tenant
                           Improvements to the office and/or warehouse portion
                           of the Premises as approved by the Tenant.
<PAGE>

                  (c)      Tenant Plans: Tenant Plans for the Tenant
                           Improvements will be prepared by an Architect and MEP
                           engineers mutually agreed to by the Landlord and
                           Tenant. The Architect and MEP engineers will contract
                           directly with the Landlord. The cost of the
                           Architecture and MEP fees will be approved by the
                           Tenant in writing and shall be paid from the Tenant
                           Improvement Allowance. The Tenant at its sole option
                           may require that Architecture and MEP design be
                           competitively bid. The Tenant will engage a Designer
                           to complete a "Design Package" (consisting of a space
                           plan, finish selections and general requirements) for
                           the Tenant Improvements. The Tenant will submit this
                           design package to the Landlord and Tenant Improvement
                           Architect by July 15, 2004 for use in completing the
                           Tenant Plans. The Architect and MEP engineers will
                           prepare Construction Documents (including
                           architectural, electrical, mechanical, plumbing and
                           fire protection design) based upon the "Design
                           Package". The Landlord will submit the Tenant Plans
                           to the Tenant by August 16, 2004 for review. The
                           Tenant shall have 5 working days to review the Tenant
                           Plans and provide written comments to the Landlord.
                           The Landlord will incorporate the Tenants comments
                           into the Tenant Plans and will issue the documents to
                           the Tenant for written approval.

                  (d)      Change Order: any change, modification, or addition
                           to the final Tenant Plans or Base Building Plans.

         2.       Project Design and Construction. All work relative to the Base
                  Building will be performed by designers and contractors
                  selected and engaged by Landlord. All work relative to the
                  Tenant Improvements will be performed by designers and
                  contractors mutually selected by the Tenant and Landlord but
                  contracted by the Landlord.

         3.       Cost Responsibilities.

                  (a) Landlord: Landlord shall construct the Building at its
                  sole cost and expense in accordance with Exhibit B of the
                  Lease and the Base Building Plans. Landlord also will pay up
                  to the amount of the Tenant Improvement Allowance for the cost
                  of the Tenant Improvements related to the office portion of
                  the Premises.

                  (b) Tenant: Tenant will pay for:

                           (1) Tenant-initiated Change Orders to the final
                  Tenant Plans or Base Building plans after written approval by
                  the parties.

                           (2) Any additional Tenant Improvement Allowance which
                  will be paid on an amortized basis at 9.5% per annum as a
                  portion of Minimum Rental.

                  (c) In the event the entire Tenant Improvement Allowance is
                  not used, Tenant shall receive a credit for such unused
                  portion against the payment of Annual Rent.

         4.       Construction. Landlord shall cause the Building and Tenant
                  Improvements to be constructed substantially in accordance
                  with the Base Building Plans and Tenant Plans. All
                  construction shall be in a good and workmanlike manner, using
                  new materials, consistent with industry standards and in
                  accordance with all applicable building codes and laws. All
                  warranties from the Landlord's contractor and subcontractors
                  shall be assigned to Tenant to the extent the Lease requires
                  Tenant to be responsible for repair or replacement of such
                  items.

<PAGE>

         5.       Condition of the Premises.

                  (a) Prior to the Commencement Date, Tenant will conduct a
         walk-through inspection of the Premises with Landlord and prepare a
         punch-list of items needing additional work by Landlord. Other than the
         items specified in the punch-list and latent defects (as defined
         below), and subject to the representations and warranties set forth
         herein and in the Lease, by taking possession of the Premises, Tenant
         will be deemed to have accepted the Premises in their condition on the
         date of delivery of possession and to have acknowledged that Landlord
         has installed the Tenant Improvements as required by this workletter
         and that there are no items needing additional work or repair. The
         punch-list will not include any damage to the Premises caused by
         Tenant's move-in or early access, if permitted. Damage caused by Tenant
         will be repaired or corrected by Landlord at Tenant's expense. Tenant
         acknowledges that neither Landlord or its agents or employees have made
         any representations or warranties as to the suitability or fitness of
         the Premises for the conduct of Tenant's business or for any other
         purpose, nor has Landlord or its agents or employees agreed to
         undertake any alterations or construct any Tenant Improvements to the
         Premises except as expressly provided in the Lease and this workletter.
         Landlord's contractor will complete all reasonable punch-list items
         within 30 days after the walk-through inspection or as soon as
         practicable after such walk-through.

                  (b) A "latent defect" is a defect in the condition of the
         Building or the Premises, caused by Landlord's failure to construct the
         Building or Tenant Improvements in a good and workman-like manner and
         in accordance with the working drawings, or in violation of the
         provisions of the Lease or Applicable Law, which would not ordinarily
         be observed during a walk-through inspection. If Tenant notifies
         Landlord of a latent defect within one year following the Commencement
         Date, then Landlord, at its expense, will repair the latent defect as
         soon as practicable.

         The terms hereof are approved.
                                               LANDLORD:
                                               CRESCENT RESOURCES, LLC

                                               By: /S/ PATRICK G. EMERY
                                                   -----------------------------

                                               Name: PATRICK G. EMERY
                                                     ---------------------------

                                               Title: REGIONAL VICE PRESIDENT

                                               TENANT:
                                               HOT TOPIC, INC.

                                               By: /S/ ELIZABETH MCLAUGHLIN
                                                   -----------------------------

                                               Name: ELIZABETH MCLAUGHLIN
                                                    ----------------------------
                                               Title: CHIEF EXECUTIVE OFFICER
                                                    ----------------------------

<PAGE>

                                    EXHIBIT D
                                       TO
                                 LEASE AGREEMENT

                              RULES AND REGULATIONS
                              ---------------------

1.       RESTRICTED USES. Neither the Premises nor any part of the common areas
         of the Building, the Land or the Center shall be used by Tenant for any
         one or more of the following uses:

         (a)      Agriculture or any related use, including any roadside stand
                  for the display and sale of agricultural products and any use
                  which involves the raising, breeding, or keeping of any
                  animals or poultry;

         (b)      Processing or slaughter of livestock, swine, poultry or other
                  animals;

         (c)      Manufacture of leather goods;

         (d)      Manufacture of explosives or explosive agents;

         (e)      Manufacture, sale, rental, repair or storage of heavy
                  equipment, buses, trucks, trailers, automobiles, recreational
                  vehicles and mobile or trailer homes;

         (f)      Unscreened outdoor storage, outdoor fabrication or outdoor
                  handling of any machinery, parts, material, supplies or
                  products;

         (g)      Residential uses;

         (h)      Overnight parking of campers, mobile homes, boats, trailers or
                  motor homes;

         (i)      Erecting and maintaining structures of a temporary nature,
                  except that during the period of construction of improvements
                  to the Premises, Tenant's contractors or subcontractors may be
                  permitted to erect or maintain such temporary structures upon
                  Landlord's prior written approval;

         (j)      Jails, prisons, labor camps, penal, detention or correction
                  facilities or farms;

         (k)      Cemeteries or mausoleums;

         (l)      Mining, including the extraction, processing and removal of
                  sand, gravel, stone, minerals or clay;

         (m)      Any land fills, any hazardous waste disposal or storage
                  facilities and any incinerators;

         (n)      Racetracks, raceways and drag strips; and

         (o)      Massage parlors, topless night clubs or similar business
                  operations.

2.       NUISANCES. Tenant shall not cause any unclean, unhealthy, unsightly or
         unkempt condition to exist in the Premises or in the common areas of
         the Building, the Land or the Center. Tenant shall not use the Premises
<PAGE>

         or any portion of the common areas of the Building, the Land or the
         Center, in whole or in part, for the deposit, storage or burial of any
         property or thing that will cause the above-mentioned areas to appear
         to be in an unclean or untidy condition or that will be obnoxious to
         the eye; nor shall Tenant allow any substance, thing, or material to be
         kept, utilized or carried out in the Premises or the common areas of
         the Building, the Land or the Center that will emit foul or obnoxious
         odors, fumes, smoke or dust or that will cause any vibration or noise
         or other condition that will or might disturb the peace, quiet, safety,
         comfort, or serenity of the occupants of the Building or the Center.
         Provided however, so long as there is no adjacent tenant in the
         Building, Tenant may have music associated with the nature of Tenant's
         business so long as local ordinances are complied with. No obnoxious,
         offensive or illegal trade or activity shall be carried out in the
         Premises or in the common areas of the Building, the Land or the
         Center, nor shall anything be done to cause embarrassment, discomfort,
         annoyance, or nuisance to any person using any portion of the Building,
         the Land or the Center.

3.       RESTRICTED ACTIONS ON COMMON AREAS OF THE BUILDING, THE LAND AND THE
         CENTER. Tenant shall not cause or allow any cutting of vegetation,
         dumping, digging, filling, destruction or other waste to be committed
         on the common areas of the Building, the Land or the Center. Tenant
         shall not cause any obstruction of, or allow or cause anything to be
         kept or stored on, altered, constructed or planted in, or removed from
         the common areas of the Building, the Land or the Center, without
         Landlord's prior written consent.

4.       SIGN DISPLAY. All signage will be coordinated by Landlord throughout
         the Center for uniformity and attractiveness. The size, shape, design,
         lighting, materials and location of all signs shall conform to the
         uniform signage plan for the Center, however, Tenant shall be able to
         use its logos on signs. Tenant shall not cause any sign, tag, label,
         picture, advertisement or notice to be displayed, distributed,
         inscribed, painted or affixed by Tenant on any part of the Building,
         the Land, the Center or the Premises without the prior written consent
         of Landlord. Landlord shall have the right, at Tenant's sole cost and
         expense, to remove all unapproved signs installed by or on behalf of
         Tenant, without notice to Tenant.

5.       DRIVES AND PARKING AREAS. All parking shall be within the boundaries of
         the Land and within marked parking spaces. There shall be no on-street
         parking and at no time shall Tenant obstruct drives and loading areas
         intended for the joint use of all tenants of the Building. The drives
         and parking areas on the Land are for the joint use of all tenants of
         the Building unless specifically marked. If there is an adjacent tenant
         in the Building, truck traffic and parking will be restricted to areas
         designated by Landlord. Tenant, its employees, agents and invitees
         shall comply with reasonable parking rules and regulations as they may
         be posed and distributed from time to time. Tenant is responsible for
         controlling all of its truck traffic in accordance with the reasonable
         restrictions and regulations imposed by Landlord.

6.       STORAGE AND TRASH DISPOSAL. No materials, supplies or equipment
         belonging to Tenant shall be stored in any area of the Building, the
         Land or the Center, except inside the Premises. Trash disposal is
         confined to the receptacles provided by Tenant in a location approved
         by Landlord and no trash receptacles may be placed in any other
         location in the Premises, in the Building, on the Land or in the
         Center.

7.       LOCKS. No additional locks shall be placed on the doors of the Premises
         by Tenant which would prohibit Landlord's reasonable access to the
         Premises permitted by the Lease. If Tenant changes any existing locks,
         Tenant shall immediately furnish Landlord with two keys to such new
         locks. Landlord will, without charge, furnish Tenant with two keys for
         each lock existing upon the entrance door when Tenant assumes
         possession of the Premises, with the understanding that, at the
         termination of the Lease, the keys shall be returned.
<PAGE>

8.       IMPROVEMENTS, CONTRACTORS AND SERVICE MAINTENANCE. Except as provided
         in the Lease, Tenant shall not make any improvements to the exterior of
         the Building or the Center and Tenant shall not make any structural
         changes or other material alterations, additions or improvements to the
         Premises without the prior written consent of Landlord.

9.       REGULATIONS FOR OPERATION AND USE. Tenant shall not place, install or
         operate in the Premises or in any part of the Building, the Land or the
         Center any engine, stove or machinery, nor shall Tenant conduct any
         mechanical or cooking operations therein, nor place or use in or about
         the Premises or any part of the Building, the Land or the Center any
         explosives, gasoline, kerosene, oil, acids, caustics or any other
         flammable, explosive or hazardous material, without the prior written
         consent of Landlord, which shall not unreasonable be withheld; provided
         it is agreed Tenant shall have and operate forklifts and other
         mechanical items consistent with is business.

10.      WINDOW COVERINGS. Windows facing the Building exterior shall at all
         times be wholly clear and uncovered (except for such blinds or curtains
         or other window coverings as Landlord may provide or approve which
         approval shall not be unreasonably withheld) so that a full
         unobstructed view of the interior of the Premises may be had from the
         exterior of the Building.

11.      NO VIOLATIONS OF FIRE LAWS OR HEALTH CODE. Tenant shall not do or
         permit anything to be done in the Premises, or bring or keep anything
         therein, which will obstruct or interfere with the rights of other
         tenants in the Building or the Center or in any other way injure or
         annoy them or conflict with any laws relating to fires, or with any
         regulations of the Fire Department or with any insurance policy upon
         the Building or the Center, or any part thereof, or conflict with any
         of the rules and ordinances of the Board of Health.

12.      NO VIOLATIONS OF LAWS. Tenant shall promptly and at its expense execute
         and comply with all laws, rules, orders, ordinances, including all
         applicable zoning ordinances, and regulations of the City, County,
         State or Federal Government, and of any department or bureau of any of
         them and of any other governmental authority having jurisdiction over
         the Premises, affecting Tenant's occupancy of the Premises or Tenant's
         business conducted therein.

13.      NO USE OF ROOF. Neither Tenant, nor Tenant's servants, employees or
         agents shall go upon the roof of the Building without the written
         consent of Landlord.

14.      NO CANVASSING. Canvassing, soliciting and peddling in and about the
         Building, the Land and the Center is prohibited.

15.      INTENTIONALLY DELETED.

16.      USE OF WASHROOMS. Tenant shall not use the washrooms, restrooms, and
         plumbing fixtures of the Premises or the Building, and appurtenances
         thereto, for any purposes other than the purposes for which they were
         constructed, and Tenant shall not deposit any sweepings, rubbish, rags,
         or other improper substances therein. If Tenant or Tenant's servants,
         employees, agents, contractors, jobbers, licensees, invitees, guests or
         visitors cause any damage to such washrooms, restrooms, plumbing
         fixtures or appurtenances, such damage shall be repaired, at Tenant's
         expense, and Landlord shall not be responsible therefor.

17.      NO UNPLEASANT ODORS. Tenant shall not cause or permit any unpleasant
         odors to emanate from the Premises, or otherwise interfere, injure or
         annoy in any way other tenants in the Building or the Center, or
         persons conducting business with them.
<PAGE>

18.      DISPOSAL OF CRATES. When conditions are such that Tenant must dispose
         of crates, boxes, etc. on the sidewalk or parking areas on the Land, it
         will be the responsibility of Tenant to dispose of same only between
         the hours of 5:45 p.m. until 7:15 a.m.

19.      NO FOOD DISTRIBUTION. No prepared food and/or beverages shall be
         distributed from the Premises, but, notwithstanding the provisions of
         PARAGRAPH 9 hereof or this PARAGRAPH 19, Tenant may operate a cafeteria
         and offer items for the consumption of Tenant's employees and invitees
         provided Tenant complies with all applicable local health department
         rules and regulations.

20.      LOCATION OF IMPROVEMENTS. Tenant will not locate furnishings or
         cabinets adjacent to mechanical or electrical access panels or over air
         conditioning outlets in the Premises so as to prevent operating
         personnel from servicing such units as routine or emergency access may
         require. Tenant shall be responsible for any cost associated with
         moving such furnishings for Landlord's access to such mechanical or
         electrical access panels or air conditioning outlets.

21.      MODIFICATIONS. Landlord shall have the right from time to time to make
         any and all such reasonable modifications and additions to these Rules
         and Regulations as may be necessary for the safety, care, quiet
         enjoyment and cleanliness of the Building, the Land and the Center.
         Tenant agrees to abide by these Rules and Regulations and any
         reasonable modifications and additions as are hereafter adopted by
         Landlord, including, but not limited to, modifications made by Landlord
         as a result of any changes in the city zoning ordinance.

<PAGE>

                                    EXHIBIT E
                                       TO
                                 LEASE AGREEMENT
                                  RENT SCHEDULE

                             PROJECT:        CENTRE POINTE DISTRIBUTION PARK
                             TENANT:         HOT TOPIC, INC.
                             DATE:           06/01/04

                             RENTABLE SF:    300,000

   PERIOD            SF          NET RATE        MONTHLY RENT       ANNUAL RENT
   ------            --          --------        ------------       -----------
   May-05          300,000         $ 3.85        $  96,250.00      $1,155,000.00
   May-06          300,000         $ 3.93        $  98,175.00      $1,178,100.00
   May-07          300,000         $ 4.01        $ 100,138.50      $1,201,662.00
   May-08          300,000         $ 4.09        $ 102,141.27      $1,225,695.24
   May-09          300,000         $ 4.17        $ 104,184.10      $1,250,209.14
   May-10          300,000         $ 4.25        $ 106,267.78      $1,275,213.33
   May-11          300,000         $ 4.34        $ 108,393.13      $1,300,717.59
   May-12          300,000         $ 4.43        $ 110,750.00      $1,329,000.00
   May-13          300,000         $ 4.52        $ 112,965.00      $1,355,580.00
   May-14          300,000         $ 4.61        $ 115,224.30      $1,382,691.60

<PAGE>

                                    EXHIBIT F
                                       TO
                                 LEASE AGREEMENT

                                  RENEWAL TERMS
                                  -------------

Provided Tenant is not in default at the time, Tenant will have the right to
renew the lease for two (2) successive five (5) year terms upon one hundred
eighty (180) days prior written notice ("Renewal Notice") before the expiration
date of each term. The rental rate for the Renewal Terms shall be determined by
the procedure set forth on Exhibit F-1.

<PAGE>

                                   EXHIBIT F-1
                                   -----------

                        ARBITRATION OF RENEWAL TERM RENT

If the parties are unable to agree on the rent for a Renewal Term within thirty
(30) days after Tenant gives its Renewal Notice for such Extension Term, then
upon written request from either party, each party, at its cost, shall appoint a
person with at least ten (10) years' active commercial real estate appraisal or
brokerage experience in the county in which the Land is located to act as an
appraiser hereunder, to determine the fair market rent for the Premises for the
Renewal Term. If a party does not appoint a person to act as an appraiser within
fifteen (15) days, the sole appointed appraiser shall determine fair market
rent.

The two (2) appraisers shall meet promptly and attempt to determine the fair
market rent. If they are unable to agree within fifteen (15) days after the
appointment of the second appraiser, they shall attempt to select a third person
meeting the qualifications stated in the immediately preceding paragraph within
five (5) days after the last day the two (2) appraisers are given to determine
the fair market rent. If they are unable to agree on the third person to act as
appraiser within five (5) days, the third person shall be appointed by the
American Arbitration Association, upon the application of Landlord or Tenant to
the office of the Association nearest the Building, which appraiser shall meet
the qualifications stated above. Each of the parties shall bear 50% of the cost
of appointing the third person and of paying the third person's fees. A decision
in which two (2) of the three (3) appraisers concur shall be binding and
conclusive upon the parties. In the event two (2) appraisers are unable to agree
upon the fair market rent, the three (3) appraisals shall be averaged and the
average shall be the fair market rent.

If the rent for the Renewal Term has not been agreed to or established prior to
the commencement of the Term, then Tenant shall pay to Landlord an annual rent
("Temporary Rent") which Temporary Rent shall be equal to 100% of the rent
payable by Tenant for the last year of the Term and once rent for the Renewal
Term is determined, Tenant shall pay or Landlord shall credit any amounts
underpaid or overpaid, as applicable.

In determining the fair market rent during the Renewal Term, the appraiser or
appraisers shall be required to take into account all relevant factors.

<PAGE>

                                    EXHIBIT G

                               OPTION TO PURCHASE

         Tenant shall have the right to purchase the Premises and Land by giving
Landlord notice of such election any time prior to the later of (i) May 31,
2005, and (ii) ninety days following the Commencement Date. The Tenant shall
have 90 days thereafter to close subject to the parties reasonable cooperation,
diligence and good faith. The purchase price shall be $14,260,000 and there
shall be no credit against the purchase price for rent paid prior to closing
except rent for the month in which the closing occurs shall be prorated through
the date of closing, and other terms of the sale (including reasonable
representations and warranties) and required performance and deliverables of the
parties shall be determined through reasonable, good faith negotiation of the
parties, consistent with sales transactions of a similar nature. Real estate
taxes shall be prorated through the Lease Commencement Date. Landlord shall
provide at Landlord's cost an owner's title insurance policy in the amount of
the purchase price and issued by Old Republic National Title Insurance Company,
and shall provide other information and documents as required by the title
insurer. Landlord shall provide a Special Warranty Deed to convey the Premises.
Tenant shall be responsible for paying the cost to record the Deed including the
State of Tennessee Transfer Tax.

<PAGE>

                                    EXHIBIT H
                                    ---------

                                    EXPANSION

         Tenant shall have the right ("Expansion Right") to have an additional
200,000 square feet of adjacent building ("Expansion Premises") as shown on
Exhibit B as "200,000 SF Future Expansion". Tenant may only exercise the
Expansion Right by giving Notice ("Expansion Notice") prior to the last day of
the fourth year of the Lease Term of the Original Premises. The Lease Term for
Expansion Premises shall be for the remainder of the Lease Term for the Original
Premises; provided however in the event the Expansion Notice is given after the
end of the third year of the Lease Term of the Original Premises, the Lease Term
for the Expansion Premises shall be ten years and the Lease Term for the
original Premises shall be extended so that both Terms shall terminate at the
same time. After the Expansion Notice is given, the parties shall have ninety
(90) days ("Negotiation Period") to agree upon the construction plans for the
Expansion Premises to be based upon construction costs in effect at that time
and the fair market rent and reasonable tenant improvement allowance for
comparable tenants, comparable space, and comparable terms and conditions.
During the Negotiation Period, the parties shall enter into a written agreement
("Lease Amendment") modifying and supplementing this Lease so as to incorporate
the Expansion Premises as a part of the Premises subject to all of the terms and
conditions of this Lease. Regarding all of the foregoing provisions, the parties
shall cooperate and proceed in reasonable good faith to consummation; and pursue
activities diligently in efforts to provide occupancy to Tenant of the Expansion
Premises within twelve (12) months following Tenant's exercise of its rights
hereunder.
         After the end of the fifth year of the initial Terms in the event
Tenant has not previously properly exercised the Expansion Right or Right of
First Offer as set forth on Exhibit H-1 and the appropriate Lease Amendment has
not been executed by both parties, Landlord may construct an additional building
on all or a portion of the Expansion Premises and lease the same to one or more
tenants. Landlord may to the extent reasonably necessary move to another part of
the Land any parking area which interferes with such construction so long as the
same number of parking spaces is maintained.

<PAGE>

                                  EXHIBIT H -1
                                  ------------

                              RIGHT OF FIRST OFFER

         Provided this Lease is then in full force and effect, provided Tenant
has not exercised the Expansion Right and there is no uncured event of default
hereunder as described herein at the time such right is exercised by Tenant,
then commencing upon the first day of the fourth year of the Lease Term and
ending on the last day of the fifth year of the Lease Term, Tenant shall have a
one time right of first offer to lease the Expansion Premises for a term
beginning on the Effective Date, hereinafter defined, and ending
contemporaneously with the expiration of the Term, unless sooner terminated as
provided in the Lease. The right of first offer granted herein shall be
exercisable at the following time and upon the following conditions:

         (A) Landlord will notify Tenant of Landlord's intent to enter into
negotiations with a bona fide third party tenant desiring to lease the Expansion
Premises. Tenant shall then have a period of twenty-one (21) days after receipt
of Landlord's notice in which to notify Landlord in writing regarding whether
Tenant elects to exercise its right granted hereby to lease all (but not less
than all) of the Expansion Premises. If Tenant elects not to lease such
Expansion Premises or fails to give any notice to Landlord within the required
twenty-one (21) day period, then Landlord shall have the right to lease all or
any portion of such Expansion Premises to a prospective tenant or tenants upon
terms and conditions no more favorable than those offered to Tenant. If Tenant
fails to exercise its right to lease any Expansion Premises, then Tenant shall
have no further right of first offer hereunder with respect to such Expansion
Premises, provided the space is leased to a bona fide third party tenant within
ninety (90) days thereafter.

         (B) Upon the exercise by Tenant of its right of first offer as provided
in this Exhibit H-1, Landlord and Tenant shall, within ninety (90) days after
Tenant delivers to Landlord notice of its election to lease the Expansion
Premises, enter into a written agreement modifying and supplementing this Lease
so as to incorporate the Expansion Premises as a part of the Premises, subject
to all of the terms and conditions of this Lease. The cost to construct the
Expansion Premises and Rent for the same shall be based upon the construction
costs then in effect and the fair market rent then in effect to be agreed upon
by both parties and negotiated by them reasonably and in good faith. The Lease
Term for the Expansion shall be ten (10) years and the initial Lease Term for
the Premises shall be extended so as to terminate upon the same date; provided
in the event Landlord's notice was given prior to the end of the third year of
the Original Term, the Lease Term for the Expansion Premises shall terminate as
of the end of the Term for the Original Premises.

         (C) Fair market base rental shall mean the fair market value base
rental per rentable square foot per year in effect on the Effective Date for
comparable space, comparable terms and conditions and comparable tenants.

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