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ex10-76.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ML
Realty Partners

    Chas.
Levy Circulating Company

    

    INDUSTRIAL
LEASE AGREEMENT

    

    THIS
INDUSTRIAL LEASE AGREEMENT (the "Lease") is made as of the "Lease Date" (as
defined herein) by and between MLRP Sergo LLC, a Delaware limited liability
company ("Landlord"), Chas. Levy Circulating Company, LLC, a Delaware limited
liability company ("Tenant") (the words "Landlord" and "Tenant" to include their
respective legal representatives, successors and permitted assigns where the
context requires or permits).

    

    W
I T N E S S E T H

    

    1.           Basic Lease
Provisions.  The following constitute the basic provisions of
this Lease:

    

    (a)           Demised
Premises:  As defined in Section 2.

    

    (b)           Demised
Premises Square Footage:  210,315 square feet.

    

    (c)           Building
Square Footage:  443,924 square feet.

    

    (d)           Annual
Base Rent:

    

    Time
Period                                                      Annual Base
Rent

    

    Months
1-12*                                                      $809,712.75

    Months
13-24                                                      $825,907.00

    Months
25-36                                                      $842,425.15

    Months
37-48                                                      $859,274.69

    Months
49-60                                                      $876,459.16

    Months
61-72                                                      $893,988.28

    Months
73-84                                                      $911,868.00

    Months
85-96                                                      $930,105.47

    Months
97-108                                                      $948,707.62

    Months
109-120                                                      $967,681.61

    Months
121-122                                                      $164,505.90

    

    (e)           Monthly
Base Rent Installments:

    

    Time
Period                                                      Monthly Base
Rent

    

    Months
1-12*                                                      $67,476.06

    Months
13-24                                                      $68,825.58

    Months
25-36                                                      $70,202.10

    Months
37-48                                                      $71,606.14

    Months
49-60                                                      $73,038.26

    Months
61-72                                                      $74,499.00

    Months
73-84                                                      $75,989.00

    Months
85-96                                                      $77,508.79

    Months
97-108                                                      $79,058.97

    Months
109-120                                                      $80,640.13

    Months
121-122                                                      $82,252.95

    

    *   Notwithstanding
any other provision of this Lease to the contrary, provided that no Event of
Default (as defined in Section 22 hereof) has occurred, Base Rent shall abate
for the first two (2) months of the Primary Term (or the first sixty (60) days
of the Term if the Term commences on a date other than the first day of a
calendar month) (the "Abatement Period").  If there is an occurrence
of an Event of Default Tenant at any time prior to or during the Abatement
Period, then all Base Rent for the Abatement Period shall come due immediately
upon demand by Landlord.

    

    (f)           Commencement
Date:  Upon substantial completion of the Improvements in accordance
with the provisions of the Tenant Improvement Agreement attached hereto as Exhibit
“C”.  At Landlord’s option, the Commencement Date shall be
confirmed pursuant to a Term Commencement Letter substantially in the form
attached hereto as Exhibit “D” and
forming a part hereof.

    

    (g)           Expiration
Date:  The last day of the one hundred twenty second (122nd) full
calendar month following the Commencement Date.

    

    (h)           Term:  One
hundred twenty two (122) full calendar months after the Commencement Date (plus
a partial month if the Commencement Date does not fall on the first day of a
calendar month), unless renewed or sooner terminated in accordance with the
provisions of this Lease.

    

    (i)           Tenant's
Operating Expense and Tax Percentage:  47.38%

    

    (j)           Extension
Options:  See Section 1 of Exhibit “I” attached
hereto and forming a part hereof.

    

    (k)           Permitted
Use:  Warehousing and distribution of Tenant’s products and general
office use ancillary thereto.

    

    (l)           Address
for notice:

    

    Landlord:                                c/o
ML Realty Partners, LLC

    One
Pierce Place

    Itasca,
IL  60143

    Attn:  Asset
Management

    Facsimile:  (630)
250-2901

    

    with a
copy
to:                                           c/o
ML Realty Partners, LLC

    One Pierce Place

    Itasca,
IL  60143

    Attn:  Michael J.
Harmon

    Facsimile:
(630) 250-2901

    

    Tenant:                                           Chas.
Levy Circulating, LLC

    27500
Riverview Center Blvd.

    Bonita
Springs, Florida 34134

    Attn:
Vice President of Facilities

    Facsimile:  (239)
495-5129

    

    (m)           Address
for rental payments:

    

    __________________________

    __________________________

    __________________________

    

    (n)           Brokers:                                CB
Richard Ellis and Mohr Partners

    

    (o)           Guarantor(s):                                Form
of Guaranty is attached hereto as Exhibit
“H”.

    Source
Interlink Companies Inc. (“Guarantor”)

    27500
Riverview Center Blvd.

    Bonita
Springs, Florida 34134

    Attn:
Vice President of Facilities

    Facsimile:  (239)
475-5129

    

    (p)           Security
Deposit:                                Letter
of Credit in the amount of two (2) months Rent.

    

    (q)           Exhibits:  The
following Exhibits attached to this Lease are incorporated herein by this
reference and shall be deemed as a part of this Lease:

    

    Exhibit
"A" Demised Premises

    Exhibit
"B" Legal Description of Land

    Exhibit
"C" Tenant Improvement Agreement

    Exhibit
"D" Term Commencement Letter

    Exhibit
"E" Estoppel Certificate

    Exhibit
"F" Rules and Regulations

    Exhibit
"G" Certificate of Authority

    Exhibit
"H" Guaranty

    Exhibit
"I" Additional Provisions

    Exhibit
"J" Broom Clean Condition and Repair Requirements

    Exhibit
"K" Letter of Credit Form

    

    2.           Demised
Premises.  For and in consideration of the rent hereinafter
reserved and the mutual covenants hereinafter contained, and upon all the terms
and provisions of this Lease, (i) Landlord does hereby lease and demise unto
Tenant, and Tenant does hereby lease and accept from Landlord the premises (the
"Demised Premises") known as Unit C (as crosshatched on Exhibit "A" attached
hereto and incorporated herein), located within a building (the "Building") at
9450 Sergo Drive, McCook, Illinois which is situated on the land ("Land")
described or depicted on Exhibit “B” attached
hereto and incorporated herein (the Building, the Land and any other
improvements from time to time situated thereon being hereinafter referred to
collectively hereinafter from time to time as the "Property") and (ii) Landlord
also grants to Tenant a non-exclusive right to use, in common with other tenants
of the Building (and the employees, guests and other invitees of such tenants),
all driveways and curb cuts located on the Land and other common areas of the
Property (collectively, "Common Areas").  Tenant shall have the
exclusive right to use only the 172 car parking spaces and 24 truck parking
spaces depicted on Exhibit “A” attached
hereto as the “Chas. Levy Parking Area” (hereinafter the “Tenant Parking Area”),
as parking for its employees, customers and other invitees, however, Tenant, its
employees, customers and other invitees shall not be permitted to use any other
parking areas on the Property.  Tenant’s right to use the Common Areas
and Tenant Parking Area for the purposes intended is subject to and conditioned
upon Tenant’s compliance with such reasonable rules and regulations as may be
established from time to time.  Tenant shall not interfere with the
rights of any or all of Landlord, other tenants or licensees, or any other
person entitled to use the Common Areas or other parking areas serving the
Building.  Without limitation of the foregoing, Tenant shall not park
or store any trailers on, or conduct truck loading and unloading activities in
the Tenant Parking Area designated for car parking or in the Common Areas in a
manner that unreasonably disturbs, disrupts or prevents the use of the Common
Areas or other parking areas serving the Building by Landlord, other tenants or
licensees or other persons entitled to use the Common Areas or other parking
areas serving the Building.  Landlord, from time to time, may change
any or all of the size, location, nature and use of any of the Common Areas
although such changes may result in inconvenience to Tenant, so long as such
changes do not materially and adversely affect Tenant’s use of the Demised
Premises.  In addition to the foregoing, Landlord may, at any time,
close or suspend access to any Common Areas to perform any acts in the Common
Areas as, in Landlord’s reasonable judgment, are desirable to improve or
maintain either or both of the Demised Premises and the Property; provided,
however, that Landlord shall use reasonable efforts to limit any disruption of
Tenant’s use and operation of the Demised Premises in connection
therewith.

    

    3.           Term.  To
have and to hold the Demised Premises for a term (the "Term") commencing on the
Commencement Date and ending on the Expiration Date, unless renewed or
terminated in accordance with the provisions of this Lease.  The
initial term of this Lease, specified in Section 1(h) is hereinafter sometimes
referred to as the "Primary Term".  If the lease is not fully executed
by the Commencement Date, the Commencement Date and the Expiration Date shall be
advanced by one day for each day of delay.  If the Landlord shall be
unable to give possession of the Demised Premises on the Commencement Date for
any reason Landlord shall not be liable for any damages caused thereby nor shall
this Lease be void or voidable, however, the Rent shall not commence until the
Demised Premises are available for occupancy by Tenant, at which time the Term
shall commence so as to give effect to the full stated Term.

    

    4.           Base
Rent.  Tenant shall pay to Landlord at the address set forth in
Section 1(l), as base rent for the Demised Premises, commencing on the
Commencement Date and continuing throughout the Term in lawful money of the
United States, the annual amount set forth in Section 1(d), payable in equal
monthly installments as set forth in Section 1(e) (the "Base Rent"), payable in
advance, without demand and without abatement, reduction, set-off or deduction,
on the first day of each calendar month during the
Term.  Notwithstanding any other provision of this Lease to the
contrary, upon Tenant’s execution of this Lease, Tenant will pay the first
month’s rent in advance.  If the Commencement Date shall fall on a day
other than the first day of a calendar month, the Base Rent shall be apportioned
prorata on a per diem basis for the period between the Commencement Date and the
first day of the following calendar month.  If the Term ends on a day
other than the last day of a calendar month, Base Rent shall likewise be
apportioned prorata on a per diem basis for the calendar month in which
expiration or termination occurs.

    

    5.           Security
Deposit.

    

               (a)           Simultaneously
with the execution of this Lease, Tenant will deliver to Landlord the sum set
forth in 1(p) of the Basic Lease Provisions (the “Security Deposit”) as security
for the full and faithful performance by Tenant of each and every term,
provision, covenant, and condition of this Lease.  The Security
Deposit shall be an unconditional and irrevocable letter of credit (“Letter of
Credit”) in the form attached hereto as Exhibit
“K”.  The Letter of Credit shall be issued by Wells Fargo Bank
NA and located in Chicago, Illinois.  Tenant shall ensure that at all
times after the execution and delivery of this Lease through the date that is
thirty (30) days after the Termination Date, an unexpired Letter of Credit in
the amount of the Security Deposit or cash in the amount of the Security Deposit
shall be in the possession of Landlord.  The Letter of Credit shall
contain a so-called "evergreen" clause providing that the Letter of Credit shall
not be canceled unless the issuing bank delivers thirty (30) days' prior written
notice to Landlord.  Tenant shall deliver to Landlord, no later than
thirty (30) days prior to the expiry date of the then outstanding and expiring
Letter of Credit a replacement Letter of Credit.  Failure by Tenant to
deliver any replacement Letter of Credit as required above shall entitle
Landlord to draw under the outstanding Letter of Credit and to retain the entire
proceeds thereof for application as the Security Deposit under this Lease, which
will be held pursuant to Section 5(b) below.  Failure by the issuer to
honor a draw request on the Letter of Credit shall be an Event of Default under
the terms of this Lease entitling Landlord to exercise its remedies
hereunder.  Each Letter of Credit shall be for the benefit of Landlord
or its successors and assigns and shall entitle Landlord or its successors or
assigns to draw from time to time under the Letter of Credit in portions or in
whole upon presentation of a sight draft and statement by Landlord that Landlord
is entitled to draw thereunder pursuant to the terms and provisions of this
Lease.  Landlord shall have an unrestricted right to transfer the
Letter of Credit at anytime and to any successor to Landlord without the payment
of any transfer fee or other charge.

    

    (b)             In
the event that Tenant is in default under this Lease, fails to perform any of
the terms, provisions, covenants, or conditions of this Lease, including, but
not limited to, payment of Rent, or fails to deliver any replacement Letter of
Credit as provided above, Landlord may draw upon the Letter of Credit and hold
and apply the funds drawn as a cash security deposit ("Cash Security
Deposit").  If Tenant defaults under this Lease or the exhibits
hereto, Landlord may use, apply, or retain the whole or any part of the proceeds
for the payment of such Rent in default, or for any other sum due Landlord or
which Landlord may, without prejudice to any other remedy, expend or be required
to expend by reason of Tenant’s default or failure to perform, including,
without limitation, any damages or deficiency accrued before or after any
re-entry by Landlord; provided, however, that any such use, application or
retention by Landlord of the whole or any part of the Cash Security Deposit
shall not be or be deemed to be an election of remedies by Landlord or viewed as
liquidated damages, it being expressly understood and agreed that,
notwithstanding such use, application or retention, Landlord shall have the
right to pursue any and all other remedies available to it under the terms of
this Lease or otherwise.  In the event that Landlord uses or applies
any portion of the Cash Security Deposit as hereinabove provided, Tenant shall
replenish such applied portions thereof within five (5) days of Landlord’s
demand and Tenant’s failure to do so within such five (5) day period shall be
deemed an Event of Default hereunder.  In the event of a sale of the
Building, Landlord shall transfer the Cash Security Deposit to the purchaser,
and Landlord shall thereupon be released from all liability for the return of
such Cash Security Deposit.  Tenant shall look solely to the new
Landlord for the return of the Cash Security Deposit.  Tenant shall
not assign or encumber the money deposited as security, and neither Landlord nor
its successors or assigns shall be bound by any such assignment or
encumbrance.  The Cash Security Deposit will not bear interest and may
be commingled with other funds of Landlord.

    

    6.           Operating Expenses, Taxes
and Additional Rent.

    

    (a)           Commencing
on the Commencement Date, Tenant agrees to pay as Additional Rent (as defined in
Section 6(d) below) its proportionate share of Operating Expenses and Taxes (as
such terms are hereinafter defined).  "Operating Expenses" shall be
defined as all costs and expenses paid or incurred by Landlord in connection
with the ownership and operation of the Land and Building including, without
limitation, costs and expenses for management, operation, repair, replacement
and maintenance as necessary to keep the Building and the Common Areas
(including the Tenant Parking Area), driveways, parking areas, landscaped areas
and other areas associated therewith in good order, condition and repair,
including but not limited to, wages, salaries, fringe benefits and payroll
burden for employees utilized in the management or the Building or the Property,
exterior window cleaning, interior and exterior painting, façade maintenance,
maintenance of all water retention facilities, discharge piping, fountains,
pumps, catch basins and other facilities, both on and off site, utilities for
the common areas of and relating to the Building, expenses associated with the
driveways and parking areas (including pavement repair, sealing and restriping,
and snow, trash and ice removal), non-tenant-specific security systems, lighting
facilities, landscaped areas, walkways, directional signage, curbs and drainage
strips, relating to the Building, all charges assessed against or attributed to
the Land or the Building pursuant to any operating declaration or similar
agreement ("Protective Covenants") governing the operation, maintenance or
improvement of the Property or any other common area of the facility, customary
property management fees (subject to the limitations stated below), all
insurance premiums paid by Landlord with respect to customary insurance
coverages Landlord may carry from time to time in respect of the Property
consistent with prudent property management practice, together with deductibles,
and costs of capital improvements applicable to the Property generally (and not
because of the particular use of the Property by a particular tenant), which
cost shall be amortized on a straight line basis over the useful life of such
improvement, as reasonably determined by Landlord, together with a reasonable
finance charge not to exceed two (2) percent over the Prime Rate (as defined
herein).  Operating Expenses shall not include (1) depreciation,
interest and principal payments on mortgages and other debt costs, (2) real
estate brokers' leasing commissions or compensation, (3) any cost or expenditure
(or portion thereof) for which Landlord is reimbursed, whether by insurance
proceeds or otherwise, (4) the cost of any service or improvements furnished to
any other occupant of the Building which Landlord does not provide to Tenant
hereunder, (5) advertising and promotional expenses, and (6) federal or other
income and franchise taxes of Landlord (other than any taxes which may be
imposed upon rents); the costs described in the foregoing items (1) through (6)
shall be the sole and exclusive responsibility of Landlord.  In no
event shall Landlord increase property management fees payable by Tenant in any
calendar year by more than four percent (4%) over the property management fees
payable during the immediately preceding calendar
year.  Notwithstanding any other provision herein to the contrary, it
is agreed that if the Property is not fully occupied during any calendar year,
then an adjustment shall be made in computing the Operating Expenses for such
calendar year so that the Operating Expenses are computed as though the Building
had been fully occupied during such calendar year.  To the extent that
Landlord (or an affiliate thereof) incurs any expenses (such as, by way of
illustration only, multi-property service contracts or blanket insurance
policies) in respect of both the Property and any other properties owned by
Landlord, Landlord may include a fair and equitable apportionment of such
expenses in Operating Expenses.

    

    (b)           The
proportionate share of Operating Expenses and Taxes to be paid by Tenant shall
be a percentage of the Operating Expenses and Taxes based upon the proportion
that the stipulated square footage of the Demised Premises bears to the total
stipulated square footage of the Building (such figure being referred to as
"Tenant's Operating Expense and Tax Percentage" and set forth in Section
1(i)).  Landlord shall estimate the total amount of Operating Expenses
and Taxes to be paid by Tenant during each calendar year and shall provide such
estimate to Tenant prior to or with reasonable promptness after the beginning of
each calendar year during the Term.  Tenant shall pay to Landlord
one-twelfth (1/12) of such sum on the first day of each calendar month during
each such calendar year, or part thereof, during the Term.  Landlord
may during the course of any year, redetermine the amount of its estimate of
Operating Expenses and Taxes for such year and adjust the amount of estimated
Additional Rent accordingly, whereupon Tenant shall pay the adjusted estimated
Additional Rent from and after the first day of the month following the month in
which Landlord delivers to Tenant written notice of such adjustment of estimated
Additional Rent.  Within a reasonable time after the end of each
calendar year, Landlord shall submit to Tenant a statement of the actual amount
of Operating Expenses and Taxes for such calendar year, and the actual amount
owed by Tenant, and within thirty (30) days after receipt of such statement,
Tenant shall pay any deficiency between the actual amount owed and the estimates
paid during such calendar year, or in the event of overpayment, Landlord shall,
at the option of Tenant (so long as no Event of Default has occurred and is then
continuing), credit the amount of such overpayment toward the next installment
of Operating Expenses and Taxes owed by Tenant or remit such overpayment to
Tenant.  If the Commencement Date shall fall on a day other than the
first day of the calendar year, and/or if the Expiration Date shall fall on a
day other than the last day of the calendar year, Tenant's proportionate share
of the Operating Expenses and Taxes for such calendar year shall be apportioned
prorata.  No interest shall be payable to Tenant on account of
payments of estimated Additional Rent, and such payments may be
commingled.  If there exists any dispute as to (i) the amount of
Additional Rent, (ii) whether a particular expense is properly included in
Additional Rent or (iii) Landlord's calculation of Additional Rent (each an
“Additional Rent Dispute”), the events, errors, acts or omissions giving rise to
such Additional Rent Dispute shall not constitute a breach or default by
Landlord under this Lease and even if a judgment resolving the Additional Rent
Dispute is entered against Landlord, this Lease shall remain in full force and
effect and Landlord shall not be liable for any consequential damages resulting
from the event, error, act or omission giving rise to such Additional Rent
Dispute.  Notwithstanding the existence of an Additional Rent Dispute,
Tenant shall pay timely the amount of Additional Rent which is in dispute and
will continue to make all subsequent payments of Additional Rent as and when
required under this Lease, provided that the payment of such disputed amount and
other amounts shall be without prejudice to Tenant's position.

    

    (c)           “Taxes”
shall be defined as real estate and ad valorem taxes, assessments, sewer rents,
rates and charges, transit taxes, taxes based upon the receipt of rent, and any
other federal, state or local governmental charge, general, special, ordinary or
extraordinary, which are levied or assessed or become a lien against the
Property or any portion thereof, or are payable in any calendar year during the
Term and any tax in substitution of any of the foregoing.  Taxes shall
not include any franchise, capital, stock, transfer, inheritance or income
(other than rental income) tax imposed on Landlord.  In case of
special taxes or assessments which may be payable in installments, only the
amount of each installment and interest paid thereon paid during a calendar year
shall be included in taxes for that calendar year.  Taxes shall also
include any personal property taxes (attributable to the year in which paid)
imposed upon the furniture, fixtures, machinery, equipment, apparatus, systems
and appurtenances of Landlord used in connection with the operation of the
Building.  Taxes also include Landlord’s reasonable costs and expenses
(including reasonable attorney’s fees) in contesting or attempting to reduce any
taxes.

    

    (d)           This
shall be a net lease and Base Rent shall be paid to Landlord net of all costs
and expenses, except as herein provided.  The provisions for payment
of Operating Expenses and the Taxes are intended to pass on to Tenant and
reimburse Landlord for costs and expenses incurred in connection with ownership
and operation of the Demised Premises and Property and such additional
facilities now and in subsequent years as may be reasonably determined by
Landlord to be necessary to the Building or Property as a whole.  Any
amounts required to be paid by Tenant under this Lease and any charges or
expenses incurred by Landlord on behalf of Tenant under the terms of this Lease
shall be considered "Additional Rent" and Base Rent and Additional Rent may be
referred to collectively as “Rent.”  Any failure on the part of Tenant
to pay such Additional Rent when and as the same shall become due shall entitle
Landlord to the remedies available to it for non-payment of Base
Rent.  Tenant's obligations for payment of Additional Rent shall begin
to accrue on the Commencement Date.  No sum shall be deemed to have
been paid under this Lease unless and until such time as Landlord is in actual
receipt of such payment in immediately available good funds.

    

    (e)           If
applicable in the jurisdiction where the Demised Premises are located, Tenant
shall pay and be liable for all rental, sales, use and inventory taxes or other
similar taxes, if any, on the amounts payable by Tenant hereunder levied or
imposed by any city, state, county or other governmental body having authority,
such payments to be in addition to all other payments required to be paid
Landlord by Tenant under the terms of this Lease.  Tenant shall have
no responsibility for any income tax of any nature payable by
Landlord.  Such payment shall be made by Tenant directly to such
governmental body if billed to Tenant, or if billed to Landlord, such payment
shall be paid concurrently with the payment of the Base Rent, Additional Rent,
or such other charge upon which the tax is based, all as set forth
herein.

    

    (f)           Tenant
or its representative shall have the right to examine Landlord’s books and
records with respect to the items in Landlord’s annual statement during normal
business hours at any time within one hundred eighty (180) days following the
furnishing by Landlord to Tenant of such statement.  Unless Tenant
shall take written exception to any item within sixty (60) days after the
furnishing of the foregoing statement, such statement shall be considered as
final and conclusively accepted by Tenant.  Any amount due to Landlord
as shown on any such statement, whether or not written exception is taken
thereto, shall be paid by Tenant within thirty (30) days after Landlord shall
have submitted the statement, without prejudice to any such written
exception.

    

    7.           Use of Demised
Premises.

    

    (a)           The
Demised Premises shall be used for the Permitted Use set forth in Section 1(k)
and for no other purpose.

    

    (b)           Tenant
will permit no liens to attach or exist against the Demised Premises, and shall
not commit any waste.

    

    (c)           The
Demised Premises shall not be used for any illegal purposes, and Tenant shall
not allow, suffer, or permit any vibration, noise, odor, light or other effect
to occur within or around the Demised Premises that could constitute a nuisance
or trespass for Landlord or any occupant of an adjoining building, its
customers, agents, or invitees.  Upon notice by Landlord to Tenant
that any of the aforesaid prohibited uses are occurring, Tenant agrees to
promptly remove or control the same.

    

    (d)           Tenant
shall not in any way violate any law, ordinance or restrictive covenant
affecting the Demised Premises, and shall not in any manner use the Demised
Premises so as to cause cancellation of, prevent the use of, or increase the
rate of, the fire and extended coverage insurance policy required
hereunder.

    

    (e)           In
the event insurance premiums pertaining to the Demised Premises, the Building,
or the common areas, whether paid by Landlord or Tenant, are increased over the
least hazardous rate available due to the nature of the use of the Demised
Premises by Tenant, Tenant shall pay such additional amount as Additional
Rent.

    

    8.           Insurance.

    

    (a)           Tenant
covenants and agrees that from and after the date of delivery of the Demised
Premises from Landlord to Tenant, Tenant will carry and maintain, at its sole
cost and expense, (i) liability insurance in the commercial general liability
form (or reasonable equivalent thereto) covering the Demised Premises and
Tenant's use thereof against claims for personal injury or death, property
damage and product liability occurring upon, in or about the Demised Premises,
such insurance to be written on an occurrence basis (not a claims made basis),
with combined single limit coverage of not less than $3,000,000.00 and with a
general aggregate limit of not less than $5,000,000.00 for each policy year, and
(ii) comprehensive automobile liability insurance covering Tenant against any
losses arising out of liability for personal injuries or deaths of persons and
property damage occurring in or about the Demised Premises in the amount of not
less than $3,000,000, combined single limit.  The insurance coverage
required under this Section 8(a) shall, in addition, extend to any liability of
Tenant arising out of the indemnities by Tenant provided in this Lease and, if
necessary, the policy shall contain a contractual endorsement to that
effect.

    

    (b)           All
policies of the insurance provided for in Section 8(a) shall be issued in form
reasonably acceptable to Landlord by insurance companies with a rating of not
less than "A," and financial size of not less than Class X, as established in
the most current available "Best's Insurance Reports", and licensed to do
business in the state in which the Building is located.  Each and
every such policy:

    

    (i)           shall
name Landlord as well as Mortgagee, as defined in Section 24, and any other
party reasonably designated by Landlord, as an additional insured, to the extent
of the obligations of Tenant to Landlord under this Lease which are
insurable;

    

    (ii)           a
certificate thereof shall be delivered to Landlord prior to the Lease
Commencement Date and thereafter within thirty (30) days prior to the expiration
of each such policy, and, as often as any such policy shall expire or terminate;
with respect to any certificates of insurance delivered pursuant to this
subsection, Tenant shall, upon written request of Landlord, provide the Landlord
within thirty (30) days a copy of the provisions of the policy evidenced by the
certificate which govern or limit the coverage for the Demised Premises,
certified by the carrier or its agent to be correct and complete; renewal or
additional policies shall be procured and maintained by Tenant in like manner
and to like extent;

    

    (iii)           shall
contain a provision that the insurer will give to Landlord and such other
parties in interest at least thirty (30) days notice in writing in advance of
any material change, cancellation, termination or lapse, or the effective date
of any reduction in the amounts of insurance; and

    

    (iv)           shall
be written as a primary policy which does not contribute to and is not in excess
of coverage which Landlord may carry.

    

    (c)           Tenant
shall, from and after the Commencement Date, carry and maintain, at its sole
cost and expense, (i) insurance on the "all-risk" or equivalent form against
loss or damage to the personal property of Tenant within the Building at its
replacement value including, without limitation, stored inventory, with
companies, amounts and terms of coverage reasonably deemed prudent by Tenant and
(ii) workers’ compensation insurance per the applicable state statutes covering
all employees of Tenant.  Landlord shall have no interest in or claim
of any nature to the proceeds of any such insurance.  At the request
of Landlord, Tenant shall provide Landlord with a certificate of such insurance,
issued by the carrier or its agent, setting forth the terms of
coverage.

    

    (d)           In
the event that Tenant shall fail to carry and maintain the insurance coverages
set forth in this Section 8, Landlord may upon thirty (30) days notice to Tenant
(unless such coverages will lapse in which event no such notice shall be
necessary) procure such policies of insurance and Tenant shall promptly
reimburse Landlord therefor.

    

    (e)           Landlord
and Tenant hereby waive any rights each may have against the other on account of
any loss or damage occasioned to Landlord or Tenant, as the case may be, their
respective property, the Demised Premises, its contents or to the other portions
of the Building, to the extent that such loss or damage is actually covered by
fire and extended coverage insurance and is fully
reimbursed.  Landlord and Tenant each agree that, to the extent a
waiver of subrogation is obtainable from their respective insurance companies
insuring the property of either Landlord or Tenant, waiving any right of
subrogation that such insurers may have against Landlord or Tenant, as the case
may be, for any such loss, such waiver of subrogation shall be contained in
their respective policies.  If, for any reason, Tenant fails to insure
its personal property and contents (including inventory) within the Demised
Premises, Tenant shall conclusively be deemed to have waived any claim against
or recovery from Landlord to the extent that any such claim or recovery would
have been covered by an "all risks" casualty insurance policy for such personal
property and contents and therefore would have been within the scope of a waiver
of subrogation contained in such policy of insurance.

    

    9.           Utilities.  During
the Term, Tenant shall promptly pay as billed to Tenant all rents and charges
for water and sewer services and all costs and charges for gas, steam,
electricity, fuel, light, power, telephone, heat and any other utility or
service used or consumed in or servicing the Demised Premises.  Any
utilities which are not separately metered shall be billed to Tenant by Landlord
at Landlord's actual cost.  In the event Tenant's use of any utility
not separately metered is in excess of the average use by other tenants,
Landlord shall have the right to install a meter for such utility, at Tenant's
expense, and bill Tenant for Tenant's actual use.  If Tenant fails to
pay any utility bills or charges, Landlord may, at its option and upon
reasonable notice to Tenant, pay the same and, in such event, the amount of such
payment, together with interest thereon at the Interest Rate (as defined in
Section 33) from the date of such payment by Landlord will be added to Tenant's
next due payment as Additional Rent.

    

    10.           Maintenance and
Repairs.

    

    (a)           Tenant
shall, at its own cost and expense, maintain in good condition and repair, and
replace as necessary, the Demised Premises, including but not limited to the
heating, air conditioning and ventilation systems, glass, windows and doors,
sprinkler, all plumbing and sewage systems, fixtures, interior walls, wall
finishes, floors (including floor slabs), ceilings, columns, storefronts, plate
glass, skylights, pipes, mains, water and sewer connections, truck docks and
doors, dock bumpers, dock plates, levelers, entrance doors, door jams, all
electrical facilities and equipment including, without limitation, lighting
fixtures, lamps, fans and any exhaust equipment and systems, electrical motors,
and all other appliances and equipment (including, without limitation, dock
levers, dock shelters, dock seals and dock lighting) of every kind and nature
located in, upon or about the Demised Premises and return the same to Landlord
in the condition required under Section 32(b) hereof.  All such
maintenance, repairs and replacements shall be of first class quality and
sufficient for the proper maintenance and operation of the Demised
Premises.  Tenant shall keep and maintain the Demised Premises safe,
secure and clean, specifically including, but not by way of limitation, removal
of waste and refuse matter.  Tenant shall not permit anything to be
done upon the Demised Premises (and shall perform all maintenance and repairs
thereto so as not) to invalidate, in whole or in part, or prevent the
procurement of any insurance policies which may, at any time, be required under
the provisions of this Lease.  Tenant shall not obstruct or permit the
obstruction of any parking area, adjoining street or sidewalk.  During
the Term, Tenant shall maintain in full force and effect a service contract for
the maintenance of the heating, ventilation and air conditioning systems with an
entity acceptable to Landlord.  Such service contract shall conform to
the requirements under the warranty, if any, on said systems, including, but not
limited to, replacement of filters as necessary and provide for at least
quarterly inspections and cleaning of the applicable units, systems and
equipment, together with such adjustments and servicing as each such inspection
discloses to be recommended or required.  Tenant shall deliver to
Landlord (i) a copy of said service contract prior to the Commencement Date, and
(ii) thereafter, a copy of a renewal or substitute service contract within
thirty (30) days prior to the expiration of the existing service contract, and
(iii) upon Landlord’s request, a copy of the service log reflecting all services
performed under such service contract.

    

    (b)           Subject
to the provisions of Sections 20 and 21, Landlord shall maintain in good
condition and repair the (i) Common Areas (including the Tenant Parking Area),
(ii) gutters, (iii) roof, (iv) foundation (beneath the floor slab) and
structural frame of the Building and (v) the structural soundness of all
exterior walls at Landlord’s cost; provided, however, that the roof, Common Area
and Tenant Parking Area repair and replacement (but repairs or replacements of
the foundation or structure of the Building) shall be deemed an Operating
Expense payable by Tenant to the extent permitted under Section 6(a) of this
Lease.  Landlord’s obligation shall exclude the cost of any
maintenance or repair required because of the act or negligence of Tenant or any
of Tenant’s subsidiaries or affiliates or subtenant(s), or any of Tenant’s or
such subsidiaries’ or affiliates’ or subtenant(s)’ agents, contractors,
employees, licensees or invitees (collectively, “Tenant’s Affiliates”), the cost
of which shall be the responsibility of Tenant.  Landlord shall never
have any obligation to repair, maintain or replace, pursuant to this subsection
10(b) or any other provision of this Lease, any Tenant Change (as defined in
Section 19 hereof).

    

    (c)           Notwithstanding
anything in Sections 6(a) and 10.1(a) to the contrary, Landlord shall be
responsible for the repair or replacement, as determined in Landlord’s
reasonable discretion, of any material defects to the (i) electrical, gas,
water, telecommunications, and sewer service extending from the main service
connection to the Building, to the extent such services are located on the
Property; (ii) mechanical services within the Demised Premises, including, (1)
the electrical lines, electrical components and lighting, and (2) the plumbing
and drain/sewer line, sprinkler system and fixtures; (iii) the roof, foundation
and walls of the Building; (iv) the parking lot and entry drives servicing the
Demised Premises, including lighting and striping; (v) the docks within the
Demised Premises, including all improvements thereto; (vi) all flooring within
the Demised Premises; (vii) all heating, ventilation and cooling systems
servicing the Demised Premises; (viii) all other improvements to the Demised
Premises, except for the Pre-Term Tenant Alterations (as defined in Exhibit “C” hereto)
and any Tenant Changes; and (ix) all other structural components serving the
Demised Premises as of the date hereof (collectively referred to herein as, the
“Landlord Warranty Items”) for a period of one (1) year from the Commencement
Date (“Warranty Period”).  Landlord’s obligations under this Section
10(c) shall only apply to the Landlord Warranty Items serving the Demised
Premises as of the Commencement Date and Landlord shall have no obligation or
responsibility to repair or replace the Landlord Warranty Items after the
Warranty Period or any equipment, mechanical or other items installed to service
the Demised Premises in connection with the Improvements as provided in Exhibit “C” hereto or
at any time thereafter.  Tenant shall promptly notify Landlord of any
warranty claim and provide Landlord with its full cooperation and access to the
Demised Premises, as necessary for Landlord to complete any such Landlord
Warranty Item repairs.  Landlord’s obligation shall exclude the cost
of any repair or replacement of any damage or defects arising because of (i) the
act, misuse or negligence of Tenant or any of Tenant’s Affiliates, or (ii)
failure of Tenant to properly maintain such items as required herein, the cost
of which shall be the responsibility of Tenant.  In addition, Landlord
shall have no obligation to repair or replace any Landlord Warranty Items that
have been modified or repaired by Tenant, except to the extent that such
modifications or repairs made by Tenant are required pursuant to Tenant’s
maintenance obligations under this Lease.

    

    (d)           Except
to the extent caused by Landlord’s negligence, Landlord shall not be liable to
Tenant or to any other person for any damage occasioned by failure in any
utility system or by the bursting or leaking of any vessel or pipe in or about
the Demised Premises, or for any damage occasioned by water coming into the
Demised Premises or arising from the acts or neglects of occupants of adjacent
property or the public.

    

    11.           Non-Liability and
Indemnification.

    

    (a)           Subject
to Landlord’s indemnity under Subsection 10(c), none of Landlord, any managing
agent, Landlord’s members and their respective affiliates, owners, partners,
members, directors, officers, agents and employees shall be liable to Tenant for
any loss, injury, or damage, to Tenant or to any other person, or to its or
their property, irrespective of the cause of such injury, damage or
loss.  In the event that Landlord’s indemnity under Subsection 10(c)
is applicable, it shall apply only as and to the specific extent expressly
provided in Subsection 10(c).  Further, none of Landlord, any managing
agent, Landlord’s members and their respective affiliates, owners, partners,
members, directors, officers, agents and employees shall be liable to Tenant (a)
for any damage caused by other tenants or persons in, upon or about the
Property, or caused by operations in construction of any public or quasi-public
work; (b) with respect to matters for which Landlord is liable, for
consequential or indirect damages, including those purportedly arising out of
any loss of use of the Demised Premises or any equipment or facilities therein
by Tenant or any person claiming through or under Tenant; or (c) for injury or
damage to person or property caused by fire, or theft, or resulting from the
operation of heating or air conditioning or lighting apparatus, or from falling
plaster, or from steam, gas, electricity, water, rain, snow, ice, or dampness,
that may leak or flow from any part of the Property, or from the pipes,
appliances or plumbing work of the same.

    

    (b)           Except
in the event of, and to the extent of, Landlord’s negligence, sole negligence or
willful misconduct, Tenant hereby indemnifies, defends, and holds Landlord, its
managing agent, Landlord’s members and their respective affiliates, owners,
partners, members, directors, officers, agents and employees (collectively,
“Landlord Indemnified Parties”) harmless from and against any and all Losses
(defined below) arising from or in connection with any or all of:  (a)
the conduct or management of either or both the Property and the Demised
Premises or any business therein, or any work or Tenant Changes, or any
condition created by any or all of Tenant and Tenant’s Affiliates in or about
the Demised Premises during the Term or during the period of time, if any, prior
to the Commencement Date that Tenant has possession of, or is given access to,
the Demised Premises; (b) any act, omission or negligence of any or all of
Tenant and Tenant’s Affiliates; (c) any accident, injury or damage whatsoever
occurring in, at or upon either or both of the Property and the Demised Premises
and caused by any or all of Tenant and Tenant’s Affiliates; (d) any breach by
Tenant of any or all of its warranties, representations and covenants under this
Lease; (e) any actions necessary to protect Landlord’s interest under this Lease
in a bankruptcy proceeding or other proceeding under the Bankruptcy Code; (f)
the creation or existence of any Hazardous Substances in, at, on or under the
Demised Premises or the Property, if and to the extent brought to the Demised
Premises or the Property or caused by Tenant or any party within Tenant’s
control; and (g) any violation or alleged violation by any or all of Tenant and
Tenant’s Affiliates of any law (collectively, “Tenant’s Indemnified
Matters”).  In case any action or proceeding is brought against any or
all of Landlord and the Landlord Indemnified Parties by reason of any of
Tenant’s Indemnified Matters, Tenant, upon notice from any or all of Landlord,
managing agent or any Mortgagee (as defined herein), shall resist and defend
such action or proceeding by counsel reasonably satisfactory to, or selected by,
Landlord.  The term “Losses” shall mean all claims, demands, expenses,
actions, judgments, damages (actual, but not consequential), penalties, fines,
liabilities, losses of every kind and nature, suits, administrative proceedings,
costs and fees, including, without limitation, attorneys’ and consultants’
reasonable fees and expenses, and the costs of cleanup, remediation, removal and
restoration, that are in any way related to any matter covered by the foregoing
indemnity.  The provisions of this Section 11 shall survive the
expiration or termination of this Lease.

    

    (c)           Landlord
hereby indemnifies, defends and holds Tenant harmless from and against any and
all Losses actually suffered or incurred by Tenant as the direct result of any
negligent, willful or intentional acts or omissions of any or all of Landlord,
managing agent and any parties within the direct and sole control of either or
both of Landlord and managing agent.  Notwithstanding anything to the
contrary set forth in this Lease, however, in all events and under all
circumstances, the liability of Landlord to Tenant, whether under this Section
11(c) or any other provision of this Lease, shall be limited to the interest of
Landlord in the Property, and Tenant agrees to look solely to Landlord’s
interest in the Property for the recovery of any judgment or award against
Landlord, it being intended that Landlord shall not be personally liable for any
judgment or deficiency.  The provisions of this Section 11(c) shall
survive the expiration or termination of this Lease.

    

    (d)           Notwithstanding
anything to the contrary herein, nothing in this Section 11 shall be deemed to
exculpate Landlord from, or require Tenant to indemnify Landlord for, Landlord’s
negligent or willful acts or omissions.

    

    12.           Tenant's Fixtures and
Personal Property.  Tenant shall have the right to install in
the Demised Premises trade fixtures and personal property required by Tenant or
used by it in its business.  Tenant may remove any or all such trade
fixtures and personal property from time to time during the Term and shall
remove all such trade fixtures and personal property upon the expiration or
earlier termination of this Lease; provided, however, that Tenant may not remove
any property from the Demised Premises from and after the occurrence of any
Event of Default without the prior consent of Landlord.  Tenant shall
repair and restore any damage or injury to the Demised Premises (to the
condition in which the Demised Premises existed prior to such installation)
caused by the installation and/or removal of any such trade fixtures or personal
property.

    

    13.           Signs.  No
sign, advertisement or notice shall be inscribed, painted, affixed, or displayed
on the windows or exterior walls of the Demised Premises or on any public area
of the Building, except in such places, numbers, sizes, colors and styles as are
approved in advance in writing by Landlord, such approval not to be unreasonably
withheld, delayed or conditioned, subject always to the condition that all signs
must conform to all applicable laws and ordinances affecting the Demised
Premises and the Protective Covenants.  Subject to the foregoing
requirements of this Section 13, if Tenant vacates the Demised Premises during
the Term, Tenant, may, subject to Landlord’s approval rights set forth
immediately above, post signage at a location on the Property acceptable to
Landlord, advertising the Demised Premises for sublease.  Any and all
permitted signs shall be installed, maintained and removed by Tenant at Tenant's
sole expense.

    

    14.           Intentionally
Omitted.

    

    15.           Governmental
Regulations.  Tenant shall promptly comply throughout the Term,
at Tenant's sole cost and expense, with all present and future laws, ordinances
and regulations of all applicable governing authorities relating to all or any
part of the Demised Premises, ordinary as well as extraordinary, or to the use
or manner of use of the Demised Premises or to the sidewalks, parking areas,
curbs and access ways adjoining the Demised Premises.  Tenant shall
give prompt notice to Landlord of any written notice it receives of the alleged
violation of any law or requirement of any governmental or administrative
authority with respect to either or both of the Demised Premises and the use or
occupation thereof.

    

    16.           Environmental
Matters.

    

    (a)           For
purposes of this Lease:

    

    (i)             "Contamination"
as used herein means the uncontained or uncontrolled presence of or release of
Hazardous Substances (as hereinafter defined) into any environmental media from,
upon, within, below, into or on any portion of the Demised Premises, the
Building, or the Property so as to require remediation, cleanup or investigation
under any applicable Environmental Law (as hereinafter defined).

    

    (ii)           "Environmental
Laws" as used herein means all federal, state, and local laws, regulations,
orders, permits, ordinances or other requirements, concerning protection of
human health, safety and the environment, all as may be amended from time to
time.

    

    (iii)           "Hazardous
Substances" as used herein means any hazardous or toxic substance, material,
chemical, pollutant, contaminant or waste as those terms are defined by any
applicable Environmental Laws (including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq.
("CERCLA") and the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et
seq. ("RCRA") and any solid wastes, polychlorinated biphenyls, urea
formaldehyde, asbestos, radioactive materials, radon, explosives, petroleum
products and oil.

    

    (b)           Tenant
represents that all its activities on the Demised Premises or the Property
during the course of this Lease will be conducted in compliance with
Environmental Laws.  Tenant warrants that it is currently in
compliance with all applicable Environmental Laws affecting the business which
Tenant intends to conduct at the Demised Premises and that there are no pending
or threatened notices of deficiency, notices of violation, orders, or judicial
or administrative actions involving alleged violations by Tenant of any
Environmental Laws and relating to or affecting in any way the Demised
Premises.  Tenant, at Tenant's sole cost and expense, shall be
responsible for obtaining all permits or licenses or approvals under
Environmental Laws necessary for Tenant's operation of its business on the
Demised Premises and shall make all notifications and registrations required by
any applicable Environmental Laws to the extent applicable to the Demised
Premises.  Tenant, at Tenant's sole cost and expense, shall at all
times comply with the terms and conditions of all such permits, licenses,
approvals, notifications and registrations and with any other applicable
Environmental Laws affecting in any way the Demised Premises.  Tenant
warrants that it will obtain all such permits, licenses or approvals and make
all such notifications and registrations required by any applicable
Environmental Laws necessary for Tenant's operation of its business on the
Demised Premises.  Tenant shall promptly provide Landlord or its
designated agent with complete copies of all communications, permits or
agreements with, from or issued by any governmental authority or agency
(federal, state or local) or any private entity relating in any way to the
presence, release, threat of release, or placement of Hazardous Substances on or
in the Demised Premises or any portion of the Property, or the generation,
transportation, storage, use, treatment, or disposal at, on, in or from the
Demised Premises, of any Hazardous Substances.

    

    (c)           Tenant
shall not cause or permit any Hazardous Substances to be brought upon, kept,
stored or used in or about the Demised Premises, the Building, or the Property
without the prior written consent of Landlord, which consent may be granted or
withheld in the absolute discretion of Landlord; provided, however, that the
consent of Landlord shall not be required for cleaning supplies, toner for
photocopying machines and other similar materials, in containers and quantities
reasonably necessary for and consistent with normal and ordinary use by Tenant,
at the Demised Premises, in the routine operation or maintenance of Tenant's
office equipment or in the routine janitorial service, cleaning and maintenance
for the Demised Premises.  Any Hazardous Substances which are brought
upon, kept, stored or used by Tenant or any Tenant Affiliate in, on or about the
Land, the Building or the Demised Premises are hereinafter sometimes referred to
as "Tenant Hazardous Substances".

    

    (d)           Tenant
shall not cause or permit the release of any Hazardous Substances by Tenant or
its agents, contractors, employees or invitees into any environmental media such
as air, water or land, or into or on the Demised Premises, the Building or the
Property in any manner that violates any Environmental Laws.  If such
release shall occur, Tenant shall (i) take all steps reasonably necessary to
contain and control such release and any associated Contamination, (ii) clean up
or otherwise remedy such release and any associated Contamination in accordance
with the highest standards of remediation and to the satisfaction of Landlord
and also to the extent required by, and take any and all other actions required
under, applicable Environmental Laws and (iii) notify and keep Landlord
reasonably informed of such release and response.

    

    (e)           Regardless
of any consents granted by Landlord pursuant to Section 16(c) allowing Hazardous
Substances upon the Demised Premises, Tenant shall under no circumstances
whatsoever (i) cause or permit any activity on the Demised Premises which would
cause the Demised Premises to become subject to regulation as a hazardous waste
treatment, storage or disposal facility under RCRA or the regulations
promulgated thereunder; (ii) discharge Hazardous Substances into the storm sewer
system serving the Property; or (iii) install any underground storage tank or
underground piping on or under the Demised Premises.

    

    (f)           Tenant
shall and hereby does indemnify Landlord and the other Landlord Indemnified
Parties and hold and defend (through counsel selected by Landlord) Landlord and
the other Landlord Indemnified Parties harmless from and against any and all
reasonable and actual expense, loss, and liability suffered by Landlord or the
other Landlord Indemnified Parties (with the exception of those expenses,
losses, and liabilities arising from Landlord's own gross negligence or willful
misconduct), by reason of Tenant's storage, generation, handling, treatment,
transportation, disposal, or arrangement for transportation or disposal, of any
Hazardous Substances (whether accidental, intentional, or negligent) or by
reason of Tenant's or any Tenant Affiliate’s breach of any of the provisions of
this Section 16.  Such expenses, losses and liabilities shall include,
without limitation, (i) any and all expenses that Landlord may incur to comply
with any Environmental Laws as a result of Tenant's or any Tenant’s Affiliate’s
failure to comply therewith; (ii) any and all costs that Landlord may incur in
studying or remedying any Contamination at or arising from the Demised Premises
as a result of a failure by Tenant to comply with this Section 16 or
Environmental Laws; (iii) any and all costs that Landlord may incur in studying,
removing, disposing or otherwise addressing any Hazardous Substances which are
present at the Demised Premises as a result of a failure by Tenant or any Tenant
Affiliate to comply with this Section 16 or Environmental Laws; (iv) any and all
fines, penalties or other sanctions assessed upon Landlord by reason of Tenant's
failure to comply with Environmental Laws; and (v) any and all reasonable legal
and professional fees and costs incurred by Landlord in connection with the
foregoing. Notwithstanding the foregoing, Tenant shall have the right and
obligation to undertake and perform all such studying, remedying, removing,
disposing or otherwise addressing any Hazardous Substances which are the
responsibility of Tenant under this subsection (f), and Landlord shall not
perform such acts unless (x) Landlord is specifically required by Environmental
Laws to perform such acts or (y) Tenant has failed or refused to perform such
acts after having been afforded reasonable notice by Landlord and having had
reasonable opportunity to perform such acts.  The indemnity contained
herein shall survive the termination or expiration of this Lease.

    

    (g)           Landlord
shall have the right, but not the obligation, to enter the Demised Premises at
reasonable times throughout the Term, after prior written notice to Tenant, to
audit and inspect the Demised Premises for Tenant's compliance with this Section
16.  Upon written request by Landlord, Tenant shall provide Landlord
with the results of reasonably appropriate tests of air, water or soil to
demonstrate that Tenant complies with all applicable laws, rules or permits
relating in any way to the generation, transport, storage, use, treatment,
disposal or presence of Hazardous Materials on, at, in or from all or any
portion of either or both of the Demised Premises and the Property.

    

    (h)           In
any case where there is any dispute or controversy regarding the source of any
Hazardous Substances, unless it is clearly and indisputably proven that such
Hazardous Substances were present in the Demised Premises on or before the
execution of this Lease or thereafter placed therein by (a) Landlord or its
employees, agents or contractors, or (b) by any tenant of the Building other
than Tenant, or (c) by any other third party not affiliated with Tenant, it
shall be conclusively deemed for all purposes of this Lease that such Hazardous
Substances were placed in the Demised Premises by Tenant or one of the Tenant’s
Affiliates.

    (i)           Landlord
shall indemnify and hold Tenant harmless from and against any and all “Covered
Liabilities and Costs” (as defined below) arising from (i) the release of
Hazardous Substances on the Property in violation of Environmental Laws
occurring prior to the commencement of the Term, and (ii) the release of
Hazardous substances on the Property in violation of Environmental Laws by
Landlord, its agents, employees, contractors, invitees and
licensees.  Covered Liabilities and Costs shall include only (i)
reasonable coasts that Tenant may incur in order to comply with any clean up of
Contamination required by any governmental entity responsible for enforcing
applicable Environmental Laws, (ii) fines, penalties or other sanctions assessed
against or imposed upon Tenant, (iii) reasonable professional fees incurred by
Tenant in connection with the foregoing, and (iv) damages to Tenant’s personal
property directly caused by such release to the extent not covered by Tenant’s
insurance required hereunder.  In the event that any claim arises
under this subsection (i) Landlord shall have the right and obligation to
undertake and perform, at its sole cost and expense, all necessary studies,
removals, disposals and remediation of such Contamination, as necessary to bring
the Property in compliance with such Environmental Laws.

    

    17.           Acceptance of Demised
Premises.

    

    (a)           Except
as set forth in this Lease, LANDLORD IS LEASING THE DEMISED PREMISES TO TENANT
“AS IS,” WITHOUT ANY REPRESENTATIONS OR WARRANTIES, INCLUDING ANY EXPRESS OR
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS OR HABITABILITY, AND WITHOUT ANY
OBLIGATION TO ALTER, REMODEL, IMPROVE, REPAIR, DECORATE OR CLEAN ANY PART OF THE
DEMISED PREMISES OR COMMON AREAS.

    

    (b)           Any
improvements which Tenant proposes to make to the Demised Premises shall be
deemed a “Tenant Change” (as defined in Section 19) and shall be made in strict
accordance therewith.  Upon completion of such work, Tenant shall
furnish Landlord with final waivers of liens and contractors’ affidavits, in
such form as may be required by Landlord, Landlord’s title insurance company and
Landlord’s construction lender, from all parties performing labor or supplying
materials or services in connection with the work showing that all such parties
have been compensated in full and waiving all liens in connection with the
Demised Premises and Building.  Tenant shall submit to Landlord a
detailed breakdown of Tenant’s total construction costs, together with such
evidence of payment as is reasonably satisfactory to Landlord.

    

    18.           Force
Majeure.  Landlord shall not be in default under this Lease to
the extent Landlord is unable to perform any of its obligations on account of
any strike or labor problem, energy shortage, governmental withholding of
permits for work to be performed by Landlord for reasons outside of Landlord’s
control, governmental pre-emption or prescription, national emergency, or any
other cause of any kind beyond the reasonable control of Landlord (“Force
Majeure”).

    

    19.           Tenant Alterations and
Additions.  Tenant shall not make or permit to be made any
alterations, improvements, or additions to the Demised Premises (a "Tenant
Change"), without first obtaining on each occasion Landlord's prior written
consent; provided, however, that Tenant shall have the right, without the prior
written consent of Landlord, to make non-structural Tenant Changes which require
an expenditure of less than $10,000.00 for any one Tenant Change and less than
$100,000.00 in the aggregate over the Term.  Landlord shall approve or
reject a Tenant Change request within ten (10) business days after receipt of
written notice of such request; provided, however, that Landlord’s failure to
timely respond to a Tenant Change request shall be deemed a rejection of such
request.  As part of its approval process, Landlord may require that
Tenant submit plans and specifications to Landlord, for Landlord's approval and
to deliver to Landlord “as built” plans and specifications (in CAD format if
Landlord so requests) following the substantial completion
hereof.  Notwithstanding any other provision of this Lease to the
contrary, the term Tenant Change shall include any changes made to the Demised
Premises by Landlord or Tenant pursuant to the Tenant Improvement Agreement
attached hereto as Exhibit “C” and
forming a part hereof.  Tenant shall be required to remove all Tenant
Changes to the Demised Premises at the end of the Term unless Landlord provides
written notice to Tenant, at least thirty (30) calendar days prior to the end of
the Term, that such Tenant Change must be left in the Demised
Premises.  Accordingly, Tenant shall, at its sole cost and expense and
upon the expiration or earlier termination of this Lease, remove the same and
restore the Demised Premises to its condition prior to such Tenant Change unless
notified to the contrary by Landlord as provided above.  All Tenant
Changes shall be performed in accordance with all legal requirements applicable
thereto and in a good and workmanlike manner with first-class
materials.  Tenant shall maintain insurance reasonably satisfactory to
Landlord during the construction of all Tenant Changes and shall provide
Landlord with evidence thereof satisfactory to Landlord prior to the
commencement of construction.  No Tenant Change shall be structural in
nature or impair the structural strength of the Building or reduce its
value.  Tenant shall pay the full cost of any Tenant Change and shall
give Landlord such reasonable security as may be requested by Landlord to insure
payment of such cost.  With respect to any Tenant Change, Landlord
shall have no duty or obligation to make any replacement or repair thereto,
whether pursuant to Section 10 of this Lease or as required to comply with any
law or otherwise, whether interior or exterior, structural or nonstructural,
ordinary or extraordinary.

    

    20.           Fire and Other
Casualty.

    

    (a)           If
the Demised Premises are damaged or destroyed by fire or other casualty,
Landlord shall, subject to the limitations in subsection (b) of this Section 20,
promptly and diligently proceed to repair, rebuild or replace the Demised
Premises, so as to restore the Demised Premises to the condition in which the
Demised Premises existed immediately prior to such damage or
destruction.  If Landlord carries on any restoration or repair at the
Demised Premises pursuant to this Section 20 and Tenant continues to occupy any
other portion of the Demised Premises, Landlord shall take all such steps as may
be reasonable and practicable to prevent interference with Tenant's use and
enjoyment of the portion of the Demised Premises which Tenant continues to
occupy.  Landlord shall perform its obligations under this Section 20
in a manner which will achieve restoration of any damage as soon as practicable,
giving due regard to the nature and scope of the damage, subject to the
occurrence of Permitted Delay.

    

    (b)           Any
provision of this Section 20 to the contrary notwithstanding, if either (i) all
or any portion of the Demised Premises is damaged by fire or other casualty and
the time period reasonably determined by Landlord to be required for the actual
restoration or repair of the Demised Premises will exceed two hundred seventy
(270) days from the date the casualty occurs or (ii) the Demised Premises is
damaged by fire or other casualty within twelve (12) months preceding the end of
the Term (which includes any renewal of the Term then properly exercised by
Tenant) either (x) to an extent exceeding twenty-five percent (25%) of the then
current value of the Demised Premises, or (y) affecting a portion of the Demised
Premises which is critical to Tenant’s business operations and which cannot be
relocated or restored, then either Landlord or Tenant shall have the right, to
be exercised by giving written notice to the other (which notice shall set forth
with specificity the basis for giving the notice) within thirty (30) days after
the occurrence of the casualty, to terminate this Lease.  Termination
shall be effective on a date specified in the written notice, which date shall
be not less than thirty (30) nor more than sixty (60) days after the date the
notice is given.  Upon such termination, the term of this Lease shall
end as if the date of termination were the date originally specified for
expiration of the Term.

    

    (c)           If
a casualty prevents Tenant from fully occupying the Demised Premises, Base Rent
shall abate, for so long as such full occupancy is prevented, in proportion to
the amount of the Demised Premises not usable by Tenant as a result of the
casualty; provided that if the casualty occurred as a result of the act or
negligence of Tenant, there shall be no such abatement unless (and only to the
extent) that the loss of rent is actually covered by insurance carried by
Landlord pursuant to Section 8.

    

    21.           Condemnation.

    

    (a)           If
all of the Demised Premises is taken or condemned for a public or quasi-public
use ("Taking"), or if a Material Portion of the Demised Premises (as hereinafter
defined) is acquired in a Taking, Landlord shall promptly upon receipt of notice
thereof, give notice of such Taking to Tenant.  This Lease shall then
terminate as of the earlier of the date title to the condemned real estate vests
in the condemnor or the date on which Tenant is deprived of possession of the
Demised Premises.  In such event, the Base Rent herein reserved and
all Additional Rent and other sums payable hereunder shall be apportioned and
paid in full by Tenant to Landlord to that date, all Base Rent, Additional Rent
and other sums payable hereunder prepaid for periods beyond that date shall
forthwith be repaid by Landlord to Tenant, and neither party shall thereafter
have any liability hereunder, except that any obligation or liability of either
party, actual or contingent, under this Lease which has accrued on or prior to
such termination date shall survive.  A Taking shall have acquired a
"Material Portion of the Demised Premises" if the Taking:

    

    (i)           affects
more than 10% of the area of the Demised Premises or an area which is critical
to Tenant’s business operations and cannot be relocated or restored;
or

    

    
      	
              (ii)  

            	
              materially
      and adversely affects access to the Land or the
  Building.

            

    

    

    (b)           If
less than a Material Portion of the Demised Premises is affected by a Taking,
Landlord, to the extent of the award it receives, shall restore the Demised
Premises to a condition and to a size as nearly comparable as reasonably
possible to the condition and size thereof immediately prior to the Taking, and
there shall be an equitable adjustment to the Base Rent based on loss of use of
the Demised Premises as a result of the Taking.

    

    (c)           Except
as hereinafter expressly provided to the contrary, Landlord shall be entitled to
receive the entire award in any proceeding with respect to any Taking provided
for in this Section 21, without deduction therefrom for any estate vested in
Tenant by this Lease, and Tenant shall receive no part of such
award.  Nothing herein contained shall be deemed to prohibit Tenant
from making a separate claim, against the condemnor, to the extent permitted by
law, for the value of Tenant's moveable trade fixtures, machinery and moving
expenses, provided that the making of such claim shall not and does not
adversely affect or diminish Landlord's award.

    

    22.           Tenant's
Default.

    

    (a)           The
occurrence of any one or more of the following events shall constitute an "Event
of Default" of Tenant under this Lease:

    

    (i)           if
Tenant fails to pay Base Rent or any Additional Rent hereunder as and when such
rent becomes due and such failure continues for seven (7) calendar days after
Landlord gives written notice of such failure to Tenant;

    

    (ii)           if
Tenant permits to be done anything which creates a lien upon the Demised
Premises and fails to discharge, bond such lien or post security with Landlord
acceptable to Landlord within thirty (30) days after receipt by Tenant of
written notice thereof;

    

    (iii)           if
Tenant fails to maintain in force all policies of insurance required by this
Lease and such failure shall continue for more than ten (10) days after Landlord
gives Tenant notice of such failure;

    

    (iv)           if
any petition is filed by or against Tenant under any present or future section
or chapter of the Bankruptcy Code, or under any similar law or statute of the
United States or any state thereof (which, in the case of an involuntary
proceeding, is not permanently discharged, dismissed, stayed, or vacated, as the
case may be, within sixty (60) days of commencement), or if any order for relief
shall be entered against Tenant in any such proceedings;

    

    (v)           if
Tenant becomes insolvent or makes a transfer in fraud of creditors or makes an
assignment for the benefit of creditors;

    

    (vi)           if
a receiver, custodian, or trustee is appointed for the Demised Premises or for
all or substantially all of the assets of Tenant, which appointment is not
vacated within sixty (60) days following the date of such
appointment;

    

    (vii)           if
Tenant shall  fail to deliver to Landlord at least ten days prior
written notice, accompanied by an additional security deposit equal to two
monthly installments of Base Rent and then prevailing estimated Additional Rent,
prior to vacating or abandoning the Demised Premises;

    

    (viii)           if
Tenant fails to perform or observe any other term of this Lease and such failure
shall continue for more than ten (10) days after Landlord gives Tenant notice of
such failure;

    

    (ix)           Source
Interlink Companies Inc., the Guarantor under the Guaranty dated of even date
herewith and attached hereto as Exhibit “H”,
breaches, defaults under or fails to comply with any or all of the requirements
of such Guaranty; or

    

    (x)           if
Tenant vacates or abandons the Demised Premises during the Term and fails to
continue to comply with the terms of this Lease, including, but not limited to
maintenance of required insurance covered and keeping the same in repair and
secured.

    

    (b)           Upon
the occurrence of any Event of Default Landlord may, at Landlord's option,
without any demand or notice whatsoever (except as expressly required in this
Section 22):

    

    (i)           Terminate
this Lease by giving Tenant notice of termination, in which event this Lease
shall expire and terminate on the date specified in such notice of termination
and all rights of Tenant under this Lease and in and to the Demised Premises
shall terminate.  Tenant shall remain liable for all obligations under
this Lease arising up to the date of such termination, and Tenant shall
surrender the Demised Premises to Landlord on the date specified in such notice;
or

    

    (ii)           Terminate
this Lease as provided in Section 22(b)(i) hereof and recover from Tenant all
damages Landlord may incur by reason of Tenant's default, including, without
limitation, a sum which, at the date of such termination, represents the (1)
value of the excess, if any, of (a) the Base Rent, Additional Rent and all other
sums which would have been payable hereunder by Tenant for the period commencing
with the day following the date of such termination and ending with the
Expiration Date had this Lease not been terminated, over (b) the aggregate
reasonable rental value of the Demised Premises for the period commencing with
the day following the date of such termination and ending with the Expiration
Date had this Lease not been terminated (which is hereby stipulated and agreed
shall not exceed sixty percent (60%) of the Rent reserved for such period under
this Lease), plus (2) the costs of recovering possession of the Demised Premises
and all other expenses incurred by Landlord due to Tenant's default, including,
without limitation, reasonable attorney's fees, plus (3) the unpaid Base Rent
and Additional Rent earned as of the date of termination plus any interest and
late fees due hereunder, plus other sums of money and damages owing on the date
of termination by Tenant to Landlord under this Lease or in connection with the
Demised Premises, all of which shall be deemed immediately due and payable;
provided, however, that such payments shall not be deemed a penalty but shall
merely constitute payment of liquidated damages, it being understood and
acknowledged by Landlord and Tenant that actual damages to Landlord are
extremely difficult, if not impossible, to ascertain.  The excess, if
any, of subparagraph (ii)(1)(a) over subparagraph (ii)(1)(b) herein shall be
discounted to present value at the "Treasury Yield" rate.  "Treasury
Yield" shall mean the rate of return in percent per annum of Treasury Constant
Maturities for the length of time specified as published in document H.15(5 19)
(presently published by the Board of Governors of the U.S. Federal Reserve
System titled "Federal Reserve Statistical Release") for the calendar week
immediately preceding the calendar week in which the termination
occurs.  If the rate of return of Treasury Constant Maturities for the
calendar week in question is not published on or before the business day
preceding the date the Treasury Yield in question is to become effective, then
the Treasury Yield shall be based upon the rate of return of Treasury Constant
Maturities for the length of time specified for the most recent calendar week
for which such publication has occurred.  If no rate of return for
Treasury Constant Maturities is published for the specific length of time
specified, the Treasury Yield for such length of time shall be the weighted
average of the rates of return of Treasury Constant Maturities most nearly
corresponding to the length of the applicable period specified.  If
the publishing of the rate of return of Treasury Constant Maturities is ever
discontinued, then the Treasury Yield shall be based upon the index which is
published by the Board of Governors of the U.S. Federal Reserve System in
replacement thereof or, if no such replacement index is published, the index
which, in Landlord's reasonable determination, most nearly corresponds to the
rate of return of Treasury Constant Maturities.  In determining the
aggregate reasonable rental value pursuant to subparagraph (ii) (1)(b) above,
the parties hereby agree that, at the time Landlord seeks to enforce this
remedy, all relevant factors should be considered, including, but not limited
to, (a) the length of time remaining in the Term, (b) the then current market
conditions in the general area in which the Building is located, (c) the
likelihood of reletting the Demised Premises for a period of time equal to the
remainder of the Term, (d) the net effective rental rates then being obtained by
landlords for similar type space of similar size in similar type buildings in
the general area in which the Building is located, (e) the vacancy levels in the
general area in which the Building is located, (f) current levels of new
construction that will be completed during the remainder of the Term and how
this construction will likely affect vacancy rates and rental rates and (g)
inflation; or

    

    (iii)           Without
terminating this Lease, Landlord may, without the necessity of notice to the
Tenant, terminate Tenant’s right of possession of the Demised Premises pursuant
to any available judicial proceeding and thereupon enter into and upon and take
possession of the Demised Premises or any part thereof.  Any property
then remaining in the Demised Premises may be removed and stored in a warehouse
or elsewhere at the cost of, and for the account of Tenant without Landlord
becoming liable for any loss or damage which may be occasioned
thereby.  Thereafter, Landlord shall use its best reasonable efforts
as required by Illinois law to lease to a third party the Demised Premises or
any portion thereof as the agent of Tenant upon such terms and conditions as
Landlord may deem necessary or desirable in order to relet the Demised
Premises.  The remainder of any rentals received by Landlord from such
reletting, after the payment of any indebtedness due hereunder from Tenant to
Landlord, and the payment of any costs and expenses of such reletting
(including, without limitation, leasing commissions and costs of preparing the
Demised Premises for reletting), shall be held by Landlord to the extent of and
for application in payment of future rent owed by Tenant, if any, as the same
may become due and payable hereunder, plus the costs and expenses relating to
reletting as described in the immediately preceding sentence.  If such
rentals received from such reletting shall at any time or from time to time be
less than sufficient to pay to Landlord the entire sums then due from Tenant
hereunder, Tenant shall pay any such deficiency to
Landlord.  Notwithstanding any such reletting without termination,
Landlord may at any time thereafter elect to terminate this Lease for any such
previous default provided same has not been cured; or

    

    (iv)           Without
liability to Tenant or any other party and without constituting a constructive
or actual eviction, suspend or discontinue furnishing or rendering to Tenant any
property, material, labor, utilities or other service, wherever Landlord is
obligated to furnish or render the same so long as Tenant is in default under
this Lease; or

    

    (v)           With
or without terminating this Lease, allow the Demised Premises to remain
unoccupied and collect rent from Tenant as it comes due; provided that nothing
contained in this Lease will relieve Landlord of its duty to mitigate its
damages to the extent required under the laws of the State of Illinois;
or

    

    (vi)           Pursue
such other remedies as are available at law or equity.

    

    (c)           If
this Lease shall terminate as a result of or while there exists an Event of
Default hereunder, any funds of Tenant held by Landlord may be applied by
Landlord to any damages payable by Tenant (whether provided for herein or by
law) as a result of such termination or default.

    

    (d)           Neither
the commencement of any action or proceeding, nor the settlement thereof, nor
entry of judgment thereon shall bar Landlord from bringing subsequent actions or
proceedings from time to time, nor shall the failure to include in any action or
proceeding any sum or sums then due be a bar to the maintenance of any
subsequent actions or proceedings for the recovery of such sum or sums so
omitted.

    

    (e)           No
agreement to accept a surrender of the Demised Premises and no act or omission
by Landlord or Landlord's agents during the Term shall constitute an acceptance
or surrender of the Demised Premises unless made in writing and signed by
Landlord.  No re-entry or taking possession of the Demised Premises by
Landlord shall constitute an election by Landlord to terminate this Lease unless
a written notice of such intention is given to Tenant.  No provision
of this Lease shall be deemed to have been waived by either party unless such
waiver is in writing and signed by the party making such
waiver.  Landlord's acceptance of Base Rent or Additional Rent in full
or in part following an Event of Default hereunder shall not be construed as a
waiver of such Event of Default.  No custom or practice which may grow
up between the parties in connection with the terms of this Lease shall be
construed to waive or lessen either party's right to insist upon strict
performance of the terms of this Lease, without a written notice thereof to the
other party.

    

    (f)           If
an Event of Default shall occur, Tenant shall pay to Landlord, on demand, all
expenses incurred by Landlord as a result thereof, including reasonable
attorneys' fees, court costs and expenses actually incurred.  Landlord
may, at the option of Landlord, cure any Event of Default and the actual cost of
such cure shall be payable by Tenant to Landlord within thirty (30) calendar
days after written demand and shall bear interest at the Interest Rate until
repayment in full by Tenant occurs; provided, however, that if a failure by
Tenant to perform or observe any term of this Lease gives rise to circumstances
or conditions which constitute an emergency threatening human health or safety,
Landlord shall, after making a reasonable effort to notify Tenant, be entitled
to take immediately curative action to the extent necessary to eliminate the
emergency.  Any cost so incurred by Landlord shall be reasonably
incurred and must not exceed the scope of the Event of Default in question; and
if such costs are chargeable as a result of labor or materials provided directly
by Landlord, rather than by unrelated third parties, the cost shall not exceed
the amount which would have been charged by a qualified third party unrelated to
Landlord.  Such costs must be reasonably documented and copies of such
documentation must be delivered to Tenant with the written demand for
reimbursement.

    

    23.           Landlord's Right of
Entry.  Tenant agrees to permit Landlord and the authorized
representatives of Landlord and of Lender to enter upon the Demised Premises at
all reasonable times for the purposes of inspecting the Demised Premises,
ascertaining Tenant's compliance with this Lease, curing any Event of Default
and making any repairs required to be performed by Landlord; provided that,
except in the case of an emergency, Landlord shall give Tenant reasonable prior
notice of Landlord's intended entry upon the Demised
Premises.  Nothing herein shall imply any duty upon the part of
Landlord to do any work required of Tenant hereunder, and the performance
thereof by Landlord shall not constitute a waiver of Tenant's default in failing
to perform it.  Landlord shall not be liable for inconvenience,
annoyance, disturbance or other damage to Tenant by reason of making such
repairs or the performance of such work in the Demised Premises or on account of
bringing materials, supplies and equipment into or through the Demised Premises
during the course thereof and the obligations of Tenant under this Lease shall
not thereby be affected; provided, however, that Landlord shall use reasonable
efforts not to interfere with Tenant's operations in the Demised Premises in
making such repairs or performing such work.  Landlord also shall have
the right, upon giving prior notice (which may be given verbally) to Tenant, to
enter the Demised Premises at all reasonable times to exhibit the Demised
Premises to any prospective purchaser, mortgagee or tenant.  During
the final nine (9) months of the Term, Landlord may place signs at the Demised
Premises indicating that the Demised Premises is available for
rent.

    

    24.           Mortgagee's
Rights.

    

    (a)           For
purposes of this Lease:

    

    (i)           "Mortgagee"
as used herein means the holder of a Mortgage;

    

    (ii)           "Mortgage"
as used herein means any or all mortgages, deeds to secure debt, deeds of trust
or other instruments in the nature thereof which may now or hereafter affect or
encumber Landlord's title to the Demised Premises, and any amendments,
modifications, extensions or renewals thereof.

    

    (b)           This
Lease and all rights of Tenant hereunder are and shall be subordinate to the
lien and security title of any Mortgage.  Tenant recognizes and
acknowledges the right of Mortgagee to foreclose or exercise the power of sale
against the Demised Premises under any Mortgage.

    

    (c)           Tenant
shall, in confirmation of the subordination set forth in Section 24(b) and
notwithstanding the fact that such subordination is self-operative, and no
further instrument or subordination shall be necessary, upon demand, at any time
or times, execute acknowledge, and deliver to Landlord or to Mortgagee any and
all instruments requested by either of them to evidence such
subordination.

    

    (d)           At
any time during the Term, Mortgagee may, by written notice to Tenant, make this
Lease superior to the lien of its Mortgage.  If requested by
Mortgagee, Tenant shall, upon demand, at any time or times, execute, acknowledge
and deliver to Mortgagee, any and all instruments that may be necessary to make
this Lease superior to the lien of any Mortgage.

    

    (e)           If
Mortgagee (or Mortgagee's nominee, or other purchaser at foreclosure) shall
hereafter succeed to the rights of Landlord under this Lease, whether through
possession or foreclosure action or delivery of a new lease, Tenant shall, if
requested by such successor, attorn to and recognize such successor as Tenant's
landlord under this Lease without change in the terms and provisions of this
Lease and shall promptly execute and deliver any instrument that may be
necessary to evidence such attornment, provided that such successor shall not be
bound by (i) any payment of Base Rent or Additional Rent for more than one month
in advance, except prepayments in the nature of security for the performance by
Tenant of its obligations under this Lease, and then only is such prepayments
have been deposited with and are under the control of such successor, (ii) any
provision of any amendment to the Lease to which Mortgagee has not consented,
(iii) the defaults of any prior landlord under this Lease except to the extent
such Mortgagee was given notice of and an opportunity to cure such default and
failed to do so, or (iv) any offset rights arising out of the defaults of any
prior landlord under this Lease, except to the extent such Mortgagee was given
notice of and an opportunity to cure such default and failed to do
so.  Upon such attornment, this Lease shall continue in full force and
effect as a direct lease between each successor landlord and Tenant, subject to
all of the terms, covenants and conditions of this Lease.

    

    25.           Financial
Statements.  Tenant agrees to timely provide financial
information about itself and any Guarantor as requested by Landlord, including,
but not limited to, annual financial statements audited by independent certified
public accountants within ninety (90) days after the end of each fiscal year and
quarterly financial statements within sixty (60) days after the end of each
fiscal quarter and any other financial information reasonably requested by
Landlord (collectively, “Financial Information”).  Tenant agrees that
Landlord may deliver the Financial Information to any lender, prospective lender
or prospective purchaser of the Demised Premises.  Tenant hereby
further agrees that the Financial Information submitted by it to Landlord, and
by any guarantor(s) of Tenant’s performance under this Lease, whenever furnished
to Landlord and whether or not requested by Landlord, are material inducements
to the execution by Landlord of this Lease.  Tenant represents and
warrants that such Financial Information is, and all Financial Information,
whether furnished to Landlord and whether or not requested by Landlord, are
true, correct and complete in all material respects and fairly present the
financial condition of Tenant (and any Guarantor) for the respective periods
covered thereby, and that since the date thereof there has been no material
adverse change in such financial condition or operations of the applicable
party.  Tenant hereby authorizes Landlord to make credit inquiries
with Tenant’s bank(s) and trade references from time to time during the Term,
and Tenant agrees to provide Landlord with current references upon Landlord’s
request and to authorize such references to release credit information to
Landlord.  Notwithstanding anything in this Section 25 to the
contrary, Guarantor shall not be required to provide the Financial Information
so long as Guarantor is a publicly traded company and such information is
reasonably obtainable through Guarantor’s public filings.

    

    26.           Landlord’s Costs and
Expenses of Litigation.  Any party in breach or default under
this Lease (the “Defaulting Party”) shall reimburse the other party (the
“Nondefaulting Party”) upon demand for any legal fees and court (or other
administrative proceeding) costs or expenses that the Nondefaulting Party incurs
in connection with the breach or default, regardless whether suit is commenced
or judgment entered.  Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise.  Furthermore, in the event of litigation, the court in such
action shall award to the party in whose favor a judgment is entered a
reasonable sum as attorneys’ fees and costs, which sum shall be paid by the
losing party. Tenant shall pay Landlord’s attorneys’ reasonable fees incurred in
connection with Tenant’s request for Landlord’s consent under provisions of this
Lease governing assignment and subletting, or in connection with any other act
which Tenant proposes to do and which requires Landlord’s
consent.  The provisions of this Section 26 shall survive the
expiration or earlier termination of this Lease.

    

    27.           Estoppel
Certificate.  Tenant agrees that on the Commencement Date and
at any time and from time to time thereafter, Tenant will execute, acknowledge
and deliver to Landlord, Landlord’s mortgagee, purchasers, or any other third
party designated by Landlord, within ten (10) days from request by Landlord, a
statement in writing in the form of Exhibit "E" attached
hereto and by this reference incorporated herein, with such modifications
thereto as may be necessary to render the statements therein factually accurate,
and subject to such modifications thereto as Landlord may reasonably
require.  Tenant further agrees to certify to any prospective
purchaser or mortgagee any other reasonable information specifically requested
by such prospective purchaser or mortgagee.  If Landlord does not
receive estoppel certificate as required under this Section 27 within the
prescribed time, Tenant’s failure to timely deliver such estoppel certificate
shall constitute an Event of Default.

    

    28.           Landlord
Liability.  No owner of the Demised Premises, whether or not
named herein, shall have liability hereunder after it ceases to hold title to
the Demised Premises, except for obligations which may have theretofore
accrued.  No officer, director, shareholder, partner or principal of
Landlord, whether disclosed or undisclosed, nor any employee or agent thereof
shall be under any personal liability with respect to any of the provisions of
this Lease.

    

    29.           Notices.  Any
notice or payment required or permitted to be given or served by either party to
this Lease shall be deemed given when made in writing and either (i) personally
delivered, (ii) deposited with the United States Postal Service, postage
prepaid, to be mailed by registered or certified mail, return receipt requested,
(iii) delivered by overnight delivery service providing proof of delivery, or
(iv) facsimile with confirmation copy sent by registered or certified mail,
properly addressed to the address set forth in Section 1(l) of the Basic Lease
Provisions (as the same may be changed to another address in the Continental
United States by giving written notice of the change not less than ten (10) days
prior to effective date of the change); provided, however, that the time period
allowed for a response to any notice so given shall not commence until the date
of actual receipt of the notice.  Refusal to accept delivery or
inability to deliver as a result of a change of address as to which no notice
was properly given shall be deemed receipt.

    

    30.           Brokers.  Neither
Landlord nor Tenant has engaged any brokers who would be entitled to any
commission or fee based on the execution of this Lease, other than those set
forth in Section 1(n) (the "Brokers") who will be paid by Landlord pursuant to a
separate agreement.  Neither Landlord nor Tenant have had any
conversations or negotiations with any broker except the Brokers concerning the
leasing of the Demised Premises to Tenant.  Landlord and Tenant hereby
indemnify each other against and from any claims for any brokerage commissions
(except those payable to the Brokers, all of which are payable by Landlord) and
all costs, expenses and liabilities in connection therewith, including, without
limitation, reasonable attorneys' fees and expenses, for any breach of the
foregoing.  The foregoing indemnification shall survive the
termination of this Lease for any reason.

    

    31.           Assignment and
Subleasing.

    

    (a)           Tenant
may not assign, mortgage, pledge, encumber or otherwise transfer this Lease, or
any interest hereunder, or sublet the Demised Premises, in whole or in part,
without on each occasion first obtaining the prior express written consent of
Landlord, which consent shall not, except as hereinafter provided, be
unreasonably withheld, delayed or conditioned.  Any change in control
of Tenant due to a merger, consolidation, stock transfer or asset sale shall be
considered an assignment or transfer which requires Landlord’s prior written
consent.  In making a determination to grant or withhold such consent,
in addition to any other relevant factors, Landlord shall be entitled to
consider the creditworthiness of the proposed assignee or sublessee, the nature
of the use of the Demised Premises contemplated by the proposed assignee or
sublessee and whether or not the proposed use will increase wear and tear on the
Demised Premises.  In addition, if the intended use by the proposed
assignee or sublessee involves in any way any Hazardous Substances other than
the Hazardous Substances then being used by Tenant at the Demised Premises, in
accordance with Section 17 of this Lease, and if such additional Hazardous
Substances create, in the reasonable judgment of Landlord an increased risk of
Contamination at the Demised Premises, Landlord shall be unconditionally
entitled to withhold consent to the proposed assignment or
sublease.  Permitted subtenants or assignees shall become liable
directly to Landlord for all obligations of Tenant hereunder, without, however,
relieving Tenant of any of its liability hereunder; provided, however, that so
long as no Event of Default has occurred and is continuing, Landlord shall not
collect any rent directly from any subtenant of less than the entire Demised
Premises or otherwise interfere with the exercise by Tenant of its rights as
sublandlord under the sublease.  No assignment, mortgaging, subletting
or use or occupancy by others shall in any way be construed to relieve (i)
Tenant from any of its liability hereunder to pay Base Rent, Additional Rent and
all other sums payable by Tenant hereunder or to perform its obligations
hereunder (which shall in every instance continue as the liability and
obligation of a principal and not a surety) or (ii) Guarantor from any of its
liabilities under the Guaranty attached hereto as Exhibit “H” and
forming a part hereof, which Guaranty shall remain in full force and effect, or
from thereafter obtaining the express consent of Landlord to any other or
further assignment, mortgaging or subletting of this Lease.

    

    (b)           If
Tenant should desire to assign this Lease or sublet the Demised Premises (or any
part thereof), Tenant shall give Landlord written notice no later than ten (10)
business days in advance of the proposed effective date of any proposed
assignment or sublease, specifying (i) the name and business of the proposed
assignee or sublessee, (ii) a detailed description of the intended use of the
Demised Premises by the proposed assignee or sublessee, with particular detail
regarding any Hazardous Substances which will be used in any manner at the
Demised Premises; (iii) the amount and location of the space within the Demised
Premises proposed to be so subleased, (iv) the proposed effective date and
duration of the assignment or subletting, and (v) the proposed rent or
consideration to be paid to Tenant by such assignee or
sublessee.  Tenant shall promptly supply Landlord with financial
statements and other information as Landlord may reasonably request to evaluate
the proposed assignment or sublease.

    

    (c)           Landlord
shall have a period of ten (10) business days following receipt of such notice
and other information requested by Landlord within which to notify Tenant in
writing that Landlord elects:  (i) to permit Tenant to assign or
sublet such space; or (ii) to refuse to consent to Tenant's assignment or
subleasing of such space and to continue this Lease in full force and effect as
to the entire Demised Premises.  Tenant agrees to reimburse Landlord
for reasonable legal fees and any other reasonable costs incurred by Landlord in
connection with any requested assignment or subletting.  Tenant shall
deliver to Landlord copies of all documents executed in connection with any
permitted assignment or subletting, which documents shall be in form and
substance reasonably satisfactory to Landlord and which shall require such
assignee to assume performance of all terms of this Lease on Tenant's part to be
performed.  No acceptance by Landlord of any rent or any other sum of
money from any assignee, sublessee or other category of transferee shall be
deemed to constitute Landlord's consent to any assignment, sublease, or
transfer.

    

    (d)           Any
attempted assignment or sublease by Tenant in violation of the terms and
provisions of this Section 31 shall be void and such act shall constitute an
Event of Default.  In no event shall any assignment, subletting or
transfer, whether or not with Landlord's consent, relieve Tenant of its primary
liability under this Lease for the entire Term, and Tenant shall in no way be
released from the full and complete performance of all the terms
hereof.  If Landlord takes possession of the Demised Premises before
the expiration of the Term of this Lease, Landlord shall have the right, at its
option to take over any sublease of the Demised Premises or any portion thereof
and such subtenant shall attorn to Landlord, as its landlord, under all the
terms and obligations of such sublease occurring from and after such date, but
excluding previous acts, omissions, negligence or defaults of Tenant and any
repair or obligation in excess of available net insurance proceeds or
condemnation award.  Tenant shall reimburse Landlord for any costs
incurred by Landlord in connection with any sublease including any alterations
to the Demised Premises or any other portion of the Property undertaken in
consequence thereof.

    

    (e)           Landlord
shall have the right to sell, transfer, assign, pledge, and convey all or any
part of the Land and the Building and all of Landlord's rights under this
Lease.  In the event Landlord assigns or otherwise conveys its rights
under this Lease, Landlord shall be entirely freed and released from any
obligations accruing thereafter under this Lease, and Tenant agrees to look
solely to Landlord's successor in interest for performance of such
obligations.

    

    (f)           If
Tenant transfers or assigns this Lease or sublets the Demised Premises in whole
or in part to any permitted assignee or sublessee, Landlord shall be entitled to
receive, as Additional Rent, 50% of any "Rental Profit" (as hereinafter defined)
received by Tenant.  The term "Rental Profit" shall mean the amount,
calculated on a per square foot basis and not on an aggregate or cumulative
basis, by which (i) the total rental and other consideration (of any nature
whatsoever and however characterized) paid or delivered to Tenant by an assignee
of the interest of Tenant or sublessee of all or any part of the Demised
Premises, for the purpose of compensating Tenant directly or indirectly for the
assignment or sublease, exceeds (ii) the Monthly Base Rent Installments paid by
Tenant to Landlord pursuant to this Lease, after amortization of (x) the
reasonable costs of any improvements which Tenant has made for the purposes of
assigning or subletting all or part of the Demised Premises and (y) reasonable
and customary subletting and assignment leasing commissions paid by Tenant to
unaffiliated third parties.  By way of example, if Landlord grants the
required written consent to a sublease by Tenant of 10,000 square feet of the
Demised Premises and the total rental and other consideration received by Tenant
for the sublease equals a per annum rate of $4.50 per square foot and the per
annum rate per square foot for the Annual Base Rent then payable by Tenant is
$4.25 per square foot, the Rental Profit would be $0.25 per square foot and
Landlord would be entitled to receive its share of such Rental Profit
concurrently with receipt of each payment by the sublessee to
Tenant.  Landlord shall be entitled to receive payment of its share of
Rental Profit as and when payments are received by Tenant.

    

    (g)           Notwithstanding
anything contained herein to the contrary, Tenant may without Landlord’s prior
written consent, but subject to the remainder of the requirements of this
Section 31, assign this Lease, in whole or in part, or sublease the Demised
Premises, or any portion thereof, to any entity controlling, controlled by or
under common control with Tenant (collectively, an “Affiliate”), or to any
corporation (a “Successor Corporation”) into or with which Tenant is merged or
consolidated or to an entity which purchases all, or substantially all, of the
assets of Tenant (a “Purchaser”); provided, that (i) Tenant gives Landlord
written notice of such assignment or sublease not later than ten (10) business
days prior to the effective date of such assignment or sublease, (ii) Tenant
shall not be released from any liability under this Lease, whether past, present
or future, by reason of such assignment or sublease, (iii) in the event of an
assignment, the Affiliate, Successor Corporation or Purchaser, as the case may
be, assumes this Lease by a written assumption agreement in form acceptable to
Landlord in its reasonable judgment, delivered to Landlord prior to the
effective date of such assignment and (iv) the Purchaser or Successor
Corporation has a net worth after consummation of the applicable transfer which
is at least equal to or greater than the Tenant’s net worth at the date of this
Lease or Tenant’s net worth immediately prior to the transaction resulting in
such Purchaser or Successor Corporation becoming the Tenant
hereunder.  In addition, notwithstanding anything to the contrary in
this Lease, a registered offering of the stock of Tenant shall not be deemed an
assignment of this Lease requiring Landlord’s consent provided (i) there is no
material change in Tenant’s management on account thereof and (ii) Tenant gives
Landlord at least fifteen (15) days prior notice of such registered public
offering (however, notwithstanding the foregoing, in the event applicable law
prohibits Tenant from providing fifteen (15) days prior notice, then Tenant
shall only be required to provide notice at the earliest date allowed by
applicable law).  Any transfer permitted under this paragraph shall be
referred to herein as a “Permitted Transfer” and an Affiliate, Successor
Corporation or Purchaser may be referred to as a “Permitted
Transferee.”

    

    32.           Termination or
Expiration.

    

    (a)           No
termination of this Lease prior to the normal ending thereof, by lapse of time
or otherwise, shall affect Landlord's right to collect rent for the period prior
to termination thereof.

    

    (b)           Upon
the end of the Term or termination of Tenant's right to possession of the
Demised Premises, Tenant will at once surrender and deliver up the Demised
Premises to Landlord, in compliance with the requirements of Exhibit “J” attached
hereto and forming a part hereof, ordinary wear and tear (as is attributable to
deterioration by reason of time and normal usage in spite of Tenant’s reasonable
care) excepted.  As used herein (i) "Broom Clean" means free from all
debris, dirt, rubbish, oil, grease, tire tracks, marking tape or other
substances, inside the Demised Premises and outside of the Building, and (ii)
"Good Condition" means that the Demised Premises are in good condition and in
good working order.  Any damage caused by removal of Tenant from the
Property, including any damage caused by the removal of Tenant's Property under
Section 32(c) below, shall be repaired and paid for by Tenant prior to the end
of the Term.

    

    (c)           Upon
the end of the Term or termination of Tenant's right to possession of the
Demised Premises, Tenant shall remove all Tenant Changes unless Landlord has
provided written notice to the contrary as provided in Section 19 hereof
("Required Removables") and all of Tenant's personal property and trade fixtures
(including, without limitation, all of Tenant's equipment and all computer and
telecommunications cabling and wiring both within and outside the Demised
Premises and all signage), which removal shall be done in a good, workmanlike
and lien-free manner, and upon such removal Tenant shall repair all damage to
the Demised Premises, the Building and the Land caused by the installation or
removal of such items (including the removal of any and floor bolts) and restore
the Demised Premises to its condition prior to the installation of such
items.  If Tenant does not remove any items comprising Tenant's
property or the Required Removables prior to the end of the Term, then Landlord
may remove such items and repair and restore the Demised Premises and Tenant
shall pay the cost of such removal, repair and restoration to Landlord upon
demand.  If Tenant does not remove any items comprising Tenant's
property, or the Required Removables, in addition to any other remedies of
Landlord, then Tenant shall be conclusively presumed to have conveyed such items
to Landlord without further payment or credit by Landlord to Tenant or, at
Landlord's sole option, such items shall be deemed abandoned, in which event
Landlord may cause such items to be stored, removed or disposed of at Tenant's
expense, without notice to Tenant and without obligation to compensate
Tenant.

    

    (d)           If
Tenant remains in possession of the Demised Premises after expiration of the
Term, with or without Landlord's acquiescence and without any express agreement
of the parties, Tenant shall be a tenant-at-sufferance at one hundred ten
percent (110%) of the Base Rent in effect at the end of the Term, for the first
thirty (30) days of such holdover, increased to one hundred fifty percent (150%)
after the expiration of such thirty (30) day period.  Tenant shall
also continue to pay all other Additional Rent due hereunder, and there shall be
no renewal of this Lease by operation of law.  In addition to the
foregoing, in the event that Tenant remains in possession of the Demised
Premises after the expiration of the Term, Tenant shall be liable for all
damages, direct and consequential, incurred by Landlord as a result of such
holdover.  No receipt of money by Landlord from Tenant after the
termination of this Lease or Tenant's right of possession of the Demised
Premises shall reinstate, continue or extend the Term or Tenant's right of
possession.

    

    33.           Late
Payments.  In the event any installment of rent, inclusive of
Base Rent, or Additional Rent or other sums due hereunder, if any, is not paid
within five (5) days after the same comes due, Tenant shall pay a late charge
equal to five percent (5%) of such past due amount.  Any installment
of Base Rent, Additional Rent or other sums due hereunder, which is not paid
within thirty (30) calendar days after the date when such rent is due shall,
after such thirty (30) day period, bear interest at the Interest
Rate.  The term "Interest Rate," as used in this Lease, shall mean a
per annum rate of interest equal to five percent (5%) in excess of the Prime
Rate (as herein defined) in effect from time to time.  The term "Prime
Rate", as used in this Lease, shall mean the prime rate of interest as then most
recently published in The Wall Street Journal section on “Money
Rates”.

    

    34.           Rules and
Regulations.  Tenant agrees to abide by the rules and
regulations set forth on Exhibit "F" attached
hereto, as well as other rules and regulations reasonably promulgated by the
Landlord from time to time, so long as such rules and regulations are uniformly
enforced against all tenants of Landlord in the Building and do not materially
diminish or impair the rights of Tenant under this Lease.

    

    35.           Miscellaneous.

    

    (a)           The
parties hereto hereby covenant and agree that Landlord shall receive the Base
Rent and Additional Rent and all other sums payable by Tenant hereinabove
provided as income from the Demised Premises, without any abatement, reduction,
set-off, counterclaim, defense or deduction whatsoever.

    

    (b)           If
any clause or provision of this Lease is determined to be illegal, invalid or
unenforceable under present or future laws effective during the Term, then and
in that event, it is the intention of the parties hereto that the remainder of
this Lease shall not be affected thereby, and that in lieu of such illegal,
invalid or unenforceable clause or provision there shall be substituted a clause
or provision as similar in terms to such illegal, invalid or unenforceable
clause or provision as may be possible and be legal, valid and
enforceable.

    

    (c)           All
rights, powers, and privileges conferred hereunder upon the parties hereto shall
be cumulative, but not restrictive to those given by law

    

    (d)           Time
is of the essence of this Lease.

    

    (e)           No
failure of Landlord or Tenant to exercise any power given Landlord or Tenant
hereunder or to insist upon strict compliance by Landlord or Tenant with its
obligations hereunder, and no custom or practice of the parties at variance with
the terms hereof shall constitute a waiver of Landlord's or Tenant's rights to
demand exact compliance with the terms hereof.

    

    (f)           This
Lease contains the entire agreement of the parties hereto and no
representations, inducements, promises or agreements, oral or otherwise, between
the parties not embodied herein shall be of any force and effect.  The
masculine (or neuter) pronoun, singular number shall include the masculine,
feminine and neuter gender and the singular and plural number.

    

    (g)           Landlord
and Tenant agree to execute, upon request of the other, a memorandum of this
Lease in recordable form and the requesting party shall pay the costs and
charges for the recording of such memorandum of lease.  Under no
circumstances shall Tenant have the right to record this Lease.

    

    (h)           The
captions of this Lease are for convenience only and are not a part of this
Lease, and do not in any way define, limit, describe or amplify the terms or
provisions of this Lease or the scope or intent thereof.

    

    (i)           This
Lease may be executed in multiple counterparts, each of which shall constitute
an original, but all of which taken together shall constitute one and the same
agreement.

    

    (j)           This
Lease shall be interpreted under the laws of the State where the Demised
Premises are located.

    

    (k)           The
parties acknowledge that this Lease is the result of negotiations between the
parties, and in construing any ambiguity hereunder no presumption shall be made
in favor of either party.  No inference shall be made from any item
which has been stricken from this Lease other than the deletion of such
item.

    

    36.           Lease
Date.  For purposes of this Lease, the term "Lease Date" shall
mean the date upon which this Lease is signed by Landlord or Tenant, whichever
is later.

    

    37.           Anti-Terrorism
Representations.  Tenant is not, and shall not during the Term
become, a person or entity with whom Landlord is restricted from doing business
with under the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 1002, H.R. 3162, Public Law
107-56 (commonly known as the “USA Patriot Act”) and Executive Order Number
13224 on Terrorism Financing, effective September 24, 2001 and regulations
promulgated pursuant thereto (collectively, “Anti-Terrorism Laws”), including
without limitation persons and entities named on the Office of Foreign Asset
Control Specially Designated and Blocked Persons List (collectively “Prohibited
Persons).

    

    To the best of its knowledge, Tenant is
not currently engaged in any transactions or dealings, or otherwise associated
with, any Prohibited Persons in connection with the use or occupancy of the
Demised Premises.  Tenant will not in the future during the Term
engage in any transactions or dealings, or be otherwise associated with, any
Prohibited Persons in connection with the use or occupancy of the Demised
Premises.

    

    Breach of these representations
constitutes a material breach of this Lease and shall entitle Landlord to any
and all remedies available thereunder, or at law or in equity.

    

    38.           Authority.  If
Tenant is not a natural person, Tenant shall cause its corporate secretary or
general partner, as applicable, to execute the certificate attached hereto as
Exhibit
“G”.  Tenant is authorized by all required corporate or
partnership action to enter into this Lease and the individual(s) signing this
Lease on behalf of Tenant are each authorized to bind Tenant to its
terms.  The individual(s) signing this Lease on behalf of Landlord are
each authorized to bind Landlord to its terms.

    

    39.           JURY TRIAL
WAIVER.  THE LANDLORD AND THE TENANT, TO THE FULLEST EXTENT
THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BROUGHT BY ANY PARTY TO THIS LEASE WITH RESPECT TO THIS LEASE, THE
DEMISED PREMISES, OR ANY OTHER MATTER RELATED TO THIS LEASE OR THE DEMISED
PREMISES.

    

    40.           Additional
Provisions.  The Additional Provisions, if any, attached hereto
as Exhibit “I”
are incorporated herein and made a part hereof, and to the extent of any
conflict between the foregoing provisions and the Additional Provisions, the
Additional Provisions shall control.

    

    

    

    

    [Signature
Page to Follow]

    
      
        
          12024/00003/428855/9

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, the parties hereto have hereunto set their hands under seals,
the day and year written next to each party's signature below.

    

    LANDLORD:

    

    MLRP
Sergo LLC,

    a
Delaware limited liability company

    

    By:           /s/
Michael J. Dolan

    Name:                      Michael
J. Dolan

    Title:           Vice
President

    

    Date:   04/18/2007

    

    

    TENANT:

    

    Chas.
Levy Circulating Company, LLC,

    a
Delaware limited liability company

    

    Date:  04/17/2007

    By:           /s/
James Gillis

    Name: James Gillis

    Title:           Pres
/ Co-CEO

    

    Attest:                      /s/
Sheila Morgan

    Name: Sheila Morgan

    Title:           Contract
Administratorex10-77.htm

    LEASE

    

    1.
Parties. This Lease, dated December 1, 1994, for reference purposes only, is
made by and between Robert E. Petersen and Margaret McNally Petersen, Trustees
of The R. E. and M. M. Petersen Living Trust Dated January 17, 1983 ("Lessor"),
and Petersen Publishing Company, a Califomia corporation
("Lessee").

    

    2.
Premises. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
for the term, at the rental, and upon all of the terms and conditions set forth
herein, that certain real property situated in the County of Los Angeles, State
of California, commonly known as 6420 Wilshire Boulevard, Los Angeles,
California, and described as Parcel "A", as shown on Parcel Map No. 2377, in the
City of Los Angeles, as per map fled in Book 38 Page 7 of Parcel Maps, in the
Office of the Recorder of Los Angeles County, California (the "Property"). The
Property consists of a 20-story office building, with approximately 207,469
rentable square feet and is herein called the "Premises."

    

    3. Term.
The term of this Lease shall be for fifteen (15) years, commencing on December
1, 1994, and ending on November 30, 2009, unless sooner terminated pursuant to
any provision hereof.

    

    4.
-Rent.

    

    4.1 For
the period commencing December 1, 1994 and ending June 30, 1995, an amount equal
to Three Hundred Ten Thousand One Hundred Ninety-Four Dollars ($310,194) per
month

    

    4.2 For
the period commencing July 1, 1995 and ending August 30, 1995, an amount equal
to Three Hundred Twenty-Six Thousand Seven Hundred Fifty-Five Dollars ($326,755)
per month.

    

    4.3 For
the period commencing September 1, 1995 and ending September 30, 1995, an amount
equal to Three Hundred Fifty-Nine Thousand Nine Hundred Ninety- Nine Dollars
($359,999) per month.

    

    4.4 For
the period commencing October 1, 1995 and ending November 30, 1995, an amount
equal to Three Hundred Seventy-Six Thousand Four Hundred Thirty-Eight Dollars
($376,438) per month.

    

    4.5 For
the period commencing December 1, 1995 and ending November 30, 1996, an amount
equal to Three Hundred Eighty Three Thousand Ten Dollars ($383,010) per
month.

    

    4.6 For
the period commencing December 1, 1996 and ending November 30, 1997, an amount
equal to Three Hundred Eighty-Nine Thousand Six Hundred Ninety- Six Dollars
($389,696) per month.

    

    4.7 For
the period commencing December 1, 1997 and ending November 30, 1998, an amount
equal to Three Hundred Ninety-Six Thousand Four Hundred Ninety- Seven Dollars
($396,497) per month.

    

    4.8 For
the period commencing December 1, 1998 and ending November 30, 1999, an amount
equal to Four Hundred Three Thousand Four Hundred Thirty Three Dollars
($403,433) per month.

    

    4.9 For
the period commencing December 1, 1999 and ending November 30,2009, rent per
month shall be increased by 1 3/4% per mum.

    

    5
Parking. The Premises include four hundred twenty-five (425) parking spaces for
vehicles, the designation and location of such spaces to be within the
discretion of Lessor. No additional rent shall be due under Paragraph 4 for the
use of such parking spaces.

    

    6.
-Use.

    

    6.1 Use.
The Premises shall be used and occupied for any lawful purpose.

    

    6.2
Compliance With Law. Lessee shall, at Lessee's sole cost and expense, fully,
diligently and in a timely manner, comply with all "Applicable Law," which term
is used in this Lease to include all laws, rules, regulations, ordinances,
directives, covenants, easements and restrictions of record, permits, the
requirements of any applicable fire insurance underwriter or rating bureau, and
the recommendations of Lessor's engineers and/or consultants, relating in any
manner to the Premises (including, but not limited to, matters pertaining to (a)
industrial hygiene, (b) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (c) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor’s written request, provide Lessor
with copies of all documents and information, including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Law.

    

    6.3
Condition of premises. Lessee hereby accepts the Premises in their condition
existing as of the Lease commencement date or the date that Lessee takes
possession of the Premises, whichever is earlier, subject to all applicable
zoning, municipal, county and sate laws, ordinances and regulations governing
and regulating the use of the Premises, and any covenants or restrictions of
record, and accepts this Lease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto. Lessee acknowledges that neither
Lessor nor Lessor's agent have made any representation or warranty as to the
present or future suitabiity of the Premises for the conduct of Lessee's
business.

    

    7.
Maintenance. Repairs and Alterations.

    

    7.1 No
Obligation of Lessor. Lessor shall have no obligation whatsoever to replace,
repair or maintain any portion of the Property or the Premises. All obligations
with respect to the replacement, repair and maintenance of the Property during
the term of the Lease shall be the obligation and responsibility of
Lessee.

    

    7.2
Lessee’s Obligations.

    

    (a)
Lessee, at Lessee's expense, shall replace, repair and maintain in good order
and condition, the Property and the Premises and every part thereof (whether or
not the damaged portion of the Premises or the means of replacing or repairing
the same are reasonably or readily accessible to Lessee) including, without
limiting the generality of the foregoing, the foundations, exterior walls and
common areas, all plumbing heating, air conditioning (Lessee shall procure and
maintain, at Lessee's expense, an air conditioning system maintenance contract),
ventilating, electrical and lighting facilities and equipment within the
Property and the Premises, fixtures, interior walls and interior surfaces of
exterior walls, ceilings, windows, doors, plate glass and skylights, located
within the Premises, and all landscaping, driveways, parking lots, sidewalks,
fences and signs located on the Property or in the Premises.

    

    (b) If
Lessee fails to perform Lessee's obligations under this Paragraph 7.2 or under
any other provision of this Lease, Lessor may, at Lessor's option, enter upon
said Premises after ten (10) days' prior written notice to Lessee (except in the
case of emergency, in which case no notice shall be required), perform such
obligations on Lessee's behalf and put the Premises in good order, condition and
repair, and the cost thereof, together with interest thereon at the maximum rate
then allowable by law, shall be due and payable as additional rent to Lessor
together with Lessee's next rental installment.

    

    (c) On
the last day of the term hereof, or any sooner termination Lessee shall
surrender the Premises to Lessor in the same condition as received, ordinary
wear and tear excepted, clean and free of debris.  Lessee shall repair
any damage to the Premises occasioned by the installation or removal of its
trade fixtures, furnishings and equipment. Notwithstanding anything to the
contrary contained in this Lease, Lessee shall leave the air lines, power
panels, electrical distribution systems, lighting fixtures, space heaters, air
conditioning, plumbing and fencing on the Premises in good operating
condition.

    

    7.3
Alterations and Additions.

    

    (a)
Lessee may make any alterations, improvements, additions or Utility
Installations in, on or about the Premises, required by Paragraph 6.2
hereof.  Lessor shall have the right to approve any alterations,
improvements, additions or Utility Installations costing in excess of Two
Hundred Fifty Thousand Dollars ($250.000), and to approve the design (including
such matters as finishes) of any such alterations, improvements, additions or
Utility Installations, regardless of the cost thereof, which approval shall not
be unreasonably withheld or delayed.  As used in this Paragraph 7.3
the term "Utility Installation" shall mean carpeting, window coverings, air
lines, power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing and fencing. Lessor may require that Lessee
remove any or all of said alterations, improvements, additions or Utility
Installations at the expiration of the term, and restore the Premises to their
prior condition.  Lessor may require Lessee to provide Lessor, at
Lessee's sole cost and expense, a lien and completion bond in an amount equal to
one and one-half times the estimated cost of such improvements, to insure Lessor
against any liability for mechanic's and materialmen's liens and to insure
completion of the work.  Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior notice of
Lessor, Lessor may require that Lessee remove any or all of the same, whether or
not Lessor's approval was required.

    

    (b) Any
alterations, improvements, additions or Utility Installations in or about the
Premises that Lessee shall desire to make and which require the consent of
Lessor shall be presented to Lessor in written form, with proposed detailed
plans. If Lessor shall give its consent, the consent shall be deemed conditioned
upon Lessee acquiring a permit to do so from appropriate governmental agencies,
the furnishing of a copy thereof to Lessor prior to the commencement of the work
and the compliance by Lessee of all the conditions of said permit in a prompt
and expeditious manner. If a building permit is required for any alterations,
improvements, additions or Utility Installations, Lessee shall obtain same at
its expense and furnish a copy to Lessor.

    

    (c)
Lessee shall pay, when due, all claims for labor and materials furnished or
alleged to have been furnished to or for Lessee for use in the Premises, which
claims are or may be secured by any mechanics' or materialmen's lien against the
Premises or any interest therein. Lessee shall give Lessor not less than ten
(10)days' notice prior to the commencement of any work on the Premises, and
Lessor shall have the right to post notices of non-responsibility on the
Premises as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense, defend itself and Lessor against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereon against Lessor or the Premises, upon the condition that if Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in
an amount equal to such contested lien claim or demand indemnifying Lessor
against liability for the same and holding the Premises free from the effect of
such lien or claim. In addition, Lessor may require Lessee to pay Lessor's
attorneys' fees and costs in participating in such action if Lessor shall decide
it is to its best interest to do so.

    

    (d)
Unless Lessor requires their removal, as set forth in Paragraph 7.3(a), all
alterations, improvements, additions or Utility Installations (whether or not
such Utility Installations constitute trade fixtures of Lessee) which may be
made on the Premises shall become the property of Lessor and shall remain upon
and be surrendered with the Premises at the expiration of the term.
Notwithstanding the provisions of this Paragraph 7.3(d), Lessee's machinery and
equipment, other than that which is affixed to the Premises so that it cannot be
removed without material damage to the Premises, shall remain the property of
Lessee and may be removed by Lessee subject to the provisions of Paragraph
7.2(c).

    

    8.
Insurance, Indemnity.

    

    8.1
Liability Insurance. Lessee, at its sole expense, shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing continued single-limit coverage in an amount not less than Ten Million
Dollars ($10,000,000) per occurrence with an "Additional Insured Manager or
Lessors of Premises" Endorsement and shall contain the "Amendment of the
Pollution Exclusion" for damage caused by heat, smoke or fumes from a hostile
fire. The policy shall not contain any intra-insured exclusions as between
insured persons or organizations, but shall include coverage for liability
assumed under this Lease as an "insured contract" for the performance of
Lessee's indemnity obligations under this Lease. The limits of said insurance
required by this Lease or as carried by Lessee shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance to be carried by Lessee shall be primary to and not contributory with
any similar insurance carried by Lessor, whose insurance shall be considered
excess insurance only.

    

    8.2
Buildings and Improvements. Lessee, at its sole expense, shall obtain and keep
in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to the holders of any mortgages, deeds
of trust or ground leases on the Premises ("Lender(s)"), insurance loss or
damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by Lenders, if greater. Such policy or policies shall insure
against all risks of direct physical loss or damage, including flood and
earthquake coverage for any additional costs resulting from debris removal and
reasonable amounts of coverage for the enforcement of any ordinance or law
regulating the reconstruction or replacement of any undamaged sections of the
Premises required to be  demolished or removed by reason of the
enforcement of any building, zoning, safety or land use laws as the result of a
covered cause of loss. Such policy shall also cover (a) Lessee's fixtures,
equipment and tenant improvements, (b) fire, extended coverage, vandalism and
malicious mischief, (c) special extended coverage and (d) plate glass. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any coinsurance clause, waiver of subrogation and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of net less than the adjusted U.S. Department of Labor Consumer Price Index for
all Urban Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, the deductible amount shall not
exceed One Thousand Dollars ($1,000) per occurrence, and Lessee shall be liable
for such deductible amount.

    

    8.3
Rental Value. Lessee, at its sole expense, shall obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and Lender(s), insuring the loss of the full rental and other
charges payable by Lessee to Lessor under this Lease for one year (including all
real estate taxes, insurance costs and any scheduled rental increases). Said
insurance shall provide that in the event the Lease is terminated by reason of
an insured loss, the period of indemnity for such coverage shall be extended
beyond the date of the completion of repairs or replacement of the Premises, to
provide for one full year's loss of rental revenues from the date of any such
loss. Said insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected rental income, property taxes, insurance premium costs and
other expenses if any, otherwise payable by Lessee, for the next twelve (12)
month period. Lessee shall be liable for any deductible amount in the event of
such loss.

    

    8.4
Insurance Policies. Insurance required hereunder shall be in companies holding a
"BestRating" of at least A+. Lessee shall deliver to Lessor copies of liability
and casualty insurance required under Paragraphs 8.1 and 8.2 or certificates
evidencing the existence and amounts of such insurance. No such policy shall be
cancellable or subject to other modification except after thirty (30) days'
prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to
the expiration of such policies, furnish Lessor with the renewals or "binders"
thereof, or Lessor may order such insurance and charge the cost of such to
Lessee, which amount shall be payable by Lessee upon demand. Lessee shall not do
or permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8.

    

    8.5
Waiver of Subrogation. Lessee and Lessor each release and relieve the other, and
waive their entire right of recovery against the other for loss or damage
arising out of or incident to the perils insured against under this Paragraph 8,
which perils occur in, on or about the Premises, whether due to the negligence
of Lessor or Lessee or their agents, employees, contractors and/or invitees.
Lessee and Lessor shall, upon obtaining the policies of insurance required
hereunder, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.

    

    8.6
Indemnity. Lessee shall indemnify and hold harmless Lessor from and against any
and all claims arising from Lessee's use of the Premises, or from the conduct of
Lessee's business or from any activity, work or thing done, permitted or
suffered by Lessee in or about the Premises or elsewhere, and shall further
indemnify and hold harmless Lessor from and against any and all claims arising
from any breach or default in the performance of any obligation on Lessee's part
to be performed under the terms of this Lease, or arising from any negligence of
the Lessee, or any of Lessee's agents, contractors or employees, and from and
against all costs, attorneys' fees, expenses and liabilities incurred in the
defense of any such claim or any action or proceeding brought thereon; and in
case any action be brought against Lessor by reason of any such clam, Lessee,
upon notice from Lessor, shall defend the same at Lessee's expense by counsel
satisfactory to Lessor. Lessee, as a material part of the consideration to
Lessor, hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises arising from any cause and Lessee hereby waives all
claims in respect thereof against Lessor.

    

    8.7
Exemption of Lessor from Liability. Lessee hereby agrees that Lessor shall not
be liable for injury to Lessee's business or any loss of income therefrom or
damage to the goods, wares, merchandise or other property of Lessee, Lessee's
employees, invitees, customers, or any other person in or about the Premises,
nor shall Lessor be liable for injury to the person of Lessee, Lessee's
employees, agents or contractors, whether such damage or injury is caused by or
results from fire,steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said damage or injury results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources and places and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Lessee. Lessor shall not be liable for any damage arising from any act or
neglect of any other tenant, if any, of the building in which the Premises are
located.

    

    9. Damage
or Destruction.

    

    9.1
Premises Damage. If at any time during the term of this Lease there occurs
Premises Damage, then (unless Paragraph 9.2 applies) Lessee shall, at Lessee's
sole cost, repair such damage as soon as reasonably possible and this Lease
shall continue in full force and effect. As used herein, the term "Premises
Damage" shall mean damage or destruction to the Premises or
Property.

    

    9.2 Total
Destruction. If at any time during the term of this Lease there is damage which
destroys sixty-six and two-thirds percent (66-2/3%) or more of the Premises,
then, at Lessor's option, exercisable within ninety (90) days of such event,
this Lease shall automatically terminate as of the date of such total
destruction and Lessor shall be entitled to receive all insurance proceeds
payable on account of such damage.

    

    9.3
Damage Near End of Term. If at any time during the last six (6) months of the
term of this Lease there is damage affecting twenty percent (20%) or more of the
rentable square feet of the Premises, Lessor may, at Lessor’s option, cancel and
terminate this Lease as of the date of the occurrence of such damage by giving
written notice to Lessee of Lessor’s election to do so within sixty (60) days
after the date of occurrence of such damage and Lessor shall be entitled to
receive all insurance proceeds payable on account of such damage.

    

    9.4
Abatement of Rent: Lessee's Remedies. In the event of damage described in
Paragraph 9.1, and Lessee repairs or restores the Premises pursuant to the
provisions of this Paragraph 9, the rent payable hereunder for the period during
which such damage, repair or restoration continues shall be abated in proportion
to the degree to which Lessee's use of the Premises is impaired. Except for
abatement of rent, if any, Lessee shall have no claim against Lessor for any
damage suffered by reason of any such damage, destruction, repair or
restoration.

    

    9.5
Termination -Advance Pavments. Upon termination of this Lease pursuant to this
Paragraph 9, an equitable adjustment shall be made concerning advance rent and
any advance payment made by Lessee to Lessor.

    

    9.6
Waiver. Lessor and Lessee waive the provisions of any statutes which relate to
termination of leases when leased property is destroyed and agree that any such
event shall be governed by the terns of this Lease.

    

    10. Real
Property Taxes.

    

    10.1
Payment of Tax Increase. Lessee shall pay the real property tax, as defined in
Paragraph 10.3, applicable to the Premises prior to the delinquency date
therefor. Lessee shall also be responsible for any property tax
increase.

    

    10.2
Additional Improvements. Lessee shall pay the entirety of any increase in real
property tax assessed solely by reason of additional improvements placed upon
the Premises by Lessee or at Lessee's request.

    

    10.3
Definition of "Real Property Tax”. As used herein, the term "real property tax"
shall include any form of real estate tax or assessment, general, special,
ordinary or extraordinary, any license fee, commercial rental tax, improvement
bond or bonds, levy or tax (other than inheritance, personal income or estate
taxes) imposed on the Premises by any authority having the direct or indirect
power to tax, including any city, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other district improvement
thereof, as against any income thereof, and as against Lessor's business of
leasing the Premises. The term "real property tax" shall also include any tax
fee, levy, assessment or charge (i) in substitution of, partially or totally,
any tax fee, levy, assessment or charge hereinabove included within the
definition of "real property tax”, "or (ii) the nature of which was hereinbefore
included within the definition of "real property tax”, or (iii) which is imposed
for a service or right not charged prior to June 1, 1978, or, if previously
charged, has been increased since June 1, 1978, or (iv) which is imposed as a
result of a transfer, either partial or total, of Lessor's interest in the
Premises or which is added to a tax or charge hereinbefore included within the
definition of "real property tax" by reason of such transfer, or (v) which is
imposed by reason of this transaction, or any modifications or changes hereto or
any transfers hereof.

    

    10.4
Personal Property Taxes

    

    (a)
Lessee shall pay prior to delinquency all taxes assessed against and levied upon
trade fixtures, furnishings, equipment and all other personal property of Lessee
contained in the Premises or elsewhere. When possible, Lessee shall cause trade
fixtures, furnishings, equipment and all other personal property to be assessed
and bid separately from the real property of Lessor.

    

    (b) If
any of Lessee's personal property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Lessee's property.

    

    11.
Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone
and all other utilities supplied to the Premises, together with all taxes
thereon. If any such services are not separately metered to Lessee, Lessee shall
pay a reasonable proportion to be determined by Lessor of all charges jointly
metered with other premises. Lessee shall also pay the cost of all user
fees.

    

    12.
Assignment and Subletting.

    

    12.1
Lessors Consent Required. Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage, sublet or otherwise transfer or encumber all or any
part of Lessee's interest in this Lease or in the Premises, without Lessors
prior written consent, which Lessor shall not reasonably withhold. Lessor shall
respond to Lessee's request for consent hereunder in a timely manner and any
attempted assignment, transfer, mortgage, encumbrance or subletting without such
consent shall be void, and shall constitute a breach of this Lease.

    

    12.2
Lessee Affiliate. Notwithstanding the provisions of Paragraph 12.1 hereof,
Lessee may assign or sublet the Premises, or any portion thereof, without
Lessors consent, to any corporation which controls, is controlled by or is under
common control with Lessee, or to any corporation resulting from the merger or
consolidation with Lessee, or to any person or entity which acquires all of the
assets of Lessee as a going concern of the business that is being conducted on
the Premises, provided that said assignee assumes, in I11, the obligations of
Lessee under this Lease. Any such assignment shall not, in any way, affect or
limit the liability of Lessee under the terms of this Lease even if after such
assignment or subletting the terms of this Lease are materially changed or
altered without the consent of Lessee, the consent of whom shall not be
necessary.

    

    12.3 No
Release of Lessee. Regardless of Lessor s consent, no subletting or assignment
shall release Lessee of Lessee's obligation or alter the primary liability of
Lessee to pay the rent and to perform all the other obligations by Lessee
hereunder. The acceptance of rent by Lessor from any other person shall not be
deemed to be a waiver by Lessor of any provision hereof. Consent to one
assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting. In the event of default by any assignee of Lessee or
successor of Lessee, in performance of any of the terms hereof Lessor may
proceed directly against Lessee without the necessity of exhausting remedies
against said assignee. Lessor may consent to subsequent assignments or
sub-letting of this Lease or amendments or modifications to this Lease with
assignees of Lessee, without notifying Lessee, or any successor of Lessee, and
without obtaining its or their consent thereto and such action shall not relieve
Lessee of liability under this Lease.

    

    12.4
Attorneys' Fees. In the event Lessee shall assign or sublet the Premises, or
request the consent of Lessor to any assignment or subletting, or if Lessee
shall request the consent of Lessor for any act Lessee proposes to do, then
Lessee shall pay Lessor reasonable attorneys' fees and costs incurred in
conjunction therewith.

    

    13.
Defaults: Remedies.

    13.1
Defaults. The occurrence of any one or more of the following events shall
constitute a material breach of this Lease by Lessee:

    

    (a) The
vacating or abandonment of twenty percent (20%) or more of the rentable square
feet of the Premises by Lessee.

    

    (b) The
failure by Lessee to make any payment of rent or any other payment required to
be made by Lessee hereunder, as and when due, where such failure shall continue
for a period of three (3) days after written notice thereof from Lessor to
Lessee. In the event that Lessor serves Lessee with a notice to pay rent or quit
pursuant to applicable unlawful detainer statutes such notice to pay rent or
quit shall also constitute the notice required by this Paragraph
13.1(b).

    

    (c) The
failure by Lessee to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by Lessee, other than
described in Paragraph 13. 1(b) above, where such failure shall continue for a
period of thirty (30) days after written notice thereof from Lessor to Lessee;
provided, however, that if
the nature of Lessee's default is such that more than thirty (30) days are
reasonably required for its cure, then Lessee shall not be deemed to be in
default if Lessee commenced such cure within said thirty (30) day period and
there- after diligently prosecutes such cure to completion.

    

    (d) (i)
The making by Lessee of any such general arrangement or assignment for the
benefit of creditors; (ii) Lessee becomes a "debtor" as defined in 11 U.S.C.
-101 or any successor statute thereto (unless, in the case of a petition fled
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days. Provided, however, in the
event that any provision of this Paragraph 13.l (d) is contrary to any
applicable law, such provision shall be of no force or effect.

    

    13.2
Remedies. In the went of any such material default or breach by Lessee, Lessor
may at any time thereafter, with or without notice or demand and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such default or breach:

    

    (a)
Terminate Lessee's right to possession of the Premises by any lad means, in
which case this Lease shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor. In such went, Lessor shall be entitled to
recover from Lessee:  (i) the worth at the time of the award of the
unpaid rent which had been earned at the time of termination; (ii) the worth at
the time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Lessee proves could have been reasonably avoided, (iii) the
worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rental
loss that Lessee proves could be reasonably avoided; and (iv) any other amount
necessary to compensate Lessor for all the detriment proximately caused by
Lessee's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, including, but
not limited to, the cost of recovering possession of the Premises, expenses of
reletting, including necessary renovation and alteration of the Premises,
reasonable attorneys' fees and costs, and that portion of any leasing commission
paid by Lessor applicable to the unexpired term of this Lease, and any leasing
commission payable with respect to any reletting. The worth at the time of award
of the amount referred to in provisions (i) and (i)of this Paragraph 13.2(a)
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's default or breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve therein the right to recover all or any part thereof in a separate suit
for such rent and/or damages. If a notice and grace period required under
Paragraph 13.l(c) or (d) was not previously given, a notice to pay rent or quit,
or to perform or quit, as the case may be, given to Lessee under any statute
authorizing the forfeiture of leases for unlawful detainer shall also constitute
the applicable notice for grace period purposes required by Paragraph 13.l(c) or
(d). In such case, the applicable grace period under Paragraph 13.l(c) or (d)
and under the unlawful detainer statute shall run concurrently after the one
such statutory notice, and the failure of Lessee to cure the default within the
grater of the two such grace periods shall constitute both an unlawful detainer
and a breach of this Lease entitling Lessor to the remedies provided for in this
Lease and/or by said statute.

    

    (b)
Maintain Lessee's right to possession under Civil Code Section 1951.4, in which
case this Lease shall continue in effect whether or not Lessee shall have
abandoned the Premises. In such event Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to recover
rent as it becomes due hereunder.

    (c)
Pursue any other remedy now or hereafter available to Lessor under the laws or
judicial decisions under the state wherein the Premises are located. Unpaid
installments of rent or other unpaid monetary obligations of Lessee under the
terms of this Lease shall bear interest from the date due at the maximum rate
allowable by law.

    

    (d) The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee of any obligation under any indemnity
accruing under this Lease during the term hereof or by reason of Lessee's
possession of the Premises.

    

    13.3
Default by. Lessor shall not be in default unless Lessor fails to perform
obligations required of Lessor within a reasonable time, but in no event later
than thirty (30) days, except in case of emergency requiring immediate
attention, after written notice by Lessee to Lessor and to the holder of any
mortgage or deed of trust covering the Premises whose name and address shall
have theretofore been finished to Lessor in writing, specifying wherein Lessor
has failed to perform such obligation; provided, however, that if the nature of
Lessor obligation is such that more than thirty (30) days are required for
performance, then Lessor shall not be in default if Lessor commences performance
within such thirty (30) day period and thereafter diligently prosecutes the same
to completion.

    

    13.4 Late
Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of
rent or other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or other sum due from Lessee shall not be received by Lessor
or Lessor's designee within ten (10) days after such sum shall be due, then,
without any requirement for notice to Lessee, Lessee shall pay to Lessor a late
charge equal to four percent (4%) of such overdue amount. The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of late payment by Lessee. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from exercising any of
the other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding Paragraph 4 or any
other provision of this Lease to the contrary.

    

    13.5
Impounds. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) installments of rent or any other monetary obligation
of Lessee under the terms of this Lease, Lessee shall pay to Lessor, if Lessor
shall so request, in addition to any other payments required under this Lease, a
monthly advance payment, payable at the same time as the rent, as established by
Lessor, for real property tax and insurance expenses on the Premises which are
payable by Lessee under the terms of this Lease. Such fund shall be established
to insure payment when due, before delinquency, of any and all such real
property taxes and insurance premiums. If the amounts paid to Lessor by Lessee
under the provisions of this Paragraph 13.5 are insufficient to discharge the
obligations of Lessee to pay such real property taxes and insurance premiums as
the same become due, Lessee shall pay to Lessor, upon Lessors demand, such
additional sums necessary to pay such obligations. All moneys paid to Lessor
under this Paragraph 13.5 may be intermingled with other moneys of Lessor and
shall not bear interest. Lessor shall not be liable for any late payment charges
or interest. In the event of a default in the obligations of Lessee to perform
under this Lease, then any balance remaining from funds paid to Lessor under the
provisions of this Paragraph 13.5 may, at the option of Lessor, be applied to
the payment of any monetary default of Lessee in lieu of being applied to the
payment of real property tax and insurance premiums.

    

    14.
Condemnation. If the Premises or any portion thereof are taken under the power
of eminent domain, or sold under the threat of exercise of said power (all of
which are herein called "condemnation"), this Lease shall terminate as to the
part so taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than fifty percent (50%) of the floor area of
the building on the Premises is taken by condemnation, Lessee may, at Lessee's
option, to be exercised in writing only within ten (10) days after Lessor shall
give Lessee written notice of such taking (or in the absence of such notice
within ten (10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that-the rent shall be reduced in the proportion
that the floor area of the building taken bears to the total floor area of the
Premises. No reduction of rent shall occur if the only area taken is that which
does not have a building located thereon. Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance of damages; provided,
however, that Lessee shall be entitled to any award for loss or damage to
Lessee's trade fixtures and removable personal property. In the event that this
Lease is not terminated by reason of such condemnation, Lessor shall, to the
extent of severance damages received by Lessor in connection with such
condemnation, repair any damage to the Premises caused by such condemnation
except to the extent that Lessee has been reimbursed therefor by the condemning
authority. Lessee shall pay any amount in excess of such severance damages
required to complete such repair.

    

    15.
Estoppel Certificate.

    

    15.1
Lessee shall, at any time upon not less than ten (10) days' prior written notice
from Lessor, execute, acknowledge and deliver to Lessor a statement in writing
(a) certifying that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in fill force and effect) and the date to which the
rent and other charges are paid in advance, if any, and (b) acknowledging that
there are not, to Lessee's knowledge, any incurred defaults on the part of
Lessor hereunder, or specifying such defaults if any are claimed. Any such
statement may be conclusively relied upon by any prospective purchaser or
encumbrancer of the Premises. Such statement shall also provide a copy of any
lease and amendment, the remaining term and the length and timing of any
unexercised options, the last day to which rent has been paid, the current
monthly rent, and any other matters reasonably requested by lesson and
customarily provided by lessees.

    

    15.2 At
Lessor's option, Lessee's failure to deliver such statement within such time
shall be a material breach of this Lease or shall be conclusive upon Lessee that
(a) this Lease is in full force and effect, without modification except as may
be reasonably represented by Lessor, (b) there are no uncured defaults in
Lessors performance, and (iii) not more than one month's rent has been paid in
advance or such failure may be considered by Lessor as a default by Lessee under
this Lease.

    

    15.3 If
Lessor decides to finance, refinance or sell the Premises, or any part thereof
Lessee hereby agrees to deliver to any lender or purchaser designated by Lessor
such financial statements of Lessee as may be reasonably required by such lender
or purchaser. Such statements shall include the past three (3) years' financial
statements of Lessee. All such financial statements shall be received by Lessor
and such lender or purchaser in confidence and shall be used only for the
purposes herein set forth.

    

    16.
Lessors Liability. The term "Lessor" as used herein shall mean only the owner or
owners at the time in question of the fee title or a lessee's interest in a
ground lease of the Premises. In the event of any transfer of such title or
interest, Lessor herein named (and, in case of any subsequent transfers, then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, provided
that any funds in the hands of Lessor or the then grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Lessor shall, subject
as aforesaid, be biding on Lessor's successors and assigns, only during their
respective periods of ownership. Notwithstanding any other provision in this
Lease to the contrary, Lessor's liability under this Lease shall cease as to the
then fee owner of the Property from and after any sale by such fee owner of the
Property. In no case shall Lessor's liability under this Lease exceed its equity
interest in the Property and any insurance for Lessee's benefit.

    

    17.
Severability. The invalidity of any provision of this Lease as determined by a
court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

    

    18.
Interest on Past Due Obligations. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law from the date due, in addition to any late charges due.
Payment of such interest shall not excuse or cure any default by Lessee under
this Lease, provided, however, that interest shall not be payable on late
charges incurred by Lessee nor on any amounts upon which late charges are paid
by Lessee.

    

    19. Time
of Essence. Time is of the essence.

    

    20.
Additional Rent. Any monetary obligations due from Lessee to Lessor under the
terms of this Lease shall be deemed to be rent.

    

    21.
Incorporation of Prior Agreements: Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest at
the time of the modification. Except as otherwise stated in this Lease, Lessee
hereby acknowledges that neither Lessor nor any employees or agents of Lessor
have made any oral or written warranties or representations to Lessee relative
to the condition or use by Lessee of said Premises and Lessee acknowledges that
Lessee assumes all responsibility regarding the Occupational Safety Health Act,
"Hazardous Substances" conditions, as such term is hereinafter defined, the
legal use and adaptability of the Premises and the compliance thereof with all
applicable laws and regulations in effect during the term of this
Lease.

    

    22.
Notice. Any notice, request, demand, instruction or other communication given
hereunder by any party must be in writing and will be validly and timely given
or made to another party if (i) served personally, (ii) deposited in the United
States mail, certified or registered, postage prepaid, return receipt requested,
(iii) delivered by overnight courier, or (iv) sent by telecopier, to each of the
parties as set forth below:

    

    If to
Lessor, to:

    Robert E.
Petersen and Margaret McNally Petersen, Trustees

    R E. and
M. M.-Petersen Living

    Trust
Dated January 17, 1983

    6420
Wilshire Boulevard

    Los
Angeles, California 90048

    Telecopier:
(213) 782-2484

    

    If to
Lessee, to:

    Petersen
Publishing Company

    6420
Wilshire Boulevard

    Los
Angeles, California 90048

    Telecopier:
(213) 782-2484

    

    If such
notice is served personally, such notice will be deemed to be given at the time
of such personal service. If notice is served by mail, such notice will be
deemed to be given two days after the deposit of same in any United States mail
post office box. If such notice is served by overnight courier, such notice will
be deemed to be given on the next business day following the acceptance of such
notice for delivery by such overnight courier. If such notice is served by
telecopier, such notice will be deemed to be given at the time such notice is
sent, provided that an additional copy of such notice is sent the same day by
another acceptable means of giving notice under this Paragraph 22. Any person
entitled to receive notice under this agreement may change the address or
telecopier number to which such notice may be sent, by giving notice thereof
pursuant to this Paragraph 22.

    

    23.
Waivers. No waiver by Lessor of a breach by Lessee of any provision hereof shall
be deemed a waiver of any other provision hereof or of any subsequent breach by
Lessee of the same or any other provision. Lessor's consent to, or approval of
any act, shall not be deemed to render unnecessary the obtaining of Lessors
consent to or approval of any subsequent act by Lessee. The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of
any provision hereof; other than the failure of Lessee to pay the particular
rent so accepted, regardless of Lessors knowledge of such preceding breach at
the time of acceptance of such rent. Any payment given Lessor by Lessee may be
accepted by Lessor on account of money or damages due Lessor, not- withstanding
any qualifying statements or other conditions made by Lessee in connection
therewith, which statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

    

    24.
Recording. Lessee shall not record any memorandum of this Lease.

    

    25.
Holding Over. If Lessee, with Lessor's consent remains in possession of the
Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, but all options and rights of
6rst refusal, if any, granted under the terms of this Lease shall be deemed
terminated and of no further effect during said month-to-month tenancy and Base
Rent shall be one hundred twenty percent (120%) of the Base Rent last paid by
Lessee prior to the expiration of the term for the first three (3) months of
Lessee's holding over and one hundred fifty percent (150%) of such Base Rent
thereafter.

    

    26.
Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive
but shall, wherever possible, be cumulative with all other remedies at law or in
equity.

    27.
Covenants and Conditions. Each provision of this Lease performable by Lessee
shall be deemed both a covenant and a condition.

    

    28.
Binding Effect: Choice of Law. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of Paragraph
16, this Lease shall bid the parties, their personal representatives, successors
and assigns. This Lease shall be governed by the laws of the State of
California.

    

    29.
Subordination: Attornment: Non-Disturbance.

    

    29.1
Subordination. This Lease shall be subject and subordinate to any ground lease,
mortgage, deed of trust or other hypothecation or security device (collectively,
"Security Device") now or hereafter placed by Lessor upon the property, to any
and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation Lessee will give any Lender, whose name and address have been
furnished Lessee in writing for such purpose, notice of Lessor default and allow
such Lender thirty (30) days following receipt of such notice for the cure of
said default before invoking any remedies Lessee may have by reason thereof. If
any Lender shall elect to have this Lease superior to the lien of its Security
Device and shall give written notice thereof to Lessee, this Lease shall be
deemed prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.

    

    29.2
Attornment. Subject to the non-disturbance provisions of Paragraph 29.3,Lessee
agrees to attorn to a Lender or any other party who acquires ownership of the
Premises by reason of a foreclosure of a Security Device, and that in the event
of such foreclosure, such new owner shall not: (a) be liable for any act or
omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership, (b) be subject to any offsets or defenses which Lessee
might have against any prior lessor, or (c) be bound by prepayment of more than
one month's rent.

    

    29.3
Non-Disturbance. With respect to Security Devices entered into by Lessor after
the execution of this Lease, Lessee's subordination of this Lease shall be
subject to receiving assurance (a "non-disturbance agreement") from the Lender
that Lessee's possession and this Lease, including any options to extend the
term hereof, will not be disturbed so long as-Lessee is not in breach hereof and
attorns to the record owner of the Premises.

    

    29.4
Self-Executing. The agreements contained in this Paragraph 29 shall be effective
without the execution of any further documents; provided, however, that, upon
written request from Lessor or a Lender in connection with a sale, financing or
re6nancing of the Premises, Lessee and Lessor shall execute such further
writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as provided for herein.

    

    30
Attorneys' Fees If Lessor retains the services of attorneys (a) for recovery of
possession of the Premises, (b) for recovery of any sum due under this Lease, or
(c) to defend any claim by Lessee against Lessor, whether or not suit be filed,
then all such costs and expenses, including reasonable attorneys' fees and
costs, incurred by Lessor shall be paid by Lessee. If any action or proceeding
(including any appeal thereof) is brought by Lessor or Lessee (whether or not
such action is prosecuted to judgment) to enforce its respective rights under
this Lease or to enforce a judgment ("Action"), (i) the unsuccessful party
therein shall pay all costs incurred by the prevailing party therein, including
reasonable attorneys' fees and costs to be fixed by the court, and (ii) as a
separate right, severable from any other rights set forth in this Lease, the
prevailing party therein shall be entitled to recover its reasonable attorneys'
fees and costs incurred in enforcing any judgment against the unsuccessful party
therein, which right to recover post-judgment attorneys' fees and costs shall be
included in any such judgment.

    

    31.
Lessors Access. Lessor and Lessors agents shall have the right to enter the
Premises at reasonable times for the purposes of inspecting the same, showing
the same to prospective purchasers, lenders or lessees, and making such
alterations, repairs, improvements or additions to the Premises or the building
of which they are a part as Lessor may deem necessary or desirable. Lessor may
at any time during the last one hundred twenty (120) days of the term hereof
place on or about the Premises any ordinary "For Lease" signs, all without
rebate of rent or liability to Lessee.

    

    32.
Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary contained in this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant such
consent.

    

    33.
Signs. Lessee shall not place any sign upon the Premises without Lessors prior
written consent, which consent shall not be unreasonably withheld or
delayed.

    

    34.
Merger. The voluntary or other surrender of this Lease by Lessee., or a mutual
cancellation thereof or a termination by Lessor, shall not work a merger, and
shall, at the option of Lessor, terminate all or any existing subtenancies or
may, at the option of Lessor, operate as an assignment to Lessor of any or all
of such subtenancies.

    

    35. Quiet
Possession. Upon Lessee timely paying the rent for the Premises and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder, Lessee shall have quiet possession of
the Premises for the entire term hereof subject to all of the provisions of this
Lease. The individuals executing this Lease on behalf of Lessor represent and
warrant to Lessee that they are fully authorized and legally capable of
executing this Lease on behalf of Lessor and that such execution is binding upon
all parties holding an ownership interest in the Premises.

    

    36.
Security Measures. Lessee hereby acknowledges that the rental payment to Lessor
hereunder does not include the cost of guard service or other security measures,
and that Lessor shall have no obligation whatsoever to provide same. Lessee
assumes all responsibility for the protection of Lessee, its agents and invitees
from acts of third parties.

    

    37.
Easements. Lessor reserves to itself the right, from time to time, to grant such
easements, rights and dedications that Lessor deems necessary or desirable, and
to cause the recordation of parcel maps and restrictions, so long as such
easements, rights, dedications, maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material breach of this Lease.

    

    38.
Performance Under Protest. If at any time a dispute shall arise as to any amount
or sum of money to be paid by one party to the other under the provisions hereof
the party against whom the obligation to pay the money is asserted shall have
the right to make payment "under protest" and such payment shall not be regarded
as a voluntary payment, and there shall survive the right on the part of said
party to institute suit for recovery of such sum. If it shall be adjudged that
there was no legal obligation on the part of said party to pay such sum or any
part thereof said party shall be entitled to recover such sum or so much thereof
as it was not legally required to pay under the provisions of this
Lease.

    

    39.
Authority. If Lessee is a corporation, trust or general or limited partnership,
each individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
behalf of said entity. If Lessee is a corporation, trust or partnership, Lessee
shall, within (30) days after execution of this Lease, deliver to Lessor
evidence of such authority satisfactory to Lessor.

    

    40.
Royalties. Lessor shall receive any and all royalties from mineral or oil
rights.

    

    41.
Amendments. This Lease may be modified only in writing, signed by Lessor and
Lessee at the time of modification. So long as they do not materially change
Lessee's obligations hereunder, Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably requested by an
institution, insurance company, or pension plan lender in connection with the
obtaining of normal financing or refinancing of the Property.

    

    42.
Further Assurances. Each party agrees to execute, whenever and as often as
reasonably requested to do so, such other and further documents and instruments
as shall be necessary or desirable to further the intentions of the parties to
this Lease.

    

    43.
Hazardous Substances.

    

    43.1.
Reportable Uses Require Consent. The term "Hazardous Substance" as used in this
Lease shall mean any product, substance, chemical, material or waste whose
presence, nature, quantity and/or intensity of existence, use, manufacture,
disposal, transportation spill, release or effect, either by itself or in
combination with other materials expected to be on the Premises, is either: (a)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (b) regulated or monitored by any governmental authority, or
(c) a basis for liability of Lessor to any governmental agency or third party
under any applicable statute or common law theory. Hazardous Substance shall
include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or
any products, by-products or fractions thereof. Lessee shall not engage in any
activity in, on or about the Premises which constitutes a Reportable Use (as
hereinafter defined) of Hazardous Substances with the express prior written
consent of Lessor, which consent may be given or denied in Lessor's sole and
absolute discretion, and compliance in a timely manner (at Lessee's sole cost
and expense) with all Applicable Law (as defined in Paragraph 6.2). "Reportable
Use" shall mean (i) the installation or use of any above or below ground storage
tank, (ii) the generation, possession, storage, use, transportation or disposal
of a Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be fled with, any
governmental authority. Reportable Use shall also include Lessee's being
responsible for the presence in, on or about the Premises of a Hazardous
Substance with respect to which any Applicable Law requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may, without Lessors prior consent, but in
compliance with all Applicable Law, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of Lessee's
business permitted on the Premises, so long as such use in not a Reportable Use
and does not expose the Premises or neighboring properties to any meaningful
risk of contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may (but without any obligation to do so) condition its consent
to the use or presence of any Hazardous Substance, activity or storage tank by
Lessee upon Lessee's giving Lessor such additional assurances as Lessor, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises and the environment against damage, contamination or injury and/or
liability therefrom or therefor, including, but not limited to, the installation
(and removal on or before Lease expiration or earlier termination) of reasonably
necessary protective modifications to the Premises (such as concrete
encasements).

    

    43.2 Duty
to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance, or a condition involving or resulting from same, is or has
come to be located in, on, under or about the Premises, other than as previously
consented to be Lessor in writing, Lessee shall immediately give written notice
of such fact to Lessor. Lessee shall also immediately give Lessor a copy of any
statement, report, notice, registration, application, permit, business plan,
license, claim, action or proceeding given to, or received from, any
governmental authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill release, discharge of or exposure to,
any Hazardous Substance or contamination in, on or about the Premises,
including, but not limited to, all such documents as may be involved in any
Reportable Uses involving the premises.

    

    43.3
Indemnification. Lessee shall indemnify, protect, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, and the Premises, harmless
from and against any and all loss of rents and/or damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, permits and attorneys' and
consultants' fees and costs arising out of or involving any Hazardous Substance
or storage tank brought onto the Premises by or for Lessee or under Lessee's
control, whether before or after the date of execution of this Lease. Lessee's
obligations under this Paragraph 43.3 shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation (including
attorneys' and consultants' fees and costs and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with respect to
Hazardous Substances or storage tanks, unless specifically so agreed by Lessor
in writing at the time of such agreement, which agreement may be given in
Lessor's sole and absolute discretion

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Lease at Los Angeles,
California on the dates specified immediately adjacent to their respective
signatures.

    

    LESSOR:

    

    THE R.E.
AND M.M. PETERSEN LIVING TRUST DATED JANUARY 17, 1983

    

    /s/
Robert E.
Petersen                                                                           Date:
7/26/1995

    Robert E.
Petersen, Trustee

    

    /s/
Margaret McNally
Petersen                                                                Date:
7/26/1995

    Margaret
McNally Petersen, Trustee

    

    LESSEE:

    

    PETERSEN
PUBLISHING COMPANY, a California Corporation

    

    /s/
[unreadable]                                           Date:
7/24/1995

    President

    

    /s/
[unreadable]                                           Date:
7/24/1995

    Secretary

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