Document:

usdc_8k-ex1007.htm

     

     

    Exhibit 10.7

    
      Execution
Version

    

    
 

    LICENSE
AGREEMENT

    

    THIS LICENSE AGREEMENT (this
“Agreement”), made and
entered into as of this 24th day of
March 2008 (the “Effective
Date”), by and between ZOOTS CORPORATION, a
corporation organized and existing under the laws of the State of
Delaware  (“Licensor”), and USDC PORTSMOUTH, INC., a
corporation organized and existing under the laws of the State of
California  (“Licensee”).

    

    RECITALS

    

    WHEREAS, Licensor is the owner
of all right, title, and interest in and to: (i) common law rights and the
listed federal trademark registrations in and for the service marks ZOOTS (Reg.
Nos. 2,631,264; 2,620,976; 2,428,729; 2,282,160), THE CLEANER CLEANER, ZOOTS THE
CLEANER CLEANER (Reg. Nos. 2,620,975; 2,531,165) (all of the foregoing used for
dry cleaning and laundry services), and the goodwill embodied therein, and (ii)
the Internet domain name zoots.com and the content
contained thereon(collectively, the “Licensed Marks”);

    

    WHEREAS,  pursuant
to a Secured Party Sale Agreement, dated of even date herewith (the “Sale Agreement”), and related
documents, Licensee is purchasing certain assets of Licensor, including without
limitation certain dry cleaning businesses located in Commonwealth of Virginia
and in the States of Georgia, Maryland, North Carolina, and South Carolina (the
“Territory”);

    

    WHEREAS, Licensor intends to
continue to use the Licensed Marks outside the Territory but wishes to license
to Licensee the exclusive right to use the Licensed Marks in the
Territory;

    

               NOW, THEREFORE, in
consideration of the mutual covenants herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

    

    1.           Grant
and Scope of License.

     

    1.1             Grant of License. Subject to Section
2.1, Licensor hereby
grants to Licensee an exclusive, perpetual, royalty-free, nontransferable,
nonsublicensable license to use the Licensed Marks (and the goodwill embodied
therein) in the Territory (the “License”) for the purpose of
offering dry cleaning and laundry services.  The sole exception to the
exclusivity of the License shall be that Licensor will retain the right to use
the Licensed Marks in the Territory for a limited transition period beginning on
the Effective Date and ending thirty (30) days after the Effective
Date.  The License shall include without limitation the right for
Licensee to use the mark ZOOTS as part of the domain name zootsva.com and domain
names identifying other web sites related to Licensee’s stores within the
Territory (“Territory Store
Sites”), as well as the right to use all trade dress and “look and feel”
of Licensor’s zoots.com web site on the Territory Store Sites.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.2             Initial Licensor Link to zootsva.com
Web Site.   For a period of six (6) months after the Effective
Date, Licensor agrees to maintain its existing zoots.com web site in accordance
with its recent past practice; and to place a prominent link on the zoots.com
web site to the zootsva.com web site.  Licensee shall reimburse Licensor for direct,
reasonable and documented costs relating to the maintenance of such
link.

     

    2.              
trademark
use and protection.

     

    2.1          Goodwill; Quality
Control. Licensee
shall use the Licensed Marks in accordance with Licensor’s acceptable use
policies regarding such Licensed Marks provided to the Licensee prior to the
date hereof (if any), and Licensee acknowledges that its use of the Licensed
Marks shall inure to the benefit of Licensor as the owner of the Licensed
Marks. Licensee
shall permit Licensor to inspect and review applicable business locations of
Licensee upon reasonable prior notice and during normal business hours for the
purposes of assuring that Licensor’s quality standards are being met with
respect to services offered under the Licensed Marks.

     

    3.               Infringements.

     

    3.1         Third Party
Infringement.  In the event that Licensee
become aware that any third party is infringing one or more of the Licensed
Marks in the Territory, Licensee agrees to notify Licensor in writing and
provide pertinent details of such infringement.  Upon prior written
notice to Licensor, Licensee shall have the right to bring a legal action for
infringement against the third party, together with the right to enforce and
collect any judgment thereon.  If Licensee elects to exercise such
right, Licensor agrees to provide reasonable assistance to Licensee in such
legal action at Licensee’s request at the sole expense of
Licensee.  Notwithstanding the foregoing, Licensor reserves the right
to retain separate counsel at Licensor’s expense to represent Licensor in any
such infringement action.

     

    4.         
     Term
and Termination

     

    4.1          This
Agreement shall commence on the Effective Date and continue until terminated by
Licensee by written notice to Licensor.

    

    5.           Miscellaneous.

     

    5.1         Governing
Law.  This
Agreement will be governed by and construed in accordance with the laws of the
United States and the State of New York, without recourse to conflicts of law
principles.

    

    5.3         Consent to
Jurisdiction.  Each of the parties hereby submits to the
exclusive personal jurisdiction of the United States District Court for the
Southern District of New York, or, if jurisdiction in such court is lacking, any
court sitting in the City of New York, in respect of any action brought to
enforce any provisions of this Agreement.

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.4         Notices. 
All notices, requests, demands, consents and other communications
required or permitted under this Agreement shall be in writing and shall be
considered to have been duly given when (i) delivered by hand, (ii) sent by
telecopier or facsimile (with receipt confirmed), provided that a copy is mailed
(on the same date) by certified or registered mail, return receipt requested,
postage prepaid, or (iii) received by the addressee, if sent by Express Mail,
Federal Express or other express delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may from time to time
designate as to itself by notice similarly given to the other party in
accordance herewith).  A notice of change of address shall not be
deemed given until received by the addressee.  Notices shall be
provided as follows:

     

    

    If to Licensor:

    

    Todd
Krasnow

    ZOOTS
Corporation

    153
Needham Street, Building 1

    Newton,
Massachusetts 02464

    Telecopier:  (617)558-9667

    

    With
copies (which shall not constitute notice) to :

    

    Michael
Nowlan

    FTI
Consulting

    125 High
Street, Suite 1402

    Boston,
Massachusetts 02110

    Telecopier:  617-897-1510

    

    and

    

    Robert V.
Jahrling, III

    Choate
Hall & Stewart, LLP

    Two
International Place

    Boston,
Massachusetts 02110

    Telecopier:  617-248-4000

    

    If to
Licensee:

    

    U.S. Dry
Cleaning Corp.

    4040
MacArthur Blvd., Suite 305

    Newport
Beach, California 92660

    Telecopier:  (949)
863-9657

    Attn:  Mr.
Robert Y. (Robbie) Lee, Chief Executive Officer

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    With
copies (which shall not constitute notice) to:

    

    Levene,
Neale, Bender, Rankin & Brill L.L.P.

    10250
Constellation, Suite 1700

    Los
Angeles, CA 90067

    Telecopier:  (310)
229-1244

    Attn.:  Mr.
Martin Brill

    

    and

    

    Greenberg
Traurig, LLP

    The Met
Life Building

    200 Park
Avenue, 14th
Floor

    New York,
New York 10166

    Telecopier:  (212)
801-6400

    Attn:  Spencer
G. Feldman, Esq.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.5         Entire
Agreement.  This
Agreement contains the entire agreement between the parties hereto and
constitutes the complete, final and exclusive embodiment of their agreement with
respect to the subject matter hereof and will supersede any and all prior oral
or written representations, conditions, warranties, understandings, proposals or
agreements between the parties regarding the subject matter
hereof.

     

    5.6         Amendment and
Waiver.  No
provision of this Agreement may be amended or waived except by a writing signed
by both parties.  Any delay or failure on the part of either
party to enforce its rights hereunder to which it may be entitled shall not be
construed as a waiver of the right and privilege to do so at any subsequent
time.  Waiver by any party of any particular default by the other
party shall not impair such party's right and respect to any subsequent default
of the same or of a different nature.

    

    5.7         Severability.  Any invalidity, in whole or
in part, of any provision of this Agreement, will not affect the validity of any
other provision of this Agreement.

     

    5.8         Successors.  Subject to the prohibitions
against assignment contained herein, this Agreement will inure to the benefit of
and will be binding on the parties hereto and their respective successors and
assigns.

     

    5.9         Survival.  Any provisions of this Agreement which
must survive in order to give effect to their meaning shall survive any
termination or expiration of this Agreement, including without limitation all
provisions pertaining to Licensor’s sole rights of ownership of the
Licensed Marks.

     

    

     

    [Signature page
follows]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    IN
WITNESS WHEREOF, each of the undersigned has executed and delivered this License
Agreement as of the date first above written.

     

    

     

    
      	 
      	
              ZOOTS
      CORPORATION

            
	 	 
	 	 
	 
      	
              By:                                                                 

              Name:                                                            

              Title:                                                               

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              USDC
      PORTSMOUTH, INC.

            
	 	 
	 	 
	 
      	
                    
                By:                                                                 

                Name:                                                            

                Title:exhibit_10-23.htm

    EXHIBIT
10.24

     

     

    LEASE
AGREEMENT

    

    1.           PARTIES.  THIS
LEASE (the “Lease”), dated the 28th day of February,
2007, is between W&G Associates, a North Carolina limited partnership
("Landlord") and Starsys, Inc., a Colorado corporation ("Tenant").

    

    2.           CONSIDERATION: Each
of the aforesaid parties acknowledges receipt of a valuable consideration from
the other and that they and each of them act herein in further consideration of
the covenants of the other as herein stated.

    

    3.           PREMISES: That
Landlord does hereby lease unto Tenant Suite No.
100, consisting of approximately 13,500
net usable square feet as outlined on the floor plan attached hereto as
"Exhibit B-1" (excluding Expansion Area #1 and Expansion Area #2 until the Hard
Expansion, the "Premises"), in that certain building (the "Building") located at
1030 Swabia Court Durham, North Carolina, 27703.

    

    The term
"net rentable area", as used herein, shall refer to (i) in the case of a single
tenancy floor, all floor area measured from the plane set by the inside surface
of the outer glass of the building to the inside surface of the opposite outer
wall, excluding only the areas ("service areas") within the outside walls used
for elevator mechanical rooms, building stairs, fire towers, elevator shafts,
flues, vents, stacks, pipe shafts and vertical ducts but including any such
areas which are for the specific use of the particular tenant such as special
stairs or elevators, and (ii) in the case of a partial floor tenancy, all floor
areas within the plane set by the inside surface of the outer glass enclosing
the tenant occupied portion of the floor and measured to the mid-point of the
walls separating areas leased by or held for lease to other tenants or from
areas devoted to corridors, elevators foyers, restrooms, mechanical rooms,
janitor closets, vending areas and other similar facilities for the use of all
tenants on the particular floor (hereinafter sometimes called "common areas"),
but including a proportionate part of the common areas located on such floor
based upon the ratio which the tenant's net rentable area on such floor bears to
the aggregate net rentable area on such floor.  No deductions from net
rentable area are made for columns or projections necessary to the
Building.  The net rentable area in the Premises has been calculated
on the basis of the foregoing definition and is hereby stipulated for all
purposes hereof to be 14,310
net rentable square feet (RSF), whether the same should be more or less
as a result of minor variations resulting from actual construction and
completion of the Premises for occupancy so long as such work is done in
accordance with the terms and provisions hereof.

    

    4.           USE OF PREMISES. That
Premises are to be used and occupied continuously throughout the term hereof for
general office purposes in connection with its business exclusively, and no
other, except that Landlord shall permit Tenant to use the area marked on
Exhibit B-1 as “Lab Area” for the manufacturing, assembly, and testing of
hardware and electronics for space and similar applications, including the
utilization of a small vibration lab (such uses collectively, the “Permitted
Use”). Notwithstanding the foregoing, the Premises shall be used for lawful
purposes, and no part of Premises or improvements thereon shall be used in any
manner whatsoever for any purposes in violation of laws, ordinances or
regulations of any applicable governmental authority, nor shall Tenant create or
allow any nuisances to exist in the Premises.  Tenant shall, at its
sole cost and at no cost to Landlord, abate any nuisance that may arise at the
Premises.  Tenant will be provided with any restrictive covenants
affecting the Premises and the current zoning classification of the Premises as
of the execution of this Lease. Notwithstanding Landlord’s consent to use the
Lab Area for manufacturing, assembly, and testing of hardware and electronics
for space and similar applications, including the utilization of a small
vibration lab, it is understood and agreed that such consent was granted on
condition that, and Tenant represents and warrants (i) that appropriate dampers
and soundproofing equipment shall be installed, so that no noise, odor, dust or
vibration from the Permitted Use, which would be reasonably objectionable to
Landlord or other tenants in the Building extends outside the Premises and (ii)
the operation of Tenant’s business and the vibrations from such operations shall
not adversely affect the Building, including but not limited to the structural
stability of the Building.

    

    5.           TERM OF LEASE. The
term of this Lease shall be for a period of Sixty-Five
Months (the “Term”), commencing on May 1,
2007 (the “Commencement Date”), provided the Commencement Date is subject
to adjustment as set out herein.  If the Commencement Date is not the
first day of the month, then the Term shall be extended to add such partial
month, so that Base Rent increases shall occur as of the first day of the month;
provided however, that any abatement of Base Rent provided for in Paragraph 6
below shall not be extended by such partial month and Base Rent for the partial
month shall begin upon the end of the period of such abatement.

    

    Under no
circumstances shall Landlord be liable to Tenant for any damages which may be
caused by any delay in commencing or completing its construction of the Premises
or for a total failure to complete same.

    

    At the
time that the Commencement Date is established, the parties will promptly, upon
request of Landlord, enter into an amendment to the Lease prepared by Landlord,
stipulating the Commencement Date and the expiration date of the term of this
Lease as provided herein (the “Commencement Date Amendment”).

    

    The
parties covenant and agree that this Lease shall not be recorded; provided,
however, that upon written request of either Landlord or Tenant, a Memorandum of
Lease prepared by, and in form and content satisfactory to, Landlord describing
the property herein demised, giving the term of this Lease and the name and
address of Landlord and Tenant and referring to this Lease (but containing no
other terms or provisions hereof except as may be permitted or required by
Landlord) shall be properly executed, acknowledged and delivered by both
parties.  Such Memorandum of Lease may be recorded by either party at
its expense.  If the Commencement Date, expiration date or Term of
this Lease is amended as evidenced by a Commencement Date Amendment, then at the
request of any party, each party agrees to properly execute, acknowledge and
deliver an Amendment to Memorandum of Lease, referring to the original
Memorandum of Lease, which shall be prepared by Landlord, describing the revised
Commencement Date, Expiration Date and Term of the Lease, but containing no
other terms or provisions hereof (except as permitted or required by Landlord),
which Amendment to Memorandum of Lease may be recorded by either party at its
expense.

    

    
      
        
        

      

      
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    In the
event that Tenant fails to execute, acknowledge and deliver such Commencement
Date Amendment, Memorandum of Lease or Amendment of Memorandum of Lease within
ten (10) days after Landlord's notice of request therefore, Tenant does hereby
make, constitute and irrevocably appoint Landlord as its attorney in fact and in
its place and stead so to do, unless Landlord receives written notice from
Tenant of Tenant’s dispute of the Commencement Date and expiration date within
fifteen (15) days of that same Landlord’s notice of request.  The
Commencement Date and expiration date set forth in any such Commencement Date
Amendment shall incontestably bind the parties hereto, regardless of whether
Tenant signs or whether Landlord signs for Tenant as Tenant’s attorney in
fact.

    

    6.           BASE RENT. That
Tenant is to pay Landlord as “Base Rent” for Premises for the term hereinabove
specified, adjusted as hereinafter provided, the following monthly
sums:

    

    Period                                              
    RSF                             Rent/RSF                      Rent/Month

    5/1/07 –
9/30/07                                10,575*                          Abated                            Abated

    10/1/07 –
4/30/08                              10,575
*       
                   $12.75                         $11,235.94

    5/1/08 –
4/30/09                                14,310         
                    $13.13                         $15,657.52

    5/1/09 –
4/30/10                                14,310        
                     $13.53                         $16,134.52

    5/1/10 –
4/30/11                                16,448**                          $14.00                         $19,189.33

    5/1/11 –
9/30/12                                16,448**                          $14.20                         $19,463.46

    

    *Base Rent for the first twelve
(12) months of the Term shall be based on 10,575 rentable square feet,
notwithstanding that the Premises contains 14,310 rentable square
feet.

    

    **Adjusted
pursuant to Hard Expansion set out in Section 54.(c) below.

    

    Any sums
due hereunder other than Base Rent shall be “Additional Rent”. Base Rent and
Additional Rent due hereunder are sometimes referred to herein as
“Rent”.

    

    Base Rent
and Additional Rent to be paid monthly shall be payable in advance on the first
day of each month throughout the Term of this Lease.  If Rent has not
been paid by the 10th of the month in which it is due, five percent (5%) of the
monthly payment will be assessed as a late charge and an additional ten percent
(10%) will be assessed if payment is not received within thirty (30) days of the
due date.

    

    Tenant
will pay all rentals and other charges and render all statements herein
prescribed to:

    

    W&G
Associates, a North Carolina Limited Partnership

    c/o Bert
Kuthe

    552
Lizmore Place

    Ocean
Isle Beach, NC 28469

    

     or
to such other person and at such other place as shall be designated by Landlord
in writing at least ten (10) days prior to the next payment date.

    

    7.           OPERATING EXPENSES
ADJUSTMENT.

    

    (a)  For
the purposes of this Lease, the “Base Year” shall be calendar year 2007.  If in any
calendar year during the term hereof, the Operating Expenses, as defined below,
of the Building should exceed the Operating Expenses incurred in the Base Year
(such excess being hereinafter referred to as the "Operating Expense
Differential"), then as Additional Rent for that year, Tenant shall pay Tenant’s
Proportionate Share of the Operating Expense Differential.

    

    (b)  For
purposes of this Article, the term "Operating Expenses" shall mean any and all
costs and expenses paid or incurred by Landlord, or its agents, for any calendar
year in connection with the operation, management, servicing, maintenance and
repair of the Building determined in accordance with generally accepted
accounting principles, specifically including, but not limited to, property
taxes, insurance and any tax imposed upon gross receipts, of rents, cost for
services and utilities provided by Landlord and the cost of any common area
maintenance and repair but shall exclude: (1) provisions for depreciation; (2)
interest or indebtedness, except as provided for hereinafter; (3) income taxes;
(4) dividends; and (5) brokerage and leasing commissions.

    

    
      
        
        

      

      
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    (c)   On
the first day of each month of the Term, Tenant shall pay Landlord an amount
equal to one-twelfth (1/12) of Tenant’s Proportionate Share of Landlord’s
written estimate of the Operating Expense Differential (“Landlord’s
Estimate”) for the then current calendar year. Payments for any
fractional calendar month shall be prorated. “Tenant’s
Proportionate Share” shall mean a fraction the numerator of which is the
rentable square footage of the Premises and the denominator of which is the
rentable square footage of the Building.

    

    (d)   Within
120 days after the end of each calendar year during the Term (or such longer
period as may reasonably be required), Landlord will furnish to Tenant a
statement (the  “Annual Statement”) showing the
following:

    

    (1)           the
total and Tenant’s Share of Operating Expenses for said calendar
year;

    

    (2)           the
amount of retroactive rent adjustment for the Operating Expense Differential to
be paid promptly by Tenant to Landlord upon receipt of said statement or to be
credited to Tenant for said calendar year; and

    

    (3)           Landlord’s
estimate of the amount of Additional Rent to be paid on account of the Operating
Expense Differential for the then current calendar year and thereafter until
receipt of a new statement containing a revised Landlord’ s
Estimate.

    

    Any
amount due to Landlord as shown on any such Annual Statement shall be paid by
Tenant within thirty (30) days after Landlord shall have submitted the Annual
Statement. If pursuant to the Annual Statement Landlord owes Tenant a credit,
then, Landlord may credit Tenant’s payments next coming due or refund such
credit amount to Tenant within thirty days after the date of the Annual
Statement. If this Lease expires or terminates on a day other than December 31,
then Tenant’s Share of the Operating Expense Differential shall be prorated. The
provisions of this Paragraph 7 (d) shall survive the expiration or termination
of the Lease.

    

    (e)   If
during any calendar year of the Lease, the occupancy of the net rentable area of
the Building averages less than ninety-five percent (95%), then it is agreed
that the Operating Expense will be adjusted for such year so that all such
Operating Expenses shall be computed as though the net rentable area of the
Building has been ninety-five percent (95%) occupied for such calendar
year.  All such expense categories will be accounted for and reported
in accordance with generally accepted accounting principles.

    

    (f)   At
any time during the term of this Lease, but not later than ten (10) days prior
to the date a rental payment is due, Landlord may deliver to Tenant a written
estimate of any additional Operating Expenses or other Additional Rent which may
be reasonably anticipated hereunder, whereupon the Additional Rent payment
hereunder for such full or partial calendar year shall be increased by the
additional amount estimated divided by the number of months remaining in the
calendar year.

    

    8.           SECURITY DEPOSIT.
Contemporaneously with Tenant’s execution of this Lease Tenant shall deliver to
Landlord a bank check in the amount of $11,235.94
to be held as security for the performance of Tenant's covenants herein
contained (the “Security Deposit”). If after any applicable notice and cure
period, any of the Rents or other charges or sums payable by Tenant shall be
over-due and unpaid or should payments be made by Landlord on behalf of Tenant,
or should Tenant fail to perform any of the terms of this Lease, then Landlord
may, with written notice to Tenant, appropriate and apply the Security Deposit,
or so much thereof as may be necessary, to compensate toward the payment of the
Rents, charges or other sums due from Tenant, or to compensate for funds
advanced by Landlord to cure such default, or towards any loss, damage or
expense sustained by Landlord resulting form such default on the part of the
Tenant; and in such event Tenant shall upon demand restore the security deposit
to the original sum deposited (as the same may be increased as set out herein).
Such application of the Security Deposit shall not operate in any manner to
reduce or release the obligations of Tenant hereunder, except insofar as the
application of this money may reduce or satisfy an obligation to make payment of
money.  If this Lease is renewed or extended, then the Security
Deposit shall be retained by Landlord under the same conditions for the period
of such extension or renewal.  If the Premises shall be expanded, then
Landlord may require additional funds to be added to the Security Deposit. If
Tenant is not in default hereunder, any remaining balance of the Security
Deposit shall be returned by Landlord within thirty (30) days after termination
of this Lease or any renewal or extension hereof, without interest.

    

    9.           DELIVERY OF
POSSESSION. Landlord shall deliver possession of the Premises to Tenant
upon substantial completion of that work described in Exhibit B attached to and
by reference made a part of this Lease.  Tenant’s taking possession of
the Premises shall be conclusive evidence as against Tenant that the Premises
were in good order and satisfactory condition when Tenant took possession except
for a list of items agreed to (such agreement not to be unreasonably withheld)
and signed by Landlord and Tenant. No promise of Landlord to alter, remodel,
decorate, clean or improve the Premises, the Building or the land upon which the
Building, parking lot and other common areas are located (the “Land”) and no
representation respecting the condition of the Premises, the Building or the
Land have been made by Landlord to Tenant, unless the same is contained herein,
or made a part hereto, or in a written document signed by Landlord.

    

    
      
        
        

      

      
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    If
Landlord shall be unable to give possession of the Premises on the Commencement
Date by reason of any of the following: (i) labor disputes and/or material
shortages (ii) Force Majeure or Acts of God (iii) the hold over or retention of
possession of any tenant, tenants, or occupants; (iv) the acts or omissions of
Tenant, whether or not negligent or intentional; or (v) for any other reason,
beyond Landlord’s reasonable control, Landlord shall not be subject to any
liability for the failure to give possession on said date. Under such
circumstances the Commencement Date, the expiration date of the Term, and all
other dates that may be affected by their change, shall be revised to conform to
Landlord’s delivery of possession of the Premises to Tenant. No such failure to
give possession on the date of commencement of the term hereof shall affect the
validity of this Lease or the obligation of Tenant hereunder, and neither
Landlord nor Landlord’s agents shall be liable to Tenant for any loss or damage
resulting from the delay in delivery of possession.

    

    If the
Premises are ready for occupancy prior to the Commencement Date and Tenant
occupies the Premises prior to said date, or if Tenant occupies all or any part
of the Premises prior to the Commencement Date set out in Section 5 above, then
the Commencement Date shall be the date of Tenant’s early
occupancy.  Tenant shall be granted early access free of charge solely
to install all data/communication wiring, furniture, and to assemble and test
equipment used for necessary business operation, if said access does not
interfere with Landlord’s upfit of the Premises.  This early entry
does not entitle Tenant to commence the operation of its business from the
Premises until the Commencement Date.

    

    The
Premises shall not be deemed to be unready for Tenant’s occupancy or incomplete
if only minor or insubstantial details of construction, decoration or mechanical
adjustment remain to be done in the Premises or any part thereof, or if the
delay in the availability of the Premises for occupancy shall be due to special
work, changes, alterations or additions required or made by Tenant in the layout
or finish of the Premises or any part thereof or shall be caused in whole or in
part by Tenant through the delay of Tenant in submitting plans, supplying
information, approving plans, specifications or estimates, giving authorizations
or otherwise or shall be caused in whole or in part by delay and/or default on
the part of Tenant. In the event of any dispute as to whether the Premises are
ready for Tenant’s occupancy, the decision of Landlord’s architect shall be
final and binding on the parties.

    

    10.           SERVICES TO BE FURNISHED BY
LANDLORD. Landlord shall furnish the following services to Tenant during
the Term of this Lease while Tenant is occupying the Premises:

    

    
      	
               
      

            	
              (a)
      Water, including cold water from mains for normal and ordinary drinking,
      lavatory and toilet purposes and other general use reasonably necessary to
      operate the equipment shown on Exhibit A-2 (or replacements of such
      equipment which do not require more of such utilities than the original
      equipment), all drawn through fixtures installed by Landlord, or by Tenant
      with Landlord's written consent, and hot water for lavatory purposes and
      other general use reasonably necessary to operate the equipment shown on
      Exhibit A-2 (or replacements of such equipment which do not require more
      of such utilities than the original equipment) from regular Building
      supply at the prevailing temperature. Tenant shall not waste or permit the
      waste of water.

            

    

    

    
      	
              (b)

            	
              Except
      as specifically otherwise provided in Section 54(f), heating and air
      conditioning for normal comfort in Premises at the following times and
      days except holidays: from 6:00 a.m. to 8:00 p.m. Monday through Friday
      and from 9:00 a.m. to 1:00 p.m. on
Saturdays,

            

    

    

    
      	
              (c)

            	
              Nightly
      housekeeping and janitor service Monday through Friday in and about the
      Premises.  Tenant shall not provide any janitor services without
      Landlord's prior written consent and then only (i) subject to supervision
      of Landlord and at Tenant's sole responsibility and (ii) by janitor
      contractor or employees at all times satisfactory to
      Landlord.  Areas to be designated by Tenant, such as clean room,
      shall be off limits to service personnel without explicit consent of
      Tenant, except in cases of
emergency.

            

    

    

    
      	
              (d)

            	
              Electrical
      current for lighting of Building standard fixtures provided by Landlord
      and for the operation of low-wattage office machines (such as desktop
      computers, copiers and fax machines) and the equipment used in Tenant’s
      business; provided however, if Tenant’s requirements for electrical
      current exceed what can safely be furnished given the electrical
      facilities of the Building or would overload the Building’s capacity, then
      Landlord shall not be required to furnish such capacity until it has
      updated the capacity of the Building’s electrical facilities (installed
      new risers, etc.) so that it can safely meet Tenant’s electrical
      requirements, which shall be done at Tenant’s
      expense.  Notwithstanding the foregoing, Landlord agrees that as
      of the Commencement Date the Building’s capacity shall be sufficient for
      the operation of the equipment set forth on Exhibit A-2 (or replacements
      of such equipment which do not require more of such utilities than the
      original equipment). Landlord shall pay up to a maximum of $1.50 per
      rentable square foot of the Premises average for the calendar year (which
      shall be an Operating Expense). Tenant shall pay to Landlord, upon within
      30 days of receipt of Landlord’s invoice any amounts for electrical
      service actually used by Tenant above $1.50 per rentable square foot
      average for the calendar year. Landlord, at Landlord’s cost, shall install
      submeters to meter the electrical service to the
  Premises.

            

    

    

    
      	
              (e)

            	
              Electrical
      lighting services and heating and air conditioning for all common areas
      and special service areas of Building in the manner and to the extent
      deemed by Landlord to be standard; however, heating and air conditioning
      need only be provided during 6:00 a.m. to 8:00 p.m. Monday through Friday
      and from 9:00 a.m. to 1:00 p.m. on Saturdays, holidays
      excepted.

            

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

      
        
          	
                  (f)

                	Operatorless passenger elevator service in
      common with Landlord and other tenants, and dock access in common with
      Landlord and other Tenants daily; provided dock access shall only be
      available during 8:00 a.m. to 5:00 p.m. (“Normal Business Hours”) and
      shall not be provided Saturdays, Sundays, and holidays, unless Landlord
      otherwise consents (which consent may be granted or withheld in Landlord’s
      discretion) and, in any event at hours to be determined by
      Landlord.  Freight elevator service, if furnished at other
      times, shall be deemed optional with Landlord and shall never be deemed a
      continuing obligation.

        

        
          

          
            	
                    (g)

                  	Normal interior and exterior repairs and maintenance to
      the extent not required of Tenant under Paragraph 13
      below.  Landlord may include the cost of such repair and
      maintenance as an Operating Expense.

          

          
 

        

      

    

    Any extra
or additional services provided by Landlord in addition to those above and in
Section 54(f) shall not be unreasonably withheld, and at rates established by
Landlord to reflect actual cost.  The money due for such extra or
additional services shall be deemed Additional Rent due hereunder. In the event
that by agreement with Tenant, Landlord furnishes such extra or additional
services to be paid for by Tenant, a failure to pay for such services within
five (5) days after notice shall authorize Landlord, in Landlord's discretion
and without further notice, to refuse to continue providing such extra or
additional services in the future and terminate any agreement for such extra or
additional services unless and until (i) such delinquency is paid and/or (ii)
Tenant deposits the reasonable cost of such extra or additional service with
Landlord and no such discontinuance or termination of extra or additional
service shall be deemed an eviction or disturbance of Tenant's use of Premises
or render Landlord liable for damages or relieve Tenant from any
obligation.  The provisions of this particular paragraph shall apply
only to extra or additional services provided by Landlord in addition to the
services set out in subparagraphs 10.(a) through (g) above and as set out in
Section 54(f) below.  Nothing in this particular paragraph shall be
construed to allow Landlord to discontinue providing the services set out in
subparagraphs 10.(a) through (g) above and as set out in Section 54(f)
below.

    

    Landlord
does not warrant that any service will be free from interruptions caused by
repairs, renewals, improvements, changes of service, break-downs, requirements
of public utilities or public authorities, acts of other tenants, alterations,
strikes, lockouts, labor controversies, civil commotion, riot, accidents,
inability to obtain electrical power, fuel, steam, water, supplies or labor or
other cause beyond the reasonable control of Landlord.  No such
interruption of service shall be deemed an eviction or disturbance of Tenant's
use and possession of the Premises or any part thereof, or render Landlord
liable to Tenant for damages, by abatement of Rent or otherwise, or relieve
Tenant from performance of Tenant's obligations under this Lease. Tenant hereby
waives and releases all claims against Landlord for damages for any interruption
or stoppage of service. In no event shall Landlord be liable to Tenant for
special or consequential damages.

    

    Tenant
shall not install upon the Premises equipment or fixtures which will require
extraordinary usage of such utilities without the prior written consent of
Landlord, which consent shall not be unreasonably withheld.  The
equipment shown in Exhibit A-1 and Exhibit A-2, which is necessary for the
normal conduct of Tenant’s business, is hereby approved by Landlord by execution
of this Lease.   It is intended that Tenant shall generally
operate its business during Normal Business Hours.  Notwithstanding
the foregoing, Landlord’s providing certain services above (such as by way of
example and not limitation, water and electricity) outside of Normal Business
Hours or Landlord’s consent to the installation and operation of any of Tenant’s
fixtures or equipment, if Tenant (for example, by operating its business beyond
Normal Business Hours) or any of Tenant’s equipment or fixtures shall use a
disproportionate or extraordinary amount of services (such as HVAC or water) in
excess of what is generally required for general office use and for the
operation of the equipment set forth on Exhibit A-2 (or replacements of such
equipment which do not require more of such utilities than the original
equipment), Landlord shall have the right to (a) adjust the billing to account
for such extraordinary or disproportionate use and (b) install at Landlord’s
cost a separate meter for such utilities and charge the cost thereof directly to
Tenant. Wherever heat generating machines or equipment are used in Premises
which materially affect the temperature otherwise maintained by the air
conditioning system, Landlord reserves the right to install, with a thirty (30)
day notice to Tenant, supplementary air conditioning units to serve the Premises
and the cost, operation and maintenance thereof shall be paid by Tenant to
Landlord at reasonable rates established by Landlord, provided Landlord has
agreed that this shall not apply to the operation of the equipment set forth on
Exhibit A-2 (or replacements of such equipment which do not require more of such
utilities or generate more heat than the original equipment).

    

    11.           QUIET ENJOYMENT. If
Tenant promptly and punctually complies with each of its obligations hereunder,
it shall peacefully have and enjoy the possession of the Premises during the
Term hereof, provided that no action of Landlord in work in other space in the
Building, or in repairing the Premises or any other space in the Building shall
be deemed a breach of covenant, or as giving Tenant any right to modify this
Lease either as to term, Rent payable, or other performance
obligations.

    

    12.           COMPLIANCE WITH LAWS.
Tenant agrees, at its own expense, to comply promptly with all requirements of
any legally constituted public authority made necessary by reason of Tenant’s
occupancy of the Premises; however, if in order to comply with such
requirements, the cost to Tenant shall exceed a sum equal to one year’s Base
Rent, then Tenant may terminate this Lease by giving written notice of
termination to the other party by registered mail, which termination shall
become effective sixty (60) days after receipt of such notice and which notice
shall eliminate the necessity of compliance with such requirements by giving
such notice unless the Landlord shall, before the termination becomes effective,
pay to Tenant all cost of compliance in excess of one year’s  Base
Rent, or secure payment of said sum in manner reasonably satisfactory to Tenant,
in which event this Lease shall not terminate and Tenant shall proceed with such
compliance.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    13.           REPAIR AND MAINTENANCE OF
PREMISES. Tenant shall keep and maintain Premises in a state of good
repair and tenantable condition. Tenant shall not commit or permit any waste to
be committed whatsoever. Neither Tenant, nor Tenant’s employees, agents,
contractors or subcontractors shall take any action which may void any
manufacturer’s or installer’s warranty with relation to the Premises. Tenant
shall indemnify and hold Landlord harmless from any liability, claim, demand or
cause of action arising on account of Tenant’s breach of the provisions of this
paragraph. Tenant shall at its cost and expense, repair and replace any damage
or injury done to Premises, or Building or any part thereof caused by Tenant, or
its agents, employees, invitees, or visitors.  All repairs and
replacements shall be made in good and workmanlike condition, by contractors
approved by Landlord and replacements shall be of a quality at least as good as
Landlord’s Building standard.  Should Tenant fail to commence such
repairs or replacements within fifteen (15) days and complete the same within
forty-five (45) days of occurrence, Landlord may, at its option, make such
repairs and replacements and Tenant shall pay the cost thereof to Landlord upon
demand. Notwithstanding the foregoing, Tenant shall not make any repairs to the
Premises without notifying Landlord and obtaining Landlord’s consent, and any
repairs costing more than $1,000 may, at Landlord’s option, be made by Landlord
at Tenant’s expense.

    

    14.           INDEMNITY.   Tenant
agrees to and hereby does indemnify and hold Landlord harmless against all
claims of a third party for damages to person or property occurring in or about
the Premises or Building arising by reason of (i) the Tenant’s use or occupancy
of the Premises, (ii) the acts, omissions, negligence, fault or willful
misconduct of Tenant, its agents, employees contractors, licensees or invitees,
(iii) Tenant’s breach of this Lease, or (iv) Tenant’s failure to comply with
laws, statutes, ordinances, rules or regulations applicable to the Premises and
all reasonable expenses incurred by Landlord because of such use, negligence,
willful misconduct or breach, including reasonable attorney’s fees and court
costs.

    

    15.           INSURANCE. Tenant
shall during the term of this Lease and any extension or renewal thereof, and at
Tenant’s expense, maintain in full force and effect (i) property insurance
insuring the Tenant’s personal property used at the Premises against damage and
destruction by such perils insured by the equivalent of ISO Special Form
Property Insurance in the full replacement cost of the such personal property,
(ii) commercial general liability insurance with a combined single limit
of  $1 Million ($1,000,000.00) per occurrence and a general aggregate
of $2 Million ($2,000,000.00) for bodily injury and property damage on an
occurrence basis, (iii) worker’s compensation as required by law, (iv) if Tenant
or its employees operate motor vehicles as part of their employment, commercial
automobile liability in such amounts as reasonably required by Landlord and (v)
such other insurance which would reasonably be required by a prudent landlord
given Tenant’s use and occupancy of the Premises.

    

    Landlord
(and the holder of any mortgage or deed of trust given by Landlord on the
Building) shall be named as an additional insured under Tenant’s commercial
general liability policies. The commercial general liability insurance shall
insure on an occurrence and not on a claims-made basis.  Tenant’s
insurance policies must be issued by insurance companies which have a rating of
not less than policyholder rating of A and financial category rating of at least
Class X in “Best’s Insurance Guide”; shall not be cancelable for nonpayment of
premium or amended to materially reduce coverage unless 30 days prior written
notice shall have been given to Landlord from the insurer; and shall provide
primary coverage to Landlord (any policy issued to Landlord providing duplicate
or similar coverage shall be deemed excess over Tenant’s policies). Copies of
such policies (if requested by Landlord), or certificates of insurance showing
the limits of coverage required hereunder and showing Landlord as an additional
insured, along with reasonable evidence of the payment of premiums for the
applicable period, shall be delivered to Landlord by Tenant upon the
commencement of the Term and with respect to any renewal of insurance policy, no
later than 20 days prior to the expiration of such policy.

    

    That
Tenant shall not suffer anything to be or remain upon or about Premises nor
carry on nor permit upon Premises any trade or occupation or suffer to be done
anything which would be in conflict with the Certificate of Occupancy for the
Premises or which may render an increased or extra premium payable for the
insurance of Premises or Building against fire, casualty, liability or any other
insurable causes, unless consented to in writing by Landlord and if so consented
to Tenant shall pay such increased or extra premium within ten (10) days after
Tenant shall have been advised of the amount thereof.

    

    16.           WAIVER OF CLAIMS/WAIVER OF
SUBROGATION. Landlord and Tenant each hereby release and relieve the
other, and waive any right of recovery, for loss or damage arising out of or
incident to the perils insured against in its (“Injured Party’s”) property
insurance policies, whether due to the negligence of the other party or the
other party’s agents, employees, contractors and/or invitees, to the extent that
such loss or damage is covered by the Injured Party’s property insurance or the
insurance the Injured Party is supposed to carry under this Lease, whichever is
greater.  Landlord and Tenant shall, upon obtaining the policies of
insurance required, give notice to the insurance carrier or carriers that the
forgoing mutual waiver of subrogation is contained in this Lease. For the
purposes of this waiver of subrogation, the amounts of any deductibles or
self-insurance of the Injured Party shall be considered to be “covered by the
Injured Party’s property insurance”.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    Tenant
shall cause its insurer(s) to issue appropriate waiver of subrogation rights
endorsements to all policies of insurance carried in connection with the
Premises or the contents thereof. Tenant will cause all other occupants of the
Premises (or any portion thereof), whether by sublease or assignment, claiming
by, under or through Tenant to execute and deliver to Landlord a waiver of
claims similar to the waiver in this Section 16 and to obtain such waiver of
subrogation rights endorsements; provided however this requirement shall not be
deemed a consent to any sublease or assignment.

    

    Landlord,
its employees and property manger, if any, shall not be liable to Tenant or
Tenant's agents, employees, invitees or visitors for any loss, harm or damage to
any property (including Tenant’s property) in or about the Premises or Building
from any cause whatsoever (including, but not limited to: defects in the
Building or in any equipment in the Building; fire, explosion or other casualty;
bursting, rupture, leakage or overflow of any plumbing or other pipes or lines,
sprinklers, tanks, drains, drinking fountains or wash stands in, above or about
the Premises or Building; or acts of other tenants in the Building), except for
loss harm or damage arising from the gross negligence or intentional misconduct
of Landlord or Landlord’s employees acting within the scope of their
employment.  In addition, Landlord, its employees and property
manager, if any, shall not be liable to Tenant for any bodily injury in or about
the Premises or Building from and cause whatsoever  (including, but
not limited to: defects in the Building or in any equipment in the Building;
fire, explosion or other casualty; or acts of other tenants in the Building or
their agents, employees, representatives, invitees or contractors), except for
bodily injury arising from the gross negligence or intentional misconduct of
Landlord or Landlord’s employees acting within the scope of their
employment.  In no event shall Landlord be liable to Tenant for
punitive, indirect or consequential damages or damages for loss of business by
Tenant.

    

    17.           ALTERATIONS AND
FIXTURES.  Tenant shall not have the right to make changes,
alterations, floor covering, or additions in Premises until it has first
obtained Landlord's approval in writing, which approval may be granted or
withheld in Landlord’s sole discretion. Tenant
shall have the right to contract directly for such work, provided any contractor
used by Tenant is subject to Landlord’s prior consent, which consent shall not
be unreasonably withheld.  Landlord’s approval shall not be required
for any purely cosmetic work costing less than $1,000 in the aggregate, but
Tenant’s contractor for such work is subject to Landlord’s prior consent, which
consent shall not be unreasonably withheld. By way of example and not
limitation, Landlord’s consent shall be required for any alterations that affect
compliance with municipal requirements or the functional integrity of the
mechanical, electrical, structural, and life safety systems.  Tenant
shall promptly remove any alterations, additions, or improvements constructed in
violation of this Paragraph upon Landlord’s written request. Landlord may
require Tenant to remove any alterations, additions or improvements (whether or
not made with Landlord’s consent), other than the initial improvements made
prior to the Commencement Date and purely cosmetic improvements costing less
than $1,000, at the termination of the Lease and to restore the Premises to its
prior condition, except for normal wear and tear, all at Tenant’s expense. All
approved alterations, additions, and improvements will be accomplished in a good
and workmanlike manner, in conformity with all applicable laws and regulations,
free of any liens or encumbrances. All alterations, additions and improvements
which Landlord has not required Tenant to remove shall become Landlord’s
property and shall be surrendered to Landlord upon the termination of this
Lease, except that Tenant may remove any of Tenant’s trade fixtures, machinery
or equipment which can be removed without material damage to the Premises.
Tenant shall repair, at Tenant’s expense, any damage to the Premises caused by
the removal of any such trade fixtures, machinery or equipment.

    

    18.           TRADE FIXTURES AND TENANT’S
EQUIPMENT.   All unattached movable trade fixtures,
furnishings, furniture, signs and personal property belonging to Tenant,
installed in the Premises by Tenant at its expense, and which may be removed
without material damage to the Premises shall remain the property of Tenant and,
so long as Tenant is not in default, may be removed by Tenant at the expiration
or earlier termination of this Lease or any renewal or extension thereof,
provided that any damage caused by such removal shall be repaired within thirty
(30) days and Tenant shall properly restore the Premises to their original order
and condition, reasonable wear and tear excepted.  Any such unattached
movable trade fixtures, furnishings, furniture, signs and other personal
property not removed at or prior to such expiration or earlier termination of
this Lease shall be and become the property of Landlord, unless Landlord elects
to require their removal in which case Tenant shall promptly remove same and
restore the Premises to its original condition. If Tenant fails to remove any
such of its unattached movable trade fixtures, furnishings, furniture, signs and
other personal property at the end of the expiration or earlier termination of
the Term and Landlord does not choose to accept such property as its own, then
Landlord may remove any such fixtures or property from the Premises and store
them at Tenant’s sole risk and expense or dispose of them in any manner
including the sale, scrapping or destruction thereof and, to the extent
permitted by law, Tenant waives all claims against Landlord
therefor.

    

    19.           SIGNS. That Tenant
shall not paint, display, maintain or affix any sign, picture, advertisement,
notice, lettering or direction on any part of the outside of the Premises,
except on hallway doors of Premises, and then only such name or names or matter
and in such color size, style character and materials as may first be approved
by Landlord in writing.  Landlord shall have the right to remove, at
Tenant's expense, all matter other than that above provided for without notice
to Tenant.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    20.           DEFACING PREMISES AND
OVERLOADING. Tenant shall not place anything or allow anything to be
placed near the glass of any door, partition, wall or window which may be
unsightly from outside Premises, and Tenant shall not place or permit to be
placed any article of any kind on any window ledge or on the exterior
walls.  Blinds, shades, awnings, or other forms of inside or outside
window coverings, or window ventilators or similar devices, shall not be placed
in or about the outside windows in Premises except to the extent that the
character, shape, color material and make thereof is approved by the Landlord.
Tenant shall not do any painting or decorating in the Premises or paint, cut or
drill into, or in any way deface any part of the Premises or Building without
the written consent of Landlord.  Tenant shall not overload any floor
or part thereof in Premises, or any facility in Building or any public corridors
or elevators therein while bringing in or removing any large or heavy articles,
and Landlord may direct and control the locations of safes and all other heavy
articles.  No furniture, equipment and other large or heavy articles
may be brought into Building, removed therefrom or moved from place to place
within any portion of the Premises or other portion of the Building that would
exceed the allowable load limits.

    

    21.           COMMON AREAS. In
connection with its lease of the Premises, Tenant shall have the non-exclusive
right, together with other tenants and occupants and invitees, to use of the
portions of the Land that are for the non-exclusive use of the tenants,
occupants and invitees of the Building, including but not limited to elevators,
stairwells, common hallways, lobbies, sidewalks, driveways, and parking lots
(collectively the “Common Areas”) for reasonable ingress to and egress from the
Premises or the normal use thereof, subject to the other provisions of this
Lease including, without limitation, the Rules and Regulations attached as
Exhibit C, as the same may be revised from time to time. The Common Areas are
not for the use of the general public and Landlord shall in all cases retain the
right to control and prevent access thereto by all persons whose presence, in
the judgment of Landlord shall be prejudicial to the safety, character,
reputation and interests of the Building and Land and the tenants. In addition,
Landlord reserves the right to restrict anyone, including Tenant, its employees,
agents and invitees from and Tenant, its employees, agents and invitees are
hereby restricted from certain areas of the Building designated by Landlord
(including but not limited to the roof, mechanical, electrical, and utility
rooms and risers) even though the same may be used by Landlord for the benefit
of the tenants of the Building. Landlord reserves the right to use any portion
of the Common Areas from time to time and/or to deny access to the same
temporarily in order to repair, maintain or restore such facilities or to
construct improvements under, over, along, across and upon the same and to
relocate such Common Areas, for the benefit of the Building, the Land, and other
tenants, so long as reasonable access to the Premises and reasonable alternative
parking is provided. Landlord shall have the right at any time without the same
constituting an actual or constructive eviction and without incurring any
liability to Tenant therefor, to change the arrangement and/or locations of the
Common Areas, including entrances, driveways, and parking areas so long as
reasonable access to the Premises and reasonable alternative parking is
provided.

    

    22.           ASSIGNMENT AND
SUBLETTING. Tenant shall not, without Landlord’s prior written consent,
which consent shall not be unreasonably withheld: (a) assign, hypothecate,
mortgage, encumber, or convey this Lease or any interest under it; (b) allow any
transfer thereof of any lien upon Tenant’s interest by operation of law; or (c)
sublet the Premises in whole or in part. Provided, however, by way
of example and not limitation, Landlord’s consent shall not be considered
unreasonably withheld if:  (i) the proposed subtenant’s or assignee’s
business is not suitable for the Building considering the business of the other
tenants and the Building’s prestige, (ii) the proposed use is inconsistent with
the Permitted Use, (iii) the proposed assignee or subtenant is a governmental
authority or agency, and organizational or person enjoying sovereign or
diplomatic immunity, (iv) the proposed subtenant’s or assignee’s business will
attract a volume, frequency or type of visitor or employee to the Building which
is not consistent with the standards of the Building or that will impose an
excessive demand on or use of the facilities or services of the Building, (v)
such assignment or subletting would cause a default under another lease in the
Building or under any ground lease, deed of trust, mortgage, restrictive
covenant, easement or other encumbrance affecting the Building or (vi) the
proposed assignee or subtenant is a current tenant in the Building or the
adjacent building owned by Landlord, or an entity with whom Landlord or its
agents have discussed tenancy in the Building or the adjacent building owned by
Landlord. Consent to any assignment or sublease shall not impair this provision
and all later assignments or subleases shall be made likewise only on the prior
written consent of Landlord. Notwithstanding any assignment or subletting,
Tenant and any guarantor of Tenant's obligations under this Lease shall at all
times remain fully and jointly and severally responsible and liable for the
payment of the Rent herein specified and for compliance with all of Tenant's (or
its assignee’s) other obligations under this Lease.  Any assignee of
Tenant must execute an assumption agreement, expressly assuming joint and
several liability for all Tenant’s obligations under this Lease, but no sublease
or assignment by Tenant shall relieve Tenant or any guarantor of Tenant’s
obligations of any liability hereunder.

    

    23.           ATTORNEY FEES. Tenant
shall pay all costs of collection, including reasonable attorney fees, if all or
any part of the Rent reserved herein is collected after maturity with the aid of
any attorney. In addition, Tenant shall pay reasonable attorney fees incurred by
Landlord in the event it becomes necessary for Landlord to employ an attorney to
force Tenant to comply with any of the covenants, obligations, or conditions
imposed by this Lease.

    

    24.           RULES OF BUILDING.
The Tenant shall comply, and cause Tenant's agents, employees, invitees and
visitors to comply, fully with all requirements of the rules of Building which
may be made by Landlord, and any amendments or modifications thereto, which
Landlord may promulgate from time to time.  The Rules and Regulations
of the Building are attached hereto as Exhibit C and made a part of this Lease.
Landlord shall not have any liability or obligation for the breach of any of the
Rules and Regulations by other tenants in the Building, their employees, agents,
contractors, visitors, or invitees.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    25.           ENTRY FOR REPAIRS,
ETC. The Landlord, its officers, agents or representatives shall have the
right to enter into and upon Premises at all reasonable times, with 24 hour
notice to Tenant (except for emergencies when no prior notice is required), to
inspect the same, perform such maintenance and make such repairs or alterations
to the Premises or adjoining property as Landlord may deem necessary or
desirable.  Landlord shall use commercially reasonable efforts to
schedule such work so as to minimize impact on Tenant’s ability to conduct
business, and, unless such repair or maintenance in Landlord’s reasonable
determination needs to be done more quickly (by way of example and not
limitation, (i) if the repair is to a building system that affects other
tenants, (ii) in the event of an emergency, or (iii) failure to commence repairs
more timely will result in additional damage or cost to repair), shall provide
thirty (30) days notice to Tenant when planned work will materially impact
Tenant’s ability to do business.  Landlord shall be allowed to take
all material into and upon Premises that may be required for such repairs or
alternations without the same constituting an eviction of Tenant in whole or in
part and the Rent reserved shall in no way abate while said repairs and
maintenance are being made by reason of loss or interruption of business of
Tenant, or otherwise, unless said repairs take longer than thirty (30)
days.  If said repairs and maintenance cause loss or interruption of
business for more than 30 days (subject to extension for delays caused by
Tenant), then rent may be abated on a prorated basis in relation to the areas of
the Premises not usable by Tenant because of such repairs or
replacement.  In no event shall Landlord be liable for special,
consequential or indirect damages.

    

    26.           SURRENDER OF
PREMISES. Upon any termination of this Lease, by expiration, lapse of
time or otherwise:

    

    (a)
Tenant shall immediately vacate the Premises and surrender the Premises to
Landlord in good order, condition and repair, reasonable wear and tear and
casualty damage to be repaired by Landlord pursuant to Section 36 hereof
excepted.

    

    (b) Tenant shall surrender all keys to
the Premises to Landlord.

    

    (c) Tenant grants to Landlord full
authority and license to enter Premises and take possession
thereof.

    

    (d) All
installations, decorations, additions, partitions, hardware, light fixtures,
non-trade fixtures and improvements, temporary or permanent, except movable
furniture and equipment belonging to Tenant, in or upon the Premises, whether
placed there by Tenant or Landlord, shall, at Landlord’s option, be Landlord's
property and remain upon the Premises, all without compensation, allowance or
credit to Tenant.

    

    27.           RIGHTS RESERVED TO
LANDLORD. Landlord shall have the following rights exercisable without
notice and without liability to Tenant for damage or injury to property, person
or business (all claims for damage therefor being hereby released by Tenant),
and without effecting an eviction or disturbance of Tenant's use of possession
or giving rise to any claim for setoffs, or abatement of Rent:

    

    (a) To name the Building and change the
name or street address of the Building.

    

    (b) To install and maintain signs on
the exterior and interior of the Building.

    

    (c) To
designate all sources furnishing sign painting and lettering, ice, mineral or
drinking water, beverages, foods, towels, vending machines, or toilet supplies
used or consumed on the Premises, and Tenant shall not place any vending or
dispensing machines of any kind in or about the Premises without the prior
written consent of Landlord.

    

    (d) To
retain at all times, and to use in appropriate instances, keys to all doors
within and into the Premises, and Tenant shall not replace any locks without the
prior written consent of Landlord.

    

    (e) To
decorate, remodel, repair, alter or otherwise prepare the Premises for
re-occupancy, if Tenant vacates the Premises, or at any time after Tenant
abandons the Premises.

    

    (f) To
enter the Premises at reasonable hours, with twenty-four (24) hours notice to
tenant, to make inspections, or to exhibit the Premises to prospective tenants,
lenders, purchasers or others, or for other reasonable purposes. Landlord may
place a sign on the Premises advertising the Premises “For Rent” at any time
within six (6) months before the termination of this Lease. At any time during
the Term, Landlord may place a “For Sale” sign on the Premises.

    

    (g) To have access to all mail chutes
according to the rules of the United States Post Office.

    

    (h) To
require all persons entering or leaving Building, during such hours as Landlord
may from time to time reasonably determine, to identify themselves to a watchman
by registration or otherwise and to establish their right to enter or leave, and
to exclude or expel any peddler, solicitor or beggar at any time from Premises
or Building.

    

    (i) To
approve the weight, size and location of safes, computers, and other heavy
articles in and about the Premises and Building and to require all such items
and other office furniture and equipment to be moved in and out of the Building
and Premises only at such times and in such manner as Landlord shall direct and
in all events at Tenant's sole risk and responsibility. Landlord
shall grant reasonable approval, and hereby consents to equipment detailed in
Exhibit A-1.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (j)
Except as otherwise specified in Section 25, to decorate and to make, at any
time or times, repairs, alterations, additions and improvements, structural or
otherwise, in and to the Premises, Building or any part thereof as Landlord may
deem necessary or desirable and to perform any acts related to the safety,
protection or preservation thereof, and during such operations to take into and
through the Premises or any part of Building all material and equipment or
required; and to close or temporarily suspend operation of entrances, doors,
corridors, elevators or other facilities, provided that, except in cases of
emergency, Landlord shall give Tenant 24 hours notice and  use
commercially reasonable efforts to minimize any inconvenience or annoyance to
Tenant as is reasonable under the circumstances. Landlord
shall give Tenant thirty (30) days prior notice of any regularly scheduled work
done to Premises that will affect Tenant’s normal business operations, which is
not of an emergency nature or which, in Landlord’s reasonable determination does
not need to be done more quickly (for example, if the work is to a building
system that affects other tenants).

    

    (k) To do
or permit to be done any work in or about the Premises or Building or any
adjacent or nearby building, land or street.

    

    (l) To grant to anyone the exclusive
right to conduct any business or render any service in the
Building.

    

    (m) To
close the Building at 7:00 p.m. or at such other reasonable time as Landlord may
determine; provided Tenant shall have 24 hour / 7 day access to
Premises.  Notwithstanding Tenant’s 24 hour / 7 day access to the
Premises, Tenant acknowledges (1) that Landlord may, at Landlord’s option, enact
reasonable security measures (for example requiring its employees to check-in
with a security guard or have an access card after normal business hours) which
will not prevent access to the Premises for those persons properly identified as
Tenant’s employees and (2) that Landlord may, by law, be required to deny access
in emergency events (for example, if required for safety reasons).

    

    (n) To
designate and approve, prior to installation, all types of window shades,
blinds, drapes, awnings, window ventilators and other similar equipment, and to
control all internal lighting that may be visible from the exterior of
Building.

    

    (o) To have and retain a paramount
title to the Premises.

    

    28.           DEFAULT. The
following events shall be deemed to be events of default by Tenant under this
Lease:

    

    (a)
Tenant shall fail to pay any monthly installment of Base Rent and Additional
Rent when due and such failure shall continue for a period of ten (10) days;
provided if Tenant has not been in default more than two times in the preceding
twelve (12) month period, such failure shall not be a default unless such
failure shall continue for a period of ten (10) days after written notice to
Tenant that such payment is past due;

    

    (b)  Tenant
shall fail to pay any other sum due under this Lease when due and such failure
shall continue for a period of ten (10) days after written notice thereof to
Tenant;

    

    (c)
Tenant shall fail to comply with any term, provision or covenant of this Lease,
other than the payment of Rent, which is possible to cure, and shall not cure
such failure within fifteen (15) days after written notice thereof to
Tenant.

    

    (d) Tenant or any guarantor of Tenant's
obligations shall make an assignment for the benefit of creditors.

    

    (e)
Tenant or any guarantor of Tenant's obligations shall file a petition under any
section or chapter of the National Bankruptcy Act as amended or under any
similar law or statute of the United States or any state thereof; or Tenant or
any guarantor of Tenant's obligations shall be adjudged bankrupt or insolvent in
proceedings filed against Tenant or any guarantor of Tenant's obligations
hereunder and, if involuntary, such adjudication shall not be vacated or set
aside or stayed within sixty (60) days.

    

    (f) A
receiver or trustee shall be appointed for all or substantially all of the
assets of Tenant or any guarantor of Tenant's obligations and such receivership
shall not be terminated or stayed within sixty (60) days from such
appointment.

    

     (g) Tenant shall abandon or
vacate the Premises.

    

    
      
        
        

      

      
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    Upon the
occurrence of any of such events of default, Landlord shall have the option to
pursue any one or more of the following remedies without any notice or demand
whatsoever:

    

    i)
Terminate this Lease, in which event Tenant shall immediately surrender the
Premises to Landlord, and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy which it may have for possession or arrearages in
Rent, enter upon and take possession and expel or remove Tenant and any other
person who may be occupying Premises or any part thereof, by force if necessary,
without being liable for trespass or any prosecution or any claim of damages
therefor, and Tenant shall remain liable for all loss and damage which Landlord
may suffer by reason of such termination, whether through inability to relet
Premises on satisfactory terms or otherwise.

    

    ii) Enter
upon and take possession of the Premises and expel or remove Tenant and any
other person who may be occupying the Premises or any part thereof, without
terminating this Lease, make such alterations and repairs as may be necessary in
order to relet the Premises, and relet the Premises or any part thereof for such
term and at such rental and upon such other terms and conditions as Landlord in
it sole discretion may deem advisable; upon each such reletting all rentals
received by Landlord from such reletting shall be applied: first, to the payment
of any indebtedness other than Rent hereunder due from Tenant to Landlord:
second, to the payment of any costs and expenses of such reletting including
brokerage fees and attorneys' fees and costs of such alterations and repairs;
third, to the payment of any Base Rent or Additional Rent due and unpaid
hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future Rent as the same may become due and payable hereunder. If such
rentals received from such reletting during any months shall be less than the
rental to be paid during that month by Tenant hereunder, Tenant shall pay any
such deficiency to Landlord upon demand. No such re-entry or taking possession
by Landlord shall be construed as an election on its part to terminate this
Lease unless a written notice of such intention shall be given to
Tenant.  Landlord shall not be considered to be under any duty by
reason of this provision to take any action to mitigate damages by reason of
Tenant’s default; however, any attempt by Landlord to mitigate its claim for
damages against Tenant by reletting the Premises shall not be construed as a
waiver of its right to damages under this Section.

    

    iii)
Enter upon Premises, by force if necessary, without being liable for prosecution
or any claim for damages therefor, and do whatever Tenant is obligated to do
under the terms of this Lease; and Tenant agrees to reimburse Landlord on demand
for any expenses Landlord may incur in thus effecting compliance with Tenant's
obligations under this Lease, and Tenant further agrees that Landlord shall not
be liable for any damages resulting to the Tenant from such action, whether
caused by the negligence of Landlord, its employees, agents or representatives
or otherwise.

    

    iv)  Upon
any event of default by the Tenant all unpaid Rent payments due under the terms
of the Lease are due and payable immediately upon demand by the
Landlord.

    

    All
remedies herein shall be cumulative; pursuit of any of the foregoing remedies
shall not preclude pursuit of any of the other remedies herein provided, or any
other remedies provided by law, nor shall pursuit of any remedy herein provided
constitute a forfeiture or waiver of any Rent due to Landlord hereunder or of
any damages accruing to Landlord by reason of the violation of any of the terms,
provisions ad covenants herein contained.  No waiver by Landlord of
any violation or breach of any of the terms, provisions and covenants contained
in this Lease shall be deemed or construed to constitute a waiver of any other
or succeeding violation or breach of any of the terms, provisions, and covenants
herein contained.  Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default.  Landlord shall be
under no duty to mitigate its damages by reason of Tenant’s default and Tenant
hereby waives any rights it may have to require Landlord to mitigate such
damages.

    

    Tenant
does hereby grant Landlord a security interest in and lien upon all furniture,
fixtures, chattels and other items of personal property located in or on
Premises to secure the performance of all covenants contained
herein.  This lien shall be in addition to all other liens provided by
law.

    

    29.           ESTOPPEL CERTIFICATE BY
TENANT. From time to time, upon not less than ten (10) days prior request
by Landlord, Tenant shall execute and deliver to Landlord a statement in writing
certifying (a) that Tenant is in possession of the Premises, (b) that this Lease
is unmodified and in full force and effect (or if there have been modifications
that the same is in full force and effect as modified and certifying the
modifications), (c) the Commencement Date and ending date of the Lease and the
dates to which the Rent and other charges have been paid, and (d) that Tenant is
not in default under this Lease and, so far as the person making the certificate
knows, Landlord has completed preparation of the Premises and is not in default
under any provision of this Lease.

    

    30.           SUBORDINATION OF
LEASE. The rights of Tenant under this Lease shall be and are hereby made
subject and subordinate at all times to the lien of any mortgage or mortgages
(or trust indentures) now or hereafter in force against the land, Building, the
fee or the underlying leasehold estate, if any, and to all renewals,
modifications, consolidations, replacements and extensions thereof, and to all
advances made or hereafter to be made upon the security thereof, and Tenant
shall, within ten (10) days after written request therefor, execute such further
instruments subordinating of this Lease to such liens as shall be requested by
Landlord.  Tenant hereby irrevocably appoints Landlord as attorney in
fact for Tenant with full power and authority to execute and deliver in the name
of Tenant any such instruments.  Tenant agrees in the event any
proceedings are brought for the foreclosure of any such mortgage to attorn to
the purchaser upon any such foreclosure sale and to recognize such purchaser as
Landlord under this Lease.  Tenant agrees to execute and deliver at
any time and from time to time upon the request of Landlord any instrument which
may be necessary or appropriate in any such event to evidence such
attornment.  Tenant hereby irrevocably appoints Landlord and the
holder of such mortgage, or either of them, the attorney in fact for Tenant with
full power and authority to execute and deliver in the name of Tenant any such
instrument.  Tenant further waives the provisions of any statute or
law now or hereafter in effect which may give or purport to give Tenant any
right to terminate or otherwise adversely affect this Lease in the event any
such foreclosure proceeding is brought.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    31.           REAL ESTATE BROKERS.
Tenant has dealt with (and only with) Brian Farmer of Coldwell Banker Commercial
TradeMark Properties, Landlord’s Broker, and Brian Carr of Coldwell Banker
Commercial TradeMark Properties, Tenant’s Broker, as brokers in connection with
this Lease, and that insofar as Tenant knows, no other broker has negotiated or
participated in the negotiations of this Lease or submitted or showed the
Premises or is entitled to any commission in connection therewith.

    

    32.           RENEWAL, MODIFICATION AND
AMENDMENT.  No renewal, modification or amendment of this Lease
shall be binding on either party unless it is in writing and signed by Landlord
and Tenant.

    

    33.           HOLDING
OVER.  If Tenant shall holdover after the expiration of the
Term, or any renewal or extensions hereof, with the prior written consent of
Landlord, such tenancy shall be from month to month only, and not a renewal
hereof; and Tenant agrees to pay monthly installments of Base Rent at 120% the
rate of the monthly installments of Base Rent due for the last full month of the
Term, and also to comply with all covenants of this Lease for the time Tenant
holds over.  Tenant shall be entitled to possession until Landlord has
given Tenant seven (7) days notice that such month to month tenancy shall be
terminated, so long as Tenant is not in default.

    

    In the
event Tenant remains in possession of the Premises after the expiration of the
Term, or any renewal or extensions hereof without the express written consent of
Landlord, (a) Tenant shall become a tenant at sufferance upon the terms of this
Lease except that Tenant shall then be obligated to pay monthly installments of
Base Rent at 120% the rate of the monthly installments of Base Rent due for the
last full month of the Term for so long as Landlord is kept out of possession of
the Premises and (b) Tenant shall be responsible for all damages suffered by
Landlord resulting from or occasioned by Tenant’s holding over, including
consequential damages. No such payment of Rent, nor the acceptance thereof after
expiration of the Term or earlier termination of the Lease shall result in a
renewal, extension or reinstatement of this Lease, or shall in any way
constitute a waiver of the rights of Landlord to re-enter the Premises or to
dispossess Tenant and recover possession of the Premises and the just and former
estate of Landlord and to bring any action for damages suffered by Landlord on
account of Tenant’s failure to vacate the Premises.

    

    34.           ABANDONMENT.    Tenant
shall not abandon the Premises at any time during the Lease term. If Tenant
shall abandon the premises or be dispossessed by process of law, any personal
property belonging to Tenant and left on the Premises shall, at the option of
Landlord, be deemed abandoned, and available to Landlord to use or sell to
offset any Rent due or any expenses incurred by removing same and restoring the
Premises.

    

    35.           COVENANTS TO RUN TO HEIRS,
ETC. All covenants, conditions, agreements, and undertakings in this
Lease contained shall extend and inure to the benefit of Landlord and its
successors and assigns, and, with the written consent of Landlord, to the heirs,
executors, administrators, successors and assigns of Tenant the same as if they
were in every case named and expressed; and except as herein otherwise provided,
all said covenants, conditions and agreements shall be binding upon the
successors and assigns, heirs, executors, and administrators of the respective
parties. In the event of any transfer or transfers of the title to the Building
or to the Premises, Landlord (and in case of any subsequent transfers or
conveyances, the then grantor) shall be automatically freed and relieved from
and after the date of such transfer or conveyance of all liability as respects
the performance of any covenants, conditions and agreements on the part of said
Landlord contained in this Lease, it being intended hereby that the covenants,
conditions and agreements contained in this Lease which are binding on Landlord
shall be binding on such Landlord, its successors and assigns, only during and
in respect of their respective period of ownership.

    

    36.           DAMAGE BY FIRE OR OTHER
CASUALTY.

    (a) If the Premises is totally
destroyed by fire or other casualty, Landlord may, and if the destruction does
not result from the wrongful or negligent act of Tenant, Tenant may by written
notice given not later than sixty (60) days after the date of such destruction,
terminate this Lease, in which event Rent paid for the period beyond the date of
destruction shall be refunded to Tenant. In the event the Lease is not
terminated pursuant to this provision, Rent shall abate on a per diem basis
during the period of untenantability, subject to Section 36 (d)
below.

    

    (b)  If the Premises are
partially damaged by fire or other casualty but totally destroyed, yet (i) the
damages are such that Landlord, in its sole judgment, concludes that restoration
cannot be completed within one hundred fifty (150) days; (ii) less than one year
of the Term remains; or (iii) insurance carried by Landlord in a sufficient
amount to restore the Premises is not made available to Landlord, then Landlord
may, at its option, terminate this Lease by written notice given not later than
sixty (60) days after the date of such destruction, in which event Rent paid for
the period beyond the date of destruction shall be refunded to Tenant. Within a
reasonable time after the casualty, Landlord shall furnish Tenant with
Landlord’s estimate of the time required to complete restoration and whether or
not sufficient insurance proceeds are available to Landlord to pay for the
required restoration.

    

    
      
        
        

      

      
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    (c)  If this Lease is not
terminated pursuant to Section 36 (a) or 36(b) above, Landlord shall repair
and/or restore the Premises and any other portions of the Building reasonably
required for Tenant’s use of the Premises as provided in this Lease. If Tenant
is reasonably required to close all or a portion of its operations during the
period of repair/restoration, monthly Rent shall abate on a proportional basis
(based on the rentable square footage of the unusable portion of the Premises)
until the Premises (or applicable portion thereof) is repaired and restored,
subject to the provisions of Section 36 (d) below. Landlord shall not in such
case have any liability for losses claimed by Tenant. Landlord’s obligation to
restore the Premises shall be postponed for delays arising from the collection
of insurance proceeds, from force majeure events or as needed to obtain any
license, clearance or other authorization of any kind required to enter into and
restore the Premises issued by any governmental authority having jurisdiction
over the use, storage, handling, treatment, generation, release, disposal,
removal or remediation of Hazardous Materials (as defined in Section 51 below)
in, on or about the Premises.

    

    (d) Notwithstanding anything contained
herein to the contrary, if the Premises are damaged by cause due to the fault or
negligence of Tenant, its employees, agents, customers, or invitees, Landlord
may repair such damage and there shall be no apportionment or abatement of
monthly Rent. Landlord will not be required to restore any trade fixtures or
other equipment owned by Tenant, any improvement which Tenant has the right to
remove at the end of the Term or any unapproved alterations.

    

    37.           CONDEMNATION. If the
Building, or a substantial part of the Premises which makes the Premises
unusable for the Permitted Use, shall be taken or condemned for any public or
quasi-public use or purpose, or conveyed under threat of such condemnation, the
term of this Lease shall end upon, and not before, the date of the taking of
possession by the condemning authority. If only a portion of the Premises is
taken and Tenant can continue use of the remainder, then this Lease shall not
terminate, but monthly Rent shall abate in a just and proportionate amount to
the loss of use occasioned by the taking. Landlord shall be entitled to receive
and retain the entire condemnation award for taking of the Building and/or the
Premises. Tenant shall have not right or claim against Landlord for any alleged
value of the unexpired portion of this Lease, or its leasehold estate, of for
costs of removal, relocation, business interruption expense or any other damage
arising out of such taking. Tenant, however, may make a claim against the
condemning authority (but not against Landlord) for any moving expense, loss of
profits, or taking of Tenant’s personal property (other than its leasehold
estate) to which Tenant may be entitled; provided that any such award shall not
reduce the amount of the award otherwise payable to Landlord for the taking of
the Building and Premises.

    

    38.           SUBSTITUTION OF
SPACE.  Intentionally Deleted.

    

    39.           NOTICES. Any notice
or demand required or desired to be given in connection with this Lease shall be
in writing, and sent to the respective addresses hereinafter set
forth:

    

    
      	
              LANDLORD:

            	
              W&G
      Associates, a North Carolina Limited Partnership

            
	 	 c/o
      Mr. Bert Kuthe
	 	 552
      Lizmore Place
	 	 Ocean
      Isle Beach, NC 28469

    

     

     

     

    
      	
              TENANT:

            	
              Starsys,
      Inc, a Colorado corporation

            

    

    
      	
               
      

            	
              c/o
      Mr. Richard Slansky

            

    

    
      	
               
      

            	
              4909
      Nautilus Court North

            

    

    
      	
               
      

            	
              Boulder,
      CO  80301

            

    

    

     

     Any
such notice shall be deemed to have been fully given when personally delivered
or delivered by a nationally recognized overnight courier, or, if the notice is
deposited in the United States mail, certified or registered, return receipt
requested, postage prepaid, the earlier of (i) the date set forth on the receipt
or (ii) three (3) days after the notice is deposited with the U.S. Postal
Service.  Refusal to accept delivery of otherwise properly given
notice shall also be deemed acceptance of such notice.  Other means of
delivery of written notice are acceptable with the burden of showing delivery
(or refusal to accept delivery) on the party sending the notice.

    

    Either
party may change its address for notice by at least ten (10) days written notice
to the other party. Tenant hereby appoints as its agent to receive the service
of all dispossessory or distraint proceedings and notices there under the person
in charge of or occupying the Premises at the time, and, if no person shall be
in charge of or occupying the same, then, if allowed by law, such service may be
made by attaching the same on the main entrance of the Premises.  Any
notice sent by a party’s attorney shall be considered a notice from such
party.

    

    40.           ENTIRE
AGREEMENT.  This Lease contains the entire agreement of the
parties hereto with respect to the matters contained herein and no other
representations, promises or agreements, oral or otherwise, have been made
between the parties.  Submission of this Lease for examination does
not constitute a reservation of or option for the Premises.  This
Lease becomes effective only upon execution and delivery by both Landlord and
Tenant and approval by Landlord's mortgagee where such approval is
required.  All exhibits and riders attached to this Lease are
incorporated into and made a part of this Lease.

    

    
      
        
        

      

      
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    41.           TIME. Time is of the
essence of this Lease.

    

    42.           CAPTIONS. The section
titles and captions used in this Lease are for convenience only and do not in
any way limit or amplify the terms and provisions hereof.

    

    43.           LIABILITY OF
LANDLORD.  In the event Landlord shall fail to perform any
covenant, term or condition of this Lease upon Landlord's part to be performed,
Tenant covenants and agrees to look solely to Landlord's estate and interest in
the Building for any recovery of a money judgment from Landlord from and after
the date of this Lease.  In no event is Landlord, or any individual
member, shareholder or partner thereof, or any successor in interest thereof,
ever to be personally liable for any such judgment.  This provision is
not intended to limit any right Tenant might otherwise have to obtain injunctive
relief or specific performance of any of Landlord's obligations, or otherwise to
act in any way not involving the personal liability of Landlord, or any
individual member thereof.  Likewise, this provision is not intended
to modify other provisions of this Lease stating or restricting the rights of
Tenant in the event Landlord fails to perform any obligation
hereunder.

    

    44.           SEVERABILITY.  If
any provision or clause of this Lease shall be or become invalid or
unenforceable under applicable law, such provision or clause shall be deemed
ineffective, as though not herein contained, and the remainder of this Lease
shall remain operative and in full force and effect.

    

    45.           CHOICE OF
LAW.  This Lease shall be governed by and shall be construed
according to the laws of the State of North Carolina.

    

    46.           GENDER.  The
undersigned further agree that whenever used herein, the singular number shall
include the plural, the plural the singular, and the use of the masculine,
feminine, or neuter gender shall include all genders, as required by the context
in which the terms are used.

    

    47.           COUNTERPARTS.  This
Lease may be executed in multiple counterpart copies, each of which shall be
deemed an original for all purposes.  In making proof of this Lease,
it shall not be necessary to produce or to account in any way for the other
counterpart copies.

    

    48.           NO
RELIANCE.  Each party acknowledges that it has not relied upon
any statements or representations made any other party, their brokers or agents,
other than those contained within this Lease; that it has carefully read the
foregoing Lease and knows the contents hereof; and that it has executed this
Lease as its own free act.

    

    49.           NO ACCORD AND
SATISFACTION.  No payment by Tenant or receipt by Landlord of a
lesser sum than the Rent or other charges herein stipulated to be paid by Tenant
to Landlord shall be deemed to be other than on account of the earliest
stipulated Rent or other charge, as the case may be, nor shall any endorsement
or any statement on any check or any letter accompanying any check or payment be
deemed an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such sum due and
owing to Landlord or pursue any other remedy provided for in this Lease or
available at law or in equity.

    

    50.           RELATIONSHIP OF
PARTIES.  Notwithstanding anything contained herein, it is
agreed that Landlord shall in no event be deemed to be a partner of, or engaged
in a joint venture with, or an associate of Tenant for any purpose whatsoever;
nor shall Landlord be liable for any debts incurred by Tenant in the conduct of
his business or otherwise.  Nothing contained in this Lease shall be
deemed or construed to confer upon Landlord any interest in the business of
Tenant.  The relationship of the parties during the term of this Lease
shall at all times be only that of landlord and tenant.

    

    51.           ENVIRONMENTAL
LAWS.

    

    (a)           During
the term of the Lease, Tenant shall fully comply with any laws or rules and
regulations promulgated thereunder relating to the Premises and Tenant's use
thereof, including, but not limited to, Occupational Safety and Health Act, 29
U.S.C. Sections 651, et seq.; the Toxic Substances Control Act, 15 U.S.C.
Sections 2601, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq.; the Clean Air Act, 42 U.S.C. Sections 7901, et seq.; the
Clean Water Act, 33 U.S.C. Sections 1251, et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the 1986
Superfund Amendments and Reauthorization Act, 42 U.S.C. Sections 9601, et seq.;
the National Environmental Policy Act, 42 U.S.C. Sections 4231, et seq.; the
Refuse Act, 33 U.S.C. Sections 407, et seq.; the Safe Drinking Water Act, 42
U.S.C. Sections 300 (f), et seq.; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Sections 11001, et seq.; or any other federal,
state or local law, ordinance and/or regulation promulgated under each of those
statutes and any amendments thereto, as well as applicable Department of
Transportation regulations.  Tenant shall notify Landlord immediately
if Tenant receives any notice of non-compliance with any laws or rules and
regulations promulgated thereunder, including, but not limited to, those
enumerated above.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (b)           Tenant
shall not bring onto the Premises any Hazardous Materials (as defined below)
without the prior written approval by Landlord, which shall not be unreasonably
withheld. Any approval must be preceded by submission to Landlord of appropriate
Material Safety Data Sheets (“MSD Sheets”). In the event of approval by
Landlord, Tenant covenants that it will (1) comply with all requirements of any
constituted public authority and all federal, state, and local codes, statutes,
rules and regulations, and laws, whether now in force or hereafter adopted
relating to Tenant’s use of the Premises, or relating to the storage, use,
disposal, processing, distribution, shipping or sales of any hazardous,
flammable, toxic, biologically active, or dangerous materials, waste or
substance or mold the presence of which is regulated by a federal, state, or
local law, ruling, rule or regulation (hereafter collectively referred to as
“Hazardous Materials”); (2) comply with any reasonable recommendations by the
insurance carrier of either Landlord or Tenant relating to the use by Tenant on
the Premises of such Hazardous Materials; (3) refrain from unlawfully disposing
of or allowing the disposal of any Hazardous Materials upon, within, about or
under the Premises; and (4) remove all Hazardous Materials from the Premises,
either after their use by Tenant or upon the expiration or earlier termination
of this Lease, in compliance with all applicable laws. Materials
listed in Exhibit H (attached) are hereby approved by Landlord; provided if the
Durham County fire marshal or other applicable governmental authority requires
storage of any of the Hazardous Materials listed on Exhibit H outside of the
Building, Landlord will provide an exterior area for such storage.

    

    (c)           Tenant
shall be responsible for obtaining all necessary permits in connection with its
use, storage and disposal of Hazardous Materials, and shall develop and
maintain, and where necessary file with the appropriate authorities, all
reports, receipts, manifest, filings, lists and invoices covering those
Hazardous Materials and Tenant shall provide Landlord with copies of all such
items upon request. Tenant shall provide within five (5) days after receipt
thereof, copies of all notices, orders, claims or other correspondence from any
federal, state or local government or agency alleging any violation of any
environmental law or regulation by Tenant, or related in any manner to Hazardous
Materials. In addition, Tenant shall provide Landlord with copies of all
responses to such correspondence at the time of the response.

    

    (d)           Tenant
hereby indemnifies and holds harmless Landlord, its successors and assigns from
and against any and all losses, liabilities, damages, injuries, penalties,
fines, costs, expenses and claims of any and every kind whatsoever (including
attorney’s fees and costs, expenses or claims asserted or arising under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, from time to time, and regulations promulgated thereunder, any
so-called state or local “Superfund” or “Superlien” law, or any other federal,
state or local statute, law or ordinance, code, rule, regulation, order or
decree regulating, relating to, or imposing liability or standards of conduct
concerning any Hazardous Materials) paid, incurred or suffered by, or asserted
against, Landlord as a result of any claim, demand or judicial or administrative
action by any person or entity (including governmental or private entities) for,
with respect to, or as a direct or indirect result of, the presence on or under
or the escape, seepage, leakage, spillage, discharge, emission or release from
the Premises of any Hazardous Materials caused by Tenant or Tenant’s agents,
employees, invitees or successors in interest. This indemnity shall also apply
to any release of Hazardous Materials caused by a fire or other casualty to the
premises if such Hazardous Materials were stored on the Premises by Tenant, its
agents, employees, invitees or successors in interest. Tenant is and shall be
deemed to be the “operator” of Tenant’s “facility” and the “owner” of all
Hazardous Materials brought on the Premises by Tenant, its agents, employees,
invitees or successors in interest, and the wastes, by-products, or residues
generated, resulting, or produced therefrom.

    

    (e)           If
Tenant fails to comply with the covenants to be performed hereunder with respect
to Hazardous Materials, or if an environmental protection lien is filed against
the Premises or Land as a result of the actions of Tenant, its agents, employees
or invitees, then the occurrence of any such events shall be considered a
default hereunder.

    

    (f)           Tenant
shall notify Landlord immediately if Tenant learns of any non-compliance or of
any facts (such as the existence of any release or the threat of release of
hazardous substances at, on, from or beneath the surface of the Premises) which
could give rise to a claim of non-compliance with such laws or rules and
regulations promulgated thereunder. Tenant will give Landlord prompt notice of
any release of Hazardous Materials, reportable or non-reportable, to federal,
state or local authorities, of any fire, or any damage occurring on or to the
Premises. In addition, Tenant warrants and represents that if during the term of
the Lease any violations are recorded or any notices are received with respect
to any of any licenses, permits, registrations and approvals regarding any
Hazardous Materials on the Premises or if a proceeding is commenced or
threatened to revoke or limit any of them, Tenant shall notify Landlord
immediately.

    

    (g)           Tenant
will use and occupy the Premises and conduct its business in such a manner that
the Premises are neat, clean and orderly at all times with all chemicals or
Hazardous Materials marked for easy identification and stored according to all
codes as outlined above.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (h)           Landlord
and its engineers, technicians, and consultants (collectively the “Auditors”)
may, from time to time as Landlord deems appropriate, conduct periodic tests and
examinations (“Audits”) of the Premises to confirm and monitor Tenant’s
compliance with this Section 51, “Environmental Laws”.  Such Audits
shall be conducted in such a manner as to minimize the interference with
Tenant’s Permitted Use; however in all cases, the Audits shall be of such nature
and scope as shall be reasonably required by then existing technology to confirm
Tenant’s compliance with this Section 51.  Tenant shall fully
cooperate with Landlord and its Auditors in the conduct of such
Audits.  The cost of such Audits shall be paid by Landlord unless an
Audit shall disclose a material failure of Tenant to comply with this Section
51, in which case the cost of such Audit, and the cost of all subsequent Audits
made during the Term and within thirty (30) days thereafter, shall be paid for
on demand by Tenant.

    

    (i)           Tenant’s
warranties and indemnities contained in this Section 51, “Environmental Laws”
shall survive the termination of this Lease.

    

    52.           FORCE
MAJEURE.  In the event Landlord shall be delayed, hindered or
prevented from the performance of any act required hereunder, by reason of war,
civil commotion, acts of God, governmental restrictions, scarcity of labor or
materials, strikes, labor walkouts, or any other causes beyond its reasonable
control, the performance of such act shall be excused for the period of delay,
and the period for the performance of any such act shall be extended for the
period necessary to complete performance after the end of the period of such
delay.

    

    53.           GUARANTY OF
LEASE.  As an inducement for Landlord to enter into the Lease,
Landlord has required that SpaceDev, Inc., a Colorado corporation (“Guarantor”)
guarantee the payment and performance Tenant’s obligations under this
Lease.  Guarantor shall execute and deliver such guaranty in the form
required by Landlord and attached as Exhibit G hereto (the
“Guaranty”).  It is understood and agreed that but for such Guaranty,
Landlord would not enter into this Lease with Tenant, and Tenant’s right to
occupy the Premises and Landlord’s obligations under this Lease are subject to
Landlord’s receipt of a fully signed Guaranty from Guarantor, which Guaranty
shall be delivered by Guarantor with Tenant’s execution and deliver of this
Lease.

    

    54.           SPECIAL
CONDITIONS.

    

    (a)           Extension
Option.   Tenant shall have an Option to Extend the Term
of this Lease, pursuant to and subject to the terms and conditions set forth on
Exhibit E attached hereto and incorporated herein by reference.

    

    (b)           Right of First
Offer.   Tenant shall have a Right of First Offer for the
other rentable areas of the first floor of the Building pursuant to and subject
to the terms and conditions set forth on Exhibit F attached hereto and
incorporated herein by reference.

    

    (c)           Hard
Expansion.    Beginning on the third anniversary of
the Commencement Date (i.e. the fourth lease year, also referred to herein as
the “Hard Expansion Date”) the Premises shall be expanded to include the 2017
useable square feet, 2138 rentable square feet area shown as “Expansion” on
Exhibit A attached hereto (the “Hard Expansion Space”).  As of the
Hard Expansion Date, (i) the Base Rent shall increase as set forth in Section 6
of the Lease and (ii) any sums calculated based on rentable square footage of
the Premises, including but not limited to Tenant’s Proportionate Share shall be
recalculated based on 16,448 rentable square feet (or the actual square footage
of the Premises as of such expansion), and any sums charged based on the
rentable square footage of the Premises shall be revised based on the new
rentable square footage.  Tenant shall accept the Expansion Space in
its “as is” condition, except Landlord shall provide VCT flooring in areas of
the Hard Expansion Space that are currently carpeted.  Tenant shall
use Expansion Space #1 for office use or for light manufacturing and assembly.
Expansion Space #1 will not be considered part of the lab area subject to
temperature control specified in Section 54(f).  Expansion Space #2
shall be part of the Lab Area.  Landlord may require Tenant to deposit
additional funds to the Security Deposit because of such
expansion.  Landlord shall use commercially reasonable efforts to
remove any holdover tenants or other occupants from the Hard Expansion Space
prior to the Hard Expansion Date.  Landlord shall not be liable for
any damages for any holdover Tenant or other occupant; however, all of Tenant's
obligations regarding the Hard Expansion Space shall be abated until the
holdover tenant or other occupant is removed and the commencement date for the
Hard Expansion Space shall be delayed until the holdover tenant or other
occupant is removed, and any necessary improvements and cleaning have been
completed. In no event shall Landlord be liable for indirect or consequential
damages.

    

    (d)           Building
Security.   Landlord shall provide Tenant with card access
to the public Building entrances and common areas and a keyed entrance to the
Premises, at Landlord’ s cost.  Up to ten (10) Building access cards
and keys to the Premises shall be initially provided to Tenant at no
cost.  Additional Building access cards and additional keys may be
provided by the Landlord at a charge of $20 each to the
Tenant.  Tenant shall not copy or cause the keys to be
copied.

    

    (e)           Signage.  Building
standard suite door and lobby directory signage shall be available to Tenant at
landlord’s expense. Landlord, at its expense, shall replace the existing
“W&G” sign on the exterior monument sign currently at the Building with a
sign reading “Starsys” prior to the Commencement Date, provided the same can be
done in compliance with applicable codes and standards, including the codes and
standards of Imperial Center; and further provided that if another Tenant
occupies more rentable square footage in the Building, then Landlord may remove
the “Starsys” sign from the monument sign, but, in such event, Landlord shall
furnish a directional sign, building directory sign or other sign displaying
Tenant’s name and directing persons to the Premises, at Landlord’s
expense.

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (f)           Lab
HVAC.  Subject to the last two paragraph of Section 10 above,
Landlord shall provide HVAC to the “Lab Area” of Premises to maintain between
64-82 Degrees Fahrenheit at all times (24/7), including after hours and
weekends.  Tenant acknowledges that Tenant’s right to bring in
additional equipment which would generate such heat as to raise the temperature
of the Premises above what it would otherwise be operating the equipment set out
on Exhibit A-2 (or replacements of such equipment which do not require more of
such utilities or generate more heat than the original equipment), and
Landlord’s obligation to maintain the temperatures set out in this Section 54(f)
are subject to (i) Landlord being able to provide such additional HVAC without
under wear, tear or stress on the building HVAC systems provided as of the
Commencement Date or (ii) at Landlord’s option, installation, with a thirty (30)
day notice to Tenant, of supplementary air conditioning units to serve the
Premises and the cost, operation and maintenance thereof shall be paid by Tenant
to Landlord at reasonable rates established by Landlord.

    

    (g)           Furniture.  Tenant
shall have access to select furniture, including as many as twenty blue
cubicles, currently situated in the unleased area on the second floor of the
Building (as designated by Landlord) for use in the Premises by Tenant at no
additional charge.  All furniture selected by Tenant shall be
inventoried on a list approved by both Landlord and Tenant.  All such
furniture shall remain the property of Landlord.  Tenant shall not
dispose of such furniture during the Term of the Lease or subject the furniture
to any lien, and shall keep the furniture in good repair and condition, ordinary
wear and tear excepted.  The detailed itemized inventory list shall be
created and attached to this Lease as Exhibit D prior to the Commencement
Date.

    

    (h)           Prepaid
Rent.  In addition to the Security Deposit, Tenant shall pay
the sum of $33,707.82, being three (3) months Base Rent on the Commencement
Date.  Such prepaid Base Rent shall be applied to the Base Rent as it
becomes due.

    

    (i)           Rule
14.  Notwithstanding Rule 14 on Exhibit C attached hereto, (i)
Landlord has consented to the equipment set out on Exhibit A-2 and Exhibit B (or
replacements of such equipment which do not require more of such utilities or
generate more heat than the original equipment), (ii) Landlord shall not
unreasonably withhold its consent to Tenant bringing in additional equipment
(provided, by way of example and not limitation, Landlord shall not be deemed to
be unreasonably withholding consent if the additional equipment would place
unacceptable loads on the Building structure or Building systems) and (iii)
Landlord has consented to the storage of certain inflammable fluids or
substances as allowed in Section 51.

    

    [remainder
of page intentionally blank; signature page follows]

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    IN
TESTIMONY WHEREOF, the above named Landlord and the above named Tenant have
executed this instrument on the day and year set forth in Section 1 of this
Lease.

    

    

    LANDLORD:

    
      	
               
      

            	
              W&G
      Associates, a North Carolina Limited
Partnership

            

    

    
      	
               
      

            	
              a
      North Carolina limited partnership

            

    

    

    

    

    

    By:     /s/
Bert
Kuthe                            
(SEAL)

    
 

    

    

    

    TENANT:

    
      
        	
                 
      

              	
                Starsys,
      Inc.

              

      

      
        	
                 
      

              	
                A
      Colorado corporation

              

      

    

     

     

    

    By:    /s/
Richard B.
Slansky                   
(SEAL)

         Chief
Financial Officer

    

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
A-1

    FLOOR
PLAN with Layout

    (attached)

    

     

     

     

     

     

    
 

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    EXHIBIT
A-2

    

    Manufacturing
and Test Equipment for Normal Operation of Tenant’s Business

    

    

    
      	
              Item

            	
              Equipment

            	
              Voltage
      / Phase

            	
              Max
      Current

            	
              Notes

            
	
              1

            	
              CMM

            	
              120

            	
              20A

            	
              Needs
      dedicated circuit

            
	
              2

            	
              Oven

            	
              208-240
      / 1

            	
              20A

            	 
      
	
              3

            	
              Oven

            	
              208-240
      / 1

            	
              20A

            	 
      
	
              4

            	
              Flow
      Bench

            	
              120

            	
              20A

            	
              Needs
      dedicated circuit

            
	
              5

            	
              Vacuum
      Oven

            	
              120

            	
              13.4A

            	 
      
	
              6

            	
              Flow
      Bench

            	
              120

            	
              20A

            	
              Needs
      dedicated circuit

            
	
              7

            	
              Oven

            	
              120

            	
              15A

            	 
      
	
              8

            	
              Small
      Vacuum Pump

            	
              120

            	
              8.5A

            	 
      
	
              9

            	
              Vacuum
      Oven

            	
              120

            	
              13.4A

            	 
      
	
              10

            	
              XANTREX
      Power Supply

            	
              200-240
      / 3

            	
              20A

            	 
      
	
              11

            	
              Sub-panel
      for test Equipment

            	
              208
      / 3

            	
              50A

            	 
      
	
              12

            	
              Cryo
      pump- Small Vac. Chamber

            	
              208-230
      / 1

            	
              15A

            	 
      
	
              13

            	
              Vacuum
      Pump- Small Vac. Chamber

            	
              120

            	
              6.6A

            	 
      
	
              14

            	
              Thermal
      Chamber

            	
              480
      / 3

            	
              40A

            	 
      
	
              15

            	
              Cryo
      pump- Small Vac. Chamber

            	
              208-230
      / 1

            	
              15A

            	 
      
	
              16

            	
              Vacuum
      Pump- Small Vac. Chamber

            	
              120

            	
              6.6A

            	 
      
	
              17

            	
              Thermal
      Chamber

            	
              480
      / 3

            	
              40A

            	 
      
	
              18

            	
              Cryo
      Pump –TVAC #1

            	
              208
      / 3

            	
              30A

            	 
      
	
              19

            	
              Telemark
      3500 –TVAC #1

            	
              208
      /3

            	
              90A

            	 
      
	
              20

            	
              Vacuum
      Pump –TVAC #1

            	
              208
      / 3

            	
              30A

            	 
      
	
              21

            	
              Cryo
      Pump – TVAC #2

            	
              208
      / 3

            	
              30A

            	 
      
	
              22

            	
              Telemark
      3500 – TVAC #2

            	
              208
      /3

            	
              90A

            	 
      
	
              23

            	
              Vacuum
      Pump – TVAC #2

            	
              208
      / 3

            	
              30A

            	 
      
	
              24

            	
              Bench
      Lathe

            	
              208
      /3

            	
              30-50A

            	 
      
	
              25

            	
              Mill

            	
              208
      /3

            	
              30-50A

            	 
      
	
              26

            	
              Shaker

            	
              440-480
      / 3

            	
              50A

            	 
      
	
              27

            	
              Oil
      pump – for Shaker

            	
              120

            	
              <15A

            	 
      
	
              28

            	
              Water
      Chiller

            	
              480
      / 3

            	
              40A

            	
              Approx.
      Dims:  117" x 48" x 72"
(LxWxH)

            

    

    

    

    The
equipment listed above shall be installed in the Premises in the places and
quantities as shown on Exhibit A-1 attached to this Lease.

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        
EXHIBIT
B

    

    TENANT
IMPROVEMENTS TO PREMISES

    

    

    Landlord
agrees to make the following Building-standard improvements per Exhibits A, A-1,
and A-2, including space planning, at its own cost and expense:

    

    1.  Landlord
shall add and remove walls and doors as necessary to deliver the Premises as
shown on Exhibit A-1

    

    2.  Landlord
to provide new carpet, paint and base in the office areas of the Premises.
Tenant acknowledges that the open lab areas already have VCT and paint in
satisfactory condition.

    

    3.  Plumbing
stubs to be provided in the floor in two (2) areas in the open lab area as
agreed to by Landlord and Tenant.

    

    4.  Landlord
to provide ventilation to Building exterior to two pieces of Tenant’s equipment
in a mutually agreed upon area. Landlord to provide through-wall venting of
excess heat from environmental lab area.

    

    5.  Landlord
to provide fiber optic lines to server room of the Premises, at sole cost of
Landlord.  Further, Landlord to provide three (3) patch panels to the
first floor server room necessary for telecommunication operations by Tenant at
sole cost of the Landlord.  Nothing herein shall require Landlord to
run fiber optic or other telecommunications cabling within the Premises
itself.

    

    6.  Subject
to compliance with ordinances, rules and regulations and receipt of any
necessary approvals, Landlord to provide a small concrete slab outside of the
back of Building to house a chiller necessary to Tenant’s operations, and
provide electrical service and plumbing to chiller. The size, installation and
operation of the chiller are subject to Landlord’s prior approval, which
approval is hereby granted with lease execution.  Chiller requirements
will be substantially as shown in Exhibit A-2.  The location of the
chiller and chiller pad is to be mutually agreed upon between Landlord and
Tenant and is subject to any restrictions affecting the Land, including Imperial
Center covenants.

    

    7.      Landlord
to provide ~8’ x 10’ room for Vibration Lab with soundproofing, per attached
layout of Exhibit A-1.  Room shall have window and door
access.  Landlord shall provide 480V, 3 ph, 30 KVA power to vibration
panel, and at least one 120V outlet in room.

    

    
      	
              8.  

            	
              Landlord
      shall provide 120V outlets distributed to support Tenant’s needs per
      Exhibits A-1, and A-2.

            

    

    
 

    9. Landlord
shall provide 460V and 208V 3 phase and 1 phase power to Lab Area necessary to
operate equipment per Exhibits A-1 and A-2.

    

    10. Landlord
shall provide sprinkler heads for two modular clean rooms per layout of Exhibit
A-1 (approximately two per room)

    

    11. Landlord
shall provide all other improvements approved by Landlord and Tenant as part of
turnkey buildout per layout of Exhibits A-1 and A-2.

    

    

    

    It is
expressly understood and agreed that Landlord’s obligation with respect to the
upfit of the Premises shall be limited to the scope of work described on this
Exhibit B and shall in no event include any work not described on this Exhibit
B.

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    EXHIBIT
B-1

    

    LAB AREA
AND EXPANSION SPACE AREA

    

    (attached)

    

     

     

     

     

     

    
 

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

      EXHIBIT
"C"

      RULES AND
REGULATIONS

    

    

    

    1.           Sidewalks,
doorways, vestibules, halls, stairways, and similar areas shall not be
obstructed by tenants or used for any purpose other than ingress and egress to
and from the Premises and for going from one to another part of the
Building.

    

    2.           Plumbing
fixtures and appliances shall be used only for purposes for which constructed,
and no sweepings, rubbish, rags or other unsuitable material shall be thrown or
placed therein.  Damage resulting to any such fixtures or appliances
from misuse by a tenant shall be paid by such tenant, and Landlord shall not in
any case be responsible therefor.

    

    3.           No
signs, advertisements or notices shall be painted or affixed on or to any
windows or doors or other part of the building, except of such color, size and
style and in such placed, as shall be first approved in writing by
Landlord.  No nails, hooks or screws shall be driven or inserted in
any part of the building, except by the building maintenance personnel, nor
shall any part be defaced by tenants.

    

    4.           No
Building signage or directories shall be permitted, unless previously consented
to by Landlord in writing.

    

    5.           Tenants
shall not do, or permit anything to be done in or about the Building, or keep
anything therein that will in any way increase the rate of fire or other
insurance on the Building, or on property kept therein, or obstruct or interfere
with the rights of or otherwise injure or annoy, other tenants, or do anything
in conflict with the valid pertinent laws, rules or regulations of any
government authority.

    

    6.           Landlord
shall have the power to prescribe the weight and positions of iron safes or
other heavy equipment, which shall in all cases, to distribute weight, stand on
plank strips at least two inches thick.  All damage done to the
building by taking in or putting out any property of a tenant, or done by a
tenant's property while in the building, shall be repaired at the expense of
such tenant.

    

    7.           A
tenant shall notify the building manager when safes or other heavy equipment are
to be taken in or out of the building, and the moving shall be done under the
supervision of the building manager, after written permit from the
Landlord.  Persons employed to move such property shall be acceptable
to Landlord.

    

    8.           Corridor
and/or lobby doors, when not in use, shall be kept closed at all
times.

    

    9.           No
furniture, packages, or bulky material of any kind will be received in the
Building or carried up or down stairs or in the elevators, except in the manner
and at the times specified by Landlord.

    

    10.           Should
a tenant require telegraphic, telephonic, annunciation or other communication
service, Landlord will direct the electricians where and how wires are to be
introduced and placed, and none shall be introduced or placed except as Landlord
shall direct.  Electric heaters shall not be used without Landlord's
prior written permission.

    

    11.           Landlord
shall, at reasonable hours, have the right to enter premises leased to tenants,
to examine same or to make such alterations and repairs as may be deemed
necessary or to exhibit same to prospective tenants.

    

    12.           Tenant
shall not make or permit any improper noises in the building, or otherwise
interfere in any way with other tenants, or persons having business with
them.

    

    13.           Nothing
shall be swept or thrown into or stored in the corridors, halls, elevators,
shafts, or stairways.  No birds or animals shall be brought or kept in
or about the building.

    

    14.           No
machinery of any kind shall be operated on leased premises without prior written
consent of Landlord, nor shall a tenant use or keep in the building any
inflammable or explosive fluid or substance, or any illuminating material,
except candles in case of electric failure.

    

    15.           Tenant
will refer all contractors, contractor's representatives and installation
technicians, rendering any service to Tenant, to Landlord for Landlord's
supervision, approval and control before performance of any contractual
service.  This provision shall apply to all work performed in
building, including installations of telephones, electrical devices and
attachments, and installations of any nature affecting floors, walls, woodwork,
trim, windows, ceilings, equipment or any other physical portion of
building.

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    16.           Movement
in or out of building of furniture of office equipment, or dispatch or receipt
by Tenant of any merchandise or materials which requires use of elevators or
stairways, or movement through building entrances or lobby shall be restricted
to hours designated by Landlord.  All such movement shall be under
performances.  Such prearrangement initialed by Tenant will include
determination by Landlord and shall be subject to his decision and control of
the time, method, and routing of movement, limitations imposed by safety or
other concerns which may prohibit any article, equipment or any other item from
being brought into the Building.  Tenant is to assume all risk as to
damage to articles moved and injury to persons or public engaged or not engaged
in such movement, including equipment, property and personnel of
Landlord.  If damaged or injured as a result of acts in connection
with carrying out this service for Tenant from time of entering property to
completion of work; and Landlord shall not be liable for acts of any person
engaged in, or any damage or loss to any of said property or persons resulting
from any act in connection with such service performed for Tenant.

    

    17.           No
draperies, shutters, or other window covering shall be installed on exterior
windows or walls or windows and doors facing public corridors without Landlord's
approval.  Landlord shall have the right to require installation and
continued use of uniform window covering for such windows.

    

    18.           No
portion of Tenant's area or any other part of building shall at any time be used
or occupied as sleeping or lodging quarters.

    

    19.           Landlord
will not be responsible for lost or stolen property, equipment, money or jewelry
from Tenant's area or public rooms, regardless of whether such loss occurs when
area is locked against entry or not.

    

    20.           Employees
of Landlord shall not receive or carry messages for or to any Tenant or other
person or contact with or render free or paid services to any Tenant or Tenant's
agent, employees or invitees.

    

    21.           Landlord
reserves the right to rescind any of these rules and make sure other further
policies, rules and regulations as in its judgment shall from time to time be
needful for the safety, protection, care and cleanliness of the building, the
operation thereof, the preservation of good order therein, and the protection
and comfort of its tenants, their agents, employees, and invitees, which rules
when made and notice thereof given to a tenant shall be binding upon him in like
manner as if originally herein prescribed.

    

    22.           No
persons shall be permitted to smoke tobacco products in the building except in
specially designated areas to be determined by Landlord.

    

    23.           Tenant
shall not overburden the parking areas or use more than Tenant’s Proportionate
Share of the parking spaces provided for the Building.  Tenant and
Tenant’s employees shall not park in any parking space marked
“Visitor”.  Any Tenant or Tenant’s employee vehicle parked in any such
marked space shall be subject to towing without notice to
Tenant or Tenant’s employees.

     

     

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    EXHIBIT
D

    ITEMIZED
LIST OF FURNITURE USED BY TENANT

    (Forthcoming)

    

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    EXHIBIT
E

    

    EXTENSION
OPTION RIDER

    

    Tenant shall have the right to extend
(the “Extension Option”) the original Term of this Lease for one (1) period of
five (5) years (the “Extension Term”), upon and subject to the following terms
and conditions:

    

    
      	
              1.  

            	
              If
      Tenant shall give written notice of Tenant’s intention to extend the Term
      to Landlord not sooner than twelve (12) months and not later than four (4)
      months prior to the expiration of the then current Term, then upon receipt
      of such written notice by Landlord, this Lease, subject to the provisions
      of this Extension Option Rider, shall be automatically extended for the
      Extension Term with the same force and effect as if the Extension Term had
      been originally included in the Term, upon the same terms and conditions
      as in this Lease, including the provisions regarding Tenant’s payment of
      Tenant’s Proportionate Share of Operating Expenses, except that (a) the
      Base Rent set out in Paragraph 4 shall be as set forth in paragraph 3 of
      this Extension Option Rider below, (b) the terms of the Lease relating to
      Landlord’s obligations to construct leasehold improvements (including
      Exhibit B) shall
      be of no force or effect and Tenant shall be deemed to accept the Premises
      in its then “as is” condition, and (c) Tenant shall have no right to
      extend or renew the Term for any period beyond the Extension Term set
      forth herein; once exercised the Extension Term is not incorporated into
      the Lease as extended.

            

    

    

    
      	
              2.  

            	
              Tenant’s
      right to extend the Term for an Extension Term shall be of no force or
      effect if (i) either at the time of exercise of this extension option or
      at the time of commencement of the Extension Term, an Tenant default then
      exists or (ii) if, during the Lease Term, Tenant fails more than twice
      within any twelve (12) month period to observe or perform any covenant,
      condition, or agreement of this Lease (including without limitation the
      payment of Rent), regardless of whether such defaults shall have been
      cured by Tenant.  Tenant’s failure to exercise its option for
      any Extension Term shall be deemed a waiver of any additional remaining
      Extension Term(s), if any. In addition, if the performance of Tenant’s
      obligations under the Lease is guaranteed, then the Guarantor’s
      obligations must apply to the exercised Extension
  Term.

            

    

    

    
      	
              3.  

            	
              The
      Base Rent for the Premises for the exercised Extension Term shall be 95%
      of the then current “Market Rate” for the Premises as of the date of the
      exercise of the Extension Option with typical annual escalations of Base
      Rent (the Extension Term Base Rent”). For the purposes of determining
      Market Rate (and the typical annual escalations) and the Extension Term
      Base Rent. If Tenant exercises its option to extend the Lease, Landlord
      shall within thirty (30) days after Landlord’s receipt of Tenant’s written
      notice of exercise, notify Tenant in writing of Landlord’s reasonable
      determination of the Extension Term Base Rent (based on 95% of Market
      Rate) for the Premises for the Extension Term, taking into account all
      relevant factors for space of this type in the comparable Durham/Chapel
      Hill market area (the “Market Rate Notice”). Tenant shall notify Landlord
      within ten (10) days if Tenant objects to Landlord’s determination of
      Market Rate (“Tenant’s Notice”). If Tenant fails to notify Landlord of
      Tenant’s response to the Market Rate Notice within ten (10) days, Tenant
      shall be deemed to have accepted Landlord’s determination.  If
      Tenant notifies Landlord that it objects to Landlord’s determination in
      the Market Rate Notice and Landlord and Tenant are unable to agree upon
      the Extension Term Base Rent within fifteen (15) days of the Tenant’s
      Notice, then the Extension Term Base Rent and the prevailing Market Rate
      shall be determined by an appraiser mutually agreed upon by Landlord and
      Tenant within 30 days of the appraiser’s selection, or if they cannot
      mutually agree on one appraiser within twenty (20) days of the Tenant’s
      Notice, then by three (3) appraisers selected within thirty (30) days of
      Tenant’s Notice and holding the earned designation “MAI” and having at
      least ten (10) years experience in appraising commercial real estate in
      the Durham/Chapel Hill, North Carolina area, one appraiser to be selected
      by Tenant, one appraiser to be selected by Landlord, and the third
      appraiser to be selected by the other two appraisers.  If the
      three appraisers are unable to agree upon the prevailing Market Rate, then
      each shall submit its written determination within thirty (30) days after
      the appraiser’s appointment and the rate shall be the average of the three
      appraisers’ determinations.  Provided, however, if the
      appraisals of two of the three appraisers vary from one another by less
      than ten percent (10%) then the Extension Term Base Rent and the Market
      Rate shall be the average of the two “closest” appraisals and the third
      appraisal shall be disregarded.  Tenant and Landlord each shall
      pay the cost of the appraiser it selects and the cost of the third
      appraiser shall be split equally between Landlord and
      Tenant.  If Landlord and Tenant mutually agree on one appraiser,
      then Landlord and Tenant shall split equally the cost of the
      appraiser.

            

    

    

    
      	
              4.  

            	
              Upon
      the exercise by Tenant of its option in respect of an Extension Term, the
      term “Term”, as otherwise defined and used in the Lease, shall mean the
      Term, as extended for the Extension Term in question, and references to
      the expiration of the Term shall mean the date of expiration of such
      Extension Term.

            

    

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    
      	
              5.  

            	
              The
      Extension Option contained herein is personal to Starsys, Inc., a Colorado
      corporation. In the event the Lease is, or has been, assigned or all or
      any part of the Premises is, or has been, subleased, or if Starsys, Inc.
      is not in occupation of and conducting its business in the whole of the
      Premises, then Tenant may not exercise the Extension Option and if already
      exercised, but prior to commencement of the Extension Term, Landlord, at
      Landlord’s option, may refuse to honor such Extension Term. In such event
      Landlord shall so notify Tenant and the Lease shall terminate as if the
      Extension Term in question had never been
  exercised.

            

    

    

    
      	
              6.  

            	
              Time
      shall be of the essence with respect to the exercise by Tenant of its
      option under this Extension Option
Rider.

            

    

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    EXHIBIT
F

    

    FIRST
RIGHT TO LEASE

    

    Tenant
shall have a one-time first right to lease (the "First Right to Lease") the
remaining rentable portions on the first floor of the Building (the "Expansion
Space”) which is or shall become “available for lease” (as defined below) during
the Term of this Lease and any exercised renewal or extension term, subject to
the provisions of this Exhibit. Notwithstanding anything contained herein to the
contrary, this First Right to Lease shall terminate and be of no further force
and effect (i) if Tenant subleases all or part of the Premises or assigns this
Lease, in whole or in part; or (ii) during the last six (6) months of the Lease
Term.

    

    Expansion
Space shall be deemed to be “available for lease” if (1) no bona fide written
lease agreement exists relative to such Expansion Space, (2) the Expansion Space
is or becomes vacant, and (3) the holder(s) of any right to lease all or any
part of the Expansion Space existing as of the Commencement Date has/have failed
to timely exercise its/their option(s) or right(s).  Tenant
acknowledges that Embrex, Inc. currently has a prior right of first refusal as
to the Expansion Space.

    

    As a
condition to exercising the First Right to Lease, at the time Tenant exercises
the First Right to Lease, (i) Tenant shall not be in default under the terms of
the Lease, (ii) the Lease must be in full force and effect, and (iii) Tenant’s
financial condition as revealed by its most recent financial statements (not
more than one year old) must indicate that Tenant meets the financial criteria
that Landlord generally uses to lease space to Tenant or that Tenant’s net worth
is at least equal to its net worth at the time the Lease was
signed.

    

    As a
result of Tenant’s First Right to Lease, if Landlord, in good faith, identifies
a Prospective Tenant for all or a portion of the Expansion Space (in any such
specific instance, the “Available Expansion Space”), Landlord shall notify
Tenant in writing (“Landlord’s Notice”) that a Prospective Tenant has been
identified. A “Prospective Tenant” is a party identified by Landlord as
expressing a bona fide interest in entering into a lease of all or part of the
Expansion Space.

    

    Landlord’s
Notice shall describe the amount and location of the Available Expansion Space
that has or will become available for lease, specify the date on which the
Available Expansion Space will be available for lease by Tenant, set out terms
of the lease of the Available Expansion Space sought by Landlord including the
rental rate and term sought by Landlord. It is intended that the term of the
lease on the Available Expansion Space shall be co-terminus with the term of the
lease of the then existing Premises.  If it appears at the time of
Landlord’s Notice that less than 36 months will be left on the Term of the Lease
at the time the Available Expansion Space would be occupied by Tenant should
Tenant exercise this First Right to Lease, then Landlord at its option, may in
Landlord’s Notice require that the Term of the Lease be extended (and the term
of the lease on the Available Expansion Space be) at least 36 months and in such
event Base Rent for such extended term of the Lease shall be at the Prevailing
Market Rate as set forth below, and in such event if the Option to Extend set
out in Exhibit E above has not be exercised at the time of Landlord’s Notice,
then at the time Tenant exercises this First Right to Lease, then the 5-year
Extension Term set out in Exhibit E shall be reduced by the number of months
Landlord requires the Term to be  extended pursuant to this paragraph;
it still being the intention that the term of the lease on the Available
Expansion Space and the Term of the Lease of the then existing Premises prior to
such expansion shall be co-terminus.

    

    So long
as Tenant is not in default under the Lease, if Tenant delivers to Landlord
written notice of Tenant's desire to lease all of the Available Expansion Space
within five (5) business days after Landlord’s Notice (“Tenant’s Expansion
Notice”), the Available Expansion Space shall be leased by Tenant on the terms
and conditions set forth in Landlord’s Notice and Tenant shall enter into either
an amendment of this Lease or a new lease agreement as required by Landlord,
upon terms substantially similar to the terms of this Lease except as otherwise
specified in Landlord’s Notice; provided such shall not include this First Right
to Lease; provided however if Tenant objects to Landlord’s determination of
Prevailing Market Rate, the Tenant’s Expansion Notice shall specifically state
this objection and Prevailing Market Rate for Base Rent shall be determined by
an appraiser or appraiser(s) as set out below.

    

    If Tenant
notifies Landlord that it objects to Landlord’s determination of Prevailing
Market Rate and Landlord and Tenant are unable to agree upon the then Prevailing
Market Rate within fifteen (15) days of the Tenant’s Expansion Notice, then the
Prevailing Market Rate shall be determined by an appraiser mutually agreed upon
by Landlord and Tenant within 30 days of the appraiser’s selection, or if they
cannot mutually agree on one appraiser within twenty (20) days of the Tenant’s
Expansion Notice, then by three (3) appraisers selected within thirty (30) days
of the Tenant’s Expansion Notice and holding the earned designation “MAI” and
having at least ten (10) years experience in appraising commercial real estate
in the Durham/Chapel Hill, North Carolina area, one appraiser to be selected by
Tenant, one appraiser to be selected by Landlord, and the third appraiser to be
selected by the other two appraisers.  If the three appraisers are
unable to agree upon the Prevailing Market Rate, then each shall submit its
written determination within thirty (30) days after the appraiser’s appointment
and the rate shall be the average of the three appraisers’
determinations.  Provided, however, if the appraisals of two of the
three appraisers vary from one another by less than ten percent (10%) then the
Prevailing Market Rate shall be the average of the two “closest” appraisals and
the third appraisal shall be disregarded.  Tenant and Landlord each
shall pay the cost of the appraiser it selects and the cost of the third
appraiser shall be split equally between Landlord and Tenant.  If
Landlord and Tenant mutually agree on one appraiser, then Landlord and Tenant
shall split equally the cost of the appraiser.

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    Failure
to exercise the First Right to Lease within five (5) business days of receipt of
Landlord’s Notice by giving written notice to Landlord shall constitute
rejection of the First Right to Lease as to the Available Expansion Space in
Landlord’s Notice and Landlord shall be free thereafter to lease all or any part
of the Available Expansion Space, under any terms without Tenant’s consent or
approval and such Available Expansion Space need not be offered again to Tenant,
unless the prospective tenant and Landlord fail to agree upon a mutually
acceptable lease, in which  event this First Right to Lease shall
continue. The First Right to Lease shall terminate as to any part of the
Expansion Space which Tenant has rejected for fails to validly exercise its
First Right to Lease, unless the prospective tenant and Landlord fail to agree
upon a mutually acceptable lease, in which  event this First Right to
Lease shall continue.

    

    Landlord
shall use commercially reasonable efforts to remove any holdover tenants or
other occupants from the Available Expansion Space that Tenant leases pursuant
to the terms of this Exhibit.  Landlord shall not be liable for any
damages for any holdover Tenant or other occupant; however, all of Tenant's
obligations regarding the Available Expansion Space shall be abated until the
holdover tenant or other occupant is removed and the commencement date for the
Available Expansion Space shall be delayed until the holdover tenant or other
occupant is removed, and any necessary improvements and cleaning have been
completed. In no event shall Landlord be liable for indirect or consequential
damages.

    

    Time is
of the essence as to Tenant’s notices and obligations under this First Right to
Lease.

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    EXHIBIT
G

    

    GUARANTY
OF LEASE

    

    Date:
________________, 2007

    

    WHEREAS,
Starsys, Inc., a Colorado corporation, having
an address of ______________________________________________________, is
desirous of entering into the lease hereinafter mentioned, and is hereinafter
referred to as "Tenant";

    

    WHEREAS,
the Guarantor, as defined below, has requested W & G Associates, a North
Carolina Limited partnership, hereinafter referred to as "Landlord",
to enter into a lease (the “Lease”)
with Tenant for approximately 14,310 rentable square feet
(plus any expansions which may occur) of the building located at 1030 Swabia Court, Durham, North
Carolina, and

    

    WHEREAS,
Landlord has refused to enter into said Lease unless the Guarantor guaranties
said Lease in the manner hereinafter set forth;

    

    NOW,
THEREFORE, to induce Landlord to enter into said Lease, the undersigned, SpaceDev, Inc., a
______________ corporation, whose main
business address is _________________________________________

    ________________________________________________,
hereinafter referred to as "Guarantor",
hereby agrees:

    

    1.           Guarantor
unconditionally guaranties to the Landlord and the successors and assigns of
Landlord the full and punctual performance and observance by Tenant of all
terms, covenants and conditions in said Lease contained on Tenant's part to be
kept, performed or observed, including without limitation, the obligation to pay
rent and additional rent. If, at any time, default shall be made by Tenant in
the performance or observance of any of the terms, covenants or conditions in
said Lease contained on Tenant's part to be kept, performed or observed,
Guarantor will keep, perform and observe the same, as the case may be, in place
and stead of Tenant. This is a guaranty of payment and performance, not a
guaranty of collection.  This Guaranty shall include any liability of
Tenant which shall accrue under said Lease for any period preceding as well as
any period following the term in said Lease specified.

    

    2.           Guarantor
does not require and hereby waives all notices of Tenant’s nonpayment,
nonperformance or nonobservance of the covenants, terms and conditions of the
Lease. Guarantor hereby expressly waives all notices and demands otherwise
required by law which Guarantor may lawfully waive.

    

    3.           The
obligations of Guarantor hereunder shall not be released by Landlord's receipt,
application or release of security given for the performance and observance of
covenants and conditions in said Lease contained on Tenant's part to be
performed or observed Guarantor expressly agrees that Landlord, or its
successors or assigns, may, in its sole and absolute discretion, without notice
to or further consent of Guarantor and without in any way releasing, affecting,
or impairing the obligations and liabilities of Guarantor
hereunder:

    

    
      	
               
      

            	
              (a)

            	
              waive
      compliance with any of the terms or conditions of said
    Lease;

            

    

    

    
      	
               
      

            	
              (b)

            	
              give
      any consent to any manner or thing relating to said Lease (including but
      not limited to any consent to the assignment of the Lease, the subletting
      of all or part of the premises leased under the Lease, or the conveyance
      or other transfer of the interest of Tenant in the
  Lease);

            

    

    

    
      	
               
      

            	
              (c)

            	
              grant
      any indulgences or extensions of time to
Tenant;

            

    

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              (d)

            	
              modify,
      amend or change any provisions of the Lease by agreement between Landlord
      and Tenant;

            

    

    

    
      	
               
      

            	
              (e)

            	
              grant
      extensions or renewals of the Lease and/or effect any release, compromise,
      or settlement in connection therewith;
and

            

    

    

    
      	
               
      

            	
              (f)

            	
              assign
      or otherwise transfer all or part of Landlord’s interest in the Lease, the
      premises leased under the Lease, or this Guaranty or any interest therein
      or herein.

            

    

    

    4.           The
liability of Guarantor hereunder shall in no way be affected by:

    

    
      	
               
      

            	
              (a)

            	
              the
      release or discharge of Tenant in any creditors', receivership, bankruptcy
      or other proceedings;

            

    

    

    
      	
               
      

            	
              (b)

            	
              the
      impairment, limitation or modification of the liability of the Tenant or
      the estate of the Tenant in bankruptcy, or of any remedy resulting from
      the operation of any present or future provision of the National
      Bankruptcy Act or other statute or from the decision in any
      court;

            

    

    

    
      	
               
      

            	
              (c)

            	
              the
      rejection or disaffirmation of the Lease in any such
      proceedings;

            

    

    

    
      	
               
      

            	
              (d)

            	
              the
      assumption and/or assignment or transfer of the Lease by Tenant or
      Tenant’s bankruptcy trustee;

            

    

    

    
      	
               
      

            	
              (e)

            	
              any
      disability or other defense of Tenant;
or

            

    

    

    
      	
               
      

            	
              (f)

            	
              the
      cessation from any cause whatsoever of the liability of
      Tenant.

            

    

    

    5.           Until
all the covenants and conditions in said Lease on Tenant's part to be performed
and observed are fully performed and observed, Guarantor:

    

    
      	
               
      

            	
              (a)

            	
              shall
      have no right of subrogation against Tenant by reason of any payments or
      acts of performance by the Guarantor, in compliance with the obligations
      of the Guarantor hereunder;

            

    

    

    
      	
               
      

            	
              (b)

            	
              waives
      any right to enforce any remedy which Guarantor now or hereafter shall
      have against Tenant by reason of any one or more payments or acts of
      performance in compliance with the obligations of Guarantor hereunder;
      and

            

    

    

    
      	
               
      

            	
              (c)

            	
              subordinates
      any liability or indebtedness of Tenant now or hereafter held by Guarantor
      to the obligations of Tenant to the Landlord under said
    Lease.

            

    

    

    6.           Landlord
shall not be required to make any demand on Tenant, apply any security deposit
being held by Landlord on behalf of Tenant or any other credit in favor of
Tenant, or otherwise pursue or exhaust its remedies against Tenant, before,
simultaneously with, or after enforcing its rights and remedies hereunder
against Guarantor. Without limiting the generality of the foregoing, the
Guarantor hereby specifically waives the benefits of North Carolina General
Statutes §§ 26-7 through 26-9 inclusive, as such provisions may be amended from
time to time, and the laws of any other jurisdiction similar in effect to such
provisions. Guarantor waives the benefit of any statute of limitations affecting
Guarantor’s liability under this Guaranty.

    

    7.           This
Guaranty shall apply to the said Lease, any extension or renewal thereof, and to
any holdover term following the term granted in the Lease or any extension or
renewal thereof.

    

    8           Guarantor
agrees to pay all costs and expenses incurred by Landlord in enforcing this
Guaranty, including, without limitation, all legal fees and
disbursements.

    

    9           This
instrument may not be changed, modified, discharged or terminated orally or in
any manner other than by an agreement in writing signed by Guarantor and the
Landlord.

    

    10.           This
Guaranty, and all of the terms hereof shall be binding on Guarantor and the
successors, assigns, and legal representatives of Guarantor.

    

    11.           Guarantor
represents and warrants that this Guaranty has been duly authorized by all
necessary corporate
action on Guarantor’s part, has been duly executed and delivered by a duly
authorized officer and
constitutes Guarantor’s valid and legally binding agreement in accordance with
its terms.

    

    12.           This
Guaranty shall be governed and construed in accordance with the laws of the
State of North Carolina. Guarantor hereby consents to the jurisdiction of any
competent court within Durham County, North Carolina in Landlord’s discretion,
including, without limitation, Federal courts of the United States, and hereby
appoints ____________________________________________________________, having an
address of __________________________________________________, North Carolina as
its agent to receive service of process or other legal summons by any means
authorized by the State of North Carolina.

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, Guarantor has hereunto caused this instrument to be executed by
the appropriate corporate officer(s) and the corporate seal to be affixed as of
the date of this instrument first written above.

    

    

    SpaceDev,
Inc.

    a
______________________ corporation

    

    

    By:_________________________

       _____
President

    

    

    (affix
corporate seal)

     

     

     

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

     

     

     

    

    EXHIBIT
H

    

    Pre-Approved
Hazardous Materials List

    

    Starsys
will store a limited amount of hazardous chemicals on site.  They are
stored in safety cabinets that meet both OSHA and NFPA standards.

    

    The
chemicals will consist of:

    5 gallons
or less of isopropyl alcohol

    5 gallons
or less of Acetone

    1 gallon
or less of Toluene

    1 gallon
or less of Hexane

    1 gallon
or less of Heptane

    1 gallon
or less of Freon

    

     Various
varnishes, epoxies, adhesives, paints and polyurethanes.  Each material is
in quantities of 1 gallon or less.

    

    Stored
Solvent waste is usually 10 gallons or less.

    

    MSD
Sheets will be made available to Landlord for all hazardous
materials.

     

     

     

    
 

    
      
        
        

      

      
        33

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