Document:

Exhibit 10.1

AIR COMMERCIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL
SINGLE-TENANT LEASE — NET

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

1.
Basic Provisions (“Basic Provisions”).

1.1 Parties: This
Lease (“Lease”), dated for
reference purposes only February 13, 2007                       , is made by and between 30452 Esperanza
LLC, a California limited liability company (“Lessor”)  and Liquidmetal Technologies, Inc., a
Delaware corporation                                                      “Lessee”), (collectively the “Parties,”
or individually a “Party”).

1.2 Premises: That
certain real property, including all improvements therein or to be provided by
Lessor under the  terms of this Lease,
and commonly known as 30452 Esperanza; Rancho Santa Margarita                                                          , located in the County of Orange
, State of California 92688                                                                                                      
, and generally described as (describe briefly the nature of the property and,
if applicable, the “Project”, if
the property is located within a Project) an approximate 15,070 rentable
square foot R&D building referred to as Building D of  the
Brookhollow Business Park - Phase III (the “Project”)                                                                                                                                                   —(“Premises”). (See also Paragraph 2)

1.3 Term: 5      years and N/A                                months (“Original Term”) commencing May 1, 2007                         (“Commencement Date”) and ending April 30,
2012                                          
(“Expiration Date”). (See also
Paragraph 3)

1.4 Early Possession:
Upon execution of the Lease by all parties and the delivery of the
certificate or copies of insurance policies referred to in Paragraph 8.5, the
payment of the sum set out in Paragaph 1.6(e), and the incumbency certificate
set out in Exhibit “D”. (“Early Possession
Date”). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $14,919.30     per month (“Base Rent”), payable on the 1st                                . day of each month commencing June 1,
2007                                                                                                                .(See also Paragraph 4)

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

1.6 Base Rent and Other Monies Paid Upon Execution:

(a) Base Rent: $14,919.30              for the period May 1, 2007
through May 31, 2007                                              .

(b) Security Deposit: $76,555.60                  (“Security Deposit” ). (See also Paragraph
5)

(c) Association Fees: $See (d)                       for the period

(d) Other: $4,219.60                                                 for estimated NNN fees for May 1, 2007
through  May 31, 2007 .

(e) Total Due Upon Execution of this Lease: $95,694.50                                            .

1.7 Agreed Use: Administrative office and
research, development, design, engineering,  and light manufacturing (but
not mass production) of amorphous alloys . (See also Paragraph 6)

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

1.9 Real Estate Brokers: (See also Paragraph
15)

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

x  Lee & Associates - Irvine, Inc.                          represents Lessor
exclusively ( “Lessor’s Broker”);

x  CB Richard Ellis                                                               
represents Lessee exclusively ( “Lessee’s
Broker”); or

o  N/A                                                                                                   
represents both Lessor and Lessee ( “Dual
Agency”).

(b) Payment to Brokers: Upon execution and
delivery of this Lease by both Parties, Lessor shall pay to the Broker the fee
agreed to in their separate written agreement (or if there is no such
agreement, the sum of or % of the total Base Rent) for the brokerage
services rendered by the Brokers.

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

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

x  an Addendum One consisting of Paragraphs 51                through 52, and 56-58              ;

x  a plot plan depicting the Premises; Exhibit “A”

x  a current set of the Rules and Regulations;
Exhibit “C”

o  a Work Letter;

x  other
(specify): Addendum Two consisting of Paragraph 53; Addendum Three
consisting of Paragraph 54; Addendum Four consisting of Paragraph 55; Exhibit “B”
Floor Plan; and Exhibit “D” Incumbency Certificate and Resolution                                                
..

 

2.
Premises.

 

 PAGE 1 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                                     FORM STN-8-5/05E

2.1 Letting. Lessor hereby leases to Lessee,
and Lessee hereby leases from Lessor, the Premises, for the term, at the
rental, and upon all of the terms, covenants and conditions set forth in this
Lease. Unless otherwise provided herein, any statement of size set forth in
this Lease, or that may have been used in calculating Rent, is an approximation
which the Parties agree is reasonable and any payments based thereon are not
subject to revision whether or not the actual size is more or less. Note: Lessee is advised to verify the actual size
prior to executing this Lease.

2.2 Condition. Lessor shall deliver the
Premises to Lessee broom clean and free of debris on the Commencement Date or
the Early Possession Date, whichever first occurs ( “Start Date”), and, so long as the required service contracts
described in Paragraph 7.1(b) below are obtained by Lessee and in effect within
thirty days following the Start Date, warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, 
ventilating and air conditioning systems (“HVAC”), loading doors, sump pumps, if any, and all other such
elements in the Premises, other than those constructed by Lessee, shall be in
good operating condition on said date, that the structural elements of the
roof, bearing walls and foundation of any buildings on the Premises (the “Building”) shall be free of material
defects, and that the Premises do not contain hazardous levels of any mold or
fungi defined as toxic under applicable state or federal law. If a non-compliance
with said warranty exists as of the Start Date, or if one of such systems or
elements should malfunction or fail within the appropriate warranty period,
Lessor shall, as Lessor’s sole obligation with respect to such matter, except
as otherwise provided in this Lease, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such
non-compliance, malfunction or failure, rectify same at Lessor’s expense. The
warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and
(ii) 30 days as to the remaining systems and other elements of the Building .
If Lessee does not give Lessor the required notice within the appropriate
warranty period, correction of any such non-compliance, malfunction or failure
shall be the obligation of Lessee at Lessee’s sole cost and expense.

2.3 Compliance. Lessor warrants that to the
best of its knowledge the improvements on the Premises comply with the building
codes, applicable laws, covenants or restrictions of record, regulations, and
ordinances ( “Applicable Requirements” )
that were in effect at the time that each improvement, or portion thereof, was
constructed. Said warranty does not apply to the use to which Lessee will put
the Premises, modifications which may be required by the Americans with
Disabilities Act or any similar laws as a result of Lessee’s use (see Paragraph
50), or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. NOTE:
Lessee is responsible for determining whether or not the Applicable
Requirements, and especially the zoning, are appropriate for Lessee’s intended
use, and acknowledges that past uses of the Premises may no longer be allowed. If
the Premises do not comply with said warranty, Lessor shall, except as
otherwise provided, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
rectify the same at Lessor’s expense. If Lessee does not give Lessor written
notice of a non-compliance with this warranty within 6 months following the
Start Date, correction of that non-compliance shall be the obligation of Lessee
at Lessee’s sole cost and expense. If the Applicable Requirements are hereafter
changed so as to require during the term of this Lease the construction of an
addition to or an alteration of the Premises and/or Building, the remediation
of any Hazardous Substance, or the reinforcement or other physical modification
of the Unit, Premises and/or Building ( “Capital
Expenditure”), Lessor and Lessee shall allocate the cost of such
work as follows:

(a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last 2 years of this Lease and the cost
thereof exceeds 6 months’ Base Rent, Lessee may instead terminate this Lease
unless Lessor notifies Lessee, in writing, within 10 days after receipt of
Lessee’s termination notice that Lessor has elected to pay the difference
between the actual cost thereof and an amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

(b) If such Capital Expenditure is not the result of
the specific and unique use of the Premises by Lessee (such as, governmentally
mandated seismic modifications), then Lessor and Lessee shall allocate the
obligation to pay for such costs pursuant to the provisions of Paragraph
7.1(d); provided, however, that if such Capital Expenditure is required during
the last 2 years of this Lease or if Lessor reasonably determines that it is
not economically feasible to pay its share thereof, Lessor shall have the
option to terminate this Lease upon 90 days prior written notice to Lessee
unless Lessee notifies Lessor, in writing, within 10 days after receipt of
Lessor’s termination notice that Lessee will pay for such Capital Expenditure.
If Lessor does not elect to terminate, and fails to tender its share of any
such Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor’s share of such costs have been fully paid. If
Lessee is unable to finance Lessor’s share, or if the balance of the Rent due
and payable for the remainder of this Lease is not sufficient to fully
reimburse Lessee on an offset basis, Lessee shall have the right to terminate
this Lease upon 30 days written notice to Lessor.

(c) Notwithstanding the above, the provisions
concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected,
and new Applicable Requirements. If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event,
Lessee shall either: (i) immediately cease such changed use or intensity of use
and/or take such other steps as may be necessary to eliminate the requirement
for such Capital Expenditure, or (ii) complete such Capital Expenditure at its
own expense. Lessee shall not, however, have any right to terminate this Lease.

2.4 Acknowledgements.
Lessee acknowledges that: (a) it has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises
(including but not limited to the electrical, HVAC and fire sprinkler systems,
security, environmental aspects, and compliance with Applicable Requirements
and the Americans with Disabilities Act), and their suitability for Lessee’s
intended use, (b) Lessee has made such investigation as it deems necessary with
reference to such matters and assumes all responsibility therefor as the same
relate to its occupancy of the Premises, and (c) neither Lessor, Lessor’s
agents, nor Brokers have made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease. In
addition, Lessor acknowledges that: (i) Brokers have made no representations,
promises or warranties concerning Lessee’s ability to honor the Lease or
suitability to occupy the Premises, and (ii) it is Lessor’s sole responsibility
to investigate the financial capability and/or suitability of all proposed
tenants.

2.5 Lessee as Prior
Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall
be of no force or effect if immediately prior to the Start Date Lessee was the
owner or occupant of the Premises. In such event, Lessee shall be responsible
for any necessary corrective work.

3. Term.

3.1 Term. The
Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.

3.2 Early Possession.
If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the
period of such early possession. All other terms of this Lease (including but
not limited to the obligations to pay Real

 PAGE 2 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                     FORM STN-8-5/05E
 

Property Taxes and insurance premiums and all other
monetary obligations and NNN charges other than Base Rent and to maintain the
Premises) shall be in effect during such period. Any such early possession
shall not affect the Expiration Date.

3.3 Delay In Possession.
Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date. If,
despite said efforts, Lessor is unable to deliver possession by such date,
Lessor shall not be subject to any liability therefor, nor shall such failure
affect the validity of this Lease. Lessee shall not, however, be obligated to
pay Rent or perform its other obligations until Lessor delivers possession of
the Premises and any period of rent abatement that Lessee would otherwise have
enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts or omissions of Lessee.
If possession is not delivered within 60 days after the Commencement Date,
Lessee may, at its option, by notice in writing within 10 days after the end of
such 60 day period, cancel this Lease, in which event the Parties shall be
discharged from all obligations hereunder. If such written notice is not
received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate. If possession of the Premises is not delivered within 120 days after
the Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.

3.4 Lessee
Compliance. Lessor shall not be required to deliver possession of
the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence,
Lessee shall be required to perform all of its obligations under this Lease
from and after the Start Date, including the payment of Rent, notwithstanding
Lessor’s election to withhold possession pending receipt of such evidence of
insurance. Further, if Lessee is required to perform any other conditions prior
to or concurrent with the Start Date, the Start Date shall occur but Lessor may
elect to withhold possession until such conditions are satisfied. For the purposes
of this Paragraph 3.4 only, the Start Date shall be determined as if Paragraph
1.4 excluded the phrase “the certificate or copies of insurance policies
referred to in Paragraph 8.5 and”.

4. Rent.

4.1. Rent Defined. All
monetary obligations of Lessee to Lessor under the terms of this Lease (except
for the Security Deposit) are deemed to be rent (“Rent”).

4.2 Payment. Lessee
shall cause payment of Rent to be received by Lessor in advance in lawful money
of the United States, without offset or deduction (except as specifically
permitted in this Lease), on or before the day on which it is due. All monetary
amounts shall be rounded to the nearest whole dollar. In the event that any
invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute a
waiver and Lessee shall be obligated to pay the amount set forth in this Lease.
Rent for any period during the term hereof which is for less than one full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating. In the event that any check,
draft, or other instrument of payment given by Lessee to Lessor is dishonored
for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to
any Late Charge and Lessor, at its option, may require all future Rent be paid
by cashier’s check. Payments will be applied first to accrued bad check
charges, late charges and attorney’s fees, second to accrued interest, then to
Base Rent and Common Area Operating Expenses, and any remaining amount to any
other outstanding charges or costs.

4.3 Association Fees.
In addition to the Base Rent, Lessee shall pay to Lessor each month
an amount equal to 1/12 of the annual amount of any owner’s association or
condominium fees levied or assessed against the Premises. Said monies shall be
paid at the same time and in the same manner as the Base Rent.

5. Security Deposit. Lessee
shall deposit with Lessor upon execution hereof the Security Deposit as
security for Lessee’s faithful performance of its obligations under this Lease.
If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may
use, apply or retain all or any portion of said Security Deposit for the
payment of any amount due Lessor or to reimburse or compensate Lessor for any
liability, expense, loss or damage which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies all or any portion of the Security Deposit,
Lessee shall within 10 days after written request therefor deposit monies with
Lessor sufficient to restore said Security Deposit to the full amount required
by this Lease. If the Base Rent increases during the renewed or extended term
of this Lease (but not the original term), Lessee shall, upon written request
from Lessor, deposit additional moneys with Lessor so that the total amount of
the Security Deposit shall at all times bear the same proportion to the
increased Base Rent as the initial Security Deposit bore to the initial Base
Rent. Should the Agreed Use be amended to accommodate a material change in the
business of Lessee or to accommodate a sublessee or assignee, Lessor shall have
the right to increase the Security Deposit to the extent necessary, in Lessor’s
reasonable judgment, to account for any increased wear and tear that the
Premises may suffer as a result thereof. If a change in control of Lessee
occurs during this Lease and following such change the financial condition of
Lessee is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall
deposit such additional monies with Lessor as shall be sufficient to cause the
Security Deposit to be at a commercially reasonable level based on such change
in financial condition. Lessor shall not be required to keep the Security
Deposit separate from its general accounts. Within 14 days after the expiration
or termination of this Lease, if Lessor elects to apply the Security Deposit
only to unpaid Rent, whether past or future, and otherwise within 30 days after
the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor.
Notwithstanding anything in California Civil Code Section 1950.7 to the
contrary, Lessor may apply the Security Deposit to defaults in the payment of
Rent accruing after the date referred to in that section or in the immediately
preceding sentence of this Lease, and Lessee waives the provisions of
California Civil Code Section 1950.7 to the extent that such provisions would
otherwise prevent Lessor from applying the Security Deposit to a default in
Rent accruing after the date specified in that section or in this Lease for the
return of the Security Deposit. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease. See also Paragraph 52 in Addendum
One.

6. Use.

6.1 Use. Lessee
shall use and occupy the Premises only for the Agreed Use, or any other legal
use which is reasonably comparable thereto, and for no other purpose. Lessee
shall not use or permit the use of the Premises in a manner that is unlawful,
creates damage, waste or a nuisance, or that unreasonably disturbs occupants of
or causes damage to neighboring premises or properties. Other than guide,
signal and seeing eye

 PAGE 3 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                     FORM STN-8-5/05E
 

dogs, Lessee shall not keep or allow in the Premises
any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably
withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the
improvements on the Premises or the mechanical or electrical systems therein,
and/or is not significantly more burdensome to the Premises or more likely to
increase the risk of release of a Hazardous Substance in the Premises or a
Reportable Use therein . If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which
notice shall include an explanation of Lessor’s objections to the change in the
Agreed Use.

6.2 Hazardous
Substances.

(a) Reportable Uses
Require Consent. The term “Hazardous
Substance” as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or
release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health,
safety or welfare, the environment or the Premises, (ii) regulated or monitored
by any governmental authority, or (iii) a basis for potential liability of
Lessor to any governmental agency or third party under any applicable statute
or common law theory. Hazardous Substances shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products,
by-products or fractions thereof. Lessee shall not engage in any activity in or
on the Premises which constitutes a Reportable Use of Hazardous Substances
without the express prior written consent of Lessor and timely compliance (at
Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. In addition, Lessor may condition its
consent to any Reportable Use upon receiving such additional assurances as
Lessor reasonably deems necessary to protect itself, the public, the Premises
and/or the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.

(b) Duty to Inform
Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on, under or about the Premises,
other than as previously consented to by Lessor, Lessee shall immediately give
written notice of such fact to Lessor, and provide Lessor with a copy of any
report, notice, claim or other documentation which it has concerning the
presence of such Hazardous Substance.

(c) Lessee
Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly,
at Lessee’s expense, comply with all Applicable Requirements and take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party acting for
Lessee or on behalf of Lessee, or under Lessee’s direction or control .

(d) Lessee
Indemnification. Lessee shall indemnify, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys’ and consultants’ fees arising out of or
involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability
under this Lease with respect to underground migration of any Hazardous
Substance under the Premises from adjacent properties not caused or contributed
to by Lessee). Lessee’s obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.

(e) Lessor
Indemnification. Lessor and its successors and assigns shall
indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which result from Hazardous Substances which existed on the
Premises prior to Lessee’s occupancy or which are caused by the gross
negligence or willful misconduct of Lessor, its agents or employees. Lessor’s
obligations, as and when required by the Applicable Requirements, shall
include, but not be limited to, the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease.

(f) Investigations
and Remediations. Lessor shall retain the responsibility and pay for
any investigations or remediation measures required by governmental entities
having jurisdiction with respect to the existence of Hazardous Substances on
the Premises prior to Lessee’s occupancy, unless such remediation measure is
required as a result of Lessee’s use (including “Alterations”, as defined in
paragraph 7.3(a) below) of the Premises, in which event Lessee shall be
responsible for such payment. Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing Lessor and Lessor’s
agents to have reasonable access to the Premises at reasonable times in order
to carry out Lessor’s investigative and remedial responsibilities.

(g) Lessor
Termination Option. If a Hazardous Substance Condition (see
Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is
legally responsible therefor (in which case Lessee shall make the investigation
and remediation thereof required by the Applicable Requirements and this Lease
shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor’s expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor’s desire to terminate this Lease as of the date
60 days following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee’s commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000, whichever is greater. Lessee
shall provide Lessor with said funds or satisfactory assurance thereof within
30 days following such

 PAGE 4 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                     FORM STN-8-5/05E
 

commitment. In such event, this Lease shall continue in
full force and effect, and Lessor shall proceed to make such remediation as
soon as reasonably possible after the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified
in Lessor’s notice of termination.

6.3 Lessee’s
Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee’s sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, including without limitation the covenants, conditions ,
reservations, and restrictions of the Brookhollow Business Park, the
requirements of any applicable fire insurance underwriter or rating bureau, and
the reasonable recommendations of Lessor’s engineers and/or consultants which
relate in any manner to the such Requirements, without regard to whether such
Requirements are now in effect or become effective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor’’s written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee’s compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure
of Lessee or the Premises to comply with any Applicable Requirements. Likewise,
Lessee shall immediately give written notice to Lessor of: (i) any water damage
to the Premises and any suspected seepage, pooling, dampness or other condition
conducive to the production of mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.

6.4 Inspection;
Compliance. Lessor and Lessor’’s “Lender”
(as defined in Paragraph 30) and consultants shall have the right to
enter into Premises at any time, in the case of an emergency, and otherwise at
reasonable times during business hours as defined below after reasonable notice,
for the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a Hazardous
Substance Condition (see paragraph 9.1) is found to exist or be imminent, or
the inspection is requested or ordered by a governmental authority. In such
case, Lessee shall upon request reimburse Lessor for the cost of such
inspection, so long as such inspection is reasonably related to the violation
or contamination. In addition, Lessee shall provide copies of all relevant
material safety data sheets (MSDS)
to Lessor within 10 days of the receipt of a written request therefor. The
inspections referred to in this paragraph shall not unreasonably interfere with
Lessee’s business. For the purposes of this paragraph the term “business hours”
shall be from 9:00 a.m. to 5:00 p.m., or within shall other hours as Lessee
shall customarily be conducting business, on business days as that term is
defined in Calfironia Civil Code Section 9.

7. Maintenance;
Repairs, Utility Installations; Trade Fixtures and Alterations.

7.1 Lessee’s
Obligations.

(a) In General. Subject
to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s
Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage
or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense,
keep the Premises, Utility Installations (intended for Lessee’s exclusive use,
no matter where located), and Alterations in good order, condition and repair
(whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of such portion of the Premises), including, but
not limited to, all equipment or facilities, such as plumbing, HVAC equipment,
electrical, lighting facilities, boilers, pressure vessels, fire protection
system, fixtures, walls (interior and exterior), foundations, ceilings, roofs,
roof drainage systems, floors, windows, doors, plate glass, skylights,
landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks
and parkways located in, on, or adjacent to the Premises. Lessee, in keeping
the Premises in good order, condition and repair, shall exercise and perform
good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below. Lessee’s
obligations shall include restorations, replacements or renewals when necessary
to keep the Premises and all improvements thereon or a part thereof in good
order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a first-class condition
(including, e.g. graffiti removal) consistent with the exterior appearance of
other similar facilities of comparable age and size in the vicinity, including,
when necessary, the exterior repainting of the Building.

(b) Service
Contracts. Lessee shall, at Lessee’s sole expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in the maintenance of the
following equipment and improvements, if any, if and when installed on the
Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire
extinguishing systems, including fire alarm and/or smoke detection, (iv)
landscaping and irrigation systems, (v) roof covering and drains, (vi)
clarifiers (vii) basic utility feed to the perimeter of the Building, and
(viii) any other equipment, if reasonably required by Lessor. However, Lessor
reserves the right, upon notice to Lessee, to procure and maintain any or all
of such service contracts, and Lessee shall reimburse Lessor, upon demand, for
the reasonable cost thereof.

(c) Failure to
Perform. If Lessee fails to perform Lessee’s obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after 10 days’ prior written
notice to Lessee (except in the case of an emergency, in which case no notice
shall be required), perform such obligations on Lessee’s behalf, and put the
Premises in good order, condition and repair, and Lessee shall promptly pay to
Lessor a sum equal to 115% of the cost thereof.

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

7.2 Lessor’s
Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation),
it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this Lease.

7.3 Utility
Installations; Trade Fixtures; Alterations.

(a) Definitions. The
term “Utility Installations”
refers to all floor and window coverings, air and/or vacuum lines, power
panels, electrical distribution, security and fire protection systems,
communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing
in or on the

 PAGE 5 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                     FORM STN-8-5/05E
 

Premises. The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises. The term “Alterations” shall mean any modification
of the improvements, other than Utility Installations or Trade Fixtures,
whether by addition or deletion. “Lessee
Owned Alterations and/or Utility Installations “ are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a).

(b) Consent. Lessee
shall not make any Alterations or Utility Installations to the Premises without
Lessor’s prior written consent. Lessee may, however, make non-structural
Utility Installations to the interior of the Premises (excluding the roof)
without such consent but upon notice to Lessor, as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof or
any existing walls, will not affect the electrical, plumbing, HVAC, and/or life
safety systems, and the cumulative cost thereof during this Lease as extended
does not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum
equal to one month’s Base Rent in any one year. Notwithstanding the foregoing,
Lessee shall not make or permit any roof penetrations and/or install anything
on the roof without the prior written approval of Lessor. Lessor may, as a
precondition to granting such approval, require Lessee to utilize a contractor
chosen and/or approved by Lessor. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall
be presented to Lessor in written form with detailed plans. Consent shall be
deemed conditioned upon Lessee’s: (i) acquiring all applicable governmental
permits, (ii) furnishing Lessor with copies of both the permits and the plans
and specifications prior to commencement of the work, and (iii) compliance with
all conditions of said permits and other Applicable Requirements in a prompt
and expeditious manner. Any Alterations or Utility Installations shall be
performed in a workmanlike manner with good and sufficient materials. Lessee
shall promptly upon completion furnish Lessor with as-built plans and
specifications. For work which costs an amount in excess of one month’s Base
Rent, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to 150% of the estimated cost of such
Alteration or Utility Installation and/or upon Lessee’s posting an additional
Security Deposit with Lessor.

c) Liens; Bonds. Lessee
shall pay, when due, all claims for labor or materials furnished or alleged to
have been furnished to or for Lessee at or for use on the Premises, which
claims are or may be secured by any mechanic’s or materialmen’s lien against
the Premises or any interest therein. Lessee shall give Lessor not less than 10
days notice prior to the commencement of any work in, on or about the Premises,
and Lessor shall have the right to post notices of non-responsibility. If Lessee
shall contest the validity of any such lien, claim or demand, then Lessee
shall, at its sole expense defend and protect itself, Lessor and the Premises
against the same and shall pay and satisfy any such adverse judgment that may
be rendered thereon before the enforcement thereof. If Lessor shall require,
Lessee shall furnish a surety bond in an amount equal to 150% of the amount of
such contested lien, claim or demand, indemnifying Lessor against liability for
the same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor’s reasonable attorneys’ fees and costs immediately upon presentation of
invoices.

7.4 Ownership;
Removal; Surrender; and Restoration.

(a) Ownership. Subject
to Lessor’s right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations made by Lessee shall be the
property of Lessee, but considered a part of the Premises. Lessor may, at any
time, elect in writing to be the owner of all or any specified part of the
Lessee Owned Alterations and Utility Installations. Unless otherwise instructed
per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become the
property of Lessor and be surrendered by Lessee with the Premises.

(b) Removal. By
delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be
removed by the expiration or termination of this Lease. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent.

(c) Surrender;
Restoration. Subject to the provisions of Paragraph 9 below, Lessee
shall surrender the Premises by the Expiration Date or any earlier termination
date, with all of the improvements, parts and surfaces thereof broom clean and
free of debris, and in good operating order, condition and state of repair,
ordinary wear and tear excepted. “Ordinary wear and tear” shall not include any
damage or deterioration that would have been prevented by good maintenance
practice. Notwithstanding the foregoing, if this Lease is for 12 months or
less, then Lessee shall surrender the Premises in the same condition as
delivered to Lessee on the Start Date with NO allowance for ordinary wear and
tear. Lessee shall repair any damage occasioned by the installation,
maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or
Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee. Lessee shall completely remove from
the Premises any and all Hazardous Substances brought onto the Premises by or
for Lessee, or any third party (except Hazardous Substances which were
deposited via underground migration from areas outside of the Premises, or if
applicable, the Premises) even if such removal would require Lessee to perform
or pay for work that exceeds statutory requirements. Trade Fixtures shall
remain the property of Lessee and shall be removed by Lessee. Any personal
property of Lessee not removed on or before the Expiration Date or any earlier
termination date shall be deemed to have been abandoned by Lessee and may be
disposed of or retained by Lessor as Lessor may desire. The failure by Lessee
to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the
express written consent of Lessor shall constitute a holdover under the
provisions of Paragraph 26 below.

8. Insurance;
Indemnity.

8.1 Payment For
Insurance. Lessee shall pay for all insurance required under
Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $ 4,000,000 ,000,000
per occurrence. Premiums for policy periods commencing prior to or extending
beyond the Lease term shall be prorated to correspond to the Lease term.
Payment shall be made by Lessee to Lessor within 10 days following receipt of
an invoice or at Lessor’s election by monthly estimates due and payable in
advance with the payment of Base Rent .

8.2 Liability
Insurance.

(a) Carried by
Lessee. Lessee shall obtain and keep in force a Commercial General
Liability policy of insurance protecting Lessee and Lessor as an additional
insured against claims for bodily injury, personal injury and property damage
based upon or arising out of the ownership, use, occupancy or maintenance of
the Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$2,000,000 1,000,000 per occurrence with an annual aggregate of not less
than $ 4,000,000 2,000,000. Lessee shall add Lessor as an additional
insured by means of an endorsement at least as broad as the Insurance Service
Organization’s “Additional Insured-Managers or Lessors of Premises” Endorsement
and coverage shall also be extended to include damage caused by heat, smoke or
fumes from a hostile fire. The policy shall not contain any intra-insured
exclusions as between insured persons or organizations, but shall include
coverage for liability assumed under this Lease as an “ insured contract” for the performance of
Lessee’s indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. Lessee shall provide an endorsement on its

 PAGE 6 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                     FORM STN-8-5/05E
 

liability policy(ies) which provides that its insurance
shall be primary to and not contributory with any similar insurance carried by
Lessor, whose insurance shall be considered excess insurance only.

(b) Carried by
Lessor. Lessor shall maintain liability insurance as described in
Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to
be maintained by Lessee. Lessee shall not be named as an additional insured
therein.

8.3 Property
Insurance - Building, Improvements and Rental Value.

(a) Building and
Improvements. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor, with loss payable to Lessor, any
ground-lessor, and to any Lender insuring loss or damage to the Premises. The
amount of such insurance shall be equal to the full insurable replacement cost
of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party,
however, Lessee Owned Alterations and Utility Installations, Trade Fixtures,
and Lessee’s personal property shall be insured by Lessee under Paragraph 8.4
rather than by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to
where the Premises are located. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence, and
Lessee shall be liable for such deductible amount in the event of an Insured
Loss.

(b) Rental Value. The
Insuring Party shall obtain and keep in force a policy or policies in the name
of Lessor with loss payable to Lessor and any Lender, insuring the loss of the
full Rent for one year with an extended period of indemnity for an additional
180 days (“Rental Value insurance”). Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next 12 month period. Lessee shall be liable for any
deductible amount in the event of such loss.

(c) Adjacent
Premises. If the Premises are part of a larger building, or of a
group of buildings owned by Lessor which are adjacent to the Premises, the
Lessee shall pay for any increase in the premiums for the property insurance of
such building or buildings if said increase is caused by Lessee’s acts,
omissions, use or occupancy of the Premises.

8.4 Lessee’s
Property; Business Interruption Insurance.

(a) Property Damage. Lessee
shall obtain and maintain insurance coverage on all of Lessee’s personal
property, Trade Fixtures, and Lessee Owned Alterations and Utility
Installations. Such insurance shall be full replacement cost coverage with a
deductible of not to exceed $1,000 per occurrence. The proceeds from any such
insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.

(b) Business
Interruption. Lessee shall obtain and maintain loss of income and
extra expense insurance in amounts as will reimburse Lessee for direct or
indirect loss of earnings attributable to all perils commonly insured against
by prudent lessees in the business of Lessee or attributable to prevention of
access to the Premises as a result of such perils.

(c) No Representation
of Adequate Coverage. Lessor makes no representation that the limits
or forms of coverage of insurance specified herein are adequate to cover Lessee’s
property, business operations or obligations under this Lease.

8.5 Insurance
Policies. Insurance required herein shall be by companies duly
licensed or admitted to transact business in the state where the Premises are
located, and maintaining during the policy term a “General Policyholders Rating”
of at least A-, VI, as set forth in the most current issue of “Best’s Insurance
Guide”, or such other rating as may be required by a Lender. Lessee shall not
do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified
copies of policies of such insurance or certificates evidencing the existence
and amounts of the required insurance. No such policy shall be cancelable or
subject to modification except after 30 days prior written notice to Lessor.
Lessee shall, at least 10 days prior to the expiration of such policies,
furnish Lessor with evidence of renewals or “insurance binders” evidencing
renewal thereof, or Lessor may order such insurance and charge the cost thereof
to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such
policies shall be for a term of at least one year, or the length of the
remaining term of this Lease, whichever is less. If either Party shall fail to
procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

8.6 Waiver of
Subrogation. Without affecting any other rights or remedies, Lessee
and Lessor each hereby release and relieve the other, and waive their entire
right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

8.7 Indemnity. Except
for Lessor’s gross negligence or willful misconduct, Lessee shall indemnify,
reimburse, protect, defend and hold harmless the Premises, Lessor and its
agents, Lessor’s master or ground lessor, partners and Lenders, from and
against any and all claims, losses including without limitation loss of rents
and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the use and/or occupancy of the Premises by Lessee. If any action or proceeding
is brought against Lessor by reason of any of the foregoing matters, Lessee
shall upon notice defend the same at Lessee’s expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense.
Lessor need not have first paid any such claim in order to be defended or
indemnified.

8.8 Exemption of
Lessor and its Agents from Liability . Notwithstanding the negligence
or breach of this Lease by Lessor or its agents, neither Lessor nor its agents
shall be liable under any circumstances except to the extent of injury or
damage caused by the gross negligence or willful misconduct of Lessor for: (i)
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee’s employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other
defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the
building of which the Premises are a part, or from other sources or places,
(ii) any damages arising from any act or neglect of any other tenant of Lessor
or from the failure of Lessor or its agents to enforce the provisions of any
other lease in the Project, or (iii) injury to Lessee’s business or for any
loss of income or profit therefrom. Instead, it is intended that Lessee’s sole
recourse in

 PAGE 7 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                     FORM STN-8-5/05E
 

the event of such damages or injury be to file a claim
on the insurance policy(ies) that Lessee is required to maintain pursuant to
the provisions of paragraph 8.

8.9 Failure to
Provide Insurance. Lessee acknowledges that any failure on its part
to obtain or maintain the insurance required herein will expose Lessor to risks
and potentially cause Lessor to incur costs not contemplated by this Lease, the
extent of which will be extremely difficult to ascertain. Accordingly, for any
month or portion thereof that Lessee does not maintain the required insurance
and/or does not provide Lessor with the required binders or certificates
evidencing the existence of the required insurance, the Base Rent shall be
automatically increased, without any requirement for notice to Lessee, by an
amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/costs that Lessor will incur by
reason of Lessee’s failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise of
any of the other rights and remedies granted hereunder, nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease.

9. Damage or
Destruction.

9.1 Definitions.

(a) “Premises Partial
Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which
can reasonably be repaired in 6 months or less from the date of the damage or
destruction. Lessor shall notify Lessee in writing within 30 days from the date
of the damage or destruction as to whether or not the damage is Partial or
Total. Notwithstanding the foregoing, Premises Partial Damage shall not include
damage to windows, doors, and/or other similar items which Lessee has the
responsibility to repair or replace pursuant to the provisions of Paragraph
7.1.

(b) “Premises Total
Destruction” shall mean damage or destruction to the Premises, other
than Lessee Owned Alterations and Utility Installations and Trade Fixtures,
which cannot reasonably be repaired in 6 months or less from the date of the
damage or destruction. Lessor shall notify Lessee in writing within 30 days
from the date of the damage or destruction as to whether or not the damage is
Partial or Total.

(c) “Insured Loss” shall
mean damage or destruction to improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations and Trade Fixtures, which was
caused by an event required to be covered by the insurance described in
Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
involved.

(d) “Replacement Cost”
shall mean the cost to repair or rebuild the improvements owned by
Lessor at the time of the occurrence to their condition existing immediately
prior thereto, including demolition, debris removal and upgrading required by
the operation of Applicable Requirements, and without deduction for
depreciation.

(e) “Hazardous
Substance Condition” shall mean the occurrence or discovery of a
condition involving the presence of, or a contamination by, a Hazardous
Substance as defined in Paragraph 6.2(a), in, on, or under the Premises which
requires repair, remediation, or restoration.

9.2 Partial Damage -
Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not
Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations)
as soon as reasonably possible and this Lease shall continue in full force and
effect; provided, however, that Lessee shall, at Lessor’s election, make the
repair of any damage or destruction the total cost to repair of which is
$10,000 or less, and, in such event, Lessor shall make any applicable insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or
the insurance proceeds are not sufficient to effect such repair, the Insuring
Party shall promptly contribute the shortage in proceeds (except as to the
deductible which is Lessee’s responsibility) as and when required to complete
said repairs. In the event, however, such shortage was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said 10 day
period, the party responsible for making the repairs shall complete them as
soon as reasonably possible and this Lease shall remain in full force and
effect. If such funds or assurance are not received, Lessor may nevertheless
elect by written notice to Lessee within 10 days thereafter to: (i) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shall not
be entitled to reimbursement of any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood or earthquake
shall be subject to Paragraph 9.3, notwithstanding that there may be some
insurance coverage, but the net proceeds of any such insurance shall be made
available for the repairs if made by either Party.

9.3 Partial Damage -
Uninsured Loss. If a Premises Partial Damage that is not an Insured
Loss occurs, unless caused by a negligent or willful act of Lessee (in which
event Lessee shall make the repairs at Lessee’s expense), Lessor may either:
(i) repair such damage as soon as reasonably possible at Lessor’s expense, in
which event this Lease shall continue in full force and effect, or (ii)
terminate this Lease by giving written notice to Lessee within 30 days after
receipt by Lessor of knowledge of the occurrence of such damage. Such
termination shall be effective 60 days following the date of such notice. In
the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice
to Lessor of Lessee’s commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this
Lease shall terminate as of the date specified in the termination notice.

9.4 Total Destruction.
Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 45 60 days following such Destruction ; provided, however,
that if the Premises Total Destruction is the result of a natural disaster or
other cause resulting in widespread damage causing a shortage of available
contractors the number of days shall be 60 . If the damage or destruction was
caused by the gross negligence or willful misconduct of Lessee, Lessor shall
have the right to recover Lessor’s damages from Lessee, except as provided in
Paragraph 8.6.

9.5 Damage Near End
of Term. If at any time during the last 6 months of this Lease there
is damage for which the cost to repair exceeds one month’s Base Rent, whether
or not an Insured Loss, Lessor may terminate this Lease effective 60 days
following the date of occurrence of such damage by giving a written termination
notice to Lessee within 30 days after the date of occurrence of such damage.
Notwithstanding the foregoing,

 PAGE 8 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                     FORM STN-8-5/05E
 

if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, (a) exercising such option and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the
repairs on or before the earlier of (i) the date which is 10 days after Lessee’s
receipt of Lessor’s written notice purporting to terminate this Lease, or (ii)
the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor’s commercially reasonable expense, repair such damage as soon
as reasonably possible and this Lease shall continue in full force and effect.
If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in
the termination notice and Lessee’s option shall be extinguished.

9.6 Abatement of
Rent; Lessee’s Remedies.

(a) Abatement. In
the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this
Lease, the Rent payable by Lessee for the period required for the repair,
remediation or restoration of such damage shall be abated in proportion to the
degree to which Lessee’s use of the Premises is impaired, but not to exceed the
proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no
liability for any such damage, destruction, remediation, repair or restoration
except as provided herein.

(b) Remedies. If
Lessor shall be obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration
within 60 90 days after such
obligation shall accrue, Lessee may, at any time prior to the commencement of
such repair or restoration, give written notice to Lessor and to any Lenders of
which Lessee has actual notice, of Lessee’s election to terminate this Lease on
a date not less than 45 60 days
following the giving of such notice. If Lessee gives such notice and such
repair or restoration is not commenced within 30 days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within such 30 days, this Lease shall continue in full
force and effect. “Commence” shall mean either the unconditional authorization
of the preparation of the required plans, or the beginning of the actual work
on the Premises, whichever first occurs.

9.7 Termination;
Advance Payments. Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s
Security Deposit as has not been, or is not then required to be, used by Lessor.

9.8 Waive Statutes. Lessor
and Lessee agree that the terms of this Lease shall govern the effect of any
damage to or destruction of the Premises with respect to the termination of
this Lease and hereby waive the provisions of any present or future statute to
the extent inconsistent herewith.

10. Real Property
Taxes.

10.1 Definition. As
used herein, the term “Real Property Taxes” shall
include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income
or estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Premises or the
Project, Lessor’s right to other income therefrom, and/or Lessor’s business of
leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Building address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. Real
Property Taxes shall also include any tax, fee, levy, assessment or charge, or
any increase therein: (i) imposed by reason of events occurring during the term
of this Lease, including but not limited to, a change in the ownership of the
Premises, and (ii) levied or assessed on machinery or equipment provided by
Lessor to Lessee pursuant to this Lease.

10.2 Payment of
Taxes. In addition to Base Rent, Lessee shall pay to Lessor an
amount equal to the Real Property Tax installment due at least 20 days prior to
the applicable delinquency date. If any such installment shall cover any period
of time prior to or after the expiration or termination of this Lease, Lessee’s
share of such installment shall be prorated. In the alternative, at Lessor’s
election event Lessee incurs a late charge on any Rent payment, Lessor may
estimate the current Real Property Taxes, and require that such taxes be paid
in advance to Lessor by Lessee monthly in advance with the payment of the Base
Rent. Such monthly payments shall be an amount equal to the amount of the
estimated installment of taxes divided by the number of months remaining before
the month in which said installment becomes delinquent. When the actual amount
of the applicable tax bill is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes. If the amount collected by Lessor is insufficient to pay such
Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such
additional sum as is necessary. Advance payments may be intermingled with other
moneys of Lessor and shall not bear interest. In the event of a Breach by
Lessee in the performance of its obligations under this Lease, then any such
advance payments may be treated by Lessor as an additional Security Deposit.

10.3 Joint
Assessment. If the Premises are not separately assessed, Lessee’s
liability shall be an equitable proportion of the Real Property Taxes for all
of the land and improvements included within the tax parcel assessed, such
proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor’s work sheets or such other information as
may be reasonably available.

10.4 Personal
Property Taxes. Lessee shall pay, prior to delinquency, all taxes
assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and
Utility Installations, Trade Fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property
of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s
real property, Lessee shall pay Lessor the taxes attributable to Lessee’s
property within 10 days after receipt of a written statement setting forth the
taxes applicable to Lessee’s property.

11. Utilities and
Services. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered or billed to Lessee, Lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered or
billed. There shall be no abatement of rent and Lessor shall not be liable in
any respect whatsoever for the inadequacy, stoppage, interruption or
discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor’s reasonable control
or in cooperation with governmental request or directions.

12. Assignment and
Subletting.

12.1 Lessor’s Consent
Required.

(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or sublet all or
any part of Lessee’s interest in this Lease or in the Premises without Lessor’s
prior written consent.

 

 PAGE 9 OF 18
  
 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                     FORM STN-8-5/05E

(b) Unless Lessee is a corporation and its stock is
publicly traded on a national stock exchange, a change in the control of Lessee
shall constitute an assignment requiring consent. The transfer, on a cumulative
basis, of more than 50% 25% or more of the voting control of Lessee shall
constitute a change in control for this purpose.

(c) The involvement of Lessee or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment
or hypothecation of this Lease or Lessee’s assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its
consent. “Net Worth of Lessee” shall
mean the net worth of Lessee (excluding any guarantors) established under
generally accepted accounting principles.

(d) An assignment or subletting without consent shall,
at Lessor’s option, be a Default curable after notice per Paragraph 13.1(c), or
a noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days
written notice, increase the monthly Base Rent to 105% 110% of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (i) the purchase price of any
option to purchase the Premises held by Lessee shall be subject to similar
adjustment to 110% of the price previously in effect, and (ii) all fixed and
non-fixed rental adjustments scheduled during the remainder of the Lease term
shall be increased to 110% of the scheduled adjusted rent.

(e) Lessee’s remedy for any breach of Paragraph 12.1 by
Lessor shall be limited to compensatory damages and/or injunctive relief. f)
Lessor may reasonably withhold consent to a proposed assignment or subletting
if Lessee is in Default at the time consent is requested.

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

12.2 Terms and
Conditions Applicable to Assignment and Subletting.

(a) Regardless of Lessor’s consent, no assignment or
subletting shall: (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.

(b) Lessor may accept Rent or performance of Lessee’s
obligations from any person other than Lessee pending approval or disapproval
of an assignment. Neither a delay in the approval or disapproval of such
assignment nor the acceptance of Rent or performance shall constitute a waiver
or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or
Breach.

(c) Lessor’s consent to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting.

(d) In the event of any Default or Breach by Lessee,
Lessor may proceed directly against Lessee, any Guarantors or anyone else
responsible for the performance of Lessee’s obligations under this Lease,
including any assignee or sublessee, without first exhausting Lessor’s remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.

(e) Each request for consent to an assignment or
subletting shall be in writing, accompanied by information relevant to Lessor’s
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the Premises, if
any, together with a fee of $500 as consideration for Lessor’s considering and processing
said request. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested. (See also
Paragraph 36)

(f) Any assignee of, or sublessee under, this Lease
shall, by reason of accepting such assignment, entering into such sublease, or
entering into possession of the Premises or any portion thereof, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.

(g) Lessor’s consent to any assignment or subletting
shall not transfer to the assignee or sublessee any Option granted to the
original Lessee by this Lease unless such transfer is specifically consented to
by Lessor in writing. (See Paragraph 39.2)

12.3 Additional Terms
and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting byLessee of all or any part of the
Premises and shall be deemed included in all subleases under this Lease whether
or not expressly incorporated therein:

(a) Lessee hereby assigns and transfers to Lessor all
of Lessee’s interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee’s obligations under this Lease;
provided, however, that until a Breach shall occur in the performance of Lessee’s
obligations, Lessee may collect said Rent. In the event that the amount
collected by Lessor exceeds Lessee’s then outstanding obligations any such
excess shall be refunded to Lessee. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of the collection
of Rent, be deemed liable to the sublessee for any failure of Lessee to perform
and comply with any of Lessee’s obligations to such sublessee. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of
Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to
become due under the sublease. Sublessee shall rely upon any such notice from
Lessor and shall pay all Rents to Lessor without any obligation or right to
inquire as to whether such Breach exists, notwithstanding any claim from Lessee
to the contrary.

(b) In the event of a Breach by Lessee, Lessor may, at
its option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.

(c) Any matter requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor.

(d) No sublessee shall further assign or sublet all or
any part of the Premises without Lessor’s prior written consent.

(e) Lessor shall deliver a copy of any notice of
Default or Breach by Lessee to the sublessee, who shall have the right to cure
the Default of Lessee within the grace period, if any, specified in such
notice. The sublessee shall have a right of reimbursement and offset from and
against Lessee for any such Defaults cured by the sublessee.

13. Default; Breach;
Remedies.

13.1 Default; Breach.
A “Default” is defined
as a failure by the Lessee to comply with or perform any of the terms,
covenants, conditions

 PAGE 10 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  
 

or Rules and Regulations under this Lease. A “Breach” is defined as the occurrence of
one or more of the following Defaults, and the failure of Lessee to cure such
Default within any applicable grace period:

(a) The abandonment of the Premises; or the vacating of
the Premises without providing a commercially reasonable level of security, or
where the coverage of the property insurance described in Paragraph 8.3 is
jeopardized as a result thereof, or without providing reasonable assurances to
minimize potential vandalism.

(b) The failure of Lessee to make any payment of Rent
or any Security Deposit required to be made by Lessee hereunder, whether to
Lessor or to a third party, when due, to provide reasonable evidence of
insurance or surety bond, or to fulfill any obligation under this Lease which
endangers or threatens life or property, in each case where such failure
continues for a period of 3 business days following written notice to Lessee.

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

(d) The failure by Lessee to provide (i) reasonable
written evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42,
(viii) material safety data sheets (MSDS), or (ix) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of 10 days following
written notice to Lessee.

(e) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof, other than those described in subparagraphs 13.1(a), (b), (c) or
(d), above, where such Default continues for a period of 30 days after written
notice; provided, however, that if the nature of Lessee’s Default is such that
more than 30 days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said 30 day period
and thereafter diligently prosecutes such cure to completion.

(f) The occurrence of any of the following events: (i)
the making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a “debtor” as
defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case
of a petition filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this subparagraph is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.

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

(h) If the performance of Lessee’s obligations under
this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of
a Guarantor’s liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the
guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an
anticipatory basis, and Lessee’s failure, within 60 days following written
notice of any such event, to provide written alternative assurance or security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.

13.2 Remedies. If
Lessee fails to perform any of its affirmative duties or obligations, within 10
days after written notice (or in case of an emergency, without notice), Lessor
may, at its option, perform such duty or obligation on Lessee’s behalf,
including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. Lessee
shall pay to Lessor an amount equal to 115% of the costs and expenses incurred
by Lessor in such performance upon receipt of an invoice therefor. In the event
of a Breach, Lessor may, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach:

(a) Terminate Lessee’s right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and Lessee
shall immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned
at the time of termination; (ii) the worth at the time of award of the amount
by which the unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor
for all the detriment proximately caused by the Lessee’s failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys’ fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to
recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the
right to recover in such proceeding any unpaid Rent and damages as are
recoverable therein, or Lessor may reserve the right to recover all or any part
thereof in a separate suit. If a notice and grace period required under
Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful detainer statute shall also
constitute the notice required by Paragraph 13.1. In such case, the applicable
grace period required by Paragraph 13.1 and the unlawful detainer statute shall
run concurrently, and the failure of Lessee to cure the Default within the
greater of the two such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute. In no event shall Lessor be required
to provide separate notices in order to comply with the unlawful detainer
statutes and the notice provisions of Paragraph 13.1, and one notice shall be
deemed sufficient for both purposes.

(b) Continue the Lease and Lessee’s right to possession
and recover the Rent as it becomes due, in which event Lessee may sublet or
assign, subject only to reasonable limitations. Acts of maintenance, efforts to
relet, and/or the appointment of a receiver to protect the Lessor’s interests,
shall not constitute a termination of the Lessee’s right to possession.

(c) Pursue any other remedy now or hereafter available
under the laws or judicial decisions of the state wherein the Premises are
located. The expiration or termination of this Lease and/or the termination of
Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during
the term hereof or by reason of Lessee’s occupancy of the Premises.

13.3 Inducement
Recapture. Any agreement for free or abated rent or other charges,
or for the giving or paying by Lessor to or for

 PAGE 11 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  
 

Lessee of any cash or other bonus, inducement or
consideration for Lessee’s entering into this Lease, all of which concessions
are hereinafter referred to as “Inducement
Provisions,” shall be deemed conditioned upon Lessee’s full and
faithful performance of all of the terms, covenants and conditions of this
Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall
automatically be deemed deleted from this Lease and of no further force or
effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall
not be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance.

13.4 Late Charges. Lessee
hereby acknowledges that late payment by Lessee of Rent will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor
within 7 5 days after such amount
shall be due, then, without any requirement for notice to Lessee, Lessee shall
immediately pay to Lessor a one-time late charge equal to 10% of each such
overdue amount or $100, whichever is greater. The Parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of such late payment. Acceptance of such late charge by
Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with
respect to such overdue amount, nor prevent the exercise of any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for any 3 consecutive installments
of Base Rent within any 12-month period, then notwithstanding any provision of
this Lease to the contrary, Base Rent shall, at Lessor’s option, become due and
payable quarterly in advance. Lessor may exercise this option by giving written
notice thereof to Lessee.

13.5 Interest. Any
monetary payment due Lessor hereunder, other than late charges, not received by
Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for non-scheduled payment, shall bear
interest from the date when due, as to scheduled payments, or the 31st day
after it was due as to non-scheduled payments. The interest ( “Interest”) charged shall be computed at
the rate of 10% per annum but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in Paragraph
13.4.

13.6 Breach by
Lessor.

(a) Notice of Breach.
Lessor shall not be deemed in breach of this Lease unless Lessor
fails within a reasonable time to perform an obligation required to be
performed by Lessor. For purposes of this Paragraph, a reasonable time shall in
no event be less than 30 days after receipt by Lessor, and any Lender whose
name and address shall have been furnished Lessee in writing for such purpose,
of written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor’s obligation is such
that more than 30 days are reasonably required for its performance, then Lessor
shall not be in breach if performance is commenced within such 30 day period
and thereafter diligently pursued to completion.

(b) Performance by
Lessee on Behalf of Lessor. In the event that neither Lessor nor
Lender cures said breach within 30 days after receipt of said notice, or if
having commenced said cure they do not diligently pursue it to completion, then
Lessee may elect to cure said breach at Lessee’s expense and offset from Rent
the actual and reasonable cost to perform such cure, provided, however, that
such offset shall not exceed an amount equal to the greater of one month’s Base
Rent or the Security Deposit, reserving Lessee’s right to seek reimbursement
from Lessor for any such expense in excess of such offset. Lessee shall
document the cost of said cure and supply said documentation to Lessor.

14. Condemnation. If
the Premises or any portion thereof are taken under the power of eminent domain
or sold under the threat of the exercise of said power (collectively “Condemnation”), this Lease shall terminate
as to the part taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than 10% of the Building, or more than 25% of
that portion of the Premises not occupied by any building, is taken by
Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within
10 days after Lessor shall have given Lessee written notice of such taking (or
in the absence of such notice, within 10 days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in proportion to the reduction in utility of the Premises caused by
such Condemnation. Condemnation awards and/or payments shall be the property of
Lessor, whether such award shall be made as compensation for diminution in
value of the leasehold, the value of the part taken, or for severance damages;
provided, however, that Lessee shall be entitled to any compensation for Lessee’s
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

15. Brokerage Fees.

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

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

 PAGE 12 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  
 

15.3 Representations
and Indemnities of Broker Relationships. Lessee and Lessor each
represent and warrant to the other that it has had no dealings with any person,
firm, broker or finder (other than the Brokers, if any) in connection with this
Lease, and that no one other than said named Brokers is entitled to any
commission or finder’s fee in connection herewith. Lessee and Lessor do each
hereby agree to indemnify, protect, defend and hold the other harmless from and
against liability for compensation or charges which may be claimed by any such
unnamed broker, finder or other similar party by reason of any dealings or
actions of the indemnifying Party, including any costs, expenses, attorneys’
fees reasonably incurred with respect thereto.

16. Estoppel
Certificates.

(a) Each Party (as “Responding
Party”) shall within 15 10
days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to the
Requesting Party a statement in writing in form similar to the then most
current “Estoppel Certificate” form
published by the AIR Commercial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.

(b) If the Responding Party shall fail to execute or
deliver the Estoppel Certificate within such 15
10 day period, the Requesting Party may execute an Estoppel
Certificate stating that: (i) the Lease is in full force and effect without
modification except as may be represented by the Requesting Party, (ii) there
are no uncured defaults in the Requesting Party’s performance, and (iii) if
Lessor is the Requesting Party, not more than one month’s rent has been paid in
advance. Prospective purchasers and encumbrancers may rely upon the Requesting
Party’s Estoppel Certificate, and the Responding Party shall be estopped from
denying the truth of the facts contained in said Certificate.

(c) If Lessor desires to finance, refinance, or sell
the Premises, or any part thereof, Lessee and all Guarantors shall deliver to
any potential lender or purchaser designated by Lessor such financial
statements as may be reasonably required by such lender or purchaser, including
but not limited to Lessee’s financial statements for the past 3 years. All such
financial statements shall be received by Lessor and such lender or purchaser
in confidence and shall be used only for the purposes herein set forth.

17. Definition of
Lessor. The term “Lessor” as
used herein shall mean the owner or owners at the time in question of the fee
title to the Premises, or, if this is a sublease, of the Lessee’s interest in
the prior lease. In the event of a transfer of Lessor’s title or interest in
the Premises or this Lease, Lessor shall deliver to the transferee or assignee
(in cash or by credit) any unused Security Deposit held by Lessor. Except as
provided in Paragraph 15, upon such transfer or assignment and delivery of the
Security Deposit, as aforesaid, the prior Lessor shall be relieved of all
liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the
obligations and/or covenants in this Lease to be performed by the Lessor shall
be binding only upon the Lessor as hereinabove defined.

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

19. Days. Unless
otherwise specifically indicated to the contrary, the word “days” as used in
this Lease shall mean and refer to calendar days.

20. Limitation on
Liability. The obligations of Lessor under this Lease shall not
constitute personal obligations of Lessor or its partners, members, directors,
officers or shareholders, and Lessee shall look to the Premises, and to no
other assets of Lessor, for the satisfaction of any liability of Lessor with
respect to this Lease, and shall not seek recourse against Lessor’s partners,
members, directors, officers or shareholders, or any of their personal assets
for such satisfaction.

21. Time of Essence. Time
is of the essence with respect to the performance of all obligations to be
performed or observed by the Parties under this Lease.

22. No Prior or Other
Agreements; Broker Disclaimer. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and no other
prior or contemporaneous agreement or understanding shall be effective. Lessor
and Lessee each represents and  warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the use, nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and attorneys’
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by
such Broker pursuant to this Lease; provided, however, that the foregoing
limitation on each Broker’s liability shall not be applicable to any gross negligence
or willful misconduct of such Broker.

23. Notices.

23.1 Notice
Requirements. All notices required or permitted by this Lease or
applicable law shall be in writing and may be delivered in person (by hand or
by courier) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party’s
signature on this Lease shall be that Party’s address for delivery or mailing
of notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee’s taking possession of the
Premises, the Premises shall constitute Lessee’s address for notice. A copy of
all notices to Lessor shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate
in writing. Unless and until Lessor otherwise specifies in a written notice, an
additional copy of any notice to Lessor shall also be sent to Michael Deitch;
Coldwell Banker Previews International; 4 San Joaquin Plaza, Suite 260; Newport
Beach, CA 92660.

23.2 Date of Notice. Any
notice sent by registered or certified mail, return receipt requested, shall be
deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. If sent by regular mail the
notice shall be deemed given 72 hours after the same is addressed as required
herein and mailed with postage prepaid. Notices delivered by United States
Express Mail or overnight courier that guarantee next day delivery shall be
deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted

 PAGE 13 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  
 

by facsimile transmission or similar means shall be
deemed delivered upon telephone confirmation of receipt (confirmation report
from fax machine is sufficient), provided a copy is also delivered via delivery
or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall
be deemed received on the next business day.

24. Waivers. No
waiver by Lessor of the Default or Breach of any term, covenant or condition
hereof by Lessee, shall be deemed a waiver of any other term, covenant or
condition hereof, or of any subsequent Default or Breach by Lessee of the same
or of any other term, covenant or condition hereof. Lessor’s consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of
Lessor’s consent to, or approval of, any subsequent or similar act by Lessee,
or be construed as the basis of an estoppel to enforce the provision or
provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment.

25. Disclosures
Regarding The Nature of a Real Estate Agency Relationship.

(a) When entering into a discussion with a real estate
agent regarding a real estate transaction, a Lessor or Lessee should from the
outset understand what type of agency relationship or representation it has
with the agent or agents in the transaction. Lessor and Lessee acknowledge
being advised by the Brokers in this transaction, as follows:

(i) Lessor’s Agent. A Lessor’s agent under a listing
agreement with the Lessor acts as the agent for the Lessor only. A Lessor’s
agent or subagent has the following affirmative obligations: To the Lessor: A
fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with
the Lessor. To the Lessee and the Lessor: a. Diligent exercise of reasonable
skills and care in performance of the agent’s duties. b. A duty of honest and
fair dealing and good faith. c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An
agent is not obligated to reveal to either Party any confidential information
obtained from the other Party which does not involve the affirmative duties set
forth above.

(ii) Lessee’s Agent. An agent can agree to act as agent
for the Lessee only. In these situations, the agent is not the Lessor’s agent,
even if by agreement the agent may receive compensation for services rendered,
either in full or in part from the Lessor. An agent acting only for a Lessee
has the following affirmative obligations. To the Lessee: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To
the Lessee and the Lessor: a. Diligent exercise of reasonable skills and care
in performance of the agent’s duties. b. A duty of honest and fair dealing and
good faith. c. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or
within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party which does not involve the affirmative duties set forth above.

(iii) Agent Representing Both Lessor and Lessee. A real
estate agent, either acting directly or through one or more associate licenses,
can legally be the agent of both the Lessor and the Lessee in a transaction,
but only with the knowledge and consent of both the Lessor and the Lessee. In a
dual agency situation, the agent has the following affirmative obligations to
both the Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity,
honesty and loyalty in the dealings with either Lessor or the Lessee. b. Other
duties to the Lessor and the Lessee as stated above in subparagraphs (i) or
(ii). In representing both Lessor and Lessee, the agent may not without the express
permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that
the Lessee is willing to pay a higher rent than that offered. The above duties
of the agent in a real estate transaction do not relieve a Lessor or Lessee
from the responsibility to protect their own interests. Lessor and Lessee
should carefully read all agreements to assure that they adequately express
their understanding of the transaction. A real estate agent is a person
qualified to advise about real estate. If legal or tax advice is desired,
consult a competent professional.

(b) Brokers have no responsibility with respect to any
default or breach hereof by either Party. The Parties agree that no lawsuit or
other legal proceeding involving any breach of duty, error or omission relating
to this Lease may be brought against Broker more than one year after the Start
Date and that the liability (including court costs and attorneys’ fees), of any
Broker with respect to any such lawsuit and/or legal proceeding shall not
exceed the fee received by such Broker pursuant to this Lease; provided,
however, that the foregoing limitation on each Broker’s liability shall not be
applicable to any gross negligence or willful misconduct of such Broker.

(c) Lessor and Lessee agree to identify to Brokers as “Confidential”
any communication or information given Brokers that is  considered by such Party to be
confidential.

26. No Right To
Holdover. Lessee has no right to retain possession of the Premises
or any part thereof beyond the expiration or termination of this Lease. In the
event that Lessee holds over, then the Base Rent shall be increased to 150% of
the Base Rent applicable immediately preceding the expiration or termination.
Nothing contained herein shall be construed as consent by Lessor to any holding
over by Lessee.

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

28. Covenants and
Conditions; Construction of Agreement. All provisions of this Lease
to be observed or performed by Lessee are both covenants and conditions. In
construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever
required by the context, the singular shall include the plural and vice versa.
This Lease shall not be construed as if prepared by one of the Parties, but
rather according to its fair meaning as a whole, as if both Parties had
prepared it.

29. Binding Effect;
Choice of Law. This Lease shall be binding upon the Parties, their
personal representatives, successors and assigns and be governed by the laws of
the State in which the Premises are located. Any litigation between the Parties
hereto concerning this Lease shall be initiated in the county in which the
Premises are located.

30. Subordination;
Attornment; Non-Disturbance.

30.1 Subordination. Subject
to Paragraph 30.3, except as a Lender may otherwise elect pursuant to the last
sentence

 PAGE 14 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  
 

of this Paragraph 30.1, this This Lease and any Option
granted hereby shall be subject and subordinate to any ground lease, mortgage,
deed of trust, or other hypothecation or security device (collectively, “Security Device”), now or hereafter placed
upon the Premises, to any and all advances made on the security thereof, and to
all renewals, modifications, and extensions thereof. Lessee agrees that the
holders of any such Security Devices (in this Lease together referred to as “Lender”) shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease. Any
Lender may elect to have this Lease and/or any Option granted hereby superior
to the lien of its Security Device by giving written notice thereof to Lessee,
whereupon this Lease and such Options shall be deemed prior to such Security
Device, notwithstanding the relative dates of the documentation or recordation
thereof.

30.2 Attornment. In
the event that Lessor transfers title to the Premises, or the Premises are
acquired by another upon the foreclosure or termination of a Security Device to
which this Lease is subordinated (i) Lessee shall, subject to the
non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and
upon request, enter into a new lease, containing all of the terms and
provisions of this Lease, with such new owner for the remainder of the term
hereof, or, at the election of the new owner, this Lease will automatically
become a new lease between Lessee and such new owner, for the remainder of the
term hereof, and (ii) Lessor shall thereafter be relieved of any further
obligations hereunder and such new owner shall assume all of Lessor’s
obligations, except that such new owner shall not: (a) be liable for any
act or omission of any prior lessor or with respect to events occurring prior
to acquisition of ownership; (b) be subject to any offsets or defenses which
Lessee might have against any prior lessor, (c) be bound by prepayment of more
than one month’s rent, or (d) be liable for the return of any security
deposit paid to any prior lessor.

30.3 Non-Disturbance.
With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject
to receiving a commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the
Lender which Non-Disturbance Agreement provides that Lessee’s possession of the
Premises, and this Lease, including any options to extend the term hereof, will
not be disturbed so long as Lessee is not in Breach hereof and attorns to the
record owner of the Premises. Further, within 60 days after the execution of
this Lease, Lessor shall use its diligent commercially reasonable efforts to
obtain a Non-Disturbance Agreement from the holder of any pre-existing Security
Device which is secured by the Premises. In the event that Lessor is unable to
provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at
Lessee’s option, directly contact Lender and attempt to negotiate for the
execution and delivery of a Non-Disturbance Agreement.

30.4 Self-Executing. The
agreements contained in this Paragraph 30 shall be effective without the
execution of any further documents; provided, however, that, upon written
request from Lessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Lessee and Lessor shall execute such further
writings as may be reasonably required to separately document any subordination,
attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys’ Fees. If
any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to declare rights hereunder,
the Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may
be awarded in the same suit or recovered in a separate suit, whether or not
such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without
limitation, a Party or Broker who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party or Broker of its claim or defense. The attorneys’
fees award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys’ fees reasonably incurred. In
addition, Lessor shall be entitled to attorneys’ fees, costs and expenses
incurred in the preparation and service of notices of Default and consultations
in connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach ($200 is a
reasonable minimum per occurrence for such services and consultation).

32. Lessor’s Access;
Showing Premises; Repairs. Lessor and Lessor’s agents shall have the
right to enter the Premises at any time, in the case of an emergency, and
otherwise at reasonable times after reasonable prior notice for the purpose of
showing the same to prospective purchasers, lenders, or tenants, and making
such alterations, repairs, improvements or additions to the Premises as Lessor
may deem necessary or desirable and the erecting, using and maintaining of
utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee’s use of the
Premises. All such activities shall be without abatement of rent or liability
to Lessee. All such activities shall not unreasonably interfere with Lessee’s
business.

33. Auctions. Lessee
shall not conduct, nor permit to be conducted, any auction upon the Premises
without Lessor’s prior written consent. Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to permit an
auction.

34. Signs. Lessor
may place on the Premises ordinary “ For Sale”
signs at any time and ordinary “ For Lease”
signs during the last 6 months of the term hereof. Except for ordinary “for
sublease” signs, Lessee shall not place any sign upon the Premises without
Lessor’s prior written consent. All signs must comply with all Applicable
Requirements.

35. Termination;
Merger. Unless specifically stated otherwise in writing by Lessor,
the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or lesser estate
in the Premises; provided, however, that Lessor may elect to continue any one
or all existing subtenancies. Lessor’s failure within 10 days following any
such event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor’s election to have such event
constitute the termination of such interest.

36. Consents. Except
as otherwise provided herein, wherever in this Lease the consent or approval of
a Party is required to an act by or for the other Party, such consent or
approval shall not be unreasonably withheld or delayed. Lessor’s actual
reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor’s consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular

 PAGE 15 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  
 

condition to Lessor’s consent shall not preclude the
imposition by Lessor at the time of consent of such further or other conditions
as are then reasonable with reference to the particular matter for which
consent is being given. In the event that either Party disagrees with any
determination made by the other hereunder and reasonably requests the reasons
for such determination, the determining party shall furnish its reasons in
writing and in reasonable detail within 10 business days following such
request.

37. Guarantor.

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

37.2 Default. It
shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a) evidence of the execution of the guaranty,
including the authority of the party signing on Guarantor’s behalf to obligate
Guarantor, and in the case of a corporate Guarantor, a certified copy of a
resolution of its board of directors authorizing the making of such guaranty,
(b) current financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect.

38. Quiet Possession.
Subject to payment by Lessee of the Rent and performance of all of
the covenants, conditions and provisions on Lessee’s part to be observed and
performed under this Lease, Lessee shall have quiet possession and quiet
enjoyment of the Premises during the term hereof.

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

39.1 Definition. “Option”
shall mean: (a) the right to extend the term of or renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor;
(b) the right of first refusal or first offer to lease either the Premises or
other property of Lessor; (c) the right to purchase or the right of first
refusal to purchase the Premises or other property of Lessor.

39.2 Options Personal
To Original Lessee. Any Option granted to Lessee in this Lease is
personal to the original Lessee, and cannot be assigned or exercised by anyone
other than said original Lessee and only while the original Lessee is in full
possession of the Premises and, if requested by Lessor, with Lessee certifying
that Lessee has no intention of thereafter assigning or subletting.

39.3 Multiple
Options. In the event that Lessee has any multiple Options to extend
or renew this Lease, a later Option cannot be exercised unless the prior
Options have been validly exercised.

39.4 Effect of
Default on Options.

(a) Lessee shall have no right to exercise an Option:
(i) during the period commencing with the giving of any notice of Default and
continuing until said Default is cured, (ii) during the period of time any Rent
is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessee has been given 3 or more notices of separate Default, whether or not the
Defaults are cured, during the 12 month period immediately preceding the
exercise of the Option.

(b) The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Lessee’s inability to
exercise an Option because of the provisions of Paragraph 39.4(a).

(c) An Option shall terminate and be of no further
force or effect, notwithstanding Lessee’s due and timely exercise of the
Option, if, after such exercise and prior to the commencement of the extended
term or completion of the purchase, (i) Lessee fails to pay Rent for a period
of 30 days after such Rent becomes due (without any necessity of Lessor to give
notice thereof), or (ii) if Lessee commits a Breach of this Lease.

40. Multiple
Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by and conform to all
reasonable rules and regulations which Lessor may make from time to time for
the management, safety, and care of the Premises and the Building, and the
Project to the extent owned by Lessorsaid properties, including the care and cleanliness
of the grounds and including the parking, loading and unloading of vehicles,
and to cause its employees, suppliers, shippers, customers, contractors and
invitees to so abide and conform. Lessee also agrees to pay its fair share of
common expenses incurred in connection with such rules and regulations.

41. Security
Measures. Lessee hereby acknowledges that the Rent payable to Lessor
hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protectionof the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42. Reservations. Lessor
reserves to itself the right, from time to time, to grant, without the consent
or joinder of Lessee, such easements, rights and dedications that Lessor deems
necessary, and to cause the recordation of parcel maps and restrictions, so
long as such easements, rights, dedications, maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate any such
easement rights, dedication, map or restrictions.

43. Performance Under
Protest. If at any time a dispute shall arise as to any amount or
sum of money to be paid by one Party to the other under the provisions hereof,
the Party against whom the obligation to pay the money is asserted shall have
the right to make payment “under protest” and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part
of said Party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said Party to pay
such sum or any part thereof, said Party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay. A Party who does not
initiate suit for the recovery of sums paid “under protest” with 6 months shall
be deemed to have waived its right to protest such payment.

44. Authority;
Multiple Parties; Execution.

(a) If either Party hereto is a corporation, trust,
limited liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each Party
shall, within 30 days after request, deliver to the other Party satisfactory
evidence of such authority. Lessee shall provide to Lessor evidence of corporate
authority and the corporate resolution in substantially the form set out in
Exhibit “D” attached hereto and incorporated herein by this reference.

(b) If this Lease is executed by more than one person
or entity as “Lessee”, each such person or entity shall be jointly and severally
liable hereunder. It is agreed that any one of the named Lessees shall be
empowered to execute any amendment to this Lease, or other

 PAGE 16 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  
 

document ancillary thereto and bind all of the named
Lessees, and Lessor may rely on the same as if all of the named Lessees had
executed such document.

(c) This Lease may be executed by the Parties in
counterparts, each of which shall be deemed an original and all of which together
shall constitute one and the same instrument.

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

46. Offer. Preparation
of this Lease by either Party or their agent and submission of same to the
other Party shall not be deemed an offer to lease to the other Party. This
Lease is not intended to be binding until executed and delivered by all Parties
hereto.

47. Amendments. This
Lease may be modified only in writing, signed by the Parties in interest at the
time of the modification. As long as they do not materially change Lessee’s
obligations hereunder, Lessee agrees to make such reasonable non-monetary
modifications to this Lease as may be reasonably required by a Lender in
connection with the obtaining of normal financing or refinancing of the
Premises.

48. Waiver of Jury
Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR  PROCEEDING INVOLVING THE
PROPERTY OR ARISING OUT OF THIS AGREEMENT.

49. Mediation and
Arbitration of Disputes. An Addendum requiring the Mediation and/or
the Arbitration of all disputes between the Parties and/or Brokers arising out
of this Lease x  is  o  is not attached
to this Lease.

50. Americans with
Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee’s specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee’s use of
the Premises requires modifications or additions to the Premises in order to be
in ADA compliance, Lessee agrees to make any such necessary modifications
and/or additions at Lessee’s expense.

51, 52, and 56
through 58. See Addendum One.

53. See Addendum
Two.

54. See Addendum
Three.

55. See Addendum
Four.

LESSOR AND LESSEE
HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION
CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND
VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

ATTENTION: NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY
BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1.
SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2.
RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR LESSEE’S INTENDED USE.

WARNING: IF THE PREMISES IS
LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY
NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES
IS LOCATED.

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

	
  Executed at: 

  	
  Newport Beach, California

  	
   

  	
  Executed at:

  	
   Lake Forest,
  California

  
	
  On: 

  	
  3-23-2007

  	
   

  	
  On:

  	
   3-23-2007

  
	
   

  	
   

  	
   

  	
   

  
	
  By
  LESSOR:

  	
   

  	
   

  	
  By LESSEE:

  
	
  30452 Esperanza
  LLC, a California

  	
   

  	
   

  	
  Liquidmetal Technologies, Inc., a Delaware

  
	
  limited liability
  company

  	
   

  	
   

  	
  corporation

  
	
  By: 

  	
  /s/ Mark Silverberg

  	
   

  	
  By:

  	
  s/ /Larry Buffington

  
	
  Name Printed: 

  	
  Mark Silverberg

  	
   

  	
  Name Printed: 

  	
  Larry Buffington

  
	
  Title: 

  	
  Vice President

  	
   

  	
  Title:

  	
   President

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/Young Ham

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
  Young Ham

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  CFO

  
												

 PAGE 17 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  
 

 

	
  Address: 

  	
  P.O. Box 9395

  	
   

  	
  Address:

  	
   30452
  Esperanza

  
	
  Newport Beach, CA
  92658

  	
   

  	
   

  	
  Rancho Santa Margarita, CA 92688

  
	
  Telephone:  

  	
  (714) 797-6926

  	
   

  	
  Telephone:

  	
  (949) 206-8065

  
	
  Facsimile:

  	
  ( )

  	
   

  	
  Facsimile:

  	
  (949) 206-8008

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BROKER:

  	
   

  	
   

  	
  BROKER:

  
	
  Lee &
  Associates - Irvine, Inc.

  	
   

  	
   

  	
  CB Richard Ellis

  
	
  Attn: 

  	
  Craig
  Fitterer/Mark Jerue/Ryan Swanson

  	
   

  	
  Attn: 

  	
  Chris Ruzic

  
	
  Title: 

  	
  Vice President

  	
   

  	
  Title:

  	
   

  
	
  Address: 

  	
  7700 Irvine
  Center Drive, Suite 600

  	
   

  	
  Address: 

  	
  3501 Jamboree Road, Suite 100

  
	
  Irvine, CA 92618

  	
   

  	
   

  	
  Newport Beach, CA 92660

  
	
  Telephone:

  	
  (949) 727-1200

  	
   

  	
  Telephone:

  	
  (949) 725-8500

  
	
  Facsimile:

  	
  (949) 727-1299

  	
   

  	
  Facsimile:

  	
  (949) 477-9118

  
															

NOTE: These forms are often modified
to meet the changing requirements of law and industry needs. Always write or
call to make sure you are utilizing the most current form: AIR COMMERCIAL REAL
ESTATE ASSOCIATION, 700 So. Flower Street, Suite 600, Los Angeles, California
90017. (213) 687-8777. Fax No. (213) 687-8616

©
Copyright 2001 - By AIR Commercial Real Estate Association. All rights
reserved.

No part of these works may be
reproduced in any form without permission in writing.

 PAGE 18 OF 18
 	 ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM STN-8-5/05E
 

  

ADDENDUM ONE

	
   

  	
  Date:

  	
   

  	
  February 13, 2007

  
	
   

  	
  By and Between     (Lessor)

  	
   

  	
  30452 Esperanza LLC, a California limited liability
  company

  
	
   

  	
                                   (Lessee)

  	
   

  	
  Liquidmetal Technologies, Inc., a Delaware
  corporation

  

 

Address of Premises: 30452 Esperanza; Rancho Santa Margarita;
CA 92688

The Following additional
paragraphs are added to the Lease to read as follows:

51.    Premises Accepted AS-IS.
Lessor shall deliver, and Lessee agrees to accept, the Premises in their
condition as it exists at the time of the execution of this Lease “As-Is” and “With
All Faults,” except as is otherwise expressly provided in this Lease.  Lessee shall make no Alterations to the
Premises except in compliance with Paragraph 7.3 and other applicable
provisions of this Lease.

52.    Conditional Credit of
Security Deposit.  Provided
that Lessee has not been in Default under this Lease at any time prior to the
commencement of the 13th, 25th, and 37th months of the Original Term of this
Lease, Lessor shall at the commencement of such months apply as a credit to the
Rent for such months a portion of the Security Deposit as described in
Paragraph 1.6(b).  The portion of the
Security Deposit so applied in such months shall be only so much of the Security
Deposit as shall allow the Lessor to retain as the Security Deposit sufficient
funds to cover all of the Base Rent and additional monetary sums reasonably
expected to become due under this Lease for the last month or months, as
appropriate, of the Original Term of this Lease in accordance with the
following:

            52.1      13th Month.  At the commencement of the 13th month of the
Original Term of this Lease, if Lessee has not previously been in Default under
this Lease, Lessor shall apply to the Rent due for the 13th month of the
Original Term of this Lease so much of the Security Deposit as shall allow
Lessor to retain as the Security Deposit the equivalent of the Base Rent for
the 58th, 59th, and 60th months of the Original Term of this Lease plus all
additional sums Lessor reasonably estimates will be due as Rent for those three
(3) months of the Original Term of this Lease. 
For example, at the commencement of the 13th month, the amount of the
Security Deposit which Lessor shall be entitled to retain is $17,933.30, being
the Base Rent for each of the last three months per Paragraph 53, multiplied by
three (3) plus the estimated monthly NNN charges for each of the last three (3)
months of the Original Term of the Lease multiplied by three (3); e.g.,
($17,933.30 x 3) + ($4,567.43 x 3) = $67,502.19, where $4,567.43 is the amount
of estimated monthly NNN charges for each of the last 12 months of the Original
Term of the Lease, being the estimated NNN charges of $4,219.60 per month for
the first 12 months of the Original Term of the Lease increased by a
hypothetical estimated 2% per year by way of example.

            52.2     25th Month.    At the commencement of the 25th month of
the Original Term of this Lease, if Lessee has not previously been in Default
under this Lease, Lessor shall apply to the Rent due for the 25th month of the
Original Term of this Lease so much of the Security Deposit as shall allow
Lessor to retain as the Security Deposit the equivalent of the Base Rent for
the 59th and 60th months of the Original Term of this Lease plus all additional
sums Lessor reasonably estimates will be due as Rent for those two (2) months
of the Original Term of this Lease.  For
example, at the commencement of the 25th month, the amount of the Security
Deposit which Lessor shall be entitled to retain is $17,933.30, being the Base
Rent for each of the last two (2) months of the Original Term of the Lease per
Paragraph 53, multiplied by two (2) plus the estimated monthly NNN charges for
each of the last two (2) months of the Original Term of the Lease multiplied by
two (2); e.g., ($17,933.30 x 2) + ($4,567.43 x 2) = $45,001.46, where $4,567.43
is the amount of the estimated monthly NNN charges for the last 12 months of
the Original Term of the Lease, being the estimated monthly NNN charges of
$4,219.60 for each of the first 12 months of the Original Term of the Lease
increased by a hypothetical estimated 2% per year by way of example.

 PAGE 1 of 2
 

52.3        37th Month.   At the commencement of the 37th month of the
Original Term of this Lease, if Lessee has not previously been in Default under
this Lease, Lessor shall apply to the Rent due for the 37th month of the
Original Term of this Lease so much of the Security Deposit as shall allow
Lessor to retain as the Security Deposit the equivalent of the Base Rent for the
last month of the Original Term of this Lease plus all additional sums Lessor
reasonably estimates will be due as Rent for that last month of the Original
Term of this Lease.  For example, at the
commencement of the 37th month, the amount of the Security Desosit which Lessor
shall be entitled to retain is $17,933.30, being the Base Rent for the last
month of the Original Term of the Lease per Paragraph 53, plus the estimated
NNN charges for the last month of the Original Term of the Lease; e.g.,
$17,933.30 + $4,567.43 = $22,500.73, where $4,567.43 is the amount of the
estimated NNN charges for the last 12 months of the Original Term of the Lease,
being the estimated monthly NNN charges of $4,219.60 for the first 12 months of
the Original Term of the Lease increased by a hypothetical 2% per year by way
of example.

            52.4     During the 12th, 24th, and
36th Months.     During the
12th, 24th, and 36th months of the Original Term of this Lease, if Lessee has
not previously been in Default under this Lease, Lessor shall give notice to
Lessee of the amount of the credit which Lessor will be applying to Rent for
the succeeding month, as determined pursuant to this Paragraph 52, and the
balance of Rent which Lessee is obligated to pay for the succeeding month.  Lessor shall provide sufficient notice to
Lessee so as to allow Lessee a reasonable time prior to the end of the 12th,
24th, or 36th month of the Original Term of the Lease, as appropriate, to make
timely payment of the balance of Rent due for the 13th, 25th, or 37th month of
the Original Term of the Lease.

53.   See Addendum Two.

54.   See Addendum Three.

55.   See Addendum Four.

56.     Reconciliation of NNN
Charges.   Lessee shall pay
monthly in advance, on the same day that the Base Rent is due, all of the
monthly NNN charges which Lessee is obligated to pay pursuant to this Lease in
amounts as reasonably estimated by Lessor. 
Lessor shall deliver to Lessee within 90 days after the end of each
calendar year during the term and any extended term of this Lease a reasonably
detailed statement showing the actual NNN charges for the prior year.  If Lessee’s estimated payments of NNN charges
during that prior year exceed the actual NNN charges for that prior year,
Lessee shall be credited the amount of such overpayment against Lessee’s NNN
charges next becoming due.  If Lessee’s
estimated payments during that prior year were less than the actual NNN charges
for that prior year, Lessee shall pay to Lessor the amount of the deficiency
within 10 days after delivery by Lessor to Lessee of said statement.  At any time Lessor may adjust the amount of
the estimated NNN charges to reflect Lessor’s revised estimate of such charges,
and Lessee shall pay the revised estimated amount commencing with the next
payment due following Lessee’s receipt of notice from Lessor of the revised
estimated amount.  The term “NNN charges”
as used in this paragraph means such of the monetary obligations of Lessee
under this Lease which are not Base Rent or Security Deposit, and which Lessor
has paid or is periodically paying during the term or extended term of this
Lease.

57.     Lessor’s Assignment of
Lease to a Division of Lessor. 
Lessor reserves the right to transfer title to the Premises and assign
the Lease to a new separate entity which will be a division of Lessor.  Upon any such assignment, the new separate
entity will assume all of the obligations of Lessor under this Lease and Lessee
shall attorn to that new separate entity pursuant to the provisions of
paragraph 30.2 of this Lease; provided, however, that the exceptions in favor
of a new owner contained in subparagraphs (a), (b), (c), and (d) of paragraph
30.2(ii) shall not apply to the new separate entity as a division of Lessor.

58.     Blueprints.  Lessor agrees to make available to Lessee or
its architects or space planners such blueprints, or copies thereof, related to
the Premises as Lessor has received from Lessor’s predecessor in interest in
the Premises.  Lessor makes no
representations or warranties that such blueprints are accurate or correct or
complete, and Lessor provides them to Lessee solely as an accommodation. Lessor
shall not be responsible in any way for any inaccuracies or deficiencies in any
of such blueprints.  Lessee agrees to
return all such blueprints to Lessor in the condition in which they were
received.

 PAGE 2 of 2

RENT
ADJUSTMENT(S)

STANDARD LEASE ADDENDUM TWO

	
  Dated

  	
  February 13, 2007

  
	
  By and Between (Lessor)

  	
  30452 Esperanza LLC, a
  California limited liability company

  
	
                               (Lessee)

  	
  Liquidmetal
  Technologies, Inc., a Delaware corporation

  
	
  Address of Premises:

  	
  30452 Esperanza Rancho

  Santa Margarita, CA 92688

  

 

Paragraph 53

A. RENT ADJUSTMENTS:

The monthly rent for each month of the adjustment
period(s) specified below shall be increased using the method(s) indicated
below:

(Check Method(s) to be Used and Fill in Appropriately)

o            I. Cost of Living Adjustment(s) (COLA)

a. On (Fill in COLA Dates):

the Base Rent shall be adjusted by the change, if any,
from the Base Month specified below, in the Consumer Price Index of the Bureau
of Labor

Statistics of the U.S. Department of Labor for (select
one):o CPI W (Urban Wage Earners and Clerical
Workers) or o CPI U (All Urban Consumers), for (Fill in
Urban Area):                                                                                                                      ,
All Items

(1982-1984 = 100), herein referred to as “CPI”.

b. The monthly rent payable in accordance with
paragraph A.I.a. of this Addendum shall be calculated as follows: the Base Rent
set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a
fraction the numerator of which shall be the CPI of the calendar month 2 months
prior to the month(s) specified in paragraph A.I.a. above during which the
adjustment is to take effect, and the denominator of which shall be the CPI of
the calendar month which is 2 months prior to (select one): the o first month of the term of this Lease as
set forth in paragraph 1.3 (“Base Month”) or o (Fill in Other “Base Month”): . The sum so calculated shall constitute
the new monthly rent hereunder, but in no event, shall any such new monthly
rent be less than the rent payable for the month immediately preceding the rent
adjustment.

c. In the event the compilation and/or publication of
the CPI shall be transferred to any other governmental department or bureau or
agency or shall be discontinued, then the index most nearly the same as the CPI
shall be used to make such calculation. In the event that the Parties cannot
agree on such alternative index, then the matter shall be submitted for
decision to the American Arbitration Association in accordance with the then
rules of said Association and the decision of the arbitrators shall be binding
upon the parties. The cost of said Arbitration shall be paid equally by the
Parties.

o            II. Market Rental Value Adjustment(s) (MRV)

a. On (Fill in MRV Adjustment Date(s):

the Base Rent shall be adjusted to the “Market Rental
Value” of the property as follows:

1) Four months prior to each Market Rental Value
Adjustment Date described above, the Parties shall attempt to agree upon what
the new MRV will be on the adjustment date. If agreement cannot be reached
within thirty days, then:

(a) Lessor and Lessee shall immediately appoint a
mutually acceptable appraiser or broker to establish the new MRV within the
next 30 days. Any associated costs will be split equally between the Parties,
or

(b) Both Lessor and Lessee shall each immediately make
a reasonable determination of the MRV and submit such

determination, in writing, to arbitration in accordance
with the following provisions:

(i) Within 15 days thereafter, Lessor and Lessee shall
each select an o appraiser or o broker (“Consultant”
- check one) of their choice to act as an arbitrator. The two
arbitrators so appointed shall immediately select a third mutually acceptable
Consultant to act as a third arbitrator.

(ii) The 3 arbitrators shall within 30 days of the
appointment of the third arbitrator reach a decision as to what the actual MRV
for the Premises is, and whether Lessor’s or Lessee’s submitted MRV is the
closest thereto. The decision of a majority of the arbitrators shall be binding
on the Parties. The submitted MRV which is determined to be the closest to the
actual MRV shall thereafter be used by the Parties.

(iii) If either of the Parties fails to appoint an
arbitrator within the specified 15 days, the arbitrator timely appointed by one
of them shall reach a decision on his or her own, and said decision shall be
binding on the Parties.

(iv) The entire cost of such arbitration shall be paid
by the party whose submitted MRV is not selected, i.e., the one that is NOT the
closest to the actual MRV.

 PAGE 1 OF 2
 	 ©2000 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM RA-3-8/00E
 

  
 

2) Notwithstanding the foregoing, the new MRV shall not
be less than the rent payable for the month immediately preceding the rent
adjustment.

b. Upon the establishment of each New Market Rental
Value:

1)
the new MRV will become the new “Base Rent” for the purpose of calculating any
further Adjustments, and

2) the first month of each Market Rental Value term
shall become the new ‘Base Month’ for the purpose of calculating any further
Adjustments.

þ            III. Fixed Rental Adjustment(s) (FRA)

The Base Rent shall be increased to the following
amounts on the dates set forth below:

On
(Fill in FRA Adjustment Date(s)): The New Base Rent shall be:

Months 01 - 12
$14,919.30

Months 13 - 24 $15,672.80

Months 25 - 36 $16,426.30

Months 37 - 48 $17,179.80

Months 49 - 60 $17,933.30

B. NOTICE:

Unless specified otherwise herein, notice of any such
adjustments, other than Fixed Rental Adjustments, shall be made as specified in
paragraph 23 of the Lease.

C. BROKER’S FEE:

The Brokers shall be paid a Brokerage Fee for each
adjustment specified above in accordance with paragraph 15 of the Lease.

NOTE: These forms are often modified
to meet changing requirements of law and needs of the industry. Always write or
call to make sure you are utilizing the most current form: AIR COMMERCIAL REAL
ESTATE ASSOCIATION, 700 S. Flower Street, Suite 600, Los Angeles, Calif. 90017

 PAGE 2 OF 2
 	 ©2000 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
 	 FORM RA-3-8/00E
 

  

 

ARBITRATION AGREEMENT

Standard
Lease Addendum THREE

	
  Dated

  	
   

  	
  February 13, 2007

  
	
   

  	
   

  	
   

  
	
  By
  and Between      (Lessor) 

  	
   

  	
  30542 Esperanza LLC., a California limited company

  
	
   

  	
   

  	
   

  
	
                                    (Lessee)

  	
   

  	
  Liquidmetal Technologies, Inc., a Delaware
  corporation 

  
	
   

  	
   

  	
   

  
	
  Address of Premises: 

  	
   

  	
  30452 Esperanza Rancho Santa Margarita, CA 92688 

  

 

Paragraph   54

A.            ARBITRATION OF
DISPUTES:

Except as provided in
Paragraph B below, the Parties agree to resolve any and all claims, disputes or
disagreements arising under this Lease, including, but not limited to any
matter relating to Lessor’s failure to approve an assignment, sublease or other
transfer of Lessee’s interest in the Lease under Paragraph 12 of this Lease,
any other defaults by Lessor, or any defaults by Lessee by and through
arbitration as provided below and irrevocably waive any and all rights to the
contrary. The Parties agree to at all times conduct themselves in strict, full,
complete and timely accordance with the terms hereof and that any attempt to
circumvent the terms of this Arbitration Agreement shall be absolutely null and
void and of no force or effect whatsoever.

B.            DISPUTES EXCLUDED FROM
ARBITRATION:

The following claims,
disputes or disagreements under this Lease are expressly excluded from the
arbitration procedures set forth herein: 1. Disputes for which a different
resolution determination is specifically set forth in this Lease, 2. All claims
by either party which (a) seek anything other than enforcement or determination
of rights under this Lease, or (b) are primarily founded upon matters of fraud,
willful misconduct, bad faith or any other allegations of tortious action, and
seek the award of punitive or exemplary damages, 3. Claims relating to (a)
Lessor’s exercise of any unlawful detainer rights pursuant to applicable law or
(b) rights or remedies used by Lessor to gain possession of the Premises or
terminate Lessee’s right of possession to the Premises, all of which disputes
shall be resolved by suit filed in the applicable court of jurisdiction, the
decision of which court shall be subject to appeal pursuant to applicable law
and 4. All claims arising under Paragraph 39 of this Lease, which disputes
shall be resolved by the specific dispute resolution procedure provided in
Paragraph 39 to the extent that such disputes concern solely the determination
of rent.

C.            APPOINTMENT OF AN
ARBITRATOR:

All disputes subject to this Arbitration Agreement,
shall be determined by binding arbitration before: o a
retired judge of the applicable court of jurisdiction (e.g., the Superior Court
of the State of California) affiliated with Judicial Arbitration &
Mediation Services, Inc. (“JAMS”), o the American Arbitration Association (“AAA”)
under its commercial arbitration rules, o                                                     o, or as may be otherwise mutually agreed
by Lessor and Lessee (the “Arbitrator”). Such arbitration shall be initiated by
the Parties, or either of them, within ten (10) days after either party sends
written notice (the “Arbitration Notice”) of a demand to arbitrate by
registered or certified mail to the other party and to the Arbitrator. The
Arbitration Notice shall contain a description of the subject matter of the
arbitration, the dispute with respect thereto, the amount involved, if any, and
the remedy or determination sought. If the Parties have agreed to use JAMS they
may agree on a retired judge from the JAMS panel. If they are unable to agree
within ten days, JAMS will provide a list of three available judges and each
party may strike one. The remaining judge (or if there are two, the one
selected by JAMS) will serve as the Arbitrator. If the Parties have elected to
utilize AAA or some other organization, the Arbitrator shall be selected in
accordance with said organization’s rules. In the event the Arbitrator is not
selected as provided for above for any reason, the party initiating arbitration
shall apply to the appropriate Court for the appointment of a qualified retired
judge to act as the Arbitrator.

D.              ARBITRATION PROCEDURE:

1.               PRE-HEARING
ACTIONS. The Arbitrator shall schedule a pre-hearing conference to
resolve procedural matters, arrange for the exchange of information, obtain
stipulations, and narrow the issues. The Parties will submit proposed discovery
schedules to the Arbitrator at the pre-hearing conference. The scope and
duration of discovery will be within the sole discretion of the Arbitrator. The
Arbitrator shall have the discretion to order a pre-hearing exchange of
information by the Parties, including, without limitation, production of
requested documents, exchange of summaries of testimony of proposed witnesses,
and examination by deposition of parties and third-party witnesses. This
discretion shall be exercised in favor of discovery reasonable under the
circumstances. The Arbitrator shall issue subpoenas and subpoenas duces tecum
as provided for in the applicable statutory or case law (e.g., in California
Code of Civil Procedure Section 1282.6).

2.               THE
DECISION. The arbitration shall be conducted in the city or county
within which the Premises are located at a reasonably convenient site. Any
Party may be represented by counsel or other authorized representative. In
rendering a decision(s), the Arbitrator shall determine the rights and
obligations of the Parties according to the substantive laws and the terms and
provisions of this Lease. The Arbitrator’s decision shall be based on the
evidence introduced at the hearing, including all logical and reasonable
inferences therefrom. The Arbitrator may make any determination and/or grant
any remedy or relief that is just and equitable. The decision must be based on,
and accompanied by, a written statement of decision explaining the factual and
legal basis for the decision as to each of the principal controverted issues.
The decision shall be conclusive and binding, and it may thereafter be
confirmed as a judgment by the court of applicable jurisdiction, subject only
to challenge on the grounds set forth in the applicable statutory or case law
(e.g., in California Code of Civil Procedure Section 1286.2). The validity and
enforceability of the Arbitrator’s decision is to be determined exclusively by
the court of appropriate jurisdiction pursuant to the provisions of this Lease.
The Arbitrator may award costs, including without limitation, Arbitrator’s fees
and costs, attorneys’ fees, and expert and witness costs, to the prevailing
party, if any, as determined by the Arbitrator in his discretion. Whenever a
matter which has been submitted to arbitration involves a dispute as to whether
or not a particular act or omission (other than a failure to pay money)
constitutes a Default, the time to commence or cease such action shall be
tolled from the date that the Notice of Arbitration is served through and until
the date the Arbitrator renders his or her decision. Provided, however, that
this provision shall NOT apply in the event that the Arbitrator determines that
the Arbitration Notice was prepared in bad faith. Whenever a dispute arises
between the Parties concerning whether or not the failure to make a payment of
money constitutes a default, the

 PAGE 1 OF 2
  
 ©1997 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                                     FORM ARB-0-7/97E
 

 

service of an Arbitration
Notice shall NOT toll the time period in which to pay the money. The Party
allegedly obligated to pay the money may, however, elect to pay the money “under
protest” by accompanying said payment with a written statement setting forth
the reasons for such protest. If thereafter, the Arbitrator determines that the
Party who received said money was not entitled to such payment, said money
shall be promptly returned to the Party who paid such money under protest
together with Interest thereon as defined in Paragraph 13.5. If a Party makes a
payment “under protest” but no Notice of Arbitration is filed within thirty
days, then such protest shall be deemed waived. (See also Paragraph 43)

NOTICE:
These forms are often modified to meet changing requirements of law and
industry needs. Always write or call us to make sure you are utilizing the most
current form: AIR Commercial Real Estate Association, 700 South Flower Street,
Suite 600, Los Angeles, CA 90017, Telephone No.: (213) 687-8777. Fax.: (213)
687-8616.

 

 PAGE 2 OF 2
  
 ©1997 - AIR COMMERCIAL REAL ESTATE ASSOCIATION                                                                     FORM ARB-0-7/97E

OPTION(S)
TO EXTEND

STANDARD
LEASE ADDENDUM FOUR

	
  Dated

  	
   

  	
  February 13, 2007

  
	
  By and Between (Lessor)

  	
   

  	
  30452 Esperanza LLC, a California limited liability
  company

  
	
  By and
  Between (Lessee)

  	
   

  	
  Liquidmetal Technologies,
  Inc., a Delaware corporation

  
	
  Address of Premises:

  	
   

  	
  30452 Esperanza

  
	
   

  	
   

  	
  Rancho Santa Margarita, CA 92688

  

Paragraph 55

A. OPTION(S) TO
EXTEND:

Lessor hereby grants to Lessee the option to extend the
term of this Lease for one (1) additional sixty (60) month period(s) (the “Option
Period”) commencing when the prior term expires upon each and all of the
following terms and conditions:

(i) In order to exercise an option to extend, Lessee
must give written notice of such election to Lessor and Lessor must receive the
same at least 6 but not more than 9 months prior to the date that the option
period would commence, time being of the essence. If proper notification of the
exercise of an option is not given and/or received, such option shall
automatically expire. Options (if there are more than one) may only be
exercised consecutively.

(ii) The provisions of paragraph 39, including those
relating to Lessee’s Default set forth in paragraph 39.4 of this Lease, are
conditions of this Option.

(iii) Except for the provisions of this Lease granting
an option or options to extend the term, all of the terms and conditions of
this Lease except where specifically modified by this option shall apply.

(iv) This Option is personal to the original Lessee,
and cannot be assigned or exercised by anyone other than said original Lessee
and only while the original Lessee is in full possession of the Premises and
without the intention of thereafter assigning or subletting.

(v) The monthly rent for each month of the option
period shall be calculated as follows, using the method(s) indicated below:

(Check Method(s) to be Used and Fill in Appropriately)

o  I. Cost of
Living Adjustment(s) (COLA)

a. On (Fill in COLA Dates):

the Base Rent shall be adjusted by the change, if any,
from the Base Month specified below, in the Consumer Price Index of the Bureau
of Labor Statistics of the U.S. Department of Labor for (select one): o CPI W (Urban Wage Earners and Clerical
Workers) or o CPI U (All Urban Consumers), for (Fill in
Urban Area):

All Items (1982-1984 = 100), herein referred to as “CPI”.

b. The monthly rent payable in accordance with
paragraph A.I.a. of this Addendum shall be calculated as follows: the Base Rent
set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a fraction
the numerator of which shall be the CPI of the calendar month 2 months prior to
the month(s) specified in paragraph A.I.a. above during which the adjustment is
to take effect, and the denominator of which shall be the CPI of the calendar
month which is 2 months prior to (select one): o the first month of the term of this Lease
as set forth in paragraph 1.3 (“Base Month”) or o (Fill in Other “Base Month”):

The sum so calculated shall constitute the new monthly
rent hereunder, but in no event, shall any such new monthly rent be less than
the rent payable for the month immediately preceding the rent adjustment.

c. In the event the compilation and/or publication of
the CPI shall be transferred to any other governmental department or bureau or
agency or shall be discontinued, then the index most nearly the same as the CPI
shall be used to make such calculation. In the event that the Parties cannot
agree on such alternative index, then the matter shall be submitted for
decision to the American Arbitration Association in accordance with the then
rules of said Association and the decision of the arbitrators shall be binding
upon the parties. The cost of said Arbitration shall be paid equally by the
Parties.

o  II.
Market Rental Value Adjustment(s) (MRV)

a. On (Fill in MRV Adjustment Date(s))

the Base Rent shall be adjusted to the “Market Rental
Value” of the property as follows:

1) Four months prior to each Market Rental Value
Adjustment Date described above, the Parties shall attempt to agree upon what
the new MRV will be on the adjustment date. If agreement cannot be reached,
within thirty days, then:

(a) Lessor and Lessee shall immediately appoint a
mutually acceptable appraiser or broker to establish the new MRV within the
next 30 days. Any associated costs will be split equally between the Parties,
or

(b) Both Lessor and Lessee shall each immediately make
a reasonable determination of the MRV and submit such determination, in
writing, to arbitration in accordance with the following provisions:

(i) Within 15 days thereafter, Lessor and Lessee shall
each select an o appraiser or o broker (“Consultant”
- check one) of their choice to act as an arbitrator. The two
arbitrators so appointed shall immediately select a third mutually acceptable
Consultant to act as a third arbitrator.

PAGE 1 OF
2

©2000 - AIR COMMERCIAL REAL ESTATE
ASSOCIATION                                                                     FORM
OE-3-8/00E

(ii) The 3 arbitrators shall within 30 days of the
appointment of the third arbitrator reach a decision as to what the actual MRV
for the Premises is, and whether Lessor’s or Lessee’s submitted MRV is the
closest thereto. The decision of a majority of the arbitrators shall be binding
on the Parties. The submitted MRV which is determined to be the closest to the
actual MRV shall thereafter be used by the Parties.

(iii) If either of the Parties fails to appoint an
arbitrator within the specified 15 days, the arbitrator timely appointed by one
of them shall reach a decision on his or her own, and said decision shall be
binding on the Parties.

(iv) The entire cost of such arbitration shall be paid
by the party whose submitted MRV is not selected, ie. the one that is NOT the
closest to the actual MRV.

2) Notwithstanding the foregoing, the new MRV shall not
be less than the rent payable for the month immediately preceding the rent
adjustment.

b. Upon the establishment of each New Market Rental
Value:

1)
the new MRV will become the new “Base Rent” for the purpose of calculating any
further Adjustments, and

2) the first month of each Market Rental Value term
shall become the new “Base Month” for the purpose of calculating any further
Adjustments.

o  III.
Fixed Rental Adjustment(s) (FRA)

The Base Rent shall be increased to the following
amounts on the dates set forth below:

On (Fill in FRA Adjustment Date(s)):                                   The New Base
Rent shall be:

The Base Rent rate for the first year
of the Option Period shall be 100% fair market rental for competing properties
in the South Orange County, California, area. There shall be four percent (4%)
annual increases in Base Rent thereafter. Four (4) months prior to the
commencement of the Option Period, the Parties shall negotiate in good faith to
determine the Base Rent for the Option Period. If agreement cannot be reached
within thirty days, then Lessor and Lessee shall each, no later than 90 days
prior to the commencement of the Option Period, make a reasonable determination
of the fair market rental for the Premises for the first year of the Option
Period and submit such determination, in writing, to arbitration in accordance
with the following provisions:

(1) No later than 90 days prior to the
commencement of the Option Period, Lessor and Lessee shall each select a
licensed real estate agent or broker with not less than five (5) years of
experience in the leasing of industrial real estate in the South Orange County,
California, area to act as an arbitrator. The two arbitrators so appointed
shall, no later than 75 days prior to the commencement of the Option Period,
select a mutually acceptable licensed real estate agent or broker with not less
than five (5) years of experience in the leasing of industrial real estate in
the South Orange County, California, area to act as a third arbitrator.

(2) The three arbitrators, acting by a
majority, shall no later than 60 days prior to the commencement of the Option
Period, determine their opinion of the fair market rental for the Premises for
the first year of the Option Period. The fair market rental determination of
Lessor or Lessee which is closest to the opinion of the fair market rental as
determined by the arbitrators shall be the Base Rent for the first year of the
Option Period.

(3) If either of the Parties fails to
appoint an arbitrator within the period required by this Addendum,
thearbitrator timely appointed shall determine the Base Rent for the first year
of the Option Period.

(4) The entire cost of such
arbitration shall be paid by the party whose fair market rental submission is
not selected.

B. NOTICE:

Unless specified otherwise herein, notice of any rental
adjustments, other than Fixed Rental Adjustments, shall be made as specified in
paragraph 23 of the Lease.

C. BROKER’S FEE:

The Brokers shall be paid a Brokerage Fee in accordance
with their separate agreements with the Parties, if any for each adjustment
specified above in accordance with paragraph 15 of the Lease.

NOTE: These forms are often modified
to meet changing requirements of law and needs of the industry. Always write or
call to make sure you are utilizing the most current form: AIR COMMERCIAL REAL
ESTATE ASSOCIATION, 700 S. Flower Street, Suite 600, Los Angeles, Calif. 90017

PAGE 2 OF
2

©2000 - AIR COMMERCIAL REAL ESTATE
ASSOCIATION                                                                     FORM
OE-3-8/00EExhibit
10.2

LEASE
AGREEMENT

1.             Lease Agreement

This Lease Agreement is made and entered into
effective the 19th day of March, 2007, by and between LARRY
RUFFINO AND ROLAND RUFFINO, of Bryan, Texas, herein called “Lessor”, and
LIQUIDMETAL TECHNOLOGIES D/B/A LAKE FOREST, CA / LIQUIDMETAL COATINGS GROUP, of
Texas herein called “Lessee”.

In consideration of the mutual covenants and
agreements herein set forth, and other good and valuable consideration, Lessor
does hereby demise and lease to Lessee, and Lessee does hereby lease from
Lessor, the premises situated at 801 FM 2821 B, Huntsville, Texas, and herein
called the “leased premises”, and consisting of approximately 4,500 square
feet, more or less.

Term

1.             The term of this lease shall be for
a period of five (5) year(s) commencing on August 1, 2007, and ending August 1,
2012, except that the lease may be terminated prior thereto in the event of the
default by Lessee herein.

Rent

2.             A.  Lessee aggress to pay to Lessor as base rent
for the leased premises the sum of $3000.00 per month in advance on the first
day of each month, commencing on the 1st day of August 2007, at the place Lessor
specifies in Paragraph 17 herein.  If the
Lessor does not receive the rent by the 15th day of each
month, the Lessee agrees to pay the Lessor, in addition to the rent, a late fee
equal to five (5%) percent of the monthly rent for that month and each month
thereafter in which the Lessee is delinquent in the payment of that monthly
rental payment.

B.  Operating Expense Payment.  Lessee shall also pay as additional rental
Lessee’s pro rata share of increases in ad valorem tax or casualty insurance
premiums of Lessor for the building and project of which the leased premises
are a part, using 2006 as the base year for the purpose of calculating such
increases.  Lessor shall invoice Lessee
for Lessee’s pro rata share within on month following the close of any calendar
year for which additional rental is due under this section.  Monthly Rent for the following 12-month
period shall then be increased by such amount, divided by twelve.

Security Deposit

3.             A. Lessee has previously deposited
with Lessor the additional sum of $1,500.00, receipt of which is hereby
acknowledged by Lessor, as security for the full and faithful performance by
Lessee of the aforementioned terms, conditions, and covenants of this lease on
Lessee’s part to be performed and kept. 
This deposit does not constitute advance rental payment due herein.

B.  Excluding the final rental payment to be made
herein, if at any time during the term hereof Lessee shall be in default in the
payment of rent herein stated or any portion thereof, or of any other sums
expressly constituting rent hereunder, Lessor may appropriate and apply any
portion of the security deposit as may be necessary to the payment of the
overdue rent or other sums expressly constituting rent hereunder.

C.  If at any time during the term hereof, Lessee
should fail to repair any damage to the premises that he is required to repair
pursuant to the terms hereof for a period greater than ten (10) days after
written demand to make such repair is served on Lessee by Lessor, then Lessor
may appropriate and apply any portion of the security deposit as may be
reasonably necessary to make such repairs.

D.  If on termination of this Agreement for any
reason, Lessee does not leave the leased premises in, as good order, repair,
and condition as they were in at the effective date of this lease, excluding “normal
wear and tear”, then Lessor may appropriate and apply any portion of the
security deposit as may be reasonably necessary to put the premises in such
condition.  As used herein, the term “normal
wear and tear” means that deterioration which occurs, based upon the use for
which the premises herein are intended, without negligence, carelessness,
accident, or abuse of the premises or equipment or chattels by the Lessor, or
his invitees or guests.

E.  In the event actual cause exists for
retaining all or any portion of the security deposit, the Lessor shall return
to the Lessee the balance of the security deposit, if any, together with a
written description and itemized list of all deductions.  Such deductions shall be limited to damages
and charges for which the Lessee is legally liable under this Agreement or as a
result of breaching this Agreement.  The
Lessor shall not be required to furnish a description and itemized list of
deduction if there are any rentals due and unpaid at the time the Lessee
surrenders possession of the premises.

F.  Within thirty (30) days after Lessee surrenders
the premises, any remaining portion of the security deposit, after any lawful
deductions as above, shall be returned to Lessee, directed to the address left
by Lessee in writing specifically for such purposes.

 2
 

Use

4.             A. 
The leased premises shall be used only as office and warehouse
space.  Lessee shall not permit the
leased premises or any part thereof to be used for:  (a) the conduct of any offensive, noisy, or
dangerous activity that would increase the premiums for fire insurance on the
leased premises; (b) the creation or maintenance of a public nuisance; or (c)
anything t\which is against public regulations or rules or any public authority
at any time applicable to the leased premises.

B.  Signs. 
NO signs of any type or description shall be erected, placed or painted
in or about the leased premises or project except those signs submitted to
Lessor in writing and approved by Lessor in writing.

Utilities and
Service

5.             A. 
Building Services.  Lessee shall
furnish water, gas, and electricity during the term of the Lease.  Lessee shall pay all telephone charges.  Lessee shall also furnish routine
maintenance, painting and electric lighting service for all public areas and
special service areas of the building in the manner and to the extent deemed by
lessor to be standard.  Lessor shall
arrange for all lawn and landscape maintenance at the Leased Premises and
Lessee shall pay one-half of the cost of such maintenance monthly as additional
rent.  Lessor may, in its sole
discretion, provide additional services not enumerated herein.  Failure by Lessor to any extent to furnish
any other services not enumerated, or any cessation thereof, shall not render
Lessor liable in any respect for damages to either person or property, be
construed as an eviction of Lessee, work an abatement of rent or relieve Lessee
from fulfillment of any covenant in this Lease.

B.  Theft or Burglary.  Lessor shall not be liable to Lessee for
losses due to theft or burglary, or for damages done by unauthorized persons to
the leased premises or the building.

C.  Janitorial Service.  Lessee shall furnish his own janitorial
service to the leased premises and public areas of the building during the term
of this Lease.

Indemnity
Agreement and Liability Insurance

6.             Lessee agrees to indemnify and hold
Lessor and the property of Lessor, including the leased premises, free and
harmless from any and all liability for injury to or death of any person,
including Lessee and guests and invitees of Lessee, or for damage to property
arising from the use and occupancy of the leased premises by Lessee or from the
act or omission of any person or persons, including Lessee and guests and
invitees of Lessee, in or about the leased premises.  Lessee shall keep and maintain a current
general comprehensive liability policy in the leased premises for a minimum
amount of $1,000,000.00, naming Lessor and Lessee as insured parties.

 3
 

Alterations and
Improvements

7.             Lessee shall make no alterations to
the buildings on the leased premises nor construct any buildings or other
improvements on the leased premises without first having provided to the Lessor
or his designated agents the plans and specifications for the proposed
alterations and improvements and the name of the proposed contractor.  After receipt of such plans and
specifications and the name of the building contractor, Lessor or his
designated agents shall have the right to inspect the leased premises and
investigate the proposed alterations and improvements at a reasonable time.  After review of the plans and specifications
and any inspection, Lessor or his designated agents shall notify the Lessee in
writing as to its approval or disapproval of the proposed alterations and
improvements and the proposed contractor. 
If Lessor disapproves either or both, then Lessee shall not undertake
the construction until approval of both the construction and the contractor is
obtained from the Lessor.  Lessee agrees
to construct the alterations and improvements according to the submitted and
approved plans and specifications and to use the contractor whose name was
approved by the Lessor or his designated agents.

Conditions of
Premises

8.             Lessee stipulates that he has
examined the leased premises, as well as all buildings and improvements located
thereon, and they are all, at the effective date of this lease, in good order,
repair, and in safe and clean condition.

Maintenance of
Premises

9.             A. 
Lessee shall, at his own costs and expense, maintain the leased premises
and the buildings and improvements on the leased premises in a good order,
repair, and condition as they were in at the effective date of this lease,
reasonable wear and tear excepted. 
Lessee shall be specifically responsible for all maintenance and repair
of the leased premises and the buildings and improvements on the leased
premises, including but not limited to all plate glass, electrical fixtures and
appliances, air-conditioning and heating units, cabinets, doors, plumbing
accessories and systems and all items dealing with the inside and outside
appearance of the leased premises. 
Further, it shall be construed as an act of default under this lease if
Lessee permits by neglect or otherwise exterior windows, and the general
cleanliness and outward appearance of the leased premises to fall into a state
of disrepair as determined by periodic inspections by Lessor.  If such condition of disrepair is found by
the Lessor, the Lessor shall give Lessee thirty (30) days notice of such
default, and if Lessee does not correct the condition of default, then Lessor
may proceed with any remedies available under this lease or those available at
law.

B.  Additionally, if any damage to or required
repair of the leased premises or any building or improvement thereon is caused
by any act or negligence of Lessee or Lessee’s guests or invitees, Lessee shall
be required, at Lessee’s expense, to the extent such damage or repair costs are
not covered by insurance maintained by Lessor, to repair and pay for same.  In this connection, repair work for damage
covered wholly or partially 

 4
 

by Lessor’s
insurance shall be paid for by Lessor’s insurance and Lessee shall be
responsible only for such part of the repair costs in excess of the insurance
coverage.

Improvements
Property of Lessor

10.           All alterations, changes, and
improvements built, constructed, or placed on the leased premises by Lessee,
other than moveable personal property, shall, unless otherwise provided by
written agreement between Lessor and Lessee, be the property of Lessor and
remain on the leased premises at the expiration or sooner termination of this
lease or Lessor may require the removal of such alterations, at Lessor’s
option.  Nothing contained in this
paragraph, however, shall authorize Lessee to make or place any such
alterations, changes, or improvements on the leased premises without having
first obtained the written consent of Lessor as provided in Paragraph (7)
herein.

Casualty and
Insurance

11.           A. 
Partial destruction of the leased premises shall not render this lease
void or voidable, or terminate it except as herein provided.  If the leased premises are partially
destroyed during the term of this lease, Lessor shall repair same, to the
extent that he receives any insurance proceeds for such repairs; provided
however, Lessor shall do so only if such repairs can be made in conformity with
local, state and federal laws and regulations within one hundred twenty (120)
days of the partial destruction.  Rent
for the leased premises will be reduced proportionately to the extent to which
the repair operations interfere with the Lessee’s normal use and occupancy of
the premises.  If the repairs cannot be
so made within the time limited, Lessor has the option to make them within a
reasonable time and continue this lease in effect with proportional rent
rebated to Lessee as provided for herein. 
If the repairs cannot be so made in one hundred twenty (120) days and if
Lessor does not elect to make them within a reasonable time, either party
hereto has the option to terminate this lease. 
If the leased premises are totally destroyed, either party hereto has
the option to terminate this lease.

B.  Substantial Destruction.  If the leased premises should be totally
destroyed by fire or other casualty, or if the leased premises should be so
damaged so that rebuilding cannot reasonably be completed within 120 working
days after the date of written notification by Lessee to Lessor of the
destruction, this Lease shall terminate and the rent shall be abated for the
unexpired portion of the Lease, effective as of the date of the written notification.

C.  Property insurance.  Lessor shall at all times during the term of
this Lease maintain a policy or policies of insurance with the premiums paid in
advance, issued by and binding upon some solvent insurance company, insuring
the building against all risk of direct physical loss in an amount equal to
ninety percent of the full replacement cost of the building structure and its
improvements as of the date of the loss; provided, that Lessor shall not be
obligated in any way or manner to insure any personal property (including, but
not limited to, any furniture, machinery, goods or supplies) of Lessee upon or
within the leased premises, any fixtures installed by or paid for by Lessee
upon 

 5
 

or within the
leased premises, or any improvements which Lessee may construct on the leased
premises.  Lessee shall have no right in
or claim to the proceeds of any policy of insurance maintained by Lessor even
if the costs of such insurance is borne by Lessee as set forth in Section 2.

D.  Waiver of Subrogation.  Anything in this Lease to the contrary
notwithstanding, Lessor and Lessee hereby waive and release each other of and
from any and all rights or recovery, claim, action or cause of action, against
each other, their agents, officers and employees, for any loss or damage that
may occur to the leased premises, improvements to the building of which the
leased premises are a part or personal property within the building, by reason
of fire or the elements regardless of cause or origin, including negligence of
Lessor or Lessee and their agents, officers and employees.  Because this section will preclude the
assignment of any claim mentioned in it by way of subrogation or otherwise to
an insurance company or any other person, each party to this Lease agrees
immediately to give to each insurance company which has issued to it policies
of insurance covering all risk of direct physical loss, written notice of the
terms of the mutual waivers contained in this section and to have the insurance
policies properly endorsed, if necessary, to prevent the invalidation of the
insurance coverages by reason of the mutual waivers contained in this section.

Assignment and
Subletting

12.           Lessee shall not assign this lease
nor sublet the leased premises or any interest therein without first obtaining
the written consent of Lessor.  A consent
by Lessor to one assignment or subletting shall not be deemed to be a consent
to any subsequent assignment or subletting. 
An assignment or subletting without the written consent of Lessor, or an
assignment or subletting by operation of law, shall be void, and shall, at the
option of Lessor, terminate this lease. 
Lessor may sell the leased premises and such sale shall release Lessor
of liability under this lease.

Default by Lessee

13.           A. 
If Lessee shall allow the rent to be in arrears more than thirty (30)
days after written notice of such delinquency, or shall remain in default under
any other condition of this lease for a period of thirty (30) days after
written notice from Lessor, or should any other person than Lessee secure
possession of the premises, or any part thereof, by reason of any receivership,
bankruptcy proceedings, or other operation of law in any manner whatsoever,
Lessor may at his option, without notice to Lessee, terminate this lease.  In the alternative, Lessor may reenter and
take possession of said premises, changing locks if necessary, and remove all
persons and property therefrom and lock them out, without being deemed guilty
of any manner of trespass, and relet the premises or any part thereof, for all
or any part of the remainder of said term, to a party satisfactory to Lessor,
and at such monthly rental as Lessor may with reasonable diligence be able to
secure.  Should Lessor be unable to relet
after reasonable efforts to do so, or should such monthly rental be less than
the rental Lessee was obligated to pay under this lease, or any 

 6
 

renewal thereof,
plus the expense of reletting, then Lessee shall pay the amount of such
deficiency to Lessor.

B.  Landlord’s Lien.  As security for payment of rent, damages and
all other payments required to be made by this Lease, Lessee hereby grants to a
Lessor a lien upon all property of Lessee now or subsequently located upon the
leased premises.  If Lessee abandons or
vacates any substantial portion of the leased premises or is in default in the
payment of any rentals, damages or other payments of any rentals, damages or
other payments required to be made by this Lease or is in default of any other
provision of this Lease.  Lessor may
enter upon the leased premises, by picking or changing locks if necessary, and
take possession of all or any part of the personal property, and may sell all
or any part of the personal property at a public or private sale, in one or
more successive sales, with or without notice, to the highest bidder for cash,
and, on behalf of Lessee, sell and convey all or part of the personal property
to the highest bidder, delivering to the highest bidder all of Lessee’s title
and interest in the personal property sold. 
The proceeds of the sale of the personal property shall be applied by
Lessor toward the reasonable costs and expenses of the sale, including attorney’s
fees, and then toward the payment of all sums then due by Lessee to Lessor
under the terms of this Lease.  Any
excess remaining shall be paid to Lessee or any other person entitled thereto
by law.

C.  Uniform Commercial Code.  This Lease is intended as and constitutes a
security agreement within the meaning of the Uniform Commercial Code of the
state in which the leased premises are situated and, Lessor, in addition to the
rights prescribed in this Lease, shall have all of the rights, titles, liens,
and interest in and to Lessee’s property now or hereafter located upon the
leased premises which are granted a secured party, as that term is defined,
under the Uniform Commercial Code to secure to Lessor payment of all sums due
under the full performance of all Lessee’s covenants under this Lease.  Lessee will on request execute and deliver to
Lessor a financing statement for the purpose of perfecting Lessor’s security
interest under this Lease or Lessor may file this Lease or a copy thereof as a
financing statement.  Unless otherwise
provided by law and for the purpose of exercising any right pursuant to this
section, Lessor and Lessee agree that reasonable notice shall be met if such
notice is given by ten days written notice, certified mail, return receipt
requested to Lessor or Lessee at the addresses specified herein.

Right of
Inspection

14.           Lessor and his agents have the right
at all reasonable times during the term of this lease to enter the leased
premises for the purpose of inspecting them and all buildings and improvements
thereon, provided a thirty (30) day written notice is given.

 7
 

Holdover by Lessee

15.           Should Lessee remain in possession of
the leased premises with the consent of Lessor after the expiration of this
lease, a new tenancy from month to month subject to all the other terms and
conditions of this lease but which shall be terminable by thirty (30) days
written notice served by either Lessor or Lessee on the other party to this
lease.

Notices

16.           Any notice required or permitted by
this lease to be given to either party to this lease by the other party hereto
shall be in writing and shall be deposited in the United States mail, postage
prepaid, by certified mail, return receipts requested, addressed to Lessee at
the address of the leased premises and to Lessor at P.O. Box 4166, Bryan, Texas
77805.  Any such notice shall be deemed
to have been received as of the earlier of (i) three (3) days after mailing of
such notice in accordance herewith, or (ii) the date of the signed receipt for
such notice to such party.  From time to
time either party hereto may change his address for the purpose of this paragraph
by giving written notice of such change to the other party not less than ten
(10) days advance written notice of such change of address.

Location for Rent
Payment

17.           All rent payable under this lease
shall be paid to Lessor at P.O. Box 4166, Bryan, Texas 77805, unless changed by
written notice pursuant to the provisions in the paragraph above.

Attorney’s Fees

18.           Should any litigation be commenced
between the parties hereto concerning the leased premises, this lease, or the
rights and duties of either party in relation thereto, the party prevailing in
such litigation shall be entitled, in addition to such other relief as may be
granted, to a reasonable sum as and for this attorney’s fees in such
litigation.

Waiver of Breach

19.           The waiver by Lessor of any breach of
any provision of this lease shall not constitute a continuing waiver or a
waiver of any subsequent breach of the same or different provision of this
lease.

 8
 

Time of Essence

20.           Time is expressly declared to be of
the essence of this lease.

Binding of Heirs
and Assigns

21.           Subject to the provisions of this
lease against assignment of the Lessee’s interest hereunder, all provisions of
this lease shall extend to and bind, or inure to the benefit not only of the
parties hereto but to each and every one of the heirs, executors,
administrators, legal representatives, successors, and assigns of Lessor or
Lessee.

Rights and
Remedies Cumulative

22.           The rights and remedies provided by
this Agreement are cumulative, and the use of any one right or remedy by either
party shall not preclude or waive its right to use any or all other
remedies.  Said rights and remedies are
given in addition to any other rights the parties may have by law, statute, or
ordinance, or otherwise.

Texas Law to Apply

23.           This Agreement shall be construed
under and in accordance with the laws of the State of Texas, and all
obligations of the parties created hereunder are performable in Brazos County,
Texas.

Legal Construction

24.           In case any one or more of the
provisions contained in the Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision thereof and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.

Prior Agreements
Superseded

25.           This Agreement constitutes the sole
and only agreement of the parties hereto and supersedes any prior
understandings or written or oral agreements between the parties respecting the
Lease Agreement.

Amendment

26.           No amendment, modification, or
alteration of the terms hereof shall be binding unless the same be in writing,
dated subsequent to the date hereof and duly executed by the parties hereto.

 9

Warranty
Limitation

27.  Limitation of Warranties.  Lessor and Lessee expressly agree that there
are and shall be no implied warranties of merchantability, habitability,
fitness for a particular purpose or of any other kind arising out of this
Lease.

THIS
AGREEMENT IS EXECUTED in multiple copies, each of which shall be deemed to be
an original for all purposes.

LESSOR:

	
   

  	
   

  	
   

  
	
  Date: January 24, 2007

  	
  /s/

  	
  Larry Ruffino

  
	
   

  	
   

  	
  Larry Ruffino

  
	
   

  	
  Address:

  	
  2130 E. Wm. J. Bryan Pkwy.

  
	
   

  	
   

  	
  Bryan, Texas 77802

  
	
   

  	
  Phone:

  	
  979-776-5685

  
	
   

  	
  Fax:

  	
  979-774-7713

  
	
   

  	
   

  	
   

  
	
  Date: January 24, 2007

  	
  /s/

  	
  Roland Ruffino

  
	
   

  	
   

  	
  Roland Ruffino

  
	
   

  	
  Address:

  	
  2130 E. Wm. J. Bryan Pkwy.

  
	
   

  	
   

  	
  Bryan, Texas 77802

  
	
   

  	
  Phone:

  	
  979-776-5685

  
	
   

  	
  Fax:

  	
  979-774-7713

  
				

LESSEE:

	
  Date:March, 1, 2007

  	
   

  	
  LIQUIDMETAL TECHNOLOGIES

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Larry E. Buffington

  
	
   

  	
  Address:

  	
  25800 Commercentre Drive, #100

  
	
   

  	
   

  	
  Lake Forest, CA 92630

  
	
   

  	
  Phone:

  	
  949-206-8000

  
	
   

  	
  Fax:

  	
  949-206-8088

  

 

 10
 

ADDENDUMS

1)              Lease shall commence
on or before August 1st.

2)              Lessee shall pay
utilities and 1⁄2 (half) of lawn maintenance.

3)              Rent will increase
only if Taxes and or Insurance increase.

4)              Improvements include
— make ready of offices, warehouse, front entry door, slab at back overhead
door.

a.               Plugs in offices
were needed

b.              Door from dock to
offices

c.               Door openings
between offices

d.              Paint and clean
offices like new

e.               Remove carpet and
seal floor per Jean

5)              Gate on left side of
property and back drive way go with this lease (B).

6)              Tenant shall have
the right to assign or sublease the premises per the landlord’s standard lease
document.

 11

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