Document:

Exhibit 10.19

 

 

  

AIR COMMERCIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT
LEASE - GROSS

(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 January 17, 2014                                                             ,is
made by and between Superior Drilling of California, LLC                                                                                                                                                                                              ("Lessor") and Roger Holder or Assignee ("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 1140 Black Gold Road                                                                                                     
            ,located in the County of Kern                                                                                                        ,
State of California                                                                                 ,and generally described as (describe briefly the nature of the property and, if applicable,
the "Project", if the property is located within a Project) approximately 21, 900sf of building office warehouse
space, on 4.37 acres. ("Premises"). (See also Paragraph 2)

 

1.3         Term:
1                          
years and 8                           
months ("Original Term") commencing February 1, 2014  ("Commencement Date") and ending
September 30, 2015                                                                                                   
 ("Expiration Date"). (See also Paragraph 3)

 

1.4         Early Possession: If
the Premises are available Lessee may have non-exclusive possession of the Premises commencing ("Early Possession Date").
(See also Paragraphs 3.2 and 3.3)

 

1.5         Base
Rent: $7,500.00            per month ("Base
Rent"), payable on the first                                                                                        day
of each month commencing March
1,
2014                                                                                                                                                                                                              .
(See also Paragraph 4)

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

 

1.6         Base
Rent and Other Monies Paid Upon Execution: 

 

(a)         Base
Rent: $7,500.00______________         for the period February 1, 2014 - February 28, 2014       

_____________________________________________________________________________________________________________________________________________________________________________________________________________________

(b)         Security
Deposit: $7,500.00_______________          ("Security Deposit"). (See also Paragraph 5)

(c)         Association
Fees: $____________________          for the period __________________________________

(d)         Other: $____________________  
for_____________________________________________________

		(e)	Total Due Upon Execution of this
Lease: $15,000.00                                                                          

 

1.7         Agreed Use:__________________________________

____________________________________________________________________________    (See
also Paragraph 6)

 

1.8         Insuring Party: Lessor
is the "Insuring Party". The annual "Base Premium" is $__________________ (See also Paragraph 8)

1.9         Real Estate Brokers:
(See also Paragraph 15 and 25)

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

 

þ
Coldwell Banker Preferred - Verlen Love__________________________ represents Lessor exclusively ("Lessor's
Broker");

þ
Cushman & Wake field/Pacific - Oscar Baltazar ___________________ represents Lessee exclusively ("Lessee's
Broker"); or

 ̈ _____________________________________________________
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 Brokers for the brokerage
services rendered by the Brokers the fee agreed to in the attached separate written agreement or if no such agreement is
attached, the sum of or 6 % of the total Base Rent payable for the Original Term, the sum of __________________ or                    6                   
% of the total Base Rent payable during any period of time that the Lessee occupies the Premises subsequent to the Original
Term, and/or the sum of or 6 % of the purchase price in the event that the Lessee or anyone affiliated with Lessee acquires
from Lessor any rights to the Premises.

1.10         Guarantor.
The obligations of the Lessee under this Lease are to be guaranteed by_______________________ ("Guarantor").
(See also Paragraph 37)

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

 

þ  an Addendum
consisting of Paragraphs                       51                      
through                      56                      
;

þ  a
plot plan depicting the-PremisesExhibit
A

 ̈  a
current set of the Rules and Regulations;

 ̈  a Work
Letter;

þ  other
(specify): Disclosure & Acknowledgement

 

 

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2.          Premises.

 

2.1           Letting.
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all
of the terms, covenants and conditions set forth in this Lease. While the approximate square footage of the Premises may have been
used in the marketing of the Premises for purposes of comparison, the Base Rent stated herein is NOT tied to square footage and
is not subject to adjustment should the actual size be determined to be different. 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 and that the surface and 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 Unit does not contain hazardous
levels of any mold or fungi defined as toxic under applicable state or federal law. If a non-compliance with 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, except for the roof, foundations, and bearing walls which are handled as provided in
paragraph 7.

 

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 shall pay for such Capital Expenditure and Lessee shall only be obligated to pay, each month
during the remainder of the term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount
equal to 1/144th of the portion of such costs reasonably attributable to the Premises. Lessee shall pay Interest on the balance
but may prepay its obligation at any time. If, however, 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 given an opportunity to inspect and measure the Premises, (b) it has been advised
by Lessor and/or Brokers to satisfy itself with respect to the size and 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, (c) 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, (d) it is not relying on any representation as to the size of the Premises made by Brokers or Lessor, (e) the square
footage of the Premises was not material to Lessee's decision to lease the Premises and pay the Rent stated herein, and (f) 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. Any provision herein granting Lessee Early Possession of the Premises is subject to and conditioned upon the Premises
being available for such possession prior to the Commencement Date. Any grant of Early Possession only conveys a non-exclusive
right to occupy the Premises. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation
to pay Base Rent shall be abated for the period of such Early Possession. All other terms of this Lease (including but not limited
to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such
period. Any such Early Possession shall not affect the Expiration Date.

 

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

 

3.4           Lessee
Compliance. Lessor shall not be required to deliver possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of
its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor's election
to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions
prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession until such
conditions are satisfied.

 

4.          Rent.

 

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

 

 

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

 

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

 

5.          Security
Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's faithful performance
of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply
or retain all or any portion of said Security Deposit for the payment of any amount already due Lessor, for Rents which will be
due in the future, and/ or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer
or incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after
written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by
this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional
monies with Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion to the increased
Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material
change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor's reasonable judgment, to account for any increased wear and tear that the Premises
may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial
condition of Lessee is, in Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with
Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in financial
condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 90 days after the
expiration or termination of this Lease, Lessor shall return that portion of the Security Deposit not used or applied by Lessor.
No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to
be paid by Lessee under this Lease.

 

6.          Use.

 

6.1           Use.
Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto,
and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage,
waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties. Other than guide, signal
and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall
not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same
will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical systems therein,
and/or is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 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.

 

(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. Except as otherwise provided in paragraph 8.7, 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 Lessees
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.

 

 

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

 

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

 

6.4           Inspection;
Compliance. Lessor and Lessor's "Lender" (as defined in Paragraph 30) and consultants shall have the right
to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable 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.

 

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), ceilings, 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 is also responsible
for keeping the roof and roof drainage clean and free of debris. Lessor shall keep the surface and structural elements of the roof,
foundations, and bearing walls in good repair (see paragraph 7.2). Lessee, in keeping the Premises in good order, condition and
repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service
contracts required by Paragraph 7.1(b) below. Lessee's obligations shall include restorations, replacements or renewals when necessary
to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. 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, and (v) clarifiers. However, Lessor
reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, and Lessee shall reimburse
Lessor, upon demand, for the cost thereof.

 

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

 

(d)          Replacement.
Subject to Lessee's indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot
be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced
by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during
the remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the
cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (ie. 1/144th of the
cost per month). 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, except for the surface and structural
elements of the roof, foundations and bearing walls, the repair of which shall be the responsibility of Lessor upon receipt of
written notice that such a repair is necessary. 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 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 Alterations or 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
attorneys' fees and costs.

 

 

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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. 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 tankinstalled 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) even if such
removal would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property
of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier
termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire.
The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.

 

8.          Insurance;
Indemnity.

 

8.1           Payment
of Premium Increases.

 

(a)          Lessee
shall pay to Lessor any insurance cost increase ("Insurance Cost Increase") occurring during the term of this
Lease. Insurance Cost Increase is defined as any increase in the actual cost of the insurance required under Paragraph 8.2(b),
8.3(a) and 8.3(b), over and above the Base Premium as hereinafter defined calculated on an annual basis. Insurance Cost Increase
shall include but not be limited to increases resulting from the nature of Lessee's occupancy, any act or omission of Lessee, requirements
of the holder of mortgage or deed of trust covering the Premises, increased valuation of the Premises and/or a premium rate increase.
The parties are encouraged to fill in the Base Premium in paragraph 1.8 with a reasonable premium for the Required Insurance based
on the Agreed Use of the Premises. If the parties fail to insert a dollar amount in Paragraph 1.8, then the Base Premium shall
be the lowest annual premium reasonably obtainable for the Required Insurance as of the commencement of the Original Term for the
Agreed Use of the Premises. In no event, however, shall Lessee be responsible for any portion of the increase in the premium cost
attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence.

 

(b)          Lessee
shall pay any such Insurance Cost Increase to Lessor within 30 days after receipt by Lessee of a copy of the premium statement
or other reasonable evidence of the amount due. If the insurance policies maintained hereunder cover other property besides the
Premises, Lessor shall also deliver to Lessee a statement of the amount of such Insurance Cost Increase attributable only to the
Premises showing in reasonable detail the manner in which such amount was computed. Premiums for policy periods commencing prior
to, or extending beyond the term of this Lease, shall be prorated to correspond to the term of this Lease.

 

8.2           Liability
Insurance.

 

(a)          Carried
by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor
as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less
than $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. The policy shall not contain
any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under
this Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee
shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory
with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.

 

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

 

8.3           Property
Insurance - Building, Improvements and Rental Value.

 

(a)          Building
and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable
to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be
equal to the full insurable replacement cost of the Premises, as the same shall exist from time to time, or the amount required
by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations
and Utility Installations, Trade Fixtures, and Lessee's personal property shall be insured by Lessee not 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 or included in the Base Premium), 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 $5,000 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; Worker's Compensation Insurance.

 

(a)          Property
Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property, Trade Fixtures, and Lessee
Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to
exceed $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.

 

(b)         Business
Interruption.    Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will of
access to the Premises as a 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)          Worker's
Compensation Insurance. Lessee shall obtain and maintain Worker’s Compensation Insurance in such amount as may be
required by Applicable Requirements. Such policy shall include a Waiver of Subrogation endorsement. Lessee shall provide
Lessor with a copy of such endorsement along with the certificate of insurance or copy of the policy required by paragraph
8.5.

 

(d)         No
Representation of Adequate Coverage.   Lessor makes no representation that the limits of 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 maintaining during the policy term a “General
Policyholders Rating” of at least A-, VII, 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 with copies of the required endorsements 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.

 

 

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

 

8.7           Indemnity.
Except for Lessor’s gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises,
Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents
and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising out of, involving,
or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor
by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory
to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be
defended or indemnified.

 

8.8           Exemption
of Lessor and its Agents from Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither
Lessor nor its agents shall be liable under any circumstances for: (i) injury or damage to the person or goods, wares, merchandise
or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the
presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing,
HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, (ii) any damages
arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions
of any other lease in the Project, or (iii) injury to Lessee’s business or for any loss of income or profit therefrom. Instead,
it is intended that Lessee’s sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies)
that Lessee is required to maintain pursuant to the provisions of paragraph 8.

 

8.9           Failure
to Provide Insurance. Lessee 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.          Damageor
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.

 

(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, in, on, or under the Premises which requires 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
60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee,
Lessor shall have the right to recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

 

9.5           Damage
Near End of Term. If at any time during the last 6 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, 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.

  

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

 

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

 

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

 

(a)          Payment
of Taxes. Lessor shall pay the Real Property Taxes applicable to the Premises provided, however, that Lessee shall pay to Lessor
the amount, if any, by which Real Property Taxes applicable to the Premises increase over the fiscal tax year during which the
Commencement Date Occurs (Tax Increase). Payment of any such Tax Increase shall be made by Lessee to Lessor within 30 days after
receipt of Lessors written statement setting forth the amount due and computation thereof. If any such taxes shall cover any period
of time prior to or after the expiration or termination of this Lease, Lessees share of such taxes shall be prorated to cover only
that portion of the tax bill applicable to the period that this Lease is in effect. In the event Lessee incurs a late charge on
any Rent payment, Lessor may estimate the current Real Property Taxes, and require that the Tax Increase be paid in advance to
Lessor by Lessee monthly in advance with the payment of the Base Rent. Such monthly payment shall be an amount equal to the amount
of the estimated installment of the Tax Increase divided by the number of months remaining before the month in which said installment
becomes delinquent. When the actual amount of the applicable Tax Increase is known, the amount of such equal monthly advance payments
shall be adjusted as required to provide the funds needed to pay the applicable Tax Increase. If the amount collected by Lessor
is insufficient to pay the Tax Increase when due, Lessee shall pay Lessor, upon demand, such additional sums as are necessary to
pay such obligations. 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.

 

(b)          Additional
Improvements. Notwithstanding anything to the contrary in this Paragraph 10.2, Lessee shall pay to Lessor upon demand therefor
the entirety of any increase in Real Property Taxes assessed by reason of Alterations or Utility Installations placed upon the
Premises by Lessee or at Lessee's request or by reason of any alterations or improvements to the Premises made by Lessor subsequent
to the execution of this Lease by the Parties.

 

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

 

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

 

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

 

12.         Assignment
and Subletting.

 

12.1         Lessor’s
Consent Required.

 

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

 

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

 

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

 

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

 

(e)          Lessee's
remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.

 

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

 

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.

  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13.         Default;
Breach; Remedies.

 

13.1         Default;
Breach. A "Default" is defined as a failure by the Lessee to comply with or perform any of the terms, covenants,
conditions or Rules and Regulations under this Lease. A "Breach" is defined as the occurrence of one or more of
the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:

 

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

 

(b)          The
failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor
or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this
Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written
notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY
OF LESSOR’S RIGHTS, INCLUDING LESSOR’S RIGHT TO RECOVER POSSESSION OF THE PREMISES.

 

(c)          The
failure of Lessee to allow Lessor and/or its agents access to the Premises or 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 or financial statements, (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 (e) 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 any damages to which Lessor is otherwise entitled. If termination
of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding
any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit,
or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently,
and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.

 

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

 

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

 

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

 

 

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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 6 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 3 consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly in advance.

 

13.5         Interest.
Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from
the 31st day after it was due. 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 paid by the condemnor 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. 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 or anyone affiliated with 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 fee schedule of the Brokers in effect at the time the Lease was executed.

 

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

 

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

 

16.         Estoppel
Certificates.

 

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

 

(b)          If
the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party
may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may
be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if
Lessor is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and encumbrancers
may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of
the facts contained in said Certificate. In addition, Lessee acknowledges that any failure on its part to provide such an Estoppel
Certificate 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, should the Lessee fail to execute and/or deliver a requested Estoppel
Certificate in a timely fashion the monthly 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 for remainder of the Lease. 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 provide the Estoppel Certificate. Such increase in Base Rent shall in no event constitute
a waiver of Lessee's Default or Breach with respect to the failure to provide the Estoppel Certificate nor prevent the exercise
of any of the other rights and remedies granted hereunder.

 

(c)          If
Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall within 10 days
after written notice from Lessor 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. 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.

 

 

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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.

 

23.         Notices.

 

23.1         Notice
Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in
person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with
postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Paragraph
23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.

 

23.2         Date
of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of
delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall
be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United
States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the
same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt (confirmation report from fax machine is sufficient), provided a copy is also delivered
via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business
day.

 

24.         Waivers.

 

(a)          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.

 

(b)          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.

 

(c)          THE
PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS
OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.

 

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.
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.

 

 

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

 

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

 

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

 

31.         Attorneys’
Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity,
or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether
or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include,
without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise,
settlement, 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.

 

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 of a Party is required to an act by or for the other
Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including but
not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to,
a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence
or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor's
consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this
Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically
stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor's consent
shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination
made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its
reasons in writing and in reasonable detail within 10 business days following such request.

 

37.         Guarantor.

 

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

 

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

 

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

 

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

 

39.1         Definition.
“Option” shall mean: (a) the right to extend or reduce the term of or renew this Lease or to extend or reduce the
term of 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, the right of first offer 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
said properties, including the care and cleanliness of the grounds and including the parking, loading and unloading of vehicles,
and to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessee also agrees
to pay its fair share of common expenses incurred in connection with such rules and regulations.

 

41.         Security
Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or
other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility
for the protection of 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.

 

 

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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 therecovery of sums paid "under protest" within 6
months shall be deemed to have waived its right to protest such payment.

 

44.         Authority;
Multiple Parties; Execution.

 

(a)          If
either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease
on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority.

 

(b)          If
this Lease is executed by more than one person or entity as “Lessee”, each such person or entity shall be jointly and
severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this
Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the
named Lessees had executed such document.

 

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

 

45.         Conflict.
Any conflict between the printed provisions of this Lease and typewritten or handwritten provisions shall be controlled by
the 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.         Arbitration
of Disputes. An Addendum requiring the Arbitration of disputes between the Parties and/or Brokers arising out of this Lease
☐ is þ is not attached to this Lease.

 

50.         Accessibility;
Americans with Disabilities Act.

 

(a)          The
Premises: þ have notundergone an inspection by a Certified Access Specialist
(CASp).  ̈ have undergone an inspection by a Certified Access Specialist (CASp)
and it was determined that the Premises met all applicable construction-related accessibility standards pursuant to California
Civil Code §55.51 et seq. ☐  have undergone an inspection by a Certified Access Specialist (CASp) and it was determined
that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51
et seq.

 

(b)          Since
compliance with theAmericans 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.

 

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:		 	Executed at	 
	On:	 	 	On:	 
	By LESSOR:	 	By LESSEE:
	Superior Drilling of California, Inc.	 	Roger Holder or Assignee
	 	 	 
	 	 	 
	By: 	/s/ Annette mitr	 	By:	/s/ Roger Holder
	Name Printed: 	Annette mitr	 	Name Printed:	 Roger Holder
	Title: 	Member	 	Title: 	CEO
	 	 	 
	By:	 	 	By:	 
	Name Printed:	 	 	Name Printed:	 
	Title:	 	 	Title:	 
	Address:	 	 	Address:	 
		 	 
	Telephone: 	(439) 789-0594	 	Telephone:	(661) 201 7170
	Facsimile:	(439) 798-595	 	Facsimile:	(661) 631 8197
	Email:	annette@teamsdp.com	 	Email:	rholder@holdersac.com
	Email:	 	 	Email:	 
	Federal ID No.	 	 	Federal ID No.	 

 

 

	AM	PAGE 12  OF 13	RH
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	INITIALS	 	INITIALS
	 	 	 
	©2001 – AIR COMMERCIAL REAL ESTATE ASSOCIATION	FORM STG-17-2/13E

 

    	 

    	 

    

 

	BROKER:	 	BROKER:
	Coldwell Banker Preferred	 	Pacific Commercial Realty Advisors, Inc.
	 	 	dba Cushman & Wakefield/Pacific
	 	 	 
	Att:	 Verlen Love	 	Att:	Oscar Baltazar
	Title:	 	 	Title:	Associate Director
	Address:	1820 Westwind Drive	 	Address:	5060 California Ave., Suite #1000
	Bakersfield, CA 93301	 	Bakersfield, CA 93309
	Telephone:(_____)	 	 	Telephone:	(661)633-3821
	Facsimile:(_____)	 	 	Facsimile:	(661)633-3801
	Email:	 	 	Email:	Oscar.Baltazar@paccra.com
	Federal ID No.	 	 	Federal ID No.	 
	Broker/Agent DRE License #:	 	 	Broker/Agent DRE License #:	01919464/01263421

 

NOTICE: These forms are often modified
to meet 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, 500 N Brand Blvd, Suite 900, Glendale, CA 91203.

Telephone No. (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.

 

 

	AM	PAGE 13  OF 13	RH
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	INITIALS	 	INITIALS
	 	 	 
	©2001 – AIR COMMERCIAL REAL ESTATE ASSOCIATION	FORM STG-17-2/13E

 

    	 

    	 

    

 

 

ADDENDUM

 

Date: January 17, 2014__________________

  

By and Between (Lessor) Superior
Drilling of California, LLC________________________________________________

(Lessee) Roger Holder
or Assignee_________________________________________________________

 

Address of Premises: 1140
Black Gold Road_______________________________________________________________

Bakersfield, CA_____________________________________________________________________

 

Paragraph 51 - 56____

 

In the event of any conflict between the provisions
of this Addendum and the printed provisions of the Lease, this Addendum shall control.

 

51.         Lease
Commencement, Rent Commencement:

 

Lease to commence February 1, 2014, Rent to commence
March 1, 2014. Lessee to pay rent per Section 1.6 and per the following schedule:

 

Months 1 - 20: March 1, 2014 - September 30, 2015;
$7,500.00/month, Industrial Gross First Month’s rent and Security Deposit due upon lease execution.

 

52.           Renewal
Option:

 

A. Lessee shall
have the right to renew the Lease for one (1) three (3) year term upon the same terms and conditions as this Lease Agreement except
for Rent, which shall be at a rate increase of 3% from year 3 to year 4.

 

B. Lessee
must notify Lessor in writing of its intention to exercise this option right no less than 90-days prior to lease expiration. Failure
to do so shall result in forfeiture of this option right.

 

C. In order
to avail itself of this option right, Lessee must not be in default on any portion of this Lease Agreement. Any lease payment delinquent
more than ten (10) days shall, amongst other things, constitute a default and forfeiture of this option right.

 

53.          Tenant
Improvements:

 

Lessor, at its sole expense, shall complete the following
Tenant Improvements.

 

1.    Lessor
shall install a 600 RH AM amp 220/480v3 Phase electrical panel to the 1140 Black Gold Road building. Cost to be acceptable to
both Lessor and Lessee. At the conclusion of purchase, said expense shall be added to final purchase price to be paid by purchaser.
(see paragraph 56.a)

 

2.    Lessee
at Lessee’s sole expense, shall be allowed to modify and make any office improvements necessary to accomodate Lessee’s
needs, with Lessor approval.

 

54.          
Signage:

 

Lessee, at Lessee’s sole expense, shall be allowed
to install signage on the property where deemed necessary, subject to Lessor and County approval.

 

55.          Conditions:

 

Lessor’s approval of Lessee’s financial condition.
Lessee shall provide any and all documentation requested by Lessor.

 

 

	AM	PAGE 1  OF 2	RH
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	INITIALS	 	INITIALS

 

    	 

    	 

    

 

56.         Purchase
Option:

 

		A.	Lessor grants to Lessee an Option to Purchase 1140 Black
Gold Road at the conclusion of initial Lease Term at Purchase Price of $1,650,000.00 plus cost of Lessor’s electrical work
per paragraph 53.1, subject to the terms set forth below in Section B. To exercise this Option to Purchase, Lessee must not be
in default under the Lease Agreement and must notify the Lessor in writing of its intent to purchase no later than six (6) months
prior to the expiration of initial lease term.

 

The Security Deposit ($7,500.00) shall be applicable
to the Purchase Price. An additional $42,500 shall be delivered to escrow, at the opening of escrow for a total earnest money
deposit of $50,000. Said deposit shall be deposited into escrow and to be refundable to Purchaser should escrow fail to close
due to any contingency listed below or because of Seller-default.

 

Rent paid over the term of lease, $150,000.00, shall
be credited towards the fixed sale price.

 

		B.	Inspection Period: Purchaser shall have forty-five (45)
days from the date a Purchase and Sale Agreement is signed by both parties ("Inspection Period") within which to investigate
the following:

 

(1)  The purchase shall be subject to Purchaser’s
approval of a Preliminary Title Report, together with all documentation of any exceptions to the coverage of a CLTA Policy of
Title Insurance, which will supplied by Seller.

 

(2)  The purchase shall be conditioned upon
Purchaser’s approval of a Phase I and Phase II Environmental report, which shall be produced at Seller’s sole expense.

 

(3)  Seller’sdelivery to Purchaser
within five (5) business days after full execution of a Purchase Contract of all reports, studies, maps, plans or similar such
documentation is Seller’s possession regarding the property.

 

Loan Contingency:

 

Purchaser shall have ninety (90) days after a Purchase
and Sales Agreement is signed by both parties, within which to obtain loan funding from a lender of its choice upon market terms

 

Escrow & Closing:

 

Close of escrow to occur no later than five
(5) days following completion of Purchaser’s Loan Contingency Period.

 

Brokers Sale Commission:

 

Should Purchaser fully execute its Option to Purchase,
Landlord shall pay Cushman & Wakefield and Coldwell Banker Preffered a sales commission equal to 6% of the gross Purchase
Price, through escrow, and at the close of escrow, and Cushman & Wakefield and Coldwell Banker Preferred shall credit Seller
any un-used portion of the leasing commission.

 

 

	AM	PAGE 2  OF 2	RH
	___	 	___
	INITIALS	 	INITIALS

 

    	 

    	 

    

 

Exhibit A

 

 

    	 

    	 

    

 

		Disclosures and Acknowledgment
	Addendum to Lease Listing Agreement / Lease Agreement / Proposal to Lease 
	PACCOM REALTY ADVISORS, INC
	BROKERAGE AND MANAGEMENT 
	LICENSED REAL ESTATE BROKER 

   

	Date:      January
    17, 2014     

 

Lessor      Superior Drilling of California,
LLC______________________________________________________________

Lessee      Roger Holder_______________________________________________________________________________

Property    1140 Black Gold Road,
Bakersfield, CA__________________________________________________________

 

Street Address, City, State

 

Also known as:______________________________________________________________________________________

 

I.           Notification
re: National Flood Insurance Program (CB Form 5230)

 

According to Panel # 06029C1825E
[specify source], this property is / Ö is not
located in a Special Flood Hazard Area on United States Department of Housing and Urban Development (HUD) "Special Flood
Zone Area Maps." Federal law requires that as a condition of obtaining federally related financing on most properties located
in "flood zones," banks, savings and loan associations, and some insurance lenders require flood insurance to be carried
where the property, real or personal, is security for a loan. This requirement is mandated by the National Flood Insurance Act
of 1968 and the Flood Disaster Protection Act of 1973. The purpose of the program is to provide flood insurance to property owners
at a reasonable cost. Cities or counties participating in the National Flood Insurance Program may have adopted building or zoning
restrictions, or other measures, as part of their participation in the program. You should contact the city or county in which
the property is located to determine any such restrictions. The extent of coverage available in your area and the cost of this
coverage may vary, and for further information, you should consult your lender or insurance carrier. Lessee shall be solely responsible
for confirming the above stated Special Flood Hazard Area designation, and for investigation of the impact of such designation
on Lessee s intended use of the Property. Flood Zone Designation: Zone     X      

 

II.          Alquist-Priolo
Notification; Alquist-Priolo Special Earthquake Fault Zoning Act (CBC Form 5228-5229)

 

According to Alquist-Priolo: ______Oildale______
[specify source], the Property described above is/ is not/ Ö
may or may not be situated in an Earthquake Fault Zone as designated under the Alquist-Priolo Earthquake Fault Zoning Act,
Sections 2621-2630, inclusive, of the California Public Resources Code; and, as such, the construction or development on the Property
of any structure for human occupancy may be subject to the findings of a geologic report prepared by a geologist registered in
the State of California, unless such report is waived by the city or county under the terms of that Act. No representations on
the subject are made by Lessor or by CB Richard Ellis or its agents or employees, and the Lessee should make his/her/its own inquiry
or investigation. Lessee shall be solely responsible for confirming the above stated Special Flood Hazard Area designation, and
for investigation of the impact of such designation on Lessee s intended use of the Property.

 

	For further information you may wish to contact appropriate city or county agencies: 	Kern County Engineering & Survey
    Services Dept._______
	 	(661) 862-5100____________________________

 

III.         Hazardous
Wastes or Substances and Underground Storage Tanks

Comprehensive federal and state
laws and regulations have been enacted in the past several years in an effort to control the use, storage, handling, clean-up,
removal and disposal of hazardous wastes or substances. Some of these laws and regulations (such as, for example, the Comprehensive
Environmental Response Compensation and Liability Act [CERCLA]) provide for broad liability on the part of owners, tenants, or
other users of property for clean-up costs and damages, regardless of fault. Another such statute is California Health and Safety
Code Section 25359.7(a), which provides in part that a seller/lessor of nonresidential real property who knows, or has reasonable
cause to believe, that any release of a hazardous substance has come to be located on or beneath that real property shall, prior
to the sale or lease, give written notice of that condition to the purchaser/lessee; and that failure of the seller/lessor to provide
written notice as required shall subject the seller/lessor to liability for damages. Other laws and regulations set standards for
the handling of asbestos, and establish requirements for the use, modification, abandonment, and closure of underground storage
tanks.

 

It is not practical or possible
to list all such laws and regulations in this Notice. Therefore, Lessors and Lessees are urged to consult legal counsel to determine
their respective rights and liabilities with respect to the issues described in this Notice, as well as all other aspects of the
proposed transaction. If hazardous wastes or substances have been, or are going to be used, stored, handled or disposed on the
Property, or if the Property has been or may have underground storage tanks, it is essential that legal and technical advice be
obtained to determine, among other things, the nature of permits and approvals which have been obtained or may be required; the
estimated costs and expenses associated with the use, storage, handling, clean-up, disposal or removal of hazardous wastes or substances;
and the nature and extent of contractual provisions necessary or desirable in this transaction. Broker recommends expert assistance
and site investigation to determine past uses of the property, which may provide valuable information as to the likelihood of hazardous
wastes or substances, or underground storage tanks, being on the Property.

 

Lessor agrees to disclose to Broker
and to Lessee any and all information which he/she/it has regarding present and future zoning and environmental matters affecting
the Property and regarding the condition of the Property, including, but not limited to structural, mechanical and soils conditions,
the presence and location of asbestos, PCB transformers, other toxic, hazardous or contaminated substances, and underground storage
tanks, in, on, or about the Property. Broker hereby requests that such information be provided immediately so that it may be timely
communicated to the Lessee.

 

Broker has conducted no investigation
regarding the subject matter hereof, except as may be contained in a separate written document signed by Broker. Broker makes no
representations concerning the existence or nonexistence of hazardous wastes or substances, or underground storage tanks, in, on,
or about the Property. Lessee should contact a professional, such as a civil engineer, industrial hygienist or other persons with
experience in these matters, to advise on these matters.

 

The term "hazardous wastes
or substances" is used herein in its very broadest sense and includes, but is not limited to, petroleum based products, paints
and solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonium compounds, asbestos, PCBs and other chemical products.
Hazardous wastes or substances and underground storage tanks may be present on all types of real property. This Notice is intended
to apply to any transaction involving any type of real property, whether improved or unimproved.

 

IV.          Broker
Disclosure

The parties hereby expressly acknowledge
that Broker has made no independent determination or investigation regarding the following: present or future use or zoning of
the property; environmental matters affecting the Property; the condition of the Property, including, but not limited to structural,
mechanical and soils conditions, as well as issues surrounding hazardous wastes or substances as set out above; violations of the
Occupational Safety and Health Act or any other federal, state, county or municipal laws, ordinances, or statutes; measurements
of land and/or buildings. Lessee agrees to make its own investigation and determination regarding such items. A real estate
broker is qualified to advise on real estate. If you desire legal advice, consult your attorney.

 

Disclosures for Lease 8.96

 

    	-1-

    	 

    

 

V.Americans
with Disabilities Act (ADA)

 

Owners or tenants of real property may
be subject to the Americans with Disabilities Act (ADA), a federal law codified at 42 USC Section 12101 et seq. Among other requirements
of the ADA that could apply to your property, Title III of the Act requires owners and tenants of public accommodations" to
remove barriers to access by disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons.
The regulations under Title III of the ADA are codified at 28 CFR Part 36.

 

Broker recommends that you and your attorney
review the ADA and the regulations, and, if appropriate, your proposed lease agreement, to determine if this law would apply to
you and the nature of the requirements. These are legal issues. You are responsible for conducting your own independent investigation
of these issues.

 

VI.     Residential
Lead Paint Hazard Reduction Act - Intentionally deleted - Not Residential Property

 

VII.    Compliance
with Laws

The parties hereto agree to comply with
all applicable federal, state and local laws, regulations, codes, ordinances and administrative orders having jurisdiction over
the parties, property or the subject matter of this Agreement, including, but not limited to, the 1964 Civil Rights Act and all
amendments thereto, the Foreign Investment in Real Property Tax Act, the Comprehensive Environmental Response Compensation and
Liability Act, and The Americans With Disabilities Act.

 

Receipt
of a copy of these Disclosures is hereby acknowledged.

 

	LESSOR: Superior Drilling of California, LLC	 	LESSEE: Roger Holder
	 	 	 
	By	/s/ Annette miter	 	By	/s/ Roger Holder
	Title	 Annette miter	 	Title	CEO
	Dated: 	                1-20-14                 ,2014	 	Dated: 	    1-12-14                     ,
    2014

  

 

 

This portion to be completed in conjunction
with negotiation and/or consummation of lease agreement:

 

VIII. Broker
Representation Disclosure and Acknowledgment 

 

Paccom Realty Advisors, Inc. herein represents Lesee.

 

(check if applicable) Lessor
and Lessee hereby acknowledge that Broker represents both parties hereto; and both parties consent thereto.

 

  Am  Lessor's initials   RH  
Lessee'sinitials

 

CONSULT YOUR ADVISORS. NO REPRESENTATION
OR RECOMMENDATION IS MADE BY PACCOM REALTY ADVISORS OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL EFFECT, INTERPRETATION, OR ECONOMIC
CONSEQUENCES OF THIS AGREEMENT, THE TRANSACTION CONTEMPLATED HEREUNDER, THE NATIONAL FLOOD INSURANCE PROGRAM AND RELATED LEGISLATION,
NOR OF OTHER LEGISLATION REFERRED TO HEREIN. THESE ARE QUESTIONS THAT YOU SHOULD ADDRESS WITH YOUR CONSULTANTS AND ADVISORS.

 

Disclosures for Lease 8.96

 

    	-2-Exhibit 10.20

 

BUSINESS LOAN AGREEMENT

 

	Principal 

$650,000.00	Loan Date

04-02-2012	Maturity

04-01-2022	Loan No	Call / Coll	Account	Officer

CB	Initials
	References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing “***” has been omitted due to text length limitations.

  

	Borrower:	Superior Drilling Products
     of California,  LLC	Lender:	US Employment Development
    Lending Center, LLC
	 	2221 North 3250 West	 	1 World Trade Center, Suite 1870
	 	Vernal, UT 84078	 	Long Beach, CA 90831
	 	 	 	 

 

THIS BUSINESS LOAN AGREEMENT
dated April 2, 2012, Is made and executed between Superior Drilling Products of California, LLC (“Borrower”) and US
Employment Development Lending Center, LLC (“Lender”) on the following terms and conditions. Borrower has received
prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations,
including those which may be described on any exhibit or Schedule attached to this Agreement. Borrower understands and agrees
that: (A) in granting, renewing, or extending any Loan, Lender is relying Upon Borrower’s representations, warranties, and
agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions
of this Agreement.

 

TERM. This Agreement shall
be effective as of April 2, 2012, and shall continue in full force and effect until such time as all of Borrower’s Loans
in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees
and charges, or until such time as the parties may agree in writing to terminate this Agreement.

 

CONDITIONS PRECEDENT TO EACH ADVANCE.
Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.

 

Loan Documents. Borrower
shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security
interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4)
evidence of insurance as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for
the Loan; all in form and substance satisfactory to Lender and Lender’s counsel.

 

Borrower’s Authorization.
Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing
the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such
other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

 

Payment of Fees and Expenses.
Borrower shall have paid to Lender all fees, charges, and other expanses which are then due and payable as specified in this
Agreement or any Related Document.

 

Representations and Warranties.
The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate
delivered to Lender under this Agreement are true and correct.

 

No Event of Default. There
shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under
any Related Document.

 

ADDITIONAL LOAN CONDITIONS.
The following terms and conditional are hereby made part of this Business Loan Agreement:

 

1.   All terms
and conditions as may be required by the United States Small Business Administration (“SBA”) as stated in the SBA
Loan Authorization and all amendments, attachments and modifications (“Loan Authorization”).

 

2.   Approval by
an SBA approved Pool Originator to facilitate the pooling of Loan in the SBA’s First Mortgage Lien Pool program may be required.

 

3.   Lender’s
satisfactory verification and documentation of the required equity as documented In the SBA Loan Authorization.

 

4.   Lender’s
receipt and satisfactory review of any additional or updated financial information required by Lender and/or SBA.

 

5.   Two months’
payments on first mortgage paid in advance to Lender may be required.

 

REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

 

Organization. Borrower
is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under
and by virtue of the laws of the State of California. Borrower is duly authorized to transact business in all other states in
which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in
which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign limited liability
company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition.
Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged
or presently proposes to engage. Borrower maintains an office at 2221 North 3250 West, Vernal, UT 84078. Unless Borrower has designated
otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning
the Collateral. Borrower will notify Lender prior to any change in the location of Borrower’s state of organization or any
change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence,
rights and privileges; and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental
or quasi governmental authority or court applicable to Borrower and Borrower’s business activities.

 

Assumed Business Names.
Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower.
Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business:
None.

 

Authorization. Borrower’s
execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary
action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a)
Borrower’s articles of organization or membership agreements, or (b) any agreement or other instrument binding upon Borrower
or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties.

 

Financial Information.
Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition
as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent
to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except
as disclosed in such financial statements.

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	 	(Continued)	Page 2
	 	 	 

 

Legal Effect. This Agreement
constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute
legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

 

Properties. Except as
contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and
as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title
to all of Borrower’s properties free and clear of all Security Interests, and has not executed any security documents or
financing statements relating to such properties. All of Borrower’s properties are titled in Borrower’s legal name,
and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.

 

Hazardous Substances.
Except for Collateral described in the Hazardous Substances Certificate and Indemnity Agreement executed in connection with the
Loan, and except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the
period of Borrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower
has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any Use,
generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about
or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or
claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized
user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on,
under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal,
state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender
and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance
of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense
and for Lender’s purposes only and shall not be construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence
in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future
claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any
such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the.
Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous
waste or substance on the Collateral, The provisions of this section of the Agreement, including the obligation to indemnify and
defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall
not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.

 

Litigation and Claims.
No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition
or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender
in writing.

 

Taxes. To the best of
Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed,
and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested
by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.

 

Lien Priority. Unless
otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted
the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment
of Borrower’s Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests
and rights in and to such Collateral.

 

Binding Effect. This
Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well
as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.

 

AFFIRMATIVE COVENANTS. Borrower covenants and agrees
with Lender that, so long as this Agreement remains in effect, Borrower will;

 

Notices of Claims and Litigation.
Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) all
existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower
or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

 

Financial Records. Maintain
its books and records in accordance with GAAP, applied on aconsistent basis,and permit Lender to examine and audit Borrower’s
books and records at all reasonable times.

 

Financial Statements.
Furnish Lender with the following;

 

Annual Statements. As
soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Borrower’s
balance sheet and income statement for the year ended, compiled by a certified public accountant satisfactory to Lender.

 

Tax Returns. As soon as
available, but in no event later than 45 days after the applicable filing date for the tax reporting period ended, Borrower’s
Federal and other governmental tax returns, prepared by a certified public accountant satisfactory to Lender.

 

All financial reports
required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified
by Borrower as being true and correct.

 

Additional Information.
Furnish such additional information and statements, as Lender may request from time to time.

 

Insurance. Maintain
fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’s
properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice
to Lender. Each Insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired
in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender’s loss
payable or other endorsements as Lender may require.

 

Insurance Reports. Furnish
to Lender, upon request of Lender, reports on each existinginsurance policyshowing such information as Lender may reasonably
request, including without limitation the following; (1) the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and
the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however
not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the
actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	 	(Continued)	Page 3
	 	 	 

 

Guaranties. Prior to disbursement
of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantors named below, on
Lender’s forms, and in the amounts and under the conditions set forth in those guaranties.

 

	Names of Guarantors	 	Amounts	 
	 	 	 	 
	Superior Drilling Products, LLC	 	$	650,000.00	 
	Annette D. Meier	 	$	650,000.00	 
	Gilbert Troy Meler	 	$	650,000.00	 
	Gilbert Troy Meier Trust	 	$	650,000.00	 
	Annette Deuel Meier Trust	 	$	650,000.00	 

 

Other Agreements. Comply
with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party
and notify Lender immediately in writing of any default in connection with any other such agreements.

 

Loan Proceeds. Use all
Loan proceeds solely for the following specific purposes: Proceeds to be disbursed to acquire and improve the property commonly
known as 1140 Black Gold Road, Bakersfield, California and disbursements are in compliance with the United States Small Business
Loan 504 Loan Program.

 

Taxes, Charges and Liens.
Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental
charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if unpaid, might become a lion or charge upon any of Borrower’s
properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax,
charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings,
and (2) Borrower shall have established on Borrower’s books adequate reserves with respect to such contested assessment,
tax, charge, levy, lien, or claim in accordance with GAAP.

 

Performance. Perform and
comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents,
and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of
any default in connection with any agreement.

 

Operations. Maintain executive
and management personnel with substantially the same qualifications and experience as the present executive arid management personnel;
provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable
and prudent manner.

 

Environmental Studies.
Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may be
requested by Lender or any governmental authority relative to any substance, or any waste or by product of any substance defined
as toxic or a hazardous substance under, applicable federal, state, or local law, rule, regulation, order or directive, at or
affecting any property or any facility owned, leased or used by Borrower.

 

Compliance with Governmental
Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities
applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral,
including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance,
or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender
in writing prior to doing so and so long as, in Lender’s solo opinion, Lender’s interests in the Collateral are not
jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect
Lender’s interest.

 

Inspection. Permit employees
or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s other
properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s
books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer
generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower,
upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide
Lender with copies of any records it may request, all at Borrower’s expense.

 

Compliance Certificates.
Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower’s chief financial
officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate,
no Event of Default exists under this Agreement.

 

Environmental Compliance and
Reports. Borrower shall: comply in all respects with any and all covenants, terms, conditions and provisions set forth in
the Hazardous Substances Certificate and Indemnity Agreement executed in connection with the Loan; comply in all respects with
any and all Environmental Laws; except as otherwise provided by the Hazardous Substances Certificate and Indemnity Agreement,
not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on
the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result
to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued
by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within
thirty (30) days after receipt thereof a copy of any notice, summons, lion, citation, directive, letter or other communication
from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower’s
part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.

 

Additional Assurances.
Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing
statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.

 

JOB CREATION INTEREST RATE PROVISION.
Borrower acknowledges that Lender agreed to make the Loan(s) in reliance on Operating Company’s business growth plan
that provides for the creation and maintenance of new jobs. Borrower further acknowledges that the creation of new jobs by Operating
Company is a primary consideration of Lender in agreeing to make the Loan(s) to Borrower. During the first five (5) years of loan
life, Borrower covenants and agrees that the Operating Company shall have created new full-time employment positions with Operating
Company, for which Operating Company has hired and continues to employ as part of Operating Company’s business growth plan.
Borrower further covenants and agrees to provide, or to cause Operating Company to provide, to Lender from time-to-time upon request
all reports and documentation required by Lender to evidence and report the results of any job creation by Operating Company.
Such reports arid documentation may consist of one or more of the following: a) Quarterly Employment Update; b) Completed 1-9
form and the supporting identification documents; c) Annual Tax Return; d) Quarterly Financial Statement, and/or e) other evidence
which may be required. Borrower further agrees to submit any required reports and documentation in its best effort and in a timely
manner upon reasonable request from Lender. For purposes of this provision, the term “full-time employment position”
shall refer to any employee of Operating Company who regularly works at least thirty-five (35) hours in a workweek and is compensated
by wages paid by Operating Company and reported for federal tax purposes on 1RS Form W-2.

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	 	(Continued)	Page 4
	 	 	 

 

LENDER’S EXPENDITURES.
If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower
fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure
to discharge or pay When due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents,
Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including
but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied
or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures
incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred
or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s
option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any
installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of
the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity.

 

NEGATIVE COVENANTS. Borrower
covenants and agrees With Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:

 

Indebtedness and Liens.
(1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement,
create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3)
sell with recourse any of Borrower’s accounts, except to Lender.

 

Continuity of Operations.
(1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its; name, dissolve or transfer or
sell Collateral out of the ordinary course of business, or (3) make any distribution with respect to any capital account, whether
by reduction of capital or otherwise.

 

Loans, Acquisitions and Guaranties.
(1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire
any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary
course of business.

 

Agreements. Enter into
any agreement containing any provisions which would be violated or breached by the performance of Borrower’s obligations
under this Agreement or in connection herewith.

 

CESSATION OF ADVANCES.
If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under
the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender;
(B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings,
or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial
condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor-seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in
good faith deems itself insecure, even though no Event of Default shall have occurred.

 

DEFAULT. Each of the following
shall constitute an Event of Default under this Agreement:

 

Payment Default. Borrower
fails to make any payment when due under the Loan.

 

Other Defaults. Borrower
fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of
the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower.

 

Environmental Default.
Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any environmental
agreement executed in connection with any Loan.

 

False Statements. Any
warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement
or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes
false or misleading at any time thereafter.

 

Death or Insolvency. The
dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from Borrower, or any other
termination of Borrower’s existence as a going business or the death of any member, the insolvency of Borrower, the appointment
of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout,
or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

Defective Collateralization.
This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any time and for any reason.

 

Creditor or Forfeiture Proceedings.
Commencement of foreclosure or forfeiture proceedings, whether by Judicial proceeding, self-help, repossession or any other
method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment
of any of Borrower’s accounts, including deposit accounts, with Lender, However, this Event of Default shall not apply if
there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor
or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with
Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion,
as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor.
Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

Adverse Change. A material
adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of the
Loan is impaired.

 

Insecurity. Lender in
good faith believes itself insecure.

 

FAILURE OF THE DEBENTURE TO
FUND. Notwithstanding anything to the contrary herein, in the event that the Debenture as defined in the SBA 504 Loan Program
does not close or otherwise fund pursuant to the terms of the SBA Authorization within six (6) months of the Closing Date, then
Lender shall, at its option, have the right to declare the entire principal amount of the Loan plus any accrued interest due and
payable in full upon thirty (30) days written notice to Borrower.

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	 	(Continued)	Page 5
	 	 	 

 

EFFECT OF AN EVENT OF DEFAULT.
If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including
any obligation to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will
become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type
described in the “Insolvency” subsection above, such acceleration shall be automatic and not optional. In addition,
Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election
to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s
right to declare a default and to exercise its rights and remedies.

 

U.S. SMALL BUSINESS ADMINISTRATION
LOAN AUTHORIZATION. The Loan Authorization for Debenture Guarantee (SBA 504 Loan) and all its amendments, additions, and modifications,
issued by the U.S. Small Business Administration (“SBA”) is hereby made part of the Loan Documents of the Loan.

 

MISCELLANEOUS PROVISIONS.
The following miscellaneous provisions are a part of this Agreement:

 

Amendments. This Agreement,
together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys’ Fees; Expenses.
Borrower agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees
and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone
else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include
Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and
legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and
any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be
directed by the court.

 

Caption Headings. Caption
headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this
Agreement.

 

Consent to Loan Participation.
Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation interests
in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation Whatsoever,
to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or
about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to
such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will
be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation
agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim
that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees
that either Lender or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency
of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may
enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender

 

Governing Law. This Agreement
will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of California.

 

Choice of Venue. If there
is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Los Angeles County County,
State of California.

 

No Waiver by Lender. Lender
shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right.
A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise
to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course
of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s
rights or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.

 

Notices. Any notice required
to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed,
when deposited in the United States mail, as first class, certified or registered mall postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice
purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwise provided
or required by law, it there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given
to all Borrowers.

 

Severability. If a court
of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance,
that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible,
the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity,
or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other
provision of this Agreement.

 

Subsidiaries and Affiliates
of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation
any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s
subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to
require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates.

 

Successors and Assigns.
All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower’s
successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have
the right to assign Borrower’s rights under this Agreement or any interest therein, without the prior written consent
of Lender. 

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	 	(Continued)	Page 6
	 	 	 

 

Survival of
Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all
representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument
delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any
Investigation made by Lender, all such representations, warranties and covenants will survive the making of the Loan and
delivery to Lender of the Related Documents, shall be continuing in nature, and shall remain in full force and effect until
such time as Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner
provided above, whichever is the last to occur.

 

Time is of the Essence.
Time in of the essence in the performance of this Agreement.

 

SITE INSPECTION. At Lender’s
Request, Borrower must allow and assist Lender in inspecting Collateral at all locations wherever located. Lender’s inspection
must be satisfactory and complete in order for Lender to prepare an internal site inspection memorandum.

 

DEFINITIONS. The following
capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the
singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not
otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code, Accounting
words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally
accepted accounting principles as in effect on the date of this Agreement:

 

Advance. The word “Advance”
means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf on a line of credit or multiple
advance basis under the terms and conditions of this Agreement.

 

Agreement. The word “Agreement”
means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with
all exhibits and schedules attached to this Business Loan Agreement from time to time.

 

Borrower. The word “Borrower”
means Superior Drilling Products of California, LLC and includes all co-signers and co-makers signing the Note and all their successors
and assigns.

 

Collateral. The word “Collateral”
means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly
or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s
lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.

 

Environmental Laws. The
words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the California
Health and Safety Code, Section 25100, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant
thereto.

 

Event of Default. The
words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this
Agreement.

 

GAAP. The word “GAAP”
means generally accepted accounting principles.

 

Grantor. The word “Grantor”
means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation
all Borrowers granting such a Security Interest.

 

Guarantor. The word “Guarantor”
means any guarantor, surety, or accommodation party of any or all of the Loan.

 

Guaranty. The word “Guaranty”
means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.

 

Hazardous Substances.
The words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical
or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly
used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances”
are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste
as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.

 

Indebtedness. The word
“Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any
of the Related Documents.

 

Lender. The word “Lender”
means US Employment Development Lending Center, LLC, its successors and assigns.

 

Loan. The word “Loan”
means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.

 

Note. The word “Note”
means the Note executed by Superior Drilling Products of California, LLC in the principal amount of $650,000.00 dated April 2,
2012, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for
the note or credit agreement.

 

Permitted Liens. The words
“Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens
for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics.
Warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not
yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower
in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred
under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liens and security interests which, as
of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security
interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s
assets.

 

Related Documents. The
words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements
and documents, whether now or hereafter existing, ‘executed in connection with the Loan.

 

Security Agreement. The
words “Security Agreement” mean and include without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating
a Security Interest.

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	 	(Continued)	Page 7
	 	 	 

 

Security Interest. The
words “Security Interest” mean, without limitation, any and all types of collateral security, present and future,
whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel
mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien
or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever
whether created by law, contract, or otherwise.

 

BORROWER ACKNOWLEDGES HAVING READ ALL
THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED APRIL 2,
2012.

 

BORROWER:

 

	SUPERIOR DRILLING PRODUCTS OF CALIFORNIA, LLC	 
	 	 	 
	By:	/s/ Annette D. Meier	 
	 	Annette D. Meier, Manager of Superior Drilling Products of California, LLC	 
	 	 	 
	LENDER:	 	 
	 	 	 
	US EMPLOYMENT DEVELOPMENT LENDING CENTER, LLC	 
	 	 	 
	By:	 	 
	 	Authorized Signer	 

 

	 
	LASER PRO Lending, Ver. 5.50.00.005 Copr. Harland Financial Solutions,
    Inc. 1997, 2012. All Rights Reserved. - CA C:\HARLANDLP\CFILPL\G140.FO TR-112 PR-14

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