Document:

ex10_14.htm

    
      

    

    

     AIR
      COMMERCIAL REAL ESTATE
      ASSOCIATION

    STANDARD
      INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET

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

    

    

    
      	
              1.

            	
              Basic
                Provisions (“Basic
                Provisions”).

            

    

    

    1.1           Parties:
      This Lease (“Lease”), dated for reference purposes only February 12, 2007
is
      made
      by and between OMP INDUSTRIAL MORELAND, LLC, a Delaware limited liability
      company.  (“Lessor”)  and AEROVIRONMENT,
      INC, a Delaware corporation (“Lessee”), (collectively the “Parties,” or
      individually a “Party”).

    

    1.2           Premises:
      That certain real property, including all improvements therein or to be provided
      by Lessor under the terms of this Lease, and commonly known as 85 Moreland
      Road,
      Simi Valley, California located
      in the County of Ventura, 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) containing
      a  105,083 square foot industrial building together with other
      improvements located thereon (“Premises”). (See also Paragraph 2)

    

    1.3           Term:
      five  (5) years and four (4) months (“Original Term”)
commencing March 1, 2007 (“Commencement Date”) and ending June 30,
      2012 (“Expiration Date”). (See also Paragraph 3)

    

    1.4           Early
      Possession: February 14, 2007 (“Early Possession Date”). (See also
      Paragraphs 3.2 and 3.3)

    

    1.5           Initial
      Base Rent: $70,405.61 per month (“Base Rent”), payable on the first
      (1st) day of each month on the Commencement Date. (See also Paragraph
      4)

    

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

    

    1.6           Base
      Rent and Other Monies Paid Upon Execution:

    

    (a)  Base
      Rent:
$70,405,61 for the period fourth (4th) full, month of the
      Term.

    

    (b)  Security Deposit: $None  (“Security
      Deposit”). (See also Paragraph 5)

    

    (c)  Association
      Fees:
      $None  for the period   None

    

    (d)  Other:
      None for
      None

    

    (e)   Total
      Due Upon Execution
      of this Lease: $20,405. 61. (based on the Base Rent credit described in Section
      4 of the Addendum)

    

    1.7           Agreed
      Use : distribution, manufacturing, and warehousing of aerospace
      products , subject, however, to all Applicable Requirements. (See also Paragraph
      6)

    

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

    

    1.9           Real
      Estate Brokers: (See also Paragraph 15)

    

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

    

    x Cushman
&
      Wakefield represents Lessor exclusively  (“Lessor’s
      Broker”);

    

    x Studley,
      Inc.
      represents Lessee exclusively (Lessee’s Broker”); or
      __ N/A represents both Lessor and Lessee (“Dual
      Agency”).

    

    (b)   Payment
      to
      Brokers: Upon execution and delivery of this Lease by both Parties,
      Lessor shall pay to the Broker the fee agreed to in their separate written
      agreement for the brokerage services rendered by the Brokers.

    

    1.10           Guarantor.
      The obligations of the Lessee under this Lease are to be guaranteed by None
      _______________ (“Guarantor”).
      (See also Paragraph 37)

    

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

    x an
      Addendum consisting of Paragraphs 1 through 10

    
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              ©2001
                – AIR COMMERCIAL REAL ESTATE ASSCOCIATION

            	
              FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              o

            	
              a
                plot plan depicting the Premises
                (Exhibit  A);

            

    

    
      	
              o

            	
              a
                current set of the Rules and
                Regulations;

            

    

    
      	
              o

            	
              a
                Work Letter;

            

    

    
      	
              x

            	
              other
                (specify): Exhibit “B” Environmental
                Questionnaire

            

    

    

    2.     Premises.

     

    2.1   Letting.
      Lessor hereby teases to Lessee, and Lessee hereby leases from Lessor, the
      Premises, for the term, at the rental, and upon all of the terms, covenants
      and
      conditions set forth in this Lease. Unless otherwise provided herein, any
      statement of size set forth in this Lease, or that may have been used in
      calculating Rent, is an approximation which the Parties agree is reasonable
      and
      any payments based thereon are not subject to revision whether or not the actual
      size is more or less. Note: Lessee is advised to verify the actual size prior
      to
      executing this Lease. Subject to (I) all of the terms and conditions of this
      Lease, (II) Force Majeure events, (III) Lessor’s commercially reasonable
      security requirements, and (lV) the Applicable Requirements, Lessee shall have
      access to the Premises twenty-four (24) hours per day, seven (7) days per week
      throughout the Lease Term.

     

    2.2   Condition.
      Lessor shall deliver the Premises to Lessee broom clean and free of debris
      on
      the Commencement Date or the Early Possession Date, whichever first occurs
      (“Start Date”), and, so long as the required service contracts described in
      Paragraph 7.1(b) below are obtained by Lessee and
      in effect within thirty days following the Start Date, warrants that the
      existing electrical, plumbing, fire sprinkler, lighting, heating. ventilating
      and air conditioning systems (“HVAC”), loading doors, sump pumps, if any, and
      all other such elements in the Premises, other than those constructed by Lessee,
      shall be in good operating condition on said date, that the structural elements
      of the roof, bearing walls and foundation of any buildings on the Premises
      (the
“Building”) shall be free of material defects, and that the Premises do not
      contain hazardous levels of any mold or fungi defined as toxic under applicable
      state or federal law. If a non-compliance with said warranty exists as of the
      Start Date, 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) 90 days as to the HVAC
      systems, and (ii) 9O days as to the remaining systems and other elements of
      the
      Building. If Lessee does not give Lessor the required notice within the
      appropriate warranty period, correction of any such non-compliance, malfunction
      or failure shall be the obligation of Lessee at Lessee’s sole cost and
      expense.

     

    2.3   Compliance.  
      Lessor warrants that  to the best of its knowledge the improvements on
      the Premises comply with the building codes, applicable laws, covenants or
      restrictions of record, regulations, and ordinances (“Applicable Requirements”)
      that were in effect as of the date hereof.   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 Lessees 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 90 days 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, on the date that on which the
      Base Rent is due, an amount equal to 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 satisfied itself with respect to the
      condition of the Premises (including but not limited to the electrical, HVAC
      and
      fire sprinkler systems, security, environmental aspects, and compliance with
      Applicable Requirements and the Americans with Disabilities Act), and their
      suitability for Lessee’s intended use,(b) Lessee has made such investigation as
      it deems necessary with reference to such matters and assumes all responsibility
      therefore as the same relate to its occupancy of the Premises, and (c) neither
      Lessor, nor Lessor’s agents have made any oral or written representations or
      warranties with respect to said matters other than as set forth in this
      Lease.

     

    
      	 	
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              ©2001
                - AIR COMMERCIAL REAL ESTATE ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              3.

            	
              Term.

            

    

     

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

     

    3.2   Early
      Possession.    If Lessee totally or partially occupies
      the Premises prior to the Commencement Date, the obligation to pay Base Rent
      shall be abated for the period of such early possession. All other terms of
      this
      Lease (including but not limited to the obligations to pay 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 therefore,
      nor shall such failure affect the validity of this Lease. Lessee shall not,
      however, be obligated to pay Rent or perform its other obligations until Lessor
      delivers possession of the Premises and any period of rent abatement that Lessee
      would otherwise have enjoyed shall run from the date of delivery of possession
      and continue for a period equal to what Lessee would otherwise have enjoyed
      under the terms hereof, but minus any days of delay caused by the acts or
      omissions of Lessee. If possession is not delivered within 60 days after the
      Commencement Date, Lessee may, at its option, by notice in writing within 10
      days after the end of such 60 day period, cancel this Lease, in which event
      the
      Parties shall be discharged from all obligations hereunder. if such written
      notice is not received by Lessor within said 10 day period, Lessee’s right to
      cancel shall terminate. If possession of the Premises is not delivered within
      120 days after the Commencement Date, this Lease shall terminate unless other
      agreements are reached between Lessor and Lessee, in writing.

     

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

     

    
      	
              4.

            	
              Rent.

            

    

     

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

     

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

    

    5.   Security
      Deposit.   Lessee shall
      deposit with Lessor upon execution hereof the Security Deposit (if any) as
      security for Lessee’s faithful performance of its obligations under this Lease.
      If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor
      may
      use, apply or retain all or any portion of said Security Deposit for the payment
      of any amount due 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 therefore 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.

     

    
      	 	
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              INITIALS

            	 	
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              ©2001
                - AIR COMMERCIAL REAL ESTATE ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (g)   Lessor
      Termination Option. If a Hazardous Substance Condition (see Paragraph
      9.1(e)) occurs during the term of this Lease, unless Lessee is legally
      responsible therefore (in which case Lessee shall make the investigation and
      remediation thereof required by the Applicable Requirements and this Lease
      shall
      continue in full force and effect, but subject to Lessor’s rights under
      Paragraph 8.2(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,

     

    
      	 	
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              INITIALS

            	 	
               INITIALS

            
	 	 
	
              ©2001
                - AIR COMMERCIAL REAL ESTATE ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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 (he 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 therefore.

     

    
      	
              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,  roof membrane,
      floors, windows, doors, plate glass, skylights, landscaping, driveways, parking
      lots, fences, retaining walls, signs, sidewalks and parkways located in, on,
      or
      adjacent to the Premises. Lessee, in keeping the Premises in good order,
      condition and repair, shall exercise and perform good maintenance practices,
      specifically including the procurement and maintenance of the service contracts
      required by Paragraph 7.1(b) below. Lessee’s obligations shall include
      restorations, replacements or renewals when necessary to keep the Premises
      and
      all improvements thereon or a part thereof in good order, condition and state
      of
      repair. Lessee shall, during the term of this Lease, keep the exterior
      appearance of the Building in a first-class condition (including, e.g. graffiti
      removal) consistent with the exterior appearance of other similar facilities
      of
      comparable age and size in the vicinity, including, when necessary, the exterior
      repainting of the Building.

     

    (b) 
      Service Contracts. Lessee shall, at Lessee’s sole expense,
      procure and maintain contracts, with copies to Lessor, in customary form and
      substance for, and with contractors specializing and experienced in the
      maintenance of the following equipment and improvements, if any, if and when
      installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
      vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
      detection, (iv) parking lot, landscaping and irrigation systems,
      (v) roof covering and drains, (vi) clarifiers (vii) basic utility feed to the
      perimeter of the Building, and (viii) any other equipment, if reasonably
      required by Lessor. However, Lessor reserves the right, upon notice to Lessee,
      to procure and maintain any or all of such service contracts, and Lessee shall
      reimburse Lessor, upon demand, for the 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, end 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 (i.e. 1/144th of the cost per month). Lessee shall pay Interest
      on
      the unamortized balance but may prepay its obligation at any time, provided,
      however, that the denominator for purposes of any roof replacement
      shall be 300.

     

    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: provided, however,
      that Lessor shall, at its sole cost and expense, be responsible for the
      structure of the building (including the structural portions of the roof
      (excluding the roof membrane)) unless the necessity for repairs to the same
      are
      necessitated due to Lessee’s acts or omissions (in which event Lessee shall be
      responsible for the same). 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.

     

    
      	 	
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                5 OF 18 

            	 
	
              INITIALS

            	 	
               Initials

            
	
              ©2001
                - AIR COMMERCIAL REAL ESTATE ASSOCIATION 

            	
               FORM
                STN-9-3/OBE

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      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
      Utility Installations to the interior of the Premises (excluding the roof)
      without such consent but upon notice to Lessor, as tong 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 material
      men’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.

     

    
      	
               

            	
              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 tank installed by or for Lessee, Lessee shall completely remove
      from the Premises any and all Hazardous Substances brought onto the Premises
      by
      or for Lessee, or any third party (except Hazardous Substances which were
      deposited via underground migration from areas outside of the Premises, or
      if
      applicable, the Premises) even if such removal would require Lessee to perform
      or pay for work that exceeds statutory requirements. Trade Fixtures shall remain
      the property of Lessee and shall be removed by Lessee. Any personal property
      of
      Lessee not removed on or before the Expiration Date or any earlier termination
      date shall be deemed to have been abandoned by Lessee and may be disposed of
      or
      retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate
      the Premises pursuant to this Paragraph 7.4(c) without the express written
      consent of Lessor shall constitute a holdover under the provisions of Paragraph
      26 below.

     

    
      	
              8.

            	
              Insurance;
                Indemnity.

            

    

     

    8.1   Payment
      For
      Insurance. Lessee shall pay for all insurance required under Paragraph
      8 except to the extent of the cost attributable to liability insurance carried
      by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence.
      Premiums for policy periods commencing prior to or extending beyond the Lease
      term shall be prorated to correspond to the Lease term. Payment shall be made
      by
      Lessee to Lessor within 30 days following receipt of an
      invoice,

     

    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
      $5,000,000, Lessee shall add Lessor as an additional insured by means of an
      endorsement at least as broad as the Insurance Service Organization’s
“Additional Insured-Managers or Lessors of
      Premises” Endorsement and coverage shall also be extended
      to include damage caused by heat, smoke or fumes from a hostile fire. The policy
      shall not contain any intra-insured exclusions as between insured persons or
      organizations, but shall include coverage for liability assumed under this
      Lease
      as an “insured contract” for the performance of Lessee’s indemnity obligations
      under this Lease. The limits of said insurance shall not, however, limit the
      liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee
      shall
      provide an endorsement on its liability policy(is) 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.

     

    
      	 	
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              ©2001
                - AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
               FORM
                STN.9.3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

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

     

    
      	
               

            	
              8.4

            	
              Lessee’s
                Property; Business Interruption
                Insurance.

            

    

     

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

     

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

     

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

     

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

     

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

     

    8.7     Indemnity.
      Except for
      Lessor’s gross negligence or willful misconduct, Lessee shall indemnify,
      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 (collectively, “Claims”)
      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 there from. 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(is)
      that Lessee is required to maintain pursuant to the provisions of paragraph
      8.

     

    
      	 	
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               INITIALS

            
	
              ©2001
                - AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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, and If such failure
      continues for five (5) days’ after Lessor’s notice to lessee of such failure,
      the Base Rent shall be automatically increased, without any requirement for
      notice to Lessee, by an amount equal to 10% of the then existing Base Rent
      or
      $100, whichever is greater. The parties agree that such increase in Base Rent
      represents fair and reasonable compensation for the additional risk/costs that
      Lessor will incur by reason of Lessee’s failure to maintain the required
      insurance. Such increase in Base Rent shall in no event constitute a waiver
      of
      Lessee’s Default or Breach with respect to the failure to maintain such
      insurance, prevent the exercise of any of the other rights and remedies granted
      hereunder, nor relieve Lessee of its obligation to maintain the insurance
      specified in this Lease.

     

    
      	
              9.

            	
              Damage
                or Destruction.

            

    

     

    
      	
               

            	
              9.1

            	
              Definitions.

            

    

     

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

     

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

     

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

     

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

     

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

     

    9.2    Partial
      Damage - Insured Loss. If a Premises Partial Damage that is an Insured
      Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not
      Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations)
      as soon as reasonably possible and this Lease shall continue in full force
      and
      effect; provided, however, that Lessee shall, at Lessor’s election, make the
      repair of any damage or destruction the total cost to repair of which is $10,000
      or less, and, in such event, Lessor shall make any applicable insurance proceeds
      available to Lessee on a reasonable basis for that purpose. Notwithstanding
      the
      foregoing, if the required insurance was not in force or the insurance proceeds
      are not sufficient to effect such repair, the Insuring Party shall promptly
      contribute the shortage in proceeds (except as to the deductible which is
      Lessee’s responsibility) as and when required to complete said repairs. In the
      event, however, such shortage was due to the fact that, by reason of the unique
      nature of the improvements full replacement cost insurance coverage was not
      commercially reasonable and available, Lessor shall have no obligation to pay
      for the shortage in insurance proceeds or to fully restore the unique aspects
      of
      the Premises unless Lessee provides Lessor with the funds to cover same, or
      adequate assurance thereof, within 10 days following receipt of written notice
      of such shortage and request therefore. 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.
      lf 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.

     

    
      	 	
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              ©2001
                - AIR COMMERCIAL REAL ESTATE ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
               

            	
              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 (which
      Rental Value insurance shall be substantially consistent with such insurance
      maintained by other institutional quality lessors of comparable commercial
      properties). All other obligations of Lessee hereunder shall be performed by
      Lessee, and Lessor shall have no liability for any such damage, destruction,
      remediation, repair or restoration except as provided herein.

     

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

     

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

     

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

     

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

     

    12.   Assignment
      and Subletting.

     

    
      	
            	
              12.1

            	
              Lessor’s
                Consent Required.

            

    

     

    (a)  
      Lessee shall not voluntarily or by operation of taw 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.

     

    
      	 	
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                - AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (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) Except
      as otherwise provided in
      Section 8 of the addendum, 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 therefore to Lessor, or any security held by Lessor.

     

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

     

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

     

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

     

    12.3   Additional
      Terms and Conditions Applicable to Subletting. The following terms and
      conditions shall apply to any subletting 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.

     

    
      	 	
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              ©2001
                - AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
               FORM
                STN-9-3/06

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                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.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

     (a)  
      Terminate Lessee’s right to possession of the Premises by any lawful means, in
      which case this Lease shall terminate and Lessee shall immediately surrender
      possession to Lessor. In such event Lessor shall be entitled to recover from
      Lessee: (i) the unpaid Rent which had been earned at the time of termination;
      (ii) the worth at the time of award of the amount by which the unpaid rent
      which
      would have been earned after termination until the time of award exceeds the
      amount of such rental loss that the Lessee proves could have been reasonably
      avoided; (iii) the worth at the time of award of the amount by which the unpaid
      rent for the balance of the term after the time of award exceeds the amount
      of
      such rental loss that the Lessee proves could be reasonably avoided; and (iv)
      any other amount necessary to compensate Lessor for all the detriment
      proximately caused by the Lessee’s failure to perform its obligations under this
      Lease or which in the ordinary course of things would be likely to result
      therefrom including but not limited to the cost of recovering possession of
      the
      Premises, expenses of reletting, including necessary renovation and alteration
      of the Premises, reasonable attorneys’ fees, and that portion of any leasing
      commission paid by Lessor in connection with this Lease applicable to the
      unexpired term of this Lease. The worth at the time of award of the amount
      referred to in provision (iii) of the immediately preceding sentence shall
      be
      computed by discounting such amount at the discount rate of the Federal Reserve
      Bank of the District within which the Premises are located at the time of award
      plus one percent. Efforts by Lessor to mitigate damages caused by Lessee’s
      Breach of this Lease shall not waive Lessor’s right to recover damages under
      Paragraph 12. If termination of this Lease is obtained through the provisional
      remedy of unlawful detainer, Lessor shall have the right to recover in such
      proceeding any unpaid Rent and damages as are recoverable therein, or Lessor
      may
      reserve the right to recover all or any part thereof in a separate suit. If
      a
      notice and grace period required under Paragraph 13.1 was not previously given,
      a notice to pay rent or quit, or to perform or quit given to Lessee under the
      unlawful detainer statute shall also constitute the notice required by Paragraph
      13.1. In such case, the applicable grace period required by Paragraph 13,1
      and
      the unlawful detainer statute shall run concurrently, and the failure of Lessee
      to cure the Default within the greater of the two such grace periods shall
      constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
      to the remedies provided for in this Lease and/or by said statute.

     

    (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   Intentionally
      Omitted._______

     

    
      	 	
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                - AIR COMMERCIAL REAL ESTATE
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                STN-9-3/O6E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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 5 days after such amount shall
      be due, then, without any requirement for notice to Lessee, Lessee shall
      immediately pay to Lessor a one-time late charge equal to 10% of each such
      overdue amount or $100, whichever is greater. The Parties hereby agree that
      such
      late charge represents a fair and reasonable estimate of the costs Lessor will
      incur by reason of such late payment. Acceptance of such late charge by Lessor
      shall in no event constitute a waiver of Lessee’s Default or Breach with respect
      to such overdue amount, nor prevent the exercise of any of the other rights
      and
      remedies granted hereunder, In the event that a late charge is payable
      hereunder, whether or not collected, for 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 as to scheduled payments (such as Base Rent) or within
      30
      days following the date on which it was due for non-scheduled payment, shall
      bear interest from the date when due, as to scheduled payments, or the 31st
      day
      after it was due as to non-scheduled payments. The interest
(“Interest”) charged shall be computed at the rate of 10% per
      annum but shall not exceed the maximum rate allowed by law. Interest is payable
      in addition to the potential late charge provided for in Paragraph
      13.4.

     

    13.6   Breach
      by
      Lessor.

     

     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.

     

    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 therefore. 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.

            

    

     

    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.

     

    
      	 	
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                . AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
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                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              16.

            	
              Estoppel
                Certificates.

            

    

     

    (a)  
      Each Party (as “Responding Party”) shall within 10 days after
      written notice from the other Party (the
“RequestingParty”) execute, acknowledge and
      deliver to the Requesting Party a statement in writing in form similar to the
      then most current “EstoppelCertificate” form
      published by the AIR Commercial Real Estate Association or such other form
      as
      may be reasonably required by the Requesting Party, 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.

     

    (c)  
      if Lessor desires to finance, refinance, or sell the Premises, or any part
      thereof, Lessee and all Guarantors shall, subject to receipt of commercially
      reasonable nondisclosure agreements, 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 tease. 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 alt liability with respect to the obligations
      and/or covenants under this Lease thereafter to be performed by the Lessor.
      Subject to the foregoing, the obligations and/or covenants in this Lease to
      be
      performed by the Lessor shall be binding only upon the Lessor as hereinabove
      defined.

     

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

     

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

     

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

     

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

     

    22.   No
      Prior or
      Other Agreements; 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  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.

     

    
      	
              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 and, in the case of notice to Lessee, a copy to the
      Premises. 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 guarantee 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.

     

    
      	 	
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                - AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
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                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (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.

            	
              lntentionally
                Omitted.

            

    

     

    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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                - AIR COMMERCIAL REAL ESTATE ASSOCIATION 

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

     

    30.3   Non-Disturbance.
      With respect to Security Devices entered into by Lessor after the execution
      of
      this Lease, Lessee’s subordination of this Lease shall be subject to receiving a
      commercially reasonable non-disturbance agreement (a “Non-Disturbance
      Agreement”) from the Lender which Non-Disturbance Agreement provides that
      Lessee’s possession of the Premises, and this Lease, including any options to
      extend the term hereof, wilt 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, contractor 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-
      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  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 (in no event
      less than 24 hours’ notice (except In cases of emergency)) 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
      sub-tenancies, 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
      therefore. 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.

     

    
      	 	
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                - AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    37.   Intentionally
      Omitted.

     

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

     

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

     

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

     

    39.2
      Options Personal To Original Lessee. Any Option granted to
      Lessee in this Lease is personal to the original Lessee
      (‘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.   lntentionally
      Omitted.

     

    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,

     

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

     

    44.   Authority;
      Multiple Parties; Execution.

     

    (a)   If
      either Party
      hereto is a corporation, trust, limited liability company, partnership, or
      similar entity, each individual executing this Lease on behalf of such entity
      represents and warrants that he or she is duly authorized to execute and deliver
      this Lease on its behalf.

     

    (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.

     

    
      	 	
              PAGE  16
                OF 18 

            	 
	
              INITIALS

            	 	
               INITIALS

            
	 	 	  
	
              ©2001
                - AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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.   TO THE EXTENT
      ALLOWED UNDER THE APPLICABLE REQUIREMENTS, THE PARTIES HEREBY WAIVE THEIR
      RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE
      PROPERTY OR ARISING OUT OF THIS AGREEMENT.

     

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

     

    50.   Americans
      with Disabilities Act. Subject to Lessor’s representations and
      warranties contained herein, 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, subject to
      Lessor’s express obligations set forth herein, 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: Monrovia

            
	
              On:

            	 	
              On:2/13/07

            
	
              By

            	
              LESSOR:

            	 	
              By
                LESSEE:

            
	 	
              OMP
                INDUSTRIAL MORELAND, LLC

            	 	
              AEROVIRONMENT,
                INC.,

            
	 	
              a
                Delaware limited liability company

            	 	
              a
                Delaware corporation

            
	 	
              BY:

            	
              OMP
                Investor, LLC

            	 	 	 
	 	 	
              A
                Delaware limited liability company

            	 	
              By:

            	
               /s/
                Stephen Wright

            
	 	 	
              Its
                manager

            	 	
              Name
                Printed: Stephen Wright

            
	 	 	
              By:

            	
              OVERTON,
                MOORE PROPERTIES,

            	 	
              Title:
                CFO

            
	 	 	 	
              a
                Delaware general partnership,

            	 	 	 
	 	 	 	
              its
                sole member

            	 	 	 
	 	 	
              By:

            	
              MOORE
                TECIMER LLC.

            	 	 	 
	 	 	 	
              a
                California limited liability company,

            	 	 	 
	 	 	 	
              Its
                Administrative Partner

            	 	 	 
	 	 	 	
              By:

            	
               /s/
                Timur Tecimer

            	 	 	 
	 	 	 	 	
              Timur
                Tecimer, a managing member

            	 	 	 

    

     

    
      	 	
              PAGE
                17 OF 18

            	  
	
              INITIALS

            	 	
               INITIALS

            
	 	 	  
	
              ©2001
                - AIR COMMERCIAL REAL ESTATE ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Address:  OMP
      Industrial Moreland, LLC

    

    c/o
      Overton Moore Properties 1125 West 190th

    

    Street,  Suite
      200 Gardena, California  90248

    

    
      	
              Attn:

            	
              Property
                Management

            

    

    

    
      	
              Telephone:

            	
              (310)
                323-9100

            

    

    
      	
              Facsimile:

            	
              (310)
                608-7997

            

    

    Federal
      ID No. ___________

    
      	
              BROKER:

            	 	
              BROKER:

            
	 	 	 
	
              Omitted

            	 	
              Omitted

            

    

    

    

    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, 800 W 6th Street, Suite 800,
      Los
      Angeles, CA 90017. 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.

    

    

    MLTOMP
      Industrial-AV, Inc.

     

    
      	 	
              PAGE
                18 OF 18 

            	 
	
              INITIALS

            	 	
               INITIALS

            
	 	 	  
	
              ©2001
                - AIR COMMERCIAL REAL ESTATE
                ASSOCIATION 

            	
               FORM
                STN-9-3/06E

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ADDENDUM
      TO SINGLE-TENANT LEASE

    

    85
      Moreland Road, Simi Valley, California

     

    This
      LEASE ADDENDUM (‘Addendum) is
      attached to, incorporated into and amends and supplements that certain Standard
      lndustrial/Commercial Single-Tenant Lease-Net (the lease”) entered into as of
      the 12th day of February 2007 by and between OMP INDUSTRIAL MORELAND LLC, a
      Delaware limited liability company  ( “ Lessor ” ) and AEROVIRONMENT.
      INC., a Delaware corporation

     

    (’Lessee’).
      Lessor and Lessee agree that notwithstanding anything contained in the Lease
      to
      the contrary the Lease as modified by the provisions set forth iii this Addendum
      represents the full negotiated agreement of the parties, and the provisions
      or
      this Addendum will be deemed to be a part of the Lease and will supersede any
      contrary or conflicting provision in the Lease arid prevail and control for
      all
      purposes. This Addendum, together with the Lease itself, and all other Exhibits
      attached hereto represents the fully integrated and binding agreement of the
      parties. All references in the Lease and in this Addendum to
“Lease” are to be construed to mean the Lease as amended and supplemented
      by
      this Addendum. All terms used in (his Addendum unless specifically defined
      in
      this Addendum, have the same meaning as such terms have in the
      Lease.

    

    1.           Condition
      of Premises. Lessee hereby acknowledges and agrees that Lessor shall not be
      obligated to construct or complete any improvements in the Premises, the
      Building or the Project, and Lessor shall not ( except as otherwise expressly
      provided in the Lease (including Ibis Addendum )) be responsible,
      in any manner whatsoever for the design and construction
      of any improvements in the Premises, the Building or the Project. Except as
      otherwise provided in the Lease (including Paragraphs 2.2and 2.3 of the Lease),
      Lessee hereby accepts the Premises, the Building and the Project in their “as
      is” condition as of the date hereof, subject to the warranty of Lessor in
      Paragraph 2.3 of the Lease regarding compliance with “Applicable Requirements”
as of the date of the Lease. The taking of possession of the Premises by Lessee
      shall conclusively establish that the Premises were, at such lime, in
      satisfactory condition. In the event that as a result of Lessees use or intended
      use of the Premises or any Alterations or Utility Installations to the Premises,
      the Americans with Disabilities Act or similar law required modifications or
      the
      construction or installation of improvements in or to the Premises, Building
      or
      Project such modifications, construction or improvements shall, except for
      Lessor’s obligations in Paragraphs 2.2 and 2.3 of the Lease, be made by Lessee
      at Lessee’s expense. In the event that Lessor consents to Lessee’s construction
      and completion of any improvements in the Premises (including, but not limited
      to, any Alterations. improvements additions or Utility Installations, as set
      forth in Paragraph 7.3 of the Lease), Such construction shall be subject to
      the
      terms of Paragraph 7.3 of the Lease and all other relevant provisions of the
      Lease and Lessee hereby agrees to indemnity and defend Lessor and hold Lessor
      harmless from and against any and all claims, costs, expenses or Liability.
      arising from, Lessee’s design construction and operation of any improvements in,
      on or about the Premises ( including without limitation Lessee’s failure to
      obtain necessary permits, approvals or certificates from the applicable
      governmental authorities and/or actual attomeys’ costs and fees, and court
      costs).

    

    2.           Refurbishment
      or Premises, Notwithstanding anything to the contrary contained herein,
      Lessee shall be entitled to renovate the then-existing lessee improvements
      in
      the Premises in accordance with this Section 2 and otherwise in accordance
      with
      Paragraph 7 of the Lease. In connection therewith, Lessee shall be entitled
      to a
      one-time lessee refurbishment allowance (the “Refurbishment
      Allowance”) in (the amount up to, but not exceeding Four Dollars (
      $4.00) per square foot of the Premises (i.e., an amount up to, but not
      exceeding, Four Hundred Twenty Thousand Three Hundred Thirty-Two Dollars (
      $42O,332.00)  based on 105,083 square feet in the Premises)
      for the costs relating to the design and construction of certain
      renovations to the Premises (the “Refurbished Improvements”) In
      no event shall Lessor be obligated to make disbursements under this Section
      2 in
      a total amount which exceeds the Refurbishment Allowance.

    

    (a)           The
      Refurbishment Allowance Items. The Refurbishment Allowance shall be
      disbursed by Lessor following completion of the Refurbished Improvements for
      the
      following items and costs only (collectively the “Refurbishment
      Allowance Items” ):

    

    (i) Payment
      of the fees of the
      architect and engineer(s) retained by Lessee (if any), and payment of the fees
      incurred by, and the cost or documents and materials supplied by, Lessor and
      Lessor’s consultants in connection with the review of the plans and
      specifications prepared for the Refurbished Improvements
(“RefurbishmentDrawings”)

    

    (ii) The
      Payment of plan check,
      permit and license fees relating to construction, of the Refurbished
      Improvements­

    

    (iii) The
      cost of construction at the
      Refurbished lmprovements,

    including,
      without limitation. testing and inspection costs, trash removal costs, and
      contractors’ fees and general conditions;

    

    (iv) The
      cost of any changes to the
      Refurbishment Drawings or Refurbished Improvements required by Applicable
      Requirements; and

    

    (v) Sales
      and use taxes and Title
      24 fees.

    

    Notwithstanding
      anything herein to the contrary, Lessee may, in the event there remains any
      portion of the Refurbishment Allowance after Lessee’s
      construction or the Refurbished Improvements, also use the Refurbishment
      Allowance for (he costs of the purchase and installation of Lessee signage
      for he Premises, built-ins and moveable furniture, trade fixtures and
      equipment to be used in the Premises, relocation expenses (from Lessee’s
      existing premises to the Premises) and as a credit towards tile rent due and
      payable by Lessee to Lessor under the Lease (collectively, the ‘Other
      Allowance Items’).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b)  Disbursement
      of
      Refurbishment Allowance. Provided that Lessee is not in default on any of
      its obligations under the Lease, upon completion of the Refurbished Improvements
      and/or upon incurring the costs for the Other Allowance Items. Lessor shall
      make
      a disbursement of the Refurbishment Allowance For Refurbishment Allowance Items
      and/or Other Allowance Items for the benefit of Lessee and shall authorize
      the
      release of monies for the benefit of Lessee as follows:

    

    (i)  Disbursement.
      Lessee shall deliver to Lessor: (I) a request for payment or Lessee’s general
      contractor (“Contractor”), which Contractor shall be retained
      by Lessee and shall be subject to Lessor’s reasonable prior written approval and
      which request shall be approved by Lessee, in a form to be provided by Lessor;
      (ii) paid invoices From all subcontractors, laborers, materialmen, vendors
      and
      suppliers used by Lessee in connection with the Refurbished Improvements (such
      subcontractors, laborers, materialmen, vendors and suppliers, and the Contractor
      may be known collectively as Lessees Agents’) and/or Other
      Allowance Items, for labor rendered and materials delivered to the Premises
      for
      the Refurbished Improvements and/or Other Allowance Items; (iii) executed
      unconditional mechanics’ lien releases from all of Lessee’s Agents in such form
      and content as required by Lessor; and (iv) all other information reasonably
      requested by Lessor. Lessee’s request for payment shall be deemed Lessee’s
      acceptance and approval of the work furnished and/or the materials supplied
      as
      set forth in Lessee’s payment request. Promptly thereafter, assuming Lessor
      receives all or (the applicable information described in items (i) through
      (iv),
      above, Lessor shall deliver a check made payable to Lessee in payment of the
      amounts so requested by Lessee (but in no event to exceed the amount of the
      Refurbishment Allowance), provided that Lessor does not dispute any request
      for
      payment based on non-compliance of any work with the Refurbishment Drawings,
      or
      due to any substandard work. Lessor’s payment of such amounts shall not be
      deemed Lessor’s approval or acceptance of the work furnished or materials
      supplied as set forth in Lessee’s payment request.

    

    (ii)  Other
      Terms.
      Lessor shall only be obligated to make disbursements from time Refurbishment
      Allowance to the extent costs are incurred by Lessee for Refurbishment Allowance
      Items and/or Other Allowance Items, All Refurbishment Allowance Items for which
      the Refurbishment  Allowance has been made available shall be deemed
      Lessor’s property. Except as otherwise expressly provided above, in no event
      shall Lessee be entitled to any credit (or any unused portion of the
      Refurbishment Allowance. All drafts of the Refurbishment Drawings shall be
      subject to Lessor’s prior written approval, which approval shall not be
      unreasonably withheld or delayed. In addition, all of Lessee’s Agents shall be
      subject to Lessor’s prior written approval (which approval shall not be
      unreasonably withheld), except that subcontractors of Lessor’s selection shall
      be retained by the Contractor to perform all life-safety, mechanical electrical,
      plumbing, structural and heating. ventilation and air conditioning
      work.

    

    (c)      No
      Rent Abatement. Lessee acknowledges that the work to be performed by Lessee
      pursuant to this Section 2 above shall be performed (if at all) during
      the Early Possession period and/or during the Original Term, that Lessee shall
      be entitled to (but shall not be obligated to) conduct business throughout
      the
      course of construction of such renovations and that Lessee shall not be entitled
      to any abatement of rent, nor shall Lessee be deemed to be constructively
      evicted from the Premises, as a result of the construction of such
      renovations

    

    3.  Options
      to Extend.

     

    (a)     
      Option Right.   Lessor hereby grants the Lessee named in
      the Lease (the “Original Lessee”) two (2) options (each, an
“Option’) to extend the Lease Term for the entire Premises for a
      period of five
      (5) years each (each, an “Option Term”), which options shall be
      exercisable only by written notice delivered by Lessee to Lessor as set forth
      below. The rights contained in this Section 3 shall be personal to the Original
      Lessee and may only be exercised by the Original Lessee (and not any assignee.
      sublessee or other transferee of the Original Lessee’s interest in the Lease) if
      the Original Lessee occupies the entire Premises as of the date of Lessee’s
      Option Notice (as defined in Section 3(c) below).

    

    (b)  Option
      Rent. The rent payable by Lessee during the applicable Option Term
      (“Option Rent”) shall be equal to the Market Rent. Market Rent
      shall be denned as prevailing fair market terms and conditions for comparable
      space of comparable size, quality and location to Lessee’s Premises taking into
      consideration the rental abatement, lessee improvement allowance and any other
      lessee inducements then given to lessees in comparable class buildings in the
      general vicinity of the Building.

    

    (c)      Exercise
      of Options. The Options shall be exercised by Lessee only in the following
      manner: (i) Lessee shall not be in default, and shall not have been in Default
      under the Lease more than once on the delivery date of the Option Notice; (ii)
      Lessee shall deliver written notice (“Option Notice”) to Lessor
      not more than twelve (12) months nor less then nine (9) months prior to the
      expiration of the Original Term (or prior Option Term as the case may be),
      stating that Lessee is exercising the Option. and (iii) within forty-five (45)
      business days of Lessor’s receipt of the Option Notice, Lessor shall deliver
      notice ( “OptionRent Notice”) to Lessee
      setting forth the applicable Option Rent. Lessee’s failure to deliver the Option
      Notice to Lessor on or before the date specified above shall be deemed to
      constitute Lessee’s election not to exercise the Option (and such Option (and
      any succeeding Option, if any) shall be null and void). If Lessee timely and
      properly exercises ifs Option, the then Lease Term shall be extended for the
      applicable Option Term upon all of the terms and conditions set forth in the
      Lease, except that the rent for the applicable Option Term shall be as indicated
      in the Option Rent Notice unless Lessee, within, five (5) days after receipt
      of
      the Option Rent Notice containing Lessors Market Rent determination of the
      Option Rent, objects to the Option Rent contained in such Option Rent Notice,
      in
      which case the parties shall follow the procedure amid the Option Rent shall
      be
      determined as set forth below.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)  Determination
      of
      Market Rent. If Lessee timely and appropriately objects to the Market Rent
      set forth in the Option Rent Notice, Lessor and Lessee shell attempt to agree
      upon the Market Rent using their best good-faith efforts. If
      Lessor and Lessee fail to reach agreement within five (5) days following
      Lessee’s receipt of the Option Rent Notice, ( “Outside Agreement
      Date”), then each party shall make separate determination of the Market
      Rent which shall be submitted to each other and to arbitration in
      accordance with the following items (i) through (vii):

    

    (i)  Lessor
      and Lessee shall
      each appoint, within five (5) business days or the Outside Agreement Date,
      one
      arbitrator who shall by profession be a current real estate broker of industrial
      properties in Ventura County and Northern Los Angeles County, and who has been
      active in such field over the last fifteen (15) years. The determination of
      the
      arbitrators shall be limited solely to the issue of whether Lessor’s or Lessee’s
      submitted Market Rent is the closest to the actual Market Rent as determined
      by
      the arbitrators, taking into account the requirements of Section 3(b)
      above.

    

    (ii)  The
      two arbitrators so
      appointed shall within live (5) business days of the date of the appointment
      of
      the last appointed arbitrator agree upon and appoint a third arbitrator who
      shall be qualified under the same criteria set forth hereinabove for
      qualification or the initial two arbitrators.

    

    (iii)  The
      three
      arbitrators shall within five (5) business days of the appointment of
      the third arbitrator reach a decision as to whether the parties shall use
      Iessor’s or Lessee’s submitted Market Rent, and shall notify Lessor and Lessee
      thereof.

     

    (iv)   The
      decision of the majority of the three arbitrators shall be binding upon Lessor
      and Lessee.

    

    (v)  It
      either Lessor or
      Lessee fails to appoint an arbitrator within five (5) business days after the
      applicable Outside Agreement Date the arbitrator appointed by one of them shall
      reach a decision, notify Lessor and Lessee thereof, and such arbitrator’s
      decision shall be binding upon Lessor and Lessee.

    

    (vi)  If
      the two arbitrators
      fail to agree upon and appoint a third arbitrator, or both parties fail to
      appoint an arbitrator, then the appointment of the third arbitrator or any
      arbitrator shall be dismissed and the matter to be decided shall be forthwith
      submitted to arbitration under the provisions of the American Arbitration
      Association, but subject to the instruction set forth in this Section
      3(d).

    

    (vii)  The
      cost of arbitration
      shall be paid by Lessor and Lessee equally.

    

    4.  Base
      Rent
      Increases;  Base Rent Abatement; Temporary Cap on Certain Costs’ and
      Pre­-Paid Rent Credit.

    

    (a)  Base
      Rent Increases. The minimum monthly Base Rent payable by Lessee for the
      Premises during the Original Term shall be as follows :

     

    
      	
                Monthly
                Base Rent per   

            
	 	 	 	 	 
	
              Months
                of Original Term

            	 	
              Monthly
                Base Rent

            	 	
              SF
                of Premises

            
	
              1-12  
                

            	 	
              $70,405.61

            	 	
              $0.67

            
	
              13-24

            	 	
              $72,507.27

            	 	
              $0.69

            
	
              25-36

            	 	
              $74,608.93

            	 	
              $0.71

            
	
              37-48

            	 	
              $76,973.30

            	 	
              $0.7325

            
	
              49-64

            	 	
              $79,337.66

            	 	
              $0.755

            

    

    

    (b)  Base
      Rent
      Abatement. Notwithstanding anything in the Lease to the contrary, Lessor
      shall provide Lessee with monthly Base Rent abatement for the first (1st), second
      (2nd) and third
      (3rd) full months of the Original Term (i.e., the
      months of March, April and May, 2007) and Base Rent abatement equal to one-half
      (1/2) of the Base Rent due for the months of March and April 2008. During such
      abatement periods Lessee Shall still be responsible for the payment of all
      of
      its other monetary obligations under the Lease. In the event of a default by
      Lessee under the terms of the Lease within the first twelve (12) months of
      the
      initial term that results in early termination pursuant to the provisions of
      Paragraph 13 of the Lease, then as a part of the recovery set forth in Paragraph
      13 of the Lease, Lessor shall be entitled to the recovery of the monthly Base
      Rent that was abated under the provisions of this Section 4.

    

    (c)  Temporary
      Cap on
      Certain Costs. Landlord acknowledges and agrees that the aggregate cost
      payable by Lessee for the month of March, 2007 for Lessor’s standard landscape
      maintenance, pest control. HVAC maintenance, security, elevator maintenance,
      water and Real Property Taxes shell not exceed Fifteen Thousand Two Hundred
      Fifteen Dollars ($15,215.00) for such month.

    

    (d)  Pre-Paid
      Rent
      Credit. Lessor acknowledges and agrees that Lessee previously paid Fifty
      Thousand Dollars ($50,000) to Lessor as a credit toward the Base Rent due on
      execution of this Lease and such credit is reflected in Paragraph 1.6(e) of
      the
      Basic Provisions.

    

    5.  Lessee’s
      Right to
      Audit. In the event Lessee disputes the amount of any expenses sat forth in
      any final statement or any particular calendar year that may be delivered by
      Lessor to Lessee. Lessee shall have the right at Lessee’s cost, after reasonable
      notice to Lessor, to have Lessee’s authorized employees or agents inspect, at
      Lessor’s office during normal business hours, Lessor’s books. records and
      supporting documents concerning such expenses set forth in any such final
      statement;  provided however Lessee shall have no right to conduct
      such inspection, have an audit performed by its agent, or object to or otherwise
      dispute the amount of the any such expenses set forth in any such final
      statement, unless Lessee notifies Lessor of such objection and dispute,
      completes such inspection, and has its agent commence and complete such audit
      within six (8) months immediately following Lessor’s delivery of the particular
      final statement in question (the “Review Period”); provided,
      further that notwithstanding any such timely objection. dispute, inspection,
      and/or audit and as a condition precedent to Lessee’s exercise of its right of
      objection, dispute, inspection and/or audit as set forth in this Section 5,
      Lessee shall not be permitted to withhold payment of, and Lessee shall timely
      pay to Lessor, the full amounts as required by the provisions of this Section
      5
      in accordance with such final statement. However, such payment may be made
      under
      protest pending the outcome of any audit which may be permitted by its
      agent.  In connection with any such inspection by Lessee, Lessor and
      Lessee shall reasonably cooperate with each other so that such inspection can
      be
      performed pursuant to a mutually acceptable schedule, in an expeditious manner
      and without interference with Lessor’s operation and management of the Project.
      If after such inspection and/or request for documentation, Lessee still disputes
      the amount of the expenses set forth in the final statement, Lessee shall have
      the right, within the Review Period, to cause an independent certified public
      accountant the “Accountant”) to complete an audit of Lessor’s
      books and records pertaining to expenses to determine the proper amount of
      the
      expenses incurred and amounts payable by Lessee for the calendar year which
      is
      the subject of such final statement. Such audit by the Accountant shall be
      final
      and binding upon Lessor and Lessee. If such audit reveals that Lessor has
      over-charged Lessee, then within thirty (30) days after the results of such
      audit are made available to Lessor, Lessor shall reimburse to Lessee the amount
      of such over-charge. If the audit reveals that the Lessee was under-charged,
      then within thirty (30) days after the results of such audit are made available
      to Lessor, Lessee shall reimburse to Lessor the amount of such under-charge.
      Lessee agrees to pay the cost of such audit unless it is subsequently determined
      that Lessor’s original final statement which was the subject of such audit was
      in error to Lessee’s disadvantage by three percent (3%) or more of the total
      expenses which was the subject of such audit. The payment by Lessee of
      any amounts pursuant to this Section 5 shall not preclude Lessee
      from questioning the correctness at any final statement provided by Lessor
      at
      any time during the Review Period, but the failure of Lessee to object thereto,
      conduct and complete its inspection and have the Accountant conduct and complete
      the audit as described above prior to the expiration of the Review Period shall
      be conclusively deemed Lessee’s approval of the final statement in question and
      the amount of expenses shown thereon. In connection with any inspection and/or
      audit conducted by Lessee pursuant to this Section 5, Lessee agrees to keep,
      and
      to cause all of Lessee’s employees. agents, consultants and the Accountant to
      keep, all of Lessor’s books and records and the audit, and all information
      pertaining thereto and the results thereof,  strictly confidential,
      and in connection therewith, Lessee shall cause such employees, agents,
      consultants and the Accountant to execute such commercially reasonable
      confidentiality agreements as Lessor may require prior to conducting any such
      inspections and/or audits.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.           Hazardous
      Substances The following provisions are hereby added to Paragraph 6.2 of the
      Lease:

    

    “(d)  Indemnification
      Continued. The indemnification by Lessee of Lessor under Paragraph
      6.2(d) includes, without limitation, any and all costs incurred in connection
      with any investigation of site conditions or any clean up, remedial, removal
      or
      restoration work required by any federal, state or local governmental agency
      or
      political subdivision because of the presence of such Hazardous Substances
      in,
      on or about the Premises or the soil or groundwater on or under the Project
      or
      any portion thereof, which arise directly and/or proximately from the presence
      of Hazardous Substances on, in or about the Premises or any other portion of
      the
      Project which is caused or permitted by Lessee, its agents, employees,
      contractors or invitees. Lessee shall promptly notify Lessor of any release
      of
      Hazardous Substances in the Premises or any other portion of the Project which
      Lessee becomes aware of during the Term or this Lease, whether caused by Lessee
      or any other persons cm entities.

    

     (f)  Investigations
      and Remediations
Continued.   Lessor and Lessor’s
      agents and employees shall have the right, but not the obligation, to inspect,
      investigate sample and/or monitor the Premises, including any soil, water,
      groundwater or other sampling, and any other testing,
      digging, drilling or analyses at any reasonable time, upon prior
      notice to Lessee, to determine whether Lessee is complying with the terms of
      this Paragraph 6.2, and in connection therewith Lessee shall provide Lessor
      with
      full access to all relevant facilities, records and
      personnel.  If Lessee is not in compliance with any of the provisions
      of this Paragraph 6.2, Lessor shall provide Lessee with written notice of such
      non-compliance and a reasonable time period within which Lessee may retain
      a
      reputable contractor (selected or approved by Lessor) to prepare a work
      plan to be approved by Lessor and, once such plan is approved, to cure such
      non-compliance and to diligently prosecute to completion such cure, and if
      Lessee does not so comply, Lessor and Lessor’s agents and employees
      shall have the right, but not the obligation, without limitation upon any of
      Lessor’s other rights and remedies under this Lease, to enter upon the Premises
      and to discharge Lessee’s obligations under this Paragraph 6.2 at Lessee’s
      expense, notwithstanding any other provision of this Lease. Notwithstanding
      the
      foregoing, Lessor’s prior written consent to the work plan shall not be
      necessary in the event that the presence of Hazardous Substances in, on, under
      or about the Premises or any other portion of the Project (i) poses an
      immediate threat to the health, safety or welfare of any individual or (ii)
      is of such a nature than an immediate remedial response is necessary and
      is
      not practicable to obtain Lessor’s consent before taking such action. All
      reasonable sums disbursed, deposited or incurred by Lessor in connection
      therewith including, but not limited to, all costs expenses and actual
      attorneys’ fees, shall be due and payable by Lessee to Lessor, as an item of
      additional rent, on demand by Lessor, together with interest thereon at interest
      rate, from the date of such demand until paid by Lessee.

    

    (h)  Hazardous
      Substance Questionnaire. Prior to the execution of this Lease, Lessee
      shall complete, execute and deliver to Lessor a Hazardous Substances
      Questionnaire (the “Hazardous Substances Questionnaire”) in the
      form of Exhibit ‘B’, and Lessee shall certify to Lessor all information
      contained in the Hazardous Substances Questionnaire as true and correct to
      the
      best of Lessee’s knowledge end belief The completed Hazardous Substances
      Questionnaire shall be deemed incorporated into this Lease for all purposes
      and
      Lessor shall be entitled to rely fully on the information contained therein.
      On
      each anniversary of the Commencement Date (each such date is hereinafter
      referred to as a ‘Disclosure Date’) until and including the
      first Disclosure Date occurring after the expiration or sooner termination
      of
      this Lease, Lessee shall disclose to Lessor in
      writing the names and amounts of all Hazardous Substances or any combination
      thereof, which were stored, generated or used or disposed of on, in, under
      or
      about the Premises for the twelve-month period
      prior to and after each Disclosure Date, or which Lessee intends to
      store, generate, use or dispose of on, under or about the
      Premises.  At Lessor’s option, Lessee’s disclosure obligations under
      this Paragraph 6.2 shall include a requirement that Lessee update, execute
      and
      deliver to Lessor the Hazardous Substances Questionnaire, as the same may be
      modified by Lessor from time to time.

    

    (i)  Legal
      Proceedings. Lessor, at Lessee’s sole cost and expense as part of
      Lessee’s indemnity obligations set forth herein, shall have the right, but not
      the obligation to join and participate in any legal proceedings or actions
      initiated against Lessor the Project or the Premises in connection with any
      claims or causes of action arising out of the storage, generation, use, release,
      or disposal by Lessee, its agents, employees. contractors or invitees, of
      Hazardous Substances in, on, under, from or about The Premises or any other
      portion of the Project. If the presence of any Hazardous Substances in, on,
      under or about the Premises or any other portion of the Project caused or
      permitted by Lessee. its agents, employees. contractors, sublessees or invitees,
      results in (i) injury to any person, (ii) injury to or any
      contamination of the Premises or any other portion of the Project, or (iii)
      injury to or contamination of any real or personal property wherever situated,
      Lessee, at its sole cost and expense. shall promptly take all actions
      necessary to return the Premises or such other portion of the Project,
      to the condition existing prior to the introduction of such Hazardous Substances
      to the Premises and to remedy or repair any such injury or contamination.
      Notwithstanding the foregoing, Lessee shall not, without Lessor’s prior written
      consent (except as provided in subsection (f) above), take any remedial action
      in response to the presence of any Hazardous Substances in, on, under or about
      the Premises or any other portion of the Project, or enter into any
      settlement agreement consent decree or other compromise with any
      governmental agency with respect to any Hazardous Substances claims related
      to
      the Premises or Project,

    

    (j) 
      Closure Statement. Promptly upon the expiration or sooner termination
      of this Lease,
      Lessee shall represent to Lessor in writing that no Hazardous Substances exist
      in, on, under or about the Premises or any other portion of the Project
      other than as specifically identified to Lessor by Lessee in writing. Lessee
      acknowledges receipt of that certain Phase I Environmental Site Assessment
      report for the Building prepared by Ninyo & Moore and dated June 17,2005
      (the “Existing Phase I”) within thirty (30) days prior to Lease
      expiration Lessee shall at its sole cost and expense, also provide Lessor with
      a
      so-called Phase “I” for the Premises evidencing that the Premises are Free of
      Hazardous Substances in violation of any Applicable Requirements. In no event
      shall Lessee be responsible for the remediation of any Hazardous Substances
      which were identified in the Existing Phase I.

    

    (k)  The
      provisions of this
      Paragraph 6.2 shall survive any termination of this Lease.

    

    7.      Compliance
      with Laws. The following is hereby added to Paragraph 6.3 of the
      Lease:

    

    “Without
      limiting the provisions oh Paragraph 6.3 of the Lease, Lessee agrees, during
      the
      Term of the Lease, to comply (at its sole cost and expense) with all provisions
      applicable to occupants pursuant to any covenants, conditions and restrictions
      of record now or hereafter affecting the Premises, as each of tile foregoing
      may
      be further amended or supplemented from time to time (collectively, the
‘Restrictions’). Without limiting the generality of the
      foregoing, Lessee agrees (1) to fully cooperate with Lessor and the Declarant(s)
      under the Restrictions in satisfying obligations imposed by the Restrictions
      with respect to the Premises; and (2) that any fines or costs
      which may be imposed on or incurred by Lessor as a result of Lessee’s failure to
      comply with the previsions of the Restrictions shall constitute
      additional rent under the Lease.”

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Furthermore,
      as part of its obligations hereunder, Lessee shall, at its sole cost and
      expense, observe and comply with the provisions of Title Ill of the Americans
      with Disabilities Act of 1990, as amended and any regulations promulgated
      pursuant thereto (collectively, the ‘ADA’), as it pertains to
      Lessee’s use, occupancy, improvement and alteration of the Premises. Lessee
      shall not use or allow the Premises to be used for any improper, immoral.
      unlawful or reasonably objectionable purpose Lessee shall not do or permit
      to be
      done anything which will obstruct or interfere with the rights of other lessees
      or occupants of the Protect, or injure or annoy them. Lessee shall lot cause,
      maintain or permit any nuisance in, on or about the Premises or the Project,
      nor
      commit or suffer to he committed any waste in, on or about the
      Premises.”

    

    8. Alterations.
      The
      following is deemed added as new Paragraph 7.3(d) to the Lease:

    

    Notwithstanding
      anything in Paragraph 34 of the Lease, and subject to compliance with the
      provisions of Paragraph 7.3, Lessee shall be entitled ho reasonable building
      signage in locations reasonably acceptable to Lessor and Lessee. Lessee shall
      pay for all costs relating ho the design, fabrication, installation, permitting,
      maintaining and removal of the signage. All signage shall comply with the
      Applicable Requirements. Lessee shall remove all signage and repair any damage
      to the Premises caused by such removal upon the expiration or earlier
      termination of this Lease”

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9. Assignment  and
      Subletting.   The following provision is hereby added to Paragraph
      12.1(a):

    

    “Lessor
      and Lessee hereby acknowledge that Lessor’s disapproval of any proposed transfer
      pursuant to this Paragraph 12 (‘Transfer’) shall be deemed
      reasonably withheld if based upon any reasonable factor, including, without
      limitation, any or all of the following factors: (a) the proposed Transfer
      would
      result in more than two (2) subleases of portions of the Premises being in
      effect at any one time during the Term; (b)  the proposed transferee
      is a governmental entity; (c) the portion of the Premises ho be sublet or
      assigned is irregular in shape with inadequate means of ingress and egress;
      (d)
      the use of the Premises by the transferee is not permitted by the use provisions
      in Paragraph 1.7 hereof; (e) the transferee does not have the financial
      capability to fulfill time obligations imposed by the Transfer; or (f) the
      transferee is not in Lessor’s reasonable opinion of reputable or good
      character.

    

    Thu
      following are hereby deemed added as new Paragraphs 12.4 and 12.5 of the
      Lease:

    

    “12.4
      Transfer Premium. If Lessor consents to an assignment or
      subletting, Lessee shall pay to Lessor within thirty (30) days of Lessee’s
      receipt from the transferee, fifty percent (50%) of any “Transfer Premium” as
      that term is defined in this Paragraph 12.4, received by Lessee
      from such transferee. “Transfer Premium” shall mean all rent,
      additional rent or other consideration payable by such transferee in excess
      of
      the Rent payable by Lessee under this Lease on a per rentable square foot basis
      if less than all of the Premises is transferred, after deducting the reasonable
      expenses incurred by Lessee for (i) any changes, alterations and
      improvements to the Premises in connection with the assignment or subletting,
      and (ii) any brokerage commissions in connection with the assignment or
      subletting (collectively, the “Transfer Costs”) “Transfer
      Premium” shall also include, but not be limited to, key money and bonus money
      paid by the transferee to Lessee in connection with such assignment or
      subletting, and any payment in excess of fair market value for services rendered
      by Lessee to the transferee or for assets, fixtures, inventory, equipment,
      or
      furniture transferred by Lessee to the transferee in connection with such
      assignment or subletting. Lessor or its authorized representatives shall have
      the right at all reasonable times to audit the books, records and papers of
      Lessee relating to any assignment or subletting, and shall have the right to
      make copies thereof. If the Transfer Premium respecting any assignment or
      subletting shall be found understated. Lessee shall, within thirty (30) days
      after demand, pay the deficiency and Lessor’s costs of such audit,”

    

    “12.5
      Affiliate Transfers. Notwithstanding anything to the contrary
      contained in Paragraph 12 of the Lease, an assignment or subletting of all
      or a
      portion of the Promises to an affiliate (“Affiliate”) of Lessee
      (an entity which is controlled by, controls or is under common control with,
      Lessee), shall not be deemed an Assignment or sublease under Paragraph 12 of
      the
      Lease (and shall not entitle Lessor to any Transfer Premium), provided that
      (1)
      Lessee gives Lessor not less than thirty (30) days prior notice of any such
      assignment or sublease: (2) Lessee promptly supplies Lessor with any documents
      or information requested by Lessor regarding such assignment or sublease or
      such
      affiliate; (3) such assignment or sublease is not a subterfuge by Lessee to
      avoid its obligations under the Lease: (4) such affiliate has, as of the
      effective date of any such assignment or sublease, a tangible net worth, in
      the
      aggregate, computed in accordance with generally accepted accounting principles
      (but excluding goodwill as an asset), which equals or exceeds that of Lessee
      as
      of the date of the execution of the Lease: (5) such assignment or sublease
      shall
      be subject to all of the terms and provisions of the Lease and such assignee
      or
      sublessee shall assume, in a written document reasonably satisfactory to Lessor
      and delivered to Lessor upon of prior to the effective date of such assignment
      or sublease, all the obligations of Lessee under the Lease with respect to
      the
      space which is the subject of such transfer: (6) Lessee shall remain fully
      liable for all obligations to be performed by lessee under the Lease; end (7)
      the actual and/or intended use of the Premises by any such Affiliate complies
      with the provisions of Paragraph 1.7 and the other terms and provisions of
      the
      Lease.  An assignee of Lessee’s entire interest in the Lease pursuant
      to the immediately preceding sentence may be referred to herein as an
“Affiliated Assignee.” “Control,” as used in
      this Paragraph 12.5 shall mean the ownership, directly or indirectly, of greater
      than fifty percent (50%) of the voting securities of, or possession of the
      right
      to vote, in the ordinary direction of its affairs, of greater than fifty percent
      (50%) of the voting interest in. an entity.”

    

    10. Default.   A
      new
      Paragraph 13.1(h) to the Lease is hereby deemed added as follows:

    

    “13.1(h)  Any
      notice sent by Lessor ho Lessee pursuant to this Paragraph 13 shall be in lieu
      of, and not in addition to,  any notice required under California Code
      of Civil Procedure Section 1161.”

    

    The
      following shall be added as the third (3rd) sentence
      to
      Paragraph 13.2(a):

    

    “The
      ‘worth at the time of the award’ of the amount referred to in
      (ii) above shall be computed by allowing interest at the interest
      rate set forth in Paragraph 13.5.”

    

    The
      following is deemed added as new Paragraph 13.6(b) to the Lease:

    

    “Notwithstanding
      anything to the contrary set forth in this Lease, if Lessee provides written
      notice to Lessor of the need for repairs and/or maintenance which are Lessor’s
      obligation to perform under the terms of this Lease, and Lessor fails to
      undertake such repairs and/or maintenance within a reasonable period of time,
      given the circumstances after receipt of such notice, but in any event not
      later
      than thirty (30) days after receipt of such notice (or such longer time as
      is
      reasonably necessary if more than thirty (30) days are reasonably required
      to
      complete such repairs and Lesser commences such repairs within such 30-day
      period and thereafter diligently attempts to complete same, provided that in
      cases of emergency involving imminent threat of serious injury or damage to
      persons or property within the Premises, Lessor shall have only one (1) business
      day after receipt of such notice or such later period of time as is reasonably
      necessary to commence such corrective action), then Lessee may proceed to
      undertake such repairs and/or maintenance upon delivery of an additional five
      (5) business days’ notice to Lessor that Lessee is taking such required action
      (but no such second notice shall be required in the cases of such emergency).
      If
      such repairs and/or maintenance were required under the terms of this Lease
      to
      be performed by Lessor and are not performed by Lessor prior to the expiration
      of such 5-business day period or the one (1) business day period with respect
      to
      such emergency cases, as applicable (the “Outside Repair Period”), then Lessee
      shall be entitled to reimbursement by Lessor of Lessee’s actual, reasonable, and
      documented costs and expenses in performing such maintenance and/or repairs.
      Such reimbursement shall be made within thirty (30) days after Lessor’s receipt
      of invoice of such costs and expenses, and if Lessor fails to so reimburse
      Lessee within such 30 day period, then Lessee shall be entitled to offset
      against  Rent payable by Lessee under this Lease the amount of such
      invoice together with interest thereon, at the interest rate which shall have
      accrued on the amount of such invoice during the period from and after Lessee’s
      delivery of such invoice to Lessor through and including the earlier of the
      date
      Lessor delivers the payment to Lessee or the date Lessee offsets such amount
      against the Rent; provided, however, that notwithstanding the foregoing to
      the
      contrary, if (i) Lessor delivers to Lessee prior to the expiration
      of the Outside Repair Period described above, a written objection to Lessee’s
      right to receive any such reimbursement based upon Lessor’s good faith claim
      that such action did not have to be taken by Lessor pursuant to the terms of
      this Lease, or (ii) Lessor delivers to Lessee, within thirty (30)
      days after receipt of Lessee’s invoice, a written objection to the payment of
      such invoice based upon Lessor’s good faith claim that such charges are
      excessive (in which case, Lessor shall reimburse Lessee, within such 30-day
      period, the amount Lessor contends would not be excessive), then Lessee shall
      not be entitled to such reimbursement or offset against Rent, but Lessee, as
      its
      sole remedy, may proceed to institute a lawsuit against Lessor to determine
      and
      collect the amount, if any of such reimbursement.  In the event Lessee
      prevails in such lawsuit and receives a monetary judgment against Lessor, then
      Lessor shall pay such monetary judgment (including any attorneys’ fees awarded
      in connection therewith) to Lessee within thirty (30) days of date such monetary
      judgment is issued if such monetary judgment is not so paid, then,
      notwithstanding any contrary provision of this Lease, Lessee shall be entitled
      to offset against the Rent payable under this Lease the amount of such monetary
      judgment, including any attorneys’ fees awarded in connection therewith)
      together with interest which shall have accrued on such monetary judgment during
      the period from and after the day after the date such monetary judgment was
      issued through and including the date that Lessee offsets against the Rent
      the
      amount of such monetary judgment, at the interest rate. In the event Lessee
      undertakes such repairs and/or maintenance and such work will affect the base
      building systems and equipment of the Building, any structural portions of
      the
      building, or other areas outside the Building and/or the exterior appearance
      of
      the Building or Project (or any portion thereof), Lessee shall use only those
      unrelated third party contractors used by Lessor in the Building for such work
      unless such contractors are unwilling or unable to perform such work at
      competitive prices (including, without limitation, inability to perform due
      to
      Lessor’s failure to provide notice to Lessee of the identities and addresses of
      such contractors), in which event Lessee may utilize the services of any other
      qualified contractor which normally and regularly performs similar work in
      comparable buildings in the general vicinity of the building. Lessee shall
      comply with the other terms and conditions of this Lease if Lessee takes the
      required action, except that Lessee is not required to obtain Lessor’s consent
      for such repairs.”

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      Following is added as new Paragraph 13.6(c) to the Lease:

    

    “The
      obligations of Lessor under the Lease shall not constitute personal obligations
      of Lessor, the individual partners or Lessor or their partners, directors,
      officers or shareholders, and Lessee shall look to the Premises, and to no
      other
      assets of Lessor, for the satisfaction of any liability at Lessor with respect
      to the Lease, and shall not seek recourse against the individual partners of
      Lessor, or its or their individual partners, directors, officers or shareholders
      or any of their personal assets for such satisfaction. It is expressly
      understood and agreed that notwithstanding any contrary provision in the Lease
      and notwithstanding any applicable law to the contrary, the liability of Lessor
      hereunder and any recourse by Lessee against Lessor, shall be limited solely
      and
      exclusively to an amount which is equal to the interest of Lessor in the
      Premises, and Lessor shall have no personal liability therefore, and Lessee
      hereby expressly waives and releases such personal liability on behalf of itself
      and all persons claiming by, through or under Lessee. Notwithstanding anything
      to the contrary contained in the Lease, as hereby amended, Lessor shall not
      be
      liable under any circumstances for injury or damage to, or interference with,
      Lessee’s business, including but net limited to, loss of profits, loss of rents
      or other revenues, loss of business opportunity, loss of good will or loss
      of
      use, in each case, however occurring.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Addendum as of the day
      and year of execution of the Lease.

    

    
      	
              LESSOR:

            	 	
              LESSEE:

            
	 	 	 
	
              OMP
                INDUSTRIAL MORELAND, LLC,

            	 	
              AEROVIRONMENT,
                INC., a Delaware corporation

            
	
              a
                Delaware limited liability company

            	 	 
	 	 	 	 
	
              By:

            	
              OMP
                INVESTOR, LLC,

            	 	
              By:
                /s/ Stephen Wright

            
	 	
              a
                Delaware limited liability company.

            	 	
              Name:
                Stephen Wright

            
	 	
              its
                manager

            	 	
              Title:  CFO

            
	 	 	 	 	 
	 	
              By:

            	
              OVERTON,
                MOORE PROPERTIES,

            	 	 
	 	 	
              a
                Delaware general partnership.

            	 	 
	 	 	
              its
                sole member

            	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
              By:

            	
              MOORE
                TECIMER, LLC

            	 	 
	 	 	
              A
                California limited liability company,

            	 	 
	 	 	
              its
                Administrative Partner

            	 	 
	 	 	
              /s/
                Timur Tecimer

            	 	 
	 	 	
              Timur
                Tecimer , a managing member

            	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      “A”

    Plot
      Plan

    

    

    SITE

    DEVELOP

    MENTAMENDMENT NO. 4 TO AMENDED AND RESTATED
                          CREDIT FACILITIES AGREEMENT

     This  AMENDMENT  NO.  4 TO AMENDED AND RESTATED CREDIT FACILITIES AGREEMENT
(this  "Agreement")  is  entered  into and effective as of June 25, 2007, by and
among  (1)  Pomeroy  IT  Solutions,  Inc.  (formerly  known as, Pomeroy Computer
Resources,  Inc.,  and  as  successor  by merger with Val Tech Computer Systems,
Inc.),  (2)  Pomeroy  Select  Integration  Solutions, Inc., (3) Pomeroy Staffing
Solutions, LLC (formerly, prior to conversion, Pomeroy Select Advisory Services,
Inc.),  (4) Pomeroy IT Solutions Sales Company, Inc. (formerly known as, Pomeroy
Computer Resources Sales Company, Inc., and as successor by merger with TheLinc,
LLC  and  as successor by merger with Micrologic Business Systems of K.C., LLC),
(5)  Pomeroy  Computer  Resources  Holding  Company,  Inc., (6) Pomeroy Computer
Resources Operations, LLP, (7) PCR Holdings, Inc. (formerly known as, Technology
Integration  Financial Services, Inc.), (8) PCR Properties, LLC (formerly, prior
to  conversion,  PCR  Properties,  Inc.,  and prior to such conversion, formerly
known  as,  T.I.F.S.  Advisory  Services,  Inc.),  (9)  Alternative  Resources
Corporation,  a  Delaware  corporation  (as  successor  by  merger  with Pomeroy
Acquisition Sub, Inc.), (10) ARC Service, Inc., a Delaware corporation, (11) ARC
Staffing  Management  LLC, a Delaware limited liability company, (12) ARC Shared
Services  LLC,  a  Delaware  limited  liability  company,  (13)  ARC  Technology
Management  LLC, a Delaware limited liability company, (14) ARC Solutions, Inc.,
a  Delaware  corporation,  and (15) ARC Midholding, Inc., a Delaware corporation
(collectively  and separately referred to as, "Borrower" or "Borrowers"), and GE
Commercial  Distribution  Finance  Corporation,  formerly  known  as  Deutsche
Financial Services Corporation ("GECDF"), as Administrative Agent, and GECDF and
the  Lenders.

                                    RECITALS:
                                    ---------

A.   Borrower,  Administrative  Agent  and  Lenders  are  party  to that certain
     Amended and Restated Credit Facilities Agreement dated as of June 25, 2004,
     as  amended by Amendment No. 1 (with Waiver) to Amended and Restated Credit
     Facilities  Agreement  dated  as of March 31, 2006, as amended by Amendment
     No.  2  (with  Waiver)  to Amended and Restated Credit Facilities Agreement
     dated as of April 13, 2006, and as amended by Amendment No. 3 (with Waiver)
     to  Amended  and  Restated Credit Facilities Agreement dated as of June 23,
     2006  as  amended  or  modified  from  time to time (the "Loan Agreement").

B.   Lenders  and Borrower have agreed to the provisions set forth herein on the
     terms  and  conditions  contained  herein.

                                    AGREEMENT
                                    ---------

     Therefore,  in  consideration  of  the  mutual  agreements herein and other
sufficient consideration, the receipt of which is hereby acknowledged, Borrower,
Administrative  Agent  and  the  Lenders  hereby  agree  as  follows:

1.     DEFINITIONS. All references to the "Agreement" or the "Loan Agreement" in
the Loan Agreement and in this Agreement shall be deemed to be references to the
Loan  Agreement  as it may be amended, restated, extended, renewed, replaced, or
otherwise  modified  from time to time. Capitalized terms used and not otherwise
defined  herein  have  the  meanings  given  them  in  the  Loan  Agreement.

2.     EFFECTIVENESS  OF  AGREEMENT  This Agreement shall become effective as of
the  date  first  written above, but only if this Agreement has been executed by
Borrower,  Administrative  Agent and each of the Lenders, and only if all of the
documents  listed  on  Exhibit  A  to this Agreement have been delivered and, as
                       ----------
applicable,  executed,  sealed,  attested,  acknowledged,  certified,  or
authenticated,  each  in  form  and

<PAGE>
substance  satisfactory  to Administrative Agent and the Lenders, and the Fourth
Amendment  Fee  (as  defined  on Exhibit A) has been paid in same day funds. The
                                 ----------
Fourth  Amendment Fee shall be paid solely to, and shared solely by, each of the
Remaining  Lenders.

3.     ASSIGNMENT AND ASSUMPTION.
     3.1.
     In  connection  with  this  Agreement,  and  simultaneously  with  its
effectiveness,  Fifth Third Bank, Northern Kentucky, Inc., ArnSouth Bank and UPS
Capital  Corporation  ("Departing  Lenders") will no longer be Lenders under the
Credit  Agreement  and  the other Loan Documents, and GE Commercial Distribution
Finance  Corporation,  National  City  Bank, Bank of America, N.A. and PNC Bank,
N.A.  (the  "Remaining  Lenders")  will  continue to be Lenders under the Credit
Agreement  and the Loan Documents. The Lenders, their respective Commitments and
their  respective  pro-rata  shares  of  the  Lenders  immediately  prior to the
effectiveness  of  this  Agreement  is  as  set  forth  on  Exhibit  C.
                                                            -----------

     3.2.
     Upon  the full and complete execution of this Agreement, the Administrative
Agent  shall  arrange, and each Departing Lender and each Remaining Lender shall
fully  cooperate,  in  making  or  receiving,  as directed by the Administrative
Agent,  wire transfers and fund transfers reasonably necessary to effectuate the
pro-rate,  shares set forth on Exhibit D. The Remaining Lenders (who shall be at
                               ---------
such  time  the  Lenders),  their  respective  Commitments  and their respective
pro-rata  shares immediately after the effectiveness of this Agreement and after
giving  effect  to  the  transactions  described herein shall be as set forth on
Exhibit  D.

     3.3.
     Each  Remaining  Lender  agrees  that,  to  the extent it has purchased and
assumed  or  be found to have purchased and assumed from any Departing Lender or
any  other Remaining Lender any interest in any Loan, the Loan Agreement and the
Loan  Documents,  that  it  has  purchased  and  assumed  such interest, without
recourse and without representation or warranty except as expressly set forth in
this Section 3, and any such assignment by a Departing Lender or other Remaining
Lender  to  a  Remaining  Lender  shall  be  without  recourse  and  without
representation or warranty except as expressly set forth in this Section 3. Such
purchase,  assignment and assumption shall include that portion of any Departing
Lender's or Remaining Lender's, as the case may be, obligations to fund unfunded
Approvals,

     3.4.
     Each  Departing  Lender  and  each Remaining Lender represents and warrants
that,  immediately prior to the effectiveness of this Agreement, it is the legal
and  beneficial  owner of its Loans and the interests being assigned hereby, and
that  such  Loans  and  interest  are  free and clear of any adverse claim. Each
Departing  Lender  and  each  Remaining  Lender,  (i) makes no representation or
warranty  and  assumes  no  responsibility  with  respect  to  any  statements,
warranties  or  representations made in or in connection with the Loan Documents
or  the  execution, legality, validity, enforceability, genuineness, sufficiency
or  value  of  the  Loan Documents or any other instrument or document furnished
pursuant  thereto;  and  (ii) makes no representation or warranty and assumes no
responsibility  with  respect  to the financial condition of any Borrower or any
Covered  Person, or the performance or observance by any Borrower or any Covered
Person  of  any  of  its  obligations  under  the  Loan  Documents  or any other
instrument  or  document  furnished  pursuant  thereto.

     3.5.
     Each  Departing  Lender  and  each Remaining Lender confirms, covenants and
agrees  that it has received a copy of the Credit Agreement, the Loan Documents,
together  with  copies  of the Financial Statements referred to therein and such
other  documents  and  information  as it has deemed appropriate to make its own
credit  analysis  and  decision  to  enter into this Agreement, and confirms and
covenants  that  it

                                       2
<PAGE>
has  entered  into  this Agreement based on its own credit analysis and decision
and  without  reliance  upon  any information provided by, or statement made by.
Administrative Agent or any other Lender (including any Departing Lender and any
Remaining  Lender).

     3.6.
     Each  Remaining  Lender  (i)  confirms,  covenants and agrees that it will,
independently  and without reliance upon the Administrative Agent, any Departing
Lender or any Remaining Lender or any other Lender a party to the Loan Agreement
from  time  to time and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in talcing or
not  taking  action under the Credit Agreement; (ii) appoints and authorizes the
Administrative  Agent to take such action as agent on its behalf and to exercise
such  powers  and  discretion under the Credit Agreement as are delegated to the
Administrative  Agent  by  the  terms  thereof,  together  with  such powers and
discretion  as  are  reasonably  incidental  thereto;  (iii) agrees that it will
perform  in accordance with their terms all of the obligations that by the terms
of  the  Credit  Agreement  and  the  other  Loan  Documents  are required to be
performed  by  it as a Leader; and (iv) promptly provide to Administrative Agent
any  U.S.  Internal  Revenue  Service  or  other forms required under the Credit
Agreement.  Each  Remaining'  Lender  and  each  Departing Lender stall promptly
following  the  effectiveness  of  this  Agreement, send to Administrative Agent
(such  address being, David J Wolterink, 3330 Cumberland Blvd., Atlanta, Georgia
30339)  by  overnight  delivery  service  the  original  Notes held by it marked
"Cancelled"  and  authorizes  Administrative  Agent  and its representatives and
counsel  to  mark  such  Notes  "Cancelled".

4.     AMENDMENTS. The Loan Agreement is hereby amended as follows:

     4.1.     REQUIRED LENDERS. Section 2.5 of the Loan Agreement is deleted in
its entirety and replaced with the following:

     "2.5.  REFERENCES  TO  REQUIRED  LENDERS.  The  words  "Required  Lenders"
     means  any  one  or  more  Lenders whose shares of Lenders' Exposure at the
     relevant  time aggregate at least 69.0000% (subject to the terms of Section
     7.5)."

     4.2.     REVOLVING LOANS AGGREGATE AMOUNT Section 3.1.1 of the Loan
Agreement is deleted and replaced with the following:

     "3.1.1.  AGGREGATE  AMOUNT. Subject  to  the  limitations in Section 3.1.2,
     Section  3.6 and elsewhere herein, each Lender commits to make available to
     Borrower, from the Effective Date to the Revolving Loan Maturity Date, such
     Lender's  pro-rata  share  (as listed on Exhibit 3 hereto) of an "Aggregate
     Revolving  Loan  Commitment"  that  is  initially  Eighty  Million  Dollars
     ($80,000,000), but which may decrease from time to time as provided herein,
     minus  the  outstanding  amount  of  the  Swingline  Loans  and  minus  the
     outstanding  amount  of  the Aggregate Floorplan Loans made and outstanding
     Approvals granted due to any unused portion of the Aggregate Revolving Loan
     Facility  as  provided  in Section 3.2.1, by funding such Lender's pro-rata
     share  of  Revolving Loan Advances made from time to time by Administrative
     Agent  as  provided herein. Subject to the limitations in Section 3.1.2 and
     elsewhere  herein,  payments and prepayments that are applied to reduce the
     Aggregate Revolving Loan may be reborrowed through Revolving Loan Advances.
     Each  Lender's  Revolving  Loan  Commitment  is  its  pro-rata share of the
     Aggregate  Revolving  Loan  Commitment. Upon any reduction of the Aggregate
     Revolving  Loan  Commitment  permitted  in  this  Agreement,  each Lender's
     Revolving  Loan  Commitment  will  automatically  reduce  by  such Lender's
     pro-rata  share  of  such  reduction  of  the  Aggregate  Revolving  Loan
     Commitment."

                                       3
<PAGE>
     4.3.     LIMITATIONS ON REVOLVING LOAN ADVANCES. Section 3.1.2 of the Loan
Agreement is deleted and replaced with the following:

     "3.1.2.  LIMITATION  ON  REVOLVING  LOAN,  No  Revolving  Loan Advance will
     be  made  which  would  result  in either: (i) the Aggregate Revolving Loan
     exceeding  the  Maximum  Available  Amount;  or  (ii) the Lenders' Exposure
     exceeding the Total Aggregate Facility Limit No Revolving Loan Advance will
     be made on or after the Revolving Loan Maturity Date. Lenders may, However,
     in  their  absolute discretion make such Revolving Loan Advances, but shall
     not be deemed by doing so to have increased the Maximum Available Amount or
     the  Total  Aggregate Facility Limit and shall not be obligated to make any
     such  Revolving  Loan  Advances  thereafter.  At  any time that there is an
     Existing  Default,  the Aggregate Revolving Loan Commitment may be canceled
     as provided in Section 16.3. The "Maximum Available Amount" (which can be a
     negative  number)  on any date shall be a Dollar amount equal to the lesser
     of  (i) (A) the amount of the Aggregate Revolving Loan Commitment minus (B)
     the  outstanding  amount  of  the  Aggregate  Floorplan  Loans  made  and
     outstanding  Approvals  granted  due to any unused portion of the Aggregate
     Revolving  Loan  Facility  as  provided  in  Section  3.2.1,  minus (C) the
     outstanding  amount  of the Swingline Loans, and (ii) the Borrowing Base on
     such  date,  minus  (ii)  the  sum  of  (a) the Swingline Loan, and (b) the
     Floorplan  Shortfall,  and  (c)  the Letter of Credit Exposure on such date
     (except  to  the  extent  that  a  Revolving  Loan  Advance  will  be  used
     immediately  to reimburse Letter of Credit Issuer for unrermbursed draws on
     a  Letter  of Credit). Notwithstanding anything contained in this Agreement
     to  the  contrary,  at no time may the Aggregate Revolving Loans, Swingline
     Loans  and  the  Letter  of Credit Exposure exceed Total Aggregate Facility
     Limit"

     4.4.     LIMITATIONS ON REVOLVING LOAN ADVANCES. Section 3.1.2 of the Loan
Agreement is deleted and replaced with the following:

     "3.2.1.  FLOORPLAN  LOAN  FACILITY  GENERALLY.  Each  Lender shall, subject
     to  the  terms  and  limitations  in  this  Section  3.2,  Section 3.6, and
     elsewhere  herein,  make available to Borrower such Lender's pro-rata share
     (as  listed  on Exhibit 3 hereto) of an "Aggregate Floorplan Loan Facility"
     that  is  (A) Eighty Million Dollars ($80,000,000) plus, if applicable, (B)
     at  any  time, the unused portion of the Aggregate Revolving Loan Facility,
     by  funding  such  Lender's  pro-rata share thereof as provided for herein.
     Each  Lender's  Floorplan  Loan  Facility  is  its  pro-rata  share  of the
     Aggregate  Floorplan Loan Facility. All Floorplan Loan Advances and Interim
     Floorplan  Loan  Advances will be made directly to approved Vendors and not
     to  the Borrower. No Floorplan Loan Advance will be made which would result
     in,  either:  (i)  the  sum  of  the  Aggregate Floorplan Loan, the Interim
     Floorplan  Loan,  and  all  unfunded  Approvals,  exceeding Total Aggregate
     Facility Limit; or (ii) the Lenders' Exposure exceeding the Total Aggregate
     Facility  Limit  Subject  to  the  terms  of  this  Agreement, payments and
     prepayments  that are applied to reduce the Aggregate Floorplan Loan may be
     re-borrowed  through  subsequent  Floorplan  Loan  Advances, subject to the
     terms  and  conditions  of  this  Agreement  and  the  Loan  Documents. The
     Aggregate  Floorplan  Loan  Facility is not a commitment to lend or advance
     funds but is a discretionary facility. From and after the date on which the
     Administrative  Agent  has  actual  knowledge  of an Event of Default under
     Section  16.1.1  or  under  Section  16.1.12,  no further Approvals will be
     issued  and  except with respect to existing unfunded Approvals, no further
     Floorplan  Loan  Advances  shall  be made. From and after the date on which
     Administrative Agent has actual knowledge of any other Event of Default, no
     further  Approvals  will be issued if the - Administrative Agent so chooses
     in  its  discretion to no longer issue Approvals or if the Required Lenders
     direct  the  Administrative  Agent to no longer issue Approvals, and except
     with  respect  to  existing  unfunded  Approvals, no further Floorplan Loan
     Advances  shall  be  made."

                                       4
<PAGE>
     4.5.     TOTAL  AGGREGATE  FACILITY LIMIT Section 3.6 of the Loan Agreement
is  deleted  and  replaced  with  the  following:

     "3.6.  TOTAL  AGGREGATE  FACILITY  LIMIT.  Notwithstanding  the Commitments
     herein  or  anything  else  contained in this Agreement or any of the other
     Loan  Documents  to  the contrary, Borrower,, Administrative Agent and each
     Lender  acknowledge and agree that at no time shall the Aggregate Revolving
     Loan,  the  Swingline  Loan,  the  Aggregate  Floorplan  Loan,  the Interim
     Floorplan  Loan,  the Letter of Credit Exposure and all unfunded Approvals,
     exceed  One  Hundred  Million  Dollars ($100,000,000) in the aggregate (the
     "Total  Aggregate  Facility  Limit")."

     4.6.     PRIME INCREMENTS AND LIBOR INCREMENTS. The table in Section 4.8 of
the Loan Agreement is deleted and replaced with the following:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
"TOTAL FUNDED                         REVOLVING LOANS   FLOORPLAN LOANS      BASE RATE        BASE RATE
INDEBTEDNESS TO EBITDA                 AND SWINGLINE         LIBOR         INCREMENT FOR    INCREMENT FOR
                                        LOANS LIBOR        INCREMENT         REVOLVING        FLOORPLAN
                                         INCREMENT                           LOANS AND          LOANS
                                                                          SWINGLINE LOANS
<S>                                   <C>               <C>               <C>               <C>
------------------------------------  ----------------  ----------------  ----------------  --------------
less than or equal to                            2.75%             1.50%             0.25%          -1.50%
2,75:1.00 but greater than
2.50:1.00
------------------------------------  ----------------  ----------------  ----------------  --------------
less than or equal to                            2.50%             1.50%             0.00%          -1.50%
2.50:1.00 but greater than
2.00:1.00
------------------------------------  ----------------  ----------------  ----------------  --------------
(A) less than or equal                           2.25%             1.50%            -0.25%          -1.50%
2.00:1.00 but greater than or
equal to 1.00:1.00 OR (B) less
than 1.00:1.00 and Borrower's
quarterly volume for the
preceding quarter for the
Floorplan Loan Facility is less
than $30,000,000
------------------------------------  ----------------  ----------------  ----------------  --------------
(i) less than 1.00:1.00 AND(ii)                  2.00%             1.50%             -.50%        -1.50%"
Borrower's    quarterly volume
for   the   preceding quarter   for
the   Floorplan Loan Facility is
greater than or equal to $3
0,000,000
----------------------------------------------------------------------------------------------------------
</TABLE>

     4.7.     MATURITY. Section 6.2.1.3 of the Loan Agreement is deleted and
replaced with the following:

     "6.1.2.3.  MATURITY.  Borrower  shall  repay  the  entire  amount  of  the
     Aggregate  Revolving  Loan  on  June  25, 2008 and Borrower shall repay the
     entire  amount of the Swingline Loan on demand, or if no demand is made, on
     June  25,  2008,  and  plus  at  such  time,  payment  of  cash  collateral
     satisfactory  to Administrative Agent as security for Borrower's obligation
     to reimburse the Letter of Credit Issuer for 105% of all draws and expenses
     under  all  outstanding  Letters  of  Credit,

                                       5
<PAGE>
     Borrower  shall repay the entire amount of the Aggregate Floorplan Loan and
     the  Interim  Floorplan  Loan  on  the date as provided in Section 3.2.7 or
     specified elsewhere in. this Agreement or if no demand is made as set forth
     in  Section  3.2.7  or  elsewhere  in this Agreement, then on June 25, 2008
     (such date being, the "Floorplan Loan Maturity Date"), plus cash collateral
     equal to 100% of any unfunded Approvals, in which case such Approvals shall
     he  otherwise  paid  in  accordance  with  the  applicable  Statements  of
     Transaction."

     4.8,     MANDATORY PAYMENTS. The following sentence is added to the end of
Section 6.3.2. of the Loan Agreement:

     "In  addition,  on  any  date  that  the  sum  of  the  Aggregate Revolving
     Loans,  the  Swingline  Loans,  the  Aggregate Floorplan Loans, the Interim
     Floorplan  Loans, the Letter of Credit Exposure and the Floorplan Shortfall
     exceeds  the  Borrowing  Base  plus the Floorplan Inventory Value, then the
     Borrower  shall  immediately make a payment of the amount of such excess to
     the  Administrative  Agent."

     4.9.     ASSIGNMENTS AT THE DIRECTION OF THE BORROWING AGENT OR THE
ADMINISTRATIVE AGENT A new Section 18.4.8 is hereby added to the Loan Agreement
as follows:

     "18.4.8.  ASSIGNMENTS  AT  THE  DIRECTION  OF  THE  BORROWING  AGENT OR THE
     ADMINISTRATIVE  AGENT.  Notwithstanding  anything  contained  herein to the
     contrary,  (i)  if a Lender fails, refuses or otherwise does not consent to
     any amendment, modification, waiver or restatement of this Agreement or any
     Loan  Document,  then  the  Borrowing  Agent  in  consultation  with  the
     Administrative  Agent  or the Administrative Agent may require, at any time
     within ninety (90) days following such failure or refusal, that such Lender
     sell  and  assign (pursuant to the form Assignment and Acceptance Agreement
     attached  hereto)  to  the  Administrative  Agent,  another Lender, another
     financial institutional acceptable to Administrative Agent, on no less than
     five (5) Business Days prior written notice, at par, all of its Commitments
     and  outstanding  Loans, and (ii) at any time, the Administrative Agent may
     require  that  one  or more Lenders (including all Lenders) sell and assign
     (pursuant  to the form Assignment and Acceptance Agreement attached hereto)
     to  the  Administrative  Agent,  another  Lender,  or  another  financial
     institutional  acceptable  to Administrative Agent, on no less than 20 days
     prior  written  notice,  at  par,  all  of  its Commitments and outstanding
     Loans."

5.     REPRESENTATIONS  AND  WARRANTIES  OF  BORROWER.  Each  Borrower  hereby
represents  and  warrants  to Administrative Agent and the Lenders that (i) such
Borrower's execution of this Agreement has been duly authorized by all requisite
action  of  such Borrower; (ii) no consents are necessary from any third parries
for  such Borrower's execution, delivery or performance of this Agreement, (iii)
this  Agreement,  the  Loan  Agreement,  and  each  of the other Loan Documents,
constitute  the  legal,  valid  and  binding obligations of Borrower enforceable
against  Borrower  in accordance with their terms, except to the extent that the
enforceability thereof against Borrower may be limited by bankruptcy, insolvency
or  other  laws affecting the enforceability of creditors rights generally or by
equity  principles  of  general  application,  (iv)  except  as disclosed on the
disclosure  schedule  attached  to  the  Loan  Agreement  and attached hereto as
Exhibit  B, all of the representations and warranties contained in Section 11 of
----------
the  Loan  Agreement  are  true and correct with the same force and effect as if
made  on  and  as  of the date of this Agreement, and (v) after giving effect to
this  Agreement,  there  is  no  Existing  Default.

6.     CUSTOMER  IDENTIFICATION  -  USA PATRIOT ACT NOTICE. Administrative Agent
and  each  Lender  hereby  notifies  the Borrowers and each other Covered Person
that,  pursuant to the requirements of the USA Patriot Act, Title III of Pub. L.
107-56,  signed  into  law  October  26,  2001  (as  amended  from  tune to time
(including  any  successor  statute)  and  together  with  all rules promulgated
thereunder,  collectively,  the

                                       6
<PAGE>
"Act"),  it is required to obtain, verify and record information that identifies
the Borrowers and each other Covered Person, which information includes the name
and address of the Borrowers and each other Covered Person and other information
that  will  allow Administrative Agent and each Lender to identify the Borrowers
and  each  other  Covered  Person  in  accordance  with  the  Act.

7.     REAFFIRMATION.  Each  Borrower  hereby represents, warrants, acknowledges
and  confirms  that  (i)  except  as  specifically modified by the terms of this
Agreement,  the Loan Agreement and the other Loan Documents remain in full force
and  effect  as  amended by this Agreement, (ii) such Borrower has no defense to
its  obligations  under the Loan Agreement and the other Loan Documents, and the
Loan  Obligations  are due and owing to the Administrative Agent and the Lenders
without  setoff  or  counterclaim,  (iii)  the  Security  Interests  of  the
Administrative  Agent  (held  for  the ratable benefit of the Lenders) under the
Security  Documents  secure  all  the  Loan  Obligations,  are reaffirmed in all
respects,  continue  in  full force and effect, have the same priority as before
this  Agreement,  and  are  not  impaired or extinguished in any respect by this
Agreement,  and  (iv) such Borrower has no claim against Administrative Agent or
any  Lender  arising  from or in connection with the Loan Agreement or the other
Loan  Documents and any such claim is hereby irrevocably waived and released and
discharged  forever. Until the Loan Obligations are paid in full in cash and all
obligations  and  liabilities of each Borrower under this Agreement and the Loan
Documents  are  performed  and  paid  in  full in cash, each Borrower agrees and
covenants  that  they are respectively bound by the covenants and agreements set
forth  in the Loan Agreement, Loan Document and in this Agreement. The Borrowers
hereby  ratify  and confirm the Loan Obligations. This Agreement does not create
or  constitute,  and is not, a novation of the Loan Agreement and the other Loan
Documents.

8.       RELEASE.  As  a  material  part of the consideration for Administrative
Agent  and  each  Lender  (including,  each  Remaining Lender and each Departing
Lender)  entering into this Agreement, each Borrower, jointly and severally, for
themselves  and  their  officers,  directors, employees and agents (collectively
"Releasor")  hereby  forever  releases,  forever  waives  and forever discharges
Administrative  Agent,  each  Lender  (including, each Remaining Lender and each
Departing Lender), and Administrative Agent's and each Lender's (including, each
Remaining  Lender's  and  each  Departing  Lender's)  predecessors,  successors,
assigns,  officers,  managers,  directors,  shareholders,  employees,  agents,
attorneys,  representatives,  parent  corporations, subsidiaries, and affiliates
(hereinafter  all of the above collectively referred to as "Administrative Agent
and  Lender  Group"),  jointly  and  severally,  from  any  and  all  claims,
counterclaims, demands, damages, debts, agreements, covenants, suits, contracts,
obligations,  liabilities,  accounts,  offsets,  rights,  actions, and causes of
action  of  any  nature  whatsoever,  including, without limitation, all claims,
demands, and causes of action for contribution and indemnity, whether arising at
law  or  in  equity,  and  whether arising under, arising in connection with, or
arising  from,  the  Loan  Agreement, and the other Loan Documents or otherwise,
whether  presently  possessed  or  possessed  in  the  future,  whether known or
unknown,  whether  liability  be direct or indirect, liquidated or unliquidated,
whether  presently  accrued  or  to  accrue  hereafter,  whether  absolute  or
contingent,  foreseen  or  unforeseen,  and  whether or not heretofore asserted,
which  Releasor  may  have or claim to, have against any of Administrative Agent
and  Lender  Group.

9.     GOVERNING LAW. This Agreement has been  executed  and  delivered  in  St.
Louis,  Missouri,  and  shall be governed by and construed under the laws of the
State of Missouri without giving effect to choice or conflicts of law principles
thereunder.

10.    SECTION TITLES.  The section titles in this Agreement are for convenience
of reference only and shall not be construed so as to modify  any provisions  of
this Agreement.

11.    FEES AND EXPENSES. Borrower shall promptly pay to  Administrative  Agent
all fees, expenses and other amounts owing to  Administrative  Agent  under  the
Loan Agreement and the other Loan Documents

                                       7
<PAGE>
upon  demand,  including,  without  limitation,  all  reasonable fees, costs and
expenses  incurred  by  Administrative Agent in connection with the preparation,
negotiation,  execution,  and  delivery  of  this  Agreement.

12.     COUNTERPARTS; FACSIMILE TRANSMISSIONS. This Agreement may be executed in
one  or  more  counterparts and on separate counterparts, each of which shall be
deemed  an original, but all of which together shall constitute one and the same
instrument.  Signatures  to  this  Agreement  may be given by facsimile or other
electronic transmission, and such signatures shall be fully binding on the party
sending  the  same.

13.     INCORPORATION  BY  REFERENCE.  Administrative  Agent,  the  Lenders  and
Borrower  hereby  agree  that  all  of  the  terms  of  the  Loan  Documents are
incorporated  in  and  made  a  part  of  this Agreement by this reference. This
Agreement  is  a  Loan  Document.

14.     NOTICE-INSURANCE.
The  following  notice  is  given  pursuant  to  Section 427.120 of the Missouri
Revised  Statutes;  nothing contained in such notice shall be deemed to limit or
modify  the  terms  of  the  Loan  Documents:

UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY YOUR AGREEMENT
WITH  US,  WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTERESTS IN
YOUR  COLLATERAL.  THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS. THE
COVERAGE  THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT
IS  MADE AGAINST YOU IN CONNECTION WITH THE COLLATERAL. YOU MAY LATER CANCEL ANY
INSURANCE  PURCHASED  BY  US,  BUT  ONLY  AFTER PROVIDING EVIDENCE THAT YOU HAVE
OBTAINED  INSURANCE  AS  REQUIRED BY OUR AGREEMENT. IF WE PURCHASE INSURANCE FOR
THE  COLLATERAL,  YOU  WILL  BE  RESPONSIBLE  FOR  THE  COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES WE MAY IMPOSE IN
CONNECTION  WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE
CANCELLATION  OR  EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE
ADDED  TO  YOUR  TOTAL  OUTSTANDING  BALANCE  OR  OBLIGATION.  THE  COSTS OF THE
INSURANCE  MAY  BE  MORE THAN THE COST OF INSURANCE YOU MAY BE ABLE TO OBTAIN ON
YOUR  OWN.

15.     NOTICE-ORAL COMMITMENTS NOT ENFORCEABLE.
The  following  notice  is given pursuant to Sections 432.045 and 432.047 of the
Missouri  Revised  Statutes; nothing contained in such notice shall be deemed to
limit  or  modify  the  terms  of  the  Loan  Documents:

     ORAL  AGREEMENTS  OR  COMMITMENTS  TO  LOAN  MONEY,  EXTEND  CREDIT  OR  TO
     FORBEAR  FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR
     RENEW  SUCH  DEBT  ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON
     WHICH  IT  IS  BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO
     PROTECT  YOU  (BORROWER(S))  AND  US  (CREDITOR)  FROM  MISUNDERSTANDING OR
     DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED
     IN  THIS  WRITING,  WHICH  IS  THE  COMPLETE AND EXCLUSIVE STATEMENT OF THE
     AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

                                       8
<PAGE>
     IN  WITNESS  WHEREOF,  this Agreement has been duly executed as of the date
first  above  written.

POMEROY IT SOLUTIONS, INC.
(FORMERLY KNOWN AS, POMEROY COMPUTER RESOURCES, INC.,
AS SUCCESSOR BY MERGER WITH VAL TECH COMPUTER SYSTEMS, INC.)

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

POMEROY SELECT INTEGRATION SOLUTIONS, INC.

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

POMEROY SELECT ADVISORY SERVICES, LLC
(FORMERLY,PRIOR TO CONVERSION, POMEROY SELECT ADVISORY SERVICES, INC.)

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

POMEROY IT SOLUTIONS SALES COMPANY, INC.
(FORMERLY KNOWN AS, POMEROY COMPUTER RESOURCES SALES COMPANY, INC.,
AND AS SUCCESSOR BY MERGER WITH THELINC, LLC AND AS SUCCESSOR BY MERGER WITH
MICROLOGIC BUSINESS SYSTEMS OF K.C., LLC)

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

POMEROY COMPUTER RESOURCES HOLDING COMPANY, INC.

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

        {remainder of page intentionally left blank; signatures continue}

                                       9
<PAGE>
POMEROY COMPUTER RESOURCES OPERATIONS, LLP

By: Pomeroy Computer Resources, Inc., its partner

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

PCR HOLDINGS, INC.
(FORMERLY KNOWN AS, TECHNOLOGY INTEGRATION FINANCIAL SERVICES, INC.)

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

PCR PROPERTIES, LLC
(FORMERLY, PRIOR TO CONVERSION, PCR PROPERTIES, INC.,
AND PRIOR TO SUCH CONVERSION, FORMERLY KNOWN AS, T.I.F.S. ADVISORY SERVICES,
INC.)

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

ALTERNATIVE RESOURCES CORPORATION
(AS SUCCESSOR BY MERGER WITH POMEROY ACQUISITION SUB, INC.)

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

ARC SERVICE, INC.

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

        {remainder of page intentionally left blank; signatures continue}

                                       10
<PAGE>
ARC STAFFING MANAGEMENT LLC

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

ARC SHARED SERVICES LLC

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

ARC TECHNOLOGY MANAGEMENT LLC

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

ARC SOLUTIONS, INC.

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

ARC MIDHOLDING, INC.

By:  /s/ Kevin Gregory
     ------------------------------
     Kevin Gregory
     Senior Vice President & Chief Financial Officer

                                       11
<PAGE>
GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION,
formerly known as Deutsche Financial Services Corporation, as Administrative
Agent and a Leader

By: /s/ David Mintert
   --------------------------------
Name: David Mintert
Title: Vice President-Operations

FIFTH THIRD BANK, NORTHERN KENTUCKY, INC., as  a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title
      -----------------------------

NATIONAL CITY BANK, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

PNC BANK, N.A., as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

UPS CAPITAL CORPORATION, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

BANK OF AMERICA, N.A., as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

AMSOUTH BANK, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

                               {end of signatures}

                                       12
<PAGE>
GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION,
formerly known as Deutsche Financial Services Corporation, as Administrative
Agent and a Lender

By:
   --------------------------------
Name: David Mintert
Title: Vice President-Operations

FIFTH THIRD BANK, NORTHERN KENTUCKY, INC, as a Lender

By: /s/ Thomas J. Fisher
    -------------------------------
Name: Thomas J. Fisher
      -----------------------------
Title: Vice President
       ----------------------------

NATIONAL CITY BANK, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

PNC BANK, N A ., as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title
      -----------------------------

UPS CAPITAL CORPORATION, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

BANK OF AMERICA, N A, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

AMSOUTH BANK, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

                               {end of signatures}

                                       12
<PAGE>
GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION,
formerly known as Deutsche Financial Services Corporation, as Administrative
Agent and a Lender

By:
   --------------------------------
Name: David Mintert
Title: Vice President - Operations

FIFTH THIRD BANK, NORTHERN KENTUCKY, ING,, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

NATIONAL CITY BANK, as a Lender

By: /s/ Daniel R. Davis
    -------------------------------
Name: Daniel R. Davis
      -----------------------------
Title: Sr.  Vice President
       ----------------------------

PNC BANK, N.A., as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

UPS CAPITAL CORPORATION, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

BANK OF AMERICA, NA, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

AMSOUTH BANK, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

                               {end of signatures}

                                       12
<PAGE>
GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION, formerly known as Deutsche
Financial Services Corporation, as Administrative Agent and a  Lender

By:
   --------------------------------
Name: David Mintert
Title: Vice President-Operations

FIFTH THIRD BANK, NORTHERN KENTUCKY, INC., as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

NATIONAL CITY BANK, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

PNC BANK, N.A., as a Lender

By: /s/ Bruce J. Mettel
    -------------------------------
Name: Bruce J. Mettel
      -----------------------------
Title: Vice President
       ----------------------------

UPS CAPITAL CORPORATION, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

BANK OF AMERICA, N.A., as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

AMSOUTH BANK, as a Lender

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

                               {end of signatures}

                                       12
<PAGE>
GE COMMERCIAL DISTRIBUTION  FINANCE CORPORATION,
formerly known as Deutsche Financial Services Corporation, as Administrative
Agent and a Lender

By:
   --------------------------------
Name: David Mintert
Title: Vice President-Operations

FIFTH THIRD BANK, NORTHERN KENTUCKY, INC., as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

NATIONAL CITY BANK, as a Lender

By:
Name:
Title:

PNC BANK, N. A,., as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

UPS CAPITAL CORPORATION, as a Lender

By: /s/ John P. Holloway
    ---------------------------------
Name: John P. Holloway
       ------------------------------
Title: Director, Portfolio Management
       ------------------------------

BANK OF AMERICA, N.A., as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

AMSOUTH BANK, as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

                               {end of signatures)

                                       12
<PAGE>
GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION, formerly known as Deutsche
Financial Services Corporation, as Administrative Agent and a Lender

By:
   ----------------------------------
Name: David Mintert
Title: Vice President-Operations

FIFTH THIRD BANK, NORTHERN KENTUCKY, INC., as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

NATIONAL CITY BANK, as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

PNC BANK, N.A., as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

UPS CAPITAL CORPORATION, as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

BANK OF AMERICA, N. A., as a Lender

By:/s/ Thomas C. Kilcrease, Jr.
   ----------------------------------
Name: Thomas C. Kilcrease, Jr.
      -------------------------------
Title: Senior Vice President
       ------------------------------

AMSOUTH BANK, as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

                               {end of signatures}

                                       12
<PAGE>
GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION formerly known as Deutsche
Financial Services Corporation, as Administrative Agent and a Lender

By:
   ----------------------------------
Name: David Mintert
Title: Vice President-Operations

FIFTH THIRD BANK, NORTHERN KENTUCKY, INC, as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

NATIONAL CITY BANK, as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

PNC BANK, N.A., as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

UPS CAPITAL CORPORATION, as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

BANK OF AMERICA, N.A., as a Lender

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

AMSOUTH BANK, as a Lender

By: David A. Simmons
    ---------------------------------
Name: David A Simmons
      -------------------------------
Title: Senior Vice President
       ------------------------------

                               {end of signatures}

                                  AMSOUTH BANK
                                     is now
                                  REGIONS BANK

                                       12
<PAGE>
                                   EXHIBIT A
                                   ---------
                           DOCUMENTS AND REQUIREMENTS
                           --------------------------

1.   Amendment  No.  4  to  Amended  and  Restated  Credit  Facilities Agreement
     executed  by  Borrower  and  each  of  the  Lenders.

2.   $20,000,000  Amended  and  Restated Swingline Note payable to GE Commercial
     Distribution  Finance  Corporation.

3.   $40,000,000 Amended and Restated Note payable to GE Commercial Distribution
     Finance  Corporation.

4.   $18,700,000  Amended  and  Restated  Note  payable  to  National City Bank.

5.   $18,700,000  Amended  and  Restated  Note  payable  to  PNC  Bank,  N.A.

6.   $12,600,000  Amended  and  Restated  Note  payable to Bank of America, N.A.

7.   Secretary's Certificate (certifying resolutions) for each of the following:

     a)   Pomeroy  IT  Solutions,  Inc.  (formerly  known  as,  Pomeroy Computer
          Resources,  Inc.,  and  as  successor by merger with Val Tech Computer
          Systems,  Inc.),
     b)   Pomeroy  Select  Integration  Solutions,  Inc.,
     c)   Pomeroy  IT  Solutions  Sales  Company,  Inc.  (formerly  known  as,
          Pomeroy  Computer  Resources  Sales Company, Inc., and as successor by
          merger  with  TheLinc,  LLC and as successor by merger with Micrologic
          Business  Systems  of  K.C.,  LLC),
     d)   Pomeroy  Computer  Resources  Holding  Company,  Inc.,
     e)   PCR Holdings,  Inc.  (formerly  known  as,  Technology  Integration
          Financial  Services,  Inc.),
     f)   Alternative  Resources  Corporation,  a  Delaware  corporation  (as
          successor  by  merger  with  Pomeroy  Acquisition  Sub,  Inc.),
     g)   ARC  Service,  Inc.,  a  Delaware  corporation,
     h)   ARC  Solutions,  Inc.,  a  Delaware  corporation,  and
     i)   ARC  Midholding,  Inc.,  a  Delaware  corporation

8.   Secretary's  Certificate  (certifying  resolutions)  for  Pomeroy  Computer
     Resources  Operations,  LLP

9.   Member's  Certificate  (certifying  resolutions)  for:
     a)   ARC  Staffing  Management  LLC,  a Delaware limited liability company,
     b)   ARC  Shared  Services  LLC,  a  Delaware  limited  liability  company,
     c)   ARC  Technology  Management LLC, a Delaware limited liability company,
     d)   Pomeroy  Staffing  Solutions,  LLC  (formerly,  prior  to  conversion,
          Pomeroy Select Advisory Services, Inc., and after conversion, formerly
          Pomeroy  Select  Advisory  Services,  LLC),  and
     e)   PCR Properties,  LLC  (formerly,  prior  to  conversion,  PCR
          Properties,  Inc.,  and  prior  to such conversion, formerly known as,
          T.LF.S.  Advisory  Services,  Inc.).

10.  Good Standing  Certificates  for  the  following  Covered Persons from, the
     following  jurisdictions:
     a)   Pomeroy  IT  Solutions,  Inc.  from the Secretary of State of Delaware
     b)   Pomeroy  Select  Integration  Solutions,  Inc.  from  Secretary  of
          State  of  Delaware
     c)   Pomeroy  Staffing  Solutions,  LLC from Secretary of State of Delaware

                                       13
<PAGE>
     d)   Pomeroy  IT  Solutions  Sales  Company,  Inc.  from Secretary of State
          of  Delaware
     e)   Pomeroy  Computer  Resources  Holding  Company,  Inc.  from  Secretary
          of  State  of  Delaware
     f)   Pomeroy  Computer  Resources  Operations,  LLP  from  Secretary  of
          State  of  Kentucky
     g)   PCR  Holdings,  Inc.  from  Secretary  of  State  of  Kentucky
     h)   PCR  Properties,  LLC  from  Secretary  of  State  of  Delaware
     i)   Alternative  Resources Corporation from Secretary of State of Delaware
     j)   ARC  Service,  Inc.  from  Secretary  of  State  of  Delaware
     k)   ARC  Staffing  Management  LLC  from  Secretary  of  State of Delaware
     I)   ARC  Shared  Services  LLC  from  Secretary  of  State  of  Delaware
     m)   ARC  Technology  Management  LLC  from  Secretary of State of Delaware
     n)   ARC  Solutions,  Inc.  from  Secretary  of  State  of  Delaware
     o)   ARC  Midholding,  Inc.  from  Secretary  of  Slate  of  Delaware

11.  Payment  of  $50,000  (the  "Fourth  Amendment  Fee").

                                       14
<PAGE>
                                    Exhibit B
                                    ---------

                        Supplemental Disclosure Schedule
                        --------------------------------

                                      NONE

                                       15
<PAGE>
                                   EXHIBIT C
                                   ---------

                    LENDERS' COMMITMENTS AND PRO-RATA SHARES
            IMMEDIATELY PRIOR TO THE EFFECTIVENESS OF THIS AGREEMENT

                 Subject to the Total Aggregate Facility Limit
                 ---------------------------------------------

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                                            REVOLVING
                                              LOAN          FLOORPLAN
                                             COMMIT-           LOAN        PRO-RATA
LENDER                      TOTALS            MENT           FACILITY       SHARES
----------------------  ---------------  ---------------  --------------  -----------
<S>                     <C>              <C>              <C>             <C>

GE Commercial           $ 50,000,000.00  $ 33,333,333.00  $22,727,273.00   30.303030%
Distribution Finance
Corporation
----------------------  ---------------  ---------------  --------------  -----------
Fifth Third Bank          30,000,000.00    20,000,000.00   13,636,364.00   18.181818%
(Northern Kentucky)
----------------------  ---------------  ---------------  --------------  -----------
National City Bank        25,000,000.00    16,666,667.00   11,363,636.00   15.151515%
----------------------  ---------------  ---------------  --------------  -----------
PNC Bank, N.A.            25,000,000.00    16,666,667.00   11,363,636.00   15.151515%
----------------------  ---------------  ---------------  --------------  -----------
UPS Capital               15,000,000.00    10,000,000.00    6,818,182.00    9.090909%
Corporation
----------------------  ---------------  ---------------  --------------  -----------
Bank of America, N.A.     15,000,000.00    10,000,000.00    6,818,182.00    9.090909%
----------------------  ---------------  ---------------  --------------  -----------
AmSouth Bank               5,000,000.00     3,333,333.00    2.272,727.00    3.030303%
----------------------  ---------------  ---------------  --------------  -----------
AGGREGATES              $165,000,000.00  $110,000,000.00  $75,000,000.00  100.000000%
-------------------------------------------------------------------------------------
</TABLE>

                                       16
<PAGE>
                                   EXHIBIT D
                                   ---------

                    LENDERS' COMMITMENTS AND PRO-RATA SHARES
               FROM AND AFTER THE EFFECTIVENESS OF THIS AGREEMENT

                 SUBJECT TO THE TOTAL AGGREGATE FACILITY LIMIT
                 ---------------------------------------------

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
                                          REVOLVING
                                             LOAN         FLOORPLAN
                                           COMMIT-           LOAN        PRO-RATA
LENDER                     TOTALS            MENT          FACILITY       SHARES
---------------------  ---------------  --------------  --------------  -----------
<S>                    <C>              <C>             <C>             <C>
GE Commercial          $ 50,000,000.00  $40,000,000.00  $40,000,000.00   50.000000%
Distribution Finance
Corporation
---------------------  ---------------  --------------  --------------  -----------
National City Bank     $ 18,700,000.00  $14,960,000.00  $14,960,000.00   18.700000%
---------------------  ---------------  --------------  --------------  -----------
PNC Bank, N.A.         $ 18,700,000.00  $14,960,000.00  $14,960,000.00   18.700000%
---------------------  ---------------  --------------  --------------  -----------
Bank of America, N.A.  $ 12,600,000.00  $10,080,000.00  $10,080,000.00   12.600000%
---------------------  ---------------  --------------  --------------  -----------
AGGREGATES             $100,000,000.00  $80,000,000.00  $80,000,000.00  100.000000%
-----------------------------------------------------------------------------------
</TABLE>

                                       17

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