Document:

EXHIBIT 10.18

INDUSTRIAL REAL ESTATE LEASE

(Multi-Tenant Facility)

ARTICLE
ONE:  BASIC TERMS

This Article One contains the Basic Terms of the
Lease between the Landlord and Tenant named below.  Other Articles, Sections and Paragraphs of
the Leases referred to in this Article One explain and define the Basic Terms
and are to be read in conjunction with the Basic Terms.

	
  Section 1.01.

  	
  Date of Lease:

  	
  January 20, 2006

  
	
  Section
  1.02.

  	
  Landlord
  (include legal entity):

  	
  Paulus
  Enterprises

  
	
   

  	
   

  	
  a California Limited
  Liability Company

  
	
  Address of Landlord: 

  	
   

  	
  6060 Business Center Ct.

  
	
   

  	
   

  	
  San Diego, California
  92154

  
	
  Section
  1.03.

  	
  Tenant
  (include legal entity):

  	
  Liquidity
  Services Inc.

  
	
   

  	
   

  	
  1920 L Street NW

  
	
  Address of Tenant:

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Washington, DC  20036

  

 

Section 1.04         Property:  The
Property is part of Landlord’s multi-tenant real property development known as
NorthGate Industrial Center and described or depicted in Exhibit “A” (the “Project”).  The Project includes the land, the buildings
and all other improvements located on the land, and the common areas described
in Paragraph 4.05(a).  The Property is 

An approximate 54,000 square foot (net rentable are) office /warehouse
located within the +/- 108,000 square foot “Project” consisting of approximately
2,000 square feet of office space and located at 3824 North 5th Street, Suite A & B, North
Las Vegas Nevada  89030.  See site plan as Exhibit “A” attached hereto.

Section 1.05.        Lease Term:         Three
(3) years beginning on February 1st., 2006 or such other
date as is specified in this Lease, and ending on January 31st 2009 or 36 months from start
date if other than February 1st, 2006.

Section 1.06.        Permitted
Uses:  (See Article Five) General
office/administrative, warehousing, storage, and distribution of consumer goods
and non-hazardous general property.

Section 1.07.        Tenant’s
Guarantor:  (If none, so state) None

Section 1.08.        Brokers:  (See
Article Fourteen)

Landlord’s
Broker:  General Realty Group Inc. — Eric
L. Sallie

Tenant’s
Broker:     C.B. Richard Ellis — Greg
Tassi

Section 1.09.        Commission
Payable to Landlord’s Broker:  (See Article Fourteen)  2% General Realty Group Inc.  2% C.B. Richard Ellis.

Section 1.10.        Initial
Security Deposit:  (See Section 3.03)  $16,740.00

Section 1.11.        Vehicle
Parking Spaces Allocated to Tenant:  (See Section 4.05)  Twenty-Nine (29)

	
  

  	
   

  	
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Section 1.12.        Rent and
Other Charges Payable by Tenant:

(a)                                                    BASE RENT: 
Sixteen Thousand Seven Hundred Forty and 00/100 ($16,740.00) Dollars per
month for the first twelve (12) months, as provided in Section 3.01, and shall
be increased on the first day of the 13th and 25th month(s) after the Commencement Date as
follows.

13th through 24th month $ 18,360.00 (Eighteen Thousand Three
Hundred Sixty Dollars)

25th through 36th month $ 19,440.00 (Nineteen Thousand Four
Hundred Forty Dollars)

(b)                                                   OTHER PERIODIC PAYMENTS:  (i) Real Property Taxes (See Section 4.02);
(ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section 4.04);
(iv) Tenant’s Initial Pro Rata Share of Common Area Expenses  (See Section 4.05); (v) Impounds for
Insurance Premiums and Property Taxes (See Section 4.08); (vi) Maintenance,
Repairs and Alterations (See Article Six).

(c)                                                    Tenant’s share of the property taxes,
insurance and common area operating expenses shall be Fifty (50%) Percent.  Tenant’s share has been determined by
dividing the net leasable square footage of the Property by the net leaseable
square footage of the Project as set out in Section 4.05 (e).

Section 1.13.        Landlord’s Share of Profit on Assignment
or Sublease:  (See Section 9.05) One Hundred (100%) of the
Profit (the “Landlord’s Share”).

Section 1.14.        Riders:  The following Riders are attached to and made
a part of this Lease:

Exhibit
“A: - Site Plan

Exhibit
“B” — Disclosure Statement

Exhibit
“C” — Rules and Regulations

Duties Owed By A Nevada Real Estate Licensee

Section 1.15.        Tenant
Improvements: Landlord at it’s sole cost shall provide the
following improvements.  Lessee agrees
that T.I.’s will be completed as soon as practicable,

·                  Lessor
shall create a 20’x 20’ opening between two units or as close to that size that
is practical.

·                  Lessor
shall replace carpet in office space.

·                  Lessor
shall repaint office space.

·                  Lessor
shall install three (3) hydraulic pit levelers.

·                  Lessor
shall install +/- thirty-two (32) additional metal halide fixtures.

Landlord
will complete said improvements up to a maximum of Forty Thousand ($40,000)
Dollars. Landlord and Tenant agree that Landlord shall obtain estimates in
advance of beginning the improvements and in the event such estimates exceed
said maximum of $40,000 then at Tenants option all or part of the improvements
shall be cancelled or Tenant will accept to pay for any extra cost. In the
event any work results in a cost overrun that causes the total cost of said
improvement to be over $40,000 then Tenant agrees to pay for said cost
overruns.

ARTICLE
TWO:  LEASE TERM

Section 2.01.        Lease of Property for Lease Term. 
Landlord leases the Property to Tenant and Tenant leases the Property
from Landlord for the Lease Term.  The
Lease Term is for the Period Stated in Section 1.05 above and shall begin and
end of the dates specified in Section 1.05 above, unless the beginning or end
of the Lease Term is changed under any provision of this Lease.  The “Commencement Date” shall be the date
specified in Section 1.05 above for the beginning of the Lease Term, unless
advanced or delayed under any provision of this Lease.

	
  

  	
   

  	
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Section 2.02.        Delay in Commencement.  Landlord shall not be liable
to Tenant if Landlord does not deliver possession of the Property to Tenant on
the Commencement Date.  Landlord’s
non-delivery of the Property to Tenant on that date shall not affect this Lease
or the obligations of Tenant under this Lease except that the Commencement Date
shall be delayed until Landlord delivers possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a month.  If Landlord does not deliver possession of
the Property to Tenant within sixty (60) days after the Commencement Date,
Tenant may elect to cancel this Lese by giving written notice to Landlord
within ten (10) days after the sixty (60)-day period ends. If Tenant gives such
notice, the Lease shall be canceled and neither Landlord not Tenant shall have
any further obligations to the other.  If
Tenant does not give such notice, Tenant’s right to cancel the Lease shall
expire and the Lease Term shall commence upon the delivery of possession of the
Property to Tenant.  If delivery of
possession of the Property to Tenant is delayed, Landlord and Tenant shall,
upon such delivery, execute an amendment to this Lease setting forth the actual
Commencement Date and expiration of the Lease. 
Failure to execute such amendment shall not affect the actual
Commencement Date and expiration date of the Lease.

Section 2.03.        Early Occupancy.  If Tenant occupies the
Property prior to the Commencement Date, Tenant’s occupancy of the Property
shall be subject to all of the provisions of this Lease.  Early occupancy of the Property shall not
advance the expiration date of this Lease. 
Tenant shall pay Base Rent and all other charges specified in this Lease
for the early occupancy period.

Section 2.04.        Holding Over.  Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease.  Tenant shall reimburse Landlord for and
indemnify Landlord against all damages which Landlord incurs from Tenant’s
delay in vacating the Property.  If
Tenant does not vacate the Property upon the expiration or earlier termination
of the Lease and Landlord thereafter accepts rent from Tenant, Tenant’s
occupancy of the Property shall be a “month-to-month” tenancy, subject to all
of the terms of this Lease applicable to a month-to-month tenancy, except that
the Base Rent then in effect shall be increased by twenty-five percent (25%).

ARTICLE THREE:  BASE RENT

Section 3.01.  Time and Manner of Payment.  Upon execution of this Lease, Tenant shall
pay Landlord the Base Rent in the amount stated in Paragraph 1.12 (a) above for
the first month of the Lease Term.  On
the first day of the second month of the Lease Term and each month thereafter,
Tenant shall pay Landlord the Base Rent, in advance, without offset, deduction
or prior demand.  The Base Rent shall be
payable at Landlord’s address or at such other place as Landlord may designate
in writing.  Payment of rent shall not be
conditioned on receiving a statement or invoice from Landlord.

Section 3.02.  Security Deposit; Increases.

(a)           Upon the execution of this Lease,
Tenant shall deposit with Landlord cash Security Deposit in the amount set
forth in Section 1.10 above.  Landlord
may apply all or part of the Security Deposit to any unpaid rent or other
charges due from Tenant or to cure any other defaults of Tenant.  If Landlord uses any part of the Security
Deposit, Tenant shall restore the Security Deposit to its full amount within
ten (10) days after Landlord’s written request. 
Tenant’ failure to do so shall be a material default under this
Lease.  No interest shall be paid on the
Security Deposit.  Landlord shall not be
required to keep the Security Deposit separate from its other accounts and no
trust relationship is created with respect to the Security Deposit.

(b)           Each Time the Base Rent is increased,
Tenant shall deposit additional funds with Landlord sufficient to increase the
Security Deposit to an amount which bears the same relationship to the adjusted
Based Rent as the Initial Security Deposit bore to the initial Base Rent.

Section 3.03.        Termination; Advance Payments.  Upon termination of this Lease under Article
Seven (Damage or Destruction), Article Eight (Condemnation) or any other
termination not resulting from Tenant’s default, 

	
  

  	
   

  	
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and after Tenant has vacated the Property in the manner required by
this Lease, Landlord shall refund or credit to Tenant (or Tenant’s successor)
the unused portion of the Security Deposit, any advance rent or other advance
payments made by Tenant to Landlord, and any amounts paid for real property
taxes and other reserves which apply to any time periods after termination of
the Lease.

ARTICLE FOUR:  OTHER CHARGES
PAYABLE BY TENANT

Section 4.01.  Additional Rent.  All charges payable by Tenant other than Base
Rent are called “Additional Rent.” 
Unless this Lease provides otherwise, Tenant shall pay all Additional
Rent then due with the next monthly installment of Base Rent.  The term “rent” shall mean Base Rent and
Additional Rent.

Section 4.02.  Property Taxes.

(a)           Real Property Taxes.  Tenant shall pay all real property taxes on
the Property (including any fees, taxes or assessments against, or as a result
of, any tenant improvements installed on the Property by or for the benefit of
Tenant) during the Lease Term.  Subject
to Paragraph 4.02(c) and Section 4.08 below, such payment shall be made at
least ten (10) days prior to the delinquency date of the taxes.  Within such ten (10)-day period, Tenant shall
furnish Landlord with satisfactory evidence that the real property taxes have
been paid.  Landlord shall reimburse
Tenant for any real property taxes paid by Tenant covering any period of time
prior to or after the Lease Term.  If
Tenant fails to pay the real property taxes when due, Landlord may pay the
taxes and Tenant shall reimburse Landlord for the amount of such tax payment as
Additional Rent.

(b)           Definition of “Real
Property Tax.”  “Real property
tax” means:  (i) any fee, license fee, license
tax, business license fee, commercial rental tax, levy, charge, assessment,
penalty or tax imposed by any taxing authority against the Property; (ii) any
tax on the Landlord’s right to receive, or the receipt of, rent or income from
the Property or against Landlord’s business of leasing the Property; (iii) any
tax or charge fro fire protection, streets, sidewalks, road maintenance, refuse
of other services provided to the Property by any governmental agency; (iv) any
tax imposed upon this transaction or based upon a re-assessment of the Property
due to a change of ownership, as defined by applicable law, or other transfer
of all or part of Landlord’s Interest in the Property; and (v) any charge or
fee replacing any tax previously included within the definition of real
property tax.  “Real property tax” does
not, however, include Landlord’s federal or state income, franchise,
inheritance or estate taxes.

(c)           Joint Assessment.  If the
Property is not separately assessed, Landlord shall reasonably determine Tenant’s
share of the real property tax payable by Tenant under Paragraph4.02 (a) from
the assessor’s worksheets or other reasonably available information.  Tenant shall pay such share to Landlord
within fifteen (15) days after receipt of Landlord’s written statement.

(d)           Personal Property Taxes.

(l)            Tenant shall pay all taxes charged against
trade fixtures, furnishings, equipment or any other personal property belonging
to Tenant.  Tenant shall try to have
personal property taxed separately from the Property.

(ll)           If any of
Tenant’s person al property is taxed with the Property Tenant shall pay
Landlord the taxes for the personal property within fifteen (15) days after
Tenant receives a written statement from Landlord for such personal property
taxes.

Section 4.03.  Utilities. 
Tenant shall pay, directly to the appropriate supplier, the cost of all
natural gas, heat, light, power, sewer service, telephone, water, refuse
disposal and other utilities and services supplied to the Property.  However, if any services or utilities are
jointly metered with other property, Landlord shall make a reasonable
determination of Tenant’s proportionate share of the cost of such utilities and
services and Tenant shall pay such share to Landlord within fifteen (15) days
after receipt of Landlord’s written statement.

	
  

  	
   

  	
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Section 4.04.  Insurance Policies.

(a)           Liability Insurance. 
During the
Lease Term, Tenant shall maintain a policy of commercial general liability
insurance (sometimes known as broad form comprehensive general liability
insurance) insuring Tenant against liability for bodily injury, property damage
(including loss of use of property) and personal injury arising out of the
operation, use or occupancy of the Property. 
Tenant shall name Landlord as an additional insured under such
policy.  The initial amount of such
insurance shall be One Million Dollars ($1,000,000) per occurrence and shall be
subject to periodic increase based upon inflation, increased liability awards,
recommendation of Landlord’s professional insurance advisers and other relevant
factors.  The liability insurance
obtained by Tenant under this Paragraph 4.04(a) shall (i) be primary and
non-contributing; (ii) contain cross-liability endorsements; and (iii) insure
Landlord against Tenant’s performance under Section 5.05, if the matters giving
rise to the indemnity under Section 5.05 result from the negligence of
Tenant.  The Amount and coverage of such
insurance shall not limit Tenant’s liability nor relieve Tenant of any other
obligation under this Lease.  Landlord
may also obtain comprehensive public liability insurance in an amount and with
coverage determined by Landlord insuring Landlord against liability arising out
of ownership, operation, use or occupancy of the Property.  The policy obtained by Landlord shall not be
contributory and shall not provide primary insurance.

(b)           Property and Rental Income Insurance.  During the Lease Term, Landlord shall maintain policies of insurance
covering loss of or damage to the Property in the full amount of its
replacement value.  Such policy shall
contain an Inflation Guard Endorsement and shall provide protection against all
perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, special extended perils (all risk), sprinkler
leakage and any other perils which Landlord deems reasonable necessary.  Landlord shall have the right to obtain flood
and earth quake insurance if required by any lender holding a security interest
in the Property.  Landlord shall not
obtain insurance of Tenant’s fixtures or equipment or building improvements
installed by Tenant on the Property. 
During the Lease Term, Landlord shall also maintain a rental income
insurance policy, with loss payable to Landlord, in an amount equal to one year’s
Base Rent, plus estimated real property taxes and insurance premiums.  Tenant shall be liable for the payment of any
deductible amount under Landlord’s or Tenant’s insurance policies maintained
pursuant to this Section 4.04, in an amount not to exceed Ten Thousand Dollars
($10,000).  Tenant shall not do or permit
anything to be done which invalidates any such insurance policies.

(c)           Payment of Premiums. 
Subject to Section 4.08, Tenant shall pay all premiums for the insurance
policies described in Paragraphs 4.04(a) and (b) (whether obtained by Landlord
or Tenant) within fifteen (15) days after Tenant’s receipt of a copy of the
premium statement or other evidence of the amount due, except Landlord shall
pay all premiums for non-primary comprehensive public liability insurance which
Landlord elects to obtain as provided in Paragraph 4.04(a).  For insurance policies maintained by Landlord
which cover improvement s on the entire Project, Tenant shall pay Tenant’s
prorated share of the premiums, in accordance with the formula in Paragraph
4.05(e) for determining Tenant’s share of common Area costs.  If insurance policies maintained by Landlord
cover improvement s on real property other that the Project, landlord shall
deliver to Tenant a statement of the Premium applicable to the Property showing
in reasonable detail how Tenant’s share of the premium was computed.  If the Lease Term expires before the
expiration of an insurance policy maintained by Landlord, Tenant shall be
liable for Tenant’s prorated share of the insurance premiums.  Before the Commencement Date, Tenant shall
deliver to Landlord a copy of any policy of insurance which Tenant is required
to maintain under this Section 4.04.  At
least thirty (30) days prior to the expiration of any such policy, Tenant shall
deliver to Landlord a renewal of such policy. 
As an alternative to providing a policy of insurance, Tenant shall have
the right to provide Landlord a certificate of insurance, executed by an
authorized officer of the insurance company, showing that he insurance which
Tenant is required to maintain under this Section 4.04 is in full force and
effect and containing such other information which Landlord reasonable
requires.

(d)           General Insurance Provisions.

(i)            Any
insurance which Tenant is required to maintain under this Lease shall include a
provision which requires the insurance carrier to give Landlord not less than
thirty (30) days’ written notice prior to any cancellation or modification of
such coverage.

(ii)           If Tenant fails to deliver any
policy, certificate or renewal to Landlord required under this Lease within the
prescribed time period or if any such policy is canceled or modified during the
Lease Term without Landlord’s consent, Landlord may obtain such insurance, in
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Landlord for the cost of
such insurance within fifteen (15) days after receipt of a statement that
indicates the cost of such insurance.

(iii)         Tenant
shall maintain all insurance required under this Lease with companies holding a
“General Policy Rating” or A-12 or better, as set forth in the most current
issue of “Best Key Rating Guide”. 
Landlord and Tenant acknowledge the insurance markets are rapidly
changing and that insurance in the form and amounts described in this Section
4.04 may not be available in the future. 
Tenant acknowledges that the insurance described in this Section 4.04 is
for the primary benefit of Landlord.  If
at any time during the Lease Term, Tenant is unable to maintain the insurance
required under the Lease, Tenant shall nevertheless maintain insurance coverage
which is customary and commercially reasonable in the insurance industry for
Tenant’s type of business, as that coverage may change from time to time.  Landlord makes no representation as to the
adequacy of such insurance to protect Landlord’s or Tenant’s interests.  Therefore, Tenant shall obtain any such
additional property or liability insurance which Tenant deems necessary to
protect Landlord and Tenant.

(iv)          Unless
prohibited under any applicable insurance policies maintained, Landlord and
Tenant each hereby waive any and all rights of recovery against the other, or
against the officers employees, agents or representatives of the other, for
loss of or damage to its property or the property of others under its control,
if such loss or damage is covered by any insurance policy in force (whether or
not described in this Lease) at the time of such loss or damage.  Upon obtaining the required policies of
insurance, Landlord and Tenant shall give notice to the insurance carriers of
this mutual waiver of subrogation.

Section 4.05.  Common Areas; Use, Maintenance and Costs.

(a)           Common Areas.  As used in this Lease, “Common
Areas” shall mean all areas within the Project which are available for the
common use of tenants of the Project and which are not leased or held for the
exclusive use of Tenant or other tenants, including, but not limited to,
parking areas, driveways, sidewalks, loading area, access roads, corridors,
landscaping and planted areas.  Landlord,
from time t time, may change the size, location, nature and use of any of the
Common Areas, convert Common Areas into leaseable areas, construct additional
parking facilities (including parking structures) in the Common Areas, and
increase or decrease Common Area land and /or facilities.  Tenant acknowledges that such activities may
result in inconvenience to Tenant.  Such
activities and changes are permitted if they do not materially affect Tenant’s
use of the Property.

(b)           Use of Common Areas. 
Tenant shall have the nonexclusive right (in common with other tenants
and all others to whom Landlord has granted or may grant such rights) to use
the Common Areas for the purposes intended, subject to such reasonable rules
and regulations as Landlord may establish from time to time.  Tenant shall abide by such rules and
regulations and shall use its best effort to cause others who use the Common
Areas with Tenant’s express or implied permission to abide by Landlord’s rules
and regulations.  At any time, Landlord
may close any Common Areas to perform any acts in the Common Areas as, in
Landlord’s judgment, are desirable to improve the Project.  Tenant shall not interfere with the rights of
Landlord, other tenants or any other person entitled to use the Common Areas.

(c)           Specific Provision re: 
Vehicle Parking.  Tenant shall be entitled to use the number of
vehicle parking spaces in the Project allocated to Tenant in Section 1.11 of
the Lease without paying any additional rent. 
Tenant’s parking shall not be reserved and shall be limited to vehicles
no larger than standard size automobiles or pickup utility vehicles.  Tenant shall not cause large trucks or other
large vehicles to be parked within the Project or on the adjacent public
streets.  Temporary parking of large
delivery vehicles in the Project may be permitted by the rules and regulations
established by Landlord.  Vehicles shall
be parked only in striped parking spaces and not in driveways, loading areas or
other locations not specifically designated for parking.  Handicapped spaces shall only be used by
those legally permitted to use them.  If
Tenant parks more vehicles in the parking area than the number set forth in Section
1.11 of this Lease, such conduct shall be a materi8al breach of this Lease.  In addition to Landlord’s other remedies
under the Lese, Tenant shall pay a daily charge determined by Landlord for each
such additional vehicle.

	
  

  	
   

  	
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(d)           Maintenance of Common Areas. 
Landlord shall maintain the Common Areas in good order, condition and
repair and shall operate the Project, in Landlord’s sole discretion, as a
first-class industrial/commercial real property development.  Tenant shall pay Tenant’s pro rata share (as
determined below) of all costs incurred by Landlord for the operation and
maintenance of the Common Areas.  Common
Area costs include, but are not limited to costs and expenses for the
following:  gardening and landscaping;
utilities, water and sewage charges; maintenance of signs (other than tenants’
signs); premiums for liability, property damage, fire and other types of
casually insurance of the Common Areas and worker’s compensation insurance; all
property taxes and assessments levied on or attributable to personal property
used in connection with the Common Areas; straight-line depreciation on
personal property owned by Landlord which is consumed in the operation or
maintenance of the Common Areas; rental or lease payments paid by Landlord for
rented or leased personal property used in the operation or maintenance of the
Common Areas; fees for required licenses and permits; repairing, resurfacing,
repaving, maintaining, painting, lighting, cleaning, refuse removal, security
and similar items; reserves for roof replacement and exterior painting and
other appropriate reserves; and a reasonable allowance to Landlord for Landlord’s
supervision of the common Areas (not to exceed five percent (5%) of the gross
rents of the Project for the calendar year). 
Landlord may cause any or all of such services to be provided by third
parties and the cost of such services shall be included in Common Area costs
Common Area costs shall not include depredation of real property which forms
part of the Common Areas.

(e)           Tenant’s Share and Payment. 
Tenant shall pay tenant’s annual pro rata share of all Common Area costs
(prorated for any fractional month) upon written notice from Landlord that such
costs are due and payable, and in any event prior to delinquency.  Tenant’s pro rata share shall be calculated
by dividing the square foot area of the Property, as set forth in Section 1.04
of the Lease, by the aggregate square foot area of the Project which is leased
or held for lease by tenants, as of the date on which the computation is
made.  Tenant’s initial pro rata share is
set out in Paragraph 1.12 (b).  Any
changes in the Common Area costs and/or the aggregate area of the Project
leased or held for lease during the Lease Term shall be effective on the first
day of the month after such change occurs. 
Landlord may, at Landlord’s election, estimate in advance and charge to
Tenant as Common Area costs, all real property taxes for which Tenant is liable
under Section4.02 of the Lese, all insurance premiums for which Tenant is
liable under Section 4.04 of the Lease, all maintenance and repair costs for
which Tenant is liable under Section 6.04 of the Lease, and all other Common
Area costs payable by Tenant hereunder. 
At Landlord’s election, such statements of estimated Common Area costs
shall be delivered monthly, quarterly or at any other periodic intervals to be
designated by Landlord.  Landlord may
adjust such estimates at any time based upon Landlord’s experience and
reasonable anticipation of costs.  Such
adjustments shall be effective as of the next rent payment date after notice to
Tenant.  Within sixty (60) days after the
end of each calendar year of the Lese Term, Landlord shall deliver to Tenant a
statement prepared in accordance with generally accepted accounting principles
setting forth, in reasonable detail, the Common Area costs paid or incurred by
Landlord during the preceding calendar year and Tenant’s pro rata share.  Upon receipt of such statement, there shall
be an adjustment between Landlord and Tenant, with payment to or credit given
by Landlord (as the case may be) so that Landlord shall receive the entire
amount of Tenant’s share of such costs and expenses for such period.  The initial estimated budget for 2006 for
Common Area costs are $0.095 per square foot total Five Thousand One Hundred
Thirty ($5,130) Dollars and shall be reimbursed monthly in advance.

Section 4.06.  Late Charges. 
Tenant’s
failure to pay rent promptly may cause Landlord to incur unanticipated
costs.  The exact amount of such costs
are impractical or extremely difficult to ascertain.  Such costs may include, but are not limited
to, processing and accounting charges and late charges which may be imposed on
Landlord by any ground lease, mortgage or trust deed encumbering the
Property.  Therefore, if Landlord does
not receive any rent payment within ten (10) days after it becomes due, Tenant
shall pay Landlord a late charge equal to ten percent (10%) of the over due amount.  The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of such late payment.

Section 4.07.  Interest on Past Due Obligations.  Any
amount owed by Tenant to Landlord which is not paid when due shall bear
interest at the rate of fifteen percent (15%) per annum from the due date of
such amount.  However, interest shall not
be payable on late charges to be paid by Tenant under this Lease.  If the interest rate 

	
  

  	
   

  	
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specified in this Lease is higher than the rate permitted by law, the
interest rate is hereby decreased to the maximum legal interest rate permitted
by law.

Section 4.08.  Impounds for Insurance Premiums and Real
Property Taxes.  If requested by any ground lessor or lender
to whom Landlord has granted a security interest in the Property, or if Tenant
is more than ten (10) days late in the payment of rent more than once in any
consecutive twelve (12)-month period, Tenant shall pay Landlord a sum equal to
one-twelfth (1/12) of the annual real property taxes and insurance premiums
payable by Tenant under this Lease, together with each payment of Base
Rent.  Landlord shall hold such payments
in a non-interest bearing impound account. 
If unknown, Landlord shall reasonable estimate the amount of real
property taxes and insurance premiums when due. 
Tenant shall pay any deficiency of funds in the impound account to
Landlord upon written request.  If Tenant
defaults under this Lease, Landlord any apply any funds in the impound account
to any obligation then due under this Lease.

ARTICLE FIVE:  USE OF PROPERTY 

Section 5.01.  Permitted Uses.  Tenant may use the Property only for the Permitted Uses set forth in
Section 1.06 above.

Section 5.02.  Manner of Use.  Tenant shall not cause or permit the Property to be used in any way
which constitutes a violation of any law, ordinance, or governmental regulation
or order, which annoys or interferes with the rights of tenants of the Project,
or which constitutes a nuisance or waste. 
Tenant shall obtain and pay for all permits, including a Certificate of
Occupancy, required for Tenant’s occupancy of the Property and shall promptly
take all actions necessary to comply with all applicable statutes, ordinances,
rules, regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.

Section 5.03.  Hazardous Materials.  As used in this Lease, the term “Hazardous Material” means any
flammable items, explosives, radioactive materials, hazardous or toxic
substances, material or waste or related materials, including any substances
defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials” or “toxic substances” now or subsequently
regulated under any applicable federal, state or local laws or regulations,
including without limitation petroleum-based products, paints, solvents, lead,
cyanide, DDT, printing inks, acids, pesticides, ammonia compounds and other chemical
products, asbestos, PCBs and similar compounds, and including any different
products and materials which are subsequently found to have adverse effects on
the environment or the health and safety of persons.  Tenant shall not cause or permit any Hazardous
Material to be generated, produced, brought upon, used, stored, treated or
disposed of in or about the Property by Tenant, its agents, employees,
contractors, sub-lessees or invitees without the prior written consent of
Landlord.  Landlord shall be entitled to
take into account such other factors or facts as Landlord may reasonable
determine to be relevant in determining whether to grant or withhold consent to
Tenant’s proposed activity with respect to Hazardous Material.  In no event, however, shall Landlord be
required to consent to the installation or use of any storage tanks of the
Property.

Section 5.04.  Signs and Auctions.  Tenant shall not place any signs on the Property without Landlord’s
prior written consent.  Tenant shall not
conduct or permit any auctions or sheriff’s sales at the Property, except for
Tenant’s on-line auctions.

Section 5.05.  Indemnity. 
Tenant shall
indemnify Landlord against and hold Landlord Harmless from any and all costs,
claims or liability arising from:  (a)
Tenant’s use of the Property; (b) the conduct of Tenant’s business or anything
else done or permitted by Tenant to be done in or about the Property, including
any contamination of the Property or any other property resulting from the
presence or use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant’s obligations under this Lease;
(d) any misrepresentation or breach of warranty by Tenant under this Lease; or
(e) other acts or omissions of Tenant.  

	
  

  	
   

  	
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Tenant shall defend Landlord against any such cost, claim or liability
at Tenant’s expense with counsel reasonably acceptable to Landlord or, at
Landlord’s election, Tenant shall reimburse Landlord, Tenant assumes all risk
of damage to property or injury to persons in or about the Property arising
from any cause, and Tenant hereby waives all claims in respect thereof against
Landlord, except for any claim arising out of Landlord’s gross negligence or
willful misconduct.  As used in this
Section, the term “Tenant” shall include Tenant’s employees, agents,
contractors, and invitees, if applicable.

Section 5.06.  Landlord’s Access. 
Landlord or its agents may enter the Property at all reasonable times to
show the Property to potential buyers, investors or tenants or other parties;
to do any other act or to inspect and conduct tests in order to monitor Tenant’s
compliance with all applicable environmental laws and all laws governing the
presence and use of Hazardous Material; or for any other purpose Landlord deems
necessary.  Landlord shall give Tenant
prior notice of such entry, except in the case of an emergency.  Landlord may place customary “For Sale” or “For
Lease” signs on the Property.

Section 5.07.  Quiet Possession.  If
Tenant pays the rent and complies with all other terms of this Lease, Tenant
may occupy and enjoy the Property for the full Lease Term, subject to the
provisions of this lease.

ARTICLE
SIX:  CONDITION OF PROPERTY; MAINTENANCE,
REPAIRS AND ALTERATIONS

Section 6.01.  Existing Conditions.  Tenant accepts the Property in its condition as of the execution of the
Lease, subject to all recorded matters, laws, ordinances, and governmental
regulations and orders.   Except as
provided herein, Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation as to the condition of the Property or the
suitability of the Property for Tenant’s intended use.  Tenant represents and warrants that Tenant
has made its own inspection of and inquiry regarding the condition of the
Property and is not relying on any representations of Landlord or any Broker
with respect thereto.  If Landlord or
Landlord’s Broker has provided a Property Information Sheet or other Disclosure
Statement regarding the Property, a copy is attached as an exhibit to the
Lease.

Section 6.02.  Exemption of Landlord from Liability.  Landlord shall not be liable for any damage or
injury to the person, business (or any loss of 
income therefrom), goods, wares, merchandise or other property of
Tenant, Tenant’s employees, invitees, customers or any other person in or about
the Property, whether such damage or injury is caused by or results from:  (a) fire, steam, electricity, water, gas or
rain; (b) the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning  or lighting fixtures or any other cause; (c)
any act or omission of any other tenant to the Project.  Landlord shall not be liable for any such
damage or injury even though the cause of or the means of repairing such damage
or injury are not accessible to tenant. 
The Provisions of the Section 6.02 shall not, however, exempt Landlord
from liability for Landlord’s gross negligence or willful misconduct.

Section 6.03.  Landlord’s Obligations.

(a)           Except
as provided in Article Seven (Damage or Destruction) and Article Eight
(Condemnation), Landlord shall keep the following in good order, condition and
repair; the foundations, exterior walls and roof of the Property (including
painting the exterior surface of the exterior walls of the Property not more
often than once every five (5) years, if necessary) and all components of
electrical, mechanical, plumbing, heating and air conditioning systems and
facilities located on the Property which are concealed or used in common by
tenants of the Project.  However,
Landlord shall not be obligated to maintain or repair windows, doors, plate
glass or the interior surfaces of exterior walls.  Landlord shall make repairs under this
Section 6.03 within a reasonable time after receipt of written notice from
Tenant of the need for such repairs.

(b)           Tenant
shall pay or reimburse Landlord for all costs Landlord incurs under Paragraph
6.03 (a) above as Common Area costs as provided for in Section 4.05 of the
Lease.  Tenant waives the benefit of any
statute 

	
  

  	
   

  	
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in effect now or in the future which might give Tenant the right to
make repairs at Landlord’s expense or to terminate this Lease due to Landlord’s
failure to keep the Property in good order, condition and repair.

Section 6.04.  Tenant’s Obligations.

(a)           Except
as provided in Section 6.03, Article Seven (Damage or Destruction) and Article
Eight (Condemnation), Tenant shall keep all portions of the Property (including
structural, non-structural, interior, system and equipment) in good order,
condition and repair (including interior repainting and refinishing, as
needed).  If any portion of the Property
or any sys tem or equipment in the Property which Tenant is obligated to repair
cannot be fully repaired or restored, Tenant shall promptly replace such
portion of the Property or system or equipment in the Property, regardless of
whether the benefit of such replacement extends beyond the Lease Term; but if
the benefit or useful life of such replacement extends beyond the Lease Term
(as such term may be extended by exercise of any options), the useful life of
such replacement shall  be prorated over
the remaining portion of the Lease Term (as extended), and Tenant shall be
liable only for that portion of the cost which is applicable to the Lease Term
(as extended).  Tenant shall maintain a
preventive maintenance contract providing for the regular inspection and
maintenance of the heating and air conditioning system by a licensed heating
and air conditioning contractor, unless Landlord maintains such equipment under
Section 6.03 above.  If any part of the
Property or the Project is damaged by any act or omission of Tenant, Tenant
shall pay Landlord the cost of repairing or replacing such damaged property,
whether or not Landlord would other wise be obligated to pay the cost of
maintaining or repairing such property. 
It is the intention of Landlord and Tenant that at all times Tenant shall
maintain the portions of the Property which Tenant is obligated to maintain in
an attractive, first-class and fully operative condition.

(b)           Tenant
shall fulfill all of Tenant’s obligations under this Section 6.04 at Tenant’s
sole expense.  If Tenant fails to
maintain, repair or replace the Property as required by this Section 6.04,
Landlord may, upon ten (10) days’ prior notice to Tenant (except that no notice
shall be required bin the case of an emergency), enter the Property and perform
such maintenance or repair (including replacement, as needed) on behalf of
Tenant.  In such case, Tenant shall
reimburse Landlord for all costs incurred in performing such maintenance or
repair immediately upon demand.

Section 6.05.  Alterations, Additions, and Improvements.

(a)           Tenant
shall not make any alterations, additions, or improvements to the Property
without Landlord’s prior written consent, except for non-structural alterations
which do not exceed Ten Thousand Dollars ($10,000) in cost cumulatively over
the Lease Term and which are not visible from the outside of any building of
which the Property is part.  Landlord may
require Tenant to provide demolition and/or lien and completion bonds if form
and amount satisfactory to Landlord. 
Tenant shall promptly remove and alterations, additions, or improvements
constructed in violation of this Paragraph 6.05 (a) upon Landlord’s written
request.  All alterations, additions, and
improvement s shall be done in a good and workmanlike manner, in conformity
with all applicable laws and regulations, and by a contractor approved by
Landlord.  Upon completion of any such
work, Tenant shall provide Landlord with “as built” plans, copies of all
construction contracts, and proof of payment for all labor and materials.

(b)           Tenant
shall pay when due all claims for labor and material furnished to the
Property.  Tenant shall give Landlord at
least twenty (20) days’ prior written notice of the commencement of any work in
the property, regardless of whether Landlord’s consent to such work is
required.  Landlord may elect to record
and post notices of non-responsibility on the Property.

Section 6.06.  Condition upon Termination.  Upon the termination of the Lese, Tenant shall surrender the Property
to Landlord, broom clean and in the same condition as received except for
ordinary wear and tear which Tenant was not otherwise obligated to remedy under
any provision of this Lease.  However,
Tenant shall not be obligated to repair any damage which Landlord is required
to repair under Article Seven (Damage or Destruction).  In addition, Landlord may require Tenant to
remove any alterations, additions or improvements (whether or not made with
Landlord’s consent) prior to the expiration of the Lease and to restore the
Property to its prior condition, all at Tenant’s expense.  All alterations, additions and improvement s
which Landlord has not required Tenant to remove 

	
  

  	
   

  	
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shall become Landlord’s property and shall be surrendered to Landlord
upon the expiration or earlier termination of the Lease, except that Tenant may
remove any of  Tenant’s
machinery or equipment which can be removed without material damage to the
Property.  Tenant shall repair, at Tenant’s
expense, any damage to the Property caused by the removal of any such machinery
or equipment.  In no event, however,
shall Tenant remove any of the following materials or equipment (which shall be
deemed Landlord’s property) without Landlord’s prior written consent:  Any power wiring or power panels; lighting or
lighting fixtures; wall coverings; drapes, blinds or other window coverings;
carpets or other floor coverings; heaters, air conditioners or any other
heating or air conditioning equipment; fencing or security gates; or other
similar building operating equipment and decorations.

ARTICLE
SEVEN:  DAMAGE OR DESTRUCTION 

Section 7.01.  Partial Damage to Property.

(a)           Tenant
shall notify Landlord in writing immediately upon the occurrence of any damage
to the Property.  If the Property is only
partially damaged (i.e., less than fifty percent (50%) of the Property is
untenantable as a result of such damage or less than fifty percent (50%) of
Tenant’s operations are materially impaired) and if the proceeds received by
Landlord from the insurance policies described in Paragraph 4.04 (b) are
sufficient to pay for the necessary repairs, this Lease shall remain in effect
and Landlord shall repair the damage as soon as reasonably possible.  Landlord may elect (but is not required) to
repair any damage to Tenant’s fixtures, equipment, or improvements.

(b)           If the insurance proceeds received by
Landlord are not sufficient to pay the entire cost of repair, or if the cause
of the damage is not covered by the Insurance policies which Landlord maintains
under Paragraph 4.04 (b), Landlord may elect either to (i) repair the damage as
soon as reasonably possible, in which case this Lease shall remain in full
force and effect, or (ii) terminate this Lese as of the date the damage
occurred.  Landlord shall notify Tenant
within thirty (30) days after receipt of notice of the occurrence of the damage
whether Landlord elects to repair the damage or terminate the Lease.  If Landlord elects to repair the damage,
Tenant shall pay Landlord the “deductible amount” (if any) under Landlord’s
insurance policies and, if the damage was due to an act or omission of Tenant,
or Tenant’s employees, agents, contractors or invitees, the difference between
the actual cost of repair and any insurance proceeds received by Landlord.  If Landlord elects to terminate the Lease,
Tenant may elect continue this Lease if full force and effect, in which case
Tenant shall repair any damage to the Property and any building in which the
Property is located.  Tenant shall pay
the cost of such repairs, except that upon satisfactory completion of such repairs,
Landlord shall deliver to Tenant any insurance proceeds received by Landlord
for the damage repaired by Tenant. 
Tenant shall give Landlord written notice of such election within ten
(10) days after receiving Landlord’s termination notice.

(c)           If the damage to the Property occurs during
the last six (6) months of the Lease Term and such damage will require more
that thirty (30) days to repair, either Landlord or Tenant may elect to
terminate this Lease as of the date the damage occurred, regardless of the
sufficiency of any Insurance proceeds. 
The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant’s notice to Landlord of the occurrence of the damage.

Section 7.02.  Substantial or Total Destruction.  If
the Property is substantially or totally destroyed by any cause whatsoever
(i.e., the damage to the Property is greater than partial damage as described
in Section 7.01), and regardless of whether Landlord receives any insurance
proceeds, this Lease shall terminate as of the date the destruction
occurred.  Not withstanding the preceding
sentence, if the Property can be rebuilt within six (6) months after the date
of destruction, Landlord may elect to rebuild the Property at Landlord’s own
expense, in which case this Lease shall remain in full force and effect.  Landlord shall notify Tenant of such election
within thirty (30) days after Tenant’s notice of the Occurrence of total or
substantial destruction.   If Landlord so
elects, Landlord shall rebuild the Property at Landlord’s sole expense, except
that if the destruction was caused by an act or omission of Tenant, Tenant
shall pay Landlord the difference between the actual cost of rebuilding and any
insurance proceeds received by Landlord.

	
  

  	
   

  	
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Section 7.03.  Temporary Reduction of Rent.  If the Property is destroyed or damaged and Landlord or Tenant repairs
or restores the Property pursuant to the provisions of this Article Seven, any
rent payable during the period of such damage, repair and/or restoration shall
be reduced according to the degree, if any, to which Tenant’s use of the
Property is impaired.  However, the
reduction shall not exceed the sum of one year’s payment of Base Rent,
insurance premiums and real property taxes. 
Except for such possible reduction in Base Rent, insurance premiums and
real property taxes, Tenant shall not be entitled to any compensation,
reduction, or reimbursement from Landlord as a result of any damage,
destruction, repair, or restoration of or to the Property.

Section 7.04.  Waiver. 
Tenant waives
the protecting of any statute, code or judicial decision which grants a tenant
the right to terminate lease in the event of the substantial or total
destruction of the leased property. 
Tenant agrees that the provisions of Section 7.02 above shall govern the
rights and obligations of Landlord and Tenant in the event of any substantial
or total destruction to the Property.

ARTICLE EIGHT:  CONDEMNATION

If all or any portion
of the Property is taken under the power of eminent domain or sold under the
threat of that power (all of which are called “Condemnation”), this Lease shall
terminate as to the part taken or sold on the date the condemning authority
takes title or possession, whichever occurs first.  If more than twenty percent (20%) of the
floor area of the building in which the Property is located, or which is
located on the Property, is taken, either Landlord or Tenant may terminate this
Lease as of the date the condemning authority takes title or possession, by delivering
written notice to the other within ten (10) days after receipt of written
notice of such taking (or in the absence of such notice, within ten (10) days
after the condemning authority takes title or possession).  If neither Landlord nor Tenant terminates
this lease, this Lease shall remain in effect as to the portion of the Property
not taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property.  Any Condemnation award or payment shall be
distributed in the following order:  (a)
first, to any ground lessor, mortgageee or beneficiary under a deed of trust
encumbering the Property, the amount of its interest in the Property; (b)
second, to Tenant, only the amount of any award specifically designated for
loss of or damage to Tenant’s trade fixtures or removable personal property;
and (c) third, to Landlord, the remainder of such award, whether as
compensation for reduction in the value of the leasehold, the taking of the
fee, or otherwise.  If this Lease is not
terminated, Landlord shall repair any damage to the Property caused by the
Condemnation, except that Landlord shall not be obligated to repair any damage
for which Tenant has been reimbursed by the condemning authority.  If the severance damages received by Landlord
are not sufficient to pay for such repair, Landlord shall have the right to
either terminate this Lease or make such repair at Landlord’s expense.

ARTICLE NINE:  ASSIGNMENT AND SUBLETTING

Section 9.01.  Landlord’s consent required.  No portion of the Property or of Tenant’s interest in this Lease may be
acquired by any other person or entity, whether by sale, assignment, mortgage,
sublease, transfer, operation of law, or act of Tenant, without Landlord’s
prior written consent, except as provided in Section 9.02 below.  Landlord has the right to grant or withhold
its consent as provided in Section 9.05 below. 
Any attempted transfer without consent shall be void and shall
constitute a non-curable breach of this Lease. 
If Tenant is a partnership, any cumulative transfer of more than twenty
percent (20%) of the partnership interests shall require Landlord’s
consent.  If Tenant is a corporation, any
change in the ownership of a controlling interest of the voting stock of the
corporation shall require Landlord’s consent.

Section
9.02.  Tenant Affiliate.  Tenant may assign this Lease or sublease the Property, without Landlord’s
consent, to any corporation which controls, is controlled by or is under common
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corporation resulting from the merger of or consolidation with Tenant
(Tenant’s Affiliate”).  In such case, any
Tenant’s Affiliate shall assume in writing all of Tenant’s obligations under
this Lease.

Section 9.03.  No Release of Tenant.  No transfer permitted by this Article Nine, whether with or without
Landlord’s consent, shall release Tenant or change Tenant’s primary liability
to pay the rent and to perform all other obligations of Tenant under this
Lease.  Landlord’s acceptance of rent from
any other person is not a waiver of any provision of this Article Nine.  Consent to one transfer is not consent to any
subsequent transfer.  If Tenant’s
transferee defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee.  Landlord may consent to subsequent
assignments or modifications of this Lease by Tenant’s transferee, without
notifying Tenant or obtaining its consent. 
Such action shall not relieve Tenant’s liability under this Lease.

Section 9.04.  Offer Terminate.  If
Tenant desires to assign the Lease or sublease the Property, Tenant shall have
the right to offer, in writing, to terminate the Lease as of a date specified
in the offer.  If Landlord Elects in
writing to accept the offer to terminate within twenty (20) days after notice
of the offer, the Lease shall terminate as of the date specified and all the
terms and provisions of the Lease governing termination shall apply.  If Landlord does not so elect, the Lease
shall continue in effect until otherwise terminated and the provisions of
Section 9.05 with respect to any proposed transfer shall continue to apply.

Section 9.05.  Landlord’s Consent.

(a)           Tenant’s request for consent to any transfer
described in Section 9.01 shall set forth in writing the details of the
proposed transfer, including the name, business and financial condition of the
prospective transferee, financial details of the proposed transfer (e.g., the
term of and the rent and security deposit payable under any proposed assignment
or sublease), and any other information Landlord deems relevant.  Landlord shall have the right to withhold
consent, if reasonable, or to grant consent, based on the following factors:  (i) the business of the proposed assignee or
subtenant and the proposed use the Property; (ii) the net worth and financial
reputation of the proposed assignee or subtenant; (iii) Tenant’s compliance
with all of its obligations under the Lease; and (iv) such other factors as
Landlord may reasonably deem relevant. 
If Landlord objects to a proposed assignment solely because of the net
worth and/or financial reputation of the proposed assignee, Tenant may
nonetheless sublease (but not assign), all or a portion of the Property to the
proposed transferee, but only on the other terms of the proposed transfer.

(b)                                  If Tenant assigns or subleases, the following
shall apply:

(i)            Tenant shall pay to Landlord as
Additional Rent under the Lease the Landlord’s Share (stated in Section 1.13)
of Profit (defined below) on such transaction as and when received by Tenant,
unless Landlord gives written notice to Tenant and the assignee or subtenant
that Landlord’s Share shall be paid by the assignee or subtenant to Landlord
directly.  The “Profit” means (A) all
amounts paid to Tenant for such assignments or sublease, including “key” money,
monthly rent in excess of the monthly rent payable under the Lease, and all
fees and other consideration paid for the assignment or sublease, including
fees under any collateral agreements, less- (B) costs and expenses directly
incurred by Tenant in connection with the execution and performance of such
assignment or sublease for real estate broker’s commissions and costs of
renovation or construction of tenant improvements required under such assignment
or sublease.  Tenant is entitled to
recover such costs and expenses before Tenant is obligated to pay the Landlord’s
Share to Landlord.  The Profit in the
case of a sublease of less than all the Property is the rent allocable to the
subleased space as a percentage on a square footage basis.

(ii)           Tenant shall
provide Landlord a written statement certifying all amounts to be paid from any
assignment or sublease of the Property within thirty (30) days after the
transaction documentation is signed, and Landlord may inspect Tenant’s books
and records to verify the accuracy of such statement.  On written request, Tenant shall promptly
furnish to Landlord copies of all the transaction documentation, all of which
shall be certified by Tenant to be complete, truce and correct.  Landlord’s receipt of Landlord’s Share shall
no to consent to any further assignment or subletting.  The breach of Tenant’s obligation under this
Paragraph 9.05 (b) shall be a material default of the Lease.

	
  

  	
   

  	
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ARTICLE TEN:  DEFAULTS; REMEDIES

Section 10.01.  Covenants and Conditions.  Tenant’s performance of each of Tenant’s obligations under this Lease
is a condition as well as a covenant. 
Tenant’s right to continue in possession of the Property is conditioned
upon such performance.  Time is of the
essence in the performance of all covenants and conditions.

Section 10.02.  Defaults. 
Tenant shall
be in material default under this Lease:

(a)           If Tenant abandons the Property or if Tenant’s
vacation of the Property results in the cancellation of any insurance described
in Section 4.04.

(b)           If Tenant fails to pay rent or any other
charge when due.

(c)           If Tenant fails to perform any of Tenant’s
non-monetary obligations under this Lease for a period of thirty (30) days
after written notice from Landlord; provided that if more than thirty (30) days
are required to complete such performance, Tenant shall not be in default if
Tenant commences such performance within the thirty (30)-day period and
thereafter diligently pursues its completion. 
However, Landlord shall not be required to give such notice if Tenant’s
failure to perform constitutes a non-curable breach of this Lease.  The notice required by this Paragraph is
intended to satisfy and all notice requirements imposed by law on Landlord and
is not in addition to any such requirement.

(d)           (i)
If Tenant makes a general assignment or general arrangement for the benefit of
creditors; (ii) if a petition for adjudication of bankruptcy or for reorganization
or rearrangement is filed by or against Tenant and is not dismissed within
thirty (30) days; (iii) if a trustee or receiver is appointed to take
possession of substantially all of Tenant’s assets located at the Property or
of Tenant’s interest in this Lease and possession is not restored to Tenant
within thirty (30) days; or (iv) if substantially all of Tenant’s assets
located at the Property or of Tenant’s interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
thirty (30) days.  If a court of
competent jurisdiction determines that any of the acts described in this
subparagraph) is not default under this Lease, and a trustee is appointed to
take possession (or if Tenant remains a debtor in possession and such trustee
or Tenant transfers Tenant’s interest hereunder, then Landlord shall receive,
as Additional Rent, the excess, if any, of the rent (or other consideration)
paid in connection with such assignment or sublease over the rent payable by
Tenant under this Lease.

(e)           If any guarantor of the Lease revokes or
otherwise terminates, or purports to revoke or otherwise terminate, any
guaranty of all or any portion of Tenant’s obligations under the Lease.  Unless otherwise expressly provided, no
guaranty of the Lease is revocable.

Section 10.03.  Remedies.  On
the occurrence of any material default by Tenant, Landlord may, at any time
thereafter, with or without notice or demand and without limiting Landlord in
the exercise of any right or remedy, which Landlord may have:

(a)           Terminate Tenant’s right to possession of the
Property by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Property to Landlord.  In such event, Landlord shall be entitled to
recover from Tenant all damages incurred by Landlord by reason of Tenant’s
default, including (i) the worth at the time of the award of the unpaid Base
Rent, Additional Rent and other charges which Landlord had earned at the time
of the termination; (ii) the worth at the time of the award of the amount by
which the unpaid Base Rent, Additional Rent and other Charges which Landlord
would have earned after termination until the time of the award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid Base Rent, Additional Rent and other charges which Tenant would have
paid for the balance of the Lease Term after the time of award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
avoided; and (iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant’s failure to perform its obligations under
the Lease or which in the ordinary course of things would by likely to result
there from, including, but not limited to, any costs or expenses Landlord
incurs in maintaining or preserving the Property after such default, the cost
of recovering possession of the Property, expenses of relettling, including
necessary renovations or 

	
  

  	
   

  	
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alterations of the Property, Landlord’s reasonable attorneys’ fees
incurred in connection therewith, and any real estate commission paid or
payable.  As used in subparts (i) and
(ii) above, the “worth at the time of the award:” is computed by allowing
interest on unpaid amounts at the rate of fifteen percent (15%) per annum, or
such lesser amount as may then be the maximum lawful rate.  As used in subpart (iii) above, the “worth at
the time of the award” is computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of the award,
plus one percent (1%).  If Tenant has
abandoned the Property, Landlord shall have the option of (i) retaking
possession of the Property and Recovering from Tenant the amount specified in
this Paragraph 10.03 (a), or (ii) proceeding under Paragraph 10.03 (b).

(b)           Maintain Tenant’s right to
possessing, in which case this Lease shall continue in effect whether or not
Tenant has abandoned the Property.  Inc
such event, Landlord shall be entitled to enforce all of Landlord’s rights and
remedies under this Lease, including the right to recover the rent as it
becomes due.

(a)                                  Pursue any other
remedy now or hereafter available to Landlord under the laws or judicial
decisions of the state in which the Property is located.

Section 10.04.  Repayment of “Free” Rent.  If this Lease provides for a postponement of
any monthly rental payments, a period of “free” rent or other rent concession,
such postponed rent or “free” rent is called the “Abated Rent”.  Tenant shall be credited with having paid all
of the Abated Rent on the expiration of the Lease Term only if Tenant has
fully, faithfully, and punctually performed all of Tenant’s obligations
hereunder, including the payment of all rent (other than the Abated Rent) and
all other monetary obligations and the surrender of the Property in the
physical condition required by this Lease. 
Tenant acknowledges that its right to receive credit for the Abated Rent
is absolutely conditioned upon Tenant’s full, faithful and punctual performance
of its obligations under this Lease.  If
Tenant defaults and does not cure within any applicable grace period, the
Abated Rent shall immediately become due and payable in full and this Lease
shall be enforced as if there were no such rent abatement or other rent
concession.  In such case Abated Rent
shall be calculated based on the full initial rent payable under this Lease.

Section 10.05.  Automatic Termination.  Notwithstanding any other term or provision
hereof to the contrary, the Lease shall terminate on the occurrence of any act
which affirms the Landlord’s intention to terminate the Lease as provided in
Section 10.03 hereof, in the filling of an unlawful detainer action against
Tenant.  On such termination, Landlord’s
damages for default shall include all costs and fees, including reasonable
attorneys’ fees that Landlord
incurs in connection with the filling, commencement, pursuing and/or defending
of any action in any bankruptcy court or other court with respect to the Lease;
the obtaining of relief from any stat in bankruptcy restraining any action to
evict Tenant; or the pursuing of any action with respect to Landlord’s right to
possession of the Property.  All such
damages suffered (apart from Base Rent and other rent payable hereunder) shall
constitute pecuniary damages which must be reimbursed to Landlord prior to
assumption of the Lease by Tennant or any successor to Tenant in any bankruptcy
or other proceeding.

Section 10.06.  Cumulative Remedies.  Landlord’s
exercise of any right or remedy shall not prevent it from exercising any other
right or remedy.

ARTICLE ELEVEN:  PROTECTION OF LENDERS

Section 11.01. 
Subordination.  Landlord shall
have the right to subordinate this Lease to any ground lease, deed of trust or
mortgage encumbering the Property, any advances made on the security thereof
and any renewals, modifications, consolidations, replacements or extensions
thereof, whenever made or recorded. 
Tenant shall cooperate with Landlord and any lender that is acquiring a
security interest in the Property or the Lease. 
Tenant shall execute such further documents and assurances as such
lender may require, provided that Tenant’s obligations under this Lease shall
not be increased in any material way (the performance of ministerial acts shall
not be deemed material), and Tenant shall not be deprived of its rights under
this Lease.  Tenant’s right to quiet
possession of the Property during the Lease Term shall not be disturbed of
Tenant pays the rent and perform all of Tenant’s obligations under this Lease
and is not otherwise in default.  If any
ground lessor, beneficiary or mortgage elects to have this 

	
  

  	
   

  	
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Lease prior to the lien of its ground lease, deed of trust or mortgage
whether this Lease is dated prior or subsequent to the date of said ground
lease, deed of trust or mortgage or the date of recording thereof.

Section
11.02.  Attornment.  If Landlord’s interest in
the Property is acquired by any ground lessor, beneficiary under a deed of
trust, mortgage, or purchaser at a foreclosure sale, Tenant shall attorn to the
transferee of or successor to Landlord’s interest in the Property and recognize
such transferee or successor as Landlord under this Lease.  Tenant waives the protection of any statute
or rule of law that gives or purports to give Tenant any right to terminate
this Lease or surrender possession of the Property upon the transfer of Landlord’s
interest.

Section
11.03.  Signing of Documents.  Tenant shall sign and
deliver any instrument or documents necessary or appropriate to evidence any
such attornment or subordination or agreement to do so.  If Tenant fails to do so within ten (10) days
after written request, Tenant hereby makes, constitutes and irrevocably
appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.

Section
11.04.  Estoppel Certificates.

(a)           Upon Landlord’s written request,
Tenant shall execute, acknowledge and deliver to Landlord a written statement
certifying:  (i) that none of the terms
or provisions of this Lease have been changed (or if they have been changed, stating
how they have been changed); (ii) that this Lease has not been canceled or
terminated; (iii) the last date of payment of the Base Rent and other charges
and the time period covered by such payment; (iv) that Landlord is not in
default under this Lease (or, if Landlord is claimed to be in default, stating
why); and (v) such other representations or information with respect to Tenant
or the Lease as Landlord may reasonably request or which any prospective
purchaser or encumbrancer of the Property may require.  Tenant shall deliver such statement to
Landlord within ten (10) days after Landlord’s request. Landlord may give any
such statement by Tenant to an6 prospective purchaser or encumbrancer of the
Property.  Such purchaser or encumbrancer
may rely conclusively upon such statements true and correct.

(b)           If Tenant does not deliver
such statement to Landlord within such ten (10)-day period, Landlord, and any
prospective purchaser or encumbrancer, may conclusively presume and rely upon
the following facts:  (I) that the terms
and provisions of this Lease have not been changed except as otherwise
represented by Landlord; (ii) that this Lease has not been canceled or
terminated except as otherwise represented by Landlord; (iii) that not more
than one month’s Base Rent or other charges have been paid in advance; and (iv)
that Landlord is not in default under the Lease.  In such event, Tenant shall be stopped from
denying the truth of such facts.

Section
11.05.  Tenant’s Financial Condition.  Within ten (10) days after written request
from Landlord, Tenant shall deliver to Landlord such financial statements as
Landlord reasonably requires verifying the Net worth of Tenant or any assignee,
subtenant, or guarantor of Tenant.  In
addition, Tenant shall deliver to any lender designated by Landlord any
financial statements required by such lender to facilitate the financing or
refinancing of the Property.  Tenant
represents and warrants to Landlord that each such financial statement is a
true and accurate statement as of the date of such statement.  All financial statements shall be
confidential and shall be used only for the purposes set forth in this Lease.

ARTICLE TWELVE: 
LEGAL COSTS

Section 12.01.  Legal
Proceedings.  If Tenant or
Landlord shall be in breach or default under this Lease, such party (the “Defaulting
Party”) shall reimburse the other party (the “Nondefaulting Party”) upon demand
for any costs or expenses that the Nondefaulting Party incurs in connection
with any breach or default of the Defaulting Party under this Lease, whether or
not suit is commenced or judgment entered. 
Such costs shall include legal fees and costs incurred for the
negotiation of a settlement, enforcement of rights or otherwise.  Furthermore, if any action for breach of or
to enforce the provisions of this Lease is commenced, the court in such action
shall award to the party in whose favor a judgment is entered, a reasonable sum
as attorneys’ fees and costs.  The losing
party is such action 

	
  

  	
   

  	
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shall pay such attorneys’ fees and costs.  Tenant shall also indemnify Landlord against
and hold Landlord harmless from all costs, expenses, demands and liability
Landlord may incur if Landlord becomes or is made a party to any claim or action
(a) instituted by Tenant against any third party, or by any third party against
Tenant, or by or against any person holding any interest under or using the
Property by license of or agreement with Tenant; (b) for foreclosure of any
lien for labor or material furnished to or for Tenant or such other person; (c)
otherwise arising out of or resulting from any act or material furnished to or
for Tenant or such other person; or (d) necessary to protect Landlord’s
interest under this Lease in a bankruptcy proceeding, or other proceeding under
Title 11 of the United States Code, as amended. 
Tenant shall defend Landlord against any such claim or action at Tenant’s
expense with counsel reasonably acceptable to Landlord or, at Landlord’s
election.  Tenant shall reimburse Landlord
for any legal fees or costs Landlord incurs in any such claim or action.

Section
12.02.  Landlord’s Consent.  Tenant shall pay Landlord’s
reasonable attorneys’ fees incurred in connection with Tenant’s request for
Landlord’s consent under Article Nine (Assignment and Subletting), or in
connection with any other act which Tenant proposes to do and which requires
Landlord’s consent.

ARTICLE THIRTEEN:  MISCELLANOUS
PROVISIONS 

Section 13.01.  Non-Discrimination.  Tenant promises, and it is a
condition to the continuance of this Lease, that there will be no
discrimination against, or segregation of , any person or group of persons on
the basis of race, color, sex, creed, national origin or ancestry in the
leasing, subleasing, transferring, occupancy, tenure or use of the Property or
any portion thereof.

Section 13.02.  Landlord’s Liability; Certain Duties.

(a)           As used in this Lease, the term “Landlord”
means only the current owner or owners of the fee title to the Property or
Project or the leasehold estate under a ground lease of the Property or Project
at the time in question.  Each Landlord
is obligated to perform the obligations of Landlord under this Lease only
during the time such Landlord owns such interest or title.  Any Landlord who transfers its title or
interest is relieved of all liability with respect to the obligations of
Landlord under this Lease to be performed on or after the date of
transfer.  However, each Landlord shall
deliver to its transferee all funds that Tenant previously paid if such funds
have not yet been applied under the terms of this lease.

(b)           Tenant shall give written notice of
any failure by Landlord to perform any of its obligations under this Lease to
Landlord and to any ground lessor, mortgagee or beneficiary under any deed of
trust encumbering the Property whose name and address have been furnished to
Tenant in writing.  Landlord shall not be
in default under this Lease unless Landlord (or such ground lessor, mortgagee
or beneficiary) fails to cure such non-performance within thirty (30) days
after receipt of Tenant’s notice. 
However, if such non-performance reasonably requires more than thirty
(30) days to cure, Landlord shall not be in default if such cure is commenced
within such thirty (30)-day period and thereafter diligently pursued to
completion.

(c)           Notwithstanding any term or provision herein
to the contrary, the liability of Landlord for the performance of its duties
and obligations under this Lease is limited to Landlord’s interest in the
Property and the Project, and neither the Landlord nor its partners,
shareholders, officers or other principals shall have any personal liability
under this Lease.

Section 13.04.  Interpretation.  The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part
of the terms or provisions of this Lease. 
Whenever required by the context of this Lease, the singular shall
include the plural and the plural shall include the singular.  The masculine, feminine and neuter genders
shall each include the other.  In any
provision relating to the conduct, acts or omissions of Tenant, the term “Tenant”
shall include Tenant’s agents’ employees, contractors, invitees, successors or
others using the Property with Tenant’s expressed or implied permission.

	
  

  	
   

  	
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Section 13.05.  Incorporation of Prior Agreements;
Modifications.  This Lease is
the only agreement between the parties pertaining to the lease of the Property
and no other agreements are effective. 
All amendments to this Lease shall be in writing and signed by all
parties.  Any other attempted amendment
shall be void.

Section 13.06.  Notices. 
All notices required or permitted under this Lease shall be in writing
and shall be personally delivered or sent by certified mail, return receipt
requested, postage prepaid.  Notices to
Tenant shall be delivered to the address specified in Section 1.03 above.  Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. 
All notices shall be effective upon delivery.  Either party any change its notice address
upon written notice to the other party.

Section
13.07.  Waivers.  All waivers must be in writing and signed by
the waiving party. Landlord’s failure to enforce any provision of this Lease or
its acceptance of rent shall not be a waiver and shall not prevent Landlord
from enforcing that provision or any other provision of this Lease in the
future. No statement on a payment check from Tenant or in a letter accompanying
a payment check shall be binding on Landlord. Landlord may, with or without
notice to Tenant, negotiate such check without being bound to the conditions of
such statement.

Section 13.08.  No Recordation.  Tenant
shall not record this Lease without prior written consent from Landlord.
However, either Landlord or Tenant may require that a “Short Form” memorandum
of this Lease executed by both parties be recorded. The party requiring such
recording shall pay all transfer taxes and recording fees.

Section 13.09.   Binding Effect; Choice of Law.  This
Lease binds any party who legally acquires any rights or interest in this Lease
from Landlord or Tenant. However, Landlord shall have no obligation to Tenant’s
successor unless the rights of interests of Tenant’s successor are acquired in
accordance with the terms of this Lease. The laws of the state in which the
Property is located shall govern this Lease.

Section 13.10.  Corporate
Authority; Partnership Authority.  If
Tenant is a corporation, each person signing this Lease on behalf of Tenant
represents and warrants that he has full authority to do so and that this Lease
binds the corporation. Within thirty (30) days after this Lease is signed,
Tenant shall deliver to Landlord a certified copy of a resolution of Tenant’s
Board of Directors authorizing the execution of this Lease or other evidence of
such authority reasonably acceptable to Landlord. If Tenant is a partnership,
each person or entity signing this Lease for Tenant represents and warrants
that he or it is a general partner of the partnership, that he or it has full
authority to sign for the partnership and that this Lease binds the partnership
and all general partners of the partnership. Tenant shall give written notice
to Landlord of any general partner’s withdrawal or addition. Within thirty (30)
days after this Lease is signed, Tenant shall deliver to Landlord a copy of
Tenant’s recorded statement of partnership or certificate of limited
partnership.

 Section 13.11.  Joint and Several Liability.  All parties signing this Lease as Tenant
shall be jointly and severally liable for all obligations of Tenant.

Section 13.12.  Force
Majeure.  If Landlord cannot perform any of its
obligations due to events beyond Landlord’s control, the time provided for performing
such obligations shall be extended by a period of time equal to the duration of
such events. Events beyond Landlord’s control include, but are not limited to,
acts of God, war, civil commotion, labor disputes, strikes, fire, flood or
other casualty, shortages of labor or material, government regulation or
restriction and weather conditions.

Section 13.13.  Execution of Lease. 
This Lease may be executed in counterparts and, when all counterpart
documents are executed, the counterparts shall constitute a single binding
instrument. Landlord’s delivery of this Lease to Tenant shall not be deemed to
be an offer to lease and shall not be binding upon either 

	
  

  	
   

  	
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party until executed and delivered by
both parties.

Section
13.14.  Survival.  All representations and warranties of Landlord
and Tenant shall survive the termination of this Lease.

ARTICLE FOURTEEN: BROKERS 

Section 14.01.  Broker’s Fee.  When this
Lease is signed by and delivered to both Landlord and Tenant, Landlord shall
pay a real estate commission to Landlord’s Broker named in Section 1.08 above,
if any, as provided in the written agreement between Landlord and Landlord’s
Broker, or the sum stated in Section 1.09 above for services rendered to
Landlord by Landlord’s Broker in this transaction. Landlord shall pay Landlord’s
Broker a commission if Tenant exercises any option to extend the Lease Term or
to buy the Property, or any similar option or right which Landlord may grant to
Tenant, or if Landlord’s Broker is the procuring cause of any other lease or
sale entered into between Landlord and Tenant covering the Property. Such
commission shall be the amount set forth in Landlord’s Broker’s commission
schedule in effect as of the execution of this Lease. If a Tenant’s Broker is
named in Section 1.08 above, Landlord’s Broker shall pay an appropriate portion
of its commission to Tenant’s Broker if so provided in any agreement between
Landlord’s Broker and Tenant’s Broker. Nothing contained in this Lease shall
impose any obligation on Landlord to pay a commission or fee to any party other
than Landlord’s Broker

Section 14.02.   Protection of Brokers.  If
Landlord sells the Property, or assigns Landlord’s interest in this Lease, the
buyer or assignee shall, by accepting such conveyance of the Property or
assignment of the Lease, be conclusively deemed to have agreed to make all
payments to Landlord’s Broker thereafter required of Landlord under this Article
Fourteen. Landlord’s Broker shall have the right to bring a legal action to
enforce or declare rights under this provision. The prevailing party in such
action shall be entitled to reasonable attorneys’ fees to be paid by the losing
party. Such attorneys’ fees shall be fixed by the court in such action. This
Paragraph is included in this Lease for the benefit of Landlord’s Broker.

Section 14.03.  Agency Disclosure; No Other Brokers. 
Landlord and Tenant each warrant that they have dealt with no other real
estate broker(s) in connection with this transaction.

ARTICLE FIFTEEN:  OPTION TO RENEW 

Provided that lessee is not in default in
the performance of this Lease, Lessee will have the option to renew the Lease
for an additional term of 36 months commencing at the expiration of the initial
Lease term.  All of the terms and
conditions of the Lease will apply during the renewal term, except that the
monthly rent will be the then current Market Value for rental rates in the
North Las Vegas area for similar properties without consideration for lease
inducements offered by Landlord. In no event shall the rental rate for the
renewal period be less than the rate in last month of the preceding term plus
Three (3%) percent. In the event the parties cannot agree on the Market Value
rental rate then each party shall designate a real estate broker active in the
North Las Vegas market and said two designees shall determine the Market Value
rental rate.

The option will be exercised by written
notice given to Lessor not less than six (6) months prior to the expiration of
the initial Lease term.  If notice is not
given within the time specified, this Option will expire.

ARTICLE SIXTEEN: COMPLIANCE 

The parties hereto agree to comply with all
applicable federal, state and local laws, regulations, codes, ordinances and
administrative orders having jurisdiction over the parties, property or the
subject matter of this Agreement, 

	
  

  	
   

  	
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including,
but not limited to, the 1964 Civil Rights Act and all amendments thereto, the
Foreign Investment In Real Property Tax Act, the Comprehensive Environmental
Response Compensation and Liability Act, and The Americans With Disabilities
Act.

ADDITIONAL
PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO OR IN THE
BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED, PLEASE DRAW A LINE
THROUGH THE SPACE BELOW.

Landlord and Tenant have signed this Lease at
the place and on the dates specified adjacent to their signatures below and
have initialed all Riders which are attached to or incorporated by reference in
this Lease.

	
  Paulus Enterprises LLC

  	
   

  	
  Liquidity Services Inc.

  
	
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  Jaime Mateus-Tique

  
	
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 20EXHIBIT 10.19

STANDARD FORM

INDUSTRIAL BUILDING LEASE

(MULTI-TENANT)

1.             BASIC
TERMS.  This Section 1 contains the Basic Terms of this Lease between
Landlord and Tenant, named below.  Other
Sections of the Lease referred to in this Section 1
explain and define the Basic Terms and are to be read in conjunction with the
Basic Terms.

1.1.                            Date of Lease:                                       

1.2.                            Landlord:               First
Industrial Development Services, Inc.                                     

1.3.                            Tenant:                  Liquidity
Services, Inc.                                                                       

1.4.                            Premises:  The Premises are located as shown on  the floor plan attached as Exhibit A-1 and it is agreed are
conclusively stipulated to contain 
94,407 rentable square feet in the building commonly known as 1399 S
Perry Road, Plainfield, Indiana 46168 (the “Building”).

1.5.                            Property:  The land described on Exhibit A and the Building and other
improvements situated thereon.

1.6.                            Lease
Term:  5 years 0 months (“Term”), commencing August 1, 2006 (“Commencement Date”) and ending July 31,
2011, subject to Section 13.1 below,
(“Expiration Date”).

1.7.                            Permitted
Uses:  (See Section 4.1)    general warehouse and office                            

1.8.                            Tenant’s
Guarantor:  (if none, so state)  None                                                                

1.9.                            Brokers:  (See Section
23;  if none, so state)
                (A)  Tenant’s Broker:          CBRE                                      
                (B)  Landlord’s Broker:        None                                      

1.10.                     Security/Damage
Deposit:  (See Section 4.4)  $24,781.84

1.11.                     Initial
Estimated Additional Rent Payable by Tenant: 
$0.35 per year

1.12.                     Tenant’s
Proportionate Share: 39.04%

1.13.                     Riders to
Lease:  The following riders are attached
to and made a part of this Lease. (If none, so state)                 Exhibit A, A-1, B, C, D & E                 

1.14.                     Option to
Extend:  Provided that Tenant is not then
in default hereunder, Tenant shall have the option to extend the Term for an
additional five (5) year period (“Option
Period”) upon the same terms and conditions hereof, except that the
Base Rent (as hereinafter defined) for the Option Period shall be increased
(but in no event decreased) to an amount equal to the reasonable fair market
rental value for the Premises, as determined by the fair market rental value of
similar space in the local market/region in which the Building is located, but
in no event shall the monthly Base Rent exceed 115% of the Base Rent payable
for the month immediately preceding the Option Period; and further provided that
Tenant provides notice of its exercise of such option to Landlord at least one
hundred eighty (180) days prior to the expiration of the Term.

1.15.                     Right of
First Refusal:  Provided that Tenant is
not then in default hereunder and subject to the terms hereof, Tenant shall
have a one-time right of first refusal (“ROFR”)
to lease any space or premises within the Building adjacent to the Premises (“Additional
Space”), which is or becomes available for rent or lease during the Term.  If Landlord receives a written offer to lease
the Additional Space (an “Offer”),
Landlord shall give Tenant notice of such Offer (“ROFR Notice”).  Tenant
shall have three (3) business days to exercise the ROFR by written notice to
Landlord.  If Tenant timely exercises the
ROFR, (a) the Premises shall automatically be amended to include the Additional
Space; (b) Tenant’s Proportionate Share shall be automatically adjusted
accordingly; and (c) the terms and provisions of this Lease shall apply to the
Additional Space, except that the Base Rent attributable to the Additional
Space shall be equal to the Base Rent identified in the Offer.

2.             LEASE OF PREMISES; RENT.

2.1.         Lease of Premises for Lease Term.  Landlord hereby leases the Premises to
Tenant, and Tenant hereby rents the Premises from Landlord, for the Term and
subject to the conditions of this Lease.

 

2.2.         Types of Rental Payments. Tenant shall pay net
base rent to Landlord in monthly installments, in advance, on the first day of
each and every calendar month during the Term of this Lease (the “Base Rent”) in the amounts and for the
periods set forth below: 

	
  Lease Period

  	
   

  	
  Annual Base Rent

  	
   

  	
  Monthly Base 

  Rent

  	
   

  	
  Per Square Foot

  Base Rent

  	
   

  
	
  08/01/2006 — 07/31/2011

  	
   

  	
  $297,382.05

  	
   

  	
  $24,781.84

  	
   

  	
  $3.15

  	
   

  

Tenant
shall also pay Tenant’s Proportionate Share (as set forth in Section 1.12) of Operating Expenses (as hereinafter defined)
and any other amounts owed by Tenant hereunder [collectively,
“Additional Rent”].  In the event any monthly installment of Base
Rent or Additional Rent, or both, is not paid within 10 days of the date when
due, a late charge in an amount equal to 5% of the then delinquent installment
of Base Rent and/or Additional Rent [the “Late Charge”;
the Late Charge, Default Interest (as defined in Section 22.3
below), Base Rent and Additional Rent shall collectively be referred to as “Rent”] shall be paid by Tenant to Landlord, c/o                                                                     
or if sent by overnight courier to                                       
Attention                                       
or such other entity designated as Landlord’s management agent, if any, and if
Landlord so appoints such a management agent, the “Agent”),
or pursuant to such other directions as Landlord shall designate in this Lease
or otherwise in writing.

2.3.         Covenants Concerning Rental Payments.  Tenant shall pay the Rent promptly when due,
without notice or demand, and without any abatement, deduction or setoff,
except as may otherwise be expressly and specifically provided in this
Lease.  No payment by Tenant, or receipt
or acceptance by Agent or Landlord, of a lesser amount than the correct Rent
shall be deemed to be other than a payment on account, nor shall any
endorsement or statement on any check or letter accompanying any payment be
deemed an accord or satisfaction, and Agent or Landlord may accept such payment
without prejudice to its right to recover the balance due or to pursue any
other remedy available to Landlord.  If
the Commencement Date occurs on a day other than the first day of a calendar
month, the Rent due for the first calendar month of the Term shall be prorated
on a per diem basis (based on a 360 day, 12 month year) and paid to Landlord on
the Commencement Date, and the Term will be extended to terminate on the last
day of the calendar month in which the Expiration Date stated in Section 1.6 occurs.  Simultaneously with the execution and
delivery of this Lease, Tenant shall deposit with Landlord or Agent an amount
equal to the sum of  (i) the first
monthly installment of Base Rent payable under this Lease, as set forth in Section 2.2 above and (ii)  the sum 
designated as the Initial Estimated Additional Rent as set forth in Section 1.10 above, in cash.   Tenant’s deposit of the foregoing items,
together with the amount of the Security deposit specified in Section 1.10 above shall constitute a
condition precedent to the Landlord’s obligations under this Lease, and Tenant’s
failure to make such deposit shall constitute an event of default by Tenant
under this Lease.

3.             OPERATING EXPENSES.

3.1.         Definitional
Terms Relating to Additional Rent.  For purposes of this Section and other
relevant provisions of the Lease:

3.1.1.      Operating
Expenses.  The
term “Operating Expenses” shall
mean all costs and expenses paid or incurred with respect to the ownership,
repair, replacement, restoration, maintenance and operation of the Property,
including, without limitation, the following: 
(i) services provided directly by employees of Landlord or Agent in
connection with the operation, maintenance or rendition of other services to or
for the Property; (ii) to the extent not separately metered, billed, or
furnished, all charges for utilities and services furnished to either or both
of the Property and the Premises (including, without limitation, the Common
Areas [as hereinafter defined]), together with any taxes on such utilities;
(iii) all premiums for casualty, workers’ compensation, liability, boiler,
flood and all other types of insurance provided by Landlord and relating to the
Property, all third party administrative costs incurred in connection with the
procurement and implementation of such insurance policies, and all deductibles paid
by Landlord pursuant to insurance policies required to be maintained by
Landlord under this Lease; (iv) the cost of all supplies, tools, materials and
equipment utilized in the ownership and operation of the Property, and sales
and other taxes thereon; (v) amounts charged (including, without limitation,
those costs and expenses set forth in Section
13.2 (i) below) by any or all of contractors, materialmen and
suppliers for services, materials and supplies furnished to Landlord in
connection with any or all of the operation, repair and maintenance of any part
of the Property (together with a reasonable overhead and administrative fee to
Landlord), including, without limitation, the structural elements of the
Property and the Common Areas; (vi) management fees to Landlord or Agent or
other persons or management entities actually involved in the management and
operation of the Property; (vii) any capital improvements made by, or on behalf
of, Landlord to the Property that are either or both (a) designed to reduce
Operating Expenses and (b) required to keep the Property in compliance with all
governmental laws, rules and regulations applicable thereto, from time to time,
the cost of which capital improvements shall be reasonably amortized by
Landlord over the useful life of the improvement, in accordance with generally
accepted accounting principles; (viii) all professional fees incurred in
connection with the operation, management and maintenance of the Property; and
(ix) Taxes, as hereinafter defined in Section
3.1.2.  Notwithstanding any
other provision herein to the contrary, it is agreed that if the Property is
not fully occupied during any calendar year, then an adjustment shall be made
in computing the Operating Expenses for such calendar year so that the Operating
Expenses are computed as though the Property had been fully occupied during
such calendar year.  To the extent that
Landlord incurs any expenses (such as, by way of illustration only,
multi-property  service contracts or
blanket insurance policies) in respect of both the Property and any other
properties owned by Landlord, Landlord may include a fair and equitable
apportionment of such expenses in Operating Expenses.

 2
 

 

3.1.2.      Taxes.  The term “Taxes,”
as referred to in Section 3.1.1(ix)
above shall mean (i) all governmental taxes, assessments, fees and charges of
every kind or nature (other than Landlord’s income taxes), whether general,
special, ordinary or extraordinary, due at any time or from time to time,
during the Term and any extensions thereof, in connection with the ownership,
leasing, or operation of the Property, or of the personal property and
equipment located therein or used in connection therewith; and (ii) any
reasonable expenses incurred by Landlord in contesting such taxes or
assessments and/or the assessed value of the Property. For purposes hereof,
Tenant shall be responsible for any Taxes that are assessed, become a lien, or
accrue during any Operating Year, which obligation shall survive the
termination or expiration of this Lease.

3.1.3.      Operating
Year.  The term “Operating Year” shall mean the calendar
year commencing January 1st of each year (including the calendar year within
which the Commencement Date occurs) during the Term.

3.2.         Payment of Operating Expenses.  Tenant shall pay, as Additional Rent and in
accordance with the requirements of Section
3.3, Tenant’s Proportionate Share of the Operating Expenses as set
forth in Section 3.3.  Additional Rent commences to accrue upon the
Commencement Date.  The Tenant’s
Proportionate Share of Operating Expenses payable hereunder for the Operating
Years in which the Term begins and ends shall be prorated to correspond to that
portion of said Operating Years occurring within the Term.  Tenant’s Proportionate Share of Operating
Expenses and any other sums due and payable under this Lease shall be adjusted
upon receipt of the actual bills therefor, and the obligations of this Section 3 shall survive the termination
or expiration of the Lease.

3.3.         Payment of Additional Rent.  Landlord shall have the right to reasonably
estimate the Operating Expenses for each Operating Year.  Upon Landlord’s or Agent’s notice to Tenant
of such estimated amount, Tenant shall pay, on the first day of each month
during that Operating Year, an amount (the “Estimated
Additional Rent”) equal to the estimate of the Tenant’s
Proportionate Share of Operating Expenses divided by 12 (or the fractional
portion of the Operating Year remaining at the time Landlord delivers its
notice of the estimated amounts due from Tenant for that Operating Year).  Landlord may during the course of any
Operating Year, redetermine the amount of its estimate of Operating Expenses
for such Operating Year and adjust the amount of Estimated Additional Rent  accordingly, whereupon Tenant shall pay the
adjusted Estimated Additional Rent from and after the first day of the month
following the month in which Landlord delivers to Tenant written notice of  such adjustment of Estimated Additional
Rent.  If the aggregate amount of
Estimated Additional Rent actually paid by Tenant during any Operating Year is
less than Tenant’s actual ultimate liability for Operating Expenses for that
particular Operating Year, Tenant shall pay the deficiency within 30 days of
Landlord’s written demand therefor.  If
the aggregate amount of Estimated Additional Rent actually paid by Tenant
during a given Operating Year exceeds Tenant’s actual liability for such
Operating Year, the excess shall be credited against the Estimated Additional
Rent next due from Tenant during the immediately subsequent Operating Year,
except that in the event that such excess is paid by Tenant during the final
Lease Year, then upon the expiration of the Term, Landlord or Agent shall pay
Tenant the then-applicable excess promptly after determination thereof.  No interest shall be payable to Tenant on
account of payments of Estimated Additional Rent, and such payments may be
commingled. If there exists any dispute as to (i) the amount of Additional
Rent, (ii) whether a particular expense is properly included in Additional Rent
or (iii) Landlord’s calculation of Additional Rent (each an “Additional Rent Dispute”), the events,
errors, acts or omissions giving rise to such Additional Rent Dispute shall not
constitute a breach or default by Landlord under this Lease and even if a
judgment resolving the Additional Rent Dispute is entered against
Landlord,  this Lease shall remain in
full force and effect and Landlord shall not be liable for any consequential
damages resulting from the event, error, act or omission giving rise to such
Additional Rent Dispute.  Notwithstanding
the existence of an Additional Rent Dispute, Tenant shall pay timely the amount
of Additional Rent which is in dispute and will continue to make all subsequent
payments of Additional Rent as and when required under this Lease, provided
that the payment of such disputed amount and other amounts shall be without
prejudice to Tenant’s position.

3.4          Intentionally Deleted.

3.5          Intentionally Deleted.

4.             USE OF PREMISES AND COMMON AREAS;
SECURITY DEPOSIT.

4.1.         Use of Premises and Property.  The Premises shall be used by the Tenant for
the purpose(s) set forth in Section 1.7
above and for no other purpose whatsoever. 
Tenant shall not, at any time, use or occupy, or suffer or permit anyone
to use or occupy, the Premises, or do or permit anything to be done in the
Premises or the Property, in any manner that may (a) violate any Certificate of
Occupancy for the Premises or the Property; (b) cause, or be liable to cause,
injury to, or in any way impair the value or proper utilization of, all or any
portion of the Property (including, but not limited to, the structural elements
of the Property) or any equipment, facilities or systems therein; (c)
constitute a violation of the laws and requirements of any public authority or
the requirements of insurance bodies or the rules and regulations of the
Property, including any covenant, condition or restriction affecting the Property;
(d) exceed the load bearing capacity of the floor of the Premises; (e) impair
or tend to impair the character, reputation or appearance of the Property; or
(e) unreasonably annoy, inconvenience or disrupt the operations or tenancies of
other tenants or users of the Property. 
On or prior to the date hereof, Tenant has completed and delivered for
the benefit of Landlord a “Tenant Operations Inquiry Form” in the form attached
hereto as Exhibit D
describing the nature of Tenant’s proposed business operations at the Premises,
which form is intended to, and shall be, relied upon by Landlord.

4.2.         Use of Common Areas.  As used herein, “Common Areas” shall mean all areas within the Property that
are available for the common use of tenants of the Property and that are not
leased or held for the exclusive use of Tenant or other tenants or licensees,
including, but not limited to, parking areas, driveways, 

 3
 

 

sidewalks, loading areas, access roads,
corridors, landscaping and planted areas. 
Tenant shall have the nonexclusive right to use the Common Areas for the
purposes intended, subject to such reasonable rules and regulations as Landlord
may uniformly establish from time to time. 
Tenant shall not interfere with the rights of any or all of Landlord,
other tenants or licensees, or any other person entitled to use the Common
Areas.  Without limitation of the
foregoing, Tenant shall not park or store any vehicles or trailers on, or
conduct truck loading and unloading activities in, the Common Areas in a manner
that unreasonably disturbs, disrupts or prevents the use of the Common Areas by
Landlord, other tenants or licensees or other persons entitled to use the
Common Areas.  Landlord, from time to
time, may change any or all of the size, location, nature and use of any of the
Common Areas although such changes may result in inconvenience to Tenant, so
long as such changes do not materially and adversely affect Tenant’s use of the
Premises.  In addition to the foregoing,
Landlord may, at any time, close or suspend access to any Common Areas to
perform any acts in the Common Areas as, in Landlord’s reasonable judgment, are
desirable to improve or maintain either or both of the Premises and the
Property, or are required in order to satisfy Landlord’s obligations under
either or both of Sections 13.2
and 18; provided, however, that
Landlord shall use reasonable efforts to limit any disruption of Tenant’s use
and operation of the Premises in connection therewith.

4.3.         Signage.  Tenant shall not affix any sign of any size
or character to any portion of the Property, without prior written approval of
Landlord, which approval shall not be unreasonably withheld or delayed.  Tenant shall remove all signs of Tenant upon
the expiration or earlier termination of this Lease and immediately repair any
damage to either or both of the Property and the Premises caused by, or
resulting from, such removal.

4.4.         Security/Damage Deposit.  Simultaneously with the execution and
delivery of this Lease, Tenant shall deposit with Landlord or Agent the sum set
forth in Section 1.10 above, in
cash (the “Security”),
representing security for the performance by Tenant of the covenants and
obligations hereunder.  The Security
shall be held by Landlord or Agent, without interest, in favor of Tenant;
provided, however, that no trust relationship shall be deemed created thereby
and the Security may be commingled with other assets of Landlord.  If Tenant defaults in the performance of any
of its covenants hereunder, Landlord or Agent may, without notice to Tenant,
apply all or any part of the Security, to the extent required for the payment
of any Rent or other sums due from Tenant hereunder, in addition to any other
remedies available to Landlord.  In the
event the Security is so applied, Tenant shall, upon demand, immediately
deposit with Landlord or Agent a sum equal to the amount so used.  If Tenant fully and faithfully complies with
all the covenants and obligations hereunder, the Security (or any balance
thereof) shall be returned to Tenant within 30 days after the last to occur of
(i) the date the Term expires or terminates or (ii) delivery to Landlord of
possession of the Premises.  Landlord may
deliver the Security to any purchaser of Landlord’s interest in the Premises
[or any Successor Landlord (defined below), if applicable], and thereupon
Landlord and Agent shall be discharged from any further liability with respect
to the Security.

4.5.         Parking.  Tenant shall have the right to use
twenty-five (25) dedicated parking spaces, the location of which shall be
determined by Landlord in its reasonable direction.

5.             CONDITION AND DELIVERY OF PREMISES.

5.1.         Condition of Premises.  Tenant agrees that Tenant is familiar with
the condition of both the Premises and the Property, and Tenant hereby accepts
the foregoing on an “AS-IS,” “WHERE-IS” basis. 
Tenant acknowledges that neither Landlord nor Agent, nor any
representative of Landlord, has made any representation as to the condition of
the foregoing or the suitability of the foregoing for Tenant’s intended
use.  Tenant represents and warrants that
Tenant has made its own inspection of the foregoing.  Neither Landlord nor Agent shall be obligated
to make any repairs, replacements or improvements (whether structural or
otherwise) of any kind or nature to the foregoing in connection with, or in
consideration of, this Lease, except (a) as set forth in Sections 13.2 and 18 and (b) with respect to all (if any)
repairs and improvements expressly and specifically described in Exhibit B attached hereto (“Landlord Work Items”).  Landlord agrees to make reasonable efforts to
enforce, or cause Agent to enforce, upon Tenant’s request, all manufacturer’s
or contractor’s warranties, if any, issued in connection with any of the
Landlord Work Items.

5.2.         Delay in Commencement.  Landlord shall not be liable to Tenant if
Landlord does not deliver possession of the Premises to Tenant on the
Commencement Date.  The obligations of
Tenant under the Lease shall not be affected thereby, except that the Commencement
Date shall be delayed until Landlord delivers possession of the Premises to
Tenant, and the Lease Term shall be extended by a period equal to the number of
days of delay in delivery of possession of the Premises to Tenant, plus the
number of days necessary to end the Lease Term on the last day of a month.

5.3.         Confirmation of Commencement Date.  Upon Landlord’s delivery of possession, and
as a condition precedent to such delivery, of the Premises to Tenant, Tenant
shall deliver to Landlord a Confirmation of Commencement Date in substantially
the form attached hereto as Exhibit E.

5.4.         ACCESS.

5.4.1.      Early
Access. 
Landlord shall allow Tenant access to the Premises commencing on
July 1, 2006, for the purpose of installing fixtures in the Premises,
provided Tenant shall provide Landlord with at least three (3) business days’
prior written notice of the date on which Tenant desires to have access to the
Premises (the “Access Date”).  Any access prior to the Commencement Date
shall be subject to all of the terms and conditions of this Lease, except that
Tenant shall not be required to pay Base Rent or Additional Rent until the
Commencement Date.  Among other things,
prior to the Access Date, Tenant shall deliver to Landlord evidence reasonably
acceptable to Landlord that Tenant is in compliance with the insurance requirements
of this Lease.  Tenant shall act in good
faith to minimize interference with the work being performed by Landlord at the
Premises.

 4
 

 

5.4.2.      Temporary
Use.  Subject to the terms and
conditions hereof, Landlord hereby grants to Tenant a license to the existing
office space in the east end of the Building (the “Existing Office”).  Such
use shall be subject to all of the terms and conditions of the Lease, except
that Tenant shall not be required to pay any Base Rent or Additional Rent for
the Existing Office.  The license granted
in this Section 5.4.2 shall
commence on the Commencement Date and shall expire upon the completion of the
construction by Landlord of the TI Work (as defined in Exhibit B attached hereto).  Landlord shall reimburse Tenant for all
reasonable, out-of-pocket expenses actually incurred by Tenant in connection
with moving its business operations from the Existing Office to the New Office
(as defined in Exhibit B attached
hereto).

6.             SUBORDINATION; NOTICES TO SUPERIOR
LESSORS AND MORTGAGEES; ATTORNMENT.

6.1.         Subordination.  Provided that Tenant is provided with a  subordination, nondisturbance and attornment
agreement duly executed by the holder of any mortgage or deed of trust or the
landlord pursuant to any ground lease, this Lease shall be subject and
subordinate at all times to (a) all ground leases or underlying leases that may
now exist or hereafter be executed affecting either or both of the Premises and
the Property and (b) any mortgage or deed of trust that may now exist or
hereafter be placed upon, and encumber, any or all of (x) the Property; (y) any
ground leases or underlying leases for the benefit of the Property; and (z) all
or any portion of Landlord’s interest or estate in any of said items.  Notwithstanding the foregoing, Landlord shall
have the right to subordinate or cause to be subordinated any such ground
leases or underlying leases that benefit the Property or any such mortgage or
deed of trust liens to this Lease. 
Tenant shall execute and deliver, upon demand by Landlord and in the
form reasonably requested by Landlord, any additional documents evidencing the
priority of subordination of this Lease with respect to any such ground leases
or underlying leases for the benefit of the Property or any such mortgage or
deed of trust.

6.2.         Estoppel Certificates.  Tenant agrees, from time to time and within
10 days after request by Landlord, to deliver to Landlord, or Landlord’s
designee, an estoppel certificate stating such matters pertaining to this Lease
as may be reasonably requested by Landlord. 
Failure by Tenant to timely execute and deliver such certificate shall
constitute an event of default and an acceptance of the Premises and
acknowledgment by Tenant that the statements included therein are true and
correct without exception. Landlord and Tenant intend that any statement
delivered pursuant to this section may be relied upon by any prospective
purchaser or mortgagee of the Property or of any interest therein or any other
Landlord designee.

6.3.         Transfer for Landlord.
In the event of a sale or conveyance by Landlord of the Property, the same
shall operate to release Landlord from any future liability for any of the
covenants or conditions, express or implied, herein contained in favor of
Tenant, and in such event Tenant agrees to look solely to Landlord’s successor
in interest with respect thereto and agrees to attorn to such successor.

7.             QUIET
ENJOYMENT.  Subject to
the provisions of this Lease, so long as Tenant pays all of the Rent and
performs all of its other obligations hereunder, Tenant shall not be disturbed
in its possession of the Premises by Landlord, Agent or any other person
lawfully claiming through or under Landlord; provided, however, in addition to
Landlord’s rights under Section 16 and
elsewhere in this Lease, Landlord and Landlord’s agents, employees, contractors
and representatives shall be provided reasonable access to the Premises such
that Landlord and Landlord’s agents, employees, contractors and representatives
may perform the General Maintenance Services (as hereinafter defined) without
undue interruption, delay or hindrance. 
This covenant shall be construed as a covenant running with the Property
and is not a personal covenant of Landlord. 
Tenant shall not unreasonably interrupt, delay, prevent or hinder the
performance of the General Maintenance Services by or on behalf of
Landlord.  Notwithstanding the foregoing,
however, Tenant acknowledges and agrees that Landlord shall have the unfettered
and unilateral right to use portions of the Common Areas (inclusive of the roof
of the Building) for such purposes and uses as Landlord may desire; provided,
however, that in all events and under all circumstances, Landlord’s use of any
portion of the Common Areas shall not interfere, in any material respect, with
any or all of (a) Tenant’s rights to occupy and use the Common Areas (in the
manner and for the purposes contemplated hereunder); (b) Tenant’s right to
utilize the vehicular parking areas located on the Common Areas; and (c) Tenant’s
right of access, ingress and egress to and from the Common Areas.

8.             ASSIGNMENT, SUBLETTING AND
MORTGAGING.

8.1.         Prohibition.  Tenant acknowledges that this Lease and the
Rent due under this Lease have been agreed to by Landlord in reliance upon
Tenant’s reputation and creditworthiness and upon the continued operation of
the Premises by Tenant for the particular use described in Section 4.1 above; therefore, Tenant shall
not, whether voluntarily, or by operation of law, or otherwise: (a) assign or
otherwise transfer this Lease; (b) sublet the Premises or any part thereof, or
allow the same to be used or occupied by anyone other than Tenant; or (c)
mortgage, pledge, encumber, or otherwise hypothecate this Lease or the
Premises, or any part thereof, in any manner whatsoever, without in each
instance obtaining the prior written consent of Landlord, which consent may be
given or withheld in Landlord’s sole discretion.  Any purported assignment, mortgage, transfer,
pledge or sublease made without the prior written consent of Landlord shall be
absolutely null and void.  No assignment
of this Lease shall be effective and valid unless and until the assignee
executes and delivers to Landlord any and all documentation reasonably required
by Landlord in order to evidence assignee’s assumption of all obligations of
Tenant hereunder.  Any consent by
Landlord to a particular assignment, sublease or mortgage shall not constitute
consent or approval of any subsequent assignment, sublease or mortgage, and
Landlord’s written approval shall be required in all such instances.  No consent by Landlord to any assignment or
sublease shall be deemed to release Tenant from its obligations hereunder and
Tenant shall remain fully liable for performance of all obligations under this
Lease.

 5
 

 

8.2.         Rights of Landlord.  If this Lease is assigned, or if the Premises
(or any part thereof) are sublet or used or occupied by anyone other than
Tenant, whether or not in violation of this Lease, Landlord or Agent may
(without prejudice to, or waiver of its rights), collect Rent from the
assignee, subtenant or occupant. 
Landlord or Agent may apply the net amount collected to the Rent herein
reserved, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of any of the provisions of this Section 8.  With respect
to the allocable portion of the Premises sublet, in the event that the total
rent and any other considerations received under any sublease by Tenant is
greater than the total Rent required to be paid, from time to time, under this
Lease, Tenant shall pay to Landlord one hundred percent (100%) of such excess
as received from any subtenant and such amount shall be deemed a component of
the Additional Rent.

8.3.         Permitted Transfers.  The provisions of Section 8.1(a) shall apply to a transfer of a majority (i.e.
greater than 50% interest) of the voting stock of Tenant or to any other change
in voting control of Tenant (if Tenant is a corporation), or to a transfer of a
majority of the general partnership or membership interests in Tenant (if
Tenant is a partnership or a limited liability company) or to a change in the
managerial control of Tenant, or to any comparable transaction involving any
other form of business entity, whether effectuated in one  or more transactions, as if such transfer
were an assignment of this Lease; but said provisions shall not apply to such a
transfer, provided, in any of such events, the successor to Tenant (or any
party remaining liable for the obligations of Tenant hereunder):  (i) has a tangible net worth at least equal
to the tangible net worth of Tenant as of the Commencement Date or (ii) is
capable of satisfying Tenant’s obligations hereunder, in Landlord’s reasonable
judgment.  Any such permitted transferee
shall execute and deliver to Landlord any and all documentation reasonably
required by Landlord in order to evidence assignee’s assumption of all
obligations of Tenant hereunder. 
Notwithstanding anything to the contrary contained in this Section 8.3, in no event may Tenant assign,
mortgage, transfer, pledge or sublease this Lease to any entity whatsoever if,
at the time of such assignment, mortgage, transfer, pledge or sublease, Tenant
is in default under this Lease.

9.             COMPLIANCE WITH LAWS.

9.1.         Compliance with Laws.  Tenant shall, at its sole expense (regardless
of the cost thereof), comply with all local, state and federal laws, rules,
regulations and requirements now or hereafter in force and all judicial and
administrative decisions in connection with the enforcement thereof
(collectively, “Laws”), pertaining
to either or both of the Premises and Tenant’s use and occupancy thereof.  If any license or permit is required for the
conduct of Tenant’s business in the Premises, Tenant, at its expense, shall
procure such license prior to the Commencement Date, and shall maintain such
license or permit in good standing throughout the Term.  Tenant shall give prompt notice to Landlord
of any written notice it receives of the alleged violation of any Law or
requirement of any governmental or administrative authority with respect to
either or both of the Premises and the use or occupation thereof. The judgment
of any court of competent jurisdiction, or the admission of Tenant in any
action or proceeding against Tenant, whether Landlord is a party thereto or
not, that any such Law pertaining to the Premises has been violated, shall be
conclusive of that fact as between Landlord and Tenant.

9.2.         Hazardous Materials.  Tenant agrees and covenants that: (i) Tenant
shall, at its own cost, at all times comply (and cause all others to comply)
with all laws (federal, state or local) relating to Hazardous Materials,
including, but not limited to, all Environmental Laws (defined below), and
Tenant shall further, at its own cost, obtain and maintain in full force and
effect at all times all permits and other approvals required in connection
therewith; (ii) Tenant shall promptly provide Landlord or Agent with complete
copies of all communications, permits or agreements with, from or issued by any
governmental authority or agency (federal, state or local) or any private
entity relating in any way to the presence, release, threat of release, or
placement of Hazardous Materials on or in the Premises or any portion of the
Property, or the generation, transportation, storage, use, treatment, or
disposal at, on, in or from the Premises, of any Hazardous Materials; (iii)
Landlord, Agent and their respective agents and employees shall have the right
to either or both (x) enter the Premises and (y) conduct appropriate tests for
the purposes of ascertaining Tenant’s compliance with all applicable laws
(including Environmental Laws), rules or permits relating in any way to the
generation, transport, storage, use, treatment, disposal or presence of
Hazardous Materials on, at, in or from all or any portion of either or both of
the Premises and the Property; and (iv) upon written request by Landlord or
Agent, Tenant shall provide Landlord with the results of reasonably appropriate
tests of air, water or soil to demonstrate that Tenant complies with all
applicable laws, rules or permits relating in any way to the generation,
transport, storage, use, treatment, disposal or presence of Hazardous Materials
on, at, in or from all or any portion of either or both of the Premises and the
Property.  This Section 9.2 does not authorize the generation,
transportation, storage, use, treatment or disposal of any Hazardous Materials
at, to, from, on or in the Premises in contravention of this Section 9. 
If, at any time or from time to time during the Term (or any extension
thereof), any Hazardous Material (defined below) is generated, created,  transported, stored, used, treated or
disposed of at, to, from, on or in either or both of the Premises and the
Property by, or as a result of any act or omission of, any or all of Tenant and
any or all of Tenant’s Parties (defined below), Tenant covenants to
investigate, clean up and otherwise remediate, at Tenant’s sole expense, any
release of Hazardous Materials caused, contributed to, or created by any or all
of (A) Tenant and (B) any or all of Tenant’s officers, directors, members,
managers, partners, invitees, agents, employees, contractors or representatives
(“Tenant Parties”) during the
Term.  Such investigation and remediation
shall be performed only after Tenant has obtained Landlord’s prior written
consent; provided, however, that Tenant shall be entitled to respond
immediately to an emergency without first obtaining such consent.  All remediation shall be performed in strict
compliance with Environmental Laws in accordance with the highest standards of
remediation and to the reasonable satisfaction of Landlord.  Tenant shall be liable for any and all
conditions covered hereby, and for all costs relating thereto, that are caused
or created by any or all of Tenant and any or all of Tenant’s Parties.  Tenant shall not enter into any settlement
agreement, consent decree or other compromise with respect to any claims
relating to any Hazardous Materials in any way connected to the Premises
without first obtaining Landlord’s written consent (which consent may be given
or withheld in Landlord’s sole, but reasonable, discretion) and affording
Landlord the reasonable opportunity to participate in any such
proceedings.  As used herein, the term
(x) “Environmental Laws” shall
mean any and all laws pertaining to Hazardous Materials or 

 6
 

 

that otherwise deal with, or relate to, air
or water quality, air emissions, soil or ground conditions or other
environmental matters of any kind; and (y) “Hazardous
Materials” shall mean any waste, material or substance (whether in
the form of liquids, solids or gases, and whether or not organic or inorganic
or embedded or airborne) that is or may be deemed to be or include a pesticide,
petroleum, asbestos, polychlorinated biphenyl, radioactive material, urea
formaldehyde or any other pollutant or contaminant or material or substance
that is or may be deemed to be hazardous, toxic, ignitable, reactive,
corrosive, dangerous, harmful or injurious, or that presents a risk to public
health or to the environment, and that is or becomes regulated by any
Environmental Law.  The undertakings,
covenants and obligations imposed on Tenant under this Section 9.2 shall survive the termination
or expiration of this Lease.

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

10.          INSURANCE.

10.1.       Insurance to be Maintained by Landlord.  Landlord shall maintain (a) “all-risk”
property insurance policy covering the Property (at its full replacement cost),
but excluding Tenant’s Property (defined below), and (b) commercial general
public liability insurance covering Landlord for claims arising out of
liability for bodily injury, death, personal injury, advertising injury and
property damage occurring in and about the Property and otherwise resulting
from any acts and operations of Landlord, its agents and employees, and (c)
rent loss insurance, all of the above with limits that are required by any
lender(s) of Landlord, or as are otherwise reasonably determined by Landlord.

10.2.       Insurance to be Maintained by Tenant.  Tenant shall purchase, at its own expense,
and keep in force at all times during this Lease the policies of insurance set
forth below in Sections 10.2.1 and
10.2.2 (collectively, “Tenant’s Policies”).  All Tenant’s Policies shall (a) be issued by
an insurance company with a Best rating of A-X or better and otherwise
reasonably acceptable to Landlord and shall be licensed to do business in the
state in which the Property is located; (b) provide that said insurance shall
not be canceled or materially modified unless 30 days’ prior written notice
shall have been given to Landlord; and (c) otherwise be in such form, and
include such coverages, as Landlord may reasonably require.  All Tenant’s Policies (or, at Landlord’s
option, Certificates of Insurance, in a form reasonably acceptable to Landlord,
evidencing said Tenant’s Policies), shall be delivered to Landlord by Tenant
upon commencement of the Lease and renewals thereof shall be delivered at least
30 days prior to the expiration of each Tenant’s Policy.  Tenant shall give prompt notice to Landlord
and Agent of any bodily injury, death, personal injury, advertising injury or
property damage occurring in and about the Property.

10.2.1.      General
Liability and Auto Insurance.  Tenant shall purchase and maintain,
throughout the Term, a Tenant’s Policy(ies) of (i) commercial general or excess
liability insurance, including personal injury and property damage, in the
amount of not less than $2,000,000.00 per occurrence, and $5,000,000.00 annual
general aggregate, per location; (ii) comprehensive automobile liability
insurance covering Tenant against any losses arising out of liability for
personal injuries or deaths of persons and property damage occurring in or
about the Premises in the amount of not less than $1,000,000, combined single
limit.  The Tenant’s Policies required by
this Section 10.2.1 shall (a) name
Landlord, Agent, and any party holding an interest to which this Lease may be
subordinated as additional insureds; (b) provide coverage on an occurrence
basis; (c) provide coverage for the indemnity obligations of Tenant under this
Lease; (d) contain a severability of insured parties provision and/or a cross
liability endorsement; (e) be primary, not contributing with, and not in excess
of, coverage that Landlord may carry; and (f) provide coverage with no
exclusion for a pollution incident arising from a hostile fire.

10.2.2.      Property
and Workers’ Compensation Insurance.  Tenant shall purchase and maintain,
throughout the Term, a Tenant’s Policy or Policies of (i) “all-risk” property
insurance covering Tenant’s Property (at its full replacement cost), and damage
to other property resulting from any acts or operations of Tenant, and (ii)
workers’ compensation insurance per the applicable state statutes covering all
employees of Tenant.

10.3.       Waiver of Subrogation.  To the extent permitted by law, and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the
other for (a) damages to property, (b) damages to all or any portion of either
or both of the Premises and the Property, (c) claims arising by reason of the
foregoing, to the extent such damages and claims are insured against, or
required to be insured against, by Landlord or Tenant under this Lease, or (d)
claims paid by Tenant’s workers’ compensation carrier.  This provision is intended to waive, fully
and for the benefit of each party, any rights and/or claims which might give
rise to a right of subrogation by any insurance carrier.  The coverage obtained by each party pursuant
to this Lease shall include, without limitation, a waiver of subrogation by the
carrier which conforms to the provisions of this section.

11.          ALTERATIONS.

11.1.       Procedural Requirements.  Tenant may, from time to time, at its
expense, make alterations or improvements in and to the Premises (hereinafter
collectively referred to as “Alterations”),
provided that Tenant first obtains the written consent of Landlord in each
instance.  Landlord’s consent to
Alterations shall not be unreasonably withheld, provided that:  (a) the Alterations are non-structural and
the structural integrity of the Property shall not be affected; (b) the
Alterations are to the interior of the Premises; (c) the proper functioning of
the 

 7
 

 

mechanical, electrical, heating, ventilating,
air-conditioning (“HVAC”),
sanitary and other service systems of the Property shall not be affected and
the usage of such systems by Tenant shall not be increased; (d) the Alterations
have no adverse effect on other leased premises in the Property; (e) Tenant
shall have appropriate insurance coverage, reasonably satisfactory to Landlord,
regarding the performance and installation of the Alterations; (f) the
Alterations shall conform with all other requirements of this Lease; and (g)
Tenant shall have provided Landlord with reasonably detailed plans for such Alterations
in advance of requesting Landlord’s consent. 
Additionally, before proceeding with any Alterations, Tenant shall (i)
at Tenant’s expense, obtain all necessary governmental permits and certificates
for the commencement and prosecution of Alterations; (ii) submit to Agent, for
Landlord’s written approval, working drawings, plans and specifications and all
permits for the work to be done and Tenant shall not proceed with such
Alterations until it has received said approval; and (iii) cause those contractors,
materialmen and suppliers engaged to perform the Alterations to deliver to
Landlord certificates of insurance (in a form reasonably acceptable to
Landlord) evidencing policies of commercial general liability insurance
(providing the same coverages as required in Section
10.2.1 above) and workers’ compensation insurance.  Such insurance policies shall satisfy the
obligations imposed under Section 10.2.1(a)
through (d) and (f). 
After obtaining Landlord’s approval to the Alterations, Tenant shall
give Landlord at least five days’ prior written notice of the commencement of
any Alterations at the Premises, and Landlord may elect to record and post
notices of non-responsibility at the Premises. 
Notwithstanding anything to the contrary contained in this Section 11.1, Landlord’s consent shall not
be required for Alterations satisfying clauses (a) through (f) above and
costing $10,000.00 or less in any one instance (up to a maximum aggregate of
$25,000.00 over the Term) provided that Tenant notifies Landlord of such
Alterations prior to commencing thereon and obtains all approvals and permits
necessary for the commencement and prosecution of such Alterations.

11.2.       Performance of Alterations.  Tenant shall cause the Alterations to be
performed in compliance with all applicable permits, laws and requirements of
public authorities, and with Landlord’s reasonable rules and regulations or any
other restrictions that Landlord or Agent may impose on the Alterations.  Tenant shall cause the Alterations to be
diligently performed in a good and workmanlike manner, using new materials and
equipment at least equal in quality and class to the standards for the Property
established by  Landlord or Agent.  Tenant shall obtain all necessary permits and
certificates for final governmental approval of the Alterations and shall
provide Landlord with “as built” plans, copies of all construction contracts,
governmental permits and certificates and proof of payment for all labor and
materials, including, without limitation, copies of paid invoices and final
lien waivers.

11.3.       Lien Prohibition.  Tenant shall pay when due all claims for
labor and material furnished to the Premises in connection with the
Alterations.  Tenant shall not permit any
mechanics or materialmen’s liens to attach to the Premises or the
Property.  Tenant, at its expense, shall
procure the satisfaction or discharge of record of all such liens and
encumbrances within 30 days after the filing thereof; or, within such thirty (30)
day period, Tenant shall provide Landlord, at Tenant’s sole expense, with
endorsements (satisfactory, both in form and substance, to Landlord and the
holder of any mortgage or deed of trust) to the existing title insurance
policies of Landlord and the holder of any mortgage or deed of trust, insuring
against the existence of, and any attempted enforcement of, such lien or
encumbrance.  In the event Tenant has not
so performed, Landlord may, at its option, pay and discharge such liens and
Tenant shall be responsible to reimburse Landlord, on demand and as Additional
Rent under this Lease, for all costs and expenses incurred in connection
therewith, together with interest thereon at the rate set forth in Section 22.3, which expenses shall include
reasonable fees of attorneys of Landlord’s choosing, and any costs in posting
bond to effect discharge or release of the lien as an encumbrance against the
Premises or the Property.

12.          LANDLORD’S AND TENANT’S PROPERTY.

12.1.       Landlord’s Property.  Subject to Section
12.2, all fixtures, machinery, equipment, improvements and
appurtenances attached to, or built into, the Premises at the commencement of,
or during the Term, whether or not placed there by or at the expense of Tenant,
shall become and remain a part of the Premises; shall be deemed the property of
Landlord (the “Landlord’s Property”),
without compensation or credit to Tenant; and shall not be removed by Tenant at
the Expiration Date unless Landlord requests their removal.  Further, any personal property in the
Premises on the Commencement Date, movable or otherwise, unless installed and
paid for by Tenant, shall be and shall remain the property of Landlord and
shall not be removed by Tenant.  In no
event shall Tenant remove any of the following materials or equipment without
Landlord’s prior written consent (which consent may be given or withheld in
Landlord’s sole discretion):  any power
wiring or power panels, lighting or lighting fixtures, wall or window
coverings, carpets or other floor coverings, heaters, air conditioners or any other
HVAC equipment, fencing or security gates, or other similar building operating
equipment and decorations.

12.2.       Tenant’s Property.  All movable non-structural partitions,
business and trade fixtures, machinery and equipment, communications equipment
and office equipment that are installed in the Premises by, or for the account
of, Tenant and without expense to Landlord and that can be removed without
structural damage to the Property, and all furniture, furnishings and other
articles of movable personal property owned by Tenant and located in the
Premises (collectively, the “Tenant’s
Property”) shall be and shall remain the property of Tenant and may
be removed by Tenant at any time during the Term, provided Tenant repairs or
pays the cost of repairing any damage to the Premises or to the Property
resulting from the installation and/or removal thereof.  At or before the Expiration Date, or the date
of any earlier termination, Tenant, at its expense, shall remove from the
Premises all of Tenant’s Property and any Alterations (except such items
thereof as constitute Landlord’s Property; or as Landlord shall have expressly
permitted, in writing, to remain, which property shall become the property of
Landlord), and Tenant shall repair (to Landlord’s reasonable satisfaction) any
damage to the Premises or the Property resulting from any installation and/or
removal of Tenant’s Property.  Any other
items of Tenant’s Property that shall remain in the Premises after the
Expiration Date, or following an earlier termination date, may, at the option
of Landlord, be deemed to have been abandoned, and in such case, such items may
be retained by Landlord as its property or be disposed of by Landlord, in
Landlord’s sole and absolute discretion and without accountability, at Tenant’s
expense.  

 

 8

 

Notwithstanding the
foregoing, if Tenant is in default under the terms of this Lease, Tenant may
remove Tenant’s Property from the Premises only upon the express written
direction of Landlord.

13.          REPAIRS AND MAINTENANCE.

13.1.       Tenant Repairs and Maintenance.

13.1.1.      Tenant
Responsibilities. 
Throughout the Term, Tenant shall, at its sole cost and expense:  (i) both (x) maintain and preserve, in
first-class condition (subject to normal and customary wear and tear), and (y)
perform any and all repairs and replacements required in order to so maintain
and preserve, in first class condition, the Premises and the fixtures and
appurtenances therein (including, but not limited to, the Premises’ plumbing
and HVAC systems, all doors, overhead or otherwise, glass and levelers located
in the Premises or otherwise available in the Property for Tenant’s sole use;
and excluding, however, only those specific components of the Premises for
which Landlord is expressly responsible under Section
13.2); and (ii) except to the extent Landlord elects to repair and
maintain the HVAC systems as part of General Maintenance Services (as
hereinafter defined), maintain, in full force and effect, a preventative
maintenance and service contract with a reputable service provider for
maintenance of the HVAC systems of the Premises (the “HVAC Maintenance Contract”).  The terms and provisions of any such HVAC
Maintenance Contract shall require that the service provider maintain the
Premises’ HVAC system in accordance with the manufacturer’s recommendations and
otherwise in accordance with normal, customary and reasonable practices in the
geographic area in which the Premises is located and for HVAC systems
comparable to the Premises’ HVAC system.

In addition to Tenant’s obligations under (i) and (ii) above, Tenant
shall also be responsible for all costs and expenses incurred to perform any
and all repairs and replacements (whether structural or non-structural;
interior or exterior; and ordinary or extraordinary), in and to the Premises
and the Property and the facilities and systems thereof, if and to the extent
that the need for such repairs or replacements arises directly or indirectly
from any or all of:  (a) the performance
or existence of any Alterations, (b) the installation, use or operation of Tenant’s
Property in the Premises, (c) the moving of Tenant’s Property in or out of the
Property, and (d) any act, omission, misuse, or neglect of Tenant, any of its
subtenants, or others entering into the Premises by act or omission of Tenant
or any subtenant.  Any repairs or
replacements required to be made by Tenant to any or all of the structural
components of the Property and the mechanical, electrical, sanitary, HVAC, or
other systems of the Property or Premises shall be performed by appropriately
licensed contractors approved by Landlord, which approval shall not be
unreasonably withheld.  All such repairs
or replacements shall be subject to the supervision and control of Landlord,
and all repairs and replacements shall be made with materials of equal or better
quality than the items being repaired or replaced.

13.1.2.      General
Maintenance Services. 
Notwithstanding any of the foregoing, however, from time to time during
the Term, Landlord may elect, in its sole discretion and by delivery of written
notice to Tenant, to perform on behalf of Tenant, all or some portion of the
repairs, maintenance, restoration and replacement in and to the Premises
required to be performed by Tenant under this Lease (any such repairs,
maintenance, restoration and/or replacement activities that Landlord elects to
perform on behalf of Tenant are herein collectively referred to as “General Maintenance Services”).  Tenant shall reimburse Landlord for the cost
or value of all General Maintenance Services provided by Landlord as Additional
Rent, simultaneously with the payment of Operating Expenses as part of
Estimated Additional Rent (on a monthly estimated basis subject to annual
reconciliation, as described in Section 3.3
above).  Unless and until Landlord
affirmatively elects to provide General Maintenance Services, nothing contained
herein shall be construed to obligate Landlord to perform any General
Maintenance Services or, except as otherwise expressly provided in Section 13.2, to repair, maintain, restore
or replace any portion of the Premises. 
Landlord may from time to time, in its sole discretion, (x) reduce or
expand the scope of the General Maintenance Services that Landlord has elected
to provide or (y) revoke its election to provide any or all of the General
Maintenance Services, in either event, upon delivery of not less than thirty
(30) days’ prior written notice to Tenant.

13.1.3.      HVAC
Maintenance Contract. 
If Landlord does not elect to repair and maintain the HVAC systems as
part of General Maintenance Services, or revokes such election at any time
after having made such election, then, within 30 days following either (a) the
Commencement Date or (b) the date on which Landlord advises Tenant that
Landlord will no longer provide General Maintenance Services for the HVAC
system, whichever date is applicable, Tenant shall procure and deliver to
Landlord the HVAC Maintenance Contract. 
Thereafter, Tenant shall provide to Landlord a copy of renewals or
replacements of such HVAC Maintenance Contract no later than 30 days prior to
the then-applicable expiry date of the existing HVAC Maintenance Contract.  If Tenant fails to timely deliver to Landlord
the HVAC Maintenance Contract (or any applicable renewal or replacement
thereof), then Landlord shall have the right to contract directly for the
periodic maintenance of the HVAC systems in the Premises and to charge the cost
thereof back to Tenant as Additional Rent.

13.2.       Landlord Repairs.  Notwithstanding anything contrary herein,
Landlord shall repair, replace and restore the foundation, exterior and
interior load-bearing walls, roof structure and roof covering and tuckpointing
of the Property; provided, however, that (i) all costs and expenses so incurred
by Landlord to repair, replace and restore the above items shall constitute
Operating Expenses; provided, however, that with respect to any costs incurred
in the replacement context, those costs shall not constitute an Operating
Expense except to the extent that such costs so qualify under Section 3.1.1(vii); and (ii)
notwithstanding (i) above, in the event that any such repair, replacement or
restoration is necessitated by any or all of the matters set forth in Sections 13.1(a) through (d) above (collectively, “Tenant Necessitated Repairs”), then Tenant
shall be required to reimburse Landlord for all costs and expenses that
Landlord incurs in order to perform such Tenant Necessitated Repairs, and such
reimbursement shall be paid, in full, within 10 days after Landlord’s delivery
of demand therefor.  Landlord agrees 

 9
 

 

to commence the repairs, replacements or
restoration described in this Section 13.2
within a reasonable period of time after receiving from Tenant written notice
of the need for such repairs.

14.          UTILITIES.  Tenant shall purchase all utility services
and shall provide for scavenger, cleaning and extermination services.  As provided in Section
3.1.1. above, utility charges are included within Operating
Expenses; therefore, when and as Tenant pays estimated Operating Expenses,
those estimated monthly payments shall include monthly estimated installments
of utility charges; nevertheless, at Landlord’s election or with Landlord’s consent,
Tenant may pay the utility charges for its Premises directly to the utility or
municipality providing such service, and in that event:  (a) all charges shall be paid by Tenant
before they become delinquent; and (b) utility charges for the Premises shall
not be included in estimated Operating Expenses.  Tenant shall be solely responsible for the
repair and maintenance of any meters necessary in connection with such
services.  Tenant’s use of electrical
energy in the Premises shall not, at any time, exceed the capacity of either or
both of (i) any of the electrical conductors and equipment in or otherwise
servicing the Premises; and (ii) the HVAC systems of either or both of the
Premises and the Property.

15.          INVOLUNTARY
CESSATION OF SERVICES. 
Landlord reserves the right, without any liability to Tenant and without
affecting Tenant’s covenants and obligations hereunder, to stop service of any
or all of the HVAC, electric, sanitary, elevator (if any), and other systems
serving the Premises, or to stop any other services required by Landlord under
this Lease, whenever and for so long as may be necessary by reason of (i)
accidents, emergencies, strikes, or the making of repairs or changes which
Landlord or Agent, in good faith, deems necessary or (ii) any other cause
beyond Landlord’s reasonable control. 
Further, it is also understood and agreed that Landlord or Agent shall
have no liability or responsibility for a cessation of services to the Premises
or to the Property that occurs as a result of causes beyond Landlord’s or Agent’s
reasonable control.  No such interruption
of service shall be deemed an eviction or disturbance of Tenant’s use and
possession of the Premises or any part thereof, or render Landlord or Agent
liable to Tenant for damages, or relieve Tenant from performance of Tenant’s
obligations under this Lease, including, but not limited to, the obligation to
pay Rent; provided, however, that if any interruption of services due to the
act or omission of Landlord persists for a period in excess of five (5)
consecutive business days from the date on which Landlord receives notice from
Tenant thereof Tenant shall, as Tenant’s sole remedy, be entitled to a
proportionate abatement of Rent to the extent, if any, of any actual loss of
use of the Premises by Tenant.

16.          LANDLORD’S
RIGHTS.  Landlord,
Agent and their respective agents, employees and representatives shall have the
right to enter and/or pass through the Premises at any time or times upon
reasonable prior notice (except in the event of emergency):  (a) to examine and inspect the Premises and
to show them to actual and prospective lenders, prospective purchasers or
mortgagees of the Property or providers of capital to Landlord and its
affiliates; and (b) to make such repairs, alterations, additions and
improvements in or to all or any portion of either or both of the Premises and
the Property, or the Property’s facilities and equipment as Landlord is
required or desires to make.  Landlord
and Agent shall be allowed to take all materials into and upon the Premises
that may be required in connection with any repairs, alterations, additions or
improvements, without any liability to Tenant and without any reduction or
modification of Tenant’s covenants and obligations hereunder; provided,
however, that Landlord shall use reasonable efforts to limit interference with
Tenant’s business operations and Tenant’s occupancy and use of the
Premises.  During the period of six
months prior to the Expiration Date (or at any time, if Tenant has vacated or
abandoned the Premises or is otherwise in default under this Lease), Landlord
and its agents may exhibit the Premises to prospective tenants.  Additionally, Landlord and Agent shall have
the following rights with respect to the Premises, exercisable without notice
to Tenant, without liability to Tenant, and without being deemed an eviction or
disturbance of Tenant’s use or possession of the Premises or giving rise to any
claim for setoff or abatement of Rent: 
(i) to designate and approve, prior to installation, all types of signs;
(ii) to have pass keys, access cards, or both, to the Premises; and (iii) to
decorate, remodel, repair, alter or otherwise prepare the Premises for
reoccupancy at any time after Tenant vacates or abandons the Premises for more
than 30 consecutive days or without notice to Landlord of Tenant’s intention to
reoccupy the Premises.

17.          NON-LIABILITY AND INDEMNIFICATION.

17.1.       Non-Liability.  Except as provided in Section 17.2.2, none of Landlord, Agent,
any other managing agent, or their respective affiliates, owners, partners,
directors, officers, agents and employees shall be liable to Tenant for any
loss, injury, or damage, to Tenant or to any other person, or to its or their
property, irrespective of the cause of such injury, damage or loss.  Further, except as provided in Section 17.2.2, none of Landlord, Agent,
any other managing agent, or their respective affiliates, owners, partners,
directors, officers, agents and employees shall be liable to Tenant (a) for any
damage caused by other tenants or persons in, upon or about the Property, or
caused by operations in construction of any public or quasi-public work; (b)
with respect to matters for which Landlord is liable, for consequential or
indirect damages purportedly arising out of any loss of use of the Premises or
any equipment or facilities therein by Tenant or any person claiming through or
under Tenant; (c) any defect in the Premises or the Property; (d) injury or
damage to person or property caused by fire, or theft, or resulting from the
operation of heating or air conditioning or lighting apparatus, or from falling
plaster, or from steam, gas, electricity, water, rain, snow, ice, or dampness,
that may leak or flow from any part of the Property, or from the pipes,
appliances or plumbing work of the same.

17.2.       Indemnification.

17.2.1.      Tenant
Indemnification. 
Tenant hereby indemnifies, defends, and holds Landlord, Agent and their
respective affiliates, owners, partners, directors, officers, agents and
employees (collectively, “Landlord
Indemnified Parties”) harmless from and against any and all Losses
(defined below) arising from or in connection with any or all of:  (a) the conduct or management of either or
both the Property and the Premises or any business therein, or any work or
Alterations done, or any condition created by any or all of 

 10
 

 

Tenant and Tenant’s Parties in or about the
Premises during the Term or during the period of time, if any, prior to the
Commencement Date that Tenant is given access to the Premises; (b) any act,
omission or negligence of any or all of Tenant and Tenant’s Parties; (c) any
accident, injury or damage whatsoever (unless caused by Landlord’s negligence)
occurring in, at or upon either or both of the Property and the Premises and
caused by any or all of Tenant and Tenant’s Parties; (d) any breach by Tenant
of any of its warranties and representations under this Lease; (e) any actions
necessary to protect Landlord’s interest under this Lease in a bankruptcy
proceeding or other proceeding under the Bankruptcy Code; (f) any violation or
alleged violation by any or all of Tenant and Tenant’s Parties of any Law
including, without limitation, any Environmental Law; (g) any breach of the
provisions of Section 9 by any or
all of Tenant and Tenant’s Parties; (h) claims for work or labor performed or
materials supplies furnished to or at the request of any or all of Tenant and
Tenant’s Parties; (i) claims arising from any breach or default on the part of
Tenant in the performance of any covenant contained in this Lease; (j) any
Hazardous Materials used, exposed, emitted, released, discharged, generated,
manufactured, sold, transported, handled, stored, treated, reused, presented,
disposed of or recycled in, at, near or under all or any portion of the
Premises as a result of the acts or omissions of any or all of Tenant and
Tenant’s Parties; and (k) the violation of any Environmental Law or any permit,
application or consent required in connection with any Environmental Law by any
or all of Tenant and Tenant’s Parties with respect to the Premises during the
Term, excluding, however, any violation of any Environmental Law resulting
directly from the acts or omissions of Landlord and Landlord’s employees,
agents and contractors (collectively, “Tenant’s
Indemnified Matters”).  In
case any action or proceeding is brought against any or all of Landlord and the
Landlord Indemnified Parties by reason of any of Tenant’s Indemnified Matters,
Tenant, upon notice from any or all of Landlord, Agent or any Superior Party
(defined below), shall resist and defend such action or proceeding by counsel
reasonably satisfactory to, or selected by, Landlord.  The term “Losses”
shall mean all claims, demands, expenses, actions, judgments, damages (actual,
but not consequential), penalties, fines, liabilities, losses of every kind and
nature (including, without limitation, property damage, diminution in value of
Landlord’s interest in the Premises or the Property, damages for the loss or
restriction on use of any space or amenity within the Premises or the Property,
damages arising from any adverse impact on marketing space in the Property,
sums paid in settlement of claims and any costs and expenses associated with
injury, illness or death to or of any person), suits, administrative
proceedings, costs and fees, including, without limitation, attorneys’ and
consultants’ reasonable fees and expenses, and the costs of cleanup,
remediation, removal and restoration, that are in any way related to any matter
covered by the foregoing indemnity.  The
provisions of this Section 17.2.1
shall survive the expiration or termination of this Lease.

17.2.2.      Landlord
Indemnification. 
Landlord hereby indemnifies, defends and holds Tenant harmless from and
against any and all Losses actually suffered or incurred by Tenant as the sole
and direct result of any negligent, willful or intentional acts or omissions of
any or all of Landlord, Agent and any parties within the direct and sole
control of either or both of Landlord and Agent.  In the event that any action or proceeding is
brought against Tenant, and the foregoing indemnity is applicable to such
action or proceeding, then Landlord, upon notice from Tenant, shall resist and
defend such action or proceeding by counsel reasonably satisfactory to
Tenant.  Notwithstanding anything to the
contrary set forth in this Lease, however, in all events and under all
circumstances, the liability of Landlord to Tenant shall be limited to the
interest of Landlord in the Property, and Tenant agrees to look solely to
Landlord’s interest in the Property for the recovery of any judgment or award
against Landlord, it being intended that Landlord shall not be personally
liable for any judgment or deficiency. 
The provisions of this Section 17.2.2
shall survive the expiration or termination of this Lease.

17.3.       Force Majeure.  The obligations of Tenant hereunder shall not
be affected, impaired or excused, and Landlord shall have no liability
whatsoever to Tenant, with respect to any act, event or circumstance arising
out of (a) Landlord’s failure to fulfill, or delay in fulfilling any of its
obligations under this Lease by reason of labor dispute, governmental
preemption of property in connection with a public emergency or shortages of
fuel, supplies, or labor, or any other cause, whether similar or dissimilar,
beyond Landlord’s reasonable control; or (b) any failure or defect in the
supply, quantity or character of utilities furnished to the Premises, or by
reason of any requirement, act or omission of any public utility or others
serving the Property, beyond Landlord’s reasonable control.

18.          DAMAGE OR DESTRUCTION.

18.1.       Notification and Repair.  Tenant shall give prompt notice to Landlord
and Agent of (a) any fire or other casualty to the Premises or the Property,
and (b) any damage to, or defect in, any part or appurtenance of the Property’s
sanitary, electrical, HVAC, elevator or other systems located in or passing
through the Premises or any part thereof. 
Tenant shall be liable for any claim, loss, damage, cost or expense
resulting from Tenant’s failure to give Landlord the foregoing notice in a
timely manner.  Subject to the provisions
of Section 18.3 below, if either
or both of the Property and the Premises is damaged by fire or other insured
casualty, Landlord shall repair
(or cause Agent to repair) the damage and restore and rebuild the Property
and/or the Premises (except for Tenant’s Property) with reasonable dispatch
after (x) notice to it of the damage or destruction and (y) the adjustment of
the insurance proceeds attributable to such damage.  Subject to the provisions of Section 18.3 below, Tenant shall not be
entitled to terminate this Lease and no damages, compensation or claim shall be
payable by Landlord for purported inconvenience, loss of business or annoyance
arising from any repair or restoration of any portion of the Premises or of the
Property  pursuant to this Section.  Landlord (or Agent, as the case may be) shall
use its diligent, good faith efforts to make such repair or restoration promptly
and in such manner as not to unreasonably interfere with Tenant’s use and occupancy
of the Premises, but Landlord or Agent shall not be required to do such repair
or restoration work except during normal business hours of business days.

18.2.       Rental Abatement.  Provided that any damage to either or both of
the Property and the Premises is not caused by, or is not the result of acts or
omissions by, any or all of Tenant and Tenant’s Parties, if (a) the Property is
damaged by fire or other casualty thereby causing the Premises to be
inaccessible or (b) the Premises 

 11
 

 

are partially damaged by fire or other
casualty, the Rent shall be proportionally abated to the extent of any actual
loss of use of the Premises by Tenant.

18.3.       Total Destruction.  If the Property or the Premises shall be
totally destroyed by fire or other casualty, or if the Property shall be so
damaged by fire or other casualty that (in the reasonable opinion of a
reputable contractor or architect designated by Landlord):  (i) its repair or restoration requires more
than 180 days or (ii) such repair or restoration requires the expenditure of
more than 50% of the full insurable value of the Property immediately prior to
the casualty or (iii) the damage (x) is less than the amount stated in (ii)
above, but more than 10% of the full insurable value of the Property; and (y)
occurs during the last two years of Lease Term, Landlord and Tenant shall each
have the option to terminate this Lease (by so advising the other, in writing)
within 10 days after said contractor or architect delivers written notice of
its opinion to Landlord and Tenant, but in all events prior to the commencement
of any restoration of the Premises or the Property by Landlord.  In such event, the termination shall be
effective as of the date upon which either Landlord or Tenant, as the case may
be, receives timely written notice from the other terminating this Lease
pursuant to the preceding sentence.  If
neither Landlord nor Tenant timely delivers a termination notice, this Lease
shall remain in full force and effect. 
Notwithstanding the foregoing, if (A) any holder of a mortgage or deed
of trust encumbering the Property or landlord pursuant to a ground lease
encumbering the Property (collectively, “Superior
Parties”) or other party entitled to the insurance proceeds fails to
make such proceeds available to Landlord in an amount sufficient for
restoration of the Premises or the Property, or (B) the issuer of any casualty
insurance policies on the Property fails to make available to Landlord
sufficient proceeds for restoration of the Premises or the Property, then
Landlord may, at Landlord’s sole option, terminate this Lease by giving Tenant
written notice to such effect within 30 days after Landlord receives notice
from the Superior Party or insurance company, as the case may be, that such
proceeds shall not be made available, in which event the termination of this
Lease shall be effective as of the date Tenant receives written notice from
Landlord of Landlord’s election to terminate this Lease.  Landlord shall have no liability to Tenant,
and Tenant shall not be entitled to terminate this Lease by virtue of any
delays in completion of repairs and restoration.  For purposes of this Section 18.3 only, “full insurable value” shall mean
replacement cost, less the cost of footings, foundations and other structures
below grade.

18.4.       Insurance Proceeds.  Landlord shall not be obligated to expend in
repairs and restoration an amount in excess of the proceeds of insurance
recovered with respect to any casualty. 
Tenant acknowledges that Landlord shall be entitled to the full proceeds
of any insurance coverage, whether carried by Landlord or Tenant, for damage to
either or both of the Premises and the Property (excluding any proceeds for
damage to Tenant’s Property).  In the
event that either or both of the Premises and the Property are not repaired or
reconstructed, all proceeds of insurance (excluding any proceeds covering
Tenant’s Property), whether carried by Landlord or Tenant, shall be payable to
Landlord.  Landlord’s duty to repair the
Premises and the Property (excluding Tenant’s Property) is limited to repairing
the Premises to the condition existing immediately prior to such fire or other
casualty.

19.          EMINENT
DOMAIN.  If the whole,
or any substantial (as reasonably determined by Landlord) portion, of the
Property is taken or condemned for any public use under any Law or by right of
eminent domain, or by private purchase in lieu thereof, and such taking would
prevent or materially interfere with the Permitted Use of the Premises, this
Lease shall terminate effective when the physical taking of said Premises
occurs.  If less than a substantial
portion of the Property is so taken or condemned, or if the taking or
condemnation is temporary (regardless of the portion of the Property affected),
this Lease shall not terminate, but the Rent payable hereunder shall be
proportionally abated to the extent of any actual loss of use of the Premises
by Tenant.  Landlord shall be entitled to
any and all payment, income, rent or award, or any interest therein whatsoever,
which may be paid or made in connection with such a taking or conveyance, and
Tenant shall have no claim against Landlord for the value of any unexpired
portion of this Lease.  Notwithstanding
the foregoing, any compensation specifically and independently awarded to
Tenant for loss of business or goodwill, or for its personal property, shall be
the property of Tenant.

20.          SURRENDER
AND HOLDOVER.  On the
last day of the Term, or upon any earlier termination of this Lease, or upon
any re-entry by Landlord upon the Premises, (a) Tenant shall quit and surrender
the Premises to Landlord “broom-clean” and in good order, condition and repair
(as defined by Exhibit C, attached hereto and
incorporated herein by reference), except for ordinary wear and tear and such
damage or destruction as Landlord is required to repair or restore under this
Lease, (b) Tenant shall remove all of Tenant’s Property therefrom, except as
otherwise expressly provided in this Lease, and (c) Tenant shall surrender to
Landlord any and all keys, access cards, computer codes or any other items used
to access the Premises.  Landlord shall
be permitted to inspect the Premises in order to verify compliance with this Section 20 at any time prior to (x) the Expiration Date, (y)
the effective date of any earlier termination of this Lease, or (z) the
surrender date otherwise agreed to in writing by Landlord and Tenant.  The obligations imposed under the first
sentence of this Section 20 shall survive the
termination or expiration of this Lease. 
If any repairs are required to be performed in, to or at the Premises
(pursuant to the first sentence of this Section 20 or
any other applicable provision of this Lease) upon the expiration or
termination of the Term, Tenant shall cause such repairs to be performed, to Landlord’s
reasonable satisfaction, within 10 business days after the date on which this
Lease is terminated or expired.  If
Tenant fails to timely comply with the preceding sentence, then Landlord shall
have the right to cause the repairs to be performed, at Tenant’s expense, and
all such expenses so incurred by Landlord shall bear interest (at the rate
specified in the second sentence of Section 22.3)
from the date the expense is incurred until the date paid, in full, by Tenant
(inclusive of interest).  If Tenant
remains in possession after the Expiration Date hereof or after any earlier
termination date of this Lease or of Tenant’s right to possession:  (i) 
Tenant shall be deemed a tenant-at-sufferance;  (ii) Tenant shall pay 200% of the aggregate
of the Base Rent and Additional Rent last prevailing hereunder, and also shall
pay all actual damages sustained by Landlord, directly by reason of Tenant’s
remaining in possession after the expiration or termination of this Lease;  (iii) there shall be no renewal or extension
of this Lease by operation of law; and (iv) the tenancy-at-will may be
terminated by Landlord upon one days’ or by Tenant  upon 30 days’ prior written notice 

 12
 

 

given by the
terminating party to the non-terminating party. 
The provisions of this Section 20
shall not constitute a waiver by Landlord of any re-entry rights of Landlord
provided hereunder or by law.

21.          EVENTS OF DEFAULT.

21.1.       Bankruptcy of Tenant.  It shall be a default by Tenant under this
Lease if Tenant makes an assignment for the benefit of creditors, or files a
voluntary petition under any state or federal bankruptcy or insolvency law, or
an involuntary petition alleging an act of bankruptcy or insolvency is filed
against Tenant under any state or federal bankruptcy or insolvency law that is
not dismissed within 90 days, or whenever a petition is filed by or against (to
the extent not dismissed within 90 days) Tenant under the reorganization
provisions of the United States Bankruptcy Code or under the provisions of any
state or federal law of like import, or whenever a petition shall be filed by
Tenant under the arrangement provisions of the United States Bankruptcy Code or
similar state or federal law, or whenever a receiver of Tenant, or of, or for,
the property of Tenant shall be appointed, or Tenant admits it is insolvent or
is not able to pay its debts as they mature.

21.2.       Default Provisions.  Each of the following shall constitute a
default by Tenant under this Lease: (a) if Tenant fails to pay Rent or any
other payment when due hereunder within five days after written notice from
Landlord of such failure to pay on the due date; provided, however, that if in
any consecutive 12 month period, Tenant shall, on two (2) separate occasions,
fail to pay any installment of Rent on the date such installment of Rent is
due, then, on the third such occasion and on each occasion thereafter on which
Tenant shall fail to pay an installment of Rent on the date such installment of
Rent is due, Landlord shall be relieved from any obligation to provide notice
to Tenant, and Tenant shall then no longer have a five day period in which to
cure any such failure; or (b) if Tenant fails, whether by action or inaction,
to timely comply with, or satisfy, any or all of the obligations imposed on
Tenant under this Lease (other than the obligation to pay Rent) for a period of
30 days after Landlord’s delivery to Tenant of written notice of such default
under this Section 21.2(b);
provided, however, that if the default cannot, by its nature, be cured within
such 30 day period, but Tenant commences and diligently pursues a cure of such
default promptly within the initial 30 day cure period, then Landlord shall not
exercise its remedies under Section 22
unless such default remains uncured for more than 60 days after the initial
delivery of Landlord’s original default notice; or (c) Tenant fails to deliver
to Landlord prior written notice (accompanied by an additional security deposit
equal to two monthly installments of Base Rent) before Tenant vacates or abandons
the Premises during the Term.

22.          RIGHTS AND REMEDIES.

22.1.       Landlord’s Cure Rights Upon Default of
Tenant.  If
Tenant defaults in the performance of any of its obligations under this Lease,
and fails to cure such default on a timely basis (pursuant to Section 21.2), Landlord, without thereby
waiving such default, may (but shall not be obligated to) perform the same for
the account, and at the expense of, Tenant.

22.2.       Landlord’s Remedies.  In the event of any default by Tenant under
this Lease, Landlord, at its option, and after any applicable notice and cure
period (as required pursuant to Section 21.2),
but without additional notice or demand from Landlord, if any, as provided in Section 21.2 has expired, may, in addition
to all other rights and remedies provided in this Lease, or otherwise at law or
in equity: (a) terminate this Lease and Tenant’s right of possession of the
Premises; or (b) terminate Tenant’s right of possession of the Premises without
terminating this Lease; provided, however, that Landlord may, whether Landlord
elects to proceed under Subsections (a) or (b) above, relet the Premises, or
any part thereof for the account of Tenant, for such rent and term and upon
such terms and conditions as are acceptable to Landlord.  In addition, for purposes of any reletting,
Landlord is authorized to decorate, repair, alter and improve the Premises to
the extent deemed necessary by Landlord, in its sole discretion.  In the event of the termination of this Lease
by Landlord pursuant to (a) above, Landlord shall be entitled to recover from
Tenant (i) all damages and other sums that Landlord is entitled to recover
under any provision of this Lease or at law or in equity, including, but not
limited to, all fixed dollar amounts of Base Rent and Additional Rent accrued
and unpaid for the period up to and including such termination date; (ii) all
other additional sums payable by Tenant, or for which Tenant is liable, or in
respect of which Tenant has agreed to indemnify Landlord, under any of the
provisions of this Lease, that may be then owing and unpaid; (iii) all costs
and expenses (including, without limitation, court costs and attorneys’
reasonable fees) incurred by Landlord in the enforcement of its rights and
remedies under this Lease; and (iv) any damages provable by Landlord as a
matter of law including, without limitation, an amount equal to the positive
difference, if any, between (x) the discounted present value (at 6% per annum)
of the Base Rent provided to be paid for the remainder of the Term (measured
from the effective termination date of this Lease) and (y) the fair market
rental value of the Leased Premises (determined at the date of termination of
this Lease) after deduction (from such fair market rental value) of the
projected costs and expenses of reletting the Premises (including the
anticipated costs of repairs, alterations, improvements, additions, legal fees
and brokerage commissions) as reasonably estimated by Landlord.  If Landlord elects to pursue its rights and
remedies under Subsection (b) above, and the Premises are relet and a
sufficient sum is not realized therefrom, then to satisfy the payment, when
due, of Base Rent and Additional Rent reserved under the Lease for any monthly
period (after payment of all Landlord’s reasonable expenses of reletting),
Tenant shall, in Landlord’s sole judgment, either (i) pay any such deficiency
monthly or (ii) pay such deficiency on an accelerated basis, which accelerated
deficiency shall be discounted at a rate of 6% per annum.  If Landlord elects to pursue its rights and
remedies under Subsection (b) above, and Landlord fails to relet the Premises,
then Tenant shall pay to Landlord the sum of (x) the projected costs of
Landlord’s expenses of reletting (including the anticipated costs of repairs,
alterations, improvements, additions, legal fees and brokerage commissions) as
reasonably estimated by Landlord and (y) the accelerated amount of Base Rent
and Additional Rent due under the Lease for the balance of the Term, discounted
to present value at a rate of 6% per annum.  Tenant agrees that Landlord may file
suit to recover any sums due to Landlord hereunder from time to time and that
such suit or recovery of any amount due Landlord hereunder shall not be any
defense to any subsequent action brought for any amount not theretofore reduced
to 

 13
 

 

judgment in favor of Landlord.  If Landlord elects to pursue its rights and
remedies under Subsection (b), then Landlord shall at any time have the further
right and remedy to rescind such election and pursue its rights and remedies
under Subsection (a).  In the event
Landlord elects, pursuant to clause (b) of this Section 22.2, to terminate Tenant’s right of possession only,
without terminating this Lease, Landlord may, at Landlord’s option, enter into
the Premises, remove Tenant’s Property, Tenant’s signs and other evidences of
tenancy, and take and hold possession thereof, as provided in Section 20 hereof; provided, however, that
such entry and possession shall not terminate this Lease or release Tenant, in
whole or in part, from Tenant’s obligation to pay the Base Rent and Additional
Rent reserved hereunder for the full Term, or from any other obligation of
Tenant under this Lease.  Any and all
property that may be removed from the Premises by Landlord pursuant to the
authority of the Lease or of law, to which Tenant is or may be entitled, may be
handled, removed or stored by Landlord at the sole risk, cost and expense of
Tenant, and in no event or circumstance shall Landlord be responsible for the
value, preservation or safekeeping thereof. 
Tenant shall pay to Landlord, upon demand, any and all expenses incurred
in such removal and all storage charges against such property so long as the
same shall be in Landlord’s possession or under Landlord’s control.  Any such property of Tenant not retaken from
storage by Tenant within 30 days after the end of the Term, however terminated,
shall be conclusively presumed to have been conveyed by Tenant to Landlord
under this Lease as in a bill of sale, without further payment or credit by
Landlord to Tenant.

For purposes of
determining any recovery of rent or damages by Landlord that depends upon what
Landlord could collect by using reasonable efforts to relet the Premises, in
the event such determination is required by
applicable law notwithstanding the foregoing waiver by Tenant, it is understood
and agreed that:

(a)      Landlord may elect to
lease other comparable, available space in the Building, if any, before
reletting the Premises.

(b)      Landlord may decline to
incur out-of-pocket costs to relet the Premises, other than customary leasing
commissions and legal fees for the negotiation of a lease with a new tenant.

(c)      Landlord may decline to
relet the Premises at rental rates below then prevailing market rental rates,
because of the negative impact lower rental rates would have on the value of
the Building and because of the uncertainty of actually receiving from Tenant
the greater damages that Landlord would suffer from and after reletting at the
lower rates.

(d)      Before reletting the
Premises to a prospective tenant, Landlord may require the prospective tenant
to demonstrate the same financial wherewithal that Landlord would require as a
condition to leasing other space in the Building to the prospective tenant.

(e)      Identifying a prospective
tenant to relet the Premises, negotiating a new lease with such tenant and
making the Premises ready for such tenant will take time, depending upon market
conditions when the Premises first become available for reletting, and during
such time Landlord cannot be expected to collect any revenue from reletting.

(f)          Listing the Premises
with a broker in a manner consistent with parts (a) through (e) above
constitutes reasonable efforts on the part of Landlord to relet the Premises.

22.3.       Additional Rights of Landlord.  Any and all costs, expenses and
disbursements, of any kind or nature, incurred by Landlord or Agent in
connection with the enforcement of any and all of the terms and provisions of
this Lease, including attorneys’ reasonable fees (through all appellate
proceedings), shall be due and payable (as Additional Rent) upon Landlord’s
submission of an invoice therefor.  All
sums advanced by Landlord or Agent on account of Tenant under this Section, or
pursuant to any other provision of this Lease, and all Base Rent and Additional
Rent, if delinquent or not paid by Tenant and received by Landlord when due
hereunder, shall bear interest at  a  rate equal to the lesser of (i) the maximum
lawful rate from time to time permitted under applicable law or (ii)of 5% per
annum above the “prime” or “reference” or “base” rate (on a per annum basis) of
interest publicly announced as such, from time to time, by Bank One, N.A. or
its successor, or such other national banking association as may be designated
by Landlord in the event there is no successor thereto (“Default Interest”), from the due date
thereof until paid, and such interest shall be and constitute Additional Rent
and be due and payable upon Landlord’s or Agent’s submission of an invoice
therefor.  The various rights, remedies
and elections of Landlord reserved, expressed or contained herein are
cumulative and no one of them shall be deemed to be exclusive of the others or
of such other rights, remedies, options or elections as are now or may hereafter
be conferred upon Landlord by law.

22.4.       Event of Bankruptcy.  In addition to, and in no way limiting the
other remedies set forth herein, Landlord and Tenant agree that if Tenant ever
becomes the subject of a voluntary or involuntary bankruptcy, reorganization,
composition, or other similar type proceeding under the federal bankruptcy
laws, as now enacted or hereinafter amended, then:  (a) “adequate assurance of future performance”
by Tenant pursuant to Bankruptcy Code Section 365 will include (but not be
limited to) payment of an additional/new security deposit in the amount of
three times the then current Base Rent payable hereunder; (b) any person or
entity to which this Lease is assigned, pursuant to the provisions of the
Bankruptcy Code, shall be deemed, without further act or deed, to have assumed
all of the obligations of Tenant arising under this Lease on and after the
effective date of such assignment, and any such assignee shall, upon demand by
Landlord, execute and deliver to Landlord an instrument confirming such
assumption of liability; (c) notwithstanding anything in this Lease to the
contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated as “Rent”, shall constitute “rent”
for the purposes of Section 502(b)(6) of the Bankruptcy Code; and (d) if this
Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other considerations payable or
otherwise to be delivered to Landlord or Agent (including Base Rent, Additional
Rent and other amounts 

 14
 

 

hereunder), shall be and remain the exclusive
property of Landlord and shall not constitute property of Tenant or of the
bankruptcy estate of Tenant.  Any and all
monies or other considerations constituting Landlord’s property under the
preceding sentence not paid or delivered to Landlord or Agent shall be held in
trust by Tenant or Tenant’s bankruptcy estate for the benefit of Landlord and
shall be promptly paid to or turned over to Landlord.

23.          BROKER.  Tenant covenants, warrants and represents
that the broker set forth in Section 1.9(A)
was the only broker to represent Tenant in the negotiation of this Lease (“Tenant’s Broker”). 
Landlord covenants, warrants and represents that the broker set forth in
Section 1.9(B) was the only broker to
represent Landlord in the negotiation of this Lease (“Landlord’s
Broker”).  Landlord shall be
solely responsible for paying the commission of Tenant’s Broker.  Each party agrees to and hereby does defend,
indemnify and hold the other harmless against and from any brokerage
commissions or finder’s fees or claims therefor by a party claiming to have
dealt with the indemnifying party and all costs, expenses and liabilities in
connection therewith, including, without limitation, reasonable attorneys’ fees
and expenses, for any breach of the foregoing. 
The foregoing indemnification shall survive the termination or
expiration of this Lease.

24.          MISCELLANEOUS.

24.1.       Merger.  All prior understandings and agreements
between the parties are merged in this Lease, which alone fully and completely
expresses the agreement of the parties. 
No agreement shall be effective to modify this Lease, in whole or in
part, unless such agreement is in writing, and is signed by the party against
whom enforcement of said change or modification is sought.

24.2.       Notices.  Any notice required to be given by either
party pursuant to this Lease, shall be in writing and shall be deemed to have
been properly given, rendered or made only if personally delivered, or if sent
by Federal Express or other comparable commercial overnight delivery service,
addressed to the other party at the addresses set forth below (or to such other
address as Landlord or Tenant may designate to each other from time to time by
written notice), and shall be deemed to have been given, rendered or made on
the day so delivered or on the first business day after having been deposited
with the courier service:

	
  If to Landlord:

  	
   

  	
  First Industrial Development Services, Inc.

  
	
   

  	
   

  	
  311 South Wacker Drive, Suite 4000

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attn: Executive Vice President — Operations

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  First Industrial Realty Trust, Inc.

  
	
   

  	
   

  	
  1425 Sadlier Circle W. Drive

  
	
   

  	
   

  	
  Indianapolis, Indiana 46239

  
	
   

  	
   

  	
  Attn: Asset Manager

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Barack Ferrazzano Kirschbaum Perlman & Nagelberg
  LLC

  
	
   

  	
   

  	
  333 West Wacker Drive

  
	
   

  	
   

  	
  Suite 2700

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attn: Suzanne Bessette-Smith

  
	
   

  	
   

  	
   

  
	
  If to Tenant:

  	
   

  	
  Liquidity Services, Inc

  
	
   

  	
   

  	
  2131 K Street NW, 4th Floor

  
	
   

  	
   

  	
  Washington, DC 20037

  

 

24.3.       Non-Waiver.  The failure of either party to insist, in any
one or more instances, upon the strict performance of any one or more of the
obligations of this Lease, or to exercise any election herein contained, shall
not be construed as a waiver or relinquishment for the future of the
performance of such one or more obligations of this Lease or of the right to
exercise such election, but the Lease shall continue and remain in full force
and effect with respect to any subsequent breach, act or omission.  The receipt and acceptance by Landlord or
Agent of Base Rent or Additional Rent with knowledge of breach by Tenant of any
obligation of this Lease shall not be deemed a waiver of such breach.

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

24.5.       Parties Bound.  Except as otherwise expressly provided for in
this Lease, this Lease shall be binding upon, and inure to the benefit of, the
successors and assignees of the parties hereto. 
Tenant hereby releases Landlord named herein from any obligations of
Landlord for any period subsequent to the conveyance and transfer of Landlord’s
ownership interest in the Property.  In
the event of such conveyance and transfer, Landlord’s obligations shall
thereafter be binding upon each transferee (whether Successor Landlord or
otherwise).  No 

 15
 

 

obligation of Landlord shall arise under this
Lease until the instrument is signed by, and delivered to, both Landlord and
Tenant.

24.6.       Recordation of Lease.  Tenant shall not record or file this Lease
(or any memorandum hereof) in the public records of any county or state.

24.7.       Survival of Obligations.  Upon the expiration or other termination of
this Lease, neither party shall have any further obligation nor liability to
the other except as otherwise expressly provided in this Lease and except for
such obligations as, by their nature or under the circumstances, can only be,
or by the provisions of this Lease, may be performed after such expiration or
other termination.

24.8.       Governing Law; Construction.  This Lease shall be governed by and construed
in accordance with the laws of the state in which the Property is located.  If any provision of this Lease shall be
invalid or unenforceable, the remainder of this Lease shall not be affected but
shall be enforced to the extent permitted by law.  The captions, headings and titles in this
Lease are solely for convenience of reference and shall not affect its
interpretation.  This Lease shall be
construed without regard to any presumption or other rule requiring
construction against the party causing this Lease to be drafted.  Each covenant, agreement, obligation, or
other provision of this Lease to be performed by Tenant, shall be construed as
a separate and independent covenant of Tenant, not dependent on any other
provision of this Lease.  All terms and
words used in this Lease, regardless of the number or gender in which they are
used, shall be deemed to include any other number and any other gender as the
context may require.  This Lease may be
executed in counterpart and, when all counterpart documents are executed, the
counterparts shall constitute a single binding instrument.

24.9.       Time.  Time is of the essence for this Lease.  If the time for performance hereunder falls
on a Saturday, Sunday or a day that is recognized as a holiday in the state in
which the Property is located, then such time shall be deemed extended to the
next day that is not a Saturday, Sunday or holiday in said state.

24.10.     Authority of Tenant.  If Tenant is a corporation, partnership,
limited liability company, association or any other entity, it shall deliver to
Landlord, concurrently with the delivery to Landlord of an executed Lease,
certified resolutions of Tenant’s directors or other governing person or body
(i) authorizing execution and delivery of this Lease and the performance by
Tenant of its obligations hereunder and (ii) certifying the authority of the
party executing the Lease as having been duly authorized to do so.

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

24.12.     Relocation.  Landlord
shall have the right to relocate Tenant from the Premises to comparable (as to
size, configuration and improvements) alternative space in the Property (“Replacement Premises”) upon 90 days’ prior
written notice to Tenant.  In the event
of such a relocation, Landlord shall make reasonable, good faith efforts to
coordinate with Tenant a mutually acceptable plan (as to scope and timing) for
such relocation, and Landlord shall be responsible for the third party costs
incurred to accomplish the physical relocation of Tenant (e.g. movers and
telephone company charges).  If the
Replacement Premises are larger in size than the original Premises, there shall
be no adjustment in Tenant’s Base Rent; however, Tenant’s Proportionate Share
shall be appropriately modified, thereby resulting in a potential increase in
Tenant’s Additional Rent.  If, however,
the Replacement Premises is a smaller size (as to rentable square feet) than
the original Premises, Landlord shall appropriately adjust both Tenant’s Base
Rent and its Proportionate Share.

24.13.     Financial Information.  From time to time during the Term, Tenant
shall deliver to Landlord information and documentation describing and
concerning Tenant’s financial condition, and in form and substance reasonably
acceptable to Landlord, within ten (10) days following Landlord’s written
request therefor.

24.14.     Confidential Information.  Tenant agrees to maintain in strict
confidence the economic terms of this Lease and any or all other materials,
data and information delivered to or received by any or all of Tenant and
Tenants’ Parties either prior to or during the Term in connection with the
negotiation and execution hereof.  The
provisions of this Section 24.14
shall survive the termination of this Lease.

24.15.     Submission of Lease.  Submission of this Lease to Tenant for
signature does not constitute a reservation of space or an option to
lease.  This Lease is not effective until
execution by and delivery to both Landlord and Tenant.

24.16.     Joint and Several Liability.  All parties signing this Lease as Tenant
shall be jointly and severally liable for all obligations of Tenant hereunder.

24.17.     Riders.  All
Riders and Exhibits attached hereto and executed (or initialed) both by
Landlord and Tenant shall be deemed to be a part hereof and hereby incorporated
herein.

24.18.     Intentionally
Deleted.

24.19.     Landlord’s
Liens.  In
addition to any statutory lien for Rent in Landlord’s favor, Landlord shall
have and Tenant hereby grants to Landlord, a continuing security interest for
all Rent and other sums of money becoming due from Tenant, upon all of Tenant’s
Property situated on the Premises, and, notwithstanding anything contrary to
this, Lease such Tenant’s Property shall not be removed form the Premises
without the consent 

 16
 

 

of Landlord until all arrearages in Rent as well as any and all other
sums of money then due to Landlord shall first have been paid and
discharged.  In the event of a default
under this Lease, Landlord shall have, in addition to any other remedies
provided herein by law, all rights and remedies under the Uniform Commercial
Code, including without limitation, the right to sell the Tenant’s Property at
public or private sale.  Tenant hereby
agrees to execute such financing statements and other instruments necessary or
desirable in Landlord’s discretion to perfect the security interest hereby
created.  Any statutory lien for Rent is
not hereby waived, the express contractual lien herein granted being in
addition and supplementary thereto.

[Signature
Page to Follow]

 17

 

IN WITNESS WHEREOF,
Landlord and Tenant have duly executed this Lease as of the day and year first
above written.

LANDLORD:

First Industrial Development Services, Inc.,
a Maryland corporation

 

By:                                                                                          

Name:                                                                                     

Its:                                                                                          

 

 

TENANT:

Liquidity
Services, Inc., a ___________________________

 

By:                                                                                          

Name:     Jaime Mateus-Tique

Its:          President & Chief Operating
Officer

 S-1

 

EXHIBIT A

Property

 A-1

 

EXHIBIT
A-1

 B-1
 

 

LEASE
EXHIBIT B

Landlord’s Work Items

Landlord, at Landlord’s
sole cost and expense, shall perform certain tenant improvements to the
Premises (the “TI Work”) pursuant to a final
space plan to be prepared by Landlord and mutually agreed upon by the
parties.  All finishes for the TI Work
will be Landlord’s standard finishes. 
The TI Work shall include the following items:

1)                                      Construct
a 2,000 square foot office space (the “New Office”),
in the west end of the building, including two (2) private offices and an
airlock entry, substantially in accordance with the design of the existing
office space in the east end of the Building.

2.                                       Construct
a warehouse breakroom for approximately ten (10) employees.

3.                                       Construct
a men’s restroom and women’s restroom in compliance with building codes for a
total of twenty (20) employees.

 B-2

 

LEASE EXHIBIT C

Broom Clean Condition and Repair Requirements

·                  All walls must
be clean and free of holes.

·                  Overhead door
must be free of any broken panels, cracked lumber or dented panels.  The overhead door springs, rollers, tracks,
motorized door operator, and all other items pertaining to the overhead door
must also be in good working condition.

·                  HVAC system must
be in good working order.  Filters must
be changed, and all thermostats must be in working order.  Tenant must supply Landlord with maintenance
records.

·                  All floors
(warehouse and office) must be clean and free of excessive dust, dirt, grease,
oil and stains.

·                  Drop grid
ceiling must be free of excessive dust from lack of changing filters.  (No ceiling tiles may be missing or damaged.)

·                  All trash must
be removed from both inside and outside of the Building.

·                  All lightbulbs
and ballasts must be working.

·                  All signs in
front of Building and on glass entry door and rear door must be removed.

·                  Hot water heater
must work.

·                  All plumbing
fixtures, equipment and drains must be clean and in working order.

·                  Windows must be
clean.

·                  All mechanical
and electrical systems must be in good working condition.

 C-1

 

LEASE EXHIBIT D

TENANT
OPERATIONS INQUIRY

Tenant Name:

Tenant SIC Code/Description:

Property
Address:

Property Number/Region:

1.             Name
of Company (if different from above)

2.                                       Address (local):

Phone (local)

3.                                       Address
(corporate):

                                                Phone
(corporate)

4.                                       What
is your business (brief description):

5.                                       What
operations will you maintain at the proposed facility?

6.                                       Has
your business received any Notices of Violation of environmental laws from
municipal or state agencies regarding operations at your current facility?  If so, explain:

7.                                       Describe
any assembly, manufacturing, machining, painting, printing or mechanical repair
activities that will be part of your business operations at the proposed
facility:

8.                                       Will
your employees operate electrical equipment that contains PCB’s?      YES          NO

9.                                       Will
your business operate one or more Underground Storage Tanks (UST’s) at the
proposed facility?                                                                                                                                                                                           YES         
NO

10.                                 Will
your business operate one or more Aboveground Storage Tanks (AST’s) at the proposed
facility?                                                                                                                                                                                          YES         
NO

 D-1
 

 

11.           TENANT
CHEMICAL INVENTORY AT PROPOSED FACILITY - (make additional copies, if
required).  You may exclude small
quantities of toner and other office supplies)

	
  Chemicals

  (by name where available)

  	
   

  	
  What will be the average quantity on the
  proposed premises?

  	
   

  	
  What will be the maximum quantity on the
  proposed premises?

  	
   

  	
  What will be the annual quantity used?

  	
   

  	
  How will the chemical be stored?

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Storage Methods (use all
that apply):  A) 55 gallon drum; B) 20
gallon drum; C)2-5 gallon pallet/container; D) bulk dry packages; E) cartoned
small containers (less than 2 gallons or 10 pounds) on pallets; F) on floor; G)
on racks; H)Underground Storage Tank (UST); I) Above Ground Storage Tank (AST);
J) other(please describe).

12.                         Describe any pollution control equipment
that will be used at the proposed facility (example:  paint spray booth, fume hood, waste water
treatment).

 D-2
 

 

13.

	
  Will your operations
  generate any chemical wastes that require special disposal? (example: waste
  oil, waste solvent)

  	
   

  	
  How will the chemical wastes be stored on-site?

  	
   

  	
  How will the wastes be disposed? (example:
  recycled, landfilled, incinerated)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

14.           Does your business have an EPA
Hazardous Waste Generator ID Number?                           YES                        NO

15.           What spill prevention and containment
measures will be in place for the chemicals and wastes stored at the proposed
facility?  (describe briefly)

16.                                 Does
your business have an Emergency Response or Contingency Plan in place in the
event of a chemical  incident (please
provide a copy)                                   YES                                        NO

17.                                 Does
your business have any type of Hazardous Materials training program for your
employees? (describe briefly):

18.                                 Do
you have copies of all Material Safety Data Sheets (MSDS) at your facility for
the chemicals listed in question #7? (Please provide copies):                   YES                                        NO

19.                                 Does
your business carry environmental insurance coverage in the event of a chemical
incident?                     YES                                        NO

20.                                 Will
you be required to make filings and notices or obtain permits as required by
Federal and/or State regulations for the operations at the proposed
facility?  Specifically:

	
  a. SARA Title III Section
  312 (Tier II) reports

  	
   

  	
  YES

  	
   

  	
  NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (> 10,000lbs. of hazardous materials STORED at
  any one time)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b. SARA Title
  III Section 313 (Tier III) Form R reports

  	
   

  	
  YES

  	
   

  	
  NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (> 10,000lbs. of hazardous materials USED per
  year)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c. NPDES or
  SPDES Stormwater Discharge permit

  	
   

  	
  YES

  	
   

  	
  NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (answer “No” if “No-Exposure Certification” filed)

  	
   

  	
   

  	
   

  	
   

  

 D-3
 

 

21.                                 This
form was prepared by the undersigned as a complete and correct description of
Tenant’s proposed operations at the location noted, and the Landlord may rely
on this information.

	
  

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Print Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

 D-4

 

EXHIBIT E

CONFIRMATION OF COMMENCEMENT DATE

To be completed with Property Manager upon Lease
Commencement

                   ,
2006

Liquidity Services, Inc.

2131 K Street NW, 4th Floor

Washington, DC 20037

RE:         Industrial Building Lease dated                  
(the “Lease”) by and between First Industrial Development Services, Inc. (“Landlord”)
and Liquidity Services, Inc. (“Tenant”)

Dear                         :

This letter shall confirm
that the Commencement Date for the above-referenced Lease is                   ,
2006

Liquidity
Services, Inc., as Tenant, hereby acknowledges the following:  (i) Tenant is in possession of the Premises
(as defined in the Lease); (ii) the Lease is in full force and effect; (iii)
Landlord is not in default under the Lease; and (iv) possession of the Premises
is accepted by Tenant as having been delivered in accordance with the terms and
conditions of the Lease.

	
  Our records indicate the following information
  for the 94,407 square feet of space:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commencement Date:

  	
   

  	
                           
  200  

  
	
   

  	
   

  	
   

  
	
  Base Rent Commencement Date:

  	
   

  	
                            
  200  

  
	
   

  	
   

  	
   

  
	
  Next Monthly Base Rent Due:

  	
   

  	
                            
  200  

  
	
   

  	
   

  	
   

  
	
  Operating Expense Commencement Date:

  	
   

  	
                            
  200  

  
	
   

  	
   

  	
   

  
	
  Lease Expiration Date:

  	
   

  	
                            
  200  

  
	
   

  	
   

  	
   

  
	
  Please sign two (2) copies of this letter in the
  space provided below acknowledging your agreement with the above and return
  them to me at my office. I suggest you attach a copy of this letter to your
  copy of the Lease. Thank you again for your cooperation and assistance
  regarding this matter. Please contact me at any time should you have
  questions regarding the lease, building, or any related manner. Sincerely,

  	
   

  	
  Acknowledged and Agreed to this     
  day of                   ,
  20  

  
	
   

  	
   

  	
   

  
	
  [Name]

  Property Manager

  	
  Liquidity Services, Inc. 

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 E-1

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