Document:

Exhibit
        10.7

      

      

      

      STANDARD
        INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET

      

      AIR
        COMMERCIAL REAL ESTATE ASSOCIATION

      

      1.
        Basic Provisions (“Basic Provisions”).

      

      1.1
        Parties:
        This Lease
        (“Lease”),
        dated for reference purposes only April 6, 2006 is made by and between Pacific
        Simi Associates, LLC, a California Limited Liability Company
        (“Lessor”)
        and InterMetro Communications, a California Corporation
        (“Lessee”),
        (collectively the“Parties”,
        or individually a“Party”).

      

      1.2(a)
        Premises:
        That certain portion of the Project (as defined below), including all
        improvements therein or to be provided by Lessor under the terms of this
        Lease,
        commonly known by the street address of 2685-A Park Center Drive, located
        in the
        City of Simi Valley, County of Ventura, State of California , with zip code
        93065, as outlined on Exhibit A attached hereto
        (“Premises”)
        and generally described as (describe briefly the nature of the Premises):
        approximately 18,674 square feet of industrial R&D space which is part of a
        larger building consisting of approximately 32,350 square feet know as 2685
        Park
        Center Drive which is located within a larger multi-tenant industrial park
        located on LI-SP zoned land. In addition to Lessee’s rights to use and occupy
        the Premises as hereinafter specified, Lessee shall have non-exclusive rights
        to
        the any utility raceways of the building containing the Premises
        (“Building”)
        and to the common Areas (as defined in Paragraph 2.7 below), but shall not
        have
        any rights to the roof or exterior walls of the Building or to any other
        buildings in the Project. The Premises, the Building, the Common Areas, the
        land
        upon which they are located, along with all other buildings and improvements
        thereon, are herein collectively referred to as the“Project.”
        (See also Paragraph 2)

      

      1.2(b)
        Parking:
        fifty-six (56) unreserved vehicle parking spaces. (See also Paragraph
        2.6)

      

      1.3
        Term:
        Three (3) years and Zero (0) months
        (“Original Term”)
        commencing April 1, 2006
        (“Commencement Date”)
        and ending March 31, 2009
        (“Expiration Date”)
        . (See also Paragraph 3)

      

      1.4
        Early Possession:
        Upon full lease execution and Lessor’s receipt of Lessee’s prepaid
        monies
        (“Early Possession Date”).
        (See also Paragraphs 3.2 and 3.3)

      

      1.5
        Base Rent:
        $ 15,312.68 per month
        (“Base Rent”),
        payable on the first (1st) day of each month commencing February 1, 2006-
        see
        Addendum Paragraph 1.5 continued . (See also Paragraph 4)þ
        If this box is checked, there are provisions in this Lease for the Base Rent
        to
        be adjusted.

      

      1.6
        Lessee’s Share of Common Area Operating Expenses:
        twelve point one three percent (12.13%)
        (“Lessee’s Share”).
        Lessee’s Share has been calculated by dividing the approximate square footage of
        the Premises by the approximate square footage of the Project. In the event
        that
        the size of the Premises and/or the Project are modified during the term
        of this
        Lease, Lessor shall recalculate Lessee’s Share to reflect such
        modification.

      

      1.7
        Base Rent and Other Monies Paid Upon Execution:

      

      (a)
        Base Rent:
        $15,312.68 for the period April 1 - 30, 2006 .

      

      (b)
        Common Area Operating Expenses:
        $4,295.02 for the period February 1-28, 2006 .

      

      *(c)
        Security Deposit:
        $15,312.68
        (“Security Deposit”).
        (See also Paragraph 5) See Addendum.

      

      (d)
        Other:
        $5,312.68 for Increase in Security Deposit.

      

      *(e)
        Total Due Upon Execution of this Lease:
        $5,312.68 . See Addendum.

      

      1.8
        Agreed Use:
        Offices and engineering of telecommunication service products and related
        legal
        uses. (See also Paragraph 6)

      

      1.9
        Insuring Party.
        Lessor is the“Insuring
        Party”.
        (See also Paragraph 8)

      

      1.10
        Real Estate Brokers:
        (See also Paragraph 15)

      

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

      

      þ
        CB Richard Ellis, Inc. represents Lessor exclusively
        (“Lessor’s Broker”);

      

       ̈                    
        represents Lessee exclusively
        (“Lessee’s Broker”);
        or

      

       ̈                    
        represents both Lessor and Lessee
        (“Dual Agency”).

      

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

      

      1.11
        Guarantor.
        The obligations of the Lessee under this Lease are to be guaranteed by
        N/A
        (“Guarantor”).
        (See also Paragraph 37)

      

      1.12
        Attachments.
        Attached hereto are the following, all of which constitute a part of this
        Lease:

      

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 

      

       

      þ
        an Addendum consisting of Paragraphs 1.5, 2.2, 4.2, 50 through 5 9
        ;

      

       ̈
        a site plan depicting the Premises;

      

       ̈
        a site plan depicting the Project;

      

       ̈
        a current set of the Rules and Regulations for the Project;

      

       ̈
        a current set of the Rules and Regulations adopted by the owners’
association;

      

       ̈
        a Work Letter;

      

       ̈
        other (specify);

      

      2.
        Premises.

      

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

      

      2.2
        Condition.
        Lessor shall deliver that portion of the Premises contained within the
        Building
        (“Unit”)
        to Lessee broom clean and free of debris on the Commencement Date or the
        Early
        Possession Date, whichever first occurs
        (“Start Date”)
        , and, so long as the required service contracts described in Paragraph 7.1(b)
        below are obtained by Lessee and in effect within thirty days following the
        Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
        lighting, heating, ventilating and air conditioning systems
        (“HVAC”)
        , loading doors, sump pumps, if any, and all other such elements in the Unit,
        other than those constructed by Lessee, shall be in good operating condition
        on
        said date, that the structural elements of the roof, bearing walls and
        foundation of the Unit shall be free of material defects, and that the Unit
        does
        not contain hazardous levels of any mold or fungi defined as toxic under
        applicable state or federal law. If a non-compliance with such warranty exists
        as of the Start Date, or if one of such systems or elements should malfunction
        or fail within the appropriate warranty period, Lessor shall, as Lessor’s sole
        obligation with respect to such matter, except as otherwise provided in this
        Lease, promptly after receipt of written notice from Lessee setting forth
        with
        specificity the nature and extent of such non-compliance, malfunction or
        failure, rectify same at Lessor’s expense. The warranty periods shall be as
        follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to
        the remaining systems and other elements of the Unit. If Lessee does not
        give
        Lessor the required notice within the appropriate warranty period, correction
        of
        any such non-compliance, malfunction or failure shall be the obligation of
        Lessee at Lessee’s sole cost and expense (except for the repairs to the fire
        sprinkler systems, roof, foundations, and/or bearing walls - see Paragraph
        7).

      

      2.3
        Compliance.
        Lessor warrants that to the best of its knowledge the improvements on the
        Premises and the Common Areas comply with the building codes that were in
        effect
        at the time that each such improvement, or portion thereof, was constructed,
        and
        also with all applicable laws, covenants or restrictions of record, regulations,
        and ordinances in effect on the Start Date
        (“Applicable Requirements”).
        Said warranty does not apply to the use to which Lessee will put the Premises,
        modifications which may be required by the Americans with Disabilities Act
        or
        any similar laws as a result of Lessee’s use (see Paragraph 49), or to any
        Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made
        or to
        be made by Lessee.
        NOTE: Lessee is responsible for determining whether or not the Applicable
        Requirements and especially the zoning are appropriate for Lessee’s intended
        use, and acknowledges that past uses of the Premises may no longer be
        allowed.
        If the Premises do not comply with said warranty, Lessor shall, except as
        otherwise provided, promptly after receipt of written notice from Lessee
        setting
        forth with specificity the nature and extent of such non-compliance, rectify
        the
        same at Lessor’s expense. If Lessee does not give Lessor written notice of a
        non-compliance with this warranty within 6 months following the Start Date,
        correction of that non-compliance shall be the obligation of Lessee at Lessee’s
        sole cost and expense. If the Applicable Requirements are hereafter changed
        so
        as to require during the term of this Lease the construction of an addition
        to
        or an alteration of the Unit, Premises and/or Building, the remediation of
        any
        Hazardous Substance, or the reinforcement or other physical modification
        of the
        Unit, Premises and/or Building
        (“Capital Expenditure”)
        , Lessor and Lessee shall allocate the cost of such work as
        follows:

      

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

      

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

      

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

      

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

      

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

      

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        
          	 

        

         

      

      2.6
        Vehicle Parking.
        Lessee shall be entitled to use the number of parking spaces specified in
        Paragraph 1.2(b) on those portions of the Common Areas designated from time
        to
        time by Lessor for parking. Lessee shall not use more parking spaces than
        said
        number. Said parking spaces shall be used for parking by vehicles no larger
        than
        full-size passenger automobiles or pick-up trucks, herein called“Permitted
        Size Vehicles.”
        Lessor may regulate the loading and unloading of vehicles by adopting Rules
        and
        Regulations as provided in Paragraph 2.9. No vehicles other than Permitted
        Size
        Vehicles may be parked in the Common Area without the prior written permission
        of Lessor. In addition:

      

      (a)
        Lessee shall not permit or allow any vehicles that belong to or are controlled
        by Lessee or Lessee’s employees, suppliers, shippers, customers, contractors or
        invitees to be loaded, unloaded, or parked in areas other than those designated
        by Lessor for such activities.

      

      (b)
        Lessee shall not service or store any vehicles in the Common Areas.

      

      (c)
        If Lessee permits or allows any of the prohibited activities described in
        this
        Paragraph 2.6, then Lessor shall have the right, without notice, in addition
        to
        such other rights and remedies that it may have, to remove or tow away the
        vehicle involved and charge the cost to Lessee, which cost shall be immediately
        payable upon demand by Lessor.

      

      2.7
        Common Areas - Definition.
        The term“Common
        Areas”
        is defined as all areas and facilities outside the Premises and within the
        exterior boundary line of the Project and interior utility raceways and
        installations within the Unit that are provided and designated by the Lessor
        from time to time for the general non-exclusive use of Lessor, Lessee and
        other
        tenants of the Project and their respective employees, suppliers, shippers,
        customers, contractors and invitees, including parking areas, loading and
        unloading areas, trash areas, roadways, walkways, driveways and landscaped
        areas.

      

      2.8
        Common Areas - Lessee’s Rights.
        Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers,
        shippers, contractors, customers and invitees, during the term of this Lease,
        the non-exclusive right to use, in common with others entitled to such use,
        the
        Common Areas as they exist from time to time, subject to any rights, powers,
        and
        privileges reserved by Lessor under the terms hereof or under the terms of
        any
        rules and regulations or restrictions governing the use of the Project. Under
        no
        circumstances shall the right herein granted to use the Common Areas be deemed
        to include the right to store any property, temporarily or permanently, in
        the
        Common Areas. Any such storage shall be permitted only by the prior written
        consent of Lessor or Lessor’s designated agent, which consent may be revoked at
        any time. In the event that any unauthorized storage shall occur then Lessor
        shall have the right, without notice, in addition to such other rights and
        remedies that it may have, to remove the property and charge the cost to
        Lessee,
        which cost shall be immediately payable upon demand by Lessor.

      

      2.9
        Common Areas - Rules and Regulations.
        Lessor or such other person(s) as Lessor may appoint shall have the exclusive
        control and management of the Common Areas and shall have the right, from
        time
        to time, to establish, modify, amend and enforce reasonable rules and
        regulations
        (“Rules and Regulations”)
        for the management, safety, care, and cleanliness of the grounds, the parking
        and unloading of vehicles and the preservation of good order, as well as
        for the
        convenience of other occupants or tenants of the Building and the Project
        and
        their invitees. Lessee agrees to abide by and conform to all such Rules and
        Regulations, and shall use its best efforts to cause its employees, suppliers,
        shippers, customers, contractors and invitees to so abide and conform. Lessor
        shall not be responsible to Lessee for the non-compliance with said Rules
        and
        Regulations by other tenants of the Project.

      

      2.10
        Common Areas - Changes.
        Lessor shall have the right, in Lessor’s sole discretion, from time to
        time:

      

      (a)
        To make changes to the Common Areas, including, without limitation, changes
        in
        the location, size, shape and number of driveways, entrances, parking spaces,
        parking areas, loading and unloading areas, ingress, egress, direction of
        traffic, landscaped areas, walkways and utility raceways;

      

      (b)
        To close temporarily any of the Common Areas for maintenance purposes so
        long as
        reasonable access to the Premises remains available;

      

      (c)
        To designate other land outside the boundaries of the Project to be a part
        of
        the Common Areas;

      

      (d)
        To add additional buildings and improvements to the Common Areas;

      

      (e)
        To use the Common Areas while engaged in making additional improvements,
        repairs
        or alterations to the Project, or any portion thereof; and

      

      (f)
        To do and perform such other acts and make such other changes in, to or with
        respect to the Common Areas and Project as Lessor may, in the exercise of
        sound
        business judgment, deem to be appropriate.

      

      3.
        Term.

      

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

      

      3.2
        Early Possession.
        If Lessee totally or partially occupies the Premises prior to the Commencement
        Date, the obligation to pay Base Rent shall be abated for the period of such
        early possession. All other terms of this Lease (including but not limited
        to
        the obligations to pay Lessee’s Share of Common Area Operating Expenses, Real
        Property Taxes and insurance premiums and to maintain the Premises) shall
        be in
        effect during such period. Any such early possession shall not affect the
        Expiration Date.

      

      3.3
        Delay In Possession.
        Lessor agrees to use its best commercially reasonable efforts to deliver
        possession of the Premises to Lessee by the Commencement Date. If, despite
        said
        efforts, Lessor is unable to deliver possession as agreed, Lessor shall not
        be
        subject to any liability therefor, nor shall such failure affect the validity
        of
        this Lease or change the Expiration Date. Lessee shall not, however, be
        obligated to pay Rent or perform its other obligations until Lessor delivers
        possession of the Premises and any period of rent abatement that Lessee would
        otherwise have enjoyed shall run from the date of the delivery of possession
        and
        continue for a period equal to what Lessee would otherwise have enjoyed,
        but
        minus any days of delay caused by the acts or omissions of Lessee. If possession
        is not delivered within 60 days after the Commencement Date, Lessee may,
        at its
        option, by notice in writing within 10 days after the end of such 60 day
        period,
        cancel this Lease, in which event the Parties shall be discharged from all
        obligations hereunder. If such written notice is not received by Lessor within
        said 10 day period, Lessee’s right to cancel shall terminate. Except as
        otherwise provided, if possession is not tendered to Lessee by the Start
        Date
        and Lessee does not terminate this Lease, as aforesaid, any period of rent
        abatement that Lessee would otherwise have enjoyed shall run from the date
        of
        delivery of possession and continue for a period equal to what Lessee would
        otherwise have enjoyed under the terms hereof, but minus any days of delay
        caused by the acts or omissions of Lessee. If possession of the Premises
        is not
        delivered within 4 months after the Commencement Date, this Lease shall
        terminate unless other agreements are reached between Lessor and Lessee,
        in
        writing.

      

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

       

      
        	
                4.

              	
                Rent.

              

      

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                INITIALS

              
	
                 

                 

                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

      4.2
        Common Area Operating Expenses.
        Lessee shall pay to Lessor during the term hereof, in addition to the Base
        Rent,
        Lessee’s Share (as specified in Paragraph 1.6) of all Common Area Operating
        Expenses, as hereinafter defined, during each calendar year of the term of
        this
        Lease, in accordance with the following provisions:

      

      (a)“Common
        Area Operating Expenses”
        are defined, for purposes of this Lease, as all costs incurred by Lessor
        relating to the ownership and operation of the Project, including, but not
        limited to, the following:

      

      (i)
        The operation, repair and maintenance, in neat, clean, good order and condition,
        and if necessary the replacement, of the following:

      

      (aa)
        The Common Areas and Common Area improvements, including parking areas, loading
        and unloading areas, trash areas, roadways, parkways, walkways, driveways,
        landscaped areas, bumpers, irrigation systems, Common Area lighting facilities,
        fences and gates, elevators, roofs, and roof drainage systems.

      

      (bb)
        Exterior signs and any tenant directories,

      

      (cc)
        Any fire sprinkler systems.

      

      (ii)
        The cost of water, gas, electricity and telephone to service the Common Areas
        and any utilities not separately metered.

      

      (iii)
        Trash disposal, pest control services, property management, security services,
        owners’ association dues and fees, the cost to repaint the exterior of any
        structures and the cost of any environmental inspections.

      

      (iv)
        Reserves set aside for maintenance, repair and/or replacement of Common Area
        improvements and equipment.

      

      (v)
        Real Property Taxes (as defined in Paragraph 10).

      

      (vi)
        The cost of the premiums for the insurance maintained by Lessor pursuant
        to
        Paragraph 8.

      

      (vii)
        Any deductible portion of an insured loss concerning the Building or the
        Common
        Areas.

      

      (viii)
        Auditors’, accountants’ and attorneys’ fees and costs related to the operation,
        maintenance, repair and replacement of the Project.

      

      (ix)
        The cost of any capital improvement to the Building or the Project not covered
        under the provisions of Paragraph 2.3 provided; however, that Lessor shall
        allocate the cost of any such capital improvement over a 12 year period and
        Lessee shall not be required to pay more than Lessee’s Share of 1/144th of the
        cost of such capital improvement in any given month.

      

      (x)
        Any other services to be provided by Lessor that are stated elsewhere in
        this
        Lease to be a Common Area Operating Expense.

      

      (b)
        Any Common Area Operating Expenses and Real Property Taxes that are specifically
        attributable to the Unit, the Building or to any other building in the Project
        or to the operation, repair and maintenance thereof, shall be allocated entirely
        to such Unit, Building, or other building. However, any Common Area Operating
        Expenses and Real Property Taxes that are not specifically attributable to
        the
        Building or to any other building or to the operation, repair and maintenance
        thereof, shall be equitably allocated by Lessor to all buildings in the
        Project.

      

      (c)
        The inclusion of the improvements, facilities and services set forth in
        Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor
        to
        either have said improvements or facilities or to provide those services
        unless
        the Project already has the same, Lessor already provides the services, or
        Lessor has agreed elsewhere in this Lease to provide the same or some of
        them.

      

      (d)
        Lessee’s Share of Common Area Operating Expenses is payable monthly on the same
        day as the Base Rent is due hereunder. The amount of such payments shall
        be
        based on Lessor’s estimate of the annual Common Area Operating Expenses. Within
        60 days after written request (but not more than once each year) Lessor shall
        deliver to Lessee a reasonably detailed statement showing Lessee’s Share of the
        actual Common Area Operating Expenses incurred during the preceding year.
        If
        Lessee’s payments during such year exceed Lessee’s Share, Lessor shall credit
        the amount of such over-payment against Lessee’s future payments. If Lessee’s
        payments during such year were less than Lessee’s Share, Lessee shall pay to
        Lessor the amount of the deficiency within 10 days after delivery by Lessor
        to
        Lessee of the statement.

      

      (e)
        Common Area Operating Expenses shall not include any expenses paid by any
        tenant
        directly to third parties, or as to which Lessor is otherwise reimbursed
        by any
        third party, other tenant, or insurance proceeds.

      

      4.3
        Payment.
        Lessee shall cause payment of Rent to be received by Lessor in lawful money
        of
        the United States, without offset or deduction (except as specifically permitted
        in this Lease), on or before the day on which it is due. All monetary amounts
        shall be rounded to the nearest whole dollar. In the event that any invoice
        prepared by Lessor is inaccurate such inaccuracy shall not constitute a waiver
        and Lessee shall be obligated to pay the amount set forth in this Lease.
        Rent
        for any period during the term hereof which is for less than one full calendar
        month shall be prorated based upon the actual number of days of said month.
        Payment of Rent shall be made to Lessor at its address stated herein or to
        such
        other persons or place as Lessor may from time to time designate in writing.
        Acceptance of a payment which is less than the amount then due shall not
        be a
        waiver of Lessor’s rights to the balance of such Rent, regardless of Lessor’s
        endorsement of any check so stating. In the event that any check, draft,
        or
        other instrument of payment given by Lessee to Lessor is dishonored for any
        reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any
        Late
        Charge and Lessor, at its option, may require all future Rent be paid by
        cashier’s check. Payments will be applied first to accrued late charges and
        attorney’s fees, second to accrued interest, then to Base Rent and Common Area
        Operating Expenses, and any remaining amount to any other outstanding charges
        or
        costs.

      

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

      

      6.
        Use.

      

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

      

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

      6.2
        Hazardous Substances.

      

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

      

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

      

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

      

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

      

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

      

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

      

      (g)
        Lessor Termination Option.
        If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the
        term
        of this Lease, unless Lessee is legally responsible therefor (in which case
        Lessee shall make the investigation and remediation thereof required by the
        Applicable Requirements and this Lease shall continue in full force and effect,
        but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13), Lessor
        may, at Lessor’s option, either (i) investigate and remediate such
        Hazardous Substance Condition, if required, as soon as reasonably possible
        at
        Lessor’s expense, in which event this Lease shall continue in full force and
        effect, or (ii) if the estimated cost to remediate such condition exceeds
        12 times the then monthly Base Rent or $100,000, whichever is greater, give
        written notice to Lessee, within 30 days after receipt by Lessor of knowledge
        of
        the occurrence of such Hazardous Substance Condition, of Lessor’s desire to
        terminate this Lease as of the date 60 days following the date of such notice.
        In the event Lessor elects to give a termination notice, Lessee may, within
        10
        days thereafter, give written notice to Lessor of Lessee’s commitment to pay the
        amount by which the cost of the remediation of such Hazardous Substance
        Condition exceeds an amount equal to 12 times the then monthly Base Rent
        or
        $100,000, whichever is greater. Lessee shall provide Lessor with said funds
        or
        satisfactory assurance thereof within 30 days following such commitment.
        In such
        event, this Lease shall continue in full force and effect, and Lessor shall
        proceed to make such remediation as soon as reasonably possible after the
        required funds are available. If Lessee does not give such notice and provide
        the required funds or assurance thereof within the time provided, this Lease
        shall terminate as of the date specified in Lessor’s notice of
        termination.

      

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

    

     

    
      	
               

            	
               

            	
               

            	
               

            	
               

            
	
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              ©1999
                - AIR COMMERCIAL REAL ESTATE ASSOCIATION

            	
                

            	
              FORM
                MTN-5-5/05E

            

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    
      	 

    

     

    6.4
      Inspection; Compliance.
      Lessor and Lessor’s“Lender”
      (as defined in Paragraph 30) and consultants shall have the right to enter
      into
      Premises at any time, in the case of an emergency, and otherwise at reasonable
      times after reasonable notice, for the purpose of inspecting the condition
      of
      the Premises and for verifying compliance by Lessee with this Lease. The cost
      of
      any such inspections shall be paid by Lessor, unless a violation of Applicable
      Requirements, or a Hazardous Substance condition (see Paragraph 9.1) is found
      to
      exist or be imminent, or the inspection is requested or ordered by a
      governmental authority. In such case, Lessee shall upon request reimburse Lessor
      for the cost of such inspection, so long as such inspection is reasonably
      related to the violation or contamination. In addition, Lessee shall provide
      copies of all relevant material safety data sheets
      (MSDS)
      to Lessor within 10 days of the receipt of written request
      therefor.

    

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

    

    7.1
      Lessee’s Obligations.

    

    (a)
      In General.
      Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3
      (Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations),
      9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole
      expense, keep the Premises, Utility Installations (intended for Lessee’s
      exclusive use, no matter where located), and Alterations in good order,
      condition and repair (whether or not the portion of the Premises requiring
      repairs, or the means of repairing the same, are reasonably or readily
      accessible to Lessee, and whether or not the need for such repairs occurs as
      a
      result of Lessee’s use, any prior use, the elements or the age of such portion
      of the Premises), including, but not limited to, all equipment or facilities,
      such as plumbing, HVAC equipment, electrical, lighting facilities, boilers,
      pressure vessels, fixtures, interior walls, interior surfaces of exterior walls,
      ceilings, floors, windows, doors, plate glass, and skylights but excluding
      any
      items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee,
      in keeping the Premises in good order, condition and repair, shall exercise
      and
      perform good maintenance practices, specifically including the procurement
      and
      maintenance of the service contracts required by Paragraph 7.1(b) below.
      Lessee’s obligations shall include restorations, replacements or renewals when
      necessary to keep the Premises and all improvements thereon or a part thereof
      in
      good order, condition and state of repair.

    

    (b)
      Service Contracts.
      Lessee shall, at Lessee’s sole expense, procure and maintain contracts, with
      copies to Lessor, in customary form and substance for, and with contractors
      specializing and experienced in the maintenance of the following equipment
      and
      improvements, if any, if and when installed on the Premises: (i) HVAC
      equipment, (ii) boiler and pressure vessels, (iii) clarifiers, and
      (iv) any other equipment, if reasonably required by Lessor. However, Lessor
      reserves the right, upon notice to Lessee, to procure and maintain any or all
      of
      such service contracts, and Lessee shall reimburse Lessor, upon demand, for
      the
      cost thereof.

    

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

    

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

    

    7.2
      Lessor’s Obligations.
      Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance),
      4.2
      (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage
      or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant
      to Paragraph 4.2, shall keep in good order, condition and repair the
      foundations, exterior walls, structural condition of interior bearing walls,
      exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke
      detection systems, fire hydrants, parking lots, walkways, parkways, driveways,
      landscaping, fences, signs and utility systems serving the Common Areas and
      all
      parts thereof, as well as providing the services for which there is a Common
      Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated
      to paint the exterior or interior surfaces of exterior walls nor shall Lessor
      be
      obligated to maintain, repair or replace windows, doors or plate glass of the
      Premises. Lessee expressly waives the benefit of any statute now or hereafter
      in
      effect to the extent it is inconsistent with the terms of this
      Lease.

    

    7.3
      Utility Installations; Trade Fixtures; Alterations.

    

    (a)
      Definitions.
      The term“Utility
      Installations”
      refers to all floor and window coverings, air and/or vacuum lines, power panels,
      electrical distribution, security and fire protection systems, communication
      cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on
      the
      Premises. The term“Trade
      Fixtures”
      shall mean Lessee’s machinery and equipment that can be removed without doing
      material damage to the Premises. The term“Alterations”
      shall mean any modification of the improvements, other than Utility
      Installations or Trade Fixtures, whether by addition or deletion.“Lessee
      Owned Alterations and/or Utility Installations”
      are defined as Alterations and/or Utility Installations made by Lessee that
      are
      not yet owned by Lessor pursuant to Paragraph 7.4(a).

    

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

    

    (c)
      Liens; Bonds.
      Lessee shall pay, when due, all claims for labor or materials furnished or
      alleged to have been furnished

    

     

    
      	
               

            	
               

            	
               

            	
               

            	
               

            
	
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              ©1999
                - AIR COMMERCIAL REAL ESTATE ASSOCIATION

            	
                

            	
              FORM
                MTN-5-5/05E

            

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      
        	 

      

      

      7.4
        Ownership; Removal; Surrender; and Restoration.

      

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

      

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

      

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

      

      8.
        Insurance; Indemnity.

      

      8.1
        Payment of Premiums.
        The cost of the premiums for the insurance policies required to be carried
        by
        Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common
        Area
        Operating Expense. Premiums for policy periods commencing prior to, or extending
        beyond, the term of this Lease shall be prorated to coincide with the
        corresponding Start Date or Expiration Date.

      

      8.2
        Liability Insurance.

      

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

      

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

      

      8.3
        Property Insurance - Building, Improvements and Rental
        Value.

      

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

      

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

      

      (c)
        Adjacent Premises.
        Lessee shall pay for any increase in the premiums for the property insurance
        of
        the Building and for the Common Areas or other buildings in the Project if
        said
        increase is caused by Lessee’s acts, omissions, use or occupancy of the
        Premises.

      

      (d)
        Lessee’s Improvements.
        Since Lessor is the Insuring Party, Lessor shall not be required to insure
        Lessee Owned Alterations and Utility Installations unless the item in question
        has become the property of Lessor under the terms of this Lease.

      

      8.4
        Lessee’s Property; Business Interruption Insurance.

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      9.
        Damage or Destruction.

      

      9.1
        Definitions.

      

      (a)“Premises
        Partial Damage”
        shall mean damage or destruction to the improvements on the Premises, other
        than
        Lessee Owned Alterations and Utility Installations, which can reasonably
        be
        repaired in 3 months or less from the date of the damage or destruction,
        and the
        cost thereof does not exceed a sum equal to 6 month’s Base Rent. Lessor shall
        notify Lessee in writing within 30 days from the date of the damage or
        destruction as to whether or not the damage is Partial or Total. Notwithstanding
        the foregoing, Premises Partial Damage shall not include damage to windows,
        doors, and/or other similar items which Lessee has the responsibility to
        repair
        or replace pursuant to the provisions of Paragraph 7.1.

      

      (b)“Premises
        Total Destruction”
        shall mean damage or destruction to the improvements on the Premises, other
        than
        Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
        cannot reasonably be repaired in 3 months or less from the date of the damage
        or
        destruction and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent.
        Lessor shall notify Lessee in writing within 30 days from the date of the
        damage
        or destruction as to whether or not the damage is Partial or Total.

      

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

      

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

      

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

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

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

      

      9.4
        Total Destruction.
        Notwithstanding any other provision hereof, if a Premises Total Destruction
        occurs, this Lease shall terminate 60 days following such Destruction. If
        the
        damage or destruction was caused by the gross negligence or willful misconduct
        of Lessee, Lessor shall have the right to recover Lessor’s damages from Lessee,
        except as provided in Paragraph 8.6.

      

      9.5
        Damage Near End of Term.
        If at any time during the last 6 months of this Lease there is damage for
        which
        the cost to repair exceeds one month’s Base Rent, whether or not an Insured
        Loss, Lessor may terminate this Lease effective 60 days following the date
        of
        occurrence of such damage by giving a written termination notice to Lessee
        within 30 days after the date of occurrence of such damage. Notwithstanding
        the
        foregoing, if Lessee at that time has an exercisable option to extend this
        Lease
        or to purchase the Premises, then Lessee may preserve this Lease by,
        (a) exercising such option and (b) providing Lessor with any shortage
        in insurance proceeds (or adequate assurance thereof) needed to make the
        repairs
        on or before the earlier of (i) the date which is 10 days after Lessee’s
        receipt of Lessor’s written notice purporting to terminate this Lease, or
        (ii) the day prior to the date upon which such option expires. If Lessee
        duly exercises such option during such period and provides Lessor with funds
        (or
        adequate assurance thereof) to cover any shortage in insurance proceeds,
        Lessor
        shall, at Lessor’s commercially reasonable expense, repair such damage as soon
        as reasonably possible and this Lease shall continue in full force and effect.
        If Lessee fails to exercise such option and provide such funds or assurance
        during such period, then this Lease shall terminate on the date specified
        in the
        termination notice and Lessee’s option shall be extinguished.

      

      9.6
        Abatement of Rent; Lessee’s Remedies.

      

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

      

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

      

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

      

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

      

      10.
        Real Property Taxes.

      

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

      

      10.2
        Payment of Taxes.
        Except as otherwise provided in Paragraph 10.3, Lessor shall pay the Real
        Property Taxes applicable to the Project, and said payments shall be included
        in
        the calculation of Common Area Operating Expenses in accordance with the
        provisions of Paragraph 4.2.

      

      10.3
        Additional Improvements.
        Common Area Operating Expenses shall not include Real Property Taxes specified
        in the tax assessor’s records and work sheets as being caused by additional
        improvements placed upon the Project by other lessees or by Lessor for the
        exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.2
        hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating
        Expenses are payable under Paragraph 4.2, the entirety of any increase in
        Real
        Property Taxes if assessed solely by reason of Alterations, Trade Fixtures
        or
        Utility Installations placed upon the Premises by Lessee or at Lessee’s request
        or by reason of any alterations or improvements to the Premises made by Lessor
        subsequent to the execution of this Lease by the Parties.

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

      10.4
        Joint Assessment.
        If the Building is not separately assessed, Real Property Taxes allocated
        to the
        Building shall be an equitable proportion of the Real Property Taxes for
        all of
        the land and improvements included within the tax parcel assessed, such
        proportion to be determined by Lessor from the respective valuations assigned
        in
        the assessor’s work sheets or such other information as may be reasonably
        available. Lessor’s reasonable determination thereof, in good faith, shall be
        conclusive.

      

      10.5
        Personal Property Taxes.
        Lessee shall pay prior to delinquency all taxes assessed against and levied
        upon
        Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
        equipment and all personal property of Lessee contained in the Premises.
        When
        possible, Lessee shall cause its Lessee Owned Alterations and Utility
        Installations, Trade Fixtures, furnishings, equipment and all other personal
        property to be assessed and billed separately from the real property of Lessor.
        If any of Lessee’s said property shall be assessed with Lessor’s real property,
        Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10
        days after receipt of a written statement setting forth the taxes applicable
        to
        Lessee’s property.

      

      11.
        Utilities and Services.
        Lessee shall pay for all water, gas, heat, light, power, telephone, trash
        disposal and other utilities and services supplied to the Premises, together
        with any taxes thereon. Notwithstanding the provisions of Paragraph 4.2,
        if at
        any time in Lessor’s sole judgment, Lessor determines that Lessee is using a
        disproportionate amount of water, electricity or other commonly metered
        utilities, or that Lessee is generating such a large volume of trash as to
        require an increase in the size of the trash receptacle and/or an increase
        in
        the number of times per month that it is emptied, then Lessor may increase
        Lessee’s Base Rent by an amount equal to such increased costs. There shall be no
        abatement of Rent and Lessor shall not be liable in any respect whatsoever
        for
        the inadequacy, stoppage, interruption or discontinuance of any utility or
        service due to riot, strike, labor dispute, breakdown, accident, repair or
        other
        cause beyond Lessor’s reasonable control or in cooperation with governmental
        request or directions.

      

      12.
        Assignment and Subletting.

      

      12.1
        Lessor’s Consent Required.

      

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

      

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

      

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

      

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

      

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

      

      (f)
        Lessor may reasonably withhold consent to a proposed assignment or subletting
        if
        Lessee is in Default at the time consent is requested.

      

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

      

      12.2
        Terms and Conditions Applicable to Assignment and
        Subletting.

      

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

       

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

       

      
        	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

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

      

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

      

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

      

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

      

      13.
        Default; Breach; Remedies.

      

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

      

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

      

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

      

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

      

      (d)
        The failure by Lessee to provide (i) reasonable written evidence of
        compliance with Applicable Requirements, (ii) the service contracts,
        (iii) the rescission of an unauthorized assignment or subletting,
        (iv) an Estoppel Certificate, (v) a requested subordination,
        (vi) evidence concerning any guaranty and/or Guarantor, (vii) any
        document requested under Paragraph 41, (viii) material data safety sheets
        (MSDS), or (ix) any other documentation or information which Lessor may
        reasonably require of Lessee under the terms of this Lease, where any such
        failure continues for a period of 10 days following written notice to
        Lessee.

      

      (e)
        A Default by Lessee as to the terms, covenants, conditions or provisions
        of this
        Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those
        described in subparagraphs 13.1(a), (b), (c) or (d), above, where such
        Default continues for a period of 30 days after written notice; provided,
        however, that if the nature of Lessee’s Default is such that more than 30 days
        are reasonably required for its cure, then it shall not be deemed to be a
        Breach
        if Lessee commences such cure within said 30 day period and thereafter
        diligently prosecutes such cure to completion.

      

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

      

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

       

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

      

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

      

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

       

      
        	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

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

      

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

      

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

      

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

      

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

      

      13.6
        Breach by Lessor.

      

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

      

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

      

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

      

      15.
        Brokerage Fees.

      

      15.1
        Additional Commission.
        In addition to the payments owed pursuant to Paragraph 1.10 above, and unless
        Lessor and the Brokers otherwise agree in writing, Lessor agrees that:
        (a) if Lessee exercises any Option, (b) if Lessee acquires from Lessor
        any rights to the Premises or other premises owned by Lessor and located
        within
        the Project, (c) if Lessee remains in possession of the Premises, with the
        consent of Lessor, after the expiration of this Lease, or (d) if Base Rent
        is increased, whether by agreement or operation of an escalation clause herein,
        then, Lessor shall pay Brokers a fee in accordance with the schedule of the
        Brokers in effect at the time of the execution of this Lease.

      

      15.2
        Assumption of Obligations.
        Any buyer or transferee of Lessor’s interest in this Lease shall be deemed to
        have assumed Lessor’s obligation hereunder. Brokers shall be third party
        beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor
        fails to pay to Brokers any amounts due as and for brokerage fees pertaining
        to
        this Lease when due, then such amounts shall accrue Interest. In addition,
        if
        Lessor fails to pay any amounts to Lessee’s Broker when due, Lessee’s Broker may
        send written notice to Lessor and Lessee of such failure and if Lessor fails
        to
        pay such amounts within 10 days after said notice, Lessee shall pay said
        monies
        to its Broker and offset such amounts against Rent. In addition, Lessee’s Broker
        shall be deemed to be a third party beneficiary of any commission agreement
        entered into by and/or between Lessor and Lessor’s Broker for the limited
        purpose of collecting any brokerage fee owed.

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

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

      

      16.
        Estoppel Certificates.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      23.
        Notices.

      

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

      

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

      

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

      

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

      

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

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      30.
        Subordination; Attornment; Non-Disturbance.

      

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

      

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

      

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

      

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

      

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

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

      32.
        Lessor’s Access; Showing Premises; Repairs.
        Lessor and Lessor’s agents shall have the right to enter the Premises at any
        time, in the case of an emergency, and otherwise at reasonable times after
        reasonable prior notice for the purpose of showing the same to prospective
        purchasers, lenders, or tenants, and making such alterations, repairs,
        improvements or additions to the Premises as Lessor may deem necessary or
        desirable and the erecting, using and maintaining of utilities, services,
        pipes
        and conduits through the Premises and/or other premises as long as there
        is no
        material adverse effect on Lessee’s use of the Premises. All such activities
        shall be without abatement of rent or liability to Lessee.

      

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

      

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

      

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

      

      36.
        Consents.
        Except as otherwise provided herein, wherever in this Lease the consent of
        a
        Party is required to an act by or for the other Party, such consent shall
        not be
        unreasonably withheld or delayed. Lessor’s actual reasonable costs and expenses
        (including but not limited to architects’, attorneys’, engineers’ and other
        consultants’ fees) incurred in the consideration of, or response to, a request
        by Lessee for any Lessor consent, including but not limited to consents to
        an
        assignment, a subletting or the presence or use of a Hazardous Substance,
        shall
        be paid by Lessee upon receipt of an invoice and supporting documentation
        therefor. Lessor’s consent to any act, assignment or subletting shall not
        constitute an acknowledgment that no Default or Breach by Lessee of this
        Lease
        exists, nor shall such consent be deemed a waiver of any then existing Default
        or Breach, except as may be otherwise specifically stated in writing by Lessor
        at the time of such consent. The failure to specify herein any particular
        condition to Lessor’s consent shall not preclude the imposition by Lessor at the
        time of consent of such further or other conditions as are then reasonable
        with
        reference to the particular matter for which consent is being given. In the
        event that either Party disagrees with any determination made by the other
        hereunder and reasonably requests the reasons for such determination, the
        determining party shall furnish its reasons in writing and in reasonable
        detail
        within 10 business days following such request.

      

      37.
        Guarantor.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      39.4
        Effect of Default on Options.

      

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

      

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

      

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

      

      40.
        Security Measures.
        Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
        not
        include the cost of guard service or other security measures, and that Lessor
        shall have no obligation whatsoever to provide same. Lessee assumes all
        responsibility for the protection of the Premises, Lessee, its agents and
        invitees and their property from the acts of third parties.

      

      41.
        Reservations.
        Lessor reserves the right: (i) to grant, without the consent or joinder of
        Lessee, such easements, rights and dedications that Lessor deems necessary,
        (ii) to cause the recordation of parcel maps and restrictions, and
        (iii) to create and/or install new utility raceways, so long as such
        easements, rights, dedications, maps, restrictions, and utility raceways
        do not
        unreasonably interfere with the use of the Premises by Lessee. Lessee agrees
        to
        sign any documents reasonably requested by Lessor to effectuate such
        rights.
 

      42.
        Performance Under Protest.
        If at any time a dispute shall arise as to any amount or sum of money to
        be paid
        by one Party to the other under the provisions hereof, the Party against
        whom
        the obligation to pay the money is asserted shall have the right to make
        payment
“under protest” and such payment shall not be regarded as a voluntary payment
        and there shall survive the right on the part of said Party to institute
        suit
        for recovery of such sum. If it shall be adjudged that there was no legal
        obligation on the part of said Party to pay such sum or any part thereof,
        said
        Party shall be entitled to recover such sum or so much thereof as it was
        not
        legally required to pay. A Party who does not initiate suit for the recovery
        of
        sums paid “under protest” within 6 months shall be deemed to have waived its
        right to protest such payment.

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                ____________

              	
                  

              	
                PAGE
                  15 OF 17

              	
                  

              	
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                ____________

              	
                  

              	
                 

              	
                  

              	
                ____________

              
	
                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

      43.
        Authority; Multiple Parties; Execution.

      

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

      

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

      

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

      

      44.
        Conflict.
        Any conflict between the printed provisions of this Lease and the typewritten
        or
        handwritten provisions shall be controlled by the typewritten or handwritten
        provisions.

      

      45.
        Offer.
        Preparation of this Lease by either party or their agent and submission of
        same
        to the other Party shall not be deemed an offer to lease to the other Party.
        This Lease is not intended to be binding until executed and delivered by
        all
        Parties hereto.

      

      46.
        Amendments.
        This Lease may be modified only in writing, signed by the Parties in interest
        at
        the time of the modification. As long as they do not materially change Lessee’s
        obligations hereunder, Lessee agrees to make such reasonable non-monetary
        modifications to this Lease as may be reasonably required by a Lender in
        connection with the obtaining of normal financing or refinancing of the
        Premises.

      

      47.
        Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
        TRIAL
        BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT
        OF
        THIS AGREEMENT
        .

      

      48.
        Mediation and Arbitration of Disputes.
        An Addendum requiring the Mediation and/or the Arbitration of all disputes
        between the Parties and/or Brokers arising out of this Lease ̈
        is ̈
        is not attached to this Lease.

      

      49.
        Americans with Disabilities Act.
        Since compliance with the Americans with Disabilities Act (ADA) is dependent
        upon Lessee’s specific use of the Premises, Lessor makes no warranty or
        representation as to whether or not the Premises comply with ADA or any similar
        legislation. In the event that Lessee’s use of the Premises requires
        modifications or additions to the Premises in order to be in ADA compliance,
        Lessee agrees to make any such necessary modifications and/or additions at
        Lessee’s expense.

      

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

      

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

      

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

      

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

      

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

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Executed at:
                  1640 S. Sepulveda Blvd., Suite 308

              	
                 

              	
                 

              	
                 

              	
                Executed at:
                  Simi Valley, CA

              
	
                 

              	
                 

              	
                            Los
                  Angeles, CA 90025

              	
                 

              	
                 

              	
                 

              	
                On:

              	
                 

              	
                  

              
	
                On:

              	
                 

              	
                  

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                By
                  LESSOR:

              	
                 

              	
                 

              	
                 

              	
                By
                  LESSEE:

              
	
                Pacific
                  Simi Associates, LLC

              	
                 

              	
                 

              	
                 

              	
                Intermetro
                  Communications, Inc.,

              
	
                a
                  California Limited Liability Company

              	
                 

              	
                 

              	
                 

              	
                a
                  California Corporation

              

      

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                By:

              	
                 

              	
                  

              	
                 

              	
                 

              	
                 

              	
                By:

              	
                 

              	
                /S/
                  VINCENT
                  ARENA

              
	
                Name Printed:
                  Harvey Rosen

              	
                 

              	
                 

              	
                 

              	
                Name Printed:
                  Vincent Arena

              
	
                Title:
                  Chairman/Secretary of Managing Member

              	
                 

              	
                 

              	
                 

              	
                Title:
                  CFO

              
	
                 

              	
                 

              	
                 

              	
                 

              
	
                By:                                        
                                  

              	
                 

              	
                 

              	
                 

              	
                By:

              	
                 

              	
                  

              
	
                Name Printed:
                  David Rosen

              	
                 

              	
                 

              	
                 

              	
                Name Printed:                                        
                                  

              
	
                Title:
                  President/Treasurer of Managing Member

              	
                 

              	
                 

              	
                 

              	
                Title:

              	
                 

              	
                  

              
	
                Address:

              	
                 

              	
                  

              	
                 

              	
                 

              	
                 

              	
                Address:
                  2685-A Park Center Drive

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                              Simi
                  Valley, CA 93065

              
	
                  

              	
                 

              	
                 

              	
                 

              	
                  

              
	
                Telephone:
                  (310) 477-5300

              	
                 

              	
                 

              	
                 

              	
                Telephone:
                  (805) 433-8000

              
	
                Facsimile:
                  (            )                                       
                   

              	
                 

              	
                 

              	
                 

              	
                Facsimile:
                  (            )                                       
                   

              
	
                Federal
                  ID No.                                        
                              

              	
                 

              	
                 

              	
                 

              	
                Federal
                  ID No.                                        
                              

              

      

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                BROKER:

              	
                 

              	
                 

              	
                 

              	
                BROKER:

              
	
                  

              	
                 

              	
                 

              	
                 

              	
                  

              
	
                  

              	
                 

              	
                 

              	
                 

              	
                  

              
	
                 

              	
                 

              	
                 

              
	
                Attn:                                        
                              

              	
                 

              	
                 

              	
                 

              	
                Attn:                                        
                              

              
	
                Title:                                        
                              

              	
                 

              	
                 

              	
                 

              	
                Title:                                        
                              

              
	
                Address:                                        
                              

              	
                 

              	
                 

              	
                 

              	
                Address:                                        
                              

              
	
                  

              	
                 

              	
                 

              	
                 

              	
                  

              
	
                Telephone:(            )                                       
                   

              	
                 

              	
                 

              	
                 

              	
                Telephone:(            )                                       
                   

              
	
                Facsimile:
                  (            )                                       
                   

              	
                 

              	
                 

              	
                 

              	
                Facsimile:
                  (            )                                       
                   

              
	
                Email:                                        
                                      

              	
                 

              	
                 

              	
                 

              	
                Email:                                        
                                      

              
	
                Federal
                  ID No.                                        
                              

              	
                 

              	
                 

              	
                 

              	
                Federal
                  ID No.                                        
                              

              

      

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                ____________

              	
                  

              	
                PAGE
                  16 OF 17

              	
                  

              	
                ____________

              
	
                ____________

              	
                  

              	
                 

              	
                  

              	
                ____________

              
	
                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

      NOTICE:
        These forms are often modified to meet changing requirements of law and industry
        needs. Always write or call to make sure you are utilizing the most current
        form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800,
        Los
        Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.:
        (213) 687-8616.

      

      ©Copyright
        1999 By AIR Commercial Real Estate Association.

      

      All
        rights reserved.

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                ____________

              	
                  

              	
                PAGE
                  17 OF 17

              	
                  

              	
                ____________

              
	
                ____________

              	
                  

              	
                 

              	
                  

              	
                ____________

              
	
                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©1999
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  MTN-5-5/05E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

      ADDENDUM
        TO STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT

      

      LEASE
        - NET DATED APRIL 6, 2006 BY AND BETWEEN

      

      PACIFIC
        SIMI ASSOCIATES, LLC, A CALIFORNIA LIMITED LIABILITY

      

      COMPANY
        (LESSOR) AND INTERMETRO COMMUNICATIONS, INC.,

      

      A
        CALIFORNIA CORPORATION (LESSEE) FOR THE PROPERTY COMMONLY

      

      KNOWN
        AS 2685-A PARK CENTER DRIVE, SIMI VALLEY, CA 93065

       

      
        	
                1.5

              	
                Base
                  Rent (continued):

              

      

      

      Lessor
        has agreed to grant Lessee a total rent deferment of $32,000 to be allocated
        $8,000 per month for the months of April, May, June and July 2006. Lessee
        has
        already paid $18,603.27 for the month of April; the total payment owed for
        April
        was $19,607.70, leaving a balance owed to Lessor of $1,004.43; Lessee’s
        remaining deferment for April 2006 is $7,000. Payments for the months of
        May,
        June and July 2006, shall be as follows:

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                May 2006

              	
                  

              	
                Base
                  Rent, CAM, less deferment

              	
                  

              	
                $

              	
                4,607.70

              
	
                June 2006

              	
                  

              	
                Base
                  Rent, CAM, less deferment

              	
                  

              	
                $

              	
                11,607.70

              
	
                July 2006

              	
                  

              	
                Base
                  Rent, CAM, less deferment

              	
                  

              	
                $

              	
                11,607.70

              
	
                August 2006

              	
                  

              	
                Base
                  Rent, CAM, plus $1,000 deferment Payment

              	
                  

              	
                $

              	
                20,607.70

              

      

      

      Beginning
        with the August 1, 2006 rent payment, Lessee shall make consecutive monthly
        payments of $1,000 towards the payback of the rent deferment. This $1,000
        shall
        be in addition to the payment of Base rent, CPI increases and CAM
        charges.

      

       

      
        	
                1.7

              	
                Security
                  Deposit:

              

      

      

      Lessee
        currently has $10,000.00 on account for the security deposit; upon execution
        of
        this Lease, Lessee shall pay to Lessor an additional $5,312.68 to be added
        to
        the security deposit.

      

       

      
        	
                2.2

              	
                CONDITION
                  OF PREMISES
                  (Continued):

              

      

      

      Lessor
        Improvements:

      

      Lessor,
        at Lessor’s sole cost and expense, shall complete the improvements to be
        described on an attached diagram shown as Exhibit “A-1” and described as adding
        five (5) additional offices, a conference room, kitchen
        facilities/enclosures and upgrading the existing restrooms. Complete working
        plans will be completed by Landlord and are subject to approval by Tenant
        prior
        to completion of the work to be completed.

      

       

      
        	
                4.2

              	
                Common
                  Area Expenses
                  (Continued):

              

      

      

      During
        the initial lease period, Lessee’s portion of the Common Area Expenses
        attributable to Capital Expenditures shall not exceed $400 per
        month.

      

       

      
        	
                10.1

              	
                REAL
                  PROPERTY TAXES...DEFINITION (CONTINUED)

              

      

      

      Lessee
        shall not be responsible for any increase in property taxes during the initial
        term of the Lease in the event the property is sold. This clause shall not
        apply
        during any period beyond the initial Lease period of three
        (3) years.

      

       

      
        	
                50.

              	
                RULES
                  AND REGULATIONS:

              

      

      

      See
        attached Exhibit “B” (Rules and Regulations Attached and Made a Part of This
        Lease).

      

       

      
        	
                51.

              	
                DISCLOSURE
                  STATEMENT:

              

      

      

      See
        attached Exhibit “C” (Disclosure Statement Attached and Made a Part of This
        Lease).

      

      
        	
                52.

              	
                HAZARDOUS
                  MATERIALS ADDENDUM:

              

      

      

      See
        attached Exhibit “D” (Hazardous Materials Addendum Attached and Made a Part of
        This Lease).

      

       

      
        	
                53.

              	
                SIGNAGE:

              

      

      

      Notwithstanding
        the terms and conditions of this Lease including Paragraph 34, Lessee shall
        be
        permitted to install signage on the monument sign located on landscaped area.
        Any such signage shall be subject to Lessor’s reasonable approval, the City of
        Simi Valley, and CC&R’s, and shall be the sole cost of the
        Lessee.

      

       

      
        	
                54.

              	
                PREMISES:
                  CONDITION (Continuation of Paragraph
                  2.2):

              

      

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
        	 

      

      

       

      ADDENDUM
        TO STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT

      

      LEASE
        - NET DATED APRIL 6, 2006 BY AND BETWEEN

      

      PACIFIC
        SIMI ASSOCIATES, LLC, A CALIFORNIA LIMITED LIABILITY

      

      COMPANY
        (LESSOR) AND INTERMETRO COMMUNICATIONS, INC.,

      

      A
        CALIFORNIA CORPORATION (LESSEE) FOR THE PROPERTY COMMONLY

      

      KNOWN
        AS 2685-A PARK CENTER DRIVE, SIMI VALLEY, CA 93065

      

      Notwithstanding
        any provision contained in this Lease or any prior leases to the contrary,
        upon
        expiration or early termination of the Lease, Lessee shall not be obligated
        to
        return the Premises to its condition as of Commencement Date. Lessee shall
        not
        be responsible for ordinary wear and tear to the Premises. Any agreements
        to the
        contrary to this provision must be in writing and signed by both
        parties.

       

      
        	
                55.

              	
                RENT:
                  COMMON AREA OPERATING EXPENSES
                  (CONTINUED):

              

      

      

      Lessor’s
        failure to provide a detailed statement of actual Common Area Operating Expenses
        for the preceding year by the date provided for in the Lease shall in no
        way
        excuse Lessee from its obligation to pay its pro rata share of the Common
        Area
        Operating Expenses, nor shall it constitute a waiver of Lessor’s right to bill
        and collect such pro rata share of Common Area Operating Expenses from Lessee
        in
        accordance with this clause.

       

      
        	
                56.

              	
                SATELLITE
                  DISH:
                  Lessee shall have the right to install a satellite dish on the
                  roof
                  subject to plans approved by Lessor and the City of Simi Valley,
                  CA. Said
                  satellite dish shall not penetrate the roof structure. Lessee shall
                  be
                  responsible for any damage to the roof caused by the installation
                  and
                  later removal of the satellite
                  dish.

              

      

       

      
        	
                57.

              	
                RENT
                  ADJUSTMENT(s):

              

      

      

      See
        attached Paragraph 57 and made a part of this Lease.

      

      58. &
        59.
        OPTIONS TO EXTEND

      

      See
        attached Paragraphs 58 and 59 and made a part of this Lease.

      

      
        	
                   

              	
                 

              	
                 

              	
                 

              	
                   

              
	
                LESSOR

              	
                 

              	
                 

              	
                 

              	
                DATE

              
	
                /s/
                  Vincent Arena

              	
                 

              	
                 

              	
                 

              	
                4/1/06

              
	
                LESSEE

              	
                 

              	
                 

              	
                 

              	
                DATE

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

      

      

      

       

      RENT
        ADJUSTMENT(S)

      

      STANDARD
        LEASE ADDENDUM

      

       

      
        	
                 

              	
                 

              	
                 

              
	
                Dated

              	
                  

              	
                April 6,
                  2006

              
	
                By and Between (Lessor)

              	
                  

              	
                Pacific
                  Simi Associates, LLC, a California

                 

                Limited
                  Liability Company

              
	
                 

              	
                 

              
	
                (Lessee)

              	
                  

              	
                InterMetro
                  Communications, a California Corporation

              
	
                Address of Premises:

              	
                  

              	
                2685-A
                  Park Center

                 

                Simi
                  Valley, CA 93065

              

      

      

      Paragraph
        57

       

      
        	
                A.

              	
                RENT
                  ADJUSTMENTS:

              

      

      

      The
        monthly rent for each month of the adjustment period(s) specified below shall
        be
        increased using the method(s) indicated below: (Check Method(s) to be Used
        and
        Fill in Appropriately)

      

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

      

      a.
        On (Fill in COLA Dates): April 1, 2007, and April 1, 2008 the Base Rent shall
        be
        adjusted by the change, if any, from the Base Month specified below, in the
        Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department
        of
        Labor for (select one):þ
        CPI W (Urban Wage Earners and Clerical Workers) or ̈
        CPI U (All Urban Consumers), for (Fill in Urban Area): Los Angeles - Riverside
        -
        Orange County, CA, All Items (1982-1984 = 100), herein referred to as
“CPI”.

      

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

      

      c.
        In the event the compilation and/or publication of the CPI shall be transferred
        to any other governmental department or bureau or agency or shall be
        discontinued, then the index most nearly the same as the CPI shall be used
        to
        make such calculation. In the event that the Parties cannot agree on such
        alternative index, then the matter shall be submitted for decision to the
        American Arbitration Association in accordance with the then rules of said
        Association and the decision of the arbitrators shall be binding upon the
        parties. The cost of said Arbitration shall be paid equally by the Parties.
        The
        minimum annual increase shall be three percent (3%) and the maximum
        increase shall be six percent (6%) of the previous year’s last monthly
        rent.

      

       ̈II
                            
Market Rental Value Adjustment(s) (MRV)a. On (Fill in MRV
        AdjustmentDate(s):                                  
                                                
                                        
                              

      

      __________________________________________________________________________________________________
        the BaseRent shall be adjusted to the “Market Rental Value” of the property as
        follows:

      

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

      

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

      

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

      

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

      

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

      

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
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                  1 OF 2

              	
                  

              	
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                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©2000
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  RA-3-8/00E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

       

      
        	
                B.

              	
                NOTICE:

              

      

      

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

      

       

      
        	
                C.

              	
                BROKER’S
                  FEE:

              

      

      

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

      

      NOTICE:
        These forms are often modified to meet changing requirements of law and industry
        needs. Always write or call to make sure you are utilizing the most current
        form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800,
        Los
        Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.:
        (213) 687-8616.

       

      PAGE
        2 OF 2

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

      

      

      OPTION(S)
        TO EXTEND

      

      STANDARD
        LEASE ADDENDUM

       

      
        	
                 

              	
                 

              	
                 

              
	
                Dated

              	
                  

              	
                April 6,
                  2006

              
	
                By
                  and Between (Lessor)

              	
                  

              	
                Pacific
                  Simi Associates, LLC, a California Limited Liability
                  Company

              
	
                By
                  and Between (Lessee)

              	
                  

              	
                InterMetro
                  Communications, a California Corporation

              
	
                Address
                  of Premises:

              	
                  

              	
                2685-A
                  Park Center Drive Simi Valley, CA
                  93065

              

      

      

      Paragraph
        58

      

       

      
        	
                A.

              	
                OPTION(S)
                  TO EXTEND:

              

      

      

      Lessor
        hereby grants to Lessee the option to extend the term of this Lease for one
        (1)
        additional twelve (12) month period(s) commencing when the prior term expires
        upon each and all of the following terms and conditions:

      

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

      

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

      

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

      

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

      

      (v)
        The monthly rent for each month of the option period shall be calculated
        as
        follows, using the method(s) indicated below: (Check Method(s) to be Used
        and
        Fill in Appropriately)

      

       

      
        	
                 ̈    I.

              	
                Cost
                  of Living Adjustment(s)
                  (COLA)

              

      

      

      a. On (Fill in COLA Dates):                              
                                                
                                        
                                        
                                        
    

      

                                            
                                                
                                        
                                        
                                        
                                        
                   

      

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

      

                                            
                                                
                                        
                                        
                                        
                                        
                   

      

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

      

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

      

                                            
                                                
                                        
                                        
                                        
                                        
                   

      

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

      

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

      

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

       

      a.
        On (Fill in MRV Adjustment Date(s)) April 1, 2009 the Base Rent shall be
        adjusted to the “Market Rental Value” of the property as follows:

      

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

      

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

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                ____________

              	
                  

              	
                PAGE
                  1 OF 2

              	
                  

              	
                ____________

              
	
                ____________

              	
                  

              	
                 

              	
                  

              	
                ____________

              
	
                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©2000
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  OE-3-8/00E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

      

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

      

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

      

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

      

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

      

      2)
        Notwithstanding the foregoing, the new MRV shall not be less than the rent
        payable for the month immediately preceding the rent adjustment. Notwishstanding
        the foregoing, MRV calculations shall be based on similar properties located
        within the Simi Valley Business Center.

      

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

      

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

      

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

      

       ̈
        III. Fixed Rental Adjustment(s) (FRA)

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                On
                  (Fill in FRA Adjustment Date(s)):

              	
                 

              	
                  

              	
                  

              	
                The
                  New Base Rent shall be:

              
	
                  

              	
                 

              	
                  

              	
                  

              	
                  

              
	
                  

              	
                 

              	
                  

              	
                  

              	
                  

              
	
                  

              	
                 

              	
                  

              	
                  

              	
                  

              
	
                  

              	
                 

              	
                  

              	
                  

              	
                  

              
	
                  

              	
                 

              	
                  

              	
                  

              	
                  

              
	
                  

              	
                 

              	
                  

              	
                  

              	
                  

              
	
                  

              	
                 

              	
                  

              	
                  

              	
                  

              
	
                  

              	
                 

              	
                  

              	
                  

              	
                  

              

      

       

      
        	
                B.

              	
                NOTICE:

              

      

      

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

       

      
        	
                C.

              	
                BROKER’S
                  FEE:

              

      

      

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

      

      NOTICE:
        These forms are often modified to meet changing requirements of law and industry
        needs. Always write or call to make sure you are utilizing the most current
        form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800,
        Los
        Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.:(212)
        687-8616

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                ____________

              	
                  

              	
                PAGE
                  2 OF 2

              	
                  

              	
                ____________

              
	
                ____________

              	
                  

              	
                 

              	
                  

              	
                ____________

              
	
                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©2000
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  OE-3-8/00E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

      

       

      OPTION(S)
        TO EXTEND

      

      STANDARD
        LEASE ADDENDUM

      

       

      
        	
                Dated

              	
                 

              	
                April 6,
                  2006

              
	
                By
                  and Between (Lessor)

              	
                 

              	
                Pacific
                  Simi Associates, LLC, a California

                 

                Limited
                  Liability Company

              
	
                 

              	
                 

              
	
                By
                  and Between (Lessee)

              	
                 

              	
                InterMetro
                  Communications, a California

                 

                Corporation

              
	
                 

              	
                 

              
	
                Address
                  of Premises:

              	
                 

              	
                2685-A
                  Park Center Drive

              
	
                 

              	
                 

              	
                Simi
                  Valley, CA 93065

              

      

      

      Paragraph
        59

      

      A.
        OPTION(S) TO EXTEND:

      

      Lessor
        hereby grants to Lessee the option to extend the term of this Lease for one
        (1) additional twelve (12) month period(s) commencing when the prior term
        expires upon each and all of the following terms and conditions:

      

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

      

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

      

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

      

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

      

      (v)
        The monthly rent for each month of the option period shall be calculated
        as
        follows, using the method(s) indicated below: (Check Method(s) to be Used
        and
        Fill in Appropriately)

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      a.
        On (Fill in MRV Adjustment Date(s)) February 1, 2010 the Base Rent shall
        be
        adjusted to the “Market Rental Value” of the property as follows:

      

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

       

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

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                ____________

              	
                  

              	
                PAGE
                  1 OF 2

              	
                  

              	
                ____________

              
	
                ____________

              	
                  

              	
                 

              	
                  

              	
                ____________

              
	
                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©2000
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  OE-3-8/00E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 

      

       

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

      

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

      

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

      

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

      

      2)
        Notwithstanding the foregoing, the new MRV shall not be less than the rent
        payable for the month immediately preceding the rent adjustment. Notwishstanding
        the foregoing, MRV calculations shall be based on similar properties located
        within the Simi Valley Business Center.

      

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

      

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

      

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

      

       ̈
        III. Fixed Rental Adjustment(s) (FRA)

      

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

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                On
                  (Fill in FRA Adjustment Date(s)):

              	
                  

              	
                 

              	
                  

              	
                The
                  New Base Rent shall be:

              
	
                  

              	
                  

              	
                 

              	
                  

              	
                  

              
	
                  

              	
                  

              	
                 

              	
                  

              	
                  

              
	
                  

              	
                  

              	
                 

              	
                  

              	
                  

              
	
                  

              	
                  

              	
                 

              	
                  

              	
                  

              
	
                  

              	
                  

              	
                 

              	
                  

              	
                  

              
	
                  

              	
                  

              	
                 

              	
                  

              	
                  

              
	
                  

              	
                  

              	
                 

              	
                  

              	
                  

              

      

       

      
        	
                B.

              	
                NOTICE:

              

      

      

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

      

       

      
        	
                C.

              	
                BROKER’S
                  FEE:

              

      

      

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

      

      NOTICE:
        These forms are often modified to meet changing requirements of law and industry
        needs. Always write or call to make sure you are utilizing the most current
        form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800,
        Los
        Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.:
        (213) 687-8616.

       

      
        	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                ____________

              	
                  

              	
                PAGE
                  2 OF 7

              	
                  

              	
                ____________

              
	
                ____________

              	
                  

              	
                 

              	
                  

              	
                ____________

              
	
                INITIALS

              	
                  

              	
                 

              	
                  

              	
                INITIALS

              
	
                 

                 

                ©2000
                  - AIR COMMERCIAL REAL ESTATE ASSOCIATION

              	
                  

              	
                FORM
                  OE-3-8/00EExhibit
      10.8

    Confidential
      Treatment
      Requested: 

    Confidential
      portions of
      this document have been redacted and have been filed separately with the
      Commission. 

    CONFIDENTIAL
      

    LETTER
      AGREEMENT

    BETWEEN

    INTERMETRO
      COMMUNICATIONS, INC. 

    AND

    99¢
ONLY
      STORES

    June 30,
      2005 

    This
      proposal sets forth the
      principal terms with respect to a vendor relationship between InterMetro
      Communications, Inc. (“InterMetro”), on the one hand, and 99¢ Only Stores
      (“NDN”), on the other hand, to be created upon the execution of this Letter
      Agreement. 

    Purpose
      

    InterMetro
      desires to enter into a
      strategic, phone card merchandising agreement with NDN (“Merchandise Partnership
      Agreement”) for the launch of InterMetro’s pre-paid, long distance phone cards
      (“Phone Cards”) at all existing and future NDN stores as set forth herein. The
      following sets forth the essential terms of this Merchandise Partnership
      Agreement: 

    Business
      Terms of Proposed
      Relationship 

     

    
      	
              InterMetro
                Responsibilities 

            	
              During
                the term of the
                Merchandise Partnership Agreement, InterMetro will be responsible
                for the
                following: 

            

    

     

    
      	 	•	 	Telephony
              Service– InterMetro will be
              responsible for providing all telephony services designated on the
              Phone
              Cards. 

    

     

    
      	 	•	 	Customer
              Support– InterMetro will provide
              24/7 toll-free customer support to all purchasers of Phone Cards.
              

    

     

    
      	 	•	 	Recharge
              Capability– For customers desiring
              to recharge their Phone Card, InterMetro will provide a dedicated website
              and 24/7 toll-free customer support. 

    

     

    
      	 	•	 	Phone
              Card PIN Batches– InterMetro will
              provide and replenish PIN batch files that correspond to each type
              of
              Phone Card sold at NDN stores. 

    

     

    
      	 	•	 	Phone
              Card Design & Production–
              InterMetro will provide and bear all costs associated with the design
              and
              production of the Phone Cards. All Phone Card designs must be approved
              by
              NDN prior to production. 

    

     

    
      	 	•	 	In-Store
              Sales Collateral– For the purpose
              of marketing the Phone Cards, InterMetro will provide and bear all
              costs
              associated with the design and production of the following:
              (i) in-store posters; and (ii) counter

    

     

    
      	
            	
            	
            	
            	
            
	
              CONFIDENTIAL

            	  	- 1 -	  	

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    
      	 	  	stickers
              (collectively, “In-Store Sales Collateral”). All In-Store
              Sales Collateral designs must be approved by NDN prior to production.
              

    

     

    
      	 	•	 	Customized
              Phone Card Voice Prompts–
              InterMetro will bear all costs associated with the inclusion of customized
              voice prompts on all Phone Card access numbers for the purpose of
              promoting special offers at NDN stores. 

    

     

    
      	 	•	 	Development
              of Phone Card Programs–
              InterMetro will work on the development of alternative Phone Card programs
              that can be offered for sale within NDN stores, subject to approval
              from
              NDN. 

    

     

    
      	 	•	 	Manager &
Employee
              Training–
              InterMetro will work with NDN to train all NDN personnel on the respective
              Phone Card programs. An InterMetro representative will be made available
              to attend, in person or via telephone, district managers meetings to
              review the Phone Card programs, at NDN’s discretion.

    

     

    
      	 	•	 	Phone
              Card Sales Incentive Program–
              InterMetro will work with NDN on developing Phone Card sales incentive
              programs that reward the employees of the top-selling NDN stores, though
              NDN is not obligated to implement any such program.

    

     

    
      	
              NDN
                Responsibilities 

            	
              During
                the term of the
                Merchandise Partnership Agreement, NDN will be responsible for the
                following: 

            

    

     

    
      	 	•	 	Point-of-Sale
              Integration– NDN will be
              responsible for maintaining a Phone Card point-of-sale activation system
              through which the scanning of the UPC code on the back of each Phone
              Card
              will generate a Phone Card PIN on the applicable customer receipt.
              

    

     

    
      	 	•	 	Phone
              Card Distribution– Shipment of Phone
              Cards and In-store Sales Collateral from the NDN distribution center
              to
              each NDN store. 

    

     

    
      	 	•	 	Customized
              Phone Card Voice Prompts– At its
              sole discretion, NDN will provide InterMetro with customized voice
              prompts
              for placement on Phone Card access numbers for the purpose of promoting
              special offers at NDN stores. 

    

     

    
      	
              Phone
                Card PINs
                

            	
              NDN
                agrees to order Phone Card
                PINs as needed from InterMetro in such amounts as NDN deems adequate
                for
                its distribution efforts. InterMetro will provide NDN with Phone
                Card PINs
                on a consignment basis. 

            

    

     

    
      	
            	
            	
            	
            	
            
	
              CONFIDENTIAL

            	  	- 2 -	  	

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              99
                Minutes for 99¢
                

            	
              The
                initial Phone Card to be
                launched pursuant to the terms of the Merchandise Partnership Agreement
                will be the “99 Minutes for 99¢” Phone Card which will replace the current
                phone card being sold at NDN. The 99 Minutes for 99¢ Phone Card will work
                in exactly the same manner as the current phone card.
                

            

    

     

    
      	
              Economics
                

            	
              NDN
                will pay the “NDN Cost”
                listed in Table A, below, as InterMetro’s compensation for 99¢’ sales of
                each 99 Minutes for 99¢ Phone Card PIN sold at NDN stores. The difference
                between 99¢ retail price, and the NDN Cost, will be retained by NDN at the
                time of sale. [***] 

            

    

     

    
      	
            	
            	
            
	
              TABLE
                A

            	    	 
	
            	
            
	
              Phone
                Card
                Type

            	    	NDN Cost
	
              99
                Minutes for 99¢ Phone
                Card

            	    	[***]

    

    NDN
      will be entitled to receive
      [***] percent ([***]%) of all revenue generated from the recharge of Phone
      Cards, less uncollected monies, unapproved charges, and refunds (“Recharge
      Margin”) which may in no event result in InterMetro being owed any sum or sums
      by NDN for recharging. 

     

    
      	
              NDN
                Sales Reporting
                

            	
              At
                the beginning of each week,
                NDN will supply InterMetro with a report (“PIN Sale Report”) that details
                all of the Phone Card PINs sold during the previous seven (7) day
                period (“Reporting Period”), defined as Monday through Sunday. The PIN
                Sale Report will include the following information with respect to
                each
                PIN sold during the Reporting Period: (i) PIN sold; (ii) date
                and time of sale; and (iii) store number where sale took place.
                

            

    

     

    
      	
              InterMetro
                Invoicing 

            	
              InterMetro
                will invoice NDN on
                a weekly basis for all Phone Card PINs sold during the previous Reporting
                Period. All invoices must be paid by NDN within five (5) business
                days from NDN’s receipt of such accurate invoice. Such payments will be
                calculated as follows: Retail Price less NDN Cost for the 99 Minutes
                for
                99¢ Phone Card. 

            

    

     

    
      	
              InterMetro
                Recharge
                Reporting 

            	
              Within
                fifteen (15) days
                after the beginning of each month, InterMetro will provide NDN a
                report
                that details all of the recharge transactions that occurred during
                the
                previous calendar month (“Recharge Report”).

            

    

     

    [***]Confidential
      material redacted
      and filed separately with the Commission. 

     

    
      	
            	
            	
            	
            	
            
	
              CONFIDENTIAL

            	  	- 3 -	  	

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              InterMetro
                Recharge
                Payments 

            	
              Within
                twenty (20) days
                after the beginning of each month, InterMetro will submit payment
                to NDN
                for the corresponding Recharge Margin.

            

    

     

    
      	
              Term
                

            	
              The
                term of the Merchandise
                Partnership Agreement will commence no later than fifteen (15) days
                after the execution of this Letter Agreement by the parties and will
                continue thereafter for a period of two (2) years (the “Initial
                Term”). Additionally, NDN must place its first Phone Card PIN order for
                a
                minimum of [***] Phone Card PINs no later than thirty (30) days after
                the commencement of the Initial Term. After the Initial Term, the
                Merchandise Partnership Agreement will be automatically renewed for
                one
                (1) year terms unless terminated by either party in writing at least
                sixty (60) days prior to the expiration of the then current term.
                

            

    

    [***]

    NDN
      may terminate this Letter
      Agreement at any time if InterMetro’s quality of service falls below acceptable
      industry standards. The parties will meet in good faith in an effort to further
      define such standards. 

     

    
      	
              [***]
                

            	
              [***]
                

            

    

    During
      the Initial Term or any
      subsequent term of the Merchandise Partnership Agreement, InterMetro will be
      the
      exclusive provider of all prepaid long distance services to NDN. 

     

    
      	
              Notices
                

            	
              Any
                notice to be provided to
                NDN under this Letter Agreement must be delivered by Certified Mail,
                Return Receipt, to “99¢ Only Stores, 4000 Union Pacific Avenue, Commerce,
                CA 90023,” and sent to both NDN’s “Chief Financial Officer” as well as to
                its “EVP, Supply Chain Management.”

            

    

     

    [***]Confidential
      material redacted
      and filed separately with the Commission. 

     

    
      	
            	
            	
            	
            	
            
	
              CONFIDENTIAL

            	  	- 4 -	  	

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              Further
                Terms
                

            	
              This
                Letter Agreement contains
                the deal points of the parties’ agreement. Subsequent to the execution of
                this Letter Agreement, the parties intend to work together in good
                faith
                to prepare a fuller agreement containing “boilerplate” terms not contained
                in this Letter Agreement. However, should the parties fail to do
                so, they
                nevertheless intend the terms contained herein to be binding.
                

            

    

     

    
      	
            	
            	
            	
            	
            
	
              CONFIDENTIAL

            	  	- 5 -	  	

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    If
      the foregoing is in accordance
      with your understanding, please sign this Letter Agreement in the space
      indicated below and return it to InterMetro for receipt no later than midnight
      (Pacific time) on June 30, 2005, whereupon this Letter Agreement will
      become a binding obligation among the parties. This Letter Agreement will expire
      unless InterMetro has received an executed copy by NDN within the time period
      provide in the previous sentence. 

     

    
      	
            	
            	
            
	
            	
            
	99
              CENTS ONLY STORES, INC.	  	INTERMETRO
              COMMUNICATIONS, INC.
	
            	
            
	
              X
                Mike Zelkind
                /s/

            	  	
              X
                Christopher Folk
                /s/

            
	FOR
              99 CENTS ONLY STORES	  	FOR
              INTERMETRO COMMUNICATIONS
	
            	
            
	
              Mike
                Zelkind

            	  	
              Christopher
                Folk

            
	PRINTED
              NAME	  	PRINTED
              NAME
	
            	
            
	
              EVP

            	  	
              Director,
                Business
                Development

            
	TITLE	  	TITLE
	
            	
            
	
              6/30/05

            	  	
              6/30/05

            
	DATE	  	DATE
	
            	
            
	
              ADDRESS:
                

              4000
                Union Pacific
                Avenue

              City
                of Commerce, CA
                90023

              Phone:
                (323)
                980-8145

              Fax:
                (323)
                980-8162

            	  	
              ADDRESS:

              2685
                Park Center Drive,
                Building A

              Simi
                Valley, CA
                93065

              Phone:
                (805)
                433-8000

              Fax:
                (805)
                582-1006

            

    

     

    
      	
            	
            	
            	
            	
            
	
              CONFIDENTIAL

            	  	- 6 -

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