Document:

EX10-1

MINERAL PROPERTY OPTION AND JOINT VENTURE AGREEMENT

                      THIS MINERAL PROPERTY OPTION AND JOINT VENTURE AGREEMENT is dated for reference as of June 11, 2007.

BETWEEN:
MAGNUS MINERALS OY, a Finnish corporation having an address for notice and delivery located at PL 3, 33211 Tampere, Finland

(the "Optionor");

          OF THE FIRST PART

AND:
FINMETAL MINING LTD., a Nevada corporation having an address for notice and delivery located at Suite 500, 666 Burrard Street, Vancouver, British Columbia, Canada, V6C 2X8

(the "Optionee").

     OF THE SECOND PART

                      WHEREAS:

(A)                  The Optionor is or will be the registered and beneficial owner of a one hundred percent (100%) interest in and to certain mineral licenses, claims, concessions or reservations (collectively, the "mineral claims") situated in Finland; and which mineral claims are more particularly and accurately detailed and described in Schedule A which is attached hereto (collectively, the "Property"); and

(B)                  The Optionor and the Optionee wish to enter into an option pursuant to which the Optionee may acquire ownership from the Optionor of up to a fifty-one percent (51%) interest in and to the Property;

                      NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements hereinafter set forth the parties agree that:

PART 1

DEFINITIONS

1.1                  In this Agreement, except as otherwise expressly provided or as the context otherwise requires:

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(a)       "Area of Common Interest" means, subject to Part 17, however, excluding any third party mineral claim rights in existence as of the Effective Date hereof, the specific coordinates of the area surrounding the Property which is outlined in Schedule B which is attached hereto;

(b)       "Assignee" has the meaning set forth in §7.1;

(c)       "Closing Date" means June 11, 2007, or on such earlier or later day as may be agreed to in advance by each of the parties hereto;

(d)       "Earn-In" has the meaning set forth in §4.3;

(e)       "Effective Date" means the date first above written;

(f)       "Force Majeure" has the meaning set forth in Part 13;

(g)       "Joint Venture" means the joint venture between the Optionor and the Optionee in respect of the Property in the event of and upon exercise of the Option and which is more particularly described in §4.5 and Schedule C;

(h)       "Joint Venture Agreement" means the Joint Venture Agreement to be entered into between the Optionor and the Optionee if the Optionee exercises this Option as provided for in §4.5 and in substantially the form attached as Schedule C hereto;

(i)       "Management Committee" has the meaning set forth in §4.5(c);

(j)       "Net Returns Royalty" shall have the meaning specified in Schedule D of Schedule C (Joint Venture Agreement) which is attached hereto;

(k)       "Net Smelter Return Royalty" means the two percent (2%) net smelter return royalty which is due and payable by the Optionee to the Optionor, which shall be calculated and paid in accordance with the general provisions contained in the proposed Schedule D hereto; however, which Net Smelter Return Royalty shall be inclusive of the Optionor's concurrent obligation to pay the Underlying Royalty applicable to any portion of the Net Smelter Return Royalty hereunder:

(l)       "Option" means the exclusive right herein granted by the Optionor to the Optionee to permit the Optionee to acquire up to a fifty-one percent (51%) undivided right, title and interest in the Property and thereupon form the Joint Venture all as provided in Part 4;

(m)      "Option Payments" has the meaning set forth in §4.4;

(n)       "Option Period" means the period from the date above written on page one to and including the earliest of:
(i)       the date of exercise of the Option;

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(ii)      November 30, 2011, representing the four and one-half year anniversary of the Effective Date; and

(iii)     the termination hereof pursuant to Part 11;

(o)       "Property" means the mineral claims as more particularly and accurately detailed and described in Schedule A which is attached, together with the Area of Common Interest (collectively, the "Original Property") as they may be augmented pursuant to Part 17 (such augmenting claims or interests being referred to herein as the "Additional Property" and included as part of the Property) or reduced under Part 17, and all mining leases and other mining rights and interests derived from any such claims, and a reference herein to a mineral claim comprised in the Property includes any mineral leases or other interests into which such mineral claim may have been converted and Property includes all Property Rights;

(p)       "Property Rights" means all licenses, permits, easements, rights-of-way, surface or water rights and other rights, approvals obtained by either of the parties either before or after the date of this Agreement and necessary or desirable for the development of the Property, or for the purpose of placing the Property into production or continuing production therefrom;

(q)       "Schedules" means the documents attached hereto as follows:
(i)       Schedule A - Mineral Claims Comprising the Property;

(ii)      Schedule B - Area of Common Interest;

(iii)     Schedule C - Joint Venture Agreement; and

(iv)      Schedule D - Net Smelter Return Royalty;

(r)       "Underlying Royalty" means the one point three percent (1.3%) net smelter return royalty which is due and payable by the Optionee to order and direction of OY SES Finland Ltd. in connection with certain of the mineral claims comprising the Property which were recently acquired by the Optionee from OY SES Finland Ltd. in 2006; and

(s)       "Work Commitment" has the meaning set forth in §4.3.

PART 2

REPRESENTATIONS, WARRANTIES AND COVENANTS OF OPTIONOR

2.1                  The Optionor represents and warrants to the Optionee that:

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(a)       it has been duly incorporated and validly exists as a corporation in good standing under the laws of Finland and is authorized to acquire, hold and option mineral claims in Finland, and it is exclusively legally entitled to hold the Property and all mineral claims comprised therein, and all Property Rights held by it and will remain so entitled until all interests of the Optionor in the Property earned by the Optionee have been duly transferred to the Optionee as contemplated hereby, however, subject at all times to the Underlying Royalty, or this Option has terminated;

(b)       it is now, and will also thereafter at the time of legal transfer of interests in the Property if the Option is exercised, the registered and beneficial owner of all of the mineral claims comprising the Property free and clear of all liens, charges and claims of others, other than claims under the Underlying Royalty, and no taxes, royalties or lease payments or like amounts are due in respect of any of the mineral claims, and to its knowledge and belief; the mineral claims comprised in the Property have been duly and validly located and recorded pursuant to the applicable mining laws of Finland, and, except as specified in Schedule A and accepted by the Optionee, are in good standing in the office of the relevant government mining office on the date hereof and until the dates set opposite the respective names thereof in Schedule A;

(c)       save and except for the Underlying Royalty, there is no adverse claim or challenge against or to the ownership of or title to any of the mineral claims comprising the Property, nor to the knowledge of the Optionor is there any basis therefor, and there are no outstanding agreements or options to acquire or purchase the Property or any portion thereof, and no person other than the Optionor, pursuant to the provisions hereof, has any royalty or other interest whatsoever in production from any of the mineral claims comprising the Property;

(d)       no third party consent of any kind is required by the Optionor to enter into this Agreement and grant the Option contemplated hereby and including, without limitation, the consent of the Underlying Royalty holder;

(e)       on execution hereof, the Optionor shall deliver or cause to be delivered to the Optionee copies of all available information, including, without limitation, maps, map products and digital data, and all other documents and data in its possession respecting the Property and shall obtain additional information as requested by the Optionee on a best efforts basis with any agreed upon costs being invoiced to the Optionee;

(f)       the Optionor shall assume sole responsibility for any obligations outstanding as of the date hereof with respect to reclamation of the Property;

(g)       the execution and delivery of this Agreement and the agreements contemplated hereby by the Optionor will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating documents; 

(h)       the Optionor understands that it is in the interests of both parties to attract a major or mid-tier mining company to take an interest in the Joint Venture and while the Optionee is fulfilling the Work Commitments and making Option Payments, the Optionee has sole discretion over searching for such an interested third party; and

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(i)       this Agreement constitutes a legal, valid and binding obligation of the Optionor under the laws of Finland.

                      The Optionor acknowledges and confirms that the Optionee is relying on the foregoing representations and warranties in the entering into by it of this Agreement.

2.2                  The representations and warranties contained in §2.1 are provided for the exclusive benefit of the Optionee, and a breach of any one or more thereof may be waived by the Optionee in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty; and the representations and warranties contained in §2.1 will survive the execution hereof and continue throughout the Option Period.

PART 3

REPRESENTATIONS AND WARRANTIES OF OPTIONEE

3.1                  The Optionee represents and warrants to the Optionor that:
(a)       it has been duly incorporated and validly exists as a corporation in good standing under the laws of the State of Nevada and has the corporate power to hold mining claims and will obtain such necessary registrations as are necessary to explore and hold legal interests in mining properties in Finland;

(b)       neither the execution and delivery of this Agreement by the Optionee nor the performance by the Optionee of its obligations hereunder conflicts with the Optionee's constating documents or any agreement to which it is bound;

(c)       the execution, delivery and performance by the Optionee of this Agreement and any other agreement or instrument to be executed and delivered by it hereunder and the consummation by it of all the transactions contemplated hereby and thereby have been duly authorised by all necessary corporate action on the part of the Optionee;

(d)       the Optionee understands that it is in the interests of both parties to attract a major or mid-tier mining company to take an interest in the Joint Venture and while the Optionee is fulfilling the Work Commitments and making Option Payments, the Optionee has sole discretion over searching for such an interested third party;

(e)       each of this Agreement and any other agreement or instrument to be executed and delivered by the Optionee hereunder constitutes a legal, valid and binding obligation of the Optionee enforceable against it in accordance with its terms;

(f)       excepting only as otherwise disclosed herein, the Optionee is not subject to, or a party to, any charter or by-law restriction, any law, any claim, any encumbrance or any other restriction of any kind or character which would prevent consummation of the transaction contemplated by this Agreement or any other agreement or instrument to be executed and delivered by the Optionee hereunder; and

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(g)       the Optionee is familiar with Finnish mining law and understands the status of the exploration concessions and exploration concession applications described in Schedule A and acknowledges that the Optionor does not give any warranties on the value or economic exploitability of these concessions or concession applications.

                      The Optionee acknowledges and confirms that the Optionor is relying on the foregoing representations and warranties in the entering into by it of this Agreement.

3.2                  The representations and warranties contained in §3.1 are provided for the exclusive benefit of the Optionor and a breach of any one or more thereof may be waived by the Optionor in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty; and the representations and warranties contained in §3.1 will survive the execution hereof and continue throughout the Option Period.

PART 4

GRANT AND EXERCISE OF OPTION

4.1                  The Optionor hereby grants to the Optionee the sole and exclusive right and option (the "Option") to acquire up to a fifty-one percent (51%) interest in the Property, such 51% interest, subject to the Underlying Royalty, to be free and clear of all liens, charges, encumbrances, security interests and adverse claims arising from or through the Optionor, and subject to the laws applicable to the Property.

4.2                  The Optionee has approximately four and one-half (4.5) years to earn a fifty-one percent (51%) interest in the Property (the "Earn-In").  The Optionee must incur fifty percent (50%) or more of its Expenditures and fifty percent (50%) or more of its Option Payments before any earn-in is realized.  Once the 50% in Work Commitments and the 50% in Option Payments has been reached, the Optionee will have a twenty-five and one-half percent (25.5%) interest in the Property and the Optionee's interest will increase proportionate to its Work Commitments and Option Payments to the maximum of a fifty-one percent (51%) interest in the Property at which point both the Optionee' interest and the Optionor's interest will be converted to working interests.

4.3                  The Optionee must incur or caused to be incurred expenditures of not less than an aggregate of US$10,000,000 (the "Work Commitments") with minimum expenditures as follows:
(a)       US$1,800,000 by November 30, 2008;

(b)       US$2,200,000 by November 30, 2009;

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(c)       US$2,800,000 by November 30, 2010; and

(d)       US$3,200,000 by November 30, 2011.

If the Optionee does not meet the minimum expenditures by the due date set out in this §4.3, the Optionor will deliver written notice to the Optionee and the Optionee will have 30 calendar days from the date of receipt of such notice to meet the overdue minimum payments, including making a cash payment directly to the Optionor for the difference between the actual and the required expenditures or by prepaying its Work Commitments and paying its Option Payments.  If the Optionee defaults under this §4.3, the Earn-In right is suspended until written consent of the Optionor is obtained waiving the default.

4.4                  The Option must make or cause to be made, payments to the Optionor of not less than an aggregate of €3,000,000 (the "Option Payments") over four years as follows:
(a)       €30,000 by May 22, 2007; which Option Payment has now been made;

(b)       €270,000 on the Closing Date;

(c)       €600,000 by November 30, 2008;

(d)       €900,000 by November 30, 2009; and

(e)       €1,200,000 by November 30, 2010.

The €30,000 payment to be paid by May 22, 2007 as set out in §4.4(a) is non-refundable once paid.

4.5                  Following the Earn-In by the Optionee, the Optionor and the Optionee will form a Joint Venture for the purpose of carrying out further development work and production on the Property and will in good faith use their reasonable commercial efforts to negotiate and execute a Joint Venture Agreement, substantially in the form of Schedule C hereto; within 90 calendar days of the completion of the Earn-In by the Optionee; and said agreement shall include, but not be limited to, the following provisions representing the parties' current intentions herein:
(a)       the initial participating interests of the parties in the Joint Venture will be twenty-five and one-half percent (25.5%) as to the Optionee and seventy-four and one-half percent (74.5%) as to the Optionor;

(b)       the Optionee shall be the initial manager of the Joint Venture and the Optionee shall remain the manager until its resignation.  Property claims shall be registered in the name of the manager on behalf of the Joint Venture;

(c)       the operations of the Joint Venture will be overseen by a management committee (the "Management Committee") comprised of five members of whom two (2) members will be selected by the Optionor, two (2) members will be selected by the Optionee and the fifth member will be the Vice-President, Exploration of the Optionee who will also act as Chair of the Management Committee.  The parties acknowledge that Stephen Balch is currently the Vice President, Exploration of the Optionee;

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(d)       once the Work Commitments totalling US$10,000,000 have been incurred by the Optionee under this Agreement, the participating interests of the parties in the Joint Venture will be subject to dilution for non-contribution to costs in proportion to their interests, on a straight line basis.  For example, if after the Optionee has earned its fifty-one percent (51%) interest by fulfilling the Work Commitments and Option Payments, the Property is explored with a further US$5,000,000 and the Optionor does not pay its proportionate share of US$2,450,000, the Optionor's forty-nine percent (49%) working interest will be reduced to 49% x (US$10,000,000 / (US$10,000,000 + US$5,000,000) = 32.7%;

(e)       the working interest of the Optionor can fall to no less than ten percent (10%) at which point it will be converted into a carried interest and the Optionee will have the right to purchase the Optionor's 10% carried interest by paying US$10,000,000 to the Optionor;

(f)       notwithstanding any other provisions contained in this Agreement, the Optionor will retain a Net Smelter Return Royalty of two percent (2%) should any area within the Property be developed into an operating mine; said Net Smelter Return Royalty to be calculated in accordance with the provisions of the proposed Schedule D;

(g)       each party will have 15 calendar days following adoption of work programs to elect to participate therein and invoices rendered to participating parties in respect of any work program shall be payable within 20 calendar days;

(h)       each party will grant to the other a 21 calendar day right of first refusal with respect to any proposed sale of such party's working interest in the Joint Venture to a third party.  If a sale is completed the third party must agree to be bound to the terms of the Joint Venture Agreement; and

(i)       in the event of a dispute in reaching a binding Joint Venture Agreement the parties shall refer any such dispute to binding arbitration to have a binding agreement imposed on themselves.

PART 5

VESTING OF INTEREST

5.1                  Upon the Optionee complying with the requirements to exercise the Option set forth in Part 4, the Optionee may elect within the time required for such Option, to provide a written notice to the Optionor exercising the Option.

5.2                  Nothing herein shall be construed as requiring the Optionee to provide the Optionor with notice of exercise as contemplated by §5.1.

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5.3                  Upon giving notice to the Optionor of its exercise of the Option, the Optionee will immediately be vested in and be deemed to legally and beneficially own a twenty-five and one-half percent (25.5%) interest in the Property and the Optionee's interest will increase proportionate to its Work Commitments and Option Payments to the maximum of fifty-one percent (51%) in the Property at which point both the Optionee' interest and the Optionor's interest will be converted to working interests.

PART 6

TITLE TRANSFER

6.1                  Upon the Optionee exercising the Option, then the Optionor shall execute such documentation as the Optionee may prepare and reasonably request be executed under the laws of Finland to record to the extent possible, the respective interests of each of the parties in the Property.

PART 7

ASSIGNMENT OF OPTION

7.1                  Subject to Part 12, the Optionee may assign all or part of its obligations under this Agreement during the Option Period to a third party (the "Assignee") with consent of the Optionor, such consent not to be unreasonably withheld, providing also that the Assignee agrees to execute an acknowledgement to be bound by the terms hereof insofar as the Optionor's rights hereunder are concerned.

PART 8

OPTIONEE'S RIGHTS

8.1                  Throughout the Option Period the directors and officers of the Optionee and its servants, agents and independent contractors, will have the sole and exclusive right in respect of the Property to the extent that each time existing claims or claim reservations or other mineral rights according to Finnish law permits to:
(a)       enter thereon;

(b)       have exclusive and quiet possession thereof;

(c)       bring upon and erect upon the Property buildings, plant, machinery and equipment as the Optionee may deem advisable; and

(d)       remove therefrom and dispose of reasonable quantities of ores, minerals and metals for the purpose of obtaining assays or making other tests.

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PART 9

OBLIGATIONS OF OPTIONEE DURING OPTION PERIOD

9.1                  During the Option Period the Optionee will:
(a)       maintain in good standing those mineral claims comprised in the Property that are in good standing on the date hereof by the payment of fees, taxes and rentals and the performance of all other actions which may be necessary under Finnish law in that regard and in order to keep such mineral claims free and clear of all liens and other charges arising from the Optionee's activities thereon except those at the time contested in good faith by the Optionee;

(b)       permit the directors, officers, employees and designated consultants of the Optionor, at their own risk, access to the Property at all reasonable times subject always to Part 14, and providing the Optionor agrees to indemnify the Optionee against and to save the Optionee harmless from all costs, claims, liabilities and expenses that the Optionee may incur or suffer as a result of any injury (including injury causing death) to any director, officer, employee or designated consultant of the Optionor while on the Property;

(c)       during the 18 months following the Effective Date, the Optionee will commit to fly an airborne EM survey of approximately 5,000 line-km and a drill program of approximate 5,000 m in relation to the Property;

(d)       concentrate initial exploration on the "Halvala Mine" and its surrounding area with the goal to initiate a wide scope exploration program using modern airborne technology covering the Halvala and Makkola areas and begin evaluation of the known mineralization at Halvala with a plan for proving the existing resource and extending it;

(e)       while exploration and development is carried out, furnish the management committee with quarterly progress reports and with a final report within 90 calendar days following the conclusion of each program which will be deemed to occur upon the verification of final assays.  The final report shall show the exploration and development performed and the results obtained and shall be accompanied by a statement of costs and copies of pertinent plans, assay maps, diamond drill records and other factual engineering data.  All information and data concerning or derived from the exploration and development shall be kept confidential except as permitted under this Agreement;

(f)       deliver to the Optionor on or before six months after each anniversary hereof, a report (including up-to-date maps if there are any) describing the results of work done in the last completed expenditure year, together with reasonable details of Work Commitments made;

(g)       do all work on the Property in a good and workmanlike fashion and in accordance with all applicable laws, regulations, orders and ordinances of any governmental authority;

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(h)       indemnify and save the Optionor harmless in respect of any and all costs, claims, liabilities and expenses arising out of the Optionee's activities on the Property and, without limiting the generality of the foregoing will, during the currency of this Agreement, cause any of its independent contractors to carry not less than US$1,000,000 in third party liability insurance in respect of their operations conducted on the Property on behalf of the Optionee, such insurance to be for the benefit of the Optionee and the Optionor as their interests appear; provided that neither the Optionee nor its independent contractors will incur any obligation thereunder in respect of claims arising or damages suffered after termination of the Option if upon termination of the Option any workings on or improvements to the Property made by the Optionee are left in as safe a condition as existed on the date hereof; and

(i)       obtain such permits or operate through such qualified Finnish subsidiaries as may be required in to carry on exploration and to acquire and hold rights to mineral interests under Finnish law.

PART 10

OBLIGATIONS OF OPTIONOR DURING OPTION PERIOD

10.1                During the Option Period the Optionor will:
(a)       make its key employees and consultants available to the Optionee within a consulting arrangement for the duration of the Option Period and the Joint Venture as follows:
(i)       the Optionor will invoice the Optionee a maximum of €100,000 per year on a quarterly basis of €25,000 per quarter;

(ii)      the Optionee will pay the invoices of the Optionor for the consulting arrangement services on a net 30 calendar days' basis;

(iii)     the Optionor will provide a list of employees and consultants who are available to work on the Property, the approximate maximum number of days that they will be available and their rates and this list will be updated by the Option on an annual basis;

(iv)      the Management Committee, in consultation with the Optionor, is responsible for determining which consultants or employees of the Optionor are eligible for consulting on the Property;

(v)       if the employees or consultants of the Optionor are involved with the Property to the extent that the maximum of €100,000 under the consulting arrangement is exceeded, any necessary increase beyond this maximum will be decided by the Management Committee;

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(vi)      additional costs that are associated with the employees and consultants of the Optionor consulting on the Property require the approval of the Management Committee and such costs do not form part of the consulting arrangement costs; and

(vii)     costs to the Optionee under this consulting arrangement constitute an expenditure under the Work Commitments;

(b)       organize and take responsibility for applying for any necessary permits for the Property; the cost of applying for any permits will be paid for by the Optionee and these costs will count toward the Work Commitments required for the Earn-In;

(c)       be responsible for applying for and administering such additional and existing reservations and/or mineral claims the cost of applying for and administering any additional and existing reservation and/or mineral claim will be paid for by the Optionee and will form part of the Work Commitments, and be responsible for assisting the Optionee in maintaining in good standing those mineral claims comprised in the Property that are in good standing on the date hereof by the payment of fees, taxes and rentals and the performance of all other actions which may be necessary under Finnish law in that regard and in order to keep such mineral claims free and clear of all liens and other charges arising from the Optionee's activities thereon except those at the time contested in good faith by the Optionee;

(d)       deliver or cause to be delivered to the Optionee copies of all available information, including, without limitation, reports, assay results, technical data, maps, map products and digital data, and all other documents and data in its possession respecting the Property and shall obtain additional information as requested by the Optionee on a best efforts basis with any agreed upon costs being invoiced to the Optionee; and

(e)       disclose or cause to be disclosed to the Optionee all relevant and material information relating to the Property in its possession now or that may come into its possession in the future.

PART 11

TERMINATION OF OPTION

11.1                If the Option is terminated otherwise than upon the exercise thereof pursuant to Part 4, the Optionee will:
(a)       leave in good standing for a period of at least one year from the termination of the Option Period those mineral claims comprised in the Property that are in good standing on the date hereof and any other mineral claims comprised in the Property that the Optionee acquires after the date hereof; and

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(b)       deliver at no cost to the Optionor within 90 calendar days of such termination copies of all reports, maps, assay results and other relevant technical data compiled by or in the possession of the Optionee with respect to the Property and not theretofore furnished to the Optionor.

11.2                Notwithstanding termination of the Option, the Optionee will have the right, within a period of 90 calendar days following the end of the Option Period, to remove from the Property all buildings, plant, equipment, machinery, tools, appliances and supplies which have been brought upon the Property by or on behalf of the Optionee, and any such property not removed within such 90-calendar day period will thereafter, only if the Optionor elects in writing, become the property of the Optionor.

PART 12

SURRENDER AND ACQUISITION OF PROPERTY INTERESTS BEFORE TERMINATION OF AGREEMENT

12.1                The Optionee may during the Option Period, elect to abandon any one or more of the mineral claims comprised in the Property by giving notice to the Optionor of such intention.

12.2                For a period of 30 calendar days after the date of delivery of such notice the Optionor may elect to have any or all of the mineral claims in respect of which such notice has been given transferred to it by delivery of a request therefor to the Optionee, whereupon the Optionee will deliver to the Optionor a quit claim or provide such other appropriate deed or assurance in registrable form transferring such mineral claims to the Optionor if the Optionor is not then already the registered owner of such mineral claims.

12.3                Any claims so transferred, if in good standing at the date hereof or if the Optionee causes the same to be placed in good standing after the date hereof, will be in good standing under applicable Finnish mining law for at least six months from the date of transfer.  If the Optionor fails to make request for the transfer of any mineral claims as aforesaid within such 30-day period, the Optionee may then abandon such mineral claim without further notice to the Optionor.  Upon any such transfer or abandonment the mineral claims so transferred or abandoned will for all purposes of this Agreement cease to form part of the Property.

PART 13

FORCE MAJEURE

13.1                If the Optionee is at any time either during the Option Period prevented or delayed in complying with the Work Commitment requirement provisions of this Agreement in Part 4 by reason of strikes, walk-outs, labour shortages, power shortages, fuel shortages, fires, wars, acts of God, governmental regulations restricting normal operations, shipping delays or any other reason or reasons beyond the control of the Optionee (and for greater certainty excluding factors related to a lack of funding), the time limited for the performance by the Optionee of its obligations hereunder will be extended by a period of time equal in length to the period of each such prevention or delay, provided however that nothing herein will discharge the Optionee from its obligation to timely pay the cash under Part 4.

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13.2                The Optionee will within seven calendar days give notice to the Optionor of each event of force majeure under §13.1 and upon cessation of such event will furnish the Optionor with notice to that effect together with particulars of the number of days by which the obligations of the Optionee hereunder have been extended by virtue of such event of force majeure and all preceding events of force majeure.

PART 14

CONFIDENTIAL INFORMATION

14.1                No information furnished by any party hereunder in respect of this Agreement or the Joint Venture will be publicly disclosed without the prior written consent of the other party, but such consent in respect of the reporting of factual data will not be unreasonably withheld, and will not be withheld in respect of information required to be publicly disclosed pursuant to applicable laws.  The parties will confer with each other to mutually approve the content and timing of any public announcement regarding this Agreement , provided that each party be permitted to issue any press release or report required by applicable laws.  Information provided by the Optionor will remain confidential between the Optionee and the Optionor, but the Optionee will not be prevented from releasing confidential information under certain circumstances that are in the best interests of both parties (such as to interested third parties or for press releases).  This provision shall terminate three years after the later of the termination of this Option and the termination of the Joint Venture Agreement.

PART 15

ARBITRATION

15.1                All questions or matters in dispute with respect to the interpretation of this Agreement will, insofar as lawfully possible, be submitted to arbitration pursuant to the terms hereof using "final offer" arbitration procedures.

15.2                It will be a condition precedent to the right of any party to submit any matter to arbitration pursuant to the provisions hereof, that any party intending to refer any matter to arbitration will have given not less than 10 calendar days' prior written notice of its intention so to do to the other party together with particulars of the matter in dispute.

15.3                On the expiration of such 10 calendar days, the party who gave such notice may proceed to commence procedure in furtherance of arbitration as provided in this Part 15.

15.4                The party desiring arbitration ("First Party") will nominate in writing three proposed arbitrators, and will notify the other party ("Second Party") of such nominees, and the other party will, within 10 calendar days after receiving such notice, either choose one of the three or recommend three nominees of its own.  All nominees of either party must hold accreditation as either a lawyer, accountant or mining engineer.  If the First Party fails to choose one of the Second Party's nominees then all six names shall be placed into a hat and one name shall be randomly chosen by the president of the First Party and that person if he/she is prepared to act shall be the nominee.  Except as specifically otherwise provided in this Part 15 the arbitration herein provided for will be conducted in accordance with the Rules of the International Chamber of Commerce.  The parties shall thereupon each be obligated to proffer to the Arbitrator within 21 calendar days of his/her appointment a proposed written solution to the dispute and the arbitrator shall within 10 calendar days of receiving such proposals choose one of them without altering it except with the consent of both parties.

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15.5                The expense of the arbitration will be paid as specified in the award.

15.6                The parties may agree that the award of the arbitrator will be final and binding upon each of them.

PART 16

DEFAULT AND TERMINATION

16.1                If at any time during the Option Period either party fails to perform any obligation hereunder or any representation or warranty given by it proves to be untrue, then the other party may terminate this Agreement (without prejudice to any other rights it may have) providing:
(a)       it first gives to the party allegedly in default a notice of default containing particulars of the obligation which such has not performed, or the warranty breached;

(b)       the other party does not dispute the default, then if it is reasonably possible to cure the default without irreparable harm to the non-defaulting party, the defaulting party does not, within 30 calendar days after delivery of such notice of default, cure such default by appropriate payment or commence to correct such default and diligently prosecute the matter until it is corrected; and

(c)       if the defaulting party fails to comply with the provisions of this §16.1 the other party may thereafter terminate this Agreement, and the provisions of Part 11 will then be applicable.

16.2                The Optionee may at any time terminate this Option by giving notice of termination to the Optionor and shall thereupon be relieved of any further obligations in connection herewith but shall remain liable for obligations which have accrued to the date of notice.

PART 17

AREA OF COMMON INTEREST

17.1                If either Party (or permitted assignee hereof) beneficially acquires any interest in mineral claims or surface rights within the Area of Common Interest attached hereto as Schedule B they shall, at the election of the other party (made by it within 20 calendar days of written notice), be made part of the Property for all purposes and may be referred to as Additional Property.  That is, if acquired by the Optionee, such additional claims shall be transferred to the Optionor on termination hereof without additional cost and if acquired by the Optionor shall be optioned to the Optionee as if part of the Property (and without additional consideration being demanded from the Optionee).

- 16 -

PART 18

NOTICES

18.1                Each notice, demand or other communication required or permitted to be given under this Agreement will be in writing and will be sent by personal delivery, fax or prepaid registered mail to the addresses of the parties written on page one of this Agreement.

18.2                The date of receipt of such notice, demand or other communication will be the date of delivery or fax thereof if delivered or faxed during business hours, or, if given by registered mail as aforesaid, will be deemed conclusively to be the third day after the same will have been so mailed except in the case of interruption of postal services for any reason whatever, in which case the date of receipt will be the date on which the notice, demand or other communication is actually received by the addressee.

18.3                Either party may at any time and from time to time notify the other party in writing of a change of address and the new address to which notice will be given to it thereafter until further change.

PART 19

GENERAL

19.1                This Agreement will supersede and replace any other agreement or arrangement, whether oral or written, heretofore existing between the parties in respect of the subject matter of this Agreement.

19.2                No consent or waiver expressed or implied by either party in respect of any breach or default by the other in the performance of such other of its obligations hereunder will be deemed or construed to be a consent to or a waiver of any other breach or default.

19.3                The parties will promptly execute or cause to be executed all documents, deeds, conveyances and other instruments of further assurance which may be reasonably necessary or advisable to carry out fully the intent of this Agreement or to record wherever appropriate the respective interests from time to time of the parties in the Property.

19.4                Each party will bear their own fees and expenses in connection with this Agreement and the Joint Venture, including , without limitation, all accounting and legal fees.

19.5                This Agreement will enure to the benefit of and be binding upon the parties and their respective successors and assigns, subject to the conditions hereof.

19.6                This Agreement will be construed in accordance with the laws of Finland.  This agreement is to be construed as an option only and nothing herein shall obligate the Optionee to do anything or pay any amount except where expressly herein provided.

- 17 -

19.7                All sums of money referred to herein are expressed in United States dollars or in Euros, the currency adopted by certain members of the European Union, unless stated otherwise.

19.8                The headings appearing in this Agreement are for general information and reference only and this Agreement will not be construed by reference to such headings.

19.9                In interpreting this Agreement and the Schedules hereto attached, where the context so requires, the singular will include the plural, and the masculine will include the feminine, the neuter, and vice versa.

19.10              Nothing herein will constitute or be taken to constitute the parties as partners or create any fiduciary relationship between them.

19.11              No modification, alteration or waiver of the terms herein contained will be binding unless the same is in writing, dated subsequently hereto, and fully executed by the parties.

19.12              This Agreement may be executed in counterpart and by facsimile.

                      IN WITNESS WHEREOF this Agreement has been executed on behalf of the Optionor and the Optionee by their duly authorized officers on the date set out on page one of this Agreement.

The Optionee:

FINMETAL MINING LTD.

Per:     "Dan Hunter"                           

             Dan Hunter

             Chief Executive Officer

The Optionor:

MAGNUS MINERALS OY

Per:     "Carl Löfberg"                          

             Carl Löfberg

             Managing Director

__________

SCHEDULE A

This is Schedule A to the Option Agreement between Magnus Minerals OY and FinMetal Mining Ltd. dated for reference as of June 11, 2007.

 

MINERAL CLAIMS COMPRISING THE PROPERTY

The following are the mineral claims comprising the Property:

	

Reservation name
	
Claim Name (pending applications)
	

Concession code
	

Expiry yy.mm.dd
	

Registered Owner

	
Hälvälä 4
	 	
2007/04
	
08.01.09
	
Oy SES Finland Ltd.

	
Hälvälä 5 - 8
	 	
2007/12
	
08.01 16  
	
Magnus Minerals Oy

	
Kangaslampi 1-3
	 	
2006/203
	
07.09.18
	
Magnus Minerals Oy

	 	
Hälvälä
	
8212/1
	 	
Oy SES Finland Ltd.

	 	
Hälvälä N
	
8323/3
	 	
Magnus Minerals Oy

	 	
Hälvälä E
	
8323/2
	 	
Magnus Minerals Oy

	 	
Hälvälä S
	
8323/4
	 	
Magnus Minerals Oy

	 	
Hälvälä W
	
8323/1
	 	
Magnus Minerals Oy

	 	
Kalvosenjärvi
	
8324/3
	 	
Magnus Minerals Oy

	 	
Kelkkalampi
	
8324/1
	 	
Magnus Minerals Oy

	 	
Laukunlampi
	
8324/2
	 	
Magnus Minerals Oy

	 	
Muhola
	
8324/4
	 	
Magnus Minerals Oy

	 	
Sulkavanniemi
	
8334/1
	 	
Magnus Minerals Oy

__________

SCHEDULE B

This is Schedule B to the Option Agreement between Magnus Minerals OY and FinMetal Mining Ltd. dated for reference as of June 11, 2007.

 

AREA OF COMMON INTEREST

The following is the area comprising the Area of Common Interest surrounding the Property:

__________

SCHEDULE C

This is Schedule C to the Option Agreement between Magnus Minerals OY and FinMetal Mining Ltd. dated for reference as of June 11, 2007.

 

 

 

JOINT VENTURE AGREEMENT

 

BETWEEN

 

MAGNUS MINERALS OY

 

AND

 

FINMETAL MINING LTD.

 

[Date]

 

 

Respecting the Enonkoski Area Property

	
TABLE OF CONTENTS

	 	
Page

	
PART 1 DEFINITIONS
	
2

	
PART 2 REPRESENTATIONS AND WARRANTIES; RECORD TITLE; INDEMNITIES
	
5

	 	
CAPACITY OF PARTICIPANTS
	
5

	 	
DISCLOSURES
	
5

	 	
RECORD TITLE
	
5

	 	
LOSS OF TITLE
	
6

	 	
INDEMNITIES
	
6

	
PART 3 NAME, PURPOSES AND TERM
	
7

	 	
GENERAL
	
7

	 	
NAME
	
7

	 	
PURPOSES
	
7

	 	
LIMITATION
	
8

	 	
TERM
	
8

	
PART 4 RELATIONSHIP OF THE PARTICIPANTS
	
8

	 	
NO PARTNERSHIP
	
8

	 	
OTHER BUSINESS OPPORTUNITIES
	
8

	 	
TERMINATION OR TRANSFER OF RIGHTS TO PROPERTY
	
9

	 	
NO ROYALTY OR OTHER INTERESTS
	
9

	 	
NO THIRD PARTY BENEFICIARY RIGHTS
	
9

	
PART 5 CONTRIBUTIONS BY PARTICIPANTS
	
9

	 	
INITIAL CONTRIBUTION
	
9

	 	
VALUE OF INITIAL CONTRIBUTIONS
	
9

	 	
CASH CONTRIBUTIONS
	
10

	
PART 6 PARTICIPATING INTERESTS
	
10

	 	
PARTICIPATING INTERESTS
	
10

	 	
VOLUNTARY REDUCTION IN PARTICIPATION - DILUTION
	
11

	 	
DEFAULT IN MAKING CONTRIBUTIONS
	
11

	 	
ELIMINATION OF MINORITY INTEREST
	
12

	 	
DOCUMENTATION OF ADJUSTMENTS TO PARTICIPATING INTERESTS
	
12

	 	
GRANT OF LIEN OR SECURITY INTEREST
	
13

	 	
SUBORDINATION OF INTERESTS
	
13

	
PART 7 MANAGEMENT COMMITTEE
	
13

	 	
ORGANIZATION AND COMPOSITION
	
13

	 	
DECISIONS
	
13

	 	
MEETINGS
	
14

	 	
EXPENSE
	
15

	 	
RULES
	
15

	 	
ACTION WITHOUT MEETING
	
15

	 	
MATTERS REQUIRING APPROVAL
	
15

	
PART 8 MANAGER
	
15

	 	
APPOINTMENT
	
15

	 	
POWERS AND DUTIES OF MANAGER
	
15

	 	
STANDARD OF CARE
	
19

- ii -

	 	
RESIGNATION; DEEMED OFFER TO RESIGN
	
19

	 	
NEW MANAGER
	
20

	 	
DELIVERY OF RECORDS
	
20

	 	
NO REPLACEMENT FOR MANAGER
	
20

	 	
PAYMENTS TO MANAGER
	
20

	 	
TRANSACTIONS WITH AFFILIATES
	
21

	 	
INDEPENDENT CONTRACTOR
	
21

	
PART 9 PROGRAMS AND BUDGETS
	
21

	 	
OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS
	
21

	 	
PRESENTATION OF PROGRAMS AND BUDGETS
	
21

	 	
ADOPTION OF PROPOSED PROGRAMS AND BUDGETS
	
22

	 	
ELECTION TO PARTICIPATE
	
22

	 	
BUDGET OVERRUNS; PROGRAM CHANGES
	
22

	 	
EMERGENCY EXPENDITURES
	
22

	 	
MANDATORY EXPENDITURES
	
23

	 	
CASH CALLS
	
23

	 	
FAILURE TO MEET CASH CALLS
	
23

	 	
AUDITS
	
23

	
PART 10 DISPOSITION OF PRODUCTION
	
24

	 	
TAKING IN KIND
	
24

	 	
FAILURE OF PARTICIPANT TO TAKE IN KIND
	
24

	 	
HEDGING
	
24

	 	
VALUE OF MINERAL PRODUCTS
	
24

	 	
EXTRA EXPENDITURE
	
25

	 	
MANAGER'S AUTHORITY
	
25

	 	
PAYMENT OF PROCEEDS
	
25

	 	
NON-ARM'S LENGTH TRANSACTION
	
26

	 	
RECORDS
	
26

	
PART 11 SUSPENSION AND TERMINATION
	
26

	 	
SUSPENSION OF OPERATIONS
	
26

	 	
TERMINATION OF OPERATIONS FOLLOWING SUSPENSION
	
26

	 	
TERMINATION BY AGREEMENT
	
27

	 	
TERMINATION WHERE NO PROGRAM PROPOSED
	
27

	 	
DISPOSITION OF ASSETS ON TERMINATION
	
27

	 	
RIGHT TO DATA AFTER TERMINATION
	
27

	 	
NON-COMPETE COVENANTS
	
27

	 	
CONTINUING AUTHORITY
	
27

	 	
SURVIVAL OF INGRESS AND EGRESS AFTER TERMINATION
	
28

	
PART 12 ABANDONMENT AND SURRENDER OF PROPERTY
	
28

	
PART 13 SURRENDER OF INTEREST
	
28

	 	
SURRENDER OF INTEREST
	
28

	 	
RELIEF FROM LIABILITIES
	
29

	 	
ACCEPTANCE OF SURRENDER
	
29

	 	
EXECUTION OF INSTRUMENTS
	
29

	
PART 14 TRANSFER OF INTEREST
	
29

	 	
GENERAL
	
29

	 	
LIMITATIONS ON FREE TRANSFERABILITY
	
29

	 	
PRE-EMPTIVE RIGHT
	
30

	 	
EXCEPTIONS TO PRE-EMPTIVE RIGHT
	
31

	 	
ENCUMBRANCES
	
32

- iii -

	
PART 15 ACQUISITION WITHIN AREA OF INTEREST
	
33

	 	
GENERAL
	
33

	 	
NOTICE TO NON-ACQUIRING PARTICIPANT
	
33

	 	
OPTION EXERCISE
	
33

	 	
OPTION NOT EXERCISED
	
34

	
PART 16 GENERAL PROVISIONS
	
34

	 	
NOTICES
	
34

	 	
WAIVER
	
35

	 	
MODIFICATION
	
35

	 	
FORCE MAJEURE
	
35

	 	
SURVIVAL OF TERMS AND CONDITIONS
	
36

	 	
CONFIDENTIALITY AND PUBLIC STATEMENTS
	
36

	 	
ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS
	
37

	 	
DISPUTE RESOLUTION
	
37

	 	
FURTHER ASSURANCES
	
38

	 	
HEADINGS
	
38

	 	
CURRENCY
	
38

	 	
SEVERABILITY
	
38

	 	
TAXES
	
38

	 	
PARTITION
	
38

	 	
GOVERNING LAW
	
39

	 	
COUNTERPARTS
	
39

Schedule A - Property

Schedule B - Area of Common Interest

Schedule C - Accounting Procedure

Schedule D - Net Returns Royalty

JOINT VENTURE AGREEMENT

                      THIS JOINT VENTURE AGREEMENT is dated for reference as of _____________, 20__

BETWEEN:
MAGNUS MINERALS OY, a Finnish corporation having an address for notice and delivery located at PL 3, 33211 Tampere, Finland

("Magnus");

          OF THE FIRST PART

AND:
FINMETAL MINING LTD., a Nevada corporation having an address for notice and delivery located at Suite 500, 666 Burrard Street, Vancouver, British Columbia, Canada, V6C 2X8

("FinMetal").

     OF THE SECOND PART

                      WHEREAS:

(A)                  Magnus is or will be the registered and beneficial owner of a one hundred percent (100%) interest in certain mineral licenses, claims, concessions or reservations (collectively, the "mineral claims") situated in Finland; and which mineral claims are more particularly and accurately detailed and described in Schedule A which is attached hereto (collectively, the "Property"); and

(B)                  Magnus and FinMetal wish to enter into a joint venture pursuant to which FinMetal acquires ownership from Magnus of up to a fifty-one percent (51%) interest in and to the Property;

                      NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements hereinafter set forth the parties agree that: 

- 2 -

PART 1

DEFINITIONS

1.1                  In this Joint Venture Agreement, except as otherwise expressly provided or as the context otherwise requires:
(a)       "Accounting Procedure" means the procedure set forth in Schedule C;

(b)       "Affiliate" of a Participant means an entity or person that Controls, is Controlled by, or is under common Control with the Participant through direct or indirect ownership of greater than fifty percent (50%) of equity or voting interest;

(c)       "Agreement" means this Joint Venture Agreement, including any amendments and modifications hereof, and all appendices, Schedules and Exhibits which are incorporated herein by this reference;

(d)       "Area of Interest" means the area described in Schedule B;

(e)       "Assets" means the Property, Products, and all other real and personal property, tangible and intangible, held for the benefit of the Participants hereunder;

(f)       "Budget" means a detailed estimate of all costs to be incurred by the Participants with respect to a Program and a Schedule of cash advances to be made;

(g)       "Claims" means the mineral claims described in the agreement to which this Agreement is Schedule C, and any claims that become part of the Property pursuant to Part 14 hereof;

(h)       "Continuing Obligations" means obligations or responsibilities that are reasonably expected to continue or arise after Operations on a particular area of the Property have ceased or are suspended, including, but not limited to, Environmental Compliance;

(i)       "Control" used as a verb means, when used with respect to an entity, the ability, directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of such entity through (i) the legal or beneficial ownership of voting securities or membership interests; (ii) the right to appoint managers, directors or corporate management; (iii) contract; (iv) operating agreement; (v) voting trust; or otherwise; and, when used with respect to a person, means the actual or legal ability to control the actions of another, through family relationship, agency, contract or otherwise; and "Control" used as a noun means an interest which gives the holder the ability to exercise any of the foregoing powers;

(j)       "Development" means all preparation (other than Exploration) for the removal and recovery of Products, including the construction or installation of leach pads, a mill or any other improvements to be used for the mining, handling, milling, beneficiation or other processing of Products;

- 3 -
(k)       "Effective Date" means the date set forth in §3.5 of this Agreement;

(l)       "Encumbrance" or "Encumbrances" means mortgages, deeds of trust, security interests, pledges, liens, net profits interests, royalties or overriding royalty interests, other payments out of production, or other burdens of any nature;

(m)      "Environmental Compliance" means actions performed during or after Operations to comply with the requirements of all Environmental Laws or contractual commitments related to reclamation of the Property or other compliance with Environmental Laws;

(n)       "Environmental Laws" means Laws aimed at reclamation or restoration of the Property; abatement of pollution; protection of the environment; monitoring environmental conditions; protection of wildlife, including endangered species; ensuring public safety from environmental hazards; protection of cultural or historic resources; management, storage or control of hazardous materials and substances; releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances into the environment, and all other Laws relating to the manufacturing, processing, distribution, use, treatment, storage, disposal, handling or transport of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes;

(o)       "Environmental Liabilities" means any and all claims, actions, causes of action, damages, losses, liabilities, obligations, penalties, judgments, amounts paid in settlement, assessments, costs, disbursements, or expenses (including, without limitation, legal fees and costs, experts' fees and costs, and consultants' fees and costs) of any kind or of any nature whatsoever that are asserted against either Participant, by any person or entity other than the other Participant, alleging liability (including, without limitation, liability for studies, testing or investigatory costs, cleanup costs, response costs, removal costs, remediation costs, containment costs, restoration costs, corrective action costs, closure costs, reclamation costs, natural resource damages, property damages, business losses, personal injuries, penalties or fines) arising out of, based on or resulting from (i) the presence, release, threatened release, discharge or emission into the environment of any hazardous materials or substances existing or arising on, beneath or above the Property and/or emanating or migrating and/or threatening to emanate or migrate from the Property to off-site Property; (ii) physical disturbance of the environment caused by Operations; or (iii) the violation or alleged violation of any Environmental Laws arising from or relating to Operations;

(p)       "Existing Data" means maps, drill logs and other drilling data, core tests, pulps, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and any other material or information relating to the Property;

- 4 -
(q)       "Exploration" means activities directed toward ascertaining the existence, location, quantity, quality, or commercial value of deposits of Products;

(r)       "Government Fees" means all rentals, holding fees, location fees, maintenance payments or other payments required by any law, rule or regulation to be paid to a federal, provincial or territorial government, in order to locate or maintain any mining leases or surface leases, Claims or other tenures included in the Property;

(s)       "Initial Contribution" means that contribution each Participant agrees to make, or is deemed to have made, pursuant to §5.1;

(t)       "Joint Account" means the account maintained in accordance with the Accounting Procedure showing the charges and credits accruing to the Participants;

(u)       "Law" or "Laws" means all Finnish laws (statutory or common), rules, ordinances, regulations, grants, concessions, franchises, licenses, orders, directives, judgments, decrees, and other governmental restrictions, including permits and other similar requirements, whether legislative, municipal, administrative or judicial in nature, including Environmental Laws, which are applicable to the Property, Area of Interest, or Operations, regardless of whether or not in existence or enacted or adopted hereafter; provided, however, nothing in this definition is intended to make laws applicable to the parties during periods when the laws are not applicable by their terms or the timing of their enactment;

(v)       "Management Committee" means the committee established under Part 7;

(w)      "Manager" means the person or entity appointed under Part 8 to manage Operations, or any successor Manager;

(x)       "Option Agreement" means the agreement between the parties hereto (and/or their predecessors in title) to which this Joint Venture Agreement is Schedule C;

(y)       "Mining" means the mining, extracting, producing, handling, milling, or other processing of Products;

(z)       "Net Returns" shall have the meaning specified in Schedule D;

(aa)     "Operations" means the activities carried out under this Agreement;

(bb)     "Participant" and "Participants" mean the persons or entities that from time to time have Participating Interests;

(cc)     "Participating Interest" means the percentage interest representing the ownership interest of a Participant in the Assets, and in all other rights and obligations arising under this Agreement, as such interest may from time to time be adjusted hereunder.  Participating Interests shall be calculated to three decimal places and rounded to two (e.g., 1.519% rounded to 1.52%).  Decimals of 0.005 or more shall be rounded up to 0.01; decimals of less than 0.005 shall be rounded down.  The initial Participating Interests of the Participants are set forth in §6.1(a);

- 5 -
(dd)   "Products" means all metals, ores, concentrates, minerals, and mineral resources, including materials derived from the foregoing, produced from the Property under this Agreement;

(ee)   "Program" means a description in reasonable detail of Operations to be conducted by the Manager, as described in Part 9;

(ff)   "Property" means the Property described on Schedule A; and

(gg)   "Venture" means the contractual relationship of the parties under this Agreement.

PART 2

REPRESENTATIONS AND WARRANTIES; RECORD TITLE; INDEMNITIES

Capacity of Participants

2.1                  Each Participant represents and warrants to the other Participant as follows:
(a)       it is a corporation duly incorporated, qualified to transact business, and in good standing under the laws of its jurisdiction;

(b)       it has the capacity to enter into and perform this Agreement and all transactions contemplated herein, and all corporate, board of directors and other actions required to authorize it to enter into and perform this Agreement have been properly taken; and

(c)       it will not breach any other agreement or arrangement by entering into or performing this Agreement, and this Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms.

Disclosures

2.2                  Each of the Participants represents and warrants that it is not aware of any material facts or circumstances that have not been disclosed in this Agreement, which should be disclosed to the other Participant in order to prevent the representations and warranties in this Agreement from being materially misleading.

Record Title

2.3                  Title to real and personal property included in the Assets shall be held in the name of the Manager.  The Manager shall hold same in trust for the Participants in accordance with their respective interests from time to time.

- 6 -

Loss of Title

2.4                  Any failure or loss of title to the Assets, and all costs of defending title thereto, shall be charged to the Venture.

Indemnities

	
2.5
	
(a)       Each Participant shall indemnify the other Participant, its directors, officers, employees, agents and attorneys or Affiliates (collectively "Indemnified Participant") against any loss, cost, expense, damage or liability (including legal fees and other expenses) arising out of or based on a breach by the Participant ("Indemnifying Participant") of any representation, warranty or covenant contained in this Agreement including, subject to §8.3, a breach of a participant's duties as Manager pursuant to §8.2.

(b)       In addition to the indemnity provided in §(a), the Manager shall indemnify the other Participant, its directors, officers, agents and attorneys or Affiliates (collectively "Indemnified Participant") against any third party related loss, cost, expense, damage or liability (including Environment Liabilities) (collectively "Loss") incurred or suffered directly by a Participant arising howsoever out of the Manager's actions or omissions on the Property.  For further certainty, a Participant is not entitled to any indemnification pursuant to this §(b) in respect of any Loss incurred or suffered by the Venture.

(c)       If any claim or demand is asserted against an Indemnified Participant in respect of which such Indemnified Participant may be entitled to indemnification under this Agreement, written notice of such claim or demand shall promptly be given to the Indemnifying Participant.  The Indemnifying Participant shall have the right, but not the obligation, by notifying the Indemnified Participant within thirty calendar days after its receipt of the notice of the claim or demand, to assume the entire control of (subject to the right of the Indemnified Participant to participate, at the Indemnified Participant's expense and with counsel of the Indemnified Participant's choice), the defence, compromise, or settlement of the matter, including, at the Indemnifying Participant's expense, employment of counsel of the Indemnified Participant's choice.  Any damages to the Assets or business of the Indemnified Participant caused by a failure by the Indemnifying Participant to defend, compromise, or settle a claim or demand in a reasonable and expeditious manner requested by the Indemnified Participant, after the Indemnifying Participant has given notice that it will assume control of the defence, compromise, or settlement of the matter, shall be included in the damages for which the Indemnifying Participant shall be obligated to indemnify the Indemnified Participant.  Any settlement or compromise of a matter by the Indemnifying Participant shall include a full release of claims against the Indemnified Participant which has arisen out of the indemnified claim or demand.

(d)       Notwithstanding §(a), the Manager shall not be indemnified nor held harmless by any of the parties for any loss, liability, claim, demand, damage, expense, injury or death (including legal fees) resulting from the negligence or willful misconduct of the Manager or its officers, employees or agents.

- 7 -
(e)       An act or omission of the Manager or its officers, employees or agents done or omitted to be done:
(i)       at the direction, or within the scope of the direction, of the Management Committee;

(ii)      with the concurrence of the Management Committee; or

(iii)     unilaterally and in good faith by the Manager to protect life or property;
shall be deemed not to be negligence or willful misconduct.

(f)       The Manager shall not be liable to any other party nor shall any party be liable to the Manager in contract, tort or otherwise for special or consequential damages including loss of profits or revenues.

PART 3

NAME, PURPOSES AND TERM

General

3.1                  Magnus and FinMetal hereby enter into this Agreement for the purposes hereinafter stated.  All of the Participants' rights and obligations in connection with the Assets, the Area of Interest and all Operations shall be subject to and governed by this Agreement.

Name

3.2                  The Manager shall conduct the business of this Venture in the name of the Venture, doing business as the "Enonkoski Venture".  If applicable, the Manager shall accomplish any registration required by applicable, assumed or fictitious name statutes and similar statutes.

Purposes

3.3                  This Agreement is entered into for the following purposes and for no others, and shall serve as the exclusive means by which the Participants, or either of them, accomplish such purposes:
(a)       to conduct Exploration within the Property;

(b)       to acquire additional real property and other interests within the Area of Interest;

(c)       to evaluate the possible Development and Mining of the Property, and if justified, to engage in Development and Mining;

(d)       to engage in Operations within the Property;

- 8 -
(e)       to engage in disposition of Products, only to the limited extent permitted in Part 10;

(f)       to complete and satisfy all Environmental Compliance obligations and other Continuing Obligations relating to the Property; and

(g)       to perform any other operation or activity necessary, appropriate, or incidental to any of the foregoing.

Limitation

3.4                  Unless the Participants otherwise agree in writing, Operations shall be limited to the purposes described in §3.3, and nothing in this Agreement shall be construed to enlarge such purposes.

Term

3.5                  The Effective Date of this Agreement shall be the date determined according to the Option Agreement.  Unless the Venture is earlier terminated or terminates as provided in this Agreement, the term of this Agreement is for so long as any of the Property are jointly owned by the Participants hereto and thereafter until all materials, supplies, and equipment have been salvaged and disposed of, a final accounting has been made between the Participants, and any required Environmental Compliance has been completed and accepted by the appropriate governmental agencies.

PART 4

RELATIONSHIP OF THE PARTICIPANTS

No Partnership

4.1                  Nothing contained in this Agreement shall be deemed to constitute either Participant the partner of the other, nor, except as otherwise herein expressly provided, to constitute either Participant the agent or legal representative of the other, nor to create any fiduciary relationship between them.  The Participants do not intend to create, and this Agreement shall not be construed to create, any mining, commercial, tax, or other partnership.

                      Neither Participant shall have any authority to act for or to assume any obligation or responsibility on behalf of the other Participant, except as otherwise expressly provided herein.  The rights, duties, obligations and liabilities of the Participants shall be several and not joint or collective.  Each Participant shall be responsible only for its obligations as herein set out and shall be liable only for its share of the costs and expenses as provided herein.  It is the Participants' intent that their ownership of Assets and the rights acquired hereunder shall be as tenants in common.

- 9 -

Other Business Opportunities

4.2                  Except as expressly provided in this Agreement, each Participant shall have the right independently to engage in and receive full benefits from business activities, whether or not competitive with Operations, without consulting the other.  The doctrines of "corporate opportunity" or "business opportunity" shall not be applied to any other activity, venture, or operation of either Participant, and neither Participant shall have any obligation to the other with respect to any opportunity to acquire any property outside the Area of Interest at any time, or within the Area of Interest after the termination of this Agreement, except as provided in §11.8.  Unless otherwise agreed in writing, no Participant shall have any obligation to mill, beneficiate, or otherwise treat any Participant's share of Products in any facility owned or controlled by such Participant.

Termination or Transfer of Rights to Property

4.3                  Except as otherwise provided in this Agreement, neither Participant shall permit or cause all or any part of its interest in the Assets or this Agreement to be sold, exchanged, encumbered, surrendered, abandoned, partitioned, divided, or otherwise terminated, by judicial means or otherwise.  The Participants hereby waive and release all rights of partition, or of sale in lieu thereof, or other division of Assets, including any such rights provided by any law.

Royalty or Other Interests

4.4                  No Participant shall be entitled or permitted to create any royalty or similar carried interest in all or any part of the Assets, except that Magnus shall be entitled to a net smelter return royalty of 2% if any area within the Area of Interest is developed into an operating mine.

No Third Party Beneficiary Rights

4.5                  This Agreement shall be construed to benefit the Participants and their respective successors and assigns only, and shall not be construed to create third party beneficiary rights in any other party, governmental agency or organization.

PART 5

CONTRIBUTIONS BY PARTICIPANTS

Initial Contribution

5.1                  Each Participant, as its Initial Contribution, hereby contributes to the Venture all its undivided right, title and interest in and to the Property, together with all of its respective right, title and interest in and to any licenses and permits relating to the Property, together with all maps, data, reports, studies, and documents relating thereto, free and clear of any Encumbrances.

Value of Initial Contributions

5.2                  The agreed value of the Participants' respective Initial Contributions shall be as follows:
(a)       Magnus: [$u
 / €u
]; and

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(b)       FinMetal:  [$u
 / €u
].

Cash Contributions

5.3                  The Participants shall contribute funds for adopted Programs and Budgets in proportion to their respective Participating Interests, subject to elections permitted by §9.4.

PART 6

PARTICIPATING INTERESTS

Participating Interests

	
6.1
	
(a)       Initial Participating Interest.  Subject to §(b) below, the Participants shall have the following initial Participating Interests in the Venture:

(i)       Magnus:  74.5%; and

(ii)      FinMetal:  25.5%

(b)       Changes in Participating Interests.  A Participant's Participating Interest shall only be changed as follows:
(i)       FinMetal's initial Participating Interest is based on having incurred 50% of its Work Commitments (as defined in the Option Agreement) and paid 50% of the Option Payments (as defined in the Option Agreement).  FinMetal's Participating Interest shall increase proportionate to further expenditures under the Work Commitments and to further payments under the Option Payments and Magnus' Participating Interest shall decrease proportionately; and upon FinMetal incurring 100% of its Work Commitments and paying 100% of the Option Payments pursuant to Part 4 of the Option Agreement, as between FinMetal and Magnus, FinMetal will have a Participating Interest equal to 51% and Magnus will have a Participating Interest equal to 49%;

(ii)      upon an election or deemed election by a Participant pursuant to §9.4, not to contribute or to contribute less to an adopted Program and Budget than the percentage reflected by its Participating Interest;

(iii)     as provided in §6.4;

(iv)      in the event of default by a Participant in making its agreed upon contribution to an adopted Program and Budget, followed by an election by the other Participant to invoke §6.3(b);

(v)       pursuant to a transfer by a Participant of all or a portion of its Participating Interest in accordance with Part 14; or

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(vi)      upon acquisition by either Participant of part or all of the Participating Interest of the other Participant, however arising.

Voluntary Reduction in Participation - Dilution

6.2                  A Participant may elect, as provided in §9.4, to limit its contributions to an adopted Program and Budget (without regard to its vote on adoption of the Program and Budget) as follows:
(a)       to some lesser amount than its respective Participating Interest; or

(b)       to not contribute at all.

In such event, the non-diluting Participant shall then have the option to either fully fund the remaining portion of the adopted Program and Budget; or, within 15 calendar days following the election of the diluting Participant under §9.4(b), to propose a reduced alternative Program and Budget to which the Participants shall, within seven calendar days, make a re-election under §9.4(a) or §9.4(b).  If the non-diluting Participant elects to continue with the initially adopted Program and Budget, the Participating Interest of the Participant electing either §(a) or §(b) above shall be recalculated at the time of election by dividing: (i) the sum of (a) the value of that Participant's Initial Contribution as defined in §5.2, (b) the total of all that Participant's contributions to previous Programs and Budgets, and (c) the amount the Participant elects to contribute to the approved Program and Budget, by (ii) the sum of (a), (b) and (c) above for all Participants; and multiplying the result by 100, that is:

	
(a)+(b)+(c) diluting Participant
	
x 100 = Recalculated Participating Interest

	
(a)+(b)+(c) all Participants

The Participating Interest of the other Participant shall thereupon become the difference between one hundred percent (100%) and the recalculated Participating Interest.  As soon as practicable after the necessary information is available at the end of each period covered by an adopted Program and Budget, a recalculation of each Participant's Participating Interest shall be made in accordance with the preceding formula to adjust, as necessary, the recalculations made at the beginning of such period to reflect actual contributions made by the Participants during the period.  Except as otherwise provided in this Agreement, a diluting Participant shall retain all of its rights and obligations under this Agreement, including the right to participate in future Programs and Budgets at its Recalculated Participating Interest.

Default in Making Contributions

	
6.3
	
(a)       If a Participant elects to contribute to an approved Program and Budget and then defaults in making a contribution or cash call under an approved Program and Budget, the non-defaulting Participant may, but is not obligated to, advance the defaulted contribution on behalf of the defaulting Participant and treat the same, together with any accrued interest, as a demand loan bearing interest from the date of the advance at the rate provided in §9.9.  The failure to repay said loan upon demand shall be a default.

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(b)       The Participants acknowledge that if a Participant defaults in making a contribution to an approved Program and Budget or a cash call under §9.8, or in repaying a loan under §(a), as required hereunder, it will be difficult to measure the damages resulting from such default.  The Participants acknowledge that the damage to the non-defaulting Participant could be significant.  In the event of such default, as reasonable liquidated damages, the non-defaulting Participant may, with respect to any such default not cured within 30 calendar days after notice to the defaulting Participant of such default, declare that the respective Participating Interests of the Participants will be adjusted, in which event the Participating Interest of the defaulting Participant will be recalculated first by reducing it by the amount that it would have been reduced pursuant to §6.2 if such Participant had elected not to contribute the amount by which it is in default and second by reducing such Participating Interest by the same amount again.  The Participating Interest of the non-defaulting Participant shall thereupon become the difference between one hundred percent (100%) and the recalculated Participating Interest of the defaulting Participant.

(c)       If FinMetal twice elects not to contribute to an approved Program or Budget, Magnus at its sole discretion, shall have the right to pay out FinMetal for one hundred and fifty percent (150%) of all its expenditures and contributions to the Venture, after which time FinMetal's Participating Interest shall be forfeited to Magnus and FinMetal's Participating Interest shall be automatically converted to a one percent (1%) Net Returns Royalty and FinMetal shall have no further rights to participate in subsequent Programs.

Elimination of Minority Interest

6.4                  Upon the reduction of Magnus' Participating Interest to ten percent (10%), FinMetal shall have the right to purchase Magnus' 10% Participating Interest by paying US$10,000,000 to Magnus and upon the exercise of such right, Magnus shall sell to FinMetal its 10% Participating Interest free and clear of any Encumbrances arising by, through or under Magnus.  Magnus will retain a net smelter return royalty of two percent (2%) if any area within the Area of Interest is developed into an operating mine.  If Magnus forfeits its Participating Interest, any decision to place the Property into production shall be at the sole discretion of FinMetal and if the Property is in or is placed into production, FinMetal shall have the unfettered right to suspend, curtail or terminate any such Operation as it in its sole discretion may determine.  Except for or as provided in this §6.4 and §11.9, Part 14 and §16.6, this Agreement shall thereupon terminate.

Documentation of Adjustments to Participating Interests

6.5                  An adjustment to a Participating Interest need not be evidenced during the term of this Agreement by the execution and recording of appropriate instruments, but each Participant's Participating Interest shall be shown in the books of the Manager.  However, either Participant, at any time upon the request of the other Participant, shall execute and acknowledge instruments necessary to evidence or effectuate such adjustment in a form sufficient for recording in the jurisdiction where the Property are located.

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Grant of Lien or Security Interest

	
6.6
	
(a)       Subject to §6.7, each Participant grants to the other Participant a lien upon and a security interest in its Participating Interest, including all of its right, title and interest in the Assets and the Participant's share of Products, whenever acquired or arising, and the proceeds from and accessions to the foregoing.

(b)       The liens and security interests granted by §(a) shall secure every obligation or liability of the Participant granting such lien or security interest created under this Agreement, including the obligation to repay a loan granted under §6.3(a).  Each Participant hereby agrees to take all action necessary to perfect such lien and security interests and hereby appoints the other Participant, its attorney in-fact, to execute, file and record all financing statements and other documents necessary to perfect or maintain such lien and security interests.

Subordination of Interests

6.7                  Each Participant shall, from time to time, take all necessary actions, including execution of appropriate agreements, to pledge and subordinate its Participating Interests, any liens it may hold which are created under this Agreement, other than those created pursuant to §6.6 hereof, and any other right or interest it holds with respect to the Assets (other than any statutory lien of the Manager) to any secured borrowings for Operations approved by the Management Committee.

PART 7

MANAGEMENT COMMITTEE

Organization and Composition

7.1                  Upon execution of this Agreement, the Participants shall establish a Management Committee to determine overall policies, objectives, procedures, methods and actions under this Agreement.  The Management Committee shall consist of two members appointed by Magnus, two member appointed by FinMetal and the Vice President, Exploration of FinMetal who will serve as chair of the Management Committee.  Each Participant may appoint an alternate to act in the absence of a regular member.  Any alternate so acting shall be deemed a member.  Appointments shall be made or changed by prior written notice to the other Participant.

Decisions

7.2                  Each Participant, acting through its appointed member, shall have votes on the Management Committee, in proportion to its Participating Interest.  Unless otherwise provided in this Agreement, the vote of a Participant with a Participating Interest greater than fifty percent (50%) shall determine the decisions of the Management Committee.  In the event of a tie vote, the Participant designated as Manager shall have the deciding vote of the Management Committee.

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Meetings

7.3                  The Management Committee shall hold regular meetings at least annually in Helsinki, Finland, or at other mutually agreed places.

7.4                  The Manager shall give 30 calendar days' notice to the Participants of such regular meetings (unless such notice is waived by the Participants).  Additionally, any Participant may call a special meeting upon 14 calendar days' notice to the other Participant (unless such notice is waived by the Participants).  In case of emergency, reasonable notice of a special meeting shall suffice.

7.5                  With respect to a regular or special meeting of the Management Committee, there shall be a quorum if at least one member representing each Participant is present; provided, however, that in the event that, within 30 minutes from the time appointed for a meeting, a quorum does not exist at any such meeting, any Participant may reschedule the meeting, at a time at least two calendar days following the originally scheduled meeting but no later than 14 calendar days following the originally scheduled meeting, and, at such rescheduled meeting, there shall be a quorum if at least one member representing any Participant having greater than a twenty percent (20%) Participating Interest is present.  If within half an hour from the time appointed for a meeting, a quorum is not present, the meeting shall, at the election of those representatives who are present:
(a)       be dissolved; or

(b)       be adjourned to the same place but on a date and at a time, to be fixed by the chairperson of the meeting before the adjournment, which shall be not less than 14 calendar days following the date for which the meeting was called.

                      Notice of the adjourned meeting shall he given to the representatives of all parties immediately after the adjournment of the meeting. If at the adjourned meeting a quorum is not present within half an hour from the time appointed, the representative or representatives present and entitled to attend and vote at the meeting shall be a quorum, even if only one person is present.

7.6                  Each notice of a meeting shall include an itemized agenda prepared by the Manager in the case of a regular meeting, or by the Participant calling the meeting in the case of a special meeting, but any matter may be considered with the consent of all Participants.

7.7                  The Manager shall prepare minutes of all meetings and shall distribute copies of such minutes to the Participants within 30 calendar days after the meeting.  The Participants shall have thirty 30 calendar days after receipt to sign and return such copies or to provide any written comments on such minutes to the Manager.  If a Participant timely submits written comments on such minutes, the Management Committee shall seek, for a period not to exceed thirty 30 calendar days, to agree upon minutes of such meeting acceptable to the Participants.  At the end of such period, failing agreement by the Participants on revised minutes, the minutes of the meeting shall be the original minutes as prepared by the Manager, together with the comments on the minutes made by the other Participant.  These documents shall be placed in the minutes book maintained by the Manager.

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7.8                  If personnel employed in Operations are required to attend a Management Committee meeting, reasonable costs incurred in connection with such attendance shall be a Venture cost.  All other costs associated with Management Committee meetings shall be paid for by the Participants individually.

Expense

7.9                  Each party shall bear the expenses incurred by its representatives and alternate representatives in attending meetings of the Management Committee.

Rules

7.10                The Management Committee may, by agreement of the representative of all the parties, establish other rules of procedure, not inconsistent with this agreement, as the Management Committee deems fit.

Action Without Meeting

7.11                In lieu of meetings, the Management Committee may hold telephone conferences, so long as minutes are prepared in accordance with §7.3.  The Management Committee may also take actions in writing signed by all members.

Matters Requiring Approval

7.12                Except as otherwise delegated to the Manager in §8.2 the Management Committee shall have exclusive authority to determine all management matters related to this Agreement.  Management Committee decisions made in accordance with this agreement shall be binding on all of the parties.

PART 8

MANAGER

Appointment

8.1                  The parties hereby appoint FinMetal as the Manager with overall management responsibility for Operations and to remain as Manager until it resigns pursuant to §8.4.

Powers and Duties of Manager

8.2                  Subject to the terms and provisions of this Agreement, the Manager shall have the following powers and duties:
(a)       the Manager shall manage, direct, and control Operations, and shall prepare and present to the Management Committee proposed Programs and Budgets;

(b)       the Manager shall implement the decisions of the Management Committee, shall make all expenditures necessary to carry out adopted Programs, and shall promptly advise the Management Committee if it lacks sufficient funds to carry out its responsibilities under this Agreement;

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(c)       the Manager shall use reasonable efforts to: (i) purchase or otherwise acquire all material, supplies, equipment, water, utility and transportation services required for Operations, such purchases and acquisitions to be made on the best terms available, taking into account all of the circumstances; (ii) obtain such customary warranties and guarantees as are available in connection with such purchases and acquisitions; and (iii) keep the Assets free and clear of all Encumbrances, except for those existing at the time of, or created concurrent with, the acquisition of such Assets, or mechanic's or materialmen's liens which shall be released or discharged in a diligent manner, or Encumbrances specifically approved by the Management Committee;

(d)       the Manager shall conduct such title examinations and cure such title defects relating to the Property as may be advisable in the reasonable judgment of the Manager;

(e)       the Manager shall: (i) make or arrange for all payments required by concessions, leases, licenses, permits, contracts, and other agreements related to the Assets; (ii) pay all taxes, assessments and like charges on Operations and Assets except taxes determined or measured by a Participant's sales revenue or net income.  If authorized by the Management Committee, the Manager shall have the right to contest, in the courts or otherwise, the validity or amount of any taxes, assessments, or charges if the Manager deems them to be unlawful, unjust, unequal, or excessive, or to undertake such other steps or proceedings as the Manager may deem reasonably necessary to secure a cancellation, reduction, readjustment, or equalization thereof before the Manager shall be required to pay them, but in no event shall the Manager permit or allow title to the Assets to be lost as the result of the non-payment of any taxes, assessments, or like charges; and (iii) do all other acts reasonably necessary to maintain the Assets;

(f)       the Manager shall: (i) apply for all necessary permits, licenses and approvals; (ii) comply with the Laws; (iii) notify promptly the Management Committee of any allegations of substantial violation thereof; and (iv) prepare and file all reports or notices required for Operations.  In the event of any violation of permits, licenses or approvals, the Manager shall timely cure or dispose of such violation through performance, payment of fines and penalties, on both, and the cost thereof shall be charged to the Joint Account;

(g)       the Manager shall notify the other Participant promptly of any litigation, arbitration, or administrative proceeding commenced against the Venture.  The Manager shall prosecute and defend, but shall not initiate without consent of the Management Committee, all litigation or administrative proceedings arising out of Operations.  The non-managing Participant shall have the right to participate, at its own expense, in such litigation or administrative proceedings.  The Management Committee shall approve in advance any settlement involving payments, commitments or obligations in excess of $100,000 in cash or value;

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(h)       the Manager may dispose of Assets, whether by sale, assignment, abandonment or other transfer, in the ordinary course of business, except that Property may be abandoned or surrendered only as provided in Part 12.  However, without prior authorization from the Management Committee, the Manager shall not: (i) dispose of Assets in any one transaction having a value in excess of $100,000; (ii) enter into any sales contracts or commitments for Products, except as permitted in §10.2; (iii) begin a liquidation of the Venture; or (iv) dispose of all or a substantial part of the Assets necessary to achieve the purposes of the Venture;

(i)       the Manager shall have the right to carry out its responsibilities hereunder through agents, Affiliates or independent contractors;

(j)       the Manager shall keep and maintain all required accounting and financial records pursuant to the Accounting Procedure and in accordance with generally accepted accounting procedures;

(k)       the Manager shall keep the Management Committee advised of all Operations by submitting in writing to the Management Committee: (i) monthly progress reports within 20 calendar days after the end of each month, which include statements of expenditures and comparisons of such expenditures to the adopted Budget; (ii) periodic summaries of data acquired; (iii) copies of reports concerning Operations; (iv) a detailed final report within 60 calendar days after completion of each Program and Budget, which shall include comparisons between actual and budgeted expenditures; and (v) such other reports as the Management Committee may reasonably request.  At all reasonable times, the Manager shall provide the Management Committee or the representative of any Participant, upon the request of any member of the Management Committee, access to, and the right to inspect and copy, all information acquired in Operations, including but not limited to, maps, drill logs, core tests, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records.  In addition, the Manager shall allow the non-managing Participant, at its sole risk and expense, and subject to reasonable safety regulations, to inspect the Assets and Operations at all reasonable times, so long as the inspecting Participant does not unreasonably interfere with Operations;

(l)       the Manager shall provide insurance for the benefit of the Participants, in such amounts and of such nature as the Manager deems necessary to protect the Assets and Operations of the Venture;

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(m)      the Manager shall perform or cause to be performed all assessment and other work, and shall pay all Government Fees required by Law in order to maintain in good standing all mining leases, surface leases, Claims and other tenures included within the Property.  The Manager shall have the right to perform the assessment work required hereunder pursuant to a common plan of exploration on other Property.  The Manager shall not be liable on account of any determination by any court or governmental agency that the work performed by the Manager does not constitute the required annual assessment work or occupancy for the purposes of preserving or maintaining ownership of the claims, provided that the work done is pursuant to an adopted Program and Budget and is performed in accordance with the Manager's standard of care under §8.3.  The Manager shall timely record and file with the appropriate governmental office any required affidavits, notices of intent to hold and other documents in proper form attesting to the payment of Government Fees and the performance of assessment work, in each case in sufficient detail to reflect compliance with the applicable requirements.  The Manager shall not be liable on account of any determination by any court or governmental agency that any such document submitted by the Manager does not comply with applicable requirements, provided that such document is prepared and recorded or filed in accordance with the Manager's standard of care under §8.3;

(n)       if authorized by the Management Committee, the Manager may: (i) locate, amend or relocate any mining claim, (ii) locate any fractions resulting from such amendment or relocation, and (iii) apply for patents or mining leases or other forms of mineral tenure for any such claims;

(o)       the Manager shall prepare an Environmental Compliance plan for all Operations consistent with the requirements of any applicable Laws or contractual obligations and shall include in each Program and Budget sufficient funding to implement the Environmental Compliance plan and to satisfy the financial assurance requirements of any applicable Law or contractual obligation pertaining to Environmental Compliance.  To the extent practical, the Environmental Compliance plan shall incorporate concurrent reclamation of Property disturbed by Operations;

(p)       the funds that are to be deposited into the Environmental Compliance fund shall be maintained by the Manager in a separate, interest bearing cash management account, which may include, but is not limited to, money market investments and money market funds, and/or in longer term investments if approved by the Management Committee.  Such funds shall be used solely for Environmental Compliance, including the committing of such funds, interests in property, insurance or bond policies, or other security to satisfy Laws regarding financial assurance for the reclamation or restoration of the Property, and for other Environmental Compliance requirements;

(q)       the Manager shall undertake to perform Continuing Obligations when and as economic and appropriate, whether before or after termination of the Operations.  The Manager shall have the right to delegate performance of Continuing Obligations to persons having demonstrated skill and experience in relevant disciplines.  As part of each Program and Budget submittal, the manager shall specify in such Program and Budget the measures to be taken for performance of Continuing Obligations and the cost of such measures.  The Manager shall keep the other Participant reasonably informed about the Manager's efforts to discharge Continuing Obligations.  Authorized representatives of each Participant shall have the right from time to time to enter the Property to inspect work directed toward satisfaction of Continuing Obligations and audit books, records, and accounts related thereto;

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(r)       if Participating Interests are adjusted in accordance with this Agreement the Manager shall propose from time to time one or more methods for fairly allocating costs for Continuing Obligations;

(s)       the Manager shall undertake all other activities reasonably necessary to fulfill the foregoing.

Standard of Care

8.3                  The Manager shall discharge its duties under §8.2 and conduct all Operations in a good, workmanlike and efficient manner, in accordance with sound mining and other applicable industry standards and practices, and in material compliance with the terms and provisions of concessions, leases, licenses, permits, contracts and other agreements pertaining to Assets.  The Manager shall not be liable to the non-managing Participant for any act or omission resulting in damage, loss cost, penalty or fine to the Venture except to the extent caused by or attributable to the Manager's wilful misconduct or gross negligence.  The Manager shall not be in default of its duties under this Agreement, if its inability to perform results from the failure of the non-managing Participant to perform acts or to contribute amounts required of it by this Agreement.

Resignation; Deemed Offer to Resign

8.4                  The Manager may resign upon 90 day's prior notice to the Management Committee, in which case the other Participant may elect to become the new Manager by notice to the Management Committee within 90 calendar days after the notice of resignation.  If any of the following shall occur, the Manager shall be deemed to have offered to resign, which offer shall be accepted by the other Participant, if at all, within 90 calendar days following such deemed offer:
(a)       the Participating Interest of the Manager (inclusive of any entity claiming through the Manager as provided in §14.2(g)) ceases to be the highest between the Participants, provided; however, that in the event the Manager transfers its Participating Interest to an Affiliate, such Affiliate shall automatically become the Manager; or

(b)       the Manager fails to perform a material obligation imposed upon it under this Agreement, and such failure continues for a period of 60 calendar days after notice from the other Participant demanding performance; or

(c)       the Manager fails to pay its bills within 90 calendar days after they are due, unless the Manager contests such bills in good faith; or

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(d)       the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official is appointed for a substantial part of the Manager's assets, and such appointment is neither made ineffective nor discharged within 30 calendar days after the making thereof; or such appointment is consented to, requested by, or acquiesced in by the Manager; or

(e)       the Manager commences a voluntary case under any applicable bankruptcy, insolvency or similar law now or hereafter in effect; or consents to the entry of an order for relief in an involuntary case under any such law or to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official of any substantial part of its assets; or makes a general assignment for the benefit of creditors; or takes corporate or other action in furtherance of any of the foregoing; or

(f)       entry is made against the Manager of a judgment, decree or order for relief affecting its ability to serve as Manager, or a substantial part of its Participating Interest or other assets by a court of competent jurisdiction in an involuntary case commenced under any applicable bankruptcy, insolvency or other similar law of any jurisdiction now or hereafter in effect.

Under §(d), §(e) or §(f) above, any appointment of a successor Manager shall be deemed to pre-date the event causing a deemed offer of resignation.

New Manager

8.5                  The new Manager shall assume all of the rights, duties, liabilities and status of the previous Manager as provided in this Agreement.  The new Manager shall have no obligation to hire or continue the employment of any of the employees of the former Manager resulting from this change of Manager.

Delivery of Records 

8.6                  On ceasing to be Manager, the former Manager shall immediately deliver to the person nominated for that purpose by the Management Committee, the custody of all the Property, books, records and other property both real and personal relating to this Agreement.

No Replacement for Manager 

8.7                  If the Manager resigns and no other party consents to act as Manager the Venture shall terminate.

Payments to Manager

8.8                  The Manager shall be compensated for its services and reimbursed for its costs hereunder in accordance with the Accounting Procedure set forth in Schedule C.

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Transactions With Affiliates

8.9                  If the Manager engages Affiliates to provide services hereunder, it shall do so on terms no less favourable than would be the case with unrelated persons in arm's-length transactions.

Independent Contractor

8.10                The Manager is and shall act as an independent contractor and not as the agent of the other Participant.  The Manager shall maintain complete control over its employees and all of its subcontractors with respect to performance of the Operations.  Nothing contained in this Agreement or any subcontract awarded by the Manager shall create any contractual relationship between any subcontractor and the other Participant.  The Manager shall have complete control over and supervision of Operations and shall direct and supervise the same so as to ensure their conformity with this Agreement.

PART 9

PROGRAMS AND BUDGETS

Operations Pursuant to Programs and Budgets

9.1                  Operations shall be conducted, expenses shall be incurred, and Assets shall be acquired only pursuant to Programs and Budgets approved pursuant to §9.2.  Every Program and Budget adopted pursuant to this Agreement shall provide for accrual of reasonably anticipated Environmental Compliance expenses for all operations contemplated under the Program and Budget.

Presentation of Programs and Budgets

9.2                  Immediately after the formation of the Venture and thereafter on November 30 of each year or within 90 calendar days of completion of a Program, proposed Programs and Budgets shall be prepared by the Manager and shall be for one calendar year (or in the event that the Manager determines that appropriate methods of Exploration or Development require a shorter period or a longer period to accomplish the proposed Program and Budget, the proposed Program and Budget may be prepared for such shorter or longer period).  Each adopted Program and Budget, regardless of length, shall be reviewed at least once a year at the annual meeting of the Management Committee.  A meeting of the Management Committee shall be convened to approve each Program and Budget and at least 40 calendar days prior to such meeting of the Management Committee, a proposed Program and Budget shall be prepared by the Manager and submitted to the Participants.  Within 20 calendar days of receipt of the proposed Program and Budget, the Participants may submit written comments to the Manager detailing revisions or modifications that they would like to have made to the proposed Program and Budget.  If such written comments are received, the Manager, working with the other Participant, shall seek for a period of time not to exceed 15 calendar days to develop a revised Program and Budget acceptable to both Participants.  The Manager shall submit any revised proposed Program and Budget to the Participants at least five calendar days prior to the meeting of the Management Committee to consider the proposed Program and Budget.

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Adoption of Proposed Programs and Budgets

9.3                  At the meeting convened to consider the proposed Program and Budget, the Management Committee shall consider and vote on the proposed Program and Budget.

Election to Participate

9.4                  By notice to the Management Committee within 15 calendar days after the final vote adopting a Program and Budget, a Participant may elect to contribute to such Program and Budget as follows:
(a)       in proportion to its respective Participating Interest as of the beginning of the period covered thereby; or

(b)       to some lesser amount than its respective Participating Interest, or not at all, in which cases its Participating Interest shall be recalculated as provided in §6.2, and such recalculated Participating Interest shall be effective the first day of the period covered by the adopted Program and Budget.

                      If a Participant fails to provide notice to the Management Committee under this §9.4, the Participant will be deemed to have elected to contribute to such Program and Budget in proportion to its Participating Interest at the beginning of the Program period.

Budget Overruns; Program Changes

9.5                  The Manager shall immediately notify the Management Committee of any material departure from an adopted Program.  If the Manager exceeds the total of an adopted Program by more than ten percent (10%), the Manager shall immediately give written notice to the Participants contributing to that Program outlining the nature and extent of the additional costs and expenses (the "Program Overruns").  If Program Overruns are approved by the Participants contributing to that Program, then within 30 calendar days after the receipt of a written request from the Manager, the Participants contributing to that Program shall provide the Manager with their respective shares of the Program Overruns.  If Program Overruns are not approved by the Participants contributing to that Program, the Manager shall have the right, but not the obligation, to pay the Program Overruns, in which case, provided the Program Overruns result from work undertaken by an independent, third party contractor, the payment shall be considered to be a contribution to costs by the Manager; alternatively, the Manager shall have the right to curtail or abandon the Program.

Emergency Expenditures

9.6                  In case of emergency, the Manager may take any action it deems necessary to protect life, limb or property, to protect the Assets or to comply with law or government regulation.  The Manager may also make reasonable expenditures on behalf of the Participants for unexpected events that are beyond its reasonable control.  In the case of an emergency or unexpected expenditure, the Manager shall promptly notify the Participants of the expenditure, and the Manager shall be reimbursed therefor by the Participants in proportion to their respective Participating Interests at the time the emergency or unexpected expenditure is incurred.

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Mandatory expenditures

9.7                  Notwithstanding §9.1, if, in any year in which there is no Program adopted pursuant to this Agreement, circumstances are such that the Manager must incur costs in order to maintain tenure to the Property, to satisfy contractual obligations or obligations imposed by law, to prevent waste or to protect life and property (in this paragraph called the "non-discretionary costs"), the Manager shall immediately propose a program (in this paragraph called the "mandatory program") to incur those non-discretionary costs and provide each party with one copy of it.  The mandatory program shall be deemed to be approved and each of the parties shall be obligated to contribute to the non-discretionary costs incurred in proportion to their respective Participating Interest within 30 calendar days of receipt of the Manager's invoice.

Cash Calls

9.8                  On the basis of adopted Programs and Budgets, the Manager shall submit to each Participant, prior to the last day of each month, a billing for estimated expenditures and Environmental Compliance fund requirements for the next month.  Within 20 calendar days after receipt of each billing, or a billing made pursuant to §9.6 or §11.6, each Participant shall advance to the Manager its proportionate share of the estimated amount.  Time is of the essence of payment of such billings.  The Manager shall at all times maintain a cash balance approximately equal to the rate of disbursement for up to 15 calendar days.  After a decision has been made to begin Development, all funds in excess of immediate cash requirements shall be invested in interest-bearing accounts for the benefit of the Joint Account.

Failure to Meet Cash Calls

9.9                  Subject to §6.3(c), if a Participant that fails to meet cash calls in the amount and at the times specified in §9.8 it shall be in default, and the amounts of the defaulted cash call shall bear interest from the date due at an annual rate equal to five percentage points over the prime rate in effect from time to time for demand, commercial loans quoted by the Royal Bank of Canada to its most credit-worthy customers or the maximum interest rate permitted by law, if less than this.  Such interest shall accrue to the benefit of and be payable to the non-defaulting Participant, but shall not be deemed as amounts contributed by the non-defaulting Participant in the event dilution occurs in accordance with Part 6.  The non-defaulting Participant shall have those rights, remedies and elections specified in §6.3, as well as any other rights and remedies available to it by law.

Audits

9.10                Upon request of any Participant made within 15 months following the end of any calendar year (or, if the Management Committee has adopted an accounting period other than the calendar year, within 24 months after the end of such period), the Manager shall order an audit of the accounting and financial records for such calendar year (or other accounting period).  All exceptions to the audit and claims upon the Manager for discrepancies disclosed by such audit shall be made in writing not later than three months after receipt of the audit report by the Participant that requested the audit.  A Participant's failure to make such exceptions or claims within the three month period shall (i) mean that the audit is correct and binding upon the Participants and (ii) result in a waiver of any right to make claims upon the Manager for discrepancies disclosed by the audit.  The audits shall be conducted by a national firm of chartered accountants selected by the Manager, unless otherwise agreed by the Management Committee.  In addition each Participant shall have the right to conduct an independent audit of all books, records and accounts, at the expense of the requesting Participant, and which audit right will be limited to the period not more than twenty-four months prior to the date the audit is conducted.  All exceptions to and claims upon the Manager for discrepancies disclosed by such audit shall be made in writing within three months after completion or delivery of such audit, or they shall be deemed waived.

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PART 10

DISPOSITION OF PRODUCTION

Taking In Kind

10.1                Each Participant shall take in kind or separately dispose of its share of all Products in accordance with its Participating Interest.  Any extra expenditure incurred in the taking in kind or separate disposition by any Participant of its proportionate share of Products shall be borne by such Participant.  Nothing in this Agreement shall be construed as providing, directly or indirectly, for any joint or cooperative marketing or selling of Products or permitting the processing of Products of anyone other than the Participants at any processing facilities constructed by the Participants pursuant to this Agreement.  The Manager shall give the Participants notice at least ten calendar days in advance of the delivery date upon which their respective shares of Products will be available.

Failure of Participant to Take in Kind

10.2                If a Participant fails to take its share of Products in kind, the Manager may, but is not obligated, to sell such share on behalf of that Participant at not less than the prevailing market price in the area for a period of time not to exceed one year from the date of notice under §10.1.  Subject to the terms of any such contracts of sale then outstanding, during any period that the Manager is selling a Participant's share of production, the Participant may elect by notice to the Manager to take in kind.  The Manager shall be entitled to deduct from proceeds of any sale by it for the account of a Participant reasonable expenses incurred in such a sale.

Hedging

10.3                Neither Participant shall have any obligation to account to the other Participant for, nor have any interest or right of participation in any profits or proceeds, nor have any obligation to share in any losses from, future contracts, forward sales, trading inputs, calls, options or any similar hedging, price protection or marketing mechanism employed by a Participant with respect to its proportionate share of any Products produced or to be produced from the Property.

Value of Mineral Products

10.4                For purposes of determining the value of Mineral Products taken in kind pursuant to §10.1, each Participant's share of Products shall be valued at the time of delivery to the Participants at a value equal to that received by the other party for its share of the Products after deduction of:

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(a)       all smelting and other refining costs incurred with an independent third party smelter or other refining facility;

(b)       all costs of transporting Products, including insurance, from the Property to the place of delivery designated by the purchaser of the Products;

(c)       a reasonable charge for marketing Products as is consistent with generally accepted industry marketing practices; and

(d)       all taxes (other than income taxes). royalties or other charges or imposts provided for pursuant to any law or legal obligation imposed by any government if paid by the Participant in connection with the disposition of Products taken in kind.

Extra Expenditure

10.5                Any extra expenditure incurred by reason of the taking in kind or separate disposition by a Participant of its proportionate share of Products shall be borne by that Participant and that Participant shall he required to construct, operate and maintain, at its own expense, any and all facilities which may be necessary to receive, store and dispose of its share of Products, including any costs incurred in respect of security for receiving, storing or disposing of its share of Products.

Manager's Authority

10.6                If any Participant fails to make the necessary arrangements to take in kind or separately dispose of its proportionate share of Products, the Manager as agent may purchase for its own account or sell that share, subject to the right of the Participant owning the share to revoke at will the Manager's authority under this paragraph in respect of Products not then purchased by the Manager or committed for sale to others, and the Manager shall be entitled to deduct from the sale proceeds all costs of or related to marketing the Products as is consistent with generally accepted industry marketing practices including, without limitation, all smelting and other refining costs incurred with an independent third party smelter or other refining facility, transportation, storage, security, commissions and discounts, but all contracts of sale executed by the Manager for a Participants share of Products shall be only for reasonable periods of time as are consistent with the minimum needs of the industry under the circumstances and in no event shall any contract be for a period in excess of one year.

Payment of Proceeds

10.7                Proceeds, if any, from the sale by the Manager of Products pursuant to §10.6 shall be calculated by the Manager separately for each Participant at the end of each calendar month and shall be paid monthly within 20 calendar days after the end of each calendar month following payment to the Manager by each Participant of its respective cost share outstanding as at the end of that calendar month.

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Non-arm's Length Transaction

10.8                If the Manager, any Affiliate of the Manager, or any person with whom the Manager is not dealing at arm's length is a purchaser of Products from the Manager, and if the value of the Products is used to determine any matter arising under this paragraph, the Manager shall be required to receive competitive prices for all Products so sold.

Records

10.9                The records relating to Products taken in kind or to the calculation of proceeds from the sale thereof shall be audited annually at the end of each fiscal year of the Manager and:
(a)       any adjustments required by the audit shall be made immediately; and

(b)       a copy of the audited statements shall be delivered to each of the Participants.

10.10              Any of the Participants shall, at reasonable times and on notice in writing to the Manager, have the right to inspect, audit and copy the Manager's accounts and records relating to the accounting for Products taken in kind or to the determination of proceeds from the sale thereof for any calendar year within twelve months following the end of the calendar year. All accounts and records shall be deemed to be correct and accurate unless questioned by a Participant within twelve months following the end of the calendar year to which the accounts relate.  The Participants shall make all reasonable efforts to conduct audits in a manner which will result in a minimum of inconvenience to the Manager.

PART 11

SUSPENSION AND TERMINATION

Suspension of Operations

11.1                The Manager may, on at least 30 calendar days' notice to all Participants, recommend that the Management Committee approve that Operations be suspended.  The Manager's recommendation shall include a plan and budget (in this paragraph called the "Maintenance Plan"), in reasonable detail, of the activities to be performed to maintain the Assets and Property during the period of suspension and the costs to be incurred.  The Management Committee may, cause the Manager to suspend Operations in accordance with the Manager's recommendation, with such changes to the Maintenance Plan as the Management Committee deems necessary.  The Participants shall be committed to contribute their proportionate share of the costs incurred in connection with the Maintenance Plan.  The Management Committee may cause Operations to be resumed at any time.

Termination of Operations Following Suspension

11.2                The Manager may, at any time following a period of at least 90 calendar days during which Operations have been suspended, on at least 30 calendar days' notice to all Participants, recommend that the Management Committee approve the permanent termination of Operations.  The Manager's recommendation shall include a plan and budget (in this paragraph called the "Closure Plan"), in reasonable detail, of the activities to be performed to terminate Operations.  The Management Committee may, by unanimous approval of the representatives of all Participants, approve the Manager's recommendation, with such changes to the Closure Plan as the Management Committee deems necessary.

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Termination by Agreement

11.3                The Participants may terminate the Venture at any time by written agreement.

Termination Where No Program Proposed

11.4                The Participants agree that, if neither Participant proposes a Program and Budget for a period of four consecutive years, then the Venture shall terminate.

Disposition of Assets on Termination

11.5                Promptly after termination under §11.3, the Manager shall take all action necessary to wind up the activities of the Venture, and all costs and expenses incurred in connection with the termination of the Venture shall be expenses chargeable to the Venture.

Right to Data After Termination

11.6                After termination of the Venture under §11.3, each Participant shall be entitled to copies of all information acquired hereunder as of the date of termination and not previously furnished to it, but a terminating or withdrawing Participant shall not be entitled to any such copies after any other termination or withdrawal.

Non-Compete Covenants

11.7                A Participant that is deemed to have withdrawn pursuant to §6.3 or §6.4, shall not directly or indirectly acquire any interest in property within the Area of Interest for two years after the effective date of withdrawal.  If the withdrawing Participant, or the Affiliate of a withdrawing Participant, breaches this §11.7, such Participant or Affiliate shall be obligated to offer to convey to the non-withdrawing Participant, without cost, any such property or interest so acquired.  Such offer shall be made in writing and can be accepted by the non-withdrawing Participant at any time within 45 calendar days after it is received by such non-withdrawing Participant.

Continuing Authority

11.8                On termination of the Venture under §11.3 or §11.4 the Participant which was the Manager prior to such termination or withdrawal (or the other Participant in the event of a withdrawal by the Manager) shall have the power and authority to do all things on behalf of both Participants which are reasonably necessary or convenient to:
(a)       wind-up Operations; and

(b)       complete any transaction and satisfy any obligation, unfinished or unsatisfied, at the time of such termination or withdrawal, if the transaction or obligation arises out of Operations prior to such termination or withdrawal.  The Manager shall have the power and authority to grant or receive extensions of time or change the method of payment of an already existing liability or obligation, prosecute and defend actions on behalf of both Participants and the Venture, encumber Assets, and take any other reasonable action in any matter with respect to which the former Participants continue to have, or appear or are alleged to have, a common interest or a common liability.

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Survival of Ingress and Egress After Termination

11.9                After termination of the Venture, the Participants shall continue to have rights of ingress and egress to the Property for purposes of ensuring Environmental Compliance.

PART 12

ABANDONMENT AND SURRENDER OF PROPERTY

12.1                The Management Committee may authorize the Manager to surrender or abandon some or all of the Property.  If the Management Committee authorizes any such surrender or abandonment over the objection of a Participant, the Participant that desires to abandon or surrender shall if the objecting party elects assign to the objecting Participant, by deed, assignment, or appropriate document, and without cost to the objecting Participant, all of the surrendering Participant's interest in the property to be abandoned or surrendered, and the abandoned or surrendered property shall cease to be part of the Property.  Provided, however, the objecting Participant shall assume all responsibility and liabilities, including but not limited to Environmental Liabilities, with regard to the surrendered or abandoned property.

Part 13

Surrender of Interest 

Surrender of Interest

13.1                A Participant may, at any time on notice, surrender its entire Participating Interest to the other Participant by giving that party notice of surrender, which notice shall:
(a)       indicate a date for surrender not more than three months after the date on which the notice is given; and

(b)       contain an undertaking that the surrendering party will:
(i)       satisfy its proportionate share, based on its then Interest, of all obligations and liabilities which arose at any time prior to the date of surrender;

(ii)      pay its proportionate share, based on its then Participating Interest, of the costs of rehabilitating the mine site and of reclamation as at the date of surrender; and

(iii)     hold in confidence, for a period of two years from the date of surrender, all information and data which it acquired pursuant to this Agreement.

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Relief from Liabilities

13.2                On the surrender of its entire Participating Interest and on delivery of a release in writing, in form acceptable to counsel for the Manager, releasing the other parties from all claims and demands under this agreement, the surrendering party shall be relieved of all obligations or liabilities except for those which arose or accrued or were accruing due on or before the date of the surrender.

Acceptance of Surrender

13.3                A Participant to whom a notice of surrender has been given may elect, by notice within 90 calendar days to the party which first gave the notice, to accept the surrender, or to join in the surrender. If all of the parties join in the surrender the Venture shall be terminated.

Execution of Instruments

13.4                The surrendering Participant shall remain obligated to execute and deliver those instruments as may be necessary to formally effect the transfer of its Participating Interest to the other Participant.

PART 14

TRANSFER OF INTEREST

General

14.1                A Participant shall have the right to transfer to any third party all or any part of its interest in or to this Agreement, its Participating Interest, or the Assets solely as provided in this Part 14.  For the purposes of this Part 14 the word transfer shall mean to convey, sell, assign, grant an option, create an Encumbrance or in any manner transfer or alienate, but excluding and excepting alienation done for the purposes of obtaining financing pursuant to §14.5.

Limitations on Free Transferability

14.2                The transfer right of a Participant in §14.1 shall be subject to the following terms and conditions:
(a)       no Participant shall transfer any interest in this Agreement or the Assets (including but not limited to any royalty, profits or other interest in the Products) except by transfer of part or all of a Participating Interest;

(b)       no transferee of all or part of any Participating Interest shall have the rights of a Participant unless and until the transferring Participant has provided to the other Participant notice of the transfer, and the transferee, as of the effective date of the transfer, has committed in writing to be bound by this Agreement to the same extent and nature as the transferring Participant;

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(c)       no transfer permitted by this Part 14 shall relieve the transferring Participant of its share of any liability, whether accruing before or after such transfer, which arises out of Operations conducted prior to such transfer;

(d)       neither Participant, without the consent of the other, shall make a transfer that would violate any Law, or result in the cancellation of any permits, licenses, or other similar authorizations;

(e)       the transferring Participant and the transferee shall bear all tax consequences of the transfer;

(f)       such transfer shall be subject to a pre-emptive right in the other Participant as provided in §14.3;

(g)       in the event of a transfer of less than all of a Participating Interest, the transferring Participant and its transferee shall act and be treated as one Participant, and in such event in order for the transfer to be effective, the transferring Participant and its transferee shall provide written notice to the non-transferring Participant designating a sole authorized agent to act on behalf of their collective Participating Interest.  Such notice shall provide that: (i) the agent has the sole authority to act on behalf of, and to bind the transferring Participant and its transferee on all matters pertaining to this Agreement or the Venture, (ii) the notified Participant may rely on all decisions of, notices and other communications from, and failures to respond by, the agent, as if given (or not given) by the transferring Participant and its transferee; (iii) all decisions of, notices and other communications from, and failures to respond by, the notified Participant to the agent shall be deemed to have been given (or not given) to the transferring Participant and its transferee; and (iv) the agent has the sole authority to receive for and on behalf of the transferring Participant and its transferee any Net Returns Royalty or net smelter return royalty, as the case may be, payable to the transferring Participant and its transferee.  It is understood and agreed that should a Participant transfer less than all of its Participating Interest the transferring Participant and the transferee shall only be entitled to a pro rata portion of the  Net Returns Royalty or net smelter return royalty, as the case may be.

Pre-emptive Right

14.3                Except as otherwise provided in §14.4, if a Participant desires to transfer all or any part of its Participating Interest or any Net Returns Royalty, or an Affiliate desires to transfer control of a Participant, the other Participant shall have a pre-emptive right as provided in this §14.3.

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(a)       If either Participant intends to transfer all or any part of its Participating Interest or any Net Returns Royalty, or an Affiliate of either Participant intends to transfer Control of such Participant, the transferring Participant or Affiliate ("Transferring Entity") shall promptly notify the other Participant of its intentions.  The notice shall state the price and all other pertinent terms and conditions of the intended transfer, and shall be accompanied by a copy of the offer or contract for sale.  If the consideration for the intended transfer is, in whole or in part, other than monetary, the notice shall describe such consideration and its monetary fair market value.  The other Participant shall have 30 calendar days from the date such notice is delivered to notify the Transferring Entity whether it elects to acquire the offered interest at the same price (or its monetary equivalent) and on the same terms and conditions as set forth in the notice.  If it does so elect, the transfer shall be consummated promptly, but in no event more than 30 calendar days, after notice of such election is delivered to the Transferring Entity.

(b)       If the other Participant fails to so elect within the period provided for in §(a), the Transferring Entity shall have 90 calendar days following the expiration of such period to consummate the transfer to a third party at a price and on terms no less favourable to the Transferring Entity than those set forth in the notice required in §(a).

(c)       If the Transferring Entity falls to consummate the transfer to a third party within the period set forth in §(b), the pre-emptive right of the other Participant in such offered interest shall be deemed to be revived.  Any subsequent proposal to transfer such interest shall be conducted in accordance with all of the procedures set forth in this §14.3.

Exceptions to Pre-emptive Right

14.4                Section 14.3 shall not apply to:
(a)       the transfer by either Participant of all or any part of its Participating Interest to an Affiliate provided that such Affiliate remains an Affiliate of the Participant for a period of not less than three years;

(b)       corporate consolidation or reorganization of either Participant by which the surviving entity shall possess substantially all of the stock or all of the property rights and interests, and be subject to substantially all of the liabilities and obligations of that Participant;

(c)       corporate merger or amalgamation involving either Participant by which the surviving entity or amalgamated company shall possess all of the stock or all of the property rights and interests, and be subject to substantially all of the liabilities and obligations of that Participant; provided, however, that the value of the merging or amalgamating Participant's interest in the Assets, evidenced by its Initial Contribution and all subsequent contributions under approved Programs and Budgets, does not exceed thirty percent (30%) of the Net Worth of the surviving entity or amalgamated company;

(d)       the transfer of Control of either Participant by an Affiliate to such Participant or to another Affiliate;

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(e)       the creation by any Affiliate of either Participant of an Encumbrance affecting its Control of such Participant;

(f)       a sale or other commitment or disposition of Products or proceeds from sale of Products by either Participant upon distribution to it pursuant to Part 10 of the Agreement; or

(g)       a transfer by an Affiliate of a Participant (whether an original party to this Agreement or Participant by virtue of §14.2(b)) of Control of such Participant to a third party, provided such Participant's interest in the Assets, as evidenced by its Initial Contribution and all subsequent contributions under approved Programs and Budgets, does not exceed thirty percent (30%) of the Net Worth of the transferring Affiliate, or does not exceed 30% of the Net Worth of Transferee.

For purposes hereof the term "Net Worth" shall mean the remainder after total liabilities are deducted from total assets.  In the case of a corporation, Net Worth includes both capital stock and surplus.  In the case of a limited liability company, Net Worth includes member contributions.  In the case of a partnership or sole proprietorship, Net Worth includes the original investment plus accumulated and reinvested profits.

Encumbrances

14.5                Neither Magnus nor FinMetal shall pledge, mortgage, or otherwise create an Encumbrance on its interest in this Agreement or the Assets except for the purpose of securing project financing relating to the Property, including its share of funds for Development or Mining costs.  The right of a Participant to grant such Encumbrance shall be subject to the condition that the holder of the Encumbrance ("Chargee") first enter into a written agreement with the other Participant, in a form acceptable to that Participant, acting reasonably, which provides:
(a)       the Chargee shall not enter into possession or institute any proceedings for foreclosure or partition of the encumbering Participant's Participating Interest and that such Encumbrance shall be subject to the provisions of this Agreement;

(b)       the Chargee's remedies under the Encumbrance shall be limited to the sale of the whole (but only of the whole) of the encumbering Participant's Participating Interest to the other Participant, or, failing such a sale, at a public auction to be held at least 45 calendar days after prior notice to the other Participant, such sale to be subject to the purchaser entering into a written agreement with the other Participant whereby such purchaser assumes all obligations of the encumbering Participant under the terms of this Agreement.  The price of any pre-emptive sale to the other Participant shall be the remaining principal amount of the loan plus accrued interest and related expenses, and such pre-emptive sale shall occur within 60 calendar days of the Chargee's notice to the other Participant of its intent to sell the encumbering Participant's Participating Interest.  Failure of a sale to the other Participant to close by the end of such period, unless failure is caused by the encumbering Participant or by the Chargee, shall permit the Chargee to sell the encumbering Participant's Participating Interest at a public sale; and

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(c)       the charge shall be subordinate to any then-existing debt, including project financing previously approved by the Management Committee, encumbering the transferring Participant's Participating Interest.

PART 15

ACQUISITION WITHIN AREA OF INTEREST

General

15.1                Any interest or right to acquire any interest in real property within the Area of Interest acquired while this Agreement is in effect by or on behalf of a Participant or any Affiliate shall be subject to the terms and provisions of this Agreement.  This section shall apply to any property previously abandoned under Part 12.

Notice to Non-Acquiring Participant

15.2                Within ten calendar days after the acquisition of any interest or the right to acquire any interest in real property or water rights wholly or partially within the Area of Interest (except real property acquired by the Manager pursuant to a Program), the acquiring Participant shall notify the other Participant of such acquisition by it or its Affiliate.  If the acquisition of any interest pertains to real property or water rights partially within the Area of Interest, then all property subject to the acquisition shall be subject to this Part 15.  The acquiring Participant's notice shall describe in detail the acquisition, the lands and minerals covered thereby, the costs thereof and the reasons why the acquiring Participant believes that the acquisition is in the best interests of the Participants under this Agreement.  In addition to such notice, the acquiring Participant shall make any and all information concerning the acquired interest available for inspection by the other Participant.

Option Exercise

15.3                If, within 30 calendar days after receiving the acquiring Participant's notice, the other Participant notifies the acquiring Participant of its election to accept a proportionate interest in the acquired interest equal to its Participating Interest, the acquiring Participant shall convey to the other Participant such a proportionate undivided interest therein, free and clear of all Encumbrances arising by, through or under the acquiring Participant or its Affiliate.  The acquired interest shall become a part of the Property for all purposes of this Agreement immediately upon the notice of such other Participant's election to accept the proportionate interest therein.  Such other Participant shall promptly pay to the acquiring Participant a proportionate share of the latter's actual out-of-pocket acquisition costs equal to such other Participant's Participating Interest.

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Option Not Exercised

15.4                If the other Participant does not give notice within the 30 day period set forth in §15.3, it shall have no interest in the acquired interest, and the acquired interest shall not be a part of the Property or be subject to this Agreement.

PART 16

GENERAL PROVISIONS

Notices

16.1                All notices, payments and other required communications ("Notices") to the Participants shall be in writing, and shall be given: (i) by personal delivery to the Participant, or (ii) by electronic communication, with a confirmation sent by registered or certified mail, return receipt requested, or (iii) by registered or certified mail, return receipt requested.

                      All Notices shall be effective and shall be deemed delivered: (i) if by personal delivery on the date of delivery, (ii) if by electronic communication on the date of receipt of the electronic communication, and (iii) if solely by mail on the day delivered as shown on the actual receipt.  A Participant may change its address from time-to-time by Notice to the other Participant.
(a)       Notice to Magnus shall be sent to:
Magnus Minerals OY

PL 3

33211 Tampere

Finland

Attention:       Carl Löfberg, Managing Director

Fax:                 u

with a copy to:

u

(b)       Notice to FinMetal shall be sent to:
FinMetal Mining Ltd.

Suite 500, 666 Burrard Street

Vancouver, British Columbia

Canada V6C 2X8

Attention:       Dan Hunter, Chief Executive Officer

Fax:                 u

with a copy to:

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Lang Michener LLP

Suite 1500, 1055 West Georgia Street

Vancouver, British Columbia

Canada V6B 4N7

Attention:       Thomas J. Deutsch

Fax:                 (604) 893-2679

Waiver

16.2                The failure of a Participant to insist on the strict performance of any provision of this Agreement or to exercise any right, power or remedy upon a breach hereof shall not constitute a waiver of any provision of this Agreement or limit the Participant's right thereafter to enforce any provision or exercise any right.

Modification

16.3                No modification of this Agreement shall be valid unless made in writing and duly executed by the Participants.

Force Majeure

16.4                The obligations of a Participant, other than the payment of money provided hereunder, shall be suspended to the extent and for the period that performance is prevented or delayed by any cause, whether foreseeable or unforeseeable, beyond its reasonable control, including, without limitation, labour disputes (however arising and whether or not employee demands are reasonable or within the power of the Participant to grant); acts of God; Laws, or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any public or private license, permit or other authorization; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of Environmental Laws; action or inaction by any governmental entity that delays or prevents the issuance or granting of any approval or authorization required to conduct Operations; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot, civil strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought or other adverse weather condition; delay or failure by suppliers or transporters of materials, parts, supplies, services or equipment or by contractors' or subcontractors' shortage of, or inability to obtain, labour, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; actions by citizen groups, including but not limited to environmental organizations or native rights groups; or any other cause whether similar or dissimilar to the foregoing.  The affected Participant shall promptly give notice to the other Participant of the suspension of performance, stating therein the nature of the suspension, the reasons therefor, and the expected duration thereof.  The affected Participant shall resume performance as soon as reasonably possible.  During the period of suspension, the obligations of the Participants to advance funds pursuant to §9.8 shall be reduced to levels consistent with Operations.

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Survival of Terms and Conditions

16.5                The following Sections shall survive the transfer of any interests in the Assets under this Agreement or the termination of the Venture to the full extent necessary for their enforcement and the protection of the Participant in whose favour they run: §2.1, §2.2, §4.2, §6.3, §6.5, §9.9, §11.5, §11.6, §11.7, §11.8 and §11.9.

Confidentiality and Public Statements

16.6                Except as otherwise provided in this §16.6, the terms and conditions of this Agreement, and all data, reports, records, and other information of any kind whatsoever developed or acquired by any Participant in connection with this Venture shall be treated by the Participants as confidential (hereinafter called "Confidential Information") and no Participant shall reveal or otherwise disclose such Confidential Information to third parties without the prior written consent of the other Participant.  Confidential Information that is available or that becomes available in the public domain, other than through a breach of this provision by a Participant, shall no longer be treated as Confidential Information.

                      The foregoing restrictions shall not apply to the disclosure of Confidential Information to any Affiliate, to any public or private financing agency or institution, to any contractors or subcontractors which the Participants may engage and to employees and consultants of the Participants or to any third party to which a Participant contemplates the transfer, sale, assignment, Encumbrance or other disposition of all or part of its Participating Interest pursuant to Part 14 or with which a Participant or its Affiliate contemplates a merger, amalgamation or other corporate reorganization; provided, however, that in any such case only such Confidential Information as such third party shall have a legitimate business need to know shall be disclosed and the person or company to whom disclosure is made shall first undertake in writing to protect the confidential nature of such information at least to the same extent as the parties are obligated under this §16.6.

                      In the event that a Participant is required to disclose Confidential Information to any government, any court, or any agency or department thereof to the extent required by applicable law, rule or regulation, or in response to a legitimate request for such Confidential Information, the Participant so required shall immediately notify the other Participants hereto of such requirement and the terms thereof, and the proposed form and content of the disclosure prior to such submission.  The other Participant shall have the right to review and comment upon the form and content of the disclosure and to object to such disclosure to the court, agency, exchange or department concerned, and to seek confidential treatment of any Confidential Information to be disclosed on such terms as such Participant shall, in its sole discretion, determine.

                      For greater certainty, in the event a party is required or wishes to issue a press release containing Confidential Information, it shall provide the other party with a draft of the intended release for review and comment within one Business Day; the other party shall have the rights to object and withhold its consent set forth above acting reasonably but if no comment is provided within such time, the party will be free to issue the press release.

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                      Magnus authorizes Management Committee to consent on Magnus' behalf to the release of any Confidential Information that is required to be disclosed as set out above or to an interested third party or the investment community.

                      The provisions of this §16.6 shall apply during the term of this Agreement and for a period of three years thereafter and shall continue to apply to any Participant which forfeits, surrenders, assigns, transfers or otherwise disposes of its Participating Interest for such three year period.

Entire Agreement; Successors and Assigns

16.7                This Agreement contains the entire understanding of the Participants and supersedes all prior agreements and understandings, whether written or oral, between the Participants relating to the subject matter hereof, with respect to the Assets subject hereto, and any and all other prior negotiations, representations, offers or understandings between Magnus and FinMetal relating to the Property, whether written or oral.  This Agreement and the obligations and rights created herein shall be binding upon and enure to the benefit of the respective successors and permitted assigns of the Participants.

Dispute Resolution

16.8                The parties agree that all questions or matters in dispute with respect to any of the provisions of this agreement shall be submitted to arbitration on the following basis:
(a)       it is a condition precedent to the right of either party to submit any matter to arbitration pursuant to the provisions hereof that such party shall have given not less than 30 calendar days prior written notice of its intention to do so to the other party together with particulars of the matter in dispute; on the expiration of such 30 calendar days, the party which gave such notice may proceed to refer the dispute to arbitration as provided for in sub-paragraph §(b) below;

(b)       the party desiring arbitration shall appoint one arbitrator, and shall notify the other party of such appointment, and the other party shall, within 15 calendar days after receiving such notice, appoint an arbitrator, and the two arbitrators so named before proceeding to act, shall, within 15 calendar days of the appointment of the last appointed arbitrator, unanimously agree on the appointment of a third arbitrator to act with them and to be the chairman of the arbitration herein provided for. If the other party shall fail to appoint an arbitrator within 15 days after receiving notice of the appointment of the first arbitrator, or if the two arbitrators appointed by the parties shall be unable to agree on the appointment of the chairman, the chairman shall be appointed under the provisions of the Rules of the International Chamber of Commerce.  Except as specifically otherwise provided in this subparagraph (b), the arbitration herein provided for shall be conducted in accordance with such Act.  The chairman shall fix a time and place in Helsinki, Finland for the purpose of hearing the evidence and representations of the parties, and he shall provide over the arbitration and determine all questions of procedure not provided for under such Act or this sub-paragraph.  After hearing any evidence and representations that the parties may submit, the arbitrators shall make and award and reduce the same to writing, and deliver one copy thereof to each of the parties. The expense of the arbitration shall be as specified in the award; and

- 38 -
(c)       the parties agree that the award of a majority of the arbitrators shall be final and binding upon each of them.

Further Assurances

16.9                Each Participant shall take, from time to time and without additional consideration, such further actions and execute such additional instruments as may be reasonably necessary or convenient to implement and carry out the intent and purpose of this Agreement.

Headings

16.10              The headings to the Sections of this Agreement and the Schedules are inserted for convenience only and shall not affect the construction hereof.

Currency

16.11              All currency amounts herein shall be as between the parties expressed in United States dollars or Euros, the currency adopted by certain members of the European Union.

Severability

16.12              If any provision of this Agreement is or shall become illegal, invalid, or unenforceable, in whole or in part, the remaining provisions shall nevertheless be and remain valid and enforceable and the said remaining provisions shall be construed as if this Agreement had been executed without the illegal, invalid, or unenforceable portion.

Taxes

16.13              Each Participant shall be directly responsible for and shall directly pay all taxes applicable to revenues received by the Participant through Operations under this Agreement.  In particular, each Participant shall individually file its tax returns with the proper authorities and independently file claims for and recover any income tax credits.  A Participant's decisions with respect to such tax matters shall not have any binding effect on the course of actions taken by the other Participant.  All costs of Operations incurred hereunder shall be for the account of the Participant or Participants making or incurring the same, if more than one then in proportion to their respective Participating Interests, and each Participant on whose behalf any costs have been so incurred shall be entitled to claim all tax benefits, write-offs and deductions with respect thereto.

Partition

16.14              Each of the parties waives, during the term of this Agreement, any right to partition of the Assets or any part thereof and no party shall seek or be entitled to partition of the Property or other Assets whether by way of physical partition, judicial sale or otherwise during the term of this Agreement.

- 39 -

Governing Law

16.15              This Agreement shall be construed and governed by the laws of Finland and the parties hereby attorn to the jurisdiction of the Courts of Finland in respect of all matters arising hereunder.

Counterparts

16.16              This Agreement and any other writing delivered pursuant hereto may be executed in any number of counterparts with the same effect as if all parties to this Agreement or such other writing had signed the same document and all counterparts will be construed together and will constitute one in the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

MAGNUS MINERALS OY

Per:     ______________________________

            Carl Löfberg

            Managing Director

FINMETAL MINING LTD.

Per:     ______________________________

            Dan Hunter

            Chief Executive Officer

SCHEDULE A

This is Schedule A to the Joint Venture Agreement between Magnus Minerals OY and FinMetal Mining Ltd. dated for reference as of ________________.

 

Mineral Claims Comprising The Property

The following are the mineral claims comprising the Property:

	

Reservation name
	
Claim Name (pending applications)
	

Concession code
	

Expiry yy.mm.dd
	

Registered Owner

	
Hälvälä 4
	 	
2007/04
	
08.01.09
	
Oy SES Finland Ltd.

	
Hälvälä 5 - 8
	 	
2007/12
	
08.01 16  
	
Magnus Minerals Oy

	
Kangaslampi 1-3
	 	
2006/203
	
07.09.18
	
Magnus Minerals Oy

	 	
Hälvälä
	
8212/1
	 	
Oy SES Finland Ltd.

	 	
Hälvälä N
	
8323/3
	 	
Magnus Minerals Oy

	 	
Hälvälä E
	
8323/2
	 	
Magnus Minerals Oy

	 	
Hälvälä S
	
8323/4
	 	
Magnus Minerals Oy

	 	
Hälvälä W
	
8323/1
	 	
Magnus Minerals Oy

	 	
Kalvosenjärvi
	
8324/3
	 	
Magnus Minerals Oy

	 	
Kelkkalampi
	
8324/1
	 	
Magnus Minerals Oy

	 	
Laukunlampi
	
8324/2
	 	
Magnus Minerals Oy

	 	
Muhola
	
8324/4
	 	
Magnus Minerals Oy

	 	
Sulkavanniemi
	
8334/1
	 	
Magnus Minerals Oy

__________

SCHEDULE B

This is Schedule B to the Joint Venture Agreement between Magnus Minerals OY and FinMetal Mining Ltd. dated for reference as of ________________.

AREA OF INTEREST

The following is the area comprising the Area of Interest surrounding the Property:

 

SCHEDULE C

This is Schedule C to the Joint Venture Agreement between Magnus Minerals OY and FinMetal Mining Ltd. dated for reference as of ________________.

ACCOUNTING PROCEDURE

The financial and accounting procedures to be followed by the Manager and the Participants under the Agreement are set forth below.  Reference in this Accounting Procedure to Sections are to those located in this Accounting Procedure unless it is expressly stated that they are references to the Agreement.

The purpose of this Accounting Procedure is to establish equitable methods for determining charges and credits applicable to operations under the Agreement.  It is the intent of the Participants that none of them shall lose or profit by reason of their duties and responsibilities as the Manager.  The Participants shall meet and in good faith endeavour to agree upon changes deemed necessary to correct any unfairness or inequity.  In the event of a conflict between the provisions of this Accounting Procedure and those of the Agreement, the provisions of the Agreement shall control.

1.                    GENERAL PROVISIONS

1.1                  General Accounting Records

The Manager shall maintain detailed and comprehensive accounting records in accordance with this Accounting Procedure, sufficient to provide a record of revenues and expenditures and periodic statements of financial position and the results of operations for managerial, tax, regulatory or other financial reporting purposes.  Such records shall be retained for the duration of the period allowed the Participants for audit or the period necessary to comply with tax or other regulatory requirements.  The records shall reflect all obligations, advances and credits of the Participants.

1.2                  Bank Accounts

After the decision is made to begin Development, the Manager shall maintain one or more separate bank accounts for the payment of all expenses and the deposit of all receipts.

2.                  CHARGES TO JOINT ACCOUNT

Subject to the limitations hereinafter set forth, the Manager shall charge the Joint Account with the following:

2.1                  Rentals and Other Payments

Property maintenance costs and other payments, including Government Fees and any other payments pursuant to the Option Agreement, necessary to maintain title to the Assets.

- 2 -

2.2                  Labour and Employee Benefits
(a)       Salaries and wages of the Manager's employees directly engaged in Operations, including salaries or wages of employees who are temporarily assigned to and directly employed by the Manager.

(b)       The Manager's cost of holiday, vacation, sickness and disability benefits, and other customary allowances applicable to the salaries and wages chargeable under Sections 2.2(a) and 2.13.

(c)       The Manager's actual cost of established plans for employees' group life insurance, hospitalization, pension, retirement, stock purchase, thrift, bonus (except production or incentive bonus plans under a union contract based on actual rates of production, cost savings and other production factors, and similar non-union bonus plans customary in the industry or necessary to attract competent employees, which bonus payments shall be considered salaries and wages under §2.2(a) or 2.13, rather than employees' benefit plans) and other benefit plans of a like nature applicable to salaries and wages chargeable under §2.2(a) or 2.13, provided that the plans are limited to the extent feasible to those customary in the industry.

(d)       Cost of assessments imposed by governmental authority which are applicable to salaries and wages chargeable under Sections 2.2(a) and 2.13, including all penalties except those resulting from the wilful misconduct or gross negligence of the Manager.

(e)       Those costs in Sections 2.2(b), 2.2(c), 2.2(d) may be charged on a "when and as paid basis" or by "percentage assessment" on the amount of salaries and wages.  If percentage assessment is used, the rate shall be applied to wages or salaries excluding overtime and bonuses.  Such rate shall be based on the Manager's cost experience and it shall be periodically adjusted to ensure that the total of such charges does not exceed the actual cost thereof to the Manager.

2.3                  Assets

Cost of all Assets purchased or furnished.

2.4                  Transportation

Reasonable costs incurred in connection with the transportation of employees, equipment, material and supplies necessary for exploration, maintenance and operation of Assets.

2.5                  Services
(a)       The cost of contract services and utilities procured from outside sources, other than services described in Sections 2.10 and 2.14.  If contract services are performed by an Affiliate of the Manager, the cost charged to the Joint Account shall not be greater than that for which comparable services and utilities are available in the open market.

- 3 -
(b)       The costs of using the Manager's exclusively-owned facilities in support of Venture activities provided that the charges may not exceed those currently prevailing in the vicinity.  Such costs shall include costs of maintenance, repairs, other operating expenses, insurance, taxes, depreciation and interest at a rate not to exceed Prime Rate plus three percent (3%) per annum.

2.6                  Materials, Equipment and Supplies

The cost of materials, equipment and supplies ("Material") purchased from unaffiliated third parties or furnished by either Participant as provided in Section 3.  The Manager shall purchase or furnish only so much Material as may be required for use in efficient and economical Operations.  The Manager shall also maintain inventory levels of Materials at reasonable levels to avoid unnecessary accumulation of surplus stock.

2.7                  Environmental Compliance Fund

Costs of reasonably anticipated Environmental Compliance which, on a Program basis, shall be determined by the Management Committee and shall be based on proportionate contributions in an amount sufficient to establish a fund, which through successive proportionate contributions during the duration of the Agreement, will pay for ongoing Environmental Compliance conducted during Operations and which will cover the reasonably anticipated costs of mine closure, post-Operations Environmental Compliance and other continuing obligations.

2.8                  Insurance Premiums

Premiums paid or accrued for insurance required for the protection of the Participants.

2.9                  Damages and Losses

All costs in excess of insurance proceeds necessary to repair or replace damage or losses to any Assets resulting from any cause other than the wilful misconduct or gross negligence of the Manager.

2.10                Legal Expense

All legal costs and expenses incurred in or resulting from the Operations or necessary to protect or recover the Assets.  Routine legal expenses are included under Section 2.14.

2.11                Audit

Cost of annual audits under §9.10 of the Joint Venture Agreement.

- 4 -

2.12                Taxes

All taxes (except income taxes) of every kind and nature assessed or levied upon or in connection with the Assets, the production of Products or Operations, which have been paid by the Manager for the benefit of the Participants.  Each Participant is separately responsible for income taxes which are attributable to its respective Participating Interest.

2.13                District and Camp Expense (Field Supervision and Camp Expenses)

A pro rata portion of (i) the salaries and expenses of the Manager's superintendent and other employees serving Operations whose time is not allocated directly to such Operations, and (ii) the costs of maintaining and operating an office (the "Manager's Project Office") and any necessary suboffice and (iii) all necessary camps, including housing facilities for employees, used for Operations.  The expense of those facilities, less any revenue therefrom, shall include depreciation or a fair monthly rental in lieu of depreciation of the investment.  Such charges shall be apportioned for all Property served by the employees and facilities on an equitable basis consistent with the Manager's general accounting practice and generally accepted accounting principles.

2.14                Administrative Charge

After the Participants have made their entire Initial Contributions pursuant to Sections 5.1 and 5.2 of the Joint Venture Agreement, the Manager shall charge the Joint Account each month a sum as provided below, which shall be a liquidated amount to reimburse the Manager for its home office overhead and general and administrative expenses for its conduct of Operations, which shall be in lieu of any management fee:
(a)       with respect to Operations before commencement of Development, the Manager's fee shall be ten percent (10%) of the Allowable Costs other than funds expended pursuant to any individual contract for materials or services which exceed in the aggregate US$35,000.00 in any Program year, for which the Manager's fee shall be two percent (2%);

(b)       with respect to operations after the commencement of Development but before commencement of Mining, Manager's fee shall be five percent (5%) of Allowable Costs other than funds expended pursuant to any individual contract for materials or services which exceeds in the aggregate US$100,000 in any program year in which event the fee for such matters shall be two percent (2%);

These fee rates are based upon the principle that the Manager shall not make a profit or loss from this administrative charge but should be fairly and adequately compensated for the pro rata share of its costs and expenses.  The specific rates provided for in this Section 2.14 shall be established and may be amended from time to time by mutual agreement among the Parties hereto if, in practice, the rates are found to be insufficient or excessive.

- 5 -

Allowable Costs as used in this Section 2.14 shall include all amounts accrued to the Environmental Compliance fund, and all charges to the Joint Account except (i) the administrative charge defined herein; (ii) depreciation, depletion or amortization of tangible or intangible assets; (iii) amounts expended for acquisition, construction or installation of tangible or intangible assets after mining operations have commenced; (iv) Property payments, taxes and assessments; and (v) funds disbursed from the Environmental Compliance fund.

The following representative list of items comprising the Manager's principal business office expenses are expressly covered by the administrative charge provided in this Section 2.14:
(a)       administrative supervision, which includes services rendered by officers and directors of the Manager for Operations, except to the extent that such services represent a direct charge to the Joint Account, as provided for in Section 2.2;

(b)       accounting, billing and record keeping in accordance with governmental regulations and the provisions of the Joint Venture Agreement;

(c)       handling of all tax matters, including any protests, except any outside professional fees which the Management Committee may approve as a direct charge to the Joint Account;

(d)       routine legal services by the Manager's in-house legal staff, and

(e)       records and storage space, telephone service and office supplies.

2.15                Other Expenditures

Any reasonable direct expenditure, other than expenditures which are covered by the foregoing provisions, incurred by the Manager for the necessary and proper conduct of Operations.

3.                    BASIS OF CHARGES TO JOINT ACCOUNT

3.1                  Purchases

Material purchased and services procured shall be charged at prices paid by the Manager after deduction of all discounts actually received.

3.2                  Material Furnished by the Manager

At its discretion, the Manager may furnish Material from the Manager's stocks under the following conditions:
(a)       New Material (Condition "A"): New Material transferred from the Manager's Property shall be priced FOB the nearest reputable supply store or railway receiving point, where like Material is available, at current replacement cost of the same kind of Material (the "New Price").

(b)       Used Material (Conditions "B" and "C"):
(i)       material in sound and serviceable condition and suitable for reuse without reconditioning shall be classified as Condition "B" and priced at seventy-five percent (75%) of New Price.

- 6 -
(ii)      other used Material as defined hereafter shall be classified as Condition "C" and priced at fifty percent (50%) of New Price:
(A)       used Material which after reconditioning will be further serviceable for original function as good second-hand Material (Condition "B");

(B)       used Material which is serviceable for original function but not substantially suitable for reconditioning;

(C)       Material which cannot be classified as Condition "B" or Condition "C" shall be priced at a value commensurate with its use;

(D)       Material no longer suitable for its original purpose but usable for some other purpose shall be priced on a basis comparable with items normally used for such other purpose.

3.3                  Premium Prices

Whenever Material is not readily obtainable at prices specified in Sections 3.1 and 3.2, the Manager may charge the Joint Account for the required Material on the basis of the Manager's direct cost and expenses incurred in procuring such material; provided, however, that prior notice of the proposed charge is given to the Participants, whereupon any Participant shall have the right, by notifying the Manager within ten calendar days of the delivery of the notice from the Manager, to furnish at the usual receiving point all or part of its share of Material suitable for use and acceptable to the Manager.  If a Participant so furnishes Material in kind, the Manager shall make appropriate credits to its account.

3.4                  Warranty of Material Furnished by the Manager or Participants

Neither the Manager nor any Participant warrants the Material furnished beyond any dealer's or manufacturer's warranty.

4.                    DISPOSAL OF MATERIAL

4.1                  Disposition Generally

The Manager shall have no obligation to purchase a Participant's interest in Material.  The Management Committee shall determine the disposition of major items of surplus Material, provided the Manager shall have the right to dispose of normal accumulations of junk and scrap Material either by transfer to the Participants as provided in §4.2 or by sale.  The Manager shall credit the Participants in proportion to their Participating Interest for all Material sold hereunder.

4.2                  Division in Kind

Division of Material in kind between the Participants shall be in proportion to their respective Participating Interests, and corresponding credits shall be made to the Joint Account.

- 7 -

4.3                  Sales

Sales of material to third parties shall be credited to the Joint Account at the net amount received.  Any damages or claims by the Purchaser shall be charged back to the Joint Account if and when paid.

5.                    INVENTORIES

5.1                  Periodic Inventories, Notice and Representations

At reasonable intervals, inventories shall be taken by the Manager, which shall include all such Material as is ordinarily considered controllable by operators of mining Property.  The expense of conducting such periodic inventories shall be charged to the Joint Account.

5.2                  Reconciliation and Adjustment of Inventories

Reconciliation of inventory with charges to the Joint Account shall be made, and a list of overages and shortages shall be determined by the Manager.  Inventory adjustments shall be made by the Manager to the Joint Account for overages and shortages, but the Manager shall be held accountable to the Venture only for shortages due to lack of reasonable diligence.

SCHEDULE D

This is Schedule D to the Joint Venture Agreement between Magnus Minerals OY and FinMetal Mining Ltd. dated for reference as of ________________.

NET RETURNS

Pursuant to the Agreement to which this Schedule is attached, a party ("Payee") may be entitled to a royalty equal to one percent (1%) of net returns (the "Net Returns Royalty") payable by the other party ("Payor") as set forth below.

Net Returns Royalty

A.                    "Net Returns Royalty" means the aggregate of:
1.       all revenues from the sale or other disposition of ores, concentrates or minerals produced from the Property; and

2.       all revenues from the operation, sale or other disposition of any facilities the cost of which is included in the definition of "Operating Expenses", "Capital Expenses", or "Exploration Expenses"

less (without duplication) Working Capital, Operating Expenses, Capital Expenses and Exploration Expenses.

B.                    "Working Capital" means the amount reasonably necessary to provide for the operation of the mining operation on the Property and for the operation and maintenance of the Facilities for a period of six months.

C.                    "Operating Expenses" means all costs, expenses, obligations, liabilities and charges of whatsoever nature or kind incurred or chargeable directly or indirectly in connection with Commercial Production from the Property and in connection with the maintenance and operation of the Facilities, all in accordance with generally accepted accounting principles, consistently applied, including, without limiting the generality of the foregoing, all amounts payable in connection with mining, handling, processing, refining, transporting and marketing of ore, concentrates, metals, minerals and other products produced from the Property, all amounts payable for the operation and maintenance of the Facilities including the replacement of items which by their nature require periodic replacement, all taxes (other than income taxes), royalties and other imposts and all amounts payable or chargeable in respect of reasonable overhead and administrative services.

D.                    "Capital Expenses" means all expenses, obligations and liabilities of whatsoever kind (being of a capital nature in accordance with generally accepted accounting principles) incurred or chargeable, directly or indirectly, with respect to the development, acquisition, redevelopment, modernization and expansion of the Property and the Facilities, including, without limiting the generality of the foregoing, interest thereon from the time so incurred or chargeable at a rate per annum from time to time equal to prime rate established by the Royal Bank of Canada plus two percent (2%) percent per annum, but does not include Operating Expenses nor Exploration Expenses.

- 2 -

E.                    "Exploration Expenses" means all costs, expenses, obligations, liabilities and charges of whatsoever nature or kind incurred or chargeable, directly or indirectly, in connection with the exploration and development of the Property including, without limiting the generality of the foregoing, all costs reasonably attributable, in accordance with generally accepted accounting principles, to the design, planning, testing, financing, administration, marketing, engineering, legal, accounting, transportation and other incidental functions associated with the exploration and mining operation contemplated by this agreement and with the Facilities, but does not include Operating Expenses nor Capital Expenses.

F.                    "Facilities" means all plant, equipment, structures, roads, rail lines, storage and transport facilities, housing and service structures, real property or interest therein, whether on the Property or not, acquired or constructed exclusively for the mining operation on the Property contemplated by this Agreement (all commonly referred to as "infrastructure").

G.                    "Commercial Production" means the operation of the Property or any portion thereof as a producing mine and the production of mineral products therefrom (but does not include bulk sampling, pilot plant or test operations).

Payment

Net Returns shall be calculated for each calendar quarter in which Net Returns are realized, and payment as due hereunder shall be made within 30 days following the end of each such calendar quarter.  Such payments shall be accompanied by a statement summarizing the computation of Net Returns and copies of all relevant settlement sheets.  Such quarterly payments are provisional and subject to adjustment within 90 days following the end of each calendar year.  Within ninety days after the end of each calendar year, Payor shall deliver to Payee an unaudited statement of royalties paid to Payee during the year and the calculation thereof.  All year end statements shall be deemed true and correct six months after presentation, unless within that period Payee delivers notice to Payor specifying with particularity the grounds for each exception.  Payee shall be entitled, at Payees's expense, to an annual independent audit of the statement by a national firm of chartered accountants, only if Payee delivers a demand for an audit to Payor within four months after presentation of the related year-end statement.

SCHEDULE D

This is Schedule D to the Option Agreement between Magnus Minerals OY and FinMetal Mining Ltd. dated for reference as of June 11, 2007.

NET SMELTER RETURN ROYALTY

Pursuant to the Agreement to which this Schedule is attached, a party ("Payee") may be entitled to a royalty equal to a two percent (2%) net smelter return royalty (the "Net Smelter Return Royalty") payable by the other party ("Payor") as set forth below.

Net Smelter Return Royalty

"Net Smelter Return Royalty" means the aggregate of:

(1)       all revenues from the sale or other disposition of ores, concentrates or minerals produced from the Property;
less

(2)       the payment of all freight charges from the shipping point to the smelter and all smelter charges;

but without deduction of any other charges.  No deductions are made for the operating costs of the mine-mill complex including working capital, operating expenses, capital expenses or exploration expenses.

Payment

Each Net Smelter Return Royalty shall be calculated for each calendar quarter in which a Net Smelter Return Royalty is realized, and payment as due hereunder shall be made within 30 calendar days following the end of each such calendar quarter.  Such payments shall be accompanied by a statement summarizing the computation of the Net Smelter Return Royalty and copies of all relevant settlement sheets.  Such quarterly payments are provisional and subject to adjustment within 90 calendar days following the end of each calendar year.  Within 90 calendar days after the end of each calendar year, the Payor shall deliver to the Payee an unaudited statement of any Net Smelter Return Royalties paid to the Payee during the year and the calculation thereof.  All year end statements shall be deemed true and correct six months after presentation, unless within that period the Payee delivers notice to the Payor specifying with particularity the grounds for each exception.  The Payee shall be entitled, at the Payees's expense, to an annual independent audit of the statement by a national firm of chartered accountants; provided, however, that the Payee delivers a demand for an audit to the Payor within four months after presentation of the related year-end statement.

__________Commercial Lease

 Exhibit 10.1 
 OFFICE 
 SUBLEASE AGREEMENT 
 Knobbe, Martens, Olson & Bear, LLP, 
 a California limited liability partnership, 
 as Landlord, 
 and 
 ECC Capital Corporation, 
 a Maryland
corporation, 
 as Tenant 
 2040
MAIN STREET 
 IRVINE, CALIFORNIA 
  

					
	2040 Main Street	 		 	
	Office Lease Agreement	 		 	

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	ARTICLE 1	  	LEASE OF PREMISES AND LEASE TERM	  	3
			
	1.1	  	Premises	  	3
	1.2	  	Term, Delivery and Commencement.	  	3
			
	ARTICLE 2	  	RENTAL AND OTHER PAYMENTS	  	4
			
	2.1	  	Basic Rent	  	4
	2.2	  	Additional Rent	  	4
	2.3	  	Delinquent Rental Payments	  	4
	2.4	  	Independent Obligations	  	4
			
	ARTICLE 3	  	PROPERTY TAXES AND OPERATING EXPENSES	  	4
			
	3.1	  	Payment of Excess Expenses	  	4
	3.2	  	Estimation of Tenant's Share of Excess Expenses	  	4
	3.3	  	Payment of Estimated Tenant's Share of Excess Expenses	  	5
	3.4	  	Re-Estimation of Excess Expenses	  	5
	3.5	  	Confirmation of Tenant's Share of Excess Expenses	  	5
	3.6	  	Tenant's Inspection and Audit Rights	  	5
	3.7	  	Personal Property Taxes	  	5
	3.8	  	Landlord's Right to Contest Property Taxes	  	5
	3.9	  	Rent Tax	  	6
			
	ARTICLE 4	  	USE	  	6
			
	4.1	  	Permitted Use	  	6
	4.2	  	Acceptance of Premises	  	6
	4.3	  	Increased Insurance	  	6
	4.4	  	Laws/Building Rules	  	6
	4.5	  	Common Area	  	6
	4.6	  	Signs	  	6
			
	ARTICLE 5	  	HAZARDOUS MATERIALS	  	6
			
	5.1	  	Compliance with Hazardous Materials Laws	  	6
	5.2	  	Notice of Actions	  	7
	5.3	  	Disclosure and Warning Obligations	  	7
	5.4	  	Indemnification	  	7
			
	ARTICLE 6	  	SERVICES	  	7
			
	6.1	  	Landlord's Obligations	  	7
	6.2	  	Tenant's Obligations	  	8
	6.3	  	Other Provisions Relating to Services	  	8
	6.4	  	Tenant Devices	  	8
			
	ARTICLE 7	  	MAINTENANCE AND REPAIR	  	8
			
	7.1	  	Landlord's Obligations	  	8
	7.2	  	Tenant's Obligations	  	8
			
	ARTICLE 8	  	CHANGES AND ALTERATIONS	  	8
			
	8.1	  	Landlord Approval	  	8
	8.2	  	Tenant's Responsibility for Cost and Insurance	  	9
	8.3	  	Construction Obligations and Ownership	  	9
	8.4	  	Liens	  	9
	8.5	  	Indemnification	  	9
			
	ARTICLE 9	  	RIGHTS RESERVED BY LANDLORD	  	9
			
	9.1	  	Landlord's Entry	  	9
	9.2	  	Control of Property	  	9
	9.3	  	Right to Cure	  	10
	9.4	  	Space Planning Substitution	  	10
			
	ARTICLE 10	  	INSURANCE	  	10
			
	10.1	  	Tenant's Insurance	  	10
	10.2	  	Landlord's Insurance	  	10
	10.3	  	Waivers and Releases of Claims and Subrogation.	  	11
	10.4	  	Tenant's Failure to Insure	  	11
	10.5	  	No Limitation	  	11
	10.6	  	Tenant's Indemnification	  	11
			
	ARTICLE 11	  	DAMAGE OR DESTRUCTION	  	11
			
	11.1	  	Tenantable Within 360 Days	  	11
	11.2	  	Not Tenantable Within 360 Days	  	11

  

					
	2040 Main Street	 	i	 	9/29/04
	Office Lease Agreement	 		 	

 TABLE OF CONTENTS 
 (Continued) 
  

					
	 	  	 	  	Page
	11.3	  	Building Substantially Damaged	  	11
	11.4	  	Insufficient Proceeds	  	12
	11.5	  	Landlord's Repair; Rent Abatement	  	12
	11.6	  	Rent Apportionment Upon Termination	  	12
	11.7	  	Exclusive Casualty Remedy	  	
			
	ARTICLE 12	  	EMINENT DOMAIN	  	12
			
	12.1	  	Termination of Lease	  	12
	12.2	  	Landlord's Repair Obligations	  	12
	12.3	  	Tenant's Participation	  	12
	12.4	  	Exclusive Taking Remedy	  	12
			
	ARTICLE 13	  	TRANSFERS	  	13
			
	13.1	  	Restriction on Transfers	  	13
	13.2	  	Recapture Right	  	13
	13.3	  	No Merger	  	13
	13.4	  	Costs	  	13
	13.5	  	Transfers to Affiliates	  	13
			
	ARTICLE 14	  	DEFAULTS; REMEDIES	  	13
			
	14.1	  	Events of Default	  	13
	14.2	  	Remedies	  	14
	14.3	  	Costs	  	15
	14.4	  	Waiver and Release by Tenant	  	15
	14.5	  	Landlord's Default	  	15
	14.6	  	No Waiver	  	15
			
	ARTICLE 15	  	CREDITORS; ESTOPPEL CERTIFICATES	  	15
			
	15.1	  	Subordination	  	15
	15.2	  	Attornment	  	16
	15.3	  	Mortgagee Protection Clause	  	16
	15.4	  	Estoppel Certificates.	  	16
			
	ARTICLE 16	  	TERMINATION OF LEASE	  	16
			
	16.1	  	Surrender of Premises	  	16
	16.2	  	Holding Over	  	17
			
	ARTICLE 17	  	ADDITIONAL PROVISIONS	  	17
			
	17.1	  	Security Deposit	  	17
	17.2	  	Parking	  	17
	17.3	  	Building Name, Address and Depiction	  	17
			
	ARTICLE 18	  	MISCELLANEOUS PROVISIONS	  	17
			
	18.1	  	Notices	  	17
	18.2	  	Transfer of Landlord's Interest	  	18
	18.3	  	Successors	  	18
	18.4	  	Captions and Interpretation	  	18
	18.5	  	Relationship of Parties	  	18
	18.6	  	Entire Agreement; Amendment	  	18
	18.7	  	Severability	  	18
	18.8	  	Landlord's Limited Liability	  	18
	18.9	  	Survival	  	18
	18.10	  	Attorneys' Fees	  	18
	18.11	  	Brokers	  	18
	18.12	  	Tenant's Waiver of Claim	  	18
	18.13	  	Governing Law	  	19
	18.14	  	Time is of the Essence	  	19
	18.15	  	Joint and Several Liability	  	19
	18.16	  	Tenant's Waiver of Landlord's Default	  	19
	18.17	  	Tenant's Organization Documents; Authority	  	19
	18.18	  	Provisions are Covenants and Conditions	  	19
	18.19	  	Force Majeure	  	19
	18.20	  	Management	  	19
	18.21	  	Financial Statements	  	19
	18.22	  	Quiet Enjoyment	  	19
	18.23	  	No Recording	  	19
	18.24	  	Nondisclosure of Lease Terms	  	19
	18.25	  	Construction of Lease and Terms	  	20

  

					
	2040 Main Street	 	ii	 	9/29/04
	Office Lease Agreement	 		 	

 TABLE OF CONTENTS 
 (Continued) 
  

					
	  	 	  	  	Page
	EXHIBITS
			
	 EXHIBIT “A”
	 	Definitions	  	1
			
	 EXHIBIT “B”
	 	Legal Description of the Land	  	1
			
	 EXHIBIT “C”
	 	Floor Plan	  	1
			
	 EXHIBIT “D”
	 	Commencement Date Memorandum	  	1
			
	 EXHIBIT “E”
	 	Building Rules	  	1
			
	 EXHIBIT “F”
	 	Description of Parking Facility	  	1

  

					
	2040 Main Street	 	iii	 	9/29/04
	Office Lease Agreement	 		 	

 OFFICE SUBLEASE AGREEMENT 
 This Office Sublease Agreement (this “Lease”) is made and entered into as of the Effective Date by and between Knobbe, Martens,
Olson & Bear, LLP, as sublessor (“Landlord”), and ECC Capital Corporation, a Maryland corporation, as sublessee (“Tenant”). 
 RECITALS 
 A. Pursuant to that certain Office Lease Agreement dated October 25, 2000, as amended
(the “Master Lease”), by and between 2040 Main, LLC, a Delaware limited liability company, as lessor (“Master Lessor”), and Landlord as lessee, Master Lessor has leased to Landlord certain premises (the “Master
Premises”) in the building commonly known as 2040 Main Street, Irvine, California (the “Building”). 
 B. Landlord now desires to sublease to Tenant a portion of the Master Premises, namely a portion of the 8th floor, and Sublessee desires to sublease and occupy the same, on the terms and subject to the conditions set forth in this Lease. 
 NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions contained herein, Landlord and Tenant hereby agree as follows: 
 DEFINITIONS 
 Capitalized terms used in this Lease and not otherwise defined
have the meanings ascribed to them on the attached EXHIBIT "A". 
 BASIC TERMS 
 The following Basic Terms are applied under and governed by the particular section(s) in this Lease pertaining to the following information: 

 

					
	1.	  	Premises:	  	Suite 800, consisting of approximately 10,986 rentable square feet located on the 8th floor of the Building. The Premises is depicted on EXHIBIT “C”. The Building contains
approximately 307,559 rentable square feet.
			
	2.	  	Lease Term:	  	Eighteen (18) months
			
	3.	  	Extension Option:	  	One (1) option to extend the Term for an additional eighteen (18) months pursuant to the terms set forth in Section 1.2.5 below. Such option shall be subordinate and subject to Landlord’s
right to use the Premises for its own operations.
			
	4.	  	Delivery Date:	  	Upon Substantial Completion of Tenant’s Improvements, estimated to be June 30, 2007
			
	5.	  	Basic Rent:	  	

  

			
	Months	  	 Monthly Basic Rent per rentable square foot of the
Premises

	1-12	  	$2.80 ($30,760.08 total per month)
		
	13-18	  	$2.90 ($31,859.40 total per month)

  

					
	6.	  	Initial Tenant's Share of Excess Expenses Percentage:	  	3.56%
			
	7.	  	Expense Stop:	  	$11.35 per rentable square foot; provided, that in the event that Property Taxes for the Property are reduced after the Effective Date, the expense stop may be reduced by Landlord in an amount
equal to the tax savings achieved divided by the number of rentable square feet in the Building.
			
	8.	  	Tenant’s Improvements:	  	 Landlord will make the following Tenant’s Improvements:
  
 1. Install (i) nine to ten linear feet of building standard lower cabinets and (ii) VCT tile in one exterior office in the Premises.
  
 2. Install one demising wall.
  
 3. Remove one wall between two exterior offices and install carpet (pulled from another office) over
concrete flooring exposed by the removed wall. Remove one of two existing doors.
  
 4.
Provide an exit door into the corridor as may be required by applicable law.

  

					
	2040 Main Street	 	1	 	9/29/04
	Office Lease Agreement	 		 	

					
			
		  		  	Tenant acknowledges that Landlord has, at Landlord’s sole expense, steam cleaned the carpet and applied touch up paint in the Premises. No additional Tenant Improvements shall be required
under this Lease.
			
	9.	  	Security Deposit:	  	$35,045.34
			
	10.	  	Rent Payment Address:	  	All payments hereunder shall be made payable to 2040 MAIN, LLC at the address designated by Landlord or to such other person or at such other place as Landlord may from time to time designate in
writing.
			
	11.	  	First Right to Negotiate Lease:	  	Tenant shall have the right to negotiate for the lease of additional space on the 8th floor that may become available during the term of this Lease, pursuant to Section 1.2.7 below.
			
	11	  	Property Manager:	  	 Transwestern Commercial Services
 Attn: Lori Negrete, Sr.
Property Manager
 201 E. Sandpointe Avenue, Suite 470
 Santa Ana,
CA 92707
 Telephone: (714) 540-5655
 FAX: (714)
540-6957

			
	12.	  	Address of Landlord for Notices:	  	 Knobbe, Martens, Olson & Bear, LLP
 2040 Main Street,
14th Floor
 Irvine, CA
92614
 Attn: General Counsel
 Telephone: (949)
760-0404
 Facsimile: (949) 760-9502

			
		  	With a copy to:	  	Property Manager at the address set forth above.
			
	13.	  	Address of Tenant for Notices:	  	 Prior to Commencement Date to:
  
 ECC Capital Corporation
 1733 Alton Parkway
 Irvine, CA 92606
 Attn: Joseph W. McKnight
 Telephone: (949) 955-8733
 Facsimile: 866-405-6828
  
 After Commencement Date to Premises.

			
		  	With a copy to:	  	 ORION Property Partners, Inc.
 2211 Michelson Drive,
Suite 520
 Irvine, California 92614
 Attn: Jay D.
Carnahan
 Telephone: 949 721 6981
 Facsimile: 949 721
6989

			
	14.	  	Broker(s):	  	Voit Commercial Brokerage (Landlord) and ORION Property Partners, Inc. (Tenant)
			
	15.	  	Parking and Parking Rates:	  	Forty-three (43) unreserved stalls, of which up to five (5) will be reserved stalls. Landlord will assign to Tenant one group of three reserved stalls on the roof, with the three stalls being
adjacent to each other.

  

							
	a.	  	Reserved Parking Rates (per space):
		
	Months	  	 Monthly Rates

	1-18	  	 $130.00

		
	b.	  	Unreserved Parking Rates (per space):
		
	Months	  	 Monthly Rates

	1-18	  	 $70.00

  

					
	16.	  	Ground FloorConference Room:	  	Tenant will be provided limited access to the ground floor conference room in the Building, if available, on a first come, first served basis. There will be no charge for usage.
			
	17.	  	Master Lessor Consent:	  	Master Lessor's written consent to this Lease shall be a condition precedent to the Commencement Date and the effectiveness of this Lease.

  

					
	2040 Main Street	 	2	 	9/29/04
	Office Lease Agreement	 		 	

 ARTICLE 1 
 LEASE OF PREMISES AND LEASE TERM 
 1.1 Premises. In consideration of the covenants and
agreements set forth in this Lease and other good and valuable consideration, Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord, upon and subject to the terms, covenants and conditions set forth in this Lease. This
Lease and Tenant's rights to the Premises also shall be subject to the terms and provisions of the Master Lease. Landlord shall cause Stevenson Systems to measure the Premises based upon modified BOMA Standards and such measurement shall be the
determination of the rentable square footage and usable square footage for purposes of this Lease. The square footage so determined by Stevenson Systems will be specified in the Commencement Date Memorandum. If, upon completion of the space plans
for the Premises, Landlord's architect or space planner determines that the rentable square footage of the Premises differs from that set forth in the Basic Terms, then Landlord shall notify Tenant and the Basic Rent shall be promptly adjusted in
proportion to the change in square footage. 
 1.2 Term, Delivery and Commencement. 
 1.2.1 Commencement and Expiration of Term. The Term of this Lease is the period stated in the Basic Terms. The Term commences on the
Commencement Date and expires on the last day of the last calendar month of the Term. 
 1.2.2 Tender of Possession. Landlord
will use commercially reasonable efforts to tender possession of the Premises to Tenant on or before the Delivery Date, subject to Force Majeure and Tenant Delay. If Landlord is unable to tender possession of the Premises to Tenant on or before the
Delivery Date for any reason, this Lease remains in full force and effect and Landlord is not liable to Tenant for any resulting loss or damage; provided, however, that unless the delay is caused by Tenant Delay, Landlord will appropriately adjust
the Commencement Date. 
 1.2.3 Commencement Date Memorandum. Promptly after the Commencement Date, Landlord will deliver to
Tenant the Commencement Date Memorandum with all blanks completed. Tenant will, within ten (10) days after receiving it, execute and deliver to Landlord the Commencement Date Memorandum. Landlord's failure to deliver to Tenant and/or Tenant's
failure to execute and deliver to Landlord the Commencement Date Memorandum does not affect any right or obligation of either party under this Lease. If Tenant does not timely execute and deliver to Landlord the Commencement Date Memorandum,
Landlord and any prospective purchaser or encumbrancer may conclusively rely on the information contained in the unexecuted Commencement Date Memorandum which Landlord delivered to Tenant. 
 1.2.4 Early Occupancy. If Tenant so requests, Landlord will allow Tenant limited access to the Premises prior to Substantial Completion to
begin installing equipment, fixtures, and cabling and/or to properly coordinate such work with the construction of the Tenant's Improvements. Any such access will be subject to Landlord's prior consent in each instance, which consent will not be
unreasonably withheld but may be conditioned on Tenant's work not interfering with the construction of Tenant's Improvements. Any such use of the Premises is also subject to, and Tenant must comply with and observe, all applicable Laws and all other
terms and conditions of this Lease, other than payment of Rent. In no event may Tenant conduct business in the Premises during such early access period. 
 1.2.5 Extension of Term. Subject to the terms and conditions hereof, and provided that no Event of Default exists at the time of exercise and that Landlord does not desire to use the Premises for its own
operations, Tenant may extend the Term of this Lease for one (1) period of eighteen (18) months. Tenant must exercise such right of extension by delivering written notice of Tenant's decision to exercise at least three (3), but not more
than six (6) months prior to the expiration of the Term. Such extension of the Term will be on the same terms, covenants and conditions as in this Lease, other than Basic Rent. Basic Rent for the extension period will be the fair market rental
rate(s) for the extension period (which may include escalations during such period), determined in relation to comparable (in quality, location and size) space located in the Building and/or in comparable buildings in the John Wayne Airport area of
Irvine, California ("Fair Market Basic Rent"). Landlord will determine such Fair Market Basic Rent and deliver Landlord's determination to Tenant within one month after Tenant delivers its notice of exercise. In no event will the Fair Market
Basic Rent for an extension of the Term be less than the Basic Rent (exclusive of temporary abatements) payable by Tenant for the Lease Year immediately prior to commencement of the applicable extension period. These extension rights are personal to
Tenant and may not be assigned or transferred in any manner except in connection with an approved Transfer under Article 13. 
 1.2.6
Selection of Fair Market Basic Rent. If Tenant disputes Landlord's determination of Fair Market Basic Rent for an extension of the Term, Tenant will deliver notice of such dispute, together with Tenant's proposed Fair Market Basic Rent,
to Landlord within ten (10) Business Days of Tenant's receipt of Landlord's determination. The parties will then attempt in good faith to agree upon the Fair Market Basic Rent. If the parties fail to agree within 25 days, then either party
shall be entitled to give notice to the other electing to have the Fair Market Basic Rent selected by an appraiser as provided in this section. Upon delivery and receipt of such notice, the parties will within ten (10) days thereafter mutually
appoint an appraiser who will select (in the manner set forth below) the Fair Market Basic Rent (the "Deciding Appraiser"). The Deciding Appraiser must have at least five years of full-time commercial appraisal experience with projects comparable to
the Property and be a member of the American Institute of Real Estate Appraisers or a similar appraisal association. The Deciding Appraiser must not have any material financial or business interest in common with either of the parties. If Landlord
and Tenant are not able to agree upon a Deciding Appraiser within such ten (10) days, each party will within five (5) days thereafter separately select an appraiser meeting the criteria set forth above, which two appraisers will, within
seven (7) days of their selection, mutually appoint a third appraiser meeting the criteria set forth above (and who also does not have 

  

					
	2040 Main Street	 	3	 	9/29/04
	Office Lease Agreement	 		 	

 
any material financial or business interest in common with either of the two selecting appraisers) to be the Deciding Appraiser. Within seven (7) days
of the appointment (by either method) of the Deciding Appraiser, Landlord and Tenant will submit to the Deciding Appraiser their respective determinations of Fair Market Basic Rent and any related information. Within twenty-one (21) days of
such appointment of the Deciding Appraiser, the Deciding Appraiser will review each party's submittal (and such other information as the Deciding Appraiser deems necessary) and will select, in total and without modification, the submittal presented
by either Landlord or Tenant as the Fair Market Basic Rent; provided, however, that in no event will Fair Market Basic Rent for an extension of the Term be less than the Basic Rent (exclusive of temporary abatements) payable by Tenant immediately
prior to commencement of the applicable extension period. Subject to the previous sentence, if the Deciding Appraiser timely receives one party's submittal, but not both, the Deciding Appraiser must designate the submitted proposal as the Fair
Market Basic Rent for the applicable extension of the Term. Any determination of Fair Market Basic Rent made by the Deciding Appraiser in violation of the provisions of this section shall be beyond the scope of authority of the Deciding Appraiser
and shall be null and void. If the determination of Fair Market Basic Rent is made by a Deciding Appraiser, Landlord and Tenant will each pay, directly to the Deciding Appraiser, one-half ( 1/2) of all fees, costs and expenses of the Deciding Appraiser. Landlord and Tenant will each separately pay all costs, fees and expenses of their respective
additional appraiser (if any) used to determine the Deciding Appraiser. 
 1.2.7 First Right to Negotiate Lease. If, during the term of this Lease and any extension thereof, any additional space on the 8th floor of the Building should become available that Landlord does not require for its own business, then Landlord shall notify Tenant of the availability of such space. For a period of five days from
the date of such notice, Tenant shall have the first right to negotiate with Landlord for the sublease of such additional space. If no letter of intent for the sublease of such additional space is signed by Tenant and Landlord during such five-day
period, then Landlord shall be entitled to negotiate subleases with other parties with respect to such space. 
 ARTICLE 2 

RENTAL AND OTHER PAYMENTS 
 2.1
Basic Rent. Tenant will pay Basic Rent in monthly installments to Landlord, in advance, without offset or deduction., commencing on the Commencement Date and continuing on the first day of each and every calendar month after the
Commencement Date during the Term. Tenant will make all Basic Rent payments to the Rent Payment Address at the address specified in the Basic Terms or at such other place or in such other manner as Landlord may from time to time designate in
writing. Tenant will make all Basic Rent payments without Landlord's previous demand, invoice or notice for payment. Landlord and Tenant will prorate, on a per diem basis, Basic Rent for any partial month within the Term. An amount equal to one full
month of Basic Rent at the initial rate specified in the Basic Terms will be paid to Landlord by Tenant upon execution of this Lease by Tenant, to be applied against the first installment of Basic Rent by Landlord when due. 
 2.2 Additional Rent. Article 3 of this Lease requires Tenant to pay certain Additional Rent pursuant to estimates Landlord delivers to
Tenant. Tenant will make all payments of estimated Additional Rent in accordance with Sections 3.3 and 3.4 without deduction or offset and without Landlord's previous demand, invoice or notice for payment. Tenant will pay all other Additional
Rent described in this Lease that is not estimated under Sections 3.3 and 3.4 within ten (10) days after receiving Landlord's invoice for such Additional Rent. Tenant will make all Additional Rent payments to the same location and, except
as described in the previous sentence, in the same manner as Tenant's Basic Rent payments. 
 2.3 Delinquent Rental Payments.
If Tenant does not pay any installment of Basic Rent or any Additional Rent within three (3) days after the date the payment is due, Tenant will pay Landlord a late payment charge equal to five percent (5%) of the amount of the delinquent
payment. Further, if Tenant does not pay any installment of Basic Rent or any Additional Rent within thirty (30) days after the date the payment is due, Tenant will pay Landlord interest on the delinquent payment calculated at the Maximum Rate
from the date when the payment is due through the date the payment is made. The parties agree that such amounts represent a fair and reasonable estimate of the damages Landlord will incur by reason of such late payment. The parties agree that the
charge specified as the late payment charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of such late payment and acceptance of such late charge does not constitute a waiver of Tenant's default or limit any
other remedy of Landlord. The late charge shall be deemed Rent and Landlord's right to such compensation for the delinquency is in addition to all of Landlord's rights and remedies under this Lease, at law or in equity. 
 2.4 Independent Obligations. Notwithstanding any contrary term or provision of this Lease, Tenant's covenant and obligation to pay Rent is
independent of any of Landlord's covenants, obligations, warranties or representations in this Lease. Tenant will pay Rent without any right of offset or deduction. 
 ARTICLE 3 
 PROPERTY TAXES AND OPERATING EXPENSES 
 3.1 Payment of Excess Expenses. Tenant will pay, as Additional Rent, and in the manner this Article 3 describes, Tenant's Share of
Excess Expenses due and payable during any calendar year of the Term. Landlord will prorate Tenant's Share of Excess Expenses due and payable during the calendar year in which the Lease commences or terminates as of the Commencement Date or
termination date, as applicable, on a per diem basis based on the number of days of the Term within such calendar year. 
 3.2
Estimation of Tenant's Share of Excess Expenses. Landlord will cause Master Lessor to deliver to Tenant a written estimate of the following for each calendar year of the Term: (a) Property Taxes, (b) Operating Expenses,
(c) Excess Expenses, (d) Tenant's Share of Excess Expenses and (e) the annual and monthly Additional Rent attributable to Tenant's Share of Excess Expenses. 
  

					
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	Office Lease Agreement	 		 	

 3.3 Payment of Estimated Tenant's Share of Excess Expenses. Tenant will pay the amount
Master Lessor estimates as Tenant's Share of Excess Expenses under Section 3.2 for each calendar year of the Term in equal monthly installments, in advance, commencing on the Commencement Date and thereafter on the first day of each and every
calendar month during the Term. If Master Lessor has not delivered the estimates to Tenant by the first day of January of the applicable calendar year, Tenant will continue paying Tenant's Share of Excess Expenses based on Master Lessor’s
estimates for the previous calendar year. When Tenant receives Master Lessor’s estimates for the current calendar year, Tenant will pay the estimated amount for such calendar year (less amounts Tenant paid to Landlord in accordance with the
immediately preceding sentence) in equal monthly installments over the balance of such calendar year, with the number of installments being equal to the number of full calendar months remaining in such calendar year. 
 3.4 Re-Estimation of Excess Expenses. Master Lessor may re-estimate Excess Expenses from time to time during the Term. In such event,
Master Lessor will re-estimate the monthly Additional Rent attributable to Tenant's Share of Excess Expenses to an amount sufficient for Tenant to pay the re-estimated monthly amount over the balance of the calendar year. Landlord will cause Master
Lessor to notify Tenant of the re-estimate and Tenant will pay the re-estimated amount in the manner provided in the last sentence of Section 3.3. 
 3.5 Confirmation of Tenant's Share of Excess Expenses. After the end of each calendar year within the Term, Master Lessor will determine the actual amount of Excess Expenses and Tenant's Share of Excess
Expenses for the expired calendar year and Landlord will cause Master Lessor to deliver to Tenant a written statement of such amounts. If Tenant paid less than the amount of Tenant's Share of Excess Expenses specified in the statement, Tenant will
pay the difference to Landlord as Additional Rent in the manner described in Section 2.2. If Tenant paid more than the amount of Tenant's Share of Excess Expenses specified in the statement, Landlord will, at Landlord's option, either
(a) refund the excess amount to Tenant, or (b) credit the excess amount against Tenant's next due monthly installment or installments of estimated Additional Rent. If Master Lessor is delayed in delivering such statement to Tenant, such
delay does not constitute Landlord's waiver of Landlord's rights under this section. 
 3.6 Tenant's Inspection and Audit
Rights. If Tenant disputes Master Lessor’s determination of the actual amount of Excess Expenses or Tenant's Share of Excess Expenses for any calendar year, and provided that (a) no Event of Default exists under this Lease, and
(b) Tenant delivers to Landlord written notice of the dispute within thirty (30) days after Master Lessor’s delivery of the statement of such amount under Section 3.5, then Tenant (but not any subtenant or assignee) may within
twelve (12) months after the end of such calendar year, at its sole cost and expense, upon prior written notice and during regular Business Hours at a time and place reasonably acceptable to Landlord in the City (which may be the location where
Master Lessor or Property Manager maintains the applicable records), cause a certified public accountant reasonably acceptable to Master Lessor who shall not be compensated on a contingent fee basis or a qualified employee of Tenant to audit Master
Lessor's records relating to the disputed amounts. Tenant's objection to Master Lessor’s determination of Excess Expenses or Tenant's Share of Excess Expenses is deemed withdrawn unless Tenant completes and delivers the audit report to Landlord
within sixty (60) days after the date Tenant delivers its dispute notice to Landlord under this section. If Tenant's audit report shows that the amount Landlord charged Tenant for Tenant's Share of Excess Expenses was greater than the amount
this Article 3 obligates Tenant to pay, unless Landlord reasonably contests the audit, Landlord will refund the excess amount to Tenant, together with interest on the excess amount at the Maximum Rate (computed from the date Tenant delivers its
dispute notice to Landlord) within thirty (30) days after Landlord receives a copy of the audit report. If the audit report shows that the amount Landlord charged Tenant for Tenant's Share of Excess Expenses was less than the amount this
Article 3 obligates Tenant to pay, Tenant will pay to Landlord, as Additional Rent, the difference between the amount Tenant paid and the amount determined in the audit, together with interest on the difference at the Maximum Rate (computed
from the date Tenant delivers its dispute notice to Landlord). Pending resolution of any audit under this section, Tenant will continue to pay to Landlord the estimated amounts of Tenant's Share of Excess Expenses in accordance with
Sections 3.3 and 3.4. Tenant must keep all information it obtains in any audit strictly confidential and may only use such information for the limited purpose this section describes and for Tenant's own account. 
 3.7 Personal Property Taxes. Tenant will pay, prior to delinquency, all taxes charged against Tenant's trade fixtures and other personal
property. Tenant will use all reasonable efforts to have such trade fixtures and other personal property taxed separately from the Property. If any of Tenant's trade fixtures and other personal property are taxed with the Property, Tenant will pay
the taxes attributable to Tenant's trade fixtures and other personal property to Landlord as Additional Rent. 
 3.8 Landlord's Right
to Contest Property Taxes. Master Lessor may, but is not obligated to, contest the amount or validity, in whole or in part, of any Property Taxes. Master Lessor’s contest will be at Master Lessor’s sole cost and expense except that
if Property Taxes are reduced (or if a proposed increase is avoided or reduced) because of Master Lessor’s contest, Master Lessor may include in its computation of Property Taxes (a) all costs and expenses of any tax consultant retained by
Master Lessor in connection with contesting the Property Taxes and (b) all other costs and expenses incurred by Master Lessor in connection with contesting the Property Taxes, including without limitation reasonable attorney's fees, up to the
amount of any Property Tax reduction Master Lessor realized from the contest or any Property Tax increase avoided or reduced in connection with the contest, as the case may be. Tenant may not contest Property Taxes. 
  

					
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 3.9 Rent Tax. Tenant shall pay to Landlord all Rent Tax due in connection with this Lease
or the payment of Rent hereunder, which Rent Tax shall be paid by Tenant to Landlord concurrently with each payment of Rent made by Tenant to Landlord under this Lease. 
 ARTICLE 4 
 USE 
 4.1 Permitted Use. Tenant will occupy and operate the Premises at all times during the Term and will not vacate the Premises prior to the expiration of the Term without Landlord's prior written consent,
which consent Landlord may grant or withhold in its sole, absolute and arbitrary discretion. Tenant will not use the Premises for any purpose other than general office purposes. Tenant will not use the Project or knowingly permit the Premises to be
used in violation of any Laws or in any manner that would (a) violate any certificate of occupancy affecting the Project; (b) make void or voidable any insurance now or after the Effective Date in force with respect to the Project;
(c) cause injury or damage to the Property or to the person or property of any other tenant on the Property; (d) cause substantial diminution in the value or usefulness of all or any part of the Project (reasonable wear and tear excepted);
or (e) constitute a public or private nuisance or waste. Tenant will obtain and maintain, at Tenant's sole cost and expense, all permits and approvals required under the Laws for Tenant's use of the Premises. Subject to Force Majeure and to
rules and regulations Landlord may prescribe for security purposes, Tenant and its employees will have access to the Premises at all times. Subject to Force Majeure and to rules and regulations Landlord may prescribe for security purposes, Tenant
and its employees will have access to the Premises at all times. 
 4.2 Acceptance of Premises. Tenant acknowledges that
neither Landlord nor any agent, contractor or employee of Landlord has made any representation or warranty of any kind with respect to the Premises, the Building, the Property, or the Project, specifically including, but not limited to, any
representation or warranty of suitability or fitness of the Premises, the Building, the Property, or the Project for any particular purpose. Subject to the Warranty Terms, Tenant's occupancy of the Premises conclusively establishes Tenant's
acceptance of the Premises, the Building and the Property in an "AS IS—WHERE IS" condition, notwithstanding the Work Plan. 
 4.3
Increased Insurance. Tenant will not do on the Project or permit to be done on the Premises and/or the Project anything that will (a) increase the premium of any insurance policy Master Lessor and/or Landlord carries covering the
Premises or the Project; (b) cause a cancellation of or be in conflict with any such insurance policy; (c) result in any insurance company's refusal to issue or continue any such insurance in amounts satisfactory to Master Lessor and/or
Landlord; or (d) subject Master Lessor and/or Landlord to any liability or responsibility for injury to any person or property by reason of Tenant's operations in the Premises or use of the Project. Tenant will, at Tenant's sole cost and
expense, comply with all rules, orders, regulations and requirements of insurers and of the American Insurance Association or any other organization performing a similar function. Tenant will reimburse Landlord, as Additional Rent, for any
additional premium charges for such policy or policies resulting from Tenant's failure to comply with the provisions of this section. 
 4.4 Laws/Building Rules. This Lease is subject and subordinate to all Laws. A copy of the current Building Rules is attached to this Lease as EXHIBIT "E". Master Lessor may amend the Building Rules from time to time in
its sole, absolute and arbitrary discretion. 
 4.5 Common Area. Landlord, on behalf of Master Lessor, grants Tenant the
non-exclusive right, together with all other occupants of the Building and their agents, employees and invitees, to use the Common Area during the Term, subject to all Laws. Master Lessor may, at its sole and exclusive discretion, make changes to
the Common Area. 
 4.6 Signs. Tenant will receive, at Tenant's sole cost and expense, (a) one building standard tenant
identification sign adjacent to the entry door of the Premises and (b) one standard building directory listing. The signs will conform to Master Lessor’s sign criteria. Tenant will not install or permit to be installed in the Premises any
other sign, decoration or advertising material of any kind that is visible from the exterior of the Premises. Master Lessor’s may immediately remove, at Tenant's sole cost and expense, any sign, decoration or advertising material that violates
this section. 
 ARTICLE 5 
 HAZARDOUS MATERIALS 
 5.1 Compliance with Hazardous Materials Laws. Tenant will not cause any Hazardous
Materials to be brought upon, kept or used on the Project in a manner or for a purpose prohibited by or that could result in liability to Tenant, Landlord or Master Lessor under any Hazardous Materials Law, except for office cleaning or other
supplies customarily used in office buildings so long as such usage is in strict accordance with prudent industry practices and Hazardous Materials Laws. Tenant, at its sole cost and expense, will comply with all Hazardous Materials Laws. On or
before the expiration or earlier termination of this Lease, Tenant, at its sole cost and expense, will completely remove from the Project (regardless whether any Hazardous Materials Law requires removal), in compliance with all Hazardous Materials
Laws, all Hazardous Materials Tenant causes to be present in, on, under or about the Project. Tenant will not take any remedial action in response to the presence of any Hazardous Materials in on, under or about the Project, nor enter into any
settlement agreement, consent decree or other compromise with respect to any Claims relating to or in any way connected with Hazardous Materials in, on, under or about the Project, without first notifying Landlord of Tenant's intention to do so and
affording Landlord reasonable opportunity to investigate, appear, intervene and otherwise assert and protect Landlord's and Master Lessor’s interest in the Project. 
  

					
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 5.2 Notice of Actions. Tenant will notify Landlord of any of the following actions
affecting Landlord, Master Lessor, Tenant or the Project that result from or in any way relate to Tenant's use of the Project immediately after receiving notice of the same: (a) any enforcement, clean-up, removal or other governmental or
regulatory action instituted, completed or threatened under any Hazardous Materials Law; (b) any Claims made or threatened by any person relating to damage, contribution, liability, cost recovery, compensation, loss or injury resulting from or
claimed to result from any Hazardous Material; and (c) any reports, records, letters of inquiry and responses, manifests or other documents made by any person, including Tenant, to or from any environmental agency relating to any Hazardous
Material, including any complaints, notices, warnings or asserted violations. Tenant will also deliver to Landlord, as promptly as possible and in any event within five (5) Business Days after Tenant first receives or sends the same, copies of
all Claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Premises or Tenant's use of the Premises and/or Project. Upon Landlord's written request, Tenant will promptly deliver to Landlord documentation
acceptable to Landlord reflecting the legal and proper handling, storage and disposal of all Hazardous Materials kept at or removed or to be removed from the Premises and/or Project. All such documentation will list Tenant or its agent as a
responsible party and will not attribute responsibility for any such Hazardous Materials to Master Lessor, Landlord or Property Manager. 
 5.3 Disclosure and Warning Obligations. Tenant acknowledges and agrees that all reporting and warning obligations required under Hazardous Materials Laws resulting from or in any way relating to Tenant's use of the Premises or
Project are Tenant's sole responsibility, regardless whether the Hazardous Materials Laws permit or require Landlord to report or warn, including without limitation all notices or other requirements under California Health & Safety Code
Section 25249.5 et. seq. and California Code of Regulations 12000 et. seq. 
 5.4 Indemnification. Tenant releases and
will Indemnify the Landlord Parties from and against any and all Claims whatsoever arising or resulting, in whole or in part, directly or indirectly, from the presence, treatment, storage, transportation, disposal, release or management of Hazardous
Materials in, on, under, upon or from the Project (including water tables and atmosphere) resulting from or in any way related to Tenant's use of the Premises or Project. Tenant's obligations under this section include, without limitation and
whether foreseeable or unforeseeable, (a) the costs of any required or necessary repair, compliance, investigations, clean-up, monitoring response, detoxification or decontamination of the Project; (b) the costs of implementing any
closure, remediation or other required action in connection therewith as stated above; (c) the value of any loss of use and any diminution in value of the Project and adjacent and nearby properties, including groundwater; and
(d) consultants' fees, experts' fees and response costs. The obligations of Tenant under this section survive the expiration or earlier termination of this Lease. 
 ARTICLE 6 
 SERVICES 
 6.1 Landlord's Obligations. Landlord will cause Master Lessor to provide the following services, the costs of which are Operating Expenses:

 6.1.1 Janitorial Service. Janitorial service in the Premises. 
 6.1.2 Electrical Energy. Electrical energy to the Premises for lighting and for operating office machines for general office use.
Electrical energy will be sufficient for Tenant to operate personal computers and other equipment of similar low electrical consumption, but will not be sufficient for lighting in excess of two (2) watts per square foot installed or for
electrical convenience outlets in excess of five (5) watts per square foot installed. Tenant will not use any equipment requiring electrical energy in excess of the above standards without receiving Landlord's prior written consent, which
consent Landlord will not unreasonably withhold but may condition on Tenant paying all costs of installing the equipment and facilities necessary to furnish such excess energy and an amount equal to the average cost per unit of electricity for the
Building applied to the excess use as reasonably determined either by an engineer selected by Landlord or by submeter installed at Tenant's expense. Landlord will cause Master Lessor to replace all lighting bulbs, tubes, ballasts and starters for
standard office lighting fixtures within the Premises and excluding any non-standard lighting, and the costs of such replacement will be included in Operating Expenses. 
 6.1.3 Heating, Ventilation and Air Conditioning. During Business Hours, heating, ventilation and air conditioning to the Premises sufficient to maintain, in Landlord's reasonable judgment, comfortable
temperatures in the Premises. During other times, Landlord will cause Master Lessor to provide heat and air conditioning upon Tenant's reasonable advance notice (not less than twenty four (24) hours). Tenant will pay Landlord, as Additional
Rent, for such extended service on an hourly basis at the prevailing rates Landlord establishes for the Building. If extended service is not a continuation of the service Landlord furnished during Business Hours, Landlord may require Tenant to pay
for a minimum of four (4) hours of such service. Landlord will cause Master Lessor to provide air conditioning to the Premises based on standard lighting and general office use only. 
 6.1.4 Water. Hot and cold water from standard building outlets for lavatory, restroom and drinking purposes. 
 6.1.5 Passenger Elevator Service. Elevator service to be used by Tenant in common with other tenants. Master Lessor may restrict Tenant's
use of elevators for freight purposes to the freight elevator and to hours Master Lessor reasonably determines. Master Lessor may limit the number of elevators in operation at times other than Business Hours. 
  

					
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 6.2 Tenant's Obligations. Tenant is solely responsible for paying directly to the
applicable utility companies, prior to delinquency, all separately metered or separately charged utilities, if any, to the Premises or to Tenant. Such separately metered or charged amounts are not Operating Expenses. Except as provided in
Section 6.1, Tenant will also obtain and pay for all other utilities and services Tenant requires with respect to the Premises (including, but not limited to, hook-up and connection charges). 
 6.3 Other Provisions Relating to Services. No interruption in, or temporary stoppage of, any of the services this Article 6 describes
is to be deemed an eviction or disturbance of Tenant's use and possession of the Premises, nor does any interruption or stoppage relieve Tenant from any obligation this Lease describes, render Landlord liable for damages or entitle Tenant to any
Rent abatement. Landlord is not required to cause Master Lessor to provide any heat, air conditioning, electricity or other service in excess of that permitted by voluntary or involuntary governmental guidelines or other Laws. Master Lessor has the
exclusive right and discretion to select the provider of any utility or service to the Property and to determine whether the Premises or any other portion of the Property may or will be separately metered or separately supplied. Master Lessor
reserves the right, from time to time, to make reasonable and non-discriminatory modifications to the above standards for utilities and services. 
 6.4 Tenant Devices. Tenant will not, without Landlord's prior written consent, use any apparatus or device in or about the Premises and/or Project that causes substantial noise, odor, vibration or electrical or magnetic
interference. Tenant will not connect any apparatus or device to electrical current or water except through the electrical and water outlets Landlord installs in the Premises. 
 ARTICLE 7 
 MAINTENANCE AND REPAIR 
 7.1 Landlord's Obligations. Except as otherwise provided in this Lease, Landlord will cause Master Lessor to repair and maintain the
following in good order, condition and repair: (a) the foundations, exterior walls and roof of the Building; and (b) the electrical, mechanical, plumbing, heating and air conditioning systems, facilities and components located in the
Building and used in common by all tenants of the Building. Landlord will also cause Master Lessor to maintain and repair the Common Area and the windows, doors, plate glass and exterior surfaces of walls that are adjacent to Common Area. Master
Lessor’s repair and maintenance costs under this Section 7.1 are Operating Expenses. Neither Basic Rent nor Additional Rent will be reduced, nor will Master Lessor or Landlord be liable, for loss or injury to or interference with Tenant's
property, profits or business arising from or in connection with Master Lessor’s actions or Landlord's performance of its obligations. 
 7.2 Tenant's Obligations 
 7.2.1 Maintenance of Premises. Except as otherwise specifically provided in
this Lease, Landlord is not required to furnish any services or facilities, or to make any repairs or Alterations, in, about or to the Premises or the Project Tenant will keep the Premises in a neat and sanitary condition and will not commit any
nuisance or waste in, on or about the Premises or the Property. Landlord and/or Master Lessor may (without limiting any other right or remedy of Landlord or Master Lessor) assert against Tenant any Landlord Unreleased Casualty Claim and/or require
Tenant to pay as Additional Rent all costs and expenses of Landlord and Master Lessor in connection therewith. Tenant will maintain the Premises in a first-class and fully operative condition. Tenant's repairs will be at least equal in quality and
workmanship to the original work and Tenant will make the repairs in accordance with all Laws. 
 7.2.2 Alterations Required by
Laws. If any governmental authority requires any Alteration to the Building or the Premises as a result of Tenant's particular use of the Premises or as a result of any Alteration to the Premises made by or on behalf of Tenant or if Tenant's
particular use of the Premises subjects Master Lessor, Landlord or the Property to any obligation under any Laws, Tenant will pay the cost of all such Alterations or the cost of compliance, as the case may be. If any such Alterations are Structural
Alterations, Landlord will cause Master Lessor to make the Structural Alterations, provided that Master Lessor may first require Tenant to deposit with Master Lessor an amount sufficient to pay the cost of the Structural Alterations (including,
without limitation, reasonable overhead and administrative costs). If such Alterations are not Structural Alterations, Tenant will make such Alterations at Tenant's sole cost and expense in accordance with Article 8. 
 ARTICLE 8 
 CHANGES AND ALTERATIONS

 8.1 Landlord Approval. Tenant will not make any Structural Alterations. Tenant will not make any other Alterations
without Landlord's prior written consent, which consent Landlord may grant, withhold or condition in its sole, absolute and arbitrary discretion. Along with any request for Landlord's consent, Tenant will deliver to Landlord plans and specifications
for the Alterations and names and addresses of all prospective contractors for the Alterations. If Landlord approves the proposed Alterations, Tenant will, before commencing the Alterations or delivering (or accepting delivery of) any materials to
be used in connection with the Alterations, deliver to Landlord copies of all contracts, certificates of insurance and certified copies of all endorsements for the insurance required by Section 8.2, copies of any contractor safety programs,
copies of all necessary permits and licenses and such other information relating to the Alterations as Landlord reasonably requests. Tenant will not commence the Alterations before Landlord has, in Landlord's sole, absolute and arbitrary discretion,
provided Landlord's written approval of the foregoing deliveries. Tenant will construct all approved Alterations or cause all approved Alterations to be constructed (a) promptly by a contractor Landlord approves in writing in Landlord's
reasonable discretion, (b) in a good and workmanlike manner, (c) in compliance with all Laws, (d) in accordance with all orders, rules and regulations of the Board of Fire Underwriters having jurisdiction over the Premises and any
other body exercising similar functions, (e) during times reasonably determined by Landlord to minimize 

  

					
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interference with other tenant's use and enjoyment of the Property, and (f) in full compliance with all of Master Lessor’s rules and regulations
applicable to third party contractors, subcontractors and suppliers performing work at the Property, and (g) if Landlord elects, under Landlord's supervision and during hours reasonably determined by Landlord. 
 8.2 Tenant's Responsibility for Cost and Insurance. Tenant will pay the cost and expense of all Alterations, including, without limitation,
a reasonable charge for Landlord's review, inspection and engineering time and a reasonable charge for Property Manager's review and coordination of such Alterations, and for any painting, restoring or repairing of the Premises or the Building the
Alterations occasion. Prior to commencing the Alterations, Tenant will deliver the following to Landlord in form and amount reasonably satisfactory to Landlord: (a) demolition (if applicable) and payment and performance bonds,
(b) builder's "all risk" insurance in an amount at least equal to the replacement value of the Alterations, and (c) evidence that Tenant and each of Tenant's contractors have in force liability insurance insuring against construction
related risks in at least the form, amounts and coverages required of Tenant under Article 10. The insurance policies described in clauses (b) and (c) of this section must name Master Lessor, Landlord, Landlord's lender (if any) and
Property Manager as additional insureds. 
 8.3 Construction Obligations and Ownership. Landlord may inspect construction of
the Alterations. Immediately after completing the Alterations, Tenant will furnish Landlord with contractor affidavits, full and final lien waivers and receipted bills covering all labor and materials expended and used in connection with the
Alterations. Tenant will remove any Alterations Tenant constructs in violation of this Article 8 within 10 days after Landlord's written request and in any event prior to the expiration or earlier termination of this Lease. All Alterations
Tenant makes or installs (including all telephone, computer, security and other wiring and cabling located within the walls of and outside the Premises, but excluding Tenant's movable trade fixtures, furniture and equipment) become the property of
Master Lessor and a part of the Building immediately upon installation and, unless Landlord requires Tenant to remove the Alterations, Tenant will surrender the Alterations to Landlord upon the expiration or earlier termination of this Lease at no
cost to Landlord. 
 8.4 Liens. Tenant will keep the Property free from any mechanics', materialmens', designers' or other
liens arising out of any work performed, materials furnished or obligations incurred by or for Tenant or any person or entity claiming by, through or under Tenant. Tenant will notify Landlord in writing thirty (30) days prior to commencing any
Alterations in order to provide Master Lessor and/or Landlord the opportunity to record and post notices of non-responsibility or such other protective notices available to Master Lessor and Landlord under the Laws. If any such liens are filed and
Tenant, within fifteen (15) days after such filing, does not release the same of record or provide Master Lessor and Landlord with a bond or other security satisfactory to Master Lessor and Landlord protecting Master Lessor, Landlord and the
Property against such liens, Landlord may, without waiving its rights and remedies based upon such breach by Tenant and without releasing Tenant from any obligation under this Lease, cause such liens to be released by any means Landlord deems
proper, including, but not limited to, paying the claim giving rise to the lien or posting security to cause the discharge of the lien. In such event, Tenant will reimburse Landlord, as Additional Rent, for all amounts Landlord pays (including,
without limitation, reasonable attorneys' fees and costs). 
 8.5 Indemnification. To the fullest extent allowable under the
Laws, Tenant releases and will Indemnify the Landlord Parties and the Project from and against any Claims in any manner relating to or arising out of any Alterations or any other work performed, materials furnished or obligations incurred by or for
Tenant or any person or entity claiming by, through or under Tenant. 
 ARTICLE 9 
 RIGHTS RESERVED BY LANDLORD 
 9.1
Master Lessor’s and Landlord's Entry. Master Lessor and Landlord and their authorized representatives may at all reasonable times and upon reasonable notice to Tenant enter the Premises to: (a) inspect the Premises;
(b) show the Premises to prospective purchasers, mortgagees; (c) post notices of non-responsibility or other protective notices available under the Laws; or (d) exercise and perform Master Lessor’s and/or Landlord's rights and
obligations under this Lease. Master Lessor and Landlord may, in the event of any emergency, enter the Premises without notice to Tenant. Landlord's entry into the Premises is not to be construed as a forcible or unlawful entry into, or detainer of,
the Premises or as an eviction of Tenant from all or any part of the Premises. Tenant will also permit Master Lessor and/or Landlord (or its designees), to erect, install, use, maintain, replace and repair pipes, cables, conduits, plumbing and
vents, and telephone, electric and other wires or other items, in, to and through the Premises if Master Lessor or Landlord determines that such activities are necessary or appropriate for properly operating and maintaining the Building. 

9.2 Control of Property. Master Lessor and Landlord reserve all rights respecting the Property and Premises not specifically granted to
Tenant under this Lease, including, without limitation, the right to: (a) change the name or street address of the Building; (b) designate and approve all types of signs, window coverings, internal lighting and other aspects of the
Premises and its contents that may be visible from the exterior of the Premises; (c) grant any party the exclusive right to conduct any business or render any service in the Building, provided such exclusive right to conduct any business or
render any service in the Building does not prohibit Tenant from any permitted use for which Tenant is then using the Premises; (d) prohibit Tenant from installing of vending or dispensing machines of any kind in or about the Premises other
than those Tenant installs in the Premises solely for use by Tenant's employees; (e) close the Building after Business Hours, except that Tenant and its employees and invitees may access the Premises after Business Hours in accordance with such
rules and regulations as Master Lessor may prescribe from time to time for security purposes; (f) install, operate and maintain security systems that monitor, by closed circuit television or otherwise, all persons entering or leaving the
Building; (g) install and 

  

					
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maintain pipes, ducts, conduits, wires and structural elements in the Premises that serve other parts or other tenants of the Building; and (h) retain
and receive master keys or pass keys to the Premises and all doors in the Premises. Notwithstanding the foregoing, or the provision of any security-related services by Master Lessor, neither Master Lessor nor Landlord is not responsible for the
security of persons or property on the Property or the Project and Master Lessor and Landlord are not and will not be liable in any way whatsoever for any breach of security not solely and directly caused by the willful misconduct of Master Lessor
or Landlord, or its agents or employees. 
 9.3 Right to Cure. If Tenant defaults in the performance of any obligation under
this Lease, Landlord may, but is not obligated to, and after reasonable notice to Tenant except in the event of an emergency, perform any such obligation on Tenant's part without waiving any rights based upon such default and without releasing
Tenant from any obligations hereunder. Tenant must pay to Landlord, within ten (10) days after delivery by Landlord to Tenant of statements therefor, sums equal to expenditures reasonably made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults. Such obligations survive the termination or expiration of this Lease. 
 ARTICLE 10

 INSURANCE 
 10.1
Tenant's Insurance. Tenant will at all times during the Term and during any early occupancy period, at Tenant's sole cost and expense, maintain the insurance this Section 10.1 requires. 
 10.1.1 Liability Insurance. Tenant must maintain commercial general liability insurance (providing coverage at least as broad as the
current ISO form) with respect to the Premises and Tenant's activities in the Premises and upon and about the Property and/or Project, on an "occurrence" basis, with minimum limits of two million dollars ($2,000,000) each occurrence and five million
dollars ($5,000,000) general aggregate. Such insurance must include specific coverage provisions or endorsements (a) for broad form contractual liability insurance insuring Tenant's obligations under this Lease; (b) naming Master Lessor,
Landlord, Property Manager and Lienholder as additional insureds by an "Additional Insured—Managers or Lessors of Premises" endorsement (or equivalent coverage or endorsement); (c) waiving the insurer's subrogation rights against all
Landlord Parties; (d) providing Landlord with at least thirty (30) days prior notice of modification, cancellation or expiration; (e) expressly stating that Tenant's insurance will be provided on a primary basis and will not
contribute with any insurance Landlord maintains; and (f) providing that the insurer has a duty to defend all insureds under the policy (including additional insureds), and that defense costs are paid in addition to, and do not deplete, the
policy limits. If Tenant provides such liability insurance under a blanket policy, the insurance must be made specifically applicable to the Premises and this Lease on a "per location" basis. 
 10.1.2 Other Insurance. If insurance obligations generally required of tenants in similar space in similar office buildings in the area in
which the Premises is located increase or otherwise change, Master Lessor, Landlord or Lienholder may similarly change Tenant's insurance obligations under this Lease. 
 10.1.3 Miscellaneous Insurance Provisions. Tenant's liability insurance will be written by companies rated at least "A/VII" by A.M. Best Insurance Service and otherwise reasonably satisfactory to
Landlord. Tenant will deliver a certified copy of each policy, or other evidence of insurance satisfactory to Landlord, (a) on or before the Commencement Date (and prior to any earlier occupancy by Tenant), (b) not later than thirty
(30) days prior to the expiration of any current policy or certificate, and (c) at such other times as Landlord may reasonably request. If Landlord allows Tenant to provide evidence of insurance by certificate, Tenant will deliver an ACORD
Form 27 (or equivalent) certificate and will attach or cause to be attached to the certificate copies of the endorsements this Section 10.1 requires (including specifically, but without limitation, the "additional insured" endorsement).

 10.1.4 Property Insurance. Tenant is not required by this Lease to maintain property insurance. Accordingly, Tenant's trade
fixtures, other personal property and all other property in Tenant's care, custody or control, are located at the Project at Tenant's sole risk, and neither Master Lessor or Landlord is liable for any Casualty to such property or for any other
damage, theft, misappropriation or loss of such property, excepting only any damage to Tenant's trade fixtures or other personal property which is caused by the gross negligence or willful misconduct of Landlord. Tenant is solely responsible for
providing such insurance as Tenant may desire for the protection of Tenant, its employees and invitees against any injury, loss, or damage to persons or property occurring in the Premises or at the Project, including, without limitation, any loss of
business or profits from any Casualty or other occurrence at the Project. 
 10.2 Landlord's Insurance. Landlord will at all
times during the Term maintain the insurance this Section 10.2 requires. 
 10.2.1 Property Insurance. Landlord will cause
Master Lessor to maintain insurance on the Project providing coverage comparable to that provided by a standard ISO special causes of loss form property insurance policy in an amount not less than the full replacement cost of the Building (less
foundation, grading and excavation costs). Master Lessor may, at its option, obtain such additional coverages or endorsements as Master Lessor deems appropriate or necessary, including, without limitation, insurance covering foundation, grading,
excavation and debris removal costs; business income and rent loss insurance, boiler and machinery insurance, ordinance or laws coverage, earthquake insurance, flood insurance, terrorism and other coverages. Master Lessor may maintain such insurance
in whole or in part under blanket policies. Such insurance will not cover or be applicable to any trade fixtures or other personal property owned by or in the care, custody or control of Tenant. 
  

					
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 10.2.2 Liability Insurance. Landlord will cause Master Lessor to maintain commercial
general liability insurance for bodily injury, personal injury, and property damage occurring at the Property in such amounts as Master Lessor deems necessary or appropriate. Such liability insurance will protect only Master Lessor and, at Master
Lessor’s option, Master Lessor 's lender and some or all of the Landlord Parties, and does not protect Tenant or replace or supplement the liability insurance this Lease obligates Tenant to carry. 
 10.3 Waivers and Releases of Claims and Subrogation. 
 10.3.1 Tenant's Waiver and Release. To the fullest extent allowable under the Laws, and except for any damage to Tenant's trade fixtures or other personal property which is caused by the gross negligence
or willful misconduct of Master Lessor or Landlord, Tenant, on behalf of Tenant and its insurers, waives, releases and discharges the Landlord Parties from all Claims arising out of damage to or destruction of the Premises, the Property, the Project
or Tenant's trade fixtures or other personal property located at the Project, and any loss of use or business interruption, caused by any Casualty, regardless whether any such Claim results from the negligence or fault of any Landlord Party, and
Tenant will look only to Tenant's insurance coverage (regardless whether Tenant maintains any such coverage) in the event of any such Claim. Any property insurance which Tenant maintains must permit or include a waiver of subrogation in favor of
Landlord. 
 10.3.2 Landlord's Waiver and Release. To the fullest extent allowable under the Laws, and except for any Landlord
Unreleased Casualty Claims, Landlord, on behalf of Landlord and its insurers, waives, releases and discharges Tenant from all Claims for damage to or destruction of the Premises, or Landlord's trade fixtures or other personal property located at the
Premises, and any loss of use or business interruption, caused by an Casualty, regardless whether any such Claim results from the negligence or fault of Tenant, and Landlord will look only to Landlord's insurance coverage (regardless whether
Landlord maintains any such coverage) in the event of any such Claim. Landlord's policy or policies of property insurance will permit or include a waiver of subrogation in favor of Tenant. 
 10.4 Tenant's Failure to Insure. If Tenant fails to provide Landlord with evidence of liability insurance as required under
Section 10.1, after five (5) days written notice from Landlord, Landlord may assume that Tenant is not maintaining the insurance Section 10.1 requires Tenant to maintain and Landlord may, but is not obligated to, obtain such insurance
for Master Lessor’s and Landlord's benefit, without demand upon Tenant or any notice or cure right for Tenant (under Article 14 or otherwise) and without waiving or releasing Tenant from any obligation contained in this Lease. Tenant will
pay to Landlord, as Additional Rent, all costs and expenses Landlord reasonably incurs in obtaining such insurance. Landlord's exercise of any rights under this Section does not relieve Tenant from any default under this Lease. 
 10.5 No Limitation. Landlord's establishment of minimum liability insurance requirements for Tenant in this Lease is not a representation
by Landlord that such limits are sufficient and does not limit Tenant's liability under this Lease in any manner. 
 10.6 Tenant's
Indemnification. Except for the Claims waived by Landlord in Section 10.3.2, in addition to Tenant's other indemnification obligations in this Lease, Tenant releases and will Indemnify the Landlord Parties from and against all Claims
arising from (a) any breach or default by Tenant in the performance of any of Tenant's covenants or agreements in this Lease, (b) any act, omission, negligence or misconduct of Tenant, (c) any accident, injury, occurrence or damage
in, about or to the Premises and (d) to the extent caused in whole or in part by Tenant, any accident, injury, occurrence or damage in, about or to the Project. 
 ARTICLE 11 
 DAMAGE OR DESTRUCTION 
 11.1 Tenantable Within 270 Days. Except as provided in Section 11.3, if any Casualty renders the whole or any material part of the
Premises untenantable and Master Lessor determines (in its reasonable discretion) that Master Lessor can make the Premises tenantable within two hundred seventy (270) days after the date of the Casualty, then Landlord will notify Tenant that
Master Lessor will repair and restore the Building and the Premises to as near their condition prior to the Casualty as is reasonably possible within the two hundred seventy (270) day period (subject to Force Majeure). Master Lessor will
provide the notice within sixty (60) days after the date of the Casualty. 
 11.2 Not Tenantable Within 270 Days. If any
Casualty renders the whole or any material part of the Premises untenantable and Master Lessor determines (in its reasonable discretion) that Master Lessor cannot make the Premises tenantable within two hundred seventy (270) days after the date
of the casualty, then Landlord will so notify Tenant within sixty (60) days after the date of the Casualty and may, in such notice, terminate this Lease effective on the date sixty (60) days after the date of Landlord's notice. If Landlord
does not terminate this Lease as provided in this section and provided the Casualty was not caused by the gross negligence, willful misconduct or intentional misconduct of Tenant, Tenant may terminate this Lease by notifying Landlord within sixty
(60) days after the date of Landlord's notice, which termination will be effective thirty (30) days after the date of Tenant's notice. 
 11.3 Building Substantially Damaged. If the Building is damaged or destroyed by any Casualty (regardless whether the Premises is affected) and either (a) less than fifteen (15) months remain in the Term, or
(b) the damage reduces the value of the improvements on the Project by more than fifty percent (50%) (as Master Lessor reasonably determines value before and after the Casualty), then regardless whether Master Lessor determines (in its
reasonable discretion) that Master Lessor can make the Building tenantable within two hundred seventy (270) days after the date of the Casualty, Landlord may, at Landlord's option, by notifying Tenant within sixty (60) days after the
Casualty, terminate this Lease effective sixty (60) days after the date of Landlord's termination notice. 
  

					
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 11.4 Insufficient Proceeds. Notwithstanding any contrary language in this Article 11,
if Master Lessor does not receive sufficient insurance proceeds (excluding the amount of any policy deductible) to repair all damage to the Premises or the improvements on the Project caused by any Casualty, or if Master Lessor’s lender does
not allow Master Lessor to use sufficient proceeds to repair all such damage, then Landlord may, at Landlord's option, by notifying Tenant within sixty (60) days after the Casualty, terminate this Lease effective on the date thirty
(30) days after Landlord's notice. 
 11.5 Landlord's Repair; Rent Abatement. If this Lease is not terminated under
Sections 11.1 through 11.4 following any Casualty, then Landlord will cause Master Lessor to repair and restore the Premises and the Building to as near their condition prior to the Casualty as is reasonably possible with all commercially
reasonable diligence and speed (subject to Force Majeure) and Basic Rent and Tenant's Share of Excess Expenses for the period during which the Premises are untenantable will abate pro rata (based upon the rentable area of the untenantable portion of
the Premises as compared with the rentable area of the entire Premises). In no event is Landlord obligated to repair or restore any Alterations or Tenant's Improvements that are not covered by Master Lessor’s insurance, any special equipment or
improvements installed by Tenant, any personal property, or any other property of Tenant. Landlord will, if necessary, equitably adjust Tenant's Share of Excess Expenses Percentage to account for any reduction in the rentable area of the Premises or
Building resulting from a Casualty. 
 11.6 Rent Apportionment Upon Termination. If either Landlord or Tenant terminates this
Lease under this Article 11, Landlord will apportion Basic Rent and Tenant's Share of Excess Expenses on a per diem basis and Tenant will pay the Basic Rent and Tenant's Share of Excess Expenses to the date of the Casualty if the event renders
the Premises completely untenantable or if the event does not render the Premises completely untenantable, the effective date of such termination (provided that if a portion of the Premises is rendered untenantable, but the remaining portion is
tenantable, then, except as provided in Section 11.5, Tenant's obligation to pay Basic Rent and Tenant's Share of Excess Expenses abates pro rata (based upon the rentable area of the untenantable portion of the Premises divided by the rentable
area of the entire Premises) from the date of the Casualty and Tenant will pay the unabated portion of the Rent to the date of such termination on the portion terminated). 
 ARTICLE 12 
 EMINENT DOMAIN 
 12.1 Termination of Lease. If the Condemning Authority desires to effect a Taking of all or any material part of the Property, Landlord
will notify Tenant and Landlord and Tenant will reasonably determine whether the taking will render the Premises unsuitable for Tenant's intended purposes. If Landlord and Tenant conclude that the Taking will render the Premises unsuitable for
Tenant's intended purposes, Landlord and Tenant will document such determination and this Lease will terminate as of the date the Condemning Authority takes possession of the portion of the Property taken. Tenant will pay Rent to the date of
termination. If a Condemning Authority takes all or any material part of the improvements on the Project or if a Taking reduces the value of the Property by fifty percent (50%) or more (as reasonably determined by Landlord), regardless of
whether the Premises is affected, then Landlord, at Landlord's option, by notifying Tenant prior to the date the Condemning Authority takes possession of the portion of the Project taken, may terminate this Lease effective on the date the Condemning
Authority takes possession of the portion of the Project taken. 
 12.2 Landlord's Repair Obligations. If this Lease does not
terminate with respect to the entire Premises under Section 12.1 and the Taking includes a portion of the Premises, this Lease automatically terminates as to the portion of the Premises taken as of the date the Condemning Authority takes
possession of the portion taken and Landlord will cause Master Lessor, at its sole cost and expense, to restore the remaining portion of the Premises to a complete architectural unit with all commercially reasonable diligence and speed and will
reduce the Basic Rent for the period after the date the Condemning Authority takes possession of the portion of the Premises taken to a sum equal to the product of the Basic Rent provided for in this Lease multiplied by a fraction, the numerator of
which is the rentable area of the Premises after the Taking and after Master Lessor restores the Premises to a complete architectural unit, and the denominator of which is the rentable area of the Premises prior to the Taking. Landlord will also
equitably adjust Tenant's Share of Excess Expenses Percentage for the same period to account for the reduction in the rentable area of the Premises or the Building resulting from the Taking. Tenant's obligation to pay Basic Rent and Tenant's Share
of Excess Expenses will abate on a proportionate basis with respect to that portion of the Premises remaining after the Taking that Tenant is unable to use during Landlord's restoration for the period of time that Tenant is unable to use such
portion of the Premises. 
 12.3 Tenant's Participation. Master Lessor is entitled to receive and keep all damages, awards or
payments resulting from or paid on account of a Taking. Accordingly, Tenant waives and assigns to Master Lessor any interest of Tenant in any such damages, awards or payments. Tenant may prove in any condemnation proceedings and may receive any
separate award for damages to or condemnation of Tenant's movable trade fixtures and equipment and for moving expenses; provided however, that Tenant has no right to receive any award for its interest in this Lease or for loss of leasehold.

 12.4 Exclusive Taking Remedy. The provisions of this Article 12 are Tenant's sole and exclusive rights and remedies in
the event of a Taking. To the extent permitted by the Laws, Tenant waives the benefits of any Law, including, but not limited to, California Code of Civil Procedure Section 1265.130 or any successor statutes or laws, that provides Tenant any
abatement or termination rights or any right to receive any payment or award (by virtue of a Taking) not specifically described in this Article 12. 
  

					
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 ARTICLE 13 
 TRANSFERS 
 13.1 Restriction on Transfers. Tenant will not cause or suffer a Transfer
without obtaining Landlord's prior written consent. Landlord may grant or withhold consent in Landlord's sole and absolute discretion. Tenant's request for consent to a Transfer must describe in detail the parties, terms, portion of the Premises,
and other circumstances involved in the proposed Transfer. Landlord will notify Tenant of Landlord's election to consent or withhold consent within thirty (30) days of Landlord's receipt of such a written request for consent to the Transfer
from Tenant. Tenant will provide Landlord with any additional information Landlord reasonably requests regarding the proposed Transfer or the proposed transferee. If Landlord consents to the Transfer, Landlord may impose on Tenant or the transferee
such conditions as Landlord, in its sole, absolute and arbitrary discretion, deems appropriate. No Transfer releases Tenant from any liability or obligation under this Lease and Tenant remains liable to Landlord after such a Transfer as a principal
and not as a surety. If Landlord consents to any Transfer, Tenant will pay to Landlord, as Additional Rent, seventy-five percent (75%) of any amount Tenant receives on account of the Transfer in excess of the amounts this Lease otherwise
requires Tenant to pay. In no event may Tenant cause or permit a Transfer to another tenant of the Building. Any attempted Transfer in violation of this Lease is null and void and constitutes an Event of Default under this Lease. 
 13.2 Recapture Right. In lieu of giving or withholding consent pursuant to Section 13.1, Landlord may, within the thirty (30) day
period provided in Section 13.1, elect by written notice to Tenant to terminate this Lease or, if a proposed Transfer affects only a portion of the Premises, to terminate this Lease as respects that portion. If Landlord elects to terminate the
Lease as set forth above, Tenant may negate Landlord's election by delivering written notice withdrawing its request for Landlord's consent to the Transfer within five (5) days of Tenant's receipt of Landlord's notice. If Landlord elects to
terminate this Lease as set forth above, Landlord will release Tenant from liability under this Lease for future Basic Rent and Additional Rent with respect to the Premises (or the portion of the Premises subject to the proposed Transfer) accruing
after the effective date of termination. Landlord and Tenant agree and acknowledge that Landlord's right to recapture as set forth above is intended to permit Landlord to maintain control over the leasing or subleasing of space in the Property, to
protect its interest in the Property and the interest of any lenders and to prevent such interest from being impaired. Tenant understands the nature of this right and has approved the recapture provisions in consideration for (a) Tenant's right
to negate Landlord's recapture election by withdrawing its request for a Transfer and (b) Landlord's agreement to release Tenant from liability for Rent accruing after the effective date of termination with respect to the recaptured portion of
the Premises pursuant to the provisions of this Section. 
 13.3 No Merger. No merger shall result from Tenant's Transfer of
the Premises under this Article, Tenant's surrender of this Lease or the termination of this Lease in any other manner. In any such event, Landlord may terminate any or all subtenancies or succeed to the interest of Tenant as sub-landlord
thereunder. 
 13.4 Costs. Tenant will pay to Landlord, as Additional Rent, all costs and expenses Landlord incurs in
connection with any Transfer, including, without limitation, reasonable attorneys' fees and costs, regardless whether Landlord consents to the Transfer. 
 13.5 Transfers to Affiliates. Provided that no Event of Default exists under this Lease, Tenant may, without Landlord's consent, assign or sublet all or a portion of this Lease or the Premises to an
Affiliate if (a) Tenant notifies Landlord at least 30 days prior to such Transfer; (b) Tenant delivers to Landlord, at the time of Tenant's notice, current financial statements of Tenant and the proposed transferee that are reasonably
acceptable to Landlord; and (c) Tenant delivers to Landlord, not later than the effective date of the Transfer, a written agreement reasonably acceptable to Landlord under which the transferee assumes and agrees to perform Tenant's obligations
under this Lease and to observe all terms and conditions of this Lease. Tenant will also promptly provide Landlord with copies of any documents reasonably requested by Landlord to document the status and relationship between Tenant and its
Affiliate. A Transfer to an Affiliate does not release Tenant from any liability or obligation under this Lease. Landlord's rights under Section 13.1 to recapture or share in any profit Tenant receives from a Transfer do not apply to any
Transfer this Section 13.6 permits. "Affiliate" means any person or entity that, directly or indirectly, controls, is controlled by or is under common control with Tenant. For purposes of this definition, "control" means possessing the power to
direct or cause the direction of the management and policies of the entity by the ownership of a majority of the voting securities of the entity. 
 ARTICLE 14 
 DEFAULTS; REMEDIES 
 14.1 Events of Default. The occurrence of any of the following constitutes an "Event of Default" by Tenant under this Lease. Landlord and Tenant agree that the notices required by this Section 14.1
are intended to satisfy any and all notice requirements imposed by the Laws and are not in addition to any such requirements. 
 14.1.1
Failure to Pay Rent. Tenant fails to pay Basic Rent, any monthly installment of Tenant's Share of Excess Expenses or any other Additional Rent amount as and when due and such failure continues for three (3) days after Landlord
notifies Tenant. 
 14.1.2 Failure to Perform. Tenant materially breaches or fails to perform any of Tenant's nonmonetary
obligations under this Lease and the breach or failure continues for a period of fifteen (15) days after Landlord notifies Tenant of Tenant's breach or failure; provided that if Tenant cannot cure its breach or failure within a fifteen
(15) day period, Tenant's breach or failure is not an Event of Default if Tenant commences to cure its breach or failure within the fifteen (15) day period and thereafter diligently pursues the cure and effects the cure within a period of
time that does not exceed an additional fifteen (15) days after the expiration of the initial fifteen (15) day period. Notwithstanding any contrary language contained in this Section 14.1.2, Tenant is not entitled to any notice or
cure period before an uncurable breach or failure of this Lease becomes an Event of Default. 
  

					
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 14.1.3 Misrepresentation. The existence of any material misrepresentation or omission in
any financial statements, correspondence or other information provided to Landlord by or on behalf of Tenant or any Guarantor in connection with (a) Tenant's negotiation or execution of this Lease; (b) Landlord's evaluation of Tenant as a
prospective tenant at the Property; (c) any proposed or attempted Transfer; or (d) any consent or approval Tenant requests under this Lease. 
 14.1.4 Other Defaults. (a) Tenant makes a general assignment or general arrangement for the benefit of creditors; (b) a petition for adjudication of bankruptcy or for reorganization or
rearrangement is filed by Tenant; (c) a petition for adjudication of bankruptcy or for reorganization or rearrangement is filed against Tenant and is not dismissed within thirty (30) days; (d) a trustee or receiver is appointed to
take possession of substantially all of Tenant's assets, substantially all of Tenant's assets located at the Premises, or of Tenant's interest in this Lease and possession is not restored to Tenant within thirty (30) days; or
(e) substantially all of Tenant's assets located at the Premises or Tenant's interest in this Lease is subjected to attachment, execution or other judicial seizure not discharged within thirty (30) days. If a court of competent
jurisdiction determines that any act described in this section does not constitute an Event of Default, and the court appoints a trustee to take possession of the Premises (or if Tenant remains a debtor in possession of the Premises) and such
trustee or Tenant Transfers Tenant's interest hereunder, then Landlord is entitled to receive, as Additional Rent, the amount by which the Rent (or any other consideration) paid in connection with the Transfer exceeds the Rent otherwise payable by
Tenant under this Lease. 
 14.1.5 Prohibited Transfer. If a Transfer occurs or is attempted in violation of Article 13 of
this Lease. 
 14.1.6 Environmental Default. Tenant violates the provisions of Article 5 relating to Hazardous Materials.

 14.2 Remedies. Upon the occurrence of any Event of Default, Landlord may at any time and from time to time, without notice
or demand and without preventing Landlord from exercising any other right or remedy, exercise any of the following remedies: 
 14.2.1
Termination of Tenant's Possession/Re-entry and Reletting Right. Terminate Tenant's right to possession of the Property at any time by any lawful means, in which case this Lease shall terminate and Tenant must immediately surrender
possession of the Property to Landlord. In such event, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default, including without limitation (i) the worth at the time of the award of the
unpaid Rent and other charges which Landlord had earned at the time of the termination; (ii) the worth at the time of the award of the amount by which the unpaid Rent which Landlord would have earned after termination until the time of the
award exceeds the amount of such rental loss that Tenant proves Landlord could have reasonably avoided; (iii) the worth at the time of the award of the amount by which the unpaid Rent which Tenant would have paid for the balance of the Lease
Term after the time of award exceeds the amount of such rental loss that Tenant proves Landlord could have reasonably avoided; and (iv) any other amount, including court costs necessary to compensate Landlord for all the detriment proximately
caused by Tenant's failure to perform its obligations under the Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, any costs or expenses Landlord incurs in maintaining or preserving
the Property after such default, the cost of recovering possession of the Property, expenses of reletting, including necessary renovation or alteration of the Property, Landlord's reasonable attorneys' fees incurred in connection therewith, and any
real estate commission paid or payable. As used in subparts (i) and (ii) above, the "worth at the time of the award" is computed by allowing interest at the Maximum Rate. As used in subpart (iii) above, the "worth at the time of the
award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%) (if Tenant has abandoned the Premises, Landlord shall have the option of
(i) retaking possession of the Premises and recovering from Tenant the amount specified in this Section 14.2.1 or (ii) proceeding under Section 14.2.2 or Section 14.2.3. 
 14.2.2 Maintain Right to Possession. Maintain Tenant's right to possession, in which case this Lease shall continue in effect whether or
not Tenant has abandoned the Property. Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the Rent as it becomes due. The Landlord has the remedy described in California Civil
Code Section 1951.4 (Landlord may continue Lease in effect after Tenant's breach and abandonment and recover Rent as it becomes due, if Tenant has right to sublet or assign, subject only to reasonable limitations). During the period Tenant is
in default, Landlord may enter the Premises and relet them, or any part of them, to third parties for Tenant's account. Tenant shall be liable immediately to Landlord for all costs Landlord incurs in reletting the Premises, including brokers'
commissions, expenses of remodeling the Premises required by the reletting, and like costs. Reletting can be for a period shorter or longer than the remaining Term of this Lease. Tenant shall pay to Landlord the Rent due under this Lease on the
dates the Rent is due, less the Rent Landlord receives from reletting. No act by Landlord allowed by this Section 14.2.2 will terminate this Lease unless Landlord notifies Tenant in writing that Landlord elects to terminate this Lease. After
Tenant's default and for so long as Landlord does not terminate Tenant's right to possession of the Premises, if Tenant obtains Landlord's consent, Tenant will have the right to assign or sublet its interest in this Lease, but Tenant will not be
released from liability. If Landlord elects to relet the Premises as provided in this Section 14.2.2, Rent that Landlord receives from reletting will be applied to the payment of: (i) first, any indebtedness from Tenant to Landlord other
than Rent due from Tenant; (ii) second, all costs, including costs, incurred by Landlord in reletting; and (iii) third, Rent due and unpaid under the Lease. After deducting the payments referred to in this Section 14.2.2, any sum
remaining from the Rent Landlord receives from reletting will be held by Landlord and applied in payment of future Rent as Rent becomes due under this Lease. If, on the date 

  

					
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Rent is due under this Lease, the Rent received from the reletting is less than the Rent due on that date, Tenant will pay to Landlord, in addition to the
remaining Rent due, all costs, including costs for maintenance, Landlord incurred in reletting which remain after applying the Rent received from the reletting. 
 14.2.3 Other Remedies. Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Property is located. 
 14.2.4 Right of Landlord to Re-Enter. In the event of any termination of this Lease, Landlord shall have the immediate right to enter upon
and repossess the Premises, and any personal property of Tenant may be removed from the Premises and stored in any public warehouse at the risk and expense of Tenant. 
 14.3 Costs. Tenant will reimburse and compensate Landlord on demand and as Additional Rent for any actual loss Landlord incurs in connection with, resulting from or related to any breach or default of
Tenant under this Lease, regardless of whether the breach or default constitutes an Event of Default, and regardless of whether or not suit is commenced or judgment is entered. Such loss includes all reasonable legal fees, costs and expenses
(including paralegal fees, expert fees, and other professional fees and expenses) Landlord reasonably incurs investigating, negotiating, settling or enforcing any of Landlord's rights or remedies or otherwise protecting Landlord's interests under
this Lease. Tenant will also Indemnify the Landlord Parties from and against all Claims Landlord or any of the other Landlord Parties incurs if Landlord or any of the other Landlord Parties becomes or is made a party to any Claim or action
(a) instituted by Tenant or by or against any person holding any interest in the Premises by, under or through Tenant; (b) for foreclosure of any lien for labor or material furnished to or for Tenant or such other person; or
(c) otherwise arising out of or resulting from any act or omission of Tenant or such other person. In addition to the foregoing, Landlord is entitled to reimbursement of all of Landlord's fees, expenses and damages, including, but not limited
to, reasonable attorneys' fees and paralegal and other professional fees and expenses, Landlord incurs in connection with protecting its interests in any bankruptcy or insolvency proceeding involving Tenant including, without limitation, any
proceeding under any chapter of the Bankruptcy Code; by exercising and advocating rights under Section 365 of the Bankruptcy Code; by proposing a plan of reorganization and objecting to competing plans; and by filing motions for relief from
stay. Such fees and expenses are payable on demand, or, in any event, upon assumption or rejection of this Lease in bankruptcy. 
 14.4
Waiver and Release by Tenant. Tenant waives and releases all Claims Tenant may have resulting from Landlord's re-entry and taking possession of the Premises by any lawful means and removing and storing Tenant's property as permitted under
this Lease, regardless of whether this Lease is terminated and, to the fullest extent allowable under the Laws, Tenant releases and will indemnify the Landlord Parties from and against any and all Claims occasioned thereby. No such reentry is to be
considered or construed as a forcible entry by Landlord. 
 14.5 Landlord's Default. If Landlord defaults in the performance of
any of its obligations under this Lease, Tenant will notify Landlord of the default and Landlord will have thirty (30) days after receiving such notice to cure the default. If Landlord is not reasonably able to cure the default within a thirty
(30) day period, Landlord will have an additional reasonable period of time to cure the default as long as Landlord commences the cure within the thirty (30) day period and thereafter diligently pursues the cure. In no event shall
(a) Tenant be entitled to terminate this Lease as a result of Landlord's default under this Lease or (b) Landlord be liable to Tenant or any other person for consequential, special or punitive damages, including, without limitation, lost
profits. 
 14.6 No Waiver. No failure by Landlord to insist upon the performance of any provision of this Lease or to exercise
any right or remedy upon a breach or default thereof, and no acceptance by Landlord of full or partial Rent during the continuance of any such breach or default, constitutes Landlord's waiver of any such breach or default. No waiver of any breach or
default may be implied from any omission by Landlord to take any action on account of such breach or default. None of the terms of this Lease to be kept, observed or performed by Tenant, and no breach or default thereof, may be waived, altered or
modified except by a written instrument executed by Landlord. One or more waivers by Landlord is not to be construed as a waiver of a subsequent breach or default of the same provision. No statement on a payment check from Tenant or in a letter
accompanying a payment check is binding on Landlord. Landlord may, with or without notice to Tenant, negotiate such check without being bound to the conditions of any such statement. If Tenant pays any amount other than the actual amount due
Landlord, receipt or collection of such partial payment does not constitute an accord and satisfaction. Landlord may retain any such partial payment, whether restrictively endorsed or otherwise, without prejudice to Landlord's right to collect the
balance properly due. If all or any portion of any payment is dishonored for any reason, payment will not be deemed made until the entire amount due is actually collected by Landlord. The foregoing provisions apply in kind to the receipt or
collection of any amount by a lock box agent or other person on Landlord's behalf. 
 ARTICLE 15 
 CREDITORS; ESTOPPEL CERTIFICATES 
 15.1 Subordination. This Lease shall be subject and subordinate at all times to (a) the Master Lease, (b) all ground leases which may now exist or hereafter be executed affecting the Building, the Project, or the
land upon which the Building and Project are situated, or both, and any and all amendments, renewals, modifications, supplements and extensions thereof; and (c) the lien of any mortgage or deed of trust which may now exist or hereafter be
executed, and any and all advances made thereunder, and interest thereon and all modifications, renewals, supplements, consolidations and replacements thereof. Notwithstanding the foregoing, Tenant acknowledges that Master Lessor, Landlord and
Lienholder shall have the right to subordinate or cause to be subordinated any such ground leases or any such liens to this Lease. In the event that any ground lease terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the tenant of the successor in interest 

  

					
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to Landlord, at the option of such successor in interest and this Lease shall continue in full force and effect in such event. Notwithstanding anything to
the contrary in this Lease, such Lienholder succeeding to the interest of Landlord under this Lease (a "Successor Landlord") shall not be liable for or bound by any of the following matters: (a) any offset right that Tenant may have
against any former Landlord relating to any event or occurrence before the date of attornment, including any claim for damages of any kind whatsoever as the result of any breach by a former Landlord that occurred before the date of attornment,
provided that the foregoing shall not limit either (i) Tenant’s right to exercise against Successor Landlord any offset right otherwise available to Tenant because of events occurring after the date of attornment or (ii) Successor
Landlord’s obligation to correct any conditions that existed as of the date of attornment and violate Successor Landlord’s obligations as Landlord under this Lease; (b) any payment of Rent that Tenant may have made to a former
Landlord more than thirty (30) days before the date such Rent was first due and payable under this Lease with respect to any period after the date of attornment other than, and only to the extent that, this Lease expressly required such a
prepayment; (c) any obligation (i) to pay Tenant any sum(s) that any former Landlord owed to Tenant unless such sums, if any, shall have been actually delivered to Successor Landlord by way of an assumption of escrow accounts or otherwise;
(ii) with respect to any security deposited with a former Landlord, unless such security was actually delivered to a Successor Landlord; (iii) to commence or complete any initial construction of improvements in the Premises or any
expansion or rehabilitation of existing improvements thereon; (iv) to reconstruct or repair improvements following a fire, casualty or condemnation; or (v) arising from representations and warranties related to a former Landlord;
(e) any modification or amendment of this Lease, or any waiver of the terms of this Lease, made without Successor Landlord’s written consent; or (f) any consensual or negotiated surrender, cancellation, or termination of this Lease,
in whole or in part, agreed upon between Landlord and Tenant, unless effected unilaterally by Tenant pursuant to the express terms of this Lease. Tenant shall execute and deliver, upon reasonable prior notice from Landlord, any additional documents
in such form as is designated by Landlord evidencing the priority or subordination of this Lease with respect to any such ground leases or the lien of any such mortgage or deed of trust. Landlord shall use commercially reasonable efforts to obtain
from any Lienholder to whose mortgage, deed of trust or ground lease this Lease is hereafter subordinated, an agreement of non-disturbance on such Lienholder’s standard form for the benefit of Tenant. 
 15.2 Attornment. If any Lienholder or any other transferee acquires Landlord's interest in this Lease, the Premises or the Project, Tenant
will attorn to the transferee of or successor to Landlord's interest in this Lease, the Premises or the Project (as the case may be) and recognize such transferee or successor as landlord under this Lease. Tenant waives the protection of any statute
or rule of law that gives or purports to give Tenant any right to terminate this Lease or surrender possession of the Premises upon the transfer of Landlord's interest. 
 15.3 Mortgagee Protection Clause. Tenant will give Lienholder, by registered mail, a copy of any notice of default Tenant serves on Landlord, provided that Landlord or Lienholder previously notified
Tenant (by way of notice of assignment of rents and leases or otherwise) of the address of Lienholder. Tenant further agrees that if Landlord fails to cure such default within the time provided for in this Lease, then Tenant will provide written
notice of such failure to Lienholder and Lienholder will have an additional thirty (30) days within which to cure the default. If the default cannot be cured within the additional thirty (30) day period, then Lienholder will have such
additional time as may be necessary to effect the cure if, within the thirty (30) day period, Lienholder has commenced and is diligently pursuing the cure (including without limitation commencing foreclosure proceedings if necessary to effect
the cure). 
 15.4 Estoppel Certificates. 
 15.4.1 Contents. Upon Landlord's written request, Tenant will execute, acknowledge and deliver to Landlord a written statement in form satisfactory to Landlord certifying: (a) that this Lease (and
all guaranties, if any) is unmodified and in full force and effect (or, if there have been any modifications, that the Lease is in full force and effect, as modified, and stating the modifications); (b) that this Lease has not been canceled or
terminated; (c) the last date of payment of Rent and the time period covered by such payment; (d) whether there are then existing any breaches or defaults by Landlord under this Lease known to Tenant, and, if so, specifying the same;
(e) specifying any existing claims or defenses in favor of Tenant against the enforcement of this Lease (or of any guaranties); and (f) such other factual statements as Landlord, any lender, prospective lender, investor or purchaser may
request. Tenant will deliver the statement to Landlord within ten (10) Business Days after Landlord's request. Landlord may give any such statement by Tenant to any lender, prospective lender, investor or purchaser of all or any part of the
Property and any such party may conclusively rely upon such statement as true and correct. 
 15.4.2 Failure to Deliver. If
Tenant does not timely deliver the statement referenced in Section 15.4.1 to Landlord, (a) Landlord may execute and deliver the statement to any third party on behalf of Tenant and (b) such failure constitutes an Event of Default
under this Lease. Further, if Tenant so fails to timely deliver the statement, Landlord and any lender, prospective lender, investor or purchaser may conclusively presume and rely that, except as otherwise represented by Landlord, (i) the terms
and provisions of this Lease have not been changed; (ii) this Lease has not been canceled or terminated; (iii) not more than one month's Rent has been paid in advance; and (iv) Landlord is not in default in the performance of any of
its obligations under this Lease. In such event, Tenant is estopped from denying the truth of such facts. 
 ARTICLE 16 
 TERMINATION OF LEASE 
 16.1
Surrender of Premises. Tenant will surrender the Premises to Landlord at the expiration or earlier termination of this Lease in good order, condition and repair, reasonable wear and tear, permitted Alterations, Casualty (subject to Master
Lessor’s and Landlord's rights with respect to any Landlord Unreleased Casualty Claim) and condemnation excepted, and will surrender all keys to the Premises to Property Manager or to 

  

					
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Landlord at the place then fixed for Tenant's payment of Basic Rent or as Landlord or Property Manager otherwise directs. Tenant will also inform Landlord of
all combinations on locks, safes and vaults, if any, in the Premises or on the Project. Tenant will at such time remove all of its property from the Premises and, if Landlord so requests, all specified Alterations and improvements Tenant placed on
the Premises. Tenant will promptly repair any damage to the Premises caused by such removal. Tenant releases and will Indemnify Landlord from and against any Claim resulting from Tenant's failure or delay in surrendering the Premises in accordance
with this Section, including, without limitation, any Claim made by any succeeding occupant founded on such delay. All property of Tenant not removed on or before the last day of the Term is deemed abandoned. Tenant appoints Landlord as Tenant's
agent to remove, at Tenant's sole cost and expense, all of Tenant's property from the Premises upon termination of this Lease and to cause its transportation and storage for Tenant's benefit, all at the sole cost and risk of Tenant, and Landlord
will not be liable for damage, theft, misappropriation or loss thereof or in any manner in respect thereto. 
 16.2 Holding
Over. If Tenant possesses the Premises after the Term expires or is otherwise terminated without executing a new lease and without Landlord's written consent, Tenant is deemed to be occupying the Premises without claim of right (but subject
to all terms and conditions of this Lease) and, in addition to Tenant's liability for failing to surrender possession of the Premises as provided in Section 16.1, Tenant will pay Landlord a charge for each day of occupancy after expiration of
the Term in an amount equal to double the greater of Tenant's then-existing Rent or the basic rent and additional rent (on a daily basis) Landlord charges at the time of the holdover on new leases in the Property for space similar to the Premises.

 ARTICLE 17 
 ADDITIONAL PROVISIONS 
 17.1 Security Deposit. Concurrently with Tenant's execution of this Lease, Tenant will
deposit with Landlord the Security Deposit. If Tenant defaults with respect to any of the terms, provisions, covenants and conditions of this Lease, Landlord may use, apply or retain the whole or any part of the Security Deposit for the payment of
any Rent in default or any other sum which Landlord expends by reason of Tenant's default. Tenant is not entitled to any interest on the Security Deposit. It is expressly agreed that the Security Deposit is not an advance rental deposit or a measure
of Landlord's damages in the case of Tenant's default. Upon application of all or any part of the Security Deposit, Tenant must upon demand restore the Security Deposit to its original amount. Any application of the Security Deposit by Landlord
shall not be deemed to have cured Tenant's default. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of Law, now or hereinafter in force, which restrict the amount or types of claim
that a landlord may make upon a security deposit or imposes upon a landlord (or its successors) any obligation with respect to the handling or return of security deposits. The Security Deposit will be released to Tenant within forty-five
(45) days of the surrender of the Premises to Landlord subject to any deductions made by Landlord pursuant to the terms of this Lease. 
 17.2 Parking. During the Term of this Lease, Landlord licenses sixty-nine (69) parking spaces to Tenant. Tenant will pay Landlord the amount set forth in the Basic Terms for each unreserved space and each reserved space
that Tenant decides to reserve as Additional Rent at the same time, place and manner as Basic Rent. Landlord and Tenant acknowledge that Landlord anticipates that the Unreserved and Reserved Spaces will be made available in the Parking Facility.
Parking at the Parking Facility by Tenant is subject to the other provisions of this Lease and the provisions of the Amended and Restated Declaration Establishing Easements, Covenants and Restrictions for Parking Facilities recorded on
September 1, 1998 as Document No. 19980582940 and any amendments thereto and rules and regulations promulgated thereunder ("Parking Declaration"). In any event, under no circumstances may Tenant's parking rights and privileges be transferred,
assigned or otherwise conveyed separate and apart from Tenant's interest in this Lease. In no event will Master Lessor or Landlord be liable for any loss, damage or theft of, to or from any vehicle at the Project or given parking rights in
accordance with this section, and Tenant releases any Claim therefor, and, as to Tenant, Tenant's employees, licensees or invitees, will indemnify, defend (with counsel reasonably acceptable to Landlord) and hold the Landlord Parties harmless
against any Claim therefor or in connection therewith. "Unreserved Spaces" mean vehicular parking spaces located in the Parking Facilities provided for the Building which are not designated for the exclusive use of a specific tenant or for use by
visitors to the Property, as the same may be relocated or redesignated from time to time by Landlord. "Reserved Spaces" means vehicular parking spaces located in the parking facilities provided for the Building which are designated for the exclusive
use of a specific tenant, as the same may be relocated or redesignated from time to time by Landlord. 
 17.3 Building Name, Address
and Depiction. Tenant shall not utilize any name selected by Landlord from time to time for the Building and/or the Project as any part of Tenant's corporate or trade name. Landlord shall have the right to change the name, number or
designation of the Building or the Project without liability to Tenant. Tenant shall not use any photo or depiction of the Building in its advertising, stationery or in any other manner. 
 ARTICLE 18 
 MISCELLANEOUS PROVISIONS 
 18.1 Notices. All Notices must be in writing and must be sent by personal delivery, United States registered or certified mail (postage
prepaid) or by an independent overnight courier service, addressed to the addresses specified in the Basic Terms or at such other place as either party may designate to the other party by written notice given in accordance with this section. Notices
given by mail are deemed delivered within three (3) Business Days after the party sending the Notice deposits the Notice with the United States Post Office. Notices delivered by courier are deemed delivered on the next Business Day after the
day the party delivering the Notice timely deposits the Notice with the courier for overnight (next day) delivery. 
  

					
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 18.2 Transfer of Landlord's Interest. If Landlord Transfers (other than for collateral
security purposes) its leasehold interest in the Premises, the transferor is automatically relieved of all obligations accruing under this Lease from and after the date of the Transfer, provided that the transferor will deliver to the transferee any
funds the transferor holds in which Tenant has an interest (such as a security deposit). Landlord's covenants and obligations in this Lease bind each successive Landlord only during and with respect to its respective period of ownership. However,
notwithstanding any such Transfer, the transferor remains entitled to the benefits of Tenant's releases and indemnity and insurance obligations (and similar obligations) under this Lease with respect to matters arising or accruing during the
transferor's period of ownership. 
 18.3 Successors. The covenants and agreements contained in this Lease bind and inure to
the benefit of Landlord, its successors and assigns, bind Tenant and its successors and assigns and inure to the benefit of Tenant and its permitted successors and assigns. 
 18.4 Captions and Interpretation. The captions of the articles and sections of this Lease are to assist the parties in reading this Lease
and are not a part of the terms or provisions of this Lease. Whenever required by the context of this Lease, the singular includes the plural and the plural includes the singular. 
 18.5 Relationship of Parties. This Lease does not create the relationship of principal and agent, or of partnership, joint venture, or of
any association or relationship between Landlord and Tenant other than that of landlord and tenant. 
 18.6 Entire Agreement;
Amendment. The Basic Terms and all exhibits, addenda and schedules attached to this Lease are incorporated into this Lease as though fully set forth in this Lease and together with this Lease contain the entire agreement between the parties
with respect to the improvement and leasing of the Premises. All preliminary and contemporaneous negotiations, including, without limitation, any letters of intent or other proposals and any drafts and related correspondence, are merged into and
superseded by this Lease. No subsequent alteration, amendment, change or addition to this Lease (other than to the Building Rules) is binding on Landlord or Tenant unless it is in writing and signed by the party to be charged with performance.

 18.7 Severability. If any covenant, condition, provision, term or agreement of this Lease is, to any extent, held invalid or
unenforceable, the remaining portion thereof and all other covenants, conditions, provisions, terms and agreements of this Lease will not be affected by such holding, and will remain valid and in force to the fullest extent permitted by law.

 18.8 Landlord's Limited Liability. Tenant will to look solely to Landlord's interest in the Premises for recovering any
judgment or collecting any obligation from Landlord or any other Landlord Party. Tenant agrees that neither Landlord nor any other Landlord Party will be personally liable for any judgment or deficiency decree. In no event is Landlord Party liable
to Tenant or any other person for consequential, indirect, special or punitive damages. 
 18.9 Survival. All of Tenant's
obligations under this Lease (together with interest on payment obligations at the Maximum Rate) accruing prior to expiration or other termination of this Lease survive the expiration or other termination of this Lease. Further, all of Tenant's
releases and indemnification, defense and hold harmless obligations under this Lease survive the expiration or other termination of this Lease, without limitation. 
 18.10 Attorneys' Fees. If either Landlord or Tenant commences any litigation or judicial action to determine or enforce any of the provisions of this Lease, the prevailing party in any such litigation or
judicial action (as determined by the trier of fact) is entitled to recover all of its costs and expenses (including, but not limited to, reasonable attorneys' fees, costs and expenditures) from the nonprevailing party. 
 18.11 Brokers. Landlord and Tenant each represents and warrants to the other that it has not had any dealings with any realtors, brokers,
finders or agents in connection with this Lease (except as may be specifically set forth in the Basic Terms) and each releases and agrees to Indemnify the other against any Claims based on the failure or alleged failure to pay any realtors, brokers,
finders or agents (other than any brokers specified in the Basic Terms) and from any cost, expense or liability for any compensation, commission or changes claimed by any realtors, brokers, finders or agents (other than any brokers specified in the
Basic Terms) claiming by, through or on behalf of it with respect to this Lease or the negotiation of this Lease. Landlord will pay any brokers named in the Basic Terms in accordance with the applicable listing agreement for the Property. The
obligations of Landlord and Tenant under this Section shall survive the expiration or earlier termination of this Lease. 
 18.12
Tenant's Waiver of Claim. To the fullest extent allowable under the Laws, Tenant agrees that the Landlord Parties are not liable to Tenant or any other person for, and Tenant releases the Landlord Parties from and waives, any and all
Claims resulting or arising, directly or indirectly, from (a) any existing or future breakage, defect, insufficiency, inadequacy, malfunction, interruption, failure, breakdown or similar problem in the Premises or on the Property; (b) any
equipment, system or appurtenance becoming out of repair, malfunctioning or failing to function; or (c) any occurrence, event, situation, Casualty, activity, injury, emergency, condition or happening whatsoever at the Property, whether or not
insured or insurable. This agreement, waiver and release applies regardless whether the Claim arises (i) from personal injury, property damage, or otherwise; (ii) from the act, omission, negligence, fault or misconduct of other tenants or
occupants of the Property, any Landlord Party, or any other person whatsoever; and/or (iii) from an act of God, Force Majeure, or any other cause or reason whatsoever. Nothing in this Section, however, relieves Landlord from any liability to
Tenant (A) under the Warranty Terms; or (B) for any damage to Tenant's trade fixtures or other personal property if such damage is caused by the gross negligence or willful misconduct of Landlord. 
  

					
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	Office Lease Agreement	 		 	

 18.13 Governing Law. This Lease is governed by, and must be interpreted under, the internal
laws of the State. Any suit arising from or relating to this Lease must be brought in the County; Landlord and Tenant waive the right to bring suit elsewhere. 
 18.14 Time is of the Essence. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. 
 18.15 Joint and Several Liability. All parties signing this Lease as Tenant and any Guarantor(s) of this Lease are jointly and severally
liable for performing all of Tenant's obligations under this Lease. 
 18.16 Tenant's Waiver of Landlord's Default. Any claim
Tenant may have against Landlord for default in performance of any of Landlord's obligations under this Lease is deemed waived unless Tenant notifies Landlord of the default within sixty (60) days after Tenant knew or should have known of the
default. 
 18.17 Tenant's Organization Documents; Authority. If Tenant is an entity, Tenant will, within ten (10) days
after Landlord's written request, deliver to Landlord: (a) Certificate(s) of Good Standing from the state of formation of Tenant and, if different, the State, confirming that Tenant is in good standing under the laws governing formation and
qualification to transact business in such state(s); and (b) a copy of Tenant's organizational documents and any amendments or modifications thereof, certified as true and correct by an appropriate official of Tenant. Tenant and each individual
signing this Lease on behalf of Tenant represents and warrants that they are duly authorized to sign on behalf of and to bind Tenant and that this Lease is a duly authorized, binding and enforceable obligation of Tenant. 
 18.18 Provisions are Covenants and Conditions. All provisions of this Lease, whether covenants or conditions, are deemed both covenants and
conditions. 
 18.19 Force Majeure. If Landlord or Tenant is delayed or prevented from performing any obligation under this
Lease (excluding, however, the payment of money) by reason of Force Majeure, Tenant or Landlord's performance of such obligation will be excused for a period equal to (a) the duration of the Force Majeure event, or (b) if longer, the
period of delay actually caused by the Force Majeure event. 
 18.20 Management. Property Manager is authorized to manage the
Property. Master Lessor appointed Property Manager to act as its agent for leasing, managing and operating the Property. The Property Manager then serving is authorized to accept service of process and to receive and give notices and demands on
Master Lessor’s and Landlord’s behalf. 
 18.21 Financial Statements. Tenant will, prior to Tenant's execution of
this Lease and within ten (10) business days after Landlord's request at any time during the Term, deliver to Landlord complete, accurate and up-to-date financial statements, in accordance with SEC laws and regulations, with respect to Tenant.

 18.22 Quiet Enjoyment. Landlord covenants and agrees that Tenant will quietly hold, occupy and enjoy the Premises during the
Term, subject to the terms and conditions of this Lease free from molestation or hindrance by Landlord or any person claiming by, through or under Landlord, if Tenant pays all Rent as and when due and keeps, observes and fully satisfies all other
covenants, obligations and agreements of Tenant under this Lease. 
 18.23 No Recording. Tenant will not record this Lease or a
Memorandum of this Lease without Landlord's prior written consent, which consent Landlord may grant or withhold in its sole, absolute and arbitrary discretion. 
 18.24 Nondisclosure of Lease Terms. The terms and conditions of this Lease constitute proprietary information of Landlord that Tenant will keep confidential, unless disclosure is required by a court of
competent jurisdiction or law and Tenant promptly notifies Landlord of any court order to enable Landlord to object thereto or to seek a protective order. Tenant's disclosure of the terms and conditions of this Lease could adversely affect
Landlord's ability to negotiate other leases and impair Landlord's relationship with other tenants. Accordingly, Tenant will not, without Landlord's consent (which consent Landlord may grant or withhold in its sole, absolute and arbitrary
discretion), directly or indirectly disclose the terms and conditions of this Lease to any other tenant or prospective tenant of the Building or to any other person or entity other than Tenant's employees and agents who have a legitimate need to
know such information (and who will also keep the same in confidence). 
  

					
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	Office Lease Agreement	 		 	

 18.25 Construction of Lease and Terms. The terms and provisions of this Lease represent the
results of negotiations between Landlord and Tenant, each of which are sophisticated parties and each of which has been represented or been given the opportunity to be represented by counsel of its own choosing, and neither of which has acted under
any duress or compulsion, whether legal, economic or otherwise. Consequently, the terms and provisions of this Lease must be interpreted and construed in accordance with their usual and customary meanings, and Landlord and Tenant each waive the
application of any rule of law that ambiguous or conflicting terms or provisions contained in this Lease are to be interpreted or construed against the party who prepared the executed Lease or any earlier draft of the same. Landlord's submission of
this instrument to Tenant for examination or signature by Tenant does not constitute a reservation of or an option to lease and is not effective as a lease or otherwise until Landlord and Tenant both execute and deliver this Lease. The parties agree
that, regardless of which party provided the initial form of this Lease, drafted or modified one or more provisions of this Lease, or compiled, printed or copied this Lease, this Lease is to be construed solely as an offer from Tenant to lease the
Premises, executed by Tenant and provided to Landlord for acceptance on the terms set forth in this Lease, which acceptance and the existence of a binding agreement between Tenant and Landlord may then be evidenced only by Landlord's execution and
delivery of this Lease to Tenant. 
  

					
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	Office Lease Agreement	 		 	

 Landlord and Tenant each caused this Lease to be executed and delivered by their duly authorized
representatives to be effective as of the Effective Date. 
  

							
		 		 	LANDLORD:
			
		 		 	KNOBBE, MARTENS, OLSON & BEAR, LLP
		 		 	a California limited liability partnership
				
	Date executed by Landlord:	 		 	By:	 	  

		 		 	Name:	 	  

	June     , 2007	 		 	Title:	 	  

				
		 		 	By:	 	  

		 		 	Name:	 	  

		 		 	Title:	 	  

			
		 		 	TENANT:
			
		 		 	ECC CAPITAL CORPORATION,
		 		 	a Maryland corporation
				
	Date executed by Tenant:	 		 	By:	 	  

		 		 	Name:	 	  

	June     , 2007	 		 	Title:	 	  

 MASTER LESSOR'S CONSENT 
 Master Lessor hereby consents to the subletting of the Premises to Tenant upon the terms and subject to the conditions set forth herein. 
  

					
	 2040 MAIN, LLC

		
	 By:
	 	Knobbe, Martens, Olson & Bear, LLP
		 	Its Sole Managing Member
			
		 	 By:
	 	  

		 	 Name:
	 	  

		 	 Title:
	 	  

			
		 	 By:
	 	  

		 	 Name:
	 	  

		 	 Title:
	 	  

 Dated: June     , 2007 
  

					
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	Office Lease Agreement	 		 	

 EXHIBIT "A" 
 DEFINITIONS 
 "Additional Rent" means any charge, fee or expense (other than Basic Rent) payable by Tenant
under this Lease, however denoted. 
 "Alteration" means any change, alteration, addition or improvement to the Premises or Property. 
 "Bankruptcy Code" means the United States Bankruptcy Code as the same now exists and as the same may be amended, including any and all rules and regulations
issued pursuant to or in connection with the United States Bankruptcy Code now in force or in effect after the Effective Date. 
 "Basic Rent" means
the basic rent payable by Tenant under this Lease, initially in the amounts specified in the Basic Terms. 
 "Basic Terms" means the terms of this
Lease identified as the "Basic Terms" before Article 1 of the Lease. 
 "BOMA Standards" means the "Standard Method for Measuring Floor Area in
Office Building" approved June 7, 1996 by the American National Standards Institute, Inc., and the Building Owners and Managers Association (ANSI/BOMA Z65.1-1996). 
 "Building" means that certain office building now existing on the Land. 
 "Building Rules" means those certain
rules attached to this Lease as EXHIBIT "E," as Landlord may amend the same from time to time. 
 "Business Days" means any day other than
Saturday, Sunday or a legal holiday in the State. 
 "Business Hours" means Monday through Friday from 8:00 a.m. to 6:00 p.m. and on Saturdays from
9:00 a.m. to 1:00 p.m., excluding New Years Day, Memorial Day, Independence Day, Thanksgiving, Labor Day and Christmas Day. 
 "Casualty" means any
physical loss or damage to property which is caused by (a) fire, windstorm, hail, lightning, vandalism, theft, explosion, collision, accident, flood, earthquake, collapse, or any other peril (including, without limitation, any flooding of
basements or other subsurface areas; malfunctions or failures of equipment, machinery, sprinkling devices, or air conditioning, heating or ventilation apparatus; occurrences of presence of water, snow, frost, steam, gas, sewage, sewer backup, odors,
noise, hail or excessive heat or cold; broken or falling plaster, ceiling tiles, fixtures or signs; broken glass; or the bursting or leaking of pipes or plumbing fixtures); (b) the negligent or intentional acts, omissions or misconduct of any
person or entity (including Landlord and Tenant); or (c) any other event, occurrence, peril or cause whatsoever, whether similar or dissimilar to the foregoing, whether foreseeable or unforeseeable, and regardless whether covered or coverable
by insurance. 
 "Certificate of Occupancy" means a certificate of occupancy or similar document or permit (whether conditional, unconditional,
temporary or permanent) which must be obtained from the appropriate governmental authority as a condition to the lawful occupancy by a tenant of space in the Building. 
 "City" means the City of Irvine. 
 "Claims" means all claims, actions, demands, liabilities, damages, costs,
penalties, forfeitures, losses or expenses, including, without limitation, reasonable attorneys' fees and the costs and expenses of enforcing any indemnification, defense or hold harmless obligation under the Lease. 
 "Commencement Date" means the date Tenant commences business operations in the Premises. 
 "Commencement Date Memorandum" means the form of memorandum attached to the Lease as EXHIBIT "D". 
 "Common Area" means the parking area, driveways, lobby areas, and other areas of the Property Landlord may designate from time to time as common area available to all tenants. 
 "Condemning Authority" means any person or entity with a statutory or other power of eminent domain. 
 "County" means Orange County. 
 "Delivery Date" means the
target date for Landlord's delivery of the Premises to Tenant, which initially is the delivery date specified in the Basic Terms. 
 "Effective Date"
means the date Landlord executes this Lease, as indicated on the signature page. 
 "Event of Default" means the occurrence of any of the events
specified in Section 14.1 of the Lease, or the occurrence of any other event which this Lease expressly labels as an "Event of Default." 
  

 EXHIBIT “A” 

					
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	Office Lease Agreement	 		 	

 "Excess Expenses" means the total amount of Property Taxes and Operating Expenses due and payable with respect to
the Property during any calendar year of the Term minus the product obtained by multiplying the expense stop specified in the Basic Terms by the number of rentable square feet in the Building. 
 "Floor Plan" means the floor plan attached to the Lease as EXHIBIT "C". 
 "Force Majeure" means acts of God; strikes; lockouts; labor troubles; inability to procure materials; inclement weather; governmental laws or regulations; casualty; terrorism; orders or directives of any
legislative, administrative, or judicial body or any governmental department; inability to obtain any licenses, permissions or authorities (despite commercially reasonable pursuit of such licenses, permissions or authorities); and other similar or
dissimilar causes beyond Landlord's reasonable control. 
 "Guarantor" means any person or entity at any time providing a guaranty of all or any part
of Tenant's obligations under this Lease. 
 "Hazardous Materials" means any toxic or hazardous substance, material or waste or any pollutant or
contaminant or infectious or radioactive material, including but not limited to those substances, materials or wastes regulated now or in the future under any of the Hazardous Materials Laws, and any and all of those substances included within the
definitions of "hazardous substances," "hazardous materials," "hazardous waste," "hazardous chemical substance or mixture," "imminently hazardous chemical substance or mixture," "toxic substances," "hazardous air pollutant," "toxic pollutant," or
"solid waste," or words of similar import in the Hazardous Materials Laws or order or by common law decision, including, without limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and other chlorinated solvents,
(ii) oil or any petroleum products or fractions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi) urea formaldehyde and (vii) radioactive materials and waste, and
(viii) infectious waste. It is the intent of the parties hereto to construe the term "Hazardous Materials" in its broadest sense. 
 "Hazardous
Materials Laws" means any federal, state or local laws, ordinances, codes, statutes, regulations, administrative rules, policies and orders, and other authority, existing now or in the future, which classify, regulate, list or define hazardous
substances, materials, wastes contaminants, pollutants and/or the Hazardous Materials, including without limitation the following statutes and regulations, and any other legal authority, regulations, or policies relating to or implementing such
statutes and regulations: 
 Federal. Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA" or
"Superfund"), as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. § 9601 et seq.; Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. § 6901 et
seq.; Clean Water Act ("CWA"), 33 U.S.C. § 1251 et seq.; Clean Air Act ("CAA"), 42 U.S.C. § 78401 et seq.; Toxic Substances Control Act ("TSCA"), 15 U.S.C. § 2601 et
seq.; The Refuse Act of 1899, 33 U.S.C. § 407; Occupational Safety and Health Act ("OSHA"), 29 U.S.C. § 651 et seq.; Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq.; United States Department of Transportation Table (49 CFR 172.101 and amendments thereto) and the Environmental Protection Agency Table (40 CFR Part 302 and amendments thereto); 
 California. Carpenter-Presley-Tanner Hazardous Substance Account Act ("California Superfund"), Cal. Health & Safety Code § 25300
et seq.; California Hazardous Waste Control Act, Cal. Health & Safety Code Sections 25100 et seq.; Porter-Cologne Water Quality Control Act ("Porter-Cologne Act"), Cal. Water Code § 13000 et
seq.; Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code § 25220 et seq.; Safe Drinking Water and Toxic Enforcement Act of 1986 ("Proposition 65"), Cal. Health & Safety Code
§ 25249.5 et seq.; Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code § 25280 et seq.; California Hazardous Substance Act, Cal. Health & Safety Code
§ 28740 et seq.; Air Resources Law, Cal. Health & Safety Code § 39000 et seq.; Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety Code
§§ 25500-25541; Toxic Pits Cleanup Act of 1984 ("TCPA"), Cal. Health & Safety Code §§ 25208-25208.17; 
 Other Laws and Regulations. All other regulations promulgated pursuant to said foregoing laws or any amendments or replacement thereof, provided such amendments or replacements shall in no way limit the original scope and/or
definition of Hazardous Materials defined herein as of the execution date of this Lease. 
 "Indemnify" means that the party providing the indemnity
(the "Indemnitor") will indemnify, protect, defend and hold harmless the party(ies) receiving the indemnity (the "Indemnitee"), with the defense to be provided by counsel reasonably acceptable to the Indemnitee. Landlord and Tenant intend that all
obligations to Indemnify hereunder are (to the maximum extent allowable under California law) to be construed broadly to, upon assertion of a Claim, shift the burden of both defense and indemnity from the Indemnitee to the Indemnitor. The
Indemnitor's obligations to Indemnify shall be triggered by the mere assertion of a Claim which is, either on its face or by reasonable inference from the allegations, within the scope of any of the Indemnitor's obligations to indemnify set forth in
this Lease. It is not a condition to the Indemnitor's obligation to Indemnify that it first be determined (judicially or otherwise) that (i) the Claim is in fact within the scope of the obligation to Indemnify, (ii) the Claim has merit, or
(iii) the Indemnitor was negligent or otherwise at fault in any respect. The obligations to defend and otherwise Indemnify are intended to arise upon the mere assertion of the Claim and to continue through final adjudication, settlement or
other resolution of the Claim. 
 "Land" means that certain real property legally described on the attached EXHIBIT "B". 
  

 EXHIBIT “A” 

					
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	Office Lease Agreement	 		 	

 "Landlord" means only the owner or owners of the Property at the time in question. 
 "Landlord Parties" means Master Lessor, Landlord and Property Manager and their respective officers, directors, partners, shareholders, members and employees.

 "Landlord Unreleased Casualty Claims" means all Claims arising from or relating to any Casualty to any portion of the Property or any personal
property of Landlord located at the Project caused by (a) Tenant moving into or out of the Premises or otherwise bringing into, receiving at, or removing from the Premises any Alteration, trade fixture, equipment or other item or property of
any type; (b) any breach of Tenant's obligations under Article 5 of this Lease; or (c) the gross negligence, willful misconduct or intentional misconduct of Tenant. Landlord Unreleased Casualty Claims also include any deductible
amount or other uninsured loss resulting from any Casualty which is caused by Tenant but is not included within (a)—(c) above, up to a maximum of twenty five thousand dollars ($25,000) (as may be increased for inflation during the Term) for any
one occurrence. 
 "Laws" means any law, regulation, rule, order, statute or ordinance of any governmental or private entity in effect on or after the
Effective Date and applicable to the Project or the use or occupancy of the Project, including, without limitation, Hazardous Materials Laws, Building Rules and Permitted Encumbrances. 
 "Lease" means this Office Sublease Agreement, as the same may be amended or modified after the Effective Date. 
 "Lease Year" means each consecutive twelve (12) month period during the Term, commencing on the Commencement Date, except that if the Commencement Date is not the first day of a calendar month, then the first Lease Year is a
period beginning on the Commencement Date and ending on the last day of the calendar month in which the Commencement Date occurs plus the following twelve (12) consecutive calendar months. 
 "Lienholder" means any mortgagee under a mortgage, beneficiary under a deed of trust, or lessor under a master lease or ground lease, encumbering all or a portion
of the Project. 
 “Master Lease” has the meaning given to such term in Recital A to this Lease. 
 “Master Lessor” means 2040 Main, LLC, a Delaware limited liability company. 
 “Master Premises” has the meaning given to such term in Recital A to this Lease. 
 "Maximum Rate"
means interest at a rate equal to the lesser of (a) eighteen percent (18%) per annum, or (b) the maximum interest rate permitted by law. 
 "Mortgage" means any mortgage, deed of trust, security interest or other security document of like nature that at any time may encumber all or any part of the Property and any replacements, renewals, amendments, modifications,
extensions or refinancings thereof, and each advance (including future advances) made under any such instrument. 
 "Net Rent" means all rental
Landlord actually receives from any reletting of all or any part of the Premises, less any indebtedness from Tenant to Landlord other than Rent (which indebtedness is paid first to Landlord) and less the Re-entry Costs (which costs are paid second
to Landlord). 
 "Notices" means all notices, demands or requests that may be or are required to be given, demanded or requested by either party to
the other as provided in the Lease. 
 "Operating Expenses" means all expenses Landlord incurs in connection with maintaining, repairing and operating
the Property, as determined by Landlord's accountant in accordance with generally accepted accounting principles consistently followed, including, but not limited to, the following: insurance premiums and deductible amounts under any insurance
policy; maintenance and repair costs; steam, electricity, water, sewer, gas and other utility charges; fuel; lighting; window washing; janitorial services; trash and rubbish removal; property and parking association fees, dues and assessments and
all payments under any Permitted Encumbrance (except Mortgages) affecting the Property; wages payable to persons at the level of manager and below whose duties are connected with maintaining and operating the Property (but only for the portion of
such persons' time allocable to the Property), together with all payroll taxes, unemployment insurance, vacation allowances and disability, pension, profit sharing, hospitalization, retirement and other so-called "fringe benefits" paid in connection
with such persons (allocated in a manner consistent with such persons' wages); amounts paid to contractors or subcontractors for work or services performed in connection with maintaining and operating the Property; all costs of uniforms, supplies
and materials used in connection with maintaining, repairing and operating the Property; any expense imposed upon Landlord, its contractors or subcontractors pursuant to law or pursuant to any collective bargaining agreement covering such employees;
all services, supplies, repairs, replacements or other expenses for maintaining and operating the Property; costs of complying with Laws; reasonable management fees and the reasonable costs (including rental) of maintaining a building or management
office in the Building; and such other expenses as may ordinarily be incurred in connection with maintaining and operating an office complex similar to the Property. The term "Operating Expenses" also includes expenses Landlord incurs in connection
with public sidewalks adjacent to the Property, any pedestrian walkway system (either above or below ground) and any other public facility to which Landlord or the Property is from time to time subject in connection with operating the Property. The
term "Operating Expenses" does not include the cost of any capital improvement to the Property other than replacements required for normal maintenance and repair; the cost of repairs, restoration or other work occasioned by fire, windstorm or other
insured casualty other than the amount of any deductible under any insurance policy (regardless whether the deductible is payable by Landlord in connection with a capital expenditure); expenses Landlord incurs in connection with leasing or procuring
tenants or renovating space for new or existing tenants; legal expenses incident to Landlord's enforcement of any lease; interest or principal payments on any mortgage or other indebtedness of Landlord; or allowance or expense for depreciation or
amortization. Notwithstanding the foregoing, if Landlord installs equipment in, or makes improvements or alterations to, the Property reasonably intended to reduce energy, maintenance or other costs, to improve building security, to improve life
safety, to improve the Property operating efficiency or to comply with any Laws, Landlord may include in Operating Expenses reasonable charges for interest paid on the investment and reasonable charges for depreciation of the investment so as to
amortize the investment over the reasonable life of the equipment, improvement or alteration on a straight line basis. 
  

 EXHIBIT “A” 

					
	2040 Main Street	 	3	 	9/29/04
	Office Lease Agreement	 		 	

 "Parking Facility" means that certain parking facility described on Exhibit "F". 
 "Permitted Encumbrances" means all Mortgages, liens, easements, declarations, encumbrances, covenants, conditions, reservations, restrictions and other matters
now or after the Effective Date affecting title to the Property. 
 "Premises" means that certain space situated in the Building shown and designated
on the Floor Plan and described in the Basic Terms. 
 "Project" means the Property and the Parking Facility. 
 "Property" means, collectively, the Land, Building and all other improvements on the Land. 
 "Property Manager" means the property manager named in the Basic Terms or any other agent Landlord may appoint from time to time to manage the Property. 
 "Property Taxes" means any general real property tax, improvement tax, assessment, special assessment, reassessment, commercial rental tax, in lieu tax, levy,
charge, penalty or similar imposition imposed by any authority having the direct or indirect power to tax, including but not limited to, (a) any city, county, state or federal entity, (b) any school, agricultural, lighting, drainage or
other improvement or special assessment district, (c) any governmental agency, or (d) any private entity having the authority to assess the Property under any of the Permitted Encumbrances, together with all fees and expenses incurred by
Landlord in connection with the monitoring and payment of Property Taxes (including the fees and expenses of any tax consultant retained by Landlord to review the Property Taxes). The term "Property Taxes" includes all charges or burdens of every
kind and nature Landlord incurs in connection with using, occupying, owning, operating, leasing or possessing the Property, without particularizing by any known name and whether any of the foregoing are general, special, ordinary, extraordinary,
foreseen or unforeseen; any tax or charge for fire protection, street lighting, streets, sidewalks, road maintenance, refuse, sewer, water or other services provided to the Property. The term "Property Taxes" does not include Landlord's state or
federal income, franchise, estate or inheritance taxes. If Landlord is entitled to pay, and elects to pay, any of the above listed assessments or charges in installments over a period of two or more calendar years, then only such installments of the
assessments or charges (including interest thereon) as are actually paid in a calendar year will be included within the term "Property Taxes" for such calendar year. Tenant and Landlord acknowledge that Proposition 13 was adopted by the voters of
the State of California in June 1978 and that assessments, taxes, fees, levies, and charges may be imposed by government agencies for services such as fire protection; street, sidewalk, and road maintenance; conservation; refuse removal; and
other government services formerly provided without charge to property owners or occupants. In further recognition of the decrease in the level and quality of government services and amenities as a result of Proposition 13 (or as a result of any
other restriction on real property taxes whether by law or by choice of the applicable legislative or assessing body), Property Taxes also include any government or private assessments (or the Building's contribution toward a government or private
cost-sharing agreement) for the purpose of augmenting or improving the quality of services and amenities normally provided by government agencies. Tenant and Landlord intend that all new and increased assessments, taxes, fees, levies, and charges
and all similar assessments, taxes, fees, levies, and charges be included within the definition of "Property Taxes" for purposes of this Lease. 
 "Re-entry Costs" means all costs and expenses Landlord incurs re-entering or reletting all or any part of the Premises, including, without limitation, all costs and expenses Landlord incurs (a) maintaining or preserving the
Premises after an Event of Default; (b) recovering possession of the Premises, recovering persons and property from the Premises and storing such property (including court costs and reasonable attorneys' fees); (c) reletting, renovating or
altering the Premises; and (d) real estate commissions, advertising expenses and similar expenses paid or payable in connection with reletting all or any part of the Premises. "Re-entry Costs" also includes the value of free rent and other
concessions Landlord gives in connection with re-entering or reletting all or any part of the Premises. 
 "Rent" means, collectively, Basic Rent and
Additional Rent. 
 "Rent Tax" means any tax or excise on rents, all other sums and charges required to be paid by Tenant under this Lease, and gross
receipts tax, transaction privilege tax or other tax, however described, which is levied or assessed by the United States of America, the state in which the Building is located or any city, municipality or political subdivision thereof, against
Landlord in respect to the Basic Rent, Additional Rent or other charges payable under this Lease or as a result of Landlord's receipt of such rents or other charges accruing under this Lease. 
 "Security Deposit" means the security deposit to be provided to Landlord in the amount set forth in the Basic Terms. 
 "State" means the State of California. 
 "Structural
Alterations" means any Alterations involving the structural, mechanical, electrical, plumbing, fire/life safety or heating, ventilating and air conditioning systems of the Building. 
 "Substantial Completion" means either (a) the date a Certificate of Occupancy is issued for the Premises, or (b) if a Certificate of Occupancy is not required, the date Tenant is reasonably able to
take occupancy of the Premises; provided that if either (a) or (b) is delayed or prevented because of work Tenant is responsible for performing in the Premises, "Substantial Completion" means the date that all of Landlord's work which is
necessary for either (a) or (b) to occur has been performed and Landlord has made the Premises available to Tenant for the performance of Tenant's work. 
 "Taking" means the exercise by a Condemning Authority of its power of eminent domain on all or any part of the Property, either by accepting a deed in lieu of condemnation or by any other manner. 
  

 EXHIBIT “A” 

					
	2040 Main Street	 	4	 	9/29/04
	Office Lease Agreement	 		 	

 "Tenant" means the tenant identified in the Lease and such tenant's permitted successors and assigns. In any
provision relating to the conduct, acts or omissions of "Tenant," the term "Tenant" includes the tenant identified in the Lease and such tenant's agents, employees, contractors, invitees, successors, assigns and others using the Premises or on the
Project with Tenant's expressed or implied permission. 
 "Tenant's Improvements" means the initial improvements to the Premises which are designed
and installed in accordance with the Basic Terms above. 
 "Tenant's Share of Excess Expenses" means the product obtained by multiplying the amount of
Excess Expenses for the period in question by the Tenant's Share of Excess Expenses Percentage. 
 "Tenant's Share of Excess Expenses Percentage"
means the percentage computed by (a) dividing the rentable square footage of the Premises by the total rentable square footage of the Building and (b) multiplying the quotient by 100. 
 "Term" means the initial term of this Lease specified in the Basic Terms and, if applicable, any renewal term then in effect. 
 "Transfer" means an assignment, mortgage, pledge, transfer, sublease, license or other encumbrance or conveyance (voluntarily, by operation of law or otherwise)
of this Lease or the Premises or any right, title or interest in or created by this Lease or the Premises. The term "Transfer" also includes any assignment, mortgage, pledge, transfer or other encumbering or disposal (voluntarily, by operation of
law or otherwise) of any ownership interest in Tenant or any Guarantor that results or could result in a change of control of Tenant or any Guarantor. 
  

 EXHIBIT “A” 

					
	2040 Main Street	 	5	 	9/29/04
	Office Lease Agreement	 		 	

 EXHIBIT "B" 
 LEGAL DESCRIPTION OF THE LAND 
 THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE,
AND IS DESCRIBED AS FOLLOWS: 
 PARCEL 1 OF LOT LINE ADJUSTMENT 40088-LL RECORDED SEPTEMBER 14, 1999 AS INSTRUMENT NO. 199990660556 OF OFFICIAL RECORDS
OF ORANGE COUNTY, CALIFORNIA. 
 EXCEPTING FROM ALL OF PARCEL 7: ALL OIL, OIL RIGHTS, MINERAL RIGHTS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME FROM SAID LAND OR ANY OTHER LAND,
INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED AND TO BOTTOM SUCH WHIPSTOCK
OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT HOWEVER, THE RIGHT TO DRILL, MINE,
STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER FIVE HUNDRED (500) FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED AS RESERVED BY IRVINE INDUSTRIAL COMPLEX, IN THE DEEDS RECORDED APRIL 15, 1971, IN BOOK 9606, PAGE 441,
AND RECORDED JANUARY 21, 1974 IN BOOK 11060, PAGE 213, BOTH OF OFFICIAL RECORDS. 
  

 EXHIBIT “B” 

					
	2040 Main Street	 	1	 	9/29/04
	Office Lease Agreement	 		 	

 EXHIBIT "C" 
 FLOOR PLAN 
 

 
 EXHIBIT "D" 
 COMMENCEMENT DATE MEMORANDUM 
 THIS MEMORANDUM is made and entered into as of June
    , 2007 by and between Knobbe, Martens, Olson & Bear, LLP, a California limited liability partnership ("Landlord"), and ECC Capital Corporation, a Maryland corporation ("Tenant"). 
  

 EXHIBIT “D” 

					
	2040 Main Street	 	1	 	9/29/04
	Office Lease Agreement	 		 	

 RECITALS: 
 1. Landlord and Tenant are party to a certain Office Sublease Agreement dated as of June _____, 2007 ("Lease"), relating to certain premises ("Premises") in the building located at 2040 Main Street, Irvine, California
("Building"). 
 2. Landlord and Tenant desire to confirm the Commencement Date (as such term is defined in the Lease) and the date the
initial Term of the Lease expires and the notice date and expiration date of any extension of the Term provided to Tenant under the Lease. 
 ACKNOWLEDGMENTS: 
 Pursuant to Section 1.2.3 of the Lease and in consideration of the facts set forth in the Recitals,
Landlord and Tenant acknowledge and agree as follows: 
  

	 	1.	All capitalized terms not otherwise defined in this Memorandum have the meanings ascribed to them in the Lease. 

  

	 	2.	The Commencement Date under the Lease is June     , 2007. 

  

	 	3.	The initial Term of the Lease expires on December     , 2008, unless the Lease is sooner terminated in accordance with the terms and conditions of the
Lease. 

  

	 	4.	Tenant must exercise its right to extend the Term, if at all, by notifying Landlord no later than
                , 2008, subject to the conditions and limitations set forth in the Lease. 

  

	 	5.	The extension of the Term would expire on June     , 2010. 

 Landlord and Tenant caused this Memorandum to be executed by their duly authorized representatives as of the day and date first written above. This Memorandum may be executed in counterparts, each of which is an
original and all of which constitute one instrument. 
  

			
	 LANDLORD:

	
	 KNOBBE, MARTENS, OLSON & BEAR, LLP

	 a California limited liability partnership

		
	 By:
	 	  

	 Name:
	 	  

	 Its:
	 	  

	
	 TENANT:

	
	 ECC CAPITAL CORPORATION,

	 a Maryland corporation

		
	 By:
	 	  

	 Name:
	 	  

	 Its:
	 	  

  

 EXHIBIT “A” 

					
	2040 Main Street	 	2	 	9/29/04
	Office Lease Agreement	 		 	

 EXHIBIT "E" 
 BUILDING RULES 
 The following Building Rules apply to and govern Tenant's use of the Premises and
Project. Capitalized terms have the meanings given in the Lease, of which these Building Rules are a part. Tenant is responsible for all Claims arising from any violation of the Building Rules by Tenant. 
  

	1.	No awning or other projection may be attached to the outside walls of the Premises or Project. No curtains, blinds, shades or screens visible from the exterior of the Premises may
be attached to or hung in, or used in connection with, any window or door of the Premises without the prior written consent of Landlord, which shall not be unreasonably withheld. Such curtains, blinds, shades, screens or other fixtures must be of a
quality, type, design and color, and attached in a manner, approved by Landlord in writing. 

  

	2.	No sign, lettering, picture, notice or advertisement which is visible from the exterior of the Premises or Project may be installed on or in the Premises without Landlord's prior
written consent which shall not be unreasonably withheld, and then only in such manner, character and style as Landlord may have approved in writing. 

  

	3.	Tenant will not obstruct sidewalks, entrances, passages, corridors, vestibules, halls, or stairways in and about the Project which are used in common with other tenants. Tenant will
not place objects against glass partitions or doors or windows which would be unsightly from any of the corridors of the Project or from the exterior of the Project and will promptly remove any such objects upon notice from Landlord.

  

	4.	Tenant will not create or allow obnoxious or harmful fumes, odors, smoke or other discharges which may be offensive to the other occupants of the Project or neighboring properties,
or otherwise create any nuisance. 

  

	5.	The Premises shall not be used for cooking (as opposed to heating of food), lodging, sleeping or for any immoral or illegal purpose. 

  

	6.	Tenant will not make excessive noises, cause disturbances or vibrations or use or operate any electrical or mechanical devices or other equipment that emit excessive sound or other
waves or disturbances or which may be offensive to the other occupants of the Project, or that may unreasonably interfere with the operation of any device, equipment, computer, video, radio, television broadcasting or reception from or within the
Project or elsewhere. 

  

	7.	Machines and mechanical equipment belonging to Tenant, which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a
degree as to be objectionable to Landlord or to any tenants in the Building, shall be placed and maintained by Tenant, at Tenant's expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration.

  

	8.	No dog or other animal or bird is allowed in the Project, except for animals assisting the disabled. 

  

	9.	Tenant will not waste electricity, water or air conditioning and will cooperate with Landlord to ensure the most effective operation of the Project's heating, air conditioning,
ventilation and utility systems. Tenant will not use any method of heating or air conditioning (including without limitation fans or space heaters) other than that supplied by Landlord or approved in writing. 

  

	10.	Tenant assumes full responsibility for protecting its space from theft, robbery and pilferage, which includes keeping valuable items locked up and doors locked and other means of
entry to the Premises closed and secured after Business Hours and at other times the Premises is not in use. 

  

	11.	No additional locks or similar devices shall be attached to any door or window and no keys other than those provided by Landlord shall be made for any door. If more than two keys
for one lock are desired by the Tenant, Landlord will provide the same upon payment by the Tenant. Upon termination of this Lease or of Tenant's possession, Tenant will surrender all keys of the Premises and shall explain to Landlord all combination
locks on safes, cabinets and vaults. 

  

	12.	Tenant will not bring into the Project flammables, such as gasoline, kerosene, naphtha and benzine, or explosives or any other article of intrinsically dangerous nature.

  

	13.	Tenant shall not bring any bicycles or other vehicles of any kind into or through the main lobby of the Building, except for appropriate vehicles necessary for assisting the
disabled. 

  

	14.	If any carpeting or other flooring is installed by Tenant using an adhesive, such adhesive will be an odorless, releasable adhesive. 

  

	15.	If Tenant requires telegraphic, telephonic, security alarm, satellite dishes, antennae or similar services, Tenant shall first obtain Landlord's written approval, which shall not be
unreasonably withheld, and comply with Landlord's instructions in their installation. 

  

	16.	The water and wash closets, drinking fountains and other plumbing fixtures will not be used for any purpose other than those for which they were constructed, and no sweepings,
rubbish, rags, coffee grounds or other substances shall be thrown therein. 

  

 EXHIBIT “E” 

					
	2040 Main Street	 	1	 	9/29/04
	Office Lease Agreement	 		 	

	17.	Tenant will not overload any utilities serving the Premises. 

  

	18.	All loading, unloading, receiving or delivery of goods, supplies, furniture or other items will be made only through entryways provided for such purposes. Deliveries during normal
office hours shall be limited to normal office supplies and other small items. No deliveries shall be made which impede or interfere with other tenants or the operation of the Building. No equipment, materials, furniture, packages, supplies,
merchandise or other property will be received in the Building or carried in the passenger elevators except between such hours and in such elevators as may be designated by Landlord. 

  

	19.	Tenant's initial move in and subsequent deliveries of heavy or bulky items, such as furniture, safes and similar items shall be made only outside of Business Hours and only in such
manner as shall prescribed in writing by Landlord. Landlord will in all cases have the right to specify the proper position of any safe, equipment or other heavy article, which shall only be used by Tenant in a manner which will not interfere with
or cause damage to the Premise or the Project, or to the other tenants or occupants of the Project. Tenant will not overload the floors or structure of the Building. 

  

	20.	Tenant will be responsible for all Claims arising from any damage to the Project or the property of its employees or others and any injuries sustained by any person whomsoever
resulting from the delivery or moving of any articles by or for Tenant. 

  

	21.	Canvassing, soliciting, and peddling in or about the Project is prohibited and Tenant will cooperate to prevent the same. 

  

	22.	At all times (a) persons may enter the Building only in accordance with such regulations as Landlord may provide, (b) persons entering or departing from the Building may
be questioned as to their business in the Building, and the right is reserved to require the use of an identification card or other access device or procedures and/or the registering of such persons as to the hour of entry and departure, nature of
visit, and other information deemed necessary for the protection of the Building, and (c) all entries into and departures from the Building shall be through one or more entrances as Landlord shall from time to time designate. Landlord may elect
not to enforce clauses (a), (b) and (c) above during Business Hours, but reserves the right to do so at Landlord's discretion. 

  

	23.	In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to limit or prevent access to the Project during the continuance of the same by
closing the doors or taking other appropriate steps. Landlord will in no case be liable for damages for any error or other action taken with regard to the admission to or exclusion from the Project of any person at any time.

  

	24.	Smoking is not permitted, except in the smoking areas located outside of the Building, if any, as designated and redesignated in writing from time to time by Landlord, in its sole,
absolute and arbitrary discretion, and Tenant will not smoke anywhere within the Project including, without limitation, the Premises and the sidewalks, entrances, passages, corridors, halls, elevators and stairways of the Project, other than the
smoking areas, if any, designated in writing by Landlord. All smoking materials must be disposed of in ashtrays or other appropriate receptacles provided for that purpose. 

  

	25.	The Building directory will be provided exclusively for the display of the name and location of tenants only and Landlord reserves the right to exclude any other names therefrom and
to limit the amount of space thereon dedicated to Tenant. 

  

	26.	Unless otherwise approved by Landlord in writing, all janitorial services for the Project and the Premises shall be provided exclusively through Landlord, and except with the
written consent of Landlord, no person or persons other than those approved by Landlord shall be employed by Tenant or permitted to enter the Project for the purpose of performing janitorial services. Tenant shall not cause any unnecessary labor by
carelessness or indifference to the good order and cleanliness of the Project. 

  

	27.	Landlord reserves the right to exclude or expel from the Project any person who, in Landlord's judgment, is intoxicated or under the influence of liquor or drugs or who is in
violation of any of the Building Rules or any Laws. 

  

	28.	Tenant shall store all its trash and garbage in proper receptacles within its Premises or in other facilities provided for such purpose by Landlord. Tenant shall not place in any
trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions issued from time to time by Landlord.
Tenant will cooperate with any recycling program at the Project. 

  

	29.	Tenant will not use in the Premises or Common Area of the Project any hand truck except those equipped with rubber tires and side guards or such other material-handling equipment as
Landlord may approve. 

  

	30.	Tenant will not use the name of the Building or the Project in connection with or in promoting or advertising the business of Tenant except as Tenant's address.

  

	31.	Tenant will comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency. 

  

 EXHIBIT “E” 

					
	2040 Main Street	 	2	 	9/29/04
	Office Lease Agreement	 		 	

	32.	Tenant's requirements will be attended to only upon appropriate application to Landlord's property management office for the Project by an authorized individual.

  

	33.	Tenant will not park or permit parking in any areas designated by Landlord for parking by visitors to the Project or for the exclusive use of tenants or other occupants of the
Project. Only passenger vehicles may be parked in the parking areas. 

  

	34.	Parking stickers or any other device or form of identification supplied by Landlord as a condition of use of the parking facilities shall remain the property of Landlord. Such
parking identification device must be displayed as requested and may not be mutilated or obstructed in any manner. Such devices are not transferable and any device in the possession of an unauthorized holder will be void. Landlord may charge a fee
for parking stickers, cards or other parking control devices supplied by Landlord. 

  

	35.	No overnight or extended term parking or storage of vehicles is permitted. 

  

	36.	Parking is prohibited (a) in areas not striped for parking; (b) in aisles; (c) where "no parking" signs are posted; (d) on ramps; (e) in cross-hatched
areas; (f) in loading areas; and (g) in such other areas as may be designated by Landlord. 

  

	37.	All responsibility for damage, loss or theft to vehicles and the contents thereof is assumed by the person parking their vehicle. 

  

	38.	Tenant and/or each user of the parking area may be required to sign a parking agreement, as a condition to parking, which agreement may provide for the manner of payment of any
parking charges and other matters not inconsistent with this Lease and these Building Rules. 

  

	39.	Landlord reserves the right to refuse parking identification devices and parking rights to Tenant or any other person who fails to comply with the Building Rules applicable to the
parking areas. Any violation of such rule shall subject the vehicle to removal, at such person's expense. 

  

	40.	A third party may own, operate or control the parking areas, and such party may enforce these Building Rules relating to parking. Tenant will obey any additional rules and
regulations governing parking which may be imposed by the parking operator or any other person controlling the parking areas serving the Project. 

  

	41.	Tenant shall be responsible for the observance of all of the Building Rules by Tenant (including, without limitation, all employees, agents, clients, customers, invitees and
guests). 

  

	42.	Landlord may, from time to time, waive any one or more of these Building Rules for the benefit of Tenant or any other tenant, but no such waiver by Landlord shall be construed as a
continuing waiver of such Building Rule(s) in favor of Tenant or any other tenant, nor prevent Landlord from thereafter enforcing any such Building Rule(s) against Tenant or any or all of the tenants of the Project. 

  

	43.	These Building Rules are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the other terms, covenants, agreements and conditions of the
Lease. In the event of any conflict between these Building Rules and any express term or provision otherwise set forth in the Lease, such other express term or provision shall be controlling. 

  

 EXHIBIT “E” 

					
	2040 Main Street	 	3	 	9/29/04
	Office Lease Agreement	 		 	

 EXHIBIT "F" 
 DESCRIPTION OF PARKING FACILITY 
 

 
  

 EXHIBIT “F” 

					
	2040 Main Street	 	1	 	9/29/04
	Office Lease Agreement

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