Document:

Exhibit 10.4

 

EXHIBIT
A

INDEMNIFICATION
AGREEMENT

 

 

INDEMNIFICATION
AGREEMENT

 

This
Indemnification Agreement (the “Agreement”) is made as of this 1st day of November 2002
by and between BIDZ.com, Inc., a California corporation (the “Company”),
and David Zinberg, an individual (“Mr. Zinberg”), with respect to the
following facts:

 

R
E C I T A L S

 

A.                                    Mr. Zinberg
serves as Chairman of the Board of Directors, Chief Executive Officer, and
President of the Company.

 

B.                                    The
Company values the services of Mr. Zinberg and desires to retain those services.

 

C.                                    The
Company and Mr. Zinberg recognize the increasing difficulty in obtaining liability
insurance for directors, officers, employees, and agents, the significant
increases in the cost of such insurance, and the general reductions in the
coverage of such insurance.

 

D.                                    The
Company and Mr. Zinberg further recognize the substantial increase in corporate
litigation in general, subjecting directors, officers, employees, and agents to
expensive litigation risk at the same time that the availability and coverage
of liability insurance has been severely limited.

 

E.                                      Mr. Zinberg
does not regard the current protection available as adequate under the present
circumstances, and Mr. Zinberg and other directors, officers, employees,
and agents of the Company may not be willing to continue to serve as directors,
officers, employees, and agents without additional protection.

 

F.                                      The
Company desires to attract and retain the services of highly qualified individuals,
such as Mr. Zinberg, to serve as directors, officers, employees, and
agents of the Company and to indemnify its directors, officers, employees, and
agents so as to provide them with the maximum protection permitted by law.

 

G.                                    The
Company’s Board of Directors has adopted resolutions approving the indemnification
of officers, directors, employees, and agents by the Company to the extent
permitted by California General Corporation Law.

 

NOW,
THEREFORE, in consideration of the premises and the
mutual covenants herein contained, THE PARTIES HERETO AGREE AS FOLLOWS:

 

1.                                      Indemnification
of Mr. Zinberg for Actions by Third Parties

 

The Company
hereby agrees to indemnify and hold Mr. Zinberg harmless from any
liability, claims, damages, losses, expenses, judgments or settlements incurred
by him, including but not limited to reasonable attorneys’ fees and costs
actually incurred by him and advanced by the Company as they are incurred,
resulting from Mr. Zinberg being made a party to, or being threatened to
be made a party to, any present or future proceeding (other than an action by,
or in the right of the Company, which is addressed in Section 2 of this
Agreement), relating to actions Mr. Zinberg has taken which were within
the scope of his authority or duties as a director, officer,

 

1

 

employee,
or agent of the Company, or any subsidiary of the Company, to the extent
permitted by California General Corporation Law.  As part of this indemnification agreement,
the Company agrees to advance reasonable legal fees and costs to Mr. Zinberg
as they are incurred for any actions for which the Company is obligated to
indemnify Mr. Zinberg pursuant to the terms of this Agreement. Mr. Zinberg
hereby undertakes to repay such amounts advanced only if, and to the extent
that, it is ultimately determined that Mr. Zinberg is not entitled to be
indemnified by the Company. The advances to be made hereunder will be paid by
the Company to Mr. Zinberg within 30 days following delivery of a written
request by Mr. Zinberg to the Company. If the Company provides a defense
for Mr. Zinberg at its expense pursuant to Section 1 of this
Agreement and there is no conflict of interest, then Mr. Zinberg may not
seek indemnification from the Company for the fees or costs of any separate
counsel which he may engage. If there is a conflict of interest under those
circumstances, then Mr. Zinberg may retain separate counsel reasonably
satisfactory to the Company and the Company will advance the reasonable legal
fees and costs incurred by Mr. Zinberg in such actions if they are covered
by the Company’s indemnification obligation under this Agreement.

 

2.                                      Indemnification of Mr. Zinberg for Actions in the Right of the Company

 

The Company
hereby agrees to indemnify and hold Mr. Zinberg harmless from any
liability, claims, damages, losses, expenses, judgments or settlements incurred
by him, including but not limited to reasonable attorneys’ fees and costs
incurred by him and advanced by the Company as they are incurred, resulting
from Mr. Zinberg being made a party to, or being threatened to be made a
party to, any proceeding by or in the right of the Company to procure a
judgment in its favor by reason of any action taken by Mr. Zinberg as an
officer, director or agent of the Company, provided that Mr. Zinberg acted
in good faith in a manner he reasonably believed to be in the best interests of
the Company and its shareholders; provided further, that such indemnification
will be coextensive with and not beyond the scope of the indemnification
permitted by California General Corporation Law. As part of this indemnification
agreement, the Company agrees to advance reasonable legal fees and costs to Mr. Zinberg
as they are incurred for any actions for which the Company is obligated to
indemnify Mr. Zinberg pursuant to the terms of this Agreement. Mr. Zinberg
hereby undertakes to repay such amounts advanced only if, and to the extent
that, it is ultimately determined that Mr. Zinberg is not entitled to be
indemnified by the Company. The advances to be made hereunder will be paid by
the Company to Mr. Zinberg within 30 days following delivery of a written
request by Mr. Zinberg to the Company.

 

3.                                      Indemnification
for Serving as a Witness

 

Notwithstanding
any other provision of this Agreement, to the extent that Mr. Zinberg is,
by reason of Mr. Zinberg’s status as a director, officer, employee, or
agent of the Company, a witness in any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, Mr. Zinberg shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith. The advances to be made hereunder will be paid by the
Company to Mr. Zinberg within 30 days following delivery of a written request
by Mr. Zinberg to the Company.

 

4.                                      Cooperation
by Mr. Zinberg

 

Mr. Zinberg
will, as a condition precedent to his right to be indemnified under this
Agreement, give the Company notice, in accordance with Section 10 of this
Agreement, of any claim made against Mr. Zinberg for which indemnification
will or could be sought under this Agreement. Notice to the Company will be
directed to the President of the Company.

 

2

 

Additionally, Mr. Zinberg must give the
Company such information and cooperation as is within Mr. Zinberg’s power
as the Company may reasonably require.

 

5.                                      Notice to Insurers

 

If, at the
time of the receipt of a notice of a claim pursuant to Section 4 of this Agreement, the Company has
director and officer liability insurance in effect, the Company will give
prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The
Company will thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of Mr. Zinberg, all amounts payable as a result
of such proceeding in accordance with the terms of such policies.

 

6.                                      Additional
Indemnification Rights

 

6.1                                 Scope

 

Notwithstanding
any other provision of this Agreement, the Company hereby agrees to indemnify Mr. Zinberg
to the fullest extent permitted by law, notwithstanding that such indemnification
is not specifically authorized by the other provisions of this Agreement, the
Company’s Articles of Incorporation, the Company’s Bylaws, or by statute. In
the event of any change in any applicable law, statute, or rule which
narrows the right of a California corporation to indemnify a member of its
board of directors or its officers, employees, or agents, such change, to the
extent not otherwise required by such law, statute, or rule to be applied
to this Agreement, will have no effect on this Agreement or the parties’ rights
and obligations under this Agreement.

 

6.2                                 Nonexclusivity

 

The indemnification
provided by this Agreement will not be deemed exclusive of any rights to which Mr. Zinberg
may be entitled under the Company’s Articles of Incorporation, its Bylaws, any
agreement, any vote of shareholders or disinterested directors, the laws of the
state of California, or otherwise, both as to action in Mr. Zinberg’s
official capacity and as to action in another capacity while holding such
office. The indemnification provided under this Agreement will continue as to Mr. Zinberg
for any action taken or not taken while serving in an indemnified capacity,
even though he may have ceased to serve in such capacity at the time of any
action, suit, or other covered proceeding.

 

7.                                      Partial
Indemnification

 

If Mr. Zinberg
is entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of the expenses, judgments, fines, or penalties
actually or reasonably incurred by him in the investigation, defense, appeal,
or settlement of any civil or criminal action, suit, or proceeding, but not,
however, for the total amount thereof, the Company will nevertheless indemnify Mr. Zinberg
for the portion of such expenses, judgments, fines, or penalties to which Mr.
Zinberg is entitled.

 

3

 

8.                                      Exceptions

 

Notwithstanding
any other provision of this Agreement, the Company is not obligated pursuant to
the terms of this Agreement:

 

(a)                                  to
indemnify or advance expenses to Mr. Zinberg with respect to the
proceedings or claims initiated or brought voluntarily by Mr. Zinberg and not by
way of defense, except with respect to proceedings brought to establish or
enforce a right to indemnification under this Agreement;

 

(b)                                 to
indemnify or advance expenses to Mr. Zinberg with respect to the any proceeding
instituted by Mr. Zinberg to enforce or interpret this Agreement, if a
court of competent jurisdiction determines that each of the material assertions
made by Mr. Zinberg in such proceeding was not made in good faith or was
frivolous;

 

(c)                                  to indemnify Mr. Zinberg for expenses or liabilities of
any type whatsoever which have been paid directly to Mr. Zinberg by an
insurance carrier under a policy of officers’ and directors’ liability
insurance or other policy of insurance maintained by the Company;

 

(d)                                 to
indemnify Mr. Zinberg for expenses or payment of profits arising from the purchase
and sale by Mr. Zinberg of securities in violation of Section 16(b) of
the Securities and Exchange Act of 1934, as amended, or any similar successor
statute;

 

(e)                                  to indemnify Mr. Zinberg in any manner which is
contrary to public policy or which a court of competent jurisdiction has
finally determined to be unlawful;

 

(f)                                    to
indemnify Mr. Zinberg for liabilities in excess of the total amount at
which settlement reasonably could have been made, or for any cost or expense
incurred by Mr. Zinberg following the time such settlement reasonably
could have been effected, if Mr. Zinberg unreasonably delayed, refused, or
failed to enter into a settlement of any action, suit, or proceeding (or
investigation or appeal thereof) recommended in good faith, in writing, by the
Company; or

 

(g)                                 to
indemnify Mr. Zinberg for any breach by Mr. Zinberg of any employment
agreement between Mr. Zinberg and the Company or any of its subsidiaries.

 

9.                                      Directors’
and Officers’ Liability Insurance

 

The Company
will, from time to time, make the good faith determination whether or not it is
practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the directors, officers,
employees, and agents of the Company with coverage for losses from wrongful
acts, or to ensure the Company’s performance of its indemnification obligations
under this Agreement. In all such policies of liability insurance, Mr. Zinberg
will be named as an insured in such manner as to provide Mr. Zinberg the same
rights and benefits as are accorded to the most favorably insured of the
Company’s directors, if Mr. Zinberg is a director; or of the Company’s
officers; if Mr. Zinberg is not a director of the Company but is an
officer, or of the Company’s employees, if Mr. Zinberg is not a director
or officer but is an employee; or of the Company’s agents, if Mr. Zinberg
is not a director, officer, or employee but is an agent. Notwithstanding the
foregoing, the Company has no obligation to obtain or maintain

 

4

 

such insurance if the Company determines in
good faith that such insurance is not reasonably available, if the premium
costs for such insurance are disproportionate to the amount of coverage
provided, if the coverage provided by such insurance is limited by exclusions
so as to provide an insufficient benefit, or if Mr. Zinberg is covered by
similar insurance maintained by a subsidiary or parent of the Company.

 

10.                               Notice

 

Notice will
deemed to be given by one party to the other parties of this Agreement upon
personal delivery by messenger, air courier, express mail or certified
registered mail, return receipt requested, or upon facsimile or telegram, or
three days after mailing by first class mail by the party giving the notice,
addressed to the parties as follows, or to any other address or facsimile
numbers provided to the parties in writing in accordance with this Agreement by
the party making the change:

 

	
  If to
  the Company:

  	
   

  	
  BIDZ.com, Inc.

  
	
   

  	
   

  	
  3562 Eastham Drive

  
	
   

  	
   

  	
  Culver City, California 90232

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: David Zinberg, President

  
	
   

  	
   

  	
   

  
	
  If to Mr.
  Zinberg:

  	
   

  	
  The address of Mr. Zinberg listed
  below

  
	
   

  	
   

  	
  Mr. Zinberg’s signature to this
  Agreement.

  

 

11.                               Injunctive Relief

 

11.1                           Damages
Inadequate

 

Each party
acknowledges that it would be impossible to measure in money the damages to the
other party if there is a failure to comply with any covenants and provisions
of this Agreement, and agrees that in the event of any breach of any covenant
or provision, the other party to this Agreement will not have an adequate
remedy at law.

 

11.2                           Injunctive
Relief

 

It is
therefore agreed that the other party to this Agreement who is entitled to the
benefit of the covenants and provisions of this Agreement which have been
breached, in addition to any other rights or remedies which they may have,
shall be entitled to immediate injunctive relief to enforce such covenants and
provisions, and that in the event that any such action or proceeding is brought
in equity to enforce them, the defaulting or breaching party will not urge as a
defense that there is an adequate remedy at law.

 

12.                               Waivers

 

If any party
shall at any time waive any rights hereunder resulting from any breach by the other
party of any of the provisions of this Agreement, such waiver is not to be
construed as a continuing waiver of other breaches of the same or other
provisions of this Agreement. Resort to any remedies referred to herein shall
not be construed as a waiver of any other rights and remedies to which such
party is entitled under this Agreement or otherwise.

 

5

 

13.                               Successors
and Assigns

 

Each covenant
and representation of this Agreement shall inure to the benefit of and be
binding upon each of the parties, their personal representatives, attorneys,
agents, assigns and other successors in interest.

 

14.                               Attorneys’ Fees

 

In the event
that either party must resort to legal action in order to enforce the provisions
of this Agreement or to defend such action, the prevailing party shall be
entitled to receive reimbursement from the nonprevailing party for all
reasonable attorney’s fees and all other costs incurred in commencing or
defending such action, or in enforcing this Agreement, including but not
limited to post judgement costs.

 

15.                               Entire and Sole Agreement

 

This Agreement
constitutes the entire agreement between the parties and supersedes all
agreements, representations, warranties, statements, promises and undertakings,
whether oral or written, with respect to the subject matter of this Agreement.
This Agreement may be modified only by a written agreement signed by all
parties.

 

16.                               Governing Law

 

This Agreement
shall be construed as a whole and in accordance with its fair meaning. This
Agreement shall be interpreted in accordance with the laws of the State of Los
Angeles, and venue for any action or proceedings brought with respect to this
Agreement shall be in the County of Los Angeles in the State of California.

 

17.                               Severability

 

The provisions
of this Agreement are meant to be enforced severally so that the determination
that one or more provisions are unenforceable or invalid shall not affect or
render invalid any other provision of this Agreement, and such other provisions
shall continue to be in full force in accordance with their terms.

 

18.                               Rights Cumulative

 

All rights and
remedies under this Agreement are cumulative, and none is intended to be
exclusive of another. No delay or omission in insisting upon the strict
observance of performance of any provision of this Agreement, or in exercising
any right or remedy, shall be construed as a waiver or relinquishment of such
provision, nor shall it impair such right or remedy. Every right and remedy may
be exercised from time to time and as often as deemed expedient.

 

19.                               Captions

 

The paragraph
and other headings contained in this Agreement are for reference purposes only,
and shall not limit or otherwise affect the meaning hereof.

 

6

 

20.                               Legal
Holidays

 

In the case
where the date on which any action required to be taken, document required to
be delivered or payment required to be made is not a business day in San Diego,
California, such action, delivery or payment need not be made on that date, but
may be made on the next succeeding business day.

 

21.                               Counterparts

 

This Agreement
may be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.

 

22.                               Parties

 

This Agreement
shall inure solely to the benefit of and shall be binding upon the parties
hereto and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
contained herein.

 

23.                               Authority

 

All
signatories to this Agreement do hereby declare that they have the authority to
execute this Agreement on behalf of the parties to this Agreement.

 

	
  THE COMPANY:

  	
  BIDZ.COM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ David
  Zinberg

  	
   

  
	
   

  	
   

  	
  David Zinberg, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Marina Zinberg

  	
   

  
	
   

  	
   

  	
  Marina Zinberg, Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
  MR. ZINBERG:

  	
  By

  	
  /s/ David Zinberg

  	
   

  
	
   

  	
   

  	
  David Zinberg

  
	
   

  	
   

  
	
   

  	
   

  	
  26740 Via Linda

  	
   

  
	
   

  	
   

  	
  Street Address

  
	
   

  	
   

  
	
   

  	
   

  	
  Malibu, CA 90265

  	
   

  
	
   

  	
   

  	
  City, State, and Zip Code

  

 

7Exhibit 10.5

 

LEASE (BUILDING)

- CULVER CITY

 

 

	
  JEFFREY E. DONFELD *

  	
  LAW OFFICES OF

  	
   

  
	
  PAUL M. KELLEY

  	
  DONFELD, KELLEY & ROLLMAN

  	
   

  
	
  FREDRIC A. ROLLMAN

  	
  A PARTNERSHIP INCLUDING A PROFESSIONAL
  CORPORATION

  	
   

  
	
  AMY SEMMEL

  	
  11845 WEST
  OLYMPIC BOULEVARD

  	
   

  
	
  DAVID J. LEWIS

  	
  SUITE 1245

  	
   

  
	
   

  	
  LOS ANGELES,
  CALIFORNIA 90064-5095

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TELEPHONE (310)
  312-8080

  	
   

  
	
   

  	
  FACSIMILE
  (310)  312-3014

  	
   

  

 

* A PROFESSIONAL
CORPORATION

 

 

March 16, 2004

 

VIA MESSENGER

 

Michael A. Kahn, Esq.

12121 Wilshire Blvd.

Suite 600

Los Angeles, CA 90025

 

Re:                                                       PAS
Trust/Bidz.com Lease

3562-3582 Eastham Drive, Culver City, CA

 

Dear Michael:

 

On behalf of my
client The PAS Trust, I am pleased to enclose for you an Addendum No. 2 to
the above Lease, bearing my client’s original signature.  [Since I was only provided with one original
of your client’s signature, my client has retained that one for its file, and I
am enclosing for you a copy of your client’s signature, along with my client’s
original signature.]

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Fredric A. Rollman

  	
   

  
	
   

  	
  FREDRIC A. ROLLMAN

  

 

FAR : st

Enclosure 

 

cc:  Dr. Pablo Nankin, Trustee, The PAS Trust
(w/encl)

 

 

ADDENDUM NO. 2

TO

STANDARD
INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET

 

THIS ADDENDUM NO.
2 TO STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET (“Addendum”) is
made as of March 3, 2004 between PAS TRUST (“Lessor”), and BIDZ.COM, INC.,
a California corporation”), with reference to the following facts:

 

A.                                   Lessor
and Lessee are parties to that certain Standard Industrial/Commercial
Multi-Tenant Lease - Net dated as of April 15, 2003 (the “Original Lease”),
as amended by Addendum No. 1 thereto and dated concurrently therewith,
providing for Lessee’s rental from Lessor of the premises located at the street
address of 3562-3852 Eastham Drive, Culver City, CA (the “Premises”). The
Original Lease and Addendum No. 1 are sometimes referred to herein as the “Lease Agreement”.

 

B.                                     The
Original Term of the Lease Agreement is presently scheduled to expire on October 14,
2004, and Lessor and Lessee now desire to extend the expiration date of the
Original Term, and make certain other modifications to the Lease Agreement, as
more particularly provided herein.

 

C.                                     Defined
terms used in this Addendum shall, unless otherwise stated, have the same
meanings as are contained in the Lease Agreement.

 

NOW, THEREFORE,
the parties hereto agree as follows:

 

1.                                       Extension
of Original Term. The Original Term, presently scheduled to expire on October 14,
2004, shall be extended for five (5) years and one-half (1/2) month so
that it will instead expire on October 31, 2009. The period commencing October 15,
2004 and ending October 31, 2009 is hereafter referred to as the “Extension
Term”. Lessee shall have no other right or option to extend the term of the
Lease Agreement beyond October 14, 2009. Lessee shall lease the Premises
from Lessor during the Extension Term on the terms and conditions set forth below.

 

2.                                       Base
Rent. The Base Rent for the
Premises during the Extension Term shall be $60,264 per month from October 15,
2004 through September 30, 2005, $62,072 per month from October 1,
2005 through September 30, 2006, $63,934 per month from October 1,
2006 through September 30, 2007, $65,852 per month from October 1,
2007 through September 30, 2008, and $67,828 per month from October 1,
2008 through October 31, 2009. Base Rent for any partial calendar month
shall be prorated based on the actual number of days in the calendar month.

 

1

 

3. “As-Is” Condition.
Leasee shall accept the Premises in their then “as is” physical condition as of
the commencement date of the Extension Term, without any obligation on Lessor’s
part to make any additions, repairs, improvements or alterations thereto.

 

4. Parking. Notwithstanding anything to the contrary
contained in the Lease Agreement, during the Extension Term Lessee shall be
entitled to: (i) seventy (70) parking spaces per month without additional
charge; and (ii) up to seventy (70) parking spaces per month (in addition
to the parking spaces referenced in clause (i) above) at a charge of
Twenty-five Dollars ($25) per parking space per month. The foregoing charges
are net of any Culver City or other governmental parking taxes, all of which
shall be paid by Lessee in accordance with the provisions of Paragraph 54 of Addendum No. 1 . Monthly
parking charges shall be payable to Lessor on the first day of each month, and shall be deemed additional rent and
subject to late charges as set forth in Paragraph 13.4 and interest as set
forth in Paragraph 13.5 of the Original Lease if not received when due. The
maximum of seventy (70) parking spaces referenced in clause (ii) above
shall be deemed rented on a month-to-month basis, meaning that Lessee may
increase (subject to the seventy (70) parking space maximum) or decrease said
number on thirty (30) days advance notice to Lessor from time to time.

 

5.                                       Property
Management Fee. Notwithstanding anything to the contrary contained in the
Lease Agreement, the $2,750 per month property management fee payable to Lessor
(of which Lessee is obligated to pay Lessee’s
Share) shall be subject to an increase of three percent (3%) per annum,
commencing October 1, 2004.

 

6.                                       Prop.
13 Protection. Notwithstanding anything to the contrary contained in Paragraph
10 of the Original Lease, during the Extension Term the Real Property Taxes
payable by Lessee shall not be subject to increase based on any “change in
ownership” in the Premises by Lessor, as such term is defined in California Revenue &. Taxation Code Section 60 et.
seq. and any future statute. In the event of any such “change in ownership”,
Lessor and not Lessee shall bear the Incremental Real Property Taxes.

 

7.                                       No
Brokers. Each of Lessee and Lessor represents and warrants to the other
that it has not engaged any broker and finder to represent it in connection
with this Addendum. Each party agrees to pay any and all claims for brokers’ or
finders’ fees or commissions claimed by any broker who asserts that it was
engaged by either in connection with the negotiation, execution or consummation
of this Addendum,

 

8.                                       Ratification.
Except as otherwise specifically provided in this Addendum, all of the
definitions, terms, covenants and conditions of the Lease Agreement (including
without limitation those obligating Lessee to pay for utilities consumed in the
Premises and Lessee’s Share of Common Area Operating Expenses) are hereby
ratified, confirmed and remain in full force and effect and are hereby
incorporated into this Addendum, and shall be applicable to Lessee’s rental of
the Premises during the Extension Term. This Addendum and the Lease Agreement
supersede in their entirety any and ail prior oral and written and email
agreements and

 

2

 

understandings of
the parties with respect to the Premises. This Addendum may be signed by the parties in
counterpart copies.

 

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

 

 

	
  LESSOR:

  	
  PAS TRUST

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Pablo Nankin

  	
   

  
	
   

  	
   

  	
  Pablo Nankin, Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  LESSEE:

  	
  BIDZ.COM, INC.,

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/[ILLEGIBLE]

  	
   

  
	
   

  	
  Name:

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
  Title:

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/[ILLEGIBLE]

  	
   

  
	
   

  	
  Name:

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
  Title:

  	
  Secretary

  
							

 

3

 

 

 

STANDARD
INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

 

1.                                      Basic
Provisions (“Basic Provisions”).

 

1.1                               Parties:
This Lease (“Lease”), dated for reference
purposes only April 15, 2003 is made by and between PAS TRUST (“Lessor”) and BIDZ.COM, INC., a California corporation (“Lessee”), (collectively the “Parties”,
or individually a “Party”).

 

1.2(a)                 Premises:
That certain portion of the Project (as defined below), including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 3562-J582 Eastham Drive, located
in the City of Culver City, County of Los Angeles, State of California, with
zip code 90232, as outlined on Exhibit A, attached hereto (“Premises”) and
generally described as (describe briefly the nature of the Premises):
approximately 50,220 rentable square feet in a location indicated on Exhibit A
attached hereto, which is a portion of the entire approximately 71,220 rentable
square foot Building.

 

In addition to Lessee’s
rights to use and occupy the Premises as hereinafter specified, Lessee shall
have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7
below) as hereinafter specified, but shall not have any rights to the roof,
exterior walls or utility raceways of the building containing the Premises (“Building”) or to any other buildings in the Project. The
Premises, the Building, the Common Areas, the land upon which they are located,
along with all other buildings and improvements thereon, are herein
collectively referred to as the “Project.” (See
also Paragraph 2)

 

1.2(b)                 Parking:
-0- unreserved vehicle parking spaces (“Unreserved
Parking Spaces”); and one hundred forty (140) reserved vehicle
parking spaces (“Reserved Parking Spaces”). (See
also Paragraph 2.6 and Paragraph 54 of Addendum No. 1.1

 

1.3                               Term:
One (1) years and six (6) months (“Original Term”)
commencing April 15, 2003 (“Commencement Date”)
and ending October 14, 2004 (“Expiration Date”).
(See also Paragraph 3)

 

1.4                               Early
Possession: N/A (“Early Possession Date”).
(See also Paragraphs 3.2 and 3.3)

 

1.5                               Base
Rent: $60,264 per month (“Base Rent”),
payable on the first (1st) day of each month commencing on the Commencement
Date. (See also Paragraph 4 and Paragraph 50 of Addendum No. 1)

 

ý  If this box is checked, there are provisions
in this Lease for the Base Rent to be adjusted. See Base Rent abatement
provisions in Paragraph 50 of Addendum No. 1.

 

1.6                               Lessee’s
Share of Common Area Operating Expenses: seventy and five-tenths percent
(70.5%) (“Lessee’s Share”).

 

1.7                               Base
Rent and Other Monies Paid Upon Execution:

 

(a)                                  Base
Rent:  $46,198 for the period April 15
- May 31, 2003. On June 1, 2003 Lessee shall pay June Base Rent
of $46,198. Beginning July 1, 2003 the monthly Base Rent will be $60,764.
See Paragraph 50 of Addendum No. 1.

 

(b)                                  Common
Area Operating Expenses: $??,857.84 for the period April 15 - May 31,
2003.

 

(c)                                  Security
Deposit: $?0,000 (“Security Deposit”). (See also Paragraph 5)

 

(d)                                  Other:
$N/A for N/A DZ, MZ.

 

(e)                                  Total
Due Upon Execution of this Lease: $146,055.84 PN.

 

1.8                               Agreed
Use: general office use and any other lawful use. (See also Paragraph 8)

 

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

 

1.10                        Real
Estate Brokers: (See also Paragraph 15)

 

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

 

ý
First Property Realty Corporation represents Lessor exclusively (“Lessor’s Broker”);

 

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

 

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

 

(b)                                  Payment
to Brokers:  Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the Brokers the brokerage fee agreed to be a
separate written agreement.

 

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

 

1.12                        Addenda
and Exhibits. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 50 through 62 and Exhibits A through B, all of which constitute a
part of this Lease.

 

2.                                      Premises.

 

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

 

2.2                               Condition.  Lessor shall deliver that portion of the
Premises contained within the Building (“Unit”) to Lessee broom clean and free
of

 

	
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  © 1999 - American
  Industrial Real Estate Association

  	
   REVISED

  	
  FORM MTN-2-2/99E

  

 

1

 

debris on the
Commencement Date or the Early Possession Date, whichever first occurs (“Start
Date”), in their “sale” condition.

 

2.3                               Compliance.
If applicable laws, covenants or restrictions of record, regulations, and
ordinances in effect on the Start Date (“Applicable Requirements”) are
hereafter changed so as to require during the term of this Lease the
construction of an addition to or an alteration of the Unit, Premises and/or
Building, the remediation of any Hazardous Substance, or the reinforcement or
other physical modification of the Unit, Premises and/or Building (“Capital Expenditure”), Lessor and Lessee shall allocate the
cost of such work as follows:

 

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

 

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

 

(c)                                  Notwithstanding
the above, the provisions concerning Capital Expenditures are intended to apply
only to non-voluntary, Unexpected, and new Applicable Requirements. If the
Capital Expenditures are instead triggered by Lessee as a result of an actual
or proposed change in use, change in intensity of use, or modification to the
Premises then, and in that event, Lessee shall be fully responsible for the
cost thereof, and Lessee shall not have any right to terminate this Lease.

 

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

 

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

 

2.6                               Vehicle
Parking. See Paragraph 54 of Addendum No. 1. Lessee shall be entitled
to use the number of Unreserved Parking Spaces and Reserved Parking Spaces
specified in Paragraph 1.2(b) on those portions of the Common Areas
designated from time to time by Lessor for parking. Lessee shall not use more
parking spaces than said number. Said parking spaces shall be used for parking
by vehicles no larger than full-size passenger automobiles or pick-up trucks,
herein called “Permitted Size Vehicles.” Lessor
may regulate the loading and unloading of vehicles by adopting Rules and
Regulations as provided in Paragraph 2.9. No vehicles other than Permitted Size
Vehicles may be parked in the Common Area without the prior written permission
of Lessor.

 

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

 

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

 

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

 

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

 

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

 

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

 

2.10                        Common
Areas - Changes. Provided Lessee’s use of and access to or enjoyment of the
Common Areas are not materially adversely affected, Lessor shall have the
right, in Lessor’s sole discretion, from time to time:

 

(a)                                  To
make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of 

 

2

 

driveways, entrances,
parking spaces, parking areas, loading and unloading areas, ingress, egress,
direction of traffic, landscaped areas, walkways and utility raceways;

 

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

 

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

 

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

 

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

 

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

 

3.                                      Term.

 

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

 

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

 

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

 

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

 

4.                                      Rent.

 

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

 

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

 

(a)                                  “Common
Area Operating Expenses” are defined, for purposes of this Lease, as all
costs incurred by Lessor relating to the ownership and operation of the
Project, including, but not limited to, the following: See Paragraph 56 of
Addendum No. 1.

 

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

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

(bb)                          Exterior
signs and any tenant directories.

(cc)                            Any
fire detection and/or sprinkler systems.

 

(ii)                                  The
cost of water, gas, electricity and telephone to service the Common Areas and
any Utilities not separately [ILLEGIBLE]

 

(iii)                               Trash
disposal, pest control services, property management, security services, and
the costs of any environmental inspections. The parties confirm that the
property management fee shall be Lessee’s Share of $2.?50 per month.

 

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

 

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

 

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

 

(viii)                        The cost
of any Capital Expenditure to the Building or the Project not covered under the
provisions of Paragraph [ILLEGIBLE] provided; however, that Lessor shall
allocate the cost of any such Capital Expenditure over a 12 year period and
Lessee shall not be required to pay more than Lessee’s Share of [ILLEGIBLE]th
of the cost of such Capital Expenditure [ILLEGIBLE] any given month.

 

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

 

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

 

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

 

(d)                                 Lessee’s
Share of Common Area Operating Expenses shall be payable by Lessee within 10
days after a reasonably detailed statement of actual expenses is presented to
Lessee. At Lessor’s option, however, an amount may be estimated by Lessor from
time to time of Lessee’s Share of annual Common Area Operating Expenses and the
same shall be payable monthly or quarterly, as Lessor shall designate, during
each 12 month period of the Lease term, on the same day as the Base Rent is due
hereunder. Lessor shall deliver to Lessee within 60 days after the expiration
of each calendar year a reasonably detailed statement showing Lessee’s Share of
the actual Common Area Operating Expenses incurred during the preceding year.
If Lessee’s payments under this Paragraph 4.2(d) during the preceding year
exceed Lessee’s Share as indicated on such statement, Lessor shall credit the
amount of such over-payment against Lessee’s Share of Common Area Operating
Expenses next becoming due, but if the Original Term shall have expired, then
Lessor shall refund such over-payment directly to Lessee. If Lessee’s payments
under this Paragraph 4.2(d) during the preceding year were less than
Lessee’s Share as indicated on such statement, Lessee shall pay to Lessor the
amount of the deficiency within 10 days after delivery by Lessor to Lessee of
the statement.

 

4.3                               Payment.
Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States, without offset or deduction (except as specifically
permitted in this Lease), on or before the day on which it is due. Rent for any
period during the term hereof which is for less than one full calendar month
shall be prorated based upon the actual number of days of said month. Payment
of Rent shall be made to Lessor at its address stated herein or to such other
persons or place as Lessor may from time to time designate in writing.
Acceptance of a payment which is less than the amount [ILLEGIBLE] due shall not
be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating. In the event that any check,
draft, or other instrument of payment given by Lessee to Lessor is dishonored
for any reason, Lessee agrees to pay to Lessor the sum of $25?? addition to any
late charges which may be due.

 

5.                                      Security
Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee’s faithful performance of its obligations
under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this
Lease, Lessor may use, apply or retain all or any portion of said Security
Deposit for the payment of any amount due Lessor or to reimburse or compensate
Lessor for any liability, expense, loss or damage which Lessor may suffer or
incur by reason thereof. If Lessor uses or applies all or any portion of the
Security Deposit, Lessee shall within 10 days after written request therefor
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease.

 

3

 

Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase
the Security Deposit to the extent necessary, in Lessor’s reasonable judgment,
to account for any increased wear and tear that the Premises may suffer as a
result thereof.  If a change in control
of Lessee occurs during this Lease and following such change the financial
condition of Lessee is in Lessor’s reasonable judgment significantly reduced,
Lessee shall deposit such additional monies with Lessor as shall be sufficient
to cause the Security Deposit to be at a commercially reasonable level based on
such change in financial condition. 
Lessor shall not be required to keep the Security Deposit separate from
its general accounts.  Within 14 days
after the expiration or termination of this Lease, if Lessor elects to apply
the Security Deposit only to unpaid Rent, and otherwise within 30 days after
the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor
shall return that portion of the Security Deposit not used or applied by
Lessor.  No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.

 

6.                                      Use.

 

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

 

6.2                               Hazardous
Substances.

 

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

 

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

 

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

 

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

 

(e)                                  Lessor
Indemnification.  See Page 4A.

 

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

 

(g)                                 Lessor
Termination Option.  If a Hazardous
Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease
unless Lessee is legally responsible therefor (in which case Lessee shall make
the Investigation and remediation thereof required by the Applicable
Requirements and this Lease shall continue in full force and effect, but
subject to Lessor’s rights under Paragraph 5.2(d) and Paragraph [ILLEGIBLE],
Lessor may, at Lessor’s option, either (i) Investigate and remediate such
Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and
affect, or (ii) If the estimated cost to remediate such condition exceeds
12 times the then monthly Base Rent or $100,000, whichever is greater, give
written notice to Lessee, within 30 days after receipt by Lessor of knowledge
of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to
terminate this Lease as of the date 50 days following the date of such
notice.  In the event Lessor [ILLEGIBLE]
to give a termination notice, Lessee may, within 10 days thereafter, give
written notice to Lessor of Lessee’s commitment to pay the amount by which the
cost of the remediation of such Hazardous Substance Condition exceeds an amount
equal to 12 times the then monthly Base Rent or $100,000, whichever is
greater.  Lessee shall provide Lessor
with said funds or satisfactory assurance thereof within 30 days following such
commitment.  In such event, this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are
available.  If Lessee does not give such
notice and provide the required funds or assurance thereof within the time
provided, this Lease shall terminate as of the date specified in Lessor’s
notice of termination.

 

6.3                               Lessee’s
Compliance with Applicable Requirements.  Except as otherwise provided in this Lease,
Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely
manner, materially comply with all Applicable Requirements, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor’s engineers and/or consultants which relate in any
manner to the Premises, without regard to whether said requirements are now in
effect or become effective after the Start Date.  Lessee shall, within 10 days after receipt of
Lessor’s written request, provide Lessor with copies of all permits and other
documents, and other information evidencing Lessee’s compliances with any
Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of
any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee of the Premises to comply with
any Applicable Requirements.

 

6.4                               Inspection;
Compliance.  Lessor and Lessor’s “Lender”
(as defined in Paragraph [ILLEGIBLE]) and consultants shall have the right to
enter into Premises at any time, in the case of an emergency, and otherwise at
reasonable times, on reasonable advance notice, for the purpose of inspecting
the condition of the Premises and for verifying compliance by Lessee with this
Lease.  The cost of any such inspections
shall be paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the Inspection is requested
or ordered by a governmental authority. 
In such case, Lessee shall upon request reimburse Lessor for the cost of
such inspection, so long as such inspection is reasonably related to the
violation or contamination and such violation or contamination was caused by
Lessee or Lessee’s employees, agents or invitees.

 

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

 

7.1                               Lessee’s
Obligations.  See Paragraph 53 of
Addendum No.1.

(a)                                  In
General.  Subject to the provisions
of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with

 

4

 

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

 

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

 

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

 

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

 

7.2                               Lessor’s
Obligations.  Subject to the
provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area
Operating Expenses), 6 (Use), 7.1 (Lessor’s Obligations), 9 (Damage or
Destruction) and 14 (Condemnation), Lessor subject to reimbursement pursuant to
Paragraph 4.2, shall keep in good order, condition and repair the , fire
sprinkler system, Common Area fire alarm and/or smoke detection systems, fire
hydrants, parking, walkways, parkways, driveways, landscaping; fences, signs
and utility systems serving the Common Areas and all parts thereof, as well as
providing the services for which there is a Common Area Operating Expense
pursuant to Paragraph 4.2.  Lessor shall
not be obligated to paint the exterior or interior surfaces of exterior walls
nor shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises.  Lessee
expressly waives the benefit of any statute now or hereafter in effect to the
extent [ILLEGIBLE] is inconsistent with the terms of this Lease.  Lessee shall be responsible for the repair or
replacement of the foregoing to the extent not covered by Lessor’s insurance;
if the need for the repair or replacement is due to damage caused by Lessee or
Lessee’s employees, agents or invitees. 
Lessor shall keep in good order, condition and repair the foundations,
exterior walls, structural condition of interior bearing walls and exterior
roof, without reimbursement from Lessee, unless the need for repair or
replacement is caused by acts or omissions of Lessee or its employees, agents
or invitees.

 

7.3                               Utility
Installations; Trade Fixtures; Alterations.

 

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

 

(b)                                  Consent.
 Lessee shall not make any
Alterations or Utility installations to the Premises without Lessor’s prior
written consent to be given or withheld in Lessor’s sole
discretion.  Lessor may, as a
precondition to granting such approval, require Lessee to utilize a contractor
chosen and/or approved by Lessor.  Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans.  Any shall be deemed
conditioned upon Lessee’s; (i) acquiring all applicable governmental
permits, (ii) furnishing Lessor with copies of both the permits and the
plans and specifications prior to commencement of the work, and (iii) compliance
with all conditions of said permits and other Applicable Requirements in a
prompt and expeditious manner.  Any
Alterations or Utility Installations shall be performed in a workmanlike manner
with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications.  For work which cost an amount in excess of
one month’s Base Rent, Lessor may condition its consent upon Lessee providing a
lien and [ILLEGIBLE] bond in an amount equal to 150% of the estimated cost of
such Alteration or Utility Installation and/or upon Lessee’s posting an
additional Security Deposit with Lessor.

 

(c)                                  Indemnification.   Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessor
at or for use on the Premises, which claims are or may be secured by any
mechanic’s or materialman’s lien against the Premises or any interest therein.
Lessee shall give Lessor not less than 10 days notice prior to the commencement
of any work in, on or about the Premises, and Lessor shall have the right in
post notices of non-responsibility. If Lessee shall contest the validity of any
such lien, claim or demand, then Lessor shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety
bond in an amount equal to 150% of the amount of such contested lien, claim or
demand, indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action, Lessee shall pay Lessor’s attorneys, fees and
costs.

 

7.4                               Ownership;
Removal; Surrender; and Restoration.

 

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

 

(b)                                  Removal.
By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease.  Lessor may require that any or all Lessor
Owned Alterations or Utility Installations be removed by the expiration or
termination of the Lease. Lessor may require the removal of any [ILLEGIBLE] of
all or any part of any Lessee Owned Alterations or Utility Installations made
without the required consent. See Page 5A.

 

(c)                                  Surrender;
Restoration. Lessee shall surrender the Premises by the Expiration Date or
any earlier termination date, with all of the improvements, parts and surfaces
thereof [ILLEGIBLE] clean and free of debris, and in good operating order,
condition and state of repair, ordinary wear and tear excepted.  “Ordinary wear and tear” shall not include
any damage or deterioration that would have been prevented by good maintenance
practice. Notwithstanding the foregoing, if this Lease is for 12 months or
less, then Lessee shall surrender the Premises in the same condition as
delivered to Lessee on the Start Date with HO allowance for ordinary wear and
tear. Lessee shall repair any damage occasioned by installation, maintenance or
removal of Trade Fixtures, Lessee owned Alterations and/or Utility
Installations, furnishings, and equipment as well as the removal of any storage
tank installed by or for Lessee. Lessee shall also completely remove from the
Premises any and all Hazardous Substances brought onto the Premises by or for
Lessee, of any third party (except Hazardous Substances which were deposited
via underground migration from areas outside of the Project) even if such
removal would require Lessee to perform or pay for work that exceeds statutory
requirements. Trade Fixtures shall remain the property of Lessee and shall be
removed by Lessee.  The failure by Lessee
to timely vacate the Premises pursuant to this Paragraph 7.4(c) without
the express written consent of Lessor shall constitute a holdover under the
provisions of Paragraph 2B below.

 

5

 

8.                                      Insurance;
Indemnity.

 

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

 

8.2                               Liability
Insurance.

 

(a)                                  Carried
by Lessee.  Lessee shall obtain and
keep in force a Commercial General Liability policy of insurance protecting
Lessee and Lessor as an additional insured against claims for bodily injury,
personal injury and property damage based upon or arising out of the ownership,
use, occupancy or maintenance of the Premises and all areas [ILLEGIBLE]
thereto.  Such insurance shall be on an
occurrence basis providing single [ILLEGIBLE] coverage in an amount not less
than $2,000,000 per occurrence with an annual aggregate of not less than
$5,000,000, an “Additional Insured-Managers or Lessors of Premises Endorsement”
and contain the “Amendment of the Pollution Exclusion Endorsement” for damage
caused by heat, smoke or fumes from a hostile fire.  The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an “Insured contract” for the performance of Lessee’s indemnity
obligations under this Lease.  The limits
of said insurance shall not, however, limit the liability of Lessee nor relieve
Lessee of any obligation hereunder.  All
Insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

 

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

 

8.3                               Property
Insurance - Building, Improvements and Rental Value.

 

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

 

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

 

(c)                                  Adjacent
Premises.  Lessee shall pay for any
increase in the premiums for the property insurance of the Building and for the
Common Areas or other buildings in the Project if said increase is caused by
Lessee’s acts, omissions, use or occupancy of the Premises, other than as permitted in Paragraph 1.8 above.

 

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

 

8.4                               Lessee’s
Property: Business Interruption Insurance.

 

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

 

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

 

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

 

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

 

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

 

8.7                               Indemnity.  Except for Lessor’s gross negligence or
willful misconduct, Lessee shall indemnify, protect, defend and hold harmless
the Premises.  Lessor and its agents,
Lessor’s master or ground lessor, partners and Lenders, from and against any
and all claims, loss of rents and/or damages, liens, judgments, penalties,
attorneys’ and consultants’ fees, expenses and/or liabilities arising out of,
involving, or in connection with, the use and/or occupancy of the Premises by
Lessee.  If any action or proceeding is
brought against Lessor by reason of any of the foregoing matters, Lessee shall
upon notice defend the same at Lessee’s expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense.  Lessor need not have first paid
any such claim in order to be defended or indemnified.  See Page 6A.

 

8.8                               Exemption
of Lessor from Liability.  Lessor
shall not be liable for injury or damage to the person or goods, wares,
merchandise or other property of Lessee, Lessee’s employees, contractors,
invitees, customers, or any other person in or about the Premises, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, fire sprinkles, wires, appliances, plumbing, HVAC or lighting fixtures,
or from any other cause, whether the said injury or damage results from
conditions arising upon the Premises or upon other portions of the Building, or
from other sources or places.  Lessor
shall not be liable for any damages arising from any act or neglect of any
other tenant of Lessor nor from the failure of Lessor to enforce the provisions
of any other lease in the Project. 
Notwithstanding Lessor’s negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee’s business or for
any loss of income or profit therefrom.

 

9.                                      Damage
or Destruction.

 

9.1                               Definitions.

 

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

 

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

 

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

 

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

 

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

 

9.2                               Partial
Damage - Insured Loss.  If a Premises
Partial Damage that is an Insured Loss occurs, then Lessor shall at Lessor’s
expense,

 

6

 

repair such damage (but
not Lessee’s Trade Fixtures of Lessee Owned Alterations and Utility
installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost in repair
of which is $5,000 or less, and in such event, Lessor shall make any applicable
insurance proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not is the force
or the insurance proceeds are not sufficient to affect such repair the Insuring
Party shall promptly contribute the shortage in proceeds as and when required
to complete said repairs. In the event, however, such shortage was due to the
fact that by reason of the unique nature of the Improvements, full replacement
cost insurance coverage was not commercially reasonable and available, Lessor
shall have no obligation to pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises unless Lessee provides Lessor
with the funds to cover same, or adequate assurance thereof, within 10 days
following receipt of written notice of such shortage and content therefor. If
Lessor receives said funds or adequate assurance thereof within said 10 day
period, the party responsible for making the repairs shall [ILLEGIBLE] them as
soon as reasonably possible and this Lease shall remain in full force and
effect.  If such funds or assurance are
not received, Lessor may nevertheless elect by written notice to Lessee within
10 days thereafter to: (i) make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds. In which
case this Lease shall remain in full force and effect, or (ii) have this
Lease terminate 30 days thereafter. Lessor shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction.  Premises Partial Damage due
to flood or earthquake shall be subject to paragraph 9.1. notwithstanding that
there may be same insurance coverage, but the net proceeds of any such
insurance shall be made available for the repairs if made by either Party.

 

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

 

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

 

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

 

9.6                               Abatement
or Rent; Lessee’s Remedies.

 

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

 

(b)                                  Remedies.  If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful
way, such repair or restoration within 60 days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee’s election to terminate this Lease on a date not
less than 60 days following the giving of such notice. If Lessee gives a such
notice and such repair or restoration is not commenced within 30 days
thereafter, this Lease shall terminate as of the date specified in said notice.
If the repair or restoration is commenced with in such 30 days, this Lease
shall continue in full force and effect. “Commence” shall mean the beginning of
the actual work on the Premises, whichever. See Page 7A.

 

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

 

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

 

10.                               Real
Property Taxes.

 

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

 

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

 

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

 

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

 

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

 

11                                 Utilities.  Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and services
supplied to the Premises together with any taxes thereon. Notwithstanding the
provisions of Paragraph 4.2. If at any time in Lessor’s sole judgment, Lessor
determinates that Lessee’ is using a disproportionate amount of water,
electricity or other commonly metered utilities, or that Lessee is generating
such a large volume of trash as a require an increase in the size of the
dumpster and/or an increase in the number of lines per month that the dumpster
is [ILLEGIBLE], then Lessor may increase Lessee’s Base Rent by an amount equal
to such increased costs.

 

12.                              Assignment
and subletting.  See Paragraph 55 of
addendum No.1.

 

12.1                        Lessor’s
Consent Required.

 

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

 

7

 

consent. See Page 7A.

 

(b)                                 A
change in the control of Lessee shall constitute an assignment requiring
consent. The transfer, on a cumulative basis, of 35% more than fifty percent
(50%) of the voting control of Lessee shall constitute a change in control for
this purpose.

 

(d)                                 An
assignment or subletting without consent shall, at Lessor’s option, be a
Default curable after notice per Paragraph [ILLEGIBLE] (c), 

 

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

 

12.2                        Terms and
Conditions Applicable to Assignment and Subletting.

 

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

 

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

 

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

 

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

 

(e)                                  Each
request for consent to an assignment or subletting shall be in writing,
accompanied by information relevant to Lessor’s determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $1,000
inclusive of attorneys’ fees [ILLEGIBLE] % 
as consideration for Lessor’s considering and processing said request.
Lessee agrees to provide Lessor with such other or additional information
and/or documentation as may be reasonably requested.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13.                               Default;
Breach; Remedies.

 

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

 

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

 

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

 

(c)                                  The
failure by Leasee to provide (i)  reasonable written evidence of compliance
with Applicable Requirements, (ii) the service contracts, (iii) the
rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate, (v) a requested subordination, (vii) any document
requested under Paragraph 41 (easements), or (viii) any other
documentation or information which Less or may reasonably require of Lessee
under the forms of this Lease, where any such failure continues for a period of
10 days following written notice in Lessee.

 

(d)                                 A
Default by Lessee as to the terms, covenants, conditions or provisions of this
Lease, or of the rules adopted under Paragraph 2.0 hereof, other than
those described in subparagraphs 10.1(a), (b) or (c), above, where such
Default continues for a period of 30 days after written notice; provided,
however, that if the nature of Lessee’s Default is such that more than 30 days
are reasonably required for its cure, than it shall not be deemed to be a
Breach if Lessee commences such cure within said 30 days period and thereafter
diligently prosecutes such cure to completion.

 

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

 

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

 

13.2                        Remedies.  If Lessee fails to perform any of its
affirmative duties of obligations, within 10 days after written notice (or in
case of an emergency, without notice), Lessor may, at its option, perform such
duly or obligation on Lessee’s behalf, including but not limited to the
obtaining of

 

8

 

reasonably required
bonds, Insurance policies, or governmental licenses, permits or approvals.  The costs and expenses of any such
performance by Lessor shall be due and payable by Lessee upon receipt of
Invoice therefor.  If any check given to
Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier’s check.  In the event of a
Breach, Lessor may, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach:

 

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

 

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

 

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

 

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

 

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

 

13.5                        Interest.  Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor, when due as to scheduled
payments (such as Base Rent) or within 30 days following the date on which it was
due for non-scheduled payment, shall bear interest from the date when due, as
to scheduled payments, or the 31st day after it was due as to non-scheduled
payments.  The interest (“Interest”)
charged shall be equal to the [ILLEGIBLE] rate reported in the Wall Street
Journal as published closest prior to the date when due plus 4%, but shall not
exceed the maximum rate allowed by law. 
Interest is payable in addition to the potential late charge provided
for in Paragraph 13.4.

 

13.6                        Breach by
Lessor.

 

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

 

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

 

15.                               Brokerage
Fees.

 

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

 

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

 

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

 

9

 

16.                               Estoppel
Certificates.

 

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

 

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

 

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

 

17.                               Definition
of Lessor.  The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease,
of the Lessee’s interest in the prior lease. 
In the event of a transfer of Lessor’s title or interest in the Premises
or this Lease, Lessor shall deliver to the transferee or assignee (in cash or
by credit) any unused Security Deposit held by Lessor.  Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the
Lessor.  Subject to the foregoing, the
obligations and/or covenants in this Lease to be performed by the Lessor shall
be binding only upon the Lessor as hereinabove defined.  Notwithstanding the above, and subject to the
provisions of Paragraph 20 below, the original Lessor under this Lease, and all
subsequent holders of the Lessor’s interest in the Lease shall remain liable
and responsible with regard to the potential duties and liabilities of Lessor
pertaining to Hazardous Substances as outlined in Paragraph 6.2 above.

 

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

 

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

 

20.                               Limitation
on Liability.  Subject to the
provisions of Paragraph 17 above, the obligations of Lessor under this Lease
shall not constitute personal obligations of Lessor, the individual partners of
Lessor or its or their individual partners, directors, officers or
shareholders, and Lessee shall look to the Premises, and to no other assets of
Lessor, for the satisfaction of any liability or Lessor with respect to this
Lease, and shall not seek recourse against the individual partners of Lessor,
or its or their individual partners, directors, officers or shareholders, or
any of their personal assets for such satisfaction.

 

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

 

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

 

23.                               Notices.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 Brokers
have no responsibility with respect to any default or breach hereof by either
Party.  The liability (including court
costs and attorneys’ fees), of any Broker with respect to any breach of duty,
error or omission relating to this Lease shall not exceed the fee received by
such Broker pursuant to this Lease; provided, however, that the foregoing
limitation on each Broker’s liability shall not be applicable to any gross
negligence or willful misconduct of such Broker.

 

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

 

25.                               No
Right To Holdover.  Lessee has no
right to retain possession of the Premises or any part thereof beyond the
expiration or termination of the

 

10

 

Lease. In the event that
Lessee holds over, then the Base Rent shall be increased to 150% of the Base
Rent applicable immediately preceding the expiration or termination.  Nothing contained herein shall be construed
as consent by Lessor to any holding over by Lessee. 

 

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

 

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

 

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

 

30.                               Subordination;
Attornment; Non-Disturbance. See Paragraph 58 of Addendum No. 1.

 

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

 

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

 

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

 

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

 

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

 

32.                               Lessor’s
Access;  Showing [ILLEGIBLE]
Repairs.  Lessor and Lessor’s agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times, after reasonable advance notice
to Lessee, for the purpose of showing the same to prospective purchasers,
lenders, or [ILLEGIBLE], and making such alterations, repairs, improvements or
additions to the Premises as Lessor may deem necessary.  All such activities shall be without
abatement of rent or liability to Lessee. Lessor may at any time place on the
Premises an, ordinary “For Sale” signs and Lessor may during the last 6 months
of the term hereof place on the Premises any ordinary “For Lease” signs. Lessee
may at any time place on the Premises any ordinary “For Sublease” sign.

 

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

 

34.                               Signs.  Except for ordinary “For Sublease” signs
which may be placed only on the Premises. Lessee shall not place any sign upon
the Proact without Lessor’s prior written consent. All signs must comply with
all Applicable Requirements.  See
Paragraph 57 of Addendum No. 1.

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

46.                               Amendments.
This Lease may be modified only in writing, signed by the Parties in interest
at the time of the modification.  As long
as they [ILLEGIBLE] materially change Lessee’s obligations hereunder.  Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably required by a
Lender in connection with the obtaining of normal financing or refinancing of
the Premises.

 

47.                               Multiple
Parties.  If more than one person or
entity is named herein as either Lessor or Lessee, such multiple Parties shall
have joint and several responsibility to comply with the terms of this Lease.

 

48.                               Waiver
of Jury Trial.  The Parties hereby
waive their respective rights to trial by jury in any action or proceeding
involving the Property or arising out of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Executed at:

  	
   

  	
   

  	
  Executed at:

  	
   

  	
   

  
	
  on:

  	
   

  	
   

  	
  on:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By LESSOR:

  	
  By LESSEE:

  
	
  PAS TRUST

  	
   

  	
  BIDZ.COM, INC.,

  	
   

  
	
   

  	
   

  	
  a California
  corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Name Printed:

  	
  [ILLEGIBLE]

  	
   

  	
  Name Printed:

  	
   

  	
   

  
	
  Title:

  	
  Trustee

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
  [ILLEGIBLE]

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  Secy.

  	
   

  
	
  Address:

  	
  9370 Monte Leon Lane

  	
   

  	
  Address:

  	
  3562 Eastham Drive

  	
   

  
	
  Beverly Hills, CA 90210

  	
   

  	
  Culver City, CA 90232

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Telephone:

  	
  (     )

  	
   

  	
  Telephone:

  	
  (     )

  	
   

  
	
  Facsimile:

  	
  (     )

  	
   

  	
  Facsimile:

  	
  (     )

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  	
   

  
																	

 

 

These forms are often
modified to meet changing requirements of law and needs of the industry.  Always write or call to make sure you are
utilizing the most current form:  American
Industrial Real Estate Association, 700 South Flower Street, Suite 600,
Los Angeles, CA 90017. (210) 687-8777

 

©Copyright 1999 By
American Industrial Real Estate Association.

All rights
reserved.

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

 

12

 

 

 

ADDENDUM NO. 1

TO STANDARD INDUSTRIAL/ COMMERCIAL

MULTI- TENANT LEASE-NET

 

THIS ADDENDUM NO.
1 TO STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET (“ Addendum”) is
made as of April 15, 2003 between PAS TRUST (“Lessor”), and BIDZ.COM,
INC., a California corporation (“Lessee”), with reference to the following
facts:

 

A.                                   This
Addendum is attached to and made a part of that certain Standard
Industrial/Commercial Multi-Tenant Lease - Net dated as of the date hereof (the
“Lease”), for those certain premises (the “Premises”) indicated on Exhibit A
in the building (the “Building”) located at 3562-3582 Eastham Drive,
Culver City, CA.

 

B.                                     Lessor
and Lessee desire to supplement and amend the Lease on the terms and conditions
set forth herein.

 

C.                                     Unless
otherwise provided herein, defined terms used in this Addendum shall have the
meanings set forth in the Lease.

 

NOW, THEREFORE,
for valuable consideration, the parties hereto agree as follows;

 

50.                                 Base
Rent Abatement. Notwithstanding the provisions of Paragraph 1.5 of the
Lease, provided that no Default or Breach exists and subject to the provisions
of Paragraph 13.3 of the Lease, the Base Rent for the period April 15,
2003 through June 14, 2003 shall be $33,492 per month.

 

51.                                 [Intentionally
Deleted]

 

52.                                 Physical
Condition. Lessee shall accept the Premises in their “as is’ physical
condition on the Commencement Date, without any obligation on Lessor’s part to
make any alterations or improvements to the Premises.

 

53.                                 Certain
Occupancy Issues.

 

53.1                           Janitorial.
Lessee at Lessee’s sole cost shall contract for janitorial services to the
Premises. The janitorial services shall include the removal of trash to the
trash areas of the Project, and the cleaning of any restrooms located within
the Premises, and all other services sufficient to keep the Premises in a neat
and clean condition at all times, all at Lessee’s sole cost and expense.  However, before providing any janitorial
services, the janitorial contractor engaged by Lessee shall obtain and
thereafter maintain a certificate of insurance evidencing liability insurance
in an amount customarily provided by janitorial contractors serving similarly
situated tenants, naming Lessor as an additional insured, and Lessee shall
deliver a copy of such to Lessor.

 

53.2.                        Electricity
and Water. Lessee shall pay for all electricity and water consumed within
the Premises during the Original Term, including without limitation all hook-up
and connection fees, and utility taxes and surcharges now or hereafter imposed
by any utility company on Lessee. Lessor at Lessor’s expense shall cause the
Premises to be separately metered for electricity and water.

 

53.3. Access.
Lessee shall have twenty-four (24) hours per day, seven (7) days per week,
fifty-two (52) weeks per year, access to the premises and parking facilities
throughout the Original Term.

 

1

 

54.                                 Parking.
The parking referred to in Paragraph 1.2(b) of the Lease shall be at no
additional charge to Lessee, but Lessee shall be solely responsible to pay any
and all Culver City or other governmental parking taxes hereafter imposed, any
parking taxes shall at Lessor’s option either be paid by: (i) Lessee directly to the taxing authority
without reimbursement from Lessor and without offset or deduction against other
amounts payable; by Lessee to Lessor, or (ii) by Lessee directly to Lessor
concurrently with Lessee’s payment of the Base Rent, with Lessor then making
direct payment to the taxing authority. Lessee shall cause its employees and
agents parking at the Project to comply with such reasonable and
nondiscriminatory rules and regulations that Lessor may from time to time
promulgate with respect to parking, including without limitation the display of
parking identification lags, Lessor shall have the right to charge a
commercially reasonable refundable deposit for issuance of so-called “secards”,
parking cards or other devices used to open a parking “arm” or security gate,
should Lessor elect in its sole discretion to install such an “arm” or security
gate, Lessee shall be enliUec.1 to use during the term of the; Lease the
parking for the Premises for its employees, agents, invitees, guests and
customers. All responsibility for damage or theft to vehicles is assumed by
Lessee and Lessee’s employees, agent, invitees, guests and customers. Lessee
shall repair or cause to be repaired, at Lessee’s Sole cost and expense, any
and all damages caused to the parking area caused by Lessee’s, or Lessee’
employees’, agents’, invitees’, guests’ and customers’ use of such en, Lessee
hereby acknowledges that Lessor shall not be responsible (or removing vehicles
or obstructions, the same to be the sole responsibility of Lessee.

 

55.                                     Assignments
and Subleases.

 

55.1.                        Profits.
Not withstanding the provisions of Paragraph 12 to the Lease to the contrary,
if any proposed assignment or sublease provides for Lessee to receive total
rent or other consideration exceeding the total Base Rent called for under the
Lease after deduction of Lessee’s reasonable costs brokerage commissions and
reasonable attorneys’ fees in connection with such assignment or sublease,
Lessee shall pay one-half (1/2) of the excess to Lessor as additional rent promptly
on receipt thereof from time to time. 
Lessee shall immediately provide Lessor with written notification of any
such sublease, and such notification shall expressly provide the material terms
and conditions of such sublease including, but not limited to sublease rental
rates and commencement and expiration dales and the boundaries of the sublet
space.

 

55.2.                        Recapture
Right.  In the event Lessee wishes to
assign all of its under the Lease and this Addendum to an assignee other than
an Affiliate, or to sublease at least fifty percent (50%) of the square footage
of the Premises for all or substantially all of the balance of the Original
Term to a sublease other than an Affiliate, Lessor may, by written notice to
Lessee sent within fifteen (15) days of Lessee’s request to assign or sublease,
terminate the Original Term on the date that the proposed assignment or
sublease would have commenced or taken effect, and the rent shall be prorated,
and paid through such early termination date. If Lessor does not exercise its
right of an early termination of the Original Term pursuant to this Paragraph
55.2, Lessee may enter into the assignment or sublease upon obtaining Lessor’s
consent, to the proposed assignment or sublease, which consent Lessor shall not
unreasonably withhold of delay.

 

55.3.                        Lessee
Non-Competition.  Notwithstanding
anything in the Lease or this Addendum to the contrary, Lessor shall not be
deemed to have unreasonably withheld its consent to a proposed assignment or
sublease if the proposed assignee or sublease, or any person or entity who
directly or indirectly controls, is controlled by or is under common control
with the proposed assignee or sublease, is then ail occupant of any portion of
the Project, and space exists in the Project to accommodate the proposed
assignee’s or sublease’s space requirements.

 

56.                                 Common
Area Operating Expenses.  The
following shall be added to the end of Paragraph 4.2 of the Lease:

 

(e)                                  Allocation
of Common Area Operating Expenses. 
Lessee’s obligation for payment to Lessor of Lessee’s Share of Common
Area Operating Expenses during any year shall be governed by the following
principles; those Common Area Operating Expenses that are attributable to and
benefit the tenants of the Project (i.e., expenses related to the surface
parking

 

2

 

area
of the; Project, Real Property Taxes and insurance for the Project, shall
equitably allocated by Lessor (hereto) shall be home prorate by each tenant,
based on the square footage of the tenant’s premises as compared to the square
footage of the Building.

 

(f)                                    Lessee’s
Share.  Lessee’s Share of Common Area
Operating (including Real Properly Taxes and insurance) attributable to and
benefiting the Project shall be 70.5%.

 

(g)                                 Lessee’s
Audit Rights.  Notwithstanding any
provisions of the Lease to the contrary, Lessee shall have the eight, after
reasonable notice but no more than once per calendar year, to inspect, review,
audit and photocopy (and/or to have an independent consultant inspect, review,
audit and photocopy), at Lessee’s cost and expense, Lessor’s accounting records
related to Common Area Operating Expenses. Such inspection, review, audit and
photocopy shall take place at a location of Lessor’s choice within Los Angeles
County. If such inspection, review or audit reveals that Lessor has overcharged
Lessee, then within twenty (20) days after notice to Lessor, Lessor shall
reimburse Lessee for the amount of the overcharge. If Lessor desires to contest
such results, Lessor may do so by submitting the results of the audit to
arbitration pursuant to the commercial rules of the American Arbitration
Association within twenty (20) days of receipt of the results, and the results
of any such arbitration shall be final and binding on Lessor and Lessee. The
arbitrator shall be an independent consultant with at least five (5) years
experience in the review of operating expenses foe properties comparable to the
Premises. Lessee agrees to pay the cost of its inspection, review and audit;
provided, however, if the result of the obligations is that Lessor’s
determination of Lessee’s Share of increases in Common Area Operating Expenses
as set forth in was in error in Lessor’s favor by more than six percent (6%) of
the actual Common Area Operating Expenses for such Comparison Year, Lessor
shall pay the reasonable costs of such audit and all reasonable costs and
expenses incurred in the arbitration. Notwithstanding any other provisions of
the Lease to the contrary, Lessee’s failure to object to Lessor’s statement of
Common Area Operating Expenses for any given year of the Original Term within
ninety (90) days following Lessee’s receipt thereof shall conclusively be
deemed as Lessee’s Agreement to the accuracy of such statement. Further
notwithstanding the foregoing, an a condition to Lessee or its auditor’s review
of Lessor’s records, Lessee and its auditors shall be requited to first execute
Lessor’s then standard commercially reasonable confidentiality agreement.

 

(h)                                 Operating
Expense Exclusions. Notwithstanding anything to the contrary contained in
the Lease, Common Area Operating Expenses shall exclude, and Lessee shall not
be obligated to pay any portion of, the following:

 

(1)                                  Any
fee to or charge by Lessor or Lessor’s agents (or any person or entity
affiliated with Lessor or Lessor’s agents) for management, supervision, profit
or Lessor’s general overhead (including without limitation on-site and off-site
offices and personnel and any overhead allocation) to the extent that such fees
and charges cumulatively exceed the prevailing rule for property
management services for comparably-sized office projects in Culver City, West
Los Angeles, Santa Monica and Marina Del Rey, except that Lessee approves the
management fee intended to be charged by Lessor during the Original Term of
$2,750 per month;

 

(2)                                  Costs
associated with the operation of the business of the entity that constitutes
Lessor, us the same are distinguished from the costs of operation of the
Premises or the Project, including entity accounting and legal mutters, costs
of defending any lawsuits with any lender, costs of selling, syndicating,
financing, mortgaging or hypothecating any of Lessor’s interest in the Project,
costs of any disputes between Lessor and its employees, disputes of Lessor with
Project management, or outside fees paid in connection with disputes with other
tenants;

 

(3)                                  Lessor’s
in-house legal and/or accounting fees and costs;

 

(4)                                  Lessor’s
reserves for future expenses;

 

(5)                                  Executive
salaries, and salaries of service personnel (including any Project engineer) to
the extent that such service personnel perform services other than in

 

3

 

connection with the
management, operation, repair or maintenance of the Project, unless such costs
of such service personnel are equitably prorated;

 

(6)                                  All
interest and penalties incurred as a result of Lessor’s failure to pay hills as
they become due;

 

(7)                                  Costs
of a capital nature, including without limitation capital improvements, capital
replacements, capital repairs, capital equipment and capital tools, unless such
costs are amortized over the useful life thereof (with interest at the lesser
of 10% per annum or the rate actually charged by Lessor’s lender). No such
amortization shall be included for any such capital costs incurred prior to the
Commencement Date;

 

(8)                                  Rental
payments incurred in leasing air conditioning systems, elevators or other
equipment ordinarily considered to be of a capital nature;

 

(9)                                  Repairs,
alterations, additions, improvements or replacements made to rectify or correct
any defect in the original design, materials or workmanship of the Project and
the improvements and building systems installed by or on behalf of Lessor
thereon;

 

(10)                            Costs
incurred with respect to the repair and maintenance of the Common Area due to: (1) violation
by Lessor of the terms and conditions of any provision of this Lease or any
other lease in the Project, or any conditions, covenants, restrictions,
easement agreements and similar private contracts, or (2) violation by
Lessor of any governmental rule or authority;

 

(11)                            Costs
incurred by Lessor for repairs, replacements and/or restorations to or of the
Project to the extent that Lessor is reimbursed by insurance or condemnation
proceeds or by tenants, warrantors or other third parties;

 

(12)                            Costs
incurred with respect to the installation of tenant improvements made for other
tenants in the Project or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for tenants or other
occupants of the Project, including without limitation costs of plans,
construction, permits, license and inspection costs;

 

(13)                            Brokerage
commissions, tenant incentives, finders’ fee, attorneys’, accountants’ and
oilier consultants’ fees, advertising expenses, entertainment and travel
expenses and other costs incurred by Lessor in leasing or attempting to lease
space in the Project;

 

(14)                            Attorneys’,
accountants’ and other consultants’ fees and other costs and expenses incurred
in connection with negotiations or disputes with present or prospective tenants
or other occupants of the Project;

 

(15)                            Any
ground lease rental and all interest and amortization on any debt, including
any loans secured by the Project;

 

(16)                            Lessor’s
advertising and promotional expenditures;

 

(17)                            Lessor’s
professional dues or charitable contributions;

 

(18)                            “Real
Property Taxes” shall not include any of the following: (i) interest on
taxes or penalties resulting from Lessor’s failure to pay taxes when due; (ii) franchise
taxes, gift taxes, inheritance and succession taxes, estate taxes and federal
and state income taxes; (iii) any tax items for which Lessee or other
tenants in the Project are directly responsible; and (iv) any additional
costs that would result if, by law, any taxes or assessments may be paid in
installments at the option of the taxpayer, and Lessor elects not to pay taxes
and assessments in cash installments, in which case Lessee’s Share of increases
in Common Area Operating Expenses shall be computed as if such election had
been made and only the

 

4

 

Installments paid.
Lessee is informed by Lessor, and acknowledges and agrees that the total Real Properly Tax bill for the
Project is comprised of three (3) separate Real Property Tax bills for the
three (3) parcels that comprise the land upon which the Project is
located;

 

(19)                            Any
costs incurred in connection with the investigation, abatement or remediation
of any Hazardous Substances, including without limitation asbestos, in the
Project, unless such Hazardous Substances are brought onto or released in, on
or under the Project by Lessee or Lessee’s employees, agents, contractors or
invitees;

 

(20)                            Costs
incurred in connection with upgrading the Project to comply with disability,
fire and life safety codes, ordinances, statutes or other laws in effect as of
the date hereof, including without limitation ADA and including without
limitation penalties or damages incurred, due to such non-compliance with codes,
ordinances, statutes or other laws in effect as of the date hereof;

 

(21)                            Damage
and repairs necessitated by the gross negligence or willful misconduct of
Lessor or Lessor’s employees, contractors or agents;

 

(22)                            Any
costs related to any structural damage or repairs to the Project (other than
commercially reasonable insurance deductible amounts), unless caused by Lessee
or Lessee’s employees, agents, contractor or invitees, and any tests or
investigations regarding the structural components of the Project, including
without limitation any tests, investigations, repairs or other remedial
measures required pursuant to any applicable laws in effect as of the date
hereof;

 

(23)                            Overhead
and profit increment paid to Lessor or to subsidiaries or affiliates of Lessor
for goods and/or services in or to the Project to the extent the same exceed
the generally prevailing costs of such goods and/or services rendered by
unaffiliated third pities in Culver City, West Los Angeles, Santa Monica and
Marina Del Key, California on a competitive basis;

 

(24)                            Any
amounts in excess of the actual Common Area Operating Expenses incurred by
Lessor after reduction for all cash, trade and quantity discounts received by
Lessor;

 

(25)                            Costs
for which Lessor is reimbursed by any tenant or occupant of the Project or by
insurance proceeds from Lessor’s carrier or any tenant’s carrier or by anyone
else, and electric power costs for which any tenant directly contracts with the
local public service company;

 

(26)                            All
items and services for which Lessee or any other tenant in the Project
reimburses Lessor or which Lessor provides selectively to One or more tenants
(other than Lessee) without reimbursement;

 

(27)                            Costs
arising from Lessor’s charitable or political contributions, and gifts provided
to any entity whatsoever, including but not limited to Lessee, other tenants,
employees, vendors, contractors, prospective tenants and agents;

 

(28)                            Any
costs covered by any warranty, rebate, guarantee or service contract that are
actually collected by Lessor (though Lessor shall not be prohibited from
passing through the costs of any such service contract if such service contract
cost is otherwise includable in Common Area Operating Expenses);

 

(29)                            Costs
Incurred wild respect to the repair of the roof of the Premises, unless caused
by Lessee or Lessee’s employees, agents or invitees;

 

(30)                            Costs
incurred with respect to the repair of the main sewer line and the main water
line for the Project, unless caused by Lessee or Lessee’s employees, agents or
invitees;

 

5

 

(31)                            Costs
incurred with respect to repairs to the main electrical panel and transformers;
unless caused by Lessee or Lessee’s employees, agents or invitees; and

 

(32)                            Costs
incurred with respect to water drainage problems from the roof of the Building
and the parking areas of the Project, unless caused by Lessee or Lessee’s
employees, agents or invitees.

 

Lessor’s shall (x)
not collect or be entitled to collect from Lessee an amount in excess of Lessee’s
Share of one hundred percent (100%) of Common Area Operating Expenses actually
paid or incurred by Lessor; and (y) reduce the amount of Common Area Operating
Expenses by any refund or discount received by Lessor in connection with any
expenses previously included in Common Area Operating Expenses.

 

57.                                 Signage.
Lessee shall not place any sign upon the Premises without Lessor’s prior
written consent, which consent Lessor agrees not to unreasonably delay,
condition or withhold. Lessor agrees that, subject to its reasonable approval
of size, font and graphics, and approval by the City of Culver City, if
necessary, and conformity with any recorded covenants and restrictions, Lessee
shall have the right, at its own cost and expense, to place and maintain
signage upon the front and rear facades of the Premises to identify itself at
its location at the Premises. At the expiration or earlier termination of this
Lease, at Lessee’s sole cost and expense, it shall remove all such signage and
repair any damage caused by such removal. Lessor shall have the right during
the term of the lease to post a “for sale” sign on the facade of the Premises.

 

58.                                 Non-Disturbance
Agreement. Lessor shall use commercially reasonable efforts to obtain for
Lessee’s benefit a subordination, non-disturbance and attornment agreement (“SNDA”)
from Lessor’s lender, in form reasonably acceptable to the lender provided,
however, that Lessor’s ability to obtain such SNDA shall not be a condition
precedent to the effectiveness of the Lease and this Addendum, nor shall Lessor’s
inability to obtain such SNDA afford Lessee the right to cancel or terminate
the Lease or this Addendum.

 

59.                                 Lessor
Exculpation. It is expressly understood and agreed that notwithstanding anything in the
Lease or this Addendum to the contrary, and notwithstanding any applicable law
to the contrary, the liability of Lessor hereunder (including any successor
lessor.) and any recourse by Lessee against Lessor shall be limited solely and
exclusively to the interest of Lessor in and to the Premises and the Project
(including any sale, insurance or condemnation proceeds) and not to
Lessor’s interest in any other real or personal property that may be owned by
Lessor or Lessor’s trustees, trustors or beneficiaries, or affiliated entities,
and neither Lessor nor any of its trustees, trustors or beneficiaries or
affiliated entities or any of their respective employees or agents shall have
any personal liability therefore, and Lessee hereby expressly waives and
releases such personal liability on behalf of itself and all persons claiming
by, through or under Lessee. The limitations’ of Lessor’s liability contained
in tins Paragraph 59 art in addition to all other limitations on Lessor’s
liability that are contained in the Lease and this Addendum.

 

60.                                 Furnishings.
As of the date hereof, the furnishings presently located in the Premises and
purchased by Viant Corporation and/or divine as prior occupant of the Premises
and listed on Schedule (d) attached hereto belong to Viant
Corporation and/or divine and/or their bankruptcy estate or equipment lessors
or creditors.

 

60.1. Should
Lessor ultimately become the owner of such furnishings, then during the
original Term, Lessee shall be entitled to utilize, at no additional cost to
Lessee, the. furnishings;
provided, however, at the expiration or earlier termination of the Original
Term, all such furnishings shall be left in the Premises and returned to Lessor
in the same condition as existing, ordinary wear and tear excepted. Lessee
understands and acknowledges that should viant Corporation and/or divine or any
bankruptcy trustee or equipment lessor or other creditor of Viant Corporation
and/or divine demand the return of such furnishings, Lessee agrees to comply
with such demand and permit the removal of such furnishings; in such event
Lessor shall have no liability to Lessee, Lessor shall not be obligated to
replace any of the furnishings, nor shall Lessee shall have any right to abate
or offset the rent due Lessor and this Lease shall not be

 

6

 

affected in any way,
but Lessee shall not have any obligation to replace any of such removed
furnishings at the expiration or earlier termination of the Original Term.

 

60.2. Should
Lessee ultimately become the owner of such furnishings, then Lessee shall cause
such furnishings to be removed from the Premises at the expiration or earlier
termination of the Original Term.

 

61.                                 Back-up
Battery Invoice. Lessee and not Lessor, shall be fully responsible for
payment of the invoice in the approximate amount of $5,000 generated by the
provider of the back-up battery system that has been installed in the
Premises.  Lessee shall indemnity, defend
and hold Lessor harmless from and against the claims of such provider, and
Lessee’s failure to pay the amount of the invoice (as reduced by any discount
that Lessee may be able to with the provider) shall, at Lessor’s Option, be a
Default by Lessee under the Lease and this Addendum.

 

62.                                         Rectification.
Except as otherwise provided herein, all of the terms and conditions of the
Lease are hereby ratified and confirmed and remain in full force and effect. In
the event of a conflict between the provisions of the Lease and this Addendum,
the provisions of this Addendum shall control. The Lease this Addendum
supersede all prior oral or written understandings between the parties and
their respective brokers, including without limitation Lessor’s broker’s letter
dated April 15, 2003 to Lessee’s attorney Michael A. Kahn, Esq.

 

IN WITNESS WHEREOF, this Addendum is made as of the date first above
written.

 

	
  LESSOR:

  	
  PAS TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pablo Nankin

  	
   

  
	
   

  	
   

  	
  Pablo Nankin, Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  LESSEE:

  	
  BIDZ.COM, INC.,

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Name:

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
  Title:

  	
  Secretary

  
							

 

7

 

Schedule 60

 

LIST OF
FURNISHINGS

 

	
  Item

  	
   

  	
  Color

  	
   

  	
  Quantity

  
	
  Round Kitchen Tables

  	
   

  	
  Silver Base/Grey Top

  	
   

  	
  3

  
	
  Plastic/Metal Kitchen
  Chairs

  	
   

  	
  Orange/Silver

  	
   

  	
  12

  
	
  6ft Tango Desks

  	
   

  	
  White

  	
   

  	
  50

  
	
  Ping Pong Table

  	
   

  	
   

  	
   

  	
  1

  
	
  Metal Bar Stools

  	
   

  	
  Silver/Red

  	
   

  	
  13

  
	
  Jenn Air Refrigerator

  	
   

  	
  White

  	
   

  	
  1

  
	
  GE Refrigerator

  	
   

  	
  Silver

  	
   

  	
  1

  
	
  GE Sensor Microwave
  Oven

  	
   

  	
  Silver

  	
   

  	
  2

  
	
  U Line Tea Maker

  	
   

  	
  Black

  	
   

  	
  1

  
	
  ASKO Dishwasher

  	
   

  	
  Silver

  	
   

  	
  1

  
	
  Conference Table 96 X
  48

  	
   

  	
  Maple/Aluminum Base

  	
   

  	
  2

  
	
  Conference Table 96 X
  48

  	
   

  	
  Maple/Aluminum Base

  	
   

  	
  1

  
	
  Conference Table 144 X
  60

  	
   

  	
  Maple/Aluminum Base

  	
   

  	
  1

  
	
  Conference Table 72 X
  42

  	
   

  	
  Maple/Aluminum Base

  	
   

  	
  4

  
	
  Teknion Dog Bone Desk

  	
   

  	
  Blue

  	
   

  	
  8

  
	
  Teknion Dog Bone Desk

  	
   

  	
  Aqua

  	
   

  	
  18

  
	
  Teknion Dog Bone Desk

  	
   

  	
  Green

  	
   

  	
  18

  
	
  Teknion Dog Bone Desk

  	
   

  	
  Platinum

  	
   

  	
  17

  
	
  Teknion Dog Bone Desk

  	
   

  	
  White

  	
   

  	
  17

  
	
  Teknion Dog Bone Desk

  	
   

  	
  Grey

  	
   

  	
  80

  
	
  Teknion Dog Bone Desk

  	
   

  	
  Silver

  	
   

  	
  80

  
	
  Herman Miller Aeron
  Chairs 

  	
   

  	
  Grey

  	
   

  	
  88

  
	
  Receptionists Desk

  	
   

  	
  Purple/Grey

  	
   

  	
  1

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