Document:

RenoSaleAgreement

REAL ESTATE SALES CONTRACT AND ESCROW INSTRUCTIONS

THIS  REAL  ESTATE  SALES  CONTRACT  AND  ESCROW  INSTRUCTIONS
(this "Agreement") is made and entered into this 12th day of May, 2014, by and between LAWSON PRODUCTS, INC., an Illinois corporation ("Seller"), and KTR PROPERTY TRUST III, a Maryland real estate investment trust ("Buyer").

1.      SALE. Seller agrees to sell and convey to Buyer, and Buyer agrees to purchase from Seller, on the terms and conditions set forth in this Agreement, the Property (as hereinafter defined), including that certain approximately 226,000 square foot building commonly known as 1381 Capital Boulevard, Reno, Nevada (the "Building"). For purposes of this Agreement, the te1m, "Property" shall mean collectively:

1.1.    Land.    Those ce1iain parcels of land described in Exhibit A attached hereto (the "Land"), together with all rights, easements and interests appurtenant thereto, including, but not limited to, any streets or other public ways adjacent to the Land and any water or mineral rights related to the Land that are owned by, or leased to, Seller.

1.2.    Improvements. All improvements located on the Land, including, but not limited to, the Building, and all other structures, systems, and utilities associated with,  and utilized by Seller in, the ownership and operation of the Building (all such improvements being collectively referred to as the "Improvements," together with the Land, the "Real Property").

1.3.    Personal    Property.    All, if any, personal property owned by Seller, located on or in the Real Property, and used in connection with the operation and maintenance of the Real Property, as set forth on Exhibit C attached hereto and incorporated herein (the "Personal   Property").

1.4.    Contracts.    Those of the operating contracts and service  contracts and other comparable agreements (the "Contracts")  delivered by Seller to Buyer as part of the Documents (as hereinafter defined) that Buyer expressly elects to assume pursuant to this Agreement.

1.5.    Intangible Property.  All, if any, (i) development rights and entitlements and other intangible property owned by Seller and used in connection with the foregoing; and (ii) guaranties and warranties issued to Seller and with respect to the Improvements (collectively, the "Intangibles").

2.    PURCHASE PRICE.

2.1.    Purchase Price. The total purchase price to be paid to Seller by Buyer for the Property shall be EIGHT MILLION SEVEN HUNDRED THOUSAND AND N0/100 DOLLARS ($8,700,000.00) (the "Purchase Price"). Provided that all conditions precedent to Buyer's obligations to close as set forth in this Agreement ("Conditions Precedent") have been satisfied and fulfilled, or waived in writing by Buyer, the Purchase Price shall be paid to Seller at Closing, plus or minus prorations and other adjustments hereunder, by federal wire transfer of immediately available funds.

2.2.    Earnest Money. No later than three (3) business days after the complete execution and delivery of this Agreement (the date upon which this Agreement has been fully executed  and delivered to both parties, the "Effective Date"), Buyer shall deposit the sum of $150,000 as its earnest money deposit (the "Earnest Money") in an interest bearing escrow with Land   Services   USA,   Inc.   as    agent    for   First    American    Title    Insurance    Company (the "Title Company"), at 10 North Church Street, Suite 307, West Chester, Pennsylvania 19380, Attn: Eileen Christian, Telephone: (484) 885-2899, Facsimile: (610) 429-3149, e-mail: EChristian@lsutitle.com ("Escrow Agent"). The Title Company will hold the Earnest Money, together with all interest earned thereon (hereinafter referred to as the "Deposit"), pending joint order of the parties or pursuant to order of a court with jurisdiction over this transaction, except that in the event Buyer exercises its unilateral right to terminate this Agreement on or prior 

to the Review Period Expiration Date (as hereinafter defined) pursuant to Section 4.1 below, the Title Company shall promptly disburse the Deposit to Buyer without necessity of direction from (and irrespective of any contrary direction by) Seller. The Deposit shall be applied  against  the Purchase Price at Closing. Upon full execution of this Agreement,  Buyer will, at its expense, provide Seller with an insured closing letter from First American Title Insurance Company with regard to this transaction.

3.    CLOSING.   The purchase and sale contemplated herein shall be consummated at a closing ("Closing") to take place by mail through an escrow with  the Title Company (as hereinafter  defined) on the basis of this Agreement.   The Closing shall occur on or before ten
(10) business days after the Review Period Expiration Date (as hereinafter defined). Notwithstanding the foregoing, the risk of loss of all or any portion of the Property shall be borne by Seller up to and including the actual time of the Closing and wire transfer of the Purchase Price to Seller, and thereafter by Buyer, subject, however, to the  terms  and  conditions  of Section 13 below. Buyer and Seller shall execute and enter into such supplemental escrow instructions as the Escrow Agent shall reasonably require for purposes of defining its obligations hereunder provided that, as between Buyer and Seller, the terms of this Agreement shall in all events control.

4    PROPERTY  INSPECTION.

4.1.    Basic  Prooertv   Inspection.    To the extent not previously delivered to Buyer, Seller shall deliver to Buyer all of the  agreements, documents, contracts, information, records, reports and other items described in Exhibit B attached hereto (the "Documents") that are in its possession or reasonable control within two (2) business days after the Effective Date. Buyer's "Review Period" is the period commencing on the date of this Agreement, and ending on the date (the "Review Period Expiration Date") that is thirty (30) days after the later to occur of (i) Buyer's receipt of the Documents; or (ii) the Effective Date. During the Review Period, Buyer, its agents and representatives shall be entitled to conduct a "Due Diligence Inspection," which includes the rights to: (i) enter upon the Real Property, on reasonable notice to Seller, to perform inspections and tests of the Real Property and environmental studies and investigations of the Real Property (including, without limitation, a so-called "Phase I" study); and (ii) examine and copy any and all books, records, correspondence, financial data, and all other documents and matters, maintained by Seller or its agents, and relating to receipts and expenditures pertaining to the Real Property. Buyer shall not conduct any physically intrusive investigations of the Real Property without the prior written  consent of Seller, which consent

shall not be unreasonably withheld. If, at any time on or prior to the Review Period Expiration Date, Buyer, in its sole and absolute discretion, determines that the results of any inspection, test or examination meet Buyer's criteria for the purchase, financing or operation of the Property in the manner contemplated by Buyer and Buyer otherwise elects to acquire the Property in the exercise of its sole discretion, Buyer shall send written notice to  Seller approving the Property (an "Approval Notice") on or prior to 5:00 P.M. (California time) on or prior to the Review Period Expiration Date, in which event Buyer and Seller shall proceed to Closing on and subject to the terms and conditions contained herein. However, if Buyer fails for any or no reason to send an Approval Notice on or prior to 5:00 P.M. (California time) on the Review Period Expiration Date in the exercise of its sole discretion, or if Buyer, in its sole discretion, otherwise determines that the Property is unsatisfactory to it and sends a written notice terminating this Agreement on or prior to 5:00 P.M. (California time) on the Review Period Expiration Date, this Agreement shall terminate and the provisions  of Section 20.8 governing a permitted termination by Buyer of the entire Agreement shall apply.

4.2.    Indemnification.    Buyer hereby  covenants  and  agrees that  it shall cause all studies, investigations and inspections performed at the Property pursuant to this Section 4 to be performed in a manner that does not unreasonably disturb or disrupt the business operations at the Real Property. In the event that, as a result of Buyer's Due Diligence Inspection, any damage occurs to the Real Property, then Buyer shall promptly repair such damage at Buyer's sole cost and expense. Buyer hereby indemnifies, protects, defends and holds Seller harmless from and against any and  all losses,  damages, claims, causes of action, judgments, damages, costs and expenses (including reasonable fees of attorneys) (collectively, "Losses") that  Seller  actually suffers or incurs as a result of (i) a breach of Buyer's agreements set forth in this Section 4 in connection with the Due Diligence Inspection or (ii) physical 

damage to the Real Property or bodily injury caused by Buyer or its agents, employees  or contractors  in connection  with the right of inspection granted under this Section 4. Prior to Buyer entering the Real Property to conduct the inspections and  tests described above, Buyer shall  obtain  and  maintain,  or  shall cause each of its contractors and agents to maintain (and shall deliver to Seller evidence thereof), at no cost or expense to Seller, general liability insurance, from an insurer reasonably acceptable to Seller, in the amount of Two Million Dollars ($2,000,000.00) combined single limit  for personal injury and property damage per occurrence. Such policies shall name Seller as  an additional insured party and shall provide coverage against any claim for personal liability or property damage caused by Buyer or its agents, representatives or consultants in connection with such inspections and tests. The terms of this Section 4.2 shall survive the termination of this Agreement.

5.    TITLE AND SURVEY MATTERS.

5.1.    Conveyance  of  Title.    At Closing, Seller agrees to deliver to Buyer a Grant Deed (the "Deed") in recordable form, conveying the Real Property to Buyer, free and clear of all liens, claims and encumbrances except for the Permitted Exceptions (as hereinafter defined). Within ten (10) business days of the Effective Date, Buyer shall obtain, at Buyer's sole cost, and deliver to Seller a commitment (the "Title Commitment") issued by Land Services USA, Inc. as agent for First American Title Insurance Company (the "Title Company"), for an owner's title insurance policy insuring Buyer (the "Title Policy"), ALTA Policy Form 2006, in the full amount of the Purchase Price.  It shall be a Condition Precedent to Buyer's obligation to
proceed to Closing that, at Closing, the Title Company shall issue the Title Policy to Buyer insuring Buyer as the fee simple owner of the Property for the full amount of the Purchase Price subject only to the Permitted Exceptions, which Title Policy shall provide full "extended form" coverage.

5.2.    Survey.        Buyer may obtain, at Buyer's sole cost, an ALTA, as-built survey of the Real Property containing a certification reasonably acceptable to Buyer (the "Survey"). Notwithstanding anything contained herein to the contrary, if Buyer does not obtain the Survey, and promptly provide copies to Seller and the Title Company, the Title Policy will be subject to all survey exceptions raised by the Title Company.

5.3.    Defects and Cure. If the Title Commitment, the Survey or any update to either of the foregoing, ("Title Evidence") discloses unpermitted claims, liens, exceptions or conditions affecting the Real Property (the "Defects"), said Defects shall be cured and removed by Seller from the Title Evidence prior to Closing in accordance with this Section 5.3.

5.3.1.    Liquidated Defects.    On or prior to Closing, Seller shall be unconditionally obligated to cure or remove the following Defects (the "Liquidated Defects"), whether described in the Title Commitment, or first arising or first disclosed by the  Title Company (or otherwise) to Buyer after the date of the Title Commitment, and whether or not raised in a Title Objection Notice (defined below): (a) liens securing a mortgage, deed of trust or trust deed evidencing an indebtedness of Seller; (b) judgment liens against Seller; (c) liens for delinquent real estate taxes or assessments; (d) broker's liens based on the written agreement of Seller; and (e) any mechanics liens that are based upon a written agreement between either (x) the claimant (a  "Contract Claimant") and Seller or its managing agent, or (y) the Contract Claimant and any other contractor, supplier or materialman with which Seller or its managing agent has a written agreement. Notwithstanding  anything  to the  contrary  set forth herein,  if, prior to Closing, Seller fails to so  cure or remove (or insure over, in  a form and substance reasonably acceptable to Buyer) all Liquidated Defects, then Buyer may either (1) terminate this Agreement by written notice to Seller, in which event the provisions of Section 20.8 governing a permitted termination by Buyer of the entire Agreement shall apply; or (2) proceed to close with title to the Property as it then is, with the right to deduct from the Purchase Price a sum equal to the aggregate amount necessary to cure or remove (by endorsement or otherwise, as reasonably determined by Buyer, acting in good faith) the Liquidated Defects.

5.3.2.    Other Defects. Buyer may deliver one or more notices (each a "Title Objection Notice") to Seller  specifying  any  lien,  claim,  encumbrance,  restriction, covenant, condition, exception to title or other matter disclosed by the Title Evidence that is not a Liquidated Defect ("Other Defects"): (a) that is evidenced by the Title Evidence or (b) that first arises, or is first disclosed to Buyer, subsequent to the delivery of the applicable item of Title Evidence to Buyer, and that renders title unacceptable to Buyer. Seller shall be obligated  to advise Buyer 

in writing ("Seller's Cure Notice") within five (5) business  days  after  Buyer delivers any Title Objection Notice, which (if any) of the Other Defects specified in the applicable Title Objection Notice Seller is willing to cure (the "Seller's Cure Items"). If Seller delivers a Seller's Cure Notice, and identifies any Seller's Cure Items, Seller shall be unconditionally obligated to cure or remove the Seller's Cure Items prior to the Closing. In the event that  Seller fails to timely deliver a Seller's Cure Notice,  or in the event that Seller's Cure Notice (specifying Seller's Cure Items) does not include each and every Other Defect specified in each Title Objection Notice, then Buyer may either (A) elect to terminate this Agreement by written notice to Seller, in which event the provisions of Section 20.8 governing a permitted termination by Buyer of the entire Agreement shall apply, or (B) proceed to close, accepting title to the Property subject to those Other Defects not included in Seller's Cure Notice. For purposes of this Agreement, the term, "Permitted Exceptions," shall mean both (i) all liens, claims, encumbrances, restrictions, covenants, conditions, matters or exceptions to title (other than Liquidated Defects) that are set forth in the Title Evidence, but not objected to by Buyer in a Title Objection Notice; and (ii) any Other Defects that Seller elects, or is deemed to have elected, not to cure, but despite which, pursuant to (B) above, Buyer nevertheless elects to close.

6.    SELLER'S   REPRESENTATIONS   AND   WARRANTIES.    Seller represents and warrants to Buyer that the following matters are true as of the Effective Date and shall be true as of the Closing Date:

6.1    Seller's  Representations.

6.1.1.    Documents. To Seller's actual knowledge, Seller has delivered (or will delivery) to Buyer true and complete copies of the Documents in its possession or reasonable  control.

6.1.2.    Contracts; Leases.  There are no contracts of any kind relating to the management, leasing, operation, maintenance or repair of the Real  Property  that  will survive Closing other than the Contracts. Other than the Lease (as hereafter  defined), there are no leases, licenses or occupancy agreements binding upon the Real Property.

6.1.3.    Environmental   Matters.    Seller has not received any written notice of any pending or threatened claims, complaints, notices, correspondence or requests for information received by Seller with respect to any violation or alleged violation of any Environmental Law, any releases of Hazardous Substances (as hereinafter defined)  or  with respect to any corrective or remedial action for, or cleanup of, the Real Property, nor does Seller have any such notices in its possession related to the Real Property. For purposes of this Agreement, "Environmental Laws" shall mean: all past, present or future federal, state and local statutes, regulations,  directives,  ordinances,  rules,  policies,  guidelines,  court  orders, decrees, arbitration awards and the common law, which pertain to environmental matters, contamination of any type whatsoever or health and safety matters, as such have been amended, modified or supplemented from time to time (including all present  and  future  amendments thereto and re-authorizations thereof). For purposes  of  this  Agreement,  "Hazardous Substances" shall mean: any chemical, pollutant,  contaminant,  pesticide,  petroleum  or petroleum product or by product, radioactive substance, solid waste (hazardous or extremely hazardous), special, dangerous or toxic waste, substance, chemical or material regulated, listed, limited or prohibited under any Environmental Law. Seller has disclosed to Buyer that two underground tanks are located on the Land, which provide a reservoir  system for the collection of foam waste resulting from the activation of the foam fire suppression system.

6.1.4.    Compliance   with   Laws   and   Codes.    As of the date of this Agreement,  Seller has not received any written notice advising or alleging that the Real Property, and the use and operation thereof, are not in compliance with all applicable municipal and other governmental laws, ordinances, rules,  regulations,  codes,  licenses,  permits  and  authorizations, nor does Seller have any such notices in its possession related to the Real Property.

6.1.5.    Litigation.    There are no pending, or, to Seller's actual knowledge, threatened, judicial, municipal  or administrative proceedings  affecting the Property, or in which Seller is or will be a party by reason of Seller's ownership or  operation  of the Property or any portion thereof, including, without limitation, proceedings for or involving collections, condemnation, eminent domain, alleged building code or environmental or zoning violations, or personal injuries or property damage alleged to have occurred on the Property  or by reason of 

the condition, use of, or operations on, the Property. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending, or, to  Seller's actual knowledge,  threatened,  against  Seller, nor are any of such proceedings contemplated by Seller.

6.1.6.    Authority.    The execution and delivery of this Agreement by Seller, and the performance of this Agreement by Seller, have been duly authorized  by  Seller, and this Agreement is binding on Seller  and enforceable against Seller in accordance with its terms. No consent of any creditor, investor, judicial or administrative body, governmental authority, or other governmental body or agency, or other party to such execution, delivery and performance by Seller is required. Neither the execution  of  this  Agreement  nor  the consummation of the transactions contemplated hereby will (i) result in  a breach  of,  default under, or acceleration of, any agreement to which Seller is a party or by which Seller or the Property are bound; or (ii) violate any restriction, court order, agreement or other legal obligation to which Seller and/or the Property is subject.

6.1.7.    United States Person. Seller is a "United States Person" within the meaning of Section 1445(£)(3) of the Internal Revenue Code of 1986, as amended, and shall execute and deliver an "Entity Transferor" certification at Closing.

6.1.8.    Limitations.    The representations and warranties of Seller to Buyer contained in this Section 6.1 hereof (the "Seller Representations") shall survive the Closing Date and the delivery of the Deed for a period of nine (9) months. No claim for a breach of any Seller Representation shall be actionable or payable unless (a) the breach in question results from, or is based on, a condition, state of facts or other matter which was not actually known by Buyer prior to Closing, and (b) written notice containing a description of the specific nature of such breach shall have been delivered by Buyer to Seller prior to the expiration of said nine (9) month survival period, and an action with respect to such breach(es) shall have been commenced by Buyer against Seller within nine (9) months after Closing. For purposes of this Agreement and any document delivered at Closing, whenever the phrase "to the best of Seller's knowledge" or the "actual knowledge" of Seller or words of similar import are used, they shall be deemed to mean and are limited to the actual knowledge only of Marty Kelly, Seller's Director of Real Estate and Facilities, and not any implied, imputed or constructive knowledge of such individual(s) or of Seller or Seller related parties, and without any independent investigation or inquiry having been made or any implied duty to investigate, make any inquiries or review the Documents.   Furthermore, it is understood and agreed that such individual(s) shall have no personal  liability in any manner whatsoever  hereunder  or otherwise related to the transactions contemplated hereby.

6.2.    Buyer's Independent Investigation.

6.2.1.    By Buyer electing to proceed by delivering an Approval Notice, but without limitation on Buyer's right to rely on the representations  and warranties, covenants, agreements, indemnities and undertakings of Seller contained herein or in any closing documents executed by Seller (collectively,  the "Seller Undertakings"), Buyer will be deemed to have acknowledged and agreed that it has been given a full opportunity to inspect and investigate each and every aspect of the Real Property, either independently or through agents of Buyer's choosing, including, without limitation: (a) all matters relating to title and survey, together with all governmental and other legal requirements such as taxes, assessments, zoning, use permit requirements and building codes; and (b) the physical condition and aspects of the Real Property, including, without limitation, the interior, the exterior, the square footage within  the improvements on the Real Property, the structure, seismic aspects of the Real Property, the foundation, roof, paving, parking facilities, utilities, and all other physical and functional aspects of the Real Property. Such examination of the physical condition of the Real Property shall include an examination for the presence or absence of Hazardous Substances.

6.2.2.    Except as expressly stated herein or as part of any Seller Undertakings, Seller makes no representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by Seller to Buyer in connection with the transaction contemplated hereby. Buyer  acknowledges  and agrees that  all materials, data and information delivered by Seller to Buyer in  connection  with  the  transaction contemplated hereby are provided to Buyer as a convenience only and that any reliance on or use of such materials, data or information by Buyer shall be at the sole risk of Buyer, except as otherwise expressly stated in the representations and warranties 

contained herein or in any Seller Undertakings. Without limiting the generality of the foregoing provisions, Buyer acknowledges and agrees that (a) any environmental or other report with respect to the Real Property which is delivered by Seller to Buyer shall be for general informational purposes only, (b) Buyer shall not have any right to rely on any such report delivered by Seller to Buyer, but rather will rely on its own inspections and investigations of the Real Property and any reports commissioned by Buyer with respect thereto, and (c) neither Seller, any affiliate of Seller nor the person or entity which prepared any such report delivered by Seller to Buyer shall have any liability to Buyer for any inaccuracy in or omission from any such report.

6.2.3.    EXCEPT AS EXPRESSLY SET FORTH HEREIN AND WITHOUT LIMITATION ON THE SELLER UNDERTAKINGS, BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT SELLER IS SELLING AND BUYER IS PURCHASING THE PROPERTY ON AN "AS IS WITH ALL FAULTS" BASIS AND THAT BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, OR ITS AGENTS OR BROKERS, OR ANY OTHER PERSON ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER, AS TO ANY MATTERS CONCERNING THE REAL  PROPERTY, INCLUDING WITHOUT LIMITATION: (i) the quality, nature,  adequacy and  physical condition and aspects of the Real Property, including, but not limited to, the structural elements,seismic aspects of the Real Property, foundation, roof, appurtenances, access, landscaping, parking facilities and the electrical, mechanical, HVAC, plumbing, sewage, and utility systems, facilities and appliances, the square footage within the improvements on the Real Property and within each tenant space therein, (ii) the quality, nature, adequacy,  and physical  condition  of soils, geology and any groundwater, (iii) the existence, quality, nature, adequacy and physical condition of utilities serving the Real Property, (iv) the development potential of the  Real Property, and the Real Property's use, habitability,  merchantability,  or fitness, suitability, value or adequacy of the Property for any particular purpose, (v) the zoning or other legal status of the Real Property or any other public or private restrictions on use  of the Real Property, (vi) the compliance of the Real Property or its operation with any applicable codes, laws, regulations, statutes, ordinances, covenants, conditions and restrictions of any governmental or quasi­ governmental entity or of any other person or entity, (vii) the presence of Hazardous substances on, under or about the Real Property or the adjoining or neighboring property, (viii) the quality of any labor and materials used in any improvements  on the Real Property, (ix) the condition of title to the Real Property, (x) the value, economics of the operation  or income potential of the Real Property, or (xi) any other fact or condition which may affect the Real Property, including without limitation, the physical condition, value, economics of operation or income potential of the Real Property.

6.2.4.    Notwithstanding anything contained herein  to the contrary, the terms of this Section 6.2 shall in no event apply to or  serve to  limit  Seller's  obligations,  as tenant, under the Lease.

6.2.5.    Buyer represents to Seller that the execution and delivery of this Agreement by Buyer, and the performance of this Agreement by Buyer, has been duly authorized by Buyer, and this Agreement  is binding on Buyer and enforceable against Buyer in accordance with its terms.  No consent of Buyer's investment committee or lender, or any creditor, investor, judicial  or administrative body, governmental  authority, or other governmental  body or agency, or other party to such execution,  delivery and performance  by  Buyer  is required.   Neither  the execution of this Agreement nor the consummation  of the transactions  contemplated hereby will (i) result in a breach of, default under, or acceleration of, any agreement to which Buyer is a party or by which Buyer is bound; or (ii) violate any restriction, court order, agreement or other legal obligation to which Buyer is subject.

7.    COVENANTS OF SELLER.   From and after the Effective Date, Seller hereby covenants with Buyer as follows:

7.1.    Leasing Activities. Seller shall not execute and enter into any new lease, license or occupancy agreement for all or some portion of the Real Property (all of the foregoing, a "New Lease") unless Seller obtains Buyer's advance written consent  to  such New  Lease, which consent may be withheld in Buyer's sole discretion. At Closing, Seller and Buyer shall execute and enter into the Lease Agreement in the form attached hereto as Schedule 1 (the "Lease") pursuant to which Seller, as tenant, shall lease from Buyer, as landlord, a  105,214 square foot portion of the Improvements (the "Premises") for ten (10) years after Closing on and subject to the terms the Lease.

7.2.    New  Contracts.    Seller shall not amend any Contracts or enter into any new contract with respect to the ownership and operation of the Property that will survive the Closing, or that would  otherwise affect the use, operation or enjoyment of the Property after Closing, without Buyer's prior written approval (which approval shall not be unreasonably withheld). Seller shall, at Seller's sole cost, terminate all Contracts, including, but not limited to, all management agreements, listing agreements and comparable agreements  binding  upon the Real Property on or prior to Closing as well as any Contracts that Buyer does not expressly elect to assume by delivery of written notice to Seller on or prior to the Review Period  Expiration Date.

7.3.    Operation  of Property.    From and after the Effective Date, Seller shall operate and manage the Property in the same manner in which it is being operated as of the Effective Date; and shall perform, when due, all of Seller's obligations under all governmental approvals and other agreements relating to the Property and otherwise in accordance with applicable laws, ordinances, rules and regulations affecting the Property.

7.4.     No Assignment. After the Effective Date, Seller shall not assign, alienate, lien, encumber or otherwise transfer all or any part of the Property or  any interest  therein. Without limitation of the foregoing, Seller shall not grant any easement, right of way, restriction, covenant or other comparable right affecting the Real Property without obtaining Buyer's prior written consent, which consent shall not be unreasonably withheld. Seller shall not enter into any agreement  (other than this Agreement), arrangement or understanding,  formal or informal, for the sale of the Property, whether conditional or otherwise.

8.    ADDITIONAL  CONDITIONS PRECEDENT  TO CLOSING.  In addition to the other conditions enumerated in this Agreement, the following shall be additional  Conditions Precedent to Buyer's obligation to close hereunder:

8.1.    Representations and   Warranties.    As of the Closing Date, the representations and warranties made by Seller to Buyer as of the Effective Date shall be true, accurate and correct as if specifically remade at that time.

8.2.    Lease. Seller shall execute and enter into the Lease in its capacity as tenant as of Closing.

9.    SELLER'S CLOSING DELIVERIES. At Closing, Seller shall deliver or cause to be delivered to Buyer the following, in form and substance acceptable to Buyer:

9.1.    Deed. The Deed executed by Seller, in recordable form conveying the Real Property to Buyer free and clear of all liens, claims and encumbrances except for the Permitted Exceptions and the Lease.

9.2.    Bill of Sale. A Bill of Sale, executed by Seller, assigning, conveying and warranting to Buyer title to the Personal Property, free and clear of all liens, claims and encumbrances, other than the Permitted Exceptions.

9.3.    General Assignment. An assignment, executed by Seller, to Buyer of all right, title and interest of Seller and its agents in and to the Intangibles (including, but not limited to, the governmental approvals). On or prior to Closing, Seller shall, at Seller's sole cost, cause to be assigned to Buyer any and all guarantees and warranties issued with respect to the Improvements, including, but not limited to, any roof warranties, in accordance with their terms such that the same are enforceable by Buyer after Closing.

9.4.    Lease.    Two (2) duly executed counterparts of the Lease executed by Seller, as tenant.

9.5.    Assignment   of  Contracts.    Two (2) duly executed counterparts of an Assignment and Assumption of Contracts in form reasonably acceptable to Buyer and Seller (the "Assignment of Contracts") pursuant to which Seller assigns to Buyer those of the Contracts that Buyer has elected to assume.

9.6.    Keys.    Keys to all locks located in the Real Property, to the extent in Seller's possession or 

reasonable control.

9.7.    ALTA   Statement.    If required by the Title Company, an Owner's Affidavit and a "gap" affidavit, each executed by Seller and in form and substance reasonably acceptable to the Title Company.

9.8.    Closing Statement. A closing statement conforming to the proration and other relevant provisions of this Agreement.

9.9.    Plans and Specifications. All plans and specifications related to the Real Property in Seller's possession or reasonable control.

9.10.    Entitv Transfer Certificate.  Entity  Transfer  Certification  confirming that Seller is a "United States Person" within the meaning of Section 1445 of  the  Internal Revenue Code of 1986, as amended.

9.11.    Other.    Such other documents and instruments as may reasonably be required by Buyer or the Title Company and that may be reasonably necessary or appropriate to consummate this transaction and to otherwise effect the agreements of the parties hereto.

10.    CLOSING  DELIVERIES.    At Closing Buyer  shall cause the following to be delivered to Seller:

10.1.    Purchase Price. The Purchase Price, plus or minus prorations, shall be delivered to the Title Company in escrow for disbursement to Seller.

10.2.    Closing Statement. A closing statement conforming to the proration and other relevant portions of this Agreement.

10.3.    Lease.    Two  (2)  of  the  Lease  executed  m  counterpart  by  Buyer,  as landlord.

10.4.    Assignment   of  Contracts.    Two  (2)  of  the  Assignments  of  Contracts executed in counterpart by Buyer.

10.5.    Other.    Such other documents and instruments as may reasonably be required by Seller or the Title Company and that may be reasonably necessary or appropriate to consummate this transaction and to otherwise effect the agreements of the parties hereto.

10.6.    Title  Company  Closing  Obligations. If and when Buyer and Seller have deposited into escrow the matters required by this Agreement and Title Company can and will issue the Title Policy concurrently with the Closing, Title Company shall:

10.6.1.    Deliver to Buyer: (1) the Deed by causing it to be recorded in the Official Records of the County of Washoe, State of Nevada, and immediately upon recording delivering to Buyer a conformed copy of the Deed; (2) the Bill of Sale, the Lease, the Assignment of Contracts and the General Assignment (3) the Certificate of Non-Foreign Status; and (4) any other deposits made by Seller pursuant to Section 9 above for delivery to Buyer.

10.6.2.    Deliver to Seller: the Purchase Price, after satisfying the Closing costs, prorations and adjustments, and any broker commission to be paid by Seller pursuant to this Agreement and also satisfying all amounts paid by Title Company in satisfaction of liens and encumbrances on the Property in order to put title to the Real Property into the state required by this Agreement; and (B) the Lease and the Assignment of Contracts.

10.6.3.    Deliver to Buyer: any funds deposited by Buyer,  and  any interest earned thereon, in excess of the amount required to be paid by Buyer hereunder.

10.6.4.    Deliver the Title Policy issued by Title Company to Buyer.

11.    PRORATIONS   AND   ADJUSTMENTS.    The following  shall be prorated  and adjusted between Seller and Buyer as of the Closing Date, except as otherwise specified:

11.1.    Utilities    and    Operating    Expenses.    Water, electricity, sewer, gas, telephone and other utility charges shall be prorated, except that Buyer shall in no event be obligated to credit Seller on account of any utility charges that area allocable to the Premises as the same are payable by Seller, as tenant, under the Lease. Any operating expenses shall be prorated, except that Buyer shall not be obligated to credit to Seller for any operating expenses allocable to the Premises, which amounts shall be paid by Seller, as tenant, under the Lease.

11.2.    Security  Deposits.    The amount of all cash security and any other cash tenant deposits required to be posted  by Seller, as tenant, under the Lease shall be credited to Buyer.

11.3.    Base Rent. Buyer will receive a credit at Closing for all base or fixed rent payable pursuant to under the Lease and all Additional Rents (collectively, "Rent") owing for the month of Closing plus a credit on account of the first six (6) weeks of rent owing for the Supplemental Area (as defined in the Lease). "Additional Rents" shall mean any and all amounts due from Seller, as tenant, for operating expenses, common area maintenance charges, taxes, shared utility charges, management fees, insurance costs, other comparable expenses and pass-through charges and any other tenant charges. The provisions of this Section 11.3 shall survive the Closing and the delivery of any conveyance documentation.
16

11.4.    Assessments. All assessments, general or special, shall be prorated as of the Closing Date, with Seller being responsible for any installments of assessments that are due and payable prior to the Closing Date and Buyer being responsible for any installments of assessments that are due and payable on or after the Closing Date, except that Buyer shall in no event be obligated to credit to Seller the portion of any assessments allocable to the Premises as the same are payable by Seller, as tenant, under the Lease.

11.5.    Taxes. All ad valorem real estate and personal property taxes with respect to the Property shall be prorated as of the Closing Date, based on an accrual basis for the calendar year in which the Closing occurs (and prior years not yet due and payable), except that Buyer shall in no event be obligated to credit to Seller the portion of taxes allocable to the Premises as the same are payable by Seller, as tenant, under the Lease.

11.6.    Other. Such other items as are customarily prorated in transactions of this nature shall be ratably prorated.

For purposes of calculating prorations, Buyer shall be deemed to be in title to  the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs. All such prorations shall be made on the basis of the actual number of days of the year and month that shall have elapsed as of the Closing Date. The amount of such prorations shall be adjusted in cash after Closing, as and  when complete and accurate information becomes available. Seller and Buyer agree to cooperate and use their good faith and diligent efforts to make such adjustments no later than 30 days after the Closing, or as soon as is reasonably practicable if and to the extent that the required  final proration information is not available within such 30 day period. The obligations of the parties pursuant to this Section 11 shall survive the Closing and shall not merge into any documents of conveyance delivered at Closing.

12.    CLOSING EXPENSES.    Buyer will pay the cost of extended coverage for the Title Policy, the cost of the Survey, the base premium for the Title Policy and any endorsements to the Title Policy, one half the costs of any escrows hereunder and the cost of recording the Deed. Seller shall pay one half the costs of any escrows hereunder, all State, County  and municipal transfer taxes. Any and all other costs shall be allocated in accordance with local custom.

13.    DESTRUCTION, LOSS OR DIMINUTION OF PROJECT. If, prior to Closing, all or 

any portion of the Real Property are damaged by fire or other natural casualty (collectively "Casualty Damage"), or are taken or made subject to condemnation, eminent domain or other governmental acquisition proceedings (collectively "Eminent Domain"), then the following procedures shall apply:

		
	(a)
	If the aggregate cost of repair or replacement of the Casualty Damage (collectively, "repair and/or replacement") is $500,000 or less, in the opinion of Buyer's and Seller's respective engineering  consultants, Buyer shall close and take the Property as diminished by such events, subject to an assignment of Seller's casualty insurance proceeds (plus a credit for the 

amount of any unpaid deductible) or an assignment of any condemnation award, as applicable.

		
	(b)
	If the aggregate cost of repair and/or replacement of the Casualty Damage is greater than $500,000, in the opinion of Buyer's and Seller's respective engineering consultants, or in the event of an Eminent Domain,  then Buyer, at its sole option, may elect either to (i) terminate this Agreement by written notice to Seller in which event the provisions of Section 20.8 governing a permitted termination by Buyer of the entire Agreement shall apply; or (ii) proceed to close subject to an assignment of the proceeds of Seller's casualty insurance for all Casualty Damage  plus a credit for the amount of any unpaid deductible (or condemnation awards for  any Eminent Domain).  In such event, Seller shall fully cooperate with Buyer in the adjustment and settlement of the insurance claim. The proceeds and benefits under any rent loss or business interruption policies attributable to the period following the Closing shall likewise  be  transferred  and paid over (and, if applicable, likewise credited on an interim basis) to Buyer.

		
	(c)
	Seller agrees that Seller, as tenant, shall have no right to  terminate  its Lease in connection with any Casualty Damage or Eminent Domain occurring or threatened prior to Closing.

14.    DEFAULT.

14.1.    Default by Seller. If any of Seller's Representations contained herein are not true and correct on the Effective Date and continuing thereafter through  and including the Closing Date, or if Seller fails to perform any of the covenants and agreements contained herein to be performed by Seller within the time for performance as specified herein (including Seller's obligation to close), Buyer may elect either to (i) terminate Buyer's obligations under this Agreement by written notice to Seller, in which event the Deposit shall be returned immediately to Buyer and Seller shall reimburse Buyer for its actual, reasonable, out of pocket third party costs paid or incurred by Buyer to negotiate this Agreement and the Lease, conduct its  due diligence investigations and otherwise pursue the transactions contemplated hereby  promptly (which costs will not, in the aggregate, exceed $100,000), and in  any event within  ten  (10) business days, after receipt of invoices for such costs (which obligation shall survive any termination of this Agreement); or (ii) file an action for specific performance.  Seller agrees that in the event Buyer elects (ii) above, Buyer shall not be required to post a bond or any other collateral with the court or any other party as a condition to Buyer's pursuit of an action. The provisions of  the immediately preceding sentence shall survive any termination of  this Agreement. Nothing in this Section 14.1 shall be deemed to  in any way to  limit  or prevent Buyer from exercising any right of termination provided to Buyer elsewhere in this Agreement. Seller will indemnify,  defend  and hold Buyer harmless from and against Buyer's actual out of pocket expenses which result from a default by Seller of any of its post-closing obligations under this Agreement, which will not exceed a total liability to Seller of $500,0000 in the aggregate.

14.2.    Default   by  Buyer.    IN  THE  EVENT  OF ANY  DEFAULT  BY  BUYER HEREUNDER,    SELLER    SHALL    BE    ENTITLED    TO    RECEIVE,    AS   FIXED    AND LIQUIDATED DAMAGES AND AS SELLER'S SOLE REMEDY HEREUNDER, AT LAW OR IN EQUITY, THE DEPOSIT, EXCEPT THAT THE FOREGOING SHALL NOT APPLY TO BUYER'S INDEMNITY OBLIGATIONS HEREUNDER OR BUYER'S OBLIGATIONS UNDER SECTION 4.2 (IN CONNECTION WITH WHICH, BUYER'S LIABILITY  SHALL BE LIMITED TO SELLER'S ACTUAL DAMAGES). BUYER AND SELLER AGREE THAT IT WOULD BE IIVIPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY 

SUFFER IN THE EVENT BUYER DEFAULTS HEREUNDER AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY AS HEREIN PROVIDED. BUYER i\ND SELLER THEREFORE AGREE THAT A REASONABLE PRESENT ESTIMATE OF THE NET  DETRIMENT  THAT  SELLER WOULD SUFFER IN THE EVENT OF BUYER'S DEFAULT OR BREACH HEREUNDER IS AN AMOUNT  OF MONEY  EQUAL  TO THE DEPOSIT WHICH  SHALL BE  THE FULL, AGREED AND LIQUIDATED DAMAGES.            

                                  
NEJ                        MB        
SELLERS INITIALS                BUYERS INITIALS

15.    SUCCESSORS AND ASSIGNS; TAX-DEFERRED EXCHANGE.

15.l,    Assignment. The terms, conditions and covenants of this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective nominees, successors, beneficiaries and assigns; provided, however, no conveyance, assignment or transfer of any interest whatsoever of, in or to the Property or of this Agreement shall be made by Seller or Buyer during the term of this Agreement, except Seller may assign all or any of its right, title and interest under this Agreement to any third party intermediary (an "Intermediary'') in connection with a tax-defe1Ted exchange pursuant to Section 1031 of the Internal Revenue Code (an "Exchange"). Notwithstanding the foregoing, Buyer may assign all or any of its right, title and interest under this Agreement to: (i) an Intermediary in connection with an Exchange; or (ii) any affiliate or subsidiary of Buyer. In the event of an assignment of this Agreement by Buyer, its assignee shall be deemed to be the Buyer hereunder for all purposes hereof, and shall have all rights of Buyer hereunder (including, but not limited to, the right of further assignment), but the assignor shall not be released from all liability hereunder.

15.2.    Tax-Deferred Exchange. In the event either party elects to assign this Agreement to an Intermediary, the other party shall reasonably cooperate with the  assigning party (without incurring any additional liability or any additional third party expenses) in connection with such election and the consummation of the Exchange, including without limitation, by executing an acknowledgment of the assigning party's assignment of this Agreement to the Intermediary.

16.    NOTICES. Any notice, demand or request which may be permitted, required or desired to be given in connection therewith shall be given in writing and directed to Seller and Buyer as follows:

Seller:            Neil E. Jenkins
Executive Vice President, Secretary and General Counsel
Lawson Products, Inc.
8770 West Bryn Mawr Avenue 
Suite 900
Chicago, IL  60631
Fax:  (312) 268-5281
Email:  neil.jenkins@lawsonproducts.com

With copies to:        Steven A. Stender
Much Shelist, P.C.
191 North Wacker Drive, Suite 1800
Chicago, IL  60606
Fax: (312) 521-2318
Email:   sstender@muchshelist.com

Marty Kelly
Director, Real Estate and Facility Services Lawson Products, Inc.
8770 West Bryn Mawr Avenue 
Suite 900
Chicago, IL  60631
Fax:  (312) 268-5281
Email:   marty.kelly@lawsonproducts.com

Buyer:            KTR Property Trust III
c/o KTR Capital Partners, LLC 
601 S. Figueroa Street, 22nd Floor 
Los Angeles, CA 90017
Attn:    Philip Prassas Fax:    (213) 489-4092
Email:  pprassas@ktrcapital.com

With a copy to:    KTR Property Trust III
140 Broadway, 43rd Floor New York, New York  10005 
Attn:  John P. DiCola
Fax: (212) 710-5061
Email:  jdicola@ktrcapital.com
With a copy to
its attorneys:        Barack Ferrazzano Kirschbaum
& Nagelberg LLP
200 West Madison Street, Suite 3900
Chicago, Illinois  60606 
Attn:    Mark J. Beaubien 
Fax:    (312) 984-3150
Email:   mark.beaubien@bfkn.com

Notices shall be deemed properly delivered and received: (i) the same day when personally delivered; or (ii) one day after deposit with Federal Express or other comparable commercial overnight courier; or (iii) the same day 

when sent by confirmed facsimile.

17.    BENEFIT. This Agreement is for the benefit only of the parties hereto and their nominees, successors, beneficiaries and assignees as permitted in Section 15 and no other person or entity shall be entitled to rely hereon, receive any benefit herefrom or enforce against  any party hereto any provision hereof.

18.    LIMITATION OF LIABILITY. Upon the Closing, Buyer shall neither assume nor undertake to pay, satisfy or discharge any liabilities, obligations or commitments of Seller other than those specifically agreed to between the parties and  set  forth  in  this  Agreement. Except with respect to the foregoing obligations, Buyer shall not assume or discharge any debts, obligations, liabilities or commitments of Seller, whether accrued now or hereafter, fixed or contingent, known or unknown.

19.    BROKERAGE. Each party hereto represents and warrants to the other that it has dealt with no brokers or finders in connection with this transaction, except for Colliers International/Chicago ("Broker"). Seller shall pay a  brokers'  commission  due  to  Broker pursuant to a separate agreement between Seller and Broker. Seller hereby indemnifies, protects, defends and holds Buyer  harmless from and against all losses, liabilities, costs and expenses, including reasonable attorney's fees (collectively, "Losses") suffered or incurred by Buyer resulting from the claims of any broker, finder or other such party in connection with the transactions contemplated by this Agreement claiming by, through or under the acts  or agreements of Seller. Buyer  hereby indemnifies,  protects,  defends  and holds  Seller harmless from and against all Losses suffered or incurred by Seller resulting  from the  claims  of  any broker, finder or other such party (excluding Broker) in connection with the transactions contemplated by this Agreement claiming by, through or under the acts or agreements of Buyer. The obligations of the parties pursuant to this Section 19 shall survive the Closing or any earlier termination of this Agreement.

20.    MISCELLANEOUS.

20.1.    Entire Agreement. This Agreement constitutes the entire understanding between the parties with respect to the transaction contemplated herein, and all prior or contemporaneous oral agreements, understandings, representations and statements, and all prior written agreements, understandings, letters of intent and proposals, in each case with respect to the transaction contemplated herein, are hereby superseded and rendered null and void and of no further force and effect and are merged into this Agreement. Neither this Agreement nor any provisions hereof niay be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the  extent  set forth in such instrument.

20.2    Time of the Essence.  Time is of the essence of this Agreement.

20.3    Legal Holidays. If any date herein set forth for the performance of any obligations by Seller or Buyer or for the delivery of any instrument or notice as herein provided should be on a Saturday, Sunday or legal holiday, the compliance with  such  obligations  or delivery shall be deemed acceptable on the next business day following such Saturday, Sunday or legal holiday. As used herein, the term "legal holiday" means any state or federal holiday for which financial institutions or post offices are generally closed for  observance thereof  in the State of Nevada.

20.4    Conditions Precedent. The obligations of Buyer to make the payments described in Section 2 and to close the transaction contemplated herein are subject to the express Conditions Precedent set forth in this Agreement, each of which is for the sole benefit of Buyer and may be waived at any time by written notice thereof from Buyer to Seller. The waiver of any particular Condition Precedent shall not constitute the waiver of any other. In the event of the failure of a Condition Precedent for  any reason whatsoever, Buyer may elect, in its sole discretion, to terminate this Agreement in which event the provisions of Section 20.8 governing a permitted termination by Buyer of the entire Agreement shall apply.

20.5    Construction.    This Agreement shall not be construed more strictly against one party than against the other merely by virtue of the fact that it may have  been prepared by counsel for one of the parties, it being 

recognized that both Seller and Buyer have contributed substantially and materially to the preparation of this Agreement. The headings of various sections in this Agreement are for convenience only, and are not to be utilized in construing the content or meaning of the substantive provisions hereof.

20.6    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.

20.7    Partial  Invalidity.    The provisions hereof shall be deemed independent and severable, and the invalidity or partial invalidity or enforceability of any one provision shall not affect the validity of enforceability of any other provision hereof.

20.8    Permitted   Termination.    In the event that Buyer exercises any right it may have hereunder to terminate this Agreement, the Deposit shall be immediately returned to Buyer and neither party shall have any further obligation or liability under this Agreement except as otherwise expressly provided hereunder.

20.9    Independent  Contract  Consideration.   Seller and Buyer agree that  One Hundred  and  No/100  Dollars   ($100.00)   of   the   Deposit   shall   constitute   non-refundable independent consideration (the "Independent Consideration") for Seller's   execution and delivery of this Agreement and, notwithstanding any other provision of this  Agreement  to the
contrary, shall be paid to Seller upon the earlier to occur of (i) termination of this Agreement for any reason, or (ii) the Closing. The Independent Consideration shall be applied against the Purchase Price at Closing.

[Signature Page to Follow]

BUYER:

KTR  PROPERTY  TRUST III, a Maryland  real estate investment trust

By: \s\ Stephen J. Butte
Name: Stephen J. Butte
Its: SVP                

TITLE COMPANY, ESCROW AGENT FOR THE LIMITED PURPOSES OF ACKNOWLEDGING ITS LIABILITIES AND OBLIGATIONS HEREUNDER:

LAND SERVICES USA, INC. as agent for First American Title Insurance Company

By:            
Name:            
Its:            

IN  WITNESS   WHEREOF,   the  parties   hereto  have   executed   this   Agreement   of Purchase and Sale on the date first above written.

SELLER:

LAWSON PRODUCTS, INC., an Illinois corporation

By: \s\ Neil E. Jenkins
Name: Neil E. Jenkins
Its: Ex, V.P., Secretary And General Counsel       

EXHIBITS AND SCHEDULES

Exhibit A    Land

		
	Exhibit B
	Documents Schedule 1    Lease

EXHIBIT A

Legal Description of the Land

A portion of the Northeast Quarter (NE Yi) of Section 20, Township 19 North, Range 20 East, M.D.M., City of Reno, County of Washoe, Nevada, described as follows:

Reversion Parcel "A" as shown on that certain Reversionary Parcel Map No. 4694 and recorded December 12, 2006 as Instrument No. 3474018 of Official Records.

Said Parcel being a reversion of Parcel 2 of Parcel Map No. 3646 and Parcel 4-A of Record of Survey Map No. 2592

(NOTE: a properly engineered metes and bounds legal description will need to be provided to the Title Department prior to the close of escrow. Upon review further requirements may be made.)

Assessor's Parcel Number: 012-351-14

A-1

EXHIBIT B

Seller's Deliveries

To the extent in Seller's possession or reasonable control:

		
	1.
	Copies of current property tax bills and assessor's statements of current assessed values.

		
	2.
	Certificate of insurance coverage by policy type.

		
	3.
	Copies of "as-built" plans and specifications for the Property including, but not limited to, civil drawings, electrical plans, plumbing plans, fire sprinkler plans, and  structural plans.

		
	4.
	Most recent Seller's issued policy of title insurance and a current title report issued by the Title Company, together with true, complete, and legible copies of all listed exceptions.

		
	5.
	Most recent existing survey of the Property.

		
	6.
	Detailed information concerning all capital refurbishments/improvements to the Property over the past three years.

		
	7.
	Copies of manufacturer's roof warranty.

		
	8.
	Copies of all leases, any amendments, guaranties, Letters of Credit, letter agreements, assignments, and subleases relating thereto and  all  other  agreements  relating  to occupancy of the Property.

		
	9.
	Copies of all leasing and brokerage agreements pursuant to which commissions remain owing or are anticipated to become owing after Closing.

		
	10.
	Copies of all operating and management contracts, all leasing agreements and all service and maintenance 

agreements, and any  amendments  and  letter  agreements  relating thereto.

		
	11.
	Copies of all restrictive covenants, reciprocal easement or other private agreements relating to the Property and all agreements with adjacent property owners.

		
	12.
	Engineering, environmental and physical inspection reports generated by third parties in Seller's possession  or control regarding the Property, including  soil reports.

		
	13.
	Copies of all approvals, permits and licenses from each governmental  authority having jurisdiction over the Property and any excess land as are necessary to permit the full use and occupancy of the Property and the build-out of the excess land. These shall include but not be limited to environmental permits and approvals, certificate of completion, certificates of occupancy (each tenant's suite, each building, and the entire Property) and evidence of compliance with applicable zoning and use regulations.

		
	14.
	A  detailed  summary  of  all recent  legal  actions  concerning  the Property,  including actions taken on behalf of or against the ownership of the Property.

		
	15.
	Monthly operating statements for the past 12 months and annual statements for the past 3 years.

SCHEDULE 1 LEASE

Schedule 1-1

AGREEMENT OF LEASE

Property:
1381 Capital Boulevard Reno, Nevada

TABLE OF CONTENTS
	
				
	Section
	 
	Page
	

	1.
	Reference Data and Definitions
	1
	

	2.
	Demise of Premises
	4
	

	3.
	Possession
	5
	

	4.
	Term
	5
	

	5.
	Base Rent
	6
	

	6.
	Additional Rent for Operating Expenses and Real Estate Taxes
	7
	

	7.
	Use; Compliance With Law
	10
	

	8.
	Alterations; Tenant's Property and Tenant's Responsibilities
	13
	

	9.
	Repairs and Other Work
	15
	

	10.
	Liens
	16
	

	11.
	Subordination
	17
	

	12.
	Inability to Perform
	18
	

	13.
	Destruction
	18
	

	14.
	Insurance
	19
	

	15.
	Eminent Domain
	21
	

	16.
	Assignment; Subleasing
	22
	

	17.
	Utilities and Services
	23
	

	18.
	Default
	24
	

	19.
	Insolvency or Bankruptcy
	26
	

	20.
	Fees and Expenses; Indemnity; Payment
	27
	

	21.
	Access to Premises
	28
	

	22.
	Notices
	28
	

	23.
	No Waiver
	29
	

	24.
	Estoppel Certificates
	29
	

	25.
	Rules and Regulations
	29
	

	26.
	Tenant's Taxes
	29
	

	27.
	Miscellaneous
	30
	

EXHIBITS

A    - Site Plan

B    - Notice of Nonresponsibility
C    - Fair Market Rent Determination
Schedule 1 - Right of First Offer 
Schedule 2 - Termination of Option

AGREEMENT OF LEASE

AGREEMENT OF LEASE (the "Lease") made as of the day of         , 2014 ("Effective Date") between                             ,                              a(n)                      (the "Landlord"), and Lawson Products, Inc., an Illinois corporation (the "Tenant").

Landlord and Tenant agree as follows:

1.    Reference Data and Definitions. The following sets forth some of the basic lease information and definitions used in this Lease:

1.1    "Additional Rent" shall mean Tenant's Proportionate Share (as hereinafter defined) of Real Estate Taxes and of Operating Expenses, and all other sums (exclusive of Base Rent) payable by Tenant to Landlord under this Lease.

1.2    "Base Rent" shall mean the annual Base Rent payable by Tenant to Landlord from and after the Commencement Date. The Base Rent payable by  Tenant  to Landlord shall be in the amounts set forth below for the periods set forth below:
	
		
	Period (Months)
	Monthly Installment of Annual Base Rent

	0 - 12
	$33,668.00

	13 - 24
	$34,678.00

	25 - 36
	$35,718.00

	37 - 48
	$36,790.00

	49 - 60
	$37,894.00

	61 - 72
	$39,031.00

	73- 84
	$40,202.00

	85 - 96
	$41,408.00

	97 - 108
	$42,650.00

	109 - 120
	$43,930.00

1.3    "Building" shall mean the approximately 226,000 square foot building located at 1381 Capital Boulevard, Reno, Nevada.

1.4    "Commencement Date" shall mean [INSERT CLOSING DATE].

1.5    "Common Areas" shall mean the roadways, parking areas and landscaped areas on the Property, and the entrances, accessways and other areas located within the Building or otherwise on the Property intended for the common use of all tenants of the Property and their invitees.

1.6    "Concession Costs" shall mean leasing commissions and all other  costs such as construction allowances, rent concessions, moving expenses, takeover obligations and other similar inducements, incurred in leasing, subleasing or assigning a lease at the Building or this Lease.

1.7    "Excess Assignment Consideration" shall mean an amount, if any, equal to: (A) the consideration whenever paid by any assignee for the assignment, less (B) Concession Costs, reasonably incurred by Tenant in connection with such assignment.

1.8    "Excess Sublease Rent" shall mean an amount, if any, equal to: (A) (i) all rent  or other  consideration  paid  to Tenant by any subtenant,  for and during  each month  less (ii) the portion of Tenant's Concession Costs reasonably incurred by Tenant in connection with such subletting and allocable to such month, less (B) (i) the monthly installment of Base Rent for such month plus (ii) such other rent or consideration attributable to such month, which would otherwise be required to be paid by Tenant to Landlord. In determining the amount of Excess Sublease Rent with respect to a sublease for less than all of the Premises, the amount of the monthly installment of Base Rent to be deducted pursuant to clause (B)(i) of this Section 1.8 shall be determined by multiplying the then applicable square foot rate of the monthly installment of Base Rent by the area of the portion of the Premises which has been sublet.

1.9    "Landlord" shall mean the Landlord named on page 1 of this Lease or any subsequent owner of such Landlord's interest in the Property.

1.10    "Landlord's Address":

c/o KTR Property Trust III 5 Tower Bridge
300 Barr Harbor Drive, Suite 150
Conshohocken, PA 19428 
Attn: Stephen J. Butte

1.11    "Lease Interest Rate" shall mean the lesser of (A) 200 basis points in excess of the Prime Rate in effect from time to time or (B) the maximum amount or rate that lawfully may be charged in the circumstances, if such a maximum exists.

1.12    "Lease Taxes" shall mean any tax, assessment, levy or other charge (other than any income, franchise, state, succession, transfer, gift, capital stock or inheritance tax) by any federal, state or local law now or hereafter imposed directly or indirectly upon Landlord with respect to this Lease or the value thereof, or upon Tenant's use or occupancy of the Premises, or upon the Base Rent, Additional Rent or any other sums payable under this Lease or upon this transaction.

1.13    "Operating Expenses" shall have the meaning set forth in Section 6.1.

1.14    "Permitted Use" shall mean the receipt, packaging, shipping, storage and distribution of industrial maintenance and repair supplies and related office and ancillary uses.

1.15    "Premises" shall mean the approximately 105,214 square foot area within the Building commonly known as 1381 Capital Boulevard, Reno, Nevada, as depicted  on the Site Plan, subject, however, to Section 2 below.

1.16    "Prime Rate" shall mean the rate of interest announced from time to time by Wells Fargo Bank, N.A. or its successor as its prime rate or, if such rate is discontinued, such comparable rate as Landlord reasonably designates by notice to Tenant.

1.17    "Property" shall mean the Building together with the parcel of land and all appurtenances thereto on which the Building is located as depicted on the Site Plan, together with all other improvements which may hereafter be constructed on such parcel of land.

1.18    "Real Estate Taxes" shall mean all real estate taxes and assessments, general or special, ordinary or extraordinary, foreseen or unforeseen (other than Lease Taxes) imposed upon the  Property (on a cash basis). If, due to a future change  in the method  of taxation, any tax shall be levied or imposed in substitution, in whole or in part, for (or in lieu of) any tax or addition to or increase in any tax which would otherwise be included within the definition of Real Estate Taxes, then such other tax shall be deemed to be included within Real Estate Taxes.

1.19    "Rent" shall mean Additional Rent and Base Rent, collectively.

1.20    "Security Deposit" shall mean $                 

1.21    "Site Plan" shall mean the site plan depicting the Property annexed to this Lease as Exhibit A.

1.22    "Tenant" shall mean the Tenant named on page 1 of this Lease and such person's permitted  successors and assigns, subject to the provisions ofthis Lease.

1.23    "Tenant Parties" shall mean Tenant's contractors, agents, servants, employees, attorneys, invitees and licensees.

1.24    "Tenant's Address" shall mean:

Neil E. Jenkins
Executive Vice President, Secretary and General Counsel Lawson Products, Inc.
8770 West Bryn Mawr Avenue Suite 900
Chicago, IL  60631
With copies to:

Steven Stender Much Shelist, P.C.
191 North Wacker Drive Suite 1800
Chicago, IL  60606

1.25    "Tenant's Proportionate Share" shall be Forty-Six and Fifty-Five hundredths percent (46.55%).

1.26    "Term" shall mean the ten (10) year period commencing on the Commencement Date and terminating on the last day of the calendar month in which the ten (10) year anniversary of the day immediately preceding the Commencement Date occurs.

2.    Demise of Premises. Subject to the terms of this Lease, and from and after the Commencement Date, Landlord leases to Tenant and Tenant leases from Landlord the Premises and grants to Tenant, so long as this Lease remains in effect, the non-exclusive right to use the Common Areas for their intended purposes in common with all others entitled  to use them. Tenant shall be entitled to use the Common Areas in the same manner and fashion as other tenants of the Building on a non-discriminatory basis. During the six (6) week period after the Commencement Date (the "Relocation Period"), Tenant shall have the right to remain in that portion of the remainder of the Building not contained within the Premises (the "Supplemental Area") for the limited purpose of relocating its operations and equipment located in the Supplemental Area to the Premises and otherwise decommissioning the Supplemental  Area. Tenant has paid  a license fee to Landlord on account of the entire Relocation Period  equal to $54,000  simultaneously  with the  execution  of this  Lease.    Provided  Tenant  is not  in  default hereunder beyond  applicable notice and cure periods, Tenant may extend the Relocation Period on a week-to-week basis (i.e. by no more than a single week at a time) thereafter by providing at least ten (10) business  days prior written notice of such election to Landlord  for each weekly extension together with a weekly license fee of $9,000 payable to Landlord, except that Tenant may   not   extend   the   Relocation   Period   past   the   twelve   (12)   week   anniversary   of   the Commencement  Date  without  Landlord's  prior  written  consent  (which  may  be  withheld  in Landlord's  sole discretion)  and the Relocation Period shall end as of commencement the week for which Landlord has rejected the extension or Tenant's election not to extend the Relocation Period.    Tenant  shall,  at  Tenant's  sole  cost,  remove  all  operations,  equipment  and  personal property from the Supplemental Area and place the Supplemental Area in broom clean condition and good working  order  and repair  on or prior to the expiration  or sooner termination  of the Relocation  Period  ("Relocation  Termination  Date").    Tenant  shall  repair  all  damage  to  the 

Supplemental Area resulting from its relocation of operations from the Supplemental Area to the Premises.  If Tenant completes the relocation of its operations from the Supplemental Area to the Premises  and places the  Supplemental  Area in the condition required by this  Section 2 on or prior to the Relocation Termination Date, the Relocation Period shall end and Tenant shall have no further right to operate or engage in decommissioning  activities in the Supplemental  Area. On or after the Relocation Termination Date, Landlord shall, at Landlord's sole cost, construct a demising wall between the Supplemental Area and the Premises.   Tenant shall be obligated to pay  all  utilities  used  in  or  by  the  Supplemental  Area.  If,  on  or  prior  to  the  Relocation
Termination Date, Tenant has not relocated its operations from the Supplemental Area to the Premises, and placed the Supplemental Area in the condition required by this Section, Tenant shall be in default hereunder without benefit of any notice and cure periods and commencing on the first day following the Relocation Termination Date, Tenant shall be obligated to  pay Landlord the sum of $12,500 per week, on account of the Supplemental Area in advance until Tenant has satisfied its obligations with respect  to  the  Supplemental  Area  without  limitation upon Landlord's other rights and remedies.

3.    Possession.

3.1    Delivery  of  Possession.    Tenant agrees that Tenant is familiar with the condition of the Premises as Tenant was the prior owner of the Property, and Tenant hereby accepts the foregoing on an "AS-IS," "WHERE-IS" basis except to the extent of Landlord's repair and maintenance obligations hereunder. Tenant acknowledges that Landlord has not made any representation as to the condition of the foregoing or the suitability of the foregoing for Tenant's intended use, except as may be herein expressly set forth. Tenant represents and warrants that Tenant has made its own inspection of the foregoing. Landlord shall not be obligated to make any repairs, replacements or improvements (whether structural or otherwise) of any kind or nature to the foregoing in connection with, or in consideration of, this Lease, except as set forth herein.

4.    Term.

4.1    Commencement Date.    The term of this Lease shall commence on the Commencement Date.

4.2    Rent  Commencement.    Tenant's obligation to pay Base Rent and Additional Rent shall commence on the Commencement Date. From and after  the Commencement Date and throughout the initial Term, Tenant shall pay annual Base Rent in the amount and in the monthly installments required by Section 1.2.

4.3    Renewal. If Tenant is not in material  default (beyond applicable periods for notice and cure) under this Lease at the time the applicable option to renew described below (each a "Renewal Option") is exercised or as of the commencement of the applicable Renewal Period (as hereinafter defined), Tenant shall have two options to extend the Term for five (5) years each (each a "Renewal Period") commencing on the first day following the last day of the initial Term or the first Renewal Period, as applicable, upon the same terms and conditions as are contained in this Lease, except as hereinafter provided. Base Rent for the first year of the applicable Renewal Period shall be equal to the greater of (i) the Fair Market Value Rental (as defined in Exhibit C attached hereto), or (ii) the annual Base Rent for the last year of the initial Term or the first Renewal Period, as applicable. The Fair Market Value Rental shall be determined in accordance with Exhibit C. Each Renewal Option shall be exercised by written notice to Landlord given no earlier than twelve (12) months nor later than nine (9) months prior to the last day of the initial Term or the first Renewal Period, as applicable, and the failure to timely exercise such right shall mean that such right is null and void.

4.4    Termination Option. Tenant will have the right to terminate  this Lease prior to the end of the Term, on and subject to the terms set forth  on Schedule  2 which  is attached hereto and incorporated herein.

5.    Base Rent.

5.1    Payment.    Base Rent shall be payable by Tenant to "KTR PROPERTY TRUST III, OR TO SUCH OTHER ENTITY DESIGNATED TO TENANT IN WRITING  BY LANDLORD" in equal monthly installments on or before the first day of each calendar month, in advance. All payments of Base Rent and Additional Rent  shall  be  made  without  prior demand, without offset, deduction or counterclaim of any kind, in lawful money of the United States of America. Such payments shall be made at Landlord's Address or at such other place as Landlord shall designate from time to time. Tenant's agreement to lease the Premises and pay Base Rent, Additional Rent and all other sums payable under this Lease are independent of any other covenant, agreement or term of this Lease except as otherwise provided in this Lease.

5.2    Late Charges. Any Rent payable by Tenant to Landlord under this Lease which is not paid within five (5) days after the same is due will be automatically subject to a late payment charge, as Additional Rent, of five percent (5%) of the delinquent amount, in each instance, to cover Landlord's additional administrative costs. In addition to the late charge set forth above, Tenant shall also be required to pay interest on all such unpaid sums (including any late charge(s)), at a per annum rate equal to the Lease Interest Rate plus three percent (3%) (the "Default Rate") on all such outstanding charges of Rent, said interest charges, as applicable, to be payable on the first (1st) of each month throughout the Term of this Lease, without further notice or demand therefor by Landlord. Such late charges and interest will be due and payable as set forth herein and will accrue from the date that such Rent (including late charges and interest) sums are payable under the provisions of this Lease until actually paid by Tenant.

5.3    Security  Deposit.    Tenant agrees to deposit the Security Deposit with Landlord on the date hereof. The Security Deposit shall be retained by Landlord  as security for the faithful performance and observance by Tenant of its obligations under this Lease, it being expressly agreed that the Security Deposit is not an advance rental deposit or a measure of Landlord's damages. Except  as may otherwise be required by applicable law, (a) Tenant  shall not be entitled to any interest on the Security Deposit, (b) Landlord shall not be obligated to hold the Security Deposit in trust or in a separate account, and (c) Landlord shall have the right to commingle the Security Deposit with its other funds. If Tenant defaults under this Lease  and such default extends beyond any applicable grace or cure period (following  notice of default being given  to Tenant to the extent required hereunder), without limiting any  other  right  or remedy of Landlord, Landlord may also apply the whole or any part of the Security Deposit to the extent required for the payment of any Rent or other sums payable under this Lease as to which Tenant is in default or on account of any sum which Landlord may expend or may be required to expend by reason of Tenant's default. If any portion  of  the  Security  Deposit  is applied by Landlord for any such purpose, Tenant shall, within ten (10) days after demand is made by Landlord, deposit cash with  Landlord in an amount sufficient to restore the  Security Deposit to its original amount. If Tenant shall fully and faithfully comply with all  of  the covenants and conditions of this Lease, the Security Deposit  shall  be  promptly  returned  to Tenant after the expiration date of the Term and the surrender of the Premises to Landlord.  In no event shall the Security Deposit be applied to the last monthly installment of Base Rent or Additional Rent due prior to the expiration date of the Term. In the event of a sale of the Premises, Landlord shall have the right to transfer the Security Deposit to the purchaser subject to the terms of this Lease, whereupon Landlord shall be released by Tenant from all liability for the return of the Security Deposit and Tenant shall look solely to the new landlord for its return.

6.    Additional Rent for Operating Expenses  and Real Estate Taxes.

6.1    Definitions. "Operating Expenses" shall mean  any  and  all  reasonable costs and expenses paid or incurred by Landlord in connection with the management, operation, maintenance and repair of the Property including, without limitation:

		
	(a)
	the cost of electricity, gas, water, sewer service, and other systems and utilities serving Common Areas, and the cost of supplies and equipment and maintenance and service contracts in connection therewith;

		
	(b)
	the cost of repairs, replacements, maintenance and cleaning, including, without limitation, the cost of janitorial and other service agreements, snow removal and trash removal with respect to Common Areas;

		
	(c)
	the cost of  all repairs and maintenance associated with the landscaped areas, surface parking areas and truck courts of the Property, including, without limitation, the cost of associated roof maintenance in connection with the Property;

		
	(d)
	the cost of fire, extended coverage, boiler, sprinkler, apparatus, public liability, property damage, rent, earthquake and other insurance as Landlord carries with respect  to  the  Property, including the amounts of any deductible payment  for  such insurance incurred by Landlord in connection with any claim thereunder;

		
	(e) 
	an annual management fee, not to exceed 3% per annum;

		
	(f)
	reasonable fees, charges and other costs, including, without limitation, consulting fees, attorneys' fees and accounting fees of all contractors engaged by Landlord in connection with the operation, maintenance or repair of the Property;

		
	(g)
	the cost of any capital improvements made to the Property after the date of this Lease designed to reduce Operating Expenses (amortized over the useful life in accordance with generally accepted accounting principles consistently applied, "GAAP"), together with interest on the unamortized balance(s) at the actual rate paid by Landlord;

		
	(h)
	the cost of any capital improvements made to the Property after the date of this Lease that are required under any Law (as hereinafter defined) (amortized in accordance with GAAP), together with interest on the unamortized balance( s) at the actual rate paid by Landlord;

		
	(i)
	the cost of supplies, materials and equipment used in the management, operation, maintenance and repair of the Property, including, without limitation, any rental fees for any such supplies, materials and equipment;

		
	(j)
	fees, costs and  disbursements  incurred  in  connection  with proceedings to contest,  determine,  or reduce  Operating  Expenses or Real Estate Taxes;

		
	(k)
	the fee for a bi-annual roof inspection contract, the costs of Landlord Repairs (as hereinafter defined) pursuant to  Section 9.3 and fire monitoring of the Building; and

		
	(l)
	the cost payable by the Property pursuant to any declaration of protective covenants or comparable recorded instrument affecting the Property.

"Operating Expenses" shall not include:

		
	(1)
	leasing commissions, accountants' or attorneys' fees, costs and disbursements and other expenses incurred in connection with proposals, negotiations, or disputes with tenants or other occupants or prospective tenants or other occupants, or associated with the enforcement of any leases or the defense  of Landlord's title to or interest in the Property or any part thereof;

		
	(2)
	except as  specifically provided in this Lease with regard to amortization of capital improvement costs, interest on debt or amortization payments on any mortgages or deeds of trust or any other borrowings of Landlord;

		
	(3)
	except as provided in this Lease with regard to capital expenditures, any other expense that under GAAP would not be considered a maintenance  or operating expense;

		
	(4)
	salaries, benefits or other compensation paid to leasing agents, promotional    directors, officers, directors and executives of Landlord above the rank of building managers, or not involved in the day-to-day operations or management of the Property  (except for out-of-pocket expenses of such persons related to the Property);

		
	(5)
	all contributions to any organizations, whether political or charitable;

		
	(6)
	interest or penalties for late payments;

		
	(7)
	any cost or expenditure for which Landlord is reimbursed, whether by insurance proceeds, warranties, service contracts or otherwise, except through rent adjustment or other tax or operating expense pass-through  provisions;

		
	(8)
	ground lease rental;

		
	(9)
	depreciation;

		
	(10)
	expenses in connection with services or other benefits of a type which are not provided to Tenant but are provided  to  another tenant or occupant; and

		
	(11)
	costs incurred by Landlord to comply with its obligations under Section 7.4 (Hazardous Substances) and under its indemnity.

6.2    Payment   of   Real   Estate   Taxes.    Commencing on the Commencement Date, Tenant shall be obligated to pay to Landlord Tenant's  Proportionate  Share  of  all Real Estate Taxes as Additional Rent. Without limitation of the foregoing, commencing on the Commencement Date, Tenant shall pay to Landlord, as Additional Rent, one twelfth (I/12th) of Tenant's Proportionate Share of Real Estate Taxes on or before the first day of each month during any calendar year, in advance, in an amount reasonably estimated by Landlord in good faith and billed by Landlord to Tenant. Landlord shall have the right to reasonably revise such estimate from time to time. Within one hundred twenty (120) days after the expiration of each fiscal year for Real Estate Taxes, Landlord shall furnish Tenant with a statement  ("Landlord's Tax Statement") setting forth in reasonable detail the actual amount of Real  Estate  Taxes  for such year and Tenant's Proportionate Share of Real Estate Taxes.  If the  actual  amount  of Tenant's Proportionate Share of Real Estate Taxes due for such year differs from the estimated amount of Tenant's Proportionate  Share of Real Estate Taxes paid by Tenant for such year, then, if Tenant owes any amounts to Landlord, such amounts shall be paid by Tenant (whether or not this Lease has terminated) within thirty (30) days after receipt of Landlord's Tax Statement, and if Landlord owes any amounts to Tenant, such 

amounts shall be credited against the next installments of Base Rent and Additional Rent due from Tenant (or if the Lease has terminated for any reason other than Tenant's default, paid to Tenant within thirty (30) days after delivery of Landlord's  Tax  Statement.

6.3    Payment  of  Operating  Expenses.    Commencing on the Commencement Date, Tenant shall be obligated to pay to Landlord Tenant's Proportionate Share of all Operating Expenses as Additional Rent. Without limitation of the foregoing, commencing on the Commencement Date, Tenant shall pay to Landlord, as Additional Rent, one twelfth (I/12th) of Tenant's Proportionate Share of Operating Expenses for the Property for each calendar year on or before the first day of each month during such year, in advance, in an amount reasonably estimated by Landlord in good faith and billed by Landlord to Tenant.  Landlord shall have the right to reasonably revise such estimate from time to time. Within one hundred twenty (120) days after the expiration of each calendar  year, Landlord shall furnish Tenant with a statement ("Landlord's Operating Expense Statement"), setting forth in reasonable detail the actual amount of Operating Expenses for the Property for such year and Tenant's Proportionate Share of Operating Expenses. If the actual amount of Tenant's Proportionate Share  of  Operating Expenses due for such year payable by Tenant differs from the estimated amount of Operating Expenses paid by Tenant for such year, then, if Tenant owes any amounts to Landlord, such amounts shall be paid by Tenant (whether or not this Lease has terminated) within thirty (30) days after receipt of Landlord's Operating Expense Statement, and if Landlord owes any amounts to Tenant, such amounts shall be credited against the next installments of Base Rent and Additional Rent due from Tenant (or if the Lease has terminated for any reason  other  than Tenant's default, paid to Tenant within thirty (30) days after delivery of Landlord's Operating Expense  Statement).

6.4    Tenant's Audit Rights. Landlord shall keep reasonably detailed records of all Operating Expenses and Real Estate Taxes for a period of at least two (2) years. Not more frequently than once in every 12-month period and after at least twenty (20) days' prior written notice to Landlord, Tenant together with any representative of Tenant shall be permitted to audit the records of the Operating Expenses and Real Estate Taxes. If Tenant exercises its audit rights as provided above, Tenant shall conduct any inspection at a reasonable time and in a manner so as not to unduly disrupt the conduct of Landlord's business.  Any such inspection by Tenant shall be for the sole purpose of verifying the Operating Expenses and/or Real  Estate  Taxes. Tenant shall hold any information obtained during any such inspection in confidence, except that Tenant shall be permitted to disclose such information to its attorneys and advisors, provided Tenant informs such parties of the confidential nature of such information  and uses good faith and diligent efforts to cause such parties to maintain such information as confidential. Any shortfall or excess revealed and verified by Tenant's audit shall be paid to the applicable party within thirty (30) days after that party is notified of the shortfall or excess to the extent such overage or shortfall has not previously been adjusted pursuant to this Lease.  If Tenant's inspection of the records for any given year or partial year reveals that Tenant was overcharged for Operating Expenses or Real Estate Taxes by an amount of greater than three percent (3%), Tenant paid such overage and such overage was not otherwise adjusted pursuant to the terms of this Lease, Landlord shall reimburse Tenant for its reasonable, third party costs of the audit, up to an amount not to exceed $2,500.

7.    Use; Compliance With Law.

7.1    Permitted Use. The Premises shall be used only for the Permitted Use and for no other purpose.

7.2    No Nuisance. Tenant shall not allow, suffer or permit the Premises or any use thereof to constitute a nuisance.

7.3    Compliance  with   Laws.   Tenant,  at Tenant's  expense,  shall  comply  with and cause all of the Tenant Parties  to comply  with  all  applicable laws, ordinances,  rules  and regulations  of  governmental  and  quasi-governmental  authorities  ("Laws")  applicable  to  the Premises  or the use  or occupancy thereof.   Without  limiting  the  generality  of the  foregoing,
Tenant shall comply with the requirements of (a) the Occupational Safety and Health Act (and all regulations promulgated thereunder), and (b) the Americans with Disabilities Act (and all regulations promulgated thereunder), as the same may be amended from time to time. The foregoing obligation of Tenant shall not however permit Tenant to make,  without  Landlord's prior written approval, any alterations to the Premises which otherwise would require Landlord's approval under this Lease, and Tenant shall comply with all of the requirements of this Lease in making any such alterations.

7.4    Hazardous  Substances.

7.4.1    Definitions. "Hazardous Substance" shall mean any hazardous or toxic substance, material or waste which is or becomes regulated by any local, state or federal governmental authority having jurisdiction. The term "Hazardous Substance" includes, without limitation, any material or substance which is (i) designated as a "hazardous substance" pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Section 1317), (ii) defined as a "hazardous waste" pursuant to Section 1004 of the Resource  Conservation  and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903),  (iii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601), (iv) petroleum, (v) asbestos or asbestos-containing materials, (vi) polychlorinated biphenyls and (vii) petroleum products.

7.4.2    Compliance   with   Law.    Tenant shall conduct, and cause to be conducted, all operations and activity at the Premises in compliance with, and  in  all  other respects shall comply with, all applicable present and future federal, state, municipal and other governmental statutes, ordinances, regulations, orders, directives and other requirements, and all present and future requirements of common law, concerning  the protection  of public  health, safety or the environment (collectively "Environmental  Statutes").

7.4.3    Permits. Tenant, in a timely manner, shall, to the extent required due to Tenant's use of the Premises or arising out of Tenant's actions at the Property, obtain and maintain in full force and effect all permits, licenses and approvals, and shall make and file all notifications and registrations as required by Environmental Statutes. Tenant shall at all times comply with the terms and conditions of any such permits, licenses, approvals, notifications and registrations.

7.4.4    Documents.    Tenant shall provide to Landlord copies of the following pertaining to the Premises, the Property or Tenant's use thereof, promptly after each shall have been submitted, prepared or received by Tenant: (A) all applications and associated materials submitted to any governmental agency relating to any Environmental Statute; (B) all notifications, registrations, reports and other documents, and supporting information, prepared, submitted or maintained in connection with any Environmental Statute or otherwise relating to environmental conditions; (C) all permits, licenses, approvals, and amendments or modifications thereof, obtained under any Environmental Statute; and (D) any correspondence, notice of violation, summons, order, complaint, or other document received by Tenant pertaining to compliance with or liability under any Environmental  Statute.

7.4.5    Operations.    Tenant shall not cause in, on or under, or suffer or permit to occur in, on or under, the Premises any generation, use, manufacturing, refining, transportation, emission, release, treatment, storage, disposal, presence or handling of Hazardous Substances, except that limited quantities of Hazardous Substances may be used,  handled  or stored on the Premises, provided such is incident to and reasonably necessary for the maintenance of the Premises or Tenant's operations for the Permitted Use and is in compliance with all Environmental Statutes and other applicable governmental  requirements.  Should  a release of any Hazardous Substance occur at the Premises or the Property as the result of the acts or omissions of Tenant and/or any of the Tenant Parties, Tenant shall immediately contain, remove and dispose of, off the Premises or the Property, 

such Hazardous Substances and any material that was contaminated by the release, and remedy and mitigate all threats to human health or the environment relating to such release. When conducting any such measures Tenant shall comply with all Environmental Statutes.

7.4.6    Inspection.    Upon not less than twenty-four (24) hours' prior telephonic or written notice (except in case of an emergency in which event Landlord shall provide such telephonic or written notice as Landlord is able to under the circumstances), Tenant agrees to permit Landlord and its authorized representatives to enter, inspect and assess the Premises at reasonable times for the purpose of determining Tenant's compliance with the provisions of this Section. Such inspections and assessments may include obtaining samples and performing tests of soil, surface water, groundwater or other media.

7.4.7    Tanks.    Tenant shall not install or cause the installation of any above ground or underground storage tank at the Premises. Notwithstanding the foregoing, the parties acknowledge and approve the existence of two underground tanks located on the Premises (the "Tanks"), which provide a reservoir system for the collection of foam waste resulting from the activation of the foam fire suppression system. Tenant  represents  and warrants to Landlord that the Tanks were installed in compliance with all Laws, have been duly registered with the State of Nevada and have been owned and operated in compliance with all Laws. Tenant may leave the Tanks in place upon the expiration or sooner termination of the Lease provided it is permitted to do so by applicable Laws and complies with all Laws (including de-commissioning requirements) related to the abandonment of the Tanks, which obligation shall survive the expiration or sooner termination of this Lease.

7.4.8    Indemnification.    Notwithstanding any other prov1s10n in this Lease to the contrary, Tenant hereby agrees to indemnify and to hold harmless Landlord and its officers, directors, shareholders, partners and principals of, from and against any and all expense, loss, cost, claim, damage, penalty, fine, or liability of any kind or nature suffered by Landlord by reason of the presence or release of Hazardous Substances at or from the Premises  or  the Property, or any violation of Environmental Statutes by the Premises or the Property, as a result of the acts or omissions of Tenant or the Tenant Parties or Tenant's breach of any  of the provisions of this Section 7, including without limitation: (A) any and all expenses that Landlord may incur in complying with any Environmental Statutes, (B) any and all costs that Landlord may incur in monitoring, studying, assessing, containing, removing, remedying, mitigating, or otherwise responding to, the presence or release of any Hazardous Substance at or from the Premises or the Property, (C) any and all costs for which Landlord may be liable to any governmental  agency  for  monitoring,  studying,  assessing,  containing,  removing,  remedying, mitigating, or otherwise responding to, the presence or release of any Hazardous Substance at or from the Premises or the Property, (D) any and all fines or penalties assessed, or threatened to be assessed, upon Landlord by reason of a failure of Tenant to comply with any obligations, covenants or conditions set forth in this Section, and (E) any and all reasonable legal fees and costs incurred by Landlord in connection with any of the foregoing. Tenant's obligations under this Section shall survive the expiration or earlier termination of the Term of this Lease. Notwithstanding anything to the contrary in this Section 7.4, Tenant shall have no liability to Landlord with respect to Hazardous Substances present at the Property due to the acts or omissions of any party other than Tenant and the Tenant Parties.

7.5    Common Areas.

7.5.1    Tenant shall have the non-exclusive right to use the  Common Areas in common with other persons permitted under this Lease or persons approved by Landlord during the Term, subject to reasonable rules and regulations uniformly established and applied by Landlord and the provisions of this Lease.

7.5.2    Landlord reserves the right, at any time and from  time to time, without the consent of or liability to Tenant, to (i) make alterations or additions to the Property and the Common Areas, to change, add to, eliminate or reduce the extent, size, shape, number or configuration of any aspect of the Property and Common Areas, (ii) close to the general public all or any portion of the Property to the extent and for the period necessary to avoid any dedication to the public, provided Tenant  has reasonable means of ingress and egress to the Premises, (iii) effect any repairs or further construction, (iv) change the arrangement, character, use or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, landscaping, toilets, mechanical, plumbing, electrical or other operating systems or any other portions of the Common Areas or other parts of the Property 

provided such alterations  or additions do not materially adversely affect the use of the Common Areas by Tenant, or ingress to or egress from the Premises, and (v) change the name, number or designation by which the Property is commonly known; provided, however, Landlord  shall use reasonable efforts to limit and minimize any disruption of Tenant's use of the Premises in connection  with  Landlord's actions undertaken pursuant to this Section.

8.    Alterations;  Tenant's Property and Tenant's Responsibilities.

8.1    Alterations Defined.

8.1.1    Tenant shall not make or suffer or allow to be made any alterations, additions or improvements in or to the Premises (collectively, "Alterations") without first obtaining Landlord's written consent based  on detailed plans  and specifications submitted by Tenant; provided Landlord's consent will not be required if (a) the proposed Alterations will not affect the structure or the HVAC Systems (as hereinafter defined), mechanical, electrical, plumbing or life safety systems of the Building (collectively, "Building Systems") and (b) the total cost to acquire and install the proposed Alterations will be no more than (i) $25,000 in any one instance and (ii) $100,000 in the aggregate during any calendar year. In all other instances where Landlord's consent is so required, it may be granted or withheld by Landlord in its sole but  reasonable  discretion.    In  all  events,  Tenant  shall notify  Landlord  prior  to  commencing Alterations other than de minimis Alterations.

8.1.2    Tenant agrees that all such work (regardless of whether Landlord's consent is required) shall be done at Tenant's sole cost and expense, in accordance with the plans and specifications approved by Landlord and in a good and workmanlike manner, that the structural integrity of the Building shall not be impaired, and that no liens shall attach to all or any part of the Premises, the Building, or the Property by reason thereof. Tenant shall obtain, at its sole expense, all permits required for such work.

8.2    Removal of Property. Unless otherwise elected by Landlord as hereinafter provided, all Alterations made by Tenant shall become the property of Landlord and shall be surrendered to Landlord upon the expiration or earlier termination of this Lease, except as otherwise set forth in this Lease. However (i) movable equipment, trade fixtures, personal property, furniture, or any other items that can be removed without material harm to the Premises will remain Tenant's property; and (ii) the racks to be installed by Tenant (collectively, "Tenant Owned Property") shall not become the property of Landlord but shall be removed by Tenant upon the expiration or earlier termination  of this Lease. All Tenant Owned Property shall be removed from the Premises at Tenant's sole cost and expense at the expiration or sooner termination of this Lease. When granting consent for any Alterations that require Landlord's consent, Landlord shall indicate whether it will require the removal of those Alterations at the expiration or earlier termination of the Lease. Prior to making any Alterations not requiring Landlord's consent, Tenant shall request that Landlord notify Tenant whether Landlord requires Tenant to remove that Alteration prior to expiration or earlier termination of the Lease.  Tenant shall remove those Alterations that Landlord requested be removed under the prior two sentences at the expiration or earlier termination of the Lease. Tenant shall repair at its sole cost and expense all damage caused to the Premises or the Building by removal of any Alterations that Tenant is required to remove or Tenant Owned Property. Landlord may remove any Tenant Owned Property or Alterations that Tenant is required but fails to remove at the expiration or earlier termination of the Lease and Tenant shall pay to Landlord the reasonable cost of removal. Tenant's obligations under this Section shall survive the expiration or earlier termination of this Lease.

8.3    Tenant's    Responsibilities.    Pursuant to NRS 108.234, Landlord hereby informs Tenant that Tenant must comply with the requirements of NRS 108.2403 and NRS 108.2407. Tenant shall take all actions necessary under Nevada law to ensure that no liens encumbering Landlord's interest in the Property arise as a result of any work performed by or arranged to be performed by Tenant on the Premises or the Property ("Tenant Improvement Work"), including, without limitation, the recording of a notice of posted security in the Official Records of Clark County, Nevada, in accordance with NRS 108.2403 and either (i) establish a construction disbursement account pursuant to NRS 108.2403(1)(b)(1) or (ii) furnish and record, in accordance with NRS 108.2403(1)(b)(2), a surety bond for the prime contract for any Tenant Improvement Work at the Premises that meets the requirements of NRS 108.2415.  The name and address of Tenant's prime contractor who will be performing the Tenant Improvement Work will be provided to Landlord for Landlord's approval prior to the commencement 

of any of the Tenant Improvement Work, which approval shall not be unreasonably withheld. Tenant shall notify Landlord immediately upon the signing of any contract with the prime contractor for the construction, alteration or repair of any portion of the Premises or Tenant's improvements to the Premises. Tenant may not enter the Premises to begin initial construction on Tenant's improvements or begin any Alteration or other work in the Premises until Tenant has delivered evidence satisfactory to Landlord that Tenant has complied with the terms of this Section 8.3. Failure by Tenant to comply with the terms of this Section 8.3 shall permit Landlord to declare Tenant in default without benefit of any notice and cure periods. In accordance with NRS 108.234(2), Tenant agrees that Landlord's interest in the Premises and the Property shall not be subject to, and shall be immune from, the attachment of any lien arising as a result of the Tenant Improvement Work, including any improvement, construction, alteration or repair in the Premises by Tenant, if Landlord, within three (3) days after obtaining knowledge of the construction, alteration or repair, or the intended construction, alteration or repair, gives notice that Landlord will not be responsible for the improvement by recording a notice in writing to that effect with the Official Records of Clark County, Nevada ("Notice  of  Nonresponsibility" )  in  the  form  of  Exhibit   B  attached  hereto. The Notice of Nonresponsibility shall be deemed timely recorded within three (3) days immediately following the effective date of the Lease or by the date of the execution of this Lease by all parties, whichever occurs first. Each Notice of Nonresponsibility recorded pursuant  to NRS  108.234 shall set forth the information required in NRS 108.234(3) and shall be served by personal delivery or by certified mail, return receipt requested (1) upon Tenant within ten (10) days after the date on which the Notice of Nonresponsibility is recorded and (2) upon the prime contractor within ten (10) days after the date on which Tenant contracts with the prime contractor for the construction, alteration or repair of the work of improvement.

9.    Repairs  and Other Work.

9.1    Tenant's Obligations.

9.1.1    Tenant shall maintain in good, clean and sanitary order and condition the Premises, including without limiting the generality of the foregoing, all plumbing, heating, air conditioning, and ventilating systems ("HVAC Systems"),  electrical,  lighting facilities and equipment within the Premises, fixtures, interior walls, ceilings, decking, floors, windows, doors, plate glass and skylights located within the Premises, and signs (except Landlord's signs, if any) located on the Premises. Tenant shall enter into a preventative maintenance contract for the HVAC Systems on terms and with a provider reasonably acceptable to Landlord, which contract shall call for quarterly maintenance, inspection and repair of such HVAC Systems.

9.1.2    Tenant will not overload the electrical wiring serving the Premises or within the Premises, and will install at its expense, subject to the provisions of this Lease, any additional electrical wiring which may be required in connection with Tenant's apparatus.

9.1.3    Tenant will repair, at its expense, any damage to the Premises, or to the Property, arising out of Tenant's use or occupancy thereof, including damage caused by bringing into the Premises any property for Tenant's use or by the installation or removal of such property, all regardless of fault, or by whom such damage shall be caused, unless caused by Landlord, its agents, employees, or contractors.

9.1.4    If Tenant fails to perform Tenant's obligations under this Section 9.1, Landlord may enter upon the Premises after ten (10) days' prior written notice to Tenant (except in the event of an emergency, in which case no notice shall be required), perform such obligations on Tenant's behalf, and put the Premises in good order, condition and repair, and Tenant shall promptly pay to Landlord a sum equal to 115% of the cost thereof within ten (10) days of written demand by Landlord.

9.2    Conditions    Applicable    to    Repairs    and   Other    Work.    All repairs, replacements and reconstruction (including, without limitation, all Alterations) made by or on behalf of Tenant shall be made and performed: (a) at Tenant's cost and expense and at such time and in such manner as Landlord may reasonably designate, (b) by contractors or mechanics reasonably approved by Landlord, (c) at least equal in quality of materials and workmanship to the original work or installation, (d) in accordance with such reasonable requirements as 

Landlord may impose with respect to insurance to be obtained by Tenant in connection with the proposed work, (e) in accordance with all applicable laws and regulations of governmental authorities having jurisdiction over the Premises, and (f) if deemed reasonably appropriate by Landlord, Tenant shall provide Landlord with as built drawings of such Alterations.

9.3    Landlord's Obligations. Landlord shall  be  responsible  for  the performance of all repair, maintenance and replacement of all structural elements, roof  and exterior walls of the Building, except to the extent such is part of any Alterations.   The cost of: (a) all such repairs and maintenance pursuant to the first sentence of this Section 9.3 (the "Landlord Repairs") shall be reimbursed to Landlord as Operating Expenses  and (b) all replacements pursuant to the first sentence of this Section 9.3 shall be paid for by Landlord at its sole cost and expense, except as otherwise expressly set forth in Section 6.1.  Provided, however, if any such work, maintenance, repairs or replacements are required as a result of the negligence or misconduct of Tenant or any Tenant Parties, Tenant's failure to repair and maintain  the Premises or the misuse of the Premises or the Property by Tenant or the Tenant Parties (any of the foregoing, a "Tenant Necessitated Repair"), Tenant shall reimburse Landlord for  all reasonable costs paid or incurred by Landlord for such work upon demand as Additional Rent. Landlord shall also be responsible for the performance of landscaping and snow removal and repairs and maintenance of the exterior parking areas, sidewalks, truck courts and  HVAC Systems that are shared by more than one occupant of the Building provided that the cost of such activities shall be reimbursable as Operating Expense.

10.    Liens. Tenant shall keep the Premises and the  Property  free  from  any  liens arising out of any work performed or material furnished to or for the Premises by or for Tenant. If Tenant shall not, within thirty (30) days following notice of the imposition of any such lien, cause same to be released of record by payment or posting of a bond satisfactory to Landlord, Landlord, in addition to all other remedies provided under this Lease and by law, shall have the right (but not the obligation) to cause the lien to be released by such means as Landlord shall deem proper, including, without limitation, payment of the claim giving rise to such lien. All such sums reasonably paid by Landlord and all expenses incurred by it in connection therewith shall be considered Additional Rent and shall be payable by Tenant within ten (10) days after receipt of written demand. Tenant shall indemnify, defend and hold harmless Landlord and its agents, employees and contractors from and against any damages, losses or costs arising out of any such claim and from any liens or encumbrances arising from any work performed by Tenant or on behalf of Tenant in the Premises  or the Property. Tenant's indemnification of Landlord contained in this Paragraph shall survive the expiration or earlier termination of this Lease. All of the aforesaid rights of Landlord shall be in addition to any remedies which either Landlord or Tenant may have available to them at law or in equity. Notwithstanding  anything in this Lease to the contrary, Tenant is not authorized to act for or on behalf of Landlord as Landlord's agent or otherwise, for any purposes of constructing improvements, additions or alterations to the Premises.

11.    Subordination.

11.1    This Lease shall be subject and subordinate at all times to (a) all ground leases or underlying leases that may now exist or hereafter be executed affecting the Property or any portion thereof, (b) the lien of any mortgage, deed of trust or other security instrument that may now  exist or hereafter be executed in any amount for which the Property  or any portion thereof, any ground leases or underlying leases, or Landlord's interest or estate therein is specified as security, and (c) all modifications, renewals, supplements, consolidations and replacements thereof. If any ground lease or underlying lease terminates for any reason or any mortgage, deed of trust or other security instrument is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant, notwithstanding any subordination, shall  attorn to and become the tenant of the successor in interest to Landlord at the option of such successor in interest. The provisions of this Section shall be self operative and no further instrument shall be required to effect the provisions of this Section. Notwithstanding anything to the contrary contained herein, Landlord will, as a condition to the subordination of this Lease, provide Tenant with an executed subordination, non-disturbance and attornment agreement with  Landlord's lender, on customary terms.

11.2    If any mortgage  is foreclosed,  or Landlord's  interest  under  this  Lease is conveyed  or transferred  in lieu of foreclosure:  neither the mortgagee  nor any person  or entity acquiring title to the Property  as a result  of foreclosure or trustee's  sale, nor any successor or assign of either of the foregoing, shall be (i) liable 

for any default by Landlord, (ii) bound by or liable for any payment of Rent which may have been made more than thirty (30) days before the due date of such installment, (iii) subject to any defense or offset which Tenant may have to the payment of Rent or other performance under this Lease arising from any default by Landlord, or (iv) bound by any amendment or modification to this Lease made without the consent of such mortgagee if such mortgagee's consent thereto is required.

11.3    Within ten (10) days following request by Landlord, Tenant agrees to execute any documents reasonably required to effectuate the foregoing  subordination  or such other reasonable and  customary subordination, non-disturbance and attornment agreement submitted by Landlord to Tenant, which documents may contain such other terms as any mortgagee or prospective mortgagee may reasonably require, or to make this Lease prior to the lien of any mortgage, deed of trust or underlying lease, as the case may be.

11.4    Tenant agrees to simultaneously give to any party holding a mortgage encumbering the Building, by registered or certified mail, a copy of any notice of default served upon Landlord provided Tenant has been notified in writing of the names and addresses of such mortgagee(s) and such parties shall have the same cure rights as Landlord has under this Lease.

12.    Inability  to   Perform.    If, by reason of acts of God, governmental restrictions, strikes, labor disturbances, shortages of materials or supplies, actions or  inactions  of governmental authorities or any other cause or event beyond Landlord's or Tenant's reasonable control (collectively, "Force Majeure Events"), Landlord or Tenant is unable to furnish or is delayed in furnishing any utility or service required to be furnished by either party under the provisions of this Lease, or either party hereto is unable to perform or make or is delayed in performing or making any installations, decorations, repairs,  alterations,  additions  or improvements required to be performed or made under this  Lease, no  such inability  or delay shall impose any liability upon such non-performing party or provide the other party with any right to offset, deduction or abatement of Rent by reason of inconvenience or annoyance to such other party, or otherwise. The terms of this Section 12 shall not be applicable to or excuse any failing on the part of Tenant to satisfy Tenant's obligations to pay Rent or  other  required payments to Landlord.

13.    Destruction.

13.1    Repair. Subject to the provisions of Sections 13.2, 13.3 and 13.4 below, if any portion of the Building is damaged by fire, earthquake, flood or other casualty,  Landlord shall proceed immediately to make such repairs in accordance with Section 13.4.

13.2    Tenant's  Right  to  Terminate.    If such damage causes more than fifty percent (50%) of the Premises to be untenantable by Tenant and, in the reasonable estimate of an independent architect or contractor, such damage cannot be repaired within twelve (12) months after the date of the event causing such damage (under a normal construction schedule not requiring the payment of overtime or premium), Tenant may terminate this Lease by delivery of written notice to Landlord within thirty (30) days after the date on which such architect or contractor's estimate is delivered to Tenant by Landlord. Upon termination, Rent shall be apportioned as of the date of the damage and, provided Tenant is not in default, all prepaid Rent shall be repaid to Tenant.  Landlord agrees to provide Tenant with such estimate within thirty (30) days after Landlord has received written notice of such casualty.

13.3    Landlord's Right to Terminate. If (i) the cost to repair damage to or destruction of the Property exceeds fifty percent (50%) of replacement cost of the Building and other improvements on the Property for a casualty of the type covered by the insurance required to be carried  under Section 14.5, or (ii) the Premises or any other portion of the Property is damaged by a casualty not of the type covered by the insurance required to be carried under Section 14.5 and the amount by which the cost to repair such damage exceeds  available insurance proceeds, if any, is greater than fifteen percent (15%) of the then replacement cost of the Building and other improvements on the Property, or (iii) such damage cannot be repaired within twelve (12) months after the casualty (under a normal construction schedule not requiring the payment of overtime or premium), Landlord may terminate this Lease on twenty (20) days notice to Tenant by delivery of written notice to Tenant within forty-five (45) days after the date 

of the casualty. Upon termination, Rent shall be apportioned as of the date of the damage and all prepaid Rent shall be repaid to Tenant (less the amount necessary to cure any monetary default of Tenant under this Lease existing as of the date of termination).

13.4    Extent   of Repair   Obligations.   If this  Lease is not  terminated,  Landlord's repair obligation shall extend to the structure of the Building and all improvements  insured by Landlord in accordance with Section 14.5 below (except those  constructed  or  installed by Tenant, if any, completed after the date of this Lease, and the Tenant Owned  Property) in the Premises at the date possession of the Premises was delivered to Tenant, and Tenant shall repair all other portions of the Premises (including, without limitation, Alterations  and Tenant Owned Property). All such repairs shall be performed in a good and workmanlike  manner,  with  due diligence,   and   shall   restore   the   items   repaired   to   substantially   the   same  usefulness   and construction as existed immediately before the damage.  All work by Tenant shall be performed in accordance with the requirements of Section 9.2 above. In the event of any termination of this Lease, the  proceeds  from  any  insurance  paid  by  reason  of  damage  to or  destruction  of  the Property  or  any  portion  thereof,  or  any  other  element,  component  or  property  insured  by Landlord  (exclusive of proceeds  for damage to Tenant Owned Property), shall belong to and be paid to Landlord.

13.5    Adjustment  of Rent.    If a casualty renders all or part of the Premises untenantable, Rent shall proportionately abate commencing on the date of the casualty and ending when the Premises are delivered to Tenant with Landlord's restoration obligation substantially complete. The extent of the abatement shall be based upon the portion of the Premises rendered untenantable, inaccessible or unfit for use in a reasonable business manner for the purposes stated in this Lease.

13.6    Mutual Waiver of Subrogation. Notwithstanding anything to the contrary in this Lease, other than with respect to Tenant Necessitated Repairs, Landlord and Tenant mutually waive their respective rights of recovery against each other and each other's officers, directors, constituent partners, agents and employees, and Tenant waives such rights against each lessor under any ground or underlying lease and each lender under any mortgage or deed of trust or other lien encumbering the Property or any portion thereof or interest therein, to the extent any loss is or would be covered by fire, extended coverage, and other property insurance policies required to be carried under this Lease or otherwise carried by the waiving party, and the rights of the insurance carriers of such policy or policies to be subrogated to the rights of the insured under the applicable policy. Each party shall cause its insurance policy to be endorsed to evidence compliance with such waiver.

14.    Insurance.

14.1    Insurance   on   Tenant's   Property.    Tenant shall procure at its cost and expense and keep in effect during the Term insurance coverage for all risks of physical loss or damage insuring the full replacement value of Alterations, Tenant's trade fixtures, furnishings, equipment, plate glass, signs and all other items of Tenant Owned Property and other personal property of  Tenant. Landlord shall not be liable for any damage or damages of any nature whatsoever to persons or property caused by explosion, fire, theft or breakage, vandalism, falling plaster, by sprinkler, drainage or plumbing systems, or air conditioning equipment, by the interruption of any public utility or service, by steam, gas, electricity, water, rain or other substances leaking, issuing or flowing into any part of the Premises, by natural occurrence, acts of the public enemy, riot, strike, insurrection, war, court order, requisition or order  of governmental  body  or  authority,  or  by  anything  done  or  omitted  to  be  done  by  any  tenant, occupant or person in the Building, it being agreed that Tenant shall be responsible for obtaining appropriate insurance to protect its interests.

14.2    Tenant's  Liability  Insurance.   Tenant  shall procure at its cost and expense and maintain throughout the  Term  comprehensive  commercial  general  liability   insurance applicable  to the Premises  with  a minimum  combined  single limit  of liability of Two Million Dollars   ($2,000,000),   statutory  worker's   compensation   insurance,   and   employer's  liability insurance  with  a  One  Million  

Dollar  ($1,000,000)  minimum  limit  covering all of Tenant's employees. Such liability insurance shall include, without limitation,  products and completed operations liability insurance,  fire  and  legal  liability  insurance,  and  such  other  coverage  as Landlord may reasonably require from time to time.  At Landlord's request Tenant shall increase such insurance coverage to a level that is commercially reasonably required by Landlord.

14.3    Form   of   Policies.    Tenant's insurance shall be issued by companies authorized to do business in the State of Nevada. Tenant shall have  the  right  to  provide insurance coverage pursuant to blanket policies obtained by Tenant if the blanket policies expressly afford coverage required by this Section 14. All insurance  policies required  to be carried by Tenant under this Lease (except for worker's compensation insurance) shall (i) name Landlord, and any other reasonable number of parties designated by Landlord as additional insureds, (ii) as to liability coverages, be written on an "occurrence" basis, (iii) provide that Landlord shall receive thirty (30) days notice from the insurer before any cancellation or change in coverage, and (iv) contain a provision that no act or omission of Tenant shall affect or limit the obligation of the insurer to pay the amount of any loss sustained. Each such policy shall contain a provision that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Landlord.  Tenant  shall  deliver reasonably satisfactory evidence of such insurance to Landlord on or before the date Tenant first enters or occupies the Premises, and thereafter at least thirty (30) days before the expiration dates of expiring policies. Notwithstanding the foregoing, if  any  such  insurance  expires  without having been renewed by Tenant, Landlord shall have the option, in addition to Landlord's other remedies to procure such insurance for the account of Tenant immediately and without notice to Tenant, and the cost thereof shall be paid to Landlord as Additional Rent. The limits of the insurance required under this Lease shall not limit liability of Tenant.

14.4    Compliance  with  Insurance  Requirements.   Tenant shall not do anything, or suffer or permit anything to be done, in or about the Premises that  shall invalidate  or be in conflict with the provisions of any fire or other insurance policies covering the Building.  Tenant, at Tenant's expense, shall comply with, and shall cause all occupants of the Premises to comply with, all  applicable  customary  rules,  orders,  regulations  or requirements  of  any board  of  fire underwriters or other similar body.

14.5    Landlord's  Insurance.    Landlord will purchase and maintain a standard policy of "all risk" insurance with customary exclusions covering the Building in the full replacement cost of the Building, together with rent loss insurance and windstorm coverage (on a full replacement cost basis). Landlord will purchase and maintain broad form commercial general liability insurance with a minimum combined single limit of liability of at least Two Million Dollars ($2,000,000), written by companies authorized to do business in the State of Nevada.  All costs of insurance carried by Landlord and referred to in this Section or otherwise will constitute Operating Expenses.

15.    Eminent Domain.

15.1    Effect  of  Taking.    If all of the Premises is condemned or taken in any permanent manner before or during the Term for any public or quasi-public use, or any permanent transfer of the Premises is made in avoidance of an exercise of the power of eminent domain (each of which events shall be referred to as a "taking"), this Lease shall automatically terminate as of the date of the vesting of title as a result of such taking. If a part of the Premises is so taken, this Lease shall automatically terminate as to the portion of the Premises so taken as of the date of the vesting of title as a result of such taking. If such portion of the Property is taken as to render the balance of the Premises unusable by Tenant for the Permitted Use, as reasonably determined by Tenant and Landlord, this Lease may be terminated by Landlord or Tenant, as of the date of the vesting of title as a result of such taking, by written notice to the other party given within sixty (60) days following notice to Landlord of the date on which said vesting 

will occur. If this Lease is not terminated as a result of any taking, Landlord shall restore the Building to an architecturally whole unit; provided, however, that Landlord shall not be obligated to expend on such restoration more than the amount of condemnation proceeds actually received by Landlord.

15.2    Award.    Landlord shall be entitled to the entire award for any taking, including, without limitation, any award made for the value of the leasehold estate created by this Lease. No  award for any partial or entire taking shall be apportioned, and Tenant hereby assigns to Landlord any award that may be made in any taking, together with any and all rights of Tenant now or hereafter arising in or to such award or any part thereof; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any separate award made to Tenant for its relocation expenses, the taking of personal property and fixtures belonging to Tenant, the unamortized value of improvements made or paid for by Tenant or the interruption of or damage to Tenant's business.

15.3    Adjustment  of Rent.  In the event of a partial taking that does not result in a termination of this  Lease as to the entire Premises, Base Rent and Additional Rent shall be equitably adjusted in relation to the portions of the Premises and Building taken or rendered unusable by such taking.

15.4    Temporary   Taking.    If all or any portion of the Premises is taken for a limited period of time before or during the Term, this Lease shall remain in full force and effect; provided, however, that Rent shall abate during such limited period in proportion to the portion of the Premises taken by such taking. Landlord shall be entitled to receive the entire award made in connection with any such temporary taking; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any separate award made to Tenant for its relocation expenses, the taking of personal property and fixtures belonging to Tenant, the unamortized value of improvements made or paid for by Tenant or the interruption of or damage to Tenant's business.  Any temporary taking of all or a portion of the Premises which continues for six (6) months  shall be deemed a permanent taking of the Premises or such portion.
16.    Assignment;   Subleasing.

16.1    Consent   Required.    Neither Tenant nor any sublessee or assignee of Tenant, directly or indirectly, voluntarily or by operation of law, shall sell, assign, encumber, mortgage, pledge or otherwise transfer or hypothecate all or any part of the Premises or Tenant's leasehold estate hereunder (each such act is referred to as an "Assignment" ), or  sublet  the Premises or any portion thereof or permit the Premises to be occupied by anyone other than Tenant (each such act is referred to as a "Sublease"), without Landlord's prior written consent in each instance, which consent will not be unreasonably withheld, conditioned or delayed; provided, however, that Landlord may withhold consent to an encumbrance, mortgage or pledge of Tenant's leasehold estate hereunder in its sole discretion. Any Assignment or Sublease that is not in compliance with this Section 16 shall be void. At the option of Landlord, any Assignment that is not in compliance with this Section 16 shall constitute a material default by Tenant under this Lease. The acceptance of Rent by Landlord from a proposed  assignee,  sublessee  or occupant of the Premises shall not constitute consent to such Assignment or Sublease by Landlord. Fifty percent (50%) of the Excess Assignment Consideration which is attributable to this Lease in connection with any Assignment, and fifty percent (50%) of the Excess Sublease Rent, shall be payable to Landlord as Additional Rent, except that the terms of this sentence shall not apply to any assignment or sublease that is permitted by Section 16.5 below without Landlord's consent. The right to such amounts is expressly reserved from the grant of Tenant's leasehold estate for the benefit of Landlord.

16.2    Notice. Any request by Tenant for Landlord's consent to a specific Assignment or Sublease shall include (a) the name of the proposed assignee, sublessee or occupant, (b) the nature of the 

proposed assignee's sublessee's or  occupant's  business  to  be carried on in the Premises, (c) a copy of the proposed Assignment or Sublease, and (d) such financial information (in the event of an Assignment) and such other information as Landlord may reasonably request concerning the proposed assignee, sublessee or occupant or its business. Landlord shall respond in writing, stating the reasons for  any disapproval, within fifteen (15) business days after receipt of all information reasonably necessary to evaluate the proposed Assignment or Sublease.

16.3    No Release. No consent by Landlord to any Assignment or Sublease by Tenant, and no specification in this Lease of a right of Tenant to make any Assignment or Sublease, shall relieve Tenant of  any obligation to be performed by Tenant under this Lease, whether arising before or after (a) the Assignment or Sublease or (b) any extension of the Term (pursuant to exercise of an option granted in this Lease). The consent by Landlord to any Assignment or Sublease shall not relieve Tenant or any successor of Tenant from the obligation to obtain Landlord's express written consent to any other Assignment or Sublease.

16.4    Cost  of Processing  Request.   Tenant  shall pay to Landlord the reasonable amount of Landlord's cost of processing every proposed Assignment or Sublease,  including without limitation reasonable legal review fees and expenses, together with the  reasonable amount  of  all  direct  and  indirect  expenses  incurred  by  Landlord  arising  from  any assignee, occupant or sublessee taking occupancy (including, without limitation, security service, janitorial and cleaning service, and rubbish removal service) up to an amount not to exceed $2,500 in any one instance.
16.5    Corporate   or   Partnership    Transfers.    Notwithstanding the foregoing, provided that (i) Tenant is not in default under this Lease, and (ii) no such transaction is undertaken with the intent of circumventing Tenant's liability  under this  Lease,  Tenant  may assign this Lease to any affiliate or subsidiary of Tenant or in connection with a merger or other consolidation of Tenant and may sublease all or some portion of the Premises to an affiliate or subsidiary of Tenant without Landlord's consent provided: (a) Tenant shall remain liable hereunder; (b) Tenant provides reasonable prior written notice to Landlord of such Assignment or Sublease; (c) after such transaction is effected, the tangible net worth (excluding goodwill) of the tenant under this Lease is equal to or greater than the tangible net worth of Tenant as of the date of this Lease; and (d) Landlord shall have received  an executed copy of all documentation effecting such transfer on or before its effective date.

16.6    Assumption of Obligations. Each assignee or other transferee of Tenant's interest under this Lease, other than Landlord, shall assume all obligations of Tenant under this Lease and shall be and remain liable jointly and severally with Tenant for the payment of Base Rent and Additional Rent, and for the performance of all the terms, covenants, conditions and agreements contained in this Lease which are to be perfonned by Tenant.  Each sublessee of all or any portion of the Premises shall agree in writing for the benefit of Landlord (a) to comply with and agree to the provisions of this Lease, and (b) that such sublease  (and  all  further subleases of any portion of the Premises) shall terminate upon any termination of this Lease, regardless of whether or not such termination is voluntary. No Assignment or Sublease shall be valid or effective unless the assignee or sublessee or Tenant shall deliver to Landlord a fully­ executed counterpart of the Assignment or Sublease and an instrument that contains a covenant of assumption by the assignee or agreement of the sublessee, reasonably satisfactory in substance and form to Landlord, consistent with the requirements of this Section 16.6. The failure or refusal of the assignee to execute such instrument of assumption or of the sublessee to execute the agreement described above shall not release or discharge the assignee or sublessee from its obligations that would have been contained in such instrument or agreement, all of which obligations shall run automatically to such assignee or sublessee.

16.7    Invalid  Assignment  and  Subleases.    Notwithstanding anything  to the contrary contained in this Section 16, in no event may Tenant enter into an Assignment or Sublease if, at the time of such Assignment or Sublease, Tenant is in default under this Lease.

17.    Utilities  and Services.

17.l    Utilities.    Tenant shall pay to Landlord, as Additional Rent, Tenant's Proportionate Share of all electric, gas, water and sewer utilities  consumed at the Property that are not separately metered. Tenant shall pay directly to the providing  utility  companies  all utilities that are separately metered to the Premises.

17.2    Certain   Services.    Tenant shall contract separately for the provision, at Tenant's sole cost, of janitorial service and trash removal for the Premises and Landlord  will have no obligation to provide any such services to the Premises.

17.3    Involuntary   Cessation   of   Services.   Landlord  reserves  the  right,  without any liability to Tenant and without affecting Tenant's covenants and obligations  hereunder,  to stop service of any or all of the HVAC Systems, electric, sanitary, and other systems serving the Premises, or to stop any other services required by Landlord under this Lease, whenever and for so long as may be necessary by reason of (i) accidents, emergencies, strikes, or the making of repairs or changes which Landlord, in good faith, deems necessary or (ii) any other cause beyond Landlord's reasonable control. No such interruption of service shall be deemed an eviction or disturbance of Tenant's use and possession of the Premises or any part thereof, or  render Landlord liable to Tenant for damages, or relieve Tenant from performance of Tenant's obligations under this Lease, including, but not limited to, the obligation to pay Rent; provided, however, that if any interruption of services persists for a period in excess of two (2) consecutive business days Tenant shall, as Tenant's sole remedy, be entitled to a proportionate abatement of Rent to the extent, if any, of any actual loss of use of the Premises by Tenant.

18.    Default.

18.1    Events  of Default  by Tenant.  Except as otherwise provided in this Lease, the failure to perform  or honor  any covenant,  condition  or other obligation  of Tenant  or the failure  of  any representation  made by  Tenant  under  this  Lease  shall  constitute  a  default by Tenant upon expiration of the applicable grace period, if any. Tenant shall have a period of five (5) days from the date it receives written notice from Landlord that any payment of Rent is due within which to cure any default in the payment of Rent. Except as otherwise provided in Section 19, Tenant shall have a period of thirty (30) days from the date of written notice from Landlord within which to cure any other default under this Lease; provided, however, that with respect to any default (other than a default which can be cured by the payment of money) that cannot reasonably be cured within thirty (30) days, the default shall not be deemed to be uncured if Tenant commences to cure within thirty (30) days from Landlord's notice, continues to prosecute diligently the curing of such default and actually cures such default within ninety (90) days after Landlord's notice. Notwithstanding anything contained in this Section 18.1, Landlord shall not be obligated to provide Tenant with notice of substantially similar defaults more than two (2) times in any twelve (12) month period.

18.2    Remedies. Upon the occurrence of a default by Tenant that is not cured by Tenant within the applicable grace periods specified in Section 18.1, Landlord shall have all of the following rights and remedies in addition to all other rights and remedies available to Landlord at law or in equity:

18.2.1 The right to terminate Tenant's right to possession of the Premises and to recover (i) all Rent which shall have accrued and remain unpaid through the date of termination; plus (ii) the amount by which the unpaid Rent for the balance of the Term, discounted to present value at the Prime Rate then in effect, shall exceed the then fair rental value of the Premises for the balance of the Term (assuming reasonable allowance for downtime and free rent prior to the commencement of such fair market rent), similarly discounted, plus (iii) 

any other amount  necessary to compensate Landlord for all the damages caused by Tenant's failure to perform its obligations under this Lease (including, without limitation, reasonable attorneys' and accountants' fees, costs of alterations of the Premises, interest costs and brokers' fees incurred upon any reletting of the Premises).

18.2.2    The right to continue the Lease in effect after Tenant's breach and recover Rent as it becomes due. Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a receiver upon Landlord's initiative to protect its interest under this Lease shall not of themselves constitute a termination of Tenant's right to possession.

18.2.3    The right and power to enter the Premises and remove therefrom all persons and property, to store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant, and to sell such property and apply the proceeds therefrom pursuant to applicable law. In such event, Landlord may from time to time sublet the Premises or any part thereof for such term or terms (which may extend beyond the Term) and at such rent and such other terms as Landlord in its sole discretion may deem advisable, with the right to make alterations and repairs (in character substantially similar to those commonly made in warehouse and  distribution facilities  in the Reno area) to the Premises. Upon each such subletting, rents received from such subletting shall be applied by Landlord, first, to payment of any costs of such subletting (including, without limitation, reasonable attorneys' and accountants' fees, costs of alterations of the Premises, interest costs, and brokers' fees) and of any such alterations and repairs; second, to payment of Base Rent and Additional Rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in payment of future Base Rent and Additional Rent as they become due. If any rental or other charges due under such sublease shall not be promptly paid to Landlord by the sublessees, or if such rentals received from such subletting during any month are less than Base Rent and Additional Rent to be paid during that month by Tenant, Tenant shall pay any such deficiency to Landlord the costs of such subletting (including, without limitation, attorneys' and accountants' fees, costs of alterations of the Premises, interest costs and brokers' fees), and any other amounts due Landlord under this Section 18.2. Such deficiency shall be calculated and paid monthly. No taking possession of the Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a written notice of such intention is given to Tenant. Landlord's subletting the Premises without termination shall not constitute a waiver of Landlord's right to elect to terminate this Lease for such previous breach.

18.2.4    The right to have a receiver appointed for Tenant, upon application by Landlord, to take possession of the Premises, to apply any rental collected from the Premises and to exercise all other rights and remedies granted to Landlord pursuant to this Section.

18.2.5    The right to specific performance of any or all of Tenant's obligations under this Lease, and to damages for delay in or failure of such performance.

18.2.6    Landlord shall use reasonable efforts to mitigate damages resulting from a default by Tenant, as required by applicable law.

18.3    Remedies  Cumulative.    The exercise of any remedy provided by law or the provisions of this Lease shall not exclude any other remedies unless they are expressly excluded by this Lease. Tenant hereby waives any right of redemption or relief from forfeiture following termination of, or exercise of any remedy by Landlord with respect to, this Lease.

18.4    Events of Default by Landlord and Tenant's Remedies.    The failure by Landlord to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Landlord, where such failure shall continue for a period of thirty (30) days after written notice thereof 

by Tenant to Landlord, shall be deemed to be a default by Landlord under this Lease; provided, however, that if the nature of Landlord's default is such that more than thirty (30) days are reasonably required  for its cure, then Landlord shall not be deemed to be in default if Landlord commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. In the event of a default by Landlord beyond applicable cure periods, Tenant shall have the right, at its election, to:  (a)  sue  for damages directly resulting from such default by Landlord; or (b) perform the obligations described in the notice in which case Landlord shall reimburse Tenant for the reasonable cost of the performance of such obligations within thirty (30) days after Tenant's submission of  an invoice therefor. If Tenant elects to proceed under clause (b) above, then the Landlord's default shall be deemed to have been cured when Tenant's expense has been reimbursed in full. In the event Tenant commences a suit for  damages sustained by reason of  a Landlord default and prevails in such suit and obtains a final, non-appealable judgment with respect to such  suit, Tenant may then set-off the amount of such judgment against the amounts due to Landlord under this Lease.  Tenant shall have no other right to set-off.

18.5    Limitation of Landlord's Liability. None of Landlord's covenants, undertakings or agreements under this Lease is made or intended as personal covenants, undertakings or agreements by Landlord, or by any of Landlord's shareholders, directors, officers, trustees or constituent partners. All liability for damage or breach or nonperformance by Landlord shall be collectible only out of Landlord's interest from time to time in the Property, and no personal liability is assumed by nor at any time may be asserted against Landlord or any of Landlord's shareholders, directors, officers, trustees or  constituent  partners;  provided, however, that notwithstanding anything to the contrary set forth herein, in no event shall Landlord be liable for punitive, consequential, special, incidental or indirect damages.

18.6    Transfer   of  Landlord's   Interest.    Upon the sale or other conveyance or transfer of Landlord's interest in the Property, the transferor shall be relieved of all covenants and obligations of Landlord arising under this Lease from and after the closing of such sale, conveyance or transfer, provided the transferee assumes the obligations of Landlord under this Lease from and after the date of transfer.

19.    Insolvency   or  Bankruptcy.    The occurrence of any of the following shall, at Landlord's option, constitute a breach of this Lease by Tenant: (i) the appointment of a receiver to take possession of all or substantially all of the assets of Tenant or the Premises, (ii) an assignment by Tenant for the benefit of creditors, (iii) any action taken or suffered by Tenant under any insolvency, bankruptcy, reorganization, moratorium or other debtor relief act  or statute, whether now existing or hereafter amended or enacted, (iv) the filing of any voluntary petition in bankruptcy by Tenant, or the filing of any involuntary petition by Tenant's creditors, which involuntary petition remains undischarged for a period of ninety (90) days, (v) the attachment, execution or other judicial seizure of all or substantially all of Tenant's assets or the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of sixty (60) days after the levy thereof, (vi) the admission of Tenant in writing of its inability to pay its debts as they become due, (vii) the filing by Tenant of any answer admitting or failing timely to contest a material allegation of a petition filed against Tenant in  any proceeding seeking reorganization,  arrangement,  composition,  readjustment,  liquidation  or  dissolution  of Tenant or similar relief, (viii) if within sixty (60) days after the commencement of any proceeding against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed, or (ix) the occurrence of any of the foregoing with respect to any guarantor of Tenant's obligations under this Lease. Upon the occurrence of any such event or at any time thereafter, Landlord may elect to exercise any of its remedies under Section 18 above or any other remedy available at law or in equity. In no event shall this Lease be assigned or assignable by operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise, and in no event shall this Lease or any rights or privileges under this Lease be an asset of Tenant under any bankruptcy, insolvency or reorganization proceedings. If, upon the occurrence of any of the events enumerated above, under applicable law Tenant or the trustee in bankruptcy has the right to affirm this Lease and continue to perform the obligations of Tenant under this Lease, Tenant or such trustee, in such time period as may be permitted by the bankruptcy court having jurisdiction, shall cure all defaults of Tenant outstanding under  this Lease as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant's obligations under this Lease. Notwithstanding the provisions of Section 18.1, there shall be no cure periods for any breach or default under this 

Section 19 except as expressly provided in this Section 19.

20.    Fees and Expenses; Indemnity;  Payment.

20.l    Landlord's   Right   to   Remedy   Defaults.    If Tenant shall default in the performance of any of its obligations under this Lease after notice and expiration of the applicable cure period, Landlord, at any  time thereafter and without additional notice, may remedy such default for Tenant's account and at Tenant's reasonable expense, without waiving any other rights or remedies of Landlord with respect to such default. Notwithstanding the foregoing, Landlord shall have the right to cure any failure by Tenant to perform any of its obligations under this Lease without notice to Tenant if such failure results in an immediate threat to life or safety of any person. Notwithstanding anything contained  in  this  Lease, Landlord shall not be liable for, and there shall be no abatement of Rent with respect to, any injury to or interference with Tenant's business arising from the  exercise by  Landlord  of its rights under this Section 20.1, provided, however, Landlord will use reasonable care in exercising its rights under this section.

20.2    Indemnity.    Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims, losses, costs, liabilities, damages and expenses including, without limitation, penalties, fines and reasonable attorneys' fees, to the extent incurred in connection with or arising from the use or occupancy or manner of use or occupancy of the Premises or any injury or damage caused by Tenant, Tenant Parties or any person occupying the Premises through Tenant. Landlord will use reasonable efforts to coordinate a  mutually agreeable time with Tenant for any such entry on the Premises.  Landlord  shall  indemnify, defend and hold Tenant harmless from and against any and all claims, losses, costs, liabilities, damages and expenses including, without limitation, penalties, fines and reasonable attorneys' fees, to the extent incurred in connection with or arising from (a) any injury or damage caused by any negligent or willful acts of any or all of Landlord; (b) the presence of Hazardous Substances introduced in, on, under or about the Premises as a result of the actions of Landlord or its agents, employees, representatives or contractors; or (c) a default by Landlord under this Lease. Nothing contained in this Section 20.2 shall be deemed to exculpate Landlord from, or indemnify Landlord for, Landlord's negligent or willful acts or omissions. The terms of this Section 20.2 shall survive the expiration or sooner termination of this Lease.

20.3    Interest  on Past  Due  Obligations.   Unless otherwise specifically provided herein, any amount due from Tenant to Landlord under this Lease which is not paid  within ten (10) days after written notice from Landlord shall bear interest from the due date until paid at the Default Rate.

21.    Access  to  Premises.    Landlord reserves for itself and its agents, employees and independent contractors the  right to enter the Premises upon at least  twenty-four  (24) hours notice to inspect the Premises, to supply any service to be provided by Landlord to Tenant, to prospective purchasers, mortgagees, beneficiaries or (no earlier than twelve (12) months prior to the expiration of this Lease) tenants, to post notices of nonresponsibility, to determine whether Tenant is complying with its obligations under this Lease, and to alter, improve or repair  the Premises or any other portion of the Building. Landlord's right  to  enter  the  Premises  shall include the right to grant reasonable access to the Premises to governmental or utility employees. Landlord may erect, use and maintain scaffolding, pipes, conduits and other necessary structures in and through the Premises or any other portion of the Building where reasonably required by the character of the work to be performed in making repairs or improvements, provided that the entrance to the Premises shall not be blocked or access interfered with thereby, and that there is no unreasonable interference with the business of Tenant. In the event  of  an  emergency, Landlord shall have the right to enter the Premises at any time on oral notice. Except to the extent caused by Landlord's gross negligence or willful misconduct, Tenant waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, any right to abatement of Rent, or any other loss occasioned by Landlord's exercise of any of its rights under this Section 21. Any entry to the Premises or portions thereof obtained by Landlord in accordance with this Section 21 shall not be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portion thereof. Landlord shall perform any work pursuant to this Section 21 in a manner designed to cause as little interference with Tenant's use of the Premises as is reasonably practical, provided, however, that Landlord and Tenant shall cooperate as to the timing and staging of any such work.  To the extent reasonably practicable, any entry shall occur during normal business hours.

22.    Notices.    Except as otherwise expressly provided in this Lease, any payment required to be made and any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by personal delivery, registered or certified mail, return  receipt requested, or by overnight courier service, addressed (a) to Tenant at Tenant's Address, (b) to Landlord at Landlord's Address, or (c) to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Section 22. Any such bill, statement, notice, demand, request or other communication  shall be deemed to have been rendered or given on the date of receipt or refusal to accept delivery.

23.    No Waiver.     Neither this Lease nor any term or provision of this Lease may be waived, and no breach thereof shall be waived, except by a written instrument signed by the party against which the enforcement of the waiver is sought. No failure by Landlord or Tenant to insist upon the strict performance of any obligation of the other party under this Lease or to exercise any right, power or remedy consequent upon a breach thereof, no acceptance of full or partial Base Rent or Additional Rent during the continuance of any such breach, no course of conduct between Landlord and Tenant, and no acceptance of the keys or to possession of the Premises before the termination of the Term by Landlord or any employee of Landlord shall constitute a waiver of any such breach or a waiver or modification of any term, covenant or condition of this Lease or operate as a surrender of this Lease. No waiver of any breach shall affect or alter this Lease, but each and every term, covenant and condition of this Lease shall continue in full force and effect with respect to any other then-existing or subsequent breach thereof. No payment by Tenant or receipt by Landlord of a lesser amount than the aggregate of all Base Rent and Additional Rent then due under this Lease shall be deemed to be other than on account of the first items of such Base Rent and Additional Rent then accruing or becoming due, unless Landlord elects otherwise. No endorsement or statement on  any check and no letter accompanying any check or other payment of Base Rent or Additional Rent in any such lesser amount and no acceptance by Landlord of any such check or other payment shall constitute an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Base Rent or Additional Rent or to pursue any other legal remedy.

24.    Estoppel  Certificates.   Either party, at any time and from time to time, within ten (10) business days after written request from the other, shall execute, acknowledge and deliver to the other party, addressed to the other party and any prospective purchaser, ground or underlying lessor or mortgagee or beneficiary of any part of the Property, an estoppel certificate in form and substance reasonably designated by the other party.  It is intended that any such certificate may be relied upon by the party receiving the same and any prospective purchaser, investor, ground or underlying lessor or mortgagee or deed of trust beneficiary of all or any part of the Property.

25.    Rules  and  Regulations.    Tenant shall faithfully observe and comply with and cause all of its employees and invitees to observe and comply with all reasonable rules and regulations which may from time to time be put into effect by Landlord. In the event of any conflict between any such rule or regulation and this Lease, this Lease shall govern.

26.    Tenant's   Taxes.    In addition to all other sums to be paid by Tenant under this Lease, Tenant shall pay, before delinquency, any and all taxes  levied or assessed during the Term, whether or not now customary or within the contemplation of the parties, (a)  upon, measured by or reasonably attributable to Tenant's improvements, equipment, furniture, fixtures and other personal property located in the Premises, (b) upon or measured by Base Rent or Additional Rent, or both, payable under this Lease, including without limitation any sales, gross receipts or excise tax levied upon or measured by Base Rent or Additional Rent by any governmental body having jurisdiction with respect to the receipt of such rental; (c) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (d) upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.   Tenant  shall reimburse  Landlord  upon  demand  for any and all such taxes paid  or payable by Landlord (other than state and federal personal or corporate income taxes measured by the net income of Landlord from all sources). Notwithstanding anything to the contrary in this Section 26, Tenant shall have the right to contest any taxes payable by Tenant under this Section provided that Tenant, at its sole cost and expense, 

diligently undertakes and pursues any such contest in appropriate proceedings, indemnifies Landlord against and holds Landlord harmless from all loss or damages that Landlord shall suffer by reason of such contest, and does not permit any lien to be placed on the Building or any part thereof or interest therein.

27.    Miscellaneous.

27.1    Annual  Financial  Statements.   Within ten (10) days following the request of Landlord,  at any time during the Term that Tenant is not a "publicly traded  company" (i.e., ownership interests are  listed on  a public  securities  exchange),  then  Tenant  shall  furnish  to Landlord  financial  statements,  in  form  and  substance  satisfactory  to  Landlord, showing the complete results of such entity's operations for its immediately preceding fiscal year, certified as true and correct by a certified public accountant (or  the  officer  of  Tenant  with  primary responsibility as to financial matters if Tenant's financial statements are not audited or reviewed by a certified public accountant) and prepared in accordance with generally accepted accounting principles applied on a consistent basis from year to year.

27.2    References. All personal pronouns used in this Lease, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. The use herein of the word "including" or "include" when following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters  set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as "without limitation", or "but not limited to," or words of similar import) is used with reference thereto. All references to "mortgage" and "mortgagee" shall include deeds of trust and beneficiaries under deeds of trust, respectively. All Exhibits referenced and attached to this Lease are incorporated in this Lease by this reference. The captions preceding the Sections of this Lease have been inserted solely as a matter of convenience, and such captions in no way define or limit the scope or intent of any provision of this Lease.

27.3    Successors and Assigns.  The terms, covenants and conditions  contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and, except as otherwise provided herein, their respective personal representatives and successors and assigns;  provided, however, that upon the sale, assignment or transfer by Landlord (or by any subsequent Landlord) of its interest in the Building as owner or lessee, including, without limitation, any transfer upon or in lieu of foreclosure or by operation of law, Landlord (or subsequent  Landlord) shall be relieved from all subsequent obligations or liabilities under this Lease,  and all obligations subsequent to such sale, assignment or transfer (but not any obligations or  liabilities that have accrued prior to the date of such sale, assignment or transfer) shall be binding upon the grantee, assignee or other transferee of such interest. Any such grantee,  assignee or transferee, by accepting such interest, shall be deemed to have assumed such  subsequent obligations and liabilities.

27.4    Severability. If any provision of this Lease or the application thereof  to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall remain in effect and shall be enforceable to the full extent permitted by law.

27.5    Construction.    This Lease shall be governed by and construed in accordance with the laws of the State in which the Building is located, without regard for such State's choice of law requirements.

27.6    Integration. The terms of this Lease (including, without limitation, the Exhibits to this Lease) are intended by the parties as a final expression of their agreement with respect to such terms as are included in this Lease and may not be contradicted by evidence of any prior or contemporaneous agreement, arrangement,  understanding  or negotiation  (whether oral or written). The parties further intend that this Lease constitutes the complete and exclusive statement of its terms, and no extrinsic evidence whatsoever may be introduced in any judicial proceeding involving this Lease. Neither Landlord nor Landlord's agents have made any representations or  warranties with respect to  the Premises, the Building, the Property  or this Lease except as expressly set forth 

herein. The language in all parts of this Lease shall in all cases be construed as a whole and in accordance with its fair meaning and not construed for or against any party by reason of such party having drafted such language.

27.7    Surrender. Upon the expiration or sooner termination of the Term, Tenant will quietly and peacefully surrender to Landlord the Premises in the condition in which they are required to be kept as provided in this Lease, ordinary wear and tear excepted.

27.8    Quiet Enjoyment. Upon Tenant paying the Base Rent and Additional Rent and performing all of Tenant's obligations under this Lease, Tenant may peacefully and quietly enjoy the Premises during the Term as against all persons or entities claiming by, through or under Landlord subject, however, to the provisions of this Lease and to the priority of any mortgages or deeds of trust or ground or underlying leases referred to in Section 11.

27.9    Holding Over. If Tenant shall hold over after the expiration of the Term, Tenant shall pay one hundred fifty percent (150%) of the Base Rent payable during the final full month of the Term (exclusive of abatements, if any), together, in either period, with an amount reasonably estimated by Landlord for the monthly Additional Rent payable under this Lease, and shall otherwise be on the terms and conditions herein specified so far as applicable (but expressly excluding all renewal or extension rights). No holding over by  Tenant  after  the Term  shall operate to extend the Term. Any holding over with Landlord's written  consent  shall  be construed as a tenancy at sufferance or from month to month, at Landlord's option. Any holding over without Landlord's written consent shall entitle Landlord to reenter the  Premises  as provided in Section 18, and to enforce all other rights and remedies provided by law or this Lease. 

27.10    Time of Essence.  Time is of the essence of each and every provision of this Lease.

27.11    Broker's    Commissions.    Each party represents and warrants to the other that it has not entered into any agreement or incurred or created any obligation which might require the other party to pay any broker's commission, finder's fee or other commission or fee relating to the leasing of the Premises. Each party shall indemnify, defend and hold harmless the other and the other's constituent partners and their respective officers, directors, shareholders, agents and employees from and against all claims for any such commissions or fees made by anyone claiming by or through the indemnifying party.

27.12    No Merger. The voluntary or other surrender or termination of this Lease by Tenant, or a mutual cancellation hereof shall not work a merger,  but,  at  Landlord's  sole option, shall either terminate all existing subleases or subtenancies or shall operate as an assignment to Landlord of all such subleases or subtenancies.

27.13    Survival.    All of Tenant's and Landlord's covenants and obligations contained in this Lease which by their nature might not be fully performed or capable of performance before the expiration or earlier termination of this Lease shall survive such expiration or earlier termination. No provision of this Lease providing for termination in certain events shall be construed as a limitation or restriction of Landlord's or Tenant's  rights  and remedies at law or in equity available upon a breach by the other party of this Lease.

27.14    Amendments.    No amendments or modifications of this Lease or any agreements in connection therewith shall be valid unless in writing duly executed by  both Landlord and Tenant. No amendment to this Lease shall be binding on any mortgagee or deed of trust beneficiary of Landlord (or purchaser at any foreclosure sale) unless such mortgagee or beneficiary shall have consented in writing to such amendment.

27.15    Consent Expenses. Tenant shall reimburse Landlord for, any and all actual, reasonable out-of-pocket costs or expenses paid or incurred by Landlord, including, without limitation, reasonable attorneys' fees, in connection with any of the following activities undertaken by or on behalf of Landlord under this Lease: (i) any inspections performed by Landlord pursuant to any inspection rights granted hereunder; (ii) subject to the limitation set forth in Section 16.4, the review, execution, negotiation or delivery of any consent, waiver, estoppel, subordination agreement or approval requested of Landlord by Tenant hereunder, including, without limitation, any request for consent to Alterations, any so-called "landlord's waiver'', or the negotiation or approval of the terms 

of, or any instruments associated with, any financing by Tenant; (iii) the review by Landlord of any request by Tenant for any other approval or consent hereunder, or any waiver of any obligation of Tenant hereunder; and (iv) any other negotiation, request or other activity comparable to any of the foregoing (collectively, such expenses, "Consent Expenses"). Tenant shall reimburse Landlord for any Consent Expenses within ten (10) days after the presentation by Landlord to Tenant of invoices therefor.

27.16    WAIVER    OF    JURY    TRIAL.    LANDLORD    AND TENANT KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL  BY  JURY  IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY AGAINST THE OTHER IN ANY MATTER ARISING OUT OF THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES OR ANY CLAIM OF INJURY OR DAMAGE.

27.17   DELIVERY  FOR  EXAMINATION.    DELIVERY OF THE LEASE TO EITHER PARTY SHALL NOT BIND ANY PARTY  IN ANY MANNER, AND NO LEASE OR OBLIGATIONS OF LANDLORD OR TENANT SHALL ARISE UNTIL THIS INSTRUMENT IS SIGNED BY BOTH LANDLORD AND TENANT AND DELIVERY IS MADE TO EACH PARTY.

[Signature Page to Follow]

IN WITNESS WHEREOF, Landlord and Tenant have each caused their duly authorized representatives to execute this Lease on their behalf as of the date first above written.

LANDLORD

___                    
a(n)___                    

By:___                
Its:___                

TENANT

Lawson Products, Inc., an Illinois corporation

By:___                
Its:___Exhibit 10.1 

SHARE PURCHASE AGREEMENT

THIS SHARE PURCHASE AGREEMENT
(the “Agreement”), dated as of January 29, 2014, is entered into by and between ACOLOGY, INC., a
Florida corporation (the “Company”), and ________________________________ (“Purchaser”).

WHEREAS, subject to the
terms and conditions set forth in this Agreement, the Company wishes to sell to the Buyer, and the Buyer wishes to buy from the
Company shares of the Company’s common stock, par value $0.000001
per share, authorized after the Reverse Split, as that term is hereinafter defined (“New Common Stock”),
on the terms and conditions set forth herein, which shares are part of an offering by the Company of 700,000,000 shares of New
Common Stock for the aggregate price of $40,000.00 (the “Private Placement”),

NOW THEREFORE, in consideration
of the covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows:

ARTICLE I.  PURCHASE
AND SALE

1.1Purchase and Sale
of the Shares. Subject to and upon the terms and conditions hereof, the Company will issue and sell to Purchaser, and Purchaser
will purchase from the Company, in consideration of and in express reliance upon the representations, warranties, covenants, terms
and conditions of this Agreement, the number of shares of New Common Stock set forth opposite its name under the caption “Shares
to be Purchased” for the purchase price set forth opposite its name under the caption “Purchase Price.” Such
number of shares and the purchase price therefor are respectively referred to herein as the “Shares”
and the “Purchase Price.” The Company and Purchaser are executing and delivering this Agreement and performing
their respective obligations hereunder in accordance with and in reliance upon the exemption from registration under the Securities
Act of 1933 (the “Securities Act”), afforded by Rule 506 of Regulation D (“Regulation D”)
promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities
Act, Section 4(2) of the Securities Act or one or more other applicable exemptions from registration. As used herein, the term
“Reverse Split” means the 1-for 1,000 share reverse split of the Existing Common Stock to occur on February
14, 2014, as provided in the Company’s Articles of Incorporation, as amended, and the term “Existing Common Stock”
means the common stock, par value $0.000001 per share, authorized prior to the occurrence of the Reverse Split.

1.2Closing. The
closing of the purchase and sale of the Shares (the “Closing”) shall take place upon the closing under
that certain Agreement and Plan of Merger, dated as of December 24,
2013, by and among the Company (under its former corporate name, Pinecrest Investments Group, Inc., PNCR, ACQUISITION,
LLC., a California limited liability company and the wholly-owned subsidiary of PNCR (“Merger Sub”),
and D&C DISTRIBUTORS, LLC, a California limited liability company (the “Target”)(the “Merger
Agreement”). The time and date of the Closing is referred to herein as the “Closing Time”.
At the Closing, (A) the Company shall deliver to Purchaser the duly executed Registration Rights Agreement and (B) Purchaser
shall deliver to the Company (i) the Purchase Price and (ii) the duly executed Registration Rights Agreement in the form annexed
hereto as Exhibit A (the “Registration Rights Agreement”), to be dated as of the date on which the Closing
occurs. As quickly as shall be practicable after the Closing, the Company shall cause the Shares to be issued in book entry form
in the name of Purchaser. The Shares shall be held in such form until (i) they are registered under the Securities Act

    	 

    	 

    

pursuant to the Registration Rights
Agreement (as that term is hereinafter defined), in which case, the Company shall deliver to Purchaser, upon the effectiveness
of such registration, certificates (in such denominations as Purchaser shall request) representing the Shares without any restrictive
legend or (ii) the Company has defaulted in its obligations to Purchaser under the Registration Rights Agreement, in which case,
the Company shall deliver to Purchaser, upon Purchaser’s request, certificates a single certificate representing the Shares
bearing the restrictive legend prescribed by Section 5.1 hereof.

By completing the Closing, Purchaser
shall be deemed to have confirmed to the Company, with the same effect as if Purchaser had so confirmed in writing, that Purchaser’s
representations and warranties made in Section 2.2 were true and correct in all material respects as of the Closing Time, the compliance
by Purchaser with its covenants in this Agreement to be complied with by it prior to the Closing Time and, except to the extent
that any of the conditions precedent to the obligation of the Company set forth in Section 4.1 have been waived by the Company
in writing, Purchaser’s satisfaction thereof.

By completing the Closing, the
Company shall be deemed to have confirmed to Purchaser, with the same effect as if the Company had so confirmed in writing, that
the Company’s representations and warranties made in Section 2.1 were true and correct in all material respects as of the
Closing Time, the compliance by the Company with its covenants in this Agreement to be complied with by it prior to the Closing
Time and, except to the extent that any of the conditions precedent to the obligation of Purchaser set forth in Section 4.2 have
been waived by Purchaser in writing, the Company’s satisfaction thereof.

1.3Merger. The
parties acknowledge that simultaneously with the Closing, the Company will complete the Closing under and as defined in the Merger
Agreement, under which, upon the filing of a certificate of merger pursuant to the California Corporations Code, Merger Sub will
merge with and into Target, with Target being the surviving entity and the Company’s wholly-owned subsidiary. Among other
things, at the effective time of the merger (the “Effective Time of the Merger”), the shares of the common
stock of Target outstanding immediately prior to such effective time will be converted into an aggregate of 3,846,000,000 shares
of New Common Stock. The transactions occurring pursuant to the Merger Agreement are collectively referred to as the “Merger”).
Purchaser acknowledges receipt of a copy of the Merger Agreement.

ARTICLE II.  REPRESENTATIONS
AND WARRANTIES

2.1Representations and
Warranties of the Company. The Company hereby represents and warrants to Purchaser, as of the date hereof and as of the
Closing Time (except as set forth on the Schedule of Exceptions attached hereto with each numbered Schedule corresponding to the
section number herein), as follows:

(a)Organization,
Good Standing and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Florida and has all requisite corporate power to own, lease and operate its properties and assets and to conduct
its business as it is now being conducted. The Company has no subsidiaries other than Merger Sub, which was organized as a vehicle
for the Merger and has not engaged in any business operations. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such
qualification necessary except for any one or more jurisdictions in which, in the aggregate, the failure to be so qualified will
not have a Material Adverse Effect (as defined in Section 2.1(c)

    	 

    	 

    

hereof) on the Company’s
financial condition. The Company has furnished or made available to Purchaser true and correct copies of the Company’s Articles
of Incorporation, as amended (the “Charter”), and the Company’s By-laws (the “By-laws”),
each as in effect on the date hereof.

(b)Authorization;
Enforceability. The Company has all requisite corporate power and authority to execute and deliver and to perform this
Agreement and the Registration Rights Agreement of even date herewith (collectively, the “Transaction Documents”)
and to issue and sell the Shares in accordance with the terms hereof. The execution, delivery and performance of the Transaction
Documents by the Company, the consummation by it of the transactions contemplated thereby and the issuance and delivery of the
Shares have been duly and validly authorized by all requisite corporate action and no further consent or authorization on the part
of the Company, its Board of Directors or its stockholders is required in order for the Company to enter into and perform its obligations
under the Transaction Documents. Each of the Transaction Documents constitutes, or when executed and delivered will constitute,
the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting the enforcement of, creditors’ rights and remedies generally or by
equitable principles of general application.

(c)Capitalization.
The authorized capital stock of the Company consists of: (i) 6,000,000,000 shares of Existing Common Stock, of which 49,442,762
shares are issued and outstanding, and after the occurrence of the
Reverse Split, will consist of a like number of shares of New Common Stock, no more than 50,000 shares of which will be issued
and outstanding; and (ii) 10,000,000 shares of preferred stock, issuable in series, of which no shares are or after the Reverse
Split will be issued and outstanding. All
of the outstanding shares of the Existing Common Stock and the Preferred Shares have been, and upon the occurrence of the Reverse
Split, all of the outstanding shares of New Common Stock will be, duly and validly authorized, issued and outstanding. 

No shares of Existing Common Stock
are, and upon the occurrence of the Reverse Split, no shares of New Common Stock will be, entitled to preemptive rights or registration
rights and there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital stock of the Company. There are no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of
the Company or options, securities or rights convertible into shares of capital stock of the Company, except for (i) this Agreement,
(ii) securities purchase agreements substantially in the form of this Agreement, which, together with this Agreement and when executed
and delivered, will relate to 700,000,000 shares of New Common Stock, (iii) the Merger Agreement and (iv) registration rights
agreements granting registration rights to the Persons, including Purchaser, who are purchasing shares of New Common Stock in the
Private Placement; and except for such agreements, the Company is not a party to any agreement granting registration or anti-dilution
rights to any person with respect to any of its equity or debt securities. The Company is not a party to, and it has no knowledge
of, any agreement restricting the voting or transfer of any shares of the capital stock of the Company, other than agreements that
limit such transfer as required by federal or state securities laws. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing Time complied with all applicable

    	 

    	 

    

Federal and state securities laws,
and no stockholder has a right of rescission or claim for damages with respect thereto which would have a Material Adverse Effect
(as defined below). For purposes of this Agreement, “Material Adverse Effect” means any material adverse
effect on the business, operations, properties, or financial condition of the Company and Merger Sub, taken as a whole, and/or
any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company
to perform any of its obligations under this Agreement in any material respect.

(d)The
Shares. At the Closing Time, the Shares will be duly authorized by all requisite corporate action and, when paid for, issued
and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable.

(e)No
Conflicts. The execution and delivery of the Transaction Documents by the Company and performance by the Company of its
obligations thereunder do not and will not (i) violate any provision of the Charter or By-laws, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party or by which it or its properties or assets are bound,
(iii) except as may be contemplated by the Merger Agreement, create or impose a lien, mortgage, security interest, charge or encumbrance
of any nature on any property of the Company under any agreement or any commitment to which the Company is a party or by which
the Company is bound or by which any of its respective properties or assets are bound or (iv) result in a violation of any federal,
state or local statute, rule, regulation, order, judgment or decree (including Federal and state securities laws and regulations)
applicable to the Company or Merger Sub or by which any property or asset of the Company or Merger Sub is bound or affected, except
for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually
or in the aggregate, have a Material Adverse Effect. The business of the Company is not being conducted in violation of any laws,
ordinances or regulations of any governmental entity, except for violations, if any, which in the aggregate do not and will not
have a Material Adverse Effect.

The Company is not required under
Federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Transaction
Documents, or issue and sell the shares of New Common Stock in accordance with the terms hereof or thereof (other than (i) any
consent, authorization or order that has been obtained as of the date hereof, (ii) any filing or registration that has been made
as of the date hereof or (iii) any filings which may be required to be made by the Company with the Commission or state securities
administrators subsequent to the Closing; provided, that, for purposes of the representation and warranty made in this sentence,
the Company is assuming and relying upon the accuracy of the relevant representations, warranties and agreements of Purchaser made
herein.

(f)Subsidiaries.
Merger Sub is the wholly-owned and sole Subsidiary of the Company. For the purposes of this Agreement, “Subsidiary”
shall mean any corporation or other juridical entity of which at least a majority of the securities or other ownership interest
having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions
are at the time owned directly or indirectly by such corporation or other entity. All of the outstanding shares of capital stock
of Merger Sub have been and at the

    	 

    	 

    

Effective Time of the Merger,
all of the outstanding shares of capital stock of the company resulting from the Merger will be, duly authorized, validly issued,
fully paid and nonassessable.

(g)Financial
Statements. Purchaser acknowledges its receipt of a copy of (i) the unaudited financial statements of the Company for
the years ended December 31, 2009, and December 31, 2008 and (ii) the unaudited financial statements
of Target for the period ended July 31, 2013 (the “Target Financial Statements”), and collectively with
the Company Financial Statements, the “Financial Statements”). The Financial Statements were prepared
in accordance with generally accepted accounting principles in the United States consistently applied (“GAAP”),
except as may be otherwise specified therein or in the notes thereto; and each of the Financial Statements fairly presents in all
material respects the financial position of the entity to which it relates as at the dates thereof and the results of operations
and cash flows for the periods then ended. If the Company or Target were to prepare a financial statement in accordance with GAAP
as of the date hereof, it would not differ materially from the Financial Statement that relates to it.

(h)No
Material Adverse Effect. Other than as disclosed in the Financial Statements or in the Merger Agreement, neither the Company
nor Target has experienced or suffered any Material Adverse Effect.

(i)No
Undisclosed Liabilities. Except as disclosed in the Financial Statements or in the Merger Agreement, neither the Company
nor Target has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) other than those incurred in the ordinary course of their respective businesses and which, individually
or in the aggregate, have a Material Adverse Effect on the Company or Target.

(j)No
Undisclosed Events or Circumstances. To the Company’s knowledge, no event or circumstance has occurred or exists
with respect to the Company or its business, properties, prospects, operations or financial condition, which, under applicable
law, rule or regulation, requires public disclosure or announcement by it but which has not been so publicly announced or disclosed.

(k)Indebtedness.
Each of the Financial Statements sets forth all outstanding secured and unsecured Indebtedness of the entity to which it relates
or for which such entity has commitments. For the purposes of this Agreement, “Indebtedness” shall mean
(i) any liabilities for borrowed money or amounts owed (other than trade accounts payable incurred in the ordinary course of business),
(ii) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected in the balance sheets (or the notes thereto) of the Company contained in the Company Financial
Statements or of Target contained in the Target Financial Statements, except for guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of business; and (iii) the present value of any lease
payments due under leases required to be capitalized in accordance with GAAP. Neither the Company nor Target is in default with
respect to any Indebtedness.

(l)Title
to Assets. Each of the Company and Target has good and marketable title to all real and personal property reflected in
the Financial Statement related to it, free and clear of any mortgages, pledges, charges, liens security interests or other encumbrances,
except for those that are disclosed in such Financial Statement or that may be contemplated by the Merger

    	 

    	 

    

Agreement. Except as disclosed
in the Financial Statement related to it, neither the Company nor Target leases any material real or personal property.

(m)Actions
Pending. There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or any other
proceeding pending, or to the knowledge of the Company threatened, against the Company, Merger Sub or Target which questions the
validity of the Merger Agreement or the Transaction Documents or the transactions contemplated thereby or any action taken or to
be taken pursuant thereto. There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding
or any other proceeding pending, or to the knowledge of the Company, threatened, against or involving the Company, Merger Sub or
Target or any of their respective properties or assets. There are no outstanding orders, judgments, injunctions, awards or decrees
of any court, arbitrator or governmental or regulatory body against the Company, Merger Sub or Target or any of their executive
officers, directors or managers in their capacities as such.

(n)Compliance
with Law. The business of the Company has been and is presently being conducted in material compliance with all applicable
federal, state and local governmental laws, rules, regulations and ordinances. The Company holds all franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business in all material
respects as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental
or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.

(o)Taxes.
Each of the Company has accurately prepared and filed all tax returns required by law to be filed by it and has paid or made provisions
for the payment of all taxes shown to be due and all additional assessments; and adequate provisions have been and are reflected
in the financial statements of the Company for all current taxes and other charges for which it is liable and which are not currently
due and payable. None of the income tax returns of the Company has been audited. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability of any nature whatsoever, whether pending or threatened against the Company
for any period, nor of any basis for any such assessment, adjustment or contingency.

(p)Certain
Fees. No brokers, finders or financial advisory fees or commissions will be payable by the Company with respect to the
transactions contemplated by the Transaction Documents.

(q)Operation
of Business. The Company owns or possesses all patents, trademarks, domain names (whether or not registered) and any patentable
improvements or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks,
trade names, copyrights, licenses and authorizations, and all rights with respect to the foregoing, which are necessary for the
conduct of its business as now conducted without any conflict with the rights of others, except where the failure to so own or
possess would not have a Material Adverse Effect.

(r)Environmental
Compliance. Since its inception, the Company has not been in violation of any applicable law relating to the environment
or occupational health and safety, where such violation would have a material adverse effect on its business or financial condition.
The Company has operated all facilities and properties owned, leased or operated by it in

    	 

    	 

    

material compliance with the Environmental
Laws. “Environmental Laws” means all applicable laws relating to the protection of the environment including,
without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or
toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous
in nature. The Company has all necessary governmental approvals required under all Environmental Laws and used in its business
and is also in compliance with all other limitations, restrictions, conditions, standards, requirements, schedules and timetables
required or imposed under all Environmental Laws. There are no past or present events, conditions, circumstances, incidents, actions
or omissions relating to or in any way affecting the Company that violate or may violate any Environmental Law after the Closing
Time or that may give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related to the manufacture, processing, distribution,
use, treatment, storage (including without limitation underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous substance.

(s)Material
Agreements. Except for the Merger Agreement and the Transaction Documents, the Company is not, and at the Closing Time
will not be, a party to any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement, a copy
of which would be required to be filed with the Commission as an exhibit to a registration statement on Form S-1 if the Company
were immediately after the Closing Time registering its securities on such form under the Securities Act. The Company and Merger
Sub have in all material respects performed all of the obligations required to be performed by them to date under the Merger Agreement
and has received no notice of default and is not in default thereunder. No existing provision of the Charter, the By-laws, the
Transaction Documents or any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement of the
Company will limit the payment of dividends on the New Common Stock.

(t)Transactions
with Affiliates. Except as may be contemplated by the Merger Agreement, there are no loans, leases, agreements, contracts,
royalty agreements, management contracts or arrangements or other continuing transactions of the Company with or relating to any
Affiliate, employee or consultant of the Company or any member of the immediate family of such Affiliate, officer, director, employee
or consultant or any corporation or other juridical entity controlled by such Affiliate, officer, director, employee, consultant,
director or stockholder, or a member of the immediate family of such Affiliate, officer, director, employee or consultant. As used
herein, the term “Affiliate” has the meaning ascribed to it in Rule 405 promulgated under the Securities
Act.

(u)Securities
Act. Neither the Company nor any of its Affiliates, officers or directors nor any person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of any Common Shares.

(v)Governmental
Approvals. Except for the filing of any notice prior or subsequent to the Closing Time that may be required under applicable
state and/or federal securities

    	 

    	 

    

laws, including the filing of
a Form D, and a registration statement to be filed pursuant to the Registration Rights Agreement, no authorization, consent, approval,
license, exemption, filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary for, or in connection with, the execution or delivery of the Shares, or for the performance
by the Company or Merger Sub of its obligations under the Transaction Documents.

(w)Employees.
The Company is not and has never been a party to any collective bargaining arrangement or agreement covering any of its employees
or any employment contract, agreement regarding proprietary information, non-competition agreement, non-solicitation agreement,
confidentiality agreement, or any other similar contract or restrictive covenant, relating to the right of any officer, employee
or consultant employed or to be employed or engaged by the Company that the Company would be required to disclose in any report
that it would be required to file with the Commission a copy of which would be required to be filed with the Commission as an exhibit
to a registration statement on Form S-1 if the Company were immediately after the Closing Time registering its securities on such
form under the Securities Act. 

(x)Absence
of Certain Developments. Since the date of the Financial Statement relating to it, neither the Company nor Target has:

(i)issued
any stock, bonds, interest units or other securities or any rights, options or warrants with respect thereto, except for shares
of the Company described herein as being issued and outstanding;

(ii)borrowed
any amount or incurred or become subject to any liabilities (absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and amount to the current liabilities incurred in the ordinary course
of business during the comparable portion of its prior fiscal year, as adjusted to reflect the current nature and volume of the
its respective business;

(iii)discharged
or satisfied any lien or encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities
paid in the ordinary course of its business;

(iv)declared
or made any payment or distribution of cash or other property to stockholders with respect to its stock, or purchased or redeemed,
or made any agreements so to purchase or redeem, any shares of its capital stock;

(v)sold,
assigned or transferred any other tangible assets, or cancelled any debts or claims, except in the ordinary course of business;

(vi)sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights, trade secrets or other intangible assets or intellectual
property rights, or disclosed any proprietary confidential information to any person except to customers in the ordinary course
of its business;

(vii)suffered
any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the
loss of any material amount of prospective business;

(viii)made
any changes in employee compensation except in the ordinary course of business and consistent with past practices;

    	 

    	 

    

(ix)made
capital expenditures or commitments therefor in excess of $50,000 in the aggregate;

(x)except
for the Company in connection with this Agreement and the Company and Target in connection with the Merger Agreement, entered into
any other transaction other than in the ordinary course of business, or entered into any other material transaction, whether or
not in the ordinary course of business;

(xi)made
charitable contributions or pledges in excess of $10,000 in the aggregate;

(xii)suffered
any material damage, destruction or casualty loss, whether or not covered by insurance;

(xiii)experienced
any material problems with labor or management in connection with the terms and conditions of their employment;

(xiv)effected
any two or more events of the foregoing kind which would be material to the Company or Target; or

(xv)except
for the Company in connection with this Agreement and the Company and Target in connection with the Merger Agreement, entered into
an agreement, written or otherwise, to take any of the foregoing actions.

(y)Public
Utility Holding Company Act and Investment Company Act Status. The Company is not a “holding company” or a
“public utility company” as such terms are defined in the Public Utility Holding Company Act of 1935. The Company is
not, and immediately upon the Closing will not be, an “investment company” or a company “controlled” by
an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

(z)ERISA.
Neither the Company nor Target has any “employee pension benefit plan” (as that term is defined in Section 3 of the
Employee Income Retirement Act of 1974.)

(aa)No
Integrated Offering. Neither the Company nor any of its Affiliates, officers or directors nor any person acting on its
or their behalf, has directly or indirectly made any offer or sale of any security or solicited any offer to buy any security under
circumstances that would cause the offering of the Shares purchased and sold pursuant to this Agreement to be integrated with prior
offerings by the Company for purposes of the Securities Act so as to prevent the Company from selling the Shares pursuant to Rule
506 under the Securities Act, nor will the Company take, or permit any of its Affiliates, officers, directors or employees to take,
any action or steps that would cause the offering of the Shares to be integrated with other offerings.

(bb)No
Registration Statement. The Company does not have any registration statement pending before the Commission or currently
under the Commission’s review and for at least one year prior to the date hereof, has not offered or sold any of its equity
securities or debt securities convertible into shares of Existing Common Stock or New Common Stock, except to the persons who are
purchasing shares of New Common Stock in the Private Placement or to the persons who will be entitled to receive shares of New
Common Stock at the Effective Time of the Merger.

(cc)Disclosure.
Neither this Agreement nor any other documents, certificates or instruments furnished to Purchaser by or on behalf of the Company
in connection with this Agreement contains any untrue statement of a material fact or omits to state a material fact nec

    	 

    	 

    

essary in order to make the statements
made herein or therein, taken as a whole and in the light of the circumstances under which they were made herein or therein, not
false or misleading.

2.2Representations and
Warranties of Purchaser. Purchaser hereby makes the following representations and warranties to the Company as of the date
hereof and the Closing Time:

(a)Organization
and Good Standing of Purchaser. If Purchaser not a natural person, it is a corporation, partnership or limited liability
company validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

(b)Authorization
and Power.  Purchaser has all requisite power and authority to execute and deliver and to perform to enter into and perform
the Transaction Documents. The execution, delivery and performance of the Transaction Documents and the consummation by it of the
transactions contemplated thereby have been duly authorized by all requisite action, and no further consent or authorization of
Purchaser or, if Purchaser is not a natural person, its Board of Directors, stockholders, members, or partners, as the case may
be, is required for such authorization. Each of the Transaction Documents constitutes, or when executed and delivered will constitute,
the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership
or similar laws relating to, or affecting the enforcement of, creditors’ rights generally and remedies or by other equitable
principles of general application.

(c)No
Conflicts. The execution and delivery and the performance of the Transaction Documents do not and will not: (i) if Purchaser
is not a natural person, result in a violation of Purchaser’s articles or certificate of incorporation or organization, by-laws,
operating agreement, partnership agreement or similar instrument or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of any agreement, indenture or instrument or obligation to which Purchaser is a party or by which its properties
or assets are bound, or result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to Purchaser or its properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a material adverse effect on Purchaser). Purchaser is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under the Transaction Documents, provided that, for purposes of the representation made
in this sentence, Purchaser is assuming and relying upon the accuracy of the relevant representations, warranties and agreements
of the Company set forth in this Agreement.

(d)Acquisition
for Investment. Purchaser is acquiring the Shares solely for its own account for the purpose of investment and not with
a view to or for sale in connection with distribution. Purchaser does not have a present intention to sell the Shares, nor a present
arrangement (whether or not legally binding) or intention to effect any distribution of the Shares to or through any person or
entity; provided, however, that by making the representations herein and subject to Section 2.2(h) below, Purchaser does not agree
to hold the Shares for any minimum or other specific term, otherwise than to satisfy any condition for their disposition pursuant
to an exemption from registration under the Securities Act and reserves the right to dispose of the

    	 

    	 

    

Shares at any time in compliance
with federal and state securities laws applicable to such disposition.

Purchaser acknowledges that it
is able to bear the financial risks associated with an investment in the Shares and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company’s stage of development and otherwise so as to be able
to evaluate the risks and merits of its investment in the Company.

(e)Status
of Purchaser. Purchaser is an “accredited investor” as defined in Rule 501 promulgated under the Securities
Act or has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks
of its investment in the Private Placement. Purchaser is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act and Purchaser is not a broker-dealer or an Affiliate of a broker-dealer.

(f)Opportunities
for Additional Information. Purchaser acknowledges that it has had access to the books and records of the Company and Target
and has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive
officers of the Company and Target concerning the business of the Company (including the manner in which such business is intended
to be conducted after the consummation of the Merger) and Target and the financial and other affairs of the Company and Target.

(g)No
General Solicitation. Purchaser acknowledges that the Shares were not offered to Purchaser by means of any form of general
or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement,
article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or
radio, or (ii) any seminar or meeting to which such Purchaser was invited by any of the foregoing means of communications.

(h)Limitations
on Resale.  Purchaser understands and acknowledges that the Shares must be held indefinitely unless they are registered
under the Securities Act or an exemption from such registration is available. Purchaser is familiar with Rule 144 of the rules
and regulations of the Commission promulgated pursuant to the Securities Act (“Rule 144”), and it understands
that Rule 144 permits resales only under certain limited circumstances and understands and acknowledges that, to the extent that
Rule 144 is not available for resales of the Shares, Purchaser will be unable to sell any Shares without either registration under
the Securities Act or the availability of another exemption from such registration requirement.

(i)General.
 Purchaser understands and acknowledges that the Shares are being offered and sold in reliance on a transactional exemption
from the registration requirements of federal and state securities laws and that the Company is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgments and understandings of Purchaser set forth herein in order to determine
the applicability of such exemptions and the suitability of Purchaser to acquire the Shares.

(j)Independent
Investment. Except as may be disclosed in any filings with the Commission that Purchaser may be required to make under
Section 13 and/or Section 16 of the Exchange Act, Purchaser is acting independently with respect to its investment in the Shares.

(k)Brokers.
Purchaser has no knowledge of any brokerage or finder’s fees or commissions that are or will be payable by the Company or
any Subsidiary to any broker, financial

    	 

    	 

    

advisor or consultant, finder,
placement agent, investment banker, bank or other person or entity with respect to the transactions contemplated by this Agreement.

ARTICLE III.  COVENANTS

3.1Covenants of the
Company. The Company covenants with Purchaser as follows:

(a)Securities
Compliance. The Company shall notify the Commission in accordance with its rules and regulations of the transactions contemplated
by any of the Transaction Documents, including filing a reports on Form D with respect to the Shares if required under Regulation
D and reports under applicable “blue sky” laws, and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Shares to Purchaser and
their lawful transfer to Purchaser’s immediate transferees.

(b)Registration,
Etc. The Company shall: (i) comply in all respects with its reporting and filing obligations, if any, under the Exchange
Act, (ii) comply with all requirements related to any registration statement filed pursuant to the Registration Rights Agreement,
and (iii) not take any action or file any document (whether or not permitted by the Securities Act, the Exchange Act or the rules
promulgated thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations,
if any, under the Exchange Act or the Securities Act, except as permitted under the Transaction Documents. Nothing in this Agreement
shall require the Company to register its New Common Stock under Section 12 of the Exchange Act.

(c)Inspection
Rights.  Until the Closing Time and thereafter until the earlier of (i) 1 year after the Closing Time or (ii) until Purchaser
has disposed of all of its Shares, the Company shall permit, during normal business hours and upon reasonable request and reasonable
notice and in a manner that does not unduly disrupt the Company’s business, Purchaser or any employees, agents or representatives
thereof may, for purposes reasonably related to Purchaser’s interests as a prospective or existing stockholder, to examine
and make reasonable copies of and extracts from the records and books of account of, and visit and inspect the properties, assets,
operations and business of the Company and any Subsidiary, and to discuss the affairs, finances and accounts of the Company and
any Subsidiary with any of its officers, consultants, directors, and key employees.

(d)Compliance
with Laws. The Company shall comply, and cause each Subsidiary to comply in all material respects, with all applicable
laws, rules, regulations and orders.

(e)Keeping
of Records and Books of Account. The Company shall keep and cause each Subsidiary to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP, reflecting all financial transactions of the Company and
Merger Sub, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be made.

(f)Other
Agreements.  The Company shall not enter into any agreement the terms of which would restrict or impair the right or ability
of the Company to perform its obligations under the Transaction Documents.

    	 

    	 

    

(g)Use
of Proceeds. The proceeds from the sale of the Shares hereunder shall be used by the Company to reduce the principal amount
of the Promissory Note, as that term is defined in the Merger Agreement.

(h)Disclosure
of Material Information.  The Company covenants and agrees that neither it nor any other person acting on its behalf has
provided or will provide Purchaser or its agents or counsel with any information that the Company believes constitutes material
non-public information (other than with respect to the transactions contemplated by this Agreement), unless prior thereto Purchaser
shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and
confirms that Purchaser shall be relying on the Company’s compliance with this covenant in effecting transactions in the
Shares.

(i)Pledge
of Shares. The Shares may be pledged by Purchaser in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Shares. Such pledge shall not be deemed to be a transfer, sale or assignment of the Shares,
and if Purchaser effects such pledge, it shall not be required to provide the Company with any notice thereof or otherwise make
any delivery to the Company pursuant to any Transaction Document, except for such delivery as may be reasonably necessary for the
Company to perform its obligations under the next sentence; provided that Purchaser and the pledgee shall be required to comply
with the provisions of Article V hereof in order to effect a sale, transfer or assignment of the Shares to or by such pledgee.
At Purchaser’s expense, the Company hereby agrees to execute and deliver such documentation as a pledgee of New Common Stock
may reasonably request in connection with such pledge.

3.2Covenants of Purchaser.
Purchaser covenants with the Company as follows:

(a)Trading
Activities. Purchaser agrees that it shall not, directly or indirectly, engage in any short sales with respect to the Shares
for a period of one (1) year following the effective date of the registration statement to be filed pursuant to the Registration
Rights Agreement.

(b)Confidentiality.
 Purchaser agrees that it and its employees, agents and representatives will keep confidential and will not disclose, divulge
or use (other than for purposes of monitoring its investment in the Company) any confidential information which it may obtain from
the Company pursuant to financial statements, reports and other materials made available by the Company to Purchaser pursuant to
this Agreement or Purchaser’s inspection rights hereunder, unless such information is known to the public through no fault
of such Purchaser or its employees or representatives; provided, however, that Purchaser may disclose such information (a) to its
attorneys, accountants and other professionals in connection with their representation of Purchaser with respect to all matters
related to this Agreement and (b) upon prior written notice to the Company, to any prospective permitted transferee of the Shares,
so long as the prospective permitted transferee agrees to be bound by the provisions of this subsection. At the request of the
Company, Purchaser will execute a confidentiality agreement in form and substance reasonably acceptable to the Company as a prerequisite
to the exercise of Purchaser’s inspection rights pursuant to Section 3.1(c). The Company may require any prospective permitted
transferee of the Shares to execute such a confidentiality agreement prior to Purchaser’s disclosure of any such confidential
information to such prospective permitted transferee.

    	 

    	 

    

ARTICLE IV.  CONDITIONS

4.1Conditions Precedent
to the Obligation of the Company. The obligation of the Company to perform its obligations hereunder at and after the Closing
is subject to the satisfaction or written waiver, at or before the Closing, of all of the following conditions:

(a)Accuracy
of Purchaser’s Representations and Warranties. All of the representations and warranties of Purchaser set forth herein
shall be true and correct in all material respects as of the date when made and as of the Closing Time, as though made at that
time, except for representations and warranties that are expressly made as of a particular date.

(b)Performance.
Purchaser shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by Purchaser at or prior to the Closing.

(c)No
Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority which prohibits the consummation of any of the transactions contemplated
by this Agreement.

(d)Closing.
The Closing under the Merger Agreement shall have occurred.

(e)Verification
of Status as Accredited Investor. Purchaser shall have verified its status as an accredited investor, as represented and
warranted in Section 2.2(e), by providing written confirmation thereof from one of the following persons or entities that such
person or entity has taken reasonable steps to verify that Purchaser is an accredited investor within the prior 3 months and has
determined that Purchaser is an accredited investor:

(1) a broker-dealer
registered with the Commission;

(2) an
investment adviser registered with the Commission;

(3) a licensed
attorney who is in good standing under the laws of the jurisdictions in which he or she is admitted to practice law; or

(4) a certified
public accountant who is duly registered and in good standing under the laws of the place of his or her residence or principal
office.

4.2Conditions Precedent
to Purchaser’s Obligation.  The obligation of Purchaser to perform its obligations hereunder at and after the Closing
is subject to the satisfaction or written waiver, at or before the Closing, of all of the following conditions:

(a)Accuracy
of the Company’s Representations and Warranties. All of the representations and warranties of the Company set forth
herein shall be true and correct in all respects as of the date when made and as of the Closing Time, as though made at that time,
except for representations and warranties that are expressly made as of a particular date, which need be true and correct in all
material respects only as of such date.

(b)Performance
by the Company. The Company shall have performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing.

    	 

    	 

    

(c)No
Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority which prohibits the consummation of any of the transactions contemplated
by this Agreement.

(d)No
Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any governmental authority shall have
been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any Subsidiary,
or any of the Affiliates, officers, directors or employees of the Company or Merger Sub seeking to restrain, prevent or change
the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

(e)Secretary’s
Certificate. The Company shall have delivered to Purchaser a secretary’s certificate, dated as of the date of the
Closing, as to (i) the resolutions of the board of directors of the Company authorizing this Agreement and the issuance of the
Shares, (ii) the absence of any amendment to Charter or the By-laws after the date of this Agreement, and (iii) the incumbency
of the officers of the Company executing the Transaction Documents and any other documents required to be executed or delivered
in connection therewith.

(f)Material
Adverse Effect. No Material Adverse Effect shall have occurred at or before the Closing Time.

(g)Closing
under Merger Agreement. Prior to the Closing, the closing under the Merger Agreement shall have occurred.

ARTICLE V.  STOCK
CERTIFICATE LEGEND

5.1Legend. Each
certificate representing the Shares shall be stamped or otherwise imprinted with a legend substantially in the following form (in
addition to any legend required by applicable state securities or “blue sky” laws):

THE SECURITIES REPRESENTED
BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED.

The Company will reissue certificates
representing any of the Shares, without the legend set forth above, if at such time, prior to making any transfer of any such Shares,
the holder thereof shall give written notice to the Company describing the manner and terms of such transfer as the Company may
reasonably request. Such proposed transfer and reissuance will not be effected until: (a)(i) the Company has received an opinion
of counsel reasonably satisfactory to the Company to the effect that the registration of the Shares under the Securities Act is
not required in connection with such proposed transfer, (ii) a registration statement under the Securities Act covering such proposed
disposition has been filed by the Company with the Commission under

    	 

    	 

    

the Securities Act and has become
effective, (iii) the Company has received an opinion of such to the effect that that such registration is not required, or (iv)
the Company has received an opinion of such counsel to the effect that the Shares may be sold pursuant to the exemption from registration
provided by Rule 144 under the Securities Act; and (b)(i) the Company has received an opinion of such counsel to the effect that
registration or qualification under the securities or “blue sky” laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected.
The Company will respond to any such notice from a holder within five (5) business days. In the case of any proposed transfer under
this Section 5.1, the Company will use reasonable efforts to comply with any such applicable state securities or “blue sky”
laws, but shall in no event be required (i) to qualify to do business in any state where it is not then qualified, (ii) to
take any action that would subject it to tax or to the general service of process in any state where it is not then subject thereto,
or (iii) to comply with state securities or “blue sky” laws of any state for which registration by coordination is
unavailable to the Company. The restrictions on transfer contained in this Section 5.1 shall be in addition to, and not by way
of limitation of, any other restrictions on transfer contained in any other section of this Agreement or imposed by law or regulation.

ARTICLE VI.  INDEMNIFICATION

6.1Indemnity. 
The Company will indemnify and hold harmless Purchaser and, as applicable, his or its directors, officers, managers, partners,
members, shareholders, employees, consultants and agents, together with his or its respective heirs, successors and assigns, from
and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements) incurred by Purchaser as a result of any inaccuracy in or breach of the representations,
warranties or covenants made by the Company herein. Purchaser agrees to indemnify and hold harmless the Company and, as applicable,
his or its directors, officers, managers, partners, members, shareholders, employees, consultants and agents, together with his
or its respective heirs, successors and assigns, from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by the Company
as a result of any inaccuracy in or breach of the representations, warranties or covenants made by Purchaser herein.

6.2Indemnification Procedure.
A party entitled to indemnification under this Article VI (an “indemnified party”) will give written
notice to the party from whom it seeks indemnification (an “indemnifying party”) of any matter giving
rise to a claim for indemnification; provided, however, that the failure of any party entitled to indemnification hereunder to
give notice as provided herein shall not relieve the indemnifying party of its obligations under this Article VI, except to the
extent that the indemnifying party is actually prejudiced by such failure to give notice. In the event that any action, proceeding
or claim is brought against an indemnified party in respect of which indemnification is sought hereunder, the indemnifying party
shall be entitled to participate in and, unless in the reasonable judgment of the indemnified party a conflict of interest between
it and the indemnifying party may exist with respect of such action, proceeding or claim, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. In the event that the indemnifying party advises an indemnified party that it
will contest such a claim for indemnification hereunder, or fails, within thirty (30) days of receipt of any indemnification notice
to notify, in writing, such person of its election to defend, settle or compromise, at its sole cost and expense, any action, proceeding
or claim (or discontinues its defense at any time

    	 

    	 

    

after it commences such defense),
the indemnified party may, at its option, defend, settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does assume the defense of any such claim, proceeding or action,
the indemnified party’s costs and expenses arising out of the defense, settlement or compromise of any such action, claim
or proceeding shall be losses subject to indemnification hereunder. The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to
the indemnifying party all information reasonably available to the indemnified party which relates to such action or claim. The
indemnifying party shall keep the indemnified party fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend any such action or claim, then the indemnified party
shall be entitled to participate in such defense with counsel of its choice at its sole cost and expense.

Notwithstanding anything in this
Article VI to the contrary, (i) the indemnifying party shall not be liable for any settlement of any action, claim or proceeding
effected without its prior written consent and (ii) the indemnifying party shall not, without the indemnified party’s prior
written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as an unconditional term thereof, the giving by the claimant or
the plaintiff to the indemnified party of a release from all liability in respect of such claim.

Indemnification under this Article
VI shall be made by periodic payments of the amount thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the indemnified party irrevocably agrees to refund such
moneys if it is ultimately determined by a court of competent jurisdiction that such party was not entitled to indemnification.
The indemnity agreements contained herein shall be in addition to (a) any cause of action or similar rights of the indemnified
party against the indemnifying party or others, and (b) any liabilities the indemnifying party may be subject to pursuant to the
law.

ARTICLE VII.  MISCELLANEOUS

7.1Fees and Expenses.
Except as otherwise set forth in the Transaction Documents, each party shall pay the fees and expenses of its advisors, counsel,
accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance thereof.

7.2Specific Enforcement,
Consent to Jurisdiction.

(a)The
Company and Purchaser acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions hereof and to enforce
specifically the terms and provisions hereof, this being in addition to any other remedy to which either party may be entitled
by law or equity.

(b)All
matters relating to this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the
State of Florida, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings in
respect of this Agreement (whether brought against a party hereto or its respective Affiliates, directors, manag

    	 

    	 

    

ers, officers, shareholders, members,
employees or agents) shall be submitted to binding arbitration with the American Arbitration Association in Marion County, Florida.
This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

7.3Entire Agreement;
Amendment. This Agreement sets forth the entire understanding and agreement of the parties with respect to the matters
covered hereby and, except as specifically set forth herein, neither party makes any representation, warranty or covenant or gives
any undertaking with respect to such matters. This Agreement supersedes all prior understandings and agreements with respect to
said subject matter hereof, all of which are merged herein. This Agreement may be amended only by a written instrument signed by
the parties and no provision hereof may be waived other than by a written instrument signed by the party against whom enforcement
of any such waiver is sought.

7.4Notices.
Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and
shall be delivered by a recognized courier service, fully prepaid and properly addressed upon the earlier of (i) actual receipt
thereof, as shown by the records of such courier or (ii) five days after the receipt thereof by the courier from the party giving
it. The addresses for such notice, demand, request, waiver or other communication shall be:

If to the Company:

Prior to the Closing, at:After
the Closing, at

Acology,
Inc.Acology, Inc.

11415
NW 123d Lane 912 Maertin
Lane

Reddick,
FL 32686Fullerton,
CA 92831

If to Purchaser:

 

 

Either
party may from time to time change its address for notice by giving at least five (5) days written notice of such changed address
to the other party.

7.5Waiver. 
No waiver by any party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed
to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

7.6Headings.
The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

7.7Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.

7.8No Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties and their respective permitted successors and assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any other person.

    	 

    	 

    

7.9Survival.
The representations and warranties of the Company and Purchaser shall survive the execution and delivery hereof and the Closing
hereunder for a period of two years following the Closing Time.

7.10Counterparts.
This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party hereto, it being understood that all parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if
such facsimile signature were the original thereof.

7.12 Publicity.
The Company agrees that it will not disclose, and will not include in any public announcement, the name of Purchaser without the
consent of Purchaser unless and until such disclosure is required by law or applicable regulation, and then only to the extent
of such requirement.

7.13Severability.
 The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine
that any one or more of the provisions or part of the provisions hereof shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a
provision hereof and such provision or part shall be construed as if such invalid or illegal or unenforceable provision, or part
of such provision, had never been contained herein.

7.14Attorney’s
Fees. If any Party hereto initiates any legal or equitable action arising out of or in connection with this Agreement,
the prevailing party in such action shall be entitled to recover from the other party all reasonable attorneys’ fees, expert
witness fees and expenses incurred by the prevailing party in connection therewith.

7.15Further Assurances.
From and after the date of this Agreement, upon the request of either party, the other party shall execute and deliver such instrument,
documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent
and purposes of this Agreement.

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above
written.

ACOLOGY, INC. 

By:

Richard Astrom

President

 Shares to be Purchased
Purchase Price

 $_________

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